Your "Pros" and "Cons" Financially

[FiestaST]

G'Day; I know they may be similar threads to this on this section of MyBB but I thought I would like to pick everyone's brain.

I read MyBB forums religious & you really get a sense that the people who participate & post are well educated; intelligent and street smart

This thread is a Duo in terms of your "Pros" & "Cons" from a Financial point of view & your Approach/How you Value Money.

I will start with myself 1st:

Pros:

- My total rent for my (relatively) large two bedroom ground-floor flat with balcony and garage is under R4k pm
- My car (VW Golf 5) is fully paid off and runs excellent
- My total travelling distance to work is around 12km everyday and therefore 1 tank of fuel (~R700) is sufficient
- My car insurance is under my old mans name with me being the designated driver adds up to just over R400; my old car's premiums was almost double that!
- Our (Prepaid) Electricity comes to no more than R250;we are efficient with putting lights off when not in use and of course managing the geyser
-I dont have any Store Accounts except for a Game Card (see below)

Cons:

- I have a lot of Credit Card debt with my single C.Card (~R22k)
- I have a Game Card that I owe about R9,5k
- I have a recent Personal Loan with my Bank that I owe about R21,5k still.
- I am the only Income Provider; wife stays at home with our 18mnth old
- At the moment I am not able to save any money; I live month to month basically.

I would have like to think I earned a "decent" salary until I saw how much MyBB guys are earning; many are Jozi but still....

We have been living on our own for the past 6 months & every month all that needs to be paid or "touched" gets handled but I struggle to save every single month.

I dont spend more than 20% of my salary on debt so that is "good" but the fact that you are putting R2k+ pm for debt is just so demotivating...:twisted:

I would like to live "comfortably" but TBH I dont see that occurring in the short term; things are improving but at a slow rate.

At one stage I was even considering selling my car; and pay off all debt and get a simpler car but then I think that approach might be a bit too drastic. It is not as if I am defaulting on any payments.

At the same token I see and know people who actually earn peanuts & have kids and have it so much much more worse off that I am still very much grateful with what I have.

If any one is willing to share your "Pros" and "Cons" plz feel free.

Comments/Advice much appreciated...

 

[ld13]

We have been living on our own for the past 6 months & every month all that needs to be paid or "touched" gets handled but I struggle to save every single month.

How much is left over of you salary at the end of the month?

 

[akescpt]

Forget about saving for now. Get rid of your debt. As long as you covering everything. Just remember that with kids you need a bit of a buffer.

Did you accumulate all that debt buying essentials? I know setting up a home is expensive but that strikes me as too much for a starter family.

 

[VG008]

Have you reviewed all your expenses, even the small ones. For example, if you pay R200.00 for a bank account, you could move to a different bank and saved maybe R150. This R150 can go towards paying the debt.

My advise..

(1) Pay off the debt first, before trying to save. And don't take on new debt, unless it is crucial.
(a) As marra mentioned, the highest interest rate debt must be paid off quicker. However, don't stop paying the other debt, you don't want to default or anything like that.
(2) Once that is complete, build an emergency fund; This is very important and will help you stay out of debt.
Maybe burn those store cards as well
(3) After you have saved for your emergency fund, consider talking to a certified financial planner, not those stupid insurance guys. You will need to plan for your kids education, another kid maybe, and your life goals in general.

From my side..

Pro's

1. Car is paid off; Well it was a cash purchase.
2. Save around 70% off my nett pay
Including Investments, Home Dep Savings, R.A, Savings for other expenses such as car services, holidays
3. No store cards
4. Credit card is paid in full, if used
5. I have 3 months of my nett pay as an emergency fund
6. I have a budget

Con's

1. Petrol: ~R2500pm
2. Insurance is a bit much for the value of the car: ~R700
3. Electricity, water, rates&taxes is also a bit much. Trying to get a prepaid meter installed, but I don't want to spend R2500.00 when others are getting it for free.


Upcoming expenses

1. Looking into purchasing a home, which will be ~35% of my monthly savings.
This should reduce the fuel cost. Currently I do 100kms a day. Looking to move closer to work; around 50km max, a day

 

[FiestaST]

How much is left over of you salary at the end of the month?

I unfortunately run it very tight the past few months; at times its like under R150 at the end of the month; I can see this improving a bit in the fairly soon future.I am just grateful there is fuel leftover to go to Work with being close by.

And that is with being efficient with food & very very little entertainment and such but as the expression goes life is expensive.

Forget about saving for now. Get rid of your debt. As long as you covering everything. Just remember that with kids you need a bit of a buffer.

