But before we go there, a few words to clarify what this email is. My main goal in airing it is to share ideas and knowledge that you aren't going to get impartially from anyone else. That's not completely altruistic, becasue enough people enrol on the CrashProof your Business seminars to make it a financially profitable exercise as well. Sometimes the topic is longer than 3 pages - such as last weeks item on sureties. If you chose not to read it because it was a little long - shame. That has to be the most important article that I have ever published. If I had understood some of those issues before I started signing those damn documents I would not have lost everything I had ever owned in 1992.

One Winter's morning in 1993 the local sheriff came to collect all the assets I and my family had acquired in the 35 years that led up to my business closing. The lounge suite; dining room suite; computer equipment; hi-fi; VCR; TV; washing machine; tumble drier; drill - and on the way out the sheriff even removed my wristwatch. I was left sitting on the floor of the empty lounge - and I was so unhappy that I cursed everybody and everything that led me there. I reckon I even added a few new words to the English language!

My wife, Letitia, came home a while later and sat down next to me. "There has to be a reason for this." she said. "Maybe it's so that we can share this stuff with other folk before they get here as well." And that's what I now do for a living - share lifeskills and strategies with business owners. And doing that enriches my life immeasurably as well.

So why am I sitting in the Falcon Creek Spur in Knysna on an excitingly stormy Friday, worrying so much about what you think of me? Because most of us business owners don't have a life! We spend what little free time we allow ourselves worrying about money. And that's usually because we don't spend enough time planning our use of it. Honestly - most of us spend every waking moment focused on our businesses - and less than 1 hour each month thinking about our personal finances. Yet if the point of being in business is for our families to prosper - why does so much of our wealth flow to the banks?

I almost bought a house in Knysna this week. I haven't owned a house since 1992 [when the Sheriff kindly sold it for me]. This means that our lifestyle is very portable. OK, I know I am not going to get rich if I don't own property [at least that's what Mom says] but what sense is there in paying almost 3 times the asking price for a house? [If you take the monthly payments and multiply them by 240 (average bond lifespan) you find that the house is actually costing you 2.6 times the asking price at todays interest rates - and that's with after-tax money!]

Which brings me to the point of this weeks email. The best, guaranteed investment you can make - is to put your excess cash back into your bond and pay it off sooner. Imagine a bond of R100,000 over 20 years at 12%. Your repayment is R1101. At the end of the period you will have repaid R264,240 - out of earnings you have already paid tax on. If you increase your repayment to R1211 [up by 10%], your bond will be repaid in 175 months [not 240]. This means that you will have repaid R212,629. A saving of R51,610. That works out to a guaranteed 11.9% - after tax. Show me any other investment that can guarantee the same after tax return! And the higher the interest rates go - the more your savings. Not rocket science - simple common sense. The Bible says that the borrower is the servant of the lender. Makes you think, doesn't it?

© Peter Carruthers, www.petesweekly.co.za

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