1 00:00:00,200 --> 00:00:19,480 Speaker 1: She's on the Money. She's on the Money. 2 00:00:23,280 --> 00:00:26,000 Speaker 2: Hello, and welcome to She's on the Money, the podcast 3 00:00:26,079 --> 00:00:29,400 Speaker 2: the Millennials who want Financial Freedom. So you've got a 4 00:00:29,440 --> 00:00:31,640 Speaker 2: few bad debts and you're ready to pay them off. 5 00:00:31,800 --> 00:00:34,080 Speaker 2: But where the heck do you start in terms of 6 00:00:34,120 --> 00:00:37,479 Speaker 2: prioritizing your debts and what tricks are there to actually 7 00:00:37,520 --> 00:00:40,440 Speaker 2: start paying them off sooner? I know, Gi, I know, 8 00:00:41,760 --> 00:00:44,800 Speaker 2: she's got the answers. My name is Georgia King, and 9 00:00:44,960 --> 00:00:47,640 Speaker 2: joining me as always to answer these questions is financial 10 00:00:47,680 --> 00:00:52,760 Speaker 2: advisor Victoria Divine. Why is debt prioritization so very important? 11 00:00:53,240 --> 00:00:55,400 Speaker 3: Because if we're in debt, we need to prioritize it, 12 00:00:55,440 --> 00:00:58,120 Speaker 3: which is probably the wrong thing to say at the 13 00:00:58,120 --> 00:01:01,160 Speaker 3: start of an episode, but at the end of the day, 14 00:01:01,400 --> 00:01:03,600 Speaker 3: often when it comes to debt, and if we are 15 00:01:03,640 --> 00:01:05,800 Speaker 3: in debt and we are stressed about it, we stick 16 00:01:05,840 --> 00:01:08,679 Speaker 3: our heads in the sand and don't do what we should, 17 00:01:08,920 --> 00:01:10,400 Speaker 3: which is sit down and go, you know what, how 18 00:01:10,440 --> 00:01:12,160 Speaker 3: am I getting out of this place? What am I 19 00:01:12,240 --> 00:01:15,560 Speaker 3: going to be doing? And what am I going to prioritize? First? 20 00:01:16,000 --> 00:01:19,640 Speaker 3: Once you make a list of prioritizations, you'll find that 21 00:01:19,680 --> 00:01:23,040 Speaker 3: you are so much more motivated to actually kick them 22 00:01:23,080 --> 00:01:27,040 Speaker 3: down and get it done and start seeing progress. Whereas 23 00:01:27,120 --> 00:01:29,840 Speaker 3: if you haven't made a priorities list and you haven't 24 00:01:29,880 --> 00:01:32,080 Speaker 3: worked out how you're going to get out of that place, 25 00:01:32,520 --> 00:01:35,680 Speaker 3: you are often more likely to feel just super overwhelmed 26 00:01:35,680 --> 00:01:38,199 Speaker 3: and like it's never going to happen. So we're doing 27 00:01:38,240 --> 00:01:40,400 Speaker 3: it one so we can get out of debt, but 28 00:01:40,480 --> 00:01:43,160 Speaker 3: two for our own mental health. Jodge a king beautiful. 29 00:01:43,200 --> 00:01:45,200 Speaker 2: So it's like a plan that'll make us pay down 30 00:01:45,240 --> 00:01:47,640 Speaker 2: our debts sooner we'll feel more motivated. And that's kind 31 00:01:47,680 --> 00:01:48,160 Speaker 2: of the gist. 32 00:01:48,200 --> 00:01:51,160 Speaker 3: Yet, Yeah, and it's all about just understanding as well, 33 00:01:51,160 --> 00:01:53,160 Speaker 3: like why are we here? How did we get here? 34 00:01:53,240 --> 00:01:55,440 Speaker 3: Are there some things we need to change? But also 35 00:01:55,760 --> 00:01:57,320 Speaker 3: what one are we going to pay first? Are we 36 00:01:57,320 --> 00:01:59,560 Speaker 3: going to pay credit card one or two or three? 37 00:01:59,680 --> 00:02:02,000 Speaker 3: Or you know, maybe you've got a personal loan, And 38 00:02:02,080 --> 00:02:05,200 Speaker 3: it's about working out what that looks like, because often 39 00:02:05,240 --> 00:02:07,240 Speaker 3: when you have a lot of debts or you're in 40 00:02:07,280 --> 00:02:10,000 Speaker 3: a situation where there is a number of different ones 41 00:02:10,040 --> 00:02:12,920 Speaker 3: to prioritize, so often we can feel super overwhelmed and 42 00:02:12,960 --> 00:02:15,760 Speaker 3: just putting ourselves in the best possible position is going 43 00:02:15,840 --> 00:02:17,720 Speaker 3: to mean that we are actually going to get out 44 00:02:17,720 --> 00:02:20,400 Speaker 3: of these instead of consistently putting it off or just 45 00:02:20,440 --> 00:02:22,960 Speaker 3: paying the minimum because you're just not sure what to do. 46 00:02:23,280 --> 00:02:24,280 Speaker 4: Yeah, okay, cool. 47 00:02:24,560 --> 00:02:27,160 Speaker 2: So before we do get into it V as well, 48 00:02:27,200 --> 00:02:29,720 Speaker 2: I assume today we're going to be talking about good 49 00:02:29,760 --> 00:02:33,400 Speaker 2: debt and bad debt. Our OG is going to know 50 00:02:33,480 --> 00:02:35,880 Speaker 2: exactly what the difference is. But for our newer listeners, 51 00:02:35,919 --> 00:02:37,679 Speaker 2: can you clarify what it does? Mate? 52 00:02:38,080 --> 00:02:40,640 Speaker 3: I can clarify that. And if you've read my book, 53 00:02:40,680 --> 00:02:44,800 Speaker 3: which arguably everybody should have, you know that I classify 54 00:02:44,880 --> 00:02:48,079 Speaker 3: debt in three ways. I classified as good debt, bad debt, 55 00:02:48,200 --> 00:02:51,320 Speaker 3: and okay debt. So good debts are things that actually 56 00:02:51,400 --> 00:02:54,960 Speaker 3: help contribute to your wealth creation. So that could be 57 00:02:55,000 --> 00:02:58,040 Speaker 3: something like a mortgage because over time you're actually creating 58 00:02:58,040 --> 00:03:01,880 Speaker 3: an asset for yourself. An investment loan not as common, 59 00:03:01,919 --> 00:03:05,799 Speaker 3: but definitely worthy of consideration, where you've borrowed money and 60 00:03:05,880 --> 00:03:09,200 Speaker 3: you've invested in something. It could be a business loan 61 00:03:09,280 --> 00:03:11,840 Speaker 3: as well. I don't want people to think that any 62 00:03:11,880 --> 00:03:14,760 Speaker 3: type of loan is negative, but if it's creating your wealth, 63 00:03:14,800 --> 00:03:17,520 Speaker 3: from my perspective, it's good debt. Doesn't mean we don't 64 00:03:17,520 --> 00:03:21,040 Speaker 3: prioritize it, we absolutely do, but we don't see it 65 00:03:21,040 --> 00:03:24,639 Speaker 3: as something that we have to extinguish asap because it's 66 00:03:24,680 --> 00:03:27,480 Speaker 3: meant to be helping us over the long term. Okay, 67 00:03:27,600 --> 00:03:30,760 Speaker 3: debt from my perspective is something like a hex debt, 68 00:03:30,960 --> 00:03:32,919 Speaker 3: So I wouldn't call it good debt because at the 69 00:03:33,000 --> 00:03:35,120 Speaker 3: end of the day, yes, it is helping your future 70 00:03:35,160 --> 00:03:38,480 Speaker 3: wealth because you're getting an education, but it's still something 71 00:03:38,520 --> 00:03:40,560 Speaker 3: that is going to impact your cash flow if you 72 00:03:40,680 --> 00:03:43,520 Speaker 3: have those help repayments coming out of your income each 73 00:03:43,560 --> 00:03:47,120 Speaker 3: and every single week or month. So with hex debt, yes, 74 00:03:47,160 --> 00:03:50,080 Speaker 3: it's really important to prioritize and make sure we're paying down, 75 00:03:50,160 --> 00:03:52,040 Speaker 3: but it's something that a lot of people make the 76 00:03:52,080 --> 00:03:55,760 Speaker 3: decision to not add contributions to, so they might just 77 00:03:55,800 --> 00:03:58,440 Speaker 3: be paying the minimum for a long period of time 78 00:03:58,560 --> 00:04:01,680 Speaker 3: and that's totally okay. And the reason they might not 79 00:04:01,800 --> 00:04:05,600 Speaker 3: prioritize that is because hex debt or help debt as 80 00:04:05,600 --> 00:04:10,720 Speaker 3: it's called nowadays. It's just showing my age that debt 81 00:04:11,080 --> 00:04:14,760 Speaker 3: doesn't actually accrue any interest and there's no timeline on 82 00:04:14,880 --> 00:04:17,440 Speaker 3: paying it, so if you don't earn over a certain 83 00:04:17,480 --> 00:04:19,839 Speaker 3: amount of money, you don't have to start paying it back, 84 00:04:20,040 --> 00:04:24,200 Speaker 3: and it only increases in line with CPI or indexation, 85 00:04:24,680 --> 00:04:27,160 Speaker 3: So that's how much the cost of goods and services 86 00:04:27,200 --> 00:04:30,720 Speaker 3: increase each and every single year, So it's only accruing. 87 00:04:30,960 --> 00:04:33,520 Speaker 3: I think last year was like one point eight percent, 88 00:04:34,000 --> 00:04:37,320 Speaker 3: And that's an okay thing to carry, given the amount 89 00:04:37,360 --> 00:04:40,440 Speaker 3: of flexibility that these repayments carry. So if you lost 90 00:04:40,480 --> 00:04:42,440 Speaker 3: your job, you're not going to be in a position 91 00:04:42,440 --> 00:04:44,280 Speaker 3: where the government's like, oh my gosh, you have to 92 00:04:44,320 --> 00:04:46,640 Speaker 3: pay back your hex debt? What are you doing? Or 93 00:04:46,680 --> 00:04:48,760 Speaker 3: it's the same as not true for a credit card, 94 00:04:49,040 --> 00:04:52,640 Speaker 3: which I categorize as bad debt. So bad debts are 95 00:04:52,680 --> 00:04:55,960 Speaker 3: debts that actually stop you from attaining any level of 96 00:04:56,040 --> 00:05:00,160 Speaker 3: financial freedom. These are things like credit cards, after pay, 97 00:05:00,240 --> 00:05:04,200 Speaker 3: any type of buy now, pay later scheme, and personal loans. 