1 00:00:00,200 --> 00:00:19,440 Speaker 1: She's on the Money. She's on the Money. 2 00:00:22,960 --> 00:00:25,959 Speaker 2: Hello, and welcome to She's on the Money, the podcast 3 00:00:26,000 --> 00:00:30,160 Speaker 2: for millennials who want financial freedom debt consolidation? What is it? 4 00:00:30,360 --> 00:00:31,960 Speaker 2: How do we do it? And is it the right 5 00:00:32,040 --> 00:00:34,800 Speaker 2: option for us? While it can seem like a really 6 00:00:34,840 --> 00:00:37,400 Speaker 2: great option for some people, there are a few traps 7 00:00:37,440 --> 00:00:39,519 Speaker 2: we need to be aware of to avoid ending up 8 00:00:39,520 --> 00:00:42,400 Speaker 2: in a worse financial position than where we began, and 9 00:00:42,440 --> 00:00:46,040 Speaker 2: today we're unpacking them all. My name is Georgia King, 10 00:00:46,080 --> 00:00:47,880 Speaker 2: and joining me today to get to the very bottom 11 00:00:47,920 --> 00:00:52,240 Speaker 2: of it all is award winning financial advisor Victoria Define 12 00:00:51,840 --> 00:00:57,040 Speaker 2: the Let's start with the basics. What is debt consolidation, Georgia, 13 00:00:57,360 --> 00:01:00,640 Speaker 2: Debt consolidation a fickle thing, and if you can considering it, 14 00:01:00,680 --> 00:01:02,480 Speaker 2: you might be in a little bit of a pickle. 15 00:01:02,600 --> 00:01:05,679 Speaker 2: Hey that rhymed, I'm a poet. Didn't know it. That 16 00:01:05,800 --> 00:01:06,199 Speaker 2: was good. 17 00:01:06,360 --> 00:01:08,920 Speaker 3: That wasn't good. That wasn't even scripted. In fact, if 18 00:01:08,920 --> 00:01:14,200 Speaker 3: it was backspaced real quick. But debt consolidation is essentially 19 00:01:14,360 --> 00:01:16,440 Speaker 3: just a way to roll a whole heap of types 20 00:01:16,440 --> 00:01:19,559 Speaker 3: of debts into one debt, which can be a whole 21 00:01:19,560 --> 00:01:22,679 Speaker 3: heap less overwhelming. The idea is to try and achieve 22 00:01:22,800 --> 00:01:25,800 Speaker 3: a lower interest rate and lower monthly payments so that 23 00:01:25,840 --> 00:01:27,520 Speaker 3: you can get on top of the debt instead of 24 00:01:27,520 --> 00:01:30,480 Speaker 3: feeling like it completely gets away from you. Essentially, the 25 00:01:30,520 --> 00:01:32,960 Speaker 3: idea is to try and achieve a lower interest rate 26 00:01:33,000 --> 00:01:35,399 Speaker 3: as well as lower monthly repayments so that you can 27 00:01:35,440 --> 00:01:38,000 Speaker 3: get on top of the debt, stop being overwhelmed, stop 28 00:01:38,040 --> 00:01:40,679 Speaker 3: having a whole heap of debts coming out. It just 29 00:01:40,760 --> 00:01:43,520 Speaker 3: makes your life a whole heap easier, especially if you 30 00:01:43,520 --> 00:01:45,440 Speaker 3: have found yourself in a little bit of a pickle. 31 00:01:46,319 --> 00:01:50,040 Speaker 2: And do we go to like a bank and say hello, sir, 32 00:01:50,280 --> 00:01:53,280 Speaker 2: like I would like a big new debt and then 33 00:01:53,440 --> 00:01:54,600 Speaker 2: can you put the other ones in? 34 00:01:54,640 --> 00:01:54,800 Speaker 1: There? 35 00:01:55,120 --> 00:01:57,520 Speaker 2: Is that how it works? You feeling that's actually how 36 00:01:57,520 --> 00:02:00,240 Speaker 2: it works? But there are a couple of reasons you 37 00:02:00,280 --> 00:02:02,720 Speaker 2: might consolidate your debt, So let's start there, not with 38 00:02:02,920 --> 00:02:04,960 Speaker 2: just asking for it. But it's really. 39 00:02:04,800 --> 00:02:08,840 Speaker 3: Important to understand exactly what debt consolidation is, how it works, 40 00:02:08,880 --> 00:02:11,160 Speaker 3: and what's going on with it, and why you might 41 00:02:11,280 --> 00:02:14,480 Speaker 3: want it, because a few people in our community historically 42 00:02:14,520 --> 00:02:16,280 Speaker 3: have said, oh my gosh, like I have a few 43 00:02:16,320 --> 00:02:18,000 Speaker 3: credit cards, so what I'm going to do is apply 44 00:02:18,080 --> 00:02:20,560 Speaker 3: for an interest free credit card and then I'm going 45 00:02:20,639 --> 00:02:23,480 Speaker 3: to roll my other credit cards into that, which is possible, 46 00:02:23,800 --> 00:02:26,400 Speaker 3: but there's a really big trap there because the only 47 00:02:26,520 --> 00:02:28,679 Speaker 3: reason I'd be like, yeah, gee, like that sounds like 48 00:02:28,720 --> 00:02:31,520 Speaker 3: a good idea is if you genuinely knew you could 49 00:02:31,520 --> 00:02:34,400 Speaker 3: pay that debt off within the interest free period of time. 50 00:02:34,720 --> 00:02:37,839 Speaker 3: So say they say, hey, it's interest free for six months, 51 00:02:37,880 --> 00:02:40,000 Speaker 3: and you go, great, no problems. But you've got a 52 00:02:40,080 --> 00:02:43,320 Speaker 3: ten thousand dollars credit card that you need to pay out. 53 00:02:43,480 --> 00:02:45,680 Speaker 3: Are you actually going to be able to pay that out? 54 00:02:46,080 --> 00:02:47,800 Speaker 3: Or are you going to put yourself in a sticky 55 00:02:47,840 --> 00:02:50,840 Speaker 3: situation where you consolidate your debt into this one interest 56 00:02:50,840 --> 00:02:52,919 Speaker 3: free credit card and then it stings you with a 57 00:02:53,000 --> 00:02:56,920 Speaker 3: higher interest rate after that six month introductory period. So 58 00:02:56,960 --> 00:02:59,519 Speaker 3: we need to be really smart about the decisions we're 59 00:02:59,520 --> 00:03:01,720 Speaker 3: making because in the short term, you ain't go, oh 60 00:03:01,720 --> 00:03:03,080 Speaker 3: my gosh, this is going to make me feel so 61 00:03:03,160 --> 00:03:06,639 Speaker 3: much better, but long term, it's a really bad financial decision. 