The rich are in trouble

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Last Updated: 07:00am 26 Nov 2008

SEARCH v The rich are in trouble
Wed, 26 Nov 2008 06:59
... the website
The rich are the most indebted and banks are
for... reporting a 50 percent increase in bad debt as South
Africans now owe R1139-billion and R8.20 of every
R10 a South African earns goes to pay off debt.
WEATHER
The latest figures from the Bureau of Market
Ctn | Dbn | Jhb | Other Research (BMR) at Unisa shows that more can't pay
and are sliding down a steep slope into financial
despair. Liza van Wyk of executive management
16° 31° » More
skills training group, AstroTech says, "we are seeing
enrolments in our financial courses rise and more
executives asking not just how their companies can
INDICATORS cope, but how they can manage their way out of
serious debt." Related Articles
$ = R 9.97
» Does 'good' debt exist?
£ = R 15.31 The Unisa research shows that the income group » Free yourself from debt
€ = R 12.92 with the biggest debt burden earns between
» One easy step out of debt
Oil = $ 49.23 R500 000 and R750 000 a year. Their debt
represents more than 135 percent of their disposable » Borrow money to get out of debt?
Gold = $ 817.8
income and they use 34 percent of their disposable
Last update:
income to pay back debt.
26 Nov 2008 16:56:03

Their woes have seen the property market and car Latest News Talked About Edito
SPONSORED LINKS » sales collapse with more than 4000 jobs lost as more
than 200 car-dealerships have closed, according to » Tiger expects growth
Casino Online – get McCarthy. Ford will start lay-offs soon. » The rich are in trouble
R300 free!
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Nonetheless, major banks like Investec have said » Credit card fraud jumps
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"Our Finance for Non-Financial Managers course is
consistently jam-packed, we're seeing high interest
Flights Online
in our early February course on Corporate Budgeting
Compare quotes. as well as our Risk Management and Strategic
Insure. Management courses," Van Wyk said. "Our skills
Flight Centre Specials trainers are reporting the most attentive delegates
yet in financial courses, with many afterward asking
Car Rental Online for personal guidance — and these are the cream of South African business, government and p

Online Dating Wayne Ford, AstroTech's top financial management trainer and a highly-respected managemen
giving his overview of the present situation said a low Rand against most major currencies wou
Audio, TV, GPS & PS3
etc necessarily help the economy. "Not every company will be able to compete in the export mark
that cannot compete and survive unless domestic consumption expands is not going to be able
the much more aggressive export market."

Ford said the biggest challenge facing South Africans and global financial markets was pervasiv
GET IN TOUCH » "We keep interest rates high partly to reduce credit spending and thus domestic inflation and p
the exchange rate and reduce imported inflation from things like oil and foodstuffs. High inflati
to the poor, who have no spare disposable income, no savings and minimal flexibility to increa

http://personalfinance.iafrica.com/debtmanagement/1329100.htm 11/26/2008
iafrica.com | mymoney | debt management The rich are in trouble Page 2 of 6

— other than to strike for higher wages. Fighting
inflation is one of the best ways to help the poor.

"And when banks won't lend to them any further,
those in financial trouble go to loan sharks and incur
extortionate interest charges. 'Incentivising'
everyone to cut debt is critical.
Got something to say?
Click here to send a mail "The American plan to cut rates in order to fuel
to Personal Finance and credit spending was fine in the very short term, but
Property editor Kabous it was poorly judged credit spending that caused
le Roux. their problem in the first place. You don't have to be
a genius to realise that the credit boost they are
creating now (which is being funded by increasing
the federal debt) will lead people into further debt,
which will have to be paid for in the future by
families who can't afford their existing levels of debt
now. This is like treating gangrene with morphine —
although it has stopped hurting it is still there, it is
getting worse and if left untreated for much longer it
will certainly kill you."

Challenges for labour and land redistribution

Ford said that, "Creating jobs is very important, but those jobs must be sustainable. If we crea
allowing customers to buy on credit then those jobs will disappear as soon as the next level of
reached. Also, if jobs are created by allowing families to get into debt, then the cost of prosper
exceed the prosperity itself and the whole cycle will continue to spiral negatively. These negati
entire economies — the USA is close to the edge right now and many developing nations have
slipped over the edge.

"Allowing the exchange rate to drop helps exports but has the parallel (and much faster) effect
imported oil prices." Ford said that, "We need to increase exports by reducing manufacturing c
improving productivity vs. wages. It would help if we could break our dependence on imported
we could then happily devalue the currency.

