don'tjudge each day by the harvest you reap but by the seeds ......11don'tjudge each day...
TRANSCRIPT
11 Don'tjudge each day by the harvest you reap but by
the seeds that you plant.,, - Robert Louis Stevenson
'vV\Qt1Q ono money
AfriSam WEBINAR
SERIES
EXAMPLE OF A HOUSEHOLD BUDGET
FIXED EXPENSESHouse
Rent/bondHouse insurance
Rates and/or leviesDomestic worker
InternetDSTV
SecurityCar
RepaymentsCar insurance
Policies/savingLife insurance
Medical aidRetirement
Funeral coverEmergency savingsLong-term savings
OtherSchool fees
Credit/store card repaymentCellphone contract
Financial commitment to family
MONTHLY YEARLY VARIABLE EXPENSESHouseWater
ElectricityGroceriesTelephoneCellphone
MaintenanceCar
MaintenanceFuelTolls
FamilyMedical billsMedication
Extra muralsEating out
EntertainmentHoliday
Clothing and shoesGifts
MONTHLY YEARLY PERSONALClothing and shoes
HairCosmetics
Health and fitnessBooksCharity
Eating outEntertainment
Credit cardStore cards
Gifts
MONTHLY YEARLY
this is not necessarily an exhaustive list - there may be other expenses you incur. Just make sure you have captured them all.
Groceries
PetrolClothing
Take-aways
Airtime
Movies W
ine
You can’t meet all your bills
1. Make some calls
2. Make a plan
3. Silence isn’t golden
Speak to credit providers:• Check credit insurance policy
• COVID debt payment holiday
• Restructure loan period
• Debt counselling
Speak to insurers:• Premium break/ reduce cover
Pause investment/retirement contribution:• Put on hold
Don’t just let debit orders bounce….
POLL TIME….
Did you take a debt repayment holiday?• Yes• No• Tried but didn’t qualify
Catch up payment holiday…
Option one: After 12 months• Increase by 5% R9650 to R10133
• Pay off within 175 months
• Extra interest cost: R1 930
Option two: After 12 months• Increase repayment by 1% a year
• Pay off within 171 months
• Extra interest cost: R0
• R1 million mortgage with 180 months left
• 3-month holiday @ R9650 = R28 950
• Extra months to repay: 14 months (now 194 months)
• Extra interest cost: R106 000
Poll time….
How do you feel about your current debt levels?• Comfortable, well
managed• Coping but would like
to reduce my debt• I cannot meet my debt
repayments
Debt spreadsheetName Type Balance Payment Interest Fees Credit Insurance End date
Foschini Revolving R3 000 R500 22% R67 R10 No
Credit Card Revolving R15 000 R450 22% R67 R67 No
Bank loan Term loan R50 000 R1 000 16% R67 R200 2025
Car Vehicle finance R300 000 R5 000 12% R67 No 2025
Home loan Mortgage Bond R1 000 000 R10 000 7% R67 No 2050
R1 368 000 R16 950 R335 R277
Balloon?
• Retail store account R3000, repayment R300pm
• Clothing account R7000, repayment R500pm
• Personal loan R10 000, repayment R650pm
• Credit card R30 000, repayment R2500 pm
How to use R1 000 to pay off R50 000
Debt repayment plan
Debt free by October 2021
May 2020 Increase retail store payment from R300 to R1300
July 2020 Retail account paid off, now you have R1300
August 2020 Increase clothing store repayment from R500 to R1800
November 2020 Clothing account paid off, now you have R1800
December 2020 Increase personal loan repayment from R650 to R2450
March 2021 Personal loan paid off, now you have R2450
April 2021 Increase credit card payment from R2500 to R4950
with
R1000
Credit Card payoff calculator
Debt free
25 years R53 600and later
interest rates between 20% to 25% pa minimum payment of
3% per month on reducing balance!
if you had a credit card balance of R20 000.how long would it take you to pay the balance off if you just paid the minimum amount each month?Q:
0
10 000
20 000
30 000
40 000
50 000
60 000
1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77 81 85 89 93 97 101
105
109
113
117
121
125
129
133
137
141
145
149
153
157
161
165
169
173
177
181
185
189
193
197
201
205
209
213
217
221
225
229
233
237
241
245
Capital Total Payment
Credit card payment
• You cannot meet your debt repayments• You want to protect an asset• Court ordered – once you enter you cannot exit until debts are PAID OFF• Make sure you use a reputable firm that uses the Debt Counselling Rules System
Don’t confuse debt consolidation with debt counselling/review
When to consider debt counselling/review
Hierarchy Debt/Investing
• 1st build emergency fund – R15 000• Allocate funds to debt repayment
• Start a TFI even if it is just R200 a month• Retirement – do an assessment, commit salary
increases• Mortgage – pay off faster
aim for R15 000
Goal = Months expenses
Keep your funds liquid:
• 32-day notice account
• Fixed deposit
• Mortgage pre-paid funds
Poll time…
Do you think you/partner may be retrenched this year?• Yes• No
How much do you have ?
Calculate how much you need and how long your funds will last
Severance package tax-free up to R500 000 – if not utilized before
UIF up to 12 months but depends on credits
Cannot access your retirement annuity
Don’t rush to settle debts – you need cashflow
UIF benefits: Depends on credits• One day’s benefit for every completed four days of employment as a contributor
• A contributor will be eligible to claim benefits for a maximum duration after beingcontinuously employed for four years.
• If a contributor has already drawn benefits other than maternity, the number ofdays for which the contributor is eligible will be reduced accordingly.
• Complete continuation form every 28 days to ensure regular payment – online
• Maximum monthly benefit = R14 872
• If you have been retrenched you need to provide your credit provider with your ID anda certified letter of retrenchment from the employer.
• There is a 90-day waiting period from the time the contract is initially signed beforeany claims can be lodged.
• The benefit would pay between 6 months to 12 months of your credit installment.
Don’t fall behind on your debt repayments until you have
claimed for credit insurance!
Before you use your package to pay off debt check your Credit Insurance:
Home loan• Covid-19 payment holiday – 3 months
• Can be reduced for a period of six months andpotentially extended up to 12 months
• Loan could possibly be restructured. This includesextending the term up to 360 months to reducethe monthly instalments.
Any extension will cost you in the long-run
Car finance
• COVID-19 debt relief will apply
• Beyond that speak to finance house to see what options are available
• Be realistic – can you afford your car?
• You can’t just hand your keys back!!
Keeping all my information in oneplace
A life book is a place where you store all your important documents
This should include things like:• Your latest bank statements and tax records• Retirement documentation• Investment policies• All your short-term insurance policies• Risk policies and long-term insurance policies• Your updated will• Birth certificates• Medical detailsIt makes it easier for your family if something happens to you.
Life Book
Ensure that a trusted family member or close friend knows where to find this piece of paper
Debt repayment:• https://mayaonmoney.co.za/2014/02/budget-way-debt/
• https://mayaonmoney.co.za/2019/03/listen-the-three-step-debt-repayment-plan/
• https://mayaonmoney.co.za/2019/02/should-you-use-a-lump-sum-to-pay-off-debt/
• https://mayaonmoney.co.za/2016/05/easy-debt-payment-strategy/• https://mayaonmoney.co.za/2020/03/when-to-consider-debt-counselling/• https://mayaonmoney.co.za/2020/04/how-credit-insurance-can-cover-your-debt/Reducing your home loan:
• https://mayaonmoney.co.za/2019/05/the-stubborn-home-loan-debt/Emergency fund:
• https://mayaonmoney.co.za/2018/09/the-best-place-for-your-emergency-fund/
Additional Links