1 00:00:00,880 --> 00:00:04,000 Speaker 1: Hi everyone, and welcome back to start here, the very 2 00:00:04,000 --> 00:00:07,280 Speaker 1: special mini series within Sugar Mama's Fireplay, where I answer 3 00:00:07,320 --> 00:00:12,200 Speaker 1: your real life money questions with practical, empowering steps to 4 00:00:12,280 --> 00:00:17,880 Speaker 1: help you move forward with confidence and finally get started. 5 00:00:18,720 --> 00:00:21,040 Speaker 1: Today's question comes from my listener who wrote, Hi, Canna, 6 00:00:21,160 --> 00:00:23,520 Speaker 1: my parents have agreed to give me and my husband 7 00:00:23,520 --> 00:00:27,960 Speaker 1: a significant amount of money to help us buy a home. However, 8 00:00:28,360 --> 00:00:31,080 Speaker 1: we're still in credit card debt, so I don't want 9 00:00:31,080 --> 00:00:33,879 Speaker 1: to take this money quite yet, but I'm worried that 10 00:00:33,920 --> 00:00:37,239 Speaker 1: they will be disappointed in us. What should I do? 11 00:00:37,960 --> 00:00:40,600 Speaker 1: All right? First of all, to this listener, thank you 12 00:00:40,640 --> 00:00:42,960 Speaker 1: so much for your honesty. That wouldn't have been an 13 00:00:42,960 --> 00:00:47,400 Speaker 1: easy message to write. Questions like this often carry so 14 00:00:47,520 --> 00:00:50,479 Speaker 1: much shame and guilt, especially when we feel like we've 15 00:00:50,560 --> 00:00:53,440 Speaker 1: let other people down that we love so much and 16 00:00:53,479 --> 00:00:55,800 Speaker 1: that those people are really trying to support us. But 17 00:00:56,480 --> 00:00:59,480 Speaker 1: please know this. The fact that you are asking this 18 00:00:59,560 --> 00:01:03,520 Speaker 1: question tells me that you've got amazing integrity, awareness, and 19 00:01:03,760 --> 00:01:06,880 Speaker 1: of course maturity. You really want to do the right thing. 20 00:01:06,920 --> 00:01:10,720 Speaker 1: I can tell this, and sometimes it's not that easy, 21 00:01:11,200 --> 00:01:13,680 Speaker 1: but it is definitely a sign for someone who is 22 00:01:13,720 --> 00:01:18,080 Speaker 1: ready to take serious control of their financial growth. So 23 00:01:18,400 --> 00:01:21,280 Speaker 1: right now, I'm going to talk you through how to 24 00:01:21,319 --> 00:01:25,360 Speaker 1: approach this with your parents, both practically and emotionally and 25 00:01:25,400 --> 00:01:29,240 Speaker 1: of course financially, and how to help protect your finances, 26 00:01:29,319 --> 00:01:33,479 Speaker 1: protect your family relationships, and your own piece of mind. 27 00:01:33,600 --> 00:01:36,360 Speaker 1: So let's waste no time at all and get cracking, 28 00:01:50,960 --> 00:01:53,400 Speaker 1: all right, Step one, can we just take a moment 29 00:01:53,560 --> 00:01:57,440 Speaker 1: to please acknowledge the emotions first, You know, before we 30 00:01:57,520 --> 00:02:01,600 Speaker 1: talk numbers or low OANs, we need to start with 31 00:02:01,640 --> 00:02:05,800 Speaker 1: the feelings, because family and money are very emotional topics 32 00:02:05,880 --> 00:02:09,320 Speaker 1: and it is really normal and natural to feel conflicted. 33 00:02:09,760 --> 00:02:12,480 Speaker 1: You know, you're grateful for your parents because they really 34 00:02:12,480 --> 00:02:14,040 Speaker 1: want to help you get a foot in the door 35 00:02:14,040 --> 00:02:16,640 Speaker 1: on the property market, which is so hard, and you 36 00:02:16,680 --> 00:02:19,960 Speaker 1: know it's an amazing blessing. But at the same time, 37 00:02:20,000 --> 00:02:23,079 Speaker 1: you're torn because you feel really anxious and probably even 38 00:02:23,080 --> 00:02:25,800 Speaker 1: a little bit ashamed because of this credit card debt 39 00:02:25,800 --> 00:02:28,760 Speaker 1: that you've been carrying. But what I want to do 40 00:02:28,919 --> 00:02:35,080 Speaker 1: is reframe this guilt. Your awareness of this situation means 41 00:02:35,120 --> 00:02:38,480 Speaker 1: that you really do care about doing something, and doing 42 00:02:38,520 --> 00:02:43,679 Speaker 1: something properly and outgrowing your old toxic habits that got 43 00:02:43,720 --> 00:02:45,720 Speaker 1: you into the credit card debt in the first place, 44 00:02:46,520 --> 00:02:49,679 Speaker 1: you are not rejecting your parents' generosity, despite what you 45 00:02:49,800 --> 00:02:53,560 Speaker 1: might be worried about, but you're actually honoring the gift 46 00:02:53,639 --> 00:02:57,680 Speaker 1: by wanting to be financially responsible and ready to actually 47 00:02:57,960 --> 00:03:03,040 Speaker 1: use this amazing and very generous gift wisely. So take 48 00:03:03,080 --> 00:03:07,200 Speaker 1: a moment to just be kind to yourself. Please. You're 49 00:03:07,200 --> 00:03:11,160 Speaker 1: not behind, you're not broken or damaged, You're not dirty 50 00:03:11,200 --> 00:03:14,480 Speaker 1: for having this debt. You're actually being really responsible because 51 00:03:14,520 --> 00:03:16,560 Speaker 1: you're doing something about it, and you actually have been 52 00:03:16,600 --> 00:03:18,880 Speaker 1: doing something about it before. Your parents have offered to 53 00:03:18,880 --> 00:03:22,160 Speaker 1: give you this money, and that is the mindset, not 54 00:03:22,200 --> 00:03:25,720 Speaker 1: the money, you're going to help you get ahead successfully. 