WEBVTT - The $10,000 question: What would you do? 0:00:01.680 --> 0:00:03.920 Welcome to How Do They Afford That? The podcast that 0:00:03.960 --> 0:00:07.400 peaks into the financial lives of everyday Australians. I'm Michael Thompson. 0:00:07.440 --> 0:00:09.520 I'm an author and the co host of the business 0:00:09.520 --> 0:00:12.119 news podcast Fear and Greed, And as always I'm with 0:00:12.200 --> 0:00:15.360 Canna Campbell, financial planner and founder of Sugar Mumma TV, 0:00:15.520 --> 0:00:21.600 the financial literacy platform covering pretty much everything we are 0:00:21.680 --> 0:00:23.720 up to. This is like episode one hundred and eighty 0:00:23.800 --> 0:00:26.160 or something around there, and I still cannot get out 0:00:26.239 --> 0:00:31.240 the words financial literacy platform without having to very deliberately 0:00:31.280 --> 0:00:32.720 slow down and think about it as we go. 0:00:32.880 --> 0:00:34.479 Hello, Cannah, good morning, How are you? 0:00:35.000 --> 0:00:38.400 I am very good, Thank you. I I'm going to 0:00:38.440 --> 0:00:43.680 start today's episode with a hypothetical. Yeah yeah, if someone 0:00:43.800 --> 0:00:49.560 handed you ten thousand dollars tomorrow, no strings attached, right, 0:00:50.159 --> 0:00:53.440 no requirements on this. They handed you ten thousand dollars tomorrow, 0:00:53.600 --> 0:00:56.640 what would you do with it? Are you going to 0:00:56.640 --> 0:00:59.200 be kind of paying down debt? Would you be investing it? 0:00:59.240 --> 0:01:02.680 Would you be blowing it on a investing it on 0:01:02.680 --> 0:01:06.000 a holiday. I'm going to reframe my language already today 0:01:06.000 --> 0:01:09.880 We're going to unpack what the answer says about you. 0:01:10.319 --> 0:01:13.679 And what you probably should do rather than what your 0:01:13.680 --> 0:01:16.160 perhaps instinct is telling you to go and do with it. 0:01:17.280 --> 0:01:22.000 Let's jump straight in when people say, imagine getting ten 0:01:22.040 --> 0:01:24.760 thousand dollars, because I think everyone plays around with these hypotheticals. 0:01:24.760 --> 0:01:27.600 If I was to say, win the lottery, win the lottery, right, 0:01:28.000 --> 0:01:30.039 I mean, obviously ten thousand dollars, you're looking at probably 0:01:30.120 --> 0:01:32.800 like a third division prize or something within lotto. 0:01:33.040 --> 0:01:35.119 Hey would still be grateful for ten thousand dollars. 0:01:35.160 --> 0:01:37.360 I certainly would. I mean, I'd prefer forty million, but 0:01:37.440 --> 0:01:40.360 I will take ten thousand as well. What's the most 0:01:40.360 --> 0:01:42.880 common instinct that you see in this scenario. 0:01:43.080 --> 0:01:45.800 I think there's a real mix of reactions, and it 0:01:45.840 --> 0:01:49.360 says a lot about someone's relationship with money. So for 0:01:49.480 --> 0:01:51.800 someone it might be, you know, the reaction maybe a 0:01:51.840 --> 0:01:54.560 sense of relief thinking, okay, great, ten thousand dollars we 0:01:54.560 --> 0:01:57.240 can find and clear that, you know by now pay 0:01:57.280 --> 0:01:59.560 letter debt or critit card debt. We can fix up 0:01:59.560 --> 0:02:01.920 those bills and have a little bit of money, you know, leftover. 0:02:02.000 --> 0:02:04.200 So there's a huge sense of like, all right, I've 0:02:04.200 --> 0:02:06.000 got we can have our head above water and see 0:02:06.040 --> 0:02:07.800 light at the end. Of the tunnel. For other people, 0:02:07.840 --> 0:02:10.640 that might be just the excitement of thinking, great, we 0:02:10.680 --> 0:02:13.360 can go book that holiday or something that they've been 0:02:13.440 --> 0:02:16.520 like saving up for wanting or desiring for a long 0:02:16.520 --> 0:02:20.040 period of time. But what I noticed the most about 0:02:20.040 --> 0:02:24.400 people's reaction and how it reflects their money mindset and 0:02:24.560 --> 0:02:29.360 also their level of financial literacy and how connected and 0:02:29.400 --> 0:02:32.640 committed they are to their financial goals and dreams. So 0:02:32.880 --> 0:02:36.840 you know, it can really the reactions can be quite wide. 0:02:37.240 --> 0:02:39.960 Okay, so it's it's I was going to ask you then, 0:02:40.000 --> 0:02:43.399 whether it's usually an emotional response or a strategic response, 0:02:43.880 --> 0:02:46.160 And it could be either depending on kind of how 0:02:46.240 --> 0:02:49.639 much work they've done on money in the past and 0:02:50.240 --> 0:02:51.800 kind of the position that they are in at the 0:02:51.840 --> 0:02:54.079 time that this sudden windfall lands in their lap. 0:02:54.160 --> 0:02:58.760 Right, So it's always emotions first, you know, the joy, 0:02:58.880 --> 0:03:01.799 the relief, the excite, one of those disbelief. 0:03:01.880 --> 0:03:04.919 One of these days, I'm going to actually assume something correctly. 0:03:06.200 --> 0:03:08.880 I have over the last two hundred odd episodes, I 0:03:08.919 --> 0:03:12.280 have made a number of assumptions assuming that I'm on 0:03:12.360 --> 0:03:15.120 fairly safe ground, and I should learn that I am 0:03:15.160 --> 0:03:16.360 never on safe ground. 0:03:16.360 --> 0:03:19.640 Never with me. But interestingly, I've seen people have I 0:03:19.639 --> 0:03:24.120 guess a discouraging reaction where people feel guilty about that money, 0:03:24.240 --> 0:03:26.760 or they see have a sense of self doubt or 0:03:27.440 --> 0:03:29.480 you know, self worth, or you know, they come from 0:03:29.480 --> 0:03:32.320 a place of scarcity, and they might even say, oh, 0:03:32.600 --> 0:03:35.400 only ten thousand dollars. You know, as you just said 0:03:35.520 --> 0:03:38.600 Division III, I was the one that said I'd be 0:03:38.640 --> 0:03:41.480 grateful for that anyway. But you know, once the emotions 0:03:41.480 --> 0:03:46.000 have passed, that's when you know that calm, rational, practical 0:03:46.040 --> 0:03:48.760 approach steps in, and you know, you look at asking 0:03:48.760 --> 0:03:51.040 those questions, all right, what can we do with this money? 0:03:51.040 --> 0:03:52.880 What is the smartest thing to do with this money? 0:03:53.040 --> 0:03:58.160 What would actually in our financial lives needs attention immediately 0:03:58.160 --> 0:04:01.480 to improve our financial wellbeing? There is a definitely clear 0:04:01.520 --> 0:04:07.480 transition from the emotional reaction to those strong strategic financial decisions. 0:04:07.920 --> 0:04:10.320 Does it change, though, depending on where you're at in 0:04:10.360 --> 0:04:15.520 your life. I mean surely if you're in say your twenties, 0:04:16.120 --> 0:04:19.120 you're going to have a different reaction to someone, say 0:04:19.240 --> 0:04:25.039 in their fifties, because it's just like the look on 0:04:25.080 --> 0:04:27.640 your face, just that it's just like just stop, Michael, 0:04:27.680 --> 0:04:29.520 because you're heading down the wrong path. But I've committed it. 0:04:29.520 --> 0:04:32.400 I'm going to finish it, okay, in your twenties, right, 0:04:32.680 --> 0:04:35.479 it is about disposable income. It is about having a 0:04:35.480 --> 0:04:37.479 bit of fun with your money. And suddenly you ten 0:04:37.480 --> 0:04:40.719 thousand dollars lands in your account. You're like, fantastic, that's 0:04:40.760 --> 0:04:42.520 that holiday that I wasn't actually sure whether I was 0:04:42.520 --> 0:04:44.840 going to be able to afford. Now I can. In 0:04:44.880 --> 0:04:49.559 your fifties, inching closer to retirement, Hey, that ten thousand 0:04:49.600 --> 0:04:53.080 dollars may make a fantastic additional contribution to my super 0:04:53.360 --> 0:04:54.480 It's going to change. 0:04:54.279 --> 0:04:56.400 Right, you are actually right? 0:04:56.600 --> 0:04:57.679 But better that hurt? 0:04:58.400 --> 0:05:01.680 No, But if you let me continue on without being interrupted. 