Speaker 1: Welcome to How Do They Afford That? The podcast that
Speaker 1: peeks into the financial lives of everyday Australian. So I'm
Speaker 1: Michael Thompson. I'm an author and the co host of
Speaker 1: the business news podcast Fear and Greed. As always, I'm
Speaker 1: in the studio with Canna Campbell, financial planner and founder
Speaker 1: of Sugar Mama TV, the financial literacy platform covering YouTube podcasts, books,
Speaker 1: Instagram threads, TikTok and more. And Canna, you practically bounced
Speaker 1: into the studio today with excitement about today's topic. You
Speaker 1: call me yawning so late night, early morning, probably a
Speaker 1: combination of both, was it.
Speaker 2: I've been working very hard recently, so yes, I am
Speaker 2: a little bit tired, and I have three kids that
Speaker 2: do not sleep through the night. So yes, I'm tired
Speaker 2: and starts now get a bit cranky.
Speaker 1: Oh why do you have to bring the cranky side
Speaker 1: into the studio with Really do?
Speaker 2: I really do?
Speaker 1: Yeah? But when you do it, you make it last.
Speaker 1: It feels like it stays with me for months.
Speaker 2: I thought I really was subtle in hiding that that
Speaker 2: yawn in my may mouth. You were not.
Speaker 1: Today's episode is basically for anyone who feels like they
Speaker 1: are starting from zero, right, no savings.
Speaker 2: Or even restarting.
Speaker 1: Yeah, yeah, exactly, maybe some debt, maybe no investments, not
Speaker 1: sure where to begin, not sure how to turn things around,
Speaker 1: and not sure how to get going today if that
Speaker 1: is you, today is about where to start, right, So
Speaker 1: it is it is kind of back to basics. But yeah,
Speaker 1: as you say, it's not necessarily just for say a
Speaker 1: twenty year old kind of getting going. This is for
Speaker 1: perhaps restarting. Yeah, you're fine.
Speaker 2: I think there's a lot more people out there than
Speaker 2: one would think.
Speaker 1: All right, what does what does that look like? Then?
Speaker 1: What does starting from scratch look like in real life?
Speaker 2: Well, first of all, it's not about laziness or poor
Speaker 2: choices sometimes, you know, it's just a matter of you know,
Speaker 2: situational So you know where you've been, say, living to
Speaker 2: paycheck to paycheck, or you didn't have emergency money, or
Speaker 2: you had some consumer debt from some bad decisions that
Speaker 2: you made that now come with regret, or you know
Speaker 2: that anxiety over money or avoidance, which were spoken about
Speaker 2: lots of times, you know, avoiding looking at your bank
Speaker 2: balances or credit card statements, or you know, knowing deep
Speaker 2: down that it's time for a change.
Speaker 1: Okay. So in that case, we're not who'll be talking about.
Speaker 1: We're not talking about necessarily just young people, students, et cetera.
Speaker 1: Starting out. It could put someone coming out of a relate.
Speaker 2: Relationships, or people like parents, maybe re entering the workforce,
Speaker 2: have had time out, or actually people who have moved
Speaker 2: from another country, you know, particularly if they've had to leave,
Speaker 2: you know, a toxic situation and they're literally coming here
Speaker 2: to start afresh, and or anyone who's decided, okay, all right,
Speaker 2: I need to do things differently. Yeah.
Speaker 1: Or perhaps if you've had your head in the sand
Speaker 1: for a long time and you pulled it out and
Speaker 1: you got sand in your ears and your eye, sand everywhere,
Speaker 1: shaking the sand off, and now you're going, all right,
Speaker 1: now it's time to get stuck in and have a go. Yeah, okay,
Speaker 1: all right, So now we know what this looks like.
Speaker 1: Who we're talking about. Where do you start? Is it
Speaker 1: about fixing the problems first, and we mentioned that maybe
Speaker 1: you might have some debt there, or then trying to
Speaker 1: build or is it changing the order up? I don't know.
