Managing the hard earned cash
© W. Tong (082 922 5269; wtong@vodamail.co.za)
The Money Battle
1.
Sussing out the enemy (A company’s job
is to make money from you; your job is to
stop it.)
2.
The golden cuffs (Debt isn’t bad; bad debt
is bad. Understand the difference.)
3.
Preparing for war (You need skills and
tactics to be a top consumer; common
sense isn’t enough.)
4.
The Battle Plan (Plan to succeed)
1 Timothy 6:6-8
6 Yet true religion with contentment is
great wealth. 7 After all, we didn’t bring
anything with us when we came into the
world, and we certainly cannot carry
anything with us when we die. 8 So if we
have enough food and clothing, let us
be content.
 Holy Bible, New Living Translation, (Wheaton, IL: Tyndale House
Publishers, Inc.) 1996.
Hebrews 13:5
Keep your lives free from the love of
money, and be satisfied with what you
have. For God has said, “I will never
leave you; I will never abandon you.”
Let us be bold, then, and say: “The Lord
is my helper, I will not be afraid. What
can anyone do to me?”
 Good News Bible: Today’s English Version, American Bible
Society, (1992: New York, NY) The Living Bible.
James 4:3
“And when you ask, you do not receive it,
because your motives are bad; you ask
for things to use for your own
pleasures.”
Good News Bible: Today’s English Version, American Bible Society, (1992:
New York, NY) The Living Bible.
Know your enemy
 “A company's job is to make money; it
is NOT there to help you, it is NOT your
friend. They spend billions on
advertising, marketing, and teaching
their staff to sell; all to make you part
with your cash, even when you
shouldn't!” *
* Martin Lewis – Teen Cash Guide (www.moneysavingexpert.com)
A company’s objective:
1. Make shareholders rich by making
profits from products and/or services
Note:
 Good products/ good service is the
means toward the end
 You are the person from whom the
money is going to get taken from
 Maximise the profit from each customer
Marketing’s – Aspirational appeal
1. Appeal to the senses
2. Appeal to status
3. Appeal to icons
4. Appeal to life style
5. The feel good factor
Locking in the suckers
Basic truths
1. Get the most from each customer eg. Cell phone
packages
2.
Get the customer in for the long haul eg. Contracts
and monthly payments
3.
Get the customer to spend the most money with
you
4.
Get the customer to spend more on the premium
product than on the lower end
5.
Get the customer to be brand loyal
The shoppers appeal
Enticing the shopper:
1. The store layout.
2.
Feeling hungry?
3.
Eye-level isn’t the best level.
4.
Not all sales are ‘super!’
5.
Spot the sweets and magazines by the till
* Martin Lewis – Teen Cash Guide (www.moneysavingexpert.com)
Are you good with money?
Which of these two girls would you say is best
with cash?

Sally the Saver: She has £400 for a holiday.
She spends £250 on a budget flight to Rome,
and stays in a youth hostel managing to save
£60 of it.

Silvia the Savvyspender: She also has £400
for a holiday. She manages to find a bargain
business class flight to New York, stays in a
nice hotel with a pool and gets discount
theatre tickets but spends the whole £400
* Martin Lewis – Teen Cash Guide (www.moneysavingexpert.com)
Help yourself
Tough truths:
1. No one is ever going to teach you what
the best way to spend is.
2. No one is ever going to write a budget for
you, or watch to ensure you stick to it.
3. No one is ever going to tell you the best
way to borrow money, should you need to
do so.
4. YOU have to learn how to do all these
things for yourselves.
5. YOU have to become as clever as the
companies who are trying to get your
cash.
* Martin Lewis – Teen Cash Guide (www.moneysavingexpert.com)
A brainwave – if you are broke
Seeing the “hottest, coolest, gotta have”
thing in the shop window. What do you
do, sport? What do you do?
3 Questions *
1. Do I need it?
2. Can I afford it?
3. Can I get it cheaper somewhere
else?
* Martin Lewis – Teen Cash Guide (www.moneysavingexpert.com)
A brainwave – if you got moola
Seeing the “hottest, coolest, gotta have”
thing in the shop window. What do you
do, sport? What do you do?
3 Questions *
1. Am I going to use it?
2. Is it worth it?
3. Can I get it cheaper somewhere
else?
* Martin Lewis – Teen Cash Guide (www.moneysavingexpert.com)
Bob Always Broke

Bob recently got the Nokia 1208 but he
went to Vodaworld with James and his
mates and he saw this incredible deal. You
won’t believe it!!! A Nokia 5800 – 3.2m pixel
camera, High Res 3.2” display, stereo
surround sound, touch screen. His got
some cash but not enough. He’s also got
his credit card with him. And they offer
other good credit terms at the counter

What should he do?
Brittany Deep Pockets

Brittany, who’s dad is very rich, and
Amy recently went to the Sandton City
fashion week and she saw this terrific
designer outfit for just R7,500. It would
normally go for R10,750 but being a
special promotion for the fashion week
you get 30% off. Can you believe that
30% on a one of a kind designer outfit
from Laurent Devereaux!!! Ooh..

What should Brittany do?
A word or two on…
Brands
1. An excuse to charge a premium
2. Meant to lock you into fashions
Fashions
1. Always change
2. They are recycled
3. It’s the biggest business success of all
times
The golden cuffs
Debt
1. What is debt?
2.
What is an interest rate?
3.
Good debt vs bad debt?
The challenge
Romans 13:8

(CEV) Let love be your only debt! If you
love others, you have done all that the
Law demands.

