Category Archives: Finance

Tips For Credit Card Debt Relief

It doesn’t matter how hard you try; there are so many issues that can arise with credit card debt. It will start to pile up, and you won’t know what to do about it. This is a harrowing situation to be in, but many people deal with it on a regular basis.

So, what is the best way to tackle this problem once and for all?

You have to think about credit card debt relief to make sure you are on the right path and here are a few tips that will help break things down for you.

1) Stop Piling On

You can’t keep piling on when it comes to the debt under your name. This is the worst mistake a person can make and is the reason you are going to be in an awful position at the end of the day. You need to stop spending through your credit card and think it is going to be okay because it won’t.

You are only going to make things worse, and that is a very hard situation to be in as time goes on.

Don’t do this and toss those credit cards if possible. It will only help you.

2) Set Budget

You have to set a budget as soon as you can because this is going to stop you from overspending. Many people don’t realize what they have in their account or how much is coming in on a weekly basis.

Think about this as you pinpoint what to do next.

3) Emphasize Paying Back This Debt Immediately

You have to stop paying back debt in the wrong manner. You need to realize it has to be done now or you are going to be trapped in a horrible position that is never going to be worth it.

Think about this as you plan to figure things out.

4) Consolidate Debt

This is the final option you are going to have, and it is a good one to look at regardless of the position you are in. Consolidation is a unique way to pile all of the debt under one umbrella.

You are going to be able to find credit card debt relief as long as you are using these tips and they are going to bring about a change in your finances.

Don’t remain ignorant of these changes because they can assist you.

Found Payday Loan Help By Searching Online

I had an emergency pop up a few months back and I wasn’t sure what to do. I didn’t have the money to cover the expenses and I didn’t have anyone to ask. A friend of mine recommended that I get a payday loan. I went online and found a legitimate company that had payday loans by searching around and reading reviews about the different ones out there. I applied for the loan and was instantly approved. Within just a few hours the money was in my account. It seemed like a great thing at the time because I was able to cover the unexpected expenses that popped up.

 I knew I would have to pay it back on my next check, but tried to prepare myself for the expense of paying it. However, when my payday rolled around, I paid the loan and was left needing more money. I reapplied for a loan and was given it. I knew I was starting a cycle that was going to be hard to break. But it was so convenient.

Before the cycle continued, I wanted to look for payday loan help so I could learn more about breaking the cycle of getting a loan every time I got paid. I went online and searched for payday loan help and I found several websites that I could visit to learn more about how to get rid of the loan and be able to live without getting them ever again. I looked over a few websites from other consumers who had also found themselves in a similar situation.

 I read and learned how they were able to eliminate the loans and they made it sound so easy. I also learned about other loans that would allow you to consolidate your payday loans so you would have more time to pay off the loan and wouldn’t accrue as much interest.

After doing my research, I decided to get payday loan help by getting a loan that would allow me a longer period of time to pay it off. I have been able to slowly get it paid off and I haven’t had to worry about getting another payday loan since. It was a great resource to use when I had nowhere else to turn, but it left me needing to get a loan every time I got paid.

How to help customers address financial

Mounting financial burdens on consumers has led to a 54% increase in disputed debit order complaints over the past year, says the Ombudsman for Banking Services Clive Pillay.

“It is a worrying sign that so many people are cash-strapped and that so many people are over-indebted,” said Pillay.

According to data from the Payments Association of South Africa (Pasa), around 31 million debit orders amounting to R72 billion are processed per month, of which 1.2 million are unpaid and a further 170 000 are disputed.

There are two categories of debit orders: EFT debit orders, which are processed on the date chosen by consumers and mostly after normal business hours, and early debit orders, which are collected shortly after midnight and immediately after the processing of EFT credit payments such as salary payments, explained Pillay.

He said several complaints lodged with his office centre around non-authenticated early debit orders, whereby transactions are processed prior to the agreed date. Pasa data show that almost 14 million non-authenticated early debt orders worth R9 billion are processed each month, 4 million of which are unsuccessful, with 600 000 disputed.

An estimated 90% of disputed debit orders are for so-called ‘cash management’ reasons, Pillay said, citing Pasa data. “The Payments Association investigates every disputed debit order and often they are legitimate disputes, but there are also ones that are not legitimately stopped. They are done simply because you have to pay five people but you only have money to pay four, so you stop one debit order and then double it up the following month,” he said.