98 00:05:04,520 --> 00:05:06,040 Speaker 3: So if you're a bit confused and you're like yeah, 99 00:05:06,080 --> 00:05:07,800 Speaker 3: but be like, I don't know if it's good or 100 00:05:07,800 --> 00:05:10,240 Speaker 3: a bad debt. The question is what have you got 101 00:05:10,240 --> 00:05:13,040 Speaker 3: to show for it? Is it clothes, it's shoes, or 102 00:05:13,160 --> 00:05:15,800 Speaker 3: is it future wealth. If the answer is future wealth, 103 00:05:16,000 --> 00:05:19,279 Speaker 3: it's probably good debt. But if it's stopping you from 104 00:05:19,320 --> 00:05:22,320 Speaker 3: creating your wealth, then that's when we really need to 105 00:05:22,360 --> 00:05:25,800 Speaker 3: be having a think about prioritizing it and smashing it 106 00:05:25,800 --> 00:05:28,520 Speaker 3: out asap. So when we look at it, I'm not 107 00:05:28,600 --> 00:05:32,080 Speaker 3: saying shun credit cards, shun personal loans, like as you know, 108 00:05:32,200 --> 00:05:35,359 Speaker 3: g I've had a personal loan. I've had credit cards. 109 00:05:35,440 --> 00:05:37,520 Speaker 3: I found myself in a bit of a sticky situation 110 00:05:37,680 --> 00:05:40,599 Speaker 3: with them. But at the same time, would I change 111 00:05:40,640 --> 00:05:43,880 Speaker 3: why I used them? No. I used a personal loan 112 00:05:43,960 --> 00:05:46,480 Speaker 3: so I could go overseas and study because I couldn't 113 00:05:46,480 --> 00:05:49,000 Speaker 3: afford it in that moment. Yes, a lot of people 114 00:05:49,000 --> 00:05:50,800 Speaker 3: would say, oh, you should have saved for longer and 115 00:05:50,880 --> 00:05:52,919 Speaker 3: just done it the year after, but I wanted to 116 00:05:52,920 --> 00:05:54,560 Speaker 3: do it then, and you know what, it worked for me, 117 00:05:54,760 --> 00:05:57,159 Speaker 3: So gee, I don't regret getting them. I do regret 118 00:05:57,160 --> 00:05:59,440 Speaker 3: the amount of stress and anxiety I put myself through 119 00:05:59,480 --> 00:06:02,200 Speaker 3: and the amount of sleepless nights. But at the same time, 120 00:06:02,200 --> 00:06:04,159 Speaker 3: I wouldn't change that because that got me to where 121 00:06:04,200 --> 00:06:07,200 Speaker 3: I am today. But it's one of those things that 122 00:06:07,240 --> 00:06:09,320 Speaker 3: I wish someone had sat me down and said, Victoria, 123 00:06:09,400 --> 00:06:11,960 Speaker 3: do you actually understand what this means? So, yes, I 124 00:06:12,000 --> 00:06:14,000 Speaker 3: was paying for an experience. I wouldn't change it. I 125 00:06:14,000 --> 00:06:16,440 Speaker 3: had a brilliant time. But I do wish I had 126 00:06:16,440 --> 00:06:18,720 Speaker 3: better savings have it so I wasn't in that position 127 00:06:18,800 --> 00:06:19,560 Speaker 3: in the first place. 128 00:06:19,680 --> 00:06:21,880 Speaker 2: Yeah, but like, look how far it got you. You 129 00:06:21,960 --> 00:06:25,159 Speaker 2: learned so much from it, And I guess this episode 130 00:06:25,200 --> 00:06:27,520 Speaker 2: today it's like not about shame. There's none of that 131 00:06:27,839 --> 00:06:30,720 Speaker 2: in the Shoes on the Money community anyway. But yeah, 132 00:06:30,760 --> 00:06:32,920 Speaker 2: we're just going to talk through exactly how you can 133 00:06:32,960 --> 00:06:35,680 Speaker 2: get ahead sooner. Okay, So let's get into it then, V. 134 00:06:35,960 --> 00:06:39,040 Speaker 2: What strategies are there for debt prioritization? Oh my god, 135 00:06:39,080 --> 00:06:40,360 Speaker 2: I need a sip of my tea. What is my 136 00:06:40,440 --> 00:06:41,160 Speaker 2: voice doing? Well? 137 00:06:41,200 --> 00:06:44,440 Speaker 3: You have a suplico tea while I explain what these 138 00:06:44,520 --> 00:06:48,920 Speaker 3: strategies are. So strategies for debt prioritization there are millions, 139 00:06:49,040 --> 00:06:51,880 Speaker 3: but I talk about two key methods more often than 140 00:06:51,920 --> 00:06:55,400 Speaker 3: not because I feel like they actually help the most. 141 00:06:55,520 --> 00:06:58,600 Speaker 3: And these two strategies are not my own. I didn't 142 00:06:58,640 --> 00:07:01,520 Speaker 3: create these. I'm absolutely not taking credit for them. I 143 00:07:01,560 --> 00:07:03,960 Speaker 3: don't know who created them because I feel like they're 144 00:07:04,000 --> 00:07:07,000 Speaker 3: so universal when it comes to debt reduction, but they 145 00:07:07,080 --> 00:07:10,520 Speaker 3: work really well. And these two strategies are called the 146 00:07:10,600 --> 00:07:14,559 Speaker 3: Avalanche method and the Snowball method, And I mean sounds 147 00:07:14,640 --> 00:07:20,520 Speaker 3: very like ooh, it's a winter festive episode. But both 148 00:07:20,560 --> 00:07:22,680 Speaker 3: of them actually have nothing to do with the snow 149 00:07:22,840 --> 00:07:25,720 Speaker 3: or winter. But both of them do accelerate the debt 150 00:07:25,720 --> 00:07:28,680 Speaker 3: reduction process in their own ways and give you the 151 00:07:28,760 --> 00:07:31,640 Speaker 3: structure you might be craving to help you get out 152 00:07:31,680 --> 00:07:35,200 Speaker 3: of debt. So the first one is the avalanche method. 153 00:07:35,440 --> 00:07:39,320 Speaker 3: Avalanche avalanche unsure of which is right in Australia, I'm 154 00:07:39,320 --> 00:07:42,680 Speaker 3: sure not. They corrected on that later G. But essentially, 155 00:07:42,760 --> 00:07:46,560 Speaker 3: this method of debt reduction sees you paying the highest 156 00:07:46,640 --> 00:07:49,760 Speaker 3: interest rate first, while still making minierum more payments on 157 00:07:49,800 --> 00:07:52,080 Speaker 3: all other debts. You're not paying them at all, but 158 00:07:52,160 --> 00:07:55,440 Speaker 3: we are aggressively trying to get rid of the debt 159 00:07:55,520 --> 00:07:58,720 Speaker 3: that has the highest interest rate first, and then once 160 00:07:58,840 --> 00:08:02,120 Speaker 3: that's paid off, you work your way down to end 161 00:08:02,200 --> 00:08:05,280 Speaker 3: up paying the debt with the lowest interest rate. So 162 00:08:05,320 --> 00:08:07,040 Speaker 3: there are a number of reasons why you do this. 163 00:08:07,360 --> 00:08:10,080 Speaker 3: So the goodbits using this method means that you will 164 00:08:10,080 --> 00:08:12,400 Speaker 3: pay less in the long run money in because you 165 00:08:12,400 --> 00:08:15,720 Speaker 3: are targeting the debt with the largest amount of interest first, 166 00:08:15,880 --> 00:08:18,280 Speaker 3: so that you're not accruing a lot of other debt 167 00:08:18,320 --> 00:08:20,760 Speaker 3: in the background. And it can also speed up the 168 00:08:20,760 --> 00:08:24,560 Speaker 3: debt repayment process. So by only paying minimum on your 169 00:08:24,640 --> 00:08:28,600 Speaker 3: other debts and aggressively paying one, you're saving the most interest, 170 00:08:28,640 --> 00:08:31,800 Speaker 3: and that's putting you in the most preferable position. A 171 00:08:31,880 --> 00:08:35,200 Speaker 3: couple of downsides there always are. Requires a fair bit 172 00:08:35,240 --> 00:08:38,520 Speaker 3: of discipline, so it's not easy to do these things, 173 00:08:38,559 --> 00:08:41,520 Speaker 3: and that is okay, but it is about commitment, and 174 00:08:41,880 --> 00:08:45,640 Speaker 3: it can stay harder to stay motivated because sometimes the 175 00:08:45,720 --> 00:08:49,160 Speaker 3: debt with the highest interest rate is not necessarily the 176 00:08:49,160 --> 00:08:51,840 Speaker 3: biggest debt you have, So we need to make sure 177 00:08:51,840 --> 00:08:54,440 Speaker 3: that we understand why we're doing this and commit to 178 00:08:54,480 --> 00:08:56,840 Speaker 3: it so that over the long term we get rid 179 00:08:56,920 --> 00:09:01,640 Speaker 3: of it and stay motivated. In comparable, the snowball method 180 00:09:01,679 --> 00:09:05,000 Speaker 3: g is exact opposite. Oh that's a bit dramatic. It's 181 00:09:05,000 --> 00:09:09,000 Speaker 3: not the exact opposite, but the snowball method is basically 182 00:09:09,280 --> 00:09:12,400 Speaker 3: the opposite of the avalanche method, where you pay off 183 00:09:12,400 --> 00:09:15,840 Speaker 3: and target your smallest debt first, so you completely forget 184 00:09:15,920 --> 00:09:18,360 Speaker 3: about the interest rates on all of the debts and 185 00:09:18,400 --> 00:09:21,880 Speaker 3: you just plan on tackling the smallest step first, and 186 00:09:21,920 --> 00:09:23,839 Speaker 3: then you work your way up to the largest s 187 00:09:23,840 --> 00:09:27,080 Speaker 3: deet without taking into consideration any of the interest rates. 188 00:09:27,480 --> 00:09:30,920 Speaker 3: So some people prefer this because there's a number of 189 00:09:31,000 --> 00:09:33,559 Speaker 3: obviously good bits and I'll explain those in a second. 190 00:09:33,840 --> 00:09:37,040 Speaker 3: But some people don't like this because obviously interest rate 191 00:09:37,120 --> 00:09:40,040 Speaker 3: isn't taken into consideration, and that can make people feel 192 00:09:40,080 --> 00:09:43,199 Speaker 3: a bit angsty. So, as I said before, there are 193 00:09:43,200 --> 00:09:45,880 Speaker 3: some good bits. I love the snowball method because it 194 00:09:45,920 --> 00:09:49,120 Speaker 3: helps you nail smaller goals. Sooner you're going to feel 195 00:09:49,120 --> 00:09:51,800 Speaker 3: more motivated. You're going to feel more accomplished because you 196 00:09:51,880 --> 00:09:54,760 Speaker 3: be like, heck, yes, I got one debt smashdown and 197 00:09:54,800 --> 00:09:56,920 Speaker 3: you can move on to the next one. So it 198 00:09:57,000 --> 00:10:00,160 Speaker 3: makes you feel like you are making more progress and 199 00:10:00,200 --> 00:10:02,839 Speaker 3: you are. With the avalanche method. Doesn't mean you are 200 00:10:03,000 --> 00:10:05,720 Speaker 3: or not. It's just usually when you get to close 201 00:10:05,720 --> 00:10:08,200 Speaker 3: your credit card or get to shut your after pay like, 202 00:10:08,400 --> 00:10:11,640 Speaker 3: that's going to feel really good and keep you on 203 00:10:11,679 --> 00:10:15,000 Speaker 3: the right track. One of our best mates Dave Ramsey, 204 00:10:15,120 --> 00:10:17,600 Speaker 3: he's not my best mate gee, but I would like 205 00:10:17,679 --> 00:10:18,600 Speaker 3: to get him on the show. 206 00:10:18,760 --> 00:10:20,960 Speaker 4: You guys should do a collab, we should. 