I am not an expert. I will share my learnings as an enthusiast.
I have been learning things mostly on my own and looking into making my personal finance working well. There have been many things that have been going well. Many things that are going poorly and many things that frustrate me. I’m very happy to be in a space right now where I have financial freedom. It’s this financial freedom that allows me to do more things that I’d really like to do. Like possibly starting my own business. Or writing honest blogs where I could help others reach some financial freedom as well.
Financial freedom
this is my definition of financial freedom right now. It’s not official. You will find others.
For me financial freedom means the following:
- Not living from paycheck to paycheck.
- Having the ability to make expenses that could lead to improvement or enjoyment.
- Feeling a sense of calm when looking at your finances.
- Not paying interest for short term debt.
- Having the ability to save for retirement.
Financial freedom means a sense of control and an ability to make decisions about what to do with your money. In the absence of this freedom your money moves to the tune of someone else (banks, creditors, bills). This causes a significant amount of angst and shame. I have felt this shame and angst before, even with my upbringing giving me every opportunity to avoid this. There is a serious lack of good financial education for young South Africans. I would like to see this change.
Short term debt
short term debt is supposed to be for the short term. But really it’s just an excuse for banks to charge high interest rates.
We are sold dreams of living a life that is above our means because there is this assumption that we will always have more in the future. And yet the only person who loses out on this deal is our future self. A deal that was supposed to enrich your life only served to make the bank more money. And in reality most people live a couple of months behind on payments instead of living a couple of months ahead.
It’s truly tragic to think about how banks prey on individuals who are desperate to live a life that society has promised them. To fit in. A personal loan is a phone call away. And now even a couple of clicks away. There’s no debt counselling before a loan deal is signed. No person asking you what you wish to buy with this money. Just a comprehensive document that tells you exactly how the bank is going fuck you. I just imagine Dr Evil(the bank) relishing the fact that he has just duped you into giving him money.
These “short term” loans are just a poorly veiled attempt to pretend like banks are taking on more risk. Even though they know people are terrified of defaulting on credit cards and personal loans. In fact banks will offer you a higher limit once your salary goes up knowing that you’ll take it to stay ahead. The truth is banks take on very little risk for very high rewards. And they get away with it because of poor education and lackluster policy.
Thou shalt not covet
I believe that comparing your lifestyle to another person is one of the greatest pitfalls to obtaining financial freedom. It is the constant push from society and advertising that makes it truly difficult to resist living within or below your means. Often you’ll have friends and family who are at different stages of their financial journey wanting to do things that you realistically cannot do yet. This is where a lot of the shame fits in. It’s really important for people to fit into society. We cannot help but follow the crowd. To conform. Even the non conformists end up conforming (see goths). And to do these things you’ll need money.
It’s not crazy to think of getting money right now that you know you’ll have in the future. Add on top of this that most credit cards have a 30-60 day interest free loan. Which definitely gets you in that door. Behind the door is the promise of a better life. A life where you can have the product that will make your life better right now. Instead of waiting 30-60 days. The honest conversation you need to have with yourself is that if you had waited the 30-60 days would you still need that product? Did you need the exact one that you bought as well? Was there a cheaper option? (maybe second hand). To me the 30-60 day “grace” period is a lie that’s being sold by banks to lure you into their false sense of security. If a deal looks too good then maybe it is.
I know this sounds very doom and gloom. And I know it sounds a tad negative. But nothing is free. In the back of your mind you know this too. And the banks employ people who don’t see you as an individual but sees you as numbers and places you in a pool with people like you. They know you’ll be able to pay back the money eventually on average. They know they’ll make all their money and more back. Even if you miss payments or go bankrupt they can still get enough of the pie to be fine. And they don’t care about your problems. This is where you need to be truly careful. And it’s good to remember that people don’t give you money as a favour to you. They give it because it’s good business.
In closing
Over the next couple of weeks I am going into a bit of a deeper dive on what I have done to reach some financial freedom and where I can still be better. I will share some simple tricks that I have learned to make it easier understand the current financial landscape. In doing this I hope to make it a little bit easier to make good financial decisions and to reduce stress and shame for those of us who are struggling. We can have a society that talks openly about money within families, friends and communities.