62 00:03:07,000 --> 00:03:10,880 Speaker 3: So keeping in mind your goals for debt consolidation, so essentially, 63 00:03:10,960 --> 00:03:13,639 Speaker 3: debt consolidation is picking up a whole heap of debts 64 00:03:13,639 --> 00:03:17,120 Speaker 3: that you have and transferring them into one individual debt 65 00:03:17,280 --> 00:03:21,000 Speaker 3: with one single facility, so that you can potentially make 66 00:03:21,040 --> 00:03:24,920 Speaker 3: it a whole heap more manageable. The sticker here, though, Georgia, 67 00:03:25,040 --> 00:03:28,520 Speaker 3: is that it's not actually available to everybody. So sometimes 68 00:03:28,600 --> 00:03:31,560 Speaker 3: if your debt is one of those things that is 69 00:03:32,040 --> 00:03:34,920 Speaker 3: overwhelming and something that is really hard to deal with, 70 00:03:34,960 --> 00:03:37,920 Speaker 3: and you've tried to go through debt consolidation before and 71 00:03:37,920 --> 00:03:40,320 Speaker 3: they've said no, you're actually too risky for us to 72 00:03:40,400 --> 00:03:43,680 Speaker 3: want to do that, the next best step I genuinely 73 00:03:43,760 --> 00:03:46,320 Speaker 3: would consider is calling our friends at the National Debt 74 00:03:46,320 --> 00:03:49,720 Speaker 3: Helpline because they know exactly what next steps to take, 75 00:03:49,960 --> 00:03:53,160 Speaker 3: and unfortunately they're not always the same. They change dependent 76 00:03:53,200 --> 00:03:55,560 Speaker 3: on situation, and they'll be able to help sort you 77 00:03:55,600 --> 00:03:58,760 Speaker 3: out there. But essentially, if you're considering debt consolidation, it's 78 00:03:58,840 --> 00:04:01,360 Speaker 3: usually because you have a few different debts. You might 79 00:04:01,360 --> 00:04:04,040 Speaker 3: be overwhelmed, or you might just be on top of 80 00:04:04,040 --> 00:04:06,760 Speaker 3: them and just want one easy repayment as opposed to 81 00:04:07,080 --> 00:04:09,480 Speaker 3: having your car loan coming out having a credit card 82 00:04:09,480 --> 00:04:11,640 Speaker 3: than your partner having a credit card, And like, maybe 83 00:04:11,680 --> 00:04:13,720 Speaker 3: you have a small personal loan that you're paying back, 84 00:04:13,960 --> 00:04:17,279 Speaker 3: maybe it's just easier so debt consolidation is definitely something 85 00:04:17,279 --> 00:04:19,599 Speaker 3: to have a think about and work out if it 86 00:04:19,680 --> 00:04:23,080 Speaker 3: works for you in your personal situation. Okay, so there's 87 00:04:23,120 --> 00:04:25,359 Speaker 3: pitfalls to be mindful of, but we will get to 88 00:04:25,440 --> 00:04:28,080 Speaker 3: them a little later on in the show. So how 89 00:04:28,360 --> 00:04:31,760 Speaker 3: does it work though? Do we call up our financial advisor, 90 00:04:31,880 --> 00:04:33,280 Speaker 3: do we take a trip to the bank. How are 91 00:04:33,320 --> 00:04:35,279 Speaker 3: we actually consolidating these debts? 92 00:04:35,320 --> 00:04:37,159 Speaker 2: So the first thing is to think what type of 93 00:04:37,200 --> 00:04:40,200 Speaker 2: facility you would like to achieve, So you don't necessarily 94 00:04:40,240 --> 00:04:42,680 Speaker 2: have to call your bank. You could call a bro 95 00:04:42,839 --> 00:04:45,359 Speaker 2: car or someone who can do that for you. To 96 00:04:45,440 --> 00:04:47,800 Speaker 2: be honest, the best step would be researching and I 97 00:04:47,880 --> 00:04:49,440 Speaker 2: know I don't want to say it on the podcast, 98 00:04:49,640 --> 00:04:52,839 Speaker 2: just google it, but literally google debt consolidation and see 99 00:04:52,839 --> 00:04:55,960 Speaker 2: what types of options are available because they could be 100 00:04:55,960 --> 00:04:58,159 Speaker 2: one available at your bank. So say you've got a 101 00:04:58,200 --> 00:05:01,279 Speaker 2: personal loan and a car loan and your credit card 102 00:05:01,320 --> 00:05:03,520 Speaker 2: with NAB, maybe you want to just go straight to 103 00:05:03,600 --> 00:05:06,200 Speaker 2: NAB and say, hey, could we consolidate these together? What 104 00:05:06,240 --> 00:05:08,400 Speaker 2: can you do? It's completely up to you. 105 00:05:08,360 --> 00:05:11,359 Speaker 3: And your situation, but there are also people out there 106 00:05:11,680 --> 00:05:14,039 Speaker 3: that are going to be able to help you consolidate 107 00:05:14,080 --> 00:05:16,599 Speaker 3: debt and put you in a better financial position. So 108 00:05:16,680 --> 00:05:19,360 Speaker 3: do we need to worry about our credit score within 109 00:05:19,440 --> 00:05:20,000 Speaker 3: that process? 110 00:05:20,040 --> 00:05:22,279 Speaker 2: But do we need to check that out before? Yes, sir, 111 00:05:22,880 --> 00:05:25,400 Speaker 2: very important. So you need to make sure that you're 112 00:05:25,480 --> 00:05:28,840 Speaker 2: eligible for a debt consolidation. As I said before, there 113 00:05:28,839 --> 00:05:32,360 Speaker 2: are some people that actually just aren't eligible for debt consolidation. 