207 00:10:21,120 --> 00:10:24,360 Speaker 3: I think he's pretty picky with who he collabs with, 208 00:10:24,400 --> 00:10:26,240 Speaker 3: but did you know he collabed with our mate Glenn 209 00:10:26,280 --> 00:10:30,760 Speaker 3: James from My millenial on Andrew's podcast on My Millennial Money. 210 00:10:30,920 --> 00:10:32,480 Speaker 4: Really Yeah, when he came. 211 00:10:32,320 --> 00:10:35,600 Speaker 3: To Australia, he hung out with Glenn James, and I'm 212 00:10:35,600 --> 00:10:38,200 Speaker 3: not gonna lie, it's a little bit envious because he's 213 00:10:38,320 --> 00:10:41,200 Speaker 3: known as a bit of a finance whiz in the US. 214 00:10:41,440 --> 00:10:43,600 Speaker 3: In saying that I do want to stipulate, I don't 215 00:10:43,600 --> 00:10:46,320 Speaker 3: agree with all of his advice, and there are some 216 00:10:46,400 --> 00:10:49,040 Speaker 3: things he says that I go, come on, Dave, mate, 217 00:10:49,160 --> 00:10:53,080 Speaker 3: calm down. But he is really inspirational in this area. 218 00:10:53,200 --> 00:10:55,760 Speaker 3: So anyway back to what I was trying to say 219 00:10:55,760 --> 00:10:59,000 Speaker 3: about old mate Dave, he basically says that even though 220 00:10:59,000 --> 00:11:02,640 Speaker 3: the avalanche method should technically see us paying less, the 221 00:11:02,760 --> 00:11:06,600 Speaker 3: snowball method is more effective because personal finance is twenty 222 00:11:06,679 --> 00:11:11,880 Speaker 3: percent head knowledge, which knowledge knowledge. It's not how I 223 00:11:11,880 --> 00:11:14,800 Speaker 3: would have explained it, but you have head knowledge and 224 00:11:14,920 --> 00:11:18,040 Speaker 3: eighty percent about behavior, which we do at Cheese on 225 00:11:18,080 --> 00:11:20,800 Speaker 3: the Money. Absolutely agree with that, and you need some 226 00:11:20,880 --> 00:11:23,120 Speaker 3: quick wins in order to say super pumped enough to 227 00:11:23,120 --> 00:11:26,600 Speaker 3: get out of debt completely, so is not wrong. The 228 00:11:26,640 --> 00:11:29,520 Speaker 3: snowball method is also easy because you don't have to 229 00:11:29,559 --> 00:11:31,440 Speaker 3: do any maths, you don't have to think about the 230 00:11:31,440 --> 00:11:33,920 Speaker 3: interest rate, You don't have to calculate anything. You just 231 00:11:33,960 --> 00:11:36,600 Speaker 3: start with the smallest debt, start smashing it off and 232 00:11:36,679 --> 00:11:39,800 Speaker 3: making as many repayments as you can to that small 233 00:11:39,840 --> 00:11:42,880 Speaker 3: debt to get rid of it, obviously while still making 234 00:11:42,920 --> 00:11:45,720 Speaker 3: minimum repayments on your other debts, please don't neglect them. 235 00:11:46,280 --> 00:11:48,600 Speaker 3: But it just is a little bit simpler because there's 236 00:11:48,600 --> 00:11:51,600 Speaker 3: no working things out or calculating interest rate or how 237 00:11:51,679 --> 00:11:54,400 Speaker 3: much you'll pay over the long term versus how many years. 238 00:11:54,559 --> 00:11:56,640 Speaker 4: So what are the negatives then be So as I. 239 00:11:56,600 --> 00:11:59,040 Speaker 3: Said before, gee, you're gonna end up paying more because 240 00:11:59,040 --> 00:12:02,800 Speaker 3: of the interest factor. But again, it's about motivation and 241 00:12:02,840 --> 00:12:05,760 Speaker 3: feeling like you're smashing it out. And it may be 242 00:12:05,920 --> 00:12:09,520 Speaker 3: a longer journey to becoming debt free, but it's more 243 00:12:09,559 --> 00:12:12,120 Speaker 3: about what are you actually going to be able to 244 00:12:12,160 --> 00:12:15,559 Speaker 3: feasibly commit to. It's not about which one's going to 245 00:12:15,600 --> 00:12:18,640 Speaker 3: save us the most money, because when it comes to debt, 246 00:12:18,760 --> 00:12:21,640 Speaker 3: we actually just need a plan that works for us personally, 247 00:12:22,080 --> 00:12:24,200 Speaker 3: not necessarily works best on paper. 248 00:12:24,600 --> 00:12:29,520 Speaker 2: Yeah okay, so avalanche is harder but more effective, not 249 00:12:29,559 --> 00:12:33,360 Speaker 2: necessarily more effective, but in like on paper, more effective. 250 00:12:33,040 --> 00:12:35,480 Speaker 3: More effective if we work out what that actually means 251 00:12:35,480 --> 00:12:36,319 Speaker 3: on paper. 252 00:12:36,320 --> 00:12:40,920 Speaker 2: Yep, Snowball is potentially easier, but a slower and steadier 253 00:12:40,960 --> 00:12:42,240 Speaker 2: method of going about things. 254 00:12:42,480 --> 00:12:44,240 Speaker 4: How do you decide which one is right for you? 255 00:12:44,840 --> 00:12:48,160 Speaker 3: Well, I prefer doing it based on which name you 256 00:12:48,200 --> 00:12:51,440 Speaker 3: think is cuter, So like I think snowball soft, like 257 00:12:51,480 --> 00:12:53,360 Speaker 3: Snowball's fun. It was the name of the Cat and 258 00:12:53,400 --> 00:12:57,079 Speaker 3: the Simpsons, like it just makes sense. Avalanche sounds aggressive, 259 00:12:57,200 --> 00:13:00,800 Speaker 3: so like I don't go with it, but more serious. Gee, 260 00:13:00,800 --> 00:13:03,200 Speaker 3: it comes down to your personality. It comes down to 261 00:13:03,320 --> 00:13:06,320 Speaker 3: whether you're someone who has strong discipline to be able 262 00:13:06,320 --> 00:13:09,640 Speaker 3: to put that extra cash towards debt repayments. So if 263 00:13:09,640 --> 00:13:12,680 Speaker 3: that's you, I'd probably choose the avalanche method because you're 264 00:13:12,920 --> 00:13:15,560 Speaker 3: on top of it and you're actually motivated by that. 265 00:13:15,760 --> 00:13:18,480 Speaker 3: But if you're someone who struggles with self motivation, which, 266 00:13:18,559 --> 00:13:20,960 Speaker 3: to be honest, I think I would be a snowballer, 267 00:13:21,120 --> 00:13:24,800 Speaker 3: not an avalancher, because even though it makes logical sense, 268 00:13:25,200 --> 00:13:28,000 Speaker 3: I just like progress. So sometimes if I see that 269 00:13:28,040 --> 00:13:30,640 Speaker 3: I owe thirty bucks or something, I'm far more likely 270 00:13:30,720 --> 00:13:32,920 Speaker 3: to just want it gone and then I feel accomplished. 271 00:13:32,960 --> 00:13:35,240 Speaker 3: I'm the type of person as well. G When I'm 272 00:13:35,240 --> 00:13:37,360 Speaker 3: writing a to do list, I write things I already 273 00:13:37,400 --> 00:13:37,959 Speaker 3: have done. 274 00:13:37,760 --> 00:13:39,800 Speaker 4: The same same then you highlight them. 275 00:13:39,960 --> 00:13:42,080 Speaker 3: So if that's won you resonate with putting to do 276 00:13:42,200 --> 00:13:44,800 Speaker 3: list items on the to do list that you've already done, 277 00:13:44,840 --> 00:13:48,320 Speaker 3: I'd probably say you're a snowballer, So completely up to you. 278 00:13:48,720 --> 00:13:51,840 Speaker 3: And just like sunscreen, because we obviously are very big 279 00:13:51,880 --> 00:13:54,440 Speaker 3: advocates of sunscreen in this community, where they say the 280 00:13:54,480 --> 00:13:57,480 Speaker 3: best sunscreen is the one you use. The same goes 281 00:13:57,520 --> 00:14:00,200 Speaker 3: for debt reduction methods. The best one is just one 282 00:14:00,200 --> 00:14:01,000 Speaker 3: that you're going to stick to. 283 00:14:01,480 --> 00:14:04,720 Speaker 2: I love that, Okay. So that is the snowball and 284 00:14:04,760 --> 00:14:08,319 Speaker 2: the avalanche methods sorted fee. So they're the main methods 285 00:14:08,360 --> 00:14:11,640 Speaker 2: of debt prioritization and paying down our debts. But what 286 00:14:11,760 --> 00:14:16,640 Speaker 2: about debt consolidation Is that is that a method as well? Gee, 287 00:14:16,720 --> 00:14:19,160 Speaker 2: I guess it's not really prioritizing. It's really just prioritizing 288 00:14:19,160 --> 00:14:20,320 Speaker 2: all of them and making them one. 289 00:14:20,680 --> 00:14:23,520 Speaker 3: And yeah, Cook did an entire no I love this, 290 00:14:24,040 --> 00:14:27,240 Speaker 3: We did an entire episode on debt consolidation. So do 291 00:14:27,320 --> 00:14:29,280 Speaker 3: you should be a wizard on this by now? Like, 292 00:14:29,520 --> 00:14:34,120 Speaker 3: come on, Georgia King. But debt consolidation is essentially if 293 00:14:34,120 --> 00:14:36,920 Speaker 3: you didn't listen to that episode. Please do, but if 294 00:14:36,960 --> 00:14:38,920 Speaker 3: you didn't, it's where you take out a loan to 295 00:14:38,960 --> 00:14:41,320 Speaker 3: cover all of our debts so that we're just working 296 00:14:41,360 --> 00:14:45,080 Speaker 3: out paying one debt instead of multiple. And there are 297 00:14:45,080 --> 00:14:47,760 Speaker 3: a number of reasons we would do this. So one 298 00:14:48,000 --> 00:14:51,440 Speaker 3: because personal loans and credit cards often carry higher interest rates. 299 00:14:51,680 --> 00:14:54,640 Speaker 3: So the average of a credit card usually sits between 300 00:14:54,680 --> 00:14:58,480 Speaker 3: fourteen and twenty two percent interest rate. A personal loan 301 00:14:58,600 --> 00:15:01,800 Speaker 3: is probably sitting around fourteen if it's unsecured, maybe a 302 00:15:01,840 --> 00:15:04,480 Speaker 3: little bit less if it is a secured personal loan. 303 00:15:04,640 --> 00:15:07,520 Speaker 3: But essentially, when you roll them all together, you take 304 00:15:07,560 --> 00:15:10,120 Speaker 3: out what's called a debt consolidation loan, and it's essentially 305 00:15:10,200 --> 00:15:12,480 Speaker 3: a personal loan that just covers all of those debts, 306 00:15:12,520 --> 00:15:15,200 Speaker 3: pays them back, and you just have one in one place. 