10 Ways to Save Money on a Tight Budget

Virtually everyone would like to know ways to save money on a tight budget nowadays, especially since prices are rising and the economy has grown more and more unreliable. In order to truly do this, you have to make a real effort to alter your spending behaviour for those spending and living beyond your means. Most people can benefit with the methods I am about to talk about.

One of the first ways to save money on a tight budget is if you have lunch out often, you could save a surprising amount of money by making your lunch and bringing it to work with you. By making your sandwiches or eating leftovers, you can be spending far less than you’ll have spent at perhaps your town’s most inexpensive take out restaurants. Healthy eating is easier as well if you make your lunches, because most take out has added calories and lots of fat and salt. If you have a busy schedule, eating lunch or dinner out also consumes your time and money. Making your lunch every day is a terrific way to save money, and over the course of the season these savings can become quite big.

The second ways to save money on a tight budget and could save a pile of cash is buying items used. A lot of people feel uneasy buying used clothes, furniture, appliances, and many other items because it makes all of them feel inadequate, but that is just a frame of mind. You can in the same way easily think about it as recycling. Providing you buy goods that are in good shape, why not get them for half the value, or perhaps cheaper than brand new? Keep your eyes and ears open for high quality used goods, and you can save a lot of cash.

The third ways to save money on a tight budget is obvious, and most ignored because most people don’t take time to look for free activities to do. They find themselves spending a pile of cash on leisure activities. Instead of going to the mall or the movies when you have the time off, look for something that does not cost anything. If the weather’s good, go for a walk or hike. Any nearby newspapers, weeklies and bulletin boards have plenty of local community ads with totally free activities to do in town. Popular no cost events consist of local community concerts, museums, cook out, car shows, boat shows, and more. If a person makes the time to watch out for it, you’ll find plenty of entertainment that is certainly affordable or free of cost.

The fourth ways to save money on a tight budget is for the college students. Instead of blowing a lot of money on brand new books there are plenty of places to get used ones, or you can even rent them at a lower cost. If you do need to buy a brand-new book don’t ever buy it on campus, because you could find it for half the price at a local book store. Make sure you do your homework before purchasing any books, because doing a little price shopping could save you thousands.

The fifth ways to save money on a tight budget is you get a used vehicle for your next car and you simply won’t have to deal with a car payment. If you simply keep up with your everyday maintenance of your vehicle like oil changes, tire pressure, and other fluids that need to be maintained you should be able to make that used vehicle last for a while and save money on that unneeded car payment or high car insurance payment.

The sixth ways to save money on a tight budget is never buy anything on impulse. Anytime you want to buy something that is very expensive give yourself a 24 to 48-hour period to think about the purchase pro’s and cons. Most of the time when you do this within that 48-hour time frame you truly realize that you really don’t need that expensive item right now, and you can probably manage with what you already have.

The seventh ways to save money on a tight budget is when you go food shopping follow these three rules. One you must make out a list and stick by that list. Second is never go food shopping hungry, because when you’re hungry you will get side tracked on everything that looks good to eat, and it will end up in your grocery cart. Third is the obvious, you must sit down every Sunday and cut those coupons out of the newspaper. Coupons are time consuming, but it saves hundreds of dollars in the long run.

The eighth ways to save money on a tight budget is save all your loose change. Instead of leaving all your loose change around the house or all around your car, or even at work. You get a large container, and at the end of the day you put all your loose change in one container, and at the end of every month cash in the container, and you should have like an extra R500 to bank.

The ninth ways to save money on a tight budget is at the beginning of every month write down all your bills that need to be paid. Throughout the month you make sure you receive a receipt for everything you spend money on whether it is gas, food, clothes, or even a candy bar. At the end of the month you go over every receipt that you have, and you will truly see where every one of your pennies has gone.

The tenth ways to save money on a tight budget is save by asking for a discount. Often you can get a discount or money off on many things you use and buy just by asking for a discount.  For example, call up your internet company and ask for a discount on your monthly bill, and most of the time they have a monthly special running. Often, they’ll give you a reduced promotional rate for a limited time. Another example is your medical bills, if you ask your medical billing department for a discount rate if you paid cash, you could save up to 20% on the bill. You can also put this together with purchasing a used car or purchasing a house. Just remember everything in life is negotiable.

