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How To Prepare For A Recession · She's On The Money

• 0:00
  Speaker 1: Hello.
• 0:01
  Speaker 2: My name's Santasha Nabananga Bamblet. I'm a proud yr the
• 0:05
  Speaker 2: Order Kerni Whoalbury and a waddery woman. And before we
• 0:08
  Speaker 2: get started on She's on the Money podcast, I would
• 0:11
  Speaker 2: like to acknowledge the traditional custodians of the land of
• 0:14
  Speaker 2: which this podcast is recorded on a wondery country, acknowledging
• 0:18
  Speaker 2: the elders, the ancestors and the next generation coming through
• 0:23
  Speaker 2: as this podcast is about connecting, empowering, knowledge sharing and
• 0:27
  Speaker 2: the storytelling of you to make a difference for today
• 0:31
  Speaker 2: and lasting impact for tomorrow.
• 0:33
  Speaker 1: Let's get into it.
• 0:34
  Speaker 3: She's on the Money, She's on the Money.
• 0:57
  Speaker 4: Hello, and welcome to She's on the Money, the podcast
• 1:00
  Speaker 4: for millennials who want financial freedom. My name is Georgia King,
• 1:04
  Speaker 4: and joining me as she does each and every Wednesday,
• 1:07
  Speaker 4: is Victoria Divine v.
• 1:08
  Speaker 1: Hello. Hello.
• 1:10
  Speaker 4: Today we are talking all about how to prepare for
• 1:13
  Speaker 4: a recession. This episode is a companion piece to last
• 1:17
  Speaker 4: week's episode where we broke down what exactly a recession
• 1:20
  Speaker 4: actually is.
• 1:21
  Speaker 5: Companion companion piece so cute too.
• 1:27
  Speaker 1: It's a companion piece, yesis carry on.
• 1:31
  Speaker 4: So the point of that is please go back and
• 1:34
  Speaker 4: listen to that when you are done with this episode,
• 1:36
  Speaker 4: so you know what a recession is.
• 1:37
  Speaker 5: So you know what we are talking about, and you're
• 1:39
  Speaker 5: welcome here. If you haven't listened to it, of course,
• 1:42
  Speaker 5: we would recommend that you listen to the first companion
• 1:46
  Speaker 5: piece before the second.
• 1:48
  Speaker 4: It makes more sense. But if you are doing it
• 1:50
  Speaker 4: the wrong way around. Some key takeaways with that episode
• 1:54
  Speaker 4: where that recessions are an economic reality sucked in everyone.
• 1:58
  Speaker 4: They're also challenging to predict with any precisions. That's good
• 2:02
  Speaker 4: to know. And they typically last about eleven months, which
• 2:05
  Speaker 4: is good shot and sweet, but then the impacts do
• 2:08
  Speaker 4: go on for longer. So kandada, is.
• 2:10
  Speaker 5: That literally how you summarizecastle, heart and soul into creating
• 2:17
  Speaker 5: that You're like, yeah, cool, there a reality. Also, they're
• 2:19
  Speaker 5: not very accurately, they're not around for a long time. Vie,
• 2:22
  Speaker 5: why did we bother? Is that where you're going with you? Yeah?
• 2:24
  Speaker 1: Well a little bit? Yea right, Well, I mean you're
• 2:26
  Speaker 1: not wrong.
• 2:27
  Speaker 5: So today we are going to talk about some things
• 2:29
  Speaker 5: to keep in mind when heading into a recession or
• 2:31
  Speaker 5: a time when the economy is a little bit sluggish.
• 2:34
  Speaker 5: So this is more the hard and fast tips and
• 2:36
  Speaker 5: tricks that you guys can implement feel a little bit
• 2:38
  Speaker 5: more financially secure, which we love. We want you to
• 2:41
  Speaker 5: be prepared for what might lay ahead because at the
• 2:44
  Speaker 5: end of the day, Gee, as you said before, they're
• 2:47
  Speaker 5: challenging to predict with any precision exactly. And yeah, that's right.
• 2:52
  Speaker 5: So I might be completely wrong in saying that there
• 2:55
  Speaker 5: is a recession coming. So could a whole heap of economists,
• 2:57
  Speaker 5: and I would argue it's way more embarrassing for them
• 2:59
  Speaker 5: than for me to say that.
• 3:01
  Speaker 1: So we want you to be prepared.
• 3:03
  Speaker 5: This means mental preparedness and a few simple tips to
• 3:06
  Speaker 5: reduce your risk and help weather this economic storm. And
• 3:09
  Speaker 5: that's what we're going to get into today, Georgia King.
• 3:12
  Speaker 4: What it also means, Victoria define is that I'm going
• 3:14
  Speaker 4: to tell you some stats that still hasn't did the chat,
• 3:19
  Speaker 4: and what have you got for us? Australia was the
• 3:22
  Speaker 4: only major economy to avoid a recession in the Global
• 3:25
  Speaker 4: Financial Crisis the GFC, so we touched on that last
• 3:27
  Speaker 4: as week, but the country was unable to escape the
• 3:32
  Speaker 4: COVID induced downturn. As we try, try as we might,
• 3:36
  Speaker 4: we were unsuccess. We gave it a crack gross domestic products.
• 3:39
  Speaker 4: So the GDP fell seven percent in the June twenty
• 3:42
  Speaker 4: twenty quarter, and that is the most significant decline since
• 3:45
  Speaker 4: records began in nineteen fifty nine.
• 3:47
  Speaker 5: And we spoke about that on the podcast during that
• 3:49
  Speaker 5: period of time. So go back to June twenty twenty
• 3:52
  Speaker 5: if you would like to hear some chat about that.
• 3:54
  Speaker 5: Some of it might be irrelevant now though, because the
• 3:56
  Speaker 5: world has changed significantly. It really has.
• 3:59
  Speaker 4: That followed a zero point three percent contraction in the
• 4:02
  Speaker 4: March twenty twenty quarter, which was when we were hit
• 4:05
  Speaker 4: by the bushfires and then the pandemic and everything else
• 4:08
  Speaker 4: that happens. So that's just a little bit of statistical context.
• 4:11
  Speaker 5: And then we fast forward all the way to June
• 4:14
  Speaker 5: twenty twenty two, and we officially were in a bear market,
• 4:18
  Speaker 5: which we said before means that we are twenty percent
• 4:21
  Speaker 5: down on the twelve month high, which is it seems
• 4:24
  Speaker 5: a lot more complicated than it is, but it means
• 4:26
  Speaker 5: that the market is going backwards at a pretty significant rate.
• 4:29
  Speaker 5: So Georgia King, that gives us a little bit of
• 4:32
  Speaker 5: context as to why we are currently here as we
• 4:34
  Speaker 5: stand today. Alongside the war in Ukraine, and so many
• 4:37
  Speaker 5: other complex forces.
• 4:38
  Speaker 1: So is a bit on.
• 4:40
  Speaker 5: Yeah, it's a bit hectic. This has been busy, absolutely,
• 4:43
  Speaker 5: but we're.
• 4:43
  Speaker 4: Here today to make everyone feel better by talking through
• 4:46
  Speaker 4: how we can prepare for the looming recession. What should
• 4:50
  Speaker 4: my priorities be in a time of a sluggish economy
• 4:53
  Speaker 4: slasher recession, and what steps should I be taking.
• 4:56
  Speaker 5: I wish I had some tips that were really specific
• 4:59
  Speaker 5: to this pl in time, because at the end of
• 5:02
  Speaker 5: the day, I think that's why you guys are all
• 5:03
  Speaker 5: listening to this. But these are tried and true tips
• 5:06
  Speaker 5: that are going to see you through any kind of
• 5:08
  Speaker 5: economic climate, and I think that we all should be
• 5:11
  Speaker 5: implementing anyway. So first things first, let's stop panicking. Let's
• 5:14
  Speaker 5: stop looking at the media because they make money off
• 5:17
  Speaker 5: making us anxious. They make money off us clicking on
• 5:21
  Speaker 5: headlines because we're like, oh my gosh, what and click
• 5:23
  Speaker 5: it is. They had a headline that was like business
• 5:26
  Speaker 5: as usual. You want to click at Georgia King.
• 5:28
  Speaker 1: You're not gonna click it.
• 5:29
  Speaker 5: No, I want to know about what's going on in
• 5:31
  Speaker 5: the Kardashians life.
• 5:32
  Speaker 1: Georgia.
