Beware the dark side of Black Friday

Deeply indebted consumers should think long and hard before plunging themselves even deeper into debt by splurging on luxury goods on Black Friday.

With Black Friday and the silly season upon us, finance experts are warning consumers to steer clear of any spending sprees that could exacerbate their debt situation.

It should go without saying, but the message is clear: don’t spend money you don’t have on things you don’t need.

According to Neil Roets, CEO of debt counselling group Debt Rescue, deals offered by major retailers on Black Friday often seem so good that consumers throw caution to the wind and blow their entire Christmas budget on single expensive items such as high-end TVs and other domestic appliances.

“(Black Friday) promises deals that would tempt even the most financially distressed amongst us,” Roets said. “The short answer is – don’t.”

Roets said that his company, for the past several years, has seen the impact that Black Friday and Christmas shopping sprees have had on consumers when they approach the group to try and get them out from under the financial mess that reckless spending has caused.

“Retailers who are themselves in deep trouble because of the contracting economy have come up with a host of clever ideas to tempt consumers to open their wallets and purses, which is how the idea of Black Friday was born,” he said.

“Black Friday was initially slow to take off when the idea was imported to South Africa. Once it took hold, however, it took off like a rocket ship, and many traders are now notching up a significant portion of their yearly sales on this day and over the Christmas holidays.”

Roets said many consumers also fell into the trap of feeling a degree of resentment, believing that they had been tightening their belts for so long that they needed a break and that Black Friday would be the ideal opportunity to splurge on something nice.

However, he warned that the current state of the economy did not lend itself well to this pattern of thinking.

“We are far from seeing the light at the end of the tunnel. It is our belief – and many leading economists share that belief – that we are far from staging a recovery.”

“In short, things are going to get a lot tougher before they get better. Now is not the time to act recklessly. On the contrary – it is more important now than ever to implement fiscal discipline and save whatever money is left over at the end of the month.”

The CEO said that consumers should plan around a budget, and bear in mind that December tends to feel like a long month, as the stretch between paydays is often much longer. Those who are paid a 13th cheque also get lulled into a false sense of security, he said.

“While we all feel that we desperately need a holiday and the end of a brutal year, keep those holidays within budget and don’t think that if you don’t have the money for school fees in December that the money will somehow, magically become available in January when the schools reopen,” he said.

According to Debt Rescue’s data, half of all South Africans are three months or more behind in their repayments, having collectively notched up R1.71-trillion in debt.

Source: Business Tech

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