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A costly car radio for my Kedibone

My first financial mistake.

Have you ever played the 30 Seconds board game with someone who doesn’t quite understand the rules? For those with a competitive streak, having a teammate continually blurting out the answers to questions meant for an opposing team could drive them to violence.

Some will say it’s not that serious, right? It’s just a game.

But your team may have lost an opportunity to win, or at least edge closer to the win.

Well, it’s the same with money. Most of us are playing the game of money without knowing or fully understanding the rules. Money, in theory, is simple. But if you don’t follow the rules, you set yourself back or delay any success with it.

Mistakes happen, except that it gets tricky when you become a repeat offender. Financial education is not a trend but something we all need, so that we don’t make avoidable financial mistakes. Not being financially savvy can have a significant impact on the quality of the life you live and place limitations on the future you. 

So, what’s required? Do we need to become investment portfolio experts who understand leverage, or worldly economists who can predict currency movements? 

No, not all. But we do need to become more financially literate by learning basic financial concepts such as interest, savings, budgeting, investing, compound interest and so on.

In 2014 I was driving my ‘Kedibone’ – a 2005 VW Polo that had been a second-hand, hand-me-down purchase.

Kedibone is a Sesotho term for ‘one that has seen it all’, and she probably had seen it all, having been driven by four different people. 

One of the preceding drivers had driven her into a building. She was written off but had somehow been mended. By the time I got her, she was missing a few parts and was a bit of a wounded machine. 

One of Kedibone’s missing parts was a car radio – a crucial element for a young 20-something who wanted to cruise the roads of Johannesburg. One morning, tired of the radio silence, I decided it was time to upgrade my ride. I walked into electronics shop to buy a car radio.

Much to my dismay, I realised that I knew nothing about car radios, so I was at the mercy of an overly-excited sales guy. 

He asked if I knew what I wanted. I said: “A simple radio that has an AUX, USB and Bluetooth connection will do. I don’t need anything fancy.”

He smiled and said “I have just the one for you.” He pointed to a fancy looking radio with a R1 800 price tag. 

I cringed. How could a radio possibly be that expensive?

I had quickly Googled the night before and to my knowledge car radios were around R600. 

“Why is it so expensive?” I asked.

I got the full-on sales pitch, buttered and sprinkled with fairy dust. To this guy this was the future of car radios; it basically did everything. It could almost drive the car for me. His final words to me were: “If you are going to buy a radio, you might as well buy the best.”

Aargh. I was sold, but my bank account wasn’t. I made peace with the fact that I could not afford a car radio. 

I began to head out, telling him that I only had R800 cash and would unfortunately have to look somewhere else. He barely let me finish my sentence. “That’s no problem,” he said. “You can buy it on credit and only pay R178 for 24 months.

Beware the smiling sales guy

“I can make the deal even sweeter for you – we will install it for free,” he smiled.

I needed no convincing; R178 a month for just two years was something I could manage. I took the deal, signed on the dotted line, and left a happy girl with a car radio. 

What I didn’t know was that I was signing up for a costly unsecured loan, at an interest rate of 23% over 24 months.

In other words, after two years I could have bought two car radios or more.

The numbers may look small and irrelevant, but this is the gateway to many financial mistakes for a lot of people.

Many of us take on financial agreements and products without fully grasping the implications. It was a car radio that time, but next time it might be a car and the numbers might run to hundreds of thousands of rands.

I could have saved for that car radio, and it would have taken me less than a year to buy it. I already had R800. But a quicker, yet detrimental option was offered and I craved the instant gratification. So I took it.

Understanding concepts like budgeting, savings and interest rates are not for the wealthy, or to make you rich. Rather, it’s about learning to manoeuvre through life and secure your financial future. Money is so integrated into our lives that every decision we make will have a direct or indirect impact on us at some point. 

So go pick up a money book, or park right here for pointers on how you can ramp up your financial literacy.