307 00:15:15,680 --> 00:15:17,680 Speaker 3: So a good example is, if let's say you have 308 00:15:17,760 --> 00:15:20,400 Speaker 3: three different credit cards, all with different levels of debt 309 00:15:20,440 --> 00:15:23,640 Speaker 3: associated with them and different interest rates, and they're being 310 00:15:23,640 --> 00:15:26,800 Speaker 3: paid at different times of the month. Debt consolidation would 311 00:15:26,800 --> 00:15:29,440 Speaker 3: mean it swops in, it pays off all of those 312 00:15:29,520 --> 00:15:32,800 Speaker 3: for you, gives you one single loan that you owe 313 00:15:32,840 --> 00:15:35,960 Speaker 3: interest on. It's often a lower rate of interest, and 314 00:15:36,320 --> 00:15:39,400 Speaker 3: you just pay that off once a month. The benefits 315 00:15:39,440 --> 00:15:41,320 Speaker 3: of this is it can feel so much more free, 316 00:15:41,680 --> 00:15:43,400 Speaker 3: Like if you're someone who is in a bit of 317 00:15:43,440 --> 00:15:46,760 Speaker 3: a pickle, lots of debts can feel really overwhelming and 318 00:15:46,800 --> 00:15:49,880 Speaker 3: it does feel like you're pulling them all together, taking control, 319 00:15:49,920 --> 00:15:53,760 Speaker 3: and you just have one repayment to make it's less overwhelming, 320 00:15:53,880 --> 00:15:55,840 Speaker 3: and it just puts you in a position where you 321 00:15:55,840 --> 00:15:59,400 Speaker 3: feel a little bit more empowered to get debt free. 322 00:16:00,000 --> 00:16:01,960 Speaker 3: You might be able to manage a law interest rate, 323 00:16:02,000 --> 00:16:03,800 Speaker 3: which is a bit of a money win. So that 324 00:16:03,840 --> 00:16:06,120 Speaker 3: means that you are going to be saving money over 325 00:16:06,160 --> 00:16:10,120 Speaker 3: the long term. And it's important to understand that it's 326 00:16:10,160 --> 00:16:12,560 Speaker 3: one less admin task as well. So at the end 327 00:16:12,560 --> 00:16:14,800 Speaker 3: of the day, if you're paying lots of different debts, 328 00:16:15,280 --> 00:16:17,720 Speaker 3: let's be honest, doing one thing instead of three or 329 00:16:17,760 --> 00:16:19,560 Speaker 3: four kind of just makes sense. 330 00:16:19,640 --> 00:16:23,560 Speaker 2: Gem okay, so be that that actually does sound quite good. 331 00:16:23,600 --> 00:16:26,800 Speaker 2: But I remember from that episode that there were some 332 00:16:26,960 --> 00:16:28,760 Speaker 2: down downsides. 333 00:16:28,480 --> 00:16:30,640 Speaker 4: Can't remember what they are, so. 334 00:16:32,000 --> 00:16:34,840 Speaker 3: I'm sorry, honestly, g King, you have been on this 335 00:16:34,920 --> 00:16:37,680 Speaker 3: show long enough to be a financial whiz yourself. But 336 00:16:37,760 --> 00:16:40,560 Speaker 3: as you were asking for, when it's not a good idea, 337 00:16:40,680 --> 00:16:42,840 Speaker 3: there are a number of downfalls and we just need 338 00:16:42,880 --> 00:16:44,640 Speaker 3: to be aware of them. It doesn't mean we don't 339 00:16:44,680 --> 00:16:47,000 Speaker 3: do it. So it can take us longer to pay 340 00:16:47,000 --> 00:16:50,200 Speaker 3: off one large loan instead of you a multitude of 341 00:16:50,320 --> 00:16:53,320 Speaker 3: little debts which could ultimately cost us more. We just 342 00:16:53,360 --> 00:16:56,800 Speaker 3: need to take it into consideration. It can leave us 343 00:16:56,840 --> 00:16:59,240 Speaker 3: a bit tempted to spend more and leave you in 344 00:16:59,320 --> 00:17:01,480 Speaker 3: a deeper level of debt if you do go and 345 00:17:01,520 --> 00:17:04,040 Speaker 3: get another credit card. So if you don't have a 346 00:17:04,040 --> 00:17:07,159 Speaker 3: lot of self control, I would be really careful about 347 00:17:07,160 --> 00:17:10,720 Speaker 3: this because consolidating it makes it feel like it's going 348 00:17:10,760 --> 00:17:13,760 Speaker 3: away even though it's still there. It's just more manageable 349 00:17:13,800 --> 00:17:16,520 Speaker 3: and more palatable. So you might go, you know what 350 00:17:16,560 --> 00:17:18,840 Speaker 3: I've got that that's really manageable. I'm going to go 351 00:17:18,920 --> 00:17:22,440 Speaker 3: get another credit card. Yeah. Not a good idea, Yeah, yeah, right. 352 00:17:23,040 --> 00:17:25,840 Speaker 3: And there are a few scammers in this space, so 353 00:17:25,960 --> 00:17:28,200 Speaker 3: please be careful if you do go down this path, 354 00:17:28,400 --> 00:17:30,760 Speaker 3: please please please make sure you do so with a 355 00:17:30,840 --> 00:17:35,600 Speaker 3: legitimate mainstream lender, as there are a few scammers out 356 00:17:35,640 --> 00:17:38,040 Speaker 3: there that do make you pay upfront freeze to set 357 00:17:38,119 --> 00:17:40,080 Speaker 3: up loans and then they never follow you up and 358 00:17:40,080 --> 00:17:41,840 Speaker 3: give you the money that is required to pay off 359 00:17:41,840 --> 00:17:43,680 Speaker 3: all your spoiler debts, which means that you're in a 360 00:17:43,680 --> 00:17:46,520 Speaker 3: bigger piogle than you were before. And if you do 361 00:17:46,640 --> 00:17:49,200 Speaker 3: have a home loan, it could be impacted if things 362 00:17:49,240 --> 00:17:52,280 Speaker 3: go pair shaped with your debt consolidation loan. We have 363 00:17:52,359 --> 00:17:54,119 Speaker 3: spoken about this before and it's a bit of a 364 00:17:54,160 --> 00:17:56,760 Speaker 3: shout out to an old show partner that you know. 365 00:17:56,880 --> 00:17:58,920 Speaker 3: I actually still keep in contact with it. I haven't 366 00:17:58,920 --> 00:18:01,200 Speaker 3: worked with in a little while, but hopefully we will 367 00:18:01,240 --> 00:18:03,880 Speaker 3: soon because I love them. But our friends at Wiser 368 00:18:04,080 --> 00:18:08,080 Speaker 3: so WISR. They do a lot of debt consolidation and 369 00:18:08,280 --> 00:18:11,120 Speaker 3: also help advise on what the best outcome would be 370 00:18:11,200 --> 00:18:14,120 Speaker 3: and I really like what they do. Obviously, you can 371 00:18:14,119 --> 00:18:16,560 Speaker 3: also call the National Debt Helpline and all of that 372 00:18:16,680 --> 00:18:19,080 Speaker 3: because they are really helpful. But when it comes to 373 00:18:19,160 --> 00:18:23,640 Speaker 3: debt consolidation, Wiser do a really good job. Again, that's 374 00:18:23,680 --> 00:18:26,359 Speaker 3: not a sponsored mentioned. It's just good eggs doing good things, 375 00:18:26,359 --> 00:18:27,959 Speaker 3: and you guys deserve to know about it. 376 00:18:28,520 --> 00:18:28,960 Speaker 4: Brilliant. 377 00:18:29,560 --> 00:18:31,760 Speaker 2: Are there any other methods that people use or are 378 00:18:31,760 --> 00:18:32,440 Speaker 2: they the main. 379 00:18:32,359 --> 00:18:34,359 Speaker 3: They're pretty much the main methods. I mean, there's a 380 00:18:34,359 --> 00:18:36,119 Speaker 3: million different ways you could do it. You could put 381 00:18:36,160 --> 00:18:38,200 Speaker 3: a chart on your fridge, during app on your phone, 382 00:18:38,320 --> 00:18:40,679 Speaker 3: or you know. There's lots of different ways that you 383 00:18:40,720 --> 00:18:43,280 Speaker 3: could get rid of debt, but those are the two 384 00:18:43,400 --> 00:18:46,679 Speaker 3: main ways that I see people doing it and I 385 00:18:46,760 --> 00:18:50,320 Speaker 3: talk to clients about. And then obviously debt consolidation is 386 00:18:50,359 --> 00:18:53,159 Speaker 3: something on the top of that that you go, is 387 00:18:53,200 --> 00:18:56,200 Speaker 3: it actually better to do that? But with debt consolidation, 388 00:18:56,600 --> 00:18:58,360 Speaker 3: one thing to be aware of is if you are 389 00:18:58,520 --> 00:19:02,080 Speaker 3: up the river of debt pretty far, sometimes it won't 390 00:19:02,119 --> 00:19:05,520 Speaker 3: apply to you. Sometimes they'll say, look, we're not willing 391 00:19:05,560 --> 00:19:07,760 Speaker 3: to take on that level of risk. So if you've 392 00:19:07,800 --> 00:19:09,639 Speaker 3: got a few credit cards and you know you're in 393 00:19:09,680 --> 00:19:11,800 Speaker 3: a bit of a people, yes, debt consolidation might be 394 00:19:11,800 --> 00:19:14,760 Speaker 3: an option. But I have worked with clients and people 395 00:19:14,800 --> 00:19:18,439 Speaker 3: before where we've gone to consolidate a debt and the 396 00:19:18,480 --> 00:19:20,840 Speaker 3: banks have said, no, thank you. Come back once you've 397 00:19:20,840 --> 00:19:23,080 Speaker 3: gotten a fair bit of debt down so that we 398 00:19:23,119 --> 00:19:25,160 Speaker 3: can do it then, because we're not willing to take 399 00:19:25,200 --> 00:19:27,480 Speaker 3: the risk right now. So don't feel bad if that 400 00:19:27,640 --> 00:19:29,439 Speaker 3: is you. And if it is you and you're feeling 401 00:19:29,480 --> 00:19:32,639 Speaker 3: super super super overwhelmed, I get it. Our friends at 402 00:19:32,640 --> 00:19:35,399 Speaker 3: the National Debt Helpline are going to be able to 403 00:19:35,440 --> 00:19:37,800 Speaker 3: tell you exactly what your next steps should be. 404 00:19:38,600 --> 00:19:41,600 Speaker 2: So, speaking of the national debt helpline EE has that 405 00:19:41,640 --> 00:19:45,119 Speaker 2: for a transition. When I was doing some reading for today, 406 00:19:45,160 --> 00:19:49,000 Speaker 2: they mentioned high priority debts and they said that they 407 00:19:49,040 --> 00:19:51,600 Speaker 2: should be the ones that we focus our attention on first. 