Debt/Credit: how are you doing?

[HavocXphere]

Pretty good I guess...only a bit of CC debt which is that way by design.

The future is a bit uncertain though in multiple respects so I've given long term debt (house/car) a miss for the sake of flexibility.

 

[MrR]

I do both. Pay off my bond quicker + invest long term. The idea is to build enough cash reserve to buy my next property using the access bond money for all the transfer / duties / deposit. Then rent out the first property, which at the going rate, will cover all expenses + bond + a bit of extra into the bond. So the first property should pay itself off.

Completely agree with you and had the same idea as you do. The best type of investment is the one that pays for and grows by itself. I've been paying additional installments on my bond and reestablishing my investment portfolio for about 12 months now (of which my bond is only 18 months old).

 

[Rocket-Boy]

Bond will be paid off within the next 6 months and cars are fully paid for so I will be debt free... well for a few months until I buy the next property in which case it all starts again.

 

[creeper]

Completely agree with you and had the same idea as you do. The best type of investment is the one that pays for and grows by itself. I've been paying additional installments on my bond and reestablishing my investment portfolio for about 12 months now (of which my bond is only 18 months old).

Most immovable assets like property should generate both capital growth and income (like rent). So can shares with high dividend yields.

The trick is to reinvest the income again to get a compounding effect

 

[xrapidx]

Had debt of almost 1.5 million when i closed my business during 2010.

Moved to Pretoria for a work opportunity in September 2010.
So far I have paid off (after negotiating some of the debt down), approx 80% of the debt.

Hoping to be entirely debt free by the end of 2014.

Read somewhere that most successful businessmen have been bankrupt a few times. You win some you loose some.

 

[KingBel]

Read somewhere that most successful businessmen have been bankrupt a few times. You win some you loose some.

Yeah ... I take solace in that fact ... hoping to start up a business again once my debt has been paid off and i have saved up a bit. Learnt quite a bit the first time round.. so hopefully won't make the same mistakes.

 

[HavocXphere]

Read somewhere that most successful businessmen have been bankrupt a few times. You win some you loose some.

Thats mostly in the US - their legislation is designed to specifically favour this to boost risk taking & entrepreneurs.

 

[Carol35]

Yeah ... I take solace in that fact ... hoping to start up a business again once my debt has been paid off and i have saved up a bit. Learnt quite a bit the first time round.. so hopefully won't make the same mistakes.

Doesn't your credit rating take abit of a knock if you start negotiating with your creditors?? What did you negotiate? Interest rates?
Sorry for questions but I'm curious and a tip or two could help. The husband is not interested in extending our bond/consolidating to pay our debt and then just have 1 debt. He says if we survive the next 2 years to kill our personal loans, we will be in a very good position to quickly eliminate the rest of the debt. FYI, we are not bad spenders, we took on a lot of debt just to get into the property market. It escalated just trying to survive.

 

[KingBel]

I paid off all the creditors that would affect my credit rating. The lucky thing is the majority of the debt was in the name of the company.. with me as a the last remaining member. I negotiated with the main creditor, and reached an agreement.. I was entirely upfront and gave them the full sad story of what had transpired with my business.. they decided to compromise and offered me a deal. If I renege on the deal, they have the right to come after me for the full amount.. but I'm not planning to do that.

 

[reactor_sa]

I owe a ****load on the cc.
And a home loan.
Nothing else.

 

[ToxicBunny]

HomeLoan, CC and Car...

Downgraded the car recently so paying less than half of what I was..

CC is looking a bit horrible atm as its being used as an interest free loan of sorts for a month whilst buying building material.

Have a bit stashed in the bond, but that will disappear in the next few months as I'm doing renovations. When those are all done and dusted every spare cent will be going into the bond... hopefully inside of 5 years I can rent the place out for bond + Rates + Insurance + tax, and still have a bit left over.

 

[Sonic2k]

Many people have managed their debt carefully. Unfortunately the cost of living has spiralled out of control (thanks to the cANCer) and salaries just don't keep up.