• 5:33
  Speaker 5: I'm a click that headline instead. So first things first,
• 5:37
  Speaker 5: we're not gonna panic. We're gonna calm down because the
• 5:39
  Speaker 5: world likes to blow content out of proportion. At the
• 5:42
  Speaker 5: end of the day, yes, we are going to go
• 5:44
  Speaker 5: through this, but what that means for you is not
• 5:47
  Speaker 5: nearly as significant as what the media is making out.
• 5:50
  Speaker 5: The second thing we are going to do, if we
• 5:52
  Speaker 5: haven't done it already, I would hope that after three
• 5:55
  Speaker 5: years of that. She's on the Money podcast. You guys
• 5:57
  Speaker 5: have started to listen to me, But if you're anything
• 5:59
  Speaker 5: like me, you haven't taken a thing in Because I'm
• 6:02
  Speaker 5: gonna make my own decisions. I'm a Cancrian Georgia K.
• 6:05
  Speaker 5: So we're going to build an emergency fund. From my perspective,
• 6:10
  Speaker 5: people always say, oh, but what's a good amount of
• 6:12
  Speaker 5: money to have in an emergency fund? That's so personal?
• 6:15
  Speaker 5: I can't answer it. Not because we're verging on the
• 6:17
  Speaker 5: difference between personal and general advice. It's not that it's
• 6:21
  Speaker 5: that everybody's circumstances are literally different. If you live at
• 6:25
  Speaker 5: home and mum and dad are paying rent and you
• 6:28
  Speaker 5: don't even have to pay board, well, your emergency fund
• 6:31
  Speaker 5: is going to look so significantly different to a mum.
• 6:34
  Speaker 1: Who has three young kids.
• 6:36
  Speaker 5: Under five and is looking after them, has a mortgage
• 6:39
  Speaker 5: repayment and a husband that is in a rocky, unsteady job.
• 6:43
  Speaker 1: Right, Like, those two.
• 6:44
  Speaker 5: Circumstances are so different, and George you might go, oh,
• 6:47
  Speaker 5: I just need five hundred bucks. If anything pops up,
• 6:50
  Speaker 5: that mum might go, oh, well, I'm not going to
• 6:52
  Speaker 5: be able to sleep at all unless we have twenty
• 6:54
  Speaker 5: thousand dollars sitting in an emergency fund. So it's actually
• 6:57
  Speaker 5: what makes you comfortable. But my favorite starting point is
• 7:01
  Speaker 5: planning out three months worth of expenses, non negotiable expenses.
• 7:05
  Speaker 5: So we're not talking about your savings or your investment plans.
• 7:08
  Speaker 5: We're just talking about roof of your head, food on
• 7:10
  Speaker 5: the table, bill's paid. That is it. We're not talking
• 7:12
  Speaker 5: about g What do you spend on average three months
• 7:15
  Speaker 5: worth of expenses? And that amount of money is usually
• 7:19
  Speaker 5: a really good place to start. Then the next hot
• 7:23
  Speaker 5: tip here is stick it in a bank account. What
• 7:25
  Speaker 5: do we do with an emergency Fundjodgi A king?
• 7:27
  Speaker 1: Do not invest it?
• 7:28
  Speaker 5: Yes, clean, we do not invest our emergency funds because
• 7:32
  Speaker 5: our emergency fund's job is to sit and lie in
• 7:35
  Speaker 5: wait until it is called upon. It can't be working
• 7:39
  Speaker 5: somewhere else. Every dollar that comes into our bank accounts
• 7:42
  Speaker 5: gets given a job. Some of them they go out
• 7:44
  Speaker 5: to earn the money. They go out into their investment world.
• 7:47
  Speaker 5: They start making bank can they live there and that's
• 7:50
  Speaker 5: their job. Other dollars come in and we go. Your
• 7:53
  Speaker 5: job is to stay at home and make sure our
• 7:55
  Speaker 5: home is safe. And you put them in a savings account.
• 7:58
  Speaker 5: If you have a mortgage, perhaps you put them in
• 8:01
  Speaker 5: your offset account, because that operates in exactly the same
• 8:04
  Speaker 5: way that as savings account will, but it will offset
• 8:07
  Speaker 5: some of the interest that you're paying on your mortgage.
• 8:10
  Speaker 5: Money in money in same accessibility, same level of risk.
• 8:14
  Speaker 1: So we're all good.
• 8:15
  Speaker 5: But we never invest our emergency funds. A lot of
• 8:19
  Speaker 5: people over the last time, I don't know, three or
• 8:21
  Speaker 5: four weeks, I feel have slid into my DMS and
• 8:23
  Speaker 5: the like, vitrea, what do I do with my emergency fund?
• 8:25
  Speaker 5: I feel like it's doing nothing, Like I don't feel
• 8:28
  Speaker 5: like I'm making any money on it. I go, I
• 8:29
  Speaker 5: get it, But let's reframe this. That's its job. Its
• 8:33
  Speaker 5: job is to sit there and wait until something happens.
• 8:36
  Speaker 5: If something happens, then it will be called upon to
• 8:38
  Speaker 5: do its job. But right now, its job is to
• 8:41
  Speaker 5: sit there and guard your financial house. Right, So I
• 8:44
  Speaker 5: think we need to reframe what emergency funds look like
• 8:48
  Speaker 5: because so many of you have said they're not doing
• 8:50
  Speaker 5: anything like it feels like a waste having that money
• 8:53
  Speaker 5: sitting there not making any money. Because we obviously own
• 8:56
  Speaker 5: cheese on the money talk a lot about making money
• 8:58
  Speaker 5: with the money that you may, but your emergency fund,
• 9:01
  Speaker 5: its job is to sit at home and make sure
• 9:03
  Speaker 5: that your financial security is always front of mine.
• 9:06
  Speaker 4: Yes, that's a good point. I feel like we haven't
• 9:09
  Speaker 4: spoken that much about that in the past.
• 9:11
  Speaker 5: No, because I feel like it hasn't come up for
• 9:13
  Speaker 5: us that often. I mean, people have always said, should
• 9:16
  Speaker 5: we invest our emergency fund?
• 9:17
  Speaker 1: And I say no.
• 9:18
  Speaker 5: But at the end of the day, your emergency fund,
• 9:21
  Speaker 5: its job is to keep you safe.
• 9:23
  Speaker 1: And it has to be easily accessible, right.
• 9:25
  Speaker 5: Exactly like I need you to be able to walk
• 9:27
  Speaker 5: up to an ATM and pull that emergency money out
• 9:30
  Speaker 5: and be in a really good financial position. And from
• 9:33
  Speaker 5: my perspective, I feel like I've got a lot of
• 9:35
  Speaker 5: ranting to do because yesterday, George, I spent the entire
• 9:39
  Speaker 5: day recording my audiobook version of the investing book that's
• 9:42
  Speaker 5: coming out incredible, and one of the chapters at the
• 9:45
  Speaker 5: very front, we talk about this because I think it's
• 9:47
  Speaker 5: really important to preface.
• 9:48
  Speaker 1: You have to have an emergency fund.
• 9:50
  Speaker 5: Job is not to work hard, its job is to
• 9:52
  Speaker 5: work smart. But our emergency fund is not just for
• 9:56
  Speaker 5: those unexpected costs. It's for that financial freedom aspect. And
• 10:00
  Speaker 5: I talk about how some people see their emergency fund
• 10:03
  Speaker 5: as an f off fund. Yep, just kind of a
• 10:06
  Speaker 5: funder way to do it. I mean, I wouldn't swear
• 10:08
  Speaker 5: on this podcast, so that's why we're calling it that name.
• 10:11
  Speaker 5: But the reason we have that is so that we
• 10:13
  Speaker 5: can say no to things. Gee, if you've got a
• 10:15
  Speaker 5: good emergency fund and you're working for me and you're like,
• 10:18
  Speaker 5: I don't really like working with V anymore. Freedom to leave, Yeah, right,
• 10:22
  Speaker 5: in a relationship you want to get out of, but ooh,
• 10:24
  Speaker 5: don't have enough money to do so. Well, emergency fund
• 10:27
  Speaker 5: comes in to save the day.
• 10:29
  Speaker 1: Free to leave.
• 10:30
  Speaker 5: Go over to Europe with your friends having a terrible time.
• 10:33
  Speaker 5: You just go, I want to go home. Can buy
• 10:35
  Speaker 5: some emergency flights back home if you need it.
• 10:38
  Speaker 1: Free to leave, right, I like.