Speaker 2: So the first start to the first place to start
Speaker 2: is very much internal and that's like, you know, compassion,
Speaker 2: you know, whatever has happened in your past can't be
Speaker 2: a race by this, but we can definitely build upon
Speaker 2: the experience you've got. So you want to sort of
Speaker 2: look at creating stability before you start looking at growing financially,
Speaker 2: you know, creating that rock solid foundation for yourself, and
Speaker 2: that from a practical point of view, that starts with
Speaker 2: looking at your cash flow and stopping, you know, the
Speaker 2: financial leaks in your life and addressing the habits that
Speaker 2: are creating or leading you constantly back to say, you know,
Speaker 2: toxic debt. And this is the empowering part is you
Speaker 2: don't actually have to fix absolutely everything that's you know,
Speaker 2: and I say wrong inverted commas before you start feeling,
Speaker 2: you know, start rebuilding yourself. It's about focusing on one
Speaker 2: area at a time before you move on to the next.
Speaker 1: In that case, you're starting with compassion and you are
Speaker 1: kind of accepting that that's.
Speaker 2: Your passes your past. Build upon from that.
Speaker 1: Okay, you can't change anything. Visibility awareness, budget, yes, is
Speaker 1: that the next practical step.
Speaker 2: Yes, but budgeting is not something you just do on
Speaker 2: its own. And obviously the budget gives you that orientation
Speaker 2: where it tells you where you stand right now financially
Speaker 2: and what's happening with the money that you earn and
Speaker 2: your responsibilities and your obligations. But that also can help
Speaker 2: help reduce that sense of fear because you know where
Speaker 2: you stand and you have that that clarity. But the goals,
Speaker 2: when you can learn how to put a goal into
Speaker 2: your budget, which is something I teach, it starts to
Speaker 2: give a whole new depth and meaning to what budgeting
Speaker 2: really means to your life and how your budget is
Speaker 2: actually a very powerful tool because when you connect your
Speaker 2: budget to the goals, it actually starts to light something
Speaker 2: up within you. And this is where you go, all right,
Speaker 2: what's the first area that I want to tackle in
Speaker 2: rebuilding myself financially from restarting again. And this is where
Speaker 2: you would look at, you know, what stresses you out
Speaker 2: the most, and you then look at your budget and go,
Speaker 2: all right, what stresses me out the most is the
Speaker 2: credit card debt that I've got, And so you would
Speaker 2: build some goals and you would build a debt repayment
Speaker 2: plan into your budget, so you prioritize that happening. But
Speaker 2: you also quickly start to see the progress in that
Speaker 2: credit card debt coming down.
Speaker 1: Okay, So it is a Step one is a period
Speaker 1: of assessment. Actually this is step two because self care
Speaker 1: was the first one compassion for compassion. Step two is
Speaker 1: assessment of where the stresses are, where the pressure.
Speaker 2: And where the biggest pressure is, Like what is and
Speaker 2: even though it may not financially be the smartest thing
Speaker 2: to tackle, it's what stresses you out the most, because
Speaker 2: this is where we're looking at soothing yourself quickly rather
Speaker 2: than thinking, well, okay, financially, we should technically be tackling
Speaker 2: the debt first rather than emotion like they say the
Speaker 2: emergency money. And there is an element obviously of common sense,
Speaker 2: but we're talking about getting you out of survival mode
Speaker 2: into a place where you're like, all right, I'm feeling
Speaker 2: a lot more stable, resilient and empowered and then you
Speaker 2: can come back to That makes mathematicals and financial.
Speaker 1: Sense actually really interesting because I'm I'm a little surprised
Speaker 1: by that that I would have thought that you would
Speaker 1: have still had your kind of mathematical hat on there
Speaker 1: and said, no, you need to go with the one
Speaker 1: that's going to make the biggest difference, or that's the
Speaker 1: highest interest rate. But in the end, if you are
Speaker 1: coming out of a situation where you have known what
Speaker 1: you're doing, or you might have might have been a
Speaker 1: rough kind of period, that there is still an element
Speaker 1: of needing to take care of yourself through this. So
Speaker 1: you go for the thing that is causing you the
Speaker 1: greatest amount of stress, even if it might not be
Speaker 1: the debt with the highest interest rate, or it might
Speaker 1: not be the thing that's going to make the biggest
Speaker 1: impact long term, it will have a bigger impact on
Speaker 1: the way you feel and the way you motivate yourself
Speaker 1: then to achieve subsequent goals.