Do Not to Worry About with Investing

Between the confusing jargon, the endless list of mutual funds, ETFs, and retirement accounts to choose from, and the constant ups and downs of the market, it’s easy to feel overwhelmed, confused, and downright anxious about whether you’re making the right decisions and whether you’ll be okay.

 

But today I’d like to give you a little relief. Because there are a lot of things you shouldn’t be worrying about when it comes to your investments, and here are five of the biggest.

 

1. What the Stock Market Has Done Recently

 

The US stock market dropped 24.63% over the first 68 days of 2009 in the midst of the housing crisis and international financial meltdown. Bad sign, right? Sure, except that the total return for the year ended up being a positive 29%.

 

Or how about the two years from September 1998 to August 2000 when the US stock market increased by 25% per year, only to decrease by 21% per year over the next two years.

 

In other words, you shouldn’t spend any time worrying about what the stock market has done recently because it doesn’t in any way predict what it will do going forward.

 

2. What “Experts” Think the Stock Market Is Going to Do Next

 

Did you know that active investment managers underperform basic index funds year after year? Or that “expert” prognosticators are wrong more often than they’re right?

 

Even the experts have no idea what the stock market is going to do next. The less you pay attention to their predictions, the calmer you’ll feel and the more likely you’ll be to succeed.

 

3. What Your Friends Are Investing In

 

It’s pretty easy to read a little bit about something, repeat it to your friends or family, and sound like you know what you’re talking about. I’ve done it. You’ve done it. We’ve all done it.

 

So the next time you hear someone talking about how they’re investing, remind yourself of the following three things:

 

  1. They may or may not know more about investing than you do.
  2. They definitely don’t know about your personal investment goals and the right way to reach them.
  3. Therefore, what they’re saying is completely irrelevant to your investment plan and you can safely ignore it.

Success and good investment in the short term

At some point in the midst of holiday shopping, most of us will dip into our wallets, take out a credit or debit card and make a purchase. Many times, we leave the mall or put down our tablets and phones having spent more money than we intended.
We’re moving into a world where we hold less cash and are increasingly comfortable using cards and electronic payment methods. Before diving into the possible effects this could have, I’d like to point to a famous quote by notorious gambler Julius Weintraub: “The guy who invented gambling was bright, but the guy who invented the chip was a genius.”

 

The psychology of symbolic money
When you go into a casino, you see people throwing chips around: $50 on red in roulette, raising $25 in poker, doubling down $100 in blackjack. Unfortunately, sometimes we can’t afford to lose the money we gamble away. The $100 lost on a double down in blackjack could have been several days of groceries for the family or overdue maintenance on the car. The $10,000 lost on a weekend binge could have been college tuition.
You may be able to relate to these examples personally or through family or friends. One aspect of the psychology of gambling is that people are parting with poker chips, rather than cash in their hand. The chip changes the form of your cash, not just physically but metaphorically, too. It can cause you to justify taking a risk. It can create an excuse so the $25 that was in your pocket is only a green chip on the blackjack table. The monetary value is the same, but your mind is more comfortable separating a poker chip from a bill in your pocket.

 

How it works with credit cards
The technological advances that have accelerated the use of credit and debit cards and other payment options can act in a similar way.
From 2006 to 2014, payment volume for Visa has increased from $2.13 billion to $4.76 billion. Other major credit card companies have shown similar increases. While this may or may not lead to carrying higher credit card balances, it most likely leads to less money in the bank account for the consumer.
In my opinion, we’re likely to spend more money with these cashless payment options. We pull out our cards or phones and make purchases without consciously contemplating the downstream impact as much as we would have if we’d paid in cash. We don’t physically hand the money over. Yes, we may hand a credit card over, but that’s the same motion whether we’re buying a pack of gum or a diamond ring. The rise of mobile payments creates even less friction for purchases, since buyers don’t have to sign anything.
Another consideration is the restriction that cash creates: If you don’t have enough cash to buy something, you can’t make the purchase.
For these reasons, people who use cards and mobile payments may be increasing their purchase frequency as well as the value of their purchases.

 

Ease of purchasing
The ease of electronic purchasing is like living in a consumer world with poker chips. Twenty years ago, we would make conscious decisions to buy albums or movies. Now, at the click of a button — or even a fingerprint — we’ll buy a movie from iTunes or another gadget from Amazon. It’s as if we’re throwing a green chip toward the house at a casino. Would you be spending the same amount of money annually if you had to pay for everything in cash?

What are you choosing invest or put money into your bond

In this advice column Alexi Coutsoudis from PSG Wealth answers a question from a reader who wants to know what to do with a lump sum investment.

