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Your Checking and Savings accounts both serve your financial needs. But should you fatten each account equally? CompareLoans takes a look at the perfect ratio to maintain when it comes to your Checking and Savings balances.

What's the difference between Checking and Savings accounts?

A checking account is where you keep cash to cover everyday expenses like groceries, airtime, fuel, or taxi fare.

Your savings account is where you keep your savings money or "nest egg" so it doesn't get mixed up with your "regular money." Typically, the cash doesn't just sit there - it also earns interest for you!

What you need to know about keeping cash in a Checking Account

At the very least, you should have enough cash to meet your bank's minimum balance requirements. Otherwise, you'll get slapped with penalty fees.

Beyond this baseline, the best practice is keeping enough cash to last you 1 or 2 months plus 30% extra. For instance, say you have calculated your monthly living expenses, and your total is R10 000. That means, in a best-case scenario, you should have at least R20 000 + 30% of that, which adds up to R26 000. 

This should offer just enough financial padding for you to avoid overdrawing your account or bouncing a debit order. These "oops" moments can be costly because most South African banks won't hesitate to add expensive charges to your bill.

What you need to know about keeping cash in a Savings Account

Once your checking account is all sorted, you can now funnel any surplus cash into your savings account. In addition to earning interest, money in your savings account is also more secure. However, make sure you're not putting your cash in a low interest-bearing savings account where inflation will reduce its buying power.

Personal finance 101 says an emergency fund is a must-have. Generally, the suggestion is a minimum cash amount you can solely survive on for between 3 and 6 months. This emergency fund is usually for dire situations like losing your job or an unplanned stay in the hospital. 

If you need extra funds for a home renovation, a holiday, or some other big purchase, you'll have to save separately for that, or take out a personal loan.

The bottom line

So how much should you pour into your checking account, and how much to sink into savings? The rule of thumb is enough to last 2 months plus a little extra for your "daily needs account." This should ensure you have enough cash flow at your fingertips to avoid racking up unwanted bank fees.

For your savings account, having 3 to 6 months' worth of expenses tucked away should keep you in the green zone. But that's for emergencies and unexpected expenses. You'll need to save more for future big-ticket expenditures. 

Remember, it's not about what the average South African keeps in their accounts. Your lifestyle and financial goals are unique, and what's in your checking or savings account should be tailored to these factors. As long as you've covered the bases mentioned here, you're all set in the right direction.

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So, what exactly is financial responsibility? It's a question that makes you pause for thought, but as with most things, the best answer is always the simplest one. In this case, achieving financial responsibility is simply a matter of maintaining a lopsided balance between your income and expenses. With the balance in favour of your income, of course!

In short, what you earn should always outweigh what you spend.  

Calculate your budget to the tiniest detail

The first step to financial responsibility begins with shining a huge, bright, and unforgiving spotlight on what you spend. Make an appointment with yourself to go over your receipts, bank notifications, cash withdrawals, and any other financial record with your prints on it. By the end, you should have cleared the mystery of where all your money disappears to. Down to the last rand. Only then can you start working on your budget.

Create a 'real-life' budget

Most people focus on creating budgets that make them feel virtuous, similar to what happens with New Year's resolutions. Yet, coming up with a workable budget shouldn't be about what looks good on paper.

That's because you'll end up struggling when it comes to executing the plan. For instance, it's easy to cut out all your favourite treats and self-indulgences. But, when the cravings finally come in full force, you'll find that the illusion of iron control and willpower quickly evaporates. Clearly, the better solution is to craft a budget that accommodates your habits and lifestyle.

Getting back to the matter of treats, give yourself a small allowance to cover those, so you don't end up rebelling against your own creation. Just make sure you scale the expense down, so it fits within the balance you're trying to maintain.

Keep a tight lid on your debt

A big part of financial responsibility is trying to cut back on spending money that doesn't belong to you. After all, that's what happens every time you borrow money from friends and family. Or when you take out a loan. Or when you add new outfits to your wardrobe using a clothing account. To live within your means, start by tracking every cent you owe. Next, incorporate a workable and flexible payment plan into your budget. Once your debt is paid off, the goal should be to avoid building up more unnecessary debt.

Understand the cost of borrowing

Yes. Sometimes debt can be absolutely necessary. Home loans, car loans, student loans, and personal loans are all financial tools that bridge the gap between your savings and the asset or investment that gets you ahead in life. A credit card can help to build your credit score or provide cover when an emergency occurs.

The trick to proper management of debt lies in understanding the costs involved. Typically, when you borrow money or goods, you have to pay back everything with extra on top because of interest and other associated fees. That means for every item you spend borrowed money on, you end up paying more than the actual price or value of that particular item. This extra cost should make you hesitate every time you want to spend borrowed money on things you don't necessarily need. Like the latest car, an extravagant wedding, or a luxurious holiday in Dubai.

The bottom line? Debt comes with extra cost. But, if it has to be a part of your life, minimise costs by carefully separating essential needs from non-essential needs.

Roll out your savings plan

Financial responsibility will always circle back to you spending less than what's coming in. The truth is, you'll never run out of things to spend money on. But, sometimes, you just need to keep your hand out of that cookie jar. Instead, consider every rand put away as money that you have paid yourself. Your future self will definitely thank you once you've built enough financial protection. 

Build your "nest egg" or emergency fund

Financial experts recommend having at least 6 months' worth of savings tucked away. That way, when emergencies pop up and your boss suddenly hands you a termination letter, you'll still have a financial rescue rope that keeps you from sinking under the weight of debt.   

Work on financial growth 

Being financially responsible doesn't mean you have to scrimp and save all the way. Avoid a lifetime of frugal living and expand your financial freedom with these tips:

Stay in your financial lane

When you embrace your unique financial standing, you won't keep yourself busy with thoughts of Twitter or Instagram friends who’re showing off their latest iPhones. Neither will you waste your energy trying to one-up them. Instead, you'll keep the focus where it should be - on your immediate needs and the needs of those who depend on you. Buying the latest gadgets to match what other people are doing instead of buying groceries for you or your parents is NOT the way to financial responsibility.

Financial responsibility: Reaching the "endgame"

In the final analysis, achieving financial responsibility is about teaming up several behaviours that support the concept of living within your means. This applies whether you're earning peanuts or sitting pretty with millions in your account. So, go ahead and take stock of your financial ins and outs, then adjust your earning and spending habits to create a responsible financial balance.

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Are you a South African resident working inside or outside the country? Then you may be liable to pay tax on any income you receive worldwide. If you’re a foreigner working in the country, tax will only be levied on your South African based income. But, before you become a taxpayer, you’ll need a SARS tax number. 

Keep reading to find out everything you need to know about getting your own, unique tax number in South Africa.

What is a tax number?

Your tax number is a unique 10-digit number that is only given to you by the South African Revenue Service (SARS). This number shows that you’re a registered taxpayer and it will appear on your documents such as payslips and tax returns.

You must register as a taxpayer with SARS within 60 days of getting your first salary, wages, commission, income, etc. SARS collects the income tax, which then goes towards government projects like construction of roads, schools, hospitals and the provision of public services.

Keep in mind that if you do not give to SARS what belongs to SARS, you may then be fined or imprisoned.

What do you need to apply for a tax number with SARS?

As mentioned earlier, you can only receive a tax number from SARS. Here’s what you need to start your application:

How to get a SARS tax number?

Here are three ways to apply for a tax number if you’re a new taxpayer in South Africa:

Apply for a tax number online with SARS eFiling

  1. Visit https://www.sarsefiling.co.za/
  2. Click on Register Now and follow the guidelines provided.
  3. Once you register for SARS eFiling, request a Notice of Registration. You’ll get your tax reference number if you don’t already have one.
  4. You can also register for SARS eFiling by following the above steps on the SARS MobiApp.
  5. You’ll be able to receive your tax number via email or other methods. Generally, you’ll also be able to use the same tax number throughout your life.

Visit a SARS branch in person

You can also visit the nearest SARS branch to register for a tax number once you’ve made an appointment. Make sure to bring the required documents so the official can register you on the system. Typically, you’ll get your tax number soon after registering.

Apply through your employer or the HR department

You don’t really require a tax number to get your first job or go for an interview. Your new employer can easily register you as a taxpayer once you start working. Approach them and discuss the best way forward when it comes to getting a tax number for you.

Do you need a tax number if you’re not employed?

If you’re not formally employed, you may still need a tax number when you:

Important things to know when registering your tax number in South Africa

Conclusion

Simply follow the guidelines in this article to get your tax number in South Africa. It’s easy to get started on your tax number application today! Got family and friends who also need this information? Share this handy article with them so you can all be law-abiding, tax-compliant residents.

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What is crippling debt? How do you spiral into this deep hole? Most importantly, how do you get out of it?

First, let’s define crippling debt

Homer over consumed
Homer consumed a little too much

What you (likely) think it is

The common misconception with crippling debt is that it’s driven by compulsive consumerism. Think about the type of consumerism where you acquire a bunch of loans and credit cards in order to fulfil consumption impulses. For instance, you get the latest smartphone, go on an extended holiday, and buy a new set of wheels all without the means to reimburse those loans.

This is a cliché about the crippling debt spiral, nevertheless these situations exist and shouldn’t if lenders did their job properly by handing out credit responsibly. But, we’ll get back to this.

What it (actually) is

Life is paved with obstacles in South Africa or anywhere else in the world, and sometimes, setbacks happen. Over-indebted situations develop when the fixed costs of a household are higher than its income.

A regular error is to think that income is fixed (revenue won’t change in the foreseeable future) and costs can be adjusted. But when revenue drops (for example, if you lose your job unexpectedly during a pandemic or when you lose variable income because you didn’t hit your company’s target), your fixed costs won’t necessarily go down.

Let’s dive a little deeper into a typical household income and expenditure structure:

income vs household expenditure

Household income structure: A household’s income is made of the salaries earned by the family members, the capital income earned from a savings account, for example, and any government aid received.

Household expenditure: Expenses are either fixed or variable. Fixed expenses are costs that cannot be easily reduced. These are housing rental payments or mortgage repayments, utility bills, and taxes. Variable costs, on the other hand, are easier to cut back on when income diminishes.

When the income of a household decreases, it needs to adapt expenditures by lowering living expenses or discretionary spendings.  Examples of such cost-cutting measures may include buying cheaper clothes or food, not going on holidays, etc. 

This is the critical moment when a household can fall into financial traps and a crippling debt spiral if there’s no emergency fund or sound financial advice.

3 key variables to consider when the household's income decreases

Variable 1: Time

Imagine your household’s income just dropped, but you anticipate a recovery after a certain period of time. Your strategy, therefore, is based on an assumption, and the risk here is misjudging the length of time it will take to recover lost revenue. 

Let’s say, you use your savings and lower your everyday expenses to adjust your spendings. But as time goes by, you’re still not recovering your lost income. Perhaps you’re not reaching your targets, or your job interviews haven’t resulted in you getting a new job.

In any case, the more you anticipate your situation to get better fast (after all, you’ve had 6 interviews with recruiters, one has got to result in a job offer!) the more tempted you will be to take out a loan in order to compensate for your diminishing savings and everyday expenses. But in doing so, you’ve just stuck your finger into the first stage of over-indebtedness.

If you took out a loan and your situation doesn’t improve, you will still be required to pay it back. You might even be tempted to take out another loan to pay for the first one. This is how a crippling debt situation deepens.

Variable 2: Budget adaptation

As seen above, when faced with an income drop, households reduce their everyday expenses (food, leisure, etc.) accordingly. The pitfall here is failing to realise how the cut back on spending habits may be a difficult change to cope with.

This variable is obviously closely linked to the time variable (how long this situation of income loss is going to last).

Tightening your belt can only last for so long. If the situation doesn’t evolve positively, the whole family might start suffering from it. Kids can’t go on their usual school trips or get the latest trendy sneakers. They begin to resent you for it, arguments are more frequent, and stress starts creeping in.

The issue here is the pain caused by a diminishing standard of living and the fading hope that the situation will get better soon.

At a certain point, you give in. The youngest keeps complaining, they absolutely need a new laptop to keep studying from home, so you decide to take out a revolving loan to buy the much-needed device.

Variable 3: Mishaps

Unforeseen events happen all the time in our everyday lives. But their effects can be particularly crippling when in a situation of financial stress. When you already have a tight budget, the last thing you need is a car that breaks down, or a water leak in the ceiling, or your computer dying, or an urgent boiler maintenance, etc.

In order to cover these unforeseen costs, you may need to rely greatly on your savings account. The situation gets out of hand when the savings dry out, and the overdraft capacity of your everyday account is maxed out. 

The temptation is great to take out a loan to get some breathing space.

Now that we understand how people can become over-indebted, let’s take a look at how interest rates work.

Understanding how interest rates work and their impact on your finances

Let’s take a practical example:

Say you take out a loan for R12,000 at an annual interest rate of 15% over 12 months. 

The mistake often made when calculating how much the loan is going to cost is to simply take 15% of 12,000 (1,800) and add it to 12,000 (13,800). This method is incorrect because it doesn’t factor in a crucial element: time (i.e. over what period of time the loan will need to be reimbursed).

Here's the correct way to approach it:

The interest for the first month is calculated as follows:

[0.15 ÷ 12] × 12,000 = R150

With each monthly payment, you reduce the balance on the loan. After six months, you are left with paying off R6,000. That means the interest you pay for that month is as follows:

[0.15 ÷ 12] × 6,223.50 = R78

As you can see, the interest rate remains the same, but the interest payment is now lower. This adjustment is made until you finish paying off the loan. So, if you’re now left with only R1,000 to pay off, the interest will be:

[0.15 ÷ 12] × 1,000 = R12.5

Loan amortization plan
Example of a R12,000 loan repayment plan over 12 months.

Above is an example of a credit repayment plan. In the early repayment period, you spend more on interest and less on reimbursing the principal amount. This situation reverses as you progress through the repayments.

Cookie monster

Revolving Credit

What are revolving loans?

The bank or lender makes a certain amount of money available to you, and you can use this amount entirely or only parts of it when you want it, how you want it. Like a regular loan, you need to pay back the borrowed amounts every month with interest on top. 

The trick here is that this money is always there, available at any time for your use. Think of it as a cookie jar, full of yummy cookies, sitting quietly on your kitchen table-top. It’s tough to resist the temptation to eat one (if not the entire jar). And if this jar automatically refills without you having to go to the shop to buy more, then here comes trouble.

The revolving loan is this cookie jar but filled with money. And the more a household is stressed financially, the more it will be tempted to dig in.

To make matters worse, interest rates on revolving loans are astronomical. The rationale behind this is that the smaller a loan amount, the higher the interest rate. And as the borrowed amounts are small, the interest payments will appear small as well. But appearances can be deceiving.

Repaying R1,000 at 20% interest rate over one year equates to R96 total interest, overall. Which, in turn, translates to R8 per month. Looks affordable, right?

To sum up, revolving loans can easily become the equivalent of the banana peel that pushes you off-track if you don’t watch your steps carefully.

Why do lenders offer revolving credit?

In order to understand this, let’s take a practical example.

Say you are a lending company that offers revolving credit. Your data shows that, as a rule of thumb, out of 100 clients you grant a loan to, on average:

The problem is that when a new client applies for a loan, you don’t know in which of the 3 above categories they will fall.

In order to get a better understanding of each individual situation, you need to hire a customer advisor who is a financial specialist. This advisor will take time to study each customer’s application and situation in order to determine which financial product best fits their needs. In an ideal world, this financial advisor would detect early on the situations where people start accumulating too many debts and offer them help.

The issue is that a financial advisor costs a lot of money to lenders. As a result, many of them use statistical analysis. Most loan requests are accepted, and maximum interest rates are charged to consumers. The profit made on the 80 people who will repay their loan is more than enough to cover the losses generated by the people who default. 

To handle the people who need a nudge, a part-time worker on minimum wage in charge of hassling them on the phone or via email will do the job.

A quick philosophical thought: Goodhart’s Law applied to revolving credit lenders

Goodhart’s law is an adage which says that when a measure becomes a target, it ceases to be a good measure. 

Say what? Let me explain.

Originally, a company does not exist to make a profit but to sell goods and services to people who need them. In doing so, the company will turn a profit. But profits should always be a means, not an end. When a company places profits above everything else as a target, chances are, it’s going to lose sight of its initial purpose. That’s what loan sharks and reckless creditors do, by granting loans to people who can’t afford them.

To sum up what we’ve covered so far:

How to overcome crippling debt

There is no shame in being over-indebted

Loans are an integral part of the economy. One person’s expenditure is another’s income. People who are in debt contribute actively to making the world go round. Without their need for extra cash, many would be jobless. 

Crippling debt is a complex problem that can be tied to the growing income discrepancies within society. Production of goods and services is on the rise, but the vast majority of people don’t benefit from sufficient income to enjoy those new goods and services.

In order to compensate for these discrepancies, loans and credit facilities were invented. But with debt comes default risk. 

Anyone can make bad decisions

It’s easy to find yourself the unwitting prey of predatory lending companies. These companies have well-oiled marketing and sales campaigns that will make you think that obtaining a loan is going to be the solution to all your problems.

Most of us will make it a question of honour to repay a debt. But as much as paying back money owed to friends and family members is important, as the funds come from their own pockets, it’s a bit different with banks since they don’t lend you their own money. Instead, they use “money machines” to grant you loans. Furthermore, interest rates exist, in part, to cover default risks. Therefore and at the end of the day, defaulting on a loan is sad, but it shouldn't be considered disgraceful.

Being in a bad debt situation means you’re going to fight existing rules. These rules can be adapted to your specific situation, in order to give you breathing space and time to sort things out. The bottom line is: There is always a solution.

No mountain is too high

Which solutions are available to get out of a crippling debt situation?

Seeking help

As seen above, it’s possible to take out a loan without speaking to anyone. Fortunately, it’s also possible to speak with real humans about your money problems. Such humans can be:

These organisations are experts and know the ins and outs of financial planning. They possess a sound understanding of the levers that can be used to improve your situation.

They can help you:

They can also act as mediators between you and the lender to renegotiate interest rates and/or lengthen the repayment period in order to reduce your monthly repayments. What’s more, they can even help you find a debt consolidation loan, which will group all your credit accounts into a single loan, thus, making the management of your debt easier.

The most important thing to understand here is that during this process, you will be placed under debt review. Being placed under debt review or a credit relief program means you are protected by the National Credit Act, and your creditors will no longer be authorised to hassle you.

Debt review is a great way to get out of a dire debt situation. But it’s a “last resort” option. As soon as a crippling debt situation arises, one needs to seek advice from the financial specialists mentioned above.

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During your personal finance journey, you may come across some complicated or unfamiliar terms. No worries! We have prepared this handy, short glossary of money-related terms to help you gain more control over your financial goals.

Affordability assessment

A process lenders use to decide how much you can afford after you apply for a loan. They look at your income, current expenses, plus other factors.

Annual percentage rate/APR

A percentage that represents the cost of borrowing per year. It is applied to the loan amount and includes the interest rate and all fees. 

Asset

An item that has cash value such as your car, house, or even an engagement ring.

Bad credit

This happens when you get a low credit score after failing to pay back your loans in the past. That means lenders won't trust you when you apply for future loans unless you apply for a bad credit loan.

Balloon payment

A lump sum of money you have to pay at the end of a loan term. Balloon payments are common in vehicle finance, and the amount required is much larger than that for monthly instalments.

Bankruptcy

A legal process that helps when you no longer have the ability to pay back your debt. If you're declared bankrupt, you won't be required to pay back some of or all the debt you have.

Blacklisted

Strictly speaking, blacklisting doesn't exist. Most people use blacklisting to mean that you or someone has negative information on their credit report that can result in a lot of rejected applications. However, if you have poor credit, you might still be able to get a "loan for the blacklisted."

Borrower

A person who borrows money and has to pay it back under a loan agreement or contract.

Cash flow

The movement of money received as income and how it is released through expenses.

Co-borrower

The second person named on a joint-application loan who shares the money with you and is also responsible for paying back the loan.

Co-signer

A person you add to your loan application who will be responsible for your loan payments if you fail to repay. A co-signer improves your chances of approval, especially if you're applying for bad credit or average credit loan.

Credit bureau

If you're South African, this is where you can get your one free credit report per year. Common credit bureaus are TransUnion, Experian, and Equifax.

Credit check

Also called a credit search. This is when a bank or lender uses the information in your credit report to decide whether to lend you money or not.

Credit history

Your past behaviour in relation to the loans or debts you have applied for and how you have paid back the received funds.

Credit report

A report with all the details about your credit history or financial history when it comes to borrowing.

Credit score

A three-digit number that typically ranges between 300 and 850 and which is calculated using your credit history. A high credit score helps you to qualify for a good credit loan or an excellent credit loan.

Creditworthiness

A measure of your ability to repay borrowed money.

Collateral

An asset used to guarantee a loan. For example, secured car loans use the car as security so that when you fail to repay the loan, the lender can legally claim the car.

Debit order

A way to pay back your loan or debts. You give the lender permission to deduct funds from your bank account automatically.

Debt consolidation

Using a personal loan or debt consolidation loan to pay off your other debts for reasons that include saving money on interest or better debt management.

Debt-to-income ratio

A percentage that measures your personal finances by dividing your monthly debt with your monthly income. The lower the ratio, the more you can afford new loans.

Debt review

A process where you meet with a debt counsellor who helps you with more affordable payment arrangements if you're struggling to pay back your debt.

Default

Failure to repay your loan.

Deposit/Down payment

A lump sum of money you have to pay that partly covers the purchase price of an asset such as a car. 

Eligibility

Your ability to meet the requirements that are listed when you apply for a loan.

Emergency fund

Money that you save so you have cash ready in an emergency. Here's how you can set up an emergency fund.

Financing

Financing is when you get a loan or funds from a bank or financial institution to pay for your medical bills, wedding, home renovation, business or for other purposes.

Fixed interest rate

An interest rate that - when applied to your loan - remains the same until you finish paying your loan. Fixed-rate loans are not affected by the fluctuation in market rates. 

Home equity

The cash value of your house that belongs to you. It's the difference between the house's market value and what you still owe. A home equity loan involves borrowing against your equity.

Interest rate

A percentage applied to a loan amount. It represents how much the lender is charging you for borrowing.

Lender's risk

The chances of a borrower not repaying the loan or the interest on the loan.

Line of credit

An arrangement with a lender that allows you to borrow money any time up to a specific limit, for example as with credit cards. In an open line of credit or a revolving credit, you can keep borrowing once you pay it back.

Loan 

Borrowed money that should be repaid with interest on top. Common types of loans include personal loans, short term loans and vehicle or car loans.

Loan calculator

A tool that calculates the monthly repayments for your loan using your loan amount and loan term. There’s a personal loan calculator, vehicle finance calculator, and even a Wesbank calculator, Capitec loan calculator, and Nedbank loan calculator

Loan fees and charges

Other costs of borrowing charged by the lender besides the interest rate. This might include an initiation fee, monthly service fees, and fees for early or late payments.

Loan term

The amount of time taken to finish paying back your loan, measured in months or years.

Loan amount

The amount of money borrowed from a credit provider or lender.

Lender

The bank, credit provider, or financial institution that provides you with a loan. Popular South African lenders include Nedbank, Absa, Direct Axis, Standard Bank, and African Bank.

Monthly repayment/Monthly payment/Monthly instalment

The amount you pay back every month after you take out a loan.

National Credit Act

The legislation that governs the credit industry and which appoints the National Credit Regulator (NCR) to oversee the prescribed regulations. 

Outstanding debt

Money that you borrowed, such as a student loan or business loan and which you still haven't paid back. 

Overdraft

A line of credit that still allows you to withdraw a limited amount of money after your bank balance reaches zero.

Payday loan

A type of short term loan you have to pay back quickly, usually within 30 days or on your next payday. Payday loans are typically used for emergencies. You can borrow as little as R500 or as much as R1000 up to R8000.

Personal loan

Money borrowed from a lender and which you repay with interest added via monthly instalments. A personal loan has many purposes, including car repairs, school fees, dentist visits, cosmetic surgery, or going on holiday.

Principal amount

The amount you borrow from a lender and which you owe minus interest.

Refinancing

Replacing an old loan with a new loan that has more favourable and optimal terms.

Secured loan

A loan which requires an asset or collateral as a guarantee. That means the credit provider has a right to repossess the asset if the loan is not repaid. Common types include secured personal loans and secured car loans.

Unsecured loan

A loan that doesn't require collateral, usually an unsecured personal loan or an unsecured car loan.

Variable interest rate

An interest rate that moves up and down depending on the market rate. Variable-rate loans, therefore, have a fluctuating interest rate.

Vehicle finance

A specialised loan you can use to buy different types of vehicles, for example, new or used cars, boats, jet skis, motorbikes, trucks, caravans, classic cars, or Uber cars.

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The world would be a perfect place if we all graduated with a personal finance degree the minute we reached adulthood. Instead, when it comes to money, we sometimes have to learn from experience, even though these life lessons can literally cost us thousands of rands. 

Luckily, this is not always the case. Here are 7 expensive and all-too-common mistakes you can avoid if you’re a young professional in South Africa.

Spending without a budget

The financial freedom that comes once you become a professional might not be a lot, but without a budget, it’s easy to spend more than you can afford. You’re likely to end up with a brand-new iPhone but no transport money to get to work.

The solution: Write down how much you earn and then calculate your current monthly expenses. Next, decide how much you want to spend every month and try to use minimalist and frugalist tactics that help you save money. Last but not least, check out these cognitive biases that can easily trick you into overspending.

Not having an emergency fund

Some South African youths live paycheck to paycheck, and the only emergency fund they know are their parents or friends. Yes, you only live once, but without an emergency fund, you’re basically failing to plan for unforeseen circumstances like hospital trips and other disasters.

The solution: Having an emergency fund helps you to avoid those panicked moments where you have to rush and beg your family and friends for money. Learn more about what constitutes an emergency fund and how you can set one up

Staying away from investments

As a young professional, your focus might be on working as much as possible, but you can also make your money work for you. After all, savings can only take you so far. One of the quickest ways to financial independence is to turn into an investor.

The solution. Take the time to understand how investments work in general and the risks involved. Consider investment opportunities like stocks, bonds, and peer to peer lending. Seek professional advice wherever possible to avoid falling for scams.

Thinking you don’t need medical cover

Youth and vitality usually go hand in hand but never think that hospital bills don’t apply to you. Accidents happen, and unexpected pandemics like the coronavirus also happen. If you don’t have health insurance, an emergency trip to the hospital can wipe out all your savings and get you further into debt.

The solution. Find the most affordable health insurance provider. You might not be able to get full coverage at first but always work towards getting a better plan. Also, find out if your employer or company has a program that can contribute to your health insurance payments.

Taking out a loan you can’t afford

As a young professional, borrowing can help you in a tight spot, but it’s easy to end up in the proverbial vicious debt cycle. Societal and social media expectations can push you to take out a loan to pay for a big wedding, a luxurious apartment, or the latest iPhone. Still, if you can’t afford them, they might be completely unnecessary. 

The solution. Understand the cost of borrowing before you apply for any loans. Also, use this personal loan calculator to find affordable monthly payments for your loan. If you’re already in debt, there are steps you can take to recover from debt.

Failing to build your credit

Avoiding loans or debt altogether is also bad for you. Not having a credit history can prevent you from doing things like:

The solution. Get started by not only paying all your bills on time but by also opening affordable credit accounts. Here are a few more tips to help you improve your credit score in South Africa.

Spending a student loan unnecessarily 

You might have heard that education is your ticket out of poverty, but this is not always the case. The unemployment rate in South Africa is not very encouraging for graduates at the moment, so it might not be wise to apply for a R200 000 student loan. 

The solution.  It might be necessary to look for side hustles or gigs that bring extra income while only partly financing your education. Hopefully, you won’t end up with a low-paying job and a huge student loan you have to pay off for several years to come.

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As times have changed, South Africa has also plugged into the internet, and you can now shop, socialise, advertise, and yes, get a loan online. Unfortunately, con artists are also benefiting from technology improvements. 

If you're looking for a loan, and Google comes up with suspiciously attractive offers, beware, it might be a scam. Of course, every lender out there is looking to make a profit out of you, but some take it a little too far. 

They want to squeeze every single rand out of you or outright rob you of your hard-earned money. These are the ones to watch out for, and you can catch them in the act once you know the ten most telling signs.

No licence and registration number

Does the lender have a registration number on display on their website? Also, check if they operate under the National Credit Act or are regulated by the National Credit Regulator. This increases your chances of dealing with a trusted lender that won't try to double-cross you.

No transparency

Scam lenders aren't always honest with all the loan fees and charges you have to pay. They may advertise their loans as cheap only to start adding extra costs to your payments once you accept the loan offer. A legit lender will have all charges on display or disclose all details when asked.

No credit checks

Payday lenders are the only ones who are not interested in your credit report or credit score since they offer short term loans at very high interest rates. All other legitimate lenders will perform a credit check to weed out high-risk borrowers and to protect you from borrowing more than you can afford. 

Even lenders who offer loans for bad credit or loans for the blacklisted will still carry out a soft inquiry to verify your personal and financial details. Online scammers know that people with bad credit will easily fall for a no-credit-check loan offer. 

Such people are also more likely to miss payments, and the scammer can take advantage by charging expensive interest rates and penalty fees.

100% guaranteed loan approval

Scammers specifically target desperate borrowers by promising you an easy application and guaranteed approval. In reality, reputable lenders don't make such promises since they have to look at your application first before they reject or approve it.

Upfront fees

You should act cautiously if a lender asks you to first pay for application or processing fees before you can get money in your bank account. Usually, any fees or charges will be included in the repayments, and there are no advance fees and certainly no need to send money to anyone.

Bad reviews

Online loan scammers are easily spotted once one of their victims complains about it online. You can learn from the mistakes of others by checking for reviews on various social media platforms and other sites to see if anyone has filed a complaint. 

No professionalism

Lack of professionalism includes spam email with wrong spellings and bad grammar. There's also terrible customer service where the loan company's consultants are either unavailable or can't give you the help you need.

Unsecured website

Online lenders must provide a secure application platform since you're required to enter your personal information and financial details when applying. Avoid online lenders with unsecured websites. That means they don't have a padlock symbol on any of their page addresses. 

Also, if the URL starts with http instead of https - the missing 's' stands for secure and might be a warning sign. The scammer might even be pretending to be a legitimate business by cloning a secure website.

No physical address

They may conduct their business online, but reputable financial institutions should also have a brick and mortar presence. The address should be verifiable, so you have a tangible contact if you meet any problems along the way. They should also provide a working phone number where you can speak with a real person.

Aggressive advertising

Online scammers will invest a lot of effort into pushing you to apply and accept their loan offer. They might send endless emails or even offer discounts that are too good to be true and then tell you the offer is only available if you apply immediately. There's an increased chance that you'll make a rushed decision that puts you at a disadvantage.

Other traps to look out for

While the following may not exactly be classified as online scams they should be avoided as much as possible:

So, you have been scammed? - Here's what you can do

Online scammers use every trick up their sleeves to convince you of their legitimacy. Falling for the lie happens to the best of us, and if you have been scammed, you just have to learn from your mistakes and move forward. Besides using the scammer alert signs outlined above to protect yourself, you can also take the following steps:

  1. Report the matter to the nearest authorities and provide them with all the relevant details of the scam.
  2. Report the matter to the bank if the scammer has placed a debit order on your account, or has your banking information and personal details.
  3. Share your reviews of the scammer to warn others.

On the other hand, here's how to spot a legit online lender

We have looked at the red flags, here are some green flags to look out for when applying for a loan online:

Conclusion

As long as you stay away from the scammers applying for a loan online offers convenience and many other benefits. If you're looking for a safer starting point, CompareLoans.co.za is a top South African loan comparison website that helps you compare online loans from various reputable and trusted lenders. It's easy to get started and get the financial help you need today. 

Photo by Clint Patterson on Unsplash

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When you refinance a loan, you get a new loan in place of the old one. You might wonder what difference refinancing makes if you still owe the same amount, but it can be highly beneficial in the following circumstances:

If your current loan isn’t working for you, find out how refinancing can optimise your situation.

Refinancing your loan: How do you do it?

Refinancing your loan is as simple as applying for a new loan. You then use this new loan to pay off your old loan completely. If you have applied for a loan before, then you’re probably familiar with the refinancing process:

  1. Do some research to find out which reputable South African lenders offer loan refinancing.
  2. Go through the details of each loan offer and consider factors like: 
  1. If the new loan sounds good go ahead and submit your application!
  2. Use the cash to pay off the old loan and start making payments on the new loan, which hopefully has better features all round.

You don’t have to feel trapped by your loan

You might have taken out a loan only to find out later on that it has certain features you wish to change. Here’s where refinancing can be a lifesaver. Instead of being stuck with a less-than-optimum loan for years, you can fix these issues. A big bonus is that refinancing works for most types of loans:

Usually, when you take out a loan, you want to benefit from the lump sum of money. You also want to borrow the money at the lowest cost possible. That means a low-interest rate and fewer charges and fees. These low-cost features are not always available when you apply for your loan. Once they become available, then it might be time to refinance the loan.