• 10:40
  Speaker 5: That you can leave any circumstance, situation, or place with
• 10:44
  Speaker 5: an emergency fund. It's not just for that red JO
• 10:46
  Speaker 5: bill that you didn't expect to pop up. Because if
• 10:48
  Speaker 5: we've got our financial house in order and we have
• 10:51
  Speaker 5: a good budget and cashlow plan, there won't be anything
• 10:53
  Speaker 5: that's unexpected except potentially random things that come up. Like
• 10:58
  Speaker 5: around my car Georgia on the weekend, who was really great,
• 11:00
  Speaker 5: I was reversing out of my driveway. Yeah, this is
• 11:03
  Speaker 5: entirely my fault. By the way, Stephen Lucy was standing
• 11:06
  Speaker 5: in front of the car. It was Saturday, I was
• 11:08
  Speaker 5: on the way to Sydney to speak at a conference.
• 11:11
  Speaker 5: They were on the way to the coffee shop to
• 11:12
  Speaker 5: get a coffee, and I'm like reversing the car out
• 11:15
  Speaker 5: like I usually do, and I'm like waving, being like bye,
• 11:17
  Speaker 5: my god by Steve, have a good day. And I
• 11:21
  Speaker 5: ran into our neighbor's car, which was parked somewhere. It
• 11:24
  Speaker 5: never is, so IM not saying it's their fault. It
• 11:27
  Speaker 5: was parked completely illegally on the street, but I didn't
• 11:29
  Speaker 5: see it, and I ran into the side of their
• 11:31
  Speaker 5: car with the back of mine. So I'm going to
• 11:33
  Speaker 5: have an unexpected insurance claim today and I'm gonna have
• 11:37
  Speaker 5: to cover my own excess. Right, that's an emergency. That
• 11:41
  Speaker 5: is me going, all right, well, this is a really
• 11:43
  Speaker 5: sucky situation, but I've got some money aside so that
• 11:46
  Speaker 5: I'm able to afford that. But from my perspective, all
• 11:49
  Speaker 5: these other costs should be planned for, and coming into
• 11:52
  Speaker 5: a quite tumultuous period of time, we can plan for that.
• 11:56
  Speaker 5: We can actually sit down and go all right, gee,
• 11:58
  Speaker 5: let's do our budget. Let's do our cash flow, so
• 12:00
  Speaker 5: you know, it might be twelve months in advance that
• 12:02
  Speaker 5: our reggio was do again, but let's like put that
• 12:04
  Speaker 5: into the budget so that there are no surprises. Like
• 12:07
  Speaker 5: right now, the last thing you want is a financial surprise,
• 12:11
  Speaker 5: because we just don't need to be stressed.
• 12:14
  Speaker 1: Let's move on now. V to talk about debt.
• 12:17
  Speaker 4: What should we be doing with our debt at this
• 12:19
  Speaker 4: time as we head into a recession?
• 12:20
  Speaker 5: Maybe all right, so spicy, but my view is that
• 12:25
  Speaker 5: you should have an emergency fund even if you have debt.
• 12:28
  Speaker 5: I've seen I'm on TikTok. I'm not saying I make
• 12:31
  Speaker 5: good videos on TikTok, but I consume a lot of
• 12:33
  Speaker 5: TikTok content. I actually tell my partner that I'm going
• 12:37
  Speaker 5: to bed and I'm going to bed to lay in
• 12:39
  Speaker 5: bed for an hour.
• 12:40
  Speaker 1: To watch TikTok. Rolin.
• 12:41
  Speaker 5: Yeah, like I'm addicted. What can I say?
• 12:44
  Speaker 1: Until that guy?
• 12:45
  Speaker 5: You don't have TikTok, But there's this random TikTok that
• 12:47
  Speaker 5: pops up from TikTok that says, ah ah, is it
• 12:51
  Speaker 5: time to turn out the life? Really, the shame of
• 12:54
  Speaker 5: seeing that, I'm always like no, and then I watch
• 12:57
  Speaker 5: two more tiktoks put my phone down because I'm like,
• 13:00
  Speaker 5: I don't want him to know that it was him
• 13:01
  Speaker 5: that got meen.
• 13:02
  Speaker 2: You know.
• 13:02
  Speaker 5: Anyway, I've seen a lot of advice on there about
• 13:04
  Speaker 5: smashing down debt with absolutely every dollar you have, and
• 13:08
  Speaker 5: I actually think that's really irresponsible, Okay. And the reason
• 13:11
  Speaker 5: I think that's irresponsible is debt is as much physical
• 13:15
  Speaker 5: because you've got to pay it back physically as it
• 13:17
  Speaker 5: is mental. And the issue with debt and feeling like
• 13:21
  Speaker 5: you're trapped in the debt cycle is that George, if
• 13:24
  Speaker 5: you had, you know, twenty thousand dollars on your credit
• 13:27
  Speaker 5: card and you're channeling every single dollar into that credit card,
• 13:31
  Speaker 5: so you don't really have any free cash flow. While
• 13:34
  Speaker 5: that might feel like you're achieving a lot because you're like,
• 13:36
  Speaker 5: the I'm smashing down that debt. What if an emergency
• 13:39
  Speaker 5: pops up. What if something pops up and you just
• 13:42
  Speaker 5: didn't budget for it. What if you've got a daughter
• 13:44
  Speaker 5: and oh my gosh, it's end of term three ballet
• 13:48
  Speaker 5: and there's a concert and it costumes one hundred and
• 13:50
  Speaker 5: fifty dollars. That situation very likely to happen, very normal
• 13:54
  Speaker 5: expense that might pop up. However, if you have no
• 13:57
  Speaker 5: emergency fund, have no saving you're going to go, oh
• 14:01
  Speaker 5: my god, I'm so bad at money. I have been
• 14:05
  Speaker 5: channeling all my cash to paying off my debt. Now
• 14:07
  Speaker 5: I have this other expense and I'm gonna have to
• 14:09
  Speaker 5: go further into debt. It feels like an awful cycle. Yeah,
• 14:13
  Speaker 5: it feels horrendous because you're just like, I've been working
• 14:16
  Speaker 5: so hard and then this bit me in the bottom.
• 14:19
  Speaker 5: Reframe that you've got an emergency fund, you've got some
• 14:21
  Speaker 5: free cash flow. Yeah, we're smashing down our debt. That
• 14:24
  Speaker 5: expense pops up, you go one hundred and fifty bucks,
• 14:27
  Speaker 5: no worries, pull that out of my emergency fund or
• 14:29
  Speaker 5: their savings I've got set aside, and you're not continuing
• 14:33
  Speaker 5: that debt cycle. You're gonna be proud of yourself for
• 14:36
  Speaker 5: not having had to rely on credit. You're not putting
• 14:39
  Speaker 5: yourself further behind because our emergency fund is there to
• 14:43
  Speaker 5: not only pay for things when they pop up, but
• 14:45
  Speaker 5: it's also to reframe our thoughts around money, because otherwise
• 14:49
  Speaker 5: this alternative is putting us further into debt. It's putting
• 14:53
  Speaker 5: us in a position where we feel awful about it. Go,
• 14:55
  Speaker 5: oh my gosh, I'm so bad at this. I'm so
• 14:56
  Speaker 5: bad at money. You're not. We just haven't planned to
• 14:58
  Speaker 5: be good at money. So having an emergency fund puts
• 15:01
  Speaker 5: you in a position where you don't need to continue
• 15:04
  Speaker 5: that debt cycle and go further into debt, so that
• 15:07
  Speaker 5: we can always stay in a really good mental place, Relliant.
• 15:10
  Speaker 1: Yeah, it's a good buffer, viz.
• 15:11
  Speaker 4: So we know we've got good debt like hex for example,
• 15:15
  Speaker 4: that's a fine debt, and then we have bad debt
• 15:17
  Speaker 4: which could be perceived as like a car loan or
• 15:19
  Speaker 4: a credit card or something like that. Which kinds of
• 15:22
  Speaker 4: debts should we be prioritizing at this time?
