Savings

[guest2013-1]

Not everyone can push that amount into their debt in any given month.

Last year, I cleared all my revolving load debts + CC and closed said accounts. Luckily, it was my bonus that I recieved, which allowed me to do that.

My only "debt" now, is my car.

I'm hoping I am able to get my "rainy day fund" up to what it should be.

Am I right in saying there is no real benefit into pushing more cash into my car repayments?
I've had the car for just over two years, so the capital interest has been paid - now it's the principle debt which needs to be paid - I wouldn't be saving anything by paying it off quicker - I believe it would just be paid off sooner, that's all?

You pay it off quicker by reducing the amount of interest owing on it etc. Basically your monthly payment will reduce into the "negative" until you settled everything. IMO cars are the most evil, so I'd pay it off as fast as I can so you can push every cent into savings and drive it around for at least 10 years

 

[Priapus]

I dont know. When I paid my car off quicker the interest amount left got less and less as the capital amount was reduced.

Every payment that you make has both a capital and an interest portion. The interest portion is calculated on a periodic basis (depending on the product but for car loans I would imagine that its monthly) on the outstanding principal balance at the beginning of that period and the capital portion is then the difference between the actual payment and the interest portion. So because the interest amount is calculated on the outstanding balance at each point in time, any additional payments will reduce the capital balance which in turn will reduce the interest portion on every subsequent payment. So you will end up paying less overall.

You pay it off quicker by reducing the amount of interest owing on it etc. Basically your monthly payment will reduce into the "negative" until you settled everything. IMO cars are the most evil, so I'd pay it off as fast as I can so you can push every cent into savings and drive it around for at least 10 years

Thanks gents.

Will review it and maybe I can push an extra 1k into every month.

Will call the bank and ask them.

 

[guest2013-1]

Thanks gents.

Will review it and maybe I can push an extra 1k into every month.

Will call the bank and ask them.

Depending on your repayment, that should reduce the monthly premium you pay back by half in about 2 years. However, I did this manually (I opted not to go for a debit order) so that might be different/faster.

Then you can use your savings to buy a new 2nd hand car cash when you decide to retire your "old" car. instead of falling into the debt trap again

 

[Priapus]

I plan on buying the next car with cash. If not 100%, at least 50% cash.

However, I want to buy a house, before the next car. So my current one will just have to last.

 

[Kbeat]

Guys I have this small fund saved at one of my savings account for rainy days. Now I have a friend who is in desparate need of cash. I know he will pay back but he is not sure when and might have to wait for his bonus in December to pay me back. My biggest concern is that I have my personal savings goals that I planned to achieve. So do I loan him the money or say sorry and focus on my goals?

 

[supersunbird]

Guys I have this small fund saved at one of my savings account for rainy days. Now I have a friend who is in desparate need of cash. I know he will pay back but he is not sure when and might have to wait for his bonus in December to pay me back. My biggest concern is that I have my personal savings goals that I planned to achieve. So do I loan him the money or say sorry and focus on my goals?

I only give money I am OK in not getting back. I am not a bank.

 

[akescpt]

I invest with Old Mutual Unit Trust RA and do not use a broker, so 0% costs. Not even admin costs. Old Mutual and Alan Gray are the best option to go with in terms of costing. Be sure to take a Unit Trust RA!

How did u bypass a broker?

 

[AlmightyBender]

Guys I have this small fund saved at one of my savings account for rainy days. Now I have a friend who is in desparate need of cash. I know he will pay back but he is not sure when and might have to wait for his bonus in December to pay me back. My biggest concern is that I have my personal savings goals that I planned to achieve. So do I loan him the money or say sorry and focus on my goals?

The only money you can loan is surplus money and your emergency fund does not count as surplus money. Anything could happen betwen now and December. As supersunbird said: only lend money to friends/familiy if you are comfortable never getting it back.

 

[Icarium]

The only money you can loan is surplus money and your emergency fund does not count as surplus money. Anything could happen betwen now and December. As supersunbird said: only lend money to friends/familiy if you are comfortable never getting it back.

Depressingly enough with what I've "loaned" out to family and friends I could have paid up my house by now. But at least I know I'll be getting between half and three quarters of that back.... eventually.

Decided to take 10% of my nett salary this month straight into savings right from the start. Saving only what I end the month with is too hit and miss.

