How to be financially savvy with the little that you have

By 21:20

I’ve been meaning to write this post for ages but I only really got on to it after stumbling upon this post right here. It’s about a girl who’s trying to climb her way out of debt. I totally related to her post. After all, I was there. This is me sharing some experiences on how I got out.

All the experts say that the key to being financially sound is to pay off your debt and start saving. I agree…in certain circumstances...but what happens when saving is not an option? When I first moved to Joburg, I earned peanuts. I was all alone in Joburg with no financial support from anyone. I was living in a commune and managed to buy the cheapest car out there. After rent, car instalments, insurance, petrol and my student loan, I barely had any money left over for groceries. This is mostly the reason I hated by first job.

How did I survive? Well, firstly, I knew what I was getting in to. I knew that I didn’t have a lot of money to work with so I made sure that my spend on everything was as little as possible. I stayed in a commune close to work – so my spend on accommodation and petrol was minimal. Being all alone in Joburg, I needed a car and I chose the cheapest car possible. I shopped around for insurance. In fact, before I bought my car, I budgeted for it and saved what I would have spent on a car so I had some money to keep me going when my salary wasn’t enough.

So yes, saving is important. Although you need to know what you’re saving for otherwise, you’ll be spending it very quickly. Don’t get me wrong though – spend your money when you want to. After all, you work hard for it and you need to feel like that hard work is worth it. With all of my financial responsibilities, my savings ran out very quickly.

That’s when I learnt all about the debt that banks happily offer you. My salary just about covered the important stuff. I still needed to worry about food, clothing, money to have fun and helping my mom out. I learnt about buying my car on residual. On paper, I extrapolated my salary to 5 years later to ensure that I could actually afford to pay off the residual when the time came. This reduced my car payments to something more affordable.

My corporate credit card quickly became my most used card in my wallet. I used it for everything! Wherever Diner’s was accepted, I used it. But that meant that the next month, I had to pay everything I owed. I was literally was living off next month’s salary but with zero interest.

For places that didn’t accept Diner’s, I took out a personal credit card. In hindsight, I must have paid a crap load in interest. I only paid the minimum instalment but it helped with the additional money that I needed.

Eventually, my responsibilities grew and so did my financial knowledge. I learnt all about overdrafts. It made so much sense but again, it’s like living off next month’s salary. With all this debt to pay off, I had no money to save…and therefore, no way to get out of debt.

What the financial experts don’t tell you is that you need to have enough money to survive in order to save. Eventually, I moved jobs and earned more money. With the additional cash injection, I paid up my credit cards and my car. Earning more money also helped me save up for a deposit on a house.

Right now, my only debt is my home loan. I drive a car that is fully paid off and use a credit card with a positive balance. I even have enough savings that I will use as a deposit to buy my next house. The financial experts will say that I’m doing it right but it was a long road to get there.

So if you are earning very little or if your debt is huge, here are my tips to help you get through it…from my broke experience:
- Ensure that you are spending money on the most essential things. Daily lattes are not a necessity.
- Use credit when you need it. Yeah, the financial experts say that credit cards are bad but those financial experts probably have enough money to not need credit. 
- Set financial goals – know what you want and by when you hope to get there. Paying off my car was a great way to look forward to some extra disposable cash which I saved up for the deposit on my house.
- Don’t be afraid to move jobs. If someone will pay you more for the job you currently do, why not think about that for a bit. You can sometimes only become better at managing your finances when you income exceeds your expenditure for the basic necessities.
Be patient. Getting out of debt or earning more money doesn’t happen overnight. It took me about 4 years to be free of my credit card debt.

If you’re in this position, I hope my tips helped. If you overcame your financial troubles in a different way, I’d love to hear how you did it. 

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  1. I really love this post!

    I felt like a hamster on a wheel. Working to pay debt and reusing the banks money just to live. I was frustrated with life and so depressed. My greatest help was my family, and even though they couldn't always help me financially - the moral support is what also helped me get through it all.

    I still have a big chunk to pay off and my savings will not plump up any time soon. But I know that every day I put that R20 back into my wallet and skip on buying a brazilian hazelnut latte - that I have R20 more to pay off my debt and I amone day closer to financial freedom.