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Summer Starter Series: Managing Debt · She's On The Money

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Speaker 1: My name is Tatasha Bamblet. I'm a proud First Nations
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Speaker 1: woman and I'm here to acknowledge country t Glenn Young Ganya, Niana,
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Speaker 1: Kaka yah y and beIN Ahaka Nian Our gay In
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Speaker 1: Mbini yakarum Jar Dominyamiga Umagahawaka Woman Damon Imlan Mbaban Gadabomba
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Speaker 1: In and now in wakah ghan On yak rum Jar
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Speaker 1: water Nadaa. Hello, beautiful friends, we gather on the lands
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Speaker 1: of the Aboriginal people. We thank acknowledge and respect the
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Speaker 1: Aboriginal people's land that we're gathering on today. Take pleasure
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Speaker 1: in all the land and respect all that you see.
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Speaker 1: She's on the Money podcast acknowledges culture, country, community and connections,
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Speaker 1: bringing you the tools, knowledge and resources for you to thrive.
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Speaker 2: She's on the Money. She's on the Money.
1:04
Speaker 3: Hello, and welcome to She's on the Money, the podcast
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Speaker 3: that's here to help you get your finances on track
1:10
Speaker 3: this year. Welcome back to episode two of our summer series.
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Speaker 3: It has been so fun. This series exists for honestly
1:18
Speaker 3: a very simple reason. This time of year, motivation is
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Speaker 3: really high and a lot of you are ready to
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Speaker 3: actually do something with your money. So instead of throwing
1:25
Speaker 3: brand new concepts at you, we're going back to the foundations,
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Speaker 3: the episodes that help you get set up properly no
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Speaker 3: matter where you're starting from. I'm going to pull some
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Speaker 3: of the most important, most practical episodes from the vault
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Speaker 3: and put them right here on the feeds so that
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Speaker 3: you can move through them in order and build momentum
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Speaker 3: without feeling overwhelmed. Each episode in this series builds on
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Speaker 3: the last, so if this is the very first episode
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Speaker 3: you're joining us for, I would love it if you
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Speaker 3: could actually press stop right now, head to episode one
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Speaker 3: of the summer series, which I've linked in the show
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Speaker 3: notes for you, and start there. That episode is all
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Speaker 3: about getting your budgets ordered, and it really is the
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Speaker 3: foundation for everything we are going to be talking about today.
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Speaker 3: Once you know what's coming in, what's going out, what
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Speaker 3: you own, and what you owe, you're in a much
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Speaker 3: stronger position to actually make a plan, and today is
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Speaker 3: exactly about that turning that clarity into action. In this episode,
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Speaker 3: you and I we're diving into debt. How to decide
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Speaker 3: what to tackle first, how to choose a strategy that
2:22
Speaker 3: actually works for your personality and how to get out
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Speaker 3: of that overwhelmed head in the sand feeling that debt
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Speaker 3: can absolutely create for us. This is another one from
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Speaker 3: the Vault, from the very early days of the podcast,
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Speaker 3: but the advice is just as relevant now as it
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Speaker 3: was then. My friend, debt unfortunately hasn't changed. The way
2:39
Speaker 3: out hasn't changed either. What this will change, though, is
2:43
Speaker 3: how confident you feel when you're tackling it. So if
2:46
Speaker 3: you've ever looked at your debts and thought where do
2:49
Speaker 3: I even begin, this episode is going to give you structure,
2:52
Speaker 3: options and a whole lot of reassurance that you, my friend,
2:54
Speaker 3: are not failing. Let's get into it.
2:56
Speaker 2: So you've got a few bad debts and you're ready
2:59
Speaker 2: to pay them off, But where the heck do you
3:01
Speaker 2: start in terms of prioritizing your debts and what tricks
3:04
Speaker 2: are there to actually start paying them off sooner? I know, gi,
3:08
Speaker 2: I know she's got the answers. My name is Georgia King,
3:13
Speaker 2: and joining me as always to answer these questions is
3:15
Speaker 2: Financial Advice of Victoria Devine. Why is debt prioritization so
3:20
Speaker 2: very important?
3:21
Speaker 3: Because if we're in debt, we need to prioritize it.
3:23
Speaker 3: Which is probably the wrong thing to say at the
3:26
Speaker 3: start of an episode, but at the end of the day,
3:29
Speaker 3: often when it comes to debt, and if we are
3:32
Speaker 3: in debt and we are stressed about it, we stick
3:34
Speaker 3: our heads in the sand and don't do what we should,
3:37
Speaker 3: which is sit down and go, you know what, how
3:38
Speaker 3: am I getting out of this place? What am I
3:40
Speaker 3: going to be doing? And what am I going to prioritize? First,
3:44
Speaker 3: Once you make a list of prioritizations, you'll find that
3:48
Speaker 3: you are so much more motivated to actually kick them
3:51
Speaker 3: down and get it done and start seeing progress. Whereas
3:55
Speaker 3: if you haven't made a priorities list and you haven't
3:58
Speaker 3: worked out how you're going to get out of that,
4:00
Speaker 3: you are often more likely to feel just super overwhelmed
4:04
Speaker 3: and like it's never going to happen. So we're doing
4:06
Speaker 3: it one so we can get out of debt, but
4:08
Speaker 3: two for our own mental health jobg a king beautiful.
4:11
Speaker 2: So it's like a plan that'll make us pay down
4:13
Speaker 2: our debts sooner we'll feel more motivated, And that's kind
4:16
Speaker 2: of the gist.
4:16
Speaker 3: Yet, Yeah, and it's all about just understanding as well,
4:19
Speaker 3: like why are we here? How did we get here?
4:21
Speaker 3: Are there some things we need to change, but also
4:24
Speaker 3: what one are we going to pay first? Are we
4:25
Speaker 3: going to pay credit card one or two or three?
4:28
Speaker 3: Or you know, maybe you've got a personal loan, And
4:30
Speaker 3: it's about working out what that looks like. Because often
4:33
Speaker 3: when you have a lot of debts or you're in
4:35
Speaker 3: a situation where there is a number of different ones
4:38
Speaker 3: to prioritize, so often we can feel super overwhelmed, and
4:41
Speaker 3: just putting ourselves in the best possible position is going
4:44
Speaker 3: to mean that we are actually going to get out
4:46
Speaker 3: of these instead of consistently putting it off or just
4:48
Speaker 3: paying the minimum because you're just not sure what to do.
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Speaker 2: Yeah, okay, cool. So before we do get into it
4:54
Speaker 2: V as well, I assume today we're going to be
4:56
Speaker 2: talking about good debt and bad debt. Our OG is
5:01
Speaker 2: going to know exactly what the difference is. But for
5:03
Speaker 2: our newer listeners, can you clarify what it does?