Q: I have R100 000 in a unit trust. At the same time I have an outstanding bond. Would it be better to remove the funds from the Investment and offset part of the home loan?

Advisors are frequently asked this question. This often has more to do with personal risk preference than with economic rationality. To answer this question, however, certain assumptions must be made, and I specifically won’t look at tax to keep the answer succinct.

The rational answer

Let us assume that the interest rate on the bond is at the prime lending rate. That is currently 10.50%

The second assumption we need to make is about what the risk level of the unit trust in question is. A money market unit trust has a very different risk and associated return goal than an equity unit trust.

A low-risk money market or income fund aims to beat inflation and offer a real return of 1% per annum. Thus, if the R100 000 is in an income unit trust only yielding 7% to 8%, it would be rational to secure the higher guaranteed return of 10.5% and transfer the funds into the bond.

However, if the money is in a balanced fund which generally targets a 5% real return, it would be more rational to remain invested as the real return is in excess of the bond interest rate.

It is also important not to fall into the trap of looking at the short-term underperformance of equity linked funds in a time like now and compare this to a resilient prime rate. This may result in the wrong decision to sell out at the wrong time. Every situation is unique and the best course of action is to get advice from a financial advisor who will look at the big picture and your individual circumstances.

The subjective answer

The other way I would advise a client on this is a more subjective approach – the sleep test. Quite simply, what makes you sleep better at night? Would that be a bond balance of R100 000 lower than it is now with no funds invested, or the same outstanding bond balance but R100 000 invested?

The answer will be different for each individual and there are a lot of factors that influence one’s financial decision making such as your view of debt as either toxic or as an enabler. For some people having R100 000 invested offshore, for example, gives them comfort. Therefore, because the economic rationality argument is often such a close contest, considering the subjective approach may help make the final decision easier.

What is the problem of the pockets of South Africans

In the wake of the #DataMustFall campaign, it seems that the data revolution might have a valid and legitimate plea. The campaign founders made a presentation before the Parliamentary Communications and Postal Committee on September 21 on the costs of data in the country. According to the soon-to-be launched findings of the FinScope South Africa 2016 consumer survey, the results show that the average South African spends about 9% of their purse on airtime and data recharge, cellphone contracts, telephone lines and internet payments. The average person spends approximately R700 a month for communication-related expenses.

Parallel to the #DataMustFall campaign, which is gaining traction, is the #FeesMustFall (reloaded) campaign, which is also resurfacing in light of the announcement of an up to 8% fee increase made by the Higher Education Minister Blade Nzimande. While university students would like to see a 0% increase, universities are requesting increases to sustain operations and fund research.

Therefore, in light of these developments and expenses, how does the purse of the South African consumer fair? The preliminary results of the FinScope 2016 survey shows that South Africans spend R688 per month on average on education.

The FinScope findings further show that South Africa’s total personal monthly consumption (PMC) expenditure in 2016 is estimated at R220 billion (monthly). On a monthly basis, the average individual spent approximately R5 400 during the period of conducting the FinScope 2016 survey. The results show that the main components of expenditure are on food (21%), transport (11%), utilities (11%) and communication, which amount to 9% of the spending purse.

Overall, individuals’ spending on education is 6% of their purse (estimated monthly spend of R12.2 billion). Further demographic analysis of the data per race showed that black communities still bear the greatest brunt of the education costs. For the average black South African, education expenses constitute 7% of their purse – this is higher compared to other races for which the purse composition for coloured, Asian, Indian and whites are at an average of 4.3% of their purse.

How to get money bonus

A lot of people who get a bonus or once off additional income for whatever reason, tend to ‘blow it’ as you have pointed out. It is therefore a very good idea to try to think of better things to do with the money. I would, however, suggest that you consider not only your immediate or short term needs but also the long term potential of any extra income you receive – no matter how small.

If you have a need for extra monthly income, which might be the case if you are currently using a credit card or overdraft because your expenses are close to or more than your current monthly income, then I support your idea of putting the money in a vehicle that will allow you to supplement your income for the next two years.

A two year term, however, is a very short time horizon for an investment and I assume you intend to be drawing the full amount over the two years. In other words, you will be left with nothing at the end.

If so, you will need access to the money and very little, if any, risk. With these constraints in mind, I would suggest either multi-asset income unit trusts – the top funds produce between 8% and 10% per annum historically – or a bank savings, call or money market account with cash immediately available. These bank accounts produce between 5.5% and 7.5% per annum, depending on the amount.

