Need some finance advice

[Waffl3s]

Hi ,
As per a previous thread, please see details below. Have the following :
R620k of medical debt from Parental. Signed surety for at least half. Assuming remainder will be pulled from the estate.

R148k of CC debt.
R820k of HL debt.
R110k Overdraft,
Credit all at prime.

Expecting R1.2m from Life cover in the next few weeks.
No savings at the moment.

I make a decent salary as a developer, over R40k net (figures are a bit off to keep things private). I’m not comfortable but managing. Any advice on how to stretch the funds and maybe even generate some income from it?

 

[Snyper564]

Hi ,
As per a previous thread, please see details below. Have the following :
R620k of medical debt from Parental. Signed surety for at least half. Assuming remainder will be pulled from the estate.

R148k of CC debt.
R820k of HL debt.
R110k Overdraft,
Credit all at prime.

Expecting R1.2m from Life cover in the next few weeks.
No savings at the moment.

I make a decent salary as a developer, over R40k net (figures are a bit off to keep things private). I’m not comfortable but managing. Any advice on how to stretch the funds and maybe even generate some income from it?

As simple as I can state it change USD TO ZAR the rest is straight forward.

The Ramsey Show

Podcast · Ramsey Network · The Ramsey Show believes you can build wealth and take control of your life—no matter what stupid mistakes you've made with money. Join as Dave Ramsey and his team of experts answer your questions on the top problems holding you back. Listen now or ask your question...

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Stick to simple investing - even dollar hedged ETF via Satrix for the S&P500 and Nasdaq 100 first through TFSA then normal saving.

I would take R1.2m

Pay R310k med debt..
Pay CC debt R148
Pay Overdraft R110k
You then have around R600k left dump into your bond I HOPE YOU have a flexi bond. As you can then pull that R600k if you need it forget about "traditional savings" use that flexibond save millions

INVEST NOTHING of this kill that HL ASAP

After all this you will have 200k left on your bond you can kill that SUCKA in a year or two if you super aggressive and be 100% debt free




Follow above advice and set yourself up to BUILD WEALTH!!!!

 

[Jan van Riebeeckstad]

One bitcoin, tomorrow you retire or you end up needing more debt. YOLO.

 

[Cius]

That is a lot of CC debt. Also what is overdraft and how is it different from CC debt?

My personal advice, get out of debt and stay out of debt. Only debt that I consider good for private individuals (companies obviously a different beast) is a modest home, modest car, and education.

Interest: Them that understand it earn it. Them that don't, pay it.

 

[Barbarian Conan]

As simple as I can state it change USD TO ZAR the rest is straight forward.

The Ramsey Show

Podcast · Ramsey Network · The Ramsey Show believes you can build wealth and take control of your life—no matter what stupid mistakes you've made with money. Join as Dave Ramsey and his team of experts answer your questions on the top problems holding you back. Listen now or ask your question...

open.spotify.com

Stick to simple investing - even dollar hedged ETF via Satrix for the S&P500 and Nasdaq 100 first through TFSA then normal saving.

I would take R1.2m

Pay R310k med debt..
Pay CC debt R148
Pay Overdraft R110k
You then have around R600k left dump into your bond I HOPE YOU have a flexi bond. As you can then pull that R600k if you need it forget about "traditional savings" use that flexibond save millions

INVEST NOTHING of this kill that HL ASAP

After all this you will have 200k left on your bond you can kill that SUCKA in a year or two if you super aggressive and be 100% debt free


View attachment 1744145

Follow above advice and set yourself up to BUILD WEALTH!!!!

Good advice, although I would say take R100K - R200K and put it in an ETF with international exposure, something like MSCI world.
If you're not comfortable with investing such a large amount at once, start with R20K or so to get a feel for it.

Your HL is still SA bound, but an international ETF protects against a weakening ZAR to some extent.

 

[zerocool2009]

I would pump R100k into a tyme account… for interest

 

[Snyper564]

Good advice, although I would say take R100K - R200K and put it in an ETF with international exposure, something like MSCI world.
If you're not comfortable with investing such a large amount at once, start with R20K or so to get a feel for it.

Your HL is still SA bound, but an international ETF protects against a weakening ZAR to some extent.

NOOOO the return is not guaranteed kill then bond ASAP (and debt in order I set out) then invest otherwise you are using debt to invest.
just my 2c

There is no spare cash here to invest

 

[rh1]

As simple as I can state it change USD TO ZAR the rest is straight forward.

The Ramsey Show

Podcast · Ramsey Network · The Ramsey Show believes you can build wealth and take control of your life—no matter what stupid mistakes you've made with money. Join as Dave Ramsey and his team of experts answer your questions on the top problems holding you back. Listen now or ask your question...

open.spotify.com

Stick to simple investing - even dollar hedged ETF via Satrix for the S&P500 and Nasdaq 100 first through TFSA then normal saving.

I would take R1.2m

Pay R310k med debt..
Pay CC debt R148
Pay Overdraft R110k
You then have around R600k left dump into your bond I HOPE YOU have a flexi bond. As you can then pull that R600k if you need it forget about "traditional savings" use that flexibond save millions

INVEST NOTHING of this kill that HL ASAP

After all this you will have 200k left on your bond you can kill that SUCKA in a year or two if you super aggressive and be 100% debt free


View attachment 1744145

Follow above advice and set yourself up to BUILD WEALTH!!!!