0:05:01.720 --> 0:05:04.680 You know, money has an interesting way of magnifying what 0:05:04.720 --> 0:05:07.120 exists within this And I've said this before. Clearly you 0:05:07.160 --> 0:05:10.159 were not listening back then. So if someone is really 0:05:10.560 --> 0:05:14.320 driven and motivated and educated about money, they are going 0:05:14.360 --> 0:05:17.839 to use that to leverage and magnify that. So you know, 0:05:17.880 --> 0:05:19.680 if then the flip side is if someone's you know, 0:05:20.279 --> 0:05:24.120 really squandalous or it is really frugal with money, they're 0:05:24.160 --> 0:05:26.520 actually going to probably hold that money more or blow 0:05:26.560 --> 0:05:29.480 that money. So you know, this is where it not 0:05:29.680 --> 0:05:33.320 necessarily is different, but to you know, I guess to 0:05:33.640 --> 0:05:36.440 come to a conclusion with this and agree with you. Yes, 0:05:36.920 --> 0:05:40.440 someone who is young doesn't have serious financial responsibilities. It 0:05:40.560 --> 0:05:43.159 is more likely for them to go and spend that money, 0:05:43.560 --> 0:05:47.919 whereas someone say in their fifties, with significant financial pressures 0:05:47.920 --> 0:05:51.479 and stresses like preparing for retirement, you know, mortgages, maybe 0:05:51.720 --> 0:05:55.080 private school fees, you know, no investments, and they wanting 0:05:55.080 --> 0:05:58.080 to achieve things. Yes, that money would be used very 0:05:58.160 --> 0:06:02.600 very differently and received I guess different level appreciation. Perhaps. 0:06:03.160 --> 0:06:05.720 Can I just clear up one thing along the way 0:06:05.760 --> 0:06:10.080 here that if your first thought is great holiday, it 0:06:10.120 --> 0:06:13.719 doesn't necessarily mean that you're irresponsible with money, does it? 0:06:14.160 --> 0:06:19.159 Absolutely not. I think the investment of travel, exploring, adventure 0:06:19.240 --> 0:06:22.440 is one of the best investments you can make in yourself. 0:06:22.480 --> 0:06:26.520 You know, there's so much intangible value that comes from traveling, 0:06:26.680 --> 0:06:30.640 experiencing different cultures, meeting different people, you know, respecting all 0:06:30.680 --> 0:06:33.560 the different walks of life, and seeing you know, what 0:06:33.600 --> 0:06:36.560 the big wide world really does look like and where 0:06:36.560 --> 0:06:39.359 we sit in it is you know, the significance of 0:06:39.400 --> 0:06:42.000 the world. And yeah, I think it is something that 0:06:42.120 --> 0:06:44.560 I mean, I've never regretted going on holiday ever. 0:06:44.760 --> 0:06:48.200 Yeah, and especially when things are tight, we are still 0:06:48.240 --> 0:06:51.960 in a cost of living crisis and just being able 0:06:52.000 --> 0:06:54.359 to afford to say take the kids to Sea World 0:06:54.600 --> 0:06:58.640 or something like that. This money could make a meaningful difference. 0:06:58.960 --> 0:07:01.200 Yeah, and you know, I mean these memories that you're 0:07:01.240 --> 0:07:03.280 building and these last a lifetime. 0:07:04.839 --> 0:07:06.760 I feel like we're in a place of agreement to you, 0:07:06.839 --> 0:07:09.320 which is just so d right down the date. So 0:07:09.520 --> 0:07:12.680 therefore I'm going to just demolish everything that we've just done, 0:07:12.720 --> 0:07:14.840 all the goodwill that we've built up in the studio, 0:07:15.400 --> 0:07:17.600 and complain a little bit. Why can't you see it 0:07:17.640 --> 0:07:20.360 as free money? Right? This is ten thousand dollars that 0:07:20.440 --> 0:07:23.760 you didn't have yesterday. You weren't expecting it. It's just 0:07:23.920 --> 0:07:27.200 arrived in your account. Why can't I just claim that 0:07:27.240 --> 0:07:29.240 as free money and do whatever the heck I want? 0:07:29.480 --> 0:07:30.080 Why don't we. 0:07:30.080 --> 0:07:32.600 Just like reframe this together right now and see this 0:07:32.800 --> 0:07:38.760 as like an opportunity blessing. Unexpected money can actually represent 0:07:39.120 --> 0:07:42.440 a really powerful turning point in our lives. You know. 0:07:42.560 --> 0:07:45.480 For some people that might mean they can finally clear 0:07:45.560 --> 0:07:48.200 the debt that has been weighing on them, like not 0:07:48.240 --> 0:07:50.840 just