55 00:03:25,960 --> 00:03:28,239 Speaker 1: All right, So now that we've parked away those emotions, 56 00:03:28,360 --> 00:03:31,200 Speaker 1: let's go on to the next steps, and that is 57 00:03:31,400 --> 00:03:37,160 Speaker 1: your parents being honest and transparent. Now, I will admit 58 00:03:37,360 --> 00:03:42,200 Speaker 1: this part may feel incredibly uncomfortable, but it is essential. 59 00:03:42,800 --> 00:03:46,680 Speaker 1: Honesty is always the best policy. You have got to 60 00:03:46,760 --> 00:03:49,880 Speaker 1: have an open and honest conversation with your parents. I 61 00:03:50,000 --> 00:03:52,320 Speaker 1: know it's easier so than done, So I'm going to 62 00:03:52,360 --> 00:03:56,400 Speaker 1: suggest that you started something like this. Mum, Dad, we 63 00:03:56,480 --> 00:04:00,640 Speaker 1: are incredibly grateful for your generosity. Here we know how 64 00:04:00,640 --> 00:04:03,480 Speaker 1: hard you've worked and how hard you've saved, and what 65 00:04:03,520 --> 00:04:07,040 Speaker 1: this means to you, And it actually means the world 66 00:04:07,120 --> 00:04:09,880 Speaker 1: to us to be able to be given an opportunity 67 00:04:10,000 --> 00:04:14,600 Speaker 1: to have our own home. But before we can even 68 00:04:14,720 --> 00:04:18,120 Speaker 1: think about possibly accepting this money, we want to make 69 00:04:18,120 --> 00:04:21,240 Speaker 1: sure that we are in the right position to use 70 00:04:21,320 --> 00:04:25,760 Speaker 1: this money, your money, this gift wisely. Now, to be 71 00:04:25,880 --> 00:04:27,760 Speaker 1: open and honest with you, We've got a little bit 72 00:04:27,760 --> 00:04:30,120 Speaker 1: of credit card debt, and I would share with them 73 00:04:30,320 --> 00:04:33,000 Speaker 1: exactly what it is and how much and how you 74 00:04:33,040 --> 00:04:35,960 Speaker 1: got it, but let them know that you have already 75 00:04:36,000 --> 00:04:39,960 Speaker 1: been working on paying this off before they even offered 76 00:04:40,520 --> 00:04:42,920 Speaker 1: to give you this money. Assuming that is the case. 77 00:04:42,920 --> 00:04:47,280 Speaker 1: Of course, Now once that conversation is done, you've put 78 00:04:47,320 --> 00:04:51,279 Speaker 1: it out there, I am confident that you will feel 79 00:04:51,279 --> 00:04:54,560 Speaker 1: so much better about yourself and that your parents will 80 00:04:54,600 --> 00:04:57,000 Speaker 1: know that you are ready to handle the next step. 81 00:04:57,200 --> 00:04:59,920 Speaker 1: You know the massive responsibility that comes with home ownership, 82 00:05:00,000 --> 00:05:03,560 Speaker 1: and you will do so responsibly. Now. It is this 83 00:05:03,800 --> 00:05:09,159 Speaker 1: level of honesty that shows character. It also builds important 84 00:05:09,200 --> 00:05:12,479 Speaker 1: trust or solidifies that trust that you already have between 85 00:05:12,560 --> 00:05:14,880 Speaker 1: you and your parents, and in many cases it can 86 00:05:14,920 --> 00:05:19,159 Speaker 1: often strengthen that family bond, and who knows, your parents 87 00:05:19,240 --> 00:05:21,560 Speaker 1: actually may even prefer that some of that money that 88 00:05:21,560 --> 00:05:25,360 Speaker 1: they're about to give you goes towards clearing that credit 89 00:05:25,360 --> 00:05:29,360 Speaker 1: card debt first and completely, even if it means you 90 00:05:29,360 --> 00:05:33,400 Speaker 1: can actually move forward sooner and stronger into the property market. 91 00:05:33,800 --> 00:05:36,920 Speaker 1: So you may find that they actually appreciate your transparency 92 00:05:36,960 --> 00:05:41,200 Speaker 1: here and it actually outweighs any form of disappointment in 93 00:05:41,240 --> 00:05:44,599 Speaker 1: your life. So please have that conversation sooner rather than later. 