Dear Member

Please read this to the end. Some truly inspiring responses on what lessons some dads taught their kids about money. A special thank you to both people whose stories I share for allowing me to use their real names. A big thank you to everyone else that responded; sorry I couldn’t print all the responses.

My Personal Savings Story

Many moons ago when I started working, I was approached by this insurance sales guy who talked me into saving money in a 10-year endowment policy. Why did I buy it? He showed me this spreadsheet with how much I would have at the end of 10 years. I thought wow, I must definitely save using this endowment as I would have so much money in 10 years’ time. I knew so little then I didn’t ask him too many questions. 10 years down the line I received a letter, my endowment had matured BUT the pay-out I got was so small I might as well have put my money under the mattress! What happened? I thought. Then I found out that no, the spreadsheet he had shown me was NOT implying that I would certainly get the money he had projected. In fact, this and many other money blunders I made when I started working are the reason I write about money today. I realise how costly it is NOT to have the right information. The difference between how wealthy you are today and how wealthy you could be is packed in the little book I wrote From Debt to Riches. I continue to read as much as I can about money and I share my lessons with you so that you won’t make the same mistakes I made. Think of it as “you have a friend in the money business” 🙂

THE GOLDEN RULE OF SAVING

We must first save and invest our money and only then spend the rest. Sadly, many of us spend first and we hope to save whatever remains. The truth is there is so much to buy out there so if you don’t save first, you will never have any money remaining to save. Saving is a decision, and all of us can choose to decide to save before we spend.

Some of the factors you need to consider before you save / invest money

  • ·         Save your money with a credible institution that will NOT go under or disappear into thin air
  • ·         Check where inflation is. You want to earn interest income higher than inflation, at the very least
  • ·         Saving is for the short term to enable you to buy the things you need in cash rather than on credit
  • ·         Understand that saving money in a bank account will NOT make you rich
  • ·         If you want to grow your money, the stock exchange is the best place to put your money. You only need R300 monthly to buy Exchange Traded Funds shares as an example. Please read the last chapter in the book From Debt to Riches about ETFs
  • ·         As far as possible, ensure that you will NOT lose your capital
  • ·         Find out what the performance of the fund you are investing in has been in the past. But note that past performance does not necessarily mean that future performance will be the same
  • ·         Knowledge is power. Read as much as you can about investing so you are not fearful and you make informed decisions
  • ·         Before you save or invest your money, always ask yourself the question, will I be able to withdraw the money if I need to? Will I be charged any penalties if I do?
  • ·         Always check what the transaction and other costs are. You want to minimise costs

Why should you save money?

  • ·         So you can handle unexpected events in your life
  • ·         So you can pay a deposit for your car
  • ·         So you can buy furniture cash rather than on hire purchase
  • ·         So you can pay a deposit for your home one day
  • ·         So you can pay transfer fees in cash when you buy a home, etc…

A TALK ON ETFs AND ALL THINGS MONEY

I will be having a public event/s before the end of 2013 to talk about ETF shares, amongst other topics. This is to respond comprehensively to the many questions I’m getting on ETFs. Keep your eyes peeled for the event. Meanwhile, please read the last chapter in the book From Debt to Riches, I talk about ETFs in the chapter. ETFS are an easy and cost effective way for all of us to make money in the stock exchange.

We have sold all 5600 copies and we now have new stock in the bookshops. If you sent me an email after reading the book, be sure it is now printed with the latest re-prints. So visit CNA and Exclusives to find out if your comment is printed. Thanks again for the wonderful reviews, they mean a lot to me.

DAD, What lessons are you teaching your kids about money? SOME OF YOUR RESPONSES

Dear Phumelele

I come from a very abusive family, and my dad used to work for a weekly salary.  Always when he was paid, he would either not come home on Fridays or come home drunk.

He would then start beating my mom and would only give us money enough for a bag of maize meal which my mom would use to make MAHEU (sourish soft porridge) and cook pap.  We would then use that maize meal to cook PHUTHU PAP and use MAHEU as ISISHEBO or SOUR MILK and pour it over our PHUTHU PAP.

My dad was happy to drink half his money and spend less on us.

I remember that one day he bought furniture (YELLOW KITCHEN UNIT) from Ellerines on Higher Purchase (HP).  He paid the instalments for a year and was AWARDED a BREAD TIN same colour as the kitchen unit.  As months passed by, he then stopped paying for the goods.  As was the case, you miss instalments the Furniture Shop would repossess what you bought.

Ellerines driver came and repossessed the furniture.  To my surprise they left the BREAD TIN which was FOREVER EMPTY because my dad would not even AFFORD TO BUY BREAD for us.  The bread tin was left lying on the floor as empty as it was.  This is the tin that when you rushed home after school you would always find the bread crumps saying “THERE WAS but NO MORE”.

I used to walk bare foot to school regardless of the weather (rainy day, winter or summer).  I still have a cold-drink bottom part cut under my feet which I got when I ran home on one rainy day.

I remember on one particular day when my father sent me to the shop.  As I passed at the shebeen house where he spent lots of his money entertaining friends with Richleur Brandy, I noticed that the house owner had bought a NEW DOOR when our home was actually falling apart.  I admired the door and when I got home I shouted “Dad!!! Guess what, the shebeen owner has bought that BIG DOOR with an ELEPHANT DECOR using your money”.  My dad was so angry that he beat me up horribly.

