This article doesn’t constitute financial advice, it is based on my life experiences.
This morning when I woke up, I briefly checked on my phone before I left the room to go and study for one of my MBA modules, I am told looking at your phone first thing in the morning is a bad habit. On my Twitter time line there was a tweet with over 900 comments, it was a photo of a towing truck about to load a repossessed VW Polo and the guy wrote he was retrenched and could no longer afford to pay installments😢Many people who commented were saying they have also lost their jobs, it was scary just going through the comments. Things are bad guys. Because all these people being retrenched are customers of many businesses, there will be a domino effect.
As you go through life, you learn from your mistakes. Many of us we were taught about making money but not how to use money wisely and we are one paycheck from poverty. I remember in the late 90s back in Zimbabwe, I opened 5 store accounts and the Reserve Bank of Zimbabwe was forced to increase interests rates to defend the fast depreciating Zimbabwean dollars. It was a painful time for me and luckily I learnt a lesson for life. What I do every month I scrutinize my monthly statements, check on the interest I am paying as well as the fees.
Imagine if on all your debts you pay monthly interest and fees for a total of R10 000, that means R120 000 per year. If your monthly salary is R25 000, it means in a year you work 5 months just to pay interest and fees. The culprit is usually unsecured debts such as credit cards and personal loans. Currently the minimum lending rate in South Africa is 6.75% yet interest rates being charged on credit cards and personal loans is close to 20%. It makes sense that you must always try to clear your credit card debt first and personal loans.
A few months ago, I was fortunate to pay off some of my accounts but then I ended up closing one of the accounts because of high monthly fees charged. Imagine paying a monthly fee of R75 (R900 annually). For R900, I can get a return bus ticket from Pretoria to Harare, it is a lot of money. About 10 years ago, I was forced to close my Edgars account for the same reasons again. If you are not careful about debt, you end up working very hard in a job you hate in order to make just enough money to just be able to pay your installments. You become a prisoner of your debts. I believe as a person you should always have options and have the option to move somewhere even if it means going to sit at home, a person is not a tree and must have the freedom to move and try other things🙏🏿
Once you clear your debts, you need to start saving. Please try not to worry about what other people think of you, don’t live to impress people, because when your car is repossessed the same people will laugh at you. You need to constantly ask yourself, what will happen if I lose my job? Can I resign from my job and try a business without worrying about money for say one year? Another trajedy I see in South Africa many people pay so much for their medical aid and so little for their pension. The trajedy is that having contributed so much you won’t afford medical aid when you need it most i.e when you are old. I would recommend that you contribute as much as possible for your retirement. If you are retrenched tomorrow you will have a reasonable amount to carry you through.
I believe it’s very difficult to have standards when you are very indebted. I always give examples of Thabo Mbeki and Jacob Zuma administrations. During Mbeki’s era when he he was pushing those dubious Aids treatment policies, how many comrades reigned him or even resigned in disgust, none? Also as we are hearing in the State Capture Commission many politicians and SOE executives had no problems following clearly unlawful orders, they saw what happened to people who dared challenge the president and were summarily fired. Many people followed unlawful orders just to avoid being fired😢
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