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LETTER TO A CREDIT PROVIDER IN  JOHANNESBURG   -  THE ENDING IS JUST MAGIC.


Dear Sir/Madam

I acknowledge receipt of your letter dated 7 July 2008 in which for the 3rd time, you request that I pay the monies owed to you. I first want you to know that by no means do I dispute my debt and I intend to pay as soon as possible.

However I would like to bring to your attention that you are not my only creditor. I have many more creditors, quite as honorable and important as you, and whom I wish to pay too. That is why, each month, I throw all the names of my creditors into a hat and draw one randomly the one drawn is paid immediately.

I hope that yours will come out shortly.

Sincerely Yours,
Sipho

PS: I regret to inform you that given the harsh and threatening tone of your last letter, you will not be taking part in the next three draws.

What is budget ?

A budget is like a football game plan it brings together all the skills on a team in order to win the game. A budget does the same for your finances.  It brings together all your financial skills to create a plan for financial success. You have to track your expenses and know your assets and liabilities. You’ve got to plan to save to let interest work for you. And you have to know how to use credit and debit cards wisely.

But that’s just the start. After creating a budget, you should not only know your current financial position,

you should also know how you’re going to achieve your desired financial future

In order to provide for our needs and wants, we must learn to match income and expenses by developing a balanced budget plan. A budget is an estimate of cash available to be spent or saved. This plan enables us to get as many of the things we need and want as soon as possible. Everyone has different wants and different life goals and must set up his/her individual plan.

Objectives

• Learn how to gather the information needed to build a budget

• Develop a budget

• Learn how to work with a budget to accomplish goals

• Write down your Needs and Wants and set a time limit for your self

Your needs are all of the monthly expenses associated with the goods and services that keep your life stable

Wants are goods and services that are not essential to daily living but are often things that make people happy or may make life seem a little easier or a little more special.

Budgeting requires three things:

Determining short medium and long-range goals.

2. Estimating available cash (income) for spending or saving.

3. Planning expenses or payments.

 Developing goals

A goal is to assist in identifying and prioritizing personal and financial goals, create a plan to achieve those goals, and provide practice setting up and maintaining a personal budget.

Setting goals is an important part of securing your financial future. Here are some things to consider in

your goal-setting process. Well-written personal and financial goals SHOULD:

Be realistic

Buying a car just for image with a high balloon payment

Be stated in specifics

Plan to save R20,000 for a deposit  to buy a house.

Have a time frame

Plan to pay off my debt within the next 24 months.

State the action to be taken

Plan to start a special savings account to save money every month

Before establishing you goal and budget you need to do the following

Track your expenses

·       What did you buy? What bills did you pay?

·       Then categorize your spending into groups such as clothing, food, loan etc.

·       Don’t forget to include some money for savings.

Identify your income.

Only include regular sources of income such as salary and allowances

Subtract expenses from income.

Your expenses can be divided into two types: fixed expenses, which are the same amount every month and variable expenses, which often fluctuate throughout the year.

Examples of fixed expenses: rent, car payment, insurance, gym membership, child care

Examples of variable expenses: utility bill, groceries, gasoline, phone bill

·         This is to determine how much money you have left over at the end of the month.

·          If you have more income than expenses, that’s good.

·         If you spend more money than you earn, you’re going to have to decrease your expenses or increase your income.

Timing is important.

·         If you get paid once a month, be sure to budget money to last the whole month.

·          If you get paid twice a month, but you have several large expenses at the beginning of the month,

         make sure you save some of your money from the end of the month to help with the next month’s bills.

Reasons to budget

·         To determine how much money you have to spend

·         To decide how you want to spend your money

·         To determine how to spend money in the future

·         To learn to live on less than available income

·         To stay out of financial trouble

You must first determine some of your short-term goals and long-term goals.

·            A short-term goal can be accomplished within a year. An example of a short-term goal might be to buy a new coat.

·             A medium -term can be accomplished within 3 to 5 years. An example of a medium-term goal might be to take a vacation in Cape Town or buy a new car.

·            A long -term goal would take longer to complete. An example of a long-term goal might be to buy a house  (5year plan)

·            You need to be careful that the money you spend on short-term goals does not wipe out the money you need for your long-term goals.

List two of your goals below:

•  Short-term (1) _____________________ (2) _____________________

• Medium term (1) _____________________ (2) _____________________

• Long-term (1) _____________________ (2) _____________________