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COMMENTS   17

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Really? This on moneyweb? Glad I am not paying for this. More suited to twitter or something.

Why do you say that? Is it because it’s too elementary/obvious, too small an amount (just do the same with a car/house for your own example then), or the quality of the article itself?

I suspect that financial education should start with the young – but perhaps Moneyweb should cater to a slightly more sophisticated financial audience…

I don’t usually comment on the comments but I feel I should make a point.
With respect, you don’t see what we see. Almost every day we get emails from readers asking for basic information on how to manage their finance.
They ask about how to get out of a debt trap, how to set up a savings account or even how to make ends meet.
Sadly, for many of them, they did not grow up in households where they were taught how to budget or the dangers that come with living on debt.
To those of you who feel this kind of content is too elementary, consider yourself lucky. Many of the people reading this right now have not been as fortunate. For them, the cost of not knowing some of the basics of financial management has been astounding.
People are looking for answers but there are few platforms, or institutions for that matter, providing them with a way out.
So, you see, at a moral level, we can’t just provide content for sophisticated investors.
But just because we are speaking to their needs, it does not mean we are in any way are reducing our commitment to provide news to people who want more in-depth coverage.
We pride ourselves in offering thoughtful insight on financial matters and the business sector, and nothing will change in this regard.

Not too bad. He could have sold you a radio for R5000. Now at least you have quality sound whilst sitting in a traffic jam.

…he almost did R178 x 24 = R4,272 for a R1,800 Radio she could have negotiated a discount on with the cash – never mind credit and insurance charges she did not mention

Had this exact same article had been written by Inge Lamprecht under the title “Commandments of a Cheapskate” there would have been gushing praise. Written by a black person it draws automatic fault-finding. Tell me that this is not racially prejudiced behaviour.

By the way, the comment above does not in any way wish to detract from Inge’s journalism. I was an avid reader of “Commandments of a Cheapskate”. My comment above, however, is intended to point to what can be referred to as the micro-aggressions that are an integral part of South African life and that we need to be rid of.

You can’t just assume that if someone is critical of an article that it is due to the race of the author. I personally liked the article, but some people didn’t. So what? Must someone withhold negative comments because it will be construed as racism? That’s actually an insult to the author, who should be afforded the same treatment as her white peers, who are often lambasted by certain commentators on this site.

My comments relate not just to this particular set of responses but to a consistent pattern of responses on this website.

This article for me, starkly captures this phrase most eloquently: truly ‘a sucker is born every minute.’

That’s fine, I’ll give Nicolette a thumbs up.

Been thinking, is it really that bad to supposedly over-pay for a product (or service)? 😉 Give a thought to the salesperson/business also has to make a living, and besides it boosts economic activity and VAT is collected.

Hence, next time I hear of someone that purchased a new BMW M3 (of Alfa Giulia QV) for say R1,4million….I’m not jealous, but happy. Happy in the sense that VAT is collected rather from others, so I don’t have to carry the tax burden as much 😉

Thanks Nicolette. Being tricked into paying R4,272 for something with a sticker price of R1,800 is painful. Paying R273,734 for a car with a sticker price of R192,700 because it’s ‘only’ R2,999 per month can be financially debilitating.

I’m glad you learned this lesson early, hopefully through your journalism more people will too.

It is Moneyweb’s comment sections that reminds one where is at, South Africa. Lord!!!

Is the multiplication sign (the big “X” on that calculator app on your phone) not taught at schools these days?

I deem myself financially literate. I’m a professional person in my mid-fifties and my assets are a few million (unfortunately measured in ZAR, at least I’m a USD millionaire). So why do I like this article? Because it reminds me again of the basics of money management. Because it gives me an opportunity to send the link to friends and loved ones who still don’t get the idea of personal money management. Because it is a real life study case.

I’m looking forward to more articles from Nicolette.

Thanks for the article Nicolette, you saved someone’s financial doom with this.

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