• 15:25
  Speaker 5: So the two types of debt that you're talking about,
• 15:27
  Speaker 5: they're really easy. I do good debt, bad debt, and
• 15:30
  Speaker 5: okay debt. Yeah, and I prioritize them based on good
• 15:33
  Speaker 5: debt helps you create wealth. It could be a home
• 15:35
  Speaker 5: loan or an investment loan. Bad debt is debt that
• 15:38
  Speaker 5: takes away from your ability to create wealth. So say
• 15:42
  Speaker 5: you went on a holiday and you put it on
• 15:43
  Speaker 5: a credit card, and now you're paying off that credit card,
• 15:46
  Speaker 5: and that money is now tied up in debt repayments
• 15:49
  Speaker 5: instead of helping you get ahead financially, and then we've
• 15:53
  Speaker 5: got okay debt. So that from my perspective, is things
• 15:56
  Speaker 5: like your help or hex debt. And I say it's
• 15:58
  Speaker 5: okay debt because some people look at debt as bad
• 16:02
  Speaker 5: and some people look at debt as good. And some
• 16:05
  Speaker 5: people in our community might say, oh, well, hexteat is
• 16:07
  Speaker 5: good because it got me ahead. But at the end
• 16:09
  Speaker 5: of the day, it's okay debt because it does have
• 16:12
  Speaker 5: inflation tied to it. But from my personal perspective, I
• 16:15
  Speaker 5: don't pay it down aggressively purely because I know if
• 16:19
  Speaker 5: something happened, let's say a really bad recession happened, and
• 16:22
  Speaker 5: she's on the money, couldn't produce content anymore, and we
• 16:24
  Speaker 5: had to go under. I know that if I didn't
• 16:27
  Speaker 5: have any income coming in, I don't have to pay
• 16:29
  Speaker 5: that back. So it can sit there and wait, there's
• 16:31
  Speaker 5: no time limit or there's no time frame on it.
• 16:34
  Speaker 1: It can kind of go stagnant.
• 16:35
  Speaker 5: So when we look at this from the perspective of
• 16:38
  Speaker 5: a recession, our priorities might be on getting out of
• 16:42
  Speaker 5: personal debt because that ties up our free cash flow.
• 16:45
  Speaker 5: Not worrying too much about our good debt, but talking
• 16:48
  Speaker 5: to our mortgage brokers or our investment advisors about putting
• 16:51
  Speaker 5: us in the best possible position and having the best
• 16:54
  Speaker 5: possible interest rate on that and not being too concerned
• 16:57
  Speaker 5: about that okay debt. From my perspectives, smashing down personal
• 17:02
  Speaker 5: debt is going to be a priority, regardless of the
• 17:05
  Speaker 5: economic circumstances of the world. Now, if you have multiple debts,
• 17:09
  Speaker 5: you could choose to tackle this in two different ways,
• 17:12
  Speaker 5: and one of them you might go Victoria. That is
• 17:14
  Speaker 5: the way you should be doing it, because financially that
• 17:17
  Speaker 5: makes the most sense, and that is the debt avalanche method.
• 17:21
  Speaker 5: So an avalanche method is where it starts at the
• 17:24
  Speaker 5: top and it falls down right, like an avalanche happens
• 17:27
  Speaker 5: and it crashes down. You're starting with the debt that
• 17:30
  Speaker 5: has the biggest interest rate associated with it. So if
• 17:32
  Speaker 5: you had three credit cards, one at five percent, one
• 17:35
  Speaker 5: at fifteen percent, and one at twenty percent, you'd start
• 17:38
  Speaker 5: with the twenty percent credit card, and then you would
• 17:41
  Speaker 5: move down to the fifteen percent credit card, and you
• 17:43
  Speaker 5: might then do the five percent credit card later. Usually,
• 17:47
  Speaker 5: when we look at how this works, twenty percent credit
• 17:50
  Speaker 5: card might be like twenty thousand dollars. That fifteen percent
• 17:53
  Speaker 5: credit card might have like I don't know, three grand
• 17:56
  Speaker 5: on it, and you're like, little debt might be only
• 17:58
  Speaker 5: five hundred dollars. So you'd be leaving that five hundred
• 18:01
  Speaker 5: dollar debt till last, because you're trying to smash off
• 18:03
  Speaker 5: the biggest interest rate first, because it's technically costing you
• 18:07
  Speaker 5: the most, so financially that adds up. However, if you're
• 18:11
  Speaker 5: like me, it's not gonna work that well for you
• 18:13
  Speaker 5: because I like snowball myself off the momentum. So you know,
• 18:17
  Speaker 5: a snowball, it starts really small at the start, and
• 18:20
  Speaker 5: if you put it at the top of a hill,
• 18:22
  Speaker 5: and it rolled down, it would progressively get bigger. The
• 18:25
  Speaker 5: Stowmall method, while it doesn't stack up quote financially, mentally
• 18:30
  Speaker 5: for me, that works better. That would mean I get
• 18:32
  Speaker 5: to cut up a credit card sooner. So I would
• 18:35
  Speaker 5: then start with that five hundred dollar debt with Yeah,
• 18:37
  Speaker 5: it's the lost interest rate, but that's the easy win
• 18:40
  Speaker 5: and I can prove to myself.
• 18:41
  Speaker 1: That I can do this.
• 18:42
  Speaker 5: And the gratification I get from being able to cut
• 18:45
  Speaker 5: up my first credit card and be like, oh my gosh,
• 18:47
  Speaker 5: I did it. Let's move on to the next one
• 18:49
  Speaker 5: is sometimes stronger than the necessity for paying down the
• 18:53
  Speaker 5: debt that makes the most financial sense, yes, So we
• 18:57
  Speaker 5: have to balance the mentality with the actual financial side
• 19:01
  Speaker 5: of things, because a lot of us will go, oh, well,
• 19:03
  Speaker 5: that makes the most sense, I'll do that, but I'll go, oh,
• 19:06
  Speaker 5: but historically has that worked for you? Or should we
• 19:10
  Speaker 5: look at it from a reward way and go all right, gee,
• 19:13
  Speaker 5: how are you going to feel the most reward? What's
• 19:15
  Speaker 5: going to keep that momentum up? Because at the end
• 19:17
  Speaker 5: of the day, getting out of debt is the key,
• 19:19
  Speaker 5: and if it costs us a little bit more to
• 19:21
  Speaker 5: actually feel like we're prioritizing it.
• 19:24
  Speaker 1: That's okay my books, Yeah, brilliant.
• 19:26
  Speaker 4: Is it right that that's Dave Ramsey's approach is snowball
• 19:29
  Speaker 4: over avalanche.
• 19:30
  Speaker 5: To be honest, I have not consumed his contents.
• 19:32
  Speaker 1: In a while.
• 19:33
  Speaker 5: Resonate with me because he also said you shouldn't go
• 19:36
  Speaker 5: out to a restaurant if you have any debt.
• 19:39
  Speaker 1: Oh, get out, We've got to leave Dave.
• 19:41
  Speaker 4: Forget about Dave. Would it be worth reducing our credit
• 19:46
  Speaker 4: limit fee? Look, that can be a.
• 19:48
  Speaker 5: Really good way to put ourselves back in the driver's See.
• 19:52
  Speaker 1: So some of us are.
• 19:53
  Speaker 5: Going to feel overwhelmed with having a really big credit
• 19:56
  Speaker 5: limit because we might be tempted to go and spend
• 19:59
  Speaker 5: up to that out. At the same time, if you've
• 20:02
  Speaker 5: paid off a certain amount and now you've maybe got
• 20:04
  Speaker 5: five thousand dollars left on that credit card that is
• 20:07
  Speaker 5: twenty thousand dollars, maybe reduce it down so that you
• 20:10
  Speaker 5: can go, oh my gosh, now I just don't even
• 20:12
  Speaker 5: have the ability to get back into that place. I
• 20:14
  Speaker 5: think that can be a really positive thing. But again,
• 20:17
  Speaker 5: it's all about how you feel and as much as
• 20:20
  Speaker 5: reducing your credit limit in general, if you were going
• 20:23
  Speaker 5: to get a mortgage could be a really good idea.
• 20:26
  Speaker 5: That doesn't necessarily mean you have to lower your credit
• 20:28
  Speaker 5: limit just cause. But when we're getting out of debt,
• 20:31
  Speaker 5: it's kind of like a peg along the way, right, Like,
• 20:34
  Speaker 5: we want to get rid of this credit card so bad.
• 20:36
  Speaker 5: Let's start chopping it up technically as we go. It
• 20:39
  Speaker 5: was twenty thousand dollars. Now it's ten thousand dollars. After
• 20:42
  Speaker 5: you've paid off that five, maybe you drop it down
• 20:44
  Speaker 5: to five, and it can go lower and lower and lower,
• 20:46
  Speaker 5: and then once it's completely gone, me actually get to
• 20:48
  Speaker 5: cut the plastic bit up. I think that can be
• 20:51
  Speaker 5: a really rewarding process as well, and it can really pinpoint.
• 20:55
  Speaker 5: I don't want to ever get back to that position again,
• 20:58
  Speaker 5: but let's loop back to that first point. Have an
• 21:01
  Speaker 5: emergency fund before you make that decision, because a lot
• 21:05
  Speaker 5: of us ended up with credit card debt because we
• 21:07
  Speaker 5: didn't have an emergency fund. I think there's this misconception
• 21:11
  Speaker 5: that credit card debt is just made up of frivolous purchases.
