From Debt to Riches Review by Hazel Mantshiu

Please see below the review by Hazel. I’m just so happy that these young people were given the opportunity to understand money principles early in their careers and even more happy that they are breaking the stereotype that millenials don’t understand money. I have no doubt in my mind that Hazel and other young people who have read the book will NOT be getting into unnecessary debt – those who throw lots of bad debt to young professionals will have to go elsewhere.

Chapter 1:
There is a difference between good debts and bad debts. Bad debts don’t increase your wealth over time and your good debts are the ones that has long term benefits. Best thing to do is stay away from bad debts.

Chapter 2:
Debts are costly. At times you will have to pay a debt councillor who will “help you to get out of debts” an amount you can’t even afford which result in you being more financially compromised. Don’t let debts consume you, save and buy most things cash which prevents also paying that extra interest and as result saving you money. Examples of bad debts are your credit cards, buying furniture on credit. Example of a good debt is a home lone as it increases in value over time and interest charged is generally lower. LESSON LEARNT; BUY WHAT YOU CAN AFFORD AND SAVE UP FOR WHAT YOU CAN’T AFFORD.

Chapter 3:
Stay away from short-term loans as they have a high interest rate. Home loans generally have a low interest rate. There are always hidden costs in short-term loans. When applying for a home loan apply for the highest amount the bank is willing to offer you if you need money for other things because in this way interest charged will be lower than getting a personal loan.

Chapter 4:
It is advisable to query any garnishee orders approved by the human resource managers without consent and they can only be obtained in a court that is within the region of your home. A debt that has prescribed you no longer have to pay for it. It is important to read every document that you are signing and make sure you understand everything. When we have to too much debt’s we should also keep in mind the in duplum rule which states” If your credit agreement under the act is in default, your interest and the other costs on the contract such as layers fees-can never add up to more than the capital amount owed at the time you defaulted”. Always pay your debts on time to avoid notices from the bank.

Chapter 5:
Never buy a car on balloon payment because if you don’t have the deposit to pay for a new car chances are you won’t have money at the end of your term. Rather buy a cheap, reliable second-hand car. Buying a car cash is the best way if you’re able to hold on a bit longer in buying a car.  Cars are liabilities, no financial value only emotional value.

Chapter 6:
Invest in things that people can’t see to be able to live a comfortable life. Examples of investments are retirement annuities, education funds for your children, life covers and other savings for when you might need the money.

Chapter 7:
Start saving as early as possible so by the time you retire you might be able to retire comfortably.

Chapter 8:
Having a life cover will save you the expense of paying for credit life every time you buy something on credit. LESSON LEARNT: TAKE LIFE COVER THAT WOULD PAY UP FOR YOUR ASSETS AND ALSO BE ABLE TO TAKE YOUR CHILDREN TO SCHOOL SHOULD ANYTHING HAPPEN TO YOU BEFORE YOU FINISH PAYING OFF YOUR HOME AND OTHER ASSETS. Take life cover while you are still young to avoid high premiums because as you get older diseases creep in.

Chapter 9
It is important to own a home in order to have a roof on top of your head. Pay back extra into your home loan to be able to finish it quicker. You could always get an overdraft from your home loan if you really need money rather getting a new loan at a higher interest.

Chapter 15:
This chapter was particularly interesting for me because I always had an interest in investing in stock exchange and like everyone else I thought you had to have a financial background to be able to invest in the stock exchange. So it was interesting to know that there are ways in which one can invest in the stock exchange like investing in the top 40 companies on the JSE listing.

In conclusion
Buying a home before a car is a good investment because you can buy your car by increasing the loan on your home. Invest in property get tenants that would help you pay off the bond faster at a lesser interest rate. A home increases in value over time as compared to your car. Start investing in the JSE top 40 as early as possible because interest incurred is compounded and it is less risky. Another lesson if you have enough money you can open tax free investments for everyone in your family as long as its not more than 33000 per year per person.

Share this knowledge with your loved ones