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Your Debt Doesn't Define You · She's On The Money

0:00
Speaker 1: Hello, my name's Santasha Nabananga Bamblet. I'm a proud yor
0:04
Speaker 1: the Order Kerni Whalbury and a waddery woman. And before
0:08
Speaker 1: we get started on She's on the Money podcast, I
0:11
Speaker 1: would like to acknowledge the traditional custodians of the land
0:14
Speaker 1: of which this podcast is recorded on a wondery country,
0:18
Speaker 1: acknowledging the elders, the ancestors and the next generation coming
0:22
Speaker 1: through as this podcast is about connecting, empowering, knowledge sharing
0:27
Speaker 1: and the storytelling of you to make a difference for
0:30
Speaker 1: today and lasting impact for tomorrow.
0:33
Speaker 2: Let's get into it.
0:34
Speaker 3: She's on the Money, She's on the Money.
0:57
Speaker 2: Hello, and welcome to She's on the Money, the podcast
0:59
Speaker 2: that's here to remind you that, no matter what's happening
1:01
Speaker 2: in your bank account, your self worth is more important
1:04
Speaker 2: than your net worth. My friends, if we haven't met before,
1:07
Speaker 2: my name is Victoria Devine, and today I wanted to
1:10
Speaker 2: use my solo Saturday episode to talk to you about
1:13
Speaker 2: something a little bit personal. The D word, No, not
1:16
Speaker 2: that D word. I am talking about debt. And it's
1:19
Speaker 2: one of those topics that can feel like a little
1:22
Speaker 2: bit of a dirty word, right but here's the thing.
1:24
Speaker 2: Debt is so common. In fact, I got in a
1:27
Speaker 2: lot of debt. And I mean, I've been thinking, I
1:29
Speaker 2: know plenty of incredibly successful people who have dealt with
1:33
Speaker 2: debt at some point or another in their lives, right
1:35
Speaker 2: including me. I at one point got myself into some
1:39
Speaker 2: pretty serious personal debt. I was in more than forty
1:43
Speaker 2: thousand dollars worth of personal debt between a personal loan
1:46
Speaker 2: that I probably shouldn't have been approved for and a
1:49
Speaker 2: credit card. And the reason I did was because I
1:52
Speaker 2: was living beyond my means and at the time I
1:55
Speaker 2: was so ashamed of it. I was so overwhelmed by it.
1:58
Speaker 2: I literally would like to my housemates at the time
2:02
Speaker 2: about it. And I can tell you now, it was
2:03
Speaker 2: eight hundred and fifty three dollars each and every single
2:06
Speaker 2: month that I had to pay back. That was the
2:07
Speaker 2: minimum amount, and at that point in time, like I
2:11
Speaker 2: was earning just over that amount. So I was earning like,
2:13
Speaker 2: I think about sixty thousand dollars a year, and it
2:16
Speaker 2: was absolutely financially crippling. I just I couldn't see a
2:20
Speaker 2: way out of it, and I judged myself and was
2:23
Speaker 2: so ashamed of how I got here. I thought it
2:27
Speaker 2: was a reflection of who I was as a person.
2:29
Speaker 2: I thought that it made me a terrible human being.
2:31
Speaker 2: And I mean, at that time, I lacked a lot
2:33
Speaker 2: of financial literacy and I just didn't understand it. And now,
2:36
Speaker 2: looking back, I just want to scoop up past me
2:39
Speaker 2: and go, well, you were just doing the best that
2:41
Speaker 2: you could with the tools and the resources that you
2:43
Speaker 2: had at the time, and you made some decisions. They
2:45
Speaker 2: weren't bad decisions, but you made some decisions that weren't
2:47
Speaker 2: in line with your values because you didn't know how
2:50
Speaker 2: to live life in line with your values, because you
2:53
Speaker 2: didn't have the financial literacy you deserved. And to me,
2:57
Speaker 2: looking back on past Victoria, all she did was spend
3:01
Speaker 2: more than she earned. That didn't ever make me a
3:04
Speaker 2: bad person. That didn't ever mean I wasn't smart or intelligent.
3:07
Speaker 2: It didn't have anything to do with myself worth. But
3:11
Speaker 2: that's how it felt, right. And I mean, you're probably
3:14
Speaker 2: thinking at the moment, like vuhy, you're ruining my Saturday
3:16
Speaker 2: with a story about debt and you historically not being
3:20
Speaker 2: very good at money. But debt is not exactly a
3:22
Speaker 2: feel good topic, right, But I want to flip the
3:25
Speaker 2: narrative on that today, I want to empower you when
3:28
Speaker 2: it comes to debt. I'm not saying go get you more.
3:30
Speaker 2: But debt isn't just a financial weight, right. It can
3:33
Speaker 2: weigh heavily on your emotions, and it can weigh really
3:36
Speaker 2: heavily on your self worth. And as I said before,
3:40
Speaker 2: I have been there. Debt has this way of making
3:42
Speaker 2: us feel like we have messed up. But here's the
3:46
Speaker 2: real truth. Debt does not define your worth. Repeat after me.
