Latest / She's On The Money / I see it, I like it, I want it, I got (credit card) debt

Transcript

I see it, I like it, I want it, I got (credit card) debt · She's On The Money

• 0:00
  Speaker 1: She's on the Money.
• 0:02
  Speaker 2: She's on the Money.
• 0:14
  Speaker 3: Hello, and welcome to She's on the Money, the podcast
• 0:17
  Speaker 3: for millennials who want financial freedom. This episode of the
• 0:20
  Speaker 3: show is brought to you by Australia's first ever smart Bank,
• 0:22
  Speaker 3: eighty six four hundred. My name is Georgia King, a
• 0:25
  Speaker 3: copywriter and TV assistant whose money smarts could definitely see
• 0:28
  Speaker 3: some improving and would seem I am in luck as
• 0:30
  Speaker 3: I am as always, joined by millennial money sweetheart, Miss
• 0:34
  Speaker 3: Victoria Dubine.
• 0:35
  Speaker 2: Hello, Jaki.
• 0:37
  Speaker 3: Alrighty, So today on the show, we are going to
• 0:39
  Speaker 3: be delving into the topical world of credit cards. The
• 0:41
  Speaker 3: average Australian has three two hundred and fifty eight dollars
• 0:45
  Speaker 3: on their credit card and whilst everyone says they're paying
• 0:48
  Speaker 3: them off, the stats here are telling us that only
• 0:50
  Speaker 3: one third of the debt on these cards gets paid
• 0:53
  Speaker 3: off each month. That's a whopping nine hundred and eighty
• 0:56
  Speaker 3: six dollars each and every single month. That is getting
• 0:59
  Speaker 3: our average oussie in to more debt. This topic has
• 1:01
  Speaker 3: also been a very juicy one in our community. But
• 1:04
  Speaker 3: before we dive right on in Victoria, let's chut money
• 1:07
  Speaker 3: wins and confessions.
• 1:08
  Speaker 2: How did you go this week?
• 1:10
  Speaker 4: I actually have a money confession for you guys this week.
• 1:12
  Speaker 4: Over the last couple of weeks, we have moved offices,
• 1:15
  Speaker 4: which is very exciting. But in our previous office, we
• 1:19
  Speaker 4: had a coffee machine in the kitchen which was brilliant
• 1:23
  Speaker 4: and everyone in the yeah, everyone in the office knew
• 1:25
  Speaker 4: how to make really great coffee. And moving I just
• 1:29
  Speaker 4: didn't think of that as something that was a priority,
• 1:31
  Speaker 4: which is not at this point in time. But I
• 1:34
  Speaker 4: didn't realize how expensive everyday coffees were going to be.
• 1:38
  Speaker 4: And so every day I'm now paying for coffees, and
• 1:40
  Speaker 4: I'm often finding myself paying for coffees for.
• 1:42
  Speaker 2: Other people in the office because every time they leave to.
• 1:45
  Speaker 4: Get one, I just say, hey, does anyone else want
• 1:47
  Speaker 4: a coffee? Because I feel bad if I'm just going
• 1:49
  Speaker 4: and helping myself, you know. And so these coffee bills
• 1:53
  Speaker 4: are actually starting to add up, and I'm now looking
• 1:56
  Speaker 4: at how to get a coffee machine in the office.
• 1:58
  Speaker 2: So maybe in a couple of weeks I could have
• 1:59
  Speaker 2: a money win for you.
• 2:00
  Speaker 3: Yeah, fingers crossed. Actually just on that seven to eleven
• 2:04
  Speaker 3: not sponsored guys. They've started doing soy Milk have they
• 2:07
  Speaker 3: actually their.
• 2:07
  Speaker 2: One dollar coffee.
• 2:08
  Speaker 3: Yeah, don't have to pay the impress I was very
• 2:10
  Speaker 3: excited and it tastes pretty good.
• 2:12
  Speaker 4: At what point in time do you think they'll start
• 2:14
  Speaker 4: doing oatmeal cruse a little bit during give it a
• 2:17
  Speaker 4: few years. Sorry, that's also why my coffee orders are
• 2:20
  Speaker 4: really expensive.
• 2:22
  Speaker 2: Gee, have you got a money win or confession for
• 2:24
  Speaker 2: me this week?
• 2:25
  Speaker 5: Do you?
• 2:25
  Speaker 2: Guys?
• 2:26
  Speaker 1: Minds the money winess?
• 2:27
  Speaker 3: So a few episodes ago, I confessed that I had
• 2:31
  Speaker 3: a I got a Mikey fine, which in Victoria is
• 2:33
  Speaker 3: the public transport fine for not tapping on, which.
• 2:35
  Speaker 2: Was irresponsible, so irresponsible.
• 2:37
  Speaker 3: I was done the wrong thing. I got the letter
• 2:39
  Speaker 3: in the mail this week, opened up the letter and
• 2:42
  Speaker 3: wat should be in there?
• 2:43
  Speaker 2: Guys?
• 2:43
  Speaker 1: But a warning I got? Are you kidding? Got let off?
• 2:46
  Speaker 2: You got a warning?
• 2:47
  Speaker 3: I got a warning because I hadn't had an offense
• 2:49
  Speaker 3: in like three years or ever.
• 2:50
  Speaker 2: It's like very may three dollars. I'm very impressed with that.
• 2:53
  Speaker 2: That is amazing.
• 2:54
  Speaker 4: I feel like I've been taking the mickey out of
• 2:56
  Speaker 4: you for a little while about getting a Mikey fine.
• 2:58
  Speaker 2: And now who's now who's looking silly? It's me?
• 3:01
  Speaker 1: Yeah, No, you're right.
• 3:03
  Speaker 3: And now let's take a quick look at the Facebook community,
• 3:05
  Speaker 3: which was impressive as always, Victoria.
• 3:07
  Speaker 1: Did anyone stand out to you this week?
• 3:09
  Speaker 2: Yes?
• 3:09
  Speaker 4: I actually have a favorite post, mainly because I really
• 3:12
  Speaker 4: resonated with it.
• 3:14
  Speaker 2: Our friend Mary posted a little bit earlier.
• 3:17
  Speaker 4: This month and said, if Jane Fonder can outfit repeat
• 3:20
  Speaker 4: at the Oscars, then we can wear the same outfit
• 3:22
  Speaker 4: to two different events.
• 3:24
  Speaker 2: Ladies. She says she's a proud outfit repeater over there.
• 3:27
  Speaker 4: And I couldn't agree more. I think, really, I think
• 3:30
  Speaker 4: outfit repeating is one of my favorite things to do.
• 3:32
  Speaker 4: And I am quite known in my friend group for
• 3:36
  Speaker 4: buying a dress and wearing it multiple times to multiple events. Yeah,
• 3:39
  Speaker 4: not caring who's at the event, Like there are no
• 3:41
  Speaker 4: rules here. Oh sorry, sorry you guys. You've seen this
• 3:44
  Speaker 4: dress before. No, I love this dress. I'm gonna wear it.
• 3:47
  Speaker 2: Until it wears Now. I hate Jane Fonder, Oh yeah, exactly.
• 3:50
  Speaker 4: And if I could be eighty two and looking that
• 3:52
  Speaker 4: sassy like, I'm here for this.
• 3:54
  Speaker 1: She's the hottest dady two year older of cinema life.
• 3:56
  Speaker 2: Gee, have you got something as equally impressive? I do?
• 3:59
  Speaker 3: Mineus Sunday who has written in Basically, all I do
• 4:03
  Speaker 3: in my spare time is read this page. Same goal,
• 4:06
  Speaker 3: but on Sunday, I decided to set a goal of
• 4:08
  Speaker 3: fifty thousand dollars in fifty weeks. So saving fifty thousand dollars,
• 4:11
  Speaker 3: that's impressive, a massive goal. I had about nine hundred
• 4:14
  Speaker 3: dollars in my savings, so I wanted this week to
• 4:16
  Speaker 3: be my week two. So to try and stay accountable,
• 4:19
  Speaker 3: I felt I needed to post here because you're also supportive,
• 4:21
  Speaker 3: which you guys are. I've decided to reach my goal
• 4:24
  Speaker 3: for fifty weeks. I will only buy secondhand or borrow
• 4:26
  Speaker 3: if I can only eat at home as much as possible.
• 4:29
  Speaker 3: Give up my eyelash extensions and stick on some falsas.
• 4:31
  Speaker 2: Oh that's a big one.
• 4:33
  Speaker 3: Pay insurance up front, sell the things I've been meaning
• 4:36
  Speaker 3: to sell for ages, make my dog's food and cut
• 4:38
  Speaker 3: their portions because they're overweight.
• 4:40
  Speaker 1: Only drink water or cordial.
• 4:41
  Speaker 3: No buying makeup, do my own pedicures instead of paying
• 4:44
  Speaker 3: a swap beauty services that I offer instead of payment
• 4:47
  Speaker 3: where I can.
