How to spend your bonus or 13th cheque

Getting a bonus or 13th cheque, or even a tax refund from SARS may make you feel like a lottery winner, but if you want to stay in the pound seats, you’re going to have to resist the temptation to go on a holiday spending spree. 

Reduce your debt - total up the interest you paid on credit cards and store cards this past year and see how much you could save over the next 12 months by using your bonus to reduce or even eliminate the balances due.

Shaun Redemeyer from BetterBond Home Loans says homeowners should consider the following alternatives for balancing their budgets and improving the value of their homes: 

1. Reduce your debt 

Total up the interest you paid on credit cards and store cards this past year and see how much you could save over the next 12 months by using your bonus to reduce or even eliminate the balances due. Then restrict use of the cards to emergencies only. 

2. Home maintenance and repairs 

Set aside some of your bonus for maintenance and repairs. This will help you meet your homeownership costs in the next 12 months without wrecking your household budget. 

3. Reduce the capital portion of your home loan 

If you pay R10 000 off a R1 million home loan this December, you will cut a whole six months off your 20-year repayment period and, at the current home loan interest rate of 9.25 percent, save more than R52 000 worth of interest. 

Reducing your loan also helps create a ‘cushion’ against interest rate increases, and gives you room to manoeuvre if you need to borrow against your home in future. 

4. Increase your home’s curb appeal 

You may not be planning to sell right away, but using your additional income now to improve the exterior appearance, the security measures or the garden at today’s prices could translate into significant savings and a quicker sale for when you do decide to put your home on the market. 

5. Start making your home improvement dreams a reality 

If your budget is free of high-interest debt and you’ve set aside money for regular maintenance and emergency repairs, it may be time to think seriously about that sunroom you’ve always wanted, or the remodelled kitchen you keep promising yourself. 

Get some estimates of what your pet project will cost, set a time goal and start saving determinedly so you can pay cash for it.