Beating the Possible Recession in South Africa

I searched for what exactly this means and it is defined as a decline in a country’s GDP (gross domestic product) or negative real economic growth for two or more quarts of the year, according to Wikipedia. The interest rate was hiked for the eighth time in 2 years last week. This brings the interest rate up to 15%. Simply put this means that every R100 000 will cost you R36 more. That may not sound like much however if we analyze this it makes for interesting reading. Let us assume you have R1.5 million in debt including your home loan, 2 cars, loans and credit cards. This will cost you an extra R540 per month in debt repayment. Now let us project this figure over 10 years that is an extra R64 800 you will be paying the bank in interest.

Economists on the news agreed that on average South Africans pay 77% of their income to debt. Coupled with increasing inflation and petrol prices this news is rather despairing. However with a little discipline and creativity you can ride this storm and in fact even place yourself into a position of strength, financially speaking.

The best thing to do is to consolidate all your debt. The reason for this is that in South Africa your bond has the lowest interest rate.

When doing this help your community by dealing with a reputable bond originator instead of going directly to the banks. The service is likely to be quicker and more personalized and the bond originator and they will ensure that you get the best deal possible. It is illegal for bond originators to charge you for you for their services, so make sure he does not charge you. All bond originators get paid commission by the banks so there is no reason for them to charge you.

Typically what would happen in a debt consolidation scenario is that you should be able to improve your monthly cash flow significantly. Savings of R4000 – R14 000 are not uncommon. Now the skeptics will say this is a bad move, putting short term debt over long term. Ordinarily I would agree, however if you have now increased your cash flow by R8000 you can pay half of that into your new bond and reduce your new bond to less than the original bond paying term and you will still have an extra R4000 per month and no debt.

The next thing you need to do is to find another income stream and put all of that money into your bond. The goal is to pay your bond off as quickly as possible. You do not need to and must not go and invest money into this project, learn to derive income for free, or find low cost opportunities that will save you and your clients money. If your job lends itself to you moon lighting then do that. Spend a couple of hours per week doing private work and put all of that income into your bond. If that is not the case then seek to be a reseller of other people’s products. An example of this would be to approach small businesses such a bond originator and ask if they will pay you a finders fee for referrals. Write a list of all the possible services you can think of and approach them. Try to support work from home people, two reasons for this: small business needs all the help they can get and they will be far more approachable than large corporations.

Even if you only make an extra R500 per month and pay all of this into your bond, coupled with what extra you are already paying, you will knock your bond off in no time. Pay off all your debt so that your boss does not own you” Imagine if you had no debt whatsoever, no bond, car, loans or store cards to pay off, then your boss does not own you like he does right now, nor do the banks! Most of us are owned by our bosses and the banks, we are working to pay 77% of our income back to debt and need our bosses in order to do that. Break free today you can do it!