The unsettling truth behind a booming market

The financial backdrop in 2025 is unusual: international and local stock markets are booming simultaneously. With US and local markets rallying, gold prices at all-time highs, and reaching new peaks, there's even talk of an AI bubble. This confluence of factors creates a powerful sense of financial confidence, yet it can also be seen as a classic setup. It's the kind of exuberance that has historically preceded sharp market corrections. The concern is simple and sobering: taking on new debt right now might become a heavy burden for consumers come 2026 if these global market dynamics shift.

Experience from past economic cycles resonates deeply. If this perceived "bubble" does indeed burst, we could be looking at a global recession as severe as the early 2000s or the 2008 housing market collapse. When international investors seek safe havens, their investments in the local JSE might quickly go elsewhere. This means the ripple effects of global market instability inevitably fall directly into the laps of ordinary South African consumers, making new debt an incredibly risky proposition.

Lifestyle debt disguised as festive cheer

Beyond the macroeconomic warnings, there is an even more immediate and personal danger: the allure of "lifestyle debt." While some debt can be productive, there's a distinct category of "bad debt," especially when funds are spent on luxuries. That holiday loan, taken in the joyous flush of December, can quickly transform into a five-year financial burden, becoming a source of regret long after the festive glow fades.

Every year, the cycle plays out: the "January dread" when bills arrive, the pressing need for "February repayment," and the crushing "March snowball effect" as initial debts grow beyond control. These are the hidden costs of impulse buys and unchecked festive spending, turning temporary joy into prolonged financial stress that can impact families for years.

Planning for "winter" during the festive "summer"

A simple but powerful metaphor illustrates the point: "It's better to collect the firewood you're going to need for winter in the summer months." December, with its bonuses, time off, and high spirits, feels like an endless summer. However, economically and emotionally, winter always arrives. Acting prudently now, by avoiding unnecessary debt, is like gathering that firewood. It ensures you have the resources and stability to weather any storms that 2026 might bring, rather than being caught unprepared.

The call for a "No Debt December” empowers households to protect themselves from a perfect storm that might be quietly brewing offshore. It's a plea to prioritise stability and peace of mind over short-term enjoyment and instant gratification.

Be intentional, not impulsive

So, what should South Africans do? Consumers are urged to be intentional, not impulsive. It’s strongly advised to speak to a financial advisor to prepare for both good and bad times alike, ensuring readiness for any scenario. The smartest families this December will be the ones who plan meticulously for their financial future, rather than splurging without a thought for the consequences.

As the tills ring and the adverts blare with enticing offers, this advice cuts through the noise with refreshing honesty: the future may indeed be bright, but that’s precisely why it shouldn’t be dimmed with unnecessary debt today.

* Coetzee is the CEO of the FinFix Group.

PERSONAL FINANCE