• 21:14
  Speaker 5: Like that is a really privileged perspective. And don't get
• 21:17
  Speaker 5: me wrong, that's what mine was made up of. Like
• 21:20
  Speaker 5: mine was shoes and clothes, and I went over to
• 21:22
  Speaker 5: France and I traveled and I bought a car.
• 21:25
  Speaker 1: That's where my personal learn came from. That's privileged.
• 21:28
  Speaker 5: Some people rely on credit cards because they don't have
• 21:32
  Speaker 5: any other option. Yeah, some people are like, you know what,
• 21:35
  Speaker 5: I really don't know how I'm gonna buy a new
• 21:37
  Speaker 5: school uniform.
• 21:38
  Speaker 1: I'm gonna have to put an on credit.
• 21:40
  Speaker 5: So if that is you and you are in that position,
• 21:43
  Speaker 5: don't feel any shame. You're being a good parent, you're
• 21:45
  Speaker 5: being a good person. Maybe you needed to go buy
• 21:48
  Speaker 5: some new shoes so that you could get to work
• 21:50
  Speaker 5: and have a good job. I think that going into
• 21:53
  Speaker 5: a recession or feeling like we're going into a period
• 21:56
  Speaker 5: of economic turmoil makes us put more pressure on ourselves
• 21:59
  Speaker 5: and feel bad about our circumstances when that shouldn't be
• 22:02
  Speaker 5: it at all. If you're in a circumstance where you're
• 22:04
  Speaker 5: in debt, it is what it is. Let's just get
• 22:07
  Speaker 5: out of it. Let's find a way to not put
• 22:09
  Speaker 5: ourselves in that position again. But also, if you're going
• 22:12
  Speaker 5: through this period of time and you're like, VI, I'm
• 22:15
  Speaker 5: going to have to go back into debt, Okay, No, problems,
• 22:18
  Speaker 5: but you've got the education to know where you need
• 22:20
  Speaker 5: to be and where you want to be, and that
• 22:22
  Speaker 5: can actually be a tool to help you get from
• 22:24
  Speaker 5: point A to point B. Not everyone's journey is linear.
• 22:28
  Speaker 5: Some people's journeys do involve debt. We just need to
• 22:31
  Speaker 5: be educated about it so that we know how to
• 22:33
  Speaker 5: ultimately put ourselves in the best position.
• 22:36
  Speaker 1: Nice.
• 22:36
  Speaker 4: Let's talk about loans slash helping out family members or
• 22:41
  Speaker 4: close ones who might be going through a tough time
• 22:43
  Speaker 4: during all this, if they lose their jobs or something
• 22:45
  Speaker 4: like that, how can we help them with that? So
• 22:48
  Speaker 4: hurting ourselves?
• 22:49
  Speaker 5: So from my perspective, haha, I don't believe in lending
• 22:52
  Speaker 5: money to friends. So if you lend money to a
• 22:55
  Speaker 5: friend and you go, all right, I'm going to give
• 22:58
  Speaker 5: Georgia King five hundred dollars, I need to think about
• 23:00
  Speaker 5: this before I give that to you and workout is
• 23:04
  Speaker 5: the money more important than my friendship because money taints relationships. Obviously,
• 23:10
  Speaker 5: if I'm going to lend you five hundred bucks, gee,
• 23:11
  Speaker 5: I'll probably be like, all right, let's put it in
• 23:14
  Speaker 5: a detailed email. Here's how you're going to pay it off.
• 23:17
  Speaker 5: Here's how the plan is, but that's actually a bigger problem.
• 23:20
  Speaker 5: Like if you, George needed to borrow five hundred bucks
• 23:22
  Speaker 5: from me? Is there something else I could help you with?
• 23:25
  Speaker 5: Are there financial resources I could share with you? The
• 23:28
  Speaker 5: Debt Free help Line is a really great place to start,
• 23:32
  Speaker 5: because the Debt Free Helpline is not just about being
• 23:35
  Speaker 5: in debt. They're financial counselors. Maybe you need to reframe
• 23:38
  Speaker 5: how you're spending your money. Maybe your friend needs to
• 23:40
  Speaker 5: focus on their budget and their cash flow. There's also
• 23:43
  Speaker 5: a company called The Good Shepherd, which I am obsessed with.
• 23:47
  Speaker 5: I think I mentioned it a lot in the start
• 23:49
  Speaker 5: of season two of our podcast, but haven't revisited it recently.
• 23:54
  Speaker 1: What do they do?
• 23:54
  Speaker 5: So the Good Shepherd, it's goodshp dot org dot au,
• 23:58
  Speaker 5: and we'll make sure that the link to this is
• 24:00
  Speaker 5: in these show notes. But it's Neals loans, so they're
• 24:03
  Speaker 5: no interest loans, and they're no interest, no fees, no charges. Ever,
• 24:08
  Speaker 5: they're obviously not available to absolutely everybody. You have to
• 24:11
  Speaker 5: be in a little bit of a sticky circumstance. And
• 24:15
  Speaker 5: they have loans that are available up to two thousand
• 24:18
  Speaker 5: dollars for essentials, so essential goods and services they're not
• 24:22
  Speaker 5: gonna let you get a new flat screen TV, but
• 24:24
  Speaker 5: they will let you get things that are household items that.
• 24:27
  Speaker 1: You might need.
• 24:28
  Speaker 5: I know people who have bought washing machines and dryers
• 24:31
  Speaker 5: and stuff like that on NILS. Loans, car repairs and registration,
• 24:35
  Speaker 5: medical and dental technology if you need it, housing and education,
• 24:40
  Speaker 5: like they are so fantastic, but they do also have
• 24:44
  Speaker 5: some criteria that you need to meet to be eligible.
• 24:47
  Speaker 5: So you either need to have a healthcare card or
• 24:48
  Speaker 5: a pension card, or you need to earn less than
• 24:51
  Speaker 5: seventy thousand dollars as a single or one hundred thousand
• 24:54
  Speaker 5: dollars as a couple, and you can show that you
• 24:57
  Speaker 5: have the capacity to repay the loan.
• 24:59
  Speaker 1: So that's pretty good. Okay, that's true.
• 25:00
  Speaker 5: Like it's not saying you need to have experienced really
• 25:03
  Speaker 5: significant disadvantage. But we really need to understand what it
• 25:07
  Speaker 5: means when a friend us to borrow money, Like I
• 25:10
  Speaker 5: do think it's not your position to be like George,
• 25:12
  Speaker 5: I let's give you an education.
• 25:14
  Speaker 1: But it's also like, hey, here are some resources.
• 25:16
  Speaker 5: I don't have the capacity to lend you five hundred
• 25:19
  Speaker 5: dollars or I really don't want to for the sake
• 25:21
  Speaker 5: of our friendship, because I feel like you're going to
• 25:24
  Speaker 5: lose one of those things if your friend's bad at money, right,
• 25:27
  Speaker 5: I'm either going to lose the friendship or I'm going
• 25:28
  Speaker 5: to lose the money. Yeah, And that's a really awkward
• 25:31
  Speaker 5: circumstance to be in. And if a person is coming
• 25:34
  Speaker 5: directly to you for cash, I always wonder, like, what
• 25:39
  Speaker 5: other avenues have they explored. Maybe it was just the
• 25:43
  Speaker 5: easiest one that they came to. Yeah, And I think
• 25:45
  Speaker 5: that we need to look into the alternatives because as
• 25:49
  Speaker 5: we know, payday loans are not great, Like they're going
• 25:52
  Speaker 5: to put you in an awful financial position. And I
• 25:55
  Speaker 5: guarantee over the next few months or even the next
• 25:58
  Speaker 5: twelve months, we're going to see an uptake of advertising
• 26:01
  Speaker 5: for those payday loans. I'm seeing them everywhere. On the
• 26:04
  Speaker 5: way here, I was listening to the radio and there
• 26:06
  Speaker 5: was an ad for a company called my pay Now
• 26:09
  Speaker 5: and it's get your pay on demand.
• 26:11
  Speaker 1: Guys.
• 26:11
  Speaker 5: It's just a new way of framing a payday loan.
• 26:15
  Speaker 5: They have very high interest. Their entire premise is they're like, oh,
• 26:19
  Speaker 5: will help you budget and cash flow easier because you
• 26:21
  Speaker 5: can get the pay that you're going to get paid
• 26:23
  Speaker 5: on the fifteenth next month today, and you go, oh,
• 26:25
  Speaker 5: that's really helpful, but it's actually putting you behind because
• 26:30
  Speaker 5: they're saying things like, oh, we changed the way people
• 26:33
  Speaker 5: get paid. No, you've changed the way you're making money.
