HOW TO ADULT… HARD



How would you like to live bond free for 13 years? Or save WELL over a million in compound interest? It’s possible if you’re a little wiser and more disciplined. I’m sure most people know this but for the rest of you who are like us can I get a, “Hell’s yeah?”

Recently, Will and I spent a delightful evening with his cousin and his wife, and amongst the gin, hilarious tales of their shenanigans as kids and the most delicious food, we learned how to adult… HARD.

As you get older, #marriageporn  shifts from spontaneous trysts to coming in under budget on your Christmas shopping. In fact, the day Will was sexiest for me was when he found a 3-kg washing powder for the price of a 2-kg.

Karolina and Dyllan are the shorter and taller version of us, more attractive and way more responsible. We’re the funhouse version of them – wobbly in our views, with no focus.
And during our chats, including finding an article on shortening your bond term, we learned a number of ways to save and perhaps have that financial freedom we all long for.

PAY OFF YOUR BOND IN  7 YEARS!
Paying off your bond quicker is not as difficult as it seems. I feel that this info is the world’s best keep secret. Your home loan is the biggest debt you will ever take on but easier to pay off if you know a little. With the price of everything increasing faster than your income, you’re preaching to the choir if you’re stretched as far as you can be, so this may seem like a mammoth task. But 13 years bond free sounds better than 7 years of discipline, no? If you make a few simple adjustments – like cutting out your daily coffee OR two restaurant trips or (with the price of movie tickets nowadays) one cinema trip – it’s possible, simply by paying extra every month.

Here are ways to save:
Let’s say you have a bond of R400 000 and an interest rate of 9.5%. If you switch from a 20-year to a 5-year period, just by paying more, you could save up to R500 000! You’d think if you want to pay it off in two thirds of the time(or in this case, a quarter), that you’d have to pay two thirds more but it’s not the case. If you have a home loan of R1 million at an interest rate of 10%, that gives you a monthly payment of about R10 000. The total amount paid (plus interest) will amount to R 2 316052. Now let’s say you can afford to pay 10% more (R1 000) so R11 000 every month. If interest rates stay the same (a big if), you could pay off your bond in 15 years! That's five years saved. A pretty big difference just for giving up your daily coffee. If your salary increases by 6%, pay 6% of the R11 000 (R720) into your bond – do this annually and your home loan period is reduced to 10 years! You may need to chat to the ombudsman to make these changes but if I can save this much, I’ll have ‘em on speed dial.

Interest is calculated daily. So in addition to the above, another way to reduce your term is to switch your debit order date. Have it set for the 1st? Switch it to your salary date, say the 25th, and reduce the period down from ten years to seven or eight years! It's as simple as that.
If you’d like to pay off even faster, include things like bonuses, 13th cheques and any other income you may receive like freelance jobs or rent, or if you’re lucky enough to be the recipient of generational wealth from a long lost uncle, any inheritance etc. Set a target date so that you have a goal to work towards.
Another way to save is this: say your home value has increased by say 1.5 million since taking out a bond, and is now valued at 2.5 million. You could sell, settle the debt with the bank, and use the difference (minus commission and transfer fees, of course) as a deposit towards a new home. Look into agencies like Leadhome who charge a flat rate of R39995 + VAT regardless of the value of your home. The average estate agent will charge 7.5% - which adds up to R187500 if your home sells for R2.5 mil. Weigh your options since most home buyers still prefer dealing with people - especially if they know how to get the most for your home. In order to pay less on your bond, the key is to find a home of similar value to your current bond or go cheaper, otherwise you’ll be in the same boat. If you trawl websites for just a few weeks, you may not even have to scale down, at all.
If you’re a first-time buyer, don’t settle for the first interest rate given, or even the second, shop around for the lowest, and if possible, save up for a deposit to lower your interest rate. And NEVER, ever, ever, ever take the maximum loan amount like Mr. and Mrs. Moneybags over here or worse yet, stretch yourself even further.

SIGN UP FOR EVERY REWARDS PROGRAMME POSSIBLE
Will and I are fuss-free people (which is a nice way of saying “lazy AF”). I would seriously pay full price than shop at sales. But sign up for rewards everywhere. Most rewards cards give you a percentage back on your petrol spend so get ‘em all! Keep an eye on your email and look out for savings vouchers in addition to the rewards you already enjoy. And most importantly, sign up for Discovery Vitality – you literally get rewarded for living. By now we’re all aware of Discovery HealthyFood where you could get up to R1000 back on your shop - on anything from an orange to orange based eco-friendly household cleaner, so look at your grocery bill. Would you like to take R1000 off that? Of course you do!

To save money and reduce waste, draw up weekly or monthly meal plans and shop for those ingredients. We all have that one green pepper we buy simply to wilt away in the corner of our fridges so with a little planning you can also eliminate food waste completely. It’s estimated that we throw away about 20% of the food we buy. That’s like buying a bag of apples, dropping three and leaving them in the parking lot.

Other Vitality benefits include up to R2000 back for personal care items at Clicks and Dis-Chem - from healthy and beauty items to baby care and toiletries, free movie tickets for kids at Ster Kinekor and half price for you. But the most important thing I discovered was Discovery Insure! Apart from being rewarded for living well, you also get rewarded for driving well - with up to 50% back on fuel for driving the speed limit, and doing necessary safety checks like wheel alignment and assessments  at Tiger Wheel & Tyre. Plus, 50% off speeding tickets for those of you who drive as recklessly as I do (and pay your tickets!).


FIND OTHER WAYS TO SAVE
·      ·      Of course it goes without saying to cut unnecessary debt (do you really need another pair of shoes to gather dust?). Recycle or invite friends over for a fashion swop night instead.

·      If you’re ballin’ (unlike us), simple shifts such moving from a 10Mbps fibre line to 4Mbps line will save you hundreds every month. Unless you’re a big gamer, no-one needs a line that fast.
·      Switch to a different bank account. You don’t even need to swop banks. Do you really use all the benefits of a Gold Card? Look at an entry level account. Depending on who you bank with, you could save up to R350 per month.
·      Apply the rule of: "If I can make it, I don’t need to buy it." Whether clothing, lunch or gifts.
·      Don’t shop when you’re stressed or hangry. I don’t think this needs an explanation.
·      Shop around for better insurance quotes. If you’ve been claim free for over three years or did some security adjustments at home, insurance companies will be champing at the bit when it comes to your business. 

I hope you’ve found a few life-changing saving tips above. And please feel free to share your own.


You don’t have to use all of this advice, but if you simply pick at least one, it’ll go a long way towards helping you save.
Research: Home loan info based on Article by Anne Schauffer for Neighbourhood: Property News
Image: Pinterest / dwell.com

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