5:05
Speaker 3: Mat I can clarify that. And if you've read my book,
5:09
Speaker 3: which arguably everybody should have, you know that I classified
5:13
Speaker 3: debt in three ways. I classified as good debt, bad debt,
5:16
Speaker 3: and okay debt. So good debts are things that actually
5:19
Speaker 3: help contribute to your wealth creation. So that could be
5:23
Speaker 3: something like a mortgage because over time you're actually creating
5:26
Speaker 3: an asset for yourself. It could be an investment loan,
5:29
Speaker 3: not as common, but definitely worthy of consideration, where you've
5:33
Speaker 3: borrowed money and you've invested in something. It could be
5:36
Speaker 3: a business loan as well. I don't want people to
5:39
Speaker 3: think that any type of loan is negative, but if
5:41
Speaker 3: it's creating your wealth, from my perspective, it's good. Debt
5:45
Speaker 3: doesn't mean we don't prioritize it. We absolutely do, but
5:48
Speaker 3: we don't see it as something that we have to
5:50
Speaker 3: extinguish asap because it's meant to be helping us over
5:54
Speaker 3: the long term. Okay, debt from my perspective is something
5:58
Speaker 3: like a hex debt, So I wouldn't a good debt
6:00
Speaker 3: because at the end of the day, yes, it is
6:02
Speaker 3: helping your future wealth because you're getting an education, but
6:05
Speaker 3: it's still something that is going to impact your cash
6:08
Speaker 3: flow if you have those help repayments coming out of
6:11
Speaker 3: your income each and every single week or month. So
6:14
Speaker 3: with hex debt, yes, it's really important to prioritize and
6:17
Speaker 3: make sure we're paying down, but it's something that a
6:19
Speaker 3: lot of people make the decision to not add contributions
6:22
Speaker 3: to so they might just be paying the minimum for
6:25
Speaker 3: a long period of time, and that's totally okay. And
6:28
Speaker 3: the reason they might not prioritize that is because hex
6:32
Speaker 3: debt or help debt as it's called nowadays, it's just
6:35
Speaker 3: showing my age DORX. That debt doesn't actually accrue any interest,
6:41
Speaker 3: and there's no timeline on paying it, So if you
6:44
Speaker 3: don't earn over a certain amount of money, you don't
6:46
Speaker 3: have to start paying it back, and it only increases
6:50
Speaker 3: in line with CPI or indexation, So that's how much
6:54
Speaker 3: the cost of goods and services increase each and every
6:56
Speaker 3: single year. So it's only accruing I think last you
7:00
Speaker 3: was like one point eight percent, And that's an okay
7:03
Speaker 3: thing to carry given the amount of flexibility that these
7:07
Speaker 3: repayments carry. So if you lost your job, you're not
7:10
Speaker 3: going to be in a position where the government's like,
7:11
Speaker 3: oh my gosh, you have to pay back your hex
7:13
Speaker 3: step what are you doing? Or is the same as
7:15
Speaker 3: not true for a credit card, which I categorize as
7:19
Speaker 3: bad debt. So bad debts are debts that actually stop
7:22
Speaker 3: you from attaining any level of financial freedom. These are
7:26
Speaker 3: things like credit cards, after pay, any type of buy now,
7:29
Speaker 3: pay later scheme, and personal loans. So if you're a
7:33
Speaker 3: bit confused and you're like yeah, but be like, I
7:35
Speaker 3: don't know if it's good or a bad debt. The
7:37
Speaker 3: question is what have you got to show for it?
7:39
Speaker 3: Is it clothes, it's shoes, or is it future wealth.
7:42
Speaker 3: If the answer is future wealth, it's probably good debt.
7:46
Speaker 3: But if it's stopping you from creating your wealth, then
7:49
Speaker 3: that's when we really need to be having a think
7:51
Speaker 3: about prioritizing it and smashing it out asap. So when
7:56
Speaker 3: we look at it, I'm not saying shun credit cards,
7:58
Speaker 3: shun personal loans, like as you know, gee, I've had
8:01
Speaker 3: a personal loan. I've had credit cards. I found myself
8:04
Speaker 3: in a bit of a sticky situation with them. But
8:06
Speaker 3: at the same time, would I change why I used them? No.
8:11
Speaker 3: I used a personal loan so I could go overseas
8:13
Speaker 3: and study because I couldn't afford it in that moment. Yes,
8:16
Speaker 3: a lot of people would say, oh, you should have
8:18
Speaker 3: saved for longer and just done it the year after,
8:20
Speaker 3: but I wanted to do it then, and you know what,
8:22
Speaker 3: it worked for me. So gee, I don't regret getting them.
8:24
Speaker 3: I do regret the amount of stress and anxiety I
8:26
Speaker 3: put myself through and the amount of sleepless nights. But
8:29
Speaker 3: at the same time, I wouldn't change that because that
8:31
Speaker 3: got me to where I am today. But it's one
8:34
Speaker 3: of those things that I wish someone had sat me
8:36
Speaker 3: down and said, Victoria, do you actually understand what this means? So, yes,
8:40
Speaker 3: I was paying for an experience. I wouldn't change it.
8:42
Speaker 3: I had a brilliant time, but I do wish I
8:44
Speaker 3: had better savings habit, so I wasn't in that position
8:47
Speaker 3: in the first place.
8:48
Speaker 2: Yeah, but like, look how far it got you. You
8:50
Speaker 2: learned so much from it, And I guess this episode
8:53
Speaker 2: today it's like not about shame. There's none of that
8:56
Speaker 2: in the Shoes on the Money community anyway. But yeah,
8:59
Speaker 2: we're just going to talk through exactly how you can
9:01
Speaker 2: get ahead sooner. Okay, So let's get into it then,
9:04
Speaker 2: V What strategies are there for debt prioritization? Oh my god,
9:07
Speaker 2: I need a sip of my tea. What is my
9:08
Speaker 2: voice doing?
9:09
Speaker 3: Well? You have a suplico teat while I explain what
9:12
Speaker 3: these strategies are so strategies for debt prioritization there are millions,
9:17
Speaker 3: but I talk about two key methods more often than
9:20
Speaker 3: not because I feel like they actually help the most.
9:23
Speaker 3: And these two strategies are not my own. I didn't
9:27
Speaker 3: create these. I'm absolutely not taking credit for them. I
9:29
Speaker 3: don't know who created them because I feel like they're
9:32
Speaker 3: so universal when it comes to debt reduction, but they
9:35
Speaker 3: work really well. And these two strategies are called the
9:38
Speaker 3: Avalanche method and the Snowball method, and I mean sounds
9:43
Speaker 3: very like ooh, it's a winter festive episode, but both
9:48
Speaker 3: of them actually have nothing to do with the snow
9:51
Speaker 3: or winter. But both of them do accelerate the debt
9:54
Speaker 3: reduction process in their own ways and give you the
9:57
Speaker 3: structure you might be craving to help you get out
9:59
Speaker 3: of debt. So the first one is the Avalanche method.
10:03
Speaker 3: Avalanche Avalanche unsure of which is right in Australia. I'm
10:07
Speaker 3: sure not be corrected on that later G. But essentially,
10:11
Speaker 3: this method of debt reduction sees you paying the highest
10:15
Speaker 3: interest rate first, while still making minimum repayments on all
10:18
Speaker 3: other debts. You're not paying them at all, but we
10:20
Speaker 3: are aggressively trying to get rid of the debt that
10:24
Speaker 3: has the highest interest rate first, and then once that's
10:27
Speaker 3: paid off, you work your way down to end up
10:30
Speaker 3: paying the debt with the lowest interest rate. So there
10:33
Speaker 3: are a number of reasons why you do this. So
10:35
Speaker 3: the goodbits using this method means that you will pay
10:38
Speaker 3: less in the long run money in because you are
10:40
Speaker 3: targeting the debt with the largest amount of interest first,
10:44
Speaker 3: so that you're not accruing a lot of other debt
10:46
Speaker 3: in the background. And it can also speed up the
10:49
Speaker 3: debt repayment process. So by only paying minimum on your
10:53
Speaker 3: other debts and aggressively paying one, you're saving the most
10:56
Speaker 3: interest and that's putting you in the most preferable position.