(GNB) Be under obligation to no one--the only obligation you have is to love
one another. Whoever does this has
obeyed the Law.
What is debt?

A contractual obligation to pay a certain
amount of money to someone in return
for some good or service over a period
of time at a specified interest rate.
What is an interest rate?

No its not the level of interest shown to
you by the sexy store clerk when she
sells you the thing you don’t need!
 The
interest rate is the cost of
using someone else’s money!
 It
can be simple interest or compound
interest.
(A)Simple interest
 R10,000 at 10% interest rate per annum.
How much do you owe at end of 10 years?
(B) Compound interest
 R10,000 at 10% interest per annum
compounded monthly? How much do you
owe at end of 10 years?
(C) Answer: (A) R20,000; (B) R27,070
Which is better?
You already bought a house on credit and
now consider buying a car on credit. The
car salesperson offers you a R40,000 rand
deal on the car at 20% interest over 5 years
and you only pay R1,059 per month.
 Your friend advises you that you can buy
the car on your bond at 13% over 20 years
and that is a lower monthly payment of
only R468 p.m. This is better than what the
car dealership is offering you.

 Which
one will you take?
The interest effect
Payments on the car dealership deal
 Monthly pmts R1,059
 Total pmts over 5 years = R63,585
 Total interest is R23,585
Payments on the friend’s advice (BOND)
 Monthly pmts = R468
 Total

pmts over 20 yrs = R112,471
Total interest is R72,471
Good debt..bad debt…know the
difference *
 A.
You want to go on holiday
because you haven’t been away
for three months, but you’d need
to pay for it on a credit card.
Good debt or bad debt?
* Adapted from Martin Lewis – Teen Cash Guide (www.moneysavingexpert.com)
Good debt..bad debt…know the
difference *
 B.
You recently got married and
now it’s time to get your own
house. You need to borrow
money by getting mortgage in
order to do so. Good debt or bad
debt?
* Adapted from Martin Lewis – Teen Cash Guide (www.moneysavingexpert.com)
Good debt..bad debt…know the
difference *
 C.
You’ve just got a new job,
moved house and live fifteen
kilometers from work and your
children go to a school that’s
twenty kilometers away. There’s
no public transport, so you
borrow money for a car. Good
debt or bad debt?
* Adapted from Martin Lewis – Teen Cash Guide (www.moneysavingexpert.com)
Good debt..bad debt…know the
difference *
 D.
You have a store card with a
limit of R2,500 and you’re off to a
big party tonight. You see some
top party clothes that cost
R1,250, so you go for it. Good
debt or bad debt?
* Adapted from Martin Lewis – Teen Cash Guide (www.moneysavingexpert.com)
The DEATH SPIRAL!!!
You spend more than
you earn
You borrow to make up
the shortfall
More of your income
goes to keeping UP
You borrow more to
keep up
ALL YOUR INCOME IS
USED TO PAY DEBT
DAY OF DOOM
ARRIVES
Credit cards – some pointers
1.
This includes a store card!!
2.
High interest rates (upwards from 25%)
and you pay fees!!!
3.
A card is NOT cash. Buying on credit
means going into debt!!!
4.
The bank is NOT YOUR friend! They want
their money back!
5.
Credit cards require control & discipline
Preparing for War
1.
Businesses are not your friend! (They
don’t offer you the best deal for
yourself but for themselves)
2.
Loyalty is for losers? (Have no
obligation to businesses except to love
the people)
3.
Shop for a better deal for yourself!
Insurance
1.
The insurer is not your friend!!
2.
Insurers view – the law of large numbers; “get a
large # of suckers?”
3.
Is this the Insurer’s view? – minimise payouts;
maximise premiums
4.
Do the prey on people’s fears?
5.
Do they target the existing customers first?
6.
Do they “Sell up!! On sell!!” on you to get more
money from you?
Insurance Tips
1.
Shop around!!
2.
Re-negotiate regularly
3.
Do you really need that “extra”
insurance!!!
4.
Look at what excess you can afford
The Roadmap
1.
Plan to succeed!
2.
Do a budget or a spending plan!
3.
Discipline! A good decision is
worthless if you don’t manage your
decision.
4.
Get an accountability partner!
(Preferably a RESPONSIBLE parent)
Budget example
ANSWERS:
Good debt..bad debt…know the difference *
A. The Holiday.. Bad debt! The clue is in the question. If you can’t afford it and don’t
need it, don’t go into debt for it! A holiday is a luxury that you can live without for a
few months while you save enough money to pay for it a better way.
B. A House. Good debt! Going into debt for some things is unavoidable, and a house is
usually one of them. If you need to get a mortgage to get your own place, find the
best deal you can and consider it an investment in your future – though only do it
if you can afford the repayments and you won’t be hurting the rest of your
finances.
C. A Car. Good debt! If you need a car and can’t buy one out of your own pocket, then
borrow for one wisely. This isn’t bad debt because having the car (as long as you
get a good deal!) will improve your quality of life and enable you to earn money.
Yet as you're borrowing, try and get the cheapest workable car, don’t spend more
than you need to, ensure you budget for your repayments, check that the interest
rate is cheap, and pay it off as quickly as possible
D. Party Clothes. Bad debt! If you got this one wrong, shame on you! Feeling like
you’ve got nothing to wear is no excuse for impulse shopping or buying
something you can’t afford. Even worse is putting this crazy purchase on a store
card, which as you’ll soon see have stupidly high interest rates. Remember, they’re
the devil’s debt – designed to trap you!
* Adapted from Martin Lewis – Teen Cash Guide (www.moneysavingexpert.com)