• 26:36
  Speaker 5: You've gone from being a loan shark to pretending like
• 26:39
  Speaker 5: you're helping me with my budget and cash flow, and
• 26:41
  Speaker 5: you're not.
• 26:42
  Speaker 1: You're absolutely not.
• 26:43
  Speaker 5: You're clipping the ticket along the way, and it's expensive.
• 26:46
  Speaker 5: It's an absolute raw anyway. I just think we need
• 26:49
  Speaker 5: to talk more about what it means when friends and
• 26:52
  Speaker 5: family ask for money, because there's so many things we
• 26:55
  Speaker 5: can help with. But at the end of the day, again,
• 26:58
  Speaker 5: really way up, what are you going to lose in this?
• 27:01
  Speaker 5: If I lend you five hundred dollars? Am I losing
• 27:03
  Speaker 5: the friendship? Or am I losing the money? Because most
• 27:06
  Speaker 5: of the time you'll lose one of those things. Last
• 27:09
  Speaker 5: question before we head to the break V what if
• 27:11
  Speaker 5: it's your partner who's asking for money. I think it's
• 27:15
  Speaker 5: a bit of a different circumstance, and if they're your partner,
• 27:17
  Speaker 5: it would be around all right, let's talk about this, Why, when, where,
• 27:20
  Speaker 5: how I mean, if your partner's just lost their job
• 27:22
  Speaker 5: because their job was not a session proof, I think
• 27:25
  Speaker 5: that's a wider conversation to having a balanced conversation about
• 27:30
  Speaker 5: budget and cash flow and supporting your partner during that time.
• 27:33
  Speaker 5: But I think if it's you know, just a friend,
• 27:36
  Speaker 5: that's a different circumstance than looking after your partner.
• 27:40
  Speaker 1: Yeah, very different.
• 27:41
  Speaker 5: Okay, very good. Let's take a break here, v David.
• 27:45
  Speaker 4: On the other side, guys, we will be chatting about
• 27:47
  Speaker 4: what we should do when it comes to our jobs
• 27:49
  Speaker 4: and our investments in preparation for a recession. So please
• 27:52
  Speaker 4: don't go anywhere, all right, Vicky d We're not panicking.
• 28:00
  Speaker 1: I've been called VICKI g.
• 28:02
  Speaker 4: We're establishing an emergency fund. We are, and we're striving
• 28:06
  Speaker 4: to pay off our debt as best we can.
• 28:08
  Speaker 5: We're not crucifying ourselves if we are in debt. We
• 28:12
  Speaker 5: are being very kind to ourselves. But there is a
• 28:15
  Speaker 5: lot more to get to. V I want to start
• 28:17
  Speaker 5: by talking about interest rates, which I believe you have
• 28:20
  Speaker 5: a special episode coming in. We hate brands Grove, the
• 28:23
  Speaker 5: Directential Cell Wealth. I mean, I'm unbiased, but they're a
• 28:26
  Speaker 5: pretty good mortgage broking company.
• 28:28
  Speaker 4: Pretty good, not bad, absolutely so. Interest rates have been
• 28:32
  Speaker 4: sickeningly high. How do we prepare for a recession if
• 28:36
  Speaker 4: we have a mortgage.
• 28:38
  Speaker 1: Let's zoom out yep.
• 28:39
  Speaker 5: When in doubt, dem out, zoom learn that we're gonna
• 28:42
  Speaker 5: look at the big picture.
• 28:43
  Speaker 3: Gee.
• 28:43
  Speaker 5: I think it's really important to put things in perspective
• 28:46
  Speaker 5: because if we look back to nineteen ninety, neither of
• 28:48
  Speaker 5: us were alive yet, but interest rates were seventeen percent,
• 28:52
  Speaker 5: so yes, they can get that high. However, at the
• 28:54
  Speaker 5: time the interest rates were seventeen percent, houses also were
• 28:57
  Speaker 5: costing between two and four times your your salary to purchase.
• 29:01
  Speaker 5: Now here in Melbourne, that's thirteen times your annual salary
• 29:05
  Speaker 5: to purchase a home. That's disgusting, that's sickening. However, past
• 29:10
  Speaker 5: performance doesn't help me from feeling not stressed right Like,
• 29:13
  Speaker 5: you can't just go of a People had it worse,
• 29:16
  Speaker 5: so you're not in the worst position. This is where
• 29:19
  Speaker 5: you need to take your power back. Stop looking at
• 29:22
  Speaker 5: the media. They're the ones making us anxious and talk
• 29:24
  Speaker 5: to your broker. Have a chat with them about what
• 29:27
  Speaker 5: that means. If you already have a mortgage, go to them.
• 29:31
  Speaker 5: Some banks g have actually dropped their interest rates because
• 29:34
  Speaker 5: they are trying to protect their communities, and I think
• 29:37
  Speaker 5: that's great. What a better time to refinance to a
• 29:40
  Speaker 5: lower interest rate to put you in the best position
• 29:43
  Speaker 5: going into a time of economic turmoil. However, if you're
• 29:47
  Speaker 5: thinking about getting into the market, it can make you
• 29:49
  Speaker 5: a little bit anxious because you might have the deposit
• 29:52
  Speaker 5: to borrow six hundred grand, but if interest rates increase again,
• 29:56
  Speaker 5: that might drop to like five hundred and eighty or
• 29:58
  Speaker 5: five hundred and fifty thousand, and that changes the ball game.
• 30:02
  Speaker 5: In saying that the property market is coming off, so
• 30:05
  Speaker 5: it's not nearly as competitive as it was, and that
• 30:07
  Speaker 5: means that prices are very likely to come down because obviously,
• 30:10
  Speaker 5: with interest rates rising, people are like, well, I don't
• 30:12
  Speaker 5: want to buy right now because it's more expensive than
• 30:14
  Speaker 5: it was, so we'll just wait. However, it's really important
• 30:18
  Speaker 5: to always pay attention to what your interest rate is
• 30:21
  Speaker 5: and make sure that you're getting the best one with.
• 30:23
  Speaker 1: Your mortgage broker.
• 30:24
  Speaker 5: So yes, rising interest rates can be really scary. But
• 30:29
  Speaker 5: the thing I want you to remember there is when
• 30:30
  Speaker 5: you speak to a broker, because of the bank's requirement,
• 30:33
  Speaker 5: they always add three percent when assessing what you can
• 30:36
  Speaker 5: pay back. So even g if you were like, all right,
• 30:39
  Speaker 5: well I got assessed it three percent and now the
• 30:41
  Speaker 5: interest rate is five and a half, your broker would
• 30:44
  Speaker 5: have sat you down and said, if this increases to this,
• 30:47
  Speaker 5: you can still pay it off. Let's have a look
• 30:49
  Speaker 5: at your budget and cash flow, like the bank doesn't
• 30:51
  Speaker 5: actually want to give you a loan you can't pay off,
• 30:54
  Speaker 5: because then we'd be in a circumstance like the GFC
• 30:57
  Speaker 5: where so many people were defaulting on mortgage because they
• 31:00
  Speaker 5: were given mortgages they couldn't afford. So here in Australia
• 31:03
  Speaker 5: there is very strict regulation, which is why it's so
• 31:06
  Speaker 5: hard to get into the property market around who can
• 31:09
  Speaker 5: have a mortgage and what the interest rate might rise
• 31:12
  Speaker 5: to and how to assess you So don't worry too much.
• 31:15
  Speaker 5: But my advice would be talk to a mortgage broker
• 31:18
  Speaker 5: or your financial advisor and if you're super worried about
• 31:21
  Speaker 5: it increasing, maybe consider having a locked in mortgage rate
• 31:26
  Speaker 5: instead of a variable loan going through this period of time, beautiful.
• 31:30
  Speaker 5: Let's move on to talk about jobs.
• 31:32
  Speaker 1: Now.
• 31:32
  Speaker 4: We mentioned last week that they can be greatly impacted
• 31:35
  Speaker 4: during a recession. How can we safeguard ourselves during this time.
• 31:39
  Speaker 5: Play the long game with your job, Gking. One of
• 31:41
  Speaker 5: the points you know, looking into this is that during
• 31:44
  Speaker 5: a recession, it's not usually recommended to move jobs. It's
• 31:48
  Speaker 5: usually recommended to sit down and find your place and
• 31:52
  Speaker 5: you know, just wait out the storm, like bunk it down.
