Are you in major debt? Do you know people who are?

[SauRoNZA]

I don't know if I want to add to my bond, the repayments are really affordable and if we can make it through the next 3 years, we will be smiling big time when our loans are paid..if we survive this relatively unscathed, the money we are used to paying on loans will then go into our bond as extra payments. I'm not very clued up on any other kind of consolidation plan we can make at the moment to make things easier or what options we have available to us and don't think anyone will touch us at the moment as we are overindebt. Anyhow, I guess we are not starving, have lights/water and food(and Internet haha) and for the rest, we pick out of a hat who will be the lucky recipient of our hard earned money each month!

Thing is your personal loans are probably at a rate of 16% or even higher and probably not for very large amounts...and there are two of them.

Putting that into your bond AND continuing to pay the money you currently do into the bond instead means a much lower interest rate overall and a single amount to be paid even month.

 

[mak2000]

Thing is your personal loans are probably at a rate of 16% or even higher and probably not for very large amounts...and there are two of them.

Putting that into your bond AND continuing to pay the money you currently do into the bond instead means a much lower interest rate overall and a single amount to be paid even month.

Agree. This is smart. I had to go through this a few years back to clear myself of my CC and overdraft. Now only the homeloan remains to be paid off but the asset to debt ration is high an di'm comfortable with the repayments.

 

[OrbitalDawn]

Thing is your personal loans are probably at a rate of 16% or even higher and probably not for very large amounts...and there are two of them.

Putting that into your bond AND continuing to pay the money you currently do into the bond instead means a much lower interest rate overall and a single amount to be paid even month.

Yip. You just lose more money by paying off the high interest on a number of different loans. Rather consolidate and manage that one sum effectively.

 

[saguran]

I personally started working with debt already (student loan), in the beginning it really gets to you but you get used to it, to manage it. That said, taking unnecessary personal loans and clothing accounts is a no no for me.

 

[MyWorld]

I was in a bad spot 8 years back, depression and whatnot, and stupidly accepted two credit cards from two different banks.

It took me 8 years to get rid of both, and it is the most wonderful feeling cutting up that credit card! If I do not have the cash, it can wait.

 

[saguran]

...If I do not have the cash, it can wait.

That's a good outlook on life. Well, except if it's an emergency.

 

[SauRoNZA]

...If I do not have the cash, it can wait.

That's a good outlook on life. Well, except if it's an emergency.

I feel there's a very fine line between living within reasonable comfort and spiting yourself just to say you've paid cash for something.

As a young guy I was of the same opinion that I need to pay cash for everything, but then it comes to houses and cars the trick is really to just go within your means and with forethought than not at all because you'll end up spiting yourself for it.


There's a difference between having more debt than you can afford and ending up owing more than you get in every month, and living well within your means and using credit as a cash-flow.

Maybe I should rather say there's a huge difference between debt and (responsible) credit.


If I didn't take a home loan I wouldn't have a house now that is paid for in three years. I would have pushed too hard to pay for it cash and pisses away a crap load of money in rental every month just to build up cash more slowly to eventually get there. The offset of paying rent vs paying some interest to the bank are two very different things.

Like I've said elsewhere, if you are simply paying the bank exactly the instalments they want over 20 years then it's not too clever. However if you plan correctly and take some credit to buy a house within 10 years you are ultimately better off than trying to do it all cash.

 

[SauRoNZA]

Cars are a different matter and like someone else here said they are a petrol head and therefore it's like a hobby to them, which changes the equation.

But still if you earn 30k, don't go spending 10k per month on a car over 6 years...that's just silly and unnecessarily risk and potential debt.


And in that regard I'm a bit strange. If I had to save 10k in cash every month and after three years I had to fork out 360k (plus some interest I guess) on a car in CASH I would personally find much better things to do with my money.

So if I had 10k every month to burn I would probably take a loan on a car for 3500-4500 as a maximum and invest the rest of the money...or even buy a property with it.

 

[saguran]

I feel there's a very fine line between living within reasonable comfort and spiting yourself just to say you've paid cash for something.

As a young guy I was of the same opinion that I need to pay cash for everything, but then it comes to houses and cars the trick is really to just go within your means and with forethought than not at all because you'll end up spiting yourself for it.


There's a difference between having more debt than you can afford and ending up owing more than you get in every month, and living well within your means and using credit as a cash-flow.

Maybe I should rather say there's a huge difference between debt and (responsible) credit.


If I didn't take a home loan I wouldn't have a house now that is paid for in three years. I would have pushed too hard to pay for it cash and pisses away a crap load of money in rental every month just to build up cash more slowly to eventually get there. The offset of paying rent vs paying some interest to the bank are two very different things.