11:00
Speaker 3: A couple of downsides there always are. Requires a fair
11:03
Speaker 3: bit of discipline, so it's not easy to do these things,
11:06
Speaker 3: and that is okay, but it is about commitment, and
11:10
Speaker 3: it can stay harder to stay motivated because sometimes the
11:14
Speaker 3: debt with the highest interest rate is not necessarily the
11:17
Speaker 3: biggest debt you have. So we need to make sure
11:20
Speaker 3: that we understand why we're doing this and commit to
11:22
Speaker 3: it so that over the long term we get rid
11:25
Speaker 3: of it and stay motivated. In comparison, the snowball method
11:30
Speaker 3: g is exact opposite. Oh that's a bit dramatic. It's
11:33
Speaker 3: not the exact opposite, but the Snowball method is basically
11:37
Speaker 3: the opposite of the Avalanche method, where you pay off
11:40
Speaker 3: and target your smallest stet first, so you completely forget
11:44
Speaker 3: about the interest rates on all of the debts and
11:46
Speaker 3: you just plan on tackling the smallest step first and
11:50
Speaker 3: then you work your way up to the largest set
11:52
Speaker 3: without taking into consideration any of the interest rates. So
11:56
Speaker 3: some people prefer this because there's a number of obviously
11:59
Speaker 3: good bits, and I'll explain those in a second. But
12:02
Speaker 3: some people don't like this because obviously interest rate isn't
12:05
Speaker 3: taken into consideration, and that can make people feel a
12:08
Speaker 3: bit angsty. So, as I said before, there are some
12:11
Speaker 3: good bits. I love this Normall method because it helps
12:14
Speaker 3: you nail smaller goals. Sooner you're going to feel more motivated.
12:18
Speaker 3: You're going to feel more accomplished because you'd be like, heck, yes,
12:21
Speaker 3: I got one debt smashdown and you can move on
12:23
Speaker 3: to the next one. So it makes you feel like
12:26
Speaker 3: you are making more progress than you are with the
12:29
Speaker 3: Avalanche method. Doesn't mean you are or not. It's just
12:32
Speaker 3: usually when you get to close a credit card or
12:34
Speaker 3: get to shut your after pay like that's going to
12:37
Speaker 3: feel really good and keep you on the right track.
12:41
Speaker 3: One of our best mates Dave Ramsey. He's not my
12:44
Speaker 3: best mate gee, but I would like to get him
12:46
Speaker 3: on the show. You guys should do a collab, we should.
12:49
Speaker 3: I think he's pretty picky with who he collabs with.
12:52
Speaker 3: But did you know he collabed with our mate Glenn
12:54
Speaker 3: James from My Millennial Mood on Andrew's podcast on My
12:58
Speaker 3: Millennial Money. Really when he came to Australia, he hung
13:02
Speaker 3: out with Glenn James, and I'm not gonna lie it
13:04
Speaker 3: was a little bit envious because he's known as a
13:07
Speaker 3: bit of a finance whiz in the US. In saying
13:10
Speaker 3: that I do want to stipulate, I don't agree with
13:12
Speaker 3: all of his advice, and there are some things he
13:15
Speaker 3: says that I go, come on, Dave, mate, calm down.
13:18
Speaker 3: But he is really inspirational in this area. So anyway
13:22
Speaker 3: back to what I was trying to say about old
13:24
Speaker 3: mate Dave. He basically says that even though the avalanche
13:28
Speaker 3: method should technically see us paying less. The snowball method
13:32
Speaker 3: is more effective because of personal finance is twenty percent
13:35
Speaker 3: head knowledge, which knowledge knowledge that's not how I would
13:40
Speaker 3: have explained it, but knowledge and eighty percent about behavior,
13:45
Speaker 3: which we do at Cheese on the Money. Absolutely agree
13:47
Speaker 3: with that, and you need some quick wins in order
13:50
Speaker 3: to say super pumped enough to get out of debt completely,
13:52
Speaker 3: So he's not wrong. The snowball method is also easy
13:56
Speaker 3: because you don't have to do any maths. You don't
13:59
Speaker 3: have to think about the interest straight, you don't have
14:00
Speaker 3: to calculate anything. You just start with the smallest debt,
14:03
Speaker 3: start smashing it off and making as many repayments as
14:06
Speaker 3: you can to that small debt to get rid of it,
14:09
Speaker 3: obviously while still making minimum repayments on your other debts
14:12
Speaker 3: please don't neglect them. But it just is a little
14:16
Speaker 3: bit simpler because there's no working things out or calculating
14:19
Speaker 3: interest rate or how much you'll pay over the long
14:21
Speaker 3: term versus how many years. So what are the negatives
14:23
Speaker 3: then be So as I said before, gee, you're going
14:26
Speaker 3: to end up paying more because of the interest factor.
14:28
Speaker 3: But again it's about motivation and feeling like you're smashing
14:32
Speaker 3: it out and it may be a longer journey to
14:35
Speaker 3: becoming debt free, but it's more about what you're actually
14:39
Speaker 3: going to be able to feasibly commit to. It's not
14:42
Speaker 3: about which one's going to save us the most money,
14:45
Speaker 3: because when it comes to debt, we actually just need
14:48
Speaker 3: a plan that works for us personally, not necessarily works
14:51
Speaker 3: best on paper.
14:52
Speaker 2: Yeah, okay, so Avalanche is harder but more effective, not
14:57
Speaker 2: necessarily more effective, but in on paper, more effective, more effective.
15:02
Speaker 3: If we work out what that actually means on paper.
15:04
Speaker 2: Yep. Snowball is potentially easier, but a slower and steadier
15:09
Speaker 2: method of going about things. How do you decide which
15:11
Speaker 2: one is right for you?
15:13
Speaker 3: Well, I prefer doing it based on which name you
15:16
Speaker 3: think is cuter. So like I think snowball Snoble's soft,
15:19
Speaker 3: like Snowball's fun. It was the name of the cat
15:21
Speaker 3: in the Simpsons, Like it just makes sense. Avalanche sounds aggressive,
15:25
Speaker 3: so like, I don't go with it. But more seriously, Gee,
15:29
Speaker 3: it comes down to your personality. It comes down to
15:31
Speaker 3: whether you're someone who has strong discipline to be able
15:34
Speaker 3: to put that extra cash towards debt repayments. So if
15:38
Speaker 3: that's you, I'd probably choose the avalanche method because you're
15:41
Speaker 3: on top of it and you're actually motivated by that.
