Self funded personal loans

Pitbull

Pitbull

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Hi guys,

I was thinking about this last night and your input would be appreciated. Let's say I put R 100k in a saving pocket or some interest baring account but have full access to it. I was thinking of leaving the money in there and if I need to purchase something that normally requires a credit card or a small loan I could then use it from that fund and then repay myself with interest.

So instead of a 3rd party getting interest I reward myself with interest. on top of the interest I earn on the savings pocket (Given I don't think it's a lot, will double check what the interest is on that account). I was thinking this is a double whammy, I increase the savings via paying interest on money "lent" and not have interest that needs to be paid to someone else.

If that makes sense.
 
You'd need self control especially if you'd be touching money you're suppose to be saving.
 
DA-LION-619 said:
You'd need self control especially if you'd be touching money you're suppose to be saving.
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True. I don't have any debit apart from my credit card but it's currently in a credit too. I normally use the credit card for big expenses and then pay it back over 6 months or so. I would like to use this credit instead of the credit card if you know what I mean. I was thinking of putting the fund in the credit card and then just use it from there but I don't know what kind of interest it will bare. Actually thinking of cancelling the credit card account now. Bleh, I'll have to see which will give more interest I suppose.
 
Credit card interest is pathetic - 2.5%, you better off shoving it into a Capitec account or unit trusts.

I'm putting spare money into unit trusts at the mo, with internet banking it's easy and if you have access to a credit card with a large limit, you have 55 days interest fee to pay back the money into the credit card. Unit trust withdrawals clear after a few days.
 
Kosmik said:
Credit card interest is pathetic - 2.5%, you better off shoving it into a Capitec account or unit trusts.

I'm putting spare money into unit trusts at the mo, with internet banking it's easy and if you have access to a credit card with a large limit, you have 55 days interest fee to pay back the money into the credit card. Unit trust withdrawals clear after a few days.
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Yea, I see saving pocket pays 5.10% if under R 50k and less if more... So will then have to try keep it under R 50k

OrbitalDawn said:
Why would you pay yourself interest? To discourage yourself from using it frivolously?
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Nea, I want it to grow at the same time. See it as a growing savings. If I was to pay let's say 10% interest on R 15k that is R 1500 op top of the initial "loan"

By my calculations it should pan out like this as an example:
R 40 000 at 5.10% interest pa. (R 2 040 interest per annum if it just lays there)

I borrow R 15 000

R 25 000 at 5.10 pa means ( R 1 275 pa interest)
I pay back the R 15k + R 1500 (10%) over let's say 12 months.

After 12 months -
R 42 775.00 as opposed to just letting it lay there and get R 42 040. This is excluding the interest that would be gained as the amount increases per month with the repayments. Simplifying it shows a gain of R 735. With my interest added on top. In reality would be more to about R 1k. R 1k I would not have had and/or paid to someone else.
 
Look at a Virgin Credit card ... set it to no credit limit ... no fees on card, reasonable interest rate
 
Slightly confused to be honest. If u have the cash to buy something just buy it? If u have surplus funds that you are leaving in a savings pocket why not invest it?
 
Sounds like buying stuff for cash instead of credit (ideal) with an added pointless complication on top.

What does make sense though is keeping such an account as you say & topping it up on a "repayment" schedule...so that it gets replenished after say buying a car with it & is ready for the next car purchase. That will save you tons of money. I suppose you could call a portion of that transfer interest if you like.
 
HavocXphere said:
Sounds like buying stuff for cash instead of credit (ideal) with an added pointless complication on top.

What does make sense though is keeping such an account as you say & topping it up on a "repayment" schedule...so that it gets replenished after say buying a car with it & is ready for the next car purchase. That will save you tons of money. I suppose you could call a portion of that transfer interest if you like.
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Was the aim. Please note I'm talking about rather large purchases. I don't want to invest this R 50k as I want to use it for spending. Let's say I want to buy a 60" Curved TV. I want to buy it but not throw the money away. So instead of buying on an HP. I buy it cash (negotiate a discount for cash) and repay myself an amount equal to plus 10%. So let's say I repay the TV back in 12 months. after 12 months I have the TV, the cash and 10%. Where if I just buy the TV after a year I have the TV and not the cash.

See it more as an incentive to save as opposed to just put money away every month. I have noted this before I don't save. I see what I want I buy it if there is money for it. If not I just wait till next month and so on. This in a way is an incentive to save with me also purchasing and growing the initial amount.

Bleh now I don't know :D
 
Do it. As I said you'll save tons of cash - from the fact that you're buying cash.

Just take care not to confuse this money with saving for retirement.
 
Why don't you just park the savings cash in your mortgage?
 
Gnarls said:
Why don't you just park the savings cash in your mortgage?
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OrbitalDawn said:
You could invest it in a vehicle where you have relatively easy access to it, as well.
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I'm in the process of finding a new bakkie because of mine being totalled. This will be bought from the bond as I'll save a load on interest buy still paying it off in 54 months. Bleh, maybe I should just chuck the money in with the new bakkie and let it be... Just feels like such a waste :o
 
I would not underestimate the emotional side of it -- most people (myself included) are not really rational about money. So factor your own emotions into it! When I bought my last car I paid 50% using cash and 50% on a loan (I got prime minus 1 for a vehicle loan). I could pay it all cash, but I know that itch of having a loan will make me pay it off faster than if I just had to save -- because I really, really hate debt. So yes -- maybe I did loose a little bit if interest but I am pretty sure that the motivation side of me paying of the loan as fast as possible more than made up for it.
 
I would rather make my "bank your change" R50 or something than start lending myself money.
 
SauRoNZA said:
Seems like a much more straight forward manner to save my own money from myself.
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ah ok...got it on second reading "bank my change" is one of those banking gimmick things - FNB right? - not an actual action.
 
Perhaps just buy some books at CNA ?
Basic investing for dummies.
Maths made easy.
Lots of other useful titles in the self help section. :eek:
 
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