Like I've said elsewhere, if you are simply paying the bank exactly the instalments they want over 20 years then it's not too clever. However if you plan correctly and take some credit to buy a house within 10 years you are ultimately better off than trying to do it all cash.

This is true, I forgot to mention home loans. Rather get one and try to pay it off quickly than renting the rest of your life. I was referring mostly to things you buy on credit but not need, games, electronics, etc.

 

[F1 Fan]

Totally agree, but most people don't think this way/ Buying a house or car is not a problem. The issue is that people push the limit to what they can afford, and then complain when it does not work out.

 

[saguran]

Totally agree, but most people don't think this way/ Buying a house or car is not a problem. The issue is that people push the limit to what they can afford, and then complain when it does not work out.

True, just because you can get a loan on a car or house doesn't mean you should go looking for the most expensive one.

 

[F1 Fan]

True, just because you can get a loan on a car or house doesn't mean you should go looking for the most expensive one.

Yes. Or another example is someone that buys a 300/400k car but rents a house instead of buying...

 

[SauRoNZA]

This is true, I forgot to mention home loans. Rather get one and try to pay it off quickly than renting the rest of your life. I was referring mostly to things you buy on credit but not need, games, electronics, etc.

Yeah. I made that mistake once buying a Wii or Gamecube on a credit card thinking I would have the money later and it all went to hell.

If it's something you can pay for with six months of saving then there's no need to buy it on credit.

 

[Carol35]

Thing is your personal loans are probably at a rate of 16% or even higher and probably not for very large amounts...and there are two of them.

Putting that into your bond AND continuing to pay the money you currently do into the bond instead means a much lower interest rate overall and a single amount to be paid even month.

Ohh I see, but doesnt that mean that I could potentially be paying more/the same amount of interest as the loans will now be spread out over a longer period of time?? The overall debt amount is rather large Im afraid! Thanks for this, if its an option, we may look into it

Totally agree, but most people don't think this way/ Buying a house or car is not a problem. The issue is that people push the limit to what they can afford, and then complain when it does not work out.

We pushed our limit but are not complaining..yes, things get tough especially in months when every possible thing under the sun will go wrong/break/etc etc but to us, the long term benefits to what we have done far outweighs the "stress" we are under now. We dont have any other debt (car paid cash, store accounts have small balances as they are only used for emergencies) except the collective amounts we amassed buying our home which was a luck too good to pass up.

 

[OrbitalDawn]

Ohh I see, but doesnt that mean that I could potentially be paying more/the same amount of interest as the loans will now be spread out over a longer period of time?? The overall debt amount is rather large Im afraid! Thanks for this, if its an option, we may look into it

Interest on smallish, personal loans are exorbitant, while interest on a larger, long-term bond is more reasonable.

So let's say you owe 300k on your bond at 10% interest (for argument's sake), and you owe 20k on two personal loans at 16% interest. If you consolidate these loans by effectively adding the 20k in personal loans to your bond, then you owe 320k at 10% interest, which in the long-run will save you the money you would have paid because of the 16% interest on the personal loans.

 

[SauRoNZA]

Ohh I see, but doesnt that mean that I could potentially be paying more/the same amount of interest as the loans will now be spread out over a longer period of time?? The overall debt amount is rather large Im afraid! Thanks for this, if its an option, we may look into it

Like I said go talk to your bank about it. Don't be shy, they are there to help you. I don't know your entire portfolio so it may or may not make more sense.

Fact is your current interest rates are exorbitant on the personal loans for damn sure, so even though the bond might be over a longer period the interest rate will be half of what it is now. Also the personal loans are probably quite little in the overall picture of the bond and might be quite insignificant.

However note that I said you should keep paying what you current do on the personal loans into the bond instead...not drop all payments and only pay the new bond instalment instead.

Even a few extra hundred rand in your bond every month drastically decreased the overall loan term.

 

[OrbitalDawn]

However note that I said you should keep paying what you current do on the personal loans into the bond instead...not drop all payments and only pay the new bond instalment instead.

Even a few extra hundred rand in your bond every month drastically decreased the overall loan term.

Yes, very important. Don't slack off payments just because it's only 1 now. It's just to save you money in the long-run, as well as make it more manageable.

 

[saguran]

Yes, very important. Don't slack off payments just because it's only 1 now. It's just to save you money in the long-run, as well as make it more manageable.

Yeah, it's crazy the difference a few hundred bucks each month can make to the length of your term and interest paid.

 

[Aghori]

I'm actually struggling to pay off my credit card debt... good thing I cut up the card when i realised that I am a compulsive spender.