financially but mentally as well. But for others. It 0:07:50.920 --> 0:07:54.320 also could be the catalyst of starting something really big, 0:07:54.400 --> 0:07:57.440 perhaps kickstarting that share pot follio or you know that 0:07:57.600 --> 0:08:00.960 is the ten thousand dollars that kickstarts the decision to 0:08:01.040 --> 0:08:03.200 try and save up for a deposit on a home, 0:08:03.680 --> 0:08:06.119 or some sort of other financial investment such as starting 0:08:06.160 --> 0:08:08.720 up a business that they've always wanted to. So, whilst 0:08:08.760 --> 0:08:11.760 it can feel like bonus money, it often has the 0:08:11.760 --> 0:08:15.840 potential to create some really serious long term improvements and 0:08:15.880 --> 0:08:18.800 shifts in our lives. So, you know, sometimes a small 0:08:18.840 --> 0:08:21.360 financial blessing ten thousand dollars I think still a lot 0:08:21.360 --> 0:08:23.760 of money, can actually be absolutely the turning point for 0:08:23.920 --> 0:08:25.800 a new financial chapter of your life. 0:08:26.200 --> 0:08:28.800 Yeah, ten thousand dollars can be enough to kind of 0:08:28.880 --> 0:08:31.160 get you out of credit card debt. It can be 0:08:31.280 --> 0:08:35.440 enough to kickstart your emergency money savings. It can do 0:08:35.600 --> 0:08:37.960 a lot of things. So I just want to make 0:08:38.000 --> 0:08:40.400 it very clear that I am certainly not turning up 0:08:40.440 --> 0:08:44.080 my nose at ten thousand dollars, but if I'm going 0:08:44.080 --> 0:08:46.960 to win lotto, I would prefer it to be something 0:08:47.000 --> 0:08:49.240 with a few more zeros after it. 0:08:49.360 --> 0:08:51.800 Well, it all boils down to your money mindset and 0:08:51.840 --> 0:08:55.120 your attitude and your financial literacy, you make that money 0:08:55.120 --> 0:08:56.040 actually really count. 0:08:56.280 --> 0:09:00.000 Yeah. Yeah, indeed, so that I buy enough lottery tickets 0:09:00.040 --> 0:09:01.960 in order to increase my chances of winning. Is that 0:09:02.000 --> 0:09:02.800 what you're trying to say? 0:09:03.000 --> 0:09:07.319 No, okay, not at all. Right, I think we're getting somewhere. 0:09:08.920 --> 0:09:12.480 Last one before we get into the practical side, because 0:09:12.520 --> 0:09:14.680 I really want to kind of go through a step 0:09:14.679 --> 0:09:19.559 by step of how you might actually make those decisions 0:09:19.640 --> 0:09:21.400 around where the money goes. And I want to know 0:09:21.600 --> 0:09:24.040 from you what you would do specifically if you had 0:09:24.040 --> 0:09:25.640 ten thousand volts. But we'll do that in a minute. 0:09:25.679 --> 0:09:27.400 It's going to be really cool. Just so you know 0:09:27.480 --> 0:09:31.480 what I'm going to share with you. You'll be really impressed. 0:09:31.520 --> 0:09:34.000 Are you the one that has assessed it as being cool? 0:09:34.080 --> 0:09:37.280 Because you and I have very different definitions of cool. 0:09:37.960 --> 0:09:38.680 We'll have to see. 0:09:38.800 --> 0:09:43.040 Okay, all right, great teaser. Just quickly. Mistakes. What are 0:09:43.040 --> 0:09:46.040 the mistakes that you see people make when they receive 0:09:46.440 --> 0:09:48.400 win for money? And we're talking I suppose here it's 0:09:48.440 --> 0:09:51.800 not just about winnings. It's more likely going to be 0:09:52.120 --> 0:09:55.640 a tax refund, for instance, or a bonus from work, 0:09:56.000 --> 0:09:59.560 maybe an inheritance, those kinds of things. What are the 0:09:59.600 --> 0:10:03.160 mistakes that you see people make? Is it these emotional 0:10:03.720 --> 0:10:06.360 decisions just rushing out and doing things too quickly. 0:10:07.120 --> 0:10:11.160 So actually, one of the saddest patterns I have seen 0:10:11.480 --> 0:10:15.560 and witnessed professionally and personally. He is actually self sabotaged. 