The hidden toll of debt and why early action matters

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SIMON BROWN: I’m chatting with Sebastien Alexanderson, CEO of National Debt Advisors. Sebastien, appreciate the time. In theory payday should be a good day, right? We’ve got money, we reset our finances. But for many it’s actually about stress, it’s about debts, it’s that there’s very little real finance. It’s actually probably a tough day for many.

SEBASTIEN ALEXANDERSON: Absolutely. Payday is supposed to be a day of celebration. We have just been paid – let’s do something with it.

But I think for most of us payday comes and it has become a day of anxiety. You live month to month, that money comes in, and then it’s gone, whether it’s in seconds, a day, maybe – if you’re lucky, a few days.

But for the rest of us, for most South Africans, you’re left worrying about school fees, food, supporting your family. That kind of pressure follows you home, it affects your sleep, it affects your relationships, it affects your ability to be emotionally present. It’s a real problem.

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SIMON BROWN: It absolutely is, because it starts with money, but it ends as physical well-being and mental well-being. And, as you say, it can impact relationships, it can impact families. It’s going to manifest in different ways – and emotionally most of them are going to be very, very bad for you and those you care about.

SEBASTIEN ALEXANDERSON: Hundred percent. I mean, we’ve got a strong culture of depending on our friends and family for money as well. So that creates bigger divides when it comes time to pay that back.

SIMON BROWN: That’s a good point. We’ve seen charts that say borrowing from friends and family is up from 18% to 28%. I get why, and you want to help friends and family, but we need to, I suppose, maybe put structures in place, and try to look for some solution here. It’s an obvious and easy one, but it can bring some real conflict within a family.

SEBASTIEN ALEXANDERSON:Hundred percent. We all know that when we borrow money from a friend or family and we can’t pay that back, that strains things.

They might start avoiding you; it puts undue pressure on you and the family. And the reality is that if you have to borrow from more than one person just to survive, just for those essentials, it becomes a bigger problem than just money.

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SIMON BROWN: It’s that. The key point you’re making here is we’re talking essentials here. We’re not talking, you know, holidays to the Wild Coast or something, or fancy nights out. This really is just the day-to-day of survival.

SEBASTIEN ALEXANDERSON: Absolutely. One of the things that we really encourage is to kind of sit down with your family at least once a week or maybe once a month and talk about what’s coming in and what’s going out, and what you can do to try to cut back. But if you’re like many South Africans for whom that pay cheque is basically going for the essentials – the school fees, the transport – then there’s nothing left that you can cut back on, right?

That means that there’s a deeper systemic problem inside of our country that needs to be dealt with.

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SIMON BROWN: You mentioned school fees there. We’ve been talking around the adults. The kids obviously aren’t wage earners at any point, but they’re part of this process and they’re part of this mental health challenge and the stress that goes with it – if not directly, certainly indirectly – watching their parents and caregivers.

SEBASTIEN ALEXANDERSON: I’ve two eight-year-old twins, so I’m at the beginning of my school-fee adventure and, let me tell you, it’s tense. It’s double trouble every month. Children hear everything, they see everything, they feel everything.

As parents we try to hide our financial problems, but they notice the arguments. They feel the anxiety, the tension in the household. And at what point does a child start worrying about things like school fees instead of worrying about their homework?

SIMON BROWN: That’s a great point. So, some solutions.

One of them is, I suppose, bring in the kids, age appropriate. Let’s not get an eight-year-old and ask them to balance the budget. But engage them in the process, perhaps – to sit around at dinner and I suppose be open and frank with them.

SEBASTIEN ALEXANDERSON: Hundred percent. Those little human beings of ours are smart. They know, they understand, they see it, and they’re often very, very supportive.

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SIMON BROWN: Yes. And often way smarter than we give them credit for. You mentioned earlier as well around a sort of weekly check-in for couples: to sort of sit down – importantly non-judgmental – on what’s coming in, what’s going out.

In other words, get everyone on the same page – an important point there – so there aren’t surprises. I suppose in some senses it’s a cliché, but ‘trouble shared is trouble halved’.

SEBASTIEN ALEXANDERSON: I find one of the most interesting parts of the job that I’ve been doing for 25 years is that we speak to so many people and it surprises me – and kind of after all this time it doesn’t surprise me – but the people we find the hardest to speak to about our money problem is our loved ones.

It’s like we’ve got pride, we don’t want to admit defeat, and we are staying up all night tossing and turning, tossing and turning.

Your partner’s asking why you are tossing and turning, and it builds a wall between you. But then what you really need to do is to stop putting your head in the sand and delaying it, and have that conversation.

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SIMON BROWN: And having that conversation as well then goes to sort of the more formal assistance – there are lots out there – such as speaking to the people you owe money to, whether it’s friends and family, or secured or unsecured loans.

But also just avail yourself of the opportunities and have those conversations sooner rather than later – not just for your own mental health, which is hugely important, but also just because nearly always sooner is better than later.

SEBASTIEN ALEXANDERSON: 100%. At first we try to borrow our way out of trouble, but then that stops and we need to find other solutions. Depending on where you’re at there are different solutions available.

But the one thing we’ve learned over time is if you don’t act sooner rather than later, those solutions disappear – and before you know it, the sheriff is at the door and those problems just become even bigger than what they were.

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SIMON BROWN: This is Mental Health Awareness Month. We’ve been talking around that. I suppose the point is that it feels, I would imagine, completely unsolvable. I imagine you’re going to say it is solvable, and you’re not going to say it’s necessarily easy or fun – but it absolutely is solvable, and that is the key point.

SEBASTIEN ALEXANDERSON: Absolutely. At the end of the day, we have a great Constitution. It caters for these sorts of things. If you’re the main breadwinner and you’re finding yourself in a position where you’re stuck, you’re struggling to put food on the table or you’re struggling to speak to your family, speak to a professional, speak to a debt counsellor, speak to a financial advisor. Get your bank statements out, and see what options are available because they are there.

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SIMON BROWN: They are there, absolutely.

That’s the message we’ll leave with. Sebastien Alexanderson, CEO of National Debt Advisors, appreciate the time.

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