Speaker 1: Welcome to How Do They Afford That? A podcast that
Speaker 1: peaks into the financial lives of everyday Australians.
Speaker 2: I'm Michael Thompson.
Speaker 1: I'm an author and the co host of the business
Speaker 1: news podcast Fear and Greed. As always, I'm with Canna Campbell,
Speaker 1: financial planner and founder of Sugar Mama TV, the financial
Speaker 1: literacy platform that covers YouTube, podcast books, Instagram threads, TikTok
Speaker 1: and more.
Speaker 2: Hello, Canna, Hello, how are you? I am good and
Speaker 2: I'm looking forward to today because today we want to help.
Speaker 1: We're very selfless with today's episode. Christmas is behind us
Speaker 1: well and truly behind us, and hopefully you had a
Speaker 1: brilliant time, good presence, plenty of good food and drink,
Speaker 1: maybe even a little holiday away perhaps, bus all of
Speaker 1: that comes with the very very very real risk of
Speaker 1: a festive season financial blowout.
Speaker 3: Doesn't it hangover?
Speaker 2: Yeah, it's a good way to put it, isn't it?
Speaker 2: It is a hangover.
Speaker 1: So today we are going to put together your money
Speaker 1: bounce back plan. So if you maybe spent a little
Speaker 1: bit too much over Christmas and over that whole period,
Speaker 1: there's no judgment. It is just help getting back on track.
Speaker 1: This one is for you, it's fairly predictable and consistent,
Speaker 1: right that at this time of year there is going
Speaker 1: to be a little bit of a hangover.
Speaker 2: It's such an.
Speaker 1: Expensive time of year, right, Why why when we know
Speaker 1: it's coming, When we know that Christmas is going to
Speaker 1: be expensive, When we know it's going to be the
Speaker 1: time of year when you want to go away, or
Speaker 1: you want to spend a bit of time, you want
Speaker 1: to go out for meals and things like that, why
Speaker 1: then is it so hard to prepare for that and
Speaker 1: to why we left with the financial hangover every single year.
Speaker 1: I don't understand. I'm speaking from experience here, what you're
Speaker 1: feeling a bit financially dusty.
Speaker 2: Yeah, just a little bit, just a little bit.
Speaker 1: And I do find it for us that, even though
Speaker 1: we know it's coming, that the same result every year.
Speaker 1: Why is this happening?
Speaker 3: I think Christmas is a very emotional time of the year.
Speaker 3: You've got you know, families. It's also for some people
Speaker 3: it is a very lonely time of the year. I
Speaker 3: got traditions, you've got guilt, you know, the pressure to
Speaker 3: be generous, and of course it's an exciting time of
Speaker 3: the year, particularly if you've got young children, and then
Speaker 3: discovering you know, families, traditions and mix in all those
Speaker 3: feelings and they completely override any sort of logical way
Speaker 3: of thinking. And as a result, we over indulge, and
Speaker 3: we over indulge in gifts, We over indulge in food,
Speaker 3: We over indulge perhaps on holidays and catching up with
Speaker 3: friends and you know, all the kids' activities and travel
Speaker 3: and hosting everyone over and thinking, oh, just this once,
Speaker 3: you know, or you know it's only you know, this
Speaker 3: time of the year, and you know, before we know it,
Speaker 3: you know, the stress of the pressure, the so for
Speaker 3: social obligations, and then boxing day sales, fear missing out,
Speaker 3: boom like oh whoopsies, we blue out, a financial blowout
Speaker 3: and we are left holding the financial damage.
Speaker 1: Okay, if we are going to do a money bounce
Speaker 1: back plan, these kinds of things are best broken up
Speaker 1: into steps. I'm not going to call it a list today.
Speaker 1: It's going to be a step to program. How many
Speaker 1: steps would you like to put on this non list?
Speaker 3: I was I think instruction steps that we think maybe
Speaker 3: maybe do five five.
Speaker 1: Okay, this is the five step program, the money the
Speaker 1: five step money bounce back plan.
Speaker 3: We need a fast bounce back, So I would like
Speaker 3: to do ten just so you know, but we're going
Speaker 3: to do five.
Speaker 1: We're going to stick with five. Okay, Step number one.
