The lockdown will undoubtedly affect us on a financial level, mostly because our income will be affected.
Most people have the same questions:
* Is my employer allowed to tell me to take my sick and / or annual leave to make up for the days of lockdown?
There seems to be varying opinions on this, but the most common one seems to be - yes they can, but they shouldn’t.
They should rather make use of the National Disaster Covid-19 benefit that the Unemployment Insurance Fund has put in place to mitigate lay-offs of workers during this period of lockdown.
Sadly, the Employment and Labour Minister, Thulas Nxesi, has said that they were receiving resistance from some employers in this regard. For more information on the Covid-19 fund and how you can access it (as an employer or employee), call 012 337 1997.
* I work in a retail call centre and my company says it is an essential service, but I don’t think it is. How does this work?
It has been found that some call centres, which are not essential services, are still operating. This is not allowed during the lockdown. Should your employer not be able to produce documentation classifying them as an essential service and still make you come to work, according to Matthew Parks, Parliamentary Officer of Cosatu, employees can report the company to the police, as they are breaking the rules of the national lockdown.
* The country has been downgraded to junk status. What does this mean for me?
In ordinary times, this could have quite a negative effect on ordinary South African citizens. Government would have to pay more in interest on the money it owed, which means it would have less money for things like infrastructure, education, healthcare, etc.
To cover its shortfall, government would then increase taxes and interest rates. A weaker rand would also ordinarily come with junk status. This would lead to things like fuel and imported goods becoming more expensive.
Right now, though, with the country in lockdown due to the Coronavirus, the effect of the downgrade probably won’t be felt as much.
* Must I still pay my debt with my bank?
Unless your income has stopped completely, pay your debt as far as you possibly can. Certain banks have announced a “3 month payment break” for some small business and individuals on products like home loans, vehicle and asset finance, credit cards or short-term loan repayment (lots of terms and conditions apply) but this is in no way means that your debt is written off. In most cases you will still be incurring interest even on your “payment break”.
* Must I still pay my retail (store) accounts?
To date, no retailers have indicated any “payment breaks” for store and retail accounts, so it is definitely better to make payments as per usual. If you can’t make your usual payment, the best thing to do would be to contact your credit provider and explain your situation to them.
If however, you feel that over the next 6 to 12 months you might not be able to pay your accounts, then make the effort to contact a debt counsellor. If you are under debt review, your payment terms are lengthened, your interest lowered and your payment is therefore a lot less (especially on unsecured debt like retail accounts). Assets - like your home and vehicle - are also safe from repossession under debt review.
* What if I am under debt review and I can’t make my payment because I have been retrenched?
Make your March payment as per normal if you can. Make contact with your debt counsellor immediately if your circumstances have changed in any way. Your debt counsellor can then make your creditors aware of your change of circumstance and can motivate for even lower monthly repayments or even a payment break from next month.
Many people under debt review do not even realise that they have some sort of insurance factored into their monthly debt repayment. Credit life insurance would normally cover retrenchment as well. Make sure that you do not skip payment of this insurance cover, as it could leave you very vulnerable if it does not pay out on a claim due to non-payment of a monthly instalment.
Sebastien Alexanderson, CEO of debt counselling firm National Debt Advisors, says: “There has never been a more important time than right now to be in touch with your debt counsellor. Our company is mobilised, up and running and working full steam ahead from home - but we cannot help you if we don’t know that you need help. Answer calls and messages from your debt counsellor and make sure that you discuss your situation for the next few months.”
* I have not been retrenched or put on short-time, but I am obviously worried about my finances in the upcoming months. What can I do in preparation of tough times which may come?
Use this down time wisely and become fully aware of your financial situation.
Get out all your bank statements and take the time to go through them.
Get out all your account statements. Make sure what your payment terms are - especially your interest rates, payment amount and number of payments.
Draw up a realistic budget that has some money set aside as a contingency plan.
For the time being, until things return back to normal, stick to buying necessities.
Don’t panic. Stick to good hygiene. Stay inside. We will overcome this!
* Moeshfieka Botha is Head of Research and Consumer Education at National Debt Advisors.
For more debt and personal finance information visit www.nationaldebtadvisors.co.za