3:51
Speaker 2: Debt doesn't define your worth. And also wealth doesn't define
3:55
Speaker 2: your worth. Right Like, rich people or people with heaps
4:00
Speaker 2: the money in their bank are not worth more than
4:02
Speaker 2: other people, So why would people in the opposite position
4:05
Speaker 2: be worthless? Debt can feel, I guess, really heavy because
4:09
Speaker 2: of the emotional baggage that it often carries. It's more
4:12
Speaker 2: than just a number in your bank account. It's more
4:14
Speaker 2: than just like that debt statement that you get in
4:16
Speaker 2: the mail or in your emails. It can feel, genuinely,
4:19
Speaker 2: and I say this from an empathetic point of view,
4:22
Speaker 2: it can feel like a personal failure, especially when society
4:26
Speaker 2: loves to put so much pressure on us being financially perfect.
4:29
Speaker 2: But spoiler rella. Literally, nobody is perfect. We all are
4:33
Speaker 2: on our own financial journeys, and if debt is a
4:36
Speaker 2: part of that, that's cool. That's fine. I feel like
4:39
Speaker 2: we go through seasons in life, and right now, if
4:41
Speaker 2: you're in debt, that's just a season of your life
4:44
Speaker 2: that you are going through. And that's cool because if
4:46
Speaker 2: you're in the middle of winter and it feels really cold,
4:48
Speaker 2: you can zoom out a little bit, as you know,
4:50
Speaker 2: I love to say when in doubt, zoom out, but
4:51
Speaker 2: you can zoom out a little bit, and you just
4:53
Speaker 2: know that someone's coming. And like, if there's no rain
4:57
Speaker 2: during the winter, the flowers aren't going to bloom in summer.
5:00
Speaker 2: There have been numerous studies that have highlighted the undeniable
5:05
Speaker 2: connection between debt and mental health. I don't know why
5:09
Speaker 2: more people aren't talking about this, and the results are
5:12
Speaker 2: consistently painting a very upsetting picture. Right Financial debt doesn't
5:18
Speaker 2: just impact your wallet or your ability to create wealth
5:21
Speaker 2: or buy a house or move in with your partner.
5:24
Speaker 2: It seeps into every single corner of your life with
5:27
Speaker 2: significant impact on your mental and physical health. So whether
5:32
Speaker 2: it is stress or anxiety or even depression, the weight
5:35
Speaker 2: of debt can be overwhelming, and research across the board
5:39
Speaker 2: says that the more debt people seem to accumulate, the
5:43
Speaker 2: worse off their mental health outcomes seem to be. So
5:47
Speaker 2: let me give you an example. In twenty nineteen, there
5:50
Speaker 2: was a study that found that individuals with high levels
5:53
Speaker 2: of debt reported significantly higher levels of stress and anxiety.
5:58
Speaker 2: Another study was done at about the same time showed
6:01
Speaker 2: that unmanageable debt often led to depression, and it highlighted
6:05
Speaker 2: that it's actually not just the amount of debt, but
6:08
Speaker 2: help people perceive their ability to manage it that can
6:11
Speaker 2: actually trigger serious mental health issues. So debt doesn't just
6:15
Speaker 2: impact your mood either. It can disturb your sleep. And
6:18
Speaker 2: I can attest to this, like literally, when I was
6:21
Speaker 2: in debt, I used to stay up all night and
6:24
Speaker 2: I didn't know why at the time, Like obviously I
6:27
Speaker 2: was thinking about my debt, and I was stressed about
6:29
Speaker 2: my debt, and I was wondering how I was going
6:31
Speaker 2: to pay it off, and like if I wanted to
6:33
Speaker 2: do something, I was like, oh my gosh, how am
6:34
Speaker 2: I going to afford my debt payment? And this, But
6:36
Speaker 2: there was a study in twenty twenty that linked financial
6:40
Speaker 2: stress to disrupted sleep patterns, which often worsen anxiety. I mean,
6:45
Speaker 2: everything's worse at three am. Right. Relationship strain is also
6:49
Speaker 2: really common when you are in debt. It's the number
6:51
Speaker 2: one thing that couples fight about, right because emotional struggles
6:55
Speaker 2: can actually lead to being emotionally distant and even fighting
6:59
Speaker 2: with your partner. And some people that are in debt
7:02
Speaker 2: actually turned to very unhealthy coping mechanisms. They might get
7:07
Speaker 2: involved in substance abuse. And it was actually highlighted in
7:10
Speaker 2: a study that linked financial stress to an increased likelihood
7:14
Speaker 2: of using alcohol and drugs and all of this. It
7:17
Speaker 2: actually just shows us and distills down the relationship between
7:20
Speaker 2: debt and mental health, and it shows us that it
7:23
Speaker 2: is a very in vicious cycle, and it's one that
7:25
Speaker 2: affects more than just the dollars in your bank account. Right.
7:29
Speaker 2: But let me tell you right now, as I said before,
7:32
Speaker 2: debt does not define you. And I know that if
7:34
Speaker 2: you're listening to this, you're like, yeah, but why do
7:36
Speaker 2: I still feel like trash about it? V? I get it,
7:38
Speaker 2: I've been there. Having debt actually doesn't make you an
7:41
Speaker 2: irresponsible human being. It doesn't mean that you're bad with money.