Speaker 1: What's the very first thing that people should do if
Speaker 1: they've looked at the bank account after Christmas, after New
Speaker 1: Year's and just felt a little bit of panic?
Speaker 2: All right?
Speaker 3: First of all, guilt does not fix anything. Clarity does.
Speaker 2: Okay, all right, So we've.
Speaker 3: Got to get those numbers down pen to paper. You
Speaker 3: can't bounce back from something that you can't see, So
Speaker 3: let's first of all, like get really clear. Let's create
Speaker 3: the awareness so that we can start putting steps in
Speaker 3: place so that that bounce back happens quickly. So what
Speaker 3: does that mean, Well, it means we've got to log
Speaker 3: in and look at the numbers. As scary as they
Speaker 3: may be and as much as we really don't want it,
Speaker 3: but we need to know exactly how much money have
Speaker 3: we actually spent and where did it come from, Like
Speaker 3: did we take it out of a special savings account
Speaker 3: that we shouldn't of or did we blow all our
Speaker 3: money before payday? Or did we use our credit card
Speaker 3: or did we sign up to buy an hour pay later,
Speaker 3: Like what's left? Who do we owe? Like what are
Speaker 3: the balances, what are the interest rates? Everything's got to
Speaker 3: be written down.
Speaker 2: Is this.
Speaker 1: That makes complete sense to actually go in and look
Speaker 1: at it and see very basi really what's actually there?
Speaker 1: Is this how some people get themselves in real trouble
Speaker 1: because you just can't face it. Yes, they're the sand,
Speaker 1: bury your head in the sand. But because it's the
Speaker 1: start of the year, and because you're dealing with some
Speaker 1: debt leftover from last year, bury your head in the
Speaker 1: sand at the start of the year. Is this just
Speaker 1: going to set yourself up to fail because it's going
Speaker 1: to snowball and spiral and keep going through.
Speaker 3: The year compound and you'll be chasing your tail. And
Speaker 3: the longer this goes, the harder it is to get
Speaker 3: back on top of it. And you're wasting, wasting such
Speaker 3: precious time, time that can be used on building wealth
Speaker 3: rather than paying off regretfulness, not regretful, that's the wrong word.
Speaker 1: But you know the thing is, it's been done, done,
Speaker 1: it's in the past. There's nothing you can do to
Speaker 1: stop it from happening. It's now just about how do
Speaker 1: you recover from it?
Speaker 3: And it starts by getting clear.
Speaker 2: Okay, that's step number one. What's step number.
Speaker 3: Two, Let's stop the bleeding.
Speaker 2: Oh I like that.
Speaker 1: It's a first aid reference, so you're applying pressure to
Speaker 1: the wound.
Speaker 3: So this is where we stabilize your finances. So we
Speaker 3: have basically like I'd say, if you can do this,
Speaker 3: make it a fun and financial challenge. So we hit
Speaker 3: pause on all the discretionary spending for the next day
Speaker 3: two to four weeks, and we delay anything that's not urgent.
Speaker 3: So go aggressively through your budget, through your statements, and
Speaker 3: look whatever you can cancel or freeze, particularly if there
Speaker 3: are things that you're not using or don't need immediately.
Speaker 3: So it's all about spending only intentionally, not automatically. So
Speaker 3: if you used to maybe going out every weekend, you know,
Speaker 3: to the pub, you'd say, I'm not going to go
Speaker 3: to the pub this weekend. I'm just going to hang
Speaker 3: out at home and save my money. So it's about
Speaker 3: creating a bit of I guess, a financial respite to breathe,
Speaker 3: and any money that you're able to save up in
Speaker 3: the meantime, you can go towards putting like a band
Speaker 3: aid to stop the bleeding of your finances.
Speaker 1: It's a little bit of frugal February coming in there,
Speaker 1: isn't it.
Speaker 3: There is that very fam moss fun financial challenge that
Speaker 3: we might do together.
Speaker 1: Oh yes, yes, I know, just coming up in just
Speaker 1: a few weeks. That's exciting. That makes sense though, that
Speaker 1: you've got to stop the bleeding because it's going to
Speaker 1: be hard to make any headway if you're still spending.
