Moederloos
Honorary Master
Cars are both paid for
House is large but was bought for peanuts - in real terms as well as comparative to others in the area
none.
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Span die gordels styf!
- Thread starter Skinner
- Start date
Cars are both paid for
House is large but was bought for peanuts - in real terms as well as comparative to others in the area
none.
Ou grote
Honorary Master
And the Jones'?
Moederloos
Honorary Master
Unfortunately they are hard to keep up with.
A crusty German family that have been there for 30 years and probably have war gold in a Swiss bank account, and a pair of up-and-coming BEEs.
I will just have to contend with being inferior to the Mbusi's and Schwezkatz's ...
I love all these clever people, this is propably the second time in recent SA history where people have been caught by rising rates. I think going back to about 87 when the Banks entered the home loan market in SA.Say the last high rate cycle lasted 2 years or less, that means that about 3 years were/are bad and the other 18 were good, where we stupid people made a hell of a lot of money! (for Skinner that means we also kept up with the Jones's).
Skinner you say most South Africans live beyond there means/try to impress neighbours and friens. Is this based on any factual evidence or reports you have read? or just your personal experience. I will agree that the whole American consumerism thingie did hit us a few years back and has done harm and created unrealistic expectations, but I dont believe you can generalise. I did a sudy on the spending habits of the different generations and came up with some very interesting dynamics.
Skinner you say most South Africans live beyond there means/try to impress neighbours and friens. Is this based on any factual evidence or reports you have read? or just your personal experience. I will agree that the whole American consumerism thingie did hit us a few years back and has done harm and created unrealistic expectations, but I dont believe you can generalise. I did a sudy on the spending habits of the different generations and came up with some very interesting dynamics.
Ou grote
Honorary Master
Unfortunately they are hard to keep up with.
A crusty German family that have been there for 30 years and probably have war gold in a Swiss bank account, and a pair of up-and-coming BEEs.
I will just have to contend with being inferior to the Mbusi's and Schwezkatz's ...
supersunbird
Honorary Master
Is that Indianes Jones?
In that case, if he has a hat and whip he is sorted...
In that case, if he has a hat and whip he is sorted...
OK, there is a line indeed, but I definitely don't think we've reached it yet. I'd seen graphs of what the interest rate in SA had done in the past, so when I bought my current place about two years ago I mentally factored in an ABSOLUTE MINIMUM of a potential 5 percentage points increase over prime at the time - '5 to 10' or thereabouts. (Plus by keeping up to date with the news etc. I was able to (correctly) judge/predict for myself a few years ago that inflation and inflation rates were almost certainly going to 'soon start rapidly heading upwards' - but OK, not everybody does that, though it strikes me as obvious that if you plan to buy property anywhere, you should read up on what the happenings and trends there are --- but even if you don't do that, just blindly leaving a roughly 5 to 10 point margin is going to cover you for most scenarios.) I think that kind of margin is a fair rule of thumb in a country like South Africa, plus then also trying to have additional "backup plans" (for example, I have a two-bedroom place, and recently started renting out the spare room to get a bit of extra money in, though I don't *need* that yet, it certainly helps). I personally think if any increase under 5 points causes you to lose your house then that that starts to be in "stupid" territory, and anything under 3, definitely "stupid".
Most people here do tend to buy bigger houses than they really need. (This becomes even more obvious if you visit people in the UK/Europe
) But apart from that, there are other ways to help get through tough times. If you have a spare room you could rent out, seriously consider it. I also started looking around for old odds and ends I could sell (even though I didn't need to, it has helped) to raise a bit of extra cash, e.g. a spare bicycle I wasn't using much, some DVDs I'd already watched, a bit of old computer equipment etc. I've cut down on petrol expenditure slightly by walking or cycling a bit more often to the local grocery store.Rates are almost certainly going to go up further still (I personally don't think by 3%, even though it 'should', the pressure from the left on Tito seems too great, but you never know - either way you lose, as higher inflation is 'behind the other door'), petrol is also likely to climb a fair bit still (though it may come down a little once the bubble portion comes out of the price), so try to do whatever you can already to ease this. Our exchange rate could also worsen depending on what happens in Zim etc. Even if rates roughly stabilise, inflation will still remain comparatively high (though Y/Y it will likely ease towards next year, it'll still be a relatively high figure). Plan for things getting at least somewhat worse still.
One of the absolute best things you can do is put any spare cash into your bond (because most of what you pay the bank is not going to your house, it's debt charges just for the "privilege" of having the loan). So if you have any old stuff you could sell etc., or you can cut down a few 'luxury' expenses e.g. booze/takeout/restaurants/holidays I'd suggest doing it. (You're really supposed to be putting spare cash into your bond during the GOOD times when it's easier to find spare cash, not wait until times are tough, but anyway, that's under the bridge, one can only do one's best going forward.)