7:45
Speaker 2: I think there's a massive misconception that if you are
7:48
Speaker 2: in debt, you must be bad at managing money, and
7:52
Speaker 2: that is actually not the truth. Like for some people
7:54
Speaker 2: it might be let's be honest, but it's not actually
7:57
Speaker 2: the truth. It's not a reflection of your car. It's
8:00
Speaker 2: just a financial tool. And if you haven't been good
8:04
Speaker 2: at using those tools, because no one taught you how
8:06
Speaker 2: to use the tools, I can teach you how to
8:08
Speaker 2: use the tools and you can get back in control
8:11
Speaker 2: and you can control your life instead of that feeling
8:14
Speaker 2: of being in debt controlling your life. So let's talk
8:17
Speaker 2: about some numbers for a hot second. Did you know
8:20
Speaker 2: that here in Australia, consumer debt is actually in the trillions,
8:25
Speaker 2: not billions, trillions. That's credit cards, personal loans. Obviously mortgages
8:30
Speaker 2: fall into a part of that. Honestly, debt is a
8:32
Speaker 2: part of life for most Australians. So if you're feeling
8:35
Speaker 2: like you're the only ones struggling with it, and you're
8:38
Speaker 2: a bit like past Victoria and you're like I don't
8:39
Speaker 2: want to talk about this, you're definitely not alone. Life happens, right,
8:43
Speaker 2: and we can't control it. And I mean over the
8:45
Speaker 2: last few years going through COVID, we literally have seen
8:49
Speaker 2: it play out for us, whether it's medical bills or
8:52
Speaker 2: trying to put yourself through university to give yourself the
8:54
Speaker 2: best possible chance to create the life that you deserve
8:57
Speaker 2: or you wanted to, you know, invest in homes you've
9:00
Speaker 2: got a mortgage debt is often just part of that journey. Debt.
9:05
Speaker 2: It's not actually good or bad. It's actually very neutral.
9:09
Speaker 2: It's a tool, and it's a bit like a hammer, right,
9:12
Speaker 2: and what you do with that tool is what matters.
9:15
Speaker 2: So think about, like I guess, your hex debt or
9:19
Speaker 2: you know, any debt you went into to study and mortgages.
9:21
Speaker 2: These are often called and I often refer to them
9:24
Speaker 2: as good debts because they're actually helping you build something.
9:27
Speaker 2: So whether that is your education or it's your home,
9:30
Speaker 2: you're kind of investing in your future. And these are
9:33
Speaker 2: what I would call, I guess examples of debt that
9:37
Speaker 2: is opening doors for you. I mean it might feel
9:39
Speaker 2: all consuming and overwhelming, but like skip ahead thirty years.
9:43
Speaker 2: If you have a really good education, it is very
9:45
Speaker 2: likely that you are going to have a higher income.
9:48
Speaker 2: It's not to say that you have to have a
9:50
Speaker 2: really good education to have a high paying job. We
9:53
Speaker 2: see on money diaries all the time people absolutely killing
9:56
Speaker 2: it without an education. We also see people purchasing homes
10:00
Speaker 2: and their mortgages stressing them out of their brains. But
10:02
Speaker 2: if they've bought in a really good area and they
10:05
Speaker 2: pay off their mortgage over you know, a thirty year period,
10:08
Speaker 2: they're not paying it off earlier, but like that thirty
10:10
Speaker 2: years of paying back a mortgage is really stressful. They
10:13
Speaker 2: pay it back, they're in a really secure financial position.
10:16
Speaker 2: They own the roof over their heads. Right. But sometimes
10:19
Speaker 2: we take on debt that we have to take on
10:23
Speaker 2: because we're going through a really rough patch. So maybe
10:25
Speaker 2: there was a whole heap of unexpected costs, or you
10:28
Speaker 2: really needed a credit card to cover an emergency. That's
10:31
Speaker 2: actually okay, Like I get it. There is no such
10:34
Speaker 2: thing as being financially perfect. It doesn't make you any
10:39
Speaker 2: less capable or any less responsible. Life happens, and sometimes
10:43
Speaker 2: debt is just part of life happening, And it's actually
10:46
Speaker 2: our plan to deal with debt that is going to
10:49
Speaker 2: change the trajectory of our lives, not necessarily whether we
10:53
Speaker 2: have it or not. I mean, I don't want to
10:55
Speaker 2: talk about myself too much, but I was in forty
10:57
Speaker 2: thousand dollars worth of personal debt. It felt all consuming, overwhelming,
11:01
Speaker 2: and I think if you look at what I've done,
11:04
Speaker 2: obviously I am an absolute outlier and what I have
11:06
Speaker 2: done is very different to the norm. But like, I
11:09
Speaker 2: managed to get myself out of that hole with good
11:12
Speaker 2: financial literacy, and at that time I had still a
11:17
Speaker 2: sixty thousand dollars income. I did get a pay rise
11:20
Speaker 2: at that point. I think I was earning clusive at
11:21
Speaker 2: eighty thousand dollars. But I got out of that debt.
11:24
Speaker 2: I saved up for my first home deposit with my partner,
11:27
Speaker 2: having not made any of the money that I've made.
11:29
Speaker 2: Throusella and Cheese on the money, Like, life happens, and
11:33
Speaker 2: we can create a plan that puts you in the
11:35
Speaker 2: best possible position. You don't have to have something that
11:38
Speaker 2: is life changing to change your life. Right, And let's
11:42
Speaker 2: talk a little more about this idea of good versus
11:44
Speaker 2: bad debt. Right, So a mortgage that helps you to
11:47
Speaker 2: build equity in your home, or like your hex debt
11:50
Speaker 2: that sets you up for a better career in the future,
11:52
Speaker 2: are really good examples of good debt because they lead
11:54
Speaker 2: to I guess, long term gains. But on the other hand,
11:57
Speaker 2: you've got bad debt, I suppose, so those high interest
12:00
Speaker 2: credit cards where you're purchasing things that you don't really
12:03
Speaker 2: need and you have the ability, and a lot of
12:07
Speaker 2: people do to spiral out of control if you're not careful.
