A presentation on personal financial skills. How to budget, save, invest and use credit wisely.

1. Financial skills:
make your dreams come true

2. Outcomes
• At the end of this short session you should
know more about:
o Drawing up your own budget.
o Identifying and evaluating savings and investment
opportunities.
o Planning the financing of your first car or house.
o Insuring yourself against risk.

3. Introduction
• As a field of study, Economics is an everyday part of our lives.
• Everyone has unlimited wants, but scare resources to satisfy
those wants.
• This forces choices, which entail costs.
• Households have to decide to spend or save, firms have to
decide to produce for the local market or to export,
government has to decide to build stadiums or schools.
• This course is about applying the tools of economists to your
personal finances.

4. Introduction
• People are often ill informed and reckless about the
personal finances, thinking that there will be lots of
time later to live responsibly and to save and invest
some money.
• If the first step to achieving your financial dreams is
to know more about the economy that you live and
work in, the second step is to have a budget.

5. The Economics of it
• The macro economy is the background against which
you will be making your work, savings, investment
and borrowing decisions.
o The GDP is a determinant of personal income.
o Inflation increases the cost of living and erodes the
purchasing power of your money:
 Your employment contract may have a cost-of-living adjustment
clause.
 Or maybe there is a union that negotiates salary adjustments in
your behalf.
 Your investments have to hedge against inflation.

6. The Economics of it
• The macro economy is the background against which you will
be making your work, savings, investment and borrowing
decisions.
o Interest rates determine the yield on your investment and your ability
to borrow.
o How will the current interest rate influence your answer to the
following questions:
 Should I pay off my credit card bill faster than planned?
 Is it time to stop renting and buy a house?
 If I buy, should I have a fixed or floating rate?
 Is the financing offered on that new car a good deal?
• Keeping an eye on the economic news is the key to making
informed decisions about your own money.

7. Why budget?

8. Budgets are beautiful
• Setting up a budget is as simple as making a
list of your income and expenses.
• Then subtract your expenses from your
income.
• If you have any surplus cash (savings) you can
start thinking about investing it.
• If you are using your savings you need to earn
more income or cut spending.

9. The income-side of the budget
• The key is to start with disposable income.
o That is the money that you have left to spend or
save after:
 You have paid tax.
 Other deductions, like a pension fund, unemployment
insurance fund, or medical aid contributions.
• In your case disposable income may come
from home, a part-time job, grant or student
loan.

10. The spending-side of the budget
• List your expenses item by item.
• More detail is better so keep till slips in your wallet
when you use cash.
• If you are paying with a debit or credit card your
monthly statement will provide a record of the
spending but will indicate Pick’nPay and you will not
be able to breakdown your spending further.
• If you find it too exhausting to list every cup of coffee
you can use rough aggregates.

11. The spending-side of the budget
• Make a category for fixed expenses:
o These are your expenses that are relatively
constant each month.
o E.g. rent, car payment, medical insurance.
o These are hard to reduce in the short term.
• And group together the variable expenses:
o Like fuel, groceries, cell phone, entertainment.
o These you have more control over in the short
term.

12. The spending-side of the budget
• You may also divide your spending up into:
o Essential expenses
o Non-essential expenses:
 List these in the order of the ones that are most
important to you.
 If you like going to the movies as opposed to going for
drinks, “going to the movies” ranks above “drinking
beer”.
 For a month, try not spending on the last two items on
the list and chances are you won’t miss them.

13. The spending-side of the budget
• If planning ahead for a month seems like a
long time it helps to pay the fixed monthly
expenses, like rent, first.
• Then divide the remaining cash in four and
work with it week by week.

14. Pay yourself first
• People often only save the money that they
have left over after spending.
• To pay yourself first means to include a
savings amount in your budget as part of the
fixed expenses.
• If you think of this saved amount as one more
fixed payment it becomes easier to set money
aside for savings and investment.

15. Case study: John and Marcia’s budget
• Consider the following case study:
o John and Marcia is a young married couple.
o They have a two-year old daughter Ashley and
goldfish named Sharky.
o John manages a local shoe store.
o Marcia graduated recently and is a trainee-
manager at a local bank.
o Their combined monthly income is R22 400.

16. Case study: John and Marcia’s budget
• Have a look at their spending plan 1:
o Marcia and John need a second car.
o They have decided to practice the “pay yourself
first” approach to saving for a deposit for the
second car. How do they pay themselves first?
o What sacrifices do you think they should make in
their variable expenses to meet their goal?

