Sunday, March 09, 2008 – Day 1
So begins my quest for a million.
I’m 25 year old South African male and my financial situation at present looks dire. My liabilities exceed my assets and my cash flow barely makes it per month. In business they call the above scenario being bankrupt. I just like to call it “being financially disabled”! I think it sounds less harsh and it doesn’t have that HUGE negative connotations associated with it. Like any other disability it can be cured or at the very least rehabilitated so the individual can function better
To be honest the quest for a million (from now on affectionately known as QFAM) started little over a month ago when I was in an even worse situation than now. Basically what it came down to was that my expenses were by far exceeding my income. Fifty percent of my pay check was going towards paying off all sorts of debt. Mortgage, car payment, loan from parents, credit cards, clothing store accounts was bleeding me dry slowly. Every month I was going deeper into my savings account until there was nothing left.
I then opened an overdraft facility with my bank and started eating into that. That meant I ran out of credit completely and was faced with the hard fact that if I don’t settle my debts completely I will be facing judgments etc. Not a very pleasant thought for somebody who has always been a responsible citizen.
I started doing some research on the internet on how to effectively manage debt problems. And found some interesting options. The solution that caught my attention was debt consolidation where you consolidate all your debt into one big loan with a much better interest rate and pay it off over a longer period. This has a very positive effect on your cash flow as the repayments are much lower.
The problem most people fall into however is that they consolidate their debts, but continue to use their newly paid off credit facilities instead of closing them completely. They usually become indebted once again, but this time they are in a far worse position than last time. If they have the credit available they can once again consolidate, but for most people it’s too late and they have to declare bankruptcy.
Being a little sceptical about banks and how they feast off the general population in terms of loan interest repayments, I decided to approach my parents for a loan. I figured that by being transparent is probably the best starting point and that there is no shame in admitting you have a problem. After all, you cannot deal with something if you deny its existence! The positive side for my folks would be that they could pocket the interest instead of the commercial banks!
Consolidating the loan improved my cash flow and at least I was not going into the overdraft every month. I cut up all of my credit cards and paid off most of my debt with the exception of my clothing accounts and my overdraft facility. That was end of January 2008.
Up until now I have managed to stay clear of overspending and I’m slowly making progress in becoming debt free. Once I have achieved that I am aiming for my first million!
It’s not easy denying yourself nice things in life and it’s definitely not easy when you actually deserve it! You might deserve that new item, but the question is can you afford it? That get’s you thinking doesn’t it? One of the common mistakes we make as human beings is making financial decisions based on our emotions. The sooner we make our financial decisions based on fact the better we’ll be in the long run.
My posts will mainly focus on my QFAM, reducing my debt, living frugally – sounds funny hey 
– simplifying my life and most of all having FUN. Hopefully there is somebody out there in the same kind of boat, looking for inspiration to change their circumstances, maybe my blog will be a little beacon of hope, which inspires them to try and change their lives too! Writing in English is a whole new experience for me so please bear through some of my posts. I’m am very open to your comments as to further improve my English and writing style and just to improve the blog in general
The picture above is a “snapshot” of my financial balance sheet as of today. As you can see it’s not looking to healthy. In fact I’m technically bankrupt as my liabilities by FAR exceed my income.
Wish me luck as this will be a very interesting experiment!
