Dimakatso’s parents have a home in Orange Farm. The roof almost blew off in a storm. As a Civil Engineer, she took charge and during the storm, she went up the roof and pinned it down with a wire at its edge in her bedroom. It was at this moment that she decided that first thing the next morning she was going to apply for that personal loan.
She had dreaded getting into debt and her plan was to save enough money to be able to renovate the home in cash. The personal loan was approved and she got the money to do the necessary and urgent repairs. Little did she know that she had started on a debt trap. 4 months into the project she needed more money for the roof and a few other things that she decided to do as part of the project. Unfortunately in less than a year she had accumulated the following debts:
“How is it, that something so beautiful could feel like a burden? All I was wanted to do was to give my parents a dignified home, but the truth is I am struggling” Dimakatso told me during our first meeting. I felt her pain, she has been working as an engineer – in – training for 3 years and she has not been able to afford to buy a car. She is now a young mother of a 2 and a half year old daughter and she wishes to have her own car and soon move out of her parents home to start a life with her daughter, but with her paying so much just in loan repayments, it is not easy.
“I found a copy of your book – Debts to Riches and I could not believe how my life would have been very different had I gotten the book earlier” she said.
The first thing I did was to point out to her that for a monthly repayment of R12 600, she should be owning a home of about R1,2 million. I explained to her the difference between a secure and an unsecure loan, the credit life she was paying and the high interest rate she was paying on her unsecured loans.
After asking her a lot of questions, I told her, you know what, you can actually get out of this debt very soon and I could help you reduce your monthly repayments down to about R4000 so you can buy the car that you want. I was happy to see the look of hope and relief in her eyes.
Next time, I will share with you what my recommendations to Dimakatso were I asked her to first go speak with her parents.