17. Spending plan 1
Variable Expenses
Meals (home) 2100
Meals (away from home) 700
Utilities 1260
Automobile fuel, maintenance 455
Medical (not covered by Medical insurance) 420
Child care 1820
Clothing 385
Gifts and contributions 385
Magazines and newspapers 280
Home furnishings and appliances 280
Personal care 385
Entertainment 700
Vacation 840
Credit card 385
Variety of other expenses (personal) 385
Total variable expenses 10 780
Total expenses 22400 22400

18. Case study: John and Marcia’s budget
• One year later:
o They have bought the second car.
o Both have received salary increases.
o And they have payed off Marcia’s student loan.
o Now they want to save for a deposit to buy a
house in four year’s time.
o Have a look at their expenses – where do you
think they can save? Put together a new budget
for them.

19. Spending plan 2
Variable Expenses
Meals (home) 1995
Meals (away from home) 350
Utilities 1260
Automobile fuel, maintenance 630
Medical (not covered by Medical insurance) 385
Child care 1820
Clothing 385
Gifts and contributions 385
Magazines and newspapers 105
Home furnishings and appliances 280
Personal care 385
Entertainment 525
Vacation 700
Credit card 385
Variety of other expenses (personal) 385
Total variable expenses 9975
Total expenses 24 640 24 640

20. Savings?

21. Introduction
• People often only save the money that they have
left over after spending.
• To increase your savings it is better to pay yourself
first: include a savings amount in your budget as
part of the fixed expenses and set the money aside.
• This next section is about saving and investment of
savings as ways to achieve your financial dreams.
• In South Africa we do not save enough.

22. Savings in South Africa

23. Saving
• The power of saving lies in earning compound
interest.
• That is when you earn interest on interest.
• Look at the following example:
o Let’s say that you look at your budget, cut some non-
essential spending and pay yourself first and you put away
R2 000 at the end of this year.
o If the R2 000 earns 8% interest compounded annually you
will earn R160 next year.
o In 2011 you will earn 8% on R2 160, which is R172,80.
o R12,80 more does not seem like much, but watch this
space.

24. Saving
• If you keep adding R2 000 each year from the
age 20 to 65, you will have put aside R90 000
rand.
• Adding the interest at 8% compounded
annually will give you R773 011.
• That is R683 011 more than the saved
amounts that you put away!

25. Factors that determine your return
• In the example there are three forces at work:
o The amount saved.
o The period that you save for.
o The rate of interest that you earn.

26. Factors that determine your return
• The amount saved:
o The amount that you are able to save will depend
on your income, spending and your budget.
o If you repeat the story above and are able to put
away R2 500 per year at 8% you will have R966
264.
o Saving only R500 more per year gives you almost
R200 000 more at age 65.
o Clearly a key argument for paying yourself first
and making that as much as you can.

27. Factors that determine your return
• The period that you save for:
o With savings it is important to start early.
o More years = greater return.
o Have a look at the story of two savers in your
study material:
 Karen started saving when she was 22 years old. She
cut her budget, lived below her means and managed to
put away R2 000 per year for 12 years. At 33 she
stopped saving and started using her income to buy
that new car and get the nice flat. She put her savings
aside for retirement.

28. Factors that determine your return
• The period that you save for:
o Have a look at the story of two savers in your
study material:
 When Gerhard started working he spend his income on
a nice car and clothes and he went on vacation a few
times. At age 34 he realised that he needs to plan for
his future and he started saving R2 000 per year, also at
10% interest, for the next 32 years to his retirement at
65.
o Who do you think had the biggest nest egg?

