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.

At the house warming party Don asked Ros how he did it. When they started working Ros and his wife lived on his salary and saved the wife’s.  They rented a slightly smaller flat so they could continue with their savings plan.  These savings formed the deposit needed to buy the house. Also, his car (the same as what Don was driving) was bought for cash – Don’s was leased to the hilt.

Don in contrast lived of both salaries and rented an expensive house and had thus accumulated nothing in savings.  Two years later Don was able to buy a house with a nil deposit, fortunately.

On the house bond alone Don was then paying more than Ros who put down a healthy deposit.  Ros again restarted his savings, after paying off the bond.  To Ros cash is king – not only then but also now.

Ros bought a quality home just two years later and is still living in it today, revamping it on retirement for his pension years.

Don always had the amazing ability to earn more money to match his higher lifestyle.  He always coped well and looked good to his friends.  But his amazing ability to earn more to match lifestyle was also his greatest downfall. He would each time earn enough to match his lifestyle, never earning more so that he could save.

Don started a savings plan that suited his lifestyle later.  He bought properties that had to be repaid from his higher earnings.  Don is not yet retired and will be able to do so at 65.  Ros, the natural saver who loves cash, had accumulated millions in savings and could retire at 60.  Ros was right and cash is king.

Don will never be as comfortable in retirement as Ros, yet still able to live well at a lower level.

Rob, who Don met a few years into his new career and later became partners, always needed more cash like Don to feed his lifestyle.  He was less creative (perhaps lazier) than Don and later sold his share in the business to Don.  Today Rob has no assets or cash and later even sold his home.  His state is most dire and he has to continue working, realising that there are few opportunities for 60 somethings.  His luxury German cars cost him dearly and the last one cannot be replaced and is costing a fortune in maintenance.

In my observations of young people I see too few Ross’ and to many Robs.  I met two 30 somethings last year who each earn over R100 000 per month – yet do not own their own homes; drive cars on tick; and, are accumulating nothing in savings.  These two young protagonists believe that there is enough time left not realising that these life choices can land them in the position of Ken, who at 70 has to return and find a job that will supplement his small pension.  He was like them living the high life and earned really big money.

It is clear that Ros is our best example and to be more like him and less like the others, we must:

  • Set our hearts straight and get the right attitude
  • Think clearly and make good choices
  • Make cash king
  • Never live to the limit of your family income, and
  • Save with all your might
  • Get rid of debts quickly
  • Buy cash
  • Follow good examples (Ros had a father with the same heart and mind. If not, find someone that thinks like them and follow their example)

Young readers please tell me your story, hoping that there are more Ross’ amongst you.  My observations are disheartening when I look at my son’s stories – a car salesman who must constantly attempt to finance shortfalls into new purchases and high residual values on cars – increasing and not reducing debt.  Hopefully you are not one of those.

Deon Hattingh is a financial planner who gives financial guidance at a fee to young and old- to the young guidance that will prevent the errors of the old, the sins of the fathers as it were.  Deon can be written to on deon@howtomakesense.co.za.