Speaker 3: Yeah, you just literally got to stop spending. Leave your
Speaker 3: wallet at home, change your activities. You know, don't go
Speaker 3: wandering around the shops looking at shops because you'll just
Speaker 3: find things that you want to buy and it's going
Speaker 3: to deplete your energy. Just just change so only for
Speaker 3: the short term.
Speaker 1: And it's the time of year as well, to embrace
Speaker 1: free activities as well, because it's warm. It's nice to
Speaker 1: go out to the to the beach or to the
Speaker 1: park or something, or go to the library where there's
Speaker 1: aircon and you just you don't have to spend any
Speaker 1: money there things right, Yeah.
Speaker 2: Okay, that's number two.
Speaker 1: And I realized I've just made myself sound like a
Speaker 1: massive nerd because that would be high my priority list.
Speaker 1: I'll just go and live in the library for library.
Speaker 1: I absolutely do step number three.
Speaker 3: And that is to create im perfect timing of frugal February,
Speaker 3: a thirty day money reset for yourself, so you would
Speaker 3: track every single dollars. You've done the pause, you've stopped spending,
Speaker 3: but now it's about changing things going forward, So tracking
Speaker 3: the dollar only spending with physical cash or your direct
Speaker 3: debit cards. You're not creating any new debt in your
Speaker 3: life and doing things reverting back to a very simple life,
Speaker 3: richly simple life. So looking at simple meals, you know,
Speaker 3: not creating this expensive gourmet meals. Just something very easy,
Speaker 3: simple and cost effective, even entertaining. As I said, you know,
Speaker 3: not going to the pub. Maybe have a friend over
Speaker 3: for a drink, or don't go out for lunch, go
Speaker 3: for a walk with your friend. Like really changing up
Speaker 3: your lifestyle and learning to use what you've already got.
Speaker 3: Go through the pantry, go through the freezer. You know,
Speaker 3: if you do have to go to something, you know,
Speaker 3: shop your own wardrobe is what my girlfriend says, and
Speaker 3: stick to a set budget so that you don't go crazy.
Speaker 3: You've got some stanity money, but you can oh go
Speaker 3: to the library, yes, yes, Oh my gosh, a couple
Speaker 3: of first a paper, go to the library. Yes, for
Speaker 3: everybody listening, Michael likes to go to the library, and
Speaker 3: he highly recommends everybody else to save money goes to
Speaker 3: the library. I go to the library too, and I
Speaker 3: love it.
Speaker 1: I was trying to get you just to seamlessly work
Speaker 1: it in that way, work one of your own financial tips.
Speaker 3: I love going to the library too. But one of
Speaker 3: my problems is is there is a Calipress cafe right
Speaker 3: underneath my local library, so and I always associate cali
Speaker 3: Press with getting a not very healthy assy ball. So
Speaker 3: it ends up costing me sixteen dollars to go to
Speaker 3: the library because I can't go to the library without this.
Speaker 3: All right, So, really it's about hitting doing things, really
Speaker 3: going aggressively and doing a complete financial reset just to
Speaker 3: stop the spending and to help free up the cash
Speaker 3: flow so you can just clear the debt.
Speaker 1: Do you do them at the same time or is
Speaker 1: it one after the other, because I'm thinking that if
Speaker 1: you were to do a two week pause on discretionary spending, right,
Speaker 1: that will take you through to the start of February,
Speaker 1: for instance, and then you can just do frugal February
Speaker 1: as you're a thirty day or in this case, twenty
Speaker 1: eight day money reset where you are monitoring all of
Speaker 1: your money and you are living that more frugal life.
Speaker 3: Yeah. So the first step is more about going aggressively,
Speaker 3: and then the second step also is more about building
Speaker 3: sustainable habits that will also benefit you and also give
Speaker 3: you a great insight as to what actually does fill
Speaker 3: your cup. You know, for example, catching up with a
Speaker 3: friend for a walk. Is that Did you get more
Speaker 3: enjoyment doing that than say, sitting in front of it
Speaker 3: at a table at a restaurant, you know, an expensive lunch?
Speaker 2: Yeah, or just chatting over some books at the library.
Speaker 1: There we go, All right, very quick break. We are
Speaker 1: coming back then with steps four and five. Are you
Speaker 1: really going to be able to polish this one off
Speaker 1: in just five steps?