12:10
Speaker 2: And I mean I have not met one person, and
12:12
Speaker 2: there are hundreds of thousands of you in our shoes
12:15
Speaker 2: on the money community. I've not met one person that said,
12:17
Speaker 2: Victoria Devine, I got a credit card because I just
12:20
Speaker 2: really liked the idea of spiraling out of control and
12:23
Speaker 2: spending beyond my means. I just one day wanted to
12:25
Speaker 2: wake up with an amount of debt that's dropped me
12:27
Speaker 2: from sleeping well, enjoying life and you know, having a
12:30
Speaker 2: good relationship with money. Not one person says that no
12:33
Speaker 2: one gets a credit card with the intention of misusing it, right,
12:37
Speaker 2: No one does that. But even if you ended up
12:40
Speaker 2: in that position, there's usually a reason for it, and
12:42
Speaker 2: the best way to get back on top of that
12:44
Speaker 2: is to deep dive into why, when, where, how, and
12:48
Speaker 2: not judge yourself for it, because even if you have
12:52
Speaker 2: bad debt, It's not the end of the world. It's
12:54
Speaker 2: just that other chapter in your financial story. And with
12:58
Speaker 2: the right plan, you can manage it. We can get
12:59
Speaker 2: out of debt. We can, you know, create a plan.
13:02
Speaker 2: We can see the light at the end of the
13:03
Speaker 2: tunnel together. But I think so many times when you
13:06
Speaker 2: are spiraling out of control, you just overlay this idea
13:10
Speaker 2: that you are terrible at money and that you're not
13:12
Speaker 2: very good at it, and what you need to do
13:14
Speaker 2: is just bury your head in the sand and not
13:16
Speaker 2: deal with and that's actually the worst thing that you
13:19
Speaker 2: can do. So we've talked about debt and how it
13:21
Speaker 2: doesn't define your worth, and I hope that you listen
13:24
Speaker 2: to me about that, but don't get it twisted. It
13:27
Speaker 2: is just a financial tool. Money is neutral. And I
13:30
Speaker 2: guess people in our community and you, my friend, you
13:34
Speaker 2: are not going to let debt define you. And if
13:36
Speaker 2: you feel like it is defining you right now, we
13:38
Speaker 2: are going to change that narrative and we're going to
13:40
Speaker 2: change it today. So I guess the question now is
13:42
Speaker 2: what do you do when you've got debt that feels overwhelming.
13:45
Speaker 2: I don't just want a motivational talk from victoria that
13:47
Speaker 2: says it doesn't define me, that it's neutral. That doesn't
13:49
Speaker 2: help anybody, right, I mean it might get you interested
13:52
Speaker 2: in changing, but like, we need some tools, So stick around.
13:55
Speaker 2: I'm going to go to a really quick break and
13:57
Speaker 2: on the flip side, I'm going to tell you exactly
13:59
Speaker 2: how to change that narrative. Welcome back, my friends. Now
14:07
Speaker 2: let's have a chat about managing debt without the shame,
14:10
Speaker 2: because that's seemingly where a lot of us end up
14:13
Speaker 2: getting stuck. When debt feels overwhelming and all consuming. It
14:17
Speaker 2: is so easy to feel so powerless. But my friends,
14:20
Speaker 2: here's the thing. Tackling debt can actually be, or I
14:24
Speaker 2: think it can actually be really empowering because you're not
14:28
Speaker 2: just managing I guess a responsibility that you have, your
14:30
Speaker 2: taking control of your financial journey. You are putting few
14:34
Speaker 2: to you in the best possible position, and I promise
14:36
Speaker 2: she's gonna thank you for that. Like, can you imagine
14:39
Speaker 2: if today you're looking back on your journey and you're
14:42
Speaker 2: like far out, Like I cannot believe that I was
14:45
Speaker 2: so good to current me because I paid off all
14:48
Speaker 2: that debt and I'm not in it right now. That's
14:50
Speaker 2: such a win, and you're putting yourself in that position.
14:54
Speaker 2: I would say, and I've said it before on the podcast,
14:56
Speaker 2: I believe that looking after your finances is the highest
15:00
Speaker 2: form of self care that can exist. So taking steps
15:03
Speaker 2: to handle your debt, whether it is small steps like
15:07
Speaker 2: creating a budget, or big steps which feel overwhelming, like
15:10
Speaker 2: negotiating with creditors, or just being really proactive, it's a
15:14
Speaker 2: way of looking after yourself and looking after your future.
15:19
Speaker 2: Because I promise once you take that step, you'll realize
15:23
Speaker 2: it's not as big and scary as it currently feels.
15:27
Speaker 2: And I know that you've got this. I know that
15:29
Speaker 2: you are able to do this, and I'm here, our
15:33
Speaker 2: community is here. You're not alone in this process. You're
15:35
Speaker 2: not doing it by yourself. So if it is feeling
15:39
Speaker 2: like if you're listening to this and you're like V
15:40
Speaker 2: it's actually insane, Like I actually can't deal with this,
15:43
Speaker 2: this is all too much, you know what I do?
