Choose a Life
Don and Ros met for the first time when they went to university in the 1970’s. They followed similar life and earning patterns but made different life choices and today, both past the age of 60, look very different. We will contrast these two people in the choices they made and hope that some of our younger readers will learn from this and make their own best choices for their lives.
The names are fictitious but the events are real. We will later add Rob and his life pattern to show a further contrast.
We are early in the year and an adjustment to your life choices will even have a visible effect by this year end.
Don and Ros both married within a year after completing their studies and both earned the same income level as did their newly wed wives. Ros always was a natural saver and within five years after getting married bought his first home. Don at this time had changed jobs and was earning more than Ros, yet could not yet afford a house. Continue reading “Choose a Life”
Beware of Identity theft
There are a lot of numbers connected to you; your phone number, your identity number and your bank account number. These all identify you as they are unique to you. You can lose a lot of money when you lose your identity. This has become a problem, globally and I believe it will hit South Africans much harder as we are so trusting.
A recent event in my own life has made me wearier. I will share the bank call centre practices; suspicious conduct; the impact if I complied with requests; and, possible ways to overcome the problem in future and to protect you.
Banks call centres will not divulge any account information unless they have verified your identity by asking you about your personal information. They will not, even after properly identifying you, divulge all their information to you but will accept you changing information with them. They record all calls made to the call centre and thereby cover themselves under the law.
I one day asked a bank official what my listed cell phone number was when they claimed that they had tried to contact me but could not. The lady was more senior than a call centre operator and told me that their systems could be hacked and that she will confirm the information to me by the listed e-mail address (also not divulged) and I could then confirm by return email. I tested her claim and could not even pry an account balance from her by phone. Continue reading “Beware of Indentity theft”
Making sense of your BUDGET
A new year leads to new hope and even the odd new years’ resolution. Most of us are enthusiastic about a new year as it gives us a chance at making a fresh start and do things differently.
However, we know from experience that resolutions only materialise when we put in the required effort. Resolutions can only work when we change behaviour which in turn leads to developing new habits.
In our making sense column to appear regularly on this spot in The Star Workplace throughout the year, we aim to give you practical tips on how to acquire and sustain new habits around money matters.
The starting point is to set up a budget.
It is not only government and companies that need a new budget every year but each one of us must also set a personal budget and then manage our financial affairs per the constraints and requirements of that budget. Continue reading “How to make sense of your budget”
Control your debt
I am receiving a lot of correspondence from our readers on various financial matters and many “how to’s” to make things better. The most common complaint about money is that there just is not enough money to cover all the expenses.
During interviews it becomes clear that these people do not live exorbitantly, do not live in too expensive a home or flat, do not eat expensive types of food nor do they drive a too expensive car for their salary. It appears that it is the other expenses that cause the problem; and most of these expenses are for various debt repayments. They will vary from clothing to credit card to furnisher to personal loans. On average the people have 6 of these accounts and in value will make up to half of their rent or bond cost in a month.
In contrast to these respondents I discovered that the people who complain least are the ones with the least (or no) debt. On the same amount of money as the other respondents they cope better and even save some money each month. You will hear them say ‘we can’t afford that’ while they really are saying ‘I do not have enough cash now to buy it’. These people save monthly and once they have enough money will they go and buy; when they can afford it.
These debt free people, we had found, also exhibit a second trait: they budget. Continue reading “Bring debt under control”
Write it down…..
We have become so addicted to our computers that we have forgotten the art of writing. And yes, it is an art. Typing onto your computer, as I am now doing writing to you, is logical – finding the key and then hitting it. Writing is free flow movement of your hand and when we do this we actually create art.
The best way that you can force your mind to remember something is to write it down. We are then combining logic (the thing to remember) with art (by writing it down). When we type the same reminder into a computer we are combining logic (thing to remember) with logic (typing it into the computer). The reason is physiological as you combine left and right brain activities – one logic one art – always forget which is which (suppose because I never wrote it down).
To combine logic with logic thus makes you rigid and forgetful – like a professor. Combining art with art makes you flaky – like an artist. Combining logic with art creates balance and allows you to remember better. So when I say write it down, I really mean that you put pen to paper and write! Musicians are often good mathematicians, I am told, for this reason – scribing onto paper what they hear in their heads – constantly using logic and art in combinations.
This integration of both sides of the brain is of particular importance when you do a budget. Continue reading “Write it down…..”