• 4:48
  Speaker 2: Impressive.
• 4:52
  Speaker 3: Okay, so now let's get into the main part of
• 4:54
  Speaker 3: the show today. One point nine million Australians are struggling
• 4:57
  Speaker 3: with credit card debt and ACI that we are paying
• 5:00
  Speaker 3: a one point five billion in credit card fees that
• 5:03
  Speaker 3: includes annual fees, interest repayments, late payment fees and other
• 5:07
  Speaker 3: fees associated with credit card use. Victoria, Why are we
• 5:10
  Speaker 3: getting ourselves in such a big credit card pickle?
• 5:13
  Speaker 4: Whilst I love pickles, I do not love credit card pickles.
• 5:17
  Speaker 2: Off the top.
• 5:18
  Speaker 4: Of my head, I think that there are three main
• 5:20
  Speaker 4: rings in cities that I can just identify it here
• 5:23
  Speaker 4: and now. The first is, and I talk about this
• 5:26
  Speaker 4: all the time, like Morgan and I talk to people
• 5:28
  Speaker 4: each and every single week about credit card debt. And
• 5:31
  Speaker 4: the first thing is that it's just really easy to do.
• 5:33
  Speaker 4: It is so easy to spend money on a credit
• 5:36
  Speaker 4: card when you don't have anything associated with it, Like
• 5:40
  Speaker 4: you haven't been given a set amount of cash to spend,
• 5:43
  Speaker 4: but in your head, you know you've got a three
• 5:45
  Speaker 4: thousand dollar limit that you can max out. And whilst
• 5:47
  Speaker 4: a lot of people are like, oh, I only put
• 5:49
  Speaker 4: necessary things on my credit card, you are going to,
• 5:53
  Speaker 4: according to statistics and research, spend anywhere between fourteen and
• 5:57
  Speaker 4: twenty two percent more because you're using a credit card,
• 6:01
  Speaker 4: You're often more likely to just go, oh, I'll just
• 6:04
  Speaker 4: pop it on my card instead of making that same
• 6:07
  Speaker 4: decision had you had cash. So, for example, if you
• 6:10
  Speaker 4: had one hundred and fifty dollars budgeted for your weekly
• 6:13
  Speaker 4: family grocery shop, and you only had that one hundred
• 6:16
  Speaker 4: and fifty dollars in cash or just on a visa
• 6:18
  Speaker 4: debit card, and you were really aware of how much
• 6:21
  Speaker 4: money you had allocated to that shopping experience, you could
• 6:24
  Speaker 4: say you are probably going to pay really careful attention
• 6:28
  Speaker 4: to making sure that as you walk around the supermarket
• 6:30
  Speaker 4: you're picking things that are in line with the budget
• 6:32
  Speaker 4: that you have set. Whereas if you walk into the
• 6:35
  Speaker 4: same grocery store with a credit card that has a
• 6:38
  Speaker 4: three thousand dollar limit, there's no immediate penalty, there's no
• 6:41
  Speaker 4: one keeping you accountable, so you're just doing your grocery shop,
• 6:44
  Speaker 4: popping whatever in and oh, look, the vegan magnums are
• 6:47
  Speaker 4: on sale again this week.
• 6:49
  Speaker 2: I'll just throw it in the trolley. There's only three
• 6:51
  Speaker 2: per box.
• 6:51
  Speaker 4: Probably should get two boxes, make sense, and you are
• 6:55
  Speaker 4: likely to overspend without giving it much thought at all.
• 6:58
  Speaker 4: And that's the problem. Credit cards actually promote unconscious spending
• 7:03
  Speaker 4: and as a result, we end up spending more furthering
• 7:06
  Speaker 4: that actually g our friends over at finder dot com
• 7:09
  Speaker 4: dot au, which this isn't sponsored. I just really like
• 7:11
  Speaker 4: the status on their website. They have a really cool
• 7:15
  Speaker 4: chart that says that the average credit card purchase is
• 7:18
  Speaker 4: one hundred and eight dollars and four cents, whereas if
• 7:21
  Speaker 4: you were purchasing on a debit card, you'd only spend
• 7:25
  Speaker 4: forty six dollars and seventy five cents. And I think
• 7:28
  Speaker 4: that that just plays out quite well in terms of
• 7:31
  Speaker 4: the conversation we're having right now that you do actually
• 7:33
  Speaker 4: spend more on a credit card than you do on
• 7:36
  Speaker 4: a debit card, and I just think it's really unconscious.
• 7:39
  Speaker 4: So many times do people come in to me and
• 7:42
  Speaker 4: we do these hours of power, and it's often with
• 7:44
  Speaker 4: people who say, all right, I want to get better
• 7:46
  Speaker 4: at money, I want to change my money story, which
• 7:48
  Speaker 4: is fantastic, but often that is prompted by being in
• 7:52
  Speaker 4: some form of debt or being in a situation that
• 7:54
  Speaker 4: they no longer want to be in. And we sit
• 7:56
  Speaker 4: down with these people and not one person ever gets
• 7:59
  Speaker 4: a credit card to get into debt, Like no one
• 8:01
  Speaker 4: chooses that life. No one says, all right, well I'm
• 8:04
  Speaker 4: going to get a credit card because I want to
• 8:06
  Speaker 4: spiral out of control and not be in control of
• 8:09
  Speaker 4: my financial life. No one does that. We all get
• 8:11
  Speaker 4: it for a really good reason and.
• 8:13
  Speaker 1: Also a solution to a problem.
• 8:14
  Speaker 4: Exactly, it's a solution to an immediate problem. It makes
• 8:18
  Speaker 4: our lives easier at that point in time. We often go, oh,
• 8:21
  Speaker 4: but I'm going on a holiday and I want to
• 8:23
  Speaker 4: feel secure, or I have a whole heap of unifees
• 8:26
  Speaker 4: coming up, and I know that a credit card will
• 8:28
  Speaker 4: mean that I feel secure. Like often, getting a credit
• 8:30
  Speaker 4: card comes from a really wholesome place, but it takes
• 8:34
  Speaker 4: us somewhere we don't want to be, so for me,
• 8:36
  Speaker 4: that's really important to point out. And the second point
• 8:39
  Speaker 4: there is that using a credit card in a very
• 8:42
  Speaker 4: similar way to our one hundred and fifty dollars grocery
• 8:44
  Speaker 4: shop example, using a credit card has not very much
• 8:47
  Speaker 4: pain associated with it. So if you think about how
• 8:50
  Speaker 4: you had to when you were little, hand over cash
• 8:52
  Speaker 4: at the corner shop because you were given like five
• 8:55
  Speaker 4: dollars to spend on lollies or like one dollar to
• 8:57
  Speaker 4: spend on lolli's In my case, you were really budgeting.
• 9:00
  Speaker 4: You were thinking about how much of a value exchange
• 9:03
  Speaker 4: you could get for the money that you were handing over,
• 9:05
  Speaker 4: like oh, I could probably get like ten ghost drops
• 9:08
  Speaker 4: for a dollar, or yeah, how good were they?
• 9:11
  Speaker 2: Or I could get like some fizzzs, but fizzies.
• 9:13
  Speaker 4: Were twenty cents, yeach, So like you as a child
• 9:16
  Speaker 4: with thinking about the value exchange of your dollar, whereas nowadays,
• 9:20
  Speaker 4: when we have credit card there's absolutely no pain associated
• 9:23
  Speaker 4: with that. Whereas when you are given cash, you are
• 9:26
  Speaker 4: put in a situation where you are thinking about how
• 9:28
  Speaker 4: much money you're going to get back because you hand
• 9:31
  Speaker 4: something over and someone hands you back something worthless, and
• 9:35
  Speaker 4: that's never something appealing. So I don't want to give
• 9:38
  Speaker 4: you a fifty dollar note and break it and only
• 9:40
  Speaker 4: be handed back five dollars in change, especially if it's
• 9:43
  Speaker 4: in coins like that hurts. But I think it's really
• 9:46
  Speaker 4: important to point out that when you use a credit
• 9:49
  Speaker 4: card there's absolutely no pain involved. And whilst we are
• 9:52
  Speaker 4: very tap happy, we talk about having debit cards and
• 9:55
  Speaker 4: we tap all the time. Often with a debit card,
• 9:58
  Speaker 4: there's also a different mindset. How much is on our
• 10:00
  Speaker 4: debit card, because when it runs out, our tapping.
• 10:03
  Speaker 2: Won't go through.
• 10:04
  Speaker 4: You know, we'll be in a position where we'll be declined,
• 10:07
  Speaker 4: and that's kind of embarrassing. So often a lot of
• 10:09
  Speaker 4: us know what's on our debit cards, but we only
• 10:12
  Speaker 4: ever think of our credit cards as a limit we
• 10:14
  Speaker 4: can spend up to, so we are far more likely
• 10:17
  Speaker 4: to tap on a credit card and think about it
• 10:20
  Speaker 4: as a future us problem. But as I've said six
• 10:23
  Speaker 4: hundred million times, that's absolutely not a wild over estimation.