15:46
Speaker 2: I'd start by calling our friends at the National Debt Helpline.
15:49
Speaker 2: I'll obviously put their number in the show notes. It's
15:52
Speaker 2: a not for profit service that I have worked with before.
15:55
Speaker 2: I love them. I think that they are absolutely incredible.
15:58
Speaker 2: They are people just like you and me. They provide free,
16:01
Speaker 2: independent and confidential support to help people tackle their debt problems.
16:06
Speaker 2: I promise they are not lenders and they don't have
16:09
Speaker 2: anything to sell or they don't make money from you.
16:12
Speaker 2: They are legitimate professional financial counselors that are there to
16:15
Speaker 2: offer you guidance and practical advice on managing debt, and
16:19
Speaker 2: they have seen it all. I promise going to them
16:23
Speaker 2: it shouldn't be embarrassing going to them and laying it
16:25
Speaker 2: all out on the table. They'll go, yep, no worries,
16:27
Speaker 2: what else? And when you say no, that's it, you'll
16:30
Speaker 2: be like, oh, it's not as bad as I thought
16:32
Speaker 2: it was going to be. So don't be afraid of them.
16:35
Speaker 2: I promise. They are just like you and me, and
16:38
Speaker 2: you know what, they're probably better than me. They spend
16:40
Speaker 2: their entire life working for a company that helps people
16:44
Speaker 2: just like you get out of debt. Like they're on
16:46
Speaker 2: your side. They're not going to crucify you for where
16:49
Speaker 2: you've been. They're just going to help you create a
16:52
Speaker 2: bright future. The other thing I would say here, which
16:55
Speaker 2: can feel really overwhelming, is don't be afraid to reach
16:58
Speaker 2: out to creditors. I mean, at the end of the
17:00
Speaker 2: what's the worst they can say no, feeling intimidated. I
17:03
Speaker 2: get it, But many creditors are very willing and very
17:07
Speaker 2: able to work with you on new payment plans that
17:09
Speaker 2: are way more manageable. Or if you're struggling with a
17:12
Speaker 2: heap of debts, you might want to consider, and you've
17:15
Speaker 2: probably heard about this before, debt consolidation, and this can
17:18
Speaker 2: really simplify things by pulling all your debts together into
17:22
Speaker 2: one payment, often with a lower interest rate, that feels
17:26
Speaker 2: less overwhelming. One of the key things I want you
17:29
Speaker 2: to tackle when it comes to your debts is also
17:31
Speaker 2: to understand the different types of debts you have. It's
17:35
Speaker 2: so often that I talk to people and I'm like, oh,
17:37
Speaker 2: are you in debt? They're like, yeah, it's so bad.
17:39
Speaker 2: And then I hear they've got a mortgage, and I'm like,
17:41
Speaker 2: that is a wealth creating debt. Not all debts, my friend,
17:44
Speaker 2: are created equally, So things like credit card debt with
17:47
Speaker 2: high interest rates are very different to a mortgage, which
17:51
Speaker 2: could have a lower interest rate over a long period
17:54
Speaker 2: of time. That helps you create wealth. And understanding what
17:57
Speaker 2: you owe and why is going to help you make
18:00
Speaker 2: much better decisions moving forward. So one of the things
18:03
Speaker 2: I also wanted to talk to you about was interest
18:05
Speaker 2: free loans, and I have spoken about them on the
18:07
Speaker 2: podcast before, but often they could seem like a great deal.
18:11
Speaker 2: I have met so many people and spoken to so
18:13
Speaker 2: many people in our community who think that this is
18:15
Speaker 2: going to be the answer to their problems. You can
18:17
Speaker 2: take all of your credit cards with high interest rates
18:19
Speaker 2: and you can transfer them to this, you know, interest
18:22
Speaker 2: free loan. But more often than not, there is a
18:25
Speaker 2: catch because even though you're only making minimum repayments set
18:29
Speaker 2: by the lender, you might not be in a position
18:32
Speaker 2: to clear the debt before the interest free period ends,
18:35
Speaker 2: and then they're literally setting you up for failure in
18:38
Speaker 2: the long term. And even though you might be like me,
18:40
Speaker 2: but like my interest rate's seventeen percent, if you read
18:43
Speaker 2: the fine print on a lot of these interest free loans,
18:46
Speaker 2: after twelve months or after twenty four months, it jumps
18:49
Speaker 2: to like twenty two percent interest and that's worse for you, Like,
18:53
Speaker 2: that's going to absolutely cripple you. So what I would
18:56
Speaker 2: be doing is everything literally to avoid surprise interest charge,
19:00
Speaker 2: and I would take control. So let's have a look
19:03
Speaker 2: at debt consolidation. Maybe we can actually use an interest
19:07
Speaker 2: free loan to our advantage. But please make sure that
19:10
Speaker 2: you're either able to pay off the balance before the
19:13
Speaker 2: period closes, or you're able to increase your monthly contributions
19:17
Speaker 2: to that debt to wipe them in time. And when
19:20
Speaker 2: it comes to borrowing any type of money, I think
19:23
Speaker 2: my biggest call out here is please, please please always
19:26
Speaker 2: read the fine print. Now let's talk about by now,
19:30
Speaker 2: pay later. You guys know how I feel about this.
