Owned or Borrowed



I recently saw an advert of a car i want for free for the first 2 months and i only start paying in January 2015. It was very tempting but then i calculated my expenses every month minus income and realized i would do better off, if I saved and bought the car cash, a decision that i really much appreciate at the time of writing this article. A few months ago a business colleague leased a car based on a huge contract he landed and he changed his lifestyle to accommodate his new status, un-calculated situations landed him with huge debts and a more worse financial standing.

So, is it good luck that some people borrow and never end up bad and others do and get off worse than they started with, over the past weeks I have meet a couple of people and done a quick survey on their monthly expenditure , income and also helped them weigh their expectations in terms of liabilities and asset and the results are very baffling.

On note that I am not trying to be racist or segregative in this article , I found that whites are more organized in their finances than blacks and that the elderly of all races are more careful of their spending than the young working class group. I found fashion, lifestyle class and a need to please friends and family at the top of reasons why people have debts.

A young man I spoke to earns a salary of R16,000 gross salary and R13,768 after deduction and has a loan repayment of R5,465 on a monthly basis, owed to 4 different financial institution. He drives a Audi A3, 2012 model with a monthly repayment of R3,920.80 for 72 months calculated on a 50% ballon interest with 130,000 due on final term date. The Car value is R260,000 but with the ballon arrangement for 72 months repayment, he would pay R412,298.48. He shares a property with a friend with a monthly rent payment of R2,450 and uses R760 for petrol per month depending on the rate of petroleum. He buys grocery of R1,800 and has 4 clothing account that amounts to R634 per month. Has a child contribution of R800 monthly and almost spends R1,000 monthly on refreshment.

Now, i get confused and asks how he gets along knowing he has quite a huge debt burden and calculating the term needed to sort the bills , not considering interest rates and refinancing that would be offered to this individual on the long run, i felt there was a need to discuss this topic.

On the other hand, Gregory Swartz in Olifantsfontein (said i can mention his name). He finished paying off his debt in 2012 and decided to live a low budget life, save and earn what he calls his. He started saving R3,500 every month , the same amount he was paying for his car before he finished off the payment. He moved from a high class duplex into a townhouse where from R8,940, he now pays R5,500 per month. He opened a part time dog breeding business to raise extra income and makes at least R1,900 when business is low and R12,000 when good.

He buys his pack of 24 beers with grocery every month and braii packs, saves liquid capital in the bank and a fixed deposit for emergencies. I compared the two individuals and i see the low level of worry in Greg and a very unsettled atmosphere around the first individual i did the survey with. I also after this article made a few changes where necessary and hope you the reader make some after checking my points to living a burden free financial life.

Here are 5 points that has made a lot of successful individual peaceful :

1. Definite Aim, Vision and Purpose – Successful people constantly seek clarity in their lives. They know what they want and they follow their own dream. Vague desires and beliefs lead to vague outcomes. It is this sense of direction that gives them the staying power to stick to their goals and achieve their dreams. Hence a lot of people do not attain much when they have no vision and get dabble by different thought and opinions that would end up to consequences of ungrounded decisions.

2. Flexible – One misconception that ordinary people have about persevering is staying the course no matter what. This is true only if the reason for pursuing your goal is still valid. Most successful people became successful doing something different from what they initially intended to do (i.e. Steve Jobs started with computers, went into the animation and really made his comeback with the iPod). This is normal because the world is always changing and they know a lot more now than when they started. Successful people know that if their reasons for doing what they are doing changes, there is no point to continue. If you wanted a house in Sandton and after doing the maths you realized you will pull too much financial burden, it would be wise to check in an area within your budget limit that way you still get a house but with less or no financial worries.

3. High Self-Esteem – Extraordinary people believe they deserve their success and know that they can do anything they set their mind to. They understand that a mistake is something that they do and not who they are. They also monitor the warning signs of low self-esteem to ensure they always keep a positive self-image of themselves. They realize that self-esteem is a state of mind and choosing to have high self-esteem is much more useful than choosing to have low self-esteem. Hence i alway advise people to build inner esteem and not material base esteems as this easily wears off with time. There is nothing external that can give you 100%  confidence than yourself. Accumulating material things, in order to get a status that boosts esteem always ends badly.

4. Action Oriented – We all know of people who have potential or talk a big game but accomplishes nothing. Those who spend all their time thinking about doing something will never succeed. Successful people are doers and not talkers. They don’t wait for conditions to be perfect before they take action. They just go for it, observe the feedback and then modify their next action accordingly. Those who don’t achieve much with their lives tend to use “would”, “should” and “could” a lot. Those who do get what they want are too busy achieving their next goal to explain themselves. If you suffer from procrastination, I encourage you to check out some practical ways to stop procrastinating.

5. Great Company – As I experience and observe more and more of life, I’ve come to realize that you really can learn a lot about someone by the company that they keep. Test this by looking at people you know and the people they hang out with. You can go as far as to test the idea that a person’s salary is usually the average of the five people they hang out with the most.

This happens because people with similar beliefs tend to get along and stick together. If a group averages R65,000/year and someone in the group believes that they can make R65,000/hour, the other people in the group will think that is ridiculous. Yet in the group where everyone makes R65,000/hour, the person making R65,000/year will probably second guess his/her own beliefs concerning earning ability.

What does that mean for you?

Surround yourself with people living the life you want to live and adopt their beliefs and habits.

Lastly, if you want to make decisions that are financially linked or you see yourself in a situation that only the help of a financial institution can assist. Please get the help of a financial adviser (external) before you take the decision and do a lot of comparism of repayment insterest and the repayment term. In my next article i will be talking about enjoying the holidays without regrests.