408 00:19:51,920 --> 00:19:52,400 Speaker 4: What are they? 409 00:19:52,960 --> 00:19:55,200 Speaker 3: Yes, So I think that that's really important to point 410 00:19:55,240 --> 00:19:56,800 Speaker 3: out as well. So when you're in debt, it can 411 00:19:56,800 --> 00:20:01,080 Speaker 3: feel super overwhelming. But basically, these are debts that impact 412 00:20:01,160 --> 00:20:05,080 Speaker 3: our lives directly the most. So we're talking things like 413 00:20:05,119 --> 00:20:08,439 Speaker 3: your rent or your mortgage, or counsel rates or body 414 00:20:08,480 --> 00:20:11,800 Speaker 3: corporate fees, or a car repayment, or things like energy 415 00:20:11,880 --> 00:20:15,080 Speaker 3: and water and food. We are not talking go and 416 00:20:15,160 --> 00:20:17,639 Speaker 3: pay off your credit card for the shoes that you bought. 417 00:20:17,960 --> 00:20:20,560 Speaker 3: If you can't put food on the table, we need 418 00:20:20,600 --> 00:20:24,240 Speaker 3: to negotiate that. So if you are struggling, then these 419 00:20:24,280 --> 00:20:26,760 Speaker 3: are the debts that you need to focus on first. 420 00:20:27,040 --> 00:20:29,560 Speaker 3: And often we feel really guilty because a credit card 421 00:20:29,640 --> 00:20:32,199 Speaker 3: company will call us and they make us feel awful 422 00:20:32,200 --> 00:20:34,720 Speaker 3: for not paying it, and we don't feel good about 423 00:20:34,720 --> 00:20:36,639 Speaker 3: that situation. So you're like, oh my gosh, maybe I 424 00:20:36,640 --> 00:20:38,760 Speaker 3: should just pay that off. But if you're not able 425 00:20:38,800 --> 00:20:41,040 Speaker 3: to put food on the table. That is not something 426 00:20:41,080 --> 00:20:43,399 Speaker 3: you should be paying. And I know that they're not 427 00:20:43,440 --> 00:20:45,560 Speaker 3: going to love me for saying that, but I would 428 00:20:45,560 --> 00:20:47,720 Speaker 3: be saying to them, look really sorry, I don't have 429 00:20:47,760 --> 00:20:50,040 Speaker 3: the funds for that. Right now. I have to put 430 00:20:50,040 --> 00:20:52,240 Speaker 3: food on the table for my kids or for myself, 431 00:20:52,400 --> 00:20:53,959 Speaker 3: or I need to pay rent so that I can 432 00:20:54,040 --> 00:20:57,399 Speaker 3: keep a roof over my head. Because nobody deserves to 433 00:20:57,440 --> 00:21:02,120 Speaker 3: lose their home over bad debt. Suriously struggling, please please 434 00:21:02,400 --> 00:21:05,040 Speaker 3: please reach out to our friends at the National Debt Helpline. 435 00:21:05,080 --> 00:21:07,480 Speaker 3: They are always so helpful. They are a wealth of 436 00:21:07,520 --> 00:21:10,120 Speaker 3: knowledge in this space, and they'll be able to help 437 00:21:10,160 --> 00:21:12,320 Speaker 3: you create a plan. I know some of you have 438 00:21:12,400 --> 00:21:14,760 Speaker 3: messaged me and you've said, look, be I really want 439 00:21:14,800 --> 00:21:16,399 Speaker 3: to call them, but I feel really overwhelmed or I 440 00:21:16,440 --> 00:21:18,960 Speaker 3: don't think my situation is bad enough. No, there's no 441 00:21:19,080 --> 00:21:21,800 Speaker 3: such thing. When you call them, they'll work out what 442 00:21:21,840 --> 00:21:24,320 Speaker 3: you need. So they'll pick up the phone. They'll be like, hey, gee, 443 00:21:24,400 --> 00:21:27,520 Speaker 3: how are you hope you've been well? How can we help? 444 00:21:27,600 --> 00:21:29,600 Speaker 3: And you'll tell them a little bit about your situation 445 00:21:29,840 --> 00:21:32,119 Speaker 3: and they will match you with the right person if 446 00:21:32,160 --> 00:21:34,240 Speaker 3: it's not the right service for you. They're just going 447 00:21:34,240 --> 00:21:36,960 Speaker 3: to tell you that they are very kind humans. But 448 00:21:37,280 --> 00:21:40,000 Speaker 3: usually they will match you up with a financial counselor 449 00:21:40,320 --> 00:21:43,120 Speaker 3: for free to help you get out of the situation 450 00:21:43,240 --> 00:21:45,399 Speaker 3: that you're in, which is why I am such a 451 00:21:45,400 --> 00:21:46,600 Speaker 3: big advocate of them. 452 00:21:47,160 --> 00:21:48,160 Speaker 4: Do you hear that a lot? 453 00:21:48,400 --> 00:21:49,800 Speaker 2: I'm not sure like if you would hear it with 454 00:21:49,840 --> 00:21:52,000 Speaker 2: clients or in our community V But do you feel 455 00:21:52,040 --> 00:21:54,280 Speaker 2: like a lot of people don't reach out for help 456 00:21:54,280 --> 00:21:56,119 Speaker 2: because they don't think they're in a bad enough spot, 457 00:21:56,359 --> 00:21:58,240 Speaker 2: or maybe they think that they're taking that service from 458 00:21:58,240 --> 00:21:59,440 Speaker 2: someone else who needs it more. 459 00:21:59,680 --> 00:22:04,200 Speaker 3: Is that? Yes? And it's not a thing and complete tangent. 460 00:22:04,320 --> 00:22:06,240 Speaker 3: Have you watched on Netflix? Mate? 461 00:22:06,560 --> 00:22:08,239 Speaker 4: Oh my god, that's what I was thinking of when 462 00:22:08,280 --> 00:22:09,399 Speaker 4: you were saying all of this stuff. 463 00:22:09,480 --> 00:22:12,720 Speaker 3: Yes, So I watched that recently with Steve, and she 464 00:22:13,040 --> 00:22:15,840 Speaker 3: in that show does exactly that. She like goes to 465 00:22:16,080 --> 00:22:18,119 Speaker 3: help and she's like, yeah, but like, I don't have 466 00:22:18,160 --> 00:22:22,280 Speaker 3: real abuse. And the woman at the shelter's like, what 467 00:22:22,480 --> 00:22:24,959 Speaker 3: is real abuse? And she's like, oh, like, my partner 468 00:22:25,000 --> 00:22:28,320 Speaker 3: doesn't hit me. And it was emotional abuse and anyway, 469 00:22:28,320 --> 00:22:31,520 Speaker 3: financial abuse, Yeah, it was emotional abuse, financial abuse. It was. 470 00:22:31,640 --> 00:22:34,040 Speaker 3: It was a lot. It's a really good show. It's 471 00:22:34,080 --> 00:22:36,199 Speaker 3: probably a bit triggering if you're going through it, so 472 00:22:36,320 --> 00:22:38,560 Speaker 3: just a bit of a content warning there for you guys. 473 00:22:38,920 --> 00:22:40,919 Speaker 3: But I really enjoyed it. But the thing that I 474 00:22:40,960 --> 00:22:44,840 Speaker 3: saw was, Yes, we always think about other people being 475 00:22:44,840 --> 00:22:48,000 Speaker 3: in a worse off situation than us, when in reality, 476 00:22:48,359 --> 00:22:51,600 Speaker 3: if you're struggling with something, that doesn't mean that just 477 00:22:51,600 --> 00:22:54,080 Speaker 3: because someone else has that harder, that your struggles aren't 478 00:22:54,119 --> 00:22:57,760 Speaker 3: worthy of consideration. Like you are worthy and at the 479 00:22:57,840 --> 00:22:59,280 Speaker 3: end of the day, if it's something that you need 480 00:22:59,320 --> 00:23:01,480 Speaker 3: help with, please I don't feel like you can't reach out. 481 00:23:01,760 --> 00:23:03,840 Speaker 3: But yeah, George, I get a lot of messages from 482 00:23:03,880 --> 00:23:05,959 Speaker 3: people saying, hey, v I just don't know who to contact, 483 00:23:06,000 --> 00:23:08,640 Speaker 3: And I say National Debt Helpline. They're like, oh yeah, 484 00:23:08,640 --> 00:23:11,920 Speaker 3: but I'm just not bad enough for that. Yeah, that's okay. 485 00:23:12,200 --> 00:23:14,399 Speaker 3: You can still call them. You don't need to be 486 00:23:14,560 --> 00:23:17,000 Speaker 3: the worst of the worst to call them. They're there 487 00:23:17,040 --> 00:23:19,639 Speaker 3: for everybody. They're there for help. Like if I was 488 00:23:19,680 --> 00:23:21,760 Speaker 3: in a situation and I didn't know what to do 489 00:23:22,080 --> 00:23:24,000 Speaker 3: and I had a whole heave of debt, I'd call 490 00:23:24,040 --> 00:23:26,639 Speaker 3: them and feel really comfortable calling them because I know 491 00:23:26,720 --> 00:23:30,200 Speaker 3: they're the right people for those situations. So please don't 492 00:23:30,240 --> 00:23:32,840 Speaker 3: feel like you need to have a worse situation than 493 00:23:32,880 --> 00:23:34,919 Speaker 3: what you do to reach out for the help that 494 00:23:34,960 --> 00:23:35,479 Speaker 3: you deserve. 