Learning strategies or ways to save money on a tight budget in your lifestyle is advisable. While spending money will really feel good initially it simply just causes a lot of panic and anxiety when the bills start becoming due. The suggestions brought up in this discussion are an incredible starting point however they shouldn’t be the only things you choose to do. Follow some sort of budget and, each time you wish to spend some sort of money, try to think if there exists a cheaper solution available.

 

Leave a comment

VAT Charges and Buying Property

Value added TAX buyers who buy fixed property from a non-vendor will sooner realize that they will receive bigger tax deductions. The reason for this because of the changes to the Value added TAX Act 89 of 1991.

Before the changes of the act, South Africans were limited to the detectable tax because of the transfer duties of the property which is being purchased. This deduction was only available to property buyers if they’re sole purpose is to make profits from the purchased property. For example, if you buy a block of offices to make profits out off. It is no longer applicable to limit the detectable tax to the transfer duties.

It is important to know that if you want to qualify for VAT deductions you must be a South Africa citizen, you must have paid the full price of the property and the property must be registered by the Deed Office in South Africa. It still works the same as in the past; a piece of property must be purchased by a vendor in order to make profits from it. For example; if a vender paid R5m for the property he will be liable to pay a transfer fee of R317 000, and deductible tax can only be limited to that amount. With the recent changes we will see that a vender will now be liable to deduct tax from R614 035. Showing that there is a big difference due to the new implemented rules. If a vender buys a property for personal use he or she won’t be able to deduct tax from the purchase. One can always change the property to business purposes, and then only will you be able to deduct the taxes.

To Conclude. We can see that there are thus big financial differences in buying property for personal use or for business use. If you can make money from property then you can enjoy the big tax deductions, otherwise it will be treated as normal.

Leave a comment

FNB Property Barometer

House price and market volume growth have begun to slow again after an early-2018 “mini-surge”

August 2018 saw the FNB House Price Index growing by a slower 3.5%, year-on-year, down from the previous month’s revised 3.9%. This translates into ongoing decline in prices in “real” terms (adjusted for CPI inflation), a trend that has been ongoing since early-2016.

On a year-on-year basis, the FNB House Price Index’s growth rate has recently begun to slow once more. From a revised 3.9% rate for July, growth slowed to 3.5% in August 2018. This is the 2nd consecutive month of slowing year-on-year growth with the latest revised figures, off a 2018 high point of 4.1% reached in June.

While price growth is still mildly positive in nominal terms, it remains negative in “real” terms, when adjusting for CPI (Consumer Price Index) inflation. This means that the gradual housing market price “correction” continues in the form of a slow real price decline that has been in play since early-2016. As at July 2018 (August CPI not yet available) real house prices declined year-on-year by -1.2%, with CPI inflation at 5.1% in that month and house price growth at 3.9%.

The most recent slowing in year-on-year house price growth has been expected in recent months due to a prior commencement of slowdown in the month-on-month rate. To better evaluate recent house price growth momentum, we examine month-on-month house price growth on a seasonally-adjusted basis. Month-on-month growth direction leads year-on-year growth direction, and here we have seen 4 consecutive months of month-on-month house price growth slowdown. From a high of 0.67% month-on-month growth in April, this rate has slowed to 0.08% as at August 2018.

With 8 months’ worth of house price data available for 2018, it appears highly likely that 2018 as a whole will turn out to be a slower average house price growth year than 2017, with 2017 having recorded 4.2% average price growth, and 2018 a year-to-date 3.5% average.
This puts real average house price decline at -1% for the year to date, and suggests that 2018 will be the 3rd consecutive year of real house price decline. This recent period of real price decline is termed our “2nd Post-Bubble House Price Correction Phase”, the 1st Correction Phase having been around 2008/9.

The multi-year trend of low-but-positive nominal house price growth, but which remains below CPI (Consumer Price Index) inflation translating into a decline in “real” terms, suggests that the sluggish rates of economic growth of recent years are insufficient to create enough housing demand so as to keep the housing market in balance.

This 2016 to 2018 period has been one with little in the way of interest rate stimulus (2 x 25 basis point cuts only, and some additional help from the “pricing squeeze” on home loans in recent times), and GDP growth not exceeding 1.5% year-on-year at any stage (1.3% average for 2017).

