Joanne Miller: I am a big supporter of owning your own home

Joanne Miller is Managing Director of InvestmentWise, an INSETA accredited financial services training company, which she established in 2002. Joanne started her career in financial services in 1993, working for companies such Investec and Nedcor Investment Bank. Her qualifications include a BComm Honours degree in Financial Analysis & Portfolio Management from UCT, advanced postgraduate diploma in Financial Planning from the University of the Free State and various other industry and training related courses. Joanne is highly respected within the financial services training environment and has worked with a range of corporate clients including the Financial Services Board (FSB), Liberty, FoodBev SETA, Investec, Momentum, Amplats and Tongaat Hulett. In this interview, she talks to us about her money habits.

Are you worried that your personal finances will suffer as a result of SA's political/economic climate?
No, I live quite conservatively, avoid debt and make sure I can afford everything I own or buy. Also, running my own business means I have more control over how much I earn, so as costs go up I need to make sure the business revenues also increase to keep in line with this.

In this economic climate, have you downsized your lifestyle at all?
Not really. But if I were to do so the first areas I would look at would be eating out, where I shop and possibly substituting some of the items I buy every month with cheaper alternatives.

What are you doing to remain positive about your financial well-being during these tough times?
Economic cycles go up and down, so the current environment is at some stage going to improve again. The current climate provides the perfect opportunity for us to look at what we spend our money on in terms of what we actually need (necessities) and what we want (luxuries). It also presents us with the opportunity to investigate possible ways for the family to earn extra income.

Out of all your responsibilities (bills, groceries, etc), what do you find to be the most expensive nowadays?
Probably groceries.

How did your childhood influence your attitude towards money?
I grew up in a home where we lived relatively well but mostly funded by credit. It’s a scary place to be. This definitely influenced both how I manage my personal money and the reason I established my business InvestmentWise to help empower others to take control of their personal finances. I feel strongly about being aware of the distinction between good and bad debt and avoiding bad debt at all costs. As I truly believe we don’t own something until we properly “own” it (i.e. have paid for it).

How do you define financial independence?
It means not needing to rely on anyone else for financial support and being able to afford an unexpected emergency expense or short-term of earnings (i.e. losing your job) without incurring debt.

What is your number one financial priority right now?
Accumulating wealth.

In the event of an emergency, are you prepared financially?
Yes, I always ensure I have some funds available in a short-term savings account. I also have an access bond on my home, which if I do need to I withdraw from. I ensure I pay back into the bond within the next few months. I prefer using this to an overdraught or having to cash in investments at short notice.

Have you ever been broke and how did you did deal with that period of your life?
I was in my early 20’s living in London. I had no prior work experience and was in a foreign country where the rand was worth very little. Within a few months of arriving in London, I ran out of money, had nowhere to live and no job. It was terrifying. I cut my expenses radically and was fortunate to have a good friend who helped tide me over for a few weeks. After numerous sleepless nights and serious job hunting, I soon managed to start earning a regular income.

Why do you think we so easily fall into debt these days?
I think it’s primarily because we buy things we can’t actually afford; especially on clothes and furniture accounts, where you get to take it home now and pay for it later.

If you have the choice between buying a home or investing in shares, which would you choose and why?
I am a big supporter of owning your own home, but probably more from a security perspective than it necessarily being the better investment. If it is a second property then I would go with the shares as it’s important to diversify your portfolio (have money in different types of asset classes).

When you think of a comfortable retirement, what does that mean to you?
Having a home that is paid for and some form of regular income, which will cover all my expenses for as long as I may live. In other words not to have to stress about money and to know that it will last even if I live longer than expected.

What’s the worst money mistake you’ve ever made if you’ve made any? What did you learn from it?
Selling my first home in Sandton in 1999 due to a work transfer to Cape Town. I had bought the flat in 1997 when interest rates were 19% and sold it at a time when interest rates had skyrocketed to 25,5%. Needless to say, I lost money on it, as the property market had hit an all-time low due to the excessive interest rates. Interest rates then dropped down to 14% within the next year and property prices did exceptionally well. It was bad timing on my side and a very valuable lesson I learned about buying high and selling low!

Do you have a budget? Why? Why not?
Yes, it gives me parameters of what I can spend on different expenses every month and ensures I live within my means.

What tools or resources do you rely on to keep your own personal finances in order?
I collect my receipts in an envelope and then check them against my bank statement every month or two. I also have a file with all my investment, medical aid, home loan, motorcar, documents.

Do you have rules for lending money to friends or family?
Yes, I make sure I get the agreement to lend in writing and that we agree on a realistic pre-determined time frame for them to pay me back. I don’t charge interest, but do expect them to honour the loan.
What are your money tips for our readers?

Many people believe that if they earned more money they would be better off financially, but the reality is that it’s often not what we earn but rather how much we spend that is the real problem. So my tips for readers are to be honest with themselves about what they need and what they want so that when times are tough they can cut their spending on wants. Also to avoid buying on credit and try to start saving as early as possible, even if it’s only a small amount, it all adds up over time.