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Moederloos
Honorary Master
@Turtle: The problem really is that not everyone is fortunate to be able to factor in 5%.
You and I could do that, but we are fortunate in that instead of a R700K house 3 years ago, we bought a R500K (or whatever).
What if you can only afford R250K? Your options are limited - and then a R150K house just would not cut it in terms of family size / proximity to transport and so on.
When one gets to the "bones-of-the-arse" bottom tiers of the population, that is where these rates kill - and it is for those people that we should have sympathy and not say "you did it to yourself".
I have no pity for the fool (sorry Mr T!), who went out and bought a R2.5million "luxury townhouse" on a 110% bond last year - to match his new X5.
You and I could do that, but we are fortunate in that instead of a R700K house 3 years ago, we bought a R500K (or whatever).
What if you can only afford R250K? Your options are limited - and then a R150K house just would not cut it in terms of family size / proximity to transport and so on.
When one gets to the "bones-of-the-arse" bottom tiers of the population, that is where these rates kill - and it is for those people that we should have sympathy and not say "you did it to yourself".
I have no pity for the fool (sorry Mr T!), who went out and bought a R2.5million "luxury townhouse" on a 110% bond last year - to match his new X5.
Jeesh, why again the constant obsession with owning property at times like this? What's so wrong with renting?
Have a look at http://capetownbubble.blogspot.com/
Neither do I - one thing we at least agree on!
But a guy who buys a R2.5m house when he can only afford R1.5m, is just as bad as a guy that buys a R1m house when he can only afford R0.5m.
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That's pretty close to what I've bought.
Not to be nasty, and I definitely intend no offence, but if a person genuinely can't afford to start a family (of size X) then they shouldn't be starting one. The size of your family should - in fact must - be proportional to what you can afford. If you do a few back of the envelope calculations and see that you can only afford, say, one child, then it is obvious that you just CAN NOT have, say, three. These days we have relatively affordable contraception allowing for family planning. Having kids is also something you "do to yourself", it is a choice, not something that "just happens". You can't blindly have kids and then hope by some miracle that God will increase your salary as they pop out.
I don't have kids, but am saving money for the day I do, and when I do I will have only as many as I can afford to accommodate and properly educate. (If that is ten I'll have ten
)If you really "need" the house size and can't afford it, then you may have to buy in a poorer area than you wanted. But South Africans also tend to exaggerate the size of the house they need to raise kids in. Compare with Europe or places like London, seriously, I am not exaggerating, the average family's home is probably something like 50m^2 (I'd guess). I have a two-bedroom townhouse, that is more than enough for at least two kids. (Never mind Europe, actually you don't need to go that far, just check how poor black South Africans get by.) Our individual concepts of "need" are relative, and based on culturally ingrained expectations (and status ideals too, e.g. comparisons with friends or how you grew up). In SA you have two or three kids and suddenly everyone says "OMG you need a big house with a garden now, you have KIDS". No, you don't need that - a rough rule of thumb is that you need a minimum of about 20m^2 per person to have at least a somewhat comfortable lifestyle (though clearly it's possible to 'get by' on less).
Granted 250K won't get you far, though if you can afford to buy a R250K (what kind of bond would that be, about R3K/mo I guess) place you can afford to rent a much better place. No rule says you must buy, it's far cheaper to rent at the moment. But there are other ways too. Share a place with others to split rent, or if you can try live with relatives (e.g. grandpa/grandma) and then they can help with child-rearing too. There is no rule that says you have to completely abide by the various urban societal structures we've been indoctrinated into as being the "only way".
I'm definitely not saying it's easy, though, don't get me wrong. But with some level-headedness and realism, most should be able to get by, even if it's less than what you always dreamed of. It probably will be. Family is the most important thing though, not the house size.
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That's pretty close to what I've bought.
Not to be nasty, and I definitely intend no offence, but if a person genuinely can't afford to start a family (of size X) then they shouldn't be starting one. The size of your family should - in fact must - be proportional to what you can afford. If you do a few back of the envelope calculations and see that you can only afford, say, one child, then it is obvious that you just CAN NOT have, say, three. These days we have relatively affordable contraception allowing for family planning. Having kids is also something you "do to yourself", it is a choice, not something that "just happens". You can't blindly have kids and then hope by some miracle that God will increase your salary as they pop out.