94 00:05:45,320 --> 00:05:48,719 Speaker 1: Step number three is to focus on clearing that debt 95 00:05:48,920 --> 00:05:52,440 Speaker 1: as quickly as possible. We've got to look at the 96 00:05:52,480 --> 00:05:55,279 Speaker 1: practical side now that now we've had those conversations within 97 00:05:55,320 --> 00:05:59,120 Speaker 1: ourselves and with the parents, let's look at clearing this 98 00:05:59,240 --> 00:06:03,599 Speaker 1: debt now whilst your parents are being generous. Your most 99 00:06:03,680 --> 00:06:06,640 Speaker 1: important gift to yourself right now is financial independence, and 100 00:06:06,680 --> 00:06:10,839 Speaker 1: that starts with being toxic debt free. I'm talking credit 101 00:06:10,839 --> 00:06:13,279 Speaker 1: card debt. I'm talking car loans, I'm talking personal loans. 102 00:06:13,279 --> 00:06:15,960 Speaker 1: I'm talking by now, pay later. So you need to 103 00:06:16,080 --> 00:06:19,400 Speaker 1: sit down and create a plan to clear this credit 104 00:06:19,440 --> 00:06:23,080 Speaker 1: card debt or credit card debts as quickly as possible. 105 00:06:23,560 --> 00:06:26,440 Speaker 1: So I recommend using my hitless strategy where you list 106 00:06:26,480 --> 00:06:29,120 Speaker 1: out all your debts with the smallest step first to 107 00:06:29,160 --> 00:06:31,320 Speaker 1: the largest debt. You make a notable the interest rates 108 00:06:31,360 --> 00:06:33,720 Speaker 1: that you're paying, and you have minimum repayment plans in 109 00:06:33,760 --> 00:06:36,480 Speaker 1: place for each of them, and you focus on hitting 110 00:06:36,600 --> 00:06:39,159 Speaker 1: or paying off the smallest step first and working through 111 00:06:40,000 --> 00:06:44,960 Speaker 1: every spare dollt. You have bonuses, tax refunds, any small 112 00:06:45,000 --> 00:06:47,520 Speaker 1: windfalls along the way. I don't care how small it 113 00:06:47,560 --> 00:06:49,400 Speaker 1: is or how big it is. It goes straight towards 114 00:06:49,480 --> 00:06:52,080 Speaker 1: paying this off. The quicker you can pay this off 115 00:06:52,120 --> 00:06:53,400 Speaker 1: the quicker you're going to be able to get your 116 00:06:53,400 --> 00:06:55,479 Speaker 1: foot in the door on the property market. And of 117 00:06:55,520 --> 00:06:59,680 Speaker 1: course go through your budget and reduce any unnecessary spending 118 00:07:00,560 --> 00:07:03,440 Speaker 1: so that you can use up that extra money and 119 00:07:03,520 --> 00:07:06,000 Speaker 1: make extra payments towards this debt. You've got to remind 120 00:07:06,000 --> 00:07:10,280 Speaker 1: yourself this is short term pain for long term peace. 121 00:07:10,440 --> 00:07:12,840 Speaker 1: And once that debt's out of the way, oh my gosh, 122 00:07:13,040 --> 00:07:16,680 Speaker 1: you are property hunting. That's exciting time. So use that 123 00:07:16,840 --> 00:07:20,120 Speaker 1: as your motivation to be aggressive and becoming debt free 124 00:07:20,160 --> 00:07:23,840 Speaker 1: as quickly as possible. And as you are doing this 125 00:07:24,000 --> 00:07:29,840 Speaker 1: debt free work, please spend time also reflecting on how 126 00:07:29,920 --> 00:07:32,360 Speaker 1: you got into that debt in the first place. How 127 00:07:32,400 --> 00:07:36,000 Speaker 1: that debt built up? Was it lifestyle creep? Was it 128 00:07:36,280 --> 00:07:38,120 Speaker 1: something that happened out of the blue, you know, a 129 00:07:38,160 --> 00:07:42,000 Speaker 1: period that was very stressful, or an unexpected expense, or 130 00:07:42,040 --> 00:07:44,040 Speaker 1: was it your the fact that you don't actually have 131 00:07:44,040 --> 00:07:45,400 Speaker 1: a budget or you don't know how to stick to 132 00:07:45,440 --> 00:07:48,720 Speaker 1: a budget. You know. Please make sure that you understand 133 00:07:48,760 --> 00:07:50,760 Speaker 1: why you got into this in the first place, so 134 00:07:50,800 --> 00:07:54,360 Speaker 1: that you never repeat history. Whatever the reason may be, 135 00:07:54,880 --> 00:07:58,880 Speaker 1: this is your opportunity to understand it without any shame, 136 00:07:59,160 --> 00:08:01,280 Speaker 1: so that you can make sure never happens again. And 137 00:08:01,760 --> 00:08:06,680 Speaker 1: self awareness is always the first step to prevention. Okay, 138 00:08:06,840 --> 00:08:11,440 Speaker 1: Step four get mortgage ready. This smart way, all right, 139 00:08:11,520 --> 00:08:14,200 Speaker 1: the moment you have cleared the debt, or even actually, 140 00:08:14,200 --> 00:08:16,800 Speaker 1: if you're getting really close to paying off this debt, 141 00:08:17,440 --> 00:08:20,679 Speaker 1: it is time to get mortgage ready before you accept 142 00:08:20,840 --> 00:08:23,040 Speaker 1: any family gift. I want you to go and speak 143 00:08:23,080 --> 00:08:27,720 Speaker 1: to a mortgage broker, an experienced mortgage broker. If you 144 00:08:27,760 --> 00:08:30,360 Speaker 1: want a recommendation. Of course, you know, you're welcome to 145 00:08:30,440 --> 00:08:32,719 Speaker 1: use my mortgage broker. There's no incentive for me to 146 00:08:32,720 --> 00:08:35,960 Speaker 1: recommend him whatsoever. I just recommending him because he's so good, 147 00:08:36,120 --> 00:08:40,120 Speaker 1: so reliable and so honest. But regardless, you've got to 148 00:08:40,120 --> 00:08:43,160 Speaker 1: speak to an experienced mortgage broker that can help you. 149 00:08:43,160 --> 00:08:44,640 Speaker 1: You might be thinking, oh, hang on, isn't that a 150 00:08:44,640 --> 00:08:47,560 Speaker 1: bit soon? Like why we should we slow down a bit? Well, 151 00:08:48,000 --> 00:08:50,600 Speaker 1: the thing is a mortgage broker will help you understand 152 00:08:51,080 --> 00:08:54,600 Speaker 1: how much you can safely borrow so that you can 153 00:08:54,640 --> 00:08:56,839 Speaker 1: then work out, okay, what's our budget. You know, we're 154 00:08:56,880 --> 00:08:58,760 Speaker 1: looking at apartment and we looking at a townhouse, were 155 00:08:58,760 --> 00:09:00,920 Speaker 1: looking at a house? What areas are we looking at? 156 00:09:01,160 --> 00:09:04,600 Speaker 1: They'll also go through all the detailed documentation that the 157 00:09:04,640 --> 00:09:07,160 Speaker 1: bank are going to want, so they're going to want 158 00:09:07,200 --> 00:09:11,480 Speaker 1: to see genuine savings statements. Now this is important because 159 00:09:11,520 --> 00:09:14,640 Speaker 1: your parents are giving you money now and the bank 160 00:09:14,679 --> 00:09:16,480 Speaker 1: will recognize that. And I'll come to that in a second. 161 00:09:16,480 --> 00:09:18,240 Speaker 1: But the thing is they need to see that you 162 00:09:18,280 --> 00:09:21,480 Speaker 1: and your husband are able to stick to a budget 163 00:09:21,800 --> 00:09:26,280 Speaker 1: and regularly put money aside so that when it comes 164 00:09:26,320 --> 00:09:29,160 Speaker 1: to lending this money to you, that you will be 165 00:09:29,280 --> 00:09:33,959 Speaker 1: able to meet the mortgage repayments comfortably. This is you know, 166 00:09:34,360 --> 00:09:36,600 Speaker 1: I know, gifts are wonderful, but it doesn't mean the 167 00:09:36,600 --> 00:09:38,520 Speaker 1: bank will just happily hand money over. They need to 168 00:09:38,520 --> 00:09:40,800 Speaker 1: see an element of self control and discipline with your 169 00:09:40,840 --> 00:09:44,320 Speaker 1: own cash flow. Yes, they will take into consideration the 170 00:09:44,360 --> 00:09:46,920 Speaker 1: debt free journey that you've been going on and factor 171 00:09:46,960 --> 00:09:49,880 Speaker 1: that into the story, but they need to see consistent statements. 172 00:09:50,360 --> 00:09:54,679 Speaker 1: This is typically around about three months of genuine saving statements. 173 00:09:55,360 --> 00:09:58,680 Speaker 1: And of course the mortgage broker is going to help 174 00:09:58,720 --> 00:10:01,560 Speaker 1: show you what you're borrowing power is once you are 175 00:10:01,600 --> 00:10:05,000 Speaker 1: debt free, because if you are carrying still carrying credit 176 00:10:05,000 --> 00:10:07,559 Speaker 1: card debt or even things like hex debt, that's actually 177 00:10:07,600 --> 00:10:09,760 Speaker 1: going to impact how much you can borrow. It's going 178 00:10:09,800 --> 00:10:12,280 Speaker 1: to reduce it. So they can run some numbers and 179 00:10:12,280 --> 00:10:13,720 Speaker 1: show you, well, if you've paid off or your credit 180 00:10:13,760 --> 00:10:15,319 Speaker 1: card debt, you can borrow this much. But if you 181 00:10:15,360 --> 00:10:17,400 Speaker 1: still have say ten thousand dollars or a credit card 182 00:10:17,440 --> 00:10:20,160 Speaker 1: debt you can only pay off, you can only borrow 183 00:10:20,360 --> 00:10:22,760 Speaker 1: this much. So it's going to give you some really 184 00:10:22,840 --> 00:10:26,200 Speaker 1: important clarity and boundaries as to what your property purchase 185 00:10:26,280 --> 00:10:28,040 Speaker 1: is going to look like, and therefore it's going to 186 00:10:28,040 --> 00:10:31,760 Speaker 1: go through very smoothly. And importantly, they're going to talk 187 00:10:31,760 --> 00:10:34,320 Speaker 1: to you about how this gifted deposit actually affects your 188 00:10:34,360 --> 00:10:39,280 Speaker 1: loan application. And you know in most cases lenders these 189 00:10:39,360 --> 00:10:41,880 Speaker 1: days because there is so many bank of mom and 190 00:10:41,920 --> 00:10:45,720 Speaker 1: dad contributors here, they'll need a letter from your parents 191 00:10:45,760 --> 00:10:49,880 Speaker 1: confirming that the money is a non repayable gift, not 192 00:10:50,040 --> 00:10:54,319 Speaker 1: actually alone. And that is so that is why clarity 