495 00:23:35,760 --> 00:23:37,080 Speaker 4: Yeah, really, well said. 496 00:23:37,080 --> 00:23:39,359 Speaker 2: They're v all right, guys, we will be back after 497 00:23:39,440 --> 00:23:42,040 Speaker 2: a very short break to talk through strategies of paying 498 00:23:42,080 --> 00:23:44,960 Speaker 2: down our debts faster. Plus we'll be answering a few 499 00:23:45,000 --> 00:23:48,880 Speaker 2: debt inspired questions from the community, So please don't go anywhere, 500 00:23:54,119 --> 00:23:57,080 Speaker 2: all right, b Let's talk through some strategies for actually 501 00:23:57,119 --> 00:24:00,560 Speaker 2: paying down our debts faster. What tricks of the trade 502 00:24:00,600 --> 00:24:01,440 Speaker 2: do you have for us? 503 00:24:01,600 --> 00:24:04,200 Speaker 3: Tricks with the truck? Look, let's call them tricks. Is 504 00:24:04,240 --> 00:24:05,880 Speaker 3: the trade? Do you guys are going to be like, hey, 505 00:24:06,000 --> 00:24:08,440 Speaker 3: it's be the broken record again because I'm going to 506 00:24:08,480 --> 00:24:11,480 Speaker 3: be like, sort out your budget, sort it out, just 507 00:24:11,480 --> 00:24:13,600 Speaker 3: get it done. Do you know what I'm so passionate 508 00:24:13,640 --> 00:24:15,320 Speaker 3: about you guys sorting out your budget? So that I 509 00:24:15,320 --> 00:24:17,200 Speaker 3: put a free one on my website that you can 510 00:24:17,240 --> 00:24:19,760 Speaker 3: go and download. It's literally the one I use with 511 00:24:19,840 --> 00:24:22,680 Speaker 3: my clients. It's not the fancy budget and cash Flow 512 00:24:22,720 --> 00:24:25,960 Speaker 3: masterclass one that calculates your cash flow and tells you 513 00:24:25,960 --> 00:24:28,200 Speaker 3: what bank accounts to put it in. It's not that 514 00:24:28,240 --> 00:24:31,280 Speaker 3: one because unfortunately I can't give that one away for free. 515 00:24:31,560 --> 00:24:33,439 Speaker 3: But this one is going to help you track what 516 00:24:33,520 --> 00:24:35,439 Speaker 3: you earn, what you spend, what you own, and what 517 00:24:35,520 --> 00:24:39,000 Speaker 3: you owe. It takes into consideration everything that you need 518 00:24:39,240 --> 00:24:42,800 Speaker 3: to get a clean, clear budget in order and work 519 00:24:42,840 --> 00:24:45,240 Speaker 3: out if you are spending more than you are earning 520 00:24:45,560 --> 00:24:47,359 Speaker 3: or you're earning more than you are spending, which is 521 00:24:47,400 --> 00:24:50,840 Speaker 3: a very good situation to be in. So download that budget. 522 00:24:50,880 --> 00:24:55,600 Speaker 3: If you haven't done it yet, please do. It's literally free, 523 00:24:56,040 --> 00:24:58,080 Speaker 3: and then have a think about some things that you 524 00:24:58,119 --> 00:25:00,960 Speaker 3: can do in addition to that. Budget is going to 525 00:25:01,040 --> 00:25:04,439 Speaker 3: be helpful, not because it's restrictive. So I'm not saying 526 00:25:04,800 --> 00:25:07,760 Speaker 3: go on a budget like cut back, but a budget 527 00:25:07,800 --> 00:25:09,720 Speaker 3: is going to tell you where you're spending your money 528 00:25:09,760 --> 00:25:13,080 Speaker 3: and where you're not. It's going to tell you what 529 00:25:13,119 --> 00:25:16,720 Speaker 3: you are prioritizing, and it might just highlight some things 530 00:25:16,760 --> 00:25:20,560 Speaker 3: that you go, oh, Victoria over eat three nights this 531 00:25:20,680 --> 00:25:24,440 Speaker 3: week is unacceptable. Whereas if I didn't have my budget, 532 00:25:24,440 --> 00:25:26,600 Speaker 3: maybe I wouldn't have been thinking about that because like 533 00:25:26,640 --> 00:25:30,080 Speaker 3: the hard numbers aren't in my face. The next thing 534 00:25:30,119 --> 00:25:33,480 Speaker 3: is thinking about how can you get some additional funds 535 00:25:33,520 --> 00:25:36,040 Speaker 3: in the door. Can you get a side hustle? And 536 00:25:36,080 --> 00:25:38,560 Speaker 3: we're not saying go and start an entire business. Gee, 537 00:25:38,600 --> 00:25:41,520 Speaker 3: we recently did an entire episode on I think it 538 00:25:41,560 --> 00:25:43,920 Speaker 3: was like five ways to bring cash in the door 539 00:25:43,920 --> 00:25:47,320 Speaker 3: without leaving a couch yep, Like, go listen to that episode, 540 00:25:47,600 --> 00:25:51,520 Speaker 3: because it's side hustles that don't require any money to start. 541 00:25:51,760 --> 00:25:55,119 Speaker 3: It's surveys, it's online work. It is stuff that you 542 00:25:55,200 --> 00:25:59,600 Speaker 3: can do literally today without having to put another dollar aside, 543 00:26:00,000 --> 00:26:02,600 Speaker 3: Which is the money when I reckon the next one. 544 00:26:03,080 --> 00:26:06,159 Speaker 3: Take a leaf out of Jessicriici's book, sell some stuff 545 00:26:06,160 --> 00:26:08,760 Speaker 3: you don't need. She's the biggest hustler I know, g 546 00:26:09,080 --> 00:26:12,000 Speaker 3: like she is all across Facebook marketplace. She puts her 547 00:26:12,040 --> 00:26:16,240 Speaker 3: clothes on depop all the time. Sell stuff you don't need, 548 00:26:16,359 --> 00:26:19,920 Speaker 3: and chuck that cash towards debt repayments. Like even if 549 00:26:19,960 --> 00:26:22,120 Speaker 3: you're like Gina, what I don't have enough to get 550 00:26:22,200 --> 00:26:24,800 Speaker 3: rid of the debt, but it'd feels so good to 551 00:26:24,800 --> 00:26:28,080 Speaker 3: have another month's worth of debt repayments just in the rag, 552 00:26:28,720 --> 00:26:32,159 Speaker 3: or putting that cash into an emergency account so you 553 00:26:32,200 --> 00:26:35,280 Speaker 3: feel a little bit more comfortable about your budget. So 554 00:26:35,359 --> 00:26:38,040 Speaker 3: it doesn't necessarily mean you need to go and sell 555 00:26:38,119 --> 00:26:40,560 Speaker 3: stuff to get rid of the debt completely, but you 556 00:26:40,640 --> 00:26:43,840 Speaker 3: might be feeling a bit uncomfortable about your financial situation. 557 00:26:44,320 --> 00:26:47,440 Speaker 3: So selling some stuff to create an emergency fund while 558 00:26:47,480 --> 00:26:50,600 Speaker 3: you have debt can be really empowering because you know, 559 00:26:50,840 --> 00:26:53,119 Speaker 3: you know what, if I don't have the funds this week, 560 00:26:53,320 --> 00:26:55,480 Speaker 3: I've got an emergency fund that I can dip into, 561 00:26:55,800 --> 00:26:57,679 Speaker 3: pull it out, and I'm all good, and I'm not 562 00:26:57,720 --> 00:27:00,240 Speaker 3: going to go into further debt because I don't have 563 00:27:00,320 --> 00:27:03,639 Speaker 3: cash available. So for my clients and I, that seems 564 00:27:03,680 --> 00:27:06,919 Speaker 3: to be a really empowering way of kind of getting ahead, 565 00:27:07,359 --> 00:27:09,240 Speaker 3: even though we're not in the position to be able 566 00:27:09,240 --> 00:27:12,359 Speaker 3: to extinguish the debt completely right now, because we feel 567 00:27:12,359 --> 00:27:14,840 Speaker 3: a little bit more cushy, a little bit more comfortable, 568 00:27:14,920 --> 00:27:17,720 Speaker 3: and it makes you feel so much more secure on 569 00:27:17,760 --> 00:27:22,480 Speaker 3: that journey. It's one stay motivated using visuals. Go download 570 00:27:22,520 --> 00:27:25,120 Speaker 3: the shes on the Money, debt tracking charts and our 571 00:27:25,200 --> 00:27:28,159 Speaker 3: savings hacks, put them on your fridge, keep them front 572 00:27:28,160 --> 00:27:31,119 Speaker 3: of mind, make a little mood board. Put pictures on 573 00:27:31,160 --> 00:27:32,760 Speaker 3: your fridge of what you're going to get up to 574 00:27:33,000 --> 00:27:35,240 Speaker 3: when you are out of debt and hell you're going 575 00:27:35,280 --> 00:27:38,560 Speaker 3: to feel, so it is always front of mind, and 576 00:27:38,920 --> 00:27:41,560 Speaker 3: make sure that you are putting yourself in the best position. 577 00:27:42,080 --> 00:27:44,760 Speaker 3: If you can't pay down the debt, stop putting so 578 00:27:44,880 --> 00:27:47,919 Speaker 3: much more pressure on yourself to do it faster. Just 579 00:27:48,000 --> 00:27:50,680 Speaker 3: because we're talking about it does not mean it's going 580 00:27:50,760 --> 00:27:53,200 Speaker 3: to work for you. If it is the long slog 581 00:27:53,240 --> 00:27:56,600 Speaker 3: for you, and you know that that's the case, that's okay. 582 00:27:56,280 --> 00:27:58,600 Speaker 2: Too, all right, v I thought it would be fun 583 00:27:58,760 --> 00:28:02,439 Speaker 2: to finish today's episode by answering some debt related questions 584 00:28:02,520 --> 00:28:07,200 Speaker 2: from our community. Genius you sucked, okay, So the first 585 00:28:07,200 --> 00:28:10,840 Speaker 2: one here is from Danny. So she hates the feeling 586 00:28:10,920 --> 00:28:13,679 Speaker 2: of having a hex debt. She doesn't like the feeling 587 00:28:13,680 --> 00:28:15,960 Speaker 2: of debt at all, and knowing her goal one day 588 00:28:16,000 --> 00:28:17,639 Speaker 2: in the near future it will be to have a 589 00:28:17,680 --> 00:28:20,800 Speaker 2: house and then take on more debt. What is your 590 00:28:20,840 --> 00:28:24,040 Speaker 2: advice then for HEX? Does she just leave it? She's 591 00:28:24,080 --> 00:28:27,000 Speaker 2: also added that it makes her so uncomfortable watching the 592 00:28:27,080 --> 00:28:30,680 Speaker 2: indexation get whacked on, which for her is over five 593 00:28:30,760 --> 00:28:34,440 Speaker 2: hundred dollars a year, et cetera, et cetera. That's the 594 00:28:34,600 --> 00:28:36,920 Speaker 2: essence of ze questions, so what do you think me? 595 00:28:37,240 --> 00:28:40,040 Speaker 3: So obviously I can't tell you which debt to prioritize 596 00:28:40,080 --> 00:28:42,320 Speaker 3: because that would constitute personal advice. But do you know 597 00:28:42,320 --> 00:28:43,720 Speaker 3: what I can tell you, guys? I can tell you 598 00:28:43,800 --> 00:28:46,520 Speaker 3: what I do personally, and I pay my hextet off 599 00:28:46,640 --> 00:28:50,160 Speaker 3: at the minimum. It is no secret that I am 600 00:28:50,360 --> 00:28:53,360 Speaker 3: one of those just like real nerdy people like ge. 601 00:28:53,560 --> 00:28:56,400 Speaker 3: You know, my little sister, we are chalk and cheese. 