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8 Nov 2014

DEBT TO INVESTOR

I am very proud of my baby sister. You may be gettin a tad bit confused because I have a lot of siblings. Lets name this one Pres. She is an amazing soul who has always kept her focus on saving. The only problem is that she was going at it the wrong way. A lot of people are going on about wealth building the exact same way.

Pres had a few store cards, which she only used to buy sale items. All of her kids clothes were bought at discounted prices. She really loved sales and got thousands of rands in discount every year. It bothered me that my sweet sister would know when and where the latest sale is throughout the year. She is still a sale star but with a changed mindset. This is the chat we had with her the day she stopped searching for discounted prices:

Me: Your kids have very nice quality clothing items.
Pres: You wont believe how cheap they are. I only buy at discounted prices. My favourite is 70% off or further discount on a discount. I save a lot of money that way.
Me: But you do realise that your focus is on spending and not saving, RIGHT?
Pres: What do you mean? I saved R70 by buying this for R30 instead of R100. I am saving.
Me: You are not saving R70, you are spending R30. Your R30 is not at the savings tool, it is at Woolworths. If you were saving it, it would be in your Money Market account or somewhere else making money for you. You lost R30. If anyone is saving here, its possibly Woolworths.
Pres' jaw dropped.

This is the mistake that a lot of people make. They chase the big red "SALE" signs on the windows of the shops. They get inside to buy stuff they don't need, because its discounted. Its one of women's biggest personal finance mistakes of all time. Off course, in the store catalogues they write "SAVE 50%". The truth is that you may be spending that 50% on something that you don't need. It gets different only if you actually needed that particular item that very moment. This "saving by spending" idea is such a bad habit, even if you think you will need the item in a year's time. How many times do we change our style and preferences. Besides, if you paid that R30 into your debt, you would have really saved yourself from drowning in debt.

Fast forward to just a few years later, Pres has paid up all her store cards. She carried a balance in quite a few cards before then. She never thought that being debt free is possible. She then calls me one day whilst I was at home minding my own business. Our call goes:

Pres: Hey sis I have a confession to make.
Me: What?
Press: Remember I have no store cards? Today I saw something I really wanted in one of the shops in the mall. it was heavily discounted and I didn't have cash.
Me: And...
Pres: I took a card application form. Immediately I had it in my hand I felt so much unease like something was constantly starring at me. I stopped immediately and told the shop assistant that I'll bring it back the following day. I felt so much guilt that I dropped it at a trash bin just outside the store and walked away. I felt so much relief.
Me: What did you want to buy?
Pres: A pair of shoes. They were really cheap.
Me: (with disbelief because this woman has no space to put her shoes anymore) Well done. I'm so proud of you.

My sister has no store cards since she paid them up, but her being debt free is just a tip of the iceberg. She struggled to get a job she is qualified for and settled for a job that pays way less. She used to complain about this and mentioned several times that they cannot buy investment property because of this constraint. My sister is still in her old job and now owns 3 properties. She moved to the smallest of them in one of the convenient suburbs. The other two are rented out to her tenants. My sister is glowing with confidence as she should. I am super proud of her. The most amazing part is that, this took only a few years for he to move from debt to investor.

I just want to encourage you to start getting out of debt. Its really not worth it. Stores are filled to the brim by credit card shoppers for Christmas festivities at the moment. What a sad state of affairs. Are we not much better than that? Don't our children and the next generation deserve better? Don't we deserve a comfortable retirement? Don't we just owe it to ourselves to sleep like babies?
 
I have a lot of similar stories from ordinary people like you and me. Join the winning team for a brighter future.

Many Blessings,
SISA

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