29. Ka re n Botha Ge rha rd Va n De ve nte r
Tota l Tota l
Inte re st Inte re st sa ve d a t Inte re st sa ve d a t
Age ra te Sa ve d e a rne d ye a r e nd Sa ve d ea rne d ye a r e nd
21 10% R 0.00 R 0.00 R 0.00 R 0.00 R 0.00 R 0.00
22 10% R 2,000.00 R 200 R 2,200 R 0.00 R 0.00 R 0.00
23 10% R 2,000.00 R 420 R 4,620 R 0.00 R 0.00 R 0.00
24 10% R 2,000.00 R 662 R 7,282 R 0.00 R 0.00 R 0.00
25 10% R 2,000.00 R 928.20 R 10,210.20 R 0.00 R 0.00 R 0.00
26 10% R 2,000.00 R 1,221.02 R 13,431.22 R 0.00 R 0.00 R 0.00
27 10% R 2,000.00 R 1,543.12 R 16,974.34 R 0.00 R 0.00 R 0.00
28 10% R 2,000.00 R 1,897.43 R 20,871.78 R 0.00 R 0.00 R 0.00
29 10% R 2,000.00 R 2,287.18 R 25,158.95 R 0.00 R 0.00 R 0.00
30 10% R 2,000.00 R 2,715.90 R 29,874.85 R 0.00 R 0.00 R 0.00
31 10% R 2,000.00 R 3,187.48 R 35,062.33 R 0.00 R 0.00 R 0.00
32 10% R 2,000.00 R 3,706.23 R 40,768.57 R 0.00 R 0.00 R 0.00
33 10% R 2,000.00 R 4,276.86 R 47,045.42 R 0.00 R 0.00 R 0.00
34 10% R 0.00 R 4,704.54 R 51,749.97 R 2,000.00 R 200.00 R 2,200.00
35 10% R 0.00 R 5,175.00 R 56,924.96 R 2,000.00 R 420.00 R 4,620.00
36 10% R 0.00 R 5,692.50 R 62,617.46 R 2,000.00 R 662.00 R 7,282.00
37 10% R 0.00 R 6,261.75 R 68,879.21 R 2,000.00 R 928.20 R 10,210.20
38 10% R 0.00 R 6,887.92 R 75,767.13 R 2,000.00 R 1,221.02 R 13,431.22
39 10% R 0.00 R 7,576.71 R 83,343.84 R 2,000.00 R 1,543.12 R 16,974.34
40 10% R 0.00 R 8,334.38 R 91,678.22 R 2,000.00 R 1,897.43 R 20,871.78
41 10% R 0.00 R 9,167.82 R 100,846.05 R 2,000.00 R 2,287.18 R 25,158.95
42 10% R 0.00 R 10,084.60 R 110,930.65 R 2,000.00 R 2,715.90 R 29,874.85
43 10% R 0.00 R 11,093.06 R 122,023.71 R 2,000.00 R 3,187.48 R 35,062.33
44 10% R 0.00 R 12,202.37 R 134,226.09 R 2,000.00 R 3,706.23 R 40,768.57
45 10% R 0.00 R 13,422.61 R 147,648.69 R 2,000.00 R 4,276.86 R 47,045.42
46 10% R 0.00 R 14,764.87 R 162,413.56 R 2,000.00 R 4,904.54 R 53,949.97
47 10% R 0.00 R 16,241.36 R 178,654.92 R 2,000.00 R 5,595.00 R 61,544.96
48 10% R 0.00 R 17,865.49 R 196,520.41 R 2,000.00 R 6,354.50 R 69,899.46
49 10% R 0.00 R 19,652.04 R 216,172.45 R 2,000.00 R 7,189.95 R 79,089.41
50 10% R 0.00 R 21,617.25 R 237,789.70 R 2,000.00 R 8,108.94 R 89,198.35
51 10% R 0.00 R 23,778.97 R 261,568.67 R 2,000.00 R 9,119.83 R 100,318.18
52 10% R 0.00 R 26,156.87 R 287,725.54 R 2,000.00 R 10,231.82 R 112,550.00
53 10% R 0.00 R 28,772.55 R 316,498.09 R 2,000.00 R 11,455.00 R 126,005.00
54 10% R 0.00 R 31,649.81 R 348,147.90 R 2,000.00 R 12,800.50 R 140,805.50
55 10% R 0.00 R 34,814.79 R 382,962.69 R 2,000.00 R 14,280.55 R 157,086.05
56 10% R 0.00 R 38,296.27 R 421,258.96 R 2,000.00 R 15,908.60 R 174,994.65
57 10% R 0.00 R 42,125.90 R 463,384.85 R 2,000.00 R 17,699.47 R 194,694.12
58 10% R 0.00 R 46,338.49 R 509,723.34 R 2,000.00 R 19,669.41 R 216,363.53
59 10% R 0.00 R 50,972.33 R 560,695.67 R 2,000.00 R 21,836.35 R 240,199.88
60 10% R 0.00 R 56,069.57 R 616,765.24 R 2,000.00 R 24,219.99 R 266,419.87
61 10% R 0.00 R 61,676.52 R 678,441.76 R 2,000.00 R 26,841.99 R 295,261.86
62 10% R 0.00 R 67,844.18 R 746,285.94 R 2,000.00 R 29,726.19 R 326,988.05
63 10% R 0.00 R 74,628.59 R 820,914.53 R 2,000.00 R 32,898.80 R 361,886.85
64 10% R 0.00 R 82,091.45 R 903,005.99 R 2,000.00 R 36,388.68 R 400,275.53
65 10% R 0.00 R 90,300.60 R 993,306.59 R 2,000.00 R 40,227.55 R 442,503.09

