How to live debt-free – The key to financial wellness

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There is no better time to save than the present. Recession, interest rate hikes, inflated petrol prices, a struggling economy and now the option of tax-free savings up to R300 000 per year. Our people and our economy need you to start saving. But, with debt hanging around your neck the chance of saving may seem light years away.

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Here are some simple financial wellness tips to sprinkle across your life time.

START SAVING NOW.

A piggy bank, a 32-day savings account, a box under your bed. The method is less important than learning the discipline. Saving your pocket money, birthday money or 10% of your salary each month is a great way to rack up a nest egg. The goal is to have 3 months worth of salaries stashed away to serve as a buffer in case you lose your job or hit unforeseen hard times.

AVOID LOANS AS FAR AS POSSIBLE.

Need a student loan? Try your damndest to get a get a bursary or an interest-free loan from a family member.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.

Entrepreneurial spirit? Get a business grant from the government designed to support small and medium enterprises.

Need a home loan? Use your best negotiating skills to reduce the interest rate and only buy what you can afford. The ideal is 20 - 30% of your total income.

PAY OFF YOUR HOME LOAN AS FAST AS YOU CAN.

A home loan will be most folks greatest debt. Every R100 makes a huge difference. For example, at the current interest rate of 9.5% a home loan of R1 million will mean a bond repayment of R9 400 per month. This means that you will pay a total of R2 256 000 for your home.

Pay only R500 more per month and over 20 years you will save R200 000 and own your home 2.5 years earlier.

Pay R1000 more per month and you will save R330 000 and own your home in 15 years.

Owning your home has a huge impact on your ability to save and retire so prioritize paying off your home loan above creating a savings account.

LEARN TO LOVE WHAT YOU HAVE.

Entitlement is a major problem for us humans. When we compare ourselves to others we select those who have 'more' than we do. This leaves us feeling short-changed and unsatisfied. Comparison breeds insecurity and jealousy and leads to a large waste of emotional energy. Rather spend the time auditing what you need from what you want.

Establish priorities and try to align how you spend with these values. For example, if your passion is traveling and you spend most of your time out then skip the big home with all its running costs and pay off your lock up and go flat as soon as possible. This will leave you with more disposable income to travel as well as peace of mind that your possessions are safe while you are away. Not to mention more overall life satisfaction.

Another example would be your mode of transportation. Choosing to walk, cycle or use public transport and skip the costs incurred by owning your own motor vehicle may actually give you more time, more exercise and less stress.

GIVE.

This may seem counter-intuitive but giving will make you feel richer. Keep a 'give-away' box in your cupboard and keep it stocked with quality items you no longer use, presents you do not need or clothing that you just don't wear. Not only will you have created more space and a sense of order in your life, but your generosity will also make you feel richer.

 

 

 

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