 

[InTheWild]

How did u bypass a broker?

Well, you go direct with either Old Mutual or Alan Gray. You apply for a new Unit Trust RA from their web sites and choose the unit trust allocation by yourself. BE VERY CAREFUL. If you don't know what you are doing, rather use a broker. With a RA, you need to stay within Regulation 28, which basically stipulates how your investment can be diversified through local, international, property etc funds. OM and AG has an online calculator for this, so not a biggy.

Most brokers will try to get you to go for a contract RA (binding you to the payment schedule so they can sleep better at night with the commission) that has penalties when you want to stop payments or decrease payments (and its a hefty one!). For me, this was not an option, I'm self employed and cant pay the same amount every month. Some months its double or triple, other months 0. I do the debit order and fund allocation changes online when I need to.

But again, please rather use a broker and pay the extra commission if you don't do proper research of the funds and understand them.

 

[AlmightyBender]

Depressingly enough with what I've "loaned" out to family and friends I could have paid up my house by now. But at least I know I'll be getting between half and three quarters of that back.... eventually.

Decided to take 10% of my nett salary this month straight into savings right from the start. Saving only what I end the month with is too hit and miss.

This is the first step to financial freedom my friend

Well, you go direct with either Old Mutual or Alan Gray. You apply for a new Unit Trust RA from their web sites and choose the unit trust allocation by yourself. BE VERY CAREFUL. If you don't know what you are doing, rather use a broker. With a RA, you need to stay within Regulation 28, which basically stipulates how your investment can be diversified through local, international, property etc funds. OM and AG has an online calculator for this, so not a biggy.

Most brokers will try to get you to go for a contract RA (binding you to the payment schedule so they can sleep better at night with the commission) that has penalties when you want to stop payments or decrease payments (and its a hefty one!). For me, this was not an option, I'm self employed and cant pay the same amount every month. Some months its double or triple, other months 0. I do the debit order and fund allocation changes online when I need to.

But again, please rather use a broker and pay the extra commission if you don't do proper research of the funds and understand them.

I second staying as as far away from contract RA's as possible. It is an immoral product.

 

[Shayd]

In the modern world, work is so volatile that a contract Retirement Annuity makes no sense. Go Allan Gray and select the balanced fund (same asset allocation as a pension fund) if you have no idea what fund to select.

If you have no idea what amount to save then get yourself a broker or do a lot of research and live with the consequences if you under provision.

 

[supersunbird]

This is the first step to financial freedom my friend

I second staying as as far away from contract RA's as possible. It is an immoral product.

Yes, it is best to save at the start of the month. If you are able to save whats left at the month too its a nice addded benefit.

Contract RA's are bad. And you can often stop the unual Financial Advisor/broker fee at any time you want to on a Unit Trusts RA.

 

[creeper]

Yes, it is best to save at the start of the month. If you are able to save whats left at the month too its a nice addded benefit.

Psychologists state that if there is more money in your account, you are more inclined to spend it. Most people know it, but don't apply it. So I tested the concept of saving at the beginning of the month or wait until the end of the month. The conclusion. By saving money at the beginning of the month, you are able to save more money. Otherwise you spend it on crap you don't need.

The trick is getting the discipline to budget and applying the save-at-the-beginning-of-the-month rule. Not always that easy.

On a side note. Banks tend to show you the available amount on your credit card as positive. Ever wondered why?

 

[frailwings]

The best way I have found to save more is to make use of multiple accounts. Beside retirement/pension products I try to save around 50% of my net income a month.

I've found the best way to do this is to transfer the money at the start of the month into an investment account or similar.

From that investment account, I then transfer into stock trading, unit trusts etc.

The investment account requires 24 hours, so it also limits your spending and has a 5%ish interest rate PA.

So basically this is what I do:

A) Get salary in account A.

B) Transfer 50% to account B the day I get my salary.

C) Pay all monthly expenses and use the remaining 50% for living expenses.

D) Spilt the money from account B into other investment products such as stocks and unit trusts. I do this every 3 months or so.

Finally I also have another account with Sanlam called Sanlam Liquid. It has no card, and gets a pretty good interest rate (5%-ish) that I use as a rainy day fund for things like car services, new furniture etc.

 

[Redeemed]

Nice approach.