Your "Pros" and "Cons" Financially

[Purply]

I agree, always settle debt first, which it not always possible, but sooner or later you'll dig yourself out of the hole.

Pros: I have no debt, flat is paid off, use company car who also pays for petrol (my own company)
: Currently saving around 70% of my monthly salary

Cons: Tired of living in a flat, saving for a house which will take me about another 3 years as I want to buy cash.
: Need to increase my RA's, but don't want to wait much longer for the house, so pushing that back for now.
: Running own company tends to make me play everything on the safe side, always having more than enough money to last at least 6 months as one never knows what can happen with todays economic climate, specially in SA

 

[Tinuva]

If you have debt, you shouldn't have money left at the end of the month. I usually pay whatever is left into my bond. Everything goes into a budget. If I didn't budget for something, don't buy it.

Cons:
- Have a massive bond to pay off...this takes long
- Need a higher salary
- GF gets peanuts

Pros:
- Car was a present from dad, its old nissan 1400, but it works, at least no debt on it
- No store card debt, had a Edgars card to abuse the discount vouchers. Literally used card with vouchers, then walked over to admin desk to pay it off immediately. Don't judge me on this!
- CC gets paid off each month, so I don't see it as debt, however I am moving all my monthly swiping back to my cheque account, which is now on a higher ebucks reward level, so getting more ebucks out of it.
- RA is at 7.5% of salary vs 5% minimum, company also matches up to 7.5% so technically RA = 15% of my salary
- Company pay for Medical Aid 100% so that is a huge saving each month
- Company pay for ADSL line and give capped account, and I also use fnb connect uncapped with it for free, so internet is very cheap for me each month
- Finally moved my cellphone over to prepaid so not bound to a silly contract anymore
- Learned how to fix many things around the house and car myself to save money for that too
- My extra payment each month into the bond is now almost double the required payment, and still working on making it go higher to fasten the payments, thus far it looks like I will make it within 9 years instead of 20.

 

[GoB]

That is a sucky situation to be in... it's like slavery for X years to end up where you started.

On the opposite scale you get those who get a 10-20 year head start from their parents / in-laws. I'm surrounded by those *******.

Mine:

Pros:

- Dual income partner, decent jobs
- Wife doesn't spend money
- No contracts or debt besides home loans
- Finally have some money to spend (14 years of work)

Cons:

- Dual expense offspring: 8k school fees
- Had to be a miser for a long time: didn't learn to enjoy things, no social life
- SARS still takes more than what I can save/enjoy

 

[Eniigma]

you are clearly not understanding me. Its fine though.

I do and agree with you. My advice to the OP and anyone /everyone for that matter is get yourself as much financial education as possible. Don't be scared of money and rely on others to look after your financial future. Be wise with financial advisors, would you really want to take the advice from someone who is not doing what he recommends?

Pro

• No retail or cc debt, used to cost me over R3000 per month to service it
• No store cards or accounts.
• Transfer my cash to my CC each month for ebucks, but don't go into debit on it.
• Minimized my expenses.
• Learnt not to buy toys or spend money just because I've got it.
• Actively getting financially educated, reading everything I can on boosting my financial intelligence
• Got about a months worth of savings
• Just started investing in an RA and in the stock market.

Cons

• Purchased a much bigger, more expensive car then I should have because I had the cash for the installments. If only I'd started my FI training before. Will get rid of it when I can sell it for enough to break even on whats owed.
• Moving further from work and my big car is fairly heavy on fuel (but the lifestyle benefits are huge).
• Should have learnt these lessons 10 years ago.
• Occasionally still buy something I don't really need.
• Just started an RA - should have done so 10 years ago. (Closer to 40 then 30)

 

[SauRoNZA]

These conversations only make sense as percentages, not actual figures.

 

[Progenix Oj101]

Let me put it to you this way. If you have R100 debt at 20% interest, the total becomes R120 once the interest is added. If you have R100 saved at 6% interest, the total becomes R106 once the interest is added. Your R100 has grown by R6, but your debt has grown by R20. Had you moved the money saved from your savings to your debt right away, you'd be sitting with a balance sheet of Cr R100 and Dr R100 for a closing balance of R0. By saving at a lower interest rate than your debt was growing, you end up with a balance sheet sitting at Cr R120 and Dr R106 for a closing balance of -R14 - you're still in debt.

This doesn't only work with big debts, even if you have 100x more saved than you owe it still pays to get rid of the debt fast. With savings of R10,000 and debt of R100 at the above interest rates, you'd still be R14 worse off for not clearing the debt quickly.

 

[saturnz]

Pros

*I'm an economist
*I'm retired
*No financial worries

Cons

*I have nothing to do so I sit on this forum.

 

[supersunbird]

Pros

*I'm an economist
*I'm retired
*No financial worries

Cons

*I have nothing to do so I sit on this forum and mess around with old Opels.