15:44
Speaker 3: But if you're someone who struggles with self motivation, which,
15:46
Speaker 3: to be honest, I think I would be a snowballer,
15:49
Speaker 3: not an avalancher, because even though it makes logical sense,
15:53
Speaker 3: I just like progress. So sometimes if I see that
15:56
Speaker 3: I owe thirty bucks or something, I'm far more likely
15:59
Speaker 3: to just want it gone and then I feel accomplished.
16:01
Speaker 3: I'm the type of person as well. G When I'm
16:03
Speaker 3: writing a to do list, I write things I already
16:05
Speaker 3: have done.
16:06
Speaker 2: The same same then you highlight them so.
16:08
Speaker 3: That down won you resonate with putting to do list
16:10
Speaker 3: items on the to do list that you've already done,
16:13
Speaker 3: I'd probably say you're a snowballer, okay, So completely up
16:16
Speaker 3: to you. And just like sunscreen because we obviously are
16:19
Speaker 3: very big advocates of sunscreen in this community, where they
16:22
Speaker 3: say the best sunscreen is the one you use. The
16:24
Speaker 3: same goes for debt reduction methods. The best one is
16:28
Speaker 3: just the one that you're going to stick to.
16:29
Speaker 2: I love that, okay. So that is the snowball and
16:33
Speaker 2: the avalanche methods sorted fee. So they're the main methods
16:36
Speaker 2: of debt prioritization and paying down our debts. But what
16:40
Speaker 2: about debt consolidation Is that is that a method as well? Gee,
16:45
Speaker 2: I guess it's not really prioritizing. It's really just prioritizing
16:47
Speaker 2: all of them and making them one.
16:49
Speaker 3: Yeah, cook an entire no, I love this. We did
16:52
Speaker 3: an entire episode on debt consolidation. So do you should
16:56
Speaker 3: be a wizard on this by now, like, come on,
16:58
Speaker 3: Georgia King. But debt consolidation is essentially if you didn't
17:02
Speaker 3: listen to that episode, please do. But if you didn't,
17:05
Speaker 3: it's where you take out a loan to cover all
17:07
Speaker 3: of our debts so that we're just working out paying
17:10
Speaker 3: one debt instead of multiple. And there are a number
17:13
Speaker 3: of reasons we would do this. So one because personal
17:17
Speaker 3: loans and credit cards often carry higher interest rates, So
17:20
Speaker 3: the average of a credit card usually sits between fourteen
17:23
Speaker 3: and twenty two percent interest rate. A personal loan is
17:27
Speaker 3: probably sitting around fourteen if it's unsecured, maybe a little
17:30
Speaker 3: bit less if it is a secured personal loan. But essentially,
17:33
Speaker 3: when you roll them all together, you take out what's
17:36
Speaker 3: called a debt consolidation loan, and it's essentially a personal
17:39
Speaker 3: loan that just covers all of those debts, pays them back,
17:41
Speaker 3: and you just have one in one place. So a
17:44
Speaker 3: good example is if let's say you have three different
17:46
Speaker 3: credit cards, all with different levels of debt associated with
17:49
Speaker 3: them and different interest rates, and they're being paid at
17:52
Speaker 3: different times of the month. Debt consolidation would mean it
17:55
Speaker 3: swips in, it pays off all of those for you,
17:58
Speaker 3: gives you one single loan that you owe interest on.
18:01
Speaker 3: It's often a lower rate of interest, and you just
18:05
Speaker 3: pay that off once a month. The benefits of this
18:08
Speaker 3: is it can feel so much more free, like if
18:10
Speaker 3: you're someone who is in a bit of a pickle,
18:12
Speaker 3: lots of debts can feel really overwhelming, and it does
18:15
Speaker 3: feel like you're pulling them all together, taking control, and
18:18
Speaker 3: you just have one repayment to make it's less overwhelming,
18:22
Speaker 3: and it just puts you in a position where you
18:24
Speaker 3: feel a little bit more empowered to get debt free.
18:28
Speaker 3: You might be able to manage a lowered interest rate,
18:30
Speaker 3: which is a bit of a money win. So that
18:32
Speaker 3: means that you are going to be saving money over
18:34
Speaker 3: the long term, and it's important to understand that it's
18:38
Speaker 3: one less admin task as well. So at the end
18:40
Speaker 3: of the day, if you're paying lots of different debts,
18:43
Speaker 3: let's be honest, doing one thing instead of three or
18:46
Speaker 3: four kind of just makes sense to gem.
18:48
Speaker 2: Okay, so V that that actually does sound quite good,
18:51
Speaker 2: But I remember from that episode that there were some downsides.
18:56
Speaker 2: Can't remember what they are, so yeah, I'm.
19:00
Speaker 3: Sorry, honestly, Jeking, you have been on this show long
19:03
Speaker 3: enough to be a financial whiz yourself. But as you
19:06
Speaker 3: were asking for when it's not a good idea, there
19:09
Speaker 3: are a number of downfalls and we just need to
19:11
Speaker 3: be aware of them. It doesn't mean we don't do it.
19:13
Speaker 3: So it can take us longer to pay off one
19:15
Speaker 3: large loan instead of you know, a multitude of little
19:19
Speaker 3: debts which could ultimately cost us more. We just need
19:21
Speaker 3: to take it into consideration. It can leave us a
19:25
Speaker 3: bit tempted to spend more and leave you in a
19:27
Speaker 3: deeper level of debt if you do go and get
19:30
Speaker 3: another credit card. So if you don't have a lot
19:32
Speaker 3: of self control, I would be really careful about this
19:35
Speaker 3: because consolidating it makes it feel like it's going away
19:39
Speaker 3: even though it's still there. It's just more manageable and
19:42
Speaker 3: more palatable, so you might go, you know what I've
19:45
Speaker 3: got that that's really manageable, I'm going to go get
19:47
Speaker 3: another credit card.
19:49
Speaker 2: Yeah not a good idea, Yeah, yeah right.
19:51
Speaker 3: And there are a few scammers in this space, so
19:54
Speaker 3: please be careful if you do go down this path,
19:56
Speaker 3: please please please make sure you do so with a
19:59
Speaker 3: legitimate mainstream lender, as there are a few scammers out
20:04
Speaker 3: there that do make you pay upfront freeze to set
20:06
Speaker 3: up loans and then they never follow you up and
20:08
Speaker 3: give you the money that is required to pay off
20:10
Speaker 3: all your spoiler debts, which means that you're in a
20:12
Speaker 3: bigger people than you were before. And if you do
20:15
Speaker 3: have a home loan, it could be impacted if things
20:17
Speaker 3: go pair shaped with your debt consolidation loan. We have
20:20
Speaker 3: spoken about this before, and it's a bit of a
20:22
Speaker 3: shout out to an old show partner that you know,
20:25
Speaker 3: I actually still keep in contact with and we haven't
20:27
Speaker 3: worked with in a little while, but hopefully we will
20:29
Speaker 3: soon because I love them. But our friends at wiser
20:32
Speaker 3: so WISR they do a lot of debt consolidation and
20:36
Speaker 3: also help advise on what the best outcome would be,
20:39
Speaker 3: and I really like what they do. Obviously you can
20:42
Speaker 3: also call the National Debt Helpline and all of that
20:45
Speaker 3: because they are really helpful. But when it comes to
20:47
Speaker 3: debt consolidation, Wiser do a really good job. Again, that's
20:52
Speaker 3: not a sponsored mentioned. It's just good eggs doing good things,
20:54
Speaker 3: and you guys deserve to know about it.