 

[Cius]

For those talking about investing rather than paying off debts just some stuff to think about. Yes a good share investment can earn 15% per annum over the long term but few funds match that over the long or short term. Also debt is unusually cheap right now. There is little guarantee that rates will not rise soon to above 10% making that spread a lot narrower. Also if rates go up shares tend to underperformed at the same time as money moves to the safer assets with the higher return. Keeping in mind that moving money in and out the market costs money be sure any extra money you put in there can stay for at least 5 years.

Lastly, what happens if you loose your income for a few months between jobs? Having all your money in long term stuff rather than in your open access bond means its less accessible for emergencies. This is why despite the potential investment gain on balance I prefer to put spare cash in the bond rather than investments. Besides my long term pension contributions all my spare change and long term savings currently sit in my open access bond.

 

[Nikita_k]

a car, a house and edgars card.
I’m hoping to clear my car in the next year or so. Past 2 years i was drowning in debt. Mostly personal loans, but I’ve cleared all of them now. And I can finally breathe and save/invest.

 

[Compton_effect]

2 credit cards. One in a drawer with a modest balance, being paid off every month, but never used.
And a second one with a mother of a limit and no banking costs. I actually use it as a operating card. Drop a large part of my monthly salary in it every month and pay everything out of there. The rest of the salary goes into a savings account under the misguided attempt to save money. Sadly - I seem to break even every month.A very decent bond on my house, and my car is paid off. Two investments, one being a preservation fund that is slowly accumulating. Life insurance that needs to be re-evaluated.

But not putting enough aside. I plan to, but then have to replace my car's cv joints, clutch, brakes.
Last month I had to have the roof repainted.
Month before a pressure valve in the geyser failed, cost just enough that it was not worth the excess.
The month before a hunk of metal terminated one of my front tires - the day before I was planning to replace my rear ones.
The moment I think everything is sorted - karma strikes.

 

[Kloofvreter]

No debt at the moment, but am looking to finance my first vehicle (motorcycle) for roughly R80k. As a first time buyer the banks are going to nail me - 12.5% from Wesbank, 13.0% from Absa, 11% from BMW Finance.

That's nothing. Bikefin offered me 25% so I said no thanks!

 

[Necuno]

For those talking about investing rather than paying off debts just some stuff to think about. Yes a good share investment can earn 15% per annum over the long term but few funds match that over the long or short term. Also debt is unusually cheap right now. There is little guarantee that rates will not rise soon to above 10% making that spread a lot narrower. Also if rates go up shares tend to underperformed at the same time as money moves to the safer assets with the higher return. Keeping in mind that moving money in and out the market costs money be sure any extra money you put in there can stay for at least 5 years.

Lastly, what happens if you loose your income for a few months between jobs? Having all your money in long term stuff rather than in your open access bond means its less accessible for emergencies. This is why despite the potential investment gain on balance I prefer to put spare cash in the bond rather than investments. Besides my long term pension contributions all my spare change and long term savings currently sit in my open access bond.

I'd rather pay off as much as possible than to sit in a possition where I can't pay off enough due over investing. This is partly why I'm now focusing on first clearing out as much as possible and then there will actually be more money availible not being wasted in interest or debt protection that I can invest or at least spent a little on myself instead of just making that end of the month each month.

 

[Sonic2k]

I prefer to put spare cash in the bond rather than investments.

Great advice!
I had to learn this the hard way.

Anything to do with stock exchanges is a dodgy proposition. Its those people who got us into one of the worst economic downturns ever in the first instance.

 

[creeper]

Great advice!
I had to learn this the hard way.

Anything to do with stock exchanges is a dodgy proposition. Its those people who got us into one of the worst economic downturns ever in the first instance.

Nope. It was the selling of bad house debt into financial instruments and selling it off as top grade investments that led to the downturn.

 

[Necuno]

Jolly good, I've done it:

Credit Card Balance R 0.00

Now to work the card accordingly when needed and not lapse into R minus so that I have to work it down.

Next up is clearing out my woolworths card and my personal loan