Speaker 2: Exactly, it's about alleviating that stress and anxiety and as
Speaker 2: I said, to get you out of that fight or
Speaker 2: flight mode into a place where you can be calm
Speaker 2: and rational and move forward. And you know, it's almost
Speaker 2: like sort of medication to help you Know, you've got
Speaker 2: a headache, Yes, you could put you know, push through
Speaker 2: the headaches is not too bad, or you can take
Speaker 2: some patatoll and Eurofine get rid of the headaches. You
Speaker 2: can then focus on what you know, the rest of
Speaker 2: the stuft that you need to get done for the day.
Speaker 2: You know, it's a way of getting yourself into a
Speaker 2: safe space so that you can move forward.
Speaker 1: Okay, I feel like it's a little bit premature then
Speaker 1: to ask you about emergency money money and whether that
Speaker 1: is now a good time to start thinking about that.
Speaker 1: But surely if you're in this kind of situation, then
Speaker 1: emergency money is probably going to be something that will
Speaker 1: help alleviate stress and alleviate pressure.
Speaker 2: It's interesting you say this because there's a lot of
Speaker 2: sort of conflicting content I see online about whether you
Speaker 2: should focus on paying off debt first or whether you should
Speaker 2: build up emergency money first, and it seems to people
Speaker 2: are suing to be in one party or the other,
Speaker 2: and there isn't really any direct answer. It's whatever works
Speaker 2: best for you and makes you feel safest, because often
Speaker 2: if people are rebuilding, they are feeling about fragile, they
Speaker 2: aughing vulnerable. You need to learn how to self soothe
Speaker 2: in a financially wise way, so you know, some people
Speaker 2: would say would prefer to actually see emergency money so
Speaker 2: that they don't ever have to go back into credit
Speaker 2: card debt, Versus some people would go, you know what,
Speaker 2: I'd rather just deal with a credit card first. Or
Speaker 2: some people will actually go. You know what I need both.
Speaker 2: I've got to spare one hundred dollars per month. I'm
Speaker 2: going to put fifty dollars into an emergency savings account.
Speaker 2: I'm going to put that fifty dollars as an extra
Speaker 2: debt repay plan. You have to know what is going
Speaker 2: to work best for you right now in order to
Speaker 2: continue on seeing that progress and feel like you're actually
Speaker 2: making a difference and changing your life and turning it around.
Speaker 1: Okay, we're going to take a quick break. When we
Speaker 1: come back, we're going to talk about some more of
Speaker 1: these practical steps, because I feel like this is actually
Speaker 1: a really helpful how to guide is to just get up,
Speaker 1: get going, and get started. It's great. Back in a moment, Kenna.
Speaker 1: We are putting together. It's quite an informal list. Really.
Speaker 1: Normally I love a good list on this podcast, and
Speaker 1: normally I'll say we're doing eight things or twenty steps
Speaker 1: or something. Today was just about this is how to
Speaker 1: get started if you're starting from scratch with money, start here.
Speaker 1: But naturally that has progressed into a list of a sort.
Speaker 1: So we've got the first plant, which is just taking
Speaker 1: care of yourself and being gentle with yourself, and then
Speaker 1: it is about awareness and assessing and then picking those
Speaker 1: points that are causing you the most stress and focusing
Speaker 1: on those end weighing up the value of emergency money
Speaker 1: within that and providing yourself that buffer that is going
Speaker 1: to protect you moving forward as well. What's next and
Speaker 1: kind of thinking that in a lot of situations, if
Speaker 1: you're in this case, money will probably be fairly tight
Speaker 1: when you are starting off on a financial journey, how
Speaker 1: then do you choose the next priority?