FTFY

 

[saturnz]

actually BMs, but you wouldn't know that

 

[hellfire]

Pros

*I'm an economist
*I'm retired
*No financial worries

Cons

*I have nothing to do so I sit on this forum.

That explains how you could afford to own the DMCSA CoTY91 Opel Monza 160i GSi

 

[Progenix Oj101]

Help me find an E34 530 (not the M30B30) manual or auto, or 540 auto or six speed manual

/thread_jack

 

[saturnz]

Help me find an E34 530 (not the M30B30) manual or auto, or 540 auto or six speed manual

/thread_jack

With Opels my interest is with superbosses and all that is 20xe, c20let and c20xe, with BMWs- e30 325is, all M3s. I won't comment further on the cars here.

 

[HavocXphere]

Pro:

Salary growth is outpacing lifestyle cost growth by a sizable margin so things work out well (for now...its sure to slow down)
No debt aside from CC & the CC is intentional so all good

Cons:

Uncertain future (both country & job) & thus hesitant to commit to anything major like a house
No proper assets to speak of aside from a medium sized pile of cash

/thread_jack

wtf go make your own thread.

 

[ld13]

I do and agree with you.

Mind explaining it the way you understand it?

Total expense in the year is R12 000 spread evenly over 12 months @ R1000/month. Two times a year an income of R6000 is generated and a 5% bonus is payable as a bonus at the end of every year. First 6 months are covered by the first income generating event. The last 6 months are eg. not covered as the income generating event is delayed. This forces the use use of a credit facility for the rest of the 6 months that eg. charges 20% per year interest. Ignoring any compounding interest.
Total income for the year is then R12000 + The R600 bonus. Total expenses for the year R12000.
Residual R600 MINUS R600 interest due on the R6000 debt incurred.
Leftover R0.00

As suggested the full debt is not settled. Eg. only 50%. At the end of year 1 we now have:
R3000 cash in the bank
R3000 debt
R600 interest still due

The cash in the bank plus the first R6000 income of year 2 lasts us 9 months. The last 3 months are not covered as the income is once again delayed. This forces the use of a credit facility for the rest of the 3 months.
R3000 cash in bank + R12000 income + R600 bonus - R12000 expenses.
Residual R3600
R3000 old debt + R3000 new debt = R6000
R600 old interest + R600 new interest on the old R3000 debt + R150 new interest on the R3000 new debt = R1350

Could have made an error, still have to check the above maths. But I stand by the principle here - pay off all debt ASAP. That interest will without any doubt eat you alive if you keep going at this pace. Someone please help me understand what I am seemingly missing here.

 

[koeksGHT]

Pro: make enough to live

Con: make enough to live

 

[Eniigma]

Mind explaining it the way you understand it?

Total expense in the year is R12 000 spread evenly over 12 months @ R1000/month. Two times a year an income of R6000 is generated and a 5% bonus is payable as a bonus at the end of every year. First 6 months are covered by the first income generating event. The last 6 months are eg. not covered as the income generating event is delayed. This forces the use use of a credit facility for the rest of the 6 months that eg. charges 20% per year interest. Ignoring any compounding interest.
Total income for the year is then R12000 + The R600 bonus. Total expenses for the year R12000.
Residual R600 MINUS R600 interest due on the R6000 debt incurred.
Leftover R0.00

As suggested the full debt is not settled. Eg. only 50%. At the end of year 1 we now have:
R3000 cash in the bank
R3000 debt
R600 interest still due

The cash in the bank plus the first R6000 income of year 2 lasts us 9 months. The last 3 months are not covered as the income is once again delayed. This forces the use of a credit facility for the rest of the 3 months.
R3000 cash in bank + R12000 income + R600 bonus - R12000 expenses.
Residual R3600
R3000 old debt + R3000 new debt = R6000
R600 old interest + R600 new interest on the old R3000 debt + R150 new interest on the R3000 new debt = R1350

Could have made an error, still have to check the above maths. But I stand by the principle here - pay off all debt ASAP. That interest will without any doubt eat you alive if you keep going at this pace. Someone please help me understand what I am seemingly missing here.

In your example above I'd agree with you, the math makes it impossible to do anything else. Time to find a way to increase that payday or the frequency of it.

In the example pboy gave it wasn't so cut and dry and the way I understood it was that he was making 2-3 paydays a year that help him survive and they are irregular and that he was not getting paid and using 100% to service the debt and then running up more to and repeating the cycle. The way I understood it was he was creating debt, getting his payday and then using a portion to pay off that debt and then living off the rest and creating more debt once he ran out and repeating that cycle.

how I understood pboy's example..
Month 1-6 you rack up R50k debt, Month 6 you get R80k payday
Month 7-12 pay R5k each month only to service debt and interest and you don't rack up any more debt but live off the R50k, Month 12 you get R80k payday, repeat paying R5k and living off the R50k and the most important part is to learn to break that getting into debt cycle.