Common refinancing examples

Other times your situation changes, and you realize that a new loan with different features might be safer and has less risk. You might want to change the following features:

At the same time avoid these refinancing mistakes

Refinancing isn’t always a smart move, especially if you end up increasing the total costs of your loan. During the process, you might need to pay additional costs as you close the old loan and initiate a new one. The lender might charge administrative fees to refinance the loan so always make sure you’re not getting yourself further into debt.

Another mistake to avoid is choosing a new loan that doesn’t have some crucial advantages of your old loan. As an example, your new loan might not allow early or additional repayments unless you pay a penalty fee. In this case, the best option is to take out a new loan that allows you to keep the top benefits of your old loan.

Also, when refinancing, it’s best to take steps that ensure your credit score is in the best shape possible. That means paying your monthly instalments and avoiding taking out other loans before and during the refinancing process. A low credit score and a poor credit history can hinder you from getting a better deal.

Besides refinancing, what else can you do?

After doing some calculations, you can decide that refinancing a loan might currently not be the right option for you. Here’s what you can do instead:

Main points to remember when refinancing your loan

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When it comes to money, you can’t always trust how your brain works. There are times when you might believe you’re spending money reasonably and wisely. But the truth is, your brain can influence you to make bad money decisions without you even realising it. This is what we call cognitive bias, and in this article, we look at the most common cognitive biases, how they influence your spending habits, and how to overcome them.

Bias #1: Sunk Cost Fallacy

Bestselling author Rolf Dobelli once said, “The sunk cost fallacy is most dangerous when we have invested a lot of time, money, energy, or love in something. This investment becomes a reason to carry on, even if we are dealing with a lost cause.”

A good example of sunk cost fallacy

Let’s say you buy a car that is in bad condition. You try and fix everything wrong with it, including the tires, brakes, and radiator. After spending about R7000, the mechanic tells you the engine needs to be repaired. At this point, you’re starting to make a loss, but you tell yourself, “let me just pay for the engine; otherwise all the money I have already paid will go to waste.”

What’s the solution?

Don’t throw good money after bad money as this will only result in greater loss. Accept that you can’t recover any sunk costs and try to save your money by making better decisions in the future.

Photo by Cliff Johnson on Unsplash

Bias #2: Group Thinking

The famous novelist Mark Twain said, “When you find yourself on the side of the majority, you should pause and think.” This is because you can be influenced to spend money so you can fit in with the people in your group.

A good example of group thinking

If your co-workers always buy lunch, you will spend more money taking part in this habit. Even when you could save money by bringing a lunch box, you're more inclined to copy what your peers are doing.

What’s the solution?

Understand that your situation and budget might be different from what other people are experiencing. Sometimes peer-pressure forces you to go out of budget, but when you have money troubles, you might have to face them on your own. Therefore, it’s better to buy something because you can afford it, not because you want to fit in.

Bias #3: Framing Effect

It’s not what you say; it’s how you say it. This is a motto most companies use to market their products. They use the right combination of words to influence you to ignore facts and buy their stuff.

A good example of the framing effect

You walk into your favourite shop and see an item going for R200. You’re more likely to buy it if it says 50% off because you automatically think you’re lucky for buying it at such a low price. In reality, you’re still spending money, and the framing effect might trick you into buying unnecessary things. 

What’s the solution?

Every time you shop, try and remember that most companies will present their information in an attractive way. If they offer you a buy 1, get 1 free deal, think about the real facts. Is it really cheap and do you really need it?

Photo by Jessica Ruscello on Unsplash

Bias #4: The Anchoring Effect

This is when you use information that you already know or, the first piece of information you hear to decide if buying something is a good idea.

A good example of the anchoring effect

You walk into a shop and find that the phone you want to buy costs R3000. In the next shop, you see it going for R2400. This may still be more than you had budgeted for, but because you’re using R3000 as your anchor, the second phone seems much cheaper, so you’re more willing to buy it.

What’s the solution?

Realise that you’re biased because of the anchor you’re using. In the example above, it is better to delay buying the phone until you find more information that confirms whether buying the second phone is a good decision.

Bias #5: The Ostrich Effect

Life coach Archibald Marwizi has been quoted saying, “The ostrich approach, which consists in burying your head in the sand when confronting your areas of weakness, becomes a self-set trigger for failure.” Humans sometimes behave like ostriches in order to avoid bad financial news.

A good example of the ostrich effect

You go on a shopping trip to your local mall, and you keep buying things without checking your bank balance. Deep down, you’re afraid that you have spent too much money, so you avoid looking at the numbers. That means you’re spending money blindly without a budget.

What’s the solution?

In order to make better decisions with your money, you have to face the truth head-on. If you have overspent, quickly looking at the total cost will help you avoid more unnecessary spending.

Here are more cognitive biases to look out for when spending money

So far, we’ve looked at some common examples of cognitive biases that influence your financial decisions. However, there’s more. The following cognitive biases and their examples are also worth knowing:

Some final words on cognitive biases

As you can see from what we’ve outlined, cognitive biases are numerous and happen more often than we think. With the help of this article, you will train your brain to recognise these sneaky influences. When you beat these mind tricks, you’ll make better financial decisions that will help you better manage your finances.

Photo by Diego PH on Unsplash

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When your loan application gets denied, it's easy to start thinking that the lender has something against you. Sometimes, you might feel upset and stressed if you're relying on the loan to get out of a tight situation. You may not only wonder why the lender doesn't like your profile, but you might also ask yourself, "So, what do I do next?" 

To give you the answers you need, we look at the reasons your loan application was rejected, and we provide you with the steps you can take to increase your chances of getting a "Yes" on your next application.

Possible answers to why your loan was denied

Before you can fix a problem, it's important to find out the root cause. Most of the time, the lender will save you time by explaining why they rejected your application. Here are some common reasons why your loan application might be turned down:

Problems with your credit

When credit providers offer their services, they also expect to make a profit. However, there is risk involved when you lend a person money because they might not return it, which counts as a loss. If lenders consider you to be high risk, they will charge you a higher interest rate or decline your loan application altogether. To calculate the risk you pose, lenders usually check your credit history or credit score, and if they find the following problems, your loan application is likely to be rejected:

Problems with your income

Lenders also use the details of your income to carry out an affordability assessment. As an example, if you earn a regular monthly income of more than R10,000 and are permanently employed, your chances of approval are higher. The lender has confidence in your ability to make the required monthly repayments compared to someone who earns less or who is a contract worker.

Problems with information on your application

If you submit a loan application form with incomplete or wrong information, you may not be approved. Lenders usually use your personal, employment, and financial details to verify your identity and check whether you qualify for the loan.

Your loan purpose is not approved

Depending on the loan type, some lenders usually ask why you're taking out that particular loan. If it's a personal loan, the lender may not want you to use the funds to start a business or buy Bitcoin (even if the ideas seem sound). 

You don't meet the requirements

Different lenders have different requirements you have to meet to qualify for their loans. Generally, the requirements for taking out a loan include having a South African ID, bank statements, payslips, and proof of address. Failure to meet some of these loan requirements may result in a rejected application.

What can you do to get your loan application accepted?

Now that you have the why, it's time to work on getting your next loan application approved. How and what can you do to lower the risk you pose to the lender, so they're more willing to advance the cash you need? Here are some actions you can take: 

Work on your credit score 

Having a positive credit history and an excellent credit score not only increase your approval chances, but they also help you get lower interest rates when you get approved. There are several ways to improve your credit score:

Settle your other debts first 

Paying off your existing accounts is a long term approach that reduces your debt-to-income ratio. In other words, when you pay off some of your loans, you create more room in your monthly budget where a new loan can fit. That means you're now in a better position to afford the monthly repayments for that loan.

Apply for a secured loan

Using your property or vehicle to secure a loan increases your chances of approval. In this case, the lender can always take the property or car from you if you fail to repay the loan. The lender is, therefore, more willing to take the risk and approve your application.

Provide a deposit

For vehicle finance and home loans paying the maximum deposit amount can increase your chances of approval. By paying a deposit, you reduce the amount you have to borrow, which makes the loan more affordable. If the lender is sure that you can afford the monthly repayments, you'll be more likely to get approved.

Get a co-signer

This can be a relative or close friend who makes a joint application with you. This person will also be responsible for repaying the loan if you are unable to do so. If your co-signer is more qualified than you or has better credit, then the lender has a higher chance of recovering their money. Hence, they'll be more willing to make you a loan offer.

Approach a different lender

You can try your luck with a different lender, especially if they specialise in offering loans suited to your particular situation. For example, if your problem is having low credit, or being self-employed, there are various lenders who advertise their services for this type of loan applicant.

Get assistance

There are some services such as CreditGenie that assist people in repairing their credit score and to consolidate their loans.

Conclusion

If your loan application is rejected, the important thing to realize is that most reputable credit providers in South Africa aim to protect both you and themselves. To become a more responsible borrower, follow the advice in this article as much as you can. This way, you'll lower the risk the lender has to take, which automatically increases your chances of getting your loan application approved.

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If money doesn't buy happiness, does that mean minimalism and frugalism are the way to go? Let's dive a bit deeper and explore if minimalist and frugalist lifestyles can help you move up the happiness scale.

Frugalism - Control your money, not the other way round

Frugalism is all about enjoying life while finding more and more ways to spend money wisely. In other words, it's the art of economics in best form. The danger here lies in being considered as stingy and cheap, but a true frugalist is a financial guru that always seeks maximum value for every rand they spend.

The art of frugality - Every rand counts

If you wish to incorporate frugality into your life here are few habits you should learn to get you started:

Make it count

What if frugality makes you unhappy?

Are you miserable at the thought of having to go without because you have chosen a frugal life? Chances are there are a few things you need to correct. Firstly, frugalism doesn't mean you have to buy low-quality items and stop having nicer things. If you want to go for a shopping spree at the mall and treat yourself, then go ahead. 

As a frugalist, you simply have to shop around for the best discounts and deals. Secondly, keep in mind that frugalism is something you do intentionally. At the end of the day, this lifestyle should feel flexible, not something you are forced to do.

Don't just buy at any sale. Give yourself 24 hours and see if you still really want it then.

Minimalism - Do you really need it?

With a minimalist lifestyle, the general theme seems to be less is better. It is essentially the opposite of hoarding. Most of us tend to hoard, albeit on a smaller scale. We buy and keep things we don't need. We mistake some of our clutter for value, and this distracts us from realizing that sometimes, we are mindless consumers. To start off with a minimalist lifestyle, look at what you spend money on and ask yourself, "Do I really need it?"

More tips for a happier, minimalist lifestyle

Things to remember when going minimal

There are no hard and fast rules for minimalists. How you adapt to this lifestyle is up to you because the things that bring you value and happiness are unique to your situation. For everything that you focus on and keep around you, it should be something that you derive happiness and satisfaction from. Your list can include anything from family and friends to hobbies and interests.

How minimalist and frugalist lifestyles can bring you happiness

Now that we have looked at both lifestyles and what they advocate for, it's easy to see how they can potentially be sources of happiness. Here are just a few examples of how this can happen:

Conclusion

Minimalist and frugalist lifestyles may not be the ultimate key to happiness, but they could help. When you can spend wisely and save while still having the things you love, you become financially independent and learn to be mindful, purposeful, and freer.

Cover photo by Natalia Y on Unsplash

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At times, taking out a loan or several loans might seem like such a simple process. However, things can get complicated when you borrow more than you can afford. This slippery slope potentially leads to missed monthly repayments and bad credit. Eventually, you can find yourself stressed and struggling to breathe under a landslide of debt. Does this sound like your situation? If so, then this article will be a tremendous help in guiding you towards the road to financial recovery. Before we dive in, here’s a summary of the key points to be explored:

It’s easy to feel overwhelmed when faced with so much debt, but there is a way out, and most South Africans have discovered it by following these five crucial steps:

1. Make all the necessary calculations

This process requires you to be 100% honest about the current state of your finances. Even if the numbers don’t look good, it’s important to know the ins and outs of your cash flow system. An excellent first step is to calculate the total amount of money that you owe. Next, you may look at your income and how much you spend on monthly expenses. This helps you to define your starting point clearly. From there, you can figure out how much work needs to be done and how long it will take until you become debt-free.

2. Create a financial map

This simply means coming up with reasonable goals for financial recovery. Now that you have a starting point, what endpoint are you aiming for? Linking the two creates a financial map that motivates you to move forward. Examples of financial recovery goals you can set for yourself include:

When outlining these goals, be sure to keep them realistic, specific, and time-based. For example, when you say, “In three months or 90 days I should have paid off all my store clothing accounts,” you’re setting a clearly defined goal that can be achieved and used to measure progress.  

3. Come up with a suitable plan

When you have your financial recovery goals in place, the next step is to draft a plan that takes you from your starting point (your current state) to your endpoint (your goals). The easiest way is to examine your goals one at a time. Take the goal of improving your credit score, for example. To achieve this particular goal, you can plan to:

Other debt management options you can include in your plan are as follows:

4. Put your plan into action

It goes without saying that your current debt situation is unlikely to change without disciplined action. Now is the time to consistently and diligently take action that helps you recover from debt. While doing so, keep the following key ideas in mind:

5. Work on building an emergency fund

Paying off debts is not much fun, which is why having a “piggy bank” can keep you motivated and help balance things out. While you recover from debt, you might question whether it’s better to pay off debt or save. However, focusing too much on one option can leave you open to other financial pitfalls. If all your funds go towards paying off debt, the next time you have an emergency, you’ll have no savings to fall back on. 

You might have to borrow money again, and this just keeps the debt cycle going. On the other hand, saving money and ignoring your debts results in even more debt as interest and additional fees pile up. Through careful planning, you can recover from debt and set up your emergency fund at the same time. 

If you manage to carry out these five simple but effective steps to the best of your ability, then congratulations! You’re well on your way to financial recovery and security. Remember, this journey takes time, but it is worth the effort.

Photo by Richard Jaimes on Unsplash

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We spend so much time in our homes, so we should make them perfect. Create an environment that suits all your needs and reflects your own personal style.

How do you go about that? Simple, commit to a home renovation.

You don’t have to entirely redesign the wheel here, no one is expecting you to tear the house down to its bones and the build it back up again. You can make a significant difference to the livability and sustainability of a house simply by making changes to a single area.

That being said, even a small renovation can be expensive, luckily you can easily take out a home loan to pay for a renovation. To learn more about renovations, check out this resource.

If you’re interested in learning how to effectively renovate a single area of your home, check out these tips below!

Revamp your garden

Garden’s are often desperately under-utilised. They can find themselves overgrown, unkempt and in desperate need of some tender loving care. Restrain your deck, replant your garden beds, prune your plants, mow the lawn and you’ll immediately start to notice a difference. Once you’ve cleared the canvas you’ll start to notice the potential of your space to be something truly magical. Then you can begin to invest in some quality outdoor furniture from Remarkable Furniture. Think fire pits, outdoor lounges and outdoor design sets perfect for facilitating your al fresco dining dreams.

Kitchen renovations

The kitchen is the heart and soul of the home so it’s a space where improvements will really be felt. What areas should you target? Counters, storage and flooring. Replace worn countertops with natural stone or stainless steel. Refurbish worn kitchen cabinets with sleek modern furniture. If you have linoleum flooring tear it up and invest in tiling that will instantly lift the look of your room.

Breathe life back into your bathroom

If you’re looking to put your house on the market at some point then you absolutely must update your bathroom. For buyers, a bathroom can be a sticking point and a simple remodel can be all you need to push a potential buyer over the edge. Swap out work fixtures such as tap handles and shower heads. If your bathroom tile is chipped or stained in anyway retile the space, remember larger tiles make a space appear bigger and limit the problem of grout attracting dirt. If any of your plumbing is on the fritz use a renovation as a reason to fix it.

From the floor up

It may seem like something small but your floors are a predominant feature in your home and old, faded carpeting or stained out-dated linoleum can instantly downgrade the look of your home. Rip up your current flooring to see if there are any treasures buried below you current carpeting or linoleum. If they are hiding wooden floorboards then you can polish them and bring them back to life. You could even consider committing to a polished concrete floor if that suits the overall aesthetic of your house. For more information about how to restore flooring, check out this article.

Go green

We could all stand to be a bit more environmentally friendly. You can improve the sustainability of your home by making a few simple improvements. Improving your window sealings, double glazing your windows or simply installing heavy drapes can stop your home from overheating during the day and save you from spending on your heating and air conditioning bills. You can improve your energy efficiency by retrofitting sustainable features into your room like high star rated toilets and water fittings, replacing lights with LEDs or solar-powered lightbulbs and using energy-efficient appliances (check for the five-star energy rating). To learn more about how to make your home more sustainable, head here to check out a government resource.

Photo by RhondaK Native Florida Folk Artist on Unsplash

[post_title] => The most effective ways to renovate your home [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => the-most-effective-ways-to-renovate-your-home [to_ping] => [pinged] => [post_modified] => 2020-08-01 09:25:34 [post_modified_gmt] => 2020-08-01 07:25:34 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.compareloans.co.za/?p=99309 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [13] => WP_Post Object ( [ID] => 95350 [post_author] => 1 [post_date] => 2020-07-22 16:40:25 [post_date_gmt] => 2020-07-22 14:40:25 [post_content] => Being good at managing your money doesn’t have to be something that you are born with. Often, parents assume that math and money is not their kids’ priority. In our opinion, that is a dangerous assumption to have, and it can be damaging to the kids’ future too.

Kids are like an empty canvas 

It is the responsibility of the parents to enable the kids to manage finances properly. Education about money matters starts at a very young age. However, the teenage years are the period where parents can enter into details as around this time, kids start thinking about financial independence. They take up part-time jobs and start saving up. It is crucial to guide them at the right time to prevent them from making hasty decisions. The following includes some principles that should be taught to teenagers for better money management:

Importance of financial independence

When the kids are too young to look after themselves financially, parents handle this aspect as they should. However, small lessons with regards to excessive spending and savings can be taught early on, like giving the kids pocket money only after they have completed small chores around the house. Getting a part-time job during the teenage years also has many benefits. It teaches multi-tasking, looks good on a college application, and teaches financial independence, and since they will know how hard it is to earn money, they will be inclined to save instead of spending.

Nothing comes free

Teenagers are intuitive when it comes to having their demands met and successfully manipulate parents into fulfilling their every need. Parents’ first instinct is to protect their kids from any harm or hurt. This is precisely the correct time to practice tough love and hold out. Motivate the kids to get a job if they need money to buy something. Do not hand them things on a silver platter; it will just make them entitled and bratty. You might be solving their problems in the short-term, but you are setting them up for long-term failures. Once they start earning, start charging them little amounts. It will help cultivate a habit of managing money for mortgages or any fixed payments. It may sound cruel to parents but refrain from giving your kids a free pass.

Deferred gratification

Often in life, we don’t always get the reward immediately or the way we were hoping to get despite our best efforts. There is no other option but to wait and keep working harder, no matter how frustrating it gets. The lesson needs to be taught to teenagers. What if they want to buy something big? Encourage them to set a portion of money aside each week or month to build the funds slowly. The sense of accomplishment and the sheer joy of owning something that you have worked hard for cannot be described in words. The journey may be hard, but kids need to experience it early on in life. Also, resist the urge to chip in. While you may bring them closer to buying their dream “thing”, in the long term, you are taking them farther away to deal with difficulties they may encounter.

Borrowing should not be the first choice

The world has evolved, so has the attitude towards credit. While accessing a loan is comparatively easier and has proved to be helpful to some people, it also opens up the possibility of falling into a debt trap if one is not careful. While waving a credit card in a retail store is considered a style statement, teenagers should know the dangers of credit card debt. The difference between good debt and bad debt should be explained properly. For example, debt taken to finance an asset that appreciates as time goes on is good debt. A bad debt starts accumulating and multiplying at an alarming rate. School your teen on limited spending and make them understand a basic fact, credit card spending should be well within the limits of their earnings. The consequences of credit card debt should also be highlighted.

Every action has consequences

Almost every teen has a rebellion phase, thinking that they know better. Despite your best efforts, children stray off-limits. If they do land in hot water, hold them responsible for consequences. Ensure that they take an active part in cleaning the mess that they have created. It is imminent that the kids realise that the parents do not have a magic wand that can be waved to fix every problem. Teenagers should not run to their parents at the first sign of trouble. They should be held accountable for their actions. They may need to work extra hard to pay back an impulse purchase, but this is exactly what will hold them off when they want to make an impulse decision. We know that things are easier said than done. Still, if you stick to these tips, you will be raising a responsible and independent citizen, which will probably not end joining the hordes of citizens suffering in debt. The citizens you create now will raise the citizens of the future, and your children may hate you now, but in the future, they will thank you. [post_title] => How to help your teens become money smart [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => help-teens-become-money-smart [to_ping] => [pinged] => [post_modified] => 2020-07-22 16:42:42 [post_modified_gmt] => 2020-07-22 14:42:42 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.compareloans.co.za/?p=95350 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [14] => WP_Post Object ( [ID] => 97441 [post_author] => 1 [post_date] => 2020-07-05 11:23:33 [post_date_gmt] => 2020-07-05 09:23:33 [post_content] =>

It can be a tricky situation when you find yourself with some extra money, and yet you have debts that need to be paid. Saving money is good, particularly in South Africa, where most people are losing their source of income because of the corona virus. On the other hand, you want to be debt-free. In such cases, the best way is to reason out all the facts, so you end up with a win-win solution. 

Saving money vs. paying off a debt

The best way is to look at each option independently. In this way, you can see the general advantages of prioritising each option. However, since your financial circumstances are unique, there is no one-size-fits-all solution to this decision.

Benefits of saving

What's the best way to save money?

It is considered best to save enough money to cover the cost of living for three or six months. By opening a savings account with high-interest rates, you can quickly build up your savings. So, if you find yourself with a little extra cash, just put it aside in a separate account and watch it grow.

Benefits of paying off debt

What's the best way to pay off debt?

The easiest way is to budget for your monthly repayments. Any extra money that you get can go towards making those repayments. To make the repayment process more manageable and less costly, you can look at other options such as debt consolidation and credit card balance transfer. These allow you to place your debt under one account while lowering interest payments.

Conclusion

Analysing all the factors involved and how they apply to you can help you make the right decision. Saving and paying off debt both have their good points. Therefore, you can benefit from taking a two-way approach. 

This means putting extra cash into an emergency fund while at the same time using some of it to pay your debts. At the end of the day, the goal is to have peace of mind. Staying in control of your debt and having an emergency fund can both help you to achieve this freedom.

Photo by Briona Baker on Unsplash

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Having an emergency is something we can all understand. What happens when you urgently need money but your pockets and bank account are empty? The answer to that is you get stressed, desperate, and you might even face failure. 

So many bad things can happen if you don't prepare for any crisis. But, this is where an emergency fund comes in. It allows you to be smart, save money, and plan ahead. In essence, you become your own superhero by saving yourself on rainy days.

Emergency fund: What is it?

In simple words, an emergency fund is money that you keep in an account. This money is saved specifically and only for unplanned costs that happen in life.

Emergencies can happen at any time

When you create a budget for monthly expenses, you often write down the things you know about, like your grocery and transport costs. What about the things that you don't know about? These are the things that demand your money, and yet you didn't plan for them. 

Examples include falling sick and having to pay for medical bills or having your phone stolen, and now you have to buy a new one. In more serious situations, you can even lose your job or source of income. In such cases, you might not have the cash you need to survive while you look for other ways to make money.

Why is an emergency fund important?

In South Africa, it is normal for people to live from paycheck to paycheck. So, when they now have to pay for things they didn't budget for, they usually borrow. However, borrowing or taking a loan or using credit cards are not perfect solutions.

You can find yourself in a negative cycle of always borrowing money and having to pay it back. Besides, this can get super expensive because you may also have to pay interest each time you borrow money.

By saving money and putting it into an emergency fund, you can remain independent and on top of things during emergencies. Even when there is no emergency, you still have peace of mind knowing you are at least prepared just in case something does happen.

How do you create an emergency fund?

Keeping your saved money in your mattress at home is never a good idea. Instead, you can set up an emergency fund by opening an account. Most banks and financial institutions can be trusted to keep your money safe. You can keep your emergency fund in the following types of accounts: 

Savings account

As the name suggests, a savings account is the perfect place to build a nest egg. Money that you put in a savings account gains interest over time. However, you can't use the money on a daily basis, although you can still make withdrawals.

Additionally, in your agreement with the bank, you may be required to make monthly deposits. There are also high yield savings accounts that are insured.

Transactional account

This is the account you use in your day to day financial dealings. For example, this is the account where you usually receive your salary or income. You can have a separate transactional account where you keep your emergency fund. However, most transactional accounts have monthly charges, and your money will usually not gain any interest.

To find out more you can also get help from an experienced financial adviser on other ways to create your emergency savings fund. 

How much money should you put in an emergency fund?

When you start saving the money, it takes time to build your emergency fund. The best thing is to have an end goal in sight and work slowly towards that. At the end of the day, you should have enough money saved to meet your needs in an emergency.

Some experts say that you should save at least three months of your salary. In contrast, others say your emergency fund should have enough money to last you six months when you're not working. But only you can decide the amount of money you can afford to save and how long it will take you. You can use the following ways to save money:

Benefits of an emergency fund

Make sure your emergency fund has the following attributes:

Photo by Zach Vessels on Unsplash

[post_title] => Emergency fund: What is it, and how do you set it up? [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => emergency-fund-essentials [to_ping] => [pinged] => [post_modified] => 2020-07-06 11:01:44 [post_modified_gmt] => 2020-07-06 09:01:44 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.compareloans.co.za/?p=97445 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [16] => WP_Post Object ( [ID] => 95352 [post_author] => 1 [post_date] => 2020-06-21 03:50:22 [post_date_gmt] => 2020-06-21 01:50:22 [post_content] => South Africa is a nation of borrowers, with personal debt at an all-time high and the national debt reaching highs. Statistics published by the South African Financial Services Board (FSB) in 2012 estimates that only 51% of South Africans are financially literate. Everyone deserves to have a better understanding of how to manage their hard-earned money and to understand the basics... from understanding what Annual Percentage Rates (APRs) are to maintaining a good credit score. Many people are not even aware of their credit score and the impact the rating. It's only when loan application are rejected or exorbitant interest rates are charged, that users finally realise the importance of a good credit rating. So, what should you do, to improve your credit rating? Let us guide you on how to manage your credit score, and if your credit score has already taken a hit, how can you heal it.

What is a credit score?

A credit score is an indicator of how consistently and timely you have paid off your previous debt(s). A bad credit score indicates defaults, late payments, or too many applications for credit (short term loans, credit cards, vehicle finance, etc). This alerts the lender to potentially reject your application or to charge a higher interest rate because of the perceived risk. Any adult that has applied for credit, be it a credit card, vehicle finance, mortgage, personal loan or any other type of debt, will have a credit score. If you put in an application for any of these products, your credit score is pulled up, and your request is evaluated based on the rating.

How do I know if my credit score is good or bad?

In the Rainbow Nation, the credit score typically ranges between 330 and 850, use this as an indicator of where you may stand:

Importance of a credit score

Having a 580+ credit score will make your life easier when it comes to getting approved for credit cards or small loans. Additionally you may be charged a lower interest rate for having a good credit score. Conversely, having a score below 580 can throw a wrench into your essential life plans; from not getting approved for an education loan, to paying higher interest rates... A poor credit score can pose many issues. T

How to improve your credit score?

Keep in mind that if your score is low, it takes time to re-build the score to a level that is considered acceptable by lenders.

1. Be aware of your credit score

Do not run from the reality as it is never the solution. Knowledge is power; it will only help you take the first step in your quest for a good credit rating. According to the National Credit Act, South Africans are entitled to one free credit report per year. Credit bureaus such as Transunion or sites such as Credit Genie can help you get your credit score.

2. Make your repayments on time

Your repayment history has a significant impact on your credit score. More than a third of your credit rating is impacted by your ability to make repayments on time. So be sure not to miss your repayment deadlines.

3. Get some stability in your life

If possible, do not max out your credit card or overdrafts. It could be an indicator of poor spending habits, moreover, it will leave you with less credit available for emergencies and will increase the amount of interest you pay over time. 

4. Get some stability in your life

Unstable or irregular income, frequent changes in address, among other things, are considered warning signs by lenders. So try to hold down a job for a longer duration and move around less frequently.

5. Avoid courtroom drama

Being summoned to court can be seen as a potential risk for lenders, as this could impact your ability to work and bring about extra expenses. So if possible, avoid unnecessary courtroom drama.

6. Don't borrow more than necessary

If your professional career is progressing well and you're confident about the future, it's recommended you have no more than a couple of credit cards, a mortgage and a car loan/car lease.

7. Get some stability in your life

Unstable or irregular income, frequent changes in address, among other things, are considered warning signs by lenders. So try to hold down a job for a longer duration and move around less frequently.

8. High limits, low amounts due

Being able to demonstrate that you have high limit credit cards and very little due at the of the month or that you repay most of your debts in full will help your credit score. However, keep in mind that if you plan to get a mortgage; high limit credits cards are seen as liability by the banks... even if you owe nothing on them. So consider reducing your limits when applying for a home loan.

9. Close credit cards and overdrafts

If you have unused lines of credit such as credit cards or overdrafts, close them. The lending notify credit agencies of the closures - and you'll seen as a lesser risk for lenders in the future.

10. Don't apply for credit regularly

Each time you apply for credit, your credit score takes a hit. Your credit rating could take a hit of 10% each time you apply.

11. Avoid regular credit transfers

If you find yourself rolling your credit over through credit card balance transfers regularly, consider tightening up your belt and getting a debt consolidation loan to pay off your debt once and for all.

12. Have a credit history

You may be a greater save, but that doesn't show financial institutions how well you manage debt. So consider a low fee credit card that you rarely use and always payoff on time. A good long credit will help your credit score considerably.

13. Ask your partner about their credit score

If you get married and start making plans such as getting a mortgage together; your partner's credit history can impact the success of your application. Ask them about their credit rating prior to making big financial decisions. If they don't know, get them to check credit score through a ratings agency. Photo by Oluwakemi Solaja on Unsplash [post_title] => How to improve your credit score quickly in South Africa [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => how-to-quick-improve-your-credit-score [to_ping] => [pinged] => [post_modified] => 2020-10-20 01:12:38 [post_modified_gmt] => 2020-10-19 23:12:38 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.compareloans.co.za/?p=95352 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [17] => WP_Post Object ( [ID] => 96070 [post_author] => 1 [post_date] => 2020-06-10 16:33:22 [post_date_gmt] => 2020-06-10 14:33:22 [post_content] =>

In a first for South Africa, CompareLoans brings unparalleled transparency around interest rates, fees and terms in the personal finance market.

South Africa, 10 June 2020. Financial Independent Press launched CompareLoans.co.za, a website that aggregates and compares personal loans and vehicle finance from over 30 South African lenders. The service is independent and 100% free to use. In a first for South Africa, CompareLoans displays interest rates and estimated loan repayments for all major lenders without requiring users to submit their personal information. The aim of CompareLoans is to provide consumers with greater transparency and clarity when they shop around for a loan. CompareLoans was created by the Australian firm Financial Independent Press, using a platform they developed for the Australian market; BestFind.com.au. It took several months to redevelop the website for the South African market and to source local product data. Pierre Lintzer, Chief Operations Officer for CompareLoans said “We’re extremely excited to launch CompareLoans.co.za and for the opportunity to help the forty thousand plus South Africans who search for a loan each month.”
“There’s no other tool in South Africa that quickly and easily compares that many lenders, and I have no doubt that the service will become extremely popular.”
“When researching where to expand our operations after Australia, it was quite surprising to see how opaque the South African market for personal finance was. And we’re going to change all of that.” Lintzer added that the immediate priority for CompareLoans is to establish working relationships with South Africa’s major banks and lenders and to consolidate the platform to provide the best possible user experience. “In Australia, the popularity and dominance of financial comparison and aggregator websites has meant that most major financial institutions proactively inform us about upcoming interest rate and product changes.” “As we initiated our launch in South Africa, the banks and independent lenders have been very cooperative in sharing their rates, fees and related data. They are very supportive in our endeavour to bring greater transparency into the lending market and that’s great for customers” Lintzer added. Beyond data and relationships, CompareLoan’s other priority will be producing educational content focussed on money management and financial well-being. “Knowledge is power. Providing accurate information and educational content to help South Africans better understand money and financial products will be our core focus.” Lintzer concluded. ### For further information Dennis Graham media@bestfind.com.au About CompareLoans.co.za Looking for a personal loan, vehicle finance or a payday loan? We provide transparency, simplicity and choice by comparing over 30 of South Africa’s top lenders. Our service is 100% free to use and is independently owned and operated. Follow us on Twitter, Facebook or LinkedIn. Visit www.compareloans.co.za to learn more.  About Financial Independent Press Pty Ltd Founded in 2017 by Dennis Graham and Pierre Lintzer with the launch of BestFind.com.au to help provide transparency, simplicity and choice to the Australian consumer market. Covering a range of loan and deposit products, we have helped more than 1 million users in their search for the right financial product. We’re continuing our growth through global expansion. We have recently launched in South Africa and plan to continue our expansion across key markets. Photo by Matthew Henry from Burst [post_title] => Media Release: Choice and transparency comes to borrowers in South Africa [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => media-release-choice-transparency-comes-borrowers-south-africa [to_ping] => [pinged] => [post_modified] => 2020-06-10 16:33:22 [post_modified_gmt] => 2020-06-10 14:33:22 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.compareloans.co.za/?p=96070 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [18] => WP_Post Object ( [ID] => 95357 [post_author] => 1 [post_date] => 2020-06-02 16:06:26 [post_date_gmt] => 2020-06-02 14:06:26 [post_content] => As a country knee-deep in debt, we are here trying our best to educate our readers about different types of financial instruments for lending and borrowing. We talk about everything ranging from personal loans to payday loans! In this article, you will learn about the advantages and disadvantages of a loan and costs involved.

