Real Estate Investor Magazine South Africa February 2016 | Page 21

SERIES PART ONE How to manage your personal and business debt responsibly E verybody recalls the global financial crisis and economic storm that first hit America and then the rest of the world in 2008. It was not the first economic crisis of such proportions and it certainly will not be the last. This crisis had a massive effect on the housing market and many companies were also blown over with mountains of debt. Many of these properties and companies today are history, having been bought out by somebody else. So what really happened? In short, broke people with low incomes and who were in financial trouble, were granted finance from greedy bankers with bad terms and high interest rates. Because they were not prime or good loans they were then accurately called sub prime loans. Eventually they could not service the bond mortgage payments and this was the start of massive repossessing of houses (or foreclosures as they are called in the US) on a grand scale. Fear broke out in real estate markets and moved onto the stock markets. Of course there was mayhem and people started to lose their jobs while companies closed down and real estate prices dropped. Many painful lessons were learned on a private, individual and business level while some people did not learn anything at all. We hope to address the individual level in a ‘Free Yourself from Debt Slavery’ process in part one of our new series. It is time to prepare yourself for an opportunity not to be missed. In fact many are predicting a similar if not the same scenario to happen in 2016. Harry Dent a US economist who has predicted every economic trend over the last 30 years says we could see a historic drop in stock markets, real estate markets, currency markets, in gold and also an increase in unemployment as a result of a massive increase in personal household debt worldwide. But he counters to say that if you position yourself properly it could be the most rewarding and lucrative time of your life. Real estate investors who buy negatively geared properties in the hope that there will be capital growth increases are in for a rude surprise as a repeat of 2008 is imminent. “It is now time for the world to deleverage,” says leading property economist Erwin Rode of Rode and Associates. We are starting with our first step in ‘Free Yourself from Debt Slavery’ process in this issue. Tony Webbstock who is an attorney and debt manager says that most loans given to the general public are reckless loans. While 90% of people in our culture buy things they generally buy things can’t afford by maxing out their credit cards, personal and home loans. www.reimag.co.za 5 Steps for successful Debt Management Tony Webbstock has a 5 Step Process for anybody wanting trim off much needed debt fat and has a specific process to ensure that you can thrive and survive in any crisis. 1 2 3 4 Work out your order of Priority – You and family first not creditors Pay A creditors first such as rent, bond, food, travel costs. Pay yourself first - Open a savings or dignity fund for future monthly necessary expenses. Stop paying B creditor unaffordable debt and with that get 10 automatic legal benefits! 5 Protect your order of priority using a credible Debt Defense Assistance Service For more information on Debt Management send an email to [email protected] with the subject heading ‘Debt Management’ and your contact details FEBRUARY 2016 SA Real Estate Investor 19