30. Factors that determine your return
• The period that you save for:
o The difference between an early and a late start is
more than double the amount at the end.
o When you start out your income won’t be that
much and the cost of living high, but if you can
budget well, pay yourself first and get the savings
ball rolling, you will see the difference at the end.

31. Factors that determine your return
• The rate of interest that you earn:
o Earning a higher rate of interest will also benefit
your savings efforts.
o This is illustrated by the so-called rule of 72.
 If you want to determine how long it will take for your
money to double, divide 72 by the rate of interest.
 At a 10% annually compounded interest rate it will take
7,2 years (=72/10) to double your money.

32. Factors that determine your return
• The rate of interest that you earn:
o The benefits of earning higher interest rates can
also been shown in terms an example.
o If you save R2 000 each year from the age 20 to
65, at 8% you will earn R773 011.
o If you save R2 000 each year from the age 20 to
65, at 10% you will earn R1 437 809.
o If you save R2 000 each year from the age 20 to
65, at 12% you will earn R2 716 460.

33. Factors that determine your return
• The rate of interest that you earn:
o The rate of return is also relevant when you consider that
these examples have all been in nominal terms – not
taking account of inflation.
o If you save R2 000 each year from the age 20 to 65, at 10%
you will earn R1 437 809.
o But in 45 years’ time R1,4 million will not buy what it does
today. Inflation will have eaten away at the purchasing
power of your savings.
o This means that you have to make sure that you earn a
positive real rate of return:
Interest rate – inflation rate > 0

34. Factors that determine your return
• The rate of interest that you earn:
o But keep in mind that earning higher interest rates will
involve making investments that have greater risk.
o We will speak more about investment and risk later, but
for now the fact that you may have to risk your savings to
beat inflation, has two implications:
 Again, it is important to start early – it gives you time to make
mistakes and you don’t want to risk losing your savings at age 50.
 It is important to diversify your investments. Put some for your
savings in safe investments with lower returns and some in in risky
investments with higher returns.

35. Saving
• There are three key pieces of advice about
savings:
o Pay yourself first.
o Start early.
o Take sensible risks for higher returns.

36. Investment

37. Investment
• Saving and investment are two sides of the same
coin.
• Investment return is the additional income earned
from your money.
• Risk is the uncertainty that you will receive the
expected return.
• Typically, the greater the risk, the higher the
expected return.

38. Investment
• Your risk preference refers to your attitude
towards risk – how willing you are to take
risks.
• Types of risk preferences:
o Risk takers: easily take risks to get higher returns.
o Risk avoiders: Avoid high risks even if the returns
are higher.

39. Types of investment risks
• Financial risk
o Is the risk that you will not get your money back at all.
o This is particular to investing in a business.
• Market price risk
o Is the risk that the price of the investment will go down.
o This rarely happens to savings accounts, but the prices of stocks,
bonds, unit trusts and real estate fluctuate with demand and supply
• Liquidity risk
o Refers to the risk that you won’t be able to turn your investment into
cash when you need it.
o Stocks listed on the JSE are very liquid – you can sell them at any time,
but real estate is not liquid.

40. Types of investment risks
• Risk of inflation
o We have already said that over time inflation eats away the
purchasing power of your money.
o Thus, when you make an investment there is the risk that the real rate
of return is negative.
o That means that you will be able to buy less with the money when you
get it back than you would have when you made the investment.
• Risk of fraud
o Sometimes investments are designed to deceive and defraud
investors.
o This typically occurs in schemes that do not involve established banks
and brokerage firms.