Correct; I dont "plan" on Saving just now as funny as it soon; I just want to service the debt and knock them out one by one. Yes it pains with a kid not to have any emergency money at end of the month just more motivation to knock away this debt.

Did you accumulate all that debt buying essentials? I know setting up a home is expensive but that strikes me as too much for a starter family.

The Game Card I used to accumulate things for the move as things turned very nasty with family fast and we had to bounce in a hurry.About half of the Card debt is during my "younger" days I just paid off a bit and used that up every month; so its yrs of CC spending; you know Car Hire; Expensive Servicing of Old Card; Flights etc

Agree first service your debt, there is also different 'types' of debt you need to consider. First focus on the debt with the highest interest rate and service that. Do you have a budget? If not PM me and I will send you a template.

Correct me if Im wrong but what has the higher interest rate Credit Cards or Store Cards?

I know my Personal Loan with S.Bank is 22,1% interest rate.

I have a budget yes; I try to stick to it as much as possible but would appreciate your template yes.

 

[ToxicBunny]

Store card will prob be higher... Get rid of your high interest short term debt first... Then whittle it away slowly until all your short term debt is gone... It will make a huge difference to your monthly budget

 

[^^vampire^^]

Be proud that you have identified your debt as a problem and you are addressing it.

Also you have now learned an important lesson and will probably think twice before taking on further debt. Many people still get stuck in this circle like morons and don't understand how they ripping themselves off.

It will take you a while to pay off your debt but before you know it you will be saving nicely and things will come together. Just remember to keep aiming to be debt free

 

[pboy]

you know the debt trap is just that- a trap!
i recently advised a friend on debt repayment in a different manner. He see's 2 or 3 big deals a year that keeps him and his family going; but sometimes the deals take longer than usual to land and he goes a few months of the year into credit card debt. then when the deal kicks in he just repays and moves on.
i told him NOT to pay off all his debt. he obviously lived in a cycle of getting into debt then repaying it all a few months later... but i warned him about the stress etc he goes through everytime a deal takes too long to land and he is maxing out his credit..
told him pay a smaller bit towards the debt, and in that way he will have enough to more than weather the next potential storm.. and as long as you can keep floating for a while inbetween, he could then pay off more towards debt once he has a 6 month or so buffer... not sure if I am being clear enough here; but sometimes getting into "pay off my debt ASAP" mode does not fix the underlying "why did i get into debt in the first place"question...


oops forgot to add my pros n cons:

pros:
-i save quiet a bit, with a healthy chunck of it quiet liquid too.
-bought a cheapie car for me to run around, work etc. its honda so its die hard!
-recent retrenchment has given my entrepreneurial spirit a kick start so I've been looking into alot of other business/investment opportunities
- no store cards, no credit cards, although I do have a RC and OD facility at my disposal( with zero balances)
- no cellphone contract bugger that!
-netflix hulu and torrents keep me from going to the cinema
-unconsciously stopped drinking whiskey and replaced with beers: a huge saving I didnt even plan for!


cons:
-feeling the itch alot, the one you get when you have a paid off car, and then a few months later you start justifying spending 4-500 k on another car...ya that itch!
-i am a fiend for gadgets.... and that can be quiet a bit at times

 

[ld13]

you know the debt trap is just that- a trap! i recently advised a friend on debt repayment in a different manner. i told him NOT to pay off all his debt.
told him pay a smaller bit towards the debt, and in that way he will have enough to more than weather the next potential storm..

You are not being clear enough here as it makes to sense to me to not repay all your debt asap. Keeping the debt alive for longer merely means more interest and debt in the end of the day.

 

[FlashSA]

Pro's:
*No Credit Card or clothing account debt
*Company Ranger T6 D/C with fuel and insurance
*Company fuel and insurance for wife's car
*Company Cell and mobile data
*Reasonable bond repayment and the house is valued at double the full bond amount (in case of firesale)
*1-2 weeks of company timeshare available per annum
*EDIT: Have 1 month's salary saved

Cons
*Had that "itch" and bought my wife a new car 18 months ago and used a big residual to reduce payments - the monthly instalment and lingering residual irritate me on a monthly basis now
*I don't have enough "cash" available every month after paying everything to live comfortably
*I don't have enough life insurance in place to make sure my wife and daughter are catered for if I die and my RA's need a serious bump as they are too low.
*Wife insists on keeping DSTV which costs me near 8 grand every xmas in annual subs

 

[akescpt]

cons - I got a loan to pay for the wedding. not my brightest moment. should save up and then get married.
- bought some appliances on hire purchase back then. these days just put it on the CC or save and buy. much cheaper
- no extra RA
- rough budget
- 8k CC
- edgars card - R250 only I think
- staying at current standard of living is getting harder and harder with month to month grocery increases and fuel; coupled with below inflation increases so im going backwards without doing much different compared to 2 years ago.

