What it takes to achieve financial freedom
We are now coming to the end of the Money Makeover Challenge with the grand finale on the 23rd of November where we will be announcing our winners of this challenge.
Ultimately everyone has been a winner simply by taking control of their finances.
Molefi
Molefi entered this challenge in a good situation because he had already paid off all his debt, but he needed to formulate a financial plan for his life – this includes getting married, buying a home and starting his own business one day.
Molefi has started a fund for each of these and is on track to meet all his goals including having enough money to stop working and start his own business in ten year’s time. He has also achieved the goal of his emergency fund being sufficient to cover three months of his living expenses. This is what is possible when you have no debt.
“For me, it was a chance to review my financial plan and apply discipline to it. I got a golden life lesson here, of goal-based living. Which simply means my income becomes a battalion, and I, as the commander in charge, have the assignment to send them out on a mission, be that an emergency fund, a tax-free savings account or a college fund… ”
Raymond
Raymond has been focusing on his food business - he has learned to cost his meals correctly so he knows what he should be charging and he has completed a business skills course. He has improved his monthly gross profit from R7600 to R13 800.
He even employed two people – one to help in the kitchen and the other as a bookkeeper. He identified that he would rather be in the kitchen preparing and creating food than worrying about the admin. It is important for an entrepreneur to identify when to bring in someone with skills they may not have in order to focus on what they are good at.
Raymond has also separated his personal and business finances and he's been extremely disciplined about doing so which is a huge challenge when you have a start-up – there is always the temptation to take money from the business to meet household expenses.
“I am doing my costings the right way now and I am separating my business and personal expenses. I have also gained business skills. Knowledge is power and this competition has opened doors for me to attend training.”
Sello
Sello is our other entrepreneur this year – he has also worked on separating personal and business finances. Sello focused on improving his credit score which he will need for his business loan.
He achieved this by first paying off smaller retail loans – those are the types of debt which can hurt your credit score. He has paid off over R20 000 of debt and improved his credit score significantly and now has an excellent score.
“I have learned about the importance of a will. I can now see it was irresponsible of me to not have a will. I have learned about not taking up too much personal debt that eats into your disposable income. I have also learned about the importance of financial planning and creating a budget. I did not tell my money where to go. I have learned about the consequences of not putting money aside and that putting money aside is not just for disasters, but for opportunities.”
Mlibokazi
Mlibokazi has paid off over R15,000 worth of debt over the last six months whilst building up an emergency fund. Members of her family experienced a tragic car accident, and she was able to use the emergency fund to assist with funeral expenses.
This shows how important an emergency fund is and why we insist on having one as part of Money Makeover. Without that fund she would have used her credit card - instead she has not used her credit card once in six months.
“I have learned that I need to be intentional about the goals that I have set out. I need to take stock of every single cent that I am spending, and I need to be able to justify the spend and that saving is important.”
Zihle
Zihle
Zihle had to work really hard to reduce her debt on her current budget. When Zihle entered the challenge she wrote, “I would like to find a way to repay my debt and still afford my basic needs” and she has achieved that.
She had the option to apply for debt consolidation which would have reduced her monthly installments but lengthened the time it takes to pay off the debt. Zihle decided to bite the bullet now, make the sacrifices, and pay off her debt sooner. By finding that little bit of extra money every month to pay off her debt and she has paid off R23,500 over the last six months.
In addition to this she has still managed to increase her retirement contributions to her employer fund from 7% to 10% so it just goes to show you that it is possible to pay off debt and still save for retirement.
“I have learned to handle money with care, it is all about how you handle the money you have. It is important to take full accountability when it comes to your finances. Set boundaries and realistic expectations when it comes to money. It is important to adjust your lifestyle to meet your budget. Don’t procrastinate when it comes to reaching your financial goals, the sooner you start, the better. It is a rewarding process.”
Johan
Johan
Johan committed to debt review which is not an easy thing to do especially in a public space.
He has paid off over R100,000 of debt in that period of time. He and his wife now have a household budget that is in surplus for the first time while still increasing their retirement savings.
“It is never too late to make positive changes. I have learned about planning in general and how sticking to a plan can really give huge results. Both my wife and I are graduated but we actually had very little knowledge about financial management and planning, and this is one of the big things for me that I will take forward with me, and to continue to do things better…”
Find out more about the contestants and their advisers here:
If you really want to get your finances in order, you have to start tracking your spending. If you cannot commit to that, it is unlikely you will be able to reach your goals.
City Press will follow the candidates’ progress on the first and third week of each month, as well as online on the Money Makeover page:
Follow the journey – and join in – @CPMoneyMakeover and #CPMoneyMakeover on Facebook and Twitter
Absa Enterprise Development assists SMEs with access to business development support, markets access and access to funding based on certain criteria’s being met. For further information on Absa Enterprise Development you can email ed@absa.africa
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