• 10:28
  Speaker 4: If you live fake rich now, you'll be real poor later.
• 10:31
  Speaker 4: And if you put yourself in a situation where you're
• 10:33
  Speaker 4: making a future use problem, future you is still you
• 10:37
  Speaker 4: and you need to be looking after her. And if
• 10:39
  Speaker 4: you are not looking after her, you are going to
• 10:41
  Speaker 4: be far, far further back than you ever wanted to
• 10:44
  Speaker 4: be in the future. And that third point that I
• 10:47
  Speaker 4: wanted to touch on is actually my favorite point to
• 10:49
  Speaker 4: talk about, and that's instant gratification versus long term gratification,
• 10:54
  Speaker 4: and a credit card gives us instant access to be
• 10:56
  Speaker 4: able to buy whatever we like and live the life
• 10:58
  Speaker 4: we want. Back to that fake read real poor example,
• 11:01
  Speaker 4: it just enables us to make decisions that we haven't
• 11:05
  Speaker 4: sat on. I talk about this a lot in our
• 11:07
  Speaker 4: Facebook group, and I'm a very big believer in putting
• 11:10
  Speaker 4: twenty four hours between you and your spending. So it's
• 11:14
  Speaker 4: more about making conscious spending decisions.
• 11:17
  Speaker 3: Does that mean if you really want to buy the
• 11:19
  Speaker 3: new pair of shoes, you decide you want it and
• 11:22
  Speaker 3: then wait for that period and then you're.
• 11:24
  Speaker 2: Good to go.
• 11:25
  Speaker 4: Just making sure that you really do want that and
• 11:27
  Speaker 4: it's not something a bit frivolously exactly, because it's so
• 11:30
  Speaker 4: easy to go out with your girlfriends on the weekend
• 11:32
  Speaker 4: for breakfast and see a pair of shoes that you
• 11:34
  Speaker 4: really like and just go, oh, I've had a really
• 11:35
  Speaker 4: good weekend. I'm going to purchase them. Or as if
• 11:38
  Speaker 4: you say, look, I can purchase them if I think
• 11:39
  Speaker 4: about this purchase for a little.
• 11:41
  Speaker 2: Bit longer really want it, if I really.
• 11:43
  Speaker 4: Really want it, And if you can stretch out that
• 11:45
  Speaker 4: time delay as long as you can, it's even better. So,
• 11:49
  Speaker 4: like I say, put twenty four hours between you and
• 11:51
  Speaker 4: you're spending, because that's a really easy tangible thing for
• 11:54
  Speaker 4: people to do. Or as if you can put a
• 11:56
  Speaker 4: month between you when you're spending, you're going to be
• 11:58
  Speaker 4: in an even better position. And often when I'm talking
• 12:01
  Speaker 4: to clients, they will say, oh, I really want this
• 12:03
  Speaker 4: new dress, and I'll be like, that is so great.
• 12:06
  Speaker 4: Tell me in a month that you still want that
• 12:07
  Speaker 4: new dress. And more often than not, they're like, oh, yeah,
• 12:12
  Speaker 4: it's not new anymore. I've seen it on Instagram a
• 12:14
  Speaker 4: couple of times. It is not something that I need
• 12:16
  Speaker 4: to purchase. It's not worth the two hundred dollars it
• 12:18
  Speaker 4: might cost me. Yeah, your rational mind come exactly. So,
• 12:21
  Speaker 4: the longer time period that you can put in between
• 12:24
  Speaker 4: you and your spending, the more likely you are to
• 12:27
  Speaker 4: actually not make that purchasing decision. We're not talking about
• 12:31
  Speaker 4: necessities here. We are obviously talking about discretion respending and
• 12:35
  Speaker 4: on shopping and brunch and clothes and whatever else. We
• 12:38
  Speaker 4: are definitely not saying.
• 12:39
  Speaker 2: Oh, put twenty four hours in between you and buying
• 12:42
  Speaker 2: hand wash.
• 12:43
  Speaker 1: Iive hand washed.
• 12:43
  Speaker 2: No, not eggs, maybe not coffee.
• 12:46
  Speaker 4: Like, let's not stretch this out too much, but I
• 12:48
  Speaker 4: think it's really important to actually put some time between
• 12:51
  Speaker 4: you and your spending when you are talking about making
• 12:54
  Speaker 4: some purchasing decisions that maybe aren't aligned to your bigger
• 12:57
  Speaker 4: financial goals.
• 12:59
  Speaker 3: I think it's also more subs flying as well. When
• 13:00
  Speaker 3: you've delayed, you just feel better for not having just
• 13:03
  Speaker 3: done it.
• 13:04
  Speaker 4: Yes, yes, I actually more personally, I often use spending
• 13:08
  Speaker 4: to reward my behavior, and that is absolutely not a
• 13:11
  Speaker 4: good thing to do. But I know that if I've
• 13:14
  Speaker 4: worked really, really hard and there's something that I really
• 13:16
  Speaker 4: would like to purchase, I'll often say to myself, well,
• 13:19
  Speaker 4: I can have that if I achieve this, this and this,
• 13:22
  Speaker 4: and I'll often make it a really big hurdle for
• 13:24
  Speaker 4: me to get over. So when I do get something,
• 13:26
  Speaker 4: I'm like, oh, I got this because of exact XYZ,
• 13:29
  Speaker 4: And I think for me that makes me feel good,
• 13:31
  Speaker 4: but also puts the importance back on spending, because in
• 13:35
  Speaker 4: this day and age, I really feel like spending on
• 13:38
  Speaker 4: clothes and shoes and things that we don't need is
• 13:40
  Speaker 4: really normalized.
• 13:41
  Speaker 3: So well, Instagram, I have guess, is to blame for
• 13:44
  Speaker 3: that as well.
• 13:44
  Speaker 4: Exactly We've spoken about it on the podcast before, but
• 13:47
  Speaker 4: it is actually not normal to have a new outfit
• 13:50
  Speaker 4: every single weekend to go out. It is not normal
• 13:52
  Speaker 4: to actually need a new dress every single time you
• 13:55
  Speaker 4: go to a new event, and it's not reasonable to
• 13:57
  Speaker 4: expect of people. And whilst I absolutely appreciate that, sometimes
• 14:01
  Speaker 4: we are in positions where cool a new dress is
• 14:03
  Speaker 4: going to make me feel really great, Like, can't we
• 14:06
  Speaker 4: shop our own wardrobes or our friends' wardrobes before we
• 14:08
  Speaker 4: start making decisions like that.
• 14:10
  Speaker 3: So you said earlier, Victoria, that no one gets a
• 14:12
  Speaker 3: credit card with the intention of accruing bucket loads of debt.
• 14:15
  Speaker 2: Not that I'm aware of anyway.
• 14:17
  Speaker 3: Weird, Why why are we struggling to pay off our
• 14:20
  Speaker 3: credit cards?
• 14:21
  Speaker 2: There are so many reasons for this.
• 14:24
  Speaker 4: I think that people are often too optimistic about their
• 14:26
  Speaker 4: future behavior. We don't actually factor in life events and
• 14:30
  Speaker 4: unexpected expenses. Too many times have I heard people say, oh,
• 14:34
  Speaker 4: but when I'm older, I'm going to earn more money,
• 14:36
  Speaker 4: or I'm going to get a pay rise, or I'm
• 14:38
  Speaker 4: going to save later, And I just feel like that
• 14:41
  Speaker 4: is noney realistic.
• 14:42
  Speaker 2: It's it's actually quite unrealistic. You're right.
• 14:45
  Speaker 4: Often people actually spend what they earn more often than not.
• 14:48
  Speaker 4: When I talk to clients, I talk to people, they
• 14:50
  Speaker 4: are spending exactly what they are earning. So regardless of
• 14:54
  Speaker 4: what that is, whether it's fifty thousand dollars, a year
• 14:56
  Speaker 4: or five hundred thousand dollars a year. I guarantee you
• 14:59
  Speaker 4: people find a way to spend the money that they
• 15:01
  Speaker 4: have coming into their account. And I have seen this
• 15:04
  Speaker 4: so many times, and I think that so many of
• 15:07
  Speaker 4: you would be really surprised to go, Wow, how does
• 15:09
  Speaker 4: someone who has an income of five hundred thousand dollars
• 15:12
  Speaker 4: spend that? Believe me, they can. That is and we've
• 15:16
  Speaker 4: talked about this g on the pod before. That is
• 15:18
  Speaker 4: called lifestyle creep. Whereas your income increases, your lifestyle increases
• 15:22
  Speaker 4: as well. So I gave the example a couple of
• 15:24
  Speaker 4: months ago that as you're spending increases, you go from
• 15:28
  Speaker 4: purchasing supermarket makeup all the way to purchasing makeup at
• 15:32
  Speaker 4: Mecca and justifying more expensive products, more expensive experiences, and
• 15:36
  Speaker 4: actually just putting yourself in a position where your lifestyle
• 15:39
  Speaker 4: costs more doesn't mean that you're happier, It doesn't mean
• 15:42
  Speaker 4: that anything is actually better. It just means you're making different,
• 15:46
  Speaker 4: more expensive decisions. So you go from a cheap car
• 15:50
  Speaker 4: to buying a really expensive car. You're still getting from
• 15:52
  Speaker 4: A to B and you haven't actually realized the impact
• 15:55
  Speaker 4: that purchasing that car has taken away from your ability
• 15:59
  Speaker 4: to create a future life. So it's not me saying, hey,
• 16:02
  Speaker 4: you shouldn't be spending money, it's actually, hey, are your
• 16:05
  Speaker 4: spending behaviors actually in line with your values and the
• 16:08
  Speaker 4: things that you want to achieve over your life.
