A Fin24 user writes:
I work for commission and the economic downturn has really
hurt my income. I now get about R17 000 net income as compared to the up to R25
000 I used to earn. I currently own a secondhand car which I bought for cash.
However, the car is now very unreliable and it continues to
give me problems. It is in and out of the garage every now and again to be
fixed. When I look at my budget, it doesn't allow me to buy another car that is
reliable.
My expenses are as follows:
Charitable giving 1 900
Rent 3 800
Levies for the stand 450
Stand (which I am currently buying) 4 500
Phone airtime 350
Credit card 0
Insurance 350
Medical aid 830
Grocery 1 000
Electricity 350
Incidentals 400
Savings 1 500
Tuition 1 500
Fuel 500
Total 17 430
I am not able to stop giving to the charity concerned for
personal reasons. I would like your advice on the best way I can manage the
situation.
Luke Hirst, managing director of DebtBusters, advises:
From the details, it appears you have no debt apart from a
bond on the stand, which is certainly a good place to start from. Based on your
current budget I would not advise taking out further debt, as this would
potentially put you into being overindebted.
However, for you to afford a replacement vehicle you must cut down on living expenses. Below are some areas where you can save:
1. The current vehicle would obviously have a value which
could be used as a full or part deposit on the new vehicle.
2. Do your research on what vehicle you can reasonably
afford and what the maintenance costs are likely to be, as well as the
insurance premium.
3. Secondhand cars are a lot cheaper and with cars lasting longer, there are savings to be had from buying secondhand. But make sure the vehicle has a full service history and has not been in any accidents.
4. I understand that you need to give to the charity for personal reasons. However, I would suggest that you reduce the amount as it currently equates to 11% of your monthly pay, which is a large sum. Speak to the charity, explaining the situation you are in and that 11% is too much for you during these times.
5. It is good to see you have an amount in your budget for
education and savings as this is very
important. Do your research to make sure you are making the most of this
money and perhaps it is worth splitting the savings, so that some of it can be
accessed quickly if the need arises. Perhaps some of these savings could be
used in the purchase of the car.
6. Did you buy the stand for building purposes in the near
future? This is taking up a huge sum of your disposable cash and you are paying
rent as well. In effect, you are paying R8 750 for accommodation - over 50% of
your income, far higher than the recommended 35%.
Please take another look at this and find out if it is worth
having the stand instead of buying a house, which will serve as your
accommodation as well. A house can also be rented out and rental income can pay
off a portion of the bond.
- Fin24