The festive season may be a time of celebration, but for many locals, it is also the start of another difficult financial cycle.

According to René Moonsamy, chairperson of the National Debt Counselling Association, the end-of-year period remains one of the most challenging times for consumers.

Moonsamy says the lure of retail sales from Black Friday through to the New Year plays a major role.

“The festive season can be challenging for most consumers, with the lure of retail sales throughout Black Friday, Christmas and New Year being one of several contributing factors.

“Many households [are] then further pressured by expenses such as back-to-school costs and annual service increases in January,” she says.

She adds that by January, many households find themselves overwhelmed by expenses they did not plan for.

Moonsamy says this creates a recurring cycle each year.

“Typically, what we see happening in mid-January and into February is consumers finding themselves in a pinch and borrowing to make ends meet until the next payday.”

According to Moonsamy, the problem is that many households are already struggling to keep their heads above water and repayments on these loans add long-term pressure.

She says one unexpected expense or emergency can then result in serious financial difficulties.

Moonsamy adds that debt counselling enquiries spike every January and February because several factors drive this trend.

“Retail marketing peaks during the festive period, tempting consumers to overspend.

“Many people are on holiday, travelling or entertaining, and often rely on early December salaries that must stretch until the end of January. A weak economy also means fewer people receive bonuses, leaving them with no buffer.”

She says at the same time, New Year expenses such as school costs and service increases hit households hard.

The National Debt Counselling Association advises consumers to prepare.

This includes thinking about how long a mid-December salary needs to last and setting aside funds for debit orders, school costs and regular living expenses.

Moonsamy warns that unpaid debit orders can damage credit scores and come with penalty charges.

“Consumers who receive bonuses are encouraged to use part of the money to settle debt or save for the new year instead of spending it all.

Borrowing should only be considered for essential needs such as transport, school supplies or medical costs.”

Moonsamy states that people should only borrow from lenders registered with the National Credit Regulator and avoid illegal practices such as lenders taking ID documents or bank cards as security.

She also cautions consumers not to misrepresent their income or expenses when applying for credit. Registered lenders use affordability assessments to ensure borrowers can manage repayments and avoid becoming over-indebted.

Moonsamy adds that people should continue with their debt repayments over the holidays.

“National Debt Counselling Association data shows that missing December payments can affect a household for up to two years.

“While we strongly advise people to keep up payments, we understand that this may not be possible for everyone. If that is the case, get help.”

She says delaying can negatively affect your credit score and put your assets at risk of repossession, and if you wait too long, debt counselling may no longer be an option.

The association urges consumers to take practical steps now to avoid entering the new year already financially overwhelmed.

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