 

[ld13]

how I understood pboy's example..
Month 1-6 you rack up R50k debt, Month 6 you get R80k payday
Month 7-12 pay R5k each month only to service debt and interest and you don't rack up any more debt but live off the R50k, Month 12 you get R80k payday, repeat paying R5k and living off the R50k and the most important part is to learn to break that getting into debt cycle.

Did not check the maths. Did not bring into account compounding interest every time.

0	Debit PM	Debit Owing	Interest runup				Debit PM	Debit Owing	Interest runup	CASH
1	R 8,333.33	R 8,333.33	R 138.89			1	R 8,333.33	R 8,333.33	R 138.89	R 0.00
2	R 8,333.33	R 16,666.67	R 416.67			2	R 8,333.33	R 16,666.67	R 416.67	R 0.00
3	R 8,333.33	R 25,000.00	R 833.33			3	R 8,333.33	R 25,000.00	R 833.33	R 0.00
4	R 8,333.33	R 33,333.33	R 1,388.89			4	R 8,333.33	R 33,333.33	R 1,388.89	R 0.00
5	R 8,333.33	R 41,666.67	R 2,083.33			5	R 8,333.33	R 41,666.67	R 2,083.33	R 0.00
6	R 8,333.33	R 50,000.00	R 2,916.67			6	R 8,333.33	R 50,000.00	R 2,916.67	R 27,083.33
7	-R 5,000.00	R 45,000.00	R 3,666.67			7	R 0.00		R 0.00		R 0.00		R 18,750.00
8	-R 5,000.00	R 40,000.00	R 4,333.33			8	R 0.00		R 0.00		R 0.00		R 10,416.67
9	-R 5,000.00	R 35,000.00	R 4,916.67			9	R 0.00		R 0.00		R 0.00		R 2,083.34
10	-R 5,000.00	R 30,000.00	R 5,416.67			10	R 6,249.99	R 6,249.99	R 104.17	R 0.00
11	-R 5,000.00	R 25,000.00	R 5,833.33			11	R 8,333.33	R 14,583.33	R 347.22	R 0.00
12	-R 5,000.00	R 20,000.00	R 6,166.67			12	R 8,333.33	R 22,916.66	R 729.17	R 0.00
DEBT	R 20,000.00							DEBT	R 22,916.66			
Int Due	R 6,166.67							Int due	R 729.17			
									
									
[B]BALANCE	[COLOR="#FF0000"]R 26,166.66	[/COLOR]						BALANCE	[COLOR="#FF0000"]R 23,645.83[/COLOR]		[/B]

In both scenarios the "debt" cycle will be broken when the second payday check comes. It is thus better to kill the debt asap. If one is stuck in a debt cycle, one need to cut costs and repay debt as soon as possible. No lower-debt-repayment scheme can accomplish this.

 

[Eniigma]

Actually I stand by my math.

I never said it would be easier or cheap and to put it bluntly you're going to pay an assload more interest my way, but you'll do it once. Keep repeating the pay it off, get more debt cycle you'll end up paying the same and more interest over a much longer term- the rest of your life.

I'm not arguing that getting rid of debt asap is a bad thing, not at all, I'm was agreeing with pboy that is was better to learn not keep repeating that same cycle of debt, settlement, debt, settlement which unless broken will continue forever.

Also I don't know where you came up with those figures but I know on a R60k loan I was paying R3k.

 

[ld13]

Also I don't know where you came up with those figures but I know on a R60k loan I was paying R3k.

I used a random interest rate that is identical in both scenarios.

I never said it would be easier or cheap and to put it bluntly you're going to pay an assload more interest my way, but you'll do it once. Keep repeating the pay it off, get more debt cycle you'll end up paying the same and more interest over a much longer term- the rest of your life.

I'm not arguing that getting rid of debt asap is a bad thing, not at all, I'm was agreeing with pboy that is was better to learn not keep repeating that same cycle of debt, settlement, debt, settlement which unless broken will continue forever.

You will not be doing it once. By paying less you are making things worse by elongating the cycle, not breaking it. No lower-debt-repayment scheme can accomplish this. If one is stuck in a debt cycle, one need to cut costs and repay debt as soon as possible. Living off the R50k without repaying the debt first is like racking up more debt. You have some illusion that with this scheme you will get out of that same cycle of debt, settlement, debt, settlement which unless broken will continue forever. The fact of the matter is that in your scenario that same cycle of debt, settlement, debt, settlement will continue forever longer than in my scenario.

The time value of money will screw up any kind of scheme anyone can conjure up.

 

[Brontosaurus]

Pros:

- CC paid off
- Investing, finally (and rather aggressively)
- I live like a bum, so rent is cheap
- Should be fully qualified (after 10 long years) soon. Salary skyrockets and demand for me increases exponentially.

Cons:

- I have serious FOMO, so I spend a lot on liver damage
- I'm also single, it's expensive
- Still paying off my car, there's R4k down
- I hate everything about the work I do
- Life feels directionless, even though I can pretty much afford it.