Speaker 3: Little faith, I've got.
Speaker 1: Lots of faith, but I've also seen you time and
Speaker 1: time again just squeeze an extra step in there at
Speaker 1: the end. Better not do that this time? Are you
Speaker 1: going to you better believe.
Speaker 3: This is the most important step coming up?
Speaker 1: Okay, all right, okay, great tease. We will come back
Speaker 1: for the most important step into a moment.
Speaker 2: Cana.
Speaker 1: We are putting together a five step money bounce back
Speaker 1: planned so far.
Speaker 2: Step one is.
Speaker 1: Expose it, get it out there, actually look at it
Speaker 1: and see exactly what damage has been done, understand it,
Speaker 1: understand it. Then stop the bleeding. A two to four
Speaker 1: week pause on discretionary spending, then a thirty day money
Speaker 1: reset where you're tracking every dollar and just kind of
Speaker 1: getting back to basics really.
Speaker 3: And understanding what is sustainable, what new habits you can
Speaker 3: form that you actually don't mind and actually aren't a
Speaker 3: sacrifice at all because they can serve you for the
Speaker 3: rest of the year.
Speaker 1: Step number four before the break, you said that this
Speaker 1: was the most important step.
Speaker 3: Yeah, and that is to pay off the debt.
Speaker 2: That's a very good point.
Speaker 3: Assuming you've pay off the debt or actually replenished those
Speaker 3: savings accounts. If you didn't get into debt, it actually
Speaker 3: tapped into savings that you shouldn't have actually used.
Speaker 2: So you do that.
Speaker 3: If you are in debt, you need to use something
Speaker 3: called my hitless strategy. Now, this is an aggressive strategy
Speaker 3: that taps into the psychology of money. Is not necessarily
Speaker 3: the most not necessarily the most financially savvy way of
Speaker 3: doing it, but it is where you focus on the
Speaker 3: smallest debt first rather than the most expensive debt first,
Speaker 3: not necessarily ranking it in order of the highest interest
Speaker 3: to the lowest interest, but the smallest deebt to the
Speaker 3: biggest debt. And the reason why it works, and I've
Speaker 3: coached and counseled thousands of people out of huge amounts
Speaker 3: of debt, is because it taps into the psychology of
Speaker 3: money in that each debt or each person that you
Speaker 3: owe money to is like juggling balls. If you're juggling,
Speaker 3: say seven balls, if I take one ball out of
Speaker 3: the air, it just becomes that little bit easier. So
Speaker 3: how do we get a ball out of the air quickest, Well,
Speaker 3: we get rid of one of the debts, So we'll
Speaker 3: go for the smallest one first because that's quickly and
Speaker 3: easy to hit. So you're literally punching your way through.
Speaker 3: So what that involves is obviously looking at the cash
Speaker 3: flow that you've been able to free up from doing
Speaker 3: steps one, two, and three, and then directing it towards
Speaker 3: the smallest debt first, and you make a list and
Speaker 3: you cross it off. Of course, you must honor those
Speaker 3: responsibilities or your financial responsibilities of each debts. You have
Speaker 3: a minimum payment plan for every single debt, so you're
Speaker 3: not getting calls by debt collectors and potentially damaging your
Speaker 3: credit score because if there is a repayment plan in place,
Speaker 3: but you work through the list and you will find
Speaker 3: that you're What happens is it taps into the psychology
Speaker 3: of money and you're building momentum. You can actually go, Okay,
Speaker 3: I don't owe seven people money. I now owe six
Speaker 3: people money. I now owe five people my money, and
Speaker 3: you just flow that through because it creates a routine,
Speaker 3: a rhythm of momentum. The habit system you can then
Speaker 3: use is to then start building up savings and emergency money,
Speaker 3: so you never rely on debt. Now, for the people
Speaker 3: who did not get into debt, they just have used
Speaker 3: money savings that they shouldn't have used. You do need
Speaker 3: to do pretty much the same sort of thing. You
Speaker 3: need to replenish that money. So what you would do
Speaker 3: is go back to the budget and look at what
Speaker 3: repayment plans like it is if it was a debt,
Speaker 3: and have that payment plan go back into those savings
Speaker 3: accounts so you can rebuild those savings as quickly as
Speaker 3: you possibly can.