114 00:05:32,560 --> 00:05:35,040 Speaker 2: It might be because you currently don't have an income 115 00:05:35,080 --> 00:05:36,760 Speaker 2: and when you got the loan you did and they're 116 00:05:36,800 --> 00:05:39,400 Speaker 2: not willing to service that because they're deemed too risky. 117 00:05:39,760 --> 00:05:42,320 Speaker 2: So the first thing I would say, obviously look into 118 00:05:42,320 --> 00:05:45,480 Speaker 2: what debt consolidation is. Understand it, listen to this podcast, 119 00:05:45,600 --> 00:05:49,599 Speaker 2: you genius, and then go get your credit history. So 120 00:05:49,800 --> 00:05:52,359 Speaker 2: jump on and get a free credit report. As you 121 00:05:52,360 --> 00:05:55,600 Speaker 2: guys know, there's Equifax, there's Experience, there's Ilion and then 122 00:05:55,680 --> 00:05:57,839 Speaker 2: you know, you remember from last season we worked with 123 00:05:57,839 --> 00:06:01,080 Speaker 2: our friends at Wiser. They provide free credit score checks, 124 00:06:01,120 --> 00:06:04,280 Speaker 2: which is really important. And once you understand your. 125 00:06:04,200 --> 00:06:07,120 Speaker 3: Current position, then it would be all about working out 126 00:06:07,160 --> 00:06:10,800 Speaker 3: which lender would work best for your personal situation. So 127 00:06:10,920 --> 00:06:13,560 Speaker 3: a broker might be best position to assist you with 128 00:06:13,640 --> 00:06:16,200 Speaker 3: that because they can pad out the story that you're 129 00:06:16,200 --> 00:06:19,120 Speaker 3: going to the bank with because in a lot of situations, 130 00:06:19,320 --> 00:06:21,320 Speaker 3: the bank's going to want to know why you want to. 131 00:06:21,320 --> 00:06:22,480 Speaker 2: Consolidate that debt. 132 00:06:22,720 --> 00:06:24,719 Speaker 3: So when it comes to debt consolidation, they're going to 133 00:06:24,720 --> 00:06:27,480 Speaker 3: want to know your motivation behind actually applying for that, 134 00:06:27,880 --> 00:06:29,320 Speaker 3: not just saying, oh, can I have. 135 00:06:29,279 --> 00:06:30,760 Speaker 2: A debt consolidation? Have three debts? 136 00:06:30,760 --> 00:06:32,680 Speaker 3: They're going to go why, and you'll say, oh, well, 137 00:06:32,720 --> 00:06:34,640 Speaker 3: actually it makes it more reasonable so that I can 138 00:06:34,680 --> 00:06:37,320 Speaker 3: save more, or so that I can make it easier 139 00:06:37,400 --> 00:06:39,800 Speaker 3: or more manageable. So they're going to want to know 140 00:06:39,880 --> 00:06:43,360 Speaker 3: your motivations as well, because if your motivations weren't as 141 00:06:43,400 --> 00:06:45,800 Speaker 3: pure as most peoples, they're going to say no. So 142 00:06:45,880 --> 00:06:49,440 Speaker 3: I think it's really important to understand your eligibility, get 143 00:06:49,440 --> 00:06:51,800 Speaker 3: your credit score, and make sure that you're somebody that 144 00:06:51,839 --> 00:06:54,680 Speaker 3: a bank might lend to before considering that. And as 145 00:06:54,720 --> 00:06:56,920 Speaker 3: I said, if all else fails, our friends at the 146 00:06:57,000 --> 00:07:00,839 Speaker 3: National Debt Helpline will help you with this. Again, never sponsored, 147 00:07:01,000 --> 00:07:03,520 Speaker 3: They're just good eggs doing good things, putting you guys 148 00:07:03,520 --> 00:07:06,480 Speaker 3: in better financial positions, which ge we love. 149 00:07:06,560 --> 00:07:09,480 Speaker 2: That's what we're all about. So would you say, is 150 00:07:09,520 --> 00:07:12,520 Speaker 2: there a difference between going directly to a bank and 151 00:07:12,560 --> 00:07:15,360 Speaker 2: going through a broker in terms of who has our 152 00:07:15,600 --> 00:07:18,400 Speaker 2: who has our best interests at heart? Like, will the 153 00:07:18,480 --> 00:07:21,520 Speaker 2: banks be more likely to kind of rip us off? 154 00:07:21,720 --> 00:07:23,920 Speaker 2: So you're always going to be the one that has 155 00:07:23,960 --> 00:07:26,560 Speaker 2: your best interests at heart. I don't think in this 156 00:07:26,680 --> 00:07:29,520 Speaker 2: situation a bank is necessarily going to rip you off. 157 00:07:29,600 --> 00:07:31,840 Speaker 2: But if you're going to take the time to consolidate 158 00:07:31,880 --> 00:07:34,440 Speaker 2: a debt, i'd want to be talking to a broker 159 00:07:34,840 --> 00:07:37,320 Speaker 2: because talking to a broker means you're going to have 160 00:07:37,400 --> 00:07:40,280 Speaker 2: access to a whole heap more options than just the 161 00:07:40,360 --> 00:07:43,400 Speaker 2: options that one bank has access to. I think you 162 00:07:43,520 --> 00:07:46,000 Speaker 2: also need to look at your motivations, right So if 163 00:07:46,000 --> 00:07:48,840 Speaker 2: you're just like, oh, yeah, I'll just refinance that because 164 00:07:49,080 --> 00:07:53,200 Speaker 2: you're being financially irresponsible, I want you to go deeper. 