20:56
Speaker 2: Brilliant. Are there any other methods that people use? Are
21:00
Speaker 2: they the main.
21:00
Speaker 3: They're pretty much the main methods. I mean, there's a
21:02
Speaker 3: million different ways you could do it. You could put
21:04
Speaker 3: a chart on your fridge, during app on your phone,
21:06
Speaker 3: or you know, there's lots of different ways that you
21:09
Speaker 3: could get rid of debt. But those are the two
21:11
Speaker 3: main ways that I see people doing it and I
21:15
Speaker 3: talk to clients about. And then obviously debt consolidation is
21:18
Speaker 3: something on the top of that that you go, is
21:21
Speaker 3: it actually better to do that? But with debt consolidation,
21:24
Speaker 3: one thing to be aware of is if you are
21:26
Speaker 3: up the river of debt pretty far, sometimes it won't
21:30
Speaker 3: apply to you. Sometimes they'll say, look, we're not willing
21:33
Speaker 3: to take on that level of risk. So if you've
21:36
Speaker 3: got a few credit cards and you know you're in
21:38
Speaker 3: a bit of a pickle. Yes, debt consolidation might be
21:40
Speaker 3: an option, but I have worked with clients and people
21:43
Speaker 3: before where we've gone to consolidate a debt and the
21:46
Speaker 3: banks have said no, thank you, come back once you've
21:49
Speaker 3: gotten a fair bit of debt down so that we
21:51
Speaker 3: can do it then, because we're not willing to take
21:53
Speaker 3: the risk right now. So don't feel bad if that
21:56
Speaker 3: is you. And if it is you and you're feeling
21:57
Speaker 3: super super super overwhelmed, I get it. Our friends at
22:00
Speaker 3: the National Debt Helpline are going to be able to
22:03
Speaker 3: tell you exactly what your next steps should be.
22:06
Speaker 2: So, speaking of the National Debt Helpline, EE has that
22:10
Speaker 2: for a transition. When I was doing some reading for today,
22:13
Speaker 2: they mentioned high priority debts and they said that they
22:17
Speaker 2: should be the ones that we focus our attention on first.
22:20
Speaker 2: What are they?
22:21
Speaker 3: Yeah, So I think that that's really important to point
22:23
Speaker 3: out as well. So when you're in debt, it can
22:25
Speaker 3: feel super overwhelming, but basically these are debts that impact
22:29
Speaker 3: our lives directly the most. So we're talking things like
22:33
Speaker 3: your rent or your mortgage, or counsel rates or body
22:36
Speaker 3: corporate fees or a car repayment or things like energy
22:40
Speaker 3: and water and food. We are not talking go and
22:43
Speaker 3: pay off your credit card for the shoes that you bought.
22:46
Speaker 3: If you can't put food on the table, we need
22:48
Speaker 3: to negotiate that. So if you are struggling, then these
22:52
Speaker 3: are the debts that you need to focus on first.
22:55
Speaker 3: And often we feel really guilty because a credit card
22:58
Speaker 3: company will call us and they make us awful for
23:00
Speaker 3: not paying it, and we don't feel good about that situation.
23:03
Speaker 3: So you're like, oh my gosh, maybe I should just
23:05
Speaker 3: pay that off. But if you're not able to put
23:07
Speaker 3: food on the table, that is not something you should
23:09
Speaker 3: be paying. And I know that they're not going to
23:12
Speaker 3: love me for saying that, but I would be saying
23:14
Speaker 3: to them, look, really sorry, I don't have the funds
23:16
Speaker 3: for that. Right now. I have to put food on
23:18
Speaker 3: the table for my kids or for myself, or I
23:21
Speaker 3: need to pay rent so that I can keep a
23:22
Speaker 3: roof over my head, because nobody deserves to lose their
23:26
Speaker 3: home over bad debt. If you're seriously struggling, please please
23:30
Speaker 3: please reach out to our friends at the National Debt Helpline.
23:33
Speaker 3: They are always so helpful. They are a wealth of
23:35
Speaker 3: knowledge in this space. And they'll be able to help
23:38
Speaker 3: you create a plan. I know some of you have
23:40
Speaker 3: messaged me and you've said, look, I really want to
23:43
Speaker 3: call them, but I feel really overwhelmed or I don't
23:45
Speaker 3: think my situation is bad enough. No, there's no such thing.
23:48
Speaker 3: When you call them, they'll work out what you need.
23:50
Speaker 3: So they'll pick up the phone, they'll be like, hey, gee,
23:52
Speaker 3: how are you hope you've been well? How can we help?
23:55
Speaker 3: And you'll tell them a little bit about your situation
23:58
Speaker 3: and they will match you with the right person and
24:00
Speaker 3: if it's not the right service for you, they're just
24:02
Speaker 3: going to tell you that they are very kind humans.
24:05
Speaker 3: But usually they will match you up with a financial
24:07
Speaker 3: counselor for free to help you get out of the
24:11
Speaker 3: situation that you were in, which is why I am
24:13
Speaker 3: such a big advocate of them.
24:15
Speaker 2: Do you hear that a lot? I'm not sure, like
24:17
Speaker 2: if you would hear it with clients or in our
24:19
Speaker 2: community V But do you feel like a lot of
24:20
Speaker 2: people don't reach out for help because they don't think
24:23
Speaker 2: they're in a bad enough spot, or maybe they think
24:25
Speaker 2: that they're taking that service from someone else who needs it.
24:27
Speaker 2: More Like, is that a yes?
24:29
Speaker 3: And it's not a thing and complete tangent. Have you
24:33
Speaker 3: watched on Netflix?
24:34
Speaker 1: Mate?
24:34
Speaker 2: Oh my god, that's what I was thinking of when
24:36
Speaker 2: you were saying all of this stuff.
24:37
Speaker 3: Yes, so I watched that recently with Steve, and she
24:41
Speaker 3: in that show does exactly that. She like goes to
24:44
Speaker 3: get help and she's like, yeah, but like, I don't
24:46
Speaker 3: have real abuse. And the woman at the shelters like,
24:50
Speaker 3: what is real abuse? And she's like, oh, like, my
24:52
Speaker 3: partner doesn't hit me. And it was emotional abuse and anyway,
24:56
Speaker 3: financial abuse. Yeah, it was emotional abuse, financial abuse.
24:59
Speaker 1: It was.
25:00
Speaker 3: It was a lot. It's a really good show. It's
25:02
Speaker 3: probably a bit triggering if you're going through it, So
25:04
Speaker 3: just a bit of a content warning there for you guys.
25:07
Speaker 3: But I really enjoyed it. But the thing that I
25:09
Speaker 3: saw was, yes, we always think about other people being
25:13
Speaker 3: in a worse off situation than us, when in reality,
25:16
Speaker 3: if you're struggling with something, that doesn't mean that just
25:19
Speaker 3: because someone else has that harder that your struggles aren't
25:22
Speaker 3: worthy of consideration like you are worthy. And at the
25:26
Speaker 3: end of the day, if it's something that you need
25:27
Speaker 3: help with, please don't feel like you can't reach out
25:30
Speaker 3: but yeah, George, I get a lot of messages from
25:32
Speaker 3: people saying, hey, v I just don't know who to contact,
25:34
Speaker 3: And I say National Debt Helpline. They're like, oh, yeah,
25:37
Speaker 3: but I'm just not bad enough for that. Yeah, that's okay.