• 31:55
  Speaker 5: And that makes sense because during a recession there are
• 31:58
  Speaker 5: less jobs going around anyway, there are less pay rises,
• 32:02
  Speaker 5: You're less likely to be able to move up and up.
• 32:05
  Speaker 5: This period of time is more about having financial stability
• 32:08
  Speaker 5: instead of trying to increase your pay rate. While I'm
• 32:11
  Speaker 5: not saying don't seize an opportunity if it's right in
• 32:14
  Speaker 5: front of you, like if someone knocked on your georgey
• 32:16
  Speaker 5: and was like, hey, here's a step up, here's a
• 32:18
  Speaker 5: great role. This job is quite recession proof because you're
• 32:21
  Speaker 5: working in an area that isn't impacted by recession. You
• 32:24
  Speaker 5: might go, yeah, right, no problems, but that might not
• 32:26
  Speaker 5: be the reality for everybody. So while I encourage you
• 32:29
  Speaker 5: to always back yourself, if you're not happy or supported
• 32:33
  Speaker 5: in your workplace, obviously move on. But I think it's
• 32:37
  Speaker 5: also time to realize that the job market or what's available,
• 32:40
  Speaker 5: and the job market is going to be much less
• 32:42
  Speaker 5: than it usually is because coming into times like this,
• 32:46
  Speaker 5: a lot of businesses and I look at it too,
• 32:48
  Speaker 5: you know, as a business owner, and go ooh, is
• 32:50
  Speaker 5: it a good idea to hire somebody else? I don't
• 32:52
  Speaker 5: know what's going to happen. They might just put the
• 32:55
  Speaker 5: brakes on hiring. They might put a hiring freeze on
• 32:58
  Speaker 5: just to make sure that they're not increasing or shifting around.
• 33:01
  Speaker 5: So the opportunities you want might not actually exist at
• 33:04
  Speaker 5: this point in time. If you do need to quit
• 33:07
  Speaker 5: and you don't have another job to immediately, go.
• 33:10
  Speaker 1: To emergency fund George A.
• 33:12
  Speaker 5: Kying make sure you have enough cash to support you
• 33:15
  Speaker 5: during that period of time that it might take to
• 33:18
  Speaker 5: find some new work. And then also side hustle, why
• 33:22
  Speaker 5: can't we make some extra money during this time. Let's
• 33:25
  Speaker 5: go side hustle. We had an uber driver on the
• 33:28
  Speaker 5: show a couple of weeks ago, legend making bank.
• 33:32
  Speaker 1: That's really flexible.
• 33:33
  Speaker 5: There are so many ways in twenty twenty two to
• 33:35
  Speaker 5: add extra income to your life.
• 33:37
  Speaker 1: I love it.
• 33:37
  Speaker 5: So if that's something you want to do, go for it.
• 33:40
  Speaker 5: And then if you're staying in your job, upskill, find
• 33:44
  Speaker 5: ways to make yourself more valuable in that. So once
• 33:46
  Speaker 5: we do come out the other side, maybe it's time
• 33:48
  Speaker 5: to grow, Maybe it's time to step up. I think
• 33:50
  Speaker 5: that we should always be looking for opportunities to upskill
• 33:53
  Speaker 5: or study or do something to get ourselves ahead, because
• 33:57
  Speaker 5: not only do employers expect that, but your finances are
• 34:01
  Speaker 5: going to benefit from you being more valuable.
• 34:04
  Speaker 4: Right, definitely, Okay, I feel like that's interesting because it
• 34:08
  Speaker 4: doesn't marry up with the great resignation that we've seen
• 34:12
  Speaker 4: and how many people have.
• 34:13
  Speaker 1: Been, so it's actually so interesting.
• 34:15
  Speaker 5: The juxtaposition of TikTok content again is so interesting because
• 34:20
  Speaker 5: so many people are like, no, you're right, tell your
• 34:22
  Speaker 5: boss yes and that and quit if you're not being valued,
• 34:25
  Speaker 5: and I totally get that. But then the juxtaposition of
• 34:28
  Speaker 5: there's going to be a whole heap of recession content
• 34:30
  Speaker 5: coming of like staying in your job and being stable, Like,
• 34:33
  Speaker 5: it's just so interesting how much advice floats around that
• 34:36
  Speaker 5: you go, this is like completely conflicting one another. So
• 34:41
  Speaker 5: I think the important thing is just stay in your
• 34:43
  Speaker 5: own lane. Look at your own job. If you work
• 34:45
  Speaker 5: in a job where it is quite stable during a
• 34:48
  Speaker 5: period of economic turmoil, you're good.
• 34:51
  Speaker 1: But if it's a bit.
• 34:52
  Speaker 5: Risky, maybe have a think about adding a little bit
• 34:54
  Speaker 5: of extra cash to your emergency fund, because we all
• 34:57
  Speaker 5: deserve to sleep well at night.
• 34:58
  Speaker 4: Speaking of risk fee, would you say it's too risky
• 35:02
  Speaker 4: if I have dreams of opening my own wine bar
• 35:04
  Speaker 4: or maybe a cafe that at a time of potential recession,
• 35:08
  Speaker 4: that's probably not the best time to be doing so.
• 35:10
  Speaker 1: Or should I go for it?
• 35:12
  Speaker 5: I want to support you so bad gee, but I
• 35:15
  Speaker 5: would argue that now and might not be the time
• 35:18
  Speaker 5: to start a cafe or a boutique that you've always
• 35:21
  Speaker 5: dreamed of if you don't have a solid financial plan.
• 35:24
  Speaker 5: Early on in a recession is not arguably the time
• 35:27
  Speaker 5: to stick your neck out and get it done. Later,
• 35:29
  Speaker 5: once the economy starts to show signs of a sustainable recovery,
• 35:33
  Speaker 5: then we can think about it. Then might be a
• 35:35
  Speaker 5: really good opportunity that you can seize, because unfortunately, during
• 35:39
  Speaker 5: a recession a lot of businesses do and we all
• 35:42
  Speaker 5: shut down, So there could be really great commercial opportunities.
• 35:45
  Speaker 5: Great time to pick up a cheap commercial lease if
• 35:47
  Speaker 5: you're opening a shop, Great time to pick up a
• 35:49
  Speaker 5: cafe in a good location. Maybe there are a whole
• 35:52
  Speaker 5: heap of opportunities, but I'm one that is quite quite
• 35:55
  Speaker 5: a verse to risk, and I would be concerned if
• 35:58
  Speaker 5: you wanted to open something right here and now, not
• 36:01
  Speaker 5: knowing what the future might hold.
• 36:03
  Speaker 1: But that information and.
• 36:05
  Speaker 5: That advice could have been true in COVID too, right,
• 36:08
  Speaker 5: And I think that we need to learn a lot
• 36:10
  Speaker 5: from what happened during COVID and our lockdowns, because look
• 36:13
  Speaker 5: at how many businesses absolutely flourished.
• 36:15
  Speaker 1: Even online.
• 36:17
  Speaker 5: So I think we just need to look at the
• 36:18
  Speaker 5: type of business you're opening and work out whether it's
• 36:22
  Speaker 5: still going to be an attractive offering when people have
• 36:25
  Speaker 5: less disposable income. In saying that, gee, we've also talked
• 36:29
  Speaker 5: on the podcast before about the lipstick recession and how
• 36:32
  Speaker 5: people are very likely to spend during a recession on
• 36:35
  Speaker 5: small luxuries because they can't afford the big ones. So
• 36:38
  Speaker 5: maybe Nail's the time to cease, But that is honestly
• 36:41
  Speaker 5: not up to me. It's going to only be up
• 36:43
  Speaker 5: to you. I'd just be apprehensive saying that starting any business,
• 36:46
  Speaker 5: you should be thinking about risk and what that means
• 36:48
  Speaker 5: and what's the worst thing that could happen, so that
• 36:50
  Speaker 5: you can plan to not have that happen.
• 36:52
  Speaker 4: Great podcast about business, cool, business Bible all that time.
• 36:56
  Speaker 5: If you're interesting, We'll bring that back at some point
• 36:58
  Speaker 5: next year from us it's coming.
• 37:01
  Speaker 4: Two final questions for today V and they involve spending
• 37:05
  Speaker 4: money in this time while prices are really low. If
• 37:08
  Speaker 4: you are in a position to invest, is now the
• 37:11
  Speaker 4: right time or prices alone? Can we say like shares
• 37:14
  Speaker 4: are on sale. Shares are on sale, so that's goodeen
• 37:17
  Speaker 4: money win.