0:10:16.120 --> 0:10:20.280 So this stems from you know, low self worth, and 0:10:20.720 --> 0:10:24.880 it's deeply ingrained in money beliefs, and some people subconsciously 0:10:24.880 --> 0:10:27.920 feel like they don't actually deserve financial abundance. You know, 0:10:27.960 --> 0:10:30.600 they haven't necessarily worked for it for their because they've 0:10:30.640 --> 0:10:33.400 won it, for example, or inherited it, and so they 0:10:34.240 --> 0:10:37.600 literally get rid of it and they'll spend it, they 0:10:37.600 --> 0:10:40.840 make impulsive decisions just to get it out of their 0:10:40.880 --> 0:10:43.439 hands away from them, or even I've seen situations where 0:10:43.480 --> 0:10:46.200 people even just give the money away. And you know, 0:10:46.320 --> 0:10:48.600 it can look like all sorts of different things going on, 0:10:48.679 --> 0:10:52.240 like you know, excessive spending, risky decisions, or simply not 0:10:52.280 --> 0:10:55.040 even having a plan or even being thoughtful about making 0:10:55.120 --> 0:10:57.440 that money last, or actually taking a moment to stop 0:10:57.440 --> 0:11:00.200 and actually think about the heritage of that money, if 0:11:00.200 --> 0:11:03.360 you like, and what that money actually represents. And this 0:11:03.520 --> 0:11:06.520 is why I always talk about, you know, when someone's 0:11:06.559 --> 0:11:09.920 looking at going down a path of financial literacy. The 0:11:09.960 --> 0:11:13.400 first place to invest time isn't actually the budget of 0:11:13.440 --> 0:11:16.440 the goals, is actually your money mindset, so that you 0:11:16.440 --> 0:11:20.520 can actually embrace the adventure and the journey ahead. Knowing 0:11:20.520 --> 0:11:22.680 that you know what you're doing for yourself is actually 0:11:22.720 --> 0:11:25.800 really important and as actually building up your self confidence 0:11:25.880 --> 0:11:26.920 and your belief in yourself. 0:11:27.200 --> 0:11:29.240 Okay, let's take a very quick break, come back and 0:11:29.240 --> 0:11:31.000 go through the main options of what you can do 0:11:31.120 --> 0:11:40.760 and in particular what you would do as well. Can 0:11:40.760 --> 0:11:43.040 I We are talking today about the ten thousand dollars question. 0:11:43.120 --> 0:11:46.280 This is the hypothetical that if you were to receive 0:11:46.320 --> 0:11:48.560 ten thousand dollars, if someone handed it to you tomorrow, 0:11:48.679 --> 0:11:50.440 what would you do with it? Take us through the 0:11:50.480 --> 0:11:55.360 main options, so paying off debt, boosting, savings, investing. 0:11:55.000 --> 0:11:57.480 So the order of priority, and of course it depends 0:11:57.520 --> 0:11:59.600 on your situation. But if you had, say, credit card 0:11:59.679 --> 0:12:02.000 debt or buy an hour pay later, your number one 0:12:02.040 --> 0:12:05.080 priority is to clear that instantly as much as you 0:12:05.080 --> 0:12:05.760 possibly can. 0:12:05.920 --> 0:12:06.560 Toxic debt. 0:12:06.720 --> 0:12:09.079 Toxic debt, the non deductible debt, the debt where you've 0:12:09.120 --> 0:12:12.240 just used borrowed money to just buy stuff that's depreciating value, 0:12:12.240 --> 0:12:15.280 including actually car loans in that. The next one is 0:12:15.280 --> 0:12:18.640 obvious courses in emergency savings, so you know you already 0:12:18.679 --> 0:12:21.559 may have some emergency savings, but it may not necessarily 0:12:21.600 --> 0:12:23.520 be enough where you may have recently taken some money 0:12:23.520 --> 0:12:25.400 out of that emergency savings as the need of being 0:12:25.440 --> 0:12:27.680 topped back up again, so that would be your next 0:12:27.720 --> 0:12:31.480 point of call. The third step really comes down to 0:12:31.520 --> 0:12:33.439 your situation, like what are you working on right now? 0:12:33.480 --> 0:12:36.800 What are your big long term financial goals. Perhaps you 0:12:36.800 --> 0:12:38.440 know you want to put that money towards, if there's 0:12:38.440 --> 0:12:41.079 any leftover, towards you know, saving up a deposit for 0:12:41.120 --> 0:12:42.840 a home, or perhaps you want to use that money 0:12:42.840 --> 0:12:45.960 to start investing and start earning passive income. Or perhaps 0:12:46.040 --> 0:12:48.600 you're