25:40
Speaker 3: You can still call them. You don't need to be
25:42
Speaker 3: the worst of the worst to call them. They're there
25:45
Speaker 3: for everybody. They're there for help. Like, if I was
25:48
Speaker 3: in a situation and I didn't know what to do
25:50
Speaker 3: and I had a whole heave of debt, I'd call
25:52
Speaker 3: them and feel really comfortable calling them because I know
25:55
Speaker 3: they're the right people for those situations. So please don't
25:58
Speaker 3: feel like you need to have a worse situation than
26:01
Speaker 3: what you do to reach out for the help that
26:03
Speaker 3: you deserve.
26:04
Speaker 2: Yeah, really, well said, They're v all right. Guys, will
26:07
Speaker 2: be back after a very short break to talk through
26:09
Speaker 2: strategies of paying down our debts faster. Plus we'll be
26:12
Speaker 2: answering a few debt inspired questions from the community, So
26:15
Speaker 2: please don't go anywhere, all right, be Let's talk through
26:24
Speaker 2: some strategies for actually paying down our debts faster. What
26:27
Speaker 2: tricks of the trade do you have for us? Tricks
26:30
Speaker 2: of the track.
26:31
Speaker 3: Look, let's call them tricks of the trade. Do you
26:33
Speaker 3: guys are going to be like, hey, it's be the
26:35
Speaker 3: broken record again, because I'm going to be like, sort
26:37
Speaker 3: out your budget, sort it out, just get it done.
26:40
Speaker 3: Do you know what I'm so passionate about you guys
26:42
Speaker 3: sorting out your budget? So that I put a free
26:44
Speaker 3: one on my website that you can go and download.
26:46
Speaker 3: It's literally the one I use with my clients. It's
26:49
Speaker 3: not the fancy budget and cash Flow Masterclass one that
26:52
Speaker 3: calculates your cash flow and tells you what bank accounts
26:55
Speaker 3: to put it in. It's not that one because unfortunately
26:57
Speaker 3: I can't give that one away for free. This one
27:00
Speaker 3: is going to help you track what you earn, what
27:02
Speaker 3: you spend, what you own, and what you owe. It
27:04
Speaker 3: takes into consideration everything that you need to get a clean,
27:08
Speaker 3: clear budget in order and work out if you are
27:12
Speaker 3: spending more than you are earning, or you're earning more
27:14
Speaker 3: than you are spending, which is a very good situation
27:16
Speaker 3: to be in. So download that budget. If you haven't
27:19
Speaker 3: done it yet, please do. It's literally free, and then
27:24
Speaker 3: have a think about some things that you can do
27:26
Speaker 3: in addition to that. So a budget is going to
27:29
Speaker 3: be helpful, not because it's restrictive. So I'm not saying
27:33
Speaker 3: go on a budget like cut back, but a budget
27:36
Speaker 3: is going to tell you where you're spending your money
27:38
Speaker 3: and where you're not. It's going to tell you what
27:41
Speaker 3: you are prioritizing, and it might just highlight some things
27:45
Speaker 3: that you go, oh, Victoria over eat three nights this
27:49
Speaker 3: week is unacceptable. Whereas if I didn't have my budget,
27:52
Speaker 3: maybe I wouldn't have been thinking about that because like,
27:55
Speaker 3: the hard numbers aren't in my face. The next thing
27:58
Speaker 3: is thinking about how can you get some additional funds
28:01
Speaker 3: in the door? Can you get a side hustle? And
28:04
Speaker 3: we're not saying go and start an entire business. Gee,
28:06
Speaker 3: we recently did an entire episode on I think it
28:09
Speaker 3: was like five ways to bring cash in the door
28:12
Speaker 3: without leaving a couch yep, Like, go listen to that episode,
28:15
Speaker 3: because it's side hustles that don't require any money to start.
28:20
Speaker 3: It's surveys, it's online work. It is stuff that you
28:23
Speaker 3: can do literally today without having to put another dollar aside,
28:28
Speaker 3: which is the money when I reckon the next one.
28:31
Speaker 3: Take a leaf out of Jessicriici's book, sell some stuff
28:34
Speaker 3: you don't need. She's the biggest hustler I know, g
28:37
Speaker 3: Like she is all across Facebook marketplace. She puts her
28:40
Speaker 3: clothes on depop all the time, Sell stuff you don't need,
28:44
Speaker 3: and chuck that cash towards debt repayments. Like even if
28:48
Speaker 3: you're like Gina, what, I don't have enough to get
28:50
Speaker 3: rid of the debt, but it feels so good to
28:53
Speaker 3: have another month's worth of debt repayments just in the
28:56
Speaker 3: rag or putting that cash into an emergency so you
29:00
Speaker 3: feel a little bit more comfortable about your budget. So
29:03
Speaker 3: it doesn't necessarily mean you need to go and sell
29:06
Speaker 3: stuff to get rid of the debt completely, but you
29:09
Speaker 3: might be feeling a bit uncomfortable about your financial situation.
29:12
Speaker 3: So selling some stuff to create an emergency fund while
29:15
Speaker 3: you have debt can be really empowering because you know,
29:19
Speaker 3: you know what, if I don't have the funds this week,
29:21
Speaker 3: I've got an emergency fund that I can dip into
29:24
Speaker 3: pull it out, and I'm all good and I'm not
29:26
Speaker 3: going to go into further debt because I don't have
29:28
Speaker 3: cash available. So for my clients and I, that seems
29:32
Speaker 3: to be a really empowering way of kind of getting
29:34
Speaker 3: ahead even though we're not in the position to be
29:37
Speaker 3: able to extinguish the debt completely right now, because we
29:40
Speaker 3: feel a little bit more cushy, a little bit more comfortable,
29:43
Speaker 3: and it makes you feel so much more secure on
29:46
Speaker 3: that journey. But it's fun, stay motivated using visuals. Go
29:50
Speaker 3: download the shoes on the Money, debt tracking charts and
29:53
Speaker 3: our savings hacks. Put them on your fridge, keep them
29:56
Speaker 3: front of mind, make a little mood board. Put pictures
29:59
Speaker 3: on your fridge of what you're going to get up
30:01
Speaker 3: to when you are out of debt, and hell you're
30:03
Speaker 3: going to feel, so it is always front of mind.
30:06
Speaker 3: And make sure that you are putting yourself in the
30:09
Speaker 3: best position. If you can't pay down the debt, stop
30:12
Speaker 3: putting so much more pressure on yourself to do it faster.
30:16
Speaker 3: Just because we're talking about it does not mean it's
30:18
Speaker 3: going to work for you. If it is the long
30:21
Speaker 3: slog for you and you know that that's the case,
30:23
Speaker 3: that's okay too, all right, v I thought it would be.
