Billion Rand Bonanza

The recession is biting and the government is reacting. President Jacob Zuma recently announced a 2.4 billion Rand fund to help us get through. The money is going to be targeted to a training allowance and will be taken from the budget of the national skills fund and the UIF. Bailouts have been the order of the day internationally to deal with the financial crisis but instead of just chucking money at dubious companies, this bailout is intended to protect workers. So what will it entail?

• Training allowance of 50% salary
• Not a way to nationalise debt
• Reskill workers in under pressure industries

In the US a large part of the Obama bailout is unaccounted for. Many companies have essentially had their debt written off by tax payer's monies. There has been some dissatisfaction about this. With the Zuma scheme, however rather than writing off debt, companies that are under pressure will have the ability to place workers that they would otherwise have had to retrench into a training scheme under half pay. This may be tough on workers but it is better than no pay and joining the mass ranks of unemployed. The upshot is that the relief will allow companies to weather the recession and have better skilled workers after.

As always the details are where it will stick and the government is expected to release details on how it will work in practise soon. There is of course the danger that companies may place workers in the 'training' programme pay them 50% wages from the government then keep them working on their regular jobs without the benefit of the training programme. This would be a short sighted approach as the programme could be of major benefit to the South African economy in the longer term. The economy is under strain and investment should be in strengthening employment and skills. This programme is a measured response and if implemented correctly could place us at the forefront of the global economic recovery next year.

Grocers taken to task

The Competition Commission is hotting up its campaign to help the consumer. They have initiated an investigation into the supermarket industry. They have a number of concerns about how the industry is structured that may directly affect consumers. While the commission deliberates you can save money and embrace the recession by buying no-name brands.

• Biscuits - R22.04 saved
• Washing powder - R 6.00 saved
• Cleaning fluid - R 3.56 saved

These may seem like small amounts but over a whole month and with a full basket of products you can save hundreds of Rands. The Competition Commission is concerned that price deflation in the agricultural industry is not being passed onto consumers by the big retailers. They are also worried about possible barriers to entry that exist for smaller outfits that can't compete against the big groups buying power.

The basic inputs for both branded and non branded products are the same, the major price differences can be explained by the marketing cost attached to branding. The Commission however is worried about category manipulation whereby competing brands are managed by one function limiting inter-brand competition. This also allows no name brands to be discounted against named brands. The retailers have all stated that they wish to co-operate with the commission.

Embrace the Recession!

Embrace the Recession!

Its official, the recession is here.

Throw in a case of winter blues and a splash of negative media sentiment and you could be in for a long four months. But fear not dear readers, this month we try something a little different - we give you actual savings... that you can use right now!

Some of these ideas won't be new to you, some of them will, but because you know this advice could actually make a difference to your daily expenses, why not actually put some of this into practise? Even if it's just for a month. Then write to us and tell us about it. Better yet, offer some suggestions of your own.

Socialising

Just because the recession is official it doesn't mean that you need to cut down on your social ties completely, it's just time to become a little more savvy on where you go and when you do it. Looking for a drink? Why not socialise during happy hours when you can literally save 50% on everything you buy!

You know when your local has its happy hour, but it is usually a few hours earlier than you would normally go and have a drink, so why not start festivities a little earlier this weekend a take advantage of some lower prices.

Movies

Keep your movie nights to those specially chosen as "half price" nights and try not to splurge on a dinner beforehand or cough up exorbitant prices for popcorn and a drink - rather have something to eat at home beforehand.

Example:

We've used Ster Kinekor in this example, but Nu Metro Movies are half price every Wednesday too...

Saturday Night Movie:

2 x Movie tickets: R90.00

Regular popcorn, regular coke, dairy milk chocolate: R40.50

Total R130.50

Movie special night: 2 x tickets to any show R44.00

Total Saving R86.50

Grocery Shopping

When purchasing basic household goods try to stick to no name brands which offer standardised packaging and no brand name all of which you would usually be paying for.

Example: We compared branded goods to the no name brands offered from Pick n pay....

