WHAT YOU OWN IN A SECTIONAL TITLE SCHEME

If you invest in a sectional title unit (like a flat, townhouse, etc), just educate yourself on what you own and what you can and cannot do. I got a letter on one of my rental townhouses with an invoice attached. It annoyed me so much to think that the administration company for the Home Owners Association (HOA) doesn't even know what they are doing.

Dear Sir / Madam

RE: INVOICE OWNERS RESPONSIBILITY – x BODY CORPORATE – UNIT x

We address this letter to you on instruction of the Trustees of the aforementioned Body Corporate.

Please find attached the invoice from Plumb xxx for the recent unblocking of a drain at your unit.

Kindly note the account from Plumb xxx is the owner’s responsibility.

Please take note that your levy account will be debited in the amount of R1152.68. Further note if monthly levy payments are made by debit order, this amount will be deducted in full unless instructed otherwise in writing.

Trust you find the above in order.

Yours Faithfully

Off course I didn't find the above in order. I responded immediately by email and followed up within seconds with a phone call. That's how furious I was. Bear in mind, I never even authorised this expenditure. I was never consulted prior to the appointment of the plumber.

Good Day xxx

I don't know anything about this blocked drain invoice. Was this done inside my unit or in the outside of it? Was it my unit's fault. No one informed me of this blocked drain. Receiving this bill is the first time I hear of this problem. Even my tenant was never contacted.

I would have expected to be informed to make my own arrangements if the problem was inside my unit. (Please refer to the Sectional Title Act)

The drain outside my unit, which services the whole block can get blocked for various reasons that are not necessarily my fault. This problem is not my unit's nor mine. This is the problem for the whole sectional title complex.

Regards,

Like I said, I called the lady and she said they will talk to the complex trustees. They really got back to me the following morning with:

Good day

The trustees have confirmed that they will cover the cost.
The cost will thus be reversed from your account.

Regards

What you own in a sectional title scheme

What you buy and own in a complex or sectional title scheme is:

• the mid-point of outer or dividing walls. Where bricks are double, you only own the internal brick. You don’t own the garden, the garage and parking space but you get a right to use it.
• the inside part of the ceiling and nothing above the ceiling. I heard that the amendments include the geyser or allow owners to own or partly own the geyser. Meaning the HOA can decide on this and have you liable for repairs and maintenance of the geyser.
• upper part of the floor, and not the foundation.

The driveway, garden, swimming pool, corridors, parking bay, any external structures and plumbing that is outside your unit is the HOA’s property. These are referred to as the common property. You just have to be clear on that one. If they see a plant they don’t like in your garden, they have a say.

Even if you have a property manager, its your responsibility to know what you own in the sectional title scheme and what your responsibility is. Ignorance is fatal!

All the best with your Financial Freedom search,

SISA

Read More

WHAT WORKS FOR ME

Let us get something straight guys... I am as bad as the next person with discipline and loving nice stuff. I know you don’t believe me but I really am. I love shopping and dressing up among other things. But I have a way to keep my focus on the financial freedom ball. The only way I do that is by committing every single cent I make to some cause. I am amazing at setting priorities, if I say so myself… nudge!

What Works for Me is thinking with caffeine

Even when I am out and about shopping and indulging (which I actually do), I ensure that my priorities are taken care of first.What works for me  is keeping mental notes of what matters in my life.

Financial Independence
I am very clear on what I want. I don’t want to owe anyone, and I don’t want to be anyone’s slave. For the past ten plus years, I worked my butt off to build a cushion that ensures my peace of mind. It’s not always easy but very doable. My first priority was financial independence which I define as being able to live solely on investments. Keeping a job because I love it; it builds on my intelligence; it’s not standing in the way of my happiness, and all the nice phrases that come with job satisfaction. One of the nastiest things I had to witness in the workplace is people fighting for promotions and bonuses. It’s amazing what 10 years or less of hard work can buy. I would rather work on my investments than being desperate to fight for a job.

Time is Money
Starting your wealth building journey early is better than investing bigger lump sums of money later. R500 per month now earns way better returns in the long run than R2000 in five years’ time. Start already. After taking the decision to start, keep at it. Remember your key term “compound”.