• 16:11
  Speaker 2: So the thing with credit cards.
• 16:13
  Speaker 4: Is that for each and every single credit card that
• 16:15
  Speaker 4: you have, you need to be able to pay that
• 16:18
  Speaker 4: entire credit card off each month so that you're not
• 16:21
  Speaker 4: accruing interests. So it might be thirty days, it might
• 16:24
  Speaker 4: be forty five. I'm not going to argue on semantics here,
• 16:26
  Speaker 4: but for you to be able to pay off your
• 16:28
  Speaker 4: credit card and have no interest accrued, you have to
• 16:32
  Speaker 4: be doing that from your surplus income every single month.
• 16:35
  Speaker 4: So that is after you've saved, after you've invested, after
• 16:38
  Speaker 4: you've put food on the table, just to pay your
• 16:40
  Speaker 4: credit card off.
• 16:41
  Speaker 2: You need to make sure that.
• 16:42
  Speaker 4: If you've maxed out, you actually have that two thousand
• 16:45
  Speaker 4: dollars one thousand dollars five thousand dollars free and available
• 16:49
  Speaker 4: to put on the credit card to get rid of it.
• 16:51
  Speaker 4: And I think that that is something that we don't
• 16:53
  Speaker 4: actually think about when we get credit cards, like at
• 16:56
  Speaker 4: no point has anyone turned around and said, hey, Victoria,
• 16:59
  Speaker 4: if you're going to get a credit card, just make
• 17:01
  Speaker 4: sure that the credit card limit you have is only
• 17:03
  Speaker 4: your surplus cash. Like what, oh, well, I can only
• 17:06
  Speaker 4: have four hundred dollars surplus cash. Okay, Well, if you're
• 17:09
  Speaker 4: going to get a credit card, that's probably what your
• 17:11
  Speaker 4: credit card should look like.
• 17:13
  Speaker 2: And then so what's the point exactly what's the point?
• 17:15
  Speaker 4: Well, you're just going to get into debt, and that
• 17:17
  Speaker 4: is exactly how people get into debt because they get
• 17:20
  Speaker 4: their two thousand dollars credit card, and your credit card
• 17:23
  Speaker 4: is incredibly shiny.
• 17:24
  Speaker 2: It is incredibly appealing.
• 17:25
  Speaker 4: And David Jones is just down the road and like,
• 17:28
  Speaker 4: I've just got this credit card. I've been working really hard.
• 17:31
  Speaker 4: I deserve a new pair of shoes. And I think
• 17:33
  Speaker 4: that people run really quickly to put money on their
• 17:35
  Speaker 4: credit card, especially in the first instance of getting them,
• 17:38
  Speaker 4: and they know a lot of people are listening to this,
• 17:40
  Speaker 4: relating to this because it is so common. But then
• 17:43
  Speaker 4: we actually don't have the surplus cash to paid off,
• 17:46
  Speaker 4: so we pay off the minimum, and then we go
• 17:48
  Speaker 4: into a position where we are paying off the minimum
• 17:50
  Speaker 4: each and every single month but we aren't actually getting
• 17:54
  Speaker 4: into the capital of it and paying down what we
• 17:56
  Speaker 4: actually owe. And that is how it compounds completely out
• 17:59
  Speaker 4: of control. Have you seen it go completely out of
• 18:01
  Speaker 4: control with any of your clients?
• 18:03
  Speaker 2: Absolutely, And they're not clients. Now.
• 18:06
  Speaker 4: I'm going to give an example here of someone who
• 18:08
  Speaker 4: didn't actually want to come on as a client because
• 18:10
  Speaker 4: they weren't ready to actually face that issue. But we
• 18:13
  Speaker 4: were talking to someone who had come in and we
• 18:17
  Speaker 4: had a couple of meetings with them, and we created
• 18:19
  Speaker 4: this complete debt reduction strategy. But as a couple, they
• 18:23
  Speaker 4: were in one hundred and sixty thousand dollars worth of
• 18:26
  Speaker 4: credit card and personal debt. So we're not talking like, oh,
• 18:28
  Speaker 4: I've got fifteen thousand dollars on my credit card. They
• 18:30
  Speaker 4: had one hundred and sixty thousand dollars spread between them.
• 18:35
  Speaker 4: And when they came in to me, they were like, oh,
• 18:37
  Speaker 4: we've got some credit card debt.
• 18:38
  Speaker 2: And I was like, yep, no problems, yep. We all
• 18:39
  Speaker 2: start somewhere. And they didn't actually know the sum of
• 18:44
  Speaker 2: what they were in debt to.
• 18:45
  Speaker 4: They couldn't articulate to me what was going on, and
• 18:47
  Speaker 4: so how much credit card debt have you got And
• 18:50
  Speaker 4: the wife said, look, I think it's about twenty thousand
• 18:52
  Speaker 4: dollars and the husband was like yeah, and I've got
• 18:55
  Speaker 4: a ten thousand dollar credit card. And I was like, okay,
• 18:57
  Speaker 4: no problems, Like, can you start sending me the statements then,
• 19:00
  Speaker 4: and I'll just make a spreadsheet. We'll just get on
• 19:02
  Speaker 4: top of this so we can start smashing it down.
• 19:05
  Speaker 4: And the statements kept coming in, and then there was
• 19:08
  Speaker 4: another card, and there was another card, and then there
• 19:10
  Speaker 4: was a personal loan, and then there was another personal loan.
• 19:14
  Speaker 4: And we looked at their situation and it was honestly
• 19:17
  Speaker 4: heartbreaking because they were living a lifestyle that they once had,
• 19:21
  Speaker 4: so they once had the capacity to spend that money.
• 19:25
  Speaker 4: But when they moved, they changed their jobs, they changed
• 19:28
  Speaker 4: their lifestyles into a lifestyle that wasn't actually aligned to
• 19:33
  Speaker 4: what they were earning. So I think in the end
• 19:35
  Speaker 4: they actually had a situation where they had an income
• 19:39
  Speaker 4: of one hundred thousand dollars between them. That was the
• 19:41
  Speaker 4: money that was going into their accounts each and every
• 19:44
  Speaker 4: single year, so total hundred thousand dollars, and then they
• 19:48
  Speaker 4: had ninety thousand dollars every year in credit card repayments
• 19:52
  Speaker 4: to pay. So they only had ten thousand dollars of
• 19:54
  Speaker 4: surplus cash for food, for their fuel, for their rent,
• 19:58
  Speaker 4: for their mortgage for two of them, and they had children,
• 20:01
  Speaker 4: and so every single time that they would spend money,
• 20:05
  Speaker 4: it had to be on a credit card because they
• 20:06
  Speaker 4: didn't actually have any access to any money to spend
• 20:09
  Speaker 4: in cash.
• 20:10
  Speaker 3: So what are you meant to do when you get
• 20:11
  Speaker 3: to that spot.
• 20:12
  Speaker 4: You actually need to see a financial advisor, You need
• 20:15
  Speaker 4: some debt counseling, like, you actually need to.
• 20:17
  Speaker 2: Get out of that.
• 20:19
  Speaker 4: It's not just a deep hole, it's a heartbreaking hole.
• 20:23
  Speaker 2: It is one that you were in.
• 20:24
  Speaker 4: That you can get out of, Like, it is absolutely
• 20:26
  Speaker 4: possible to get out of that situation. You just have
• 20:29
  Speaker 4: to be committed to getting out of that situation and
• 20:31
  Speaker 4: make some really tough calls. So the call for that
• 20:34
  Speaker 4: client or that couple was to actually sell their family home,
• 20:38
  Speaker 4: which they thankfully had enough equity in that if we
• 20:42
  Speaker 4: completely sold that home, they would be able to extinguish
• 20:45
  Speaker 4: most of their debt and then then have a few
• 20:47
  Speaker 4: extra payments that they needed to make which would be
• 20:50
  Speaker 4: manageable over the next five years. So they could be
• 20:53
  Speaker 4: one hundred percent debt free and not have to declare
• 20:55
  Speaker 4: bankruptcy because if they declare bankruptcy, you'd lose your assets anyway.