Advantages of taking out a loan

You can borrow larger amounts (as compared to credit cards)

Whether or not you are approved for a larger loan amount depends on your credit score is and your ability to service (repay) the debt. If you have managed to avoid defaults, there is a good chance that a large amount will be granted to you by lenders. Loans are considered better for people needing a large amount of money, whereas, credit card limits increase as you use the credit card, depending on your spending and payback habits. The whole process takes up more time than getting the one-time approval on a large loans.

Flexibility on how you spend your money

There are usually no restrictions on how you can spend a granted loan except for loans granted for specific purposes like housing, car loans or education loans. However, in the case of general loans like personal loans, you are free to use them for your urgent needs or in any way you please. Although we always advise our readers to keep in mind that the money borrowed may not have any restrictions, but that only leaves more room for incessant spending that lacks self-discipline.

Fewer restrictions on the payment structure

The loan can be paid back over term (duration) which you and the lender agree upon. But remember, while you still have an outstanding balance, the high interest costs can put a dent in your future spending.

Disadvantages of taking a loan

High financing costs

Evaluate your income before getting a loan as you do not want to default on its repayment. Make sure you calculate all the costs involved in getting a loan and have money left aside for emergencies. Defaulting or being late on repayments could damage your credit score or leave you in a debt trap.

You need a good credit score

The average credit score of a citizen of South Africa is below 560, meaning that most of its citizens do not qualify for a loan. There may be lenders that give out loans to a low credit score, but that usually comes at a very high cost.

More now, less in the future

Loans can fund whatever it is that you want now, but it comes at cost of possibly doing less in the future. So consider carefully whether or not you need a loan. Because after you take into account all your other expenses, such as your phone, travelling costs, food AND the loan repayments... You might not have a lot left over for important things, like going out with friends or short term emergencies.

Factors that drive the costs of loans

Loans size

The bigger the loan, bigger the repayments... So don't borrow more than what you need. Your income and credit score determines your borrowing capacity. The higher your income and credit score, the more you can potentially borrow.

Interest rate

This is how lenders make money from borrowers. The interest rate can be seen as a “charge” that you have to pay for borrowing money and compensating the lender for the risk they take in lending the money. If your credit score is high or if you secure your loan, you're likely to get a lower interest rate.

Initiation and services fees

This is to pay for the staffing costs and other overheads (such as rent, their websites, etc) that are involved in processing your loan application and administrating it. Service fees are usually paid monthly.

Length of your loan

If you choose to repay a loan in 1 year instead of 2 years, your monthly repayment amount will be greater. You will repay the loan faster and pay less interest. However, if you want to have a bit of extra cash at the end of the month in your pocket, you may choose a longer term. Your monthly repayments will be less, because they're spread over a longer term - but at the end you will end up paying more in interest. We hope that this article will help you in your journey. Remember to research well and always know your capabilities and capacities so that you never end up in a difficult position. If you want to see who has the lowest fees and interest rates as well as flexible terms, check out our personal, vehicle and payday loan comparison tables. [post_title] => Understanding the cost of borrowing in South Africa [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => understanding-the-cost-of-borrow [to_ping] => [pinged] => [post_modified] => 2020-06-03 02:04:37 [post_modified_gmt] => 2020-06-03 00:04:37 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.compareloans.co.za/?p=95357 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [19] => WP_Post Object ( [ID] => 94655 [post_author] => 1 [post_date] => 2020-05-24 09:39:18 [post_date_gmt] => 2020-05-24 07:39:18 [post_content] => For a newly bought car, depreciation is one of the highest costs that car owners incur. The second the key is turned in the ignition, the freshly bought car loses 20% of its value. Albeit inevitable, there are multiple ways in which this progression can be slowed - from purchasing a vehicle that consistently maintains its value to keeping tabs on maintenance.

Lower your depreciation before you buy

The second you buy your car, the value comes down before you are even off the driveway. Thankfully, there are ways to reduce the blow to the value of your vehicle:

Choosing the right build and model

Some of the indicators that a future car owner can look for in prospective models are – excellent fuel economy, a reliable reputation, and low running and maintaining costs. Your best bet will be to pick for a model that retains its value in the best way possible. Manufacturers that have been recognised by companies such as J.D. Power usually mean that they bring out vehicles with stellar quality, which, in turn, means a lower depreciation rate. Certification from National Highway Traffic Safety Administration (NHTSA) and the Insurance Institute for Highway Safety (IIHS) can ensure the safety of your vehicle. Keeping the above checklist in mind while shopping for a car helps you to recover some of the costs lost to depreciation during resale.

Gathering knowledge of the market

It can be confusing to gauge the resale value, three to five years down the road. Some of the confusion can be alleviated if proper research is done before buying the car. Websites such as AutoTrader and Cars.co.za help you estimate future prices of different cars. Every year, Kelley Blue Book publishes a list that gives information on the top list of cars with the best resale value. Websites like these can be immensely helpful in narrowing down your search for an asset that depreciates at a slower rate.

Pick a common colour

Picking the colour affects the resale value of a car in more ways than you can think. Colours such as white, gold, silver, grey, black, etc. remain in constant demand and are better at maintaining value. On the flip side, it will be harder to find buyers for a car that’s been painted neon or a rare color.

Consider options other than buying

Evaluation of all the options available in the market also helps you in conducting a cost-benefit analysis. Leasing can be one option to lower depreciation if the buyout price of the car at the end of the lease is lower than the resale value. Another option is to buy a second-hand car; the majority of depreciation is absorbed by the first owner, and the loss in value is reduced considerably. If you're considering vehicle finance to purchase a car, be sure to check out our comparison table to see who offers the lowest rates and best features.

Transferable warranty

New cars come with a warranty and finding a manufacturer that allows the transfer of the warranty to the next owner of your car - can help maintain the car’s value .

Ways to reduce your depreciation after you buy

Want to maintain your car in the best shape? Keep reading for some tricks that prolong the life of your vehicle and also help in lowering your depreciation:

Regular maintenance

A well-maintained car will inevitably have a higher resale value compared to a neglected one. Heed your dealer’s advice and bring in your vehicle at scheduled intervals for servicing and regular upkeep. Another important tip is to keep records! Documentary evidence makes you a responsible car owner in the eyes of buyers and makes depreciation much less costly.

Keep the miles in check

If the car has fewer miles on its odometer, then the resale value will be higher. If a vehicle has been driven more, the chances of it malfunctioning increases.

Drive safely

Accidents have dual damaging effects on your car. Major accidents can damage the vehicle more permanently, and not to mention the cost of repairs can practically empty your wallet (if there is no insurance or insurance doesn’t cover the repairs). Another hidden effect of accidents, insurance premium goes up, and an accident report will forever be attached to your car. This harms the resale value of your car severely.

Keep it clean

A clean car is a reflection of its owner. Regularly vacuuming, using fabric and car freshener spray, avoiding eating and drinking in the car, maintaining the leather seats, and frequent trips to car wash, are some tips that can go a long way to preserve the value of your car.

Avoid non-standard modifications

People tend to customise their cars with unusual modifications to make it stand out from the rest of the crowd; personalisation may render your car less attractive to prospective buyers. While the option is great in the short term, it may not be practical in the long run as buyers may not be too keen to pay for the customisation.

Lower your depreciation when you sell

Two main pointers that can assure you to get the best deal when you want to sell your car are:

Identify the right time to sell

Based on your car’s specifications, build and model, identify the strengths and gauge the market for your vehicle. For example, a convertible might not be in demand in winter as much as it is in the summers. Also, keep continuous tabs on your car’s model, discontinued or upgraded models could lose considerable value.

A private buyer might be a better option

While many people might prefer exchanging their old car for a new one at a car dealership, it is usually a trap to get you to sell the car at a lower rate than what you could have gotten in the market. If you are not in a hurry, take the time to search for private buyers that will help you to realise a much higher price for your car. By staying updated and making smart decisions, you can reduce depreciation costs, ensuring that you lose less money! Photo by Erik Mclean on Unsplash [post_title] => 12 ways to maintain your car's value [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => 12-ways-maintain-cars-value [to_ping] => [pinged] => [post_modified] => 2020-05-24 09:39:58 [post_modified_gmt] => 2020-05-24 07:39:58 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.compareloans.co.za/?p=94655 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [20] => WP_Post Object ( [ID] => 94641 [post_author] => 1 [post_date] => 2020-05-17 08:55:47 [post_date_gmt] => 2020-05-17 06:55:47 [post_content] =>

How to make some extra cash in South Africa?

We all could do with an extra grand in our pockets or purses... But how do we get it there? A bunch of entrepreneurs have created apps, that can help you do just that. These sharing and gig economy apps can help you make some extra cash online or in the real world. Some of the apps are native to South Africa and others are global.

What is the gig economy?

The gig economy otherwise known as the sharing economy consists of online platforms and apps that connect buyers with sellers and people who need services, with those who can provide it. These transactions are also known as peer-to-peer or P2P. If you find work on one of these apps, you're not necessarily an employee of that company or app... Their platform simply acts as a middleman between you and people who need your goods and services. We've compiled a huge list of all the various gig economy apps available to South Africans (see list below). If you notice something missing... Hit us up on Twitter or Facebook.

Money making ideas for kids and teens

We'll start with some quick money-making ideas for the kids first. Coca-cola, video games, clothes... All that stuff costs money. So you can appreciate what your parents have to do, to give you all of that good stuff, it's time to do a weekend or after school side hustle.

Driver Apps

Bolt (ex Taxify) - A clever way to get around when public transport or regular taxi services are not an option. Available on both iOS and Android. Uber - The most popular ride-sharing app in the world, with the widest network of users and drivers. Yookoo Ride - A ridesharing app that focuses on price and safety, offering 3 payment methods, a panic button and face recognition. inDriver - The app promises low commissions on their side, direct payments from passengers and highly profitable rides. Taxi Live Africa - Taxi Live Africa is a South African e-hailing and metered taxi service available for the pan-African market. Chaufher - Chaufher is a ride-sharing service specifically designed by women, for women. Only women are invited to become drivers or riders.

Food Delivery Apps

Mr D Food - With 5000+ restaurants to choose from, the service is offered in over 2500 suburbs in South Africa. Uber Eats - With Uber Eats, you can deliver food from restaurants in your area to hungry customers with your car, motorbike, scooter or bicycle. Orderin - Orderin delivers your favourite food quickly to your door. The app offers in-app driver tracking so you know when to expect your food.

Freelance Apps

Fiverr - Affordable English to Zulu translators, voice actors, South African virtual assistants, writers and hundreds more freelance South African services online. NoSweat - A great talent pool to complete your job, ranging from veterans with many years of experience to fresh talent at a lower price tag. UpWork - Part of a global talent network, this platform offers a wide range of professionals and freelancers at various price tags to fulfil most needs. People Per Hour - Find remote freelancers, contractors and consultants to complete your work online. JobVine Freelance - The freelance section of one of the most popular recruiting sites in South Africa.

Community Marketplace Apps

TaskRabbit - A marketplace that connects users, needing odd jobs and errands done, to skilled taskers. Doit4u - South Africa’s marketplace for outsourcing house or business-related work. MicroWorkers - Work from the comfort of your home and choose from thousands of microtasks. SkillPatron - Pan African outsourcing marketplace. SkillPatron focuses on bridging the gap between young talents and businesses.

Mystery Shopping Apps

Secret Agent - An application that connects job seekers and mystery shopping job opportunities all over South Africa. Available on iOS and Android. Clandestine - Clandestine is a platform helping businesses get in-depth customer insights by hiring mystery shoppers. Opinion Hero - The platform allows you to earn money by taking part in customer surveys, testing new or existing products and through mystery shopping.

Home Sharing Apps

Airbnb - The original copy. If you have a spare room, a granny flat or an entire home, you can rent it out to guests from all over the world thanks to Airbnb. MisterBandB - The first LGBTQ or gay-friendly accommodation finding app. Great to find gay-friendly hosts, travel tips and more. Homestay - Whether you are a tourist or a travelling student, Homestay will have the right option for you. Benefit from long term rental discount rates with certain hosts. BedyCasa - Stay with locals, find a bed & breakfast accommodation and beat the hotel rates, these are the BedyCasa promises. HomeStayin - With Homestayin, you can browse thousands of accommodations and find the perfect host whether you are a traveler or an international student. Need to buy a car? Consider comparing vehicle finance options.

Teaching & Tutoring Apps

Teach me 2 - An effective tutoring service with carefully selected tutors who travel to their students’ place and fit in their busy schedules. Tuta-me - An edu-tech company that wants to be more than the “Uber” of tutoring by enabling access to high-quality tutors to boost academic performance. TurtleJar - Choose from 150+ subjects and get access to online or face to face tutoring with TurtleJar. Smarttutor - SmartTutor offers courses in Mathematics for students wishing to matriculate. Their website mentions they will soon offer chemistry and physical sciences courses.

Home Maintenance Apps

HomeFixer - HomeFixer offers tradesman services to anyone who needs to fix something in their homes. The app is available on iOS and Android. getTOD - The app connects homeowners and handymen, through a secure platform offering in-app billing and pre-screening. Homify - Homify is South Africa’s online platform for architecture, interior design, building and decoration.

Online Selling Apps

OLX - OLX is a popular South African platform to buy and sell everything from cars to furniture. It also has a job section. Gumtree - Gumtree is the leading online classifieds platform in South Africa with thousands of ads, from used cars to electronics and real estate. Yaga - Yaga allows you to sell your brand new, used or forgotten belongings online in a safe and efficient way. Bid or Buy - A recent auction-based e-commerce website offering products ranging from furniture & electronics to fashion and more. eBay - eBay is the world’s online marketplace. Buy or sell cars, electronic equipment, rare collectibles and much more.

Specialty Services Apps

Prim-U - South Africa’s first application that connects beauty entrepreneurs to customers and beauty salons. Minderz - Minderz puts pet owners and pet service providers together. From walkers to beauticians and many more. Droppa - Bought a piece of furniture that doesn’t fit in your trunk? No worries, Droppa will pick it up and deliver it to your doorstep! Sweep South - Sweep South is a marketplace that connects local professionals for cleaning, gardening, heavy lifting, and caregiving with people who need those services. Zulzi - Get your groceries delivered within an hour with this on-demand delivery platform. TaskApp - TaskApp is the first multi-service, on-demand application in South Africa. From food delivery to house cleaning or home improvement work, TaskApp will sort you out. If you need some cash to get your micro business or gig economy idea off the ground, consider comparing these personal loan providers. Main photo by Lechon Kirb from StockSnap [post_title] => Ultimate list of side hustle ideas & gig economy sites to make extra money [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => how-to-make-extra-money-through-a-side-hustle-in-south-africa [to_ping] => [pinged] => [post_modified] => 2020-08-24 17:37:38 [post_modified_gmt] => 2020-08-24 15:37:38 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.compareloans.co.za/?p=94641 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) ) [post_count] => 21 [current_post] => -1 [in_the_loop] => [post] => WP_Post Object ( [ID] => 104835 [post_author] => 3 [post_date] => 2020-12-14 23:53:21 [post_date_gmt] => 2020-12-14 21:53:21 [post_content] =>

Your Checking and Savings accounts both serve your financial needs. But should you fatten each account equally? CompareLoans takes a look at the perfect ratio to maintain when it comes to your Checking and Savings balances.

What's the difference between Checking and Savings accounts?

A checking account is where you keep cash to cover everyday expenses like groceries, airtime, fuel, or taxi fare.

Your savings account is where you keep your savings money or "nest egg" so it doesn't get mixed up with your "regular money." Typically, the cash doesn't just sit there - it also earns interest for you!

What you need to know about keeping cash in a Checking Account

At the very least, you should have enough cash to meet your bank's minimum balance requirements. Otherwise, you'll get slapped with penalty fees.

Beyond this baseline, the best practice is keeping enough cash to last you 1 or 2 months plus 30% extra. For instance, say you have calculated your monthly living expenses, and your total is R10 000. That means, in a best-case scenario, you should have at least R20 000 + 30% of that, which adds up to R26 000. 

This should offer just enough financial padding for you to avoid overdrawing your account or bouncing a debit order. These "oops" moments can be costly because most South African banks won't hesitate to add expensive charges to your bill.

What you need to know about keeping cash in a Savings Account

Once your checking account is all sorted, you can now funnel any surplus cash into your savings account. In addition to earning interest, money in your savings account is also more secure. However, make sure you're not putting your cash in a low interest-bearing savings account where inflation will reduce its buying power.

Personal finance 101 says an emergency fund is a must-have. Generally, the suggestion is a minimum cash amount you can solely survive on for between 3 and 6 months. This emergency fund is usually for dire situations like losing your job or an unplanned stay in the hospital. 

If you need extra funds for a home renovation, a holiday, or some other big purchase, you'll have to save separately for that, or take out a personal loan.

The bottom line

So how much should you pour into your checking account, and how much to sink into savings? The rule of thumb is enough to last 2 months plus a little extra for your "daily needs account." This should ensure you have enough cash flow at your fingertips to avoid racking up unwanted bank fees.

For your savings account, having 3 to 6 months' worth of expenses tucked away should keep you in the green zone. But that's for emergencies and unexpected expenses. You'll need to save more for future big-ticket expenditures. 

Remember, it's not about what the average South African keeps in their accounts. Your lifestyle and financial goals are unique, and what's in your checking or savings account should be tailored to these factors. As long as you've covered the bases mentioned here, you're all set in the right direction.

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Your Checking and Savings accounts both serve your financial needs. But should you fatten each account equally? CompareLoans takes a look at the perfect ratio to maintain when it comes to your Checking and Savings balances.

What's the difference between Checking and Savings accounts?

A checking account is where you keep cash to cover everyday expenses like groceries, airtime, fuel, or taxi fare.

Your savings account is where you keep your savings money or "nest egg" so it doesn't get mixed up with your "regular money." Typically, the cash doesn't just sit there - it also earns interest for you!

What you need to know about keeping cash in a Checking Account

At the very least, you should have enough cash to meet your bank's minimum balance requirements. Otherwise, you'll get slapped with penalty fees.

Beyond this baseline, the best practice is keeping enough cash to last you 1 or 2 months plus 30% extra. For instance, say you have calculated your monthly living expenses, and your total is R10 000. That means, in a best-case scenario, you should have at least R20 000 + 30% of that, which adds up to R26 000. 

This should offer just enough financial padding for you to avoid overdrawing your account or bouncing a debit order. These "oops" moments can be costly because most South African banks won't hesitate to add expensive charges to your bill.

What you need to know about keeping cash in a Savings Account

Once your checking account is all sorted, you can now funnel any surplus cash into your savings account. In addition to earning interest, money in your savings account is also more secure. However, make sure you're not putting your cash in a low interest-bearing savings account where inflation will reduce its buying power.

Personal finance 101 says an emergency fund is a must-have. Generally, the suggestion is a minimum cash amount you can solely survive on for between 3 and 6 months. This emergency fund is usually for dire situations like losing your job or an unplanned stay in the hospital. 

If you need extra funds for a home renovation, a holiday, or some other big purchase, you'll have to save separately for that, or take out a personal loan.

The bottom line

So how much should you pour into your checking account, and how much to sink into savings? The rule of thumb is enough to last 2 months plus a little extra for your "daily needs account." This should ensure you have enough cash flow at your fingertips to avoid racking up unwanted bank fees.

For your savings account, having 3 to 6 months' worth of expenses tucked away should keep you in the green zone. But that's for emergencies and unexpected expenses. You'll need to save more for future big-ticket expenditures. 

Remember, it's not about what the average South African keeps in their accounts. Your lifestyle and financial goals are unique, and what's in your checking or savings account should be tailored to these factors. As long as you've covered the bases mentioned here, you're all set in the right direction.

[post_title] => Checking vs Savings account: How much cash should you keep? [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => checking-vs-savings-account-how-much-cash-should-you-keep [to_ping] => [pinged] => [post_modified] => 2020-12-14 23:53:22 [post_modified_gmt] => 2020-12-14 21:53:22 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.compareloans.co.za/?p=104835 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw )

Checking vs Savings account: How much cash should you keep?

Your Checking and Savings accounts both serve your financial needs. But should you fatten each account equally? CompareLoans takes a look at the perfect ratio to maintain when it comes to your Checking and Savings balances.

What’s the difference between Checking and Savings accounts?

A checking account is where you keep cash to cover everyday expenses like groceries, airtime, fuel, or taxi fare.

Your savings account is where you keep your savings money or “nest egg” so it doesn’t get mixed up with your “regular money.” Typically, the cash doesn’t just sit there – it also earns interest for you!

What you need to know about keeping cash in a Checking Account

At the very least, you should have enough cash to meet your bank’s minimum balance requirements. Otherwise, you’ll get slapped with penalty fees.

Beyond this baseline, the best practice is keeping enough cash to last you 1 or 2 months plus 30% extra. For instance, say you have calculated your monthly living expenses, and your total is R10 000. That means, in a best-case scenario, you should have at least R20 000 + 30% of that, which adds up to R26 000. 

This should offer just enough financial padding for you to avoid overdrawing your account or bouncing a debit order. These “oops” moments can be costly because most South African banks won’t hesitate to add expensive charges to your bill.

What you need to know about keeping cash in a Savings Account

Once your checking account is all sorted, you can now funnel any surplus cash into your savings account. In addition to earning interest, money in your savings account is also more secure. However, make sure you’re not putting your cash in a low interest-bearing savings account where inflation will reduce its buying power.

Personal finance 101 says an emergency fund is a must-have. Generally, the suggestion is a minimum cash amount you can solely survive on for between 3 and 6 months. This emergency fund is usually for dire situations like losing your job or an unplanned stay in the hospital. 

If you need extra funds for a home renovation, a holiday, or some other big purchase, you’ll have to save separately for that, or take out a personal loan.

The bottom line

So how much should you pour into your checking account, and how much to sink into savings? The rule of thumb is enough to last 2 months plus a little extra for your “daily needs account.” This should ensure you have enough cash flow at your fingertips to avoid racking up unwanted bank fees.

For your savings account, having 3 to 6 months’ worth of expenses tucked away should keep you in the green zone. But that’s for emergencies and unexpected expenses. You’ll need to save more for future big-ticket expenditures. 

Remember, it’s not about what the average South African keeps in their accounts. Your lifestyle and financial goals are unique, and what’s in your checking or savings account should be tailored to these factors. As long as you’ve covered the bases mentioned here, you’re all set in the right direction.

WP_Post Object ( [ID] => 104162 [post_author] => 3 [post_date] => 2020-11-24 01:24:51 [post_date_gmt] => 2020-11-23 23:24:51 [post_content] =>

So, what exactly is financial responsibility? It's a question that makes you pause for thought, but as with most things, the best answer is always the simplest one. In this case, achieving financial responsibility is simply a matter of maintaining a lopsided balance between your income and expenses. With the balance in favour of your income, of course!

In short, what you earn should always outweigh what you spend.  

Calculate your budget to the tiniest detail

The first step to financial responsibility begins with shining a huge, bright, and unforgiving spotlight on what you spend. Make an appointment with yourself to go over your receipts, bank notifications, cash withdrawals, and any other financial record with your prints on it. By the end, you should have cleared the mystery of where all your money disappears to. Down to the last rand. Only then can you start working on your budget.

Create a 'real-life' budget

Most people focus on creating budgets that make them feel virtuous, similar to what happens with New Year's resolutions. Yet, coming up with a workable budget shouldn't be about what looks good on paper.

That's because you'll end up struggling when it comes to executing the plan. For instance, it's easy to cut out all your favourite treats and self-indulgences. But, when the cravings finally come in full force, you'll find that the illusion of iron control and willpower quickly evaporates. Clearly, the better solution is to craft a budget that accommodates your habits and lifestyle.

Getting back to the matter of treats, give yourself a small allowance to cover those, so you don't end up rebelling against your own creation. Just make sure you scale the expense down, so it fits within the balance you're trying to maintain.

Keep a tight lid on your debt

A big part of financial responsibility is trying to cut back on spending money that doesn't belong to you. After all, that's what happens every time you borrow money from friends and family. Or when you take out a loan. Or when you add new outfits to your wardrobe using a clothing account. To live within your means, start by tracking every cent you owe. Next, incorporate a workable and flexible payment plan into your budget. Once your debt is paid off, the goal should be to avoid building up more unnecessary debt.

Understand the cost of borrowing

Yes. Sometimes debt can be absolutely necessary. Home loans, car loans, student loans, and personal loans are all financial tools that bridge the gap between your savings and the asset or investment that gets you ahead in life. A credit card can help to build your credit score or provide cover when an emergency occurs.

The trick to proper management of debt lies in understanding the costs involved. Typically, when you borrow money or goods, you have to pay back everything with extra on top because of interest and other associated fees. That means for every item you spend borrowed money on, you end up paying more than the actual price or value of that particular item. This extra cost should make you hesitate every time you want to spend borrowed money on things you don't necessarily need. Like the latest car, an extravagant wedding, or a luxurious holiday in Dubai.

The bottom line? Debt comes with extra cost. But, if it has to be a part of your life, minimise costs by carefully separating essential needs from non-essential needs.

Roll out your savings plan

Financial responsibility will always circle back to you spending less than what's coming in. The truth is, you'll never run out of things to spend money on. But, sometimes, you just need to keep your hand out of that cookie jar. Instead, consider every rand put away as money that you have paid yourself. Your future self will definitely thank you once you've built enough financial protection. 

Build your "nest egg" or emergency fund

Financial experts recommend having at least 6 months' worth of savings tucked away. That way, when emergencies pop up and your boss suddenly hands you a termination letter, you'll still have a financial rescue rope that keeps you from sinking under the weight of debt.   

Work on financial growth 

Being financially responsible doesn't mean you have to scrimp and save all the way. Avoid a lifetime of frugal living and expand your financial freedom with these tips:

Stay in your financial lane

When you embrace your unique financial standing, you won't keep yourself busy with thoughts of Twitter or Instagram friends who’re showing off their latest iPhones. Neither will you waste your energy trying to one-up them. Instead, you'll keep the focus where it should be - on your immediate needs and the needs of those who depend on you. Buying the latest gadgets to match what other people are doing instead of buying groceries for you or your parents is NOT the way to financial responsibility.

Financial responsibility: Reaching the "endgame"

In the final analysis, achieving financial responsibility is about teaming up several behaviours that support the concept of living within your means. This applies whether you're earning peanuts or sitting pretty with millions in your account. So, go ahead and take stock of your financial ins and outs, then adjust your earning and spending habits to create a responsible financial balance.

[post_title] => What is financial responsibility and how to achieve it [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => what-is-financial-responsibility-and-how-do-you-achieve-it [to_ping] => [pinged] => [post_modified] => 2020-11-24 01:25:30 [post_modified_gmt] => 2020-11-23 23:25:30 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.compareloans.co.za/?p=104162 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw )

What is financial responsibility and how to achieve it

So, what exactly is financial responsibility? It’s a question that makes you pause for thought, but as with most things, the best answer is always the simplest one. In this case, achieving financial responsibility is simply a matter of maintaining a lopsided balance between your income and expenses. With the balance in favour of your income, of course!

In short, what you earn should always outweigh what you spend.  

Calculate your budget to the tiniest detail

The first step to financial responsibility begins with shining a huge, bright, and unforgiving spotlight on what you spend. Make an appointment with yourself to go over your receipts, bank notifications, cash withdrawals, and any other financial record with your prints on it. By the end, you should have cleared the mystery of where all your money disappears to. Down to the last rand. Only then can you start working on your budget.

Create a ‘real-life’ budget

Most people focus on creating budgets that make them feel virtuous, similar to what happens with New Year’s resolutions. Yet, coming up with a workable budget shouldn’t be about what looks good on paper.

That’s because you’ll end up struggling when it comes to executing the plan. For instance, it’s easy to cut out all your favourite treats and self-indulgences. But, when the cravings finally come in full force, you’ll find that the illusion of iron control and willpower quickly evaporates. Clearly, the better solution is to craft a budget that accommodates your habits and lifestyle.

Getting back to the matter of treats, give yourself a small allowance to cover those, so you don’t end up rebelling against your own creation. Just make sure you scale the expense down, so it fits within the balance you’re trying to maintain.

Keep a tight lid on your debt

A big part of financial responsibility is trying to cut back on spending money that doesn’t belong to you. After all, that’s what happens every time you borrow money from friends and family. Or when you take out a loan. Or when you add new outfits to your wardrobe using a clothing account. To live within your means, start by tracking every cent you owe. Next, incorporate a workable and flexible payment plan into your budget. Once your debt is paid off, the goal should be to avoid building up more unnecessary debt.

Understand the cost of borrowing

Yes. Sometimes debt can be absolutely necessary. Home loans, car loans, student loans, and personal loans are all financial tools that bridge the gap between your savings and the asset or investment that gets you ahead in life. A credit card can help to build your credit score or provide cover when an emergency occurs.

The trick to proper management of debt lies in understanding the costs involved. Typically, when you borrow money or goods, you have to pay back everything with extra on top because of interest and other associated fees. That means for every item you spend borrowed money on, you end up paying more than the actual price or value of that particular item. This extra cost should make you hesitate every time you want to spend borrowed money on things you don’t necessarily need. Like the latest car, an extravagant wedding, or a luxurious holiday in Dubai.

The bottom line? Debt comes with extra cost. But, if it has to be a part of your life, minimise costs by carefully separating essential needs from non-essential needs.

Roll out your savings plan

Financial responsibility will always circle back to you spending less than what’s coming in. The truth is, you’ll never run out of things to spend money on. But, sometimes, you just need to keep your hand out of that cookie jar. Instead, consider every rand put away as money that you have paid yourself. Your future self will definitely thank you once you’ve built enough financial protection. 

Build your “nest egg” or emergency fund

Financial experts recommend having at least 6 months’ worth of savings tucked away. That way, when emergencies pop up and your boss suddenly hands you a termination letter, you’ll still have a financial rescue rope that keeps you from sinking under the weight of debt.   

Work on financial growth 

Being financially responsible doesn’t mean you have to scrimp and save all the way. Avoid a lifetime of frugal living and expand your financial freedom with these tips:

  • Invest in the stock market
  • Negotiate a raise at work or look for a better job
  • Create another stream of income by starting a business or finding a suitable side gig     

Stay in your financial lane

When you embrace your unique financial standing, you won’t keep yourself busy with thoughts of Twitter or Instagram friends who’re showing off their latest iPhones. Neither will you waste your energy trying to one-up them. Instead, you’ll keep the focus where it should be – on your immediate needs and the needs of those who depend on you. Buying the latest gadgets to match what other people are doing instead of buying groceries for you or your parents is NOT the way to financial responsibility.

Financial responsibility: Reaching the “endgame”

In the final analysis, achieving financial responsibility is about teaming up several behaviours that support the concept of living within your means. This applies whether you’re earning peanuts or sitting pretty with millions in your account. So, go ahead and take stock of your financial ins and outs, then adjust your earning and spending habits to create a responsible financial balance.

WP_Post Object ( [ID] => 103993 [post_author] => 3 [post_date] => 2020-11-22 07:13:57 [post_date_gmt] => 2020-11-22 05:13:57 [post_content] =>

Are you a South African resident working inside or outside the country? Then you may be liable to pay tax on any income you receive worldwide. If you’re a foreigner working in the country, tax will only be levied on your South African based income. But, before you become a taxpayer, you’ll need a SARS tax number. 

Keep reading to find out everything you need to know about getting your own, unique tax number in South Africa.

What is a tax number?

Your tax number is a unique 10-digit number that is only given to you by the South African Revenue Service (SARS). This number shows that you’re a registered taxpayer and it will appear on your documents such as payslips and tax returns.

You must register as a taxpayer with SARS within 60 days of getting your first salary, wages, commission, income, etc. SARS collects the income tax, which then goes towards government projects like construction of roads, schools, hospitals and the provision of public services.

Keep in mind that if you do not give to SARS what belongs to SARS, you may then be fined or imprisoned.

What do you need to apply for a tax number with SARS?