19:32
Speaker 2: Say you're using after pay to buy a two hundred
19:35
Speaker 2: dollar handbag that you've got your eye on. It's on
19:37
Speaker 2: the iconic and you're all over it. In most of
19:40
Speaker 2: our brains, the math is, all right, well, that's actually
19:42
Speaker 2: just like four payments of fifty dollars, and that's so
19:45
Speaker 2: much more palatable. But your brain actually, and this is
19:49
Speaker 2: scientifically proven, your brain actually anchors to the smaller amount
19:54
Speaker 2: of fifty dollars and it makes you feel like that's
19:56
Speaker 2: all you're spending. And if you have been in the
20:00
Speaker 2: after pay traps before, I can almost guarantee that if
20:03
Speaker 2: I asked you what that dress you bought was, or
20:05
Speaker 2: what that bag was, or whatever you put on after pay,
20:08
Speaker 2: I can almost guarantee you don't remember the full price.
20:11
Speaker 2: You just remember what payment came out, and that's what
20:13
Speaker 2: anchoring is. And before you know it, you add another
20:17
Speaker 2: cute top to the cart as well, because what's the
20:19
Speaker 2: difference between fifty and seventy dollars? Right? So only seventy dollars.
20:23
Speaker 2: That's not that much. And after pay his own website
20:26
Speaker 2: actually brags. So if you go to the after pay
20:29
Speaker 2: website and then go to like I'm a small business
20:32
Speaker 2: and have a look, they literally brag to potential merchants
20:35
Speaker 2: that work with them, the average order increases by eighteen percent.
20:40
Speaker 2: They know that you're going to spend more because you're
20:44
Speaker 2: not spending your own money. So while this might be
20:47
Speaker 2: interest free and you might go this is a really
20:50
Speaker 2: good tool for MeV where a costs more is actually
20:54
Speaker 2: in the amount that you're justifying to spend. And I
20:56
Speaker 2: think that just understanding these things can help you make
20:59
Speaker 2: better choices. And some people might be listening to this
21:02
Speaker 2: and going the I'm actually really good at after pay.
21:05
Speaker 2: I use it as a cash flow tool, and I've
21:07
Speaker 2: also spoken about this as a lot before as well.
21:09
Speaker 2: Then the great this tip is not for you, and
21:11
Speaker 2: that is fine. But there are people who don't know this,
21:15
Speaker 2: and there are people in our community who after pay
21:17
Speaker 2: just doesn't work for And I'm one of those people.
21:20
Speaker 2: I know that anchoring works very well on me. I
21:24
Speaker 2: think it's very related to being a little bit neurospicy,
21:27
Speaker 2: where that's the first number I saw, that's all I'm
21:30
Speaker 2: going to remember and moving forward, that number actually makes
21:33
Speaker 2: me feel a lot better about myself than two hundred.
21:35
Speaker 2: So I know what I'm going to anchor too, and
21:38
Speaker 2: I know that to have the best financial health personally,
21:42
Speaker 2: something like after pay or any by now pay later
21:45
Speaker 2: is just not going to fit into my financial plan
21:48
Speaker 2: or my financial modeling. Right. The other thing we need
21:51
Speaker 2: to get really real about is your finance habits or
21:54
Speaker 2: your money habits. And I'm actually here talking about just
21:57
Speaker 2: being brutally honest with yourself and be really hard. Like
22:01
Speaker 2: I remember coming to the conclusion that I'm just not
22:03
Speaker 2: good at money and debt, and this is before I
22:05
Speaker 2: became a financial advisor. I wasn't good at handling money.
22:08
Speaker 2: And how do you handle money? Are you super self
22:12
Speaker 2: aware about how you make money choices or are you
22:15
Speaker 2: a bit head in the sand, Like, are you able
22:18
Speaker 2: to avoid going further into debt and start gaining control
22:21
Speaker 2: of your life? And that can be a big shift
22:22
Speaker 2: because often that involves complete lifestyle shift. So if you're
22:26
Speaker 2: going into debt because you're spending more than you earn,
22:29
Speaker 2: often that is reflective of you living a lifestyle that's
22:33
Speaker 2: actually beyond your means. You might go there. I don't
22:35
Speaker 2: really want to change that, Like I love brunch with
22:37
Speaker 2: my girlfriends, like I love going and buying new activewear,
22:40
Speaker 2: Like this is just for me. I'll work it all
22:42
Speaker 2: out later. Like it does involve being brutally honest with yourself,
22:47
Speaker 2: and that can sometimes be a little bit painful, but
22:49
Speaker 2: I promise by doing that, you're putting yourself in the
22:53
Speaker 2: best possible situation. Let's talk about credit card debt as
22:57
Speaker 2: an example. So, like a zero percent balance trans to
23:01
Speaker 2: somebody who is like me might seem like a golden ticket,
23:04
Speaker 2: but it only works if you transfer the balance and
23:09
Speaker 2: take to that card with a pair of scissors and
23:11
Speaker 2: stick to that repayment plan and pay it off during
23:14
Speaker 2: that interest free period. And people in our community have
23:17
Speaker 2: done that. It's been a brilliant strategy for them. But
23:20
Speaker 2: if you're prone to spending and you're just gonna justify
23:23
Speaker 2: to yourself, which we've all done, like, oh my gosh,
23:25
Speaker 2: actually I I'm going to keep this card in my
23:28
Speaker 2: wallet just in case, for just in case splurges. This