at a stage in your life where you're looking 0:12:48.640 --> 0:12:51.640 at retirement and you're looking at some sort of financial 0:12:51.679 --> 0:12:53.600 goals to work on, and you've now got idea as 0:12:53.640 --> 0:12:56.080 to how much money you need and SUPER, perhaps it 0:12:56.160 --> 0:12:57.800 is time to then put that money in SUPER. But 0:12:57.840 --> 0:12:59.920 it really depends as to where you are in your 0:13:00.400 --> 0:13:03.640 life stage and cycle and what your goals really are 0:13:03.679 --> 0:13:07.160 and what's going to add the most value to your 0:13:07.200 --> 0:13:08.280 financial well being. 0:13:08.480 --> 0:13:11.640 Okay, but that's a pretty clear guide actually that really 0:13:11.679 --> 0:13:14.360 you do start with the thing that is going to 0:13:14.400 --> 0:13:18.560 cause you the most damaged financially and rather to reframe 0:13:18.600 --> 0:13:21.400 it that will do you the most good to clear. 0:13:21.679 --> 0:13:23.160 So say that toxic debt. 0:13:23.400 --> 0:13:27.760 It will rebuild financial stability and resilience if you can 0:13:27.800 --> 0:13:30.000 clear that debt and then stay out of that debt, 0:13:30.040 --> 0:13:31.400 because the last thing I want to do is clear 0:13:31.440 --> 0:13:34.520 the debt and then find six months later you're back 0:13:34.520 --> 0:13:37.800 because you haven't addressed your habits, your mindset, your attitude. 0:13:37.880 --> 0:13:40.040 Okay, and then it's working through kind of where you 0:13:40.080 --> 0:13:43.080 are at with your other assets. Say you already have 0:13:43.160 --> 0:13:45.360 emergency money, you may not need to be adding to it. 0:13:45.440 --> 0:13:47.920 If you've already got if you're happy with her superza, 0:13:48.080 --> 0:13:49.400 you may not need to be adding to that. Or 0:13:49.440 --> 0:13:51.560 if you go, hey, this would actually benefit me best 0:13:52.080 --> 0:13:54.800 as an additional contribution to my super then maybe that's 0:13:56.120 --> 0:13:59.160 and I suspect it would be quite valuable getting some. 0:13:59.200 --> 0:14:02.400 Advice, definitely, And one thing I should also say is 0:14:02.480 --> 0:14:04.880 it's not one or the other. You can definitely have 0:14:04.920 --> 0:14:07.600 a combination of PA. You can split it well, you know, 0:14:08.000 --> 0:14:09.280 and you know at the end of the day. This 0:14:09.320 --> 0:14:11.040 is your money, it's your business what you choose to 0:14:11.080 --> 0:14:13.240 do with it, and you want to feel good about 0:14:13.280 --> 0:14:15.120 what you decide to do. And that's why it's important 0:14:15.160 --> 0:14:17.720 to like not rush out and do this straight away, 0:14:17.760 --> 0:14:19.800 but to get advised, to sit and think, to write 0:14:19.800 --> 0:14:22.680 down some goals, and to really understand also your values 0:14:22.720 --> 0:14:25.280 around money. So for some people, that actually may look 0:14:25.480 --> 0:14:27.200 doing a little bit of everything. So you may already 0:14:27.200 --> 0:14:29.080 have a good debt payment plan in place, but you think, 0:14:29.120 --> 0:14:30.840 you know what, I'll put to say two thousand of 0:14:30.840 --> 0:14:33.640 that ten thousand towards that. Technically it's not the smartest 0:14:33.680 --> 0:14:35.800 thing to do, but it's okay. And then you use 0:14:35.800 --> 0:14:37.520 the other two thousand, for example, to top up your 0:14:37.520 --> 0:14:39.560 super the other two thousand to buy a parcelo shares, 0:14:39.600 --> 0:14:41.880 and you know, others say remaining four thousand news is 0:14:41.920 --> 0:14:44.400 emergency money. At least you're addressing all of those goals 0:14:44.400 --> 0:14:47.640 on a maybe you could say a holistic level, but 0:14:47.800 --> 0:14:49.280 at the end of the day, is what makes you 0:14:49.320 --> 0:14:52.080 feel good and what you decide understanding all the pros 0:14:52.120 --> 0:14:55.400 and cons behind each one, even though it's not technically 0:14:55.400 --> 0:14:57.520 the smartest thing to do, but it's okay. It's what's 