As the festive season becomes a hazy, distant memory - the aftermath of the annual spending binge leaves many in a state of forced financial detox.
Tattered credit cards, wallets as barren as the Sahara desert and New Year's resolutions that slowly dwindle from memory, make recovering from the overindulgence of the season that much more of an uphill battle. Days seem to grow longer and the time until the next pay day seems ever unreachable. For many, the impulsive trolley-filling binge encouraged by store radio Christmas carols and the merry “ho, ho ho's” of fake Santas, will once again leave them and their creditors with severe financial indigestion over the upcoming months.
With over 18 million credit-active consumers in South Africa, one can only begin to imagine the amount of card swiping that occurred over the festive season. And so, as cards got maxed out and accounts got wiped out - come January and February - many creditors will get the cold shoulder from consumers who find themselves unable to pay off the expensive watches, designer sneakers and limited edition perfumes that found themselves under the Christmas tree.
Evidence of the festive season binge can truly be seen in the financial position of consumers. Statistics released by Compuscan, a reputable South African credit bureau, show that the payment profile of 11.7% of updated and active accounts worsened over 2010's festive season. This means that 11.7% of updated and active accounts missed a payment over December and January. While many men may be stunned to hear this - men and women actually fared very similarly in their payment behaviour, with 10.8% of accounts belonging to men and 12.5% of accounts belonging to women showing a worsened payment profile over the festive season.
In fact, it seems that age, rather than gender, plays the biggest role in how one conducts one's finances over the Christmas season. Not surprisingly, consumers between the ages of 18 and 29 fared the worst, with 18.6% of accounts belonging to individuals in this age bracket showing a worsened payment profile, while only 13.3% of accounts belonging to individuals in the age bracket of 30 to 39 showed the same result. This percentage then dramatically declines as the age of accountholders increases to 10.9% of accounts belonging to individuals in the age group of 40 to 49, and then further to 8.9% of accounts of individuals between the ages of 50 to 59. Faring the best of all groups was accounts belonging to individuals over the age of 60, of which only 7.1% of accounts showed a worsened payment profile over the season.
In every age category, the payment profile of accounts belonging to women worsened more than those belonging to men over the festive season. However, the gap between the genders tends to grow as the age of the accountholders increases. Thus, in the age category 18 to 29 there is only a 0.2% difference, with 18.5% of accounts belonging to women and 18.3% of accounts belonging to men showing a worsened profile. This percentage then increases to a 1.83% difference in the age category 40 to 49, and to 3.45% in the age group of over 60s. This may serve to prove that while men and women both start out fairly poorly in how they manage their debt when they are in their 20s - men appear to learn from their mistakes and improve their budgeting and debt management as they get older at a faster rate than women.
While results of the 2010 Christmas period are somewhat disheartening - results for the 2011 Christmas spending binge will only be available in March 2012. However, regardless of the results, it is a certainty that several consumers are currently feeling the financial hangover of their seasonal overindulgence. While a cleansing detox of reducing debt, decreasing unnecessary spending and structuring tighter budgets is always good to add to one's list of New Year's resolutions - ignoring financial responsibilities and skipping payments is not a healthy habit to start the year on.
Perhaps South Africans, in particular the younger generation, need to replace their annual festive spending binge with a healthier diet of budgeting and controlled spending to prevent the financial indigestion that follows the impulsive burst of financial abandon.
Statistics supplied by Compuscan. For more information, please contact Compuscan on 021 888 6000 or e-mail info@compuscan.co.za. You can also visit the Web site: www.compuscan.co.za.
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