602 00:28:56,480 --> 00:28:59,440 Speaker 3: She's like the cool one that always has the fashionable wardrobe, 603 00:28:59,600 --> 00:29:01,480 Speaker 3: and I've been the one that's like, oh, but I 604 00:29:01,560 --> 00:29:03,520 Speaker 3: went to UNI, and then I went to UNI again, 605 00:29:03,600 --> 00:29:06,280 Speaker 3: and bam, I went to UNI again because like just 606 00:29:06,320 --> 00:29:09,000 Speaker 3: not cool, Like maybe cool kids do go to UNI. 607 00:29:09,120 --> 00:29:13,000 Speaker 3: I don't know. But anyway, to be brutally honest, my 608 00:29:13,120 --> 00:29:16,040 Speaker 3: hex stet is still, gee, put your coffee down because 609 00:29:16,040 --> 00:29:19,880 Speaker 3: you'll spit it out. Still over six figures, six figures, 610 00:29:20,080 --> 00:29:24,560 Speaker 3: six figures, because I have I have my undergraduates, I 611 00:29:24,600 --> 00:29:27,280 Speaker 3: have my postgraduate and then I have a master's degree 612 00:29:27,400 --> 00:29:30,280 Speaker 3: as well, and then I've also paid for other education 613 00:29:30,560 --> 00:29:33,040 Speaker 3: outside of that because I couldn't put it on hex, 614 00:29:33,120 --> 00:29:38,520 Speaker 3: which is totally fine, but I prioritized personally saving up 615 00:29:38,520 --> 00:29:41,320 Speaker 3: for a mortgage over paying off my hex deet, and 616 00:29:41,400 --> 00:29:44,160 Speaker 3: I did that because hex doesn't stop you from getting 617 00:29:44,160 --> 00:29:47,479 Speaker 3: a mortgage, so unlike having a credit card or a 618 00:29:47,520 --> 00:29:52,080 Speaker 3: personal loan, which will potentially stop you from getting a mortgage. 619 00:29:52,400 --> 00:29:55,240 Speaker 3: Hex stet it's just taken into consideration as a part 620 00:29:55,280 --> 00:29:57,960 Speaker 3: of your cash flow because the bank knows if you 621 00:29:58,000 --> 00:30:00,520 Speaker 3: don't have an income, that's a debt that not going 622 00:30:00,560 --> 00:30:02,479 Speaker 3: to be chased. It can just be put on the 623 00:30:02,480 --> 00:30:05,400 Speaker 3: shelf and put to the side. It does impact your 624 00:30:05,440 --> 00:30:08,760 Speaker 3: cash flow, So each and every single month, before you 625 00:30:08,800 --> 00:30:12,120 Speaker 3: get your salary from your employer, it will be taken out, 626 00:30:12,200 --> 00:30:15,360 Speaker 3: which means, yes, if you earn seventy thousand dollars, less 627 00:30:15,400 --> 00:30:17,520 Speaker 3: money will go into your account if you have a 628 00:30:17,560 --> 00:30:21,360 Speaker 3: hex deet than somebody whose hextet is gone. But from 629 00:30:21,400 --> 00:30:25,040 Speaker 3: my perspective, I'd much prefer that then to put off 630 00:30:25,080 --> 00:30:28,040 Speaker 3: the goal of purchasing a house, because gee, if I 631 00:30:28,040 --> 00:30:32,000 Speaker 3: had prioritized paying off my hextet instead of purchasing a 632 00:30:32,040 --> 00:30:35,200 Speaker 3: house with Steve, I would still be paying off my 633 00:30:35,200 --> 00:30:38,480 Speaker 3: hex step. Yeah, like I wouldn't have a house, I 634 00:30:38,480 --> 00:30:42,080 Speaker 3: wouldn't be creating wealth, I wouldn't be in that situation. 635 00:30:42,600 --> 00:30:46,040 Speaker 3: So I made the conscious decision to not do additional 636 00:30:46,080 --> 00:30:51,520 Speaker 3: hextet repayments because releasing that additional cash flow wasn't my priority. 637 00:30:51,760 --> 00:30:54,680 Speaker 3: My priority was getting in the market and actually saving 638 00:30:54,720 --> 00:30:57,560 Speaker 3: for a home. And I knew that if I had 639 00:30:57,560 --> 00:31:00,160 Speaker 3: to then pay off another one hundred grand plus, which 640 00:31:00,160 --> 00:31:03,160 Speaker 3: is really scary and probably not something I should literally 641 00:31:03,160 --> 00:31:06,560 Speaker 3: admit on a podcast this big, but I'm happy to 642 00:31:06,560 --> 00:31:09,880 Speaker 3: share it, I would be purchasing in another five years 643 00:31:09,920 --> 00:31:13,240 Speaker 3: because of my savings capacity. So I just don't want 644 00:31:13,280 --> 00:31:15,960 Speaker 3: to put myself in that position. In saying that, I 645 00:31:16,000 --> 00:31:18,080 Speaker 3: think that a lot of people do feel uncomfortable with 646 00:31:18,120 --> 00:31:22,320 Speaker 3: it because we are geared to feel relatively uncomfortable with debt, 647 00:31:22,360 --> 00:31:25,360 Speaker 3: and that's how we see it. But five hundred dollars 648 00:31:25,360 --> 00:31:29,280 Speaker 3: a year indexation isn't additional debt. Like, yes, it goes up, 649 00:31:29,480 --> 00:31:31,440 Speaker 3: but it's just going up to make sure that it 650 00:31:31,520 --> 00:31:35,560 Speaker 3: matches the costs of goods and services in that financial year, 651 00:31:35,720 --> 00:31:38,920 Speaker 3: which from my perspective, i'd prefer to be paying that 652 00:31:38,960 --> 00:31:42,280 Speaker 3: five hundred dollars in additional debt, then I would to 653 00:31:42,360 --> 00:31:44,960 Speaker 3: not be in the housing market because I was saving. 654 00:31:45,440 --> 00:31:48,480 Speaker 3: But again that's me, and it might not work for you, 655 00:31:48,680 --> 00:31:51,320 Speaker 3: and I just want to share that because it's one 656 00:31:51,360 --> 00:31:53,080 Speaker 3: of those things where people are like, oh, what should 657 00:31:53,120 --> 00:31:55,040 Speaker 3: I do, And I'm like, well, I can't tell you, 658 00:31:55,120 --> 00:31:57,280 Speaker 3: but I can share with you what I do personally. 659 00:31:57,720 --> 00:32:00,640 Speaker 2: Yeah, for people like me who we listen but we 660 00:32:00,720 --> 00:32:04,720 Speaker 2: don't always absorb. What does What is indexation again? 661 00:32:04,920 --> 00:32:08,440 Speaker 3: Right? Indexation G, or let's specifically reference what it means 662 00:32:08,440 --> 00:32:11,640 Speaker 3: for help debt. It means that it maintains the real 663 00:32:11,760 --> 00:32:14,320 Speaker 3: value of your debt by adjusting it in line with 664 00:32:14,480 --> 00:32:17,960 Speaker 3: changes of the cost of living, which is measured by CPI, 665 00:32:18,440 --> 00:32:22,760 Speaker 3: and CPI is the Consumer Price Index and that is 666 00:32:22,800 --> 00:32:25,880 Speaker 3: calculated on the first of June each and every single year, 667 00:32:26,120 --> 00:32:29,960 Speaker 3: and indexation is applied to part of an accumulated study 668 00:32:30,000 --> 00:32:34,480 Speaker 3: and training debt that remains unpaid for more than eleven months. 669 00:32:35,040 --> 00:32:38,800 Speaker 3: So when it comes to CPI, the best way to 670 00:32:38,880 --> 00:32:43,480 Speaker 3: explain it is with a macas cone. So remember when 671 00:32:43,480 --> 00:32:46,720 Speaker 3: we were little G and Maca's cones were like fifty cents, Yes, 672 00:32:47,360 --> 00:32:50,520 Speaker 3: and they've increased in price. Why have they increased in price? G. 673 00:32:51,480 --> 00:32:56,680 Speaker 3: Don't say China screw sofa, because they absolutely are. But 674 00:32:56,840 --> 00:33:00,800 Speaker 3: it's increased because the cost to produce that items increased, 675 00:33:01,040 --> 00:33:02,640 Speaker 3: so it's not as though they're like, oh my gosh, 676 00:33:02,680 --> 00:33:04,560 Speaker 3: over time, we can just charge more and make the 677 00:33:04,600 --> 00:33:07,280 Speaker 3: same profit. Like the cost of all of those things 678 00:33:07,320 --> 00:33:11,080 Speaker 3: and transport has all increased over time, so the macas 679 00:33:11,120 --> 00:33:15,560 Speaker 3: cone has increased in price. So inflation for indexation is 680 00:33:15,680 --> 00:33:18,720 Speaker 3: essentially the method of linking the price or value of 681 00:33:18,760 --> 00:33:21,480 Speaker 3: an asset to a price or price index of some 682 00:33:21,600 --> 00:33:23,560 Speaker 3: type to adjust for inflation. 683 00:33:24,360 --> 00:33:28,200 Speaker 2: So it's all linked, my friends, the name indexation name. 684 00:33:28,600 --> 00:33:31,120 Speaker 3: So it's one of those things where yes, things increase 685 00:33:31,160 --> 00:33:33,840 Speaker 3: in price over time and to make sure that our 686 00:33:34,000 --> 00:33:36,720 Speaker 3: debt actually you know, gets paid off. But also the 687 00:33:36,760 --> 00:33:40,200 Speaker 3: government is in an okay position to continue to provide 688 00:33:40,240 --> 00:33:43,560 Speaker 3: this service to us because this isn't normal. So yes, 689 00:33:43,560 --> 00:33:46,480 Speaker 3: in Australia we are incredibly lucky. But in the US 690 00:33:46,600 --> 00:33:49,080 Speaker 3: they literally have to go get personal loans to be 691 00:33:49,120 --> 00:33:53,240 Speaker 3: able to pay their university fees and they are so expensive. 692 00:33:53,680 --> 00:33:56,320 Speaker 3: So yes, like five hundred bucks a year is it's 693 00:33:56,320 --> 00:33:59,560 Speaker 3: a fair whack of money, but oh my gosh, that's 694 00:33:59,600 --> 00:34:03,120 Speaker 3: the cost of education like that that for us is 695 00:34:03,160 --> 00:34:05,400 Speaker 3: putting us in a position where we can go and 696 00:34:05,520 --> 00:34:08,799 Speaker 3: access education in the same way anybody else in this 697 00:34:08,920 --> 00:34:12,400 Speaker 3: country can, as opposed to in America, maybe you won't 698 00:34:12,400 --> 00:34:15,440 Speaker 3: get the loan so you can't go to university, or 699 00:34:15,480 --> 00:34:17,799 Speaker 3: you can't afford it because you don't have the job 700 00:34:17,840 --> 00:34:20,759 Speaker 3: that would support it, whereas in Australia, if you don't 701 00:34:20,760 --> 00:34:23,919 Speaker 3: have the job that supports it, then they're like, don't 702 00:34:23,920 --> 00:34:25,640 Speaker 3: pay it. That's great, no problems. 703 00:34:26,000 --> 00:34:29,000 Speaker 2: Yeah, yeah, oh that's interesting, So they've they've done a 704 00:34:29,040 --> 00:34:29,640 Speaker 2: good job there. 