41. A side note on Ponzi schemes
• Very now and again someone comes along promising
unbelievable returns over short periods.
• The latest is Bernard Madoff in the U.S. who defrauded
investors of $50 billion.
• One of the first was Charles Ponzi in 1919.
• The key to a pyramid scheme is to pay off early investors with
capital raised from later entrants.
• As long as new investments continue to come in the door, the
earlier adopters reap fat rewards.
• But when no new investors join the pyramid at the bottom,
the whole thing collapses.

42. A side note on Ponzi schemes
• There are many examples:
o The first was William Miller, 1899. He defrauded New York
investors of $1 million promising 520% returns.
o Ponzi promised 50% return in 90 days.
o There are many more recent examples from the U.S.
o In South Africa we have had examples such as Fidentia,
Krion.
• The key to avoiding this is to ask what is being done
with the money to earn those rates of return. When
that is not clear, it is probably too good to be true.

43. Types of investment
• Hiding you savings under your mattress.
• Savings accounts
o Interest rates vary between 1% and 5%,
depending on the balance on the account.
o You can open such an account with little money.
o And it tends to be quite liquid.

44. Types of investment
• Money market funds
o Your money becomes part of a fund that makes
short-term loans to businesses and government.
o For each rand that you put in, you can expect your
rand back with some interest.
o The interest rates are usually higher than those of
savings accounts
o But the investment still has low risk and quite
liquid.

45. Types of investment
• Stocks
o Stocks are shares of ownership in a company listed on the
JSE.
o The return depends of what happens to the price of the
shares and the dividends that you receive.
o This is a risky type of investment, but the returns may be
high.
o The investment is still quite liquid and the shares can be
bought and sold at any time that the JSE is open.

46. Types of investment
• Unit trusts
o Unit trusts are funds that typically invest in a portfolio of
shares (they make other investments too).
o Some funds invest in high quality or blue-chip stocks and
others in more speculative stocks.
o The differences between investing in unit trusts and
investing in stocks yourself:
 Unit trusts are more diversified, so you don’t have all your eggs in
one basket and the risk is lower.
 You can start with smaller amounts.
o The investment is also liquid – you can sell your units back
to the fund at any time.

47. Types of investment
• Real estate
o Most investors in property buy the house that
they live in.
o Houses can increase in value, but as we are seeing
at the moment, house prices can also fall.
o Property is an illiquid investment and it may take
a lot of time to find a buyer (on your own or
through an estate agent).

48. Risk vs. Return
High risk and return
Speculative stocks
Real estate
Individual stocks
Unit trusts
Money market funds
Savings accounts
Low risk and return

49. The steps to good investing
• Keep in mind that investment is a marathon.
• Get your mind set right.
• Get good advice.
• Get rid of debt.
• Decide what you need, income or capital
growth, or both.
• Select an asset class to invest in.

50. The steps to good investing
• Understand the risks.
• Know your risk profile.
• Diversify.
• What is your investment style: Value vs.
growth investing.
• Consider liquidity.
• Consider costs.
• Consider tax.

51. The steps to good investing
• Measure the results.
• Rebalance your portfolio.
• When an investment matures – when to cash
in.
• Start again at the start.

52. The use of credit

53. Introduction
• We have shown that savings and investment are important
components of your personal finances.
• At the opposite end of the spectrum lies your use of credit.
• Just about every adult in South Africa uses some form of
credit at some stage.
• Some people are not afraid to swipe, others are opposed to
having debt.
• Used in a smart way, credit can help you now and in the
future.
• But if you are not smart it can lead to financial problems and
broken relationships.

54. Debt in South Africa

55. What is credit?
• Using credit is to use money that you do not have.
• Your bank provides you with a loan in agreement
that you will pay it back later.
• You will have to repay the debt with interest.
• People get loans to buy cars, a home, major
appliances, to make home improvements, to pay for
university education etc.
• So the credit can be in the forms of the overdraft
facility on your cheque account or credit card,
personal loans, vehicle financing, mortgage bonds
etc.

56. What is credit?
• Keep in mind that a credit transaction always
has two sides:
o The borrower gets a loan to buy and consume
things today, but pay for it in the future.
o The lender makes the loan, but for him/her it is an
investment that and they want to get a return on
their money.
o The cost/compensation is interest paid and
earned.

57. Advantages of using credit
• Over your life time you are likely to have major
expenses when you are young and don’t have a large
income or lots of savings – like paying for your
education or buying a first car or house.
• Education and housing can be an investment and
cars and appliances are durable consumer goods that
are used over a long time.
• Credit allows you to use a good or service today and
pay for it later.

