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Follow six ordinary South Africans as they take up the Absa/City Press Money Makeover Challenge and undergo a money makeover boot camp.
The next six months will test their resolve and see them confront tough decisions about every aspect of their finances – from whether the fancy car they bought or the business they started is worth the hassle, to whether the lavish wedding they’ve wanted will put them into debt before they can even enjoy married life.
Each candidate has been allocated their own Absa financial adviser, who will help them get their money matters in order and reach their goals.
The candidates will be required to complete certain financial tasks and they must to stick to the budgets that will be set for them to win incentive prizes or become the final winner of a R100 000 investment fund.
Share their journey and be inspired.
Planning for retirement
Buti is a brigadier (director) in North West and has recently turned 51. This has brought home to him that retirement is less than 10 years away and he needs to focus on his finances to ensure that he is ready for the second part of his life.
He needs to get rid of his debts and provide for his family’s education to live a stress-free, semiretired life. He wants to learn more about managing money, budgeting, proper spending, saving and investing. He is divorced with five children. Four of his children are still studying.
The big dream:
Buti has no intention of putting his feet up at the age of 60, as he still has much to offer. His dream is to complete his PhD and become a lecturer in business management. He wants to live a debt-free life.
Worst financial mistake:
“Purchasing a luxury vehicle with very high mileage, which has cost me a lot in repairs,” he says.
The car came with issues he was not aware of. In addition, Buti invested in what appeared to be a legitimate investment, but it subsequently closed down, costing him a lot of money.
His adviser:
Matt Rudman is a BCom graduate and holds a postgraduate diploma in financial planning. Matt has been a certified financial planner at Absa private bank for the past eight years and derives great satisfaction by helping to grow clients’ wealth and ensure they are financially secure.
Matt says his focus in his initial meetings with Buti has been to develop a payment plan for his debt.
“After an in-depth budget planning session, it has emerged that Buti is spending a large part of his salary on repaying his outstanding personal loans and credit cards.”
Supplements income with a business on the side
Monique is in her 30s, and lives in East London with her husband and two young children. Her current situation is probably where most people find themselves, especially if they have recently started a family and have bought a home.
“I have a full-time job as a bookkeeper and still run a direct sales team in my spare time, just to be able to make ends meet. I don’t live extravagantly, yet find myself running in circles with the debt I have.”
The big dream:
Monique’s dream is simple – she doesn’t want to be rich, but she does want to be comfortable and not be kept awake at night worrying about financial difficulties.
“I want to be free of debt; to be able to afford things that matter to me. Like being able to finish my bookkeeping studies, to be able to send my children to good schools and to save for an annual holiday with my family.”
Worst financial mistake:
Monique borrowed R50 000 as a personal loan to start a business with someone.
“I thought I was playing it safe and even had a legal agreement in place. Yet the person squandered the money and politely claims to have no assets and is currently ‘unemployed’.”
Her adviser:
Jacques Venter joined Absa in 2008, prior to working with Metropolitan and Momentum.
“Every new client brings their own set of challenges and this gives me the opportunity help people invest wisely, to enable them to grow their money and achieve their goals,” he says.
Monique is at the point of making her business work.
“We set three priorities – consolidating her debt, building her business to make more money and curbing spending. She is currently using one bank account for both her personal and business banking. Our first step is to open a separate account for her business. She accepts that she will have to make sacrifices and change her spending habits to build a successful business.”
Property entrepreneur
Howard is in his mid-40s, and lives with his wife and two children on the East Rand, Gauteng. Howard is a disciplined saver and managed to accumulate R100 000, which he used to start a successful rooms-to-let business.
However, he needs to look at how to manage the debt he has incurred while creating the business, as well as how to handle the cash flow from the rental income. He wants to build up an emergency fund and pay off the personal loans he used to renovate the properties.
The big dream:
Howard’s dream is to pay off his personal loans and then expand his rooms-to-let business using his own cash.
Worst financial mistake:
“My biggest financial mistake was running a business without doing any market research or a risk assessment. I lost more than R100 000, which came from my retrenchment package,” says Howard.