193 00:10:54,520 --> 00:10:59,640 Speaker 1: and documentation here are so incredibly important. Is going to 194 00:10:59,679 --> 00:11:02,360 Speaker 1: help create a greater sense of peace of mind for 195 00:11:02,400 --> 00:11:06,920 Speaker 1: both yourself and your parents. Now, the next step is 196 00:11:06,960 --> 00:11:10,880 Speaker 1: more of the legal details, and that is getting legal 197 00:11:10,880 --> 00:11:15,960 Speaker 1: advice basically for everybody's protection and independent legal advice. This 198 00:11:16,080 --> 00:11:19,200 Speaker 1: is something that a lord of families overlook and recently 199 00:11:19,200 --> 00:11:21,920 Speaker 1: has been in the media. It's backfired a few times 200 00:11:21,920 --> 00:11:24,559 Speaker 1: and in a few different ways, but it is so important. 201 00:11:25,200 --> 00:11:30,320 Speaker 1: So before any money changes hands or sides between you 202 00:11:30,480 --> 00:11:34,840 Speaker 1: and your parents, you've got to both get separately independent 203 00:11:34,920 --> 00:11:38,559 Speaker 1: legal advice. Now this is not because anyone's being difficult 204 00:11:38,720 --> 00:11:43,200 Speaker 1: or distrustful. It is just simply to protect everybody involved 205 00:11:43,240 --> 00:11:49,079 Speaker 1: and have no regrets. Look, life happens, relationships can change, 206 00:11:49,600 --> 00:11:54,440 Speaker 1: and your parents may face health issues, expensive health issues 207 00:11:54,440 --> 00:11:57,160 Speaker 1: further down the track, or even age care costs which 208 00:11:57,160 --> 00:12:00,840 Speaker 1: are very expensive, or even their own form of financial hardship, 209 00:12:01,520 --> 00:12:05,560 Speaker 1: and without any sort of legal documentation in place. That 210 00:12:05,960 --> 00:12:08,400 Speaker 1: very generous gift that they're about to hand over can 211 00:12:08,480 --> 00:12:13,240 Speaker 1: end up becoming a really nasty dispute further down the track. 212 00:12:13,320 --> 00:12:16,560 Speaker 1: And this is where lawyers really are worth their weight 213 00:12:16,600 --> 00:12:19,680 Speaker 1: in gold, because they actually help set some really clear 214 00:12:19,800 --> 00:12:23,120 Speaker 1: terms and conditions around this gift. You know, for example, 215 00:12:23,160 --> 00:12:25,840 Speaker 1: you know what happens if you and your husband separate? 216 00:12:25,960 --> 00:12:29,720 Speaker 1: Does that mean your husband is entitled to half this money? 217 00:12:30,160 --> 00:12:32,840 Speaker 1: You know, how's that going to work? What if your 218 00:12:32,880 --> 00:12:36,240 Speaker 1: parents you need that money back for whatever reason, or 219 00:12:36,960 --> 00:12:39,600 Speaker 1: how's the bank going to treat that gift when assessing 220 00:12:39,640 --> 00:12:44,360 Speaker 1: that loan application. This is definitely not about doubting anyone's integrity, 221 00:12:44,600 --> 00:12:48,319 Speaker 1: but it's really about creating that peace of mind, boundaries 222 00:12:48,559 --> 00:12:55,000 Speaker 1: and clarity where everyone agrees upfront before proceeding ahead. And 223 00:12:55,040 --> 00:12:58,440 Speaker 1: then step six and this is really important and no 224 00:12:58,480 --> 00:13:00,520 Speaker 1: one really talks about this. And something I did before 225 00:13:00,520 --> 00:13:02,800 Speaker 1: I bought my first home, and I'm so glad I did, 226 00:13:03,240 --> 00:13:07,280 Speaker 1: and that is a dress rehearsal for your home ownership. 227 00:13:07,840 --> 00:13:10,720 Speaker 1: So as I said, it's one of my favorite pieces 228 00:13:10,760 --> 00:13:13,560 Speaker 1: of advice, you know, for anyone that is buying a 229 00:13:13,559 --> 00:13:15,400 Speaker 1: home or about to buy home, and that is, you know, 230 00:13:15,559 --> 00:13:18,640 Speaker 1: start your own like practice run dress rehearsal for a 231 00:13:18,640 --> 00:13:21,839 Speaker 1: home ownership. So what that means is working out what 232 00:13:21,920 --> 00:13:24,760 Speaker 1: your future mortgage repayments are going to look like, both 233 00:13:24,800 --> 00:13:28,080 Speaker 1: principal and interest of course, and then you start paying 234 00:13:28,440 --> 00:13:33,280 Speaker 1: that exact amount into a separate savings account each month 235 00:13:33,400 --> 00:13:35,719 Speaker 1: or each week or each fortnight. Obviously you have to 236 00:13:35,880 --> 00:13:39,000 Speaker 1: if you're paying rent, you can't necessarily do rent and 237 00:13:39,040 --> 00:13:41,360 Speaker 1: a pretend mortgage. You will just do the difference between 238 00:13:41,360 --> 00:13:44,960 Speaker 1: the two. But what this is really simple idea, is 239 00:13:45,000 --> 00:13:48,280 Speaker 1: it helps create three powerful things. The first thing, you're 240 00:13:48,320 --> 00:13:51,200 Speaker 1: able to actually prove to yourself and the bank that 241 00:13:51,360 --> 00:13:54,880 Speaker 1: you can handle the mortgage repayments, the responsibility of the 242 00:13:54,880 --> 00:13:58,560 Speaker 1: mortgage repayments. Number two, it actually helps you build up 243 00:13:58,600 --> 00:14:01,960 Speaker 1: some extra savings which can then help you cover the 244 00:14:02,080 --> 00:14:05,760 Speaker 1: costs with buying a home, like you know, stamp duty, conveyancing, 245 00:14:05,960 --> 00:14:09,600 Speaker 1: and obviously all of those moving costs and setting up costs. 