705 00:34:31,640 --> 00:34:33,440 Speaker 3: Anyway, what other questions have you got? 706 00:34:33,480 --> 00:34:34,360 Speaker 4: So the next one. 707 00:34:34,160 --> 00:34:37,680 Speaker 2: Here V is from Cassandra. So she will be in 708 00:34:37,719 --> 00:34:41,800 Speaker 2: a position where the ATO owes her money roughly twelve 709 00:34:41,880 --> 00:34:45,480 Speaker 2: hundred dollars we love. Her question is should she dump 710 00:34:45,560 --> 00:34:48,359 Speaker 2: all of that on her credit card, leaving about one 711 00:34:48,360 --> 00:34:51,040 Speaker 2: thousand dollars to pay off then she's cutting it up 712 00:34:51,480 --> 00:34:53,719 Speaker 2: or should she put it into savings for. 713 00:34:53,840 --> 00:34:54,840 Speaker 4: Our house deposit? 714 00:34:55,680 --> 00:34:59,000 Speaker 2: So I guess the question here is you got some 715 00:34:59,080 --> 00:35:01,719 Speaker 2: bonus money, savings or debt? 716 00:35:02,360 --> 00:35:04,800 Speaker 3: Can you answer this? G do you reckon you have that? 717 00:35:05,000 --> 00:35:07,880 Speaker 4: I think I know what is that your debt? 718 00:35:08,440 --> 00:35:08,640 Speaker 2: Right? 719 00:35:08,719 --> 00:35:11,120 Speaker 4: Because if you have debt, then you don't have savings. 720 00:35:11,520 --> 00:35:14,120 Speaker 3: Yes, And that's what I was hoping you would say. Yeah, 721 00:35:14,160 --> 00:35:18,320 Speaker 3: so again not advice, but essentially we believe it cheese 722 00:35:18,320 --> 00:35:20,319 Speaker 3: on the money that if you are in personal debt, 723 00:35:20,520 --> 00:35:24,400 Speaker 3: not mortgage debt, personal debt, so credit cards after pay 724 00:35:24,680 --> 00:35:29,080 Speaker 3: or personal loans, you don't have savings because what are 725 00:35:29,120 --> 00:35:31,160 Speaker 3: your savings going to do if you have a credit 726 00:35:31,200 --> 00:35:33,560 Speaker 3: card that's accruing a whole heap of interest, especially a 727 00:35:33,560 --> 00:35:36,560 Speaker 3: credit card that has from all intents and purposes, like 728 00:35:36,600 --> 00:35:39,360 Speaker 3: two grand on it. Yeah, like another two grand in 729 00:35:39,400 --> 00:35:41,839 Speaker 3: your savings? Is that actually getting you towards a house 730 00:35:41,880 --> 00:35:44,279 Speaker 3: deposit faster? Or are you at some point just going 731 00:35:44,360 --> 00:35:46,040 Speaker 3: to have to pull it out and pay off that debt? 732 00:35:46,719 --> 00:35:48,040 Speaker 3: Riddle me that, Georgia King. 733 00:35:48,239 --> 00:35:50,760 Speaker 4: Yeah, yeah, okay, so that one's pretty straightforward. 734 00:35:50,800 --> 00:35:53,839 Speaker 3: I guess Look, it's pretty straightforward. But again, if you 735 00:35:54,040 --> 00:35:56,200 Speaker 3: feel like you want to put it in savings, I 736 00:35:56,239 --> 00:35:58,720 Speaker 3: can't argue with you. You just need to be educated 737 00:35:58,840 --> 00:36:01,120 Speaker 3: enough to make the decision that right for you. Yeah. 738 00:36:01,200 --> 00:36:03,600 Speaker 2: Well, I think it's a good reminder and it's good 739 00:36:03,600 --> 00:36:06,160 Speaker 2: to make really clear because we are fed messages that 740 00:36:06,200 --> 00:36:08,120 Speaker 2: we should pay down our debt and that we should 741 00:36:08,160 --> 00:36:10,920 Speaker 2: be building our savings. So just to kind of clarify 742 00:36:11,000 --> 00:36:14,000 Speaker 2: that debt should be your priority is important. 743 00:36:14,000 --> 00:36:15,080 Speaker 4: I think yes, but. 744 00:36:15,680 --> 00:36:20,840 Speaker 3: This question as well. Georgia stipulated savings for a house deposit. 745 00:36:21,239 --> 00:36:23,720 Speaker 3: And to jump on my high horse for a second, 746 00:36:24,400 --> 00:36:27,480 Speaker 3: I do believe in saving while you have debt for 747 00:36:27,600 --> 00:36:30,880 Speaker 3: an emergency fund, because an emergency fund is going to 748 00:36:30,920 --> 00:36:34,280 Speaker 3: afford you the freedom that you need while paying off debt. 749 00:36:34,520 --> 00:36:36,680 Speaker 3: Because often if we're in debt, we don't have a 750 00:36:36,680 --> 00:36:40,320 Speaker 3: lot of free cash flow, and if another unexpected cost 751 00:36:40,400 --> 00:36:42,680 Speaker 3: comes up, it's usually going to be on debt again, 752 00:36:42,719 --> 00:36:44,839 Speaker 3: and you're going to have to go further into debt 753 00:36:44,880 --> 00:36:49,480 Speaker 3: on that credit card. So I would absolutely prioritize stocking 754 00:36:49,560 --> 00:36:52,720 Speaker 3: up a little emergency fund so that while you're paying 755 00:36:52,800 --> 00:36:55,680 Speaker 3: off your credit card, if another unexpected cost pops up, 756 00:36:55,719 --> 00:36:57,520 Speaker 3: you can go, you know what, I've got this. Or 757 00:36:57,560 --> 00:36:59,799 Speaker 3: if you're not able to pay the debt repayment that month, 758 00:37:00,000 --> 00:37:03,319 Speaker 3: it's okay because you have savings that can cover that. 759 00:37:03,680 --> 00:37:06,719 Speaker 3: So I don't ever recommend anybody to be in this 760 00:37:06,800 --> 00:37:10,560 Speaker 3: situation where they have debt and absolutely no savings, But 761 00:37:10,640 --> 00:37:13,719 Speaker 3: for me, those savings would be an emergency fund. And 762 00:37:14,040 --> 00:37:16,640 Speaker 3: to stipulate, I don't believe that they're savings, they're an 763 00:37:16,680 --> 00:37:20,760 Speaker 3: emergency fund because savings are put aside to buy something 764 00:37:20,760 --> 00:37:23,440 Speaker 3: else in the future, Whereas an emergency fund is a 765 00:37:23,440 --> 00:37:26,359 Speaker 3: little pool of cash that sits to the side and 766 00:37:26,400 --> 00:37:29,640 Speaker 3: we have absolutely no intention of drawing on it unless 767 00:37:29,680 --> 00:37:32,680 Speaker 3: it's in emergency. It's not for a future holiday, it's 768 00:37:32,719 --> 00:37:35,560 Speaker 3: not for a pair of shoes that feel like an emergency. 769 00:37:35,920 --> 00:37:40,759 Speaker 3: It is not for anything other than future use financial security. 770 00:37:41,360 --> 00:37:44,359 Speaker 2: Circling back to what we said earlier, V like, if 771 00:37:44,360 --> 00:37:48,000 Speaker 2: anyone does need more encouragement to kind of understand how 772 00:37:48,040 --> 00:37:50,480 Speaker 2: important having an emergency fund is. 773 00:37:50,640 --> 00:37:52,120 Speaker 4: I feel like watching Maide would be. 774 00:37:52,040 --> 00:37:55,560 Speaker 3: A really good idea because I wish she makes agency fund. 775 00:37:56,160 --> 00:37:58,560 Speaker 3: She was in such a pickle, and I mean she 776 00:37:58,760 --> 00:38:01,040 Speaker 3: ended up getting out and that it's really good, and 777 00:38:01,080 --> 00:38:03,799 Speaker 3: she ended up living her best life and being able 778 00:38:03,800 --> 00:38:06,760 Speaker 3: to move. I won't ruin it for other people, I guess, 779 00:38:07,160 --> 00:38:10,040 Speaker 3: but if she'd had an emergency fund, she would have 780 00:38:10,080 --> 00:38:12,400 Speaker 3: been able to escape the situation she was in in 781 00:38:12,480 --> 00:38:15,840 Speaker 3: such a cleaner way. So that's what an emergency fund 782 00:38:15,840 --> 00:38:19,279 Speaker 3: affords us. It affords us the ability to escape a job, 783 00:38:19,360 --> 00:38:22,919 Speaker 3: a circumstance, a person, a home, anything that we don't 784 00:38:22,960 --> 00:38:25,880 Speaker 3: want to be in. Anymore, Even if it's just covering 785 00:38:25,880 --> 00:38:27,759 Speaker 3: a taxi to leave a party you don't want to 786 00:38:27,800 --> 00:38:31,080 Speaker 3: be at anymore. An emergency fund is there to protect you, 787 00:38:31,800 --> 00:38:33,160 Speaker 3: not to pay off debt. 788 00:38:33,520 --> 00:38:35,719 Speaker 2: Yeah, love it all right, be I do think that 789 00:38:35,800 --> 00:38:38,120 Speaker 2: is all we have time for today, my friend, it is, 790 00:38:38,280 --> 00:38:39,640 Speaker 2: but g just before. 791 00:38:39,360 --> 00:38:41,960 Speaker 3: We head off, we'd like to acknowledge and pay respect 792 00:38:41,960 --> 00:38:45,480 Speaker 3: to Australia's Aboriginal and Torres Straight Island at People's the 793 00:38:45,600 --> 00:38:49,320 Speaker 3: traditional custodians of the lands, the waterways and the skies 794 00:38:49,440 --> 00:38:52,799 Speaker 3: all across Australia. We thank you for sharing and for 795 00:38:52,920 --> 00:38:55,560 Speaker 3: caring for the land on which we are able to learn. 796 00:38:55,960 --> 00:38:58,719 Speaker 3: We pay our respects to elders past and present, and 797 00:38:58,760 --> 00:39:00,920 Speaker 3: we share our friendship and our kindness. 798 00:39:01,360 --> 00:39:03,880 Speaker 2: And remember, guys, that the advice shared on She's on 799 00:39:03,920 --> 00:39:06,360 Speaker 2: the Money is general in nature and does not consider 800 00:39:06,440 --> 00:39:10,200 Speaker 2: your individual circumstances. She's on the Money exists purely for 801 00:39:10,320 --> 00:39:13,080 Speaker 2: educational purposes and should not be relied upon to make 802 00:39:13,120 --> 00:39:17,000 Speaker 2: an investment or a financial decision, and we promise. Victoria 803 00:39:17,040 --> 00:39:20,960 Speaker 2: Devine is an authorized representative of Australia Pacific Funds Management 804 00:39:21,200 --> 00:39:23,799 Speaker 2: Proprietary Limited A B and three four one three two 805 00:39:23,880 --> 00:39:26,560 Speaker 2: four six, three two five seven, AFOSL three three nine 806 00:39:26,719 --> 00:39:30,279 Speaker 2: one five one. Come join us in the Facebook community guys, 807 00:39:30,320 --> 00:39:33,600 Speaker 2: if you're not already there, We're also on Instagram, on 808 00:39:33,680 --> 00:39:35,640 Speaker 2: the TikTok, on the YouTube all. 809 00:39:35,560 --> 00:39:38,759 Speaker 4: Of the things way out, We're everywhere. Join us next week. 810 00:39:39,040 --> 00:39:42,000 Speaker 2: Bye, guys,