0:14:57.520 --> 0:14:58.240 smartest for you. 0:14:58.520 --> 0:15:01.720 Okay, it is funny. I'm getting the sense that you 0:15:01.720 --> 0:15:05.400 can actually tell quite a bit about somebody's money mindset 0:15:05.520 --> 0:15:07.200 from the way that they If you were to walk 0:15:07.280 --> 0:15:09.280 up to somebody in the street and say, right now, 0:15:09.640 --> 0:15:11.440 what would you do if I gave you ten thousand 0:15:11.480 --> 0:15:15.600 dollars tomorrow? You can learn a lot about somebody's money 0:15:15.600 --> 0:15:16.280 mindset from that. 0:15:16.800 --> 0:15:19.960 You can learn so much in the way someone talks 0:15:20.000 --> 0:15:23.120 and the language they use as well, and even the 0:15:23.160 --> 0:15:25.560 tone of their voice. And it's funny, like even at 0:15:25.600 --> 0:15:28.240 the dog park, like I've made some amazing friends and 0:15:28.280 --> 0:15:31.240 I love sometimes talk about money. And there's one particular 0:15:31.240 --> 0:15:35.920 couple in particular, and it's fascinating listen to the way 0:15:35.920 --> 0:15:37.800 that they talk about money because they have such an 0:15:37.800 --> 0:15:43.240 abundant mindset and everything is positive, everything's an opportunity, everything's exciting, 0:15:43.600 --> 0:15:44.760 everything is celebrated. 0:15:45.240 --> 0:15:47.400 Is it easier to have an abundant mindset when you've 0:15:47.400 --> 0:15:51.120 got money? Though, without being too negative about this, just 0:15:52.040 --> 0:15:55.080 playing Dell's advocate, I suppose it feels like it's easier 0:15:55.120 --> 0:15:58.560 to be abundant and welcome the flow of money when 0:15:58.600 --> 0:16:01.320 you're not having to scrap for every cent and you're 0:16:01.320 --> 0:16:02.960 not just trying to go, Okay, how am I going 0:16:03.000 --> 0:16:04.320 to pay the mortgage this week? 0:16:04.640 --> 0:16:07.200 But this is where it comes down to understanding your values. 0:16:07.960 --> 0:16:11.560 Not everyone views abundance as lots of money in the banker, 0:16:11.760 --> 0:16:16.200 I don't. I view abundance as richness in relationships and 0:16:16.240 --> 0:16:20.240 connections to people around me and myself, richness in health 0:16:20.240 --> 0:16:25.720 and well being. You know, it goes deeper than just 0:16:25.920 --> 0:16:27.880 financial when it comes you know, when it comes to 0:16:27.920 --> 0:16:31.720 the topic of abundance. So I don't it depends on 0:16:31.760 --> 0:16:34.640 where you're at and what you're working towards and were 0:16:34.680 --> 0:16:35.440 you really value. 0:16:35.680 --> 0:16:38.720 Yeah, this wasn't even the topic of today's There we Go, 0:16:38.760 --> 0:16:41.080 Good Life. I feel like there is another episode in 0:16:41.120 --> 0:16:45.120 this where I entirely understand the value and the importance 0:16:45.160 --> 0:16:47.720 of an abundance mindset. But I just feel like it 0:16:47.800 --> 0:16:51.240 is such a difficult thing to grasp when you are 0:16:52.680 --> 0:16:57.600 stuck in that day to day just trying the grind 0:16:57.800 --> 0:17:00.680 to keep a living coming through the door. 0:17:00.840 --> 0:17:03.000 But this is the cool thing about having an abundant 0:17:03.040 --> 0:17:05.199 mindset is it helps you get you out of that 0:17:05.359 --> 0:17:09.959 place of you know, this hand to mouth living, paycheck 0:17:10.000 --> 0:17:14.439 to paycheck. If you can focus and intentionally build something 0:17:14.480 --> 0:17:16.760 that is a focused around getting out of this situation, 0:17:17.240 --> 0:17:21.359 and you do learn to slowly grow and nurture and 0:17:21.440 --> 0:17:25.479 harvest an abundant mindset, it does help significantly in coming 0:17:25.480 --> 0:17:28.640 out the other side and making those consistent changes where 0:17:28.720 --> 0:17:31.280 you do end up eventually transforming your life financially. 