This requires a massive focus on green energy sources and better support for efficient corpora
opposed to land redistribution to subsistence farmers who can barely feed their own families, f
towns. The example of Zimbabwe is very relevant here. "A growing economy needs citizens to
banks cash-flush, which eases the cost of borrowing and makes capital available more cheaply

A short term solution for families in trouble

The short term solution for individual families is the following:

Stop spending.

Use all available cash to pay off debt.

Stop spending.

Use less fuel — switch to public transport where practical.

Stop spending.

Grow some of your own food in the back yard.

Stop spending.

Trade in your car for the cheapest car you can find.

Stop spending.

Get solar heating installed as soon as you can afford it and meanwhile save power with
bulbs.

Stop spending.

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iafrica.com | mymoney | debt management The rich are in trouble Page 3 of 6

Get a second job.

Stop spending.

USER COMMENTS »

the rich?
how can a person in debt be called rich,i drive a bashed up old golf,but i dont owe
nobody anything,that makes me rich.I dont need to stress about earning more and
having sleepless nights about it.I dont compete with the Joneses.That makes me
rich.. frikkie botes

Nice feeling hey Frikkie
. ddc

well done frikkie. you must be very proud.. G

proud
proud you can be indeed, Frikkie.
only stupid people borrow money and pay interest.
feels so good to have no debts.(where every Rand actually costs you 1.20)long live
that good old fashioned calvinistic thinking :-). edward

Are you kidding me.
This was obviously written by a person who thinks that going back to the 3rd world
is the best way to make/save money. - "Grow you own food in the back garden?"
And it is said, use public transport and then the righter says trade in your car for
the "Cheapest" one you can find. Ever heard of penny wise pound foolish? If you
get the cheapest car you can find it will break down and cost you more than a good
maintained car. (Oh and if you dont maintain the car, wonder what the resell value
is?) Growing food in your back yard, you need a Back yard. And then, the cost of
upkeep is more then it will be to buy food. Understand me correctly, but at a fresh
fruit market instead of Woolies. But Grow your own food. COME ON! So before we
are pushed back into the darkness if the 16th centaury, use your money correctly.
Plan forward and make informed decisions. And for Pete sake, don’t do things you
don’t know how - Like gown your own food. Oh and obviously, stop spending, like
creating a food garden is not spending. . CJ

Great idea
I do have a garden and I think growing some of your own food is a great idea.

. Dr Greenthumb

High interest rates
My biggest question is, if the government is trying to stop new debt by increasing
interest rates to discourage new loans, why not just apply higher interest rates to
new loans and not penalize old loans? I have a 5-year-old bond that I could
manage to pay without a problem, but after the many interest rate hikes I now
have to borrow from my access bond because of the R2500.00 / month more it
cost me on bond repayments. So, from been part of the solution I have become
part of the problem, and no fault of mine. It just does not make sense why people
who have been paying off their house and car for many years now have to suffer
because of the need to curb new debt. Those who are financially responsible should
be rewarded and those who are financially reckless should be penalized.. George

do not spend
A good mind only needs half a word to understand a concept ; 'CJ' obviously has
no such facility & cannot even spell or construct a decent sentence ! . GB

What about budgeting
I am surprised that there was no mention of budgeting in the short term solutions.

How will you know if you are in trouble if you don't have a budget?

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Madia Thomas,
www.onlinebudget.co.za. Thomas

Stop spending! Simple.
I love how this article repeats the words 'Stop spending'. It really is as simple as
that.. Richy Rich

Only one way
There is only one way to get out of debt problems - just don't make any debts!
Easy. And STOP SPENDING! ;-D. Brakkie

solutions
has the writer of the article priced solar heating lately? ya well no fine.. cheryl

Yeah Grow Your Own!
#. Ian Finch

The rich are in trouble
I am not happy with the advise that your writer is giving and I find it very much
the OLD stuff!!

By downgrading your car is the worst cash flow option!! By trading in your origional
car for a cheeper car is throwing away R 10 000 to R20 000 immediately!! Then
you have to put a deposit down and start paying off on a new lease...AND then
your fuel saving is R1 or so per klm!! Please this does not work and can only work
if you are doing long term planning!

Also, by installing a solar heating system will cost R30 000 to R 60 000 up front
and you only see your saving after 3 to 4 years!!

Both options are cash out right now..and will put us all very much deeper into
debt...and will not help anyone right now!!