When you put a frog in water and gradually increase the heat it will stay in the water and eventually boil to death. We are a nation that is manipulated on all fronts, both politically and economically but because it is gradual it largely goes unnoticed, until we die like frogs. Today’s discussion may appear political and perhaps it is, but it is the impact on our savings (or rather the lack thereof) that concerns and prompts me to write on these issues occasionally. I no longer trust their ‘good news’
There are certain commodities that we use daily that costs the same for everyone, whether you are rich or poor, and include bread, milk, medical aid, electricity and fuel. It is the little guys that must take better notice of these costs. To illustrate: a person earning R100 000 per month may spend only 5% or R5 000 on fuel; yet the one earning R10 000 may spend R2 000 on fuel – a massive 20% of income, even if only spending 40% as much as the high earner on fuel.
When the fuel authorities (more than just the suppliers and includes government with imposition of more levies) announce a possible 70c reduction we become elated. Their pattern of subsequent behaviour in the past has always resulted in a string of increases that are usually 300% more, and cause me to no longer accept this as good news. We, however, remain happy in our bowl of water even if just slightly warmer than before. We can now forecast a price close to R15 per liter by year-end when the 70c savings now may result in a R2,10 increase over time. Continue reading “We are a nation that are manipulated on all fronts”
The most logical of people often become illogical around money; we fluster and do not know where to start. The fact of the matter is that we know what we want and usually that is wealth; lots of money; being debt free by 50 (as one reader wrote); having enough for retirement. It is just getting there that appears to be so impossible, even just getting started is hard.
Today we will make sense of the process and demystify a seemingly impossible and obscure reality about money. Even though I have written on this process a few times before it is a fact that we learn by repetition and it is often on the third or fourth prompting that the penny drops.
There is logic! To satisfy our dream of wealth one day we must do two logical things in sequence Continue reading “The most logical of people often become illogical around Money”
Everything costs money; from the water coming from your tap to your car pulling into your garage at night for another good night’s sleep. Well, that might be a slight over simplification, but you get the point. As intelligent as we are, we often forget this fact when we see a “Buy one, get one free” sign. Our blood pressures spike and we buy things until it returns to normal.
But when you buy one, to get to the free one, how can you be sure that it is actually free? When we see the bright fonts and placards declaring Brand X is “two for one,” our common sense flies out the door. We neglect to check the usual price on the shelf that validates or rescinds that “special” offer. Often the “exclusive, one day only” bargain includes a healthy 15% price increase to compensate for the loss that the free product puts forward. Of course, we don’t see that. We love the thought of free, mahala, verniet so much that sagacity heads to the bottom of our shopping list.
We also momentarily forget that we don’t normally buy Brand X because Brand X does not satisfy our needs. We are willing to overlook that fact in lieu of gratis. Our frustration hits breaking point when Brand X again fails to wash out the grass stain or takes ages to cook. Finally, we give away our “free” product and jump in the car to buy our usual, regular brand at the usual, regular price. So, we buy products twice because of that four-letter word.
So, why do we fall in these traps? And we have all fallen in such traps at one stage or another. There are a couple of reasons. Continue reading “Take your brain with you when you shop”
Budgeting ahead of time is essential for a stress-free break
The best things in life aren’t always free – take holidays for example.
We may look forward to holiday time with that ‘can’t wait feeling’ but we often forget to save the money needed to have a holiday filled with fun activities and treats.
When we draw up our budget for the year; we plan for cars, houses, education and so on, but what about funds to get away from it all?
Everyone needs a break from responsibilities and hard work so unless your bonus is enough to cover your entire holiday, it pays to start saving early for your next holiday.
Opening an account that accumulates interest is probably the best option. Combining your “rainy-day-fund” bank account with your holiday bank account will prevent you from having too many bank accounts and, importantly, will enable you to earn more interest as the amount in a combined account will be greater if you don’t split the monies into smaller amounts in different accounts. Continue reading “Start planning and saving for a great holiday”
“There is not enough money in my budget”
One of our readers called after the last article on buying a house and claims that he does not ‘have enough money in his budget’ even when sticking to the prescribed guidelines. When we analysed his income and his expenses we found that he was right.
After Clive bought the home at the guideline 30% of salary he could buy a house at a full bond of R600 000. He soon realised that he was short and added all the other expenses as percentages and found: 18% went to taxes; 20% to car payments; 7% to required insurance; 20% to groceries; 21% to medical aid; 15% to municipal charges; travel cost to 10%. This adds up to 101% and they had not yet paid for schooling; entertainment; TV bundle. When this was added in they needed 170% of his R20 000 income (that is a needed income of R34 000)
This was discussed with the understanding wife. They both agreed that they needed a joint effort as they were not willing to lose the home; nor be embarrassed by not paying school fees.
His wife had to go back to work. She secured a job for R10 000 net per month and found that they remained another R4 000 short and had to now pay for aftercare at an additional R2000. They needed R36 000 per month before cut backs on budget. They only had R30 000.
Here are the other actions they implemented: Continue reading “There is not enough money in my budget”