Speaker 1: Okay, that makes you are right. That is the most
Speaker 1: important step, and you wouldn't be able to do any
Speaker 1: of that without step one of knowing exactly what you
Speaker 1: have spent. Because you are trying to particularly if you've
Speaker 1: used your own money rather than debt, right, you are
Speaker 1: going to need to know exactly what you've spent so
Speaker 1: that you can replenish it.
Speaker 3: You can't bounce back from something you can't see. You
Speaker 3: can't hit a target that you can't see.
Speaker 1: Yes, yeah, I like that. That's step number four. Step
Speaker 1: number five bring it home strong, okay.
Speaker 3: That is to build your buffer. Use this as an
Speaker 3: opportunity to be smarter with money. For example, take a hangover. Yeah,
Speaker 3: I don't know whether you've ever been hungover or not,
Speaker 3: but you know you think, Okay, where did I go wrong? Well?
Speaker 3: I was drinking in the sun, or okay I didn't
Speaker 3: you know, I drank too much too quickly, or I
Speaker 3: didn't have enough water in between. Like, think about where
Speaker 3: you went wrong so that if you do have another drink,
Speaker 3: you know how to actually drink responsibly. Exactly the same
Speaker 3: with money. Where did I go wrong?
Speaker 1: Well?
Speaker 3: I underestimated how much money I actually needed for Christmas,
Speaker 3: or I got carried away with all the amazing sales
Speaker 3: are on, or I didn't write a proper Christmas list
Speaker 3: of people I need to buy for, or I didn't
Speaker 3: account for the cost of traveling, you know, or hosting people,
Speaker 3: or the cost of alcohol in my you know, Christmas expenses.
Speaker 3: So look to the lesson and then look at that
Speaker 3: lesson and what that cost is, and make sure that
Speaker 3: you have a buffer going forward. And this is where
Speaker 3: you can look to set up like a regular savings
Speaker 3: plan the moment you've cleared that dead and replenished those savings,
Speaker 3: so that you don't repeat history, you don't make the
Speaker 3: same mistake again.
Speaker 1: Okay, so you're actually, even though it's January, you're already
Speaker 1: planning ahead for.
Speaker 3: December, knowing that there is a chance you could make
Speaker 3: the same mistake, but it's not going to come at
Speaker 3: a financial cost this time because you're ahead of it.
Speaker 3: And it's not about where you got wrong. It's about
Speaker 3: doing things wiser and smarter.
Speaker 1: It's a great motivator, isn't it. Yeah, except for the
Speaker 1: fact that for a lot of people it just happens
Speaker 1: each year anyway. But that's why if you do it
Speaker 1: now while those feelings are still fresh, and put those
Speaker 1: systems in place so that by the time you get
Speaker 1: round to December, it's you're fine and automated.
Speaker 3: Do you know twenty dollars a week, I mean there's
Speaker 3: an extra thousand dollars.
Speaker 2: Yea makes a massive difference.
Speaker 1: One final question, and this is the thing that always
Speaker 1: gets me, is the fact that right after Christmas you've
Speaker 1: got back to school and with that comes kind of uniforms,
Speaker 1: the various kind of tech requirements, all of those extracurricular
Speaker 1: activities starting up again are all expensive. Right if you
Speaker 1: are dealing with trying to bounce back from the Christmas hangover,
Speaker 1: how on earth then do you deal with this next
Speaker 1: big financial hit, which is potentially the return to school
Speaker 1: or the return to work or anything like that, where
Speaker 1: you're suddenly going to have to start spending money again.
Speaker 3: Well, this is exactly where I am because my son
Speaker 3: is going into year seven, he's changing schools and oh
Speaker 3: my goodness, the list of items that he needs. It
Speaker 3: is frightening and it's come a bit of a shock
Speaker 3: to me, I will admit. So what I've done is
Speaker 3: made a full list of absolutely everything that he needs
Speaker 3: and I've got a list of what he needs immediately
Speaker 3: to start the year off, but there's also a list
Speaker 3: of what can wait until, like the weather changes or
Speaker 3: the particular sport uniform that he needs, he won't be
Speaker 3: starting that until the cooler months. So I've got the
Speaker 3: two different lists, and then also going through and checking
Speaker 3: everything that we've already got at home. You know, for example,
Speaker 3: some of the last year's supplies that he's used at
Speaker 3: school he can reuse. And you know, most schools do
Speaker 3: have a secondhand uniform shop where and you can also
Speaker 3: swap with other parents, you know, if you've got I
Speaker 3: know some friends of mine who've got younger kids, I
Speaker 3: can actually give some of Roco's uniforms to them. And
Speaker 3: there are people above Rocko who wrote need their uniforms.
