The South African Economy... our personal finance and end-of-month money

Like most people, when thinking about the South African economy, I cringe when I hear: “This is just the beginning…”, “You may soon pay R16,00 per liter for petrol…”, “The interest hike has been increased by 50 basis points…”

The list seems endless, occurs daily and becomes increasingly worse.

85% of South African citizen are over-indebted as it is, and amidst the increases and further expected increases, I heard a podcast yesterday, which was hosted by a well-known Retailer and Financial Services Provider, in which their expert stated that in this time of turmoil, people can still find a way to save and pay off their debt.

He suggested that one evaluates expenses like DSTV, eating out and other, what can be termed as luxury items, reduce or eliminate those costs and use the savings to pay off your debt, starting with the items that bear the highest interest rate.

It does sound like good financial advise… the problem I have with it, is that we, as a working individuals, whom have worked hard to provide our families with the little luxuries in life have to, in certain aspects reduce our standard of living in order to cope in this economic downward spiral.
Furthermore, who benefits from us having to tighten our belts? Well, one sector that definitely does is the Financial Sector!

It’s time to get real. And I will share information with you today that you might know and have chosen to be oblivious to, or that might be an eye-opener…

The financial sector is set up to benefit from the consumer whether the economy is “bad” AND they are set up to benefit from a booming economy.

This is all done through their interest rate systems.

Here is an example: When you have a homeloan of R500 000 at an interest rate of 12% (the good old days), over twenty years you would pay back a minimum of R1 500 000, that is if you have not refinanced your homeloan within this time frame.

With the current economy, you will repay R2 400 000 on your current bond of R500 000. Almost R1 000 000 difference!

What the Financial Services providers and experts do not share with the “struggling” public, sadly a lot of them do not know this, is that one can beat the system!

You do not have to pay so much interest on your homeloan.

You do not have to repay your homeloan over a twenty year period

AND

You definitely do not have to reduce your standard of living in order to do this!

As a matter of fact, if you know how the banking system and financial sector works… you can increase the amount of money you have available at the end of the month whilst reducing your interest and your homeloan term.

And then there is the magic of saving interest on your credit card…

You are welcome to comment, question and discuss!

Have a lovely day!