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13 Aug 2012

SPENDING RESPONSIBLY IS FOR THE WEAK

a frugal housewife
YES, I know that because I am part of the weak. The strong/ brave spend carelessly and to them frugality, which I like to refer to as spending responsibly is for the weak. That's us.

The published statistics by StatsSA shows that South Africans started to spend less during and after the economic recession (2008/9/10...). the result is lowered household debt levels and improved savings. I am actually hoping this is true, and not sort of forced by the fact that people don't actually have jobs and money to splash on luxury goods. I havent been able to observe this amazing improvement in financial decision making from my close friends and family. People have been spending like there is no recession, nor a possibility of losing their jobs. they live like they are dying the next day...

My one horrible ex tenant, with a great job I must add, has left me with a huge debt in rental arrears. We have an agreement for her to pay me the outstanding rentals in installments. to my surprise, she did observe the agreement for the first four months. Being owed money when you owe no one is actually quite frustrating. The truth is that my tenant is in arrears for rental because of her previous financial choices. I never expected her to even honour the agreement. The four months has been a surprise. I was ready to write the debt off and for once use my non existent provision for bad debts account to do so. But when he started to pay every month, I sort of expected the payment every single month. I then started putting it on my monthly budget. And just as I was warming up to it, she stopped. See how frustrated I am right now?

My point is that, the BRAVE will just decide not to pay their debts, and keep making the new ones for as long as they can. At the end of it all, we keep comforting people when they are drowning in debt, losing their apartments, having kids banned from schools, etc, when they actually are the ones who made bad choices. I am not talking about people who lost their jobs or for some unfortunate reasons lost their income. I mean people who, month after month continue to live way above their means. You must know one of those. They are little miss perfect, well groomed, living in suburbs you can only dream of, in a perfectly styled home, with a perfect landscape and a machine that matches perfectly in the garage. Actually make that 2 machines in that garage. I do know a girl like that. Really now, if we have similar salaries with no inherited fortune and I live in a smaller house and drive a modest car, how on earth does she do it? How does she have all that on the same income or less. You can only stretch the rand to a certain limit.

I can think of only one explanation, consumer DEBT. The brave are not going to stay at home and not go dine out with their friends. Whilst at the dining trip, they will have to show everyone they are not cheap, they actually eat the right kind of sushi together with well matured wine. They will even offer to take everyone's bill whilst they use an almost maxed credit card. Most likely, they will be wearing a new designer pair of stilettos and a new hairstyle whilst swiping the card. Then they will force the smile whilst they feel like crying because they don't know how they will pay for the R2500 they just spent on credit card on people they pretend to like. How foolish can one be really.

On the other hand, the weak are sipping on their fresh rooibos ice tea at home playing catch up with the loved ones. They are probably reading a book they got from the library. (I buy books and never go to the library by the way. I wish I did though.) My point is that, its mostly one's own doing that they end up suffocating in debt. If you don't have savings that will last you for at least 6 months in the event that you lose your job, you are living in a glorified poverty. An emergency fund is no luxury, but a necessity. Whilst 10% of your income saved is great, 20% would be amazing. Start paying yourself first and in no time you will be addicted to it. Its not as difficult as it sounds. I have months where I save the whole 65% of my income. Those are rare months but 40% of my income should go towards my investments and savings. That is the reason I drive the car that I drive and don't buy a new outfit everytime I'm invited to a wedding. If its someone else's wedding, I don't need a new colour blocking suit for heavens' sake.

Spending responsibly is actually for those who do it for themselves. Nothing is as painful as keeping up with the Joneses at the expense of your long term happiness. I am yet to see someone happy whilst they drown in debt. I am not lying when I say I sleep like a baby. And I make it a point that I sleep on satin sheets. Its a great feeling being debt free. I know I still owe on my house, but that's about it. I don't know how I would live with myself carrying the amount of consumer debt people I know and love do.
Whats you reaction when you see a guy pulling off in his 15 year old Conquest in a traffic light? Do you frown with pity or think he might just be owning a huge part of the company you work for? In other words, he might be your employer. I always respect people who do the things that bring real happiness. And by that I mean FREE stuff like quality time with family. Think about it!!!

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