Branded Goods		No Name Goods
Five Roses Tea-bags	R10.99	No name tagless teabags	R10.95
Parmalat Fresh Cream	R9.99	PnP fresh cream	R7.99
Mccain Country crop frozen veg	R17.99	PnP organic frozen veg	R12.99
Handy Andy all purpose cleaner	R11.95	No-name all purpose cleaner	R8.39
Omo washing powder	R29.99	No name washing powder	R23.99
Bakers choice assorted biscuits	R66.99	PnP assorted biscuits	R44.95
Safari Choice mixed dried fruit	R29.99	No name mixed dried fruit	R15.99
Dettol Soap	R3.95	No name beauty bath soap	R3.29
Elastoplast clear plasters	R12.99	PnP clear plasters	R7.99
Total cost	R194.83	Total Cost	R136.43

Total Saving: R58.40

Shopping for Clothes

This one isn't rocket science, but just in case you need a reminder...

The most obvious piece of advice is to buy quality brands that don't charge a premium for the label, but if you simply MUST have designer brands, then try to buy your seasonal items in advance or at the end of the season you are buying for. Buying in season or just before the season starts means you are most likely paying a premium price for those clothes, so if the finances are in need of some trimming, but you aren't prepared to cut out the chic, time your shopping sprees correctly.

Travelling

With petrol on the increase it is time for South Africans to embrace a custom used all over the rest of the world - car pooling. If you take public transport to work, then there is little you can do to change the cost of your commuting. If you drive a car however, the time to cut down on petrol is now. Find work colleagues who live close to you and arrange a car pool system to cut down on all your travel expenses. One day at a time or one week at a time - any time you aren't driving your car you are saving on petrol costs.

By the way, you are not only saving yourself money, but contributing to decreasing traffic on the roads and pollution in the air.

Dining

Our favourite way to cut down dining costs? Bring your own lunch to work! You know you should, we know you should, and the guy who sells you fast food for lunch everyday know s you should. R35 rand a day on lunch - not when you are trying to cut back on expenses - your mom made you sandwiches for school for more than 10 years - why not return to the past?

R30/day on lunch = R150 a week on lunch = R600 a month on lunch alone. Buy a loaf of bread, some cheese and sandwich toppings and suddenly you can afford the insurance on the car. Makes you think...

If youhave to eat out for dinner, winter is the time to do it. We've all seen how many restaurants ave winter specials, so if you are in need of some spoiling, make sure you take advantage of your local restaurants winter special. Chances are that these will only apply to week night, so do your homework carefully and you could end up eating and drink for two for well under R100. Live in Cape Town? Mail us and we'll send you a list of all the half price specials for this Winter!

General Expenses

It wouldn't be a Justmoney story without us reminding you that youare more than likely paying too much money on a range of financial services you use. Our latest poll revealed that most of our users are spending more than R200 a month on bank Charges - that is unbelievably high in these tough times.

The bank accounts below will charge you less than R100/month and give you virtually everything you need to bank the way you do at present.

Things to remember:

Dont draw money from another bank's ATM - ATM withdrawal charges are avoidable. Draw from your own bank. Always.

Review you insurance

Any idea what your car insurance would cost under a different insurer?
Why not find out immediately here.
Plug in your vehicle details and get real time quotes from a number of South Africa's top insurers.

Heard it all before? Probably. Ever actually put it into practise? Probably not...

For the sake of your sanity why not actually put these ideas into practise? Suddenly you'll find the sun just around the corner and the balance in the bank looking all the more healthy. We'd love to hear your own money saving tips, so why not drop us a mail at info@justmoney.co.za and make some suggestions.

It's official: We are in a recession

Statistics SA released the quarterly Gross Domestic Product figures today. GDP has dropped by 6.4 percent! GDP is 'a basic measure of an economy's economic performance, [it] is the market value of all final goods and services produced within the borders of a nation in a year'. As such it is an indicator of how the economy is doing and is a very important indication of what the government might do to manage the economy next. This drop means we are in a recession. So what do these figures mean?

• Jobs are less secure
• Home loans less available
• Budget planning is imperative!