the thing with debt is that you committing your future earnings and your nutsack to your creditors. and come hell or whatever they want to collect. ive been itching for a new car but when I see the repayments I go 'fsuck that'. but my recent months have become somewhat of a clusterfsuck where my finances are concerned. so I need to sit soon and trace where its all going.

pros - no car debt
- some savings

 

[pboy]

You are not being clear enough here as it makes to sense to me to not repay all your debt asap. Keeping the debt alive for longer merely means more interest and debt in the end of the day.

paying off debt first is the way, dont get me wrong. I was trying to say fix the cause of the problem otherwise it just becomes a cycle. if my friend just delayed finishing off the debt payment so he could use the money to get another few months, then he would break the cycle and not need to go into debt at the same frequency. understand?

 

[Progenix Oj101]

Debt vs saving - ~6% growth on saving vs ~20% growth on debt. Unless you somehow have debt at a lower interest rate than you'd get for saving, get rid of the debt first.

Pros:
Have around six months' full salary saved so far as I want to buy my car cash
Edgars owes me a few hundred Rands (I do a payment each month whether I owe anything or not)
My Woolworths account which got raped sideways for Christmas is square

Cons:
I don't have any long term savings at the moment
I owe about R10k on my credit card, although I'll clear that next week
Cell C takes around R1500 from me each month

 

[zolly]

I'm "way behind the curve" compared to most guys my age but thankfully I'm happy (for the most part).

Pros:

- I live with family (share with my brother) so my rent/water/electricity/food costs are never more than R2500 pm (we split a lot of costs and buy in bulk)
- I don't own a car so I don't have any of the costs associated with one (although I am saving to buy one cash)
- Don't have any debt (I have an Edgars account that I owe R86 on this month)
- No longer crave gadgets and new PC stuff (my current PC plays all the games I want to play and I have no urge to play the latest stuff at ULTRA HD 60 FPS)
- Have enough cash saved that I could get by for 6 months doing absolutely nothing (this is growing slowly)
- Recently got into unit trusts (long term financial growth)
- Have a reasonable retirement package
- I work part time, which leaves me with extra time to derp around or work on my own projects

Cons:

- If I can't borrow a car/get a lift and I need to get somewhere at night...
- If I have to move into my own place I will have a ton of electronics but absolutely zero appliances
- I'm pretty sure some women have taken me off their potential boyfriend lists because of my lifestyle (thankfully there's been enough women who like or have been interested in me despite this)

 

[ld13]

he would break the cycle and not need to go into debt at the same frequency. understand?

Nope I do not. The frequency of the debt does not come into play from a financial point of view. As Oj0 mentions it is about the time value of money. If you can get more guaranteed growth out of your savings than the interest charged on your debt, then by all means - go for it. This is unfortunately not the case in the real world.

 

[liber8]

Pro: Free market
Con: Regulation

 

[akescpt]

Pro: Free market
Con: Regulation

:wtf:

 

[pboy]

Nope I do not. The frequency of the debt does not come into play from a financial point of view. As Oj0 mentions it is about the time value of money. If you can get more guaranteed growth out of your savings than the interest charged on your debt, then by all means - go for it. This is unfortunately not the case in the real world.

you are clearly not understanding me. Its fine though.

 

[hellfire]

Pros:
Good balance of debt - Long term debt in terms of bond and vehicles, but no short term debt at all (settle CC every month, pretty much only use it for rewards points). Repayments are very affordable

Cons:
Waste a lot of cash on non-necessities. I really should be saving more

 

[zippy]

Destroy the credit cards. Now. Pay your savings into clearing your debt.

Once your debt is paid off, run 2 savings accounts:
1. Long term savings. Use this as the deposit when you want to buy a house/townhouse etc.This can also be your "oh c**p" account if something bad happens.
2. Short term savings for things like holidays, big purchases etc.

Alternatively, pay what you would into the long term savings, into your debt. and start running your 2nd short term savings now with small amounts, so that you get into the habit and get a feel about the amount your family can handle. When your debt is paid off, then pay into a long term savings.

If feel the need to buy something, only buy it when you have the money in your short term savings account. Never, ever, get into an HP agreement, unless its something critical like a car. Don't buy furniture, TV's etc on credit.

Work out what your expenses are and how much you can afford to put into these 2 savings accounts without making your life a misery for the month. The day after payday, transfer into these savings accounts. Estimate an amount for "other expenses". Treat these as you would any bill. If you find you don't have any money available to transfer into your savings, then you are spending too much. Its as simple as that.