To date I vowed that none of my money will be spent on any alcohol no matter how light or less alcohol is in that drink.  I have also learnt that, if I need something I save for it even if it means saving for five years.

I once bought a house through the bank loan (BOND).  My friend invited me to a church (you know those TENT churches).  On that particular day, a Pastor from Angola was preaching.  When he explained that when you buy anything on Higher Purchase or BOND HOUSE you are actually agreeing to be a SLAVE for the duration of the BOND AGREEMENT.  I immediately decided that, I am not going to work hard and spend all my money paying for the BOND or higher purchase where all items become double or triple the actual amount.  I decided to do Right Sizing and was given an RDP house.

To cut the long story short, my cousin then passed away and his house was on Auction and I bought it for R15 000.  Three bedrooms, a dining room, a toilet and separate bath.  The house just needed a few touch ups.  Today the house has been renovated to a FIVE BEDROOMED HOUSE and it feels so warm and it is a home for anyone who visits.  Who do I owe?  NOBODY.  Furniture in the house gets paid for on cash after saving for quite a long time.

Through my dad’s actions I learnt that it is important to provide for your CHILDREN, to make your house a HOME by making sure that there is LOVE, MOSTLY that SAVING money is IMPORTANT.

PHUMELELE when I first joined this company, the employees were running a STOKVEL SAVINGS, and to date I am the one who is always ensuring that each year, employees join the stokvel because in January when we withdraw that money (though the interest is not that much); it helps us pay school fees, buy school uniforms and also keep us going for the January month.

In closing Phumelele, CHALLENGES should not always KILL or HARM us and make us fall flat after falling, but we should quickly stand up, brush ourselves and run the race with a different mind-set.

We would appreciate your help with regards to our Stockvel Savings.

Thank you

Nomsa

Phumelele’s response

Dear Nomsa

Thank you so, so much for sharing your sad but truly inspiring story. I really have nothing to add but I hope that we all learn from you. You are truly an inspiration. Our society is still struggling with all forms of abuse; alcohol, drugs, sex, money, to name but a few. I hope someone out there who is still going through the challenges that you went through will be comforted and encouraged and know that what we go through as children does NOT define who we will become as adults. Regardless of what our upbringing was like, we can all start now and make a better future for ourselves. YES, I will be more than happy to assist you to set up a vibrant stokvel that will ensure that you and your colleagues enjoy optimum returns and long-term benefits through your savings. Await a call from my office in this regard

Obongayo

Phumelele

Hi Phumelele

I’m married and am a father of two girls. Thanks so much about the Father’s Day article, you proactively saved me from the possibility of also falling into the pit that Lebo did. Tomorrow I’m supposed to be having an appointment with some lady from the JSE in this regard, glad I’m already enlightened. I will still attend but at least I now know what else is available out there

By the way, I have decided to do the opposite of what I learned from my dad about money. The way he (and the rest of my family, mum, grandparents, siblings, etc…) handled money was very poor; always having and making debts and not spending money wisely. I told myself that I will be an opposite of them. However, I also fell into this just like all of them, but luckily I just started working so there’s still a lot of chance to get out, and I have a number of supporting structures like you (thanks), my wife, and Apostle Jezile (advice).

My babes are still very young (3yr old & a new-born), but I’m taking care of 3 kids from my wife’s home (8yr, 12yr, & 17yr olds) – long story (hopefully I’m not a cash cow..lol). It’s an understandable story, like they have nowhere else to be, literally, but to be with me and my wife. I also give them little pocket money and not on a daily basis, I just try to make sure they have everything they NEED not WANT. I always talk to them about not wasting money, not rushing off to buy something as soon as they have some money, but rather saving that little money. They know I’m in heavy debts and I tell them how I got into so much debt so they can avoid it in future. They know I’m busy struggling to get out of debts and they know I’m determined to.

Kind Regards

Mvikeli

Dear Mvikeli

Thank you for sharing your story. As discussed, once you have finished reading the book, I’m happy to give you any further tips and pointers on whatever else you might still need to do to ensure you are completely bad debt free. Please also read the Debt Cancellation Plan that is posted on our website. I am looking forward to publishing your success story in the near future.

Enkosi

Phume

INVITE PHUMELELE TO SPEAK TO YOUR WOMEN FOR WOMEN’S DAY

You can invite Phumelele to speak to your women about all things money during August for only R9 800 for a talk including Q & A. A copy of the book is recommended for all women in attendance. To get more details please email phumelele@thuthuka-sa.co.za

From Debt to Riches

WHAT ONE HAPPY READER HAS TO SAY ABOUT THE BOOK

Dear  Phumelele,

I just don’t know where to begin – I am just so awed with your book “From Debts to Riches”. I have always tried to get to read financial books, even Suzie Orman’s, but hey, they sounded so greek to me. It frustrated me so much because I really wanted to get out of the debt rut, but did not have the know- how. Not only that, but to get out, stay out and even be well off while doing it..

I was so excited when two weeks back I went into CNA Alberton and your book was actually calling me to buy it. What I also like about it is that it is more closer to home as, written by a South African, the reader feels that you know what we have to go through.

I have even gotten my friends to buy it and sent whatsapp photos of it to my contacts, for them to please please buy it.

I am now starting on working on my budget again and hope for the best.

Please advise though, do you offer assistance in financial planning as well? I would love to have someone to talk to in respect of my finances and a way forward.

Thank you so much for your beneficial read!!!

God Bless,