Work off your debt

The more interest you pay the less you have to save and the more opportunity you lose to compound your wealth into the future.

Money lenders make money out of debt through interest and time.
The longer interest is paid over time the more the lender makes.

What you can control is the duration of the loan. The quicker you pay back the loan the more you effectively save.

Credit card debt is the most expensive.

If you are behind the curve – merely servicing the debt and not the principal sum then you are in a classic debt trap.
Credit cards are useful instruments if you understand how they work and
Using your access bond to consolidate your debt – its a great piggy bank.

Park your cash in the right spaces

Your access bond charges interest on the average daily balance throughout the month. The bank allocates a portion of your monthly instalment to interest and the remainder to the capital. The higher your average balance is during the month the less is allocated to interest and therefore more is allocated to the capital.
Effectively, you save interest on the rate of the loan.

Credit cards charge interest on the balance outstanding on the card at the billing date. If you pay up your card in full or as much as possible before the billing date then you save the interest for that billing cycle.

So why not leave as much cash in your access bond during the month using your credit card where possible and then just before the billing date transfer as much cash as you can into your credit card?

You have then saved interest on your bond and then had free money from your credit card during the month. Credit cards also have no transaction fees so can be very efficient payment instruments throughout the month.

Avoid the pitfalls of spending more than you earn. You need to be disciplined to always have enough in your bond to cover your credit card balance.

The year was eventful to say the least testing the South African economy to its absolute limits. Reflecting on the past 12 months the main issues which stand out in my mind are somewhat interrelated: Here is a thread:

Avoiding the downgrade

Moody’s was the last of the rating agencies holding us up from a downgrade to ‘Junk Status’. The outlook is one of “Negative” leaving with our backs against the wall for 2020 as we have the year to turn our ship around and provide positive evidence that our economy is on the mend. A tall order as we have so much to do, especially with our SOEs. 

Keeping the lights on

This leads to the huge crisis we face in bringing  Eskom from out of the dark and into the light. Drastic action has to be taken from every resource we can possibly muster up to keep the lights on for 2020. 

Prescribed assets

The one resource being ‘eyeballed’ by our leaders is a huge pot of cash found in our retirement industry.  One of the largest in the world. Instead of having to borrow money to bail out the failed SOE assets could be directed by regulations to fund them. It is a question of a ‘hand up’ or a ‘hand out?’

Adopt a champion attitude

2020 will be a huge challenge and we will need every bit of resilience and cooperation from all corners to get on top of the economy. The Springboks showed South Africa what can be achieved when we pull together against the odds. Hopefully, we can pick up the ball they passed on to our leaders and turn us into champions.