30:26
Speaker 2: Fun to finish today's episode by answering some debt related
30:30
Speaker 2: questions from our community. Genius you sucked, Okay, so the
30:35
Speaker 2: first one here is from Danny. So she hates the
30:38
Speaker 2: feeling of having a hex debt. She doesn't like the
30:41
Speaker 2: feeling of debt at all, and knowing her goal one
30:44
Speaker 2: day in the near future it will be to have
30:45
Speaker 2: a house and then take on more debt. What is
30:48
Speaker 2: your advice then for hex? Does she just leave it?
30:52
Speaker 2: She's also added that it makes her so uncomfortable watching
30:55
Speaker 2: the indexation get whacked on, which for her is over
30:58
Speaker 2: five hundred dollars a year. Yea, et cetera, et cetera.
31:02
Speaker 2: That's the essence of ze questions. So what do you
31:05
Speaker 2: think me?
31:05
Speaker 3: So obviously I can't tell you which debt to prioritize
31:08
Speaker 3: because that would constitute personal advice. But do you know
31:10
Speaker 3: what I can tell you, guys? I can tell you
31:12
Speaker 3: what I do personally, and I pay my hex stet
31:14
Speaker 3: off at the minimum. It is no secret that I
31:18
Speaker 3: am one of those just like real nerdy people like gee,
31:21
Speaker 3: you know my little sister we are chalk and cheese.
31:24
Speaker 3: She's like the cool one that always has the fashionable wardrobe.
31:27
Speaker 3: And I've been the one that's like, oh, but I
31:29
Speaker 3: went to UNI, and then I went to UNI again
31:31
Speaker 3: and Bam, I went to UNI again because like just
31:34
Speaker 3: not cool. Like maybe cool kids do go to UNI.
31:37
Speaker 3: I don't know. But anyway, to be brutally honest, my
31:41
Speaker 3: hex stet is still Gee, put your coffee down because
31:44
Speaker 3: you'll spit it out. Still over six figures.
31:47
Speaker 2: And figures six figures wigs.
31:49
Speaker 3: Because I have I have my undergraduates, I have my postgraduate,
31:53
Speaker 3: and then i have a master's degree as well, and
31:56
Speaker 3: then I've also paid for other education outside of that
32:00
Speaker 3: because I couldn't put it on HEX, which is totally fine,
32:03
Speaker 3: but I prioritized personally saving up for a mortgage over
32:08
Speaker 3: paying off my hextet, and I did that because HEX
32:11
Speaker 3: doesn't stop you from getting a mortgage, so unlike having
32:14
Speaker 3: a credit card or a personal loan, which will potentially
32:18
Speaker 3: stop you from getting a mortgage. Hextet it's just taken
32:22
Speaker 3: into consideration as a part of your cash flow because
32:25
Speaker 3: the bank knows if you don't have an income, that's
32:27
Speaker 3: a debt that's not going to be chased. It can
32:30
Speaker 3: just be put on the shelf and put to the side.
32:32
Speaker 3: It does impact your cash flow, so each and every
32:35
Speaker 3: single month, before you get your salary from your employer,
32:39
Speaker 3: it will be taken out, which means, yes, if you
32:41
Speaker 3: earn seventy thousand dollars, less money will go into your
32:44
Speaker 3: account if you have a hextet than somebody who's hex
32:47
Speaker 3: stet is gone. But from my perspective, I'd much prefer
32:51
Speaker 3: that than to put off the goal of purchasing a house,
32:55
Speaker 3: because gee, if I had prioritized paying off my hextet
32:59
Speaker 3: instead of purchase to see a house with Steve, I
33:02
Speaker 3: would still be paying off my hextep. Yeah, like I
33:05
Speaker 3: wouldn't have a house. I wouldn't be creating wealth. I
33:08
Speaker 3: wouldn't be in that situation. So I made the conscious
33:12
Speaker 3: decision to not do additional hex debt repayments because releasing
33:17
Speaker 3: that additional cash flow wasn't my priority. My priority was
33:20
Speaker 3: getting in the market and actually.
33:22
Speaker 2: Saving for a home.
33:24
Speaker 3: And I knew that if I had to then pay
33:26
Speaker 3: off another hundred grand plus, which is really scary and
33:29
Speaker 3: probably not something I should literally admit on a podcast
33:32
Speaker 3: this big, but I'm happy to share it, I would
33:36
Speaker 3: be purchasing in another five years because of my savings capacity.
33:40
Speaker 3: So I just don't want to put myself in that position.
33:43
Speaker 3: In saying that, I think that a lot of people
33:45
Speaker 3: do feel uncomfortable with it because we are geared to
33:48
Speaker 3: feel relatively uncomfortable with debt, and that's how we see it.
33:52
Speaker 3: But five hundred dollars a year indexation isn't additional debt, Like, yes,
33:57
Speaker 3: it goes up, but it's just going up to make
33:59
Speaker 3: sure that it maps the costs of goods and services
34:02
Speaker 3: in that financial year, which from my perspective, I'd prefer
34:06
Speaker 3: to be paying that five hundred dollars in additional debt
34:09
Speaker 3: than I would to not be in the housing market
34:12
Speaker 3: because I was saving. But again, that's me and it
34:15
Speaker 3: might not work for you. And I just want to
34:18
Speaker 3: share that because it's one of those things where people
34:20
Speaker 3: are like, oh, what should I do, And I'm like, well,
34:22
Speaker 3: I can't tell you, but I can share with you
34:24
Speaker 3: what I do personally.
34:26
Speaker 2: Yeah, for people like me who we listen but we
34:29
Speaker 2: don't always absorb. What does What is indexation again? Right?
34:33
Speaker 3: Indexation G or let's specifically reference what it means for
34:36
Speaker 3: help debt. It means that it maintains the real value
34:40
Speaker 3: of your debt by adjusting it in line with changes
34:43
Speaker 3: of the cost of living, which is measured by CPI
34:46
Speaker 3: and CPI is the consumer Price Index, and that is
34:51
Speaker 3: calculated on the first of June each and every single year,
34:54
Speaker 3: and indexation is applied to part of an accumulated study
34:58
Speaker 3: and training debt that re names unpaid for more than
35:01
Speaker 3: eleven months. So when it comes to CPI, the best
35:06
Speaker 3: way to explain it is with a macas cone. So
35:11
Speaker 3: remember when we were little g and macas cones were
35:13
Speaker 3: like fifty cents, Yes, and they've increased in price. Why
35:17
Speaker 3: have they increased in price? J don't say China scowl sofa,
35:22
Speaker 3: because they absolutely are. But it's increased because the cost
35:26
Speaker 3: to produce that item has increased. So it's not as
35:30
Speaker 3: though they're like, oh my gosh, over time we can
35:31
Speaker 3: just charge more and make the same profit. Like the
35:34
Speaker 3: cost of all of those things and transport has all
35:37
Speaker 3: increased over time, so the maca's cone has increased in price.
35:41
Speaker 3: So inflation for indexation is essentially the method of linking
35:45
Speaker 3: the price or value of an asset to a price
35:48
Speaker 3: or price index of some type to adjust for inflation.
35:52
Speaker 1: So it's all.
35:53
Speaker 2: Linked, my friends, the name indexation name.
