Every third person in our country is suffering from unemployment and debt. In my opinion, unemployment leads one towards a life of destitution and distress and if the individual is unable to find an earning source for a long time, availing an opportunity to obtain a loan becomes inevitable. The problem is not with obtaining a loan but with the high interest rates and uncomfortable loan policies.
Banks or local debtors ask creditors to repay the debt within a short duration and if creditors are unable to repay, their debt increases, and the interest rate also rises high. Therefore, a creditor in South Africa remains always a creditor if he does not repay the amount within the early phases of securing the loan. However, every problem has a solution, you can take a few measures to control the situation.
Redundancy Package
The majority of the workers are unaware of their right to claim an amount called a redundancy package. It is the amount you can claim if your employer fires you or eliminates your job position due to any reason except if you are caught committing a crime or become involved in fraud. A redundancy package is also known as a financial compensation or benefits package.
When a company hires an employee full-time or part-time, it signs a contract with the employee that if he is fired by the employer in the future or the company does not require his service anymore, it will pay an amount to the employee. The purpose of this amount is to financially help an individual so he can manage the early financial crises after losing a job.
The amount is determined by multiple factors in which your length of service, employment contract terms, and local labor law are important. There is a period of time in which you can apply for the redundancy package, normally, it is 1 to 3 months long. Health benefits and retirement benefits are also part of the amount of redundancy package in some companies.
Notify Credit Provider
Sometimes, people do not notify their credit provider about their recent occupation status considering that they can manage the condition. Actually, in the early phases of unemployment, we have funds to manage the crises but with the passage of time, our funds diminish gradually and we sink deeper into the financial crises. Therefore, it is always recommended to notify the credit provider if you have lost your job.
Additionally, you need to gather information about the relief measures if you obtained debts from a bank or a registered company. Normally, banks and registered loan companies have relief measures, such as the company may cut off their interest rates. Lastly, some credit providers have contracts with Credit Life Insurance, which can help credit providers cover the debt amount for a certain period.
Unemployment Insurance Fund
The government of South Africa has launched a program for unemployed people who have lost their jobs for no reason. The purpose of this program is to assist the unemployed people so they can manage the financial crises. If you have contributed to the UIF while working in the field, you can claim unemployment benefits after losing your job.
The UIF has proper eligibility criteria and if an individual does not fall under the criteria he cannot receive funding. You can apply for UIF funding via the online platform or visit the office. The Unemployment Insurance Fund can provide financial assistance to an individual for up to 6 months.
The maximum amount one can receive from UIF is about R17,000 per month. But the amount is not given to the recipient for a long period of time and after a few months, UIF can cut off your grant. During the 6 months, you can apply for jobs or start a new business.
SASSA SRD R350 Grant
Another option that can assist you for a long period is the SASSA SRD R350 grant. It is a financial assistance program launched by the South African Social Security Agency for unemployed people. The aim of this program is to assist unemployed people so they can afford daily commodities, such as food, shelter, and clothes.
Unemployment can lead you towards a life of destitution but the SASSA SRD R350 grant can solve the fundamental issues and provide you with sufficient financial assistance so you can repay your debt. The application process is very simple, you can visit the nearest SASSA office, go to the online platform, apply via the Moya app, or call the SASSA helpline.
SASSA gives SRD R350 grants to deserving people only, it has proper eligibility criteria. If you do not fall under the category of deserving people, you cannot get the R350 grant. On the other hand, if your application is successfully approved by the SASSA, you can receive R350 per month for a long period till you find an alternative source of income.
Surrender Goods
The majority of people hesitate to surrender their goods, but it can be a long-lasting solution to the inevitable debt issues. Surrendering goods is a term coined by economists meaning, selling expensive goods such as cars, houses, or gold to repay loans. You can repay your debts by selling expensive assets, such as lands or estates.
Surrendering goods is one of the most common ways to repay the loan amount. If you do not have money to repay, your UIF and SRD R350 applications are declined and you do not want to surrender goods, it will worsen the condition. Therefore, it is recommended to sell your precious goods to repay the loan; otherwise, the interest rates will increase over time.
Renew Monthly Budget
Managing the budget and reducing monthly expenditures can help you control the conditions. Usually, people unmindfully design their monthly budget or do not have the idea to renew their budget. However, designing the household budget is a skill in which you need to focus on the important and redundant expenditure.
It not only helps control the condition but also makes you aware of the non-required expenditures. Experts claim that unemployed people in debt should focus on reducing their liabilities and cutting off their budget. Additionally, they should also focus on managing the daily commodities because if they use less, they pay less.
Other Considerations
You have seen how you can tackle the debt and effortlessly repay the loan amount. However, it is possible that due to extreme distress during the financial conditions, one may suffer from mental health issues. Mental health problems can also cause physical health issues so you should seek counselling during such conditions.
Furthermore, you can solve problems by focusing on the solution rather than paying attention to the problem. In case the debt increases and you are unable to pay the debts, you should visit the debt counselor. Lastly, you should focus on finding a source of income and if you cannot find one, you should initiate a business.
How does debt affect people in South Africa?
According to polls, 67% of South Africans suffer from the stress caused by unmanageable debts.
Why does South Africa struggle with unemployment?
There are multiple reasons; South Africa has slow economic growth and limited financial incentives.
Who is affected the most by unemployment in South Africa?
Compared to men, women are more likely to be affected by unemployment issues.
Unemployment has become one of the burning issues in South Africa as more than a quarter of the population is unemployed in our country. The high rates of unemployment predict uncertainty and financial chaos in the country.
People rush to obtain loans from banks and local debtors and due to the extreme conditions, they consent to the challenging terms and conditions. But within a few months, the debtors or banks threaten creditors if they are unable to pay.
Unemployment and in-debt conditions cause extreme mental and physical health issues. However, we still have ways to control financial crises if we mindfully make decisions and consider all facts before taking action.
I have provided solutions to the debt issues above, if you are unemployed, you can get the UIF, SRD R350 grant or claim the redundancy benefits. I hope this information will help you in future, thank you.