165 00:07:53,360 --> 00:07:55,160 Speaker 3: I want you to care about your budget. I want 166 00:07:55,200 --> 00:07:57,200 Speaker 3: you to care about your cash flow. If you have 167 00:07:57,280 --> 00:08:00,160 Speaker 3: a whole heap of different debts with various lenders and 168 00:08:00,200 --> 00:08:02,240 Speaker 3: you can actually manage all of those, it's just you 169 00:08:02,360 --> 00:08:05,440 Speaker 3: being a bit unorganized. I would argue that if you 170 00:08:05,520 --> 00:08:08,880 Speaker 3: have a couple of really low interest credit cards, consolidating 171 00:08:08,920 --> 00:08:11,000 Speaker 3: it just to make it an easier payment might not 172 00:08:11,040 --> 00:08:13,640 Speaker 3: be best for you. You actually just need to use the 173 00:08:13,720 --> 00:08:17,160 Speaker 3: snowball method or the avalanche method to actually smash down 174 00:08:17,200 --> 00:08:20,400 Speaker 3: those debts and put yourself in a better financial position. 175 00:08:20,760 --> 00:08:23,240 Speaker 3: The other thing I'd really want you to look at 176 00:08:23,680 --> 00:08:25,840 Speaker 3: is why are you in this debt in the first place, 177 00:08:26,160 --> 00:08:29,440 Speaker 3: and is consolidating it and taking that pressure off actually 178 00:08:29,440 --> 00:08:31,160 Speaker 3: going to put you in a position where you get 179 00:08:31,160 --> 00:08:34,560 Speaker 3: into debt again or are you going to consolidate it 180 00:08:34,559 --> 00:08:36,440 Speaker 3: because you're like, Nope, final straw, I'm not going to 181 00:08:36,440 --> 00:08:37,560 Speaker 3: get myself into any debt. 182 00:08:37,640 --> 00:08:38,320 Speaker 2: This makes it. 183 00:08:38,240 --> 00:08:40,560 Speaker 3: Easy so that I have a lower monthly repayment so 184 00:08:40,600 --> 00:08:43,280 Speaker 3: that I can save and create financial freedom for myself. 185 00:08:43,320 --> 00:08:46,079 Speaker 3: So I want to know exactly why you want that, Georgia, 186 00:08:46,360 --> 00:08:48,920 Speaker 3: not necessarily is it a good idea or not? Like 187 00:08:49,160 --> 00:08:51,400 Speaker 3: are you putting yourself in a better financial position by 188 00:08:51,440 --> 00:08:51,760 Speaker 3: doing it? 189 00:08:51,920 --> 00:08:54,880 Speaker 2: Yes or no? And also how are you going to 190 00:08:54,960 --> 00:08:59,560 Speaker 2: plan to not do it again? Okay, you said that 191 00:08:59,559 --> 00:09:03,160 Speaker 2: that it's refinancing. Is debt consolidation refinancing it they're the 192 00:09:03,200 --> 00:09:03,559 Speaker 2: same thing. 193 00:09:03,720 --> 00:09:06,559 Speaker 3: Essentially, you're refinancing a loan, so in the same way 194 00:09:06,600 --> 00:09:08,160 Speaker 3: that you might have a home loan and a couple 195 00:09:08,160 --> 00:09:10,360 Speaker 3: of years after you established that loan, you might go, oh, 196 00:09:10,440 --> 00:09:13,040 Speaker 3: there's a better, more sexy option out there, I want that, 197 00:09:13,160 --> 00:09:15,319 Speaker 3: and you go back to your broker. You are actually 198 00:09:15,360 --> 00:09:19,360 Speaker 3: refinancing a debt. So what would happen is, let's say 199 00:09:19,440 --> 00:09:22,040 Speaker 3: bank A has said, yup, gee, I'm going to consolidate 200 00:09:22,080 --> 00:09:25,200 Speaker 3: your debt. I'm going to do that for twenty like, 201 00:09:25,240 --> 00:09:27,719 Speaker 3: you'll get a twenty thousand dollar loan. We would then 202 00:09:27,880 --> 00:09:30,600 Speaker 3: use that money to pay off your credit cards and 203 00:09:30,640 --> 00:09:32,600 Speaker 3: pay off all of your other debts, so you then 204 00:09:32,679 --> 00:09:35,480 Speaker 3: only have one debt remaining, so it kind of all 205 00:09:35,480 --> 00:09:38,560 Speaker 3: gets rolled into one place. They're not extinguishing it for you. 206 00:09:38,559 --> 00:09:40,840 Speaker 3: We're not talking our way out of any debts. We 207 00:09:40,880 --> 00:09:44,640 Speaker 3: are actually just putting ourselves in a position where we 208 00:09:44,760 --> 00:09:48,720 Speaker 3: have just one repayment instead of many. Talking about that 209 00:09:48,840 --> 00:09:51,920 Speaker 3: for a hot second, though, if you're in a credit 210 00:09:51,960 --> 00:09:55,240 Speaker 3: card pickle, or you are in a situation where you've 211 00:09:55,280 --> 00:09:59,080 Speaker 3: got a personal loan that you are struggling to repay debt, 212 00:09:59,120 --> 00:10:03,400 Speaker 3: consolidation is a really great way to negotiate. So I 213 00:10:03,440 --> 00:10:05,400 Speaker 3: know that this is a little bit left field and 214 00:10:05,400 --> 00:10:08,120 Speaker 3: a bit off center, but important to know still, if 215 00:10:08,200 --> 00:10:10,400 Speaker 3: you're going to consolidate a debt or you are going 216 00:10:10,400 --> 00:10:12,400 Speaker 3: to pay it out, or for some reason you have 217 00:10:12,440 --> 00:10:14,600 Speaker 3: a whole heap of savings you just haven't paid that 218 00:10:14,760 --> 00:10:17,360 Speaker 3: debt out. Then is a really good time to pick 219 00:10:17,440 --> 00:10:20,640 Speaker 3: up the phone and say, hey, can't afford it, can't 220 00:10:20,679 --> 00:10:23,320 Speaker 3: pay back that loan. The bank are going to go, 221 00:10:23,360 --> 00:10:26,520 Speaker 3: oh my gosh, like we want to recover whatever's possible. 222 00:10:26,760 --> 00:10:29,400 Speaker 3: So you say, can we come to a different settlement. 