What is Really Important?
I’d say for me building and maintaining my emergency fund is right on top of my list of money priorities. I hate feeling helpless when things don’t go as planned. We depleted our EF at some point and are still working on building it. It’s not helping that your expenses grow with yourself and inflation. If I had consumer debt, I would have that as the very first item to tick off my priority bucket list. Then there is retirement. Everyone has to save for a comfortable retirement. As we age, we get to be extremely expensive. Higher security and care needs. And off course in my case, there are parents and parents in law. We try to help ensure that they are comfortable.

Together we can Do More for Real
The only way to do this is involving your partner. On the background is a TV program with a troubled couple as I type this post. The wife has to hide all her credit cards and cheque books from her husband. They have been married for a whooping 16 years. The financial coach told the woman to actually get a divorce because he will never change. I doubt if he is working on changing either. He is adamant that he can change, whilst he got into the marriage with a huge debt he never declared and continued to spend every cent he earns and some more on big boys toys. I had my hands on my head because this situation is never going to change until he loses this woman. And the truth is that she also kept trying to sort him out for far too long without serving him with tough love. As for you and me, we are never going to achieve much without involving the spouse and kids.

Sacrifice for Extras
Whether it’s a holiday, a smartphone, a piece of furniture or a new car that you want, save more for it. Create a saving pocket and pour whatever extra you have on that account. Nothing drives me more than a goal. I am a typical goal driven person. I commit my money in order not to use it. If it’s already in my investments or money market account, I lack guts to withdraw it for unnecessary expenses.
I'm aware that what works for me may never work for you.

All the best,
SISA

Read More

BEFORE YOU QUIT YOUR JOB

With the sky rocketing unemployment rate figures you would think that everyone is holding tight to the jobs that they have. Surprise, Surprise! The reality is that, most of us hate our day jobs and/or work outside our passions such that quitting sounds like a dream. I found myself talking to a friend about important things to consider before one quits his or her day job this afternoon. Here goes:

Gautrain Rides - (Before you Quit your Job)

Before you quit your job to work for yourself consider doing the following:

Draw a Business Plan
Drawing a business plan should be for yourself to get a clear understanding of the industry you are about to join. And YES, quitting without a thorough research of the business you are going to own and run is a bad idea. A business plan is not drawn solely to access funding but to also scrutinize the business idea you have. Have a clear understanding of your service or product, look at the expected income and expenditure, ask questions from the right people in the industry, and, and... This gives you answers to all the question you should ask before you quit your job.

Start Part Time
If possible, test the waters and start your business part time. This is a very tough approach but it works in a lot of business models. If you will be selling stuff, writing or crafting, just start already and see how the market responds. Be careful not to steal time and resources from your employer. Create time outside your working hours to work on your dream. Its quite exhausting but rewarding.

Build a Safety Net
Remember that you may not be getting any profits from your business for the first year or so. Time to build on your savings is whilst you still have a day job. Most people save at least six months to a year’s worth of their expenses to keep them going whilst they are building on their dream. These are the expenses you have monthly and not necessarily your monthly income. Look at stuff like:

• Homeloan, rates, taxes, levies, insurance or rental costs
• Water and electricity costs
• Groceries
• School fees
• Consumer needs like clothing
• Transportation, fuel, insurance and car service and repairs if you own a car
• Medical expenses
• Other unplanned costs

This is bare minimum of what you need. Add a little to what you think covers your budget just in case. You have to be sure you can do without your salary for a year before you quit your job.

Don’t Touch your Pension Fund Planning a business around a pension fund is a bad idea. Your pensions are meant to take care of you at retirement and not a day before that. Your business should have a start-up capital that is saved elsewhere. Invest as much of your pensions as you can in a tax free retirement tool if you have to take them from your employer. This is where most people miss it. Your business should grow to enable you to add into your retirement funds and not withdraw from them.

Reduce your Monthly Budget
A lot of money is wasted on unnecessary luxuries. Cut on all unnecessary expenses before you quit your job. I can immediately think of pay TV (DSTV), take away lunches, take away coffee, and any other unnecessary expenditure. You probably need to start washing your own car and fixing your own lunch.