Pre Step1: Take life insurance out on family members I dont like and who is old.
Pre Step2: Wait for them to die. Collect payout and follow the above steps.

Only problem, I got no living older relatives.

 

[Waffl3s]

As simple as I can state it change USD TO ZAR the rest is straight forward.

The Ramsey Show

Podcast · Ramsey Network · The Ramsey Show believes you can build wealth and take control of your life—no matter what stupid mistakes you've made with money. Join as Dave Ramsey and his team of experts answer your questions on the top problems holding you back. Listen now or ask your question...

open.spotify.com

Stick to simple investing - even dollar hedged ETF via Satrix for the S&P500 and Nasdaq 100 first through TFSA then normal saving.

I would take R1.2m

Pay R310k med debt..
Pay CC debt R148
Pay Overdraft R110k
You then have around R600k left dump into your bond I HOPE YOU have a flexi bond. As you can then pull that R600k if you need it forget about "traditional savings" use that flexibond save millions

INVEST NOTHING of this kill that HL ASAP

After all this you will have 200k left on your bond you can kill that SUCKA in a year or two if you super aggressive and be 100% debt free


View attachment 1744145

Follow above advice and set yourself up to BUILD WEALTH!!!!

Was leaning toward this thinking.

How can I use the funds in the bond to e.g. purchase another property in future? Or should I ask @zerocool2009

 

[Snyper564]

Was leaning toward this thinking.

How can I use the funds in the bond to e.g. purchase another property in future? Or should I ask @zerocool2009

I can answer as can he

You dump money into bond and pull out as you need so say you dump in 600k today.

see something for 600k

Need it in a years time pull that 600k out and buy the property - just remember you have same time frame to pay off unless you renegotiate etc

 

[Waffl3s]

So went ahead with what @Snyper564 recommended. Thank you1

Some further developments. Parental's pension was moved to a Life Annuity and luckily has beneficiaries split between myself and my siblings (3 of us).

Now the company is recommending speaking to their Financial Advisor but they've just said to flog it into the same situation. I have 25 years before pension.

Other sibling was retrenched middle of last year and is looking for something to payout monthly while he finds another job. He has slowly chipped away at his pension after withdrawing it last year. For him seeing as tax isn't an issue (no work benefit?).

For myself, I am thinking taking half as cash and putting the rest into a preservation fund. Amount is around R2.5-bar each before tax.

Thoughts on a way forward for both myself and the 1 sibling?
Confused about the tax as well because company holding the LA says tax is paid as per deceased tax affairs?
Alternatively, recommendations for a Financial Advisor who is independent please.

@Speedster @W@P I understand you had to make similar decisions?

 

[zerocool2009]

Was leaning toward this thinking.

How can I use the funds in the bond to e.g. purchase another property in future? Or should I ask @zerocool2009

In short its a called a flexi bond. See it as a savings account. What you can put in, you can take out again.

 

[Stonemason]

For myself, I am thinking taking half as cash and putting the rest into a preservation fund. Amount is around R2.5-bar each before tax.

Do not touch a cent of that money - do not take half. Leave it in the preservation fund. You will thank me in 25 year's time.

 

[Waffl3s]

In short its a called a flexi bond. See it as a savings account. What you can put in, you can take out again.

Confusion rather is if I put in R500k, a year later I can pull out the same R500k. The only thing that was impacted is that I paid less interest for year that R500k was in the bond thus paying off the capital faster?

 

[Waffl3s]

Do not touch a cent of that money - do not take half. Leave it in the preservation fund. You will thank me in 25 year's time.

Understandable. I have a decent pension so far already. Thought process was to purchase additional properties or try grow this money for use now VS later.
Possible divorce in the horizon also which throws a spanner in the works as well.

 

[Corelli]

Hi ,
As per a previous thread, please see details below. Have the following :
R620k of medical debt from Parental. Signed surety for at least half. Assuming remainder will be pulled from the estate.

R148k of CC debt.
R820k of HL debt.
R110k Overdraft,
Credit all at prime.

Expecting R1.2m from Life cover in the next few weeks.
No savings at the moment.

I make a decent salary as a developer, over R40k net (figures are a bit off to keep things private). I’m not comfortable but managing. Any advice on how to stretch the funds and maybe even generate some income from it?

Pay off your high interest debt first.

ie CC Debt, pay that off and get rid of the card.
Overdraft, pay that next and get rid of it completely
Put about 50-100k into savings. You can get a fixed deposit that pays monthly into your cheque account. Ideally put aside the 36k into tax free savings.

Then you just have the HL debt. Just consider that any estate account over R3.5 million attracts tax. They may tax that.

Try cover half or most of the HL debt. If you are debt free, you can push more money into pension. Alternatively settle half of that, and put the rest into say a Coronation Top20 fund, its risky, but I slapped 90% of my pension in there and its been growing well.