23:31
Speaker 2: is I promise you, this is going to spiral you
23:33
Speaker 2: out of control. And I know that this sounds a
23:37
Speaker 2: little bit lame, but maybe if you're not ready to
23:39
Speaker 2: cut the credit card up completely, you do that thing
23:43
Speaker 2: where you put it in a container of water and
23:45
Speaker 2: chuck it in the freezer, so the card still exists
23:47
Speaker 2: but you can't really access it. Maybe that would work
23:49
Speaker 2: for you, so that the card still exists but you
23:51
Speaker 2: can't really use it, and if you want to use it,
23:54
Speaker 2: it's going to take you some serious thought about how
23:56
Speaker 2: to get back to it at some point. All right,
23:59
Speaker 2: let's pivot away from that and talk about two of
24:02
Speaker 2: the most popular methods for paying down debt. Right, so
24:05
Speaker 2: you've probably heard about them in our community. It's the
24:07
Speaker 2: snowball and then the avalanche methods, and both can be
24:09
Speaker 2: super effective, but they work in completely different ways and
24:13
Speaker 2: are actually suitable for different people. And I think this
24:16
Speaker 2: is where you need to know yourself you need to
24:18
Speaker 2: know your personality type and who you are and what
24:21
Speaker 2: might work now. I don't think it will come as
24:23
Speaker 2: a surprise. I am an instant gratification girly at heart,
24:27
Speaker 2: which is why this first method that I'm going to
24:29
Speaker 2: talk about, the Snowmall method, that's for me, so let's
24:33
Speaker 2: talk about it. It's all about quick wins and it
24:35
Speaker 2: is perfect for people who need a little extra motivation
24:39
Speaker 2: to stay in the game. The idea is relatively simple.
24:42
Speaker 2: What the plan is is you focused on your smallest
24:45
Speaker 2: debt first and then just throw every extra dollar that
24:48
Speaker 2: you have at it. So we're not going to worry
24:49
Speaker 2: about our interest rates for now. We're actually going to
24:52
Speaker 2: think about psychological wins or the fact that you're going
24:55
Speaker 2: to get instant gratification, because what you're going to do
24:58
Speaker 2: is you're going to take your debts and then you're
24:59
Speaker 2: going to list them in smallest balance to largest balance,
25:03
Speaker 2: and then you're going to make minimum repayments on all
25:05
Speaker 2: of them. So we're not going to stop paying back
25:06
Speaker 2: our debts, but we're not going to make just minimum
25:09
Speaker 2: repayments on the smallest one. For the smallest one, you're
25:12
Speaker 2: actually going to take any additional money that you have
25:15
Speaker 2: and pay it off as quickly as you possibly can.
25:18
Speaker 2: And then once that first stet is gone, you're going
25:20
Speaker 2: to take that money that you were using to pay
25:23
Speaker 2: that debt off and you're going to pay the next
25:26
Speaker 2: smallest debt. And it's kind of like building a snowball
25:29
Speaker 2: of momentum, and bit by bit you keep adding what
25:32
Speaker 2: you were paying before to the next one in line,
25:34
Speaker 2: and boom, your debt actually starts disappearing bit by bit.
25:37
Speaker 2: And for me, it's such a satisfying feeling that every
25:41
Speaker 2: time you pay something off, it's kind of like a
25:43
Speaker 2: victory lap that keeps you going. Like I'm the type
25:45
Speaker 2: of person that instant gratification works for, So if you're
25:49
Speaker 2: somebody who like me, I just thrive on seeing results
25:53
Speaker 2: quickly and I need a consistent sense of accomplishment to
25:57
Speaker 2: stay on track. This snowball method, my friend, is for you.
26:00
Speaker 2: I think it's actually perfect if you're just really overwhelmed
26:03
Speaker 2: by debt, because knocking out those smaller balances I think
26:07
Speaker 2: really builds confidence. But it's also not too technical, like
26:10
Speaker 2: there's no maths involved. You just look at which one
26:13
Speaker 2: is the smallest and start paying that off aggressively. But
26:16
Speaker 2: if you're a bit more of an efficiency girly and
26:19
Speaker 2: you're all about cutting costs and putting yourself in arguably
26:22
Speaker 2: the best possible position, then the avalanche method might be
26:25
Speaker 2: more on your page. So this one actually focuses on
26:29
Speaker 2: paying off the debt with the highest interest rate first,
26:31
Speaker 2: which is obviously going to save you the most amount
26:34
Speaker 2: of money in the long run. As I said, this
26:36
Speaker 2: one is arguably the quote better method. But for me
26:40
Speaker 2: when I was paying back my debts, the snowball method
26:43
Speaker 2: worked better for me because again, instant gratification curly. So
26:47
Speaker 2: how do you do the avalanche method? What you're going
26:49
Speaker 2: to do is, instead of focusing on what the smallest
26:51
Speaker 2: debt is, you're actually going to list your debts from
26:53
Speaker 2: the highest interest rate to the lowest interest rate, and
26:56
Speaker 2: we're going to go after the most expensive debt first.
27:00
Speaker 2: So once you've got your list, you're going to make
27:01
Speaker 2: minimum payments again on all your debts. We're not going
27:04
Speaker 2: to not pay any off except for the one with
27:06
Speaker 2: the highest interest rate, and that one you're going to
27:09
Speaker 2: throw all your extra cash at it until it has gone.