• 21:00
  Speaker 4: So they were in this position, but at that point
• 21:03
  Speaker 4: in time, they just were not ready to commit to
• 21:05
  Speaker 4: the change. And sometimes you just can't help people who
• 21:09
  Speaker 4: aren't willing to help themselves. I refer them to a
• 21:12
  Speaker 4: number of financial counselors, and I definitely check in occasionally
• 21:15
  Speaker 4: to make sure that they're okay, But sometimes there's just
• 21:19
  Speaker 4: not much I can do if that person is not
• 21:21
  Speaker 4: willing to help themselves.
• 21:22
  Speaker 3: So, is the only way you can get out of
• 21:24
  Speaker 3: a debt that large to sell your family home?
• 21:27
  Speaker 1: Is that our only option.
• 21:28
  Speaker 4: These guys were actually really lucky to have an asset
• 21:32
  Speaker 4: that had enough equity that would allow them to get out.
• 21:35
  Speaker 2: Of that debt.
• 21:35
  Speaker 4: So now I'm not saying, hey, if you're in debt,
• 21:37
  Speaker 4: go sell your home and get out of it that way.
• 21:40
  Speaker 4: You do actually need to seek advice. And this is
• 21:42
  Speaker 4: only coming out of me doing some pretty serious analysis
• 21:45
  Speaker 4: and sitting down with a mortgage broker and actually working
• 21:48
  Speaker 4: out what their ability to get out of debt is.
• 21:51
  Speaker 4: Because we looked into debt consolidation, we looked into every
• 21:55
  Speaker 4: single option available to them, but because of the level
• 21:57
  Speaker 4: of debt, no bank was willing to touch them. They
• 22:00
  Speaker 4: were not willing to refinance them, so we had to
• 22:03
  Speaker 4: do something more drastic. So if you're in a situation
• 22:06
  Speaker 4: and you actually don't have access to capital in an
• 22:09
  Speaker 4: asset like a home, then you do need to seek alternatives.
• 22:13
  Speaker 4: And if you have debt and you have a home,
• 22:15
  Speaker 4: that does not necessarily mean that you need to get
• 22:17
  Speaker 4: rid of your home to get rid of debt. That
• 22:19
  Speaker 4: is a really drastic example that I really wanted to
• 22:22
  Speaker 4: bring to light here because I think that people go, oh, look,
• 22:25
  Speaker 4: I'm in thirty thousand dollars worth of credit card debt.
• 22:27
  Speaker 2: It's not that bad. But over time, credit card.
• 22:30
  Speaker 4: Debt spirals out of control, and we start to fill
• 22:33
  Speaker 4: out of control, and we bury our heads in the
• 22:35
  Speaker 4: sand and we don't do anything about it while our
• 22:38
  Speaker 4: debt gets worse. I always jump up and down about
• 22:40
  Speaker 4: how great investing is, and I talk about how on
• 22:44
  Speaker 4: average money doubles every seven to ten years, and that's
• 22:48
  Speaker 4: really exciting, and people get so excited about that. But
• 22:51
  Speaker 4: the same happens for debt, just in reverse. So your
• 22:55
  Speaker 4: debt will compound every seven to ten years. So if
• 22:58
  Speaker 4: today you're in ten thousand dollars worth credit card debt
• 23:01
  Speaker 4: and there's interest accruing on it in ten years, I
• 23:03
  Speaker 4: can pretty much guarantee that that debt is going to
• 23:06
  Speaker 4: be sitting at twenty thousand dollars if you're not doing
• 23:08
  Speaker 4: anything about it. And that's absolutely not taking into consideration
• 23:12
  Speaker 4: that a lot of credit cards have twenty two percent
• 23:14
  Speaker 4: interest rates, like your debt could double in a couple
• 23:17
  Speaker 4: of years, not ten years. I sound very desperate when
• 23:20
  Speaker 4: I'm talking about this, and that this is a massive issue,
• 23:22
  Speaker 4: but it is like, too often do I see young
• 23:25
  Speaker 4: women who have turned eighteen and got their first credit
• 23:28
  Speaker 4: card and it is a means of freedom to them,
• 23:31
  Speaker 4: that this freedom card ends up getting them in a
• 23:34
  Speaker 4: lot more trouble and doesn't give them freedom at a.
• 23:40
  Speaker 3: Hi. There, you've reached the shoes on the money mailbox.
• 23:42
  Speaker 3: Do you have a money problem you want help solving.
• 23:44
  Speaker 3: Do you have a money dilemma you just want to
• 23:46
  Speaker 3: chat about. Victoria is here to help. Every week, We'll
• 23:49
  Speaker 3: be playing your questions to help make sense of a
• 23:51
  Speaker 3: money mess you may have found yourself in. Make a
• 23:53
  Speaker 3: quick recording on your phone and send it through to
• 23:55
  Speaker 3: podcast at shoes Ondthmoney dot com dot ahu and you
• 23:58
  Speaker 3: might find yourself on the show. But for now, here's
• 24:01
  Speaker 3: today's listener question.
• 24:02
  Speaker 5: Hey, Victoria, I have a credit card that I'm really
• 24:05
  Speaker 5: struggling to pay off. Keeping up with the interest payments
• 24:08
  Speaker 5: is hard enough, let alone paying it off completely? What
• 24:10
  Speaker 5: if I just don't pay? What can happen? Can I
• 24:13
  Speaker 5: be sued?
• 24:14
  Speaker 2: Thanks?
• 24:14
  Speaker 3: Ladies, Victoria, I'm handling this one straight over to you
• 24:18
  Speaker 3: because I don't know can you be sued? I don't
• 24:20
  Speaker 3: have a credit card, and I'm thankful that I don't
• 24:22
  Speaker 3: because the scares You're a smart, smart lady. Gee, I'm
• 24:25
  Speaker 3: just scared of them, and I think rightfully so after
• 24:28
  Speaker 3: this episode.
• 24:29
  Speaker 4: Yeah, look, I feel like this episode has been a
• 24:31
  Speaker 4: little bit of a scared tactic. You could say, yeah,
• 24:34
  Speaker 4: but no, what happens if you can't pay them? A
• 24:37
  Speaker 4: lot actually happens, and there are a number of consequences
• 24:39
  Speaker 4: associated with that. Also, if you miss subsequent payments, you
• 24:43
  Speaker 4: could actually be paid late fees each and every single
• 24:46
  Speaker 4: month that you miss them, and those actually compound, those
• 24:49
  Speaker 4: fees are added to your balance, they end up accumulating
• 24:52
  Speaker 4: interest as well. So it's just one thing after another,
• 24:56
  Speaker 4: you know how saying that credit card debt compounds, Yeah,
• 24:58
  Speaker 4: it compounds fuck than you thought it would. Some credit
• 25:02
  Speaker 4: card issuers will actually let you waive those payment fees
• 25:05
  Speaker 4: after your first violation, or if you contact them and
• 25:07
  Speaker 4: say hey, I'm really sorry, I didn't mean that and
• 25:10
  Speaker 4: pay quite promptly. Often there is a level of flexibility there.
• 25:14
  Speaker 4: If it is your quote first offense, it will negatively
• 25:17
  Speaker 4: impact your credit score if you don't pay off your
• 25:19
  Speaker 4: credit card. So if you're really good at paying off
• 25:21
  Speaker 4: your credit card, it's not going to impact it here
• 25:24
  Speaker 4: nor there. But in saying that, there is an absolute
• 25:27
  Speaker 4: myth in the industry or in Australia that you need
• 25:30
  Speaker 4: to have a credit card to create a credit score,
• 25:33
  Speaker 4: and that is entirely incorrect. So here in Australia, you
• 25:37
  Speaker 4: do not need a credit card to create a credit score.
• 25:40
  Speaker 4: You actually just need to be really good at paying
• 25:41
  Speaker 4: your bills on time and making sure that you're not
• 25:43
  Speaker 4: getting into debt and having no credit card actually looks
• 25:46
  Speaker 4: better in Australia than having one does. And I think
• 25:50
  Speaker 4: that this negative perception or this myth has actually come
• 25:53
  Speaker 4: from America where how you actually need to build a
• 25:56
  Speaker 4: credit score and going into debt and having personal loans
• 25:59
  Speaker 4: and having credit cards actually helps you create a credit
• 26:02
  Speaker 4: score in America, whereas that is not the system in
• 26:04
  Speaker 4: Australia at all. And I think it's actually really important
• 26:07
  Speaker 4: to bring that up here, g because you just said
• 26:09
  Speaker 4: something about credit scores and I was like, no, actually
• 26:12
  Speaker 4: not the case at all.
• 26:13
  Speaker 1: What do we need credit scores for? Is that to
• 26:15
  Speaker 1: my house?
• 26:16
  Speaker 4: Yeah, so they look at it when you purchase home.