I don't have kids, but am saving money for the day I do, and when I do I will have only as many as I can afford to accommodate and properly educate. (If that is ten I'll have ten
If you really "need" the house size and can't afford it, then you may have to buy in a poorer area than you wanted. But South Africans also tend to exaggerate the size of the house they need to raise kids in. Compare with Europe or places like London, seriously, I am not exaggerating, the average family's home is probably something like 50m^2 (I'd guess). I have a two-bedroom townhouse, that is more than enough for at least two kids. (Never mind Europe, actually you don't need to go that far, just check how poor black South Africans get by.) Our individual concepts of "need" are relative, and based on culturally ingrained expectations (and status ideals too, e.g. comparisons with friends or how you grew up). In SA you have two or three kids and suddenly everyone says "OMG you need a big house with a garden now, you have KIDS". No, you don't need that - a rough rule of thumb is that you need a minimum of about 20m^2 per person to have at least a somewhat comfortable lifestyle (though clearly it's possible to 'get by' on less).
Granted 250K won't get you far, though if you can afford to buy a R250K (what kind of bond would that be, about R3K/mo I guess) place you can afford to rent a much better place. No rule says you must buy, it's far cheaper to rent at the moment. But there are other ways too. Share a place with others to split rent, or if you can try live with relatives (e.g. grandpa/grandma) and then they can help with child-rearing too. There is no rule that says you have to completely abide by the various urban societal structures we've been indoctrinated into as being the "only way".
I'm definitely not saying it's easy, though, don't get me wrong. But with some level-headedness and realism, most should be able to get by, even if it's less than what you always dreamed of. It probably will be. Family is the most important thing though, not the house size.
Well said, Turtle. You detail my argument exactly. It just goes to show, South Africans FAIL miserably when it comes to future & budget planning. Family & spending comes first; where the money for it comes from, is left for a later concern. FAIL.
FAIL, FAIL, FAIL.
The solution is simple: if you want to expand your lifestyle which results in an expenditure, draw up a budget that stretches into the future as long as necessary. Then, if you find out you cannot afford the particular venture, DROP IT, and think of a cheaper alternative. It's that easy. Unfortunately it means:
1) thinking
2) less impressing the Jones'
... which South Africans are bad at. FAIL, FAIL.
Now, for them the chickens have come home to ROOST!
If I think of friends/colleagues (a small sample of course), I would say that *at heart* they all do try to, but in practice they are mostly comparatively pragmatic when it comes to spending (I guess they have to be) --- virtually all of them (no matter how poor or rich, and I know people ALL along the scale, trust me) are to some degree 'spoilt' and buy tonnes of stuff they don't actually need (and would not easily weather unexpected emergencies), and one or two got badly sideswiped in things like divorces, but I must say I know very few (except one or two of the middle class blacks I know) who are literally living beyond their means and in real danger of losing their cars/houses or anything like that. Most do live horrifyingly 'from paycheck to paycheck' on large amounts of debt, but most do get by in that way. I'd almost call it "materialism tempered by realism" or "bridled consumerism" perhaps. So while there is a lot of rhetoric about this, I'd be interested in actual facts/statistics ...
... such as these possibly? This article talks about 8000 possibly losing their homes. In the grand scheme of things, that doesn't sound like a very large figure to me, so it might be that the majority of people with homeloans are capable of weathering the current 'storm'.
Of course, that doesn't mean they aren't poor spenders, it could just mean that most are just-just managing to indeed keep up with the Jones's, or have already settled for a slightly poorer quality of Jones. Or it means that most are financially responsible after all. Who knows.
Debt is extremely expensive, it doesn't make sense not to get rid of it as quickly as possible and take on as little of it as possible. At risk of making myself less popular, I'd even say I tend to agree with Skinner's general viewpoint
.. even the poorest people I know (and I know some very poor people) buy all sorts of things they don't need at all (from hairdos to lots of clothes/shoes to excessive amounts of booze to home entertainment systems to iPods to fancy cellphones to lots of eating out to holidays to overly-expensive cars and homes, etc.), only a small percentage save any money to speak of, and most live paycheck to paycheck and wouldn't be able to handle a single 'rainy day' life event without someone bailing them out. (It depends what you want out of life, more money in the bank, or lots of 'stuff'.)
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Moederloos
Honorary Master
How much margin should people leave. Give me an exact figure that will always work. People did leave a margin, big ones and that has been eaten away. Inflation is high, fuel costs are high, interest rates are high. Interest rates have increased dramatically and will probably keep going up despite the increases having no benefit.
So go ahead give me the exact margin to allow.
Oh no, consumers being consumers in a ... capitalist society. The horror. I'm just shocked. And stunned.