246 00:14:10,120 --> 00:14:14,520 Speaker 1: And then thirdly, it actually trains you to manage your 247 00:14:14,520 --> 00:14:17,240 Speaker 1: budget and stick to it. You know, you can start 248 00:14:17,280 --> 00:14:20,760 Speaker 1: to see how your lifestyle may need to be adjusted 249 00:14:21,280 --> 00:14:25,200 Speaker 1: because you now have the responsibility of a mortgage coming 250 00:14:25,240 --> 00:14:29,600 Speaker 1: into your world very shortly, and whilst you're doing this 251 00:14:29,640 --> 00:14:33,000 Speaker 1: stress rehearsal, I also recommend upping the ante and including 252 00:14:33,000 --> 00:14:35,800 Speaker 1: a bit of a stress test to your budget, so 253 00:14:35,840 --> 00:14:38,080 Speaker 1: you you know, as you're going through this process putting 254 00:14:38,160 --> 00:14:41,040 Speaker 1: the money into that separate savings account you'll pretend mortgage. 255 00:14:41,680 --> 00:14:44,520 Speaker 1: You would then say yourself, Okay, what happens if interest 256 00:14:44,600 --> 00:14:48,840 Speaker 1: rates go up by three percent? Not three interest rate rises? 257 00:14:48,920 --> 00:14:53,200 Speaker 1: A three percent interest rate rise? Could you still cope 258 00:14:53,440 --> 00:14:58,640 Speaker 1: financially if this happened again? This will let you see, okay, 259 00:14:58,680 --> 00:15:01,640 Speaker 1: all right, perhaps we won't bother as much, or perhaps 260 00:15:01,720 --> 00:15:03,440 Speaker 1: we'll wait a little bit longer and have a bigger 261 00:15:03,440 --> 00:15:05,040 Speaker 1: deposit so we don't have to take on so much. 262 00:15:05,320 --> 00:15:09,080 Speaker 1: This is really important And if you followed my advice, gosh, 263 00:15:09,160 --> 00:15:13,160 Speaker 1: back in like two thousand and say twenty one, before 264 00:15:13,240 --> 00:15:17,240 Speaker 1: those thirteen inches rights interest rate rises happened, you would 265 00:15:17,240 --> 00:15:19,040 Speaker 1: have been so glad you followed my advice because you 266 00:15:19,040 --> 00:15:22,480 Speaker 1: would have been able to survive, you know, the painful 267 00:15:22,640 --> 00:15:27,119 Speaker 1: rise in cost of living. But this is really really important. 268 00:15:27,320 --> 00:15:29,200 Speaker 1: I think you're a fool if you don't do this, 269 00:15:29,360 --> 00:15:31,720 Speaker 1: and not just this couple, but for everyone else who's 270 00:15:31,720 --> 00:15:34,640 Speaker 1: about to take on a mortgage or a new mortgage. 271 00:15:35,200 --> 00:15:37,840 Speaker 1: And the other thing I would also say is, you know, 272 00:15:38,000 --> 00:15:40,280 Speaker 1: I don't know your situation, I don't know how old 273 00:15:40,320 --> 00:15:42,920 Speaker 1: you are. But I would also ask yourself at each other, 274 00:15:43,400 --> 00:15:47,440 Speaker 1: you know, how would we, I guess, navigate changes in 275 00:15:47,480 --> 00:15:50,520 Speaker 1: our lifestyle if we had a home, you know, would 276 00:15:50,520 --> 00:15:52,680 Speaker 1: we be able to still service the mortgage if we 277 00:15:52,720 --> 00:15:54,960 Speaker 1: took time off to say, have a family, or if 278 00:15:55,000 --> 00:15:57,240 Speaker 1: we wanted to take a career break and say focus 279 00:15:57,280 --> 00:16:00,480 Speaker 1: on some additional studies and work part time, we still 280 00:16:00,520 --> 00:16:04,160 Speaker 1: afford to keep the home that pay the mortgage. These 281 00:16:04,200 --> 00:16:07,000 Speaker 1: are important questions. You really want to explore all the 282 00:16:07,240 --> 00:16:10,360 Speaker 1: what if scenarios so that you're going into this home 283 00:16:10,400 --> 00:16:14,360 Speaker 1: ownership eyes wide open. And if you can answer yes 284 00:16:14,400 --> 00:16:16,480 Speaker 1: to all of those questions and see the power of 285 00:16:16,520 --> 00:16:20,720 Speaker 1: doing a pretend mortgage repayment dress rehearsal, then you're not 286 00:16:20,760 --> 00:16:22,680 Speaker 1: just ready to own a home, you're ready to actually 287 00:16:22,800 --> 00:16:25,760 Speaker 1: keep it and even better pay it off and then 288 00:16:25,840 --> 00:16:29,440 Speaker 1: start investing and diversifying outside of the home. And then 289 00:16:29,720 --> 00:16:34,400 Speaker 1: finally step seven, please do this build some emergency money 290 00:16:34,520 --> 00:16:39,520 Speaker 1: a separate emergency savings account, so alongside your dress rehearsal. 