The 2017 Absa/City Press Money Makeover candidates.
Three months into their money makeovers, our six candidates are turning their finances around, paying off debts, building up emergency funds and planning for the future. But the best laid plans can get derailed over the high-spend festive season. The only way to stay on track is to have a foolproof plan.
Using a bonus to boost financial stability
Mmabatho is a town planner and mother of three boys
Mmabatho has already received her bonus and, rather than indulge herself, she’s allocated it to various goals.
Her financial adviser, Gerrit de Jong, says: “A portion has been used towards her student loan, and she has paid her annual town planner registration fee and put some into her special savings account for her dream family holiday.”
Mmabatho has kept 10% of her bonus aside to help with festive season expenses, which include extra food and drinks because family will be visiting. Her husband is buying the children’s gifts this year, but Mmabatho is also keeping money aside to buy her husband a gift.
Vonne is a departure controller and first-time dad
Vonne has several short-term loans that need to be settled as quickly as possible. Using his December bonus, he has put money into his personal loan and credit card account, and has settled his clothing account. He is also going to boost his emergency savings and kick-start a savings plan.
Because he’s settled several of his debts, Vonne has an extra R1 100 this month, but he has decided not to use this for festivities and will rather continue to focus on saving.
“I have decided not to buy any Christmas gifts this year or to travel as I will be working the entire festive season. As a compromise, and in discussion with my family, we have decided that my daughter and girlfriend will go to KwaZulu-Natal to see the family.”
City Press tip: A bonus is a great opportunity to boost your finances. While some should be used to settle debt, it is important to also use a portion to boost your savings, especially your emergency fund. Remember, you can invest up to 27.5% of your bonus in your retirement fund, tax free.
Budgeting for a trip
Zamokuhle is a human resources manager and father of two
Zamokuhle will be visiting his family in KwaZulu-Natal over the festive season. One of the reasons for the visit is to discuss wedding plans. Zamo is fortunate because he usually has surplus cash each month. Normally he saves it, but he will dip into it for the festive season costs. He also settled his car debt with his bonus last month and will use the money he would have used for the instalment to spoil his family.
Zamo is very disciplined in creating budgets and he has a detailed spreadsheet for the festive season with a total budget of R12 000, of which R3 600 is for travelling expenses, including petrol and tollgates. He has also budgeted for gifts, entertainment and Christmas clothes. He has taken some pressure off by buying school uniforms and stationery for his children this month instead of just before school starts.
City Press tip: We often forget to include the cost of travel when it comes to the festive season. If you are driving to a holiday destination or just visiting family and friends, you will spend more than usual on petrol and, possibly, tollgates.
Making sure money is set aside for end-of-month bills
Monique is a bookkeeper, mother of two and owner of a side business
Financial adviser Jacques Venter says: “Monique will be receiving her salary on December 15, so she needs to make sure she leaves enough money in her personal account for debit orders.”
Monique will not receive a 13th cheque from her employer, but she has had good sales from her beauty product business, giving her a small “salary” this month, which she’ll use for Christmas and holiday expenses.
Monique’s youngest turns one this month and they will have a small get-together for family only instead of an extravagant party. At the end of next month, Monique will receive a profit share bonus from her employer and she will put this into her consolidated loan.
“It makes sense because the loan is costing her 23% and a savings account will yield a much lower return. Early in the new year, Monique will open a unit trust account to facilitate some form of investment and savings,” says Venter.
City Press tip: For her child’s birthday, Monique can open a tax-free savings account and ask family to contribute to this instead of buying presents. This can build up a fund for education costs.
Celebrating without a 13th cheque
Howard is a property entrepreneur and father of three
Not everyone is fortunate enough to receive a 13th cheque or get paid early.
“I work for a small retail security company and it is battling to make the required turnover. I’ll be paid on the last day of December, so I have to use my November salary for my Christmas budget,” says Howard, who took advantage of sales on Black Friday to buy some Christmas groceries.
He has decided not to travel this festive season: “I’ll ignore rich neighbours who fly to high-class holiday destinations. The children asked to go to Durban, but we can’t afford it as we are swimming in personal loans debt.”
Howard has written up a Christmas budget of R4 120, which includes groceries for his mom, a budget for the Christmas braai, gifts and an outing to Carnival City for his children.
City Press tip: Howard’s discipline comes from his vision for his property business. It is easier to avoid temptation when you have a goal or dream. The good news is that Howard will soon be able to give his family that Durban holiday – debt free.
Getting through the festive season without a credit card
Buti is a brigadier and father of five
Like Howard, Buti will not be receiving a 13th cheque this month and will only be paid at the end of the month. He will receive his travel allowance on December 15, but Matt Rudman, his financial adviser, has earmarked half of this money to pay off Buti’s credit card debt, leaving 50% for festive season spend.
Rudman says: “Buti’s five kids will visit him for a week in December. He is committed to keeping his credit card out
of sight for this festive season and will stick to the budget.”
Buti’s festive season budget is R9 400, which will cover movies, meals and gifts for his children, as well as travel costs.
“The trick will still be to not use the credit card, but Buti is driven to turn his financial boat around, so I have full confidence that January will not be a credit surprise,” says Rudman.
City Press tip: Avoid the temptation to overspend – don’t shop with credit cards or store cards this festive season. Set a limit on what you want to spend and draw cash or use your debit card.