Let’s use an example and say the amount is R50 000. If you can achieve returns of 10% per annum for the next two years, this will produce an income of R2 307 per month for 24 months before being depleted. At 7% per annum, the monthly amount will be R2 194 per month, so there is only a small difference, which means it is probably not worth taking the extra risk.

The question is whether you actually need additional income or if you are just going to be spending it over 24 months instead of one month. If you don’t really have a requirement for the additional income, you may want to consider investing the amount for a longer term so that it can produce even more for you.

You could consider putting the money into a tax-free savings account or retirement annuity (RA). By contributing to an RA, you would be reducing your taxable income. This means you could get something more back from the South African Revenue Service next year, depending on what retirement contributions you are already making.

Let’s use the same R50 000 we used for the example above and assume that you are below the maximum deductible contributions to your retirement funding. This is currently 27.5% of your remuneration or taxable income, or R350 000 per annum, whichever is lower.

Exposure to the iconic US index

Index-tracking product provider CoreShares has announced the launch of two new exchange-traded funds (ETFs) in the South African market. The CoreShares S&P 500 ETF and CoreShares S&P Global Property ETF will be available to local investors from early November.

Both products track indices that are not currently tracked by any other local funds. They therefore offer additional options to investors looking to make rand-based investments that track offshore markets.

It is particularly notable that CoreShares is the first to offer South African investors direct exposure to the S&P 500, which is the most referenced index in the world.

“The S&P 500 represents the very origins of index investing,” says CoreShares MD Gareth Stobie. “The very first index products ever put together were Vanguard’s S&P 500 funds.”

According to S&P Dow Jones Indices, over $7.8 trillion is benchmarked to the S&P 500, and more than $2.2 trillion is held in 73 different products tracking it.

While South African investors can already access the US market through the db x-trackers MSCI USA ETF, the S&P 500 does offer a slightly different exposure.

The MSCI USA index is slightly broader, with 620 constituents. Its largest sector exposures are to information technology (21.14%), financials (16.2%) and healthcare (14.64%).

The S&P 500 currently has 505 constituents, with its biggest exposures being information technology (21.4%), healthcare (14.7%) and financials (12.8%).

Global property

The second new fund, the CoreShares S&P Global Property ETF, will be the first local product to track an international listed real estate index. The fund references the S&P Global Property 40, which is made up of 40 large cap property stocks listed across the world.

The exposure is concentrated in developed markets, with half of the index constituents and around 57% of the index market cap based in the US. The rest of the constituents are listed in Japan, Hong Kong, Australia, Germany, France, the UK and China.

The reason for leaving too many people

Relative to its peers in the SADC region, South Africa has a high percentage of people with formal bank accounts. While 94% of the adult population in the Seychelles has a bank account, and 85% do so in Mauritius, South Africa’s banked adult population stands at 77%.

This contrasts starkly with the likes of Madagascar or the Democratic Republic of Congo, where only 12% of adults have bank accounts. In Angola, the ratio is 20%.

These are figures produced by the Finmark Trust, an organisation set up more than a decade ago to promote financial inclusion. And at face value, they may appear to suggest that South Africa is measuring up reasonably well.

However, the Trusts’s Dr Prega Ramsamy says that there is a lot more to financial inclusion than whether or not someone has a bank account.

“It’s a multi-dimensional problem,” he told the Actuarial Society 2016 Convention in Cape Town. “There is an element of access, but there is also an element of affordability, an element of proximity, and most importantly an element of quality. We might have huge access in terms of people having bank accounts, but it doesn’t necessarily mean that they are financially included because the quality of such access might not be there.”

He pointed out that often products are inappropriate or inaccessible.

“At the moment there are about 20.9 million people in South Africa with access to insurance,” he pointed out, “and of those, 18.9 million have funeral cover. So funeral insurance completely dominates the sector.”

He acknowledged that there is a cultural aspect to why this is such a popular product, but he questioned why so many people are able to afford funeral policies but don’t have any other long term risk cover or savings.

Ramsamy pointed out that ten years ago, about one million South Africans had multiple cover, in that they held more than one funeral policy. That number has grown to five million. Yet the penetration of other risk products has remained very low.

“We sit in an office and think we can provide insurance, but we don’t really know if this kind of insurance fits the needs of the people we are selling it to,” he argued. “Agents are also just interested in selling numbers for commissions, but don’t ask if what they’re selling is the type of insurance or product that their customers need.”

Speaking at the same event, Ruth Benjamin Swales of the Asisa Foundation acknowledged that there is a real challenge for financial services companies to design more relevant offerings.