291 00:16:39,760 --> 00:16:44,160 Speaker 1: You got to start setting aside some emergency money. Ideally, 292 00:16:45,160 --> 00:16:49,080 Speaker 1: you want to have enough money to cover three major 293 00:16:49,560 --> 00:16:53,680 Speaker 1: but realistic emergencies. Now there's no magical formula. I know 294 00:16:53,880 --> 00:16:56,000 Speaker 1: some people like to say three months worth of savings, 295 00:16:56,120 --> 00:16:58,080 Speaker 1: or three months worth of income or six months worth 296 00:16:58,120 --> 00:17:01,440 Speaker 1: of expenses. Everyone's sort of very with this, but you 297 00:17:01,960 --> 00:17:04,280 Speaker 1: really do need to think about what is your situation 298 00:17:04,359 --> 00:17:06,159 Speaker 1: look like, and what is a real risk and what 299 00:17:06,200 --> 00:17:08,240 Speaker 1: are the you know, what are the costs of those 300 00:17:08,320 --> 00:17:12,800 Speaker 1: risks happening and three of those things happening simultaneously. This 301 00:17:12,880 --> 00:17:15,040 Speaker 1: is will give you a much clearer idea as to 302 00:17:15,160 --> 00:17:18,680 Speaker 1: what is realistic for your situation. Now, this will vary. 303 00:17:18,720 --> 00:17:21,200 Speaker 1: Some people have lots of annual leave and sick leave accumulated, 304 00:17:21,200 --> 00:17:23,480 Speaker 1: and they've got income protection, and you know, they have 305 00:17:23,520 --> 00:17:26,520 Speaker 1: only a small mortgage, and their kids are all financially 306 00:17:26,520 --> 00:17:29,440 Speaker 1: independent and out of home. They may not necessarily need 307 00:17:29,480 --> 00:17:32,360 Speaker 1: as much emergency money as someone like myself, where I'm 308 00:17:32,400 --> 00:17:34,720 Speaker 1: self employed, my partner self employed, so we don't have 309 00:17:34,800 --> 00:17:38,320 Speaker 1: annually or sick leave. We also have three young children, 310 00:17:38,480 --> 00:17:41,439 Speaker 1: so we'd need help looking after the kids. You know, 311 00:17:41,520 --> 00:17:44,520 Speaker 1: we have a mortgage so I would need a lot 312 00:17:44,600 --> 00:17:47,639 Speaker 1: more emergency money than say that other couple that I 313 00:17:47,720 --> 00:17:50,760 Speaker 1: just refer to. No one knows what is right for 314 00:17:50,800 --> 00:17:52,840 Speaker 1: them until they actually sit down and look at their numbers. 315 00:17:52,880 --> 00:17:56,119 Speaker 1: And you know, I've explained in my book Mindful Money 316 00:17:56,200 --> 00:17:59,040 Speaker 1: how to actually do this properly in taking your time 317 00:17:59,080 --> 00:18:01,600 Speaker 1: going through all the numbers, doing crunching the numbers. But 318 00:18:02,040 --> 00:18:05,199 Speaker 1: please make sure you have emergency money. And once you 319 00:18:05,320 --> 00:18:08,240 Speaker 1: have a home, you can put that emergency money into 320 00:18:08,359 --> 00:18:11,240 Speaker 1: your redraw facility or an offset account, so that it 321 00:18:11,320 --> 00:18:14,959 Speaker 1: is actually helping reduce the interest, but is obviously still 322 00:18:15,240 --> 00:18:18,720 Speaker 1: accessible at any time if you were to experience an emergency. 323 00:18:18,720 --> 00:18:20,680 Speaker 1: And if you did experience an emergency, you would obviously 324 00:18:20,720 --> 00:18:22,600 Speaker 1: always go and top it up as quickly as you could. 325 00:18:22,600 --> 00:18:25,840 Speaker 1: And you know, this is a buffer for your safety, 326 00:18:26,000 --> 00:18:27,840 Speaker 1: eded Bain. It protects you from having to rely on 327 00:18:27,960 --> 00:18:31,560 Speaker 1: credit cards or ever getting back into debt again. It 328 00:18:31,640 --> 00:18:36,800 Speaker 1: is a non negotiable. And then finally step eight, and 329 00:18:36,840 --> 00:18:41,560 Speaker 1: that is to focus on shared values and gratitude. I 330 00:18:41,600 --> 00:18:44,199 Speaker 1: want to finish this episode today by reminding you that 331 00:18:44,280 --> 00:18:47,199 Speaker 1: this is an amazingly generous gift from your parents, and 332 00:18:47,400 --> 00:18:52,440 Speaker 1: it isn't just financial, it's also highly emotional as well. 333 00:18:53,080 --> 00:18:57,000 Speaker 1: It is their beautiful way of helping you have the 334 00:18:57,040 --> 00:19:01,440 Speaker 1: security of a home, something stable, to put down