The Impact of Debt on Employers and Employees MANAGING RISK
NCA - Introduced in 2007 Purpose – to protect the man in the street from reckless lending Boer maak n plan Lenders - developed more efficient tools to speed up the administration of the loan process Result - increase of unsecured loans over past 2 years = 53 % 1994 – 2013 - Household debt up from 56% – 75 % = 34 % National Credit Act 53 %
Credit active consumers: 20,21 million Almost 49 % with Debt problems
4 Unlocking Property Ownership Status Quo Debt Crisis in South Africa 20,21 million credit active consumers: 62% Arrears & debt impairments 38% No arrears 14 % 1 – 2 months in arrears 21% 3 – 4 months in arrears 26 % adverse or judgments
Case Study No 1 Mine worker @ XXX Mine – Income R26 000 per month – PAYE etc- 2 200 – Ex wife – maintenance - 2 600 – Debt deductions- 20 000 Balance left R 1 200 Result - …………………….
Case Study No 2 Police Sergeant - George – Income + R ….….. – PAYE etc- R……….. – Uniform- R ………. – Debt deductions- R ………. Balance left R 184.00 per month Result - …………………….
May your EXPENSES never catch up with you before you reach the PAYDAY. EXPENSES PAYDAY WORD WAKKER !!!!!!!!!! 7
8 Unlocking Property Ownership Debt Secured -Home loans *Security – Mortgage bond *Interest – prime + 1 – 3 % Unsecured & Short Term * Security or no security ? *Prime + up to 60 % per annum *Is it really UNSECURED? * Fraud & Abuse of Garnishee Orders & Emoluments
9 Unlocking Property Ownership L S M Unsecured & Short-Term Debt Home Loans Under R15 000 per month R13 billionR1,3 billion NCR Stats 2 nd Quarter 2013 LOAN LOANS GRANTED
10 Unlocking Property Ownership The Problem – Buying a House First time buyers in the affordable market Little knowledge or background * 80 % Biggest Problems: Over-indebtedness Account Conduct Affordability
11 Unlocking Property Ownership The Problem – Buying a House First time buyers in the affordable market Little knowledge or background * 80 % Biggest Problems: Over-indebtedness Account Conduct Affordability Affordable Market: Approved vs Declined 15% Approved 85% Declined
Of the five major sources of stress, the issue of personal financial stress was rated as #1 Rated 5 times higher than health concerns Financial Stress – Relevance to Employees?
14 Unlocking Property Ownership Access to property finance Major Fund *Provides funds for home loans *Outsource to lender Lender *Obstacle – bad quality of clients *2 700 applications - 310 approved *600 applications – 100 approved *Relax approval criteria *Increase interest rate to price for risk
15 Unlocking Property Ownership Back to the our Own Office LOAN What is the impact ?
Disruption of administration, emolument & garnishee orders Frequent staff financial counselling Absenteeism from work Ongoing demands for access to payroll Impact on HR & Payroll Office
18 Unlocking Property Ownership Solutions: I want to save the world
19 Unlocking Property Ownership Solutions: Housing Education and Empowerment Promote as part of a holistic campaign Engage early Continue with education This will lead to: Empowerment Improved : behaviour, dignity and integrity Reduction of risk Commence with awareness and education
20 Unlocking Property Ownership Early consumer engagement Empowering consumer Education to affect change Continual engagement Solution - Housing
21 Unlocking Property Ownership Start with the basics
Do you have a mobile phone? How do I manage my budget?
Captures Daily, Weekly Expenditure for: – Food R120; – Travel R30; – Rent R500; – Other expenses In budget Alert !!! Capture each rand you spend
How much can you save if you replace your most expensive debt & pay off your other debt faster? Investigate your most expensive debt
Investigate - 25 IDENTIFY THE MOST EXPENSIVE DEBT FIRST Savings R23 500 per year
26 Unlocking Property Ownership How to buy your own home
27 Unlocking Property Ownership Pre and Post Purchase Education Two programmes: Pre-purchasePost purchase and after transfer of ownership
28 Unlocking Property Ownership Alternative Ownership structures
29 Unlocking Property Ownership For 6 – 18 months (negotiated) Rent Towards a deposit Save Training & Mentorship Home Ownership Education Bond approval Reward Rent2buy
30 Unlocking Property Ownership Fly Solo / Partnerships? Cannot achieve this on our own Cannot achieve this on our own
31 Unlocking Property Ownership Strategic Role Players National Government Local Government Local Authorities City of Cape Town Financial Institutions Property Developers Land Owners Estate Agency Affairs Board Law Society Attorneys Fidelity Fund Corporate Entities Private Entities Community Leaders & Forums But The Most Important Stakeholder Is: The Buyer! Our Partners and Content Contributors: Blue Oak Credit Health Inspect-a-home 1 Call ASAPBlue OakCredit HealthInspect-a-home1 Call ASAP Law Property Lightstone moneysmartLaw PropertyLightstonemoneysmart My Budget Fitness Real Estate Investor Magazine Setsmol My Budget FitnessReal Estate Investor MagazineSetsmol Education : Partners and Role Players
34 Unlocking Property Ownership Conclusion – Sustainable Homeownership Customer Responsible, learns to manage own finances and makes informed decisions. Reduces the burden of debt Lender Promotes responsible lending &
35 Unlocking Property Ownership Like us on FacebookFacebook Follow us on TwitterTwitter Contact Details Meyer de Waal M: 083 653 6975 T: 021 461 0065 E: email@example.com@budgetfitness.co.za www.irent2buy.co.za www.budgetfitness.co.za www.mobile2budget.com www.consumerhousingeducation.co.za www.flisp.co.za