Dear Member

Christmas and bonuses for the lucky ones, are around the corner. Is your coming bonus making you restless? You are not the only one. This phone call from one of my close friends reminded me that the silly season is upon us.

We will call her Zine. As soon as I picked up the phone she went, “please tell me I’m stupid”. Laughing out loud I said “tell me what you want to do”. She went “I want to buy a Jeep”. Now roaring with laughter I said “yes, you are stupid! How can you?!” She said, “You know I just got a new job with a higher salary and I’m finally getting my degree so I’m expecting better days ahead. For the whole day today I’ve been trying to stop myself from picking up the phone and phoning the car dealer”. I said “Good for you!  You shouldn’t be phoning any car dealer. Not you of all people, you have even read my book and you know what I say about buying cars in the chapter, Is your car driving your destiny? You live in a 1 I-bed townhouse and your daughter is growing up fast so your first priority should be to buy at least a 2-bed unit soon”. “I know, I know,” she said. I have been under so much temptation, reading the book was not doing it, I had to phone the author to talk sense into me. Laughing I said, “No, no, no signora, please, don’t park a Jeep under a carpot, No!”

We went on to discuss more detail about the car

Phume– you know it is not just the instalment you have to worry about, it’s the insurance in case you die or become disabled while you are still paying for the car and the insurance in case of theft or accident and all the things mentioned in the chapter. How much is the residual payment?

Zine – I would have to take the highest residual and that would work out to about R300 000.

Phume – I said no way, leave that car alone. Right now if you hit a pothole, you can replace your tyre for around R1000. Do you know how much the tyres would cost you? A tyre for a BMW X6 is R8000 so expect to pay the same amount. But even most importantly, do you know how much petrol will cost you? Expect your petrol bill to be about 3 – 4 times more per month than what you are paying now.

Zine – that’s why I phoned you. I have been reading about these NO Deposit & low instalment cars and the temptation was too high. I’m also expecting a good bonus shortly.

Phume – Use your bonus to pre-pay your little one’s school fees for 2014. That will buy you peace of mind. You should start viewing 2-bed units soon

Before we finished our conversation I said to her, do me a favour. In your diary, write a gratitude list. This is a list of everything you are grateful for. As an example, the fact that you are finally finishing your degree, the fact that you have a home, you have a job, your car, your little girl, etc… Looking at your gratitude list now and again will keep you happy. Next to it then write everything you wish for, needs and wants. But start first with your most important needs e.g. you must buy a 2-bed home, you cashed your pension when you resigned from your last job so you must top up your pension with a retirement annuity ASAP, furniture for the little one’s bedroom, savings for her university education, etc….The next time you want to do something big, check your wish list and if it is not at the top of the list, let it go

This conversation with my friend highlighted the following key points:

• We all need an accountability partner. This is someone we can share our dreams with and they will keep us on track if we are tempted to do something that will not benefit us and is not in line with our dreams
• When I asked her why she wasn’t buying a 2-bed home, she said buying a house is such a hassle. She knows she should do it but it is such a big task.Don’t shy away from big tasks. You don’t buy a home every day anyway
• When she resigned from her last job, she cashed her pension to pay off all her debts so she could start afresh. If she went ahead to buy this car, she would be back where she was a few months ago – heavily indebted. So I pointed out to her that she seems to be addicted to debt
• She must very soon get an RA to make up for the pension she cashed. There’s no excuse for not doing this. If she delays this any further, she will not afford to retire
• Knowing what to do and actually doing it are two different things. We are good friends and we discuss most things including money. She has read my books and she knows the right thing but she lacks the oomph to carry through with her plans – this is where your accountability partner can help you

Make sure you have a level – headed friend you can trust and will help you stick to your plans. Also, be prepared to listen to the truth. Don’t resent your partner for being straight with you. I was able to be straight with Zine because she is a good friend and our friendship is based on honesty. She has also stopped me from doing silly staff in the past

New second hand cars

Have you seen “new” second hand cars in car dealerships lately? Most are repossessed from people who bought them and couldn’t really afford them. Others give them up when they realise they cannot afford to pay the residual. If you need / want a nice car, why don’t you buy one from the used car dealership? Let someone else incur the high depreciation of a new car and you enjoy the benefits a few months later?

Note from Phume

We all have something that we wish for but currently, it is beyond our means. We feel that if we could have just this one thing, we would feel happy and content. The reality is that the feeling of contentment wouldn’t last if we bought it before we could truly afford it. The short term joy would be replaced by the long term despair as we work hard to balance things out daily. Hang in there and teach yourself to be content even without what you think will make you happy. In the end, things don’t make us happy. We have a far better chance at happiness when we live within our means and we do NOT borrow from the future

NO offence to Jeep.

BUY copies of the book for your employees as a Christmas gift and Book Phumelele for a no- nonsense talk, email phumelele@thuthuka-sa.co.za Ts & Cs apply

Warm regards

Phume