Of course business runs on credit too. But hey, there are plenty of people to retrench, and ways to pass costs onto other parties.
Of course business runs on credit too. But hey, there are plenty of people to retrench, and ways to pass costs onto other parties.
supersunbird
Honorary Master
You should allow for a increase to a interest rate of 50%, that should cover you without problem
Except if the place turns Zim...
I did give what I think is a fair margin, back up a bit and read my earlier posts in the thread.
There is no such thing as a margin that will "always work", as nothing is a sure thing on this planet (e.g. anything could come along, war/flood/disease etc. that can screw an economy), but there is a simple probability curve: the higher the margin you leave, the lower the probability of running into serious financial trouble.
In my case, and as I already wrote, I think the definition of "fair margin" is easy enough to get a rough estimate of by simply looking at a history of the interest rate and applying a bit of common sense. E.g. in the 80's in SA the interest rate also climbed dramatically - far worse than now. By just asking "well could something similar happen now" - answer is obviously yes - then look how much it climbed then, and use that as a benchmark for how much of a margin to leave.
Leaving a margin of less than 3 or 4% is definitely not smart though, under any circumstances.
Um, I'm not complaining about consumerism, so I don't know why you felt the need to be sarcastic. Perhaps the value judgment was in your own head. I certainly hold no value judgments against it, just against "stupid consumerism" in particular.
And consumerism has nothing to do with a "capitalist society", contrary to popular misguided opinion - perhaps you should get your ideas on economic systems from textbooks instead of mindless popular slogans that Joe Public repeats over and over. You are completely wrong. Capitalism is simply defined as an economic system whereby private individuals control the means of PRODUCTION (with free markets being a critical tenet thereof - and the necessity for personal liberty incidentally underlying that). That's it. Note the term production, and NOT "consumption". Huge difference. A high-definition TV is not a "means of production". Neither a fancy car nor a big private house can be considered a "means of production". Nor is yet another pair of expensive shoes for the wife. Nor is dinner at a sushi restaurant. Etc.
The problem with "capitalism" is only that nobody knows what the heck it is, even though everyone seems to have an opinion about it.
Perhaps if people focused more on the "production" portion of the definition, they wouldn't be struggling as much as they are. Because instead of blowing that next bonus on something like an HDTV or holiday, you might start thinking, "hey, this is money, a MEANS OF PRODUCTION (rather than most peoples first thought 'hey a means to buy toys'), let me turn it into something truly productive and invest it". Yes you too can control the means of production. It's as simple as not blowing your spare change on junk and spending it more wisely. People think "capitalism" somehow means you are supposed to buy lots of sh-t that you don't need, i.e. that capitalism is consumerism. Wrong. The possibility to do that is just a side effect. If you ever want to become 'the boss' and not a wage slave, and get out of the "rut" of always "feeling like you're struggling", then you have to start seeing as much as possible of the money you get as a means of production, not a means to buy nice stuff. Then one day, eventually, you will be much richer and can then buy much more nice stuff (or can actually afford to raise kids and give them a proper education, or can afford to emigrate, whatever). Forget all the cliches you've heard that cause your brain to think of the words "capitalist" and "consumerism" as tightly linked (clearly they are in your mind, as you made a connection that I hadn't even implied, then proceeded to insult me based on a value judgment that wasn't even there, that you yourself read in, based on an incorrect premise of the definitions of core terminology).
Or alternatively keep looking at yourself and everyone around you as "consumers", if that works for you. Just don't blame others then when you struggle to make a bond repayment or something.
Business doesn't "run on credit", BS, it runs on capital (more loosely, on any "means of production" - that can even be your own hand, for example, or a computer you may currently see as being for games). This can also be savings, and often is in countries where there is more of a culture of saving than South Africa (i.e. most other countries, and that's not just rhetoric, those are the stats). Debt is only one way to supplement the financing of capital, but it almost always comes at the cost of giving up equity, so businesses actually try to avoid "running on credit" beyond what they need for their business model, and investors will shun any business that appears to be trying to "run on credit" as one of its core strategies. (EDIT: Sorry, actually, businesses generally don't even "run on" credit or capital, they "run on" operating revenue; credit/capital are generally used for investment expenditure only e.g. expanding capacity - a business attempting to "run on" debt to cover operating revenue is probably headed for trouble.)
And even if business "ran on credit" (ugh) it wouldn't justify credit for personal luxury expenditure such as fancy cars.
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You should allow for a increase to a interest rate of 50%, that should cover you without problem
Except if the place turns Zim...
Then you should take the belt that everybody tells you to tighten and wrap the one end around the shower railing and the other around your neck.