There has been some speculation that we are heading into a recession and these figures confirm that we have. Recession is defined as two consecutive quarters of contraction rather than growth. In a growth model based economy, contraction, recession and depression are the voodoo words of economic collapse. A growth based rather than sustainable economy will always be worried by lack of growth as many loans are based on the fact that the economy is expected to continue to grow. So in a growth based economy, and the government has signalled that it wants to follow a developmental model, we can expect the government to react to these figures by trying to boost the economy.

One of the methods that the Government has mandated is the Reserve Bank policy of inflation targeting. This is basically an interest rate strategy and we can expect the MPC (Monetary Policy Committee) to cut rates on Thursday 28th May 2009. The announcement will be broadcast live on SABC 3 from 15:00 to 15:30. The fact is we are in a recession and planning your budget has never been more important. Sound personal finance planning now will see you through the lean times ahead until the cycle turns and a new boom market is created. Of course in a growth model economy we will always have a cycle of boom and bust. So with no real change expected there, protect yourself now to survive the economic waves later.

Is the recession receding?

New data published by the Reserve Bank has pointed to the possibility that the recession we may not even be in is starting to lift. This is according to the leading economic indicator which measures expected conditions at least six months in advance. It is still lower over the course of the next year but has started looking up month on month. This means that things may be getting better. So what can you do to beat the recession?

• Always plan a budget
• Compare your credit card interest
• Don't splash out yet
  

This data was also looked at by The Times. Although they were fairly pessimistic about a technical recession being entered as this is the consensus of the economists that they interviewed. The article explains in more detail how the leading indicator works and how it follows the business cycle giving a fairly accurate approximation of trends within the economy. The marginal increase however is still way down on the figures we experienced for much of last year.

Business Day further calls the data indicative of any recession we may enter as being lesser than has been expected. This is marginally good news, but it looks like we will weather the global recession rather easily here in South Africa. The article also carries some more positive comment by economists who do not think that we will enter a recession at all, but rather post minimal growth figures rather than contract. In the face of the global storm we are still fairly decoupled and the crisis comes at us by proxy.

This is not a recession

Get short term loans online with Justmoney

This is not a recession

We are not in a recession.

'In economics, the term recession generally describes the reduction of a country's gross domestic product (GDP) for at least two quarters'.

We are not in a recession.

The problem with a word like recession is that it is big and scary. It sells copy. Bad news is good news. Trevor Manuel the Minister of Finance is telling all who will listen.

We are not in recession.

In socio-nomics peoples mental outlook creates many of the flows in an economy. Too much of the big R and people start acting like they are in a recession and the negative feedback loop starts.

You get scared because we are in a recession so you order less stock thinking that you won't sell enough. The buyer thinks that they are in a recession and doesn't spend expecting to get laid off. This creates a negative feedback loop which will cool the entire economy as the recession sentiment pervades it.

Let me repeat what Trevor has said repeatedly.

We are not in a recession.

Here is what some of the financial news outlets had to say about the whole sorry story.

The Mail and Guardian posed the question to Trevor Manuel 'are we in a recession?' and his succinct reply 'No, we're not'.

The thing is the economy can be talked into a recession but as Manuel put it there was 'an argument that if it walks like a duck and quacks like a duck, it probably is a duck, it probably is a recession, but in technical terms, we're not in a recession'.

Hayibo however came up with their own plan to rescue the economy 'SA to avoid recession by exporting narcotics on SAA'. It may be a joke but exports will be key for us to stay out of a recession.

Exports are subject to changes in the interest rate. There has been a loud clamouring for an early interest rate cut to stimulate the economy and lift it out of 'recession'.

Tito Mboweni the Reserve Bank governor has been hinting at it but it does not look as if it will actually happen. The MPC tends towards the conservative and they understand that interest rate effects take a long time to filter into the economy and a lot of the calls for an early rate cut are merely knee jerk reactions to the closing in of the global economy.

Business Report followed Tito to an investment conference where he stressed that South Africa is not isolated from global economic events and that they will have an effect on us, but he parried and dodged questions relating to whether we can expect an early rate cut.

Justmoney would like a rate cut but trusts the MPC to get the timing right, in the meantime we are going to plan our budget again and increase the levels of our savings.