Last year’s finalists from left: Nkosi, Amanda, Samke, Thuli and Tamsin. Picture: Mpumi Buthelezi
Maya Fisher-French touches base with last year’s Money Makeover finalists a year into financial freedom to see if they have embraced their financial freedom or gone back to their bad habits.
Next week, we launch our 2020 City Press-Absa Money Makeover competition and take six new contestants through a money boot camp. They have a hard act to follow as our five finalists last year exceeded all expectations. During the six-month Money Makeover competition, these contestants settled short-term debt, built up emergency funds, created financial plans and started on their savings goals.
A year later, we’re checking in to see if they have been able to incorporate the lessons learnt into good money habits.
Nkosi: Building up a fund for her investment properties
Nkosi, who works in environmental affairs, had taken on a lot of debt partly due to her lifestyle, but also because she was building up her property portfolio, but her five properties were pushing her to the edge financially.
After six months, Nkosi had cut down on her spending so that she had R8 000 a month to settle her debt and boost her savings. She also started an investment fund for her property portfolio rather than relying on loans to put down a deposit.
A year later, Nkosi is sticking to the promise she made to only spend on needs, not wants. This has allowed her to invest more into her dream of building passive income from her properties.
Her goal was to have R150 000 saved by the end of last year – she surpassed this by saving R200 000, and was able to settle her car debt.
This year, she is aiming to settle the bond on one of her apartments.
“I no longer do clothing accounts – only cash. Although I still have a credit card, it carries a surplus balance. I no longer have a cellphone contract – it’s only prepaid now,” says Nkosi.
However, she admits that she is still addicted to buying property and has her eye on a potential acquisition.
But, this time, she is financially stable and has a good deposit in hand.
Amanda: Controlling credit card debt
When Amanda entered the Money Makeover challenge, she was newly widowed and was struggling to make ends meet with one income.
Unfortunately, her husband passed away without having his financial life in order, so she had a lot of work to do.
After the six-month boot camp, Amanda was able to survive each month on her single income while raising her three children.
A year later, she has been able to maintain her discipline and her smaller car is the only debt she has.
“The credit card is paid off every month in full. Clothes are bought with cash and care is taken when grocery shopping – if it’s not on the list, it’s not bought. My salary lasts longer and my savings are quietly growing in the background,” says Amanda.
“Because my savings are growing in the background, I am not so keen any more to dig into it when I come up short, and that is a very good thing.”
Achieving all of your goals is always a challenge and Amanda would have liked to be further along with her emergency fund as emergencies don’t wait until you have the money for them.
“I would also like to start investing regularly in something like Satrix exchange-traded funds to see where that will take me financially, but I have decided to make that a priority for the second half of this year.”
Samke: Keeping to a budget and investing for the future
Samke was 26 when she entered the competition. Like so many young South Africans, she was responsible for supporting her parents and wanted to live the “dream lifestyle”. Samke found herself taking on consumption debt. After the boot camp, most of Samke’s short-term debts were settled.
A year later, although she struggled to adjust to managing her money without an adviser holding her hand, she has maintained her discipline by sticking to a budget.
“Life has been great, but the first few months were a bit of a struggle for me because I still wanted to be ‘babied’. But I made it. I made a few mistakes, but I learnt from them and now I am doing much better – I learnt that personal finance is a never-ending journey, and you just keep on learning,” says Samke.
“I keep a budget and, after every purchase, no matter how small, I update it. My future and retirement are very important to me, so I always think about that when I plan.”
Even with renewed discipline, spending money is a lot more fun than saving it. Samke admits that she has found it hard to transfer the money left over in her regular account into her savings the day before she gets paid: “I often find an excuse to spend the money on something and I console myself by saying that I’ve saved 15% of my gross salary. But I do transfer the money sometimes.”
Thuli: Budgeting as a family and having boundaries
Thuli works for an NGO and, despite her and her husband earning relatively good salaries, she had acquired a lot of debt and was taking strain due to an overcommitment to investment property. After six months, Thuli settled her short-term debt and separated her personal finances from her property finances.
A year later, Thuli still goes through her bank statements every month and leaves her credit card at home unless she has something specific to buy.
“For the first time in my life, I have an emergency fund. It’s still equivalent to one month’s salary – the goal is three months. I do not have an overdraft. I have increased my retirement savings by more than 50%. Last year, I completed the 52-week savings plan and have started again this year,” she says.
“Looking back, it is surprising that a short intervention had such an impact on the financial aspect of my life and on my family life. I did not have boundaries when it came to supporting my family and extended family, but now I am able to say no when I cannot afford it – I wait until I can put it in the budget. I manage my money with my partner, and we are able to achieve more with our finances because we work on them as a team.”
However, keeping her credit card under control has been a challenge and she admits she isn’t always able to settle it in full at the end of the month, though she does pay more than the minimum.
Tamsin: Paying herself a salary
Tamsin and Maya
Tamsin works as a freelancer in the film industry and earns irregular lump-sum payments rather than a regular salary.
This made it difficult for her to manage her money and she ended up living beyond her means.
Within six months, Tamsin had built up a “salary fund” that could cover three months worth of her expenses. This meant that she could pay herself a regular “salary” and she no longer lived in a feast-to-famine situation.
Tamsin’s biggest challenge was that she was an impulsive spender. The Money Makeover boot camp gave her the discipline to contain her spending, allowing her to build up her salary fund.
The salary fund helped her through the winter months, when the film industry slowed to a crawl.
“I did have a few tough months, but I am back on track. I’m paying myself a salary and trying to stick to it. I mark off my expenses every month and I am much more aware of what is going on with my finances,” says Tamsin, who adds that unexpected expenses are still a challenge.
“All of them seem to cost a fortune – vets, prescription glasses and kids.”
*The 2020 Money Makeover Challenge starts on February 23. Each new contestant has been allocated their own Absa financial adviser who will help them organise their finances and reach their personal financial goals
Follow the journey at: https://city-press.news24.com/Special-Report/MoneyMakeover
The 2019 Money Makeover candidates.