some roots, 335 00:19:01,920 --> 00:19:04,120 Speaker 1: to have a safe place that no one can take 336 00:19:04,160 --> 00:19:07,439 Speaker 1: away from you. And they may have worked decades to 337 00:19:07,520 --> 00:19:11,479 Speaker 1: build this money that they're giving you. So please, you know, 338 00:19:11,640 --> 00:19:16,520 Speaker 1: be transparent with them, plan carefully and mindfully, and obviously 339 00:19:17,280 --> 00:19:20,200 Speaker 1: it goes without saying which you're doing. It was obviously anyway, 340 00:19:20,240 --> 00:19:24,240 Speaker 1: but respecting their generosity, you know, you're not just honoring 341 00:19:24,320 --> 00:19:27,640 Speaker 1: their gift, You're actually going to hopefully multiply their gift, 342 00:19:27,800 --> 00:19:30,480 Speaker 1: so they'll be even prouder and glad that they gave 343 00:19:30,520 --> 00:19:33,200 Speaker 1: you this money because you've nurtured it and you've actually 344 00:19:33,359 --> 00:19:36,680 Speaker 1: use that money to help build your wealth beyond what 345 00:19:36,840 --> 00:19:39,040 Speaker 1: they actually gave you in the first place. And that's 346 00:19:39,080 --> 00:19:41,480 Speaker 1: something they'll be proud of and you'll definitely be be 347 00:19:41,560 --> 00:19:44,240 Speaker 1: proud of as well. And you're showing them that you 348 00:19:44,720 --> 00:19:48,080 Speaker 1: really do value their help so deeply and you're committed 349 00:19:48,119 --> 00:19:50,520 Speaker 1: to using it in a way that builds that long 350 00:19:50,640 --> 00:19:54,640 Speaker 1: term financial security for yourselves as a couple, but also 351 00:19:54,960 --> 00:19:59,960 Speaker 1: possibly for your future family. So, as I wrap up today, 352 00:20:00,119 --> 00:20:03,960 Speaker 1: episode I would love to hear from you guys as listeners. 353 00:20:04,480 --> 00:20:07,440 Speaker 1: You know, what would you do if you were in 354 00:20:07,520 --> 00:20:09,240 Speaker 1: debt and your parents were going to give you some money. 355 00:20:09,800 --> 00:20:12,480 Speaker 1: Would you be honest? Would you be strategic? Would you 356 00:20:12,600 --> 00:20:15,680 Speaker 1: be thoughtful? You know, as I said, this is so 357 00:20:15,800 --> 00:20:18,840 Speaker 1: important that you pay this debt off first. You do 358 00:20:18,920 --> 00:20:20,920 Speaker 1: the right thing, and you learn from it. You know, 359 00:20:20,960 --> 00:20:23,879 Speaker 1: you speak with a mortgage broker and our lawyer of 360 00:20:23,960 --> 00:20:27,520 Speaker 1: course before accepting any money, and you use this time 361 00:20:27,840 --> 00:20:31,800 Speaker 1: right now to strengthen your financial foundation so that when 362 00:20:31,920 --> 00:20:35,720 Speaker 1: that day comes to take the next step and buy 363 00:20:35,920 --> 00:20:39,720 Speaker 1: your first home, you do so with so much confidence, 364 00:20:39,840 --> 00:20:43,600 Speaker 1: so much stability, but also so much beautiful gratitude. You know, 365 00:20:43,680 --> 00:20:46,600 Speaker 1: you're not disappointing your parents here by being in debt. 366 00:20:46,960 --> 00:20:50,840 Speaker 1: You're just making sure that their generosity becomes a priority 367 00:20:51,160 --> 00:20:55,359 Speaker 1: of your family's legacy and not something that holds you 368 00:20:55,440 --> 00:21:00,760 Speaker 1: back with your financial liabilities. Now, if this episode resonated 369 00:21:00,800 --> 00:21:02,480 Speaker 1: with you, can you please go and share it with 370 00:21:02,680 --> 00:21:05,639 Speaker 1: any family members or friends who might be navigating a 371 00:21:05,720 --> 00:21:09,480 Speaker 1: similar financial situation. Because the bank of Mom and Dad 372 00:21:09,920 --> 00:21:13,080 Speaker 1: it is complex and there's a lot of dirty laundry 373 00:21:13,119 --> 00:21:14,600 Speaker 1: behind it as well, so it needs to be dealt 374 00:21:14,640 --> 00:21:17,879 Speaker 1: with correctly. And if you have a question for me 375 00:21:18,480 --> 00:21:21,399 Speaker 1: as part of Start Here, send me a DM on 376 00:21:21,520 --> 00:21:24,119 Speaker 1: Instagram or you can send me a direct email and 377 00:21:24,480 --> 00:21:26,440 Speaker 1: I will put on my list and I promise I 378 00:21:26,520 --> 00:21:29,800 Speaker 1: will make this episode for you. In the meantime, can 379 00:21:29,840 --> 00:21:32,600 Speaker 1: you do me a massive favor and leave me a 380 00:21:32,800 --> 00:21:35,920 Speaker 1: rating and review And of course I will see you 381 00:21:36,080 --> 00:21:39,720 Speaker 1: on Monday morning for Sugar Mamma's Fireplay and again next 382 00:21:39,800 --> 00:21:45,360 Speaker 1: Friday for start Here. Thank you everyone, have a fantastic weekend.