Avoiding loans, avoiding debt

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So many South Africans are plagued by financial troubles. Sealy's Live well, Sleep Living campaign aims to help you increase your Zzzzzzzz by living debt-free.

Check out the last part of our series Start Saving Now! or see the overview of the series Living debt-free - the key to Financial Wellness.

You have dreams; you have plans; and you want to get there as quick as you can. Money gets things done and you are looking for a way to get yours and get on with making your plans happen and your dreams a reality.

But how do you get the cash wisely?

Do you get a loan from the bank? Approach investors? Extend your bond? Plead with your parents? Visit cash crusaders and handover your life's possessions?

Living financially well often requires many of life's great virtues. Often, the key to remaining debt-free is avoiding loans altogether.

Here is a list of life's great opportunities for accruing debt and some creative ways to escape it.

Dream 1 - I want to study!

Need a student loan? Try your damndest to get a get a bursary or an interest-free loan from a family member. Hold back on buying the expensive required textbooks as these are often available for free in the university's library, or at half the price online or second-hand.

If you luck out and have to get a student loan, pay it off as quick as you can. Most students manage some part-time work. Ensure you can start paying your loan off while studying.

And where possible, opt to stay at home rather than trying to manage the cost of independent living plus tuition.

Dream 2 - I want to start my own business!

Entrepreneurial spirit? Fantastic! But don't rush into the bank just yet. Rather get a business grant from the government designed to support small and medium enterprises.

Alternatively, start small and build slowly. Businesses that start small allow the owner to refine the service/product and build up capital slowly over time. This often leads to a stable, solid business able to withstand interest rate hikes or slow periods.

Building too big, too quick can mean you take on more than you can handle alone. Use the time it takes to build your business to find suitable folk with skills you do not have that you want to employ.

Dream 3 - I want to get married!

Engagement ring + big white wedding + overseas honeymoon = EXPENSIVE! If you do not have the cash then you will need to downsize the diamond, guest list and destination.

Debt is one of the leading causes of divorce. Start as you wish to finish. Choose to stay happily married rather than to live a lavish lie that started with a ring and wedding that you really couldn't afford.

Could you delay the celebrations while you squirrel some cash away? Or would your partner rather get married sooner and forfeit the hoo-ha?

Marriage is two folks promising to love each other for life. It doesn't require a loan.

Dream 4 - I want to buy a house!

Buying a home is one of the best ways to get ahead financially and ease the burden of housing costs. It is also one of the best ways to fail financially and end your peaceful sleep.

Here are some simple truths-

Only buy what you can afford. The ideal cost of housing is 20 – 30% of your total combined monthly income.

Save towards a deposit to reduce the bond you will require and increase your chances of securing your dream home when it goes on the market. Sellers take you seriously when you have cash to offer and banks trust you if they can see you are willing to put in something of value. This makes negotiating a reduced interest rate far more likely and it is amazing the difference that a percentage or two can make over 20 years.

Don't cut corners, you will pay in the long run. Estate agent and lawyers fees are necessary evils. You want to make a wise purchase and need all the correct paper work to ensure nothing goes awry.

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