Yes that’s the question folks. What does the average (middle class) South African spend the most money on?
Their house? No but it’s a good guess. Houses are expensive, but this expense can cost you more than your house.
Beer? Boerewors? Biltong? No it’s not one of the 3 B’s either.
The wife? Hopefully not…
Speed up your time to financial independence by simply making more money, what a revolutionary idea!
No I’m not here to sell you on some crazy pyramid scheme, in fact I’m going to recommend you completely forget anything related to pyramid schemes or multi-level marketing (MLM) exists, because well researched evidence points to the fact that 99% of participants involved in MLMs lose money. Even if you don’t you’re almost certainly going to annoy your family, and alienate your friends, just don’t do it. Starting one can be very profitable though if you don’t mind the risk of jail time, like this smart lady who managed to convince thousands of people to buy a cheese making kit earning her €145 million…
No, none of that rubbish, just an honest way to earn a few extra Rand so that you have more to save and invest. But first I’ll start off with a statement. It’s far easier to save more than it is to make more. That’s why whenever someone asks how they can get their finances in order, I always recommend they look at the burn side of their budget rather than the earn. It’s something you have complete control over, and in most cases is filled with excess, waste and debt repayments. There’s bound to be some low hanging fruit, so most people can find money to save somewhere. My wife did that last year, and though I still can’t figure out how, she managed to out-save me without even trying. We figured this out weeks ago, and I still get almost daily reminders…
But sometimes trimming the budget isn’t enough to get ahead, and you just need to earn more.
1) You’re bad at maths because you bought a new car
Quite a few of my friends read my blog. Some of them like Wendy* are even on board with the whole save enough to retire really young idea, but maths isn’t her forte as the following conversation should show:
Wendy: Can you believe Bill* just bought that big BMW*. So stupid, he makes less than I do. What do you think it cost?
Patrick: Well it was about 2 years old, so it’s probably worth around R300 000.
Wendy: R300 000! I’d never spend that on a used car. I’d much rather get a new one for that price. What an idiot.
Patrick: Well the minute you drove out of the showroom in a new R300k car you’d lose R60 000. After one year of owning it your total loss would be around R90 000. After a year of owning his used car, Bill would only lose R30 000.
Conversations like that often have a lot of uncomfortable silence following them, especially when Ms want to be frugal bought a brand new (though much cheaper) Kia a few months back.
*Names and even cars have been changed. I’ve learnt my lesson on using even relatively similar examples before.
“…I want to find out whether there’s any truth in the belief that money can’t buy happiness.”
I often write about things I don’t like spending money on:
- Balloon payments for a car. Remember those, the deposits you still have to pay AFTER you’ve paid for the car for the last 72 months. The Americans have a better term for these types of loans, they call it a bullet loan. Bullets are scary so this makes sense, balloons are happy which you won’t be when your payment is due. Don’t let someone aim a loaded bullet your way when you make a car purchase, it’s going to hurt, a lot.
- Expensive label clothing. Are your genitals on display? No? Then consider yourself dressed. Feel free to spend money on quality clothing though, if it lasts a long time it is often more cost effective than buying cheap clothing more often.
- Outrageous unit trust fees. I hate them, the people who dream them up, and all of the suckers who fall for them which means they’re still not extinct. Fortunately they are on the decline, and even Steen Jacobson, the CIO of Saxo Bank knows their days are numbered.
- Taxes. It probably wouldn’t be so bad if most of the money didn’t go towards Nkandla, #1’s girlfriend at SAA who managed to lose R1.4 billion last year, our international relations minister with a hole in her head or the SABC boss who lied about finishing school, and now forces everyone else to lie about the news and to literally sing his praises. In a less corrupt country I’d have no problem with this. I’d even happily pay the Swedish 60% tax rate if the money would go back into social services rather than the pocket of politically connected hyenas.
- Bond payments. You can argue with me until you’re blue in the face. Your house is not an investment, finish and klaar. I don’t care if you have one, but don’t kid yourself, it’s a lifestyle purchase, not an investment. The only positive I see is that it force the typical South African’s with money allergies to save.
Today I want to talk about something I love spending money on. It’s appropriate too, because I’ve recently spent a lot on it!
I have a machine that prints money. It’s legal too, and operates on nothing more than cheesecake. That’s right, nothing but pure cheesecake. I have two others that operate on a combination of cheesecake and a teeny tiny amount of electricity. My brother has two of these, and I’m buying one for my wife now too so we can use ours together. These machines are really quite common, I’ve been trying to get Orca to buy one that would run on beer, since he often has a surplus of that 🙂
My favourite computer game as a child (yes we had computers back then, much to my son’s disbelief) was Lemmings. In this game you’d have to rescue these humanoid lemmings who were too stupid to do anything else except follow their leader to their doom. Sounds pretty much like our government at the moment doesn’t it?