By the age of 32 I had made the usual bad financial choices that 20-somethings do. I had cashed in my pension when changing jobs. We used bonuses to go on fabulous family holidays. When my second son was born my husband and I made the bad financial decision to buy an enormous fixer-upper of a house with a large mortgage and huge running costs all because we created the fake ‘need’ for our two boys to have a bigger garden to run in. In fact, there were only two sensible things I had done. Firstly, I had avoided car debt. This was not because I was a financial genius but because the first time I tried to buy a car, the bank turned me down for finance! That was in the mid-90s when banks weren’t handing out credit like candy. The other was that I had invested a windfall offshore. At the time it was around R200 000 and today it has grown sufficiently to form the basis of my retirement portfolio. No matter how tough things got, I never touched my growth investments. But then, just after the birth of my second child and moving to the cash-guzzling house, life threw us a curveball. Both my husband and I lost our jobs within a couple of months of each other. It was financial Armageddon. My husband was fortunate enough to find a new job within a few months, but at a lower salary, and I started my own freelance business which took a while to generate sufficient income. Despite the lower income, we didn’t make any changes to our lifestyle and before we knew it, we had amassed a sizeable debt on our credit cards and overdraft facilities. I still remember so clearly the day I realised just how out of control our finances were. When my husband received his first bonus, I was so excited because we really needed to do some renovations to the house. He looked at me as if I was crazy. “We have to use this to pay off the overdraft,” he said. What overdraft? I had been blissfully unaware of what was coming in and going out each month. It never occurred to me that when I was swiping the card that it was the bank’s money I was spending.
Everything changed that day. I made a commitment that we would never find ourselves in this situation ever again and that I would never again stick my head in the sand. Fifteen years later, our finances are comfortably on track, and we live a good lifestyle. We have no debt except for our mortgage; our retirement funds have recovered sufficiently so that we can expect to be able to retire comfortably, and we have so far managed to survive two more spates of unemployment. How we achieved this was following the basic rules of money management: budgeting, avoiding credit and investing. It is not rocket science, but it takes discipline and determination. That is why I have created Money Mentor, a space where you can take control of your money and get the help and motivation you need to stay on track.