Speaker 2: Well, this is where clarity actually matters more than the
Speaker 2: speed of the progress. So you would focus purely on
Speaker 2: the essentials, you know, things like you know, food, shelter, clothing,
Speaker 2: you know, like I say, clothing materials. You could just
Speaker 2: have clothes to wear every day. So just the absolute
Speaker 2: essentials only, and then obviously trying to minimize as much
Speaker 2: as you possibly can incurring any more high interest debt,
Speaker 2: and that debt obviously from growing. So even you can
Speaker 2: only put the minimum payment plans in place so that
Speaker 2: the interest you're just paying the interest you're not paying
Speaker 2: down the principle of the loan. That's what it is
Speaker 2: for this point in time, So be it then going
Speaker 2: back to that budget and building up buffers. You know,
Speaker 2: you never do a budget where you budget to the dollar.
Speaker 2: You should be rounding everything up to the nearest five, ten, fifty, one,
Speaker 2: hundred dollars or even thousand dollars, so you've got a
Speaker 2: safe buffer in place for the natural ebbs and flows
Speaker 2: of expenses going up up and down, you know, depending
Speaker 2: on the time of the year, depending on the month,
Speaker 2: depending on inflation and the cost of living. And then
Speaker 2: you would start as you start to build that resilience,
Speaker 2: you then start looking at being able to add things
Speaker 2: back into your budget when things are tight, as things
Speaker 2: start to alleve it and you're able to see the
Speaker 2: debts coming down, the emergency money coming up, feeling a
Speaker 2: greater sense of control where you are directing your cash flow.
Speaker 1: Yeah, it feels like it kind of feels like a
Speaker 1: triage kind of thing in an emergency department, like of
Speaker 1: figuring out out where the most urgent kind of thing is,
Speaker 1: what's causing the biggest problem and dealing with with those.
Speaker 1: A lot of this though, is it's not negative, but
Speaker 1: it's repairing. Yeah, it feels like you are fixing the debt.
Speaker 1: You are trying to get your budget sorted. You are
Speaker 1: trying to build that emergency money as your buffer. When
Speaker 1: the things turn to the positive, when do you start
Speaker 1: looking to the future and looking to growth. When can
Speaker 1: you set those financial goals that might be Hey, I'm
Speaker 1: starting from scratch, I'm getting my debt under control, but
Speaker 1: I want to start investing as well.
Speaker 2: I think you can set these goals as early as
Speaker 2: you like. It's not like yet you can't you're forbidden
Speaker 2: for setting any investing goals until you've paid off your
Speaker 2: credit card debt. I don't think it works like that.
Speaker 2: If anything, I actually encourage people to start thinking about
Speaker 2: those things early because they can act as the source
Speaker 2: of motivation to see yourself all the way through. You
Speaker 2: know you use that. Thank God, I can't wait to
Speaker 2: pay off this credit card debt because at the moment
Speaker 2: I've done, I can start working on my investing journey.
Speaker 2: So that is perfectly fine, but obvious from coming back
Speaker 2: unfortunately to that for what is the financially smartest Yes,
Speaker 2: getting rid of the seeing the debt's gone. And I'm
Speaker 2: not talking about waiting till you power your home loan
Speaker 2: here to start misting. I'm talking, you know, really about
Speaker 2: that toxic debt, where debt is something like buy now,
Speaker 2: pay later, credit card debt, car loans, personal loans. Prioritizing
Speaker 2: that because you know, particularly for someone who's gone through
Speaker 2: a tough time or is literally restarting again scratch, particularly
Speaker 2: later in life. It's like building a house. You want
Speaker 2: to build a house that can survive all the elements,
Speaker 2: when the rain, fire, you name it, the scorching heat.
Speaker 2: So you build a house somewhere safe and stable, and
Speaker 2: you build a really strong, rock solid foundation so that
Speaker 2: when those storms happen, which are part of life, the
Speaker 2: damage is minimal and you can quickly repair it and
Speaker 2: continue on living on the house. It's the same principle
Speaker 2: with money and not even just starting a generally in
Speaker 2: building financial freedom, but it probably means more to someone
Speaker 2: who's starting again because there has been some time that's passed.