As mentioned earlier, you can only receive a tax number from SARS. Here’s what you need to start your application:

How to get a SARS tax number?

Here are three ways to apply for a tax number if you’re a new taxpayer in South Africa:

Apply for a tax number online with SARS eFiling

  1. Visit https://www.sarsefiling.co.za/
  2. Click on Register Now and follow the guidelines provided.
  3. Once you register for SARS eFiling, request a Notice of Registration. You’ll get your tax reference number if you don’t already have one.
  4. You can also register for SARS eFiling by following the above steps on the SARS MobiApp.
  5. You’ll be able to receive your tax number via email or other methods. Generally, you’ll also be able to use the same tax number throughout your life.

Visit a SARS branch in person

You can also visit the nearest SARS branch to register for a tax number once you’ve made an appointment. Make sure to bring the required documents so the official can register you on the system. Typically, you’ll get your tax number soon after registering.

Apply through your employer or the HR department

You don’t really require a tax number to get your first job or go for an interview. Your new employer can easily register you as a taxpayer once you start working. Approach them and discuss the best way forward when it comes to getting a tax number for you.

Do you need a tax number if you’re not employed?

If you’re not formally employed, you may still need a tax number when you:

Important things to know when registering your tax number in South Africa

Conclusion

Simply follow the guidelines in this article to get your tax number in South Africa. It’s easy to get started on your tax number application today! Got family and friends who also need this information? Share this handy article with them so you can all be law-abiding, tax-compliant residents.

[post_title] => How to find your SARS tax number [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => how-to-find-your-sars-tax-number [to_ping] => [pinged] => [post_modified] => 2020-11-22 07:13:59 [post_modified_gmt] => 2020-11-22 05:13:59 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.compareloans.co.za/?p=103993 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw )

How to find your SARS tax number

Are you a South African resident working inside or outside the country? Then you may be liable to pay tax on any income you receive worldwide. If you’re a foreigner working in the country, tax will only be levied on your South African based income. But, before you become a taxpayer, you’ll need a SARS tax number. 

Keep reading to find out everything you need to know about getting your own, unique tax number in South Africa.

What is a tax number?

Your tax number is a unique 10-digit number that is only given to you by the South African Revenue Service (SARS). This number shows that you’re a registered taxpayer and it will appear on your documents such as payslips and tax returns.

You must register as a taxpayer with SARS within 60 days of getting your first salary, wages, commission, income, etc. SARS collects the income tax, which then goes towards government projects like construction of roads, schools, hospitals and the provision of public services.

Keep in mind that if you do not give to SARS what belongs to SARS, you may then be fined or imprisoned.

What do you need to apply for a tax number with SARS?

As mentioned earlier, you can only receive a tax number from SARS. Here’s what you need to start your application:

  • Certified copy of your valid ID, passport, or driver’s licence – certification can easily be done at your nearest police station as long as you bring the originals
  • Original bank statements for the last 3 months – these should be stamped by the bank
  • Proof of residence – usually this is a water bill or lease agreement with your name and address on it

How to get a SARS tax number?

Here are three ways to apply for a tax number if you’re a new taxpayer in South Africa:

Apply for a tax number online with SARS eFiling

  1. Visit https://www.sarsefiling.co.za/
  2. Click on Register Now and follow the guidelines provided.
  3. Once you register for SARS eFiling, request a Notice of Registration. You’ll get your tax reference number if you don’t already have one.
  4. You can also register for SARS eFiling by following the above steps on the SARS MobiApp.
  5. You’ll be able to receive your tax number via email or other methods. Generally, you’ll also be able to use the same tax number throughout your life.

Visit a SARS branch in person

You can also visit the nearest SARS branch to register for a tax number once you’ve made an appointment. Make sure to bring the required documents so the official can register you on the system. Typically, you’ll get your tax number soon after registering.

Apply through your employer or the HR department

You don’t really require a tax number to get your first job or go for an interview. Your new employer can easily register you as a taxpayer once you start working. Approach them and discuss the best way forward when it comes to getting a tax number for you.

Do you need a tax number if you’re not employed?

If you’re not formally employed, you may still need a tax number when you:

  • Have an income of R60 000 or more
  • Start a business in your name
  • Plan on buying a house
  • Buy and sell shares
  • Receive a travel allowance
  • Have had PAYE deducted from your income within the year
  • Want to be a director of a company or a member of CC

Important things to know when registering your tax number in South Africa

  • Don’t be the victim of scams. SARS will never request personal or banking details through email, post, phone calls, or SMS. If you also receive links sending you to a different website it’s most likely a scam.
  • If you forget your tax number, you can check with your employer, or any letters received from SARS or any medical and pensioned forms. Other options include visiting SARS at their offices, calling them on 0800 00 7277, or sending them a query on their website.
  • You may come across information telling you to download an IT77 form online and fill it out to register as a taxpayer. Please note that this method is no longer available. Your only options are the three methods mentioned above.

Conclusion

Simply follow the guidelines in this article to get your tax number in South Africa. It’s easy to get started on your tax number application today! Got family and friends who also need this information? Share this handy article with them so you can all be law-abiding, tax-compliant residents.

WP_Post Object ( [ID] => 103909 [post_author] => 2 [post_date] => 2020-11-04 04:25:12 [post_date_gmt] => 2020-11-04 02:25:12 [post_content] =>

What is crippling debt? How do you spiral into this deep hole? Most importantly, how do you get out of it?

First, let’s define crippling debt

Homer over consumed
Homer consumed a little too much

What you (likely) think it is

The common misconception with crippling debt is that it’s driven by compulsive consumerism. Think about the type of consumerism where you acquire a bunch of loans and credit cards in order to fulfil consumption impulses. For instance, you get the latest smartphone, go on an extended holiday, and buy a new set of wheels all without the means to reimburse those loans.

This is a cliché about the crippling debt spiral, nevertheless these situations exist and shouldn’t if lenders did their job properly by handing out credit responsibly. But, we’ll get back to this.

What it (actually) is

Life is paved with obstacles in South Africa or anywhere else in the world, and sometimes, setbacks happen. Over-indebted situations develop when the fixed costs of a household are higher than its income.

A regular error is to think that income is fixed (revenue won’t change in the foreseeable future) and costs can be adjusted. But when revenue drops (for example, if you lose your job unexpectedly during a pandemic or when you lose variable income because you didn’t hit your company’s target), your fixed costs won’t necessarily go down.

Let’s dive a little deeper into a typical household income and expenditure structure:

income vs household expenditure

Household income structure: A household’s income is made of the salaries earned by the family members, the capital income earned from a savings account, for example, and any government aid received.

Household expenditure: Expenses are either fixed or variable. Fixed expenses are costs that cannot be easily reduced. These are housing rental payments or mortgage repayments, utility bills, and taxes. Variable costs, on the other hand, are easier to cut back on when income diminishes.

When the income of a household decreases, it needs to adapt expenditures by lowering living expenses or discretionary spendings.  Examples of such cost-cutting measures may include buying cheaper clothes or food, not going on holidays, etc. 

This is the critical moment when a household can fall into financial traps and a crippling debt spiral if there’s no emergency fund or sound financial advice.

3 key variables to consider when the household's income decreases

Variable 1: Time

Imagine your household’s income just dropped, but you anticipate a recovery after a certain period of time. Your strategy, therefore, is based on an assumption, and the risk here is misjudging the length of time it will take to recover lost revenue. 

Let’s say, you use your savings and lower your everyday expenses to adjust your spendings. But as time goes by, you’re still not recovering your lost income. Perhaps you’re not reaching your targets, or your job interviews haven’t resulted in you getting a new job.

In any case, the more you anticipate your situation to get better fast (after all, you’ve had 6 interviews with recruiters, one has got to result in a job offer!) the more tempted you will be to take out a loan in order to compensate for your diminishing savings and everyday expenses. But in doing so, you’ve just stuck your finger into the first stage of over-indebtedness.

If you took out a loan and your situation doesn’t improve, you will still be required to pay it back. You might even be tempted to take out another loan to pay for the first one. This is how a crippling debt situation deepens.

Variable 2: Budget adaptation

As seen above, when faced with an income drop, households reduce their everyday expenses (food, leisure, etc.) accordingly. The pitfall here is failing to realise how the cut back on spending habits may be a difficult change to cope with.

This variable is obviously closely linked to the time variable (how long this situation of income loss is going to last).

Tightening your belt can only last for so long. If the situation doesn’t evolve positively, the whole family might start suffering from it. Kids can’t go on their usual school trips or get the latest trendy sneakers. They begin to resent you for it, arguments are more frequent, and stress starts creeping in.

The issue here is the pain caused by a diminishing standard of living and the fading hope that the situation will get better soon.

At a certain point, you give in. The youngest keeps complaining, they absolutely need a new laptop to keep studying from home, so you decide to take out a revolving loan to buy the much-needed device.

Variable 3: Mishaps

Unforeseen events happen all the time in our everyday lives. But their effects can be particularly crippling when in a situation of financial stress. When you already have a tight budget, the last thing you need is a car that breaks down, or a water leak in the ceiling, or your computer dying, or an urgent boiler maintenance, etc.

In order to cover these unforeseen costs, you may need to rely greatly on your savings account. The situation gets out of hand when the savings dry out, and the overdraft capacity of your everyday account is maxed out. 

The temptation is great to take out a loan to get some breathing space.

Now that we understand how people can become over-indebted, let’s take a look at how interest rates work.

Understanding how interest rates work and their impact on your finances

Let’s take a practical example:

Say you take out a loan for R12,000 at an annual interest rate of 15% over 12 months. 

The mistake often made when calculating how much the loan is going to cost is to simply take 15% of 12,000 (1,800) and add it to 12,000 (13,800). This method is incorrect because it doesn’t factor in a crucial element: time (i.e. over what period of time the loan will need to be reimbursed).

Here's the correct way to approach it:

The interest for the first month is calculated as follows:

[0.15 ÷ 12] × 12,000 = R150

With each monthly payment, you reduce the balance on the loan. After six months, you are left with paying off R6,000. That means the interest you pay for that month is as follows:

[0.15 ÷ 12] × 6,223.50 = R78

As you can see, the interest rate remains the same, but the interest payment is now lower. This adjustment is made until you finish paying off the loan. So, if you’re now left with only R1,000 to pay off, the interest will be:

[0.15 ÷ 12] × 1,000 = R12.5

Loan amortization plan
Example of a R12,000 loan repayment plan over 12 months.

Above is an example of a credit repayment plan. In the early repayment period, you spend more on interest and less on reimbursing the principal amount. This situation reverses as you progress through the repayments.

Cookie monster

Revolving Credit

What are revolving loans?

The bank or lender makes a certain amount of money available to you, and you can use this amount entirely or only parts of it when you want it, how you want it. Like a regular loan, you need to pay back the borrowed amounts every month with interest on top. 

The trick here is that this money is always there, available at any time for your use. Think of it as a cookie jar, full of yummy cookies, sitting quietly on your kitchen table-top. It’s tough to resist the temptation to eat one (if not the entire jar). And if this jar automatically refills without you having to go to the shop to buy more, then here comes trouble.

The revolving loan is this cookie jar but filled with money. And the more a household is stressed financially, the more it will be tempted to dig in.

To make matters worse, interest rates on revolving loans are astronomical. The rationale behind this is that the smaller a loan amount, the higher the interest rate. And as the borrowed amounts are small, the interest payments will appear small as well. But appearances can be deceiving.

Repaying R1,000 at 20% interest rate over one year equates to R96 total interest, overall. Which, in turn, translates to R8 per month. Looks affordable, right?

To sum up, revolving loans can easily become the equivalent of the banana peel that pushes you off-track if you don’t watch your steps carefully.

Why do lenders offer revolving credit?

In order to understand this, let’s take a practical example.

Say you are a lending company that offers revolving credit. Your data shows that, as a rule of thumb, out of 100 clients you grant a loan to, on average:

The problem is that when a new client applies for a loan, you don’t know in which of the 3 above categories they will fall.

In order to get a better understanding of each individual situation, you need to hire a customer advisor who is a financial specialist. This advisor will take time to study each customer’s application and situation in order to determine which financial product best fits their needs. In an ideal world, this financial advisor would detect early on the situations where people start accumulating too many debts and offer them help.

The issue is that a financial advisor costs a lot of money to lenders. As a result, many of them use statistical analysis. Most loan requests are accepted, and maximum interest rates are charged to consumers. The profit made on the 80 people who will repay their loan is more than enough to cover the losses generated by the people who default. 

To handle the people who need a nudge, a part-time worker on minimum wage in charge of hassling them on the phone or via email will do the job.

A quick philosophical thought: Goodhart’s Law applied to revolving credit lenders

Goodhart’s law is an adage which says that when a measure becomes a target, it ceases to be a good measure. 

Say what? Let me explain.

Originally, a company does not exist to make a profit but to sell goods and services to people who need them. In doing so, the company will turn a profit. But profits should always be a means, not an end. When a company places profits above everything else as a target, chances are, it’s going to lose sight of its initial purpose. That’s what loan sharks and reckless creditors do, by granting loans to people who can’t afford them.

To sum up what we’ve covered so far:

How to overcome crippling debt

There is no shame in being over-indebted

Loans are an integral part of the economy. One person’s expenditure is another’s income. People who are in debt contribute actively to making the world go round. Without their need for extra cash, many would be jobless. 

Crippling debt is a complex problem that can be tied to the growing income discrepancies within society. Production of goods and services is on the rise, but the vast majority of people don’t benefit from sufficient income to enjoy those new goods and services.

In order to compensate for these discrepancies, loans and credit facilities were invented. But with debt comes default risk. 

Anyone can make bad decisions

It’s easy to find yourself the unwitting prey of predatory lending companies. These companies have well-oiled marketing and sales campaigns that will make you think that obtaining a loan is going to be the solution to all your problems.

Most of us will make it a question of honour to repay a debt. But as much as paying back money owed to friends and family members is important, as the funds come from their own pockets, it’s a bit different with banks since they don’t lend you their own money. Instead, they use “money machines” to grant you loans. Furthermore, interest rates exist, in part, to cover default risks. Therefore and at the end of the day, defaulting on a loan is sad, but it shouldn't be considered disgraceful.

Being in a bad debt situation means you’re going to fight existing rules. These rules can be adapted to your specific situation, in order to give you breathing space and time to sort things out. The bottom line is: There is always a solution.

No mountain is too high

Which solutions are available to get out of a crippling debt situation?

Seeking help

As seen above, it’s possible to take out a loan without speaking to anyone. Fortunately, it’s also possible to speak with real humans about your money problems. Such humans can be:

These organisations are experts and know the ins and outs of financial planning. They possess a sound understanding of the levers that can be used to improve your situation.

They can help you:

They can also act as mediators between you and the lender to renegotiate interest rates and/or lengthen the repayment period in order to reduce your monthly repayments. What’s more, they can even help you find a debt consolidation loan, which will group all your credit accounts into a single loan, thus, making the management of your debt easier.

The most important thing to understand here is that during this process, you will be placed under debt review. Being placed under debt review or a credit relief program means you are protected by the National Credit Act, and your creditors will no longer be authorised to hassle you.

Debt review is a great way to get out of a dire debt situation. But it’s a “last resort” option. As soon as a crippling debt situation arises, one needs to seek advice from the financial specialists mentioned above.

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Understanding Crippling Debt – A Complete Guide

What is crippling debt? How do you spiral into this deep hole? Most importantly, how do you get out of it?

First, let’s define crippling debt

Homer over consumed
Homer consumed a little too much

What you (likely) think it is

The common misconception with crippling debt is that it’s driven by compulsive consumerism. Think about the type of consumerism where you acquire a bunch of loans and credit cards in order to fulfil consumption impulses. For instance, you get the latest smartphone, go on an extended holiday, and buy a new set of wheels all without the means to reimburse those loans.

This is a cliché about the crippling debt spiral, nevertheless these situations exist and shouldn’t if lenders did their job properly by handing out credit responsibly. But, we’ll get back to this.

What it (actually) is

Life is paved with obstacles in South Africa or anywhere else in the world, and sometimes, setbacks happen. Over-indebted situations develop when the fixed costs of a household are higher than its income.

A regular error is to think that income is fixed (revenue won’t change in the foreseeable future) and costs can be adjusted. But when revenue drops (for example, if you lose your job unexpectedly during a pandemic or when you lose variable income because you didn’t hit your company’s target), your fixed costs won’t necessarily go down.

Let’s dive a little deeper into a typical household income and expenditure structure:

income vs household expenditure

Household income structure: A household’s income is made of the salaries earned by the family members, the capital income earned from a savings account, for example, and any government aid received.

Household expenditure: Expenses are either fixed or variable. Fixed expenses are costs that cannot be easily reduced. These are housing rental payments or mortgage repayments, utility bills, and taxes. Variable costs, on the other hand, are easier to cut back on when income diminishes.

When the income of a household decreases, it needs to adapt expenditures by lowering living expenses or discretionary spendings.  Examples of such cost-cutting measures may include buying cheaper clothes or food, not going on holidays, etc. 

This is the critical moment when a household can fall into financial traps and a crippling debt spiral if there’s no emergency fund or sound financial advice.

3 key variables to consider when the household’s income decreases

Variable 1: Time

Imagine your household’s income just dropped, but you anticipate a recovery after a certain period of time. Your strategy, therefore, is based on an assumption, and the risk here is misjudging the length of time it will take to recover lost revenue. 

Let’s say, you use your savings and lower your everyday expenses to adjust your spendings. But as time goes by, you’re still not recovering your lost income. Perhaps you’re not reaching your targets, or your job interviews haven’t resulted in you getting a new job.

In any case, the more you anticipate your situation to get better fast (after all, you’ve had 6 interviews with recruiters, one has got to result in a job offer!) the more tempted you will be to take out a loan in order to compensate for your diminishing savings and everyday expenses. But in doing so, you’ve just stuck your finger into the first stage of over-indebtedness.

If you took out a loan and your situation doesn’t improve, you will still be required to pay it back. You might even be tempted to take out another loan to pay for the first one. This is how a crippling debt situation deepens.

Variable 2: Budget adaptation

As seen above, when faced with an income drop, households reduce their everyday expenses (food, leisure, etc.) accordingly. The pitfall here is failing to realise how the cut back on spending habits may be a difficult change to cope with.

This variable is obviously closely linked to the time variable (how long this situation of income loss is going to last).

Tightening your belt can only last for so long. If the situation doesn’t evolve positively, the whole family might start suffering from it. Kids can’t go on their usual school trips or get the latest trendy sneakers. They begin to resent you for it, arguments are more frequent, and stress starts creeping in.

The issue here is the pain caused by a diminishing standard of living and the fading hope that the situation will get better soon.

At a certain point, you give in. The youngest keeps complaining, they absolutely need a new laptop to keep studying from home, so you decide to take out a revolving loan to buy the much-needed device.

Variable 3: Mishaps

Unforeseen events happen all the time in our everyday lives. But their effects can be particularly crippling when in a situation of financial stress. When you already have a tight budget, the last thing you need is a car that breaks down, or a water leak in the ceiling, or your computer dying, or an urgent boiler maintenance, etc.

In order to cover these unforeseen costs, you may need to rely greatly on your savings account. The situation gets out of hand when the savings dry out, and the overdraft capacity of your everyday account is maxed out. 

The temptation is great to take out a loan to get some breathing space.

Now that we understand how people can become over-indebted, let’s take a look at how interest rates work.

Understanding how interest rates work and their impact on your finances

Let’s take a practical example:

Say you take out a loan for R12,000 at an annual interest rate of 15% over 12 months. 

The mistake often made when calculating how much the loan is going to cost is to simply take 15% of 12,000 (1,800) and add it to 12,000 (13,800). This method is incorrect because it doesn’t factor in a crucial element: time (i.e. over what period of time the loan will need to be reimbursed).

Here’s the correct way to approach it:

The interest for the first month is calculated as follows:

[0.15 ÷ 12] × 12,000 = R150

With each monthly payment, you reduce the balance on the loan. After six months, you are left with paying off R6,000. That means the interest you pay for that month is as follows:

[0.15 ÷ 12] × 6,223.50 = R78

As you can see, the interest rate remains the same, but the interest payment is now lower. This adjustment is made until you finish paying off the loan. So, if you’re now left with only R1,000 to pay off, the interest will be:

[0.15 ÷ 12] × 1,000 = R12.5

Loan amortization plan
Example of a R12,000 loan repayment plan over 12 months.

Above is an example of a credit repayment plan. In the early repayment period, you spend more on interest and less on reimbursing the principal amount. This situation reverses as you progress through the repayments.

Cookie monster

Revolving Credit

What are revolving loans?

The bank or lender makes a certain amount of money available to you, and you can use this amount entirely or only parts of it when you want it, how you want it. Like a regular loan, you need to pay back the borrowed amounts every month with interest on top. 

The trick here is that this money is always there, available at any time for your use. Think of it as a cookie jar, full of yummy cookies, sitting quietly on your kitchen table-top. It’s tough to resist the temptation to eat one (if not the entire jar). And if this jar automatically refills without you having to go to the shop to buy more, then here comes trouble.

The revolving loan is this cookie jar but filled with money. And the more a household is stressed financially, the more it will be tempted to dig in.

To make matters worse, interest rates on revolving loans are astronomical. The rationale behind this is that the smaller a loan amount, the higher the interest rate. And as the borrowed amounts are small, the interest payments will appear small as well. But appearances can be deceiving.

Repaying R1,000 at 20% interest rate over one year equates to R96 total interest, overall. Which, in turn, translates to R8 per month. Looks affordable, right?

To sum up, revolving loans can easily become the equivalent of the banana peel that pushes you off-track if you don’t watch your steps carefully.

Why do lenders offer revolving credit?

In order to understand this, let’s take a practical example.

Say you are a lending company that offers revolving credit. Your data shows that, as a rule of thumb, out of 100 clients you grant a loan to, on average:

  • 80 will reimburse you.
  • 15 will need a nudge in order to reimburse you.
  • 5 will default on their credit, i.e. will never pay you back.

The problem is that when a new client applies for a loan, you don’t know in which of the 3 above categories they will fall.

In order to get a better understanding of each individual situation, you need to hire a customer advisor who is a financial specialist. This advisor will take time to study each customer’s application and situation in order to determine which financial product best fits their needs. In an ideal world, this financial advisor would detect early on the situations where people start accumulating too many debts and offer them help.

The issue is that a financial advisor costs a lot of money to lenders. As a result, many of them use statistical analysis. Most loan requests are accepted, and maximum interest rates are charged to consumers. The profit made on the 80 people who will repay their loan is more than enough to cover the losses generated by the people who default. 

To handle the people who need a nudge, a part-time worker on minimum wage in charge of hassling them on the phone or via email will do the job.

A quick philosophical thought: Goodhart’s Law applied to revolving credit lenders

Goodhart’s law is an adage which says that when a measure becomes a target, it ceases to be a good measure. 

Say what? Let me explain.

Originally, a company does not exist to make a profit but to sell goods and services to people who need them. In doing so, the company will turn a profit. But profits should always be a means, not an end. When a company places profits above everything else as a target, chances are, it’s going to lose sight of its initial purpose. That’s what loan sharks and reckless creditors do, by granting loans to people who can’t afford them.

To sum up what we’ve covered so far:

  • Crippling debt is not only linked to over-consumption but mostly to a loss of income.
  • When a life setback happens, the risk is to under-estimate the time it will take to recover. 
  • Stress starts building up when our standard of living decreases and mishaps add to our financial stress.
  • In this situation, revolving credit is the banana peel disguised as a lifebuoy that lenders will throw at you in order to maximise their profits.

How to overcome crippling debt

There is no shame in being over-indebted

Loans are an integral part of the economy. One person’s expenditure is another’s income. People who are in debt contribute actively to making the world go round. Without their need for extra cash, many would be jobless. 

Crippling debt is a complex problem that can be tied to the growing income discrepancies within society. Production of goods and services is on the rise, but the vast majority of people don’t benefit from sufficient income to enjoy those new goods and services.

In order to compensate for these discrepancies, loans and credit facilities were invented. But with debt comes default risk. 

Anyone can make bad decisions

It’s easy to find yourself the unwitting prey of predatory lending companies. These companies have well-oiled marketing and sales campaigns that will make you think that obtaining a loan is going to be the solution to all your problems.

Most of us will make it a question of honour to repay a debt. But as much as paying back money owed to friends and family members is important, as the funds come from their own pockets, it’s a bit different with banks since they don’t lend you their own money. Instead, they use “money machines” to grant you loans. Furthermore, interest rates exist, in part, to cover default risks. Therefore and at the end of the day, defaulting on a loan is sad, but it shouldn’t be considered disgraceful.

Being in a bad debt situation means you’re going to fight existing rules. These rules can be adapted to your specific situation, in order to give you breathing space and time to sort things out. The bottom line is: There is always a solution.

No mountain is too high

Which solutions are available to get out of a crippling debt situation?

Seeking help

As seen above, it’s possible to take out a loan without speaking to anyone. Fortunately, it’s also possible to speak with real humans about your money problems. Such humans can be:

  • Your bank’s financial advisor
  • Social workers
  • NCR (National Credit Regulator) registered debt counsellors
  • Financial Advice and Intermediary Services Ombud (FAISO)

These organisations are experts and know the ins and outs of financial planning. They possess a sound understanding of the levers that can be used to improve your situation.

They can help you:

  • Assess your situation. Is there a chance your new situation (loss of income) is going to be permanent?
  • Organise your expenses. Which expenses need to be maintained in order for the household to endure the situation as best as possible?
  • Reduce borrowing costs. Which fees seem unavoidable, but actually are, if you read the fine prints?
  • Prepare for unforeseen incidents. What’s the best way to budget for mishaps if you want to avoid the pitfall of over-indebtedness?

They can also act as mediators between you and the lender to renegotiate interest rates and/or lengthen the repayment period in order to reduce your monthly repayments. What’s more, they can even help you find a debt consolidation loan, which will group all your credit accounts into a single loan, thus, making the management of your debt easier.

The most important thing to understand here is that during this process, you will be placed under debt review. Being placed under debt review or a credit relief program means you are protected by the National Credit Act, and your creditors will no longer be authorised to hassle you.

Debt review is a great way to get out of a dire debt situation. But it’s a “last resort” option. As soon as a crippling debt situation arises, one needs to seek advice from the financial specialists mentioned above.

WP_Post Object ( [ID] => 102731 [post_author] => 3 [post_date] => 2020-10-26 04:06:54 [post_date_gmt] => 2020-10-26 02:06:54 [post_content] =>

During your personal finance journey, you may come across some complicated or unfamiliar terms. No worries! We have prepared this handy, short glossary of money-related terms to help you gain more control over your financial goals.

Affordability assessment

A process lenders use to decide how much you can afford after you apply for a loan. They look at your income, current expenses, plus other factors.

Annual percentage rate/APR

A percentage that represents the cost of borrowing per year. It is applied to the loan amount and includes the interest rate and all fees. 

Asset

An item that has cash value such as your car, house, or even an engagement ring.

Bad credit

This happens when you get a low credit score after failing to pay back your loans in the past. That means lenders won't trust you when you apply for future loans unless you apply for a bad credit loan.

Balloon payment

A lump sum of money you have to pay at the end of a loan term. Balloon payments are common in vehicle finance, and the amount required is much larger than that for monthly instalments.

Bankruptcy

A legal process that helps when you no longer have the ability to pay back your debt. If you're declared bankrupt, you won't be required to pay back some of or all the debt you have.

Blacklisted

Strictly speaking, blacklisting doesn't exist. Most people use blacklisting to mean that you or someone has negative information on their credit report that can result in a lot of rejected applications. However, if you have poor credit, you might still be able to get a "loan for the blacklisted."

Borrower

A person who borrows money and has to pay it back under a loan agreement or contract.

Cash flow

The movement of money received as income and how it is released through expenses.

Co-borrower

The second person named on a joint-application loan who shares the money with you and is also responsible for paying back the loan.

Co-signer

A person you add to your loan application who will be responsible for your loan payments if you fail to repay. A co-signer improves your chances of approval, especially if you're applying for bad credit or average credit loan.

Credit bureau

If you're South African, this is where you can get your one free credit report per year. Common credit bureaus are TransUnion, Experian, and Equifax.

Credit check

Also called a credit search. This is when a bank or lender uses the information in your credit report to decide whether to lend you money or not.

Credit history

Your past behaviour in relation to the loans or debts you have applied for and how you have paid back the received funds.

Credit report

A report with all the details about your credit history or financial history when it comes to borrowing.

Credit score

A three-digit number that typically ranges between 300 and 850 and which is calculated using your credit history. A high credit score helps you to qualify for a good credit loan or an excellent credit loan.

Creditworthiness

A measure of your ability to repay borrowed money.

Collateral

An asset used to guarantee a loan. For example, secured car loans use the car as security so that when you fail to repay the loan, the lender can legally claim the car.

Debit order

A way to pay back your loan or debts. You give the lender permission to deduct funds from your bank account automatically.

Debt consolidation

Using a personal loan or debt consolidation loan to pay off your other debts for reasons that include saving money on interest or better debt management.

Debt-to-income ratio

A percentage that measures your personal finances by dividing your monthly debt with your monthly income. The lower the ratio, the more you can afford new loans.

Debt review

A process where you meet with a debt counsellor who helps you with more affordable payment arrangements if you're struggling to pay back your debt.

Default

Failure to repay your loan.

Deposit/Down payment

A lump sum of money you have to pay that partly covers the purchase price of an asset such as a car. 

Eligibility

Your ability to meet the requirements that are listed when you apply for a loan.

Emergency fund

Money that you save so you have cash ready in an emergency. Here's how you can set up an emergency fund.

Financing

Financing is when you get a loan or funds from a bank or financial institution to pay for your medical bills, wedding, home renovation, business or for other purposes.

Fixed interest rate

An interest rate that - when applied to your loan - remains the same until you finish paying your loan. Fixed-rate loans are not affected by the fluctuation in market rates. 

Home equity

The cash value of your house that belongs to you. It's the difference between the house's market value and what you still owe. A home equity loan involves borrowing against your equity.

Interest rate

A percentage applied to a loan amount. It represents how much the lender is charging you for borrowing.

Lender's risk

The chances of a borrower not repaying the loan or the interest on the loan.

Line of credit

An arrangement with a lender that allows you to borrow money any time up to a specific limit, for example as with credit cards. In an open line of credit or a revolving credit, you can keep borrowing once you pay it back.

Loan 

Borrowed money that should be repaid with interest on top. Common types of loans include personal loans, short term loans and vehicle or car loans.

Loan calculator

A tool that calculates the monthly repayments for your loan using your loan amount and loan term. There’s a personal loan calculator, vehicle finance calculator, and even a Wesbank calculator, Capitec loan calculator, and Nedbank loan calculator

Loan fees and charges

Other costs of borrowing charged by the lender besides the interest rate. This might include an initiation fee, monthly service fees, and fees for early or late payments.

Loan term

The amount of time taken to finish paying back your loan, measured in months or years.

Loan amount

The amount of money borrowed from a credit provider or lender.

Lender

The bank, credit provider, or financial institution that provides you with a loan. Popular South African lenders include Nedbank, Absa, Direct Axis, Standard Bank, and African Bank.

Monthly repayment/Monthly payment/Monthly instalment

The amount you pay back every month after you take out a loan.

National Credit Act

The legislation that governs the credit industry and which appoints the National Credit Regulator (NCR) to oversee the prescribed regulations. 

Outstanding debt

Money that you borrowed, such as a student loan or business loan and which you still haven't paid back. 

Overdraft

A line of credit that still allows you to withdraw a limited amount of money after your bank balance reaches zero.

Payday loan

A type of short term loan you have to pay back quickly, usually within 30 days or on your next payday. Payday loans are typically used for emergencies. You can borrow as little as R500 or as much as R1000 up to R8000.

Personal loan

Money borrowed from a lender and which you repay with interest added via monthly instalments. A personal loan has many purposes, including car repairs, school fees, dentist visits, cosmetic surgery, or going on holiday.

Principal amount

The amount you borrow from a lender and which you owe minus interest.

Refinancing

Replacing an old loan with a new loan that has more favourable and optimal terms.

Secured loan

A loan which requires an asset or collateral as a guarantee. That means the credit provider has a right to repossess the asset if the loan is not repaid. Common types include secured personal loans and secured car loans.

Unsecured loan

A loan that doesn't require collateral, usually an unsecured personal loan or an unsecured car loan.

Variable interest rate

An interest rate that moves up and down depending on the market rate. Variable-rate loans, therefore, have a fluctuating interest rate.

Vehicle finance

A specialised loan you can use to buy different types of vehicles, for example, new or used cars, boats, jet skis, motorbikes, trucks, caravans, classic cars, or Uber cars.

Photo by Abby Chung from Pexels

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50 personal finance terms everyone should know

During your personal finance journey, you may come across some complicated or unfamiliar terms. No worries! We have prepared this handy, short glossary of money-related terms to help you gain more control over your financial goals.

