ONLY THE UNPLANNED GETS REPOSSESSED
On Monday I read that last week 5000 cars had been repossessed by the banks. 5000! When I read this so many things ran through my mind about what could have possibly caused this situation. I saw tweets of some people talking about living within your means and others talking about financial education being incorporated into the school curriculum. I agree with all these points and even commented on a few of them. However, as the day progressed I came to one conclusion; only the unplanned gets repossessed!
Just because you can afford a car does not mean you should rush to get it. This actually applies to so many things in life. Just because you can get into a relationship does not mean you should. I know many people idolize the idea that the unplanned relationships tend to last longer. They may very well last longer but if anything meaningful is to come of that relationship then at some point you are going to have to stop taking things as they come and actually start heading towards a few of those things.
The same thing is true with most of what happens in our financial life. A young professional starts a new job and immediately the desire to buy more things overwhelms them. This is where I believe we are losing so many young professionals and many struggle to make it back on their feet from this point. For many years a student may have received an allowance from parents of about R1 000. All of sudden they start working and it jumps to 15k! Now we may think that the problem is that s/he is simply not use to having money but truth is the same way he used the R1 000 is how he will use the R15 000. “More money cannot solve a money problem” is what my mentor use to say to me. If a patient walks into a hospital losing large amounts of blood we do not just give them more blood to keep them alive. We need to stop the bleeding. If someone’s problem is how they handle their money, giving them more money will not change it. We need to fix the problem not throw more money at it.
Where our schooling and upbringing has failed us is that we are never taught how to handle our finances. We are not taught about ideas such as ‘delayed gratification’. That we do not have to buy a car that will cost us 9k per month when we are making 12k a month. We not taught that you do not have to rush to buy many fancy things with your money. You can sit down and plan about a way forward with your money. Taking into account where your life is and where you want it to get to and drawing up a working plan towards getting there. For so many the best thing they could do is actually learning from those doing well on what they could possibly do to get the place where they can afford the lifestyles they want to live.
One of my favourite quotes says entrepreneurship is going a few years of your life like most people will not so that you can live the rest of your life like most people cannot. I think the same goes with planning. Planning does not even have to be a few years, it could even be a few weeks and yet those weeks could allow you to live the kind of life you desire without worrying about the bank repossessing your things. I think part of the problem is that we want to buy so many ‘things’ as opposed to buying income producing assets. I am all for buying the things. I want those things too. I am not particularly a fan of fashion in terms of clothes and the like, but classy cars and houses are my vice. I am obsessed with these two things. Those are the ‘things’ I would probably spend my money on. But I am not in a rush to acquire either one of those things.
“I can afford it therefore I am getting it” is not a plan. If you are going to spend money on something that is going to take up a large part of your income I believe it requires some planning. If it is a car try talking to someone who owns a similar car and ask about their monthly expenses aside of the instalments. Get an idea of how much you are really looking at spending in terms of that car. If it is a house try speaking to some of the home owners in that area about the rates and things that they pay for each month. Most people simply look at the instalments and think they can afford it. Petrol price is a very real expense that many do not take into account. I wonder just how many of these repossessions could have been avoided simply through proper planning, nothing more.
“If you fail to plan then you plan to fail” is not just a nice adage. It is very real. Let us learn from these 5 000 cars that were repossessed and try to ensure we are never on the receiving end through proper planning.