He acknowledges that, even with his current business, he could have done better research on where to buy building materials.
His adviser:
Elton Govender works with business banking at Absa. He is an entrepreneur and is passionate about helping other entrepreneurs get their businesses off the ground.
“My first priority for Howard is to help him restructure the loans he took for the properties. There are far more cost-effective ways to finance them.”
Marriage, family and money
Mmabatho is in her early 30s and lives in Limpopo, where she works as a town planner. Recently married, she and her husband have two children, aged four and two. Mmabatho has an older son from a previous relationship, who lives with them.
“I want to learn how to live in the present while saving for the future for the whole family. I am able to save for the kids’ education, but there is nothing left to take me through the month,” she says.
As a newlywed, Mmabatho acknowledges that she still manages her money as a single person and that she and her husband have not looked at their finances collectively.
The big dream:
“To take my family on a holiday along the coast, which I can pay cash for. My eldest son is already 14 and I want to have that family memory before he leaves home.”
Worst financial mistake:
“Taking out my pension fund when I changed jobs in 2010.”
Mmabatho admits that, today, she cannot even remember what she did with the money. Now she has less money in her retirement kitty.
Her adviser:
Gerrit de Jong has been a financial adviser since 2005, although he has been in banking since 1981, when he joined Volkskas Bank. He helped Mmabatho draw up a proper budget and an asset and liability statement.
“If Mmabatho sticks to a strict budget, there is surplus money for saving about R2 000 per month. Our next step is to analyse her husband’s financial situation to ensure that Mmabatho and the kids are financially secure should something unexpected happen to him.”
The big wedding
Zamokuhle works for the SA National Defence Force, and lives with his partner and their two children in Pretoria. He has one child from a previous relationship who lives with the mother. Although the couple are legally married, they are planning a big traditional wedding.
“The pending wedding puts pressure on me. I keep postponing it. It will cost a lot of money – at least R50 000 on transport alone.”
He is not in debt and has surplus income that he wants to start investing.
“I want to learn more about how to invest for medium- and long-term needs. I want to understand unit trusts and how to invest on the stock exchange.”
The big dream:
Apart from giving his wife the wedding of her dreams, Zamokuhle wants to save money so that he can pay for his children’s education and wants to pay off his bond in 10 years.
Worst financial mistake:
Zamokuhle bought a flat in a deteriorating building. Some of the other owners are not paying their levies and there is not enough money to maintain the building.
“I’m paying the bond from the rental, but I am not making a profit from the flat,” he says.
His adviser:
Charlotte Pretorius has worked as an adviser for nine years, the past seven with Absa.
“I love helping and teaching others to reach their goals. I’m looking forward to working with Zamokuhle as he is willing to go the extra mile. He has memorised his budget, which shows his commitment. His goal is to enrich himself to be able to spoil his wife with a traditional wedding, and give his kids the opportunity to study.”
Reaching the tipping point
Vonne is in his early 30s and works as a departure controller. He lives on the East Rand with his girlfriend and 22-month-old daughter. Vonne is in a typical debt spiral. Until just over a year ago, he was managing financially. However, with the unexpected birth of his daughter, his financial obligations increased. He has bought a flat for the family and this, along with the child’s expenses, have pushed him over the edge.
“I have never had a budget and I was just spending unconsciously. Lately, I find it difficult to honour my debts and I am scared it’s going to get worse if I don’t get help.”
The big dream:
“To have enough money to save for my dream house, lobola and my child’s education, and to live comfortably.”
Vonne wants to continue his studies so that he can further his career.
Worst financial mistake:
“Buying the car that I love and taking out a personal loan because I spend more than I earn.”
His adviser:
Maria Mogomotsi has been a financial adviser for Absa for nine years.
“My job is challenging, yet it’s exciting and rewarding knowing that I have helped a client be in a better position than they were before.”
“Vonne’s car currently costs him more than he can afford, so we are looking at various options – can he structure the debt or will he need to sell it?”
‘Success is not a big step in the future, success is a small step taken right now.”