Speaker 2: They've got potentially some catching up to do, and they're
Speaker 2: aware of the financial fragility of life how it impacts them.
Speaker 2: So building that rock sort foundation is particularly important and
Speaker 2: particularly valuable to avoid this situation ever happening again.
Speaker 1: That's great advice. What about superannuation and can you use
Speaker 1: that almost as a bit of a bit of a
Speaker 1: cheat almost as to feel like you're starting to be
Speaker 1: involved in investing, even if you're not setting up a
Speaker 1: dedicated investment portfolio or anything just yet. That might be
Speaker 1: a little bit further down the track, but at least
Speaker 1: you can feel engaged with your financial future by just
Speaker 1: paying a bit more attention to your superannuation, which might
Speaker 1: be sitting there in the background.
Speaker 2: Superannuation is not cheating superinnation.
Speaker 1: As soon as I said that, I was like, ah,
Speaker 1: she's gonna pick me up on that.
Speaker 2: But absolutely, I mean, and look for a lot of people,
Speaker 2: you know, particularly in the latest stages of life, that
Speaker 2: are restarting from scratch, you know, for whatever reason, you know,
Speaker 2: superannuation actually is is their foundation, and it is will
Speaker 2: often be their central point of focus in rebuilding themselves
Speaker 2: because it makes sense financially to utilize superannuation. And they're
Speaker 2: even people who have actually got money, but it's actually
Speaker 2: far more efficient for them to focus on their superinnuation.
Speaker 2: So obviously, yes, you get professional personal advice around this,
Speaker 2: but you know, engaging with your super is definitely part
Speaker 2: of an important part of the equation, and it definitely
Speaker 2: forms a huge percentage of that rock solid foundation that
Speaker 2: I'm talking about.
Speaker 1: Two part question, and I there's a high likelihood that
Speaker 1: you will dodge the first part, how long does it
Speaker 1: usually take before people start to feel moment him and
Speaker 1: I don't want you to just say how long's a
Speaker 1: piece of string? Because I wasn't going to say that.
Speaker 1: Of course, I never doubted you for a moment. And
Speaker 1: then the second part, part B of this two part
Speaker 1: question is if things are slow at the beginning, it
Speaker 1: probably will be.
Speaker 2: Right, of course it will, but yeah.
Speaker 1: How do you stay motivated?
Speaker 2: Okay, So to answer the first question about which was,
Speaker 2: oh my gosh, how long?
Speaker 1: How long does it usually take before you start to
Speaker 1: see a bit of progress here?
Speaker 2: Why did you have to ask me to two questions
Speaker 2: at the same time. Okay, it's so quick. The moment
Speaker 2: you sit down and go all right, I'm going to
Speaker 2: rebuild myself. I'm going to I'm going to have a resurrection,
Speaker 2: I'm going to reinvent myself. The moment you make that decision,
Speaker 2: instantly you feel better. Instantly, you've made a decision, You've
Speaker 2: made a commitment to promise yourself. Okay, if you can
Speaker 2: then up the ante on that and start writing down
Speaker 2: on a piece of paper, pen to paper. All right,
Speaker 2: this is what I'm going to do. This is my goals,
Speaker 2: these are my dreams, is my vision. Already you're feeling
Speaker 2: better within minutes, so there's none of this I have
Speaker 2: to wait, and I can only start feeling good. Wants
Speaker 2: to see the debt paid off in full? No, that's ridiculous.
Speaker 2: The moment you start to feel good is the moment
Speaker 2: you make a decision and I promise yourself to improve
Speaker 2: the situation, to be better, to do better, and to
Speaker 2: learn and to grow, and to use this, you know,
Speaker 2: as a it's almost like a foundation to make use
Speaker 2: your life experience to help you make better decisions so
Speaker 2: that further down the track you don't repeat history. So yeah, instantly,
Speaker 2: is that my answer?
Speaker 1: You might have been yawning when you walked in, but
Speaker 1: lit a fire under you. Now here we go.
