Highlights in this issue:

    * Discover what has me hot under the collar...
    * Don’t wait till it’s too late…
    * Are these silly slip ups costing you a competitive interest rate…? and more…

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From the pen of Karin Iten

Dear Investment Academy Reader,

If you’ve been following us on twitter, you’ll know that the team and I have been fairly outraged by some of the things that have taken place in the news this week. Firstly, we tweeted about how Eskom plans to shift most of its proposed 34% tariff hike onto big business and higher-income earners. Has Eskom forgotten about the consequences this caused last year when big business (especially miners) were forced to cut electricity consumption by 10%? Now imagine what this hike would do to our already slumping economy!

But that’s not the only thing that left a bitter taste in our mouths. There’s also the story about how unhappy tourists and overseas viewers are about the Vuvuzela’s being blown at Confederation Cup matches. Personally, I agree with FIFA president, Sepp Blatter, who said: “It's a local sound and I don't know how it’s possible to stop it. I always said that when we go to South Africa, it’s Africa. It's not western Europe.”

It’s enough to get anyone hot under the collar. And so is the subject of today’s issue: Common money missteps that can cost you hundreds, if not thousands, of rands. So, without further ado… let’s get down to business!

How to keep foibles from setting you back financially…

Everyone makes mistakes. But not all of them should have you risk your livelihood. When it comes to money matters, even the smallest misstep could cost your dearly. And what’s worse, you might not even be aware of the problem until it’s too late.

That’s why, this week, we’re looking at common money mistakes and how to keep these “financial foibles” from costing you big bucks.

Small mistake #1: Overlooking traffic fines
We’ve all done it – gone too fast in a 60km/h zone or run a red light at 3am to avoid stopping in a dark area. But that’s no excuse for not paying traffic fines. In fact, now that the traffic department is considering following the global trend of debt collection, as opposed to having a criminal case first, it’s more important than ever to stay on top of your fines.

You see, the biggest problem with the new debt collection system isn’t the fact that you’ll be forced to pay the outstanding amount – plus the penalty fee. It’s the fact that by handing your debt over to a credit agency, your credit score is likely to be affected. And this has BIG implications.

Solution: Take care of fines as soon as you become aware of them. Then follow up a few weeks later to ensure payment has been received. Depending on whether you’ve been issued an Instant Summons (a fine issued by a traffic cop) or a 341 Traffic Ticket (a fine issued for a violation caught on camera), you have between 30 days and four months to pay. Make a habit of visiting www.payfine.co.za to check if you have any outstanding fines. Registration is free and the site enables you to pay the fine directly online.

Small mistake #2: Only paying off the minimum
Spending on credit is often what gets us into a mess in the first place. So, make sure you only ever use your credit card in the case of an emergency. As a card holder, minimum monthly payments are your enemy. Consider this: “A fairly typical household with R6,600 of credit card debt, making minimum monthly payments, would take over 25 years to pay off their balance – and that's with a decent interest rate! It's nearly impossible to make a dent in your debt by making minimum payments,” says money management guru Janna Weiss.

Solution: If you’re already carrying a balance, look for ways to step up payments. Talk to your bank manager about the options open to you and, if all else fails, consider taking out a loan to pay the debt off. (At least this way, you’ll be paying off the same amount at a much smaller interest rate.)

Small mistake #3: Missing a bond or car finance payment
Did you know, payment punctuality counts for about 35% of your overall credit score? Depending on the amount you owe, late payments could cause your score to drop between 50 and 250 points. This will affect your ability to get credit approved or qualify for the best interest rate next time you apply for a home loan, credit card, etc. And a higher interest rate means you’re more likely to default on a loan next time around too.

Solution: If you’ve skipped a payment, pick up the phone and call your lender right away! Explain what happened and, if you can, pay the lender immediately. If you can’t, try negotiate a suitable payment arrangement both you and your lender are happy with. Next time, plan ahead – if you won’t be able to make a payment, let your lenders know. They’ll be much happier to help you out if they can see you’re pro-active. And don’t forget to check your credit score on an annual basis. Visit www.mycredit.co.za to apply for your free report.

Small mistake #4: Making an insignificant claim on your insurance
Think twice before you claim for that bathroom window you broke to get into the house when you accidentally locked yourself out. If the cost of replacing it is under R1,000, it won’t be worth your while to claim. If you do, not only will your premiums shoot up, but you’ll probably lose your “no claim” bonus as well.

Solution: Before filing a claim, talk to your broker to help you decide whether to make it or not. If the claim is less than your deductible (that’s the amount you’re obligated to pay by the insurance policy or under R1,000) rather pay for the repair out of your own pocket. And remember, the lower your deductible, the higher the insurance premium, so consider upping this as well to keep your premiums down.

Till next week, here's to your financial freedom…

Karin Iten
For the Investment Academy

PS: Make sure you don’t miss out on the chance to get to know your Investment Academy team better and pick up some fabulous tips. Join us on twitter today!