Speaker 3: We can do a bit of a swap and pass
Speaker 3: things around. And you know, the mistake I've made is
Speaker 3: when my kids have started school, I bought them brand new,
Speaker 3: just one of brand new, thinking a lot of at
Speaker 3: least they had their one brand new T shirt and
Speaker 3: the rest will be secondhands. They ruin them within a
Speaker 3: couple of minutes. They get stains, you know, they get
Speaker 3: jump in the mud, there's paint like it. I'm no
Speaker 3: longer buying brand new anything like the blazer that's something
Speaker 3: he'll wear for you know, a couple of years different.
Speaker 3: But everything else is going to be secondhand.
Speaker 2: That is it.
Speaker 3: And it is a fraction of the price, like I'm
Speaker 3: talking ninety percent cheaper. And you know, try and you know,
Speaker 3: spread those purchases out as much as you think, oh God,
Speaker 3: I've gotta buy everything on this list, you don't have to,
Speaker 3: you know, spread out as much as you possibly can
Speaker 3: and stick to a limited shop around. You know, don't
Speaker 3: buy it all from one store. You know, Office Works
Speaker 3: is brilliant. They'll often beat the competitor's price, you know,
Speaker 3: using apps like Ziffed or using Amazon's great as well,
Speaker 3: because you can see other products at a different price
Speaker 3: or might be a bit more but a bit more appropriate.
Speaker 3: It might be more versatile, might be you know, have
Speaker 3: more longevity for that particular product. So like deep Breath,
Speaker 3: it is okay, but it is definitely overwhelming. But this
Speaker 3: is I found definitely helped me in getting through an
Speaker 3: expensive time of the year.
Speaker 1: You have done a five step program in just five steps,
Speaker 1: which I think is that honestly the first time.
Speaker 3: I've got one for good luck, though I'm joking. I
Speaker 3: told you solutions is to stop trying to.
Speaker 1: Let go of my OCD just and not squeeze extra
Speaker 1: steps and tips in there. Now, look, that's great list though,
Speaker 1: expose it is number one. Stop the bleeding. Number two,
Speaker 1: create a thirty day money reset is number three. Number four,
Speaker 1: pay off the debt or basically put the money back
Speaker 1: where it belongs, where it came from, if you spend
Speaker 1: your own money. And then finally number five, build your
Speaker 1: buffer so that you can avoid hopefully the same thing
Speaker 1: happening again. That is a five step money bounce back plan.
Speaker 1: I reckon, that's pretty good. I know that I was here,
Speaker 1: so I can't really judge it appropriately, but I would
Speaker 1: say that's at least ten out of ten.
Speaker 3: Why, thank you?
Speaker 1: I should have gone with five stars because it's a
Speaker 1: five step program. Sorry, missed opportunity.
Speaker 3: Why don't we ask our listeners to leave us a
Speaker 3: five star rating and review? Oh they're enjoying these.
Speaker 1: That is a fantastic idea. Yeah, wherever you're listening, a
Speaker 1: five star rating and a review is very very much appreciated.
Speaker 2: He cannup. Where do we find you if we want
Speaker 2: more information.
Speaker 3: The best place to get in contact with me is
Speaker 3: on Instagram at Sugar Mama TV.
Speaker 1: And you can hear me every day with Sean Aylmer
Speaker 1: on Fear and Greed business news you can use. Thank
Speaker 1: you for listening to how do they afford that? Remember
Speaker 1: to follow on the podcast. That is very important and
Speaker 1: the best thing that you can do is tell somebody
Speaker 1: else spread the words. Send them a link to this
Speaker 1: episode so they can hear it too. Thank you for
Speaker 1: your company. Join us again next week