Speaker 2: I'm about to fall flat on my face because I've
Speaker 2: forgot the other question you have.
Speaker 1: I was going to just feed it to you again,
Speaker 1: just to save face for you. How do you stay
Speaker 1: motivated then, because that would be a big burst when
Speaker 1: you get started, you would feel this rush, right, But
Speaker 1: it's kind of like any new Year's resolution or something.
Speaker 1: You get this big burst of enthusiasm at the start,
Speaker 1: but once the real kind of the work kicks in,
Speaker 1: it is hard to keep that motivation. How do you
Speaker 1: do it?
Speaker 2: From a practical point, tracking your progress is really important,
Speaker 2: So cape keep keeping a journal or keeping a note
Speaker 2: in your phone, or keeping an Excel spreadsheet where you
Speaker 2: can put this is the date, this is how much
Speaker 2: I've got emergency savings, This is how much I've got
Speaker 2: in this credit card debt, that credit card debt, that
Speaker 2: credit card debt, And so you can go back and go, wow,
Speaker 2: look at where I was this time last month. It
Speaker 2: might only be a small shift, but it's a shift
Speaker 2: in the right direction. Also, another thing I think is
Speaker 2: really powerful is to think about the sort of keywords
Speaker 2: when you think about your future. You know, you know,
Speaker 2: you think, okay, well my future is now going to
Speaker 2: be feel stable, it's going to feel secure, i am
Speaker 2: going to feel independent, I'm going to feel proud. Just
Speaker 2: those keywords to remind yourself as to what you're working
Speaker 2: towards and the feelings that you are attracting into your life. Also,
Speaker 2: I think is very motivating and inspiring. And then even
Speaker 2: from like a manifestation point of view, visualizing yourself succeeding,
Speaker 2: you know, to help keep you motivated. See yourself making
Speaker 2: that final debt repayment. See yourself calling up your best
Speaker 2: friend to say, guess what, I'm so proud of myself.
Speaker 2: I've just paid off twenty thousand dollars with a credit
Speaker 2: card dead and in you know, eighteen months. I can't
Speaker 2: believe I did it. You know, it's not going to
Speaker 2: be a walk in the park. You can't expect this
Speaker 2: to be like a magical transition overnight, like you know
Speaker 2: that saying you just like I just walked out of
Speaker 2: a salon like looking like this. You know, it doesn't
Speaker 2: happen like that. It is hard work, and there are
Speaker 2: a lot of really confronting, uncomfortable lessons to be gained
Speaker 2: from doing the hard work. And there is I really
Speaker 2: genuinely believe in the gestation period in doing the work
Speaker 2: to improve your situation, regardless whether you're starting from scratch
Speaker 2: or whether you're just working on something really big. You know,
Speaker 2: there's so much to be gained beyond the numbers and
Speaker 2: the dollars.
Speaker 1: All right, final word, someone's listening to this right now,
Speaker 1: perhaps feeling a bit overwhelmed. The one step they should
Speaker 1: take today to get started, I.
Speaker 2: Think is to make a serious promise to yourself that
Speaker 2: it stops here. You draw that line in the sand
Speaker 2: and go from this very moment, in this defining moment
Speaker 2: in my life listening to this podcast right now, my
Speaker 2: life needs to change and I'm committed to doing things differently.
Speaker 2: It starts today now, not tomorrow, today, in this very moment.
Speaker 1: It's very strong finish from someone who is yawning twenty
Speaker 1: minutes ago. I am awake now, and that's really positive.
Speaker 1: I think that's a really, really great message to leave
Speaker 1: on that. Really the only thing that is preventing you
Speaker 1: from getting started is just it is you.
Speaker 2: Yeah.
Speaker 1: It's a money block, really, isn't it. That's great? Okay.
Speaker 1: Anyone who wants more information, you head to Instagram.
Speaker 2: Yes, the best place to get in contact with me
Speaker 2: is on Instagram at sugar mam My TV.
Speaker 1: Perfect and you can hear me every day with Sean
Speaker 1: Aylmer on Fear and Greed business News. You can use
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