223 00:10:29,520 --> 00:10:31,800 Speaker 3: So so you have a twenty thousand dollars personal loan 224 00:10:31,840 --> 00:10:34,520 Speaker 3: and you go, guys, I'm really struggling to pay this back. 225 00:10:34,760 --> 00:10:37,360 Speaker 3: Can we come to a settlement number? Like what would 226 00:10:37,400 --> 00:10:40,440 Speaker 3: you take today if I just paid that loan out 227 00:10:40,480 --> 00:10:43,160 Speaker 3: in full instead of me going back and forth and 228 00:10:43,240 --> 00:10:45,720 Speaker 3: like maybe missing payments, Like what is the best you 229 00:10:45,760 --> 00:10:49,360 Speaker 3: can do? And in some situations they are able to 230 00:10:49,440 --> 00:10:52,679 Speaker 3: actually cut that loan down, so instead of you paying 231 00:10:52,720 --> 00:10:55,360 Speaker 3: that twenty thousand dollars back, they might say, gee, all right, 232 00:10:55,360 --> 00:10:58,560 Speaker 3: if you pay today, it's fifteen grand, which is a 233 00:10:58,720 --> 00:11:01,280 Speaker 3: very great option. And if you don't ask, you don't 234 00:11:01,360 --> 00:11:03,640 Speaker 3: get I don't think there's any shame in calling up 235 00:11:03,679 --> 00:11:05,800 Speaker 3: and being like, well, what could we negotiate out of that? 236 00:11:06,120 --> 00:11:08,320 Speaker 3: Like if I've got the cash sitting there, or if 237 00:11:08,360 --> 00:11:10,600 Speaker 3: I have access to be able to pay you out today, 238 00:11:11,080 --> 00:11:13,320 Speaker 3: what would that look like. How can I get out 239 00:11:13,320 --> 00:11:15,560 Speaker 3: of this debt and save some money at the same time. 240 00:11:15,760 --> 00:11:17,360 Speaker 3: Kind of feels like a no brainer to me. 241 00:11:17,720 --> 00:11:22,360 Speaker 2: No, that's smart. Okay, So back to debt consolidation, the consolidation, 242 00:11:23,040 --> 00:11:25,679 Speaker 2: What are your thoughts on it? As a financial advisor? 243 00:11:25,720 --> 00:11:29,520 Speaker 2: Is this something that you are recommending to your clients frequently? Absolutely, 244 00:11:29,640 --> 00:11:32,120 Speaker 2: It depends on what the situation is like. If you 245 00:11:32,160 --> 00:11:34,440 Speaker 2: came to me and we do our fact find process 246 00:11:34,520 --> 00:11:36,439 Speaker 2: g and then we find out that you've got a 247 00:11:36,440 --> 00:11:39,000 Speaker 2: whole heap of credit cards with really high interest rates 248 00:11:39,040 --> 00:11:42,280 Speaker 2: and you're actually a good little saver, but you know, 249 00:11:42,360 --> 00:11:45,120 Speaker 2: you've just got these credit cards. Debt consolidation could be 250 00:11:45,120 --> 00:11:46,960 Speaker 2: a really powerful tool for you because you're a good 251 00:11:46,960 --> 00:11:47,960 Speaker 2: person to lend to. 252 00:11:48,480 --> 00:11:51,280 Speaker 3: It just because you have debt doesn't actually make you 253 00:11:51,320 --> 00:11:53,240 Speaker 3: a bad person to lend to, which I think is 254 00:11:53,240 --> 00:11:56,920 Speaker 3: a really common misconception when they say you're a bad 255 00:11:56,960 --> 00:11:58,800 Speaker 3: person to lend to. And I mean, that's probably not 256 00:11:58,800 --> 00:12:00,440 Speaker 3: the right language, but we're going to go with it, guys, 257 00:12:00,480 --> 00:12:02,520 Speaker 3: because that's how we would talk about it, just you 258 00:12:02,600 --> 00:12:02,880 Speaker 3: and me. 259 00:12:03,080 --> 00:12:03,360 Speaker 2: Yep. 260 00:12:03,520 --> 00:12:06,679 Speaker 3: But it doesn't make you a bad person. It actually 261 00:12:06,800 --> 00:12:09,720 Speaker 3: just means are you somebody who pays back your credit 262 00:12:09,840 --> 00:12:12,880 Speaker 3: on time? So say, GEU went and got a credit card, 263 00:12:12,880 --> 00:12:14,560 Speaker 3: and your friend went and got a credit card at 264 00:12:14,600 --> 00:12:18,239 Speaker 3: exactly the same time, and you paid yours off consistently 265 00:12:18,320 --> 00:12:20,959 Speaker 3: every single month with absolutely no bumps in the road. 266 00:12:21,000 --> 00:12:23,120 Speaker 3: You always paid your fees, there was never any question. 267 00:12:23,480 --> 00:12:25,959 Speaker 3: But your friend did the same thing, but just missed 268 00:12:25,960 --> 00:12:28,680 Speaker 3: payments here and there and kind of was like, oh whatever, 269 00:12:28,840 --> 00:12:30,440 Speaker 3: Like I just won't pay it this month, I'll just 270 00:12:30,520 --> 00:12:33,200 Speaker 3: pay it next month, or got a couple of additional 271 00:12:33,280 --> 00:12:36,000 Speaker 3: late fees and stuff like that that shows up on 272 00:12:36,040 --> 00:12:38,480 Speaker 3: your credit report. So just having a credit card or 273 00:12:38,480 --> 00:12:42,040 Speaker 3: not doesn't necessarily make you a bad person to lend to. 274 00:12:42,600 --> 00:12:44,560 Speaker 3: It actually puts you in a position where they go, 275 00:12:44,640 --> 00:12:47,360 Speaker 3: all right, so she took on that responsibility. Could she 276 00:12:47,440 --> 00:12:50,720 Speaker 3: handle it in your situation, Georgia, and I gave you 277 00:12:50,760 --> 00:12:54,800 Speaker 3: the good outcome here, just Jeph, you're responsible goal pow. 278 00:12:55,400 --> 00:12:58,240 Speaker 3: But in your situation they might look at that and go, oh, 279 00:12:58,240 --> 00:13:00,200 Speaker 3: she always paid it back, no, no problems at all. 280 00:13:00,200 --> 00:13:05,040 Speaker 3: She's a responsible goalpal. She's a responsible girl, whereas your friend, 281 00:13:05,559 --> 00:13:08,240 Speaker 3: even with exactly the same credit card, just by missing 282 00:13:08,280 --> 00:13:11,200 Speaker 3: a few payments and maybe not being as responsible, that 283 00:13:11,280 --> 00:13:14,560 Speaker 3: would put her in a position where a bank might say, nap, 284 00:13:14,800 --> 00:13:17,720 Speaker 3: you can't be held responsible or something like this because 285 00:13:17,720 --> 00:13:20,640 Speaker 3: you haven't been able to prove it historically. So it's 286 00:13:20,679 --> 00:13:24,120 Speaker 3: not necessarily just having debt. It's actually how you deal 287 00:13:24,160 --> 00:13:27,040 Speaker 3: with it. And that's why I jump down people's throats, 288 00:13:27,080 --> 00:13:29,040 Speaker 3: and I don't mean to. I'm not aggressive in real life. 289 00:13:29,080 --> 00:13:30,600 Speaker 3: Last Georgia, I'm five to two, Like. 290 00:13:30,559 --> 00:13:33,280 Speaker 2: I'm really not that scary if you're not able to 291 00:13:33,320 --> 00:13:35,880 Speaker 2: make a repayment on something and you're like, look, you 292 00:13:35,920 --> 00:13:37,880 Speaker 2: know a lot of people have gone through this recently 293 00:13:37,920 --> 00:13:41,800 Speaker 2: where financially the pandemics hit us really hard. Instead of 294 00:13:41,840 --> 00:13:44,760 Speaker 2: burying your head in the sand, call your electricity company, 295 00:13:44,840 --> 00:13:48,040 Speaker 2: call the credit card people. Have the payments deferred, instead 296 00:13:48,040 --> 00:13:51,440 Speaker 2: of having a instead of having a default on your 297 00:13:51,440 --> 00:13:54,760 Speaker 2: credit report, Like you can protect your credit score just 298 00:13:54,880 --> 00:13:58,560 Speaker 2: by being open and honest and truthful and calling them 299 00:13:58,600 --> 00:14:00,760 Speaker 2: and saying, hey, gee, it's so worry you know how 300 00:14:00,800 --> 00:14:03,240 Speaker 2: I owe you fifty bucks, I'm not able to pay 301 00:14:03,240 --> 00:14:03,920 Speaker 2: that this month? 302 00:14:03,960 --> 00:14:06,160 Speaker 3: Is there anything that we can do? And more often 303 00:14:06,160 --> 00:14:08,480 Speaker 3: than not, they'll say, okay, no problems. What if we 304 00:14:08,600 --> 00:14:10,560 Speaker 3: just pushed it out by fifteen days, would that be 305 00:14:10,600 --> 00:14:12,760 Speaker 3: all right? And you go, oh yeah, actually I get 306 00:14:12,800 --> 00:14:15,760 Speaker 3: paid next Friday, like I could pay it then, and 307 00:14:15,800 --> 00:14:17,840 Speaker 3: they go, great, no problems. We'll push it out for free, 308 00:14:17,920 --> 00:14:21,120 Speaker 3: no fees associated with that, no defaults on your account, nothing, 309 00:14:21,120 --> 00:14:23,240 Speaker 3: we don't have to chase you up. And you're putting 310 00:14:23,280 --> 00:14:26,400 Speaker 3: your future self in a better financial position, even though 311 00:14:26,440 --> 00:14:29,360 Speaker 3: you can't afford it today. So it's all about and 312 00:14:29,560 --> 00:14:32,320 Speaker 3: I feel like a broken record not putting your head 313 00:14:32,320 --> 00:14:34,480 Speaker 3: in the sand when it comes to debt or payments 314 00:14:34,520 --> 00:14:37,800 Speaker 3: that you owe. But I guess back to debt consolidation. 315 00:14:38,320 --> 00:14:41,000 Speaker 3: I have recommended it to some clients. I've even helped 316 00:14:41,040 --> 00:14:44,480 Speaker 3: some of my clients facilitate that happening with their brokers. 317 00:14:45,120 --> 00:14:48,800 Speaker 3: But I also have had to have some fickle conversations 318 00:14:48,800 --> 00:14:51,520 Speaker 3: with clients, sat them down and said, actually, gee, you 319 00:14:51,560 --> 00:14:53,160 Speaker 3: and I both know you can pay this off, so 320 00:14:53,280 --> 00:14:55,640 Speaker 3: pull your finger out and get it done, Like, stop 321 00:14:55,680 --> 00:14:59,120 Speaker 3: trying to rely on a different solution instead of just 322 00:14:59,240 --> 00:15:02,800 Speaker 3: buckling down and paying off the debt. So I as 323 00:15:02,840 --> 00:15:05,360 Speaker 3: a financial advisor. I'd like to think I'm a good advisor, 324 00:15:05,760 --> 00:15:08,120 Speaker 3: but I'm definitely not going to always be like, oh, 325 00:15:08,400 --> 00:15:10,800 Speaker 3: let's do the easiest option, or let's do the option 326 00:15:10,880 --> 00:15:13,840 Speaker 3: that makes you feel the most comfortable, because sometimes to 327 00:15:13,840 --> 00:15:16,560 Speaker 3: put ourselves in a better financial position, we have to 328 00:15:16,600 --> 00:15:18,000 Speaker 3: be a little bit uncomfortable. 329 00:15:19,000 --> 00:15:21,840 Speaker 2: All Right, before we head into the break V, we've 330 00:15:21,880 --> 00:15:26,120 Speaker 2: obviously just been chatting about credit scores. Does debt consolidation 331 00:15:26,400 --> 00:15:27,920 Speaker 2: impact your credit score? 