27:12
Speaker 2: It might take a little bit longer to get that
27:14
Speaker 2: first debt knocked out completely. But financially, this one actually
27:19
Speaker 2: makes the most sense because you're cutting down on all
27:21
Speaker 2: of those sneaky interest charges. When that I guess first
27:24
Speaker 2: high interest debt is paid off, then you're going to
27:27
Speaker 2: take the money that you were using to paid off
27:29
Speaker 2: and roll it into the next high interest debt and
27:31
Speaker 2: you just keep going from there. It might not feel
27:34
Speaker 2: like you're making progress as fast as the snowball method,
27:37
Speaker 2: but you'll be saving a lot more over time. So
27:40
Speaker 2: if you're somebody who is more motivated by saving money,
27:43
Speaker 2: and you know, having the most control you could say,
27:47
Speaker 2: and you can actually handle the patients it takes to
27:49
Speaker 2: focus on the long game, then I would say this
27:51
Speaker 2: one's definitely for you. It's also the best option if
27:54
Speaker 2: you've got a really high interest debt, like maybe a
27:57
Speaker 2: big credit card balance, because that interest up really fast.
28:01
Speaker 2: But when you're picking the method, I think the most
28:02
Speaker 2: important thing that you do is actually think about you
28:05
Speaker 2: and your personality and what's going to motivate you. So, yes,
28:08
Speaker 2: you might save a bit more interest in the avalanche method,
28:11
Speaker 2: but even the fact that you are considering a method
28:14
Speaker 2: to pay off your debt means that you're going to
28:16
Speaker 2: save money in the long term. For me, the Stoneball
28:19
Speaker 2: method made sense. I'm sure if I went back and
28:21
Speaker 2: calculated it, I could have saved some interest charges. But
28:24
Speaker 2: like I see that as the payment for actually finding
28:27
Speaker 2: the motivation and getting it done. Like, I don't think
28:30
Speaker 2: I missed out on that. And if you wanted to
28:32
Speaker 2: get technical, yes I could have left out money. The
28:34
Speaker 2: Avalanche method might have been better. But at the end
28:37
Speaker 2: of the day, I got out of debt and that
28:39
Speaker 2: was the main goal, and that is what I'm most
28:41
Speaker 2: proud of. I'm running out of time here really quickly,
28:45
Speaker 2: so I just wanted to, I guess touch on something
28:47
Speaker 2: a little bit fluffier, and it's more of like a
28:49
Speaker 2: little reminder for you. You are more than your debt.
28:52
Speaker 2: It is actually just a number on a piece of paper.
28:55
Speaker 2: It doesn't define who you are or what you're capable of,
28:58
Speaker 2: or your thoughts, your feelings, you're belief your values. It
29:00
Speaker 2: doesn't define who you are or what you're going to
29:03
Speaker 2: create with this life that you've been given. Every single
29:07
Speaker 2: person's financial journey is so different, and having debt doesn't
29:12
Speaker 2: take away from your value or your potential or the
29:15
Speaker 2: ability to be successful in the future. I was forty
29:19
Speaker 2: thousand dollars in debt. I was up to my eyeballs.
29:23
Speaker 2: I would cry about it all the time. Eight hundred
29:26
Speaker 2: and eighty three dollars I was paying back each and
29:28
Speaker 2: every single month, and I had nothing extra Like that
29:32
Speaker 2: was a chapter for me, a chapter that was really sad,
29:36
Speaker 2: and I didn't feel my best, and I felt like
29:39
Speaker 2: it defined me. But I feel like I'm a very
29:42
Speaker 2: good example of coming out the other side. So does
29:45
Speaker 2: being in debt define who you are? Absolutely not. I
29:48
Speaker 2: think what matters the most is actually how you're planning
29:50
Speaker 2: on moving forward. It's not about perfection or creating a
29:54
Speaker 2: debt free life tomorrow. It's actually about understanding that debt
29:58
Speaker 2: is just part of your financial story to chapter, and
30:01
Speaker 2: you actually have the power, like the complete power to
30:04
Speaker 2: write the next chapter in a different font. So be
30:08
Speaker 2: kind to yourself, show yourself some compassion, and know that
30:12
Speaker 2: tackling your debts, I would say it's very brave, but
30:16
Speaker 2: it's also a really important step and one going in
30:19
Speaker 2: the right direction. I think that being in debt it
30:23
Speaker 2: can be overwhelming and all consuming, but I promise it
30:25
Speaker 2: doesn't define who you are. I have run out of
30:29
Speaker 2: time now, so I'm going to stop going on about it.
30:32
Speaker 2: But I think that you are brilliant. I think that
30:34
Speaker 2: if you have listened to this entire episode, hopefully it
30:37
Speaker 2: resonated with you. And if it did strike a chord
30:40
Speaker 2: with you, please don't forget to subscribe because it helps
30:43
Speaker 2: me to continue to bring this content to you on
30:46
Speaker 2: a weekly basis. And I hope you have a beautiful
30:48
Speaker 2: weekend and I will see you bright and early on
30:51
Speaker 2: Monday for a money diary. Bye. Shared on She's on
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31:10
Speaker 2: an investment or financial decision. If you do choose to
31:13
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31:17
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