Affordability assessment

A process lenders use to decide how much you can afford after you apply for a loan. They look at your income, current expenses, plus other factors.

Annual percentage rate/APR

A percentage that represents the cost of borrowing per year. It is applied to the loan amount and includes the interest rate and all fees. 

Asset

An item that has cash value such as your car, house, or even an engagement ring.

Bad credit

This happens when you get a low credit score after failing to pay back your loans in the past. That means lenders won’t trust you when you apply for future loans unless you apply for a bad credit loan.

Balloon payment

A lump sum of money you have to pay at the end of a loan term. Balloon payments are common in vehicle finance, and the amount required is much larger than that for monthly instalments.

Bankruptcy

A legal process that helps when you no longer have the ability to pay back your debt. If you’re declared bankrupt, you won’t be required to pay back some of or all the debt you have.

Blacklisted

Strictly speaking, blacklisting doesn’t exist. Most people use blacklisting to mean that you or someone has negative information on their credit report that can result in a lot of rejected applications. However, if you have poor credit, you might still be able to get a “loan for the blacklisted.”

Borrower

A person who borrows money and has to pay it back under a loan agreement or contract.

Cash flow

The movement of money received as income and how it is released through expenses.

Co-borrower

The second person named on a joint-application loan who shares the money with you and is also responsible for paying back the loan.

Co-signer

A person you add to your loan application who will be responsible for your loan payments if you fail to repay. A co-signer improves your chances of approval, especially if you’re applying for bad credit or average credit loan.

Credit bureau

If you’re South African, this is where you can get your one free credit report per year. Common credit bureaus are TransUnion, Experian, and Equifax.

Credit check

Also called a credit search. This is when a bank or lender uses the information in your credit report to decide whether to lend you money or not.

Credit history

Your past behaviour in relation to the loans or debts you have applied for and how you have paid back the received funds.

Credit report

A report with all the details about your credit history or financial history when it comes to borrowing.

Credit score

A three-digit number that typically ranges between 300 and 850 and which is calculated using your credit history. A high credit score helps you to qualify for a good credit loan or an excellent credit loan.

Creditworthiness

A measure of your ability to repay borrowed money.

Collateral

An asset used to guarantee a loan. For example, secured car loans use the car as security so that when you fail to repay the loan, the lender can legally claim the car.

Debit order

A way to pay back your loan or debts. You give the lender permission to deduct funds from your bank account automatically.

Debt consolidation

Using a personal loan or debt consolidation loan to pay off your other debts for reasons that include saving money on interest or better debt management.

Debt-to-income ratio

A percentage that measures your personal finances by dividing your monthly debt with your monthly income. The lower the ratio, the more you can afford new loans.

Debt review

A process where you meet with a debt counsellor who helps you with more affordable payment arrangements if you’re struggling to pay back your debt.

Default

Failure to repay your loan.

Deposit/Down payment

A lump sum of money you have to pay that partly covers the purchase price of an asset such as a car. 

Eligibility

Your ability to meet the requirements that are listed when you apply for a loan.

Emergency fund

Money that you save so you have cash ready in an emergency. Here’s how you can set up an emergency fund.

Financing

Financing is when you get a loan or funds from a bank or financial institution to pay for your medical bills, wedding, home renovation, business or for other purposes.

Fixed interest rate

An interest rate that – when applied to your loan – remains the same until you finish paying your loan. Fixed-rate loans are not affected by the fluctuation in market rates. 

Home equity

The cash value of your house that belongs to you. It’s the difference between the house’s market value and what you still owe. A home equity loan involves borrowing against your equity.

Interest rate

A percentage applied to a loan amount. It represents how much the lender is charging you for borrowing.

Lender’s risk

The chances of a borrower not repaying the loan or the interest on the loan.

Line of credit

An arrangement with a lender that allows you to borrow money any time up to a specific limit, for example as with credit cards. In an open line of credit or a revolving credit, you can keep borrowing once you pay it back.

Loan 

Borrowed money that should be repaid with interest on top. Common types of loans include personal loans, short term loans and vehicle or car loans.

Loan calculator

A tool that calculates the monthly repayments for your loan using your loan amount and loan term. There’s a personal loan calculator, vehicle finance calculator, and even a Wesbank calculator, Capitec loan calculator, and Nedbank loan calculator

Loan fees and charges

Other costs of borrowing charged by the lender besides the interest rate. This might include an initiation fee, monthly service fees, and fees for early or late payments.

Loan term

The amount of time taken to finish paying back your loan, measured in months or years.

Loan amount

The amount of money borrowed from a credit provider or lender.

Lender

The bank, credit provider, or financial institution that provides you with a loan. Popular South African lenders include Nedbank, Absa, Direct Axis, Standard Bank, and African Bank.

Monthly repayment/Monthly payment/Monthly instalment

The amount you pay back every month after you take out a loan.

National Credit Act

The legislation that governs the credit industry and which appoints the National Credit Regulator (NCR) to oversee the prescribed regulations. 

Outstanding debt

Money that you borrowed, such as a student loan or business loan and which you still haven’t paid back. 

Overdraft

A line of credit that still allows you to withdraw a limited amount of money after your bank balance reaches zero.

Payday loan

A type of short term loan you have to pay back quickly, usually within 30 days or on your next payday. Payday loans are typically used for emergencies. You can borrow as little as R500 or as much as R1000 up to R8000.

Personal loan

Money borrowed from a lender and which you repay with interest added via monthly instalments. A personal loan has many purposes, including car repairs, school fees, dentist visits, cosmetic surgery, or going on holiday.

Principal amount

The amount you borrow from a lender and which you owe minus interest.

Refinancing

Replacing an old loan with a new loan that has more favourable and optimal terms.

Secured loan

A loan which requires an asset or collateral as a guarantee. That means the credit provider has a right to repossess the asset if the loan is not repaid. Common types include secured personal loans and secured car loans.

Unsecured loan

A loan that doesn’t require collateral, usually an unsecured personal loan or an unsecured car loan.

Variable interest rate

An interest rate that moves up and down depending on the market rate. Variable-rate loans, therefore, have a fluctuating interest rate.

Vehicle finance

A specialised loan you can use to buy different types of vehicles, for example, new or used cars, boats, jet skis, motorbikes, trucks, caravans, classic cars, or Uber cars.

Photo by Abby Chung from Pexels

WP_Post Object ( [ID] => 103713 [post_author] => 3 [post_date] => 2020-10-26 03:41:54 [post_date_gmt] => 2020-10-26 01:41:54 [post_content] =>

The world would be a perfect place if we all graduated with a personal finance degree the minute we reached adulthood. Instead, when it comes to money, we sometimes have to learn from experience, even though these life lessons can literally cost us thousands of rands. 

Luckily, this is not always the case. Here are 7 expensive and all-too-common mistakes you can avoid if you’re a young professional in South Africa.

Spending without a budget

The financial freedom that comes once you become a professional might not be a lot, but without a budget, it’s easy to spend more than you can afford. You’re likely to end up with a brand-new iPhone but no transport money to get to work.

The solution: Write down how much you earn and then calculate your current monthly expenses. Next, decide how much you want to spend every month and try to use minimalist and frugalist tactics that help you save money. Last but not least, check out these cognitive biases that can easily trick you into overspending.

Not having an emergency fund

Some South African youths live paycheck to paycheck, and the only emergency fund they know are their parents or friends. Yes, you only live once, but without an emergency fund, you’re basically failing to plan for unforeseen circumstances like hospital trips and other disasters.

The solution: Having an emergency fund helps you to avoid those panicked moments where you have to rush and beg your family and friends for money. Learn more about what constitutes an emergency fund and how you can set one up

Staying away from investments

As a young professional, your focus might be on working as much as possible, but you can also make your money work for you. After all, savings can only take you so far. One of the quickest ways to financial independence is to turn into an investor.

The solution. Take the time to understand how investments work in general and the risks involved. Consider investment opportunities like stocks, bonds, and peer to peer lending. Seek professional advice wherever possible to avoid falling for scams.

Thinking you don’t need medical cover

Youth and vitality usually go hand in hand but never think that hospital bills don’t apply to you. Accidents happen, and unexpected pandemics like the coronavirus also happen. If you don’t have health insurance, an emergency trip to the hospital can wipe out all your savings and get you further into debt.

The solution. Find the most affordable health insurance provider. You might not be able to get full coverage at first but always work towards getting a better plan. Also, find out if your employer or company has a program that can contribute to your health insurance payments.

Taking out a loan you can’t afford

As a young professional, borrowing can help you in a tight spot, but it’s easy to end up in the proverbial vicious debt cycle. Societal and social media expectations can push you to take out a loan to pay for a big wedding, a luxurious apartment, or the latest iPhone. Still, if you can’t afford them, they might be completely unnecessary. 

The solution. Understand the cost of borrowing before you apply for any loans. Also, use this personal loan calculator to find affordable monthly payments for your loan. If you’re already in debt, there are steps you can take to recover from debt.

Failing to build your credit

Avoiding loans or debt altogether is also bad for you. Not having a credit history can prevent you from doing things like:

The solution. Get started by not only paying all your bills on time but by also opening affordable credit accounts. Here are a few more tips to help you improve your credit score in South Africa.

Spending a student loan unnecessarily 

You might have heard that education is your ticket out of poverty, but this is not always the case. The unemployment rate in South Africa is not very encouraging for graduates at the moment, so it might not be wise to apply for a R200 000 student loan. 

The solution.  It might be necessary to look for side hustles or gigs that bring extra income while only partly financing your education. Hopefully, you won’t end up with a low-paying job and a huge student loan you have to pay off for several years to come.

Photo by Ketut Subiyanto from Pexels

[post_title] => 7 personal finance mistakes young professionals make and how to avoid them [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => 7-personal-finance-mistakes-young-professionals-make-and-how-to-avoid-them [to_ping] => [pinged] => [post_modified] => 2020-11-12 14:39:40 [post_modified_gmt] => 2020-11-12 12:39:40 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.compareloans.co.za/?p=103713 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw )

7 personal finance mistakes young professionals make and how to avoid them

The world would be a perfect place if we all graduated with a personal finance degree the minute we reached adulthood. Instead, when it comes to money, we sometimes have to learn from experience, even though these life lessons can literally cost us thousands of rands. 

Luckily, this is not always the case. Here are 7 expensive and all-too-common mistakes you can avoid if you’re a young professional in South Africa.

Spending without a budget

The financial freedom that comes once you become a professional might not be a lot, but without a budget, it’s easy to spend more than you can afford. You’re likely to end up with a brand-new iPhone but no transport money to get to work.

The solution: Write down how much you earn and then calculate your current monthly expenses. Next, decide how much you want to spend every month and try to use minimalist and frugalist tactics that help you save money. Last but not least, check out these cognitive biases that can easily trick you into overspending.

Not having an emergency fund

Some South African youths live paycheck to paycheck, and the only emergency fund they know are their parents or friends. Yes, you only live once, but without an emergency fund, you’re basically failing to plan for unforeseen circumstances like hospital trips and other disasters.

The solution: Having an emergency fund helps you to avoid those panicked moments where you have to rush and beg your family and friends for money. Learn more about what constitutes an emergency fund and how you can set one up

Staying away from investments

As a young professional, your focus might be on working as much as possible, but you can also make your money work for you. After all, savings can only take you so far. One of the quickest ways to financial independence is to turn into an investor.

The solution. Take the time to understand how investments work in general and the risks involved. Consider investment opportunities like stocks, bonds, and peer to peer lending. Seek professional advice wherever possible to avoid falling for scams.

Thinking you don’t need medical cover

Youth and vitality usually go hand in hand but never think that hospital bills don’t apply to you. Accidents happen, and unexpected pandemics like the coronavirus also happen. If you don’t have health insurance, an emergency trip to the hospital can wipe out all your savings and get you further into debt.

The solution. Find the most affordable health insurance provider. You might not be able to get full coverage at first but always work towards getting a better plan. Also, find out if your employer or company has a program that can contribute to your health insurance payments.

Taking out a loan you can’t afford

As a young professional, borrowing can help you in a tight spot, but it’s easy to end up in the proverbial vicious debt cycle. Societal and social media expectations can push you to take out a loan to pay for a big wedding, a luxurious apartment, or the latest iPhone. Still, if you can’t afford them, they might be completely unnecessary. 

The solution. Understand the cost of borrowing before you apply for any loans. Also, use this personal loan calculator to find affordable monthly payments for your loan. If you’re already in debt, there are steps you can take to recover from debt.

Failing to build your credit

Avoiding loans or debt altogether is also bad for you. Not having a credit history can prevent you from doing things like:

  • Applying for a home loan
  • Negotiating a low interest rate on loans
  • Getting approved for a rental apartment
  • Finding car insurance with better rates

The solution. Get started by not only paying all your bills on time but by also opening affordable credit accounts. Here are a few more tips to help you improve your credit score in South Africa.

Spending a student loan unnecessarily 

You might have heard that education is your ticket out of poverty, but this is not always the case. The unemployment rate in South Africa is not very encouraging for graduates at the moment, so it might not be wise to apply for a R200 000 student loan. 

The solution.  It might be necessary to look for side hustles or gigs that bring extra income while only partly financing your education. Hopefully, you won’t end up with a low-paying job and a huge student loan you have to pay off for several years to come.

Photo by Ketut Subiyanto from Pexels

WP_Post Object ( [ID] => 102404 [post_author] => 3 [post_date] => 2020-10-25 09:47:43 [post_date_gmt] => 2020-10-25 07:47:43 [post_content] =>

As times have changed, South Africa has also plugged into the internet, and you can now shop, socialise, advertise, and yes, get a loan online. Unfortunately, con artists are also benefiting from technology improvements. 

If you're looking for a loan, and Google comes up with suspiciously attractive offers, beware, it might be a scam. Of course, every lender out there is looking to make a profit out of you, but some take it a little too far. 

They want to squeeze every single rand out of you or outright rob you of your hard-earned money. These are the ones to watch out for, and you can catch them in the act once you know the ten most telling signs.

No licence and registration number

Does the lender have a registration number on display on their website? Also, check if they operate under the National Credit Act or are regulated by the National Credit Regulator. This increases your chances of dealing with a trusted lender that won't try to double-cross you.

No transparency

Scam lenders aren't always honest with all the loan fees and charges you have to pay. They may advertise their loans as cheap only to start adding extra costs to your payments once you accept the loan offer. A legit lender will have all charges on display or disclose all details when asked.

No credit checks

Payday lenders are the only ones who are not interested in your credit report or credit score since they offer short term loans at very high interest rates. All other legitimate lenders will perform a credit check to weed out high-risk borrowers and to protect you from borrowing more than you can afford. 

Even lenders who offer loans for bad credit or loans for the blacklisted will still carry out a soft inquiry to verify your personal and financial details. Online scammers know that people with bad credit will easily fall for a no-credit-check loan offer. 

Such people are also more likely to miss payments, and the scammer can take advantage by charging expensive interest rates and penalty fees.

100% guaranteed loan approval

Scammers specifically target desperate borrowers by promising you an easy application and guaranteed approval. In reality, reputable lenders don't make such promises since they have to look at your application first before they reject or approve it.

Upfront fees

You should act cautiously if a lender asks you to first pay for application or processing fees before you can get money in your bank account. Usually, any fees or charges will be included in the repayments, and there are no advance fees and certainly no need to send money to anyone.

Bad reviews

Online loan scammers are easily spotted once one of their victims complains about it online. You can learn from the mistakes of others by checking for reviews on various social media platforms and other sites to see if anyone has filed a complaint. 

No professionalism

Lack of professionalism includes spam email with wrong spellings and bad grammar. There's also terrible customer service where the loan company's consultants are either unavailable or can't give you the help you need.

Unsecured website

Online lenders must provide a secure application platform since you're required to enter your personal information and financial details when applying. Avoid online lenders with unsecured websites. That means they don't have a padlock symbol on any of their page addresses. 

Also, if the URL starts with http instead of https - the missing 's' stands for secure and might be a warning sign. The scammer might even be pretending to be a legitimate business by cloning a secure website.

No physical address

They may conduct their business online, but reputable financial institutions should also have a brick and mortar presence. The address should be verifiable, so you have a tangible contact if you meet any problems along the way. They should also provide a working phone number where you can speak with a real person.

Aggressive advertising

Online scammers will invest a lot of effort into pushing you to apply and accept their loan offer. They might send endless emails or even offer discounts that are too good to be true and then tell you the offer is only available if you apply immediately. There's an increased chance that you'll make a rushed decision that puts you at a disadvantage.

Other traps to look out for

While the following may not exactly be classified as online scams they should be avoided as much as possible:

So, you have been scammed? - Here's what you can do

Online scammers use every trick up their sleeves to convince you of their legitimacy. Falling for the lie happens to the best of us, and if you have been scammed, you just have to learn from your mistakes and move forward. Besides using the scammer alert signs outlined above to protect yourself, you can also take the following steps:

  1. Report the matter to the nearest authorities and provide them with all the relevant details of the scam.
  2. Report the matter to the bank if the scammer has placed a debit order on your account, or has your banking information and personal details.
  3. Share your reviews of the scammer to warn others.

On the other hand, here's how to spot a legit online lender

We have looked at the red flags, here are some green flags to look out for when applying for a loan online:

Conclusion

As long as you stay away from the scammers applying for a loan online offers convenience and many other benefits. If you're looking for a safer starting point, CompareLoans.co.za is a top South African loan comparison website that helps you compare online loans from various reputable and trusted lenders. It's easy to get started and get the financial help you need today. 

Photo by Clint Patterson on Unsplash

[post_title] => How to spot online loan scammers - 10 signs to watch out for [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => how-to-spot-online-loan-scammers [to_ping] => [pinged] => [post_modified] => 2020-10-26 15:20:31 [post_modified_gmt] => 2020-10-26 13:20:31 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.compareloans.co.za/?p=102404 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw )

How to spot online loan scammers – 10 signs to watch out for

As times have changed, South Africa has also plugged into the internet, and you can now shop, socialise, advertise, and yes, get a loan online. Unfortunately, con artists are also benefiting from technology improvements. 

If you’re looking for a loan, and Google comes up with suspiciously attractive offers, beware, it might be a scam. Of course, every lender out there is looking to make a profit out of you, but some take it a little too far. 

They want to squeeze every single rand out of you or outright rob you of your hard-earned money. These are the ones to watch out for, and you can catch them in the act once you know the ten most telling signs.

No licence and registration number

Does the lender have a registration number on display on their website? Also, check if they operate under the National Credit Act or are regulated by the National Credit Regulator. This increases your chances of dealing with a trusted lender that won’t try to double-cross you.

No transparency

Scam lenders aren’t always honest with all the loan fees and charges you have to pay. They may advertise their loans as cheap only to start adding extra costs to your payments once you accept the loan offer. A legit lender will have all charges on display or disclose all details when asked.

No credit checks

Payday lenders are the only ones who are not interested in your credit report or credit score since they offer short term loans at very high interest rates. All other legitimate lenders will perform a credit check to weed out high-risk borrowers and to protect you from borrowing more than you can afford. 

Even lenders who offer loans for bad credit or loans for the blacklisted will still carry out a soft inquiry to verify your personal and financial details. Online scammers know that people with bad credit will easily fall for a no-credit-check loan offer. 

Such people are also more likely to miss payments, and the scammer can take advantage by charging expensive interest rates and penalty fees.

100% guaranteed loan approval

Scammers specifically target desperate borrowers by promising you an easy application and guaranteed approval. In reality, reputable lenders don’t make such promises since they have to look at your application first before they reject or approve it.

Upfront fees

You should act cautiously if a lender asks you to first pay for application or processing fees before you can get money in your bank account. Usually, any fees or charges will be included in the repayments, and there are no advance fees and certainly no need to send money to anyone.

Bad reviews

Online loan scammers are easily spotted once one of their victims complains about it online. You can learn from the mistakes of others by checking for reviews on various social media platforms and other sites to see if anyone has filed a complaint. 

No professionalism

Lack of professionalism includes spam email with wrong spellings and bad grammar. There’s also terrible customer service where the loan company’s consultants are either unavailable or can’t give you the help you need.

Unsecured website

Online lenders must provide a secure application platform since you’re required to enter your personal information and financial details when applying. Avoid online lenders with unsecured websites. That means they don’t have a padlock symbol on any of their page addresses. 

Also, if the URL starts with http instead of https – the missing ‘s’ stands for secure and might be a warning sign. The scammer might even be pretending to be a legitimate business by cloning a secure website.

No physical address

They may conduct their business online, but reputable financial institutions should also have a brick and mortar presence. The address should be verifiable, so you have a tangible contact if you meet any problems along the way. They should also provide a working phone number where you can speak with a real person.

Aggressive advertising

Online scammers will invest a lot of effort into pushing you to apply and accept their loan offer. They might send endless emails or even offer discounts that are too good to be true and then tell you the offer is only available if you apply immediately. There’s an increased chance that you’ll make a rushed decision that puts you at a disadvantage.

Other traps to look out for

While the following may not exactly be classified as online scams they should be avoided as much as possible:

  • Payday loans. These are well known for high interest rates that can trap borrowers in a vicious debt cycle.
  • Credit cards. Unless you get one with a low interest rate to help you build your credit or pay for an emergency, credit cards should generally be avoided.
  • Overdrafts. Are you tempted to keep withdrawing money from your account even if the balance has gone past zero? Think twice because most banks offer this service at a high price.
  • Title loans. You can borrow money using the title to your car as collateral, but the moment you fail to repay the loan, you’ll risk losing the asset.

So, you have been scammed? – Here’s what you can do

Online scammers use every trick up their sleeves to convince you of their legitimacy. Falling for the lie happens to the best of us, and if you have been scammed, you just have to learn from your mistakes and move forward. Besides using the scammer alert signs outlined above to protect yourself, you can also take the following steps:

  1. Report the matter to the nearest authorities and provide them with all the relevant details of the scam.
  2. Report the matter to the bank if the scammer has placed a debit order on your account, or has your banking information and personal details.
  3. Share your reviews of the scammer to warn others.

On the other hand, here’s how to spot a legit online lender

We have looked at the red flags, here are some green flags to look out for when applying for a loan online:

  • Verifiable physical address and working contact details;
  • Positive online reviews; and
  • The financial institution should be a registered credit provider that offers authorised financial services. Credit providers showcased on CompareLoans are all authorised Financial Services Providers.

Conclusion

As long as you stay away from the scammers applying for a loan online offers convenience and many other benefits. If you’re looking for a safer starting point, CompareLoans.co.za is a top South African loan comparison website that helps you compare online loans from various reputable and trusted lenders. It’s easy to get started and get the financial help you need today. 

Photo by Clint Patterson on Unsplash

WP_Post Object ( [ID] => 102309 [post_author] => 3 [post_date] => 2020-09-23 16:41:34 [post_date_gmt] => 2020-09-23 14:41:34 [post_content] =>

When you refinance a loan, you get a new loan in place of the old one. You might wonder what difference refinancing makes if you still owe the same amount, but it can be highly beneficial in the following circumstances:

If your current loan isn’t working for you, find out how refinancing can optimise your situation.

Refinancing your loan: How do you do it?

Refinancing your loan is as simple as applying for a new loan. You then use this new loan to pay off your old loan completely. If you have applied for a loan before, then you’re probably familiar with the refinancing process:

  1. Do some research to find out which reputable South African lenders offer loan refinancing.
  2. Go through the details of each loan offer and consider factors like: 
  1. If the new loan sounds good go ahead and submit your application!
  2. Use the cash to pay off the old loan and start making payments on the new loan, which hopefully has better features all round.

You don’t have to feel trapped by your loan

You might have taken out a loan only to find out later on that it has certain features you wish to change. Here’s where refinancing can be a lifesaver. Instead of being stuck with a less-than-optimum loan for years, you can fix these issues. A big bonus is that refinancing works for most types of loans:

Usually, when you take out a loan, you want to benefit from the lump sum of money. You also want to borrow the money at the lowest cost possible. That means a low-interest rate and fewer charges and fees. These low-cost features are not always available when you apply for your loan. Once they become available, then it might be time to refinance the loan.

Common refinancing examples

Other times your situation changes, and you realize that a new loan with different features might be safer and has less risk. You might want to change the following features:

At the same time avoid these refinancing mistakes

Refinancing isn’t always a smart move, especially if you end up increasing the total costs of your loan. During the process, you might need to pay additional costs as you close the old loan and initiate a new one. The lender might charge administrative fees to refinance the loan so always make sure you’re not getting yourself further into debt.

Another mistake to avoid is choosing a new loan that doesn’t have some crucial advantages of your old loan. As an example, your new loan might not allow early or additional repayments unless you pay a penalty fee. In this case, the best option is to take out a new loan that allows you to keep the top benefits of your old loan.

Also, when refinancing, it’s best to take steps that ensure your credit score is in the best shape possible. That means paying your monthly instalments and avoiding taking out other loans before and during the refinancing process. A low credit score and a poor credit history can hinder you from getting a better deal.

Besides refinancing, what else can you do?

After doing some calculations, you can decide that refinancing a loan might currently not be the right option for you. Here’s what you can do instead:

Main points to remember when refinancing your loan

Photo by Humphrey Muleba on Unsplash

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What is loan refinancing and why you should care

When you refinance a loan, you get a new loan in place of the old one. You might wonder what difference refinancing makes if you still owe the same amount, but it can be highly beneficial in the following circumstances:

  • The new loan has a lower interest rate, so you save money.
  • Your preferences have changed; for example, if you have a secured loan, you might no longer want to use your personal property as security.
  • Overall, the new loan has more benefits, better features, greater flexibility, plus more positive aspects that improve your financial situation.

If your current loan isn’t working for you, find out how refinancing can optimise your situation.

Refinancing your loan: How do you do it?

Refinancing your loan is as simple as applying for a new loan. You then use this new loan to pay off your old loan completely. If you have applied for a loan before, then you’re probably familiar with the refinancing process:

  1. Do some research to find out which reputable South African lenders offer loan refinancing.
  2. Go through the details of each loan offer and consider factors like: 
  • Interest rate
  • How much you can borrow
  • Which loan terms are available
  • Repayment flexibility
  • Loan charges and fees 
  • Other features of the loan
  1. If the new loan sounds good go ahead and submit your application!
  2. Use the cash to pay off the old loan and start making payments on the new loan, which hopefully has better features all round.

You don’t have to feel trapped by your loan

You might have taken out a loan only to find out later on that it has certain features you wish to change. Here’s where refinancing can be a lifesaver. Instead of being stuck with a less-than-optimum loan for years, you can fix these issues. A big bonus is that refinancing works for most types of loans:

Usually, when you take out a loan, you want to benefit from the lump sum of money. You also want to borrow the money at the lowest cost possible. That means a low-interest rate and fewer charges and fees. These low-cost features are not always available when you apply for your loan. Once they become available, then it might be time to refinance the loan.

Common refinancing examples

Other times your situation changes, and you realize that a new loan with different features might be safer and has less risk. You might want to change the following features:

  • Variable interest rate – If the interest rate goes up the loan might become too expensive for you, and switching to a fixed interest rate loan might be a better option.
  • Fixed interest rate – If the interest rate goes down, you might not be able to benefit if you have a fixed-rate loan. Switching to a variable rate loan gives you a lower starting interest rate.
  • Balloon payment – A balloon loan requires you to pay a lump sum of money at the end of the loan agreement. If you can’t afford this simply apply for a new loan to cover the balloon payment.
  • Secured loan – Refinancing a secured loan to an unsecured loan means you remove the risk of losing your asset or personal property.
  • Unsecured loan – You can get a lower interest rate and better loan terms by switching to a secured loan if you have the right type of asset.
  • Loan terms – A longer loan term reduces your monthly repayment amount, which improves cash flow. On the other hand, a loan term means your monthly repayments increase, but you save on interest since you can pay off the loan quicker.
  • Refinancing your home loan to get your equity back – This allows you to get back the balance you have already paid towards your home loan. This frees up a lump sum of cash you can use for anything you like, including paying for a holiday, wedding, or home renovation.

At the same time avoid these refinancing mistakes

Refinancing isn’t always a smart move, especially if you end up increasing the total costs of your loan. During the process, you might need to pay additional costs as you close the old loan and initiate a new one. The lender might charge administrative fees to refinance the loan so always make sure you’re not getting yourself further into debt.

Another mistake to avoid is choosing a new loan that doesn’t have some crucial advantages of your old loan. As an example, your new loan might not allow early or additional repayments unless you pay a penalty fee. In this case, the best option is to take out a new loan that allows you to keep the top benefits of your old loan.

Also, when refinancing, it’s best to take steps that ensure your credit score is in the best shape possible. That means paying your monthly instalments and avoiding taking out other loans before and during the refinancing process. A low credit score and a poor credit history can hinder you from getting a better deal.

Besides refinancing, what else can you do?

After doing some calculations, you can decide that refinancing a loan might currently not be the right option for you. Here’s what you can do instead:

  • If you want to minimise the total cost of your high-interest loan, you can speed up the loan payments to avoid accumulating interest.
  • You can simply approach your current lender and negotiate a loan restructuring. 

Main points to remember when refinancing your loan

  • The purpose of refinancing a loan is to switch to a different loan that has better features.
  • When done correctly, refinancing offers benefits that include more affordable monthly payments, a lower interest rate, and more savings.
  • In addition, you can refinance your loan to get your equity back which gives you money that can be used for many purposes.
  • However, refinancing can become too costly if there are too many fees involved during the refinancing process. 
  • Ultimately, the best thing is to use the information in this article to assess your individual situation and figure out if refinancing is the best option for you.

Photo by Humphrey Muleba on Unsplash

WP_Post Object ( [ID] => 101913 [post_author] => 1 [post_date] => 2020-09-07 17:09:22 [post_date_gmt] => 2020-09-07 15:09:22 [post_content] =>

When it comes to money, you can’t always trust how your brain works. There are times when you might believe you’re spending money reasonably and wisely. But the truth is, your brain can influence you to make bad money decisions without you even realising it. This is what we call cognitive bias, and in this article, we look at the most common cognitive biases, how they influence your spending habits, and how to overcome them.

Bias #1: Sunk Cost Fallacy

Bestselling author Rolf Dobelli once said, “The sunk cost fallacy is most dangerous when we have invested a lot of time, money, energy, or love in something. This investment becomes a reason to carry on, even if we are dealing with a lost cause.”

A good example of sunk cost fallacy

Let’s say you buy a car that is in bad condition. You try and fix everything wrong with it, including the tires, brakes, and radiator. After spending about R7000, the mechanic tells you the engine needs to be repaired. At this point, you’re starting to make a loss, but you tell yourself, “let me just pay for the engine; otherwise all the money I have already paid will go to waste.”

What’s the solution?

Don’t throw good money after bad money as this will only result in greater loss. Accept that you can’t recover any sunk costs and try to save your money by making better decisions in the future.

Photo by Cliff Johnson on Unsplash

Bias #2: Group Thinking

The famous novelist Mark Twain said, “When you find yourself on the side of the majority, you should pause and think.” This is because you can be influenced to spend money so you can fit in with the people in your group.

A good example of group thinking

If your co-workers always buy lunch, you will spend more money taking part in this habit. Even when you could save money by bringing a lunch box, you're more inclined to copy what your peers are doing.

What’s the solution?

Understand that your situation and budget might be different from what other people are experiencing. Sometimes peer-pressure forces you to go out of budget, but when you have money troubles, you might have to face them on your own. Therefore, it’s better to buy something because you can afford it, not because you want to fit in.

Bias #3: Framing Effect

It’s not what you say; it’s how you say it. This is a motto most companies use to market their products. They use the right combination of words to influence you to ignore facts and buy their stuff.

A good example of the framing effect

You walk into your favourite shop and see an item going for R200. You’re more likely to buy it if it says 50% off because you automatically think you’re lucky for buying it at such a low price. In reality, you’re still spending money, and the framing effect might trick you into buying unnecessary things. 

What’s the solution?

Every time you shop, try and remember that most companies will present their information in an attractive way. If they offer you a buy 1, get 1 free deal, think about the real facts. Is it really cheap and do you really need it?

Photo by Jessica Ruscello on Unsplash

Bias #4: The Anchoring Effect

This is when you use information that you already know or, the first piece of information you hear to decide if buying something is a good idea.

A good example of the anchoring effect

You walk into a shop and find that the phone you want to buy costs R3000. In the next shop, you see it going for R2400. This may still be more than you had budgeted for, but because you’re using R3000 as your anchor, the second phone seems much cheaper, so you’re more willing to buy it.

What’s the solution?

Realise that you’re biased because of the anchor you’re using. In the example above, it is better to delay buying the phone until you find more information that confirms whether buying the second phone is a good decision.

Bias #5: The Ostrich Effect

Life coach Archibald Marwizi has been quoted saying, “The ostrich approach, which consists in burying your head in the sand when confronting your areas of weakness, becomes a self-set trigger for failure.” Humans sometimes behave like ostriches in order to avoid bad financial news.

A good example of the ostrich effect

You go on a shopping trip to your local mall, and you keep buying things without checking your bank balance. Deep down, you’re afraid that you have spent too much money, so you avoid looking at the numbers. That means you’re spending money blindly without a budget.