Looking ahead, Firstrand’s annual GDP growth forecasts fluctuate not far from 1.5% per annum, for the period up to 2020. In addition, the forecast is for interest rates to begin rising mildly as from 2019, given mildly higher CPI inflation projections.

Based on the performance of house prices in recent years, we believe that, should such a weak growth and rising interest rate environment materialize, this would be insufficient to significantly alter the housing market’s performance from the current low positive single digit house price growth environment.

Therefore, we forecast average house price growth to average in a range between 3% and 4% for our forecast period to 2020, which would imply a negative rate in real terms through the forecast period.

The housing market would thus remain somewhat off its equilibrium (“equilibrium” referring to where housing demand and supply are in balance) through the forecast period, which is seen in the projected average time of homes on the market prior to sale moving in a 16-18 week range, whereas we believe around 12 weeks to be more-or-less where market equilibrium is.

To achieve positive house price growth in “real” terms, we believe that economic growth would need to be nearer to 3%, which appears unlikely in the foreseeable future. On the other hand, we believe that a full blown recession (GDP decline) would cause not only “real” house price decline but nominal (actual) house price decline too.

Leave a comment

Dealing with problematic levy contributors

The owners of units in Sectional Title schemes that do not pay their levies place an unacceptable and burden on the other members of the scheme, and in some instances the trustees must resort to raising a special levy to cover the body corporate’s ongoing financial obligations. In these instances, because defaulters are unlikely to contribute to the special levy, they create an even greater financial burden for the other members.

Sometimes, the case of non-payment is due to lack of finances and in these cases, it is advisable for those who cannot afford to live in the complex to sell as soon as they can and find alternative accommodation, rather than wait for the case to get to the extreme of having their assets attached or possibly the unit being sold in execution. Trustees should keep in mind that when they hand an account over to attorneys for collection, that it will not be paid immediately and will incur further costs.

To collect the arrear levy’s efficiently, it is important that the trustees appoint an experienced sectional title attorney who understands the Sectional Titles Act. Collections of levies are not an easy task, and it is a good idea to involve collection experts as early as possible and they must be given all the backing documentation to execute the collection process efficiently. The documents that will be needed by the attorneys are: the participation quota schedule, a copy of the approved budget, the last AGM minutes, the levies schedule, the trustees’ resolution in terms of which the levies were determined, and a general ledger account of the defaulting owner, showing what is owed.

The target of the attorneys who handle the collections will always be to collect as much of the monies owed in the shortest time possible. There are various ways of recovering costs, e.g. a warrant of execution against movable property could be granted, in which case the Sheriff of the court will determine and write up the moveable assets that can be removed for sale at auction. If there are no attachable assets, or the Sheriff could not find the owner, it needs to be decided whether to trace the owner and what to do next. With some cases, there are various options: if the owner has equity in property, how many properties he owns, and his salary and employment situation. It will then be determined whether a garnishee order must be pursued, whether to apply for the rental income to be attached or whether to apply for the unit itself to be sold in execution.

As a drastic step of action, the debtor can also be sequestrated / liquidated. From the start of the collection process to the body corporate receiving money, up to three years could have passed, and the trustees will have had to make plans to cover these amounts in the meantime. The quicker the matter can be dealt with, the quicker the body corporate receives the monies owed, so it is of utmost importance that the trustees have their ‘ducks in a row’ in terms of resolutions, minutes, financial records, etcetera, so that the attorneys can get on with the job of collecting the outstanding amounts.

Leave a comment

Many fail to consider ALL the costs involved when entering into a property transaction – Don’t be taken by surprise!

The costs involved in a property transaction aside from the actual price of property are often overlooked. These costs are significant from the perspective of both the buyer and the seller. It is important to take these costs into account before getting involved in the purchase or sale of a property so that you have a realistic idea of what you will be in for.

