Your protection when buying Financial Products

Your protection when buying Financial Products

Many pseudo financial service providers sound legit when they sell you all kinds of insurance contracts and loan facilities.  This last week it was a selling organisation by name of Mzansi Money that came to the fore.

Today we will look at the way that you should react to their and similar presentations.   Each time we fall for one of these offerings we are robbed of savings.  These savings can buy your baby a car when they graduate one day, or provide more comfort to you in your old age.

The Mzansi call centre agent nearly promised a pre-approved loan.  To qualify for the loan you had to buy an income protection policy.  The agent was asked what would happen if the loan was not approved, to which he replied, that you then at least have the insurance policy.  In this instance the sale of a product could be secured on the promise of a loan.  Continue reading “Your protection when buying Financial Products”

Tips for Christmas

Tips for Christmas.

It is hard to believe that we are one month and two weeks away from Christmas.  I really love this time of year and to see the goodwill of people, one toward the other.  Few realise the sweat that follows early in January when the credit cards had been maxed out to prove the goodwill.  Let us make this year better and financially rewarding.

Today I want to take a lighter view and look at methods of extending the goodwill without breaking the bank.

I start with a story from my own life, to prove how people appreciate it when you give of yourself; and, how to save a fortune on your budget.  Later we look at what can be done with some of that savings to make 2011 a much better year.

My mother passed away at the end of 2008.  She wanted me to take the doorstop I made for her back in 1985.  This doorstop represents the cheapest presents I ever produced and I remember the event well.  Continue reading “Tips for Christmas”

Choose a Life

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”

Employers can help

Employers can help

We’ve all felt that a little pay rise wouldn’t go amiss. Most of us don’t do much about it, but every so often a handful of people decide to speak out against their, in their opinion, low pay.

I followed last week’s strike avidly. In a radio interview, one woman described that she needs an 8.5% pay increase because her husband lost his job. She wrongly believes that because one member of the family is now in a poor financial position, the employer of the other family members should somehow compensate and make up for that lack.

The problem that the average civil servant experience is a simpler economic one. There is not enough money.  They are overextended on salary and a 6% increases will not relieve the problem and they must push for an 8.5% increase. They strike until their demands are met, causing harm to the economy.

The civil servants are a peculiar group and their demands have more direct impact on the macro economy.  They are paid from tax income; so now taxes are raised; then it becomes more expensive to run your business because of the higher tax burden and prices must increase. Your staff are affected by the higher prices of all products: and, they too demand a pay increase. Continue reading “Employers can help”

How to make sense of your budget

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”

How to recover

How to recover

The Football World Cup is one of the best things that hit our shores.  It is thoroughly enjoyable but nearly over.  There are so many life lessons to be learnt from the player and team actions and responses.

It was when Italy went out at the group stage that I was wondering how that must feel having won the last world cup and how will one going about one’s recovery?  They went from being on top four years ago, to ending bottom of their group.  It was not only them that went out but also their 2006 world cup rivals, France, that went out at group stage – beaten by our very own Bafana Bafana in their last match.  Both France and Italy ended at the bottom of their group, amongst the worst eight performers of the 32 world cup team qualifiers.

We go through similar challenges in our lives and many of us lost a lot during the 2009 recession.  How do we recover?  We will look at what the football teams do and apply it in our lives. Continue reading “How to recover”

Breaking the debt cycle

Breaking the debt cycle

In today’s article in how to make sense we look at the most difficult and most failed personal financial action: breaking the debt cycle.

First, I needed to know what the extent of the problem was and commissioned a mini survey among friend s and family.  In this survey we tried to determine the volume and extent of useless debts in our lives.

Later we will look at possible solutions and the sacrifices needed to overcome the problem and find solutions.

We defined useless debt as all those debts not related to any tangible asset.  It thus excluded the house and cars and included: credit cards, personal loans, doctor bill repayments and other debt compromises (like paying a garage, electrician or plumber in stages rather than settling in cash).

All the people surveyed are responsible people and none are reckless spenders, yet ended up with the same common problem: too much useless debt.  Everyone had the same causation problem:  none had emergency funds to settle sudden unforeseen expenses.

We will later look at the importance and the size of an emergency fund and how to provide for it. Continue reading “Breaking the debt cycle”

Irresponsible lending

Irresponsible lending

One of our regular readers contacting me this week after reading a previous article on debt management.  He acknowledges that this was a difficult call as he had to admit to me that his debt was out of control.  I pacified him by advising that we are all ashamed about our debt condition and nobody admits that we are not in control.

After our discussion, I thought that in howtomakesense today we should revisit the matter of debt; and, that I should in all fairness also grant our other readers the special offer I made him.

He is due to get married and his fiance thinks that he does not love her enough because he wants to get married out of community of property and not in community.   She does not realise that his bad credit referencing will affect her badly.  You see, if you are married in community of property your spouse has to co-sign on all your credit applications and their bad references will thus transfer onto your loan and may disqualify you also.  Continue reading “Irresponsible lending”

Take no credit

Take no credit

We all thrive on credit and take it whenever from other’s acknowledgements whenever we do something good.  We in financial terms also, however, need credit of a different kind when we want to buy something.

We most often turn to banks first to get more credit.  Obtaining too much credit could eventually destroy you; or, at the least may seriously sabotage you.  Banks are dangerous places and will give you money when you do not need it and will recall it when you do not need it and cannot afford to repay it.  The shorten your credit and call up facilities at the worst possible time.

From my point of view and in answer to the rhetorical question ‘who is the best bank’ the answer is simple “none”.  In South Africa, there is no good bank, thus no accolade of best can ever be awarded.  Continue reading “Take no credit”

What if I grow to be a 105?

What if I grow to be a 105?

This was the refrain from a song in the 1960’s.  It now appears in becoming a reality when Three D printing will one day soon be able to reproduce replacement organs, it is reported.  They reckon that our children may live to 140 years old.

Living too long has always been a problem for us but appears to becoming a dilemma for the future of our children.  In financial planning and retirement provision we have always had to look at balancing living to long with dying too soon.

Here is our quandary if we partially benefit from the artificially printed organs: what if I live to be a 105?

As South Africans, we have never acquired a savings culture and are one of the worst countries in the world in saving money.  So, even if we do not want to acquire the savings habit for ourselves we have a responsibility to train our children into the habit.

We currently only live for about 20 years beyond retirement and most cannot even survive that long.  How much more will our children suffer in their old age if they will live for 60 years beyond retirement?  How much more will I suffer if I do not accumulate much more than my current life pattern is indicating?

If you are over 30 and you have not started your retirement savings you are in trouble.  Short term accessible savings, that everyone insists on having, do not count!

In howtomakesense today we look at the importance of saving and starting sooner rather than later. Continue reading “What if I grow to be a 105?”