35:56
Speaker 3: So it's one of those things where yes, things increase
35:59
Speaker 3: in price over time, and to make sure that our
36:02
Speaker 3: debt actually you know, gets paid off. But also the
36:05
Speaker 3: government is in an okay position to continue to provide
36:08
Speaker 3: this service to us because this isn't normal. So yes,
36:11
Speaker 3: in Australia we are incredibly lucky. But in the US
36:14
Speaker 3: they literally have to go get personal loans to be
36:17
Speaker 3: able to pay their university fees and they are so expensive.
36:22
Speaker 3: So yes, like five hundred bucks a year is it's
36:24
Speaker 3: a fair whack of money, but oh my gosh, that's
36:28
Speaker 3: the cost of education. Like that, that for US is
36:31
Speaker 3: putting us in a position where we can go and
36:33
Speaker 3: access education in the same way anybody else in this
36:37
Speaker 3: country can, as opposed to in America, maybe you won't
36:40
Speaker 3: get the loan so you can't go to university, or
36:43
Speaker 3: you can't afford it because you don't have the job
36:46
Speaker 3: that would support it, orreas in Australia, if you don't
36:49
Speaker 3: have the job that supports it, then they're like, don't
36:52
Speaker 3: pay it. That's great, no problems.
36:54
Speaker 2: Yeah, yeah, that's interesting. So they've done they've done a
36:57
Speaker 2: good job there.
36:58
Speaker 3: Let you discov anyway, what other questions have you got?
37:01
Speaker 2: So the next one here V is from Cassandra, so
37:04
Speaker 2: she will be in a position where the ATO owes
37:08
Speaker 2: her money roughly twelve hundred dollars. We love her question
37:12
Speaker 2: is should she dump all of that on her credit card,
37:15
Speaker 2: leaving about one thousand dollars to pay off then she's
37:18
Speaker 2: cutting it up, or should she put it into savings
37:21
Speaker 2: for our house deposit? So I guess the question here
37:26
Speaker 2: is you got some bonus money, savings or debt?
37:30
Speaker 3: Can you answer this? G do you reckon you have that?
37:33
Speaker 3: I think I know?
37:34
Speaker 2: What is that your debt? Right? Because if you have debt,
37:38
Speaker 2: then you don't have savings?
37:39
Speaker 3: Yes, And that's what I was hoping you would say, yeah, same.
37:43
Speaker 3: So again not advice, but essentially we believe it. She's
37:46
Speaker 3: on the money that if you are in personal debt,
37:48
Speaker 3: not mortgage debt, personal debt, so credit cards after pay
37:53
Speaker 3: or personal loans, you don't have savings because what are
37:57
Speaker 3: your savings going to do if you have a credit
37:59
Speaker 3: card that's cruing a whole heap of interest, especially a
38:01
Speaker 3: credit card that has from all intents and purposes, like
38:04
Speaker 3: two grand on it. Yeah, like another two grand in
38:07
Speaker 3: your savings? Is that actually getting you towards a house
38:10
Speaker 3: deposit faster? Or are you at some point just going
38:12
Speaker 3: to have to pull it out and pay off that debt.
38:15
Speaker 3: Riddle me that, Georgia King.
38:16
Speaker 2: Yeah, yeah, okay, so that one's pretty straightforward. I guess.
38:19
Speaker 3: Look, it's pretty straightforward. But again, if you feel like
38:23
Speaker 3: you want to put it in savings, I can't argue
38:25
Speaker 3: with you. You just need to be educated enough to
38:27
Speaker 3: make the decision that it's right for you. Yeah.
38:29
Speaker 2: Well, I think it's a good reminder and it's good
38:31
Speaker 2: to make really clear because we are fed messages that
38:34
Speaker 2: we should pay down our debt and that we should
38:36
Speaker 2: be building our savings. So just to kind of clarify
38:39
Speaker 2: that debt should be your priority is important.
38:42
Speaker 3: I think, yes, but this question as well, Georgia stipulated
38:47
Speaker 3: savings for a house deposit. And to jump on my
38:50
Speaker 3: high horse for a second, I do believe in saving
38:54
Speaker 3: while you have debt for an emergency fund, because an
38:57
Speaker 3: emergency fund is going to afford you the freedom that
39:00
Speaker 3: you need while paying off debt. Because often if we're
39:04
Speaker 3: in debt, we don't have a lot of free cash flow,
39:06
Speaker 3: and if another unexpected cost comes up, it's usually going
39:10
Speaker 3: to be on debt again, and you're going to have
39:11
Speaker 3: to go further into debt on that credit card, So
39:15
Speaker 3: I would absolutely prioritize stocking up a little emergency fund
39:19
Speaker 3: so that while you're paying off your credit card, if
39:22
Speaker 3: another unexpected cost pops up, you can go, you know what,
39:24
Speaker 3: I've got this, Or if you're not able to pay
39:26
Speaker 3: the debt repayment that month, it's okay because you have
39:30
Speaker 3: savings that can cover that. So I don't ever recommend
39:33
Speaker 3: anybody to be in this situation where they have debt
39:36
Speaker 3: and absolutely no savings, But for me, those savings would
39:40
Speaker 3: be an emergency fund. And to stipulate, I don't believe
39:43
Speaker 3: that they're savings. They're an emergency fund because savings are
39:47
Speaker 3: put aside to buy something else in the future, Whereas
39:50
Speaker 3: an emergency fund is a little pool of cash that
39:53
Speaker 3: sits to the side and we have absolutely no intention
39:56
Speaker 3: of drawing on it unless it's an emergency. It's not
39:59
Speaker 3: for a few holiday, it's not for a pair of
40:01
Speaker 3: shoes that feel like an emergency. It is not for
40:05
Speaker 3: anything other than future use financial security.
40:09
Speaker 2: Circling back to what we said earlier, V like, if
40:12
Speaker 2: anyone does need more encouragement to kind of understand how
40:16
Speaker 2: important having an emergency fund is, I feel like watching
40:19
Speaker 2: Maide would be a really good idea because I wish
40:22
Speaker 2: she makes a fund.
40:24
Speaker 3: She was in such a pickle, and I mean she
40:27
Speaker 3: ended up getting out and that is really good, and
40:29
Speaker 3: she ended up, you know, living her best life and
40:31
Speaker 3: being able to move. I won't ruin it for other people,
40:34
Speaker 3: I guess, but if she'd had an emergency fund, she
40:38
Speaker 3: would have been able to escape the situation she was
40:40
Speaker 3: in in such a cleaner way. So that's what an
40:43
Speaker 3: emergency fund affords us. It affords us the ability to
40:46
Speaker 3: escape a job, a circumstance, a person, a home, anything
40:50
Speaker 3: that we don't want to be in anymore, even if
40:53
Speaker 3: it's just covering a taxi to leave a party you
40:55
Speaker 3: don't want to be at anymore. An emergency fund is
40:58
Speaker 3: there to protect you, not to pay off debt. The
41:05
Speaker 3: advice shared on She's on the Money is general in
41:08
Speaker 3: nature and does not consider your individual circumstances. She's on
41:12
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41:15
Speaker 3: be relied upon to make an investment or financial decision.
41:18
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41:21
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41:25
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