These are the major costs of selling a property (costs incurred by the seller):

  1. Real estate agent’s commissionReal estate agents usually charge a commission rate of between 5% and 8% of the property sale price, excluding VAT of 14%. By selling through No Agent, you will save thousands of Rands compared to using a traditional estate agent.
    An estate agent charging 8% on a sale price of R2 million, will cost R182 400 including VAT
  2. Compliance certificates
    You will need the following compliance certificates before you can sell your property:

    • Electrical
    • Beetle (if a coastal property)
    • Electric fencing (if applicable)
    • Gas (if applicable)A Johannesburg inspection company quoted the following: Electrical – R800, Beetle – R600, Electric fencing – R850 and Gas – R750. Then, you will also have to pay for the work that has to be done to fix any problems that may be discovered through these compliance checks.
  3. Bond cancellation
    When a property is sold and the property has a bond registered over it, the seller must cancel this bond on the transfer of the property. The cancellation of an existing bond must comply with certain legislation as well as the relevant financial institutions’ procedures and it is therefore mandatory that this procedure is handled by a conveyancing attorney, in this case acting as the bond cancellation attorney.Conveyancing describes the legal procedure whereby lawful ownership of immovable/fixed property is changed (i.e. ownership is “conveyed” from the existing owner to the purchaser).
    The bond cancellation attorney is usually appointed by the financial institution which holds the bond on the property. The seller is responsible for the fee charged by the attorney, which usually ranges between R1 700 and R2 800.
  1. Early bond cancellation penalty
    If you intend to sell your property and cancel the bond, then it is important to notify your bank in writing at least 3 months before the cancellation of the bond. It is therefore important to do this as early as possible, ideally even before the property is put on the market and continue notifying the bank every 3 months until your property is sold. If notice is not given to the bank, then you may be charged a penalty fee for cancelling your bond early. The penalty fee is calculated as 3 months’ interest on the value of the bond, which can be a substantial sum to pay unnecessarily. Do keep in mind that if you give notice about cancelling your bond, the bank will freeze your facility and you won’t be able to access it.
    This is a vital step of the property sales process that the seller needs to be aware of to avoid incurring costs unnecessarily.
  1. Capital Gains Tax (CGT)
    CGT is charged on the profit made from the sale of a property. However, CGT will not apply to most property sales since the first R2 000 000 of the profit made on the sale of a “primary residence” is excluded from tax. This exemption obviously doesn’t apply to the sale of holiday homes or investment property, where CGT is applied to profit from the word go. The maximum effective CGT rate works out to approximately 13.3%.Let’s assume you sell your holiday home (therefore, not a primary residence) for R2 million, there is a R200 000 capital gain and an effective tax rate of 13.3%. You will be liable to pay R26 600 in capital gains tax.
  1. Furniture removalWhen it comes to moving furniture and possessions it is important to get quotes from a couple furniture removal companies and understand the level of service each offers, as this can vary from one company to the next. It is also advisable to ensure that your possessions are insured during the move.
    The actual fee will vary greatly depending on the distance and volume of the removal.
  1. Rates and taxes/levy clearance certificates
    You will usually be required to obtain rates and taxes and levy clearance certificates which entail upfront contributions equivalent to about 4 months’ payments. If your property transfers earlier than anticipated, you may apply for a refund.This is an advanced payment rather than an outright expense, but nevertheless, it is worth mentioning so that you are not taken by surprise.Below is a practical example of what your costs will look like on a R2 million property taking the above expenses into account. This is excluding the bond cancellation penalty, furniture removal and rates and taxes/ levy clearance certificates due to their variable nature.
COSTS WHEN SELLING
1 Estate agent commission @ 8%  R 182,000
2 Compliance  R 2,900
Electrical  R 850
  Beetle  R 600
  Electric fencing  R 700
  Gas  R 750
3 Attorney Fee for Bond Cancellation  R 2,500
4 Capital Gains Tax  R 26,600
GRAND TOTAL  R 214,000

These are the major costs involved when buying a property (costs incurred by the buyer):

  1. Deposit
    As a buyer, to qualify for finance, you will generally need to provide a deposit of between 10% and 30% of the purchase price.The deposit amount will be stated in the offer to purchase agreement between the buyer and the seller.The money will accrue interest in your favour while kept in an attorney trust account until the property is transferred into your name.
  1. Bond registration costs
    These are fees which are applicable if you require a bond to finance your property purchase. The two main costs here are the initiation fee payable to the bank and legal fees payable to the bond registration attorney.The initiation fee varies from one bank to the next. You can expect to pay R5000, plus VAT which is R5700 in total.The legal fees are payable to the bond registration attorney who is involved in the bond registration process. They are appointed by the bank and the fee is calculated according to the value of the bond (not the purchase price). They request the draft deed and draft the bond documents.For a bond of R1.5 million the attorney’s fees will be approximately R10 000.
  1. Transfer duty
    The South African Government levies a tax on property transactions called transfer duty. Transfer duty is payable by the buyer when the property is transferred into a buyer’s name.Transfer duty is not charged on homes under R600 000. For properties costing between R600 000 and R1 000 000, the rate of transfer duty is 3%. Properties costing more than R1 million are subject to a rate of R12 000 plus 5% on the value between R1 million and R1.5 million. For properties over R1.5 million, the duty will be R37 000 plus 8% of the amount above that figure.Therefore, the transfer duty on a R2 million purchase would be R77 000.