• 26:18
  Speaker 4: Things like zipay actually show up on your credit score,
• 26:21
  Speaker 4: so that is a form of debt. Credit cards show
• 26:23
  Speaker 4: off on your credit score. The amount of times that
• 26:27
  Speaker 4: the amount of times that your credit score has been
• 26:29
  Speaker 4: checked shows up on your credit score, so it can
• 26:32
  Speaker 4: be a negative if it's been checked too many times.
• 26:34
  Speaker 4: And things like getting a new phone plan will check
• 26:37
  Speaker 4: your credit score. So each and every single time you
• 26:40
  Speaker 4: sign up to something or sign up to a new
• 26:41
  Speaker 4: debt or a reoccurring direct debit, often your credit score
• 26:45
  Speaker 4: will be checked. So just be wary of those things.
• 26:47
  Speaker 4: We can talk about it on a later podcast. It
• 26:49
  Speaker 4: is literally a whole new ballgame and probably a podcast
• 26:52
  Speaker 4: worthy of consideration. But definitely don't need to have a
• 26:56
  Speaker 4: credit card to increase your credit score, and it can
• 26:59
  Speaker 4: actually negatively impact it when we actually get them, because
• 27:02
  Speaker 4: we think it'll be a positive thing and.
• 27:03
  Speaker 2: It's just not the case.
• 27:07
  Speaker 3: Okay, now for the fun stuff. What good would a
• 27:10
  Speaker 3: money podcast be without the perby bits. It's time for
• 27:13
  Speaker 3: money diaries. Let's get into it.
• 27:14
  Speaker 6: I'm twenty six in evolving and I work as an
• 27:19
  Speaker 6: associate within the financial technology services industry, and I have
• 27:25
  Speaker 6: a on and off relationship with money, something that I'm
• 27:29
  Speaker 6: working on bettering.
• 27:30
  Speaker 3: Today's money diary is from a twenty six year old
• 27:32
  Speaker 3: who's got myself into a little bit of a pickle
• 27:34
  Speaker 3: with a credit card and a few personal loans.
• 27:37
  Speaker 6: My current money situation is fairly scattered. I've managed to
• 27:41
  Speaker 6: create a fair bit of debt, some of which comes
• 27:44
  Speaker 6: from a business that I created about two and a
• 27:47
  Speaker 6: half years ago. In addition to that, I have also
• 27:51
  Speaker 6: got a credit card, I have a personal loan, a
• 27:54
  Speaker 6: loan which is shared with my ex business partner, and
• 27:59
  Speaker 6: all of that sort of creates a debt of about
• 28:05
  Speaker 6: forty eight thousand dollars.
• 28:07
  Speaker 3: Okay, so now we know what she does. Let's get
• 28:09
  Speaker 3: into the juicy stuff. How much does she earn and
• 28:11
  Speaker 3: how much is sitting in her bank account right now?
• 28:13
  Speaker 6: Currently got about twelve hundred dollars sitting in my bank account.
• 28:16
  Speaker 6: In terms of how much I earn, I'm earning about
• 28:18
  Speaker 6: seventy thousand dollars and superannuation is on top.
• 28:21
  Speaker 3: And what exactly happens to that money after it's deposited
• 28:24
  Speaker 3: into her account.
• 28:25
  Speaker 6: Once the money hits my account, A lot of it
• 28:27
  Speaker 6: is contributed towards a lot of the repayments, so credit
• 28:31
  Speaker 6: card repayments, which are at a minimum at the moment,
• 28:34
  Speaker 6: all of my loans, so a three hundred and eighty
• 28:38
  Speaker 6: dollars a fortnight into one of my personal loans. I
• 28:42
  Speaker 6: have another one which is two hundred dollars a month,
• 28:46
  Speaker 6: and then in addition to that, I also have another
• 28:48
  Speaker 6: personal loan which has a repayment of one hundred dollars
• 28:53
  Speaker 6: and four hundred and seventy five in that shared loan
• 28:56
  Speaker 6: that I spoke about earlier. In terms of what I
• 28:58
  Speaker 6: have left for spending, I do currently live in a
• 29:01
  Speaker 6: minimal way. So because of the amount of debt that
• 29:04
  Speaker 6: I've got, I think my goals over the next two
• 29:07
  Speaker 6: years are focusing on completing the debt, and I do
• 29:11
  Speaker 6: spend a bit of money on petrol going out. I
• 29:15
  Speaker 6: also have a terrible habit I'm a smoker. So between
• 29:17
  Speaker 6: all of those, I do have a little bit left over, which, unfortunately,
• 29:22
  Speaker 6: as a part of one of my current money habits,
• 29:24
  Speaker 6: I tend to spend on good things like so for uh,
• 29:29
  Speaker 6: skincare and makeup and perfumes. I have a bit of
• 29:32
  Speaker 6: a perfume session as well, so I do tend to
• 29:35
  Speaker 6: have a lot of my money go that way as well.
• 29:37
  Speaker 3: Okay, then, so how does she feel about investing?
• 29:39
  Speaker 1: Does she invest?
• 29:40
  Speaker 2: And if so, how it's something that I've really wanted
• 29:43
  Speaker 2: to do.
• 29:43
  Speaker 6: So prior to my business, I did have a fairly
• 29:46
  Speaker 6: good relationship with money. I found myself saving a fair
• 29:50
  Speaker 6: amount and investing was something that I'd always look forward to.
• 29:53
  Speaker 6: I did spend a lot of my earlier years traveling,
• 29:56
  Speaker 6: so prior to the business, although I saved a lot
• 29:59
  Speaker 6: of mone, I also spent it on traveling. I've been
• 30:02
  Speaker 6: to Europe, I've been to America. I've been to Europe
• 30:04
  Speaker 6: twice actually, so that was something that was always at
• 30:07
  Speaker 6: the back of my mind. But I felt that I
• 30:09
  Speaker 6: was so young that I could sort of start investing later,
• 30:12
  Speaker 6: and unfortunately it hasn't been the case so far. However,
• 30:15
  Speaker 6: it is in my near future goals to start investing
• 30:18
  Speaker 6: in building wealth that is further lasting than just the
• 30:21
  Speaker 6: next couple of years, so really focusing on long term goals.
• 30:25
  Speaker 3: What about debt, Let's learn a little bit more about
• 30:27
  Speaker 3: her credit card and personal loans.
• 30:29
  Speaker 6: I have a personal loan which is sitting at about
• 30:32
  Speaker 6: twenty four thousand. In addition to that, I have a
• 30:35
  Speaker 6: credit card which is totally seven thousand dollars. I also
• 30:38
  Speaker 6: have another personal loan which is sitting at.
• 30:42
  Speaker 1: Four and a half thousand dollars.
• 30:43
  Speaker 6: And then in addition to that, I also have a
• 30:47
  Speaker 6: personal loan with my business partner, which at half is
• 30:50
  Speaker 6: sitting at about fifteen thousand. I also have a store
• 30:54
  Speaker 6: credit card, which I quite foolishly brought to get an
• 30:57
  Speaker 6: Apple MacBook Pro, which I probably didn't need at the time,
• 30:59
  Speaker 6: but I've wanted one anyway, and that has about two
• 31:03
  Speaker 6: thousand dollars remaining on that as well. So my total
• 31:05
  Speaker 6: amount of debt is sitting at forty eight thousand dollars.
• 31:08
  Speaker 6: When I applied for my first loan. It was a
• 31:11
  Speaker 6: travelers credit card from American Express, and I remember they
• 31:14
  Speaker 6: offered me I think it was like seven thousand dollars
• 31:17
  Speaker 6: and I was like, you know what, I can get
• 31:18
  Speaker 6: seven thousand dollars. What am I going to spend this
• 31:21
  Speaker 6: money on? And I thought, you know what, I'll get
• 31:23
  Speaker 6: a four hundred and fifty dollars credit towards flights and
• 31:26
  Speaker 6: that kind of thing because it's a traveler's card. And
• 31:28
  Speaker 6: I thought, this is great, I can go to Europe.