• 37:18
  Speaker 5: But from my perspective, the best time to invest is
• 37:21
  Speaker 5: the time that works for you. However, a lot of
• 37:23
  Speaker 5: people in our community are seeing right now as a
• 37:26
  Speaker 5: really great opportunity to add some stuff to their portfolios
• 37:29
  Speaker 5: because shares are on sale.
• 37:31
  Speaker 1: Again.
• 37:32
  Speaker 5: I'd go back to your cash flow, can you afford that?
• 37:34
  Speaker 5: Or should you really be prepping yourself to have a
• 37:36
  Speaker 5: bit more of a financially secur at home, Like should
• 37:39
  Speaker 5: we be building up our emergency fund a little bit more?
• 37:42
  Speaker 5: And before anybody starts investing. Summary of my next book,
• 37:47
  Speaker 5: George comes out on the twentieth of October. Have an
• 37:50
  Speaker 5: emergency fund before we even consider investing, because we never
• 37:54
  Speaker 5: ever ever want to buy a share, and then what
• 37:56
  Speaker 5: happens if you lose your job in a month, George, Like,
• 37:59
  Speaker 5: then you have to say, and the market might have
• 38:01
  Speaker 5: gone down even more because it might have because you
• 38:03
  Speaker 5: lost your job. What then we pull out the money
• 38:06
  Speaker 5: and we've lost even more. It's just it's not a
• 38:08
  Speaker 5: position we want.
• 38:09
  Speaker 1: To be in.
• 38:10
  Speaker 5: Anything we put into the market, we want to put
• 38:12
  Speaker 5: into the market for a long period of time so
• 38:15
  Speaker 5: that we can benefit from the magic of compound interest.
• 38:18
  Speaker 5: And if you can't do that, it wouldn't be investing it.
• 38:21
  Speaker 5: So it's not the time to make short term gains.
• 38:23
  Speaker 5: It's not about buying now and selling in six months.
• 38:25
  Speaker 5: One because you'll have big CGT issues capital gains tax
• 38:29
  Speaker 5: scus I'm not needed here. But two because we just
• 38:34
  Speaker 5: don't want to be in a circumstance where we're forced
• 38:36
  Speaker 5: to sell something. And we also can't predict the markets, Like,
• 38:40
  Speaker 5: how do you know in six months that that's going
• 38:42
  Speaker 5: to go up?
• 38:43
  Speaker 1: If we could predict the market's jeeking up, be well,
• 38:46
  Speaker 1: be well, you'd definitely be wealthyer.
• 38:48
  Speaker 5: Oh you'd be taking about me like they talk about
• 38:51
  Speaker 5: Lauren Bucket, and I'm all about that.
• 38:53
  Speaker 4: So you would also say we're obviously in a bear
• 38:55
  Speaker 4: market as discussed, are we shouldn't feel the temptation to sell.
• 38:59
  Speaker 5: No, we need to remember the emotional journey of investing.
• 39:04
  Speaker 5: When people are really scared, that's often a really good
• 39:07
  Speaker 5: time to pick up more investments. However, it's not a
• 39:11
  Speaker 5: good time to sell because say you had ten shares
• 39:13
  Speaker 5: g and you bought them for ten dollars, so a
• 39:15
  Speaker 5: dollar per share, and then we're going through this bear market,
• 39:19
  Speaker 5: they've dropped in value. Your shares now worth fifty cents each.
• 39:22
  Speaker 5: You're absolutely terrified and you're like, maybe I should take
• 39:25
  Speaker 5: my cash off the table. No, because you're accepting less
• 39:30
  Speaker 5: for something that was worth more. And we want to
• 39:33
  Speaker 5: make sure that we are putting ourselves in the best
• 39:35
  Speaker 5: possible position, and the best position is to educate ourselves
• 39:39
  Speaker 5: on what that means and have a look at those
• 39:40
  Speaker 5: shares and go all right, well, right now they're worth
• 39:43
  Speaker 5: fifty cents each of my share portfolio might only be
• 39:45
  Speaker 5: worth five dollars. But when in doubt, zoom ount. We
• 39:48
  Speaker 5: look at how every other hiccup in history has always recovered,
• 39:53
  Speaker 5: and then some you look at the Great Depression, you
• 39:55
  Speaker 5: look at the GFC, you look at COVID. We are
• 39:58
  Speaker 5: up and up. Since then, nobody, if they had invested
• 40:03
  Speaker 5: ten thousand dollars over a period of thirty years in
• 40:06
  Speaker 5: the Australian stock market, had a portfolio that went back food, George,
• 40:10
  Speaker 5: So we need to zoom out see the big picture.
• 40:12
  Speaker 5: It might be stressful. However, the amount that you are
• 40:15
  Speaker 5: seeing in your investment portfolio today is not how much
• 40:18
  Speaker 5: money you have. It's how much money your investment portfolio
• 40:22
  Speaker 5: would be worth if you sold it. But we're not
• 40:25
  Speaker 5: going to sell it.
• 40:25
  Speaker 1: Are we just not going to sell it?
• 40:27
  Speaker 5: And the same is true if you're looking at your superannuation,
• 40:30
  Speaker 5: you're like, should I put it in a more conservative portfolio? Okay,
• 40:34
  Speaker 5: well that might be more aligned to your risk profile. However,
• 40:37
  Speaker 5: if you move it right now, you are accepting losses
• 40:41
  Speaker 5: in that previous portfolio to then sell it down and
• 40:44
  Speaker 5: put it in a different one. Is that what you
• 40:46
  Speaker 5: want to do with your money? But I can't answer
• 40:48
  Speaker 5: that for you. You might not want to do that,
• 40:50
  Speaker 5: g but someone else might go. But V I'd sleep
• 40:52
  Speaker 5: so much better at night.
• 40:53
  Speaker 1: You do, you boo.
• 40:54
  Speaker 5: But our job is to make sure you are super
• 40:57
  Speaker 5: educated and have all the tools and skills and options
• 41:00
  Speaker 5: on the table necessary to make the right decision for you.
• 41:03
  Speaker 5: Because sadly, as much as I would love to give
• 41:05
  Speaker 5: each and every single one of you personal advice and go, gee,
• 41:08
  Speaker 5: this is right for you, Ana, Lisa, this is right
• 41:11
  Speaker 5: for you, Lucy the Dog, this is how you do
• 41:13
  Speaker 5: your finances, Unfortunately, there's not enough of me to go around.
• 41:16
  Speaker 1: And that's why I.
• 41:17
  Speaker 5: Want to put you in a position where you can
• 41:19
  Speaker 5: make that decision for yourself.
• 41:21
  Speaker 4: All right, VD, I'm feeling zen, I'm feeling calm and
• 41:24
  Speaker 4: feeling ready for this gorgeous recession on the way. Moral
• 41:27
  Speaker 4: of the story is set yourself up with an emergency fund.
• 41:29
  Speaker 5: Yeah. Moral of the story is that always understand what
• 41:32
  Speaker 5: it means to go through a period of time that
• 41:34
  Speaker 5: isn't so certain, and maybe think about upskilling or doing
• 41:38
  Speaker 5: some side jobs, or how are you going to generate
• 41:41
  Speaker 5: income if you were to lose your job.
• 41:43
  Speaker 1: I think is a very good question to answer yourself.
• 41:45
  Speaker 1: As well.
• 41:46
  Speaker 4: As I said in a previous episode, V, honestly, I'm
• 41:49
  Speaker 4: excited for this period after the recession. Yeah, the flapper era, oh,
• 41:53
  Speaker 4: the flappey era getting in our little skirts. We're going
• 41:56
  Speaker 4: for a dance.
• 41:57
  Speaker 1: Oh, we we're going. I love it. We're all invited.
• 42:00
  Speaker 4: She's on the Money having against part Yeah, absolutely, just you're.
• 42:04
  Speaker 1: Done here, alrighty.
• 42:05
  Speaker 4: The advice chair on She's on the Money is general
• 42:08
  Speaker 4: in nature and does not consider your individual circumstances. She's
• 42:11
  Speaker 4: on the money exists purely for educational purposes and should
• 42:14
  Speaker 4: not be relied upon to make an investment or a
• 42:16
  Speaker 4: financial decision. And we promise Victoria divine and She's on
• 42:20
  Speaker 4: the Money are authorized representatives in Focus Securities Australia Proprietary
• 42:25
  Speaker 4: Limited AVM four seven zero nine seven seven nine seven
• 42:28
  Speaker 4: zero four nine as L two three six by two three.
• 42:32
  Speaker 1: We will see you on Friday. Team, see you on Friday, guys.
• 42:35
  Speaker 5: Bye,