58. Advantages of using credit
• It would be impossible to save up for a house, or a
car or to go to university, but using credit allows you
to smooth your consumption over time.
• It is also very handy in case of emergency expenses
that you cannot pay from your current income or
savings.

59. Disadvantages of using credit
• When credit is easily available you may end up with a
lifestyle above your means.
• Loans and their interest have to be repaid first,
before you can spend or save the rest of your
income.
• This may later require sacrifices over goods and
services that have already been consumed.
• The key is the smart use of credit.

60. How do you get credit?
• Lenders typically look at the “three C’s” before they
approve a loan:
o Character
 Will the applicant be responsible and repay the loan?
o Capacity
 Does the applicant have enough discretionary income to
comfortably make the repayments?
o Collateral
 Will the loan be secured or guaranteed by collateral that can be
sold to repay the debt in case the borrower defaults on the loan.

61. The importance of a good credit rating
• It is important to build and maintain a good credit
history.
• Lenders compile credit reports in which your credit
history is rated.
• A good rating indicates that in the past you have
repaid your debts on time.
• A poor rating indicates overdue or unpaid accounts.

62. The importance of a good credit rating
• Lenders get this information from credit bureaus.
• These bureaus collect and store information on
liquidations and list the names of people who are
incapable of paying their debts.
• When you apply for credit, the credit information
bureaus are contacted for more information about
the applicants.
• No one will supply credit to anyone who does not
regularly repay their debts.

63. How to establish and maintain a good credit
record
• Borrow sensibly:
o Only the amount that you need.
o That means that you have to budget first and make sure
that you can afford the installments.
o Credit repayments should be between 20% and 30% of
your monthly income.
o Know how much you owe at all times.
• Develop good savings habits so that you can handle a
financial emergency without borrowing.

64. How to establish and maintain a good credit
record
• Repayment:
o Always pay your bills on time.
o Pay the full installment amount that is owed.
o Contact lenders immediately if you expect to have a
payment problem.
o Never ignore a letter of demand for payment.
o Never ignore a summons to court for non-payment.

65. How to establish and maintain a good credit
record
• Don’t apply for too many credit cards – even if you
don’t use them, the credit limits are taken into
account when you apply for more credit.
• Ensure that you supply accurate information in new
applications.
• Check your credit record regularly to ensure that the
information is accurate.
• Beware of fraud and identity theft.

66. A note on store credit
• In today's harsh economic climate, many people do not have
available cash and so resort to buying on credit.
• Most clothing chains offer both the traditional six-month,
interest-free account (you merely pay for your purchases over
six months, at no extra cost), and an extended payment plan,
12 to 24 months, on which you pay interest.
• Edgars:
o Grey card: A six-month plan. No interest is charged on this account
unless the accountholder falls behind on monthly repayments, and
then interest at 32% a year is levied.
o Red card: a 12-month payment plan where interest is charged. The
interest is 2.66% a month, which works out to 32% a year.

67. A note on store credit
• Bally Spitz:
o A six-month interest-free account as well as a 12-month account, with
interest.
o Interest charged on the cards is the same as for "the ordinary bank
credit card" at 35% a year.
• Truworths:
o Offers a six-month interest-free account, as well as extended payment
plans (12, 18 or 24 months) where interest is charged at 2% a month -
an effective 26.5% a year.
• Woolworths:
o The Woolworths card is different from other store cards in that it
works pretty much the same as a bank credit card.
o Woolworths charges 30% interest on any amount owing up to R6 000,
and 29% for amounts above that.
o No interest is charged on revolving credit for up to 55 days (this works
like a bank card), so to avoid paying interest, account holders should
aim to pay the full amount owing before the due date on their
monthly statement.

68. Finally some tips
• With credit the key is to use it wisely:
o Borrow only to finance the big ticket items like houses and cars.
o Don’t live above your means and use debt to pay for it.
o Sell investments that have not performed as well as you expected and
use the proceeds to settle some debts.
o Any surplus cash should be used to repay high-interest bearing loans
first, and then interest-free loans and other creditors.
o Never juggle credit by repaying an old debt with a new one. This only
postpones the problem.
o Consolidating your debts is a viable option, but only if it's not an
exercise in juggling credit. Mortgage finance is generally cheaper than
overdraft or installment credit finance, so it makes financial sense to
consolidate your debts using your mortgage bond.