See below the transfer duty tax table:

TRANSFER DUTY
Transfer duty is payable at the following rates on transactions which are not subject to VAT-
Value of property (R) Rate
0 – 600 000 0%
600 001 – 1 000 000 3% of the value above R600 000
1 000 001 – 1 500 000 R12 000 + 5% of the value above 1 000 000
1 500 001 and above R37 000 + 8% of the value exceeding R1 500 000

 

  1. Conveyancing
    It is the conveyancer’s role to change the ownership of the property from the seller to the buyer in accordance with the Deed of Sale.Although the purchaser pays the conveyancer’s fee, it is usually the seller who appoints the attorney. This ensures that the conveyancer acts in the seller’s interest and prevents unnecessary delays in the transfer process.Conveyancing Fees are prescribed by the Law Society of South Africa and is calculated on a sliding scale based on the purchase price of the property.Calculation method where the sale price is more than R500 000:

    R8 250 for the first R500 000 plus R1 100 per R100 000 or part thereof above that, thereafter, up to and including R1 000 000 where after the recommended fee be R550 per R100 000 or part thereof up to and including R5 000 000 where after the recommended fee be R275 per R100 000.

Therefore, expect to pay a conveyancing fee of R19 250 on a R2 million property. ie. R8250 + (110 x 5) + (550 x 10)

  1. Deeds Office registration fees
    The Deeds Office will complete all that is required to register the bond in the buyer’s name. The fee for transferring a property is calculated on a sliding scale based on the purchase price of the property.The fee is currently R900 on a R2 million property. Deeds Office registration is the final step in the process and takes approximately 15 days.

Below is a practical example of what your costs will look like on the purchase of a R2 million property with a R500 000 deposit, taking the above expenses into account.

COSTS WHEN BUYING
Sale price  R 2,000,000
Bond  R 1,500,000
                1 Deposit  R 500,000
                2 Bond registration  R 15,700
Initiation fee  R 5,700
  Bond attorney  R 10,000
                3 Transfer duty  R 77,000
                4 Conveyancing  R 19,250
                5 Deeds office  R 900
TOTAL COST EXCLUDING DEPOSIT  R 112,850
GRAND TOTAL  R 612,850

 

 

1 Comment

Invest in your future

By buying a home, you are investing in your future and you will have security and shelter for you and your family for many years to come.

Steps to owning your own home:

  1. Once you have found your dream home, and your offer to purchase has been accepted, you then contact a mortgage consultant.
  2. The consultant will help you complete a home loan application form and gather all necessary documents needed.
  3. The banks will then assess your application and either approve or decline your home loan application.
  4. The banks will then assess the property you intend buying.
  5. The banks then make a final decision based on the valuation of the property. The interest rate, special conditions and repayment terms will be explained and confirmed with you.
  6. An attorney will proceed with the registration of your property. The attorney will prepare all the documents and will contact you for signing. Transfer and registration cost must be paid to the attorney. Once the costs are paid the attorney lodges the documents at the Deeds Office.
  7. Registration then takes place; the bank will confirm your monthly repayments, debit order details and HOC insurance details.

How much do I qualify for?

Monthly payment should not exceed 30% of gross income per month. In the case of a married couple, joint income can be considered.

Documents needed with Application:

  • Bond Application forms
  • Copies of Id Document (ID book will have to be presented)
  • Proof of income
    Bank statements for 3-6 months
  • Offer to Purchase
  • Other appropriate documents (e.g. Marriage Certificate)

Make sure the Offer to purchase has the following information:

  • A description of the property e.g. the stand number, size and address
  • The price you are buying the house for
  • The date you can move into the house
  • What fittings and fixtures are sold with the house

 

Leave a comment
Style Selector
Select the layout
Choose the theme
Preset colors
No Preset
Select the pattern