Get a Mentor
If possible, get a mentor who is experienced in the business of your choice. Getting a free mentor is ideal. A lot of people are willing to share their knowledge and experience. You may even start subcontracting with experienced firms and individuals as you start your business. This is also a perfect way to learn until you have an understanding of how your business works and how you can go about securing your own contracts.

Business versus Personal Income
You may have started on your business already. If so, separate your personal income from the business income. Your business income is for your business needs. It is not to escalate your lifestyle. Your business should be saving for its times of need. A lot of small business owners are quick to withdraw from the business funds before their businesses develop some wings.

Starting and running own business is definitely tougher than being employed. It may look like a bed of roses. It is definitely not. As you start, you work twice as hard as you worked at your day job only to make a fraction of what you earned. Whilst the outcome is rewarding, make sure that the journey is as enjoyable. You cannot cut corners. Make sure you are mentally and financially prepared.

All the best with your plans,
SISA

Read More

BUILDING WEALTH FROM YOUR FIRST JOB

This piece of advice on building wealth from your first job is a letter to my youngest sister who just got her first job as an intern. I am the proudest big sister right now. What makes me even more proud is that she asked for some financial guidance as she starts her career path. It feels good to give needed advice because you are almost certain it will be used. And that I can always follow up later.

SIDE-NOTE:
All of this is what I wish someone told me when I was a twenty something year old starting out in the salary world.
Heck! I wish I got this when I was running a small business as a university student making a modest but sufficient living.
Forget that, I wish I was given some wisdom when I was a school child selling sweets to other learners.

Anyway, let’s get back to building wealth from your first job. Here are a few pointers for you gorgeous sister and any other interested person:

1. Stay out of debt. ALL debt is BAD. I know you will probably need some debt but it is never a good thing to owe anyone. This should be your principle! Credit cards and retail cards are the most toxic of debts. AVOID them at all cost.

2. Bad company corrupts good character. This piece of scripture will keep you in the straight and narrow. Friends who are flashy and materialistic usually think less. Surround yourself with people as smart as and even smarter than yourself.    

3. SAVE, SAVE, SAVE! If possible, save more than 30% of your income every month. 50% would be great. I’m sure you have no intention of working for a boss for the rest of your life. OK, I hope so. Watch your clothing budget!

4. FIRST things FIRST. The first thing you do when you get your salary (besides Spiritual commitments) is to transfer the portion you are saving to your savings account, preferably a Money Market account. This way you start building your Emergency Fund.

5. INVEST! Within your first months of being employed put a portion of the money you are saving in Exchange Traded Funds (ETFs) like satrix. This has to be a bigger portion of your savings. You will see it rise and fall but steadily building up. (I cannot emphasize on this point enough as part of building wealth from your first job). Later on in your life you will have this fund cover all your lifestyle needs in dividends.

When you get braver, you may start investing in stocks. It’s not as scary as it looks. Just don’t buy the products and software that they sell to teach you how to invest. If you prefer, go for property investing like I do. Buy property at below market rate and resell or rent out to tenants. It’s important to remember that NO investment is passive. You work your butt off building wealth with or without investment managers.

6. GROW with your career. You will ultimately get a raise in your job or get a higher paying job elsewhere. Raise your savings and investments with your increase in income. Stick to your percentage of savings and investments.

7. PROPERTY AND DEBT. In South Africa it is better to own your home. You never need to invest in your own home but it has worked out better for me and people I know. This is the only debt that is justifiable to have. When you do buy a house of your own, get a townhouse in a high rental demand, convenient and upmarket area. You may rent this out someday.

8. WARNING: Almost everyone around you will be carrying bucket loads of debt. Most will argue that you cannot live without debt. That’s a lie. A very few people will be debt free and labelled ridiculous names. Choose to be your own person and stay away from the crowds when it comes to your personal finance. You are guaranteed to lose friends over this. Press on; they are not worth it anyway.

There are a number of other ways you can fast track your progress when building wealth from your first job like earning extra from side hustles. For any specific how-to information, click on the active links within this post.

Read More