Real Estate Investor Magazine South Africa July 2013 | Page 17

UPFRONT
securitised and now belongs to another entity.
Recently, Peter Moyo from SABC3’s Special
Assignment exposed the banks’ securitisation
practices on national television. Follow the story
on NewERA’s website and have a look at some
of the responses proposed by the UBUNTU

wait for government to protect or enforce our
rights. And the fastest way we, the people, can
stop them is to cut off the demand, especially
for “bad” debt, and to stop feeding their greed
with obscene interest payments that enables
them to enslave people en masse and to place the

“While most of the people and the media
are blissfully ignorant and unaware of the
unlawful and fraudulent activities of the banks,
no one is untouched by their criminal activity”
Liberation Movement should a debt that has
been securitised be handed over by the bank to
lawyers to initiate legal action against you.

stability of the entire financial system at risk,
with no regard for the consequences that will
affect every one of us.

But these practices extend beyond the home
loan industry. The Star recently revealed that
hundreds of cars are being repossessed by
agents employed by banks, who drive around
in unmarked cars fitted with number plate
recognition cameras. According to the report,
the banks and owners of the technology
claimed they were acting within the law, but the
repossessions are illegal. Only a sheriff of the
court can legally hand people court orders and
repossess their belongings.

Cut off the demand
The fastest way to stop the banks without
destroying the entire financial system is to cut
off the demand, bluntly and absolutely. We
refuse to enslave ourselves to compounding
interest of 25% or even 30%. We refuse to
accept loans that we cannot repay. We start
living within our means.

Furthermore, a Third Degree investigation
recently revealed that, of a random sample of
1 450 garnishee orders, only three were legal.
The rest were either defective or fraudulent.

Cut up your credit cards and your store account
cards. Cut down on lifestyle expenses. Don’t
spend what you don’t have. Respect the power of
your “promise to pay” by using it only to acquire
assets that will build financial independence, only
at low interest rates and only when you can indeed
keep this all-important “promise to pay”.

Roughshodding over our rights?

Pay off your existing debt

And all this is happening despite our advanced
Constitution and laws such as the NCA, because
not all credit providers play by the rules. As
Michael Tellinger of the UBUNTU Liberation
Movement puts it: “While most of the people and
the media are blissfully unaware of the unlawful
and fraudulent activities of the banks, no one
is untouched by their criminal activity. More
than 20 million South Africans’ lives have been
destroyed by their draconian behaviour. They act
with impunity and seem to be above the law. Their
actions go unpunished and are so well hidden and
protected by a complex legal system that many
who have tried to expose them have been silenced
in various ways.”

If the financial system – which is based on our
“promises to pay” – crumbles, every single one
of us will be affected. We must ensure that our
“promises to pay” are valid and trustworthy
so that the foundation of the system does
not collapse. However, we need to settle our
“promises to pay” as fast as possible, to free
ourselves from the shackles of compounding
interest payments.

How to stop the rot
The banks’ and other credit providers’ reckless
lending practices must be stopped. We cannot
www.reimag.co.za

At the very least, pay the minimum repayment
amount on time each month to avoid additional
interest payments and penalties that increase your
debt burden further.
But, because the minimum repayments cover
mostly interest and very little of the capital
amount borrowed, make every effort to pay more
than the minimum amount required. This is a

powerful strategy. For example, as BetterBond
explains: on an average home of R900 000,
acquired with an 18% deposit on a 20-year loan
at an interest rate of 8.5%, the average monthly
bond repayment is R6 400 a month. If you pay
only the minimum amount each month, you
will pay some R800 000 in interest over the 20
years of the loan. By contrast, if you pay just 10%
more than the minimum each month – or an
additional R640 in this example – you will pay
off the loan in 16 years instead of 20, and save
around R185 000 in interest.
“Focus on repaying the debts with the highest
interest rates quicker, but without neglecting
your promises to pay on other debts,” adds Tanya
Gerstner of Gerstner Attorneys Inc.
Even if you are not in complete financial dire
straits yet, take a good look at your finances
and realise that looming interest rate hikes
will send many more down the slippery slope
of the debt spiral. Knowledge and discipline
are vital. “Through tools such as My Budget
Fitness, you can be educated, mentored and
empowered to manage your finances according
to a budget prepared taking into account your
actual income and expenses, to track each
rand you spend on your mobile phone with the
mobile2budget tool, and to maximise savings
through debt consolidation to get out of debt
as soon as possible,” says Meyer de Waal of My
Budget Fitness.
Blue Oaks Systems has launched a unique
online tool called RESET, designed to assist
debtors by analysing their debt. “Consumers are
not aware that a monthly savings may exist in
their current debt,” explains Theuns Hanekom
of Blue Oak Systems. “Given the average savings
of R2 300 per month per consumer reviewed,
everyone’s debt should be reviewed. Savings
such as these will significantly improve personal
cash flow, increasing savings or at least reducing
the need to borrow more. If you don’t enjoy a
monthly cash flow improvement that makes a
real difference, sooner or later you’re going to
borrow again.”
Another option is get the help of a debt
counsellor, registered with the Debt Counselling
Industry portal, theDCI.co.za, to reduce your
debt burden. Professional debt counsellors will
negotiate more favourable repayment terms
to help you manage your debt better and pay
it off faster. “For a less formal process without
July 2013 SA Real Estate Investor

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