Adapting your financial plans for the Covid-19 lockdown

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For the Money Makeover candidates, the Covid-19 lockdown has been an unexpected obstacle on their journey to financial freedom. Personal finance expert Maya Fisher-French touched base with Absa/City Press Money Makeover Challenge contestants – here’s how they’re adjusting.

Colen is worried about his investment properties, while Mishack has lost out on overtime pay and Bellah’s construction business has ground to a halt. However, Nono and Catherien’s side gigs have turned into winners. Consultant Peter’s wife is a speech therapist but as she’s unable to see clients, she won't be earning an income. This has come as a blow to the couple who had for the first time in years managed to live within their budget.

Managing tenants as a landlord

Area manager and property inves: Colen has significant debt on his investment properties. Many tenants are university students which is a concern if the universities don’t reopen soon.

Around 70% have paid their rent and others have assured Colen payment will be made at the end of lockdown. Colen is prepared for a one-month rental holiday which can be repaid once the students receive their NSFAS grants.

Tenant credit bureau TPN has a free online rental recovery pack with agreements you can use for your tenants so a payment holiday or reduction to be repaid at a later stage can be agreed on. Go to tpn.co.za.

Use the help that’s available

Construction entrepreneur: Bellah has been hard hit by lockdown. “It’s difficult now because after the financial year-end we do our site inspection briefings. We can then start planning our work for the year.”

Bellah is unable to start work and has no income. She’s waiting for feedback from her application to the debt-relief fund offered by the department of small business development at smmesa.gov.za.

She has a three-month payment relief plan on her Absa cheque account overdraft. Interest will accrue so it’s important she resumes repayments as soon as she can. She can apply for a debt-repayment holiday on her mortgage, although that’s a last resort as interest will be capitalised and extend her repayment term.

Manage increased pressure from extended family

“I’m receiving financial assistance requests from my family and relatives. I need to balance between in-laws and direct relatives,” says Colen.

If you’re in a similar situation start by looking at your budget to see what you can realistically afford. If you’re not travelling or spending on entertainment, can you create a fund to help family?

Setting boundaries and expectations is important. Also help them access the various relief measures – especially through employers who’ve been given relief by the Unemployment Insurance Fund.

Use the time to work on your side gig

TV producer: Nono is fortunate to be employed and paid while on leave. She can work on her body-care products, Salt and Light. She produced hand sanitisers and had an uptick in sales before lockdown.

“Unfortunately, we’ve had to suspend all production of products due to lockdown but I’m grateful we were able to make our mark. Even after this, our hand sanitisers will be needed. We’ve got a preorder of more than 300 bottles of sanitiser for after lockdown ends!” she says.

Personal assistant: Catherien sells cleaning products, aromatic oils and a range of vitamins which has been a huge success as people look for immune-boosting remedies. Her family are also using the opportunity of being at home to redecorate their new house which needed some serious TLC.

Don’t rely on that bonus or overtime

Even if you still receive a salary, you’re unlikely to receive a bonuses or salary increase this year. This needs to be built into your financial plan.

Communications specialist Mishack has lost overtime money because events have been cancelled.

Use the opportunity to save

You’re not eating out, travelling or impulse buying, says finance expert Maya Fisher-French. This is the best opportunity you may ever have to pay off debt and start saving. Use this time to start a proper budget – go through three months of bank statements and work out how much it really costs you to live.

As you’re not driving, some insurance companies are offering premium reductions as the risk of accidents has been reduced. If your income has been reduced and you have contractual savings such as a retirement annuity or endowment, ask for a premium waiver.

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