We have entered a period unprecedented in our history in terms of the scale and the effect it is going to have on our world.
How we all react is going to determine our future as people.
An extract of what Bill Gates said in a long mail: “[I]t is reminding us how materialistic our society has become and how, when in times of difficulty, we remember that it is the essentials that we need (food, water, medicine) as opposed to the luxuries that we sometimes unnecessarily give value to”
There are also many practical things that we need to do.
We discuss a lockdown budget template in this blog post. If you want an Excel version, contact us and we will mail it to you.
Lockdown budget
It is vital to do some financial planning for the lockdown period. The best is to do a budget, with all your income and expenses.
I am aware and have spoken to a number of clients who are not sure how, or if, or when, they will be paid. This makes budgeting very difficult.
We understand the difficult position businesses find themselves in.
We, however, appeal to all business owners to do your own lockdown business budget and try to give your staff a minimum guaranteed amount that you will pay as salary, and if events improve, then it could be more.
Assume you are getting a certain amount, then take off all your expenses.
Remember that things like petrol won’t be used much for 21 days, so adjust your budget and stick to it, particularly if you aren’t sure of your next income.
What should I pay while on lockdown?
In these tough times, I always say look after number one first, otherwise number one can’t look after anyone else.
Look after yourself and your family.
In the spirit of national survival, if you have extra, share with others, if you are an employer, support your employees.
Look after number one first – If you are getting a full salary, then pay all your accounts as per normal.
Maya Fischer French on Moneytalk on eNCA, made a very valid point. Your child may not be at school, or nursery school or creche, but pay them your normal monthly amount, they are also under immense financial pressure and have staff to pay who are also on lockdown.
However, if your salary has been cut, and you have done your lockdown budget, and you can’t afford to pay your debt, your rent, your insurance and policies or part thereof, then you need to act now, and do not just ignore the problem until it bites you.
If you are not going to be able to pay anyone, then let them know. Send a mail to the bank. Do get a letter from work which outlines what and how they will pay you. Get a copy of a bank statement as proof of what you got. Have recent payslips to prove what you were earning.
Stop your debit orders ahead of time so as not to incur the severe penalties for bounced debit orders. If you can only pay some of your accounts decide which are the most important to you, for me, it’s always house then car, then the rest.
Start discussions with your landlord immediately.
Insurance and policies – contact your broker or the institution directly and find out what mechanisms they have in place. You don’t want to suddenly find, when you claim, that you are/were not covered.
Here are some others you may also have to negotiate with:
- vehicle tracking
- phone accounts
- child maintenance
- medical aid
- the security company
- pool service
- garden service.
I think that while the lockdown is in progress many mechanisms will be put in place, they all have conditions, so don’t assume you are going to get some form of subsidy. Some of the banks have put in payment holidays for small business, investigate those. Try to survive on your own without subsidies. If you do qualify for an extension of periods, I don’t expect interest moratoria.
The subsidy cake is only so big, the more people that want a piece means the smaller the piece that everyone gets, so if you don’t need, don’t apply.
Should I apply for debt review while the lockdown is in progress?
- If you are genuinely over indebted, not just short paid temporarily, then yes.
- If you are threatened by your creditors, then yes.
- If you are just panicky in this uncertain time, then no.
- If you have no income at all, then unfortunately, no.
- If one partner will not be going back to work, then yes.
- If you were behind on your debt before the crisis, then yes.
- If you want someone to manage your debt renegotiations, then yes.