• 31:30
  Speaker 6: I'm twenty one and I'm about to travel. And there
• 31:34
  Speaker 6: was like a level of excitement, but then there was
• 31:36
  Speaker 6: always also that worry that, Okay, I'm gonna have to
• 31:39
  Speaker 6: pay this seven thousand dollars back. But I think we
• 31:42
  Speaker 6: often say this to ourselves, it's a future me problem,
• 31:45
  Speaker 6: which is exactly what I did. The tipping point for
• 31:48
  Speaker 6: me was the recent changes that I've gone through having
• 31:51
  Speaker 6: moved away from the business. I think it really forced
• 31:53
  Speaker 6: me to look at my current situation and find ways
• 31:57
  Speaker 6: to better myself. I think I found time, which was
• 32:01
  Speaker 6: incredible because it meant that I could sit down and
• 32:04
  Speaker 6: really reassess where my life was going. As someone who's
• 32:08
  Speaker 6: twenty five or above. I think we start questioning where
• 32:11
  Speaker 6: we see ourselves in five years, where we see ourselves
• 32:13
  Speaker 6: in ten years, And I think I realized that I
• 32:16
  Speaker 6: just didn't have any clarity on it. I wasn't totally
• 32:19
  Speaker 6: happy with my career in the past because of the
• 32:22
  Speaker 6: business and the commitments. In terms of time, I've let
• 32:25
  Speaker 6: go of a lot of opportunities within the past two
• 32:27
  Speaker 6: years as well. So not being happy with my career
• 32:31
  Speaker 6: knowing that I've got all this money that I have
• 32:33
  Speaker 6: to pay off, I found myself in a situation where
• 32:35
  Speaker 6: I started questioning what I was really doing and what
• 32:38
  Speaker 6: the purpose was of me working nine to five, coming home,
• 32:42
  Speaker 6: not having a lot of money to enjoy life, but
• 32:44
  Speaker 6: then also watching all that money leave my account. I
• 32:47
  Speaker 6: think it really made me reassess where my financial situation
• 32:51
  Speaker 6: will be in the future and just how much i'd
• 32:53
  Speaker 6: straight away from what my goals were as a twenty
• 32:56
  Speaker 6: one year old me. So that was sort of the
• 32:58
  Speaker 6: tipping point in terms of moving forward and really evolving.
• 33:02
  Speaker 6: So currently I am in a situation where debt consolidation
• 33:06
  Speaker 6: is not an option. I know that the only way
• 33:09
  Speaker 6: that I can really get out of debt is starting
• 33:12
  Speaker 6: to essentially save as much money as possible and starting
• 33:15
  Speaker 6: from the smallest to the largest in terms of loans.
• 33:19
  Speaker 6: So say, for example, the store credit card that we
• 33:22
  Speaker 6: spoke about was sitting at about two and a half thousand
• 33:24
  Speaker 6: dollars there, I know that I could probably over time
• 33:27
  Speaker 6: continue putting more money in there and hoping to get
• 33:31
  Speaker 6: that two and a half paid off so I could
• 33:32
  Speaker 6: move on to the next one, and then eventually getting
• 33:35
  Speaker 6: myself in a position where debt is no longer a thing.
• 33:37
  Speaker 3: Does she have any good money habits that she's especially
• 33:39
  Speaker 3: proud of?
• 33:40
  Speaker 6: About six months ago, I created a terrible habit of
• 33:43
  Speaker 6: driving into the city. So I was spending twenty five
• 33:46
  Speaker 6: dollars a day, which is one hundred and twenty five
• 33:49
  Speaker 6: over five days, just because I didn't want to catch
• 33:52
  Speaker 6: public transport. A Mikey costs about one hundred and forty
• 33:55
  Speaker 6: eight dollars a month, and I was spending one hundred
• 33:58
  Speaker 6: and twenty five a week. So things like that I
• 34:01
  Speaker 6: didn't realize just how much they added up.
• 34:03
  Speaker 3: And what about her worst money habit?
• 34:05
  Speaker 6: One of my biggest habits is buying fragrances. I've got
• 34:08
  Speaker 6: over forty fragrances, None of which are under one hundred
• 34:12
  Speaker 6: and fifty dollars.
• 34:13
  Speaker 3: How would today's money diarist rate her own relationship with
• 34:16
  Speaker 3: money if you had to give herself a grade.
• 34:18
  Speaker 6: I'm sitting at a C and aiming for a B plus.
• 34:22
  Speaker 6: Being a C at the moment, I think it would
• 34:24
  Speaker 6: be really important to cutting those habits such as after pace,
• 34:28
  Speaker 6: such as relying on my credit cards, such as spending
• 34:31
  Speaker 6: the money that I could probably spend towards repaying alone
• 34:34
  Speaker 6: on little things that I'm going to use today or
• 34:37
  Speaker 6: rack up at the back of my closet and not
• 34:40
  Speaker 6: use in the future. And I think that's what's going
• 34:42
  Speaker 6: to get me to a B plus, just really working
• 34:44
  Speaker 6: towards walking away from all of this and creating a
• 34:47
  Speaker 6: sustainable future for myself.
• 34:49
  Speaker 3: My god, Victoria, I do not envy this person's situation.
• 34:52
  Speaker 4: No, but you know what, I really like that she's
• 34:54
  Speaker 4: actually taking steps to get out of it. And I
• 34:56
  Speaker 4: think that's really positive. Yeah, because as much as it
• 34:59
  Speaker 4: is so overwhelming, like forty eight thousand dollars worth of
• 35:02
  Speaker 4: debt is a lot of debt to be in, and
• 35:05
  Speaker 4: she's lovely, she's absolutely delightful, and I think that it
• 35:08
  Speaker 4: is such a story here to be like the nicest
• 35:11
  Speaker 4: people get in a lot of debt as well. It
• 35:14
  Speaker 4: has nothing to do with you being silly or not educated.
• 35:16
  Speaker 4: It just happens to the best of us. And I
• 35:19
  Speaker 4: think that we just need to be educated in not
• 35:21
  Speaker 4: getting there. And she needs to work on making sure
• 35:24
  Speaker 4: that she is debt snowballing her way out of there,
• 35:27
  Speaker 4: because she's not in a position where after getting in
• 35:29
  Speaker 4: all this debt, she can actually be debt consolidated. She's
• 35:32
  Speaker 4: spoken to a broker and she's not actually able to
• 35:35
  Speaker 4: consolidate that debt into something else. So she needs to
• 35:38
  Speaker 4: be debt snowballing her way out of their asap.
• 35:41
  Speaker 1: And what is debt snowballing?
• 35:42
  Speaker 4: So it's one of my favorite things to talk about
• 35:44
  Speaker 4: when talking about debt. Surprised that hasn't come up. Yes,
• 35:47
  Speaker 4: it's a strategy of debt reduction. So it's where you
• 35:50
  Speaker 4: pay your debts off in order of the smallest to
• 35:53
  Speaker 4: the largest, and you kind of gain momentum as you
• 35:55
  Speaker 4: knock out each balance. And I think this is really
• 35:58
  Speaker 4: important because if we cant all of our debts and
• 36:01
  Speaker 4: we start at the smallest, regardless of what the interest
• 36:04
  Speaker 4: rate is, mind you, it actually gives us.
• 36:07
  Speaker 2: Short term motivation. Yes, we're more likely to reach.
• 36:09
  Speaker 4: A goal sooner to knock something off the table than
• 36:12
  Speaker 4: we are if we just are smashing down the biggest
• 36:14
  Speaker 4: deep with the biggest interest rate. And whilst that sounds
• 36:17
  Speaker 4: a little bit backwards in terms of actually, you know,
• 36:20
  Speaker 4: good quality financial advice, you could say because obviously, if
• 36:24
  Speaker 4: we put our debts in order of the greatest interest
• 36:27
  Speaker 4: rate down to the lowest interest rate, that's called debt avalanching.
• 36:31
  Speaker 2: Actually, that's got it. That's got a name as well.
• 36:33
  Speaker 4: That's actually I think I prefer debt snowballing because it
• 36:36
  Speaker 4: gives us the motivation to keep going, and more often
• 36:39
  Speaker 4: than not, people who debt snowball get out of debt
• 36:42
  Speaker 4: quicker Victoria.
• 36:44
  Speaker 3: This whole chat has been quite enlightening and terrifying, if
• 36:47
  Speaker 3: I'm being honest.
• 36:48
  Speaker 4: Maybe because I don't love credit cards, I don't know
• 36:50
  Speaker 4: if you're getting that vibe though, we would.
• 36:52
  Speaker 3: You say then that there are any redeemable qualities to
• 36:55
  Speaker 3: having a credit card or should be pretty shiny.
• 36:57
  Speaker 2: No, No, that's absolutely not it.
• 37:00
  Speaker 4: I think there are a number of good things associated
• 37:02
  Speaker 4: with credit cards, and if I'm being completely honest, I
• 37:05
  Speaker 4: do know a number of people who are using credit
• 37:08
  Speaker 4: cards in a really practical way. However, that is not
• 37:12
  Speaker 4: the majority. Right now, we are talking to the majority
• 37:14
  Speaker 4: of people. I know people exist who are using credit
• 37:18
  Speaker 4: cards for every single one of their purchases each and
• 37:21
  Speaker 4: every single month, and they are They're getting points, and
• 37:23
  Speaker 4: they are getting a whole heap of really great returns
• 37:26
  Speaker 4: for that. But it actually doesn't work for the normal
• 37:29
  Speaker 4: average Australian because we are more likely to get in debt.