. David Hartley

CJ???
I dont think CJ got the message.. pala

how stupid !
oh what a joke of an article.. cant belief that allow this rubbish here. We must
catch public transport and grow veg in our back yard lololol. The wealthy are
wealthy because we take advantage of opportunity.. if that means we need to
borrow in order to turn profit we do so..and yes i drive the bmws and have nice
properties and things are tighter that usual.. but when this economic mess blows
over.. the "poor dads" of the world will still be debt free and have nothing !! what a
joke. Paul S

David is misguided
David,downgrading your car is an EXCELLENT option, probably the best thing you
can do! What are you on about 'put down a deposit for a new lease'? The idea is to
get rid of debt. Sell your car for as much as you can and buy a second hand one
CASH! (If you could only get R30 000 for your car then you only buy one worth
R30 000 and not a cent more) You obviously don't get it and is addicted to
spending like the 'rich' this article refers to.

Solar heating DOES save money. If you have the money, do it! Three/four years
and you have all your cash back!

David Hartley, ru in trouble? I wouldn't be surprised.. Matt Duval

Paul is spewing rubbish
To Paul, what the hell is wrong with using public transport? It will save tons of
money not to mention spare the environment! Even if you don't have money
trouble it's a good idea.

The wealthy are in trouble because they borrow (not only to turn a profit, that
wouldn't have been a problem) to consume and keep up with the Jones's.

You might be doing OK, but the rich are losing their BMW's and nice properties at

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an unprecedented rate. You're NOT rich if you struggle to make ends meet,
whether you own a Beemer or not.

Paul, you're spewing rubbish.
. Karien Meintjies

Well Off
How do you judge when you are well off? Its all relative.

I was one of those in the 500000 per year bracket until 4 months ago. ( I was only
in it from Jan 2008) before that a good+-360000 supporting a wife and 2 kids, I
made a decision to jump off the band wagon, why ? life is too short to have to
worry about who gets paid when,,what car can I buy, lets eat out tonight etc etc I
wanted a stress free life with enough to eat ,a car to get me from A toB and a roof
over my head.

I was fortuneate I had bought over the years a couple of properties which I sold
off ,sold my exec car and 4x4, bought a 1.3 runabout , Bought a caravan and had
a Custom tent made . We bought a small house with Granny flat and now My
eldest son and his wife live in the main house ,pay me rent and I have the granny
flat to go to when I need a night in Town, or am not well.

I now live beside a river in the East Cape, with a magnificent life style and
everything is paid for.

No more worries, Life is great

To recap:Get rid of debt, choose a simple life style,don’t keep up with the Jones
and yes grow your own veggies its fun
. PB

eish is rich
how about diverting politicians' salaries into a national cabbage patch and making
their teams of bodyguards do the weeding? Then give the 33 Mercs in their
calavcades to the poor and replacing them with skateboards, and finally set the
politicians themselves to productive work by making them polish the insides of
sewers. They always have been full of s##t anyway. Viva making politicians help
us out of debt viva!. the dude

I love spending and saving......
Basically im 29 years old and i have 2 jobs : Travel agent by day during the week
and house DJ on the weekends....NICE salary of R10000 afta TAX..Im a bachelor
living in a nice area in cape town,,paying R4000 rent plus another R4000 for
essentials like food and petrol and still saving R2000 a month that goes in the
bank...I have woman every weekend keeping me company BUT i never commit
cause you see WOMAN are expensive things,,,,if you know what i mean!!!!! ;)
I drive a R30 000 tazz which i bought cash ,,,yes cash!!!! i suffered for a while with
public transport but now the car is mine...
SO......does that make me rich???? SCrew what any1 else thinks...i dont give a
faack...i spend money on clothes and restaurants,maintain my self and my car and
my flat and thats dat....
so i spend and save and i dont go overboard with having the biggest #### in the
cemetery.....
Problem with rich ppl is they never know went to stop : 1 business is not
enough,,they want 20.....1 car is not enough they want 1 for their cats and
dogs.....so the writer can go blow coke for all i care.....having money and how you
deal with it is a mind set.....stop spending money on woman and babies....it makes
me sick when i see families of like 5 to 10 kids then they complain and moan.....

Anyways....summer is here,,,im gonna go to the beach...see ya lata.... Scott Scot

solar heating
forget the advice about solar heating, its only worth it over the very long haul +5
years payback, if you're in debt that money will be better spent reducing your
debt. You can reduce your thermostat temp and just take showers to save
electricity in the mean time.. xf

I agree
I paid off all my credit cards using my year-end bonus, and while I might not have
a great xmas, I am saving +-1000 a month for the next 2 years that the bank isn't
making from me in interest payments anymore. freddie

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Solar Heating
I installed a solar prefeed system myself..150l geyser and solar tubes..total
cost..R8000...We are saving about R180 a month as a family.. but with elec. price
increases i expect payback within 3 yrs. and ongoing increasing savings.... aj

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http://personalfinance.iafrica.com/debtmanagement/1329100.htm 11/26/2008