What’s the solution?

In order to make better decisions with your money, you have to face the truth head-on. If you have overspent, quickly looking at the total cost will help you avoid more unnecessary spending.

Here are more cognitive biases to look out for when spending money

So far, we’ve looked at some common examples of cognitive biases that influence your financial decisions. However, there’s more. The following cognitive biases and their examples are also worth knowing:

Some final words on cognitive biases

As you can see from what we’ve outlined, cognitive biases are numerous and happen more often than we think. With the help of this article, you will train your brain to recognise these sneaky influences. When you beat these mind tricks, you’ll make better financial decisions that will help you better manage your finances.

Photo by Diego PH on Unsplash

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How cognitive biases influence our financial decisions

When it comes to money, you can’t always trust how your brain works. There are times when you might believe you’re spending money reasonably and wisely. But the truth is, your brain can influence you to make bad money decisions without you even realising it. This is what we call cognitive bias, and in this article, we look at the most common cognitive biases, how they influence your spending habits, and how to overcome them.

Bias #1: Sunk Cost Fallacy

Bestselling author Rolf Dobelli once said, “The sunk cost fallacy is most dangerous when we have invested a lot of time, money, energy, or love in something. This investment becomes a reason to carry on, even if we are dealing with a lost cause.”

A good example of sunk cost fallacy

Let’s say you buy a car that is in bad condition. You try and fix everything wrong with it, including the tires, brakes, and radiator. After spending about R7000, the mechanic tells you the engine needs to be repaired. At this point, you’re starting to make a loss, but you tell yourself, “let me just pay for the engine; otherwise all the money I have already paid will go to waste.”

What’s the solution?

Don’t throw good money after bad money as this will only result in greater loss. Accept that you can’t recover any sunk costs and try to save your money by making better decisions in the future.

Photo by Cliff Johnson on Unsplash

Bias #2: Group Thinking

The famous novelist Mark Twain said, “When you find yourself on the side of the majority, you should pause and think.” This is because you can be influenced to spend money so you can fit in with the people in your group.

A good example of group thinking

If your co-workers always buy lunch, you will spend more money taking part in this habit. Even when you could save money by bringing a lunch box, you’re more inclined to copy what your peers are doing.

What’s the solution?

Understand that your situation and budget might be different from what other people are experiencing. Sometimes peer-pressure forces you to go out of budget, but when you have money troubles, you might have to face them on your own. Therefore, it’s better to buy something because you can afford it, not because you want to fit in.

Bias #3: Framing Effect

It’s not what you say; it’s how you say it. This is a motto most companies use to market their products. They use the right combination of words to influence you to ignore facts and buy their stuff.

A good example of the framing effect

You walk into your favourite shop and see an item going for R200. You’re more likely to buy it if it says 50% off because you automatically think you’re lucky for buying it at such a low price. In reality, you’re still spending money, and the framing effect might trick you into buying unnecessary things. 

What’s the solution?

Every time you shop, try and remember that most companies will present their information in an attractive way. If they offer you a buy 1, get 1 free deal, think about the real facts. Is it really cheap and do you really need it?

Photo by Jessica Ruscello on Unsplash

Bias #4: The Anchoring Effect

This is when you use information that you already know or, the first piece of information you hear to decide if buying something is a good idea.

A good example of the anchoring effect

You walk into a shop and find that the phone you want to buy costs R3000. In the next shop, you see it going for R2400. This may still be more than you had budgeted for, but because you’re using R3000 as your anchor, the second phone seems much cheaper, so you’re more willing to buy it.

What’s the solution?

Realise that you’re biased because of the anchor you’re using. In the example above, it is better to delay buying the phone until you find more information that confirms whether buying the second phone is a good decision.

Bias #5: The Ostrich Effect

Life coach Archibald Marwizi has been quoted saying, “The ostrich approach, which consists in burying your head in the sand when confronting your areas of weakness, becomes a self-set trigger for failure.” Humans sometimes behave like ostriches in order to avoid bad financial news.

A good example of the ostrich effect

You go on a shopping trip to your local mall, and you keep buying things without checking your bank balance. Deep down, you’re afraid that you have spent too much money, so you avoid looking at the numbers. That means you’re spending money blindly without a budget.

What’s the solution?

In order to make better decisions with your money, you have to face the truth head-on. If you have overspent, quickly looking at the total cost will help you avoid more unnecessary spending.

Here are more cognitive biases to look out for when spending money

So far, we’ve looked at some common examples of cognitive biases that influence your financial decisions. However, there’s more. The following cognitive biases and their examples are also worth knowing:

  • The spotlight effect – This is when you think other people notice you and pay a lot of attention to what you do. For example, you might buy an expensive outfit to impress your co-workers, but in reality, they hardly notice what you wear.
  • Confirmation bias – If you want to buy an iPhone, you will only look for and listen to information that supports your decision. You’re likely to ignore any negative information about iPhones.
  • The denomination effect – It’s easy to spend more money when your wallet is full of R10 notes. However, if you have just one R200 note, you’re less willing to break it down.
  • Time discounting – You’re more likely to spend money on a holiday trip that is 2 weeks away than save for a retirement which is 10 years away.
  • Status quo bias – Because of emotional attachment to specific products, you might resist changing things and finding better options even if the product becomes too expensive.
  • Blind-spot bias – This is a big one. When you spend money, but you try to convince yourself that you’re not biased, you might be suffering from blind-spot bias. In fact, blind-spot bias can keep you from recognising the cognitive biases mentioned in this article. A bit like an inception bias.

Some final words on cognitive biases

As you can see from what we’ve outlined, cognitive biases are numerous and happen more often than we think. With the help of this article, you will train your brain to recognise these sneaky influences. When you beat these mind tricks, you’ll make better financial decisions that will help you better manage your finances.

Photo by Diego PH on Unsplash

WP_Post Object ( [ID] => 101896 [post_author] => 1 [post_date] => 2020-08-23 18:15:53 [post_date_gmt] => 2020-08-23 16:15:53 [post_content] =>

When your loan application gets denied, it's easy to start thinking that the lender has something against you. Sometimes, you might feel upset and stressed if you're relying on the loan to get out of a tight situation. You may not only wonder why the lender doesn't like your profile, but you might also ask yourself, "So, what do I do next?" 

To give you the answers you need, we look at the reasons your loan application was rejected, and we provide you with the steps you can take to increase your chances of getting a "Yes" on your next application.

Possible answers to why your loan was denied

Before you can fix a problem, it's important to find out the root cause. Most of the time, the lender will save you time by explaining why they rejected your application. Here are some common reasons why your loan application might be turned down:

Problems with your credit

When credit providers offer their services, they also expect to make a profit. However, there is risk involved when you lend a person money because they might not return it, which counts as a loss. If lenders consider you to be high risk, they will charge you a higher interest rate or decline your loan application altogether. To calculate the risk you pose, lenders usually check your credit history or credit score, and if they find the following problems, your loan application is likely to be rejected:

Problems with your income

Lenders also use the details of your income to carry out an affordability assessment. As an example, if you earn a regular monthly income of more than R10,000 and are permanently employed, your chances of approval are higher. The lender has confidence in your ability to make the required monthly repayments compared to someone who earns less or who is a contract worker.

Problems with information on your application

If you submit a loan application form with incomplete or wrong information, you may not be approved. Lenders usually use your personal, employment, and financial details to verify your identity and check whether you qualify for the loan.

Your loan purpose is not approved

Depending on the loan type, some lenders usually ask why you're taking out that particular loan. If it's a personal loan, the lender may not want you to use the funds to start a business or buy Bitcoin (even if the ideas seem sound). 

You don't meet the requirements

Different lenders have different requirements you have to meet to qualify for their loans. Generally, the requirements for taking out a loan include having a South African ID, bank statements, payslips, and proof of address. Failure to meet some of these loan requirements may result in a rejected application.

What can you do to get your loan application accepted?

Now that you have the why, it's time to work on getting your next loan application approved. How and what can you do to lower the risk you pose to the lender, so they're more willing to advance the cash you need? Here are some actions you can take: 

Work on your credit score 

Having a positive credit history and an excellent credit score not only increase your approval chances, but they also help you get lower interest rates when you get approved. There are several ways to improve your credit score:

Settle your other debts first 

Paying off your existing accounts is a long term approach that reduces your debt-to-income ratio. In other words, when you pay off some of your loans, you create more room in your monthly budget where a new loan can fit. That means you're now in a better position to afford the monthly repayments for that loan.

Apply for a secured loan

Using your property or vehicle to secure a loan increases your chances of approval. In this case, the lender can always take the property or car from you if you fail to repay the loan. The lender is, therefore, more willing to take the risk and approve your application.

Provide a deposit

For vehicle finance and home loans paying the maximum deposit amount can increase your chances of approval. By paying a deposit, you reduce the amount you have to borrow, which makes the loan more affordable. If the lender is sure that you can afford the monthly repayments, you'll be more likely to get approved.

Get a co-signer

This can be a relative or close friend who makes a joint application with you. This person will also be responsible for repaying the loan if you are unable to do so. If your co-signer is more qualified than you or has better credit, then the lender has a higher chance of recovering their money. Hence, they'll be more willing to make you a loan offer.

Approach a different lender

You can try your luck with a different lender, especially if they specialise in offering loans suited to your particular situation. For example, if your problem is having low credit, or being self-employed, there are various lenders who advertise their services for this type of loan applicant.

Get assistance

There are some services such as CreditGenie that assist people in repairing their credit score and to consolidate their loans.

Conclusion

If your loan application is rejected, the important thing to realize is that most reputable credit providers in South Africa aim to protect both you and themselves. To become a more responsible borrower, follow the advice in this article as much as you can. This way, you'll lower the risk the lender has to take, which automatically increases your chances of getting your loan application approved.

Photo by JESHOOTS.COM on Unsplash

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Why was my loan application rejected?

When your loan application gets denied, it’s easy to start thinking that the lender has something against you. Sometimes, you might feel upset and stressed if you’re relying on the loan to get out of a tight situation. You may not only wonder why the lender doesn’t like your profile, but you might also ask yourself, “So, what do I do next?” 

To give you the answers you need, we look at the reasons your loan application was rejected, and we provide you with the steps you can take to increase your chances of getting a “Yes” on your next application.

Possible answers to why your loan was denied

Before you can fix a problem, it’s important to find out the root cause. Most of the time, the lender will save you time by explaining why they rejected your application. Here are some common reasons why your loan application might be turned down:

Problems with your credit

When credit providers offer their services, they also expect to make a profit. However, there is risk involved when you lend a person money because they might not return it, which counts as a loss. If lenders consider you to be high risk, they will charge you a higher interest rate or decline your loan application altogether. To calculate the risk you pose, lenders usually check your credit history or credit score, and if they find the following problems, your loan application is likely to be rejected:

  • Low credit score – This shows you have a past behaviour of not paying your debts as agreed.
  • Insufficient credit history – If you have little or no credit history, the lender won’t have enough information to decide whether you’re creditworthy.
  • Too many debts – These typically strain your budget and leave you with a high debt-to-income ratio. Basically, the lender compares what you earn with the amount you owe and decides that you can’t afford another loan.
  • Too many credit enquiries – Your credit history shows how many times you have applied for a loan. Too many applications might lead the lender to think you have money problems, and they will consider you to be high risk.
  • Negative judgements – Negative information such as a court judgement, sequestration, or debt review usually serve as a warning to other lenders you approach in the future.

Problems with your income

Lenders also use the details of your income to carry out an affordability assessment. As an example, if you earn a regular monthly income of more than R10,000 and are permanently employed, your chances of approval are higher. The lender has confidence in your ability to make the required monthly repayments compared to someone who earns less or who is a contract worker.

Problems with information on your application

If you submit a loan application form with incomplete or wrong information, you may not be approved. Lenders usually use your personal, employment, and financial details to verify your identity and check whether you qualify for the loan.

Your loan purpose is not approved

Depending on the loan type, some lenders usually ask why you’re taking out that particular loan. If it’s a personal loan, the lender may not want you to use the funds to start a business or buy Bitcoin (even if the ideas seem sound). 

You don’t meet the requirements

Different lenders have different requirements you have to meet to qualify for their loans. Generally, the requirements for taking out a loan include having a South African ID, bank statements, payslips, and proof of address. Failure to meet some of these loan requirements may result in a rejected application.

What can you do to get your loan application accepted?

Now that you have the why, it’s time to work on getting your next loan application approved. How and what can you do to lower the risk you pose to the lender, so they’re more willing to advance the cash you need? Here are some actions you can take: 

Work on your credit score 

Having a positive credit history and an excellent credit score not only increase your approval chances, but they also help you get lower interest rates when you get approved. There are several ways to improve your credit score:

  • Stick to the due date when paying all your debts and instalments – This helps you establish a good track record and improve creditworthiness in the long term.
  • Build your credit score – To create some proof of your ability to manage debt, you can get an affordable credit card that is easy to pay off.
  • Fix errors in your credit report – This requires you to obtain a free copy of your credit history so you can update and correct any negative information that is lowering your credit score.
  • Limit your loan applications – It’s best to apply for a loan you can afford and qualify for. This prevents too many enquiries from showing up on your credit history.

Settle your other debts first 

Paying off your existing accounts is a long term approach that reduces your debt-to-income ratio. In other words, when you pay off some of your loans, you create more room in your monthly budget where a new loan can fit. That means you’re now in a better position to afford the monthly repayments for that loan.

Apply for a secured loan

Using your property or vehicle to secure a loan increases your chances of approval. In this case, the lender can always take the property or car from you if you fail to repay the loan. The lender is, therefore, more willing to take the risk and approve your application.

Provide a deposit

For vehicle finance and home loans paying the maximum deposit amount can increase your chances of approval. By paying a deposit, you reduce the amount you have to borrow, which makes the loan more affordable. If the lender is sure that you can afford the monthly repayments, you’ll be more likely to get approved.

Get a co-signer

This can be a relative or close friend who makes a joint application with you. This person will also be responsible for repaying the loan if you are unable to do so. If your co-signer is more qualified than you or has better credit, then the lender has a higher chance of recovering their money. Hence, they’ll be more willing to make you a loan offer.

Approach a different lender

You can try your luck with a different lender, especially if they specialise in offering loans suited to your particular situation. For example, if your problem is having low credit, or being self-employed, there are various lenders who advertise their services for this type of loan applicant.

Get assistance

There are some services such as CreditGenie that assist people in repairing their credit score and to consolidate their loans.

Conclusion

If your loan application is rejected, the important thing to realize is that most reputable credit providers in South Africa aim to protect both you and themselves. To become a more responsible borrower, follow the advice in this article as much as you can. This way, you’ll lower the risk the lender has to take, which automatically increases your chances of getting your loan application approved.

Photo by JESHOOTS.COM on Unsplash

WP_Post Object ( [ID] => 100814 [post_author] => 1 [post_date] => 2020-08-18 15:43:13 [post_date_gmt] => 2020-08-18 13:43:13 [post_content] =>

If money doesn't buy happiness, does that mean minimalism and frugalism are the way to go? Let's dive a bit deeper and explore if minimalist and frugalist lifestyles can help you move up the happiness scale.

Frugalism - Control your money, not the other way round

Frugalism is all about enjoying life while finding more and more ways to spend money wisely. In other words, it's the art of economics in best form. The danger here lies in being considered as stingy and cheap, but a true frugalist is a financial guru that always seeks maximum value for every rand they spend.

The art of frugality - Every rand counts

If you wish to incorporate frugality into your life here are few habits you should learn to get you started:

Make it count

What if frugality makes you unhappy?

Are you miserable at the thought of having to go without because you have chosen a frugal life? Chances are there are a few things you need to correct. Firstly, frugalism doesn't mean you have to buy low-quality items and stop having nicer things. If you want to go for a shopping spree at the mall and treat yourself, then go ahead. 

As a frugalist, you simply have to shop around for the best discounts and deals. Secondly, keep in mind that frugalism is something you do intentionally. At the end of the day, this lifestyle should feel flexible, not something you are forced to do.

Don't just buy at any sale. Give yourself 24 hours and see if you still really want it then.

Minimalism - Do you really need it?

With a minimalist lifestyle, the general theme seems to be less is better. It is essentially the opposite of hoarding. Most of us tend to hoard, albeit on a smaller scale. We buy and keep things we don't need. We mistake some of our clutter for value, and this distracts us from realizing that sometimes, we are mindless consumers. To start off with a minimalist lifestyle, look at what you spend money on and ask yourself, "Do I really need it?"

More tips for a happier, minimalist lifestyle

Things to remember when going minimal

There are no hard and fast rules for minimalists. How you adapt to this lifestyle is up to you because the things that bring you value and happiness are unique to your situation. For everything that you focus on and keep around you, it should be something that you derive happiness and satisfaction from. Your list can include anything from family and friends to hobbies and interests.

How minimalist and frugalist lifestyles can bring you happiness

Now that we have looked at both lifestyles and what they advocate for, it's easy to see how they can potentially be sources of happiness. Here are just a few examples of how this can happen:

Conclusion

Minimalist and frugalist lifestyles may not be the ultimate key to happiness, but they could help. When you can spend wisely and save while still having the things you love, you become financially independent and learn to be mindful, purposeful, and freer.

Cover photo by Natalia Y on Unsplash

[post_title] => Minimalist and frugalist lifestyles: Are they key to happiness? [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => minimalist-and-frugalist-lifestyles-are-they-key-to-happiness [to_ping] => [pinged] => [post_modified] => 2020-09-02 18:02:52 [post_modified_gmt] => 2020-09-02 16:02:52 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.compareloans.co.za/?p=100814 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw )

Minimalist and frugalist lifestyles: Are they key to happiness?

If money doesn’t buy happiness, does that mean minimalism and frugalism are the way to go? Let’s dive a bit deeper and explore if minimalist and frugalist lifestyles can help you move up the happiness scale.

Frugalism – Control your money, not the other way round

Frugalism is all about enjoying life while finding more and more ways to spend money wisely. In other words, it’s the art of economics in best form. The danger here lies in being considered as stingy and cheap, but a true frugalist is a financial guru that always seeks maximum value for every rand they spend.

The art of frugality – Every rand counts

If you wish to incorporate frugality into your life here are few habits you should learn to get you started:

  • Spend what you can afford. An excellent place to start is creating a monthly budget to avoid compulsive buying of unnecessary and often expensive items.
  • Get excited about finding cheaper ways to do things. For example, if you have your eye on an essential item, find out where to get it on sale or at the best discount.
  • Think about the value every rand brings into your life. If you’re buying a car or clothes, it may be better to buy a good second hand if it offers close to the same value.
  • Make more effort and plan smartly. Being lazy can make you spend recklessly. For example, ordering takeout instead of cooking. Why not make your meals in bulk and store them in the freezer for times when hunger strikes and you don’t feel like cooking?
Make it count

What if frugality makes you unhappy?

Are you miserable at the thought of having to go without because you have chosen a frugal life? Chances are there are a few things you need to correct. Firstly, frugalism doesn’t mean you have to buy low-quality items and stop having nicer things. If you want to go for a shopping spree at the mall and treat yourself, then go ahead. 

As a frugalist, you simply have to shop around for the best discounts and deals. Secondly, keep in mind that frugalism is something you do intentionally. At the end of the day, this lifestyle should feel flexible, not something you are forced to do.

Don’t just buy at any sale. Give yourself 24 hours and see if you still really want it then.

Minimalism – Do you really need it?

With a minimalist lifestyle, the general theme seems to be less is better. It is essentially the opposite of hoarding. Most of us tend to hoard, albeit on a smaller scale. We buy and keep things we don’t need. We mistake some of our clutter for value, and this distracts us from realizing that sometimes, we are mindless consumers. To start off with a minimalist lifestyle, look at what you spend money on and ask yourself, “Do I really need it?”

More tips for a happier, minimalist lifestyle

  • Get rid of items that don’t contribute to your happiness: If you only bought that flashy car because you wanted to impress people, exchange it for the fuel saver you have always wanted.
  • Scale everything down: Think about living in a studio apartment instead of a 2-bedroomed flat. This will force you to keep the things you only need. You will soon realize what is important and what is not. 
  • Find ways to save on time and effort: A minimalist lifestyle pushes you to focus more on the things that matter to you. If that 2-bedroom apartment needs more of your attention to keep things neat and ordered, then getting a smaller apartment might be the right move.

Things to remember when going minimal

There are no hard and fast rules for minimalists. How you adapt to this lifestyle is up to you because the things that bring you value and happiness are unique to your situation. For everything that you focus on and keep around you, it should be something that you derive happiness and satisfaction from. Your list can include anything from family and friends to hobbies and interests.

How minimalist and frugalist lifestyles can bring you happiness

Now that we have looked at both lifestyles and what they advocate for, it’s easy to see how they can potentially be sources of happiness. Here are just a few examples of how this can happen:

  • You save more money and increase your financial stability: This removes a lot of stress and worry and gives you the freedom to be happier.
  • There is a feeling of being more in control of your life when you can deliberately leverage your finances, experiences, and belongings to bring more value.
  • When you remove the things that you consider unnecessary, you’re happy because you’re putting yourself first. Doing something because of societal expectations can steal peace of mind, especially in this era of social media.

Conclusion

Minimalist and frugalist lifestyles may not be the ultimate key to happiness, but they could help. When you can spend wisely and save while still having the things you love, you become financially independent and learn to be mindful, purposeful, and freer.

Cover photo by Natalia Y on Unsplash

WP_Post Object ( [ID] => 100736 [post_author] => 1 [post_date] => 2020-08-11 14:35:09 [post_date_gmt] => 2020-08-11 12:35:09 [post_content] =>

At times, taking out a loan or several loans might seem like such a simple process. However, things can get complicated when you borrow more than you can afford. This slippery slope potentially leads to missed monthly repayments and bad credit. Eventually, you can find yourself stressed and struggling to breathe under a landslide of debt. Does this sound like your situation? If so, then this article will be a tremendous help in guiding you towards the road to financial recovery. Before we dive in, here’s a summary of the key points to be explored:

It’s easy to feel overwhelmed when faced with so much debt, but there is a way out, and most South Africans have discovered it by following these five crucial steps:

1. Make all the necessary calculations

This process requires you to be 100% honest about the current state of your finances. Even if the numbers don’t look good, it’s important to know the ins and outs of your cash flow system. An excellent first step is to calculate the total amount of money that you owe. Next, you may look at your income and how much you spend on monthly expenses. This helps you to define your starting point clearly. From there, you can figure out how much work needs to be done and how long it will take until you become debt-free.

2. Create a financial map

This simply means coming up with reasonable goals for financial recovery. Now that you have a starting point, what endpoint are you aiming for? Linking the two creates a financial map that motivates you to move forward. Examples of financial recovery goals you can set for yourself include:

When outlining these goals, be sure to keep them realistic, specific, and time-based. For example, when you say, “In three months or 90 days I should have paid off all my store clothing accounts,” you’re setting a clearly defined goal that can be achieved and used to measure progress.  

3. Come up with a suitable plan

When you have your financial recovery goals in place, the next step is to draft a plan that takes you from your starting point (your current state) to your endpoint (your goals). The easiest way is to examine your goals one at a time. Take the goal of improving your credit score, for example. To achieve this particular goal, you can plan to:

Other debt management options you can include in your plan are as follows:

4. Put your plan into action

It goes without saying that your current debt situation is unlikely to change without disciplined action. Now is the time to consistently and diligently take action that helps you recover from debt. While doing so, keep the following key ideas in mind:

5. Work on building an emergency fund

Paying off debts is not much fun, which is why having a “piggy bank” can keep you motivated and help balance things out. While you recover from debt, you might question whether it’s better to pay off debt or save. However, focusing too much on one option can leave you open to other financial pitfalls. If all your funds go towards paying off debt, the next time you have an emergency, you’ll have no savings to fall back on. 

You might have to borrow money again, and this just keeps the debt cycle going. On the other hand, saving money and ignoring your debts results in even more debt as interest and additional fees pile up. Through careful planning, you can recover from debt and set up your emergency fund at the same time. 

If you manage to carry out these five simple but effective steps to the best of your ability, then congratulations! You’re well on your way to financial recovery and security. Remember, this journey takes time, but it is worth the effort.

Photo by Richard Jaimes on Unsplash

[post_title] => 5 essential steps to help you recover from debt [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => 5-essential-steps-to-help-you-recover-from-debt [to_ping] => [pinged] => [post_modified] => 2020-08-11 14:38:02 [post_modified_gmt] => 2020-08-11 12:38:02 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.compareloans.co.za/?p=100736 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw )

5 essential steps to help you recover from debt

At times, taking out a loan or several loans might seem like such a simple process. However, things can get complicated when you borrow more than you can afford. This slippery slope potentially leads to missed monthly repayments and bad credit. Eventually, you can find yourself stressed and struggling to breathe under a landslide of debt. Does this sound like your situation? If so, then this article will be a tremendous help in guiding you towards the road to financial recovery. Before we dive in, here’s a summary of the key points to be explored:

  • How to get familiar with your debt situation so you can implement a plan that works.
  • Moving away from bad debt and towards financial freedom.
  • How to secure your future from more financial disaster.

It’s easy to feel overwhelmed when faced with so much debt, but there is a way out, and most South Africans have discovered it by following these five crucial steps:

1. Make all the necessary calculations

This process requires you to be 100% honest about the current state of your finances. Even if the numbers don’t look good, it’s important to know the ins and outs of your cash flow system. An excellent first step is to calculate the total amount of money that you owe. Next, you may look at your income and how much you spend on monthly expenses. This helps you to define your starting point clearly. From there, you can figure out how much work needs to be done and how long it will take until you become debt-free.

2. Create a financial map

This simply means coming up with reasonable goals for financial recovery. Now that you have a starting point, what endpoint are you aiming for? Linking the two creates a financial map that motivates you to move forward. Examples of financial recovery goals you can set for yourself include:

  • Improving your credit score
  • Paying off specific debts by a certain deadline
  • Freeing up more money by cutting out some expenditures from your monthly budget

When outlining these goals, be sure to keep them realistic, specific, and time-based. For example, when you say, “In three months or 90 days I should have paid off all my store clothing accounts,” you’re setting a clearly defined goal that can be achieved and used to measure progress.  

3. Come up with a suitable plan

When you have your financial recovery goals in place, the next step is to draft a plan that takes you from your starting point (your current state) to your endpoint (your goals). The easiest way is to examine your goals one at a time. Take the goal of improving your credit score, for example. To achieve this particular goal, you can plan to:

  • Set a reminder, so you pay all your bills on time
  • Obtain an updated and current copy of your credit report and go through it in case there are errors that can raise your score once corrected
  • Prioritise payment of outstanding bills that are contributing to your poor credit score.

Other debt management options you can include in your plan are as follows:

  • Applying for a debt consolidation loan that enables you to save on interest.
  • Cutting out unnecessary costs such as luxury items in order to divert more funds towards paying off your debt.
  • Seeking debt counselling and learning how to manage your budget and finances properly. 

4. Put your plan into action

It goes without saying that your current debt situation is unlikely to change without disciplined action. Now is the time to consistently and diligently take action that helps you recover from debt. While doing so, keep the following key ideas in mind:

  • It may take time to recover fully. This is fine as long as you continually head in the right direction.
  • You may need to adjust your earlier financial recovery goals and plans as your situation changes, and as you learn what works and what doesn’t.
  • Remain accountable to yourself but, at the same time, avoid setting unrealistic expectations. 

5. Work on building an emergency fund

Paying off debts is not much fun, which is why having a “piggy bank” can keep you motivated and help balance things out. While you recover from debt, you might question whether it’s better to pay off debt or save. However, focusing too much on one option can leave you open to other financial pitfalls. If all your funds go towards paying off debt, the next time you have an emergency, you’ll have no savings to fall back on. 

You might have to borrow money again, and this just keeps the debt cycle going. On the other hand, saving money and ignoring your debts results in even more debt as interest and additional fees pile up. Through careful planning, you can recover from debt and set up your emergency fund at the same time. 

If you manage to carry out these five simple but effective steps to the best of your ability, then congratulations! You’re well on your way to financial recovery and security. Remember, this journey takes time, but it is worth the effort.

Photo by Richard Jaimes on Unsplash

WP_Post Object ( [ID] => 99309 [post_author] => 1 [post_date] => 2020-08-01 09:25:32 [post_date_gmt] => 2020-08-01 07:25:32 [post_content] =>

We spend so much time in our homes, so we should make them perfect. Create an environment that suits all your needs and reflects your own personal style.

How do you go about that? Simple, commit to a home renovation.

You don’t have to entirely redesign the wheel here, no one is expecting you to tear the house down to its bones and the build it back up again. You can make a significant difference to the livability and sustainability of a house simply by making changes to a single area.

That being said, even a small renovation can be expensive, luckily you can easily take out a home loan to pay for a renovation. To learn more about renovations, check out this resource.

If you’re interested in learning how to effectively renovate a single area of your home, check out these tips below!

Revamp your garden

Garden’s are often desperately under-utilised. They can find themselves overgrown, unkempt and in desperate need of some tender loving care. Restrain your deck, replant your garden beds, prune your plants, mow the lawn and you’ll immediately start to notice a difference. Once you’ve cleared the canvas you’ll start to notice the potential of your space to be something truly magical. Then you can begin to invest in some quality outdoor furniture from Remarkable Furniture. Think fire pits, outdoor lounges and outdoor design sets perfect for facilitating your al fresco dining dreams.

Kitchen renovations

The kitchen is the heart and soul of the home so it’s a space where improvements will really be felt. What areas should you target? Counters, storage and flooring. Replace worn countertops with natural stone or stainless steel. Refurbish worn kitchen cabinets with sleek modern furniture. If you have linoleum flooring tear it up and invest in tiling that will instantly lift the look of your room.

Breathe life back into your bathroom

If you’re looking to put your house on the market at some point then you absolutely must update your bathroom. For buyers, a bathroom can be a sticking point and a simple remodel can be all you need to push a potential buyer over the edge. Swap out work fixtures such as tap handles and shower heads. If your bathroom tile is chipped or stained in anyway retile the space, remember larger tiles make a space appear bigger and limit the problem of grout attracting dirt. If any of your plumbing is on the fritz use a renovation as a reason to fix it.

From the floor up

It may seem like something small but your floors are a predominant feature in your home and old, faded carpeting or stained out-dated linoleum can instantly downgrade the look of your home. Rip up your current flooring to see if there are any treasures buried below you current carpeting or linoleum. If they are hiding wooden floorboards then you can polish them and bring them back to life. You could even consider committing to a polished concrete floor if that suits the overall aesthetic of your house. For more information about how to restore flooring, check out this article.

Go green

We could all stand to be a bit more environmentally friendly. You can improve the sustainability of your home by making a few simple improvements. Improving your window sealings, double glazing your windows or simply installing heavy drapes can stop your home from overheating during the day and save you from spending on your heating and air conditioning bills. You can improve your energy efficiency by retrofitting sustainable features into your room like high star rated toilets and water fittings, replacing lights with LEDs or solar-powered lightbulbs and using energy-efficient appliances (check for the five-star energy rating). To learn more about how to make your home more sustainable, head here to check out a government resource.

Photo by RhondaK Native Florida Folk Artist on Unsplash

[post_title] => The most effective ways to renovate your home [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => the-most-effective-ways-to-renovate-your-home [to_ping] => [pinged] => [post_modified] => 2020-08-01 09:25:34 [post_modified_gmt] => 2020-08-01 07:25:34 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.compareloans.co.za/?p=99309 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw )

The most effective ways to renovate your home

We spend so much time in our homes, so we should make them perfect. Create an environment that suits all your needs and reflects your own personal style.

How do you go about that? Simple, commit to a home renovation.

You don’t have to entirely redesign the wheel here, no one is expecting you to tear the house down to its bones and the build it back up again. You can make a significant difference to the livability and sustainability of a house simply by making changes to a single area.

That being said, even a small renovation can be expensive, luckily you can easily take out a home loan to pay for a renovation. To learn more about renovations, check out this resource.

If you’re interested in learning how to effectively renovate a single area of your home, check out these tips below!

Revamp your garden

Garden’s are often desperately under-utilised. They can find themselves overgrown, unkempt and in desperate need of some tender loving care. Restrain your deck, replant your garden beds, prune your plants, mow the lawn and you’ll immediately start to notice a difference. Once you’ve cleared the canvas you’ll start to notice the potential of your space to be something truly magical. Then you can begin to invest in some quality outdoor furniture from Remarkable Furniture. Think fire pits, outdoor lounges and outdoor design sets perfect for facilitating your al fresco dining dreams.

Kitchen renovations

The kitchen is the heart and soul of the home so it’s a space where improvements will really be felt. What areas should you target? Counters, storage and flooring. Replace worn countertops with natural stone or stainless steel. Refurbish worn kitchen cabinets with sleek modern furniture. If you have linoleum flooring tear it up and invest in tiling that will instantly lift the look of your room.