0:17:31.920 --> 0:17:35.719 Okay, Canna, I have ten thousand dollars in my pocket, 0:17:36.359 --> 0:17:40.280 and I'm gifting it to you, no strings attached, except 0:17:40.320 --> 0:17:42.400 for one string, which is that you have to tell 0:17:42.400 --> 0:17:45.080 me what you're going to do with it. What are 0:17:45.119 --> 0:17:46.560 you doing with this cash? 0:17:46.720 --> 0:17:50.160 I ran some numbers, okay, so I'm going to turn it. 0:17:51.280 --> 0:17:54.040 I'm going to turn this ten thousand dollars into one 0:17:54.160 --> 0:17:56.440 hundred and forty six thousand dollars. 0:17:57.160 --> 0:18:00.360 I am most definitely listening. Go on, all right. 0:18:00.680 --> 0:18:03.400 I would use a debt recycling strategy, so I would 0:18:03.440 --> 0:18:07.000 put ten thousand dollars directly onto my mortgage to reduce 0:18:07.000 --> 0:18:09.840 obviously the non deductible debt. I would then go and 0:18:10.080 --> 0:18:13.800 redraw that money through a separate investment loan obviously secured 0:18:13.840 --> 0:18:16.439 against my home, after checking my budget and looking at 0:18:16.480 --> 0:18:19.040 interest direct rises, and then I would go and invest 0:18:19.160 --> 0:18:22.040 that money into a diversified share portfolio of say like 0:18:22.119 --> 0:18:25.879 listed investment companies, allowing obviously all of those dividends to 0:18:25.920 --> 0:18:30.040 be reinvested and compound over time. So over a thirty 0:18:30.119 --> 0:18:35.880 year period, that ten thousand dollars, assuming a net return 0:18:35.960 --> 0:18:38.639 on average of say ten percent per annum, would actually 0:18:38.720 --> 0:18:42.919 be around one hundred and ten thousand dollars. But this 0:18:43.080 --> 0:18:45.439 is where there are other benefit comes in. Because I 0:18:45.440 --> 0:18:50.080 have prioritized paying down debt, I would actually have saved 0:18:50.440 --> 0:18:55.440 over thirty six thousand dollars in interest off my home 0:18:55.480 --> 0:18:58.800 loan assuming a six and a half percent mortgage, and 0:18:59.119 --> 0:19:02.520 I'm using an average sh loan size of six hundred 0:19:02.520 --> 0:19:05.480 and fifty thousand, which is the average home loan in Australia, 0:19:05.800 --> 0:19:09.439 and I would shorten my debt free mortgage free journey 0:19:09.440 --> 0:19:10.720 by ten months. 0:19:11.200 --> 0:19:13.800 That's actually really cool, And what I like about that 0:19:13.920 --> 0:19:17.080 is the fact that you are essentially paying it off 0:19:17.119 --> 0:19:21.560 your mortgage only to then reborrow the money again, but 0:19:21.640 --> 0:19:25.320 you're doing it in a more You're taking it from 0:19:25.400 --> 0:19:29.480 kind of semi toxic debt to tax deductible debt exactly. 0:19:30.119 --> 0:19:33.879 And this is why having financial goals and then having 0:19:33.960 --> 0:19:37.919 a financial plan built around these goals means that you 0:19:38.000 --> 0:19:44.480 do you make really wise, intelligent decisions. When abundance like 0:19:44.960 --> 0:19:48.280 ten thousand dollars lands magically lands in your lap, you 0:19:48.359 --> 0:19:50.960 have all those positive feelings and then you can hit 0:19:51.000 --> 0:19:52.520 the ground running with that money. 0:19:52.560 --> 0:19:55.600 I want to make two things very clear. The first 0:19:55.920 --> 0:19:59.600 is that this is a very specific scenario for you. Yes, 0:20:00.160 --> 0:20:02.760 that definitely yeah. And that if you think, hey, that 0:20:02.840 --> 0:20:05.600 sounds great, talk to a financial planner, get some advice 0:20:05.640 --> 0:20:08.159 that is tailored specifically to you, because that is just 0:20:08.200 --> 0:20:11.119 a scenario that is tailored to your own circumstances. 0:20:11.520 --> 0:20:14.320 And debt recycling is a high risk strategy is not 0:20:14.400 --> 0:20:17.080 for everyone. And we've even got quite a few episodes 0:20:17.119 --> 0:20:19.480 now all about debt recycling. So if you like the 0:20:19.560 --> 0:20:22.960 sound of what I'm talking, obviously it's not strategic advice whatsoever, 0:20:23.280 --> 0:20:25.640 but you can go and learn more from our other 0:20:25.680 --> 0:20:27.439 podcast where we talk about this and how to do 0:20:27.480 --> 0:20:29.640