I am thinking of putting about R30 000 into the bond, which will reduce the monthly payment and also using about R20 000 to extend my home, which I think will be a good investment. Do you think this is a good financial plan?

I will also have to purchase my currently company-owned vehicle which will be about R25 000. Should I take this money from the pension value? What should I do with the balance of the pension money? I have an endowment policy right now, paying R399 per month. Must I invest it there, or to another pension scheme?

Answer:
You need to be very careful with this money. Your pension payout should be transferred to a unit trust-linked preservation plan so that it can keep growing until you retire. Your company will be able to give you more information about this.

You should try to pay off your home bond as soon as is reasonably possible. If you are adding a room for resale purposes only, rather hold out until you have found another job.

If you really need the extra space then go ahead and build the addition. It is certainly cheaper to add a room than move to a bigger house. Just be careful in terms of the costs. Get three quotes, and get references on the builders. Take the money for the car out of your retrenchment money, and invest the rest into your bond.

The last thing you want is car repayments when you are unemployed. Bear in mind that it may take you up to four months to find a new job so live as frugally as possible during this time.