• 37:32
  Speaker 4: And it's all about mindset. It actually comes down to psychology,
• 37:35
  Speaker 4: and it is not a good idea for ninety nine
• 37:37
  Speaker 4: point ninety five percent of our population to have a
• 37:40
  Speaker 4: credit card. I'm not dismissing the fact that there are
• 37:43
  Speaker 4: people who use them constructively though, so please don't get
• 37:46
  Speaker 4: me wrong. I know people who do, and I would
• 37:48
  Speaker 4: be naive to say that I don't have one, because
• 37:50
  Speaker 4: I run a business and I use a credit card
• 37:53
  Speaker 4: to cash flow my business to make sure that I
• 37:55
  Speaker 4: am paying the invoices that are coming in and making
• 37:58
  Speaker 4: sure that I am on top of the business income.
• 38:00
  Speaker 4: Because when you run a business, not everyone pays invoices
• 38:03
  Speaker 4: when they are meant to, so I need to make
• 38:05
  Speaker 4: sure that I'm actually doing what I said I was
• 38:07
  Speaker 4: going to do.
• 38:08
  Speaker 2: So don't get me wrong, I'm not.
• 38:10
  Speaker 4: Saying that they are one hundred percent negative, but I
• 38:12
  Speaker 4: am saying they are worse for you than they are.
• 38:15
  Speaker 2: Good for you.
• 38:15
  Speaker 1: The negatives outweigh.
• 38:16
  Speaker 2: The negatives far outweigh the positives.
• 38:19
  Speaker 3: So you mentioned the points in rewards, Victoria. Are they
• 38:21
  Speaker 3: actually worth it in any measure?
• 38:23
  Speaker 4: Well, it depends on how you're using them. Obviously, the
• 38:26
  Speaker 4: more you spend on credit cards, the more points you make.
• 38:29
  Speaker 4: But I think you'd actually be quite surprised at how
• 38:32
  Speaker 4: much you have to spend to actually earn enough points
• 38:35
  Speaker 4: to make it worth it. At slightly above average spend
• 38:39
  Speaker 4: of twenty four thousand dollars a year on a credit
• 38:42
  Speaker 4: card means that you aren't really breaking even on a
• 38:45
  Speaker 4: points system. So, like, I've done my research and I
• 38:49
  Speaker 4: understand this to the nth degree. There's a really great
• 38:51
  Speaker 4: article on the can Style website about this, and I
• 38:54
  Speaker 4: think if you just google can start, are the rewards
• 38:57
  Speaker 4: on credit cards actually worth it? It will come up.
• 39:00
  Speaker 4: But if you spend twenty four thousand dollars on your
• 39:04
  Speaker 4: credit card, each and every single year, the returns after
• 39:08
  Speaker 4: fees for cash is about.
• 39:09
  Speaker 2: One hundred and eleven dollars.
• 39:11
  Speaker 1: That's it.
• 39:11
  Speaker 4: Your general returns are one hundred and thirteen dollars, and
• 39:15
  Speaker 4: you will get a total of one hundred and fifty
• 39:17
  Speaker 4: nine dollars worth of frequent flypoint.
• 39:19
  Speaker 1: It's not really worth it, is it?
• 39:20
  Speaker 3: No?
• 39:20
  Speaker 4: Because I feel like people aren't taking into consideration the
• 39:24
  Speaker 4: credit card fees and how much it actually costs you
• 39:27
  Speaker 4: personally to have a credit card because you are spending
• 39:30
  Speaker 4: more and it makes it more accessible.
• 39:32
  Speaker 2: And I'm not talking.
• 39:33
  Speaker 4: About, oh, I accidentally slipped into a store and bought
• 39:36
  Speaker 4: a new dress. I'm saying you're more likely to say
• 39:39
  Speaker 4: yes to that extra coffee, you are more likely to
• 39:41
  Speaker 4: get that side of avocado with your brunch. You are
• 39:43
  Speaker 4: more likely to spend money just incidentally along the way.
• 39:47
  Speaker 4: We're not talking about going on spending vendors. We are
• 39:50
  Speaker 4: talking about going out and just accidentally spending a few
• 39:53
  Speaker 4: dollars here and there that over the long term, really
• 39:56
  Speaker 4: really adds up. So yes, it's actually crazy how much
• 40:00
  Speaker 4: much it doesn't actually add up. But in saying that
• 40:03
  Speaker 4: a number of people have hacked the system, and there's
• 40:06
  Speaker 4: a website called points hack that I've been on a
• 40:08
  Speaker 4: number of times, and it's really interesting to see the
• 40:11
  Speaker 4: different offers and how people are actually you know, getting
• 40:13
  Speaker 4: free flights or doing this or doing that. But to me,
• 40:16
  Speaker 4: that's a lot of effort and a lot of work. Yeah,
• 40:19
  Speaker 4: that I could see you concentrating that energy into something
• 40:22
  Speaker 4: else to generate money, Like can you not go and
• 40:24
  Speaker 4: sell some stuff on Facebook marketplace and you know, get
• 40:28
  Speaker 4: that income from there without having to go through this
• 40:30
  Speaker 4: convoluted credit card hack point trial thing where you end
• 40:35
  Speaker 4: up forgetting to cancel the credit card and you end
• 40:38
  Speaker 4: up with an annual fee. I think it's really important
• 40:40
  Speaker 4: to actually see it as Okay, well that's the value
• 40:43
  Speaker 4: exchange there. Could I get a better value exchange somewhere else?
• 40:46
  Speaker 4: Could I go and do a few hours of freelance work.
• 40:49
  Speaker 4: Could I go and pick up a side job? Could
• 40:51
  Speaker 4: I do this? Could I do that? And actually think
• 40:53
  Speaker 4: of ways to generate income because points aren't the thing
• 40:56
  Speaker 4: that are going to make you wealthy. I have never
• 40:58
  Speaker 4: seen one person come to me and so I, hey, Victoria,
• 41:00
  Speaker 4: I'm actually really wealthy and they go, wow, have you
• 41:02
  Speaker 4: done it? And they say I did it through credit
• 41:05
  Speaker 4: card point, it's not a thing, and you know what,
• 41:08
  Speaker 4: if it is, I'll do a whole podcast on it.
• 41:10
  Speaker 2: Please step forward.
• 41:11
  Speaker 1: What would you say?
• 41:11
  Speaker 3: The main takeaway for today's episode is victoria.
• 41:14
  Speaker 4: If you have a credit card, you are always a
• 41:16
  Speaker 4: month behind. If you are spending a lot of money
• 41:18
  Speaker 4: on it and you need to be paying off your
• 41:20
  Speaker 4: credit card, you are living in the past instead of
• 41:23
  Speaker 4: creating a future. You are spending money on paying back
• 41:26
  Speaker 4: a debt instead of spending money and putting it somewhere
• 41:29
  Speaker 4: where you can create wealth. And I think that that's
• 41:31
  Speaker 4: my main takeaway because you are actually living in the
• 41:34
  Speaker 4: past and you are not pushing yourself forward. You are
• 41:37
  Speaker 4: taking away future usability to create wealth. And as you
• 41:41
  Speaker 4: all know, I am wowly passionate about creating wealth and
• 41:44
  Speaker 4: what that actually means. So for every time you are
• 41:47
  Speaker 4: paying five hundred dollars back on a credit card, it's
• 41:50
  Speaker 4: five hundred dollars that you are not putting into an
• 41:52
  Speaker 4: investment that can help create the future that you want.
• 41:58
  Speaker 1: And that is all we have time for today.
• 42:00
  Speaker 3: But before we head off, let's quickly wrap the boring
• 42:02
  Speaker 3: but important stuff the advice shared on She's on the
• 42:04
  Speaker 3: Money is general in nature and does not consider your
• 42:07
  Speaker 3: individual circumstances. She's on the Money exists purely for educational
• 42:10
  Speaker 3: purposes and should not be relied upon to make an
• 42:13
  Speaker 3: investment or financial decision.
• 42:15
  Speaker 1: And bear not. We promise.
• 42:16
  Speaker 3: Victoria Devine is an authorized representative of Consultant Financial Advisors
• 42:20
  Speaker 3: Proprietary Limited ABM sixty five double six three seven three
• 42:24
  Speaker 3: double nine to five AFSL two three OHO.
• 42:26
  Speaker 2: Three two three.
• 42:28
  Speaker 3: And thank you to the lovely Ryan John, our audio king,
• 42:31
  Speaker 3: for whipping our wild chat.
• 42:32
  Speaker 2: Into the podcast you love.
• 42:33
  Speaker 4: We would love it if you joined us in our
• 42:35
  Speaker 4: Facebook group, where g almost fifty five thousand women I
• 42:41
  Speaker 4: know share money tips and tricks every single day, free
• 42:44
  Speaker 4: of judgment.
• 42:44
  Speaker 2: Search She's on the Money on Facebook and join.
• 42:47
  Speaker 4: If Facebook's not your thing, you can also find us
• 42:49
  Speaker 4: on Instagram.
• 42:50
  Speaker 2: We're it. She's on the Money a US. See you guys,
• 42:52
  Speaker 2: next sake, See you bye,