Be able to pay bond if you lose your job

From time to time, all of us are faced with statistics that matter.

We see that house prices have risen by X percent (or fallen by Y), that food inflation has increased by so much or that electricity in the home has, over two years climbed by an almost pornographic XXX-rated number.

And of course the statistics take much of the reality out of the numbers.

So if you hear that 1,684 companies have gone into liquidation in the first five months of this year and that’s an increase of only 2,8 % compared with the first five months of last year then, typically you’ll say: “Well that’s not too bad, considering. . .”

Or if you hear that liquidations have increased by 35,7% from 283 to 384 those figures also don’t sound too bad considering the many thousands of companies that exist in this country.

However, hidden inside the statistics are the realities.

You see, for every company that goes into liquidation there are several (sometimes very many) people who are involved.

The ordinary people who have bonds to pay (or rentals if they don’t own their own homes); who have commitments (maybe school fees, maybe medical bills, maybe an electricity account); people who rely on a salary and expect it on payday.

Then, at the end of the month, they don’t get paid, even though they were counting on it.

The statistics for liquidations don’t really seem so harsh do they? But consider the number of people who didn’t get paid at the end of the month and then the picture looks a little more desperate, doesn’t it?

You see, what the statistics don’t tell us is just how many people didn’t get paid at the end of January, February, March, April or May this year. Or how many families went without hot water in the morning, without heaters in the evening and without lunch on Sunday.

You might wonder why I’m asking these questions?

The point is that we all have certain expectations and these expectations are directly linked to the predictability that becomes really comfortable when we are salaried people who just have to go to the HR department to sort out some or other hiccup.

Or, in smaller companies, go to the “boss” and just chat to her. Because she will always help you out: she understands how things happen and how you didn’t expect this or that to occur.

But the practical realities are much more severe. You see the only person that will look after you is you. So the responsibility for taking care of yourself or your own family is you and not to the company or the organisation that employs you.

And, just as companies go into liquidation, so too, can you face financial ruin unless you do something about it and recognise it when you are at your most optimistic level (like when you’re buying a new home that you so badly want to own).

Why am I saying this?

Well, all of us have been swept up by the euphoria of FIFA’s World Cup 2010. It has descended into our lives and entered every television set that we can cluster around. And, during all this fun, we have moved away from the realities of the bills.

Postponed them for another 30 days – and bought a 42-inch plasma because the World Cup only happens once in a lifetime.

Loitering in the background are the “statistics” that keep crawling up on us: Liquidations have risen, more and more people are jobless, the investment levels are falling and, while the interest rates are down the demand for credit remains high.

So, amidst all this apparent euphoria, I would ask all of you out there to quietly ask yourself the question: “If the company that I work for went into liquidation and I was without a job, how would I survive?”

There is good news and bad news in this regard. First of all you can take out different types of insurance to give you a “breathing space” if you lose your job. The problem is that it will cover you for a certain period of time and then stop.

The bad news is that getting another job is often a huge problem. I know this. For a long time I was without a job because of the changes that we have seen in our society. But I was determined enough to keep trying and was lucky enough to find the right gap at the right time.

There are many thousands more who have been unable to do so. In fact, there are young people out there, right now, who have bought houses on the strength of a “good job” that they have had for five years or more and they are now unemployed.

And it is these people (both young and old) who are never included in the statistics of the companies that go into liquidation. It is these people who find that they suddenly can’t get another job because, as the number of companies reduce (in the overall economy) so the number of jobs reduce as well.

I have a number of buddies and relatives who have been working for 25 years or more in a particular field and who, now, cannot find a job because they are “too expensive” or “overqualified” or “too old”.

I know, because I have been there myself and suffered the misery and indignity that goes with being unemployed. I have lived with the desperation of “how am I going to feed my family?”.

These are the realities for millions of South Africans and, while I’m not suggesting that we need to descend into the dependence of a welfare state, I am sure that had I known then, what I know now, I would have made many different decisions then.

I suppose that’s a bit like saying that hindsight is an exact science. It is – but that’s not the point. What I’m suggesting, instead, is don’t look at the statistics rather look at what you can do now to protect yourself in the future. Well, here are some of the things you should consider:

- Protect your income through an insurance policy and make sure that you can protect your assets for a while (through suspended payments) so that you can resettle yourself if a predicament hits you;
- Reduce your debt levels as rapidly as you can;
- Take 10% of your income and put it into a savings account before you pay any bills or buy yourself or your loved ones a treat. Without your income, the whole family is at risk;
- Always look for warning signs in the company you are working for. Much as the company might have existed for years and has a good name in the industry, remember that it may be at risk or that you (as an employee) might be at risk too.

Take sensible precautions and take the time to do the irritating paperwork that goes with it. Then, if you do find yourself in the predicament that the employees of 1,686 companies faced during the first five months of this year then you will be able to survive.

And you’ll continue to prosper without losing everything – unlike so many other people who are victims of a company’s liquidation.

*Paddy Hartdegen writes a regular column for Property24.com. The content of his columns constitutes his personal opinion and doesn’t pretend to be facts or advice. Contact him at paddy@neomail.co.za.

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