Breathe life back into your bathroom

If you’re looking to put your house on the market at some point then you absolutely must update your bathroom. For buyers, a bathroom can be a sticking point and a simple remodel can be all you need to push a potential buyer over the edge. Swap out work fixtures such as tap handles and shower heads. If your bathroom tile is chipped or stained in anyway retile the space, remember larger tiles make a space appear bigger and limit the problem of grout attracting dirt. If any of your plumbing is on the fritz use a renovation as a reason to fix it.

From the floor up

It may seem like something small but your floors are a predominant feature in your home and old, faded carpeting or stained out-dated linoleum can instantly downgrade the look of your home. Rip up your current flooring to see if there are any treasures buried below you current carpeting or linoleum. If they are hiding wooden floorboards then you can polish them and bring them back to life. You could even consider committing to a polished concrete floor if that suits the overall aesthetic of your house. For more information about how to restore flooring, check out this article.

Go green

We could all stand to be a bit more environmentally friendly. You can improve the sustainability of your home by making a few simple improvements. Improving your window sealings, double glazing your windows or simply installing heavy drapes can stop your home from overheating during the day and save you from spending on your heating and air conditioning bills. You can improve your energy efficiency by retrofitting sustainable features into your room like high star rated toilets and water fittings, replacing lights with LEDs or solar-powered lightbulbs and using energy-efficient appliances (check for the five-star energy rating). To learn more about how to make your home more sustainable, head here to check out a government resource.

Photo by RhondaK Native Florida Folk Artist on Unsplash

WP_Post Object ( [ID] => 95350 [post_author] => 1 [post_date] => 2020-07-22 16:40:25 [post_date_gmt] => 2020-07-22 14:40:25 [post_content] => Being good at managing your money doesn’t have to be something that you are born with. Often, parents assume that math and money is not their kids’ priority. In our opinion, that is a dangerous assumption to have, and it can be damaging to the kids’ future too.

Kids are like an empty canvas 

It is the responsibility of the parents to enable the kids to manage finances properly. Education about money matters starts at a very young age. However, the teenage years are the period where parents can enter into details as around this time, kids start thinking about financial independence. They take up part-time jobs and start saving up. It is crucial to guide them at the right time to prevent them from making hasty decisions. The following includes some principles that should be taught to teenagers for better money management:

Importance of financial independence

When the kids are too young to look after themselves financially, parents handle this aspect as they should. However, small lessons with regards to excessive spending and savings can be taught early on, like giving the kids pocket money only after they have completed small chores around the house. Getting a part-time job during the teenage years also has many benefits. It teaches multi-tasking, looks good on a college application, and teaches financial independence, and since they will know how hard it is to earn money, they will be inclined to save instead of spending.

Nothing comes free

Teenagers are intuitive when it comes to having their demands met and successfully manipulate parents into fulfilling their every need. Parents’ first instinct is to protect their kids from any harm or hurt. This is precisely the correct time to practice tough love and hold out. Motivate the kids to get a job if they need money to buy something. Do not hand them things on a silver platter; it will just make them entitled and bratty. You might be solving their problems in the short-term, but you are setting them up for long-term failures. Once they start earning, start charging them little amounts. It will help cultivate a habit of managing money for mortgages or any fixed payments. It may sound cruel to parents but refrain from giving your kids a free pass.

Deferred gratification

Often in life, we don’t always get the reward immediately or the way we were hoping to get despite our best efforts. There is no other option but to wait and keep working harder, no matter how frustrating it gets. The lesson needs to be taught to teenagers. What if they want to buy something big? Encourage them to set a portion of money aside each week or month to build the funds slowly. The sense of accomplishment and the sheer joy of owning something that you have worked hard for cannot be described in words. The journey may be hard, but kids need to experience it early on in life. Also, resist the urge to chip in. While you may bring them closer to buying their dream “thing”, in the long term, you are taking them farther away to deal with difficulties they may encounter.

Borrowing should not be the first choice

The world has evolved, so has the attitude towards credit. While accessing a loan is comparatively easier and has proved to be helpful to some people, it also opens up the possibility of falling into a debt trap if one is not careful. While waving a credit card in a retail store is considered a style statement, teenagers should know the dangers of credit card debt. The difference between good debt and bad debt should be explained properly. For example, debt taken to finance an asset that appreciates as time goes on is good debt. A bad debt starts accumulating and multiplying at an alarming rate. School your teen on limited spending and make them understand a basic fact, credit card spending should be well within the limits of their earnings. The consequences of credit card debt should also be highlighted.

Every action has consequences

Almost every teen has a rebellion phase, thinking that they know better. Despite your best efforts, children stray off-limits. If they do land in hot water, hold them responsible for consequences. Ensure that they take an active part in cleaning the mess that they have created. It is imminent that the kids realise that the parents do not have a magic wand that can be waved to fix every problem. Teenagers should not run to their parents at the first sign of trouble. They should be held accountable for their actions. They may need to work extra hard to pay back an impulse purchase, but this is exactly what will hold them off when they want to make an impulse decision. We know that things are easier said than done. Still, if you stick to these tips, you will be raising a responsible and independent citizen, which will probably not end joining the hordes of citizens suffering in debt. The citizens you create now will raise the citizens of the future, and your children may hate you now, but in the future, they will thank you. [post_title] => How to help your teens become money smart [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => help-teens-become-money-smart [to_ping] => [pinged] => [post_modified] => 2020-07-22 16:42:42 [post_modified_gmt] => 2020-07-22 14:42:42 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.compareloans.co.za/?p=95350 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw )

How to help your teens become money smart

Being good at managing your money doesn’t have to be something that you are born with. Often, parents assume that math and money is not their kids’ priority. In our opinion, that is a dangerous assumption to have, and it can be damaging to the kids’ future too.

Kids are like an empty canvas 

It is the responsibility of the parents to enable the kids to manage finances properly.

Education about money matters starts at a very young age. However, the teenage years are the period where parents can enter into details as around this time, kids start thinking about financial independence. They take up part-time jobs and start saving up. It is crucial to guide them at the right time to prevent them from making hasty decisions.

The following includes some principles that should be taught to teenagers for better money management:

Importance of financial independence

When the kids are too young to look after themselves financially, parents handle this aspect as they should. However, small lessons with regards to excessive spending and savings can be taught early on, like giving the kids pocket money only after they have completed small chores around the house.

Getting a part-time job during the teenage years also has many benefits. It teaches multi-tasking, looks good on a college application, and teaches financial independence, and since they will know how hard it is to earn money, they will be inclined to save instead of spending.

Nothing comes free

Teenagers are intuitive when it comes to having their demands met and successfully manipulate parents into fulfilling their every need. Parents’ first instinct is to protect their kids from any harm or hurt. This is precisely the correct time to practice tough love and hold out.

Motivate the kids to get a job if they need money to buy something. Do not hand them things on a silver platter; it will just make them entitled and bratty. You might be solving their problems in the short-term, but you are setting them up for long-term failures.

Once they start earning, start charging them little amounts. It will help cultivate a habit of managing money for mortgages or any fixed payments. It may sound cruel to parents but refrain from giving your kids a free pass.

Deferred gratification

Often in life, we don’t always get the reward immediately or the way we were hoping to get despite our best efforts. There is no other option but to wait and keep working harder, no matter how frustrating it gets.

The lesson needs to be taught to teenagers. What if they want to buy something big? Encourage them to set a portion of money aside each week or month to build the funds slowly.

The sense of accomplishment and the sheer joy of owning something that you have worked hard for cannot be described in words. The journey may be hard, but kids need to experience it early on in life.

Also, resist the urge to chip in. While you may bring them closer to buying their dream “thing”, in the long term, you are taking them farther away to deal with difficulties they may encounter.

Borrowing should not be the first choice

The world has evolved, so has the attitude towards credit. While accessing a loan is comparatively easier and has proved to be helpful to some people, it also opens up the possibility of falling into a debt trap if one is not careful.

While waving a credit card in a retail store is considered a style statement, teenagers should know the dangers of credit card debt.

The difference between good debt and bad debt should be explained properly. For example, debt taken to finance an asset that appreciates as time goes on is good debt. A bad debt starts accumulating and multiplying at an alarming rate.

School your teen on limited spending and make them understand a basic fact, credit card spending should be well within the limits of their earnings. The consequences of credit card debt should also be highlighted.

Every action has consequences

Almost every teen has a rebellion phase, thinking that they know better. Despite your best efforts, children stray off-limits. If they do land in hot water, hold them responsible for consequences. Ensure that they take an active part in cleaning the mess that they have created.

It is imminent that the kids realise that the parents do not have a magic wand that can be waved to fix every problem. Teenagers should not run to their parents at the first sign of trouble. They should be held accountable for their actions. They may need to work extra hard to pay back an impulse purchase, but this is exactly what will hold them off when they want to make an impulse decision.

We know that things are easier said than done. Still, if you stick to these tips, you will be raising a responsible and independent citizen, which will probably not end joining the hordes of citizens suffering in debt.

The citizens you create now will raise the citizens of the future, and your children may hate you now, but in the future, they will thank you.

WP_Post Object ( [ID] => 97441 [post_author] => 1 [post_date] => 2020-07-05 11:23:33 [post_date_gmt] => 2020-07-05 09:23:33 [post_content] =>

It can be a tricky situation when you find yourself with some extra money, and yet you have debts that need to be paid. Saving money is good, particularly in South Africa, where most people are losing their source of income because of the corona virus. On the other hand, you want to be debt-free. In such cases, the best way is to reason out all the facts, so you end up with a win-win solution. 

Saving money vs. paying off a debt

The best way is to look at each option independently. In this way, you can see the general advantages of prioritising each option. However, since your financial circumstances are unique, there is no one-size-fits-all solution to this decision.

Benefits of saving

What's the best way to save money?

It is considered best to save enough money to cover the cost of living for three or six months. By opening a savings account with high-interest rates, you can quickly build up your savings. So, if you find yourself with a little extra cash, just put it aside in a separate account and watch it grow.

Benefits of paying off debt

What's the best way to pay off debt?

The easiest way is to budget for your monthly repayments. Any extra money that you get can go towards making those repayments. To make the repayment process more manageable and less costly, you can look at other options such as debt consolidation and credit card balance transfer. These allow you to place your debt under one account while lowering interest payments.

Conclusion

Analysing all the factors involved and how they apply to you can help you make the right decision. Saving and paying off debt both have their good points. Therefore, you can benefit from taking a two-way approach. 

This means putting extra cash into an emergency fund while at the same time using some of it to pay your debts. At the end of the day, the goal is to have peace of mind. Staying in control of your debt and having an emergency fund can both help you to achieve this freedom.

Photo by Briona Baker on Unsplash

[post_title] => Is it better to pay off a debt or save money? [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => saving-money-vs-paying-off-debt [to_ping] => [pinged] => [post_modified] => 2020-07-05 11:23:35 [post_modified_gmt] => 2020-07-05 09:23:35 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.compareloans.co.za/?p=97441 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw )

Is it better to pay off a debt or save money?

It can be a tricky situation when you find yourself with some extra money, and yet you have debts that need to be paid. Saving money is good, particularly in South Africa, where most people are losing their source of income because of the corona virus. On the other hand, you want to be debt-free. In such cases, the best way is to reason out all the facts, so you end up with a win-win solution. 

Saving money vs. paying off a debt

The best way is to look at each option independently. In this way, you can see the general advantages of prioritising each option. However, since your financial circumstances are unique, there is no one-size-fits-all solution to this decision.

Benefits of saving

  • You can build an emergency fund – This is money that can save you when a rainy day comes. Instead of paying off your loan, you can put the money in a savings account. This means in an emergency such as a job loss you don’t have to borrow again.  
  • You can save money on interest – You can earn interest on money that you put in a savings account. This literally gives you more value for your money. But to achieve this, you have to choose the bank or financial institution with the most favourable interest rates.
  • It can be used to grow your pension fund – In situations where your employer makes an equal contribution to your pension fund, putting more money into your pension fund can be beneficial. For example, if you increase your contribution from R250 to R400, your employer now also has to contribute R400.

What’s the best way to save money?

It is considered best to save enough money to cover the cost of living for three or six months. By opening a savings account with high-interest rates, you can quickly build up your savings. So, if you find yourself with a little extra cash, just put it aside in a separate account and watch it grow.

Benefits of paying off debt

  • It can reduce interest costs – There are cases where taking a loan or credit with high-interest charges can be very costly. This is especially so if you don’t pay back the loan as quickly as possible. Paying off your debt may be better than saving the money since it reduces interest payments. Hence, you can save more money compared to the interest you gain by having a savings account.
  • It can save your credit record – There are many benefits of having a good credit record. It can help you qualify for better interest rates when you take out a loan. You also have a better chance of being approved when you apply for financial help or when you are looking to rent a house or apartment. On the other hand, having bad credit can keep you from doing all these things.
  • Prioritising your debt saves you from the borrowing cycle – You have probably heard that having debts is a vicious cycle. Paying back loans with high interests can be very expensive. You end up trapped in a cycle of continually borrowing and struggling to pay back the total amount plus other charges. When you focus on paying your debts and living a credit-free life, you can save more money in the long run.

What’s the best way to pay off debt?

The easiest way is to budget for your monthly repayments. Any extra money that you get can go towards making those repayments. To make the repayment process more manageable and less costly, you can look at other options such as debt consolidation and credit card balance transfer. These allow you to place your debt under one account while lowering interest payments.

Conclusion

Analysing all the factors involved and how they apply to you can help you make the right decision. Saving and paying off debt both have their good points. Therefore, you can benefit from taking a two-way approach. 

This means putting extra cash into an emergency fund while at the same time using some of it to pay your debts. At the end of the day, the goal is to have peace of mind. Staying in control of your debt and having an emergency fund can both help you to achieve this freedom.

Photo by Briona Baker on Unsplash

WP_Post Object ( [ID] => 97445 [post_author] => 1 [post_date] => 2020-07-05 11:07:04 [post_date_gmt] => 2020-07-05 09:07:04 [post_content] =>

Having an emergency is something we can all understand. What happens when you urgently need money but your pockets and bank account are empty? The answer to that is you get stressed, desperate, and you might even face failure. 

So many bad things can happen if you don't prepare for any crisis. But, this is where an emergency fund comes in. It allows you to be smart, save money, and plan ahead. In essence, you become your own superhero by saving yourself on rainy days.

Emergency fund: What is it?

In simple words, an emergency fund is money that you keep in an account. This money is saved specifically and only for unplanned costs that happen in life.

Emergencies can happen at any time

When you create a budget for monthly expenses, you often write down the things you know about, like your grocery and transport costs. What about the things that you don't know about? These are the things that demand your money, and yet you didn't plan for them. 

Examples include falling sick and having to pay for medical bills or having your phone stolen, and now you have to buy a new one. In more serious situations, you can even lose your job or source of income. In such cases, you might not have the cash you need to survive while you look for other ways to make money.

Why is an emergency fund important?

In South Africa, it is normal for people to live from paycheck to paycheck. So, when they now have to pay for things they didn't budget for, they usually borrow. However, borrowing or taking a loan or using credit cards are not perfect solutions.

You can find yourself in a negative cycle of always borrowing money and having to pay it back. Besides, this can get super expensive because you may also have to pay interest each time you borrow money.

By saving money and putting it into an emergency fund, you can remain independent and on top of things during emergencies. Even when there is no emergency, you still have peace of mind knowing you are at least prepared just in case something does happen.

How do you create an emergency fund?

Keeping your saved money in your mattress at home is never a good idea. Instead, you can set up an emergency fund by opening an account. Most banks and financial institutions can be trusted to keep your money safe. You can keep your emergency fund in the following types of accounts: 

Savings account

As the name suggests, a savings account is the perfect place to build a nest egg. Money that you put in a savings account gains interest over time. However, you can't use the money on a daily basis, although you can still make withdrawals.

Additionally, in your agreement with the bank, you may be required to make monthly deposits. There are also high yield savings accounts that are insured.

Transactional account

This is the account you use in your day to day financial dealings. For example, this is the account where you usually receive your salary or income. You can have a separate transactional account where you keep your emergency fund. However, most transactional accounts have monthly charges, and your money will usually not gain any interest.

To find out more you can also get help from an experienced financial adviser on other ways to create your emergency savings fund. 

How much money should you put in an emergency fund?

When you start saving the money, it takes time to build your emergency fund. The best thing is to have an end goal in sight and work slowly towards that. At the end of the day, you should have enough money saved to meet your needs in an emergency.

Some experts say that you should save at least three months of your salary. In contrast, others say your emergency fund should have enough money to last you six months when you're not working. But only you can decide the amount of money you can afford to save and how long it will take you. You can use the following ways to save money:

Benefits of an emergency fund

Make sure your emergency fund has the following attributes:

Photo by Zach Vessels on Unsplash

[post_title] => Emergency fund: What is it, and how do you set it up? [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => emergency-fund-essentials [to_ping] => [pinged] => [post_modified] => 2020-07-06 11:01:44 [post_modified_gmt] => 2020-07-06 09:01:44 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.compareloans.co.za/?p=97445 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw )

Emergency fund: What is it, and how do you set it up?

Having an emergency is something we can all understand. What happens when you urgently need money but your pockets and bank account are empty? The answer to that is you get stressed, desperate, and you might even face failure. 

So many bad things can happen if you don’t prepare for any crisis. But, this is where an emergency fund comes in. It allows you to be smart, save money, and plan ahead. In essence, you become your own superhero by saving yourself on rainy days.

Emergency fund: What is it?

In simple words, an emergency fund is money that you keep in an account. This money is saved specifically and only for unplanned costs that happen in life.

Emergencies can happen at any time

When you create a budget for monthly expenses, you often write down the things you know about, like your grocery and transport costs. What about the things that you don’t know about? These are the things that demand your money, and yet you didn’t plan for them. 

Examples include falling sick and having to pay for medical bills or having your phone stolen, and now you have to buy a new one. In more serious situations, you can even lose your job or source of income. In such cases, you might not have the cash you need to survive while you look for other ways to make money.

Why is an emergency fund important?

In South Africa, it is normal for people to live from paycheck to paycheck. So, when they now have to pay for things they didn’t budget for, they usually borrow. However, borrowing or taking a loan or using credit cards are not perfect solutions.

You can find yourself in a negative cycle of always borrowing money and having to pay it back. Besides, this can get super expensive because you may also have to pay interest each time you borrow money.

By saving money and putting it into an emergency fund, you can remain independent and on top of things during emergencies. Even when there is no emergency, you still have peace of mind knowing you are at least prepared just in case something does happen.

How do you create an emergency fund?

Keeping your saved money in your mattress at home is never a good idea. Instead, you can set up an emergency fund by opening an account. Most banks and financial institutions can be trusted to keep your money safe. You can keep your emergency fund in the following types of accounts: 

Savings account

As the name suggests, a savings account is the perfect place to build a nest egg. Money that you put in a savings account gains interest over time. However, you can’t use the money on a daily basis, although you can still make withdrawals.

Additionally, in your agreement with the bank, you may be required to make monthly deposits. There are also high yield savings accounts that are insured.

Transactional account

This is the account you use in your day to day financial dealings. For example, this is the account where you usually receive your salary or income. You can have a separate transactional account where you keep your emergency fund. However, most transactional accounts have monthly charges, and your money will usually not gain any interest.

To find out more you can also get help from an experienced financial adviser on other ways to create your emergency savings fund. 

How much money should you put in an emergency fund?

When you start saving the money, it takes time to build your emergency fund. The best thing is to have an end goal in sight and work slowly towards that. At the end of the day, you should have enough money saved to meet your needs in an emergency.

Some experts say that you should save at least three months of your salary. In contrast, others say your emergency fund should have enough money to last you six months when you’re not working. But only you can decide the amount of money you can afford to save and how long it will take you. You can use the following ways to save money:

  • When you budget, put money aside every month. Even if it’s only R100 or R50 it adds up and your emergency fund will eventually grow.
  • Save your loose change. When you have extra money lying around, don’t think of ways to use it. Put it in your emergency fund instead.
  • Set up a debit order. As an example, you can have some of your salary or income automatically transferred to your savings account/emergency fund. This reduces temptation and saves you time and effort.

Benefits of an emergency fund

  • it keeps you disciplined and organized in the long term;
  • it teaches you the proper way to handle personal finance;
  • you don’t have to borrow money every time you meet an emergency;
  • there is peace of mind from knowing that you have backup money in an account; and
  • you can earn more money with your emergency fund via reasonable interest rates.

Make sure your emergency fund has the following attributes:

  • Accessibility – You should always be able to access your money when you need it. The worst thing that can happen is being unable to withdraw the money or use it because of some regulation on your account that you didn’t know about.
  • Increasing value – If your emergency fund is not gaining interest at the least, make sure it’s not losing value from inflation.
  • Safety – Keep your emergency money with an institution that is registered and has a good reputation. 

Photo by Zach Vessels on Unsplash

WP_Post Object ( [ID] => 95352 [post_author] => 1 [post_date] => 2020-06-21 03:50:22 [post_date_gmt] => 2020-06-21 01:50:22 [post_content] => South Africa is a nation of borrowers, with personal debt at an all-time high and the national debt reaching highs. Statistics published by the South African Financial Services Board (FSB) in 2012 estimates that only 51% of South Africans are financially literate. Everyone deserves to have a better understanding of how to manage their hard-earned money and to understand the basics... from understanding what Annual Percentage Rates (APRs) are to maintaining a good credit score. Many people are not even aware of their credit score and the impact the rating. It's only when loan application are rejected or exorbitant interest rates are charged, that users finally realise the importance of a good credit rating. So, what should you do, to improve your credit rating? Let us guide you on how to manage your credit score, and if your credit score has already taken a hit, how can you heal it.

What is a credit score?

A credit score is an indicator of how consistently and timely you have paid off your previous debt(s). A bad credit score indicates defaults, late payments, or too many applications for credit (short term loans, credit cards, vehicle finance, etc). This alerts the lender to potentially reject your application or to charge a higher interest rate because of the perceived risk. Any adult that has applied for credit, be it a credit card, vehicle finance, mortgage, personal loan or any other type of debt, will have a credit score. If you put in an application for any of these products, your credit score is pulled up, and your request is evaluated based on the rating.

How do I know if my credit score is good or bad?

In the Rainbow Nation, the credit score typically ranges between 330 and 850, use this as an indicator of where you may stand:

Importance of a credit score

Having a 580+ credit score will make your life easier when it comes to getting approved for credit cards or small loans. Additionally you may be charged a lower interest rate for having a good credit score. Conversely, having a score below 580 can throw a wrench into your essential life plans; from not getting approved for an education loan, to paying higher interest rates... A poor credit score can pose many issues. T

How to improve your credit score?

Keep in mind that if your score is low, it takes time to re-build the score to a level that is considered acceptable by lenders.

1. Be aware of your credit score

Do not run from the reality as it is never the solution. Knowledge is power; it will only help you take the first step in your quest for a good credit rating. According to the National Credit Act, South Africans are entitled to one free credit report per year. Credit bureaus such as Transunion or sites such as Credit Genie can help you get your credit score.

2. Make your repayments on time

Your repayment history has a significant impact on your credit score. More than a third of your credit rating is impacted by your ability to make repayments on time. So be sure not to miss your repayment deadlines.

3. Get some stability in your life

If possible, do not max out your credit card or overdrafts. It could be an indicator of poor spending habits, moreover, it will leave you with less credit available for emergencies and will increase the amount of interest you pay over time. 

4. Get some stability in your life

Unstable or irregular income, frequent changes in address, among other things, are considered warning signs by lenders. So try to hold down a job for a longer duration and move around less frequently.

5. Avoid courtroom drama

Being summoned to court can be seen as a potential risk for lenders, as this could impact your ability to work and bring about extra expenses. So if possible, avoid unnecessary courtroom drama.

6. Don't borrow more than necessary

If your professional career is progressing well and you're confident about the future, it's recommended you have no more than a couple of credit cards, a mortgage and a car loan/car lease.

7. Get some stability in your life

Unstable or irregular income, frequent changes in address, among other things, are considered warning signs by lenders. So try to hold down a job for a longer duration and move around less frequently.

8. High limits, low amounts due

Being able to demonstrate that you have high limit credit cards and very little due at the of the month or that you repay most of your debts in full will help your credit score. However, keep in mind that if you plan to get a mortgage; high limit credits cards are seen as liability by the banks... even if you owe nothing on them. So consider reducing your limits when applying for a home loan.

9. Close credit cards and overdrafts

If you have unused lines of credit such as credit cards or overdrafts, close them. The lending notify credit agencies of the closures - and you'll seen as a lesser risk for lenders in the future.

10. Don't apply for credit regularly

Each time you apply for credit, your credit score takes a hit. Your credit rating could take a hit of 10% each time you apply.

11. Avoid regular credit transfers

If you find yourself rolling your credit over through credit card balance transfers regularly, consider tightening up your belt and getting a debt consolidation loan to pay off your debt once and for all.

12. Have a credit history

You may be a greater save, but that doesn't show financial institutions how well you manage debt. So consider a low fee credit card that you rarely use and always payoff on time. A good long credit will help your credit score considerably.

13. Ask your partner about their credit score

If you get married and start making plans such as getting a mortgage together; your partner's credit history can impact the success of your application. Ask them about their credit rating prior to making big financial decisions. If they don't know, get them to check credit score through a ratings agency. Photo by Oluwakemi Solaja on Unsplash [post_title] => How to improve your credit score quickly in South Africa [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => how-to-quick-improve-your-credit-score [to_ping] => [pinged] => [post_modified] => 2020-10-20 01:12:38 [post_modified_gmt] => 2020-10-19 23:12:38 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.compareloans.co.za/?p=95352 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw )

How to improve your credit score quickly in South Africa

South Africa is a nation of borrowers, with personal debt at an all-time high and the national debt reaching highs. Statistics published by the South African Financial Services Board (FSB) in 2012 estimates that only 51% of South Africans are financially literate.

Everyone deserves to have a better understanding of how to manage their hard-earned money and to understand the basics… from understanding what Annual Percentage Rates (APRs) are to maintaining a good credit score.

Many people are not even aware of their credit score and the impact the rating. It’s only when loan application are rejected or exorbitant interest rates are charged, that users finally realise the importance of a good credit rating. So, what should you do, to improve your credit rating? Let us guide you on how to manage your credit score, and if your credit score has already taken a hit, how can you heal it.

What is a credit score?

A credit score is an indicator of how consistently and timely you have paid off your previous debt(s). A bad credit score indicates defaults, late payments, or too many applications for credit (short term loans, credit cards, vehicle finance, etc). This alerts the lender to potentially reject your application or to charge a higher interest rate because of the perceived risk.

Any adult that has applied for credit, be it a credit card, vehicle finance, mortgage, personal loan or any other type of debt, will have a credit score. If you put in an application for any of these products, your credit score is pulled up, and your request is evaluated based on the rating.

How do I know if my credit score is good or bad?

In the Rainbow Nation, the credit score typically ranges between 330 and 850, use this as an indicator of where you may stand:

  • 800+ – Outstanding
  • 740 – 799 – Perfect
  • 670 – 739 – Very Good
  • 580 – 669 – Average/ Good
  • 579 & below – Poor

Importance of a credit score

Having a 580+ credit score will make your life easier when it comes to getting approved for credit cards or small loans. Additionally you may be charged a lower interest rate for having a good credit score. Conversely, having a score below 580 can throw a wrench into your essential life plans; from not getting approved for an education loan, to paying higher interest rates… A poor credit score can pose many issues. T

How to improve your credit score?

Keep in mind that if your score is low, it takes time to re-build the score to a level that is considered acceptable by lenders.

1. Be aware of your credit score

Do not run from the reality as it is never the solution. Knowledge is power; it will only help you take the first step in your quest for a good credit rating. According to the National Credit Act, South Africans are entitled to one free credit report per year. Credit bureaus such as Transunion or sites such as Credit Genie can help you get your credit score.

2. Make your repayments on time

Your repayment history has a significant impact on your credit score. More than a third of your credit rating is impacted by your ability to make repayments on time. So be sure not to miss your repayment deadlines.

3. Get some stability in your life

If possible, do not max out your credit card or overdrafts. It could be an indicator of poor spending habits, moreover, it will leave you with less credit available for emergencies and will increase the amount of interest you pay over time. 

4. Get some stability in your life

Unstable or irregular income, frequent changes in address, among other things, are considered warning signs by lenders. So try to hold down a job for a longer duration and move around less frequently.

5. Avoid courtroom drama

Being summoned to court can be seen as a potential risk for lenders, as this could impact your ability to work and bring about extra expenses. So if possible, avoid unnecessary courtroom drama.

6. Don’t borrow more than necessary

If your professional career is progressing well and you’re confident about the future, it’s recommended you have no more than a couple of credit cards, a mortgage and a car loan/car lease.

7. Get some stability in your life

Unstable or irregular income, frequent changes in address, among other things, are considered warning signs by lenders. So try to hold down a job for a longer duration and move around less frequently.

8. High limits, low amounts due

Being able to demonstrate that you have high limit credit cards and very little due at the of the month or that you repay most of your debts in full will help your credit score. However, keep in mind that if you plan to get a mortgage; high limit credits cards are seen as liability by the banks… even if you owe nothing on them. So consider reducing your limits when applying for a home loan.

9. Close credit cards and overdrafts

If you have unused lines of credit such as credit cards or overdrafts, close them. The lending notify credit agencies of the closures – and you’ll seen as a lesser risk for lenders in the future.

10. Don’t apply for credit regularly

Each time you apply for credit, your credit score takes a hit. Your credit rating could take a hit of 10% each time you apply.

11. Avoid regular credit transfers

If you find yourself rolling your credit over through credit card balance transfers regularly, consider tightening up your belt and getting a debt consolidation loan to pay off your debt once and for all.

12. Have a credit history

You may be a greater save, but that doesn’t show financial institutions how well you manage debt. So consider a low fee credit card that you rarely use and always payoff on time. A good long credit will help your credit score considerably.

13. Ask your partner about their credit score

If you get married and start making plans such as getting a mortgage together; your partner’s credit history can impact the success of your application. Ask them about their credit rating prior to making big financial decisions. If they don’t know, get them to check credit score through a ratings agency.

Photo by Oluwakemi Solaja on Unsplash

WP_Post Object ( [ID] => 96070 [post_author] => 1 [post_date] => 2020-06-10 16:33:22 [post_date_gmt] => 2020-06-10 14:33:22 [post_content] =>

In a first for South Africa, CompareLoans brings unparalleled transparency around interest rates, fees and terms in the personal finance market.

South Africa, 10 June 2020. Financial Independent Press launched CompareLoans.co.za, a website that aggregates and compares personal loans and vehicle finance from over 30 South African lenders. The service is independent and 100% free to use. In a first for South Africa, CompareLoans displays interest rates and estimated loan repayments for all major lenders without requiring users to submit their personal information. The aim of CompareLoans is to provide consumers with greater transparency and clarity when they shop around for a loan. CompareLoans was created by the Australian firm Financial Independent Press, using a platform they developed for the Australian market; BestFind.com.au. It took several months to redevelop the website for the South African market and to source local product data. Pierre Lintzer, Chief Operations Officer for CompareLoans said “We’re extremely excited to launch CompareLoans.co.za and for the opportunity to help the forty thousand plus South Africans who search for a loan each month.”
“There’s no other tool in South Africa that quickly and easily compares that many lenders, and I have no doubt that the service will become extremely popular.”
“When researching where to expand our operations after Australia, it was quite surprising to see how opaque the South African market for personal finance was. And we’re going to change all of that.” Lintzer added that the immediate priority for CompareLoans is to establish working relationships with South Africa’s major banks and lenders and to consolidate the platform to provide the best possible user experience. “In Australia, the popularity and dominance of financial comparison and aggregator websites has meant that most major financial institutions proactively inform us about upcoming interest rate and product changes.” “As we initiated our launch in South Africa, the banks and independent lenders have been very cooperative in sharing their rates, fees and related data. They are very supportive in our endeavour to bring greater transparency into the lending market and that’s great for customers” Lintzer added. Beyond data and relationships, CompareLoan’s other priority will be producing educational content focussed on money management and financial well-being. “Knowledge is power. Providing accurate information and educational content to help South Africans better understand money and financial products will be our core focus.” Lintzer concluded. ### For further information Dennis Graham media@bestfind.com.au About CompareLoans.co.za Looking for a personal loan, vehicle finance or a payday loan? We provide transparency, simplicity and choice by comparing over 30 of South Africa’s top lenders. Our service is 100% free to use and is independently owned and operated. Follow us on Twitter, Facebook or LinkedIn. Visit www.compareloans.co.za to learn more.  About Financial Independent Press Pty Ltd Founded in 2017 by Dennis Graham and Pierre Lintzer with the launch of BestFind.com.au to help provide transparency, simplicity and choice to the Australian consumer market. Covering a range of loan and deposit products, we have helped more than 1 million users in their search for the right financial product. We’re continuing our growth through global expansion. We have recently launched in South Africa and plan to continue our expansion across key markets. Photo by Matthew Henry from Burst [post_title] => Media Release: Choice and transparency comes to borrowers in South Africa [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => media-release-choice-transparency-comes-borrowers-south-africa [to_ping] => [pinged] => [post_modified] => 2020-06-10 16:33:22 [post_modified_gmt] => 2020-06-10 14:33:22 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.compareloans.co.za/?p=96070 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw )

Media Release: Choice and transparency comes to borrowers in South Africa

In a first for South Africa, CompareLoans brings unparalleled transparency around interest rates, fees and terms in the personal finance market.

