I have studied the financial disciplines and have also seen the chaos of ’95 in South Africa and what that caused. I have seen who profited and who lost from it. Also trained in banking and understand clearly how the system works, who it profits and who it costs. I know the philosophy behind the making and the use of debt. Also I have studied the economics involved, and in the present situation there is nothing in South Africa’s way of thinking that can prevent interest rate spikes.
When I look at those who have the greatest success in their life I notice that there is no pride and no inpatience in them. Also there is an absence of hasty actions, since those who succeed with great speed also fail with great speed. Rather they are people who built themselves slowly one day at a time.
I notice that it is better to be humbled for a while while I save up, rather than puff myself higher than I am with someone else’s wealth. Since those who humble themselves will grow and those who pride themselves over their latest car will fall when the economy takes it’s course or when their life is hit by a surprise. Do not be ambushed, save your life from what is not needed. The more material things you have the harder it is to be happy. The truth is that happiness does not come from having things, it comes from you. Those who are happy hate physical things.
Those who need will gain nothing, but those who do need nothing will be given more and more. For example: no lenders will give a poor man money, even though he needs it most. Yet, if you already have a million in savings, they will then offer you nine million in credit.
The man who has saved up, and took the “difficult way”, will buy the houses of the man in debt when interest rates increase.
The concept used as an excuse for this (Credit Risk), might confuse some people, but observation shows me that real reason for the issue of debt is greed.
There are no debts between friends: but the lender wants interest – when you are short of money, he is gone you are abandoned. Why do some refuse something that wants them and want something that hates them?
The principle stands: Those who have, will have more. Those who have nothing will have even less than nothing. If you have understanding, you will be able to see through the lender’s pretending. If not you will lose what is not even yours. If you can save a little money, you will soon be given more to save. If you can not save, you will soon owe.
Truth, is obvious and speaks for itself and in the long term the result can be observed. For example, the government wants to target inflation as by the central bank’s strategy, yet at the same time encourages investors to consume debt. How do two wrongs make one right? Does not the markup on debt driven earnings also include the markup of the lender’s interest? So does not debt partially cause inflation by increasing prices? This is not a question that economics can answer. People have gone to study complicated things before learning the simple.
I feel that currently in South Africa, many of us tend to assume loans. Remmember also that the discipline requred to repay the loan is exacly the same as the discipline required to save part of your income for yourself. If some people, and these people know who they are, do not have discipline to save their own money, how do they expect to repay someone else’s money? Only a person who is not in debt is sure. Those who are in debt are never sure, even with the best Risk Manager.
Break life down into it’s simple elements, and you are safe. Who can complicate things that you have already made simple?
We know that the right thing is that which leads to a positive result in the long term. We know that the wrong thing is that which leads to the negative result in the long term. The solution, as my friend William told me, is to say “No”. That simple. Throw debt out of your life, and who can blame you for having thrown it away?