Dont go splurging on a fancy car. Honestly I would drive a Honda Jazz or so, an older model as they seem to sell more than what you paid for them. Sure its not glamorous, but you arent loosing money either and its low on fuel.

Then what you do, is jot down all your monthly other expenses. ie water and electricity, rates, insurance, etc etc. See what you need and what you dont need. For insurance check around if you can get better deals. Around the home check what abuses electricity and what doesnt. I changed lightbulbs and it cut me down R200pm on electricity. That's R200 less I would spend. Solar geyser is good too. It saves you money monthly.

Also check your medical aid. You're 40 so unless you get sick a lot, a hospital plan should be decent. You can move your money into a Savings plan ie Discovery Coastal Saver or something similar depending where you stay. That way, any unused savings carry over compared to loosing it on a traditional plan. If you do quit the medical aid one day, it will pay out that savings less tax. You can accumulate a tidy sum there. I know of a few that over the years has savings accounts of 100-200k.

And then lastly, since you're 40s. Look about moving abroad if you can. Australia has a cut-off at 45. So depend on your degrees etc, you can get in if you're below 45. Do it before you reach the cut-off. As a programmer is in critical skills list, you should be able to get easy entry. It may take some time but it would be a big plus for your kids.

So well, hope that helps.

 

[Stonemason]

Understandable. I have a decent pension so far already. Thought process was to purchase additional properties or try grow this money for use now VS later.
Possible divorce in the horizon also which throws a spanner in the works as well.

There are two reason why you should leave the money where it is.
1. If you take half you have to pay tax on it which means in the end you lose 25 to 35% of the money immediately
2. If you leave it there, it will grow. I had R120 000 in a preservation fund grow to R1.7 million over a 21 year period

 

[Corelli]

Do not touch a cent of that money - do not take half. Leave it in the preservation fund. You will thank me in 25 year's time.

The interest will kill his gains on the debt. You can actually save more if you get rid of the high interest debt.

When you have no debt, you can breathe easily. Of course if you plan to divorce then put that into an account. Sometimes inheritances can be excluded from the marriage. But a divorce may put you into more debt.

Credit card interest = 20% normally
Investment interest 8-12% depends on risk

Its a no brainer. But then if you pay off the CC, then close it. And no more MACS. They are costly. I had a friend go from NO Bonds to a Bond of 800k just because he kept buying the newest Macs. Sad but true. Bank eventually took his house.

 

[zerocool2009]

Confusion rather is if I put in R500k, a year later I can pull out the same R500k. The only thing that was impacted is that I paid less interest for year that R500k was in the bond thus paying off the capital faster?

Correct. But if you put the lump sums into preservations funds (make sure its topup able). Not alot of providers do that

 

[Waffl3s]

The interest will kill his gains on the debt. You can actually save more if you get rid of the high interest debt.

When you have no debt, you can breathe easily. Of course if you plan to divorce then put that into an account. Sometimes inheritances can be excluded from the marriage. But a divorce may put you into more debt.

Credit card interest = 20% normally
Investment interest 8-12% depends on risk

Its a no brainer. But then if you pay off the CC, then close it. And no more MACS. They are costly. I had a friend go from NO Bonds to a Bond of 800k just because he kept buying the newest Macs. Sad but true. Bank eventually took his house.

Pay off your high interest debt first.

ie CC Debt, pay that off and get rid of the card.
Overdraft, pay that next and get rid of it completely
Put about 50-100k into savings. You can get a fixed deposit that pays monthly into your cheque account. Ideally put aside the 36k into tax free savings.

Then you just have the HL debt. Just consider that any estate account over R3.5 million attracts tax. They may tax that.

Try cover half or most of the HL debt. If you are debt free, you can push more money into pension. Alternatively settle half of that, and put the rest into say a Coronation Top20 fund, its risky, but I slapped 90% of my pension in there and its been growing well.

Dont go splurging on a fancy car. Honestly I would drive a Honda Jazz or so, an older model as they seem to sell more than what you paid for them. Sure its not glamorous, but you arent loosing money either and its low on fuel.

Then what you do, is jot down all your monthly other expenses. ie water and electricity, rates, insurance, etc etc. See what you need and what you dont need. For insurance check around if you can get better deals. Around the home check what abuses electricity and what doesnt. I changed lightbulbs and it cut me down R200pm on electricity. That's R200 less I would spend. Solar geyser is good too. It saves you money monthly.

Also check your medical aid. You're 40 so unless you get sick a lot, a hospital plan should be decent. You can move your money into a Savings plan ie Discovery Coastal Saver or something similar depending where you stay. That way, any unused savings carry over compared to loosing it on a traditional plan. If you do quit the medical aid one day, it will pay out that savings less tax. You can accumulate a tidy sum there. I know of a few that over the years has savings accounts of 100-200k.

And then lastly, since you're 40s. Look about moving abroad if you can. Australia has a cut-off at 45. So depend on your degrees etc, you can get in if you're below 45. Do it before you reach the cut-off. As a programmer is in critical skills list, you should be able to get easy entry. It may take some time but it would be a big plus for your kids.

So well, hope that helps.

Debt has all been paid off. Initial OP situation is dealt