South Africa, 10 June 2020. Financial Independent Press launched CompareLoans.co.za, a website that aggregates and compares personal loans and vehicle finance from over 30 South African lenders. The service is independent and 100% free to use.

In a first for South Africa, CompareLoans displays interest rates and estimated loan repayments for all major lenders without requiring users to submit their personal information. The aim of CompareLoans is to provide consumers with greater transparency and clarity when they shop around for a loan.

CompareLoans was created by the Australian firm Financial Independent Press, using a platform they developed for the Australian market; BestFind.com.au. It took several months to redevelop the website for the South African market and to source local product data.

Pierre Lintzer, Chief Operations Officer for CompareLoans said “We’re extremely excited to launch CompareLoans.co.za and for the opportunity to help the forty thousand plus South Africans who search for a loan each month.”

“There’s no other tool in South Africa that quickly and easily compares that many lenders, and I have no doubt that the service will become extremely popular.”

“When researching where to expand our operations after Australia, it was quite surprising to see how opaque the South African market for personal finance was. And we’re going to change all of that.”

Lintzer added that the immediate priority for CompareLoans is to establish working relationships with South Africa’s major banks and lenders and to consolidate the platform to provide the best possible user experience.

“In Australia, the popularity and dominance of financial comparison and aggregator websites has meant that most major financial institutions proactively inform us about upcoming interest rate and product changes.”

“As we initiated our launch in South Africa, the banks and independent lenders have been very cooperative in sharing their rates, fees and related data. They are very supportive in our endeavour to bring greater transparency into the lending market and that’s great for customers” Lintzer added.

Beyond data and relationships, CompareLoan’s other priority will be producing educational content focussed on money management and financial well-being.

“Knowledge is power. Providing accurate information and educational content to help South Africans better understand money and financial products will be our core focus.” Lintzer concluded.

###

For further information

Dennis Graham
media@bestfind.com.au

About CompareLoans.co.za

Looking for a personal loan, vehicle finance or a payday loan? We provide transparency, simplicity and choice by comparing over 30 of South Africa’s top lenders.

Our service is 100% free to use and is independently owned and operated.

Follow us on Twitter, Facebook or LinkedIn.

Visit www.compareloans.co.za to learn more. 

About Financial Independent Press Pty Ltd

Founded in 2017 by Dennis Graham and Pierre Lintzer with the launch of BestFind.com.au to help provide transparency, simplicity and choice to the Australian consumer market. Covering a range of loan and deposit products, we have helped more than 1 million users in their search for the right financial product.

We’re continuing our growth through global expansion. We have recently launched in South Africa and plan to continue our expansion across key markets.

Photo by Matthew Henry from Burst

WP_Post Object ( [ID] => 95357 [post_author] => 1 [post_date] => 2020-06-02 16:06:26 [post_date_gmt] => 2020-06-02 14:06:26 [post_content] => As a country knee-deep in debt, we are here trying our best to educate our readers about different types of financial instruments for lending and borrowing. We talk about everything ranging from personal loans to payday loans! In this article, you will learn about the advantages and disadvantages of a loan and costs involved.

Advantages of taking out a loan

You can borrow larger amounts (as compared to credit cards)

Whether or not you are approved for a larger loan amount depends on your credit score is and your ability to service (repay) the debt. If you have managed to avoid defaults, there is a good chance that a large amount will be granted to you by lenders. Loans are considered better for people needing a large amount of money, whereas, credit card limits increase as you use the credit card, depending on your spending and payback habits. The whole process takes up more time than getting the one-time approval on a large loans.

Flexibility on how you spend your money

There are usually no restrictions on how you can spend a granted loan except for loans granted for specific purposes like housing, car loans or education loans. However, in the case of general loans like personal loans, you are free to use them for your urgent needs or in any way you please. Although we always advise our readers to keep in mind that the money borrowed may not have any restrictions, but that only leaves more room for incessant spending that lacks self-discipline.

Fewer restrictions on the payment structure

The loan can be paid back over term (duration) which you and the lender agree upon. But remember, while you still have an outstanding balance, the high interest costs can put a dent in your future spending.

Disadvantages of taking a loan

High financing costs

Evaluate your income before getting a loan as you do not want to default on its repayment. Make sure you calculate all the costs involved in getting a loan and have money left aside for emergencies. Defaulting or being late on repayments could damage your credit score or leave you in a debt trap.

You need a good credit score

The average credit score of a citizen of South Africa is below 560, meaning that most of its citizens do not qualify for a loan. There may be lenders that give out loans to a low credit score, but that usually comes at a very high cost.

More now, less in the future

Loans can fund whatever it is that you want now, but it comes at cost of possibly doing less in the future. So consider carefully whether or not you need a loan. Because after you take into account all your other expenses, such as your phone, travelling costs, food AND the loan repayments... You might not have a lot left over for important things, like going out with friends or short term emergencies.

Factors that drive the costs of loans

Loans size

The bigger the loan, bigger the repayments... So don't borrow more than what you need. Your income and credit score determines your borrowing capacity. The higher your income and credit score, the more you can potentially borrow.

Interest rate

This is how lenders make money from borrowers. The interest rate can be seen as a “charge” that you have to pay for borrowing money and compensating the lender for the risk they take in lending the money. If your credit score is high or if you secure your loan, you're likely to get a lower interest rate.

Initiation and services fees

This is to pay for the staffing costs and other overheads (such as rent, their websites, etc) that are involved in processing your loan application and administrating it. Service fees are usually paid monthly.

Length of your loan

If you choose to repay a loan in 1 year instead of 2 years, your monthly repayment amount will be greater. You will repay the loan faster and pay less interest. However, if you want to have a bit of extra cash at the end of the month in your pocket, you may choose a longer term. Your monthly repayments will be less, because they're spread over a longer term - but at the end you will end up paying more in interest. We hope that this article will help you in your journey. Remember to research well and always know your capabilities and capacities so that you never end up in a difficult position. If you want to see who has the lowest fees and interest rates as well as flexible terms, check out our personal, vehicle and payday loan comparison tables. [post_title] => Understanding the cost of borrowing in South Africa [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => understanding-the-cost-of-borrow [to_ping] => [pinged] => [post_modified] => 2020-06-03 02:04:37 [post_modified_gmt] => 2020-06-03 00:04:37 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.compareloans.co.za/?p=95357 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw )

Understanding the cost of borrowing in South Africa

As a country knee-deep in debt, we are here trying our best to educate our readers about different types of financial instruments for lending and borrowing. We talk about everything ranging from personal loans to payday loans!

In this article, you will learn about the advantages and disadvantages of a loan and costs involved.

Advantages of taking out a loan

You can borrow larger amounts (as compared to credit cards)

Whether or not you are approved for a larger loan amount depends on your credit score is and your ability to service (repay) the debt. If you have managed to avoid defaults, there is a good chance that a large amount will be granted to you by lenders.

Loans are considered better for people needing a large amount of money, whereas, credit card limits increase as you use the credit card, depending on your spending and payback habits. The whole process takes up more time than getting the one-time approval on a large loans.

Flexibility on how you spend your money

There are usually no restrictions on how you can spend a granted loan except for loans granted for specific purposes like housing, car loans or education loans. However, in the case of general loans like personal loans, you are free to use them for your urgent needs or in any way you please.

Although we always advise our readers to keep in mind that the money borrowed may not have any restrictions, but that only leaves more room for incessant spending that lacks self-discipline.

Fewer restrictions on the payment structure

The loan can be paid back over term (duration) which you and the lender agree upon. But remember, while you still have an outstanding balance, the high interest costs can put a dent in your future spending.

Disadvantages of taking a loan

High financing costs

Evaluate your income before getting a loan as you do not want to default on its repayment. Make sure you calculate all the costs involved in getting a loan and have money left aside for emergencies. Defaulting or being late on repayments could damage your credit score or leave you in a debt trap.

You need a good credit score

The average credit score of a citizen of South Africa is below 560, meaning that most of its citizens do not qualify for a loan. There may be lenders that give out loans to a low credit score, but that usually comes at a very high cost.

More now, less in the future

Loans can fund whatever it is that you want now, but it comes at cost of possibly doing less in the future. So consider carefully whether or not you need a loan. Because after you take into account all your other expenses, such as your phone, travelling costs, food AND the loan repayments… You might not have a lot left over for important things, like going out with friends or short term emergencies.

Factors that drive the costs of loans

Loans size

The bigger the loan, bigger the repayments… So don’t borrow more than what you need. Your income and credit score determines your borrowing capacity. The higher your income and credit score, the more you can potentially borrow.

Interest rate

This is how lenders make money from borrowers. The interest rate can be seen as a “charge” that you have to pay for borrowing money and compensating the lender for the risk they take in lending the money. If your credit score is high or if you secure your loan, you’re likely to get a lower interest rate.

Initiation and services fees

This is to pay for the staffing costs and other overheads (such as rent, their websites, etc) that are involved in processing your loan application and administrating it. Service fees are usually paid monthly.

Length of your loan

If you choose to repay a loan in 1 year instead of 2 years, your monthly repayment amount will be greater. You will repay the loan faster and pay less interest. However, if you want to have a bit of extra cash at the end of the month in your pocket, you may choose a longer term. Your monthly repayments will be less, because they’re spread over a longer term – but at the end you will end up paying more in interest.

We hope that this article will help you in your journey. Remember to research well and always know your capabilities and capacities so that you never end up in a difficult position. If you want to see who has the lowest fees and interest rates as well as flexible terms, check out our personal, vehicle and payday loan comparison tables.

WP_Post Object ( [ID] => 94655 [post_author] => 1 [post_date] => 2020-05-24 09:39:18 [post_date_gmt] => 2020-05-24 07:39:18 [post_content] => For a newly bought car, depreciation is one of the highest costs that car owners incur. The second the key is turned in the ignition, the freshly bought car loses 20% of its value. Albeit inevitable, there are multiple ways in which this progression can be slowed - from purchasing a vehicle that consistently maintains its value to keeping tabs on maintenance.

Lower your depreciation before you buy

The second you buy your car, the value comes down before you are even off the driveway. Thankfully, there are ways to reduce the blow to the value of your vehicle:

Choosing the right build and model

Some of the indicators that a future car owner can look for in prospective models are – excellent fuel economy, a reliable reputation, and low running and maintaining costs. Your best bet will be to pick for a model that retains its value in the best way possible. Manufacturers that have been recognised by companies such as J.D. Power usually mean that they bring out vehicles with stellar quality, which, in turn, means a lower depreciation rate. Certification from National Highway Traffic Safety Administration (NHTSA) and the Insurance Institute for Highway Safety (IIHS) can ensure the safety of your vehicle. Keeping the above checklist in mind while shopping for a car helps you to recover some of the costs lost to depreciation during resale.

Gathering knowledge of the market

It can be confusing to gauge the resale value, three to five years down the road. Some of the confusion can be alleviated if proper research is done before buying the car. Websites such as AutoTrader and Cars.co.za help you estimate future prices of different cars. Every year, Kelley Blue Book publishes a list that gives information on the top list of cars with the best resale value. Websites like these can be immensely helpful in narrowing down your search for an asset that depreciates at a slower rate.

Pick a common colour

Picking the colour affects the resale value of a car in more ways than you can think. Colours such as white, gold, silver, grey, black, etc. remain in constant demand and are better at maintaining value. On the flip side, it will be harder to find buyers for a car that’s been painted neon or a rare color.

Consider options other than buying

Evaluation of all the options available in the market also helps you in conducting a cost-benefit analysis. Leasing can be one option to lower depreciation if the buyout price of the car at the end of the lease is lower than the resale value. Another option is to buy a second-hand car; the majority of depreciation is absorbed by the first owner, and the loss in value is reduced considerably. If you're considering vehicle finance to purchase a car, be sure to check out our comparison table to see who offers the lowest rates and best features.

Transferable warranty

New cars come with a warranty and finding a manufacturer that allows the transfer of the warranty to the next owner of your car - can help maintain the car’s value .

Ways to reduce your depreciation after you buy

Want to maintain your car in the best shape? Keep reading for some tricks that prolong the life of your vehicle and also help in lowering your depreciation:

Regular maintenance

A well-maintained car will inevitably have a higher resale value compared to a neglected one. Heed your dealer’s advice and bring in your vehicle at scheduled intervals for servicing and regular upkeep. Another important tip is to keep records! Documentary evidence makes you a responsible car owner in the eyes of buyers and makes depreciation much less costly.

Keep the miles in check

If the car has fewer miles on its odometer, then the resale value will be higher. If a vehicle has been driven more, the chances of it malfunctioning increases.

Drive safely

Accidents have dual damaging effects on your car. Major accidents can damage the vehicle more permanently, and not to mention the cost of repairs can practically empty your wallet (if there is no insurance or insurance doesn’t cover the repairs). Another hidden effect of accidents, insurance premium goes up, and an accident report will forever be attached to your car. This harms the resale value of your car severely.

Keep it clean

A clean car is a reflection of its owner. Regularly vacuuming, using fabric and car freshener spray, avoiding eating and drinking in the car, maintaining the leather seats, and frequent trips to car wash, are some tips that can go a long way to preserve the value of your car.

Avoid non-standard modifications

People tend to customise their cars with unusual modifications to make it stand out from the rest of the crowd; personalisation may render your car less attractive to prospective buyers. While the option is great in the short term, it may not be practical in the long run as buyers may not be too keen to pay for the customisation.

Lower your depreciation when you sell

Two main pointers that can assure you to get the best deal when you want to sell your car are:

Identify the right time to sell

Based on your car’s specifications, build and model, identify the strengths and gauge the market for your vehicle. For example, a convertible might not be in demand in winter as much as it is in the summers. Also, keep continuous tabs on your car’s model, discontinued or upgraded models could lose considerable value.

A private buyer might be a better option

While many people might prefer exchanging their old car for a new one at a car dealership, it is usually a trap to get you to sell the car at a lower rate than what you could have gotten in the market. If you are not in a hurry, take the time to search for private buyers that will help you to realise a much higher price for your car. By staying updated and making smart decisions, you can reduce depreciation costs, ensuring that you lose less money! Photo by Erik Mclean on Unsplash [post_title] => 12 ways to maintain your car's value [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => 12-ways-maintain-cars-value [to_ping] => [pinged] => [post_modified] => 2020-05-24 09:39:58 [post_modified_gmt] => 2020-05-24 07:39:58 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.compareloans.co.za/?p=94655 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw )

12 ways to maintain your car’s value

For a newly bought car, depreciation is one of the highest costs that car owners incur. The second the key is turned in the ignition, the freshly bought car loses 20% of its value. Albeit inevitable, there are multiple ways in which this progression can be slowed – from purchasing a vehicle that consistently maintains its value to keeping tabs on maintenance.

Lower your depreciation before you buy

The second you buy your car, the value comes down before you are even off the driveway. Thankfully, there are ways to reduce the blow to the value of your vehicle:

Choosing the right build and model

Some of the indicators that a future car owner can look for in prospective models are – excellent fuel economy, a reliable reputation, and low running and maintaining costs. Your best bet will be to pick for a model that retains its value in the best way possible. Manufacturers that have been recognised by companies such as J.D. Power usually mean that they bring out vehicles with stellar quality, which, in turn, means a lower depreciation rate. Certification from National Highway Traffic Safety Administration (NHTSA) and the Insurance Institute for Highway Safety (IIHS) can ensure the safety of your vehicle.

Keeping the above checklist in mind while shopping for a car helps you to recover some of the costs lost to depreciation during resale.

Gathering knowledge of the market

It can be confusing to gauge the resale value, three to five years down the road. Some of the confusion can be alleviated if proper research is done before buying the car. Websites such as AutoTrader and Cars.co.za help you estimate future prices of different cars. Every year, Kelley Blue Book publishes a list that gives information on the top list of cars with the best resale value. Websites like these can be immensely helpful in narrowing down your search for an asset that depreciates at a slower rate.

Pick a common colour

Picking the colour affects the resale value of a car in more ways than you can think. Colours such as white, gold, silver, grey, black, etc. remain in constant demand and are better at maintaining value. On the flip side, it will be harder to find buyers for a car that’s been painted neon or a rare color.

Consider options other than buying

Evaluation of all the options available in the market also helps you in conducting a cost-benefit analysis. Leasing can be one option to lower depreciation if the buyout price of the car at the end of the lease is lower than the resale value.

Another option is to buy a second-hand car; the majority of depreciation is absorbed by the first owner, and the loss in value is reduced considerably.

If you’re considering vehicle finance to purchase a car, be sure to check out our comparison table to see who offers the lowest rates and best features.

Transferable warranty

New cars come with a warranty and finding a manufacturer that allows the transfer of the warranty to the next owner of your car – can help maintain the car’s value .

Ways to reduce your depreciation after you buy

Want to maintain your car in the best shape? Keep reading for some tricks that prolong the life of your vehicle and also help in lowering your depreciation:

Regular maintenance

A well-maintained car will inevitably have a higher resale value compared to a neglected one. Heed your dealer’s advice and bring in your vehicle at scheduled intervals for servicing and regular upkeep. Another important tip is to keep records! Documentary evidence makes you a responsible car owner in the eyes of buyers and makes depreciation much less costly.

Keep the miles in check

If the car has fewer miles on its odometer, then the resale value will be higher. If a vehicle has been driven more, the chances of it malfunctioning increases.

Drive safely

Accidents have dual damaging effects on your car. Major accidents can damage the vehicle more permanently, and not to mention the cost of repairs can practically empty your wallet (if there is no insurance or insurance doesn’t cover the repairs). Another hidden effect of accidents, insurance premium goes up, and an accident report will forever be attached to your car. This harms the resale value of your car severely.

Keep it clean

A clean car is a reflection of its owner. Regularly vacuuming, using fabric and car freshener spray, avoiding eating and drinking in the car, maintaining the leather seats, and frequent trips to car wash, are some tips that can go a long way to preserve the value of your car.

Avoid non-standard modifications

People tend to customise their cars with unusual modifications to make it stand out from the rest of the crowd; personalisation may render your car less attractive to prospective buyers. While the option is great in the short term, it may not be practical in the long run as buyers may not be too keen to pay for the customisation.

Lower your depreciation when you sell

Two main pointers that can assure you to get the best deal when you want to sell your car are:

Identify the right time to sell

Based on your car’s specifications, build and model, identify the strengths and gauge the market for your vehicle. For example, a convertible might not be in demand in winter as much as it is in the summers. Also, keep continuous tabs on your car’s model, discontinued or upgraded models could lose considerable value.

A private buyer might be a better option

While many people might prefer exchanging their old car for a new one at a car dealership, it is usually a trap to get you to sell the car at a lower rate than what you could have gotten in the market. If you are not in a hurry, take the time to search for private buyers that will help you to realise a much higher price for your car.

By staying updated and making smart decisions, you can reduce depreciation costs, ensuring that you lose less money!

Photo by Erik Mclean on Unsplash

WP_Post Object ( [ID] => 94641 [post_author] => 1 [post_date] => 2020-05-17 08:55:47 [post_date_gmt] => 2020-05-17 06:55:47 [post_content] =>

How to make some extra cash in South Africa?

We all could do with an extra grand in our pockets or purses... But how do we get it there? A bunch of entrepreneurs have created apps, that can help you do just that. These sharing and gig economy apps can help you make some extra cash online or in the real world. Some of the apps are native to South Africa and others are global.

What is the gig economy?

The gig economy otherwise known as the sharing economy consists of online platforms and apps that connect buyers with sellers and people who need services, with those who can provide it. These transactions are also known as peer-to-peer or P2P. If you find work on one of these apps, you're not necessarily an employee of that company or app... Their platform simply acts as a middleman between you and people who need your goods and services. We've compiled a huge list of all the various gig economy apps available to South Africans (see list below). If you notice something missing... Hit us up on Twitter or Facebook.

Money making ideas for kids and teens

We'll start with some quick money-making ideas for the kids first. Coca-cola, video games, clothes... All that stuff costs money. So you can appreciate what your parents have to do, to give you all of that good stuff, it's time to do a weekend or after school side hustle.

Driver Apps

Bolt (ex Taxify) - A clever way to get around when public transport or regular taxi services are not an option. Available on both iOS and Android. Uber - The most popular ride-sharing app in the world, with the widest network of users and drivers. Yookoo Ride - A ridesharing app that focuses on price and safety, offering 3 payment methods, a panic button and face recognition. inDriver - The app promises low commissions on their side, direct payments from passengers and highly profitable rides. Taxi Live Africa - Taxi Live Africa is a South African e-hailing and metered taxi service available for the pan-African market. Chaufher - Chaufher is a ride-sharing service specifically designed by women, for women. Only women are invited to become drivers or riders.

Food Delivery Apps

Mr D Food - With 5000+ restaurants to choose from, the service is offered in over 2500 suburbs in South Africa. Uber Eats - With Uber Eats, you can deliver food from restaurants in your area to hungry customers with your car, motorbike, scooter or bicycle. Orderin - Orderin delivers your favourite food quickly to your door. The app offers in-app driver tracking so you know when to expect your food.

Freelance Apps

Fiverr - Affordable English to Zulu translators, voice actors, South African virtual assistants, writers and hundreds more freelance South African services online. NoSweat - A great talent pool to complete your job, ranging from veterans with many years of experience to fresh talent at a lower price tag. UpWork - Part of a global talent network, this platform offers a wide range of professionals and freelancers at various price tags to fulfil most needs. People Per Hour - Find remote freelancers, contractors and consultants to complete your work online. JobVine Freelance - The freelance section of one of the most popular recruiting sites in South Africa.

Community Marketplace Apps

TaskRabbit - A marketplace that connects users, needing odd jobs and errands done, to skilled taskers. Doit4u - South Africa’s marketplace for outsourcing house or business-related work. MicroWorkers - Work from the comfort of your home and choose from thousands of microtasks. SkillPatron - Pan African outsourcing marketplace. SkillPatron focuses on bridging the gap between young talents and businesses.

Mystery Shopping Apps

Secret Agent - An application that connects job seekers and mystery shopping job opportunities all over South Africa. Available on iOS and Android. Clandestine - Clandestine is a platform helping businesses get in-depth customer insights by hiring mystery shoppers. Opinion Hero - The platform allows you to earn money by taking part in customer surveys, testing new or existing products and through mystery shopping.

Home Sharing Apps

Airbnb - The original copy. If you have a spare room, a granny flat or an entire home, you can rent it out to guests from all over the world thanks to Airbnb. MisterBandB - The first LGBTQ or gay-friendly accommodation finding app. Great to find gay-friendly hosts, travel tips and more. Homestay - Whether you are a tourist or a travelling student, Homestay will have the right option for you. Benefit from long term rental discount rates with certain hosts. BedyCasa - Stay with locals, find a bed & breakfast accommodation and beat the hotel rates, these are the BedyCasa promises. HomeStayin - With Homestayin, you can browse thousands of accommodations and find the perfect host whether you are a traveler or an international student. Need to buy a car? Consider comparing vehicle finance options.

Teaching & Tutoring Apps

Teach me 2 - An effective tutoring service with carefully selected tutors who travel to their students’ place and fit in their busy schedules. Tuta-me - An edu-tech company that wants to be more than the “Uber” of tutoring by enabling access to high-quality tutors to boost academic performance. TurtleJar - Choose from 150+ subjects and get access to online or face to face tutoring with TurtleJar. Smarttutor - SmartTutor offers courses in Mathematics for students wishing to matriculate. Their website mentions they will soon offer chemistry and physical sciences courses.

Home Maintenance Apps

HomeFixer - HomeFixer offers tradesman services to anyone who needs to fix something in their homes. The app is available on iOS and Android. getTOD - The app connects homeowners and handymen, through a secure platform offering in-app billing and pre-screening. Homify - Homify is South Africa’s online platform for architecture, interior design, building and decoration.

Online Selling Apps

OLX - OLX is a popular South African platform to buy and sell everything from cars to furniture. It also has a job section. Gumtree - Gumtree is the leading online classifieds platform in South Africa with thousands of ads, from used cars to electronics and real estate. Yaga - Yaga allows you to sell your brand new, used or forgotten belongings online in a safe and efficient way. Bid or Buy - A recent auction-based e-commerce website offering products ranging from furniture & electronics to fashion and more. eBay - eBay is the world’s online marketplace. Buy or sell cars, electronic equipment, rare collectibles and much more.

Specialty Services Apps

Prim-U - South Africa’s first application that connects beauty entrepreneurs to customers and beauty salons. Minderz - Minderz puts pet owners and pet service providers together. From walkers to beauticians and many more. Droppa - Bought a piece of furniture that doesn’t fit in your trunk? No worries, Droppa will pick it up and deliver it to your doorstep! Sweep South - Sweep South is a marketplace that connects local professionals for cleaning, gardening, heavy lifting, and caregiving with people who need those services. Zulzi - Get your groceries delivered within an hour with this on-demand delivery platform. TaskApp - TaskApp is the first multi-service, on-demand application in South Africa. From food delivery to house cleaning or home improvement work, TaskApp will sort you out. If you need some cash to get your micro business or gig economy idea off the ground, consider comparing these personal loan providers. Main photo by Lechon Kirb from StockSnap [post_title] => Ultimate list of side hustle ideas & gig economy sites to make extra money [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => how-to-make-extra-money-through-a-side-hustle-in-south-africa [to_ping] => [pinged] => [post_modified] => 2020-08-24 17:37:38 [post_modified_gmt] => 2020-08-24 15:37:38 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.compareloans.co.za/?p=94641 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw )

Ultimate list of side hustle ideas & gig economy sites to make extra money

How to make some extra cash in South Africa?

We all could do with an extra grand in our pockets or purses… But how do we get it there? A bunch of entrepreneurs have created apps, that can help you do just that. These sharing and gig economy apps can help you make some extra cash online or in the real world.

Some of the apps are native to South Africa and others are global.

What is the gig economy?

The gig economy otherwise known as the sharing economy consists of online platforms and apps that connect buyers with sellers and people who need services, with those who can provide it. These transactions are also known as peer-to-peer or P2P.

If you find work on one of these apps, you’re not necessarily an employee of that company or app… Their platform simply acts as a middleman between you and people who need your goods and services.

We’ve compiled a huge list of all the various gig economy apps available to South Africans (see list below). If you notice something missing… Hit us up on Twitter or Facebook.

Money making ideas for kids and teens

We’ll start with some quick money-making ideas for the kids first. Coca-cola, video games, clothes… All that stuff costs money. So you can appreciate what your parents have to do, to give you all of that good stuff, it’s time to do a weekend or after school side hustle.

  • Wash the car. Whether it’s your parents’ car, your neighbours or your friends… It’s a job we hate but need to do.
  • Start a design business. All you kids are whizzes on computers these days, and if you have some artistic skills… sites like Fiverr can provide some great experience and some extra pocket money.
  • Babysitting. Parents need some time off, so give it to them. But make it at a price 😉
  • Help the elderly. Reading the mail, moving stuff around, cleaning… That stuff becomes difficult as you get older. Visit a few retirement homes around your neighbourhood and let ’em know your services are on offer. Some folks just need someone to listen to their stories. Get your listening skills on and build up some empathy, because that stuff is priceless.
  • Letterbox runs. Those flyers don’t deliver themselves.
  • Cleaning and recycling. After a hard day’s work, what do business owners hate? It’s cleaning the floors, throwing out the garbage, dusting the shelves, etc. Help them out and make a few bob.

Driver Apps

Bolt (ex Taxify) – A clever way to get around when public transport or regular taxi services are not an option. Available on both iOS and Android.

Uber – The most popular ride-sharing app in the world, with the widest network of users and drivers.

Yookoo Ride – A ridesharing app that focuses on price and safety, offering 3 payment methods, a panic button and face recognition.

inDriver – The app promises low commissions on their side, direct payments from passengers and highly profitable rides.

Taxi Live Africa – Taxi Live Africa is a South African e-hailing and metered taxi service available for the pan-African market.

Chaufher – Chaufher is a ride-sharing service specifically designed by women, for women. Only women are invited to become drivers or riders.

Food Delivery Apps

Mr D Food – With 5000+ restaurants to choose from, the service is offered in over 2500 suburbs in South Africa.

Uber Eats – With Uber Eats, you can deliver food from restaurants in your area to hungry customers with your car, motorbike, scooter or bicycle.

Orderin – Orderin delivers your favourite food quickly to your door. The app offers in-app driver tracking so you know when to expect your food.

Freelance Apps

Fiverr – Affordable English to Zulu translators, voice actors, South African virtual assistants, writers and hundreds more freelance South African services online.

NoSweat – A great talent pool to complete your job, ranging from veterans with many years of experience to fresh talent at a lower price tag.

UpWork – Part of a global talent network, this platform offers a wide range of professionals and freelancers at various price tags to fulfil most needs.

People Per Hour – Find remote freelancers, contractors and consultants to complete your work online.

JobVine Freelance – The freelance section of one of the most popular recruiting sites in South Africa.

Community Marketplace Apps

TaskRabbit – A marketplace that connects users, needing odd jobs and errands done, to skilled taskers.

Doit4u – South Africa’s marketplace for outsourcing house or business-related work.

MicroWorkers – Work from the comfort of your home and choose from thousands of microtasks.

SkillPatron – Pan African outsourcing marketplace. SkillPatron focuses on bridging the gap between young talents and businesses.

Mystery Shopping Apps

Secret Agent – An application that connects job seekers and mystery shopping job opportunities all over South Africa. Available on iOS and Android.

Clandestine – Clandestine is a platform helping businesses get in-depth customer insights by hiring mystery shoppers.

Opinion Hero – The platform allows you to earn money by taking part in customer surveys, testing new or existing products and through mystery shopping.

Home Sharing Apps

Airbnb – The original copy. If you have a spare room, a granny flat or an entire home, you can rent it out to guests from all over the world thanks to Airbnb.

MisterBandB – The first LGBTQ or gay-friendly accommodation finding app. Great to find gay-friendly hosts, travel tips and more.

Homestay – Whether you are a tourist or a travelling student, Homestay will have the right option for you. Benefit from long term rental discount rates with certain hosts.

BedyCasa – Stay with locals, find a bed & breakfast accommodation and beat the hotel rates, these are the BedyCasa promises.

HomeStayin – With Homestayin, you can browse thousands of accommodations and find the perfect host whether you are a traveler or an international student.

Need to buy a car? Consider comparing vehicle finance options.

Teaching & Tutoring Apps

Teach me 2 – An effective tutoring service with carefully selected tutors who travel to their students’ place and fit in their busy schedules.

Tuta-me – An edu-tech company that wants to be more than the “Uber” of tutoring by enabling access to high-quality tutors to boost academic performance.

TurtleJar – Choose from 150+ subjects and get access to online or face to face tutoring with TurtleJar.

Smarttutor – SmartTutor offers courses in Mathematics for students wishing to matriculate. Their website mentions they will soon offer chemistry and physical sciences courses.

Home Maintenance Apps

HomeFixer – HomeFixer offers tradesman services to anyone who needs to fix something in their homes. The app is available on iOS and Android.

getTOD – The app connects homeowners and handymen, through a secure platform offering in-app billing and pre-screening.

Homify – Homify is South Africa’s online platform for architecture, interior design, building and decoration.

Online Selling Apps

OLX – OLX is a popular South African platform to buy and sell everything from cars to furniture. It also has a job section.

Gumtree – Gumtree is the leading online classifieds platform in South Africa with thousands of ads, from used cars to electronics and real estate.

Yaga – Yaga allows you to sell your brand new, used or forgotten belongings online in a safe and efficient way.

Bid or Buy – A recent auction-based e-commerce website offering products ranging from furniture & electronics to fashion and more.

eBay – eBay is the world’s online marketplace. Buy or sell cars, electronic equipment, rare collectibles and much more.

Specialty Services Apps

Prim-U – South Africa’s first application that connects beauty entrepreneurs to customers and beauty salons.

Minderz – Minderz puts pet owners and pet service providers together. From walkers to beauticians and many more.

Droppa – Bought a piece of furniture that doesn’t fit in your trunk? No worries, Droppa will pick it up and deliver it to your doorstep!

Sweep South – Sweep South is a marketplace that connects local professionals for cleaning, gardening, heavy lifting, and caregiving with people who need those services.

Zulzi – Get your groceries delivered within an hour with this on-demand delivery platform.

TaskApp – TaskApp is the first multi-service, on-demand application in South Africa. From food delivery to house cleaning or home improvement work, TaskApp will sort you out.

If you need some cash to get your micro business or gig economy idea off the ground, consider comparing these personal loan providers.

Main photo by Lechon Kirb from StockSnap

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