For those lucky enough to get an end-of-year bonus, it’s a tantalising wait for the extra cash to land in their bank accounts.
It is “really easy”, particularly over the festive season, to splurge on little luxuries and impulsive buys, says Leonard Kondowe, national admin hub manager for Rawson Finance.
But while some property experts advise putting a year-end bonus straight into your bond, other areas could probably use the money first.
“Credit card bills, store accounts, personal loans – if you can clear those high-interest debts with your bonus, it can relieve a huge amount of financial pressure come January. School fees will be coming due around then too, so getting rid of additional monthly expenses like credit debt repayments will really help ease your cash fl ow in the new year.”
After clearing short-term debt, Kondowe says putting your bonus into your bond is the best way to get the most bang for your buck. But this doesn’t mean minimum bond repayments will change.
“Your contract with the bank lists specifi c minimum monthly repayments and those figures are binding, no matter how far ahead you may be on your repayment schedule. If you don’t meet your monthly minimums , you’re going to land up in big trouble with your bank and jeopardise the security of your home loan.”
For those keeping cash aside as an emergency fund, Kondowe suggests storing it in their bond instead, and using the access facility to withdraw it again if they face a financial emergency