332 00:15:28,480 --> 00:15:31,280 Speaker 3: Yes, potentially, because you're taking on a new debt. Again, 333 00:15:31,400 --> 00:15:34,560 Speaker 3: it's all about how debt consolidation is going to be 334 00:15:34,600 --> 00:15:36,920 Speaker 3: dealt with. Are you actually able to meet that fee? 335 00:15:37,040 --> 00:15:39,200 Speaker 3: Like what did it look like before? And that's something 336 00:15:39,200 --> 00:15:41,440 Speaker 3: that you can talk through with a broker and work 337 00:15:41,480 --> 00:15:44,840 Speaker 3: out what that means. But essentially, I would assume the 338 00:15:44,920 --> 00:15:47,880 Speaker 3: reason you're consolidating a debt is to be more responsible 339 00:15:48,080 --> 00:15:51,360 Speaker 3: and pay potentially more awful lower your rate of interest 340 00:15:51,440 --> 00:15:54,040 Speaker 3: that you're paying on that, which from my perspective is 341 00:15:54,040 --> 00:15:56,440 Speaker 3: a step in the right direction. Yes, so long term 342 00:15:56,480 --> 00:15:59,160 Speaker 3: it will have good impacts on Yeah, because we're. 343 00:15:59,000 --> 00:16:02,320 Speaker 2: Trying to get out of debt right, moneywin the perfect 344 00:16:02,360 --> 00:16:04,600 Speaker 2: place to head to the break I think VD, But 345 00:16:04,800 --> 00:16:06,880 Speaker 2: after the break, we will be chatting through the pros 346 00:16:06,960 --> 00:16:09,960 Speaker 2: and cons of debt consolidation, and we'll be chatting through 347 00:16:10,000 --> 00:16:12,600 Speaker 2: some alternatives if it's maybe not the right option for you. 348 00:16:12,880 --> 00:16:16,960 Speaker 3: Spoiler, you can consolidate your debt con you still have 349 00:16:17,040 --> 00:16:19,119 Speaker 3: the debt, so you're after the break. 350 00:16:18,920 --> 00:16:19,840 Speaker 1: Well wrapped. 351 00:16:24,880 --> 00:16:28,160 Speaker 2: All right now into the rest of the show. What 352 00:16:28,200 --> 00:16:31,479 Speaker 2: would you say are the main benefits of debt consolidation. 353 00:16:31,880 --> 00:16:34,200 Speaker 3: I would say that there are a few, and the 354 00:16:34,320 --> 00:16:37,680 Speaker 3: number one benefit I believe would be the feeling of 355 00:16:37,720 --> 00:16:41,720 Speaker 3: being more in control and that piece where you feel 356 00:16:41,760 --> 00:16:44,880 Speaker 3: a lot more liberated and less constricted, and with a 357 00:16:44,880 --> 00:16:47,560 Speaker 3: plan for your finances moving forward and a clear idea 358 00:16:47,600 --> 00:16:49,200 Speaker 3: of when you're going to be out of debt is 359 00:16:49,240 --> 00:16:52,520 Speaker 3: really empowering. Often with credit cards, even if you can 360 00:16:52,680 --> 00:16:56,720 Speaker 3: quote afford the minimum repayment, that's really stretched out, it 361 00:16:56,800 --> 00:16:59,120 Speaker 3: is a really long period of time that you'll be 362 00:16:59,160 --> 00:17:03,920 Speaker 3: paying that back, and debt consolidation is essential if you're 363 00:17:03,920 --> 00:17:05,960 Speaker 3: in a situation where you've got a number of different 364 00:17:05,960 --> 00:17:08,320 Speaker 3: credit cards and you're paying the minimums, because at the 365 00:17:08,440 --> 00:17:10,520 Speaker 3: end of the day, it's going to be thirty years 366 00:17:10,560 --> 00:17:13,280 Speaker 3: before you actually pay those off. Whereas with a debt 367 00:17:13,320 --> 00:17:15,520 Speaker 3: consolidation of personal debt, you could be out of it 368 00:17:15,560 --> 00:17:18,800 Speaker 3: in ten years in comparison, So you're not just doing 369 00:17:18,840 --> 00:17:21,360 Speaker 3: the best thing right now to feel less stressed. You're 370 00:17:21,400 --> 00:17:24,240 Speaker 3: doing the best thing for future you as well, because 371 00:17:24,320 --> 00:17:26,880 Speaker 3: the second that debt is gone, the second you can 372 00:17:26,880 --> 00:17:30,200 Speaker 3: start creating financial freedom. And I say this all the time, 373 00:17:30,359 --> 00:17:32,359 Speaker 3: and I want to keep saying it because I still 374 00:17:32,400 --> 00:17:35,639 Speaker 3: get that question, should we be saving while we're in debt, 375 00:17:36,080 --> 00:17:38,480 Speaker 3: which you know obviously you were going to ask me 376 00:17:38,560 --> 00:17:40,520 Speaker 3: right then and there, won't you charge up? Yes, the 377 00:17:40,600 --> 00:17:43,439 Speaker 3: answer is yes and no. Oh, yes, you should be 378 00:17:43,480 --> 00:17:46,639 Speaker 3: saving for an emergency account. The reason we want an 379 00:17:46,680 --> 00:17:49,880 Speaker 3: emergency account, Georgia is because we really want to put 380 00:17:49,920 --> 00:17:53,080 Speaker 3: ourselves in the position of power, so if another debt 381 00:17:53,160 --> 00:17:55,840 Speaker 3: comes up, or another cost comes up, we don't have 382 00:17:55,880 --> 00:17:58,040 Speaker 3: to put it on debt again. Yeah, like if re 383 00:17:58,119 --> 00:17:59,919 Speaker 3: JO came out, you'd be like, oh my gosh, like 384 00:18:00,320 --> 00:18:02,520 Speaker 3: I've been smashing down this debt. I have no money 385 00:18:02,560 --> 00:18:06,440 Speaker 3: set aside for something like that. So being in control of. 386 00:18:06,359 --> 00:18:10,359 Speaker 2: Your budget and your emergency fund is essential. But during 387 00:18:10,400 --> 00:18:11,960 Speaker 2: this period of time where you are. 388 00:18:11,840 --> 00:18:15,400 Speaker 3: In personal debt, yes, having an emergency account is important, 389 00:18:15,520 --> 00:18:17,719 Speaker 3: but we're not saving for our home deposit. We're not 390 00:18:17,800 --> 00:18:21,359 Speaker 3: saving for our future life. We aren't saving for things 391 00:18:21,960 --> 00:18:23,960 Speaker 3: like that that are above and beyond, like we're not 392 00:18:24,000 --> 00:18:26,120 Speaker 3: planning for our next holiday. I'm not saying you can't 393 00:18:26,160 --> 00:18:29,320 Speaker 3: do those things in collaboration. Like if you've consolidated your 394 00:18:29,320 --> 00:18:31,520 Speaker 3: debt and it's all well and good and you know 395 00:18:31,560 --> 00:18:33,920 Speaker 3: what that payment is, and you've integrated into your life 396 00:18:33,960 --> 00:18:36,040 Speaker 3: because you're good at budget and cashlow, because you clearly 397 00:18:36,040 --> 00:18:39,680 Speaker 3: did my masterclass, that's a different story. But if you're 398 00:18:39,680 --> 00:18:41,800 Speaker 3: in mountains of credit card debt and burying your head 399 00:18:41,840 --> 00:18:44,600 Speaker 3: in the sand, stop trying to save and pay the minimums. 400 00:18:44,880 --> 00:18:47,320 Speaker 3: We need to get rid of that debt because paying 401 00:18:47,320 --> 00:18:50,120 Speaker 3: off debt in itself is an investment. It's an investment 402 00:18:50,160 --> 00:18:53,160 Speaker 3: in your ability to save. It's an investment because if 403 00:18:53,200 --> 00:18:57,560 Speaker 3: you are paying interest at eighteen percent, that money is 404 00:18:57,640 --> 00:19:00,240 Speaker 3: essentially making you eighteen percent when you paid off, because 405 00:19:00,240 --> 00:19:03,159 Speaker 3: you don't incur an eighteen percent bill later. So I 406 00:19:03,200 --> 00:19:06,639 Speaker 3: could rant on about this four literally hours, but I 407 00:19:06,680 --> 00:19:08,639 Speaker 3: will save you that and ask you do you have 408 00:19:08,680 --> 00:19:09,760 Speaker 3: any other questions to save? 409 00:19:09,800 --> 00:19:12,240 Speaker 2: Way away from it. I really like what you've said 410 00:19:12,280 --> 00:19:15,679 Speaker 2: there because it is. It's kind of switching your mindset 411 00:19:15,760 --> 00:19:18,560 Speaker 2: to understand that that paying off your debt needs to 412 00:19:18,560 --> 00:19:21,120 Speaker 2: be the priority. Because even though you might have ten 413 00:19:21,160 --> 00:19:23,680 Speaker 2: grand in your savings account and think that that's awesome, 414 00:19:24,359 --> 00:19:24,760 Speaker 2: it's not. 415 00:19:24,960 --> 00:19:27,800 Speaker 3: You're hurting future you. If you've got ten grand in 416 00:19:27,840 --> 00:19:30,800 Speaker 3: a savings account and a six thousand dollar credit card, 417 00:19:31,160 --> 00:19:33,679 Speaker 3: you only have four thousand dollars saved. Like, if you 418 00:19:33,720 --> 00:19:36,320 Speaker 3: are saving while you are in debt, you don't have savings. 419 00:19:36,400 --> 00:19:39,200 Speaker 3: And I'm quite aggressive about that. I feel like when 420 00:19:39,200 --> 00:19:41,560 Speaker 3: we first launched this podcast, I was a lot softer. 421 00:19:41,680 --> 00:19:44,600 Speaker 3: I was a lot more comfortable with just being like, okay, cool, 422 00:19:44,640 --> 00:19:47,760 Speaker 3: like that's what I would do. But honestly, it's putting 423 00:19:47,840 --> 00:19:50,840 Speaker 3: you in a better situation. If I'm really blunt with things. 424 00:19:51,160 --> 00:19:53,000 Speaker 3: I'm not here to be your best friend. I'm here 425 00:19:53,040 --> 00:19:56,040 Speaker 3: to be your big financial sister that helps you get 426 00:19:56,080 --> 00:19:59,280 Speaker 3: through this. And sometimes you don't like what you have 427 00:19:59,320 --> 00:20:02,040 Speaker 3: to hear. Sometimes it's not good, but it's what is 428 00:20:02,119 --> 00:20:04,720 Speaker 3: best for you, and I genuinely want what is best 429 00:20:04,760 --> 00:20:06,560 Speaker 3: for you. I don't want you to be in debt. 430 00:20:06,560 --> 00:20:09,639 Speaker 3: I don't want you to be financially struggling, and this 431 00:20:09,760 --> 00:20:12,040 Speaker 3: advice is going to get you out of that position 432 00:20:12,359 --> 00:20:13,440 Speaker 3: so that you can flourish. 433 00:20:13,600 --> 00:20:17,240 Speaker 2: And like, how cool is that? Speaking of things that 434 00:20:17,320 --> 00:20:19,399 Speaker 2: we might not want to hear, let's move on and 435 00:20:19,440 --> 00:20:21,679 Speaker 2: talk about the traps of debt consolidation. 436 00:20:21,880 --> 00:20:29,160 Speaker 3: Yeah, like a smart goallenge, sometimes sometimes all at the time, 437 00:20:29,280 --> 00:20:31,240 Speaker 3: but there are actually a lot of things that you 438 00:20:31,280 --> 00:20:33,440 Speaker 3: do need to be mindful of. And this is probably 439 00:20:33,440 --> 00:20:36,119 Speaker 3: the most important. And this is probably I mean, I 440 00:20:36,119 --> 00:20:38,800 Speaker 3: would say that my rant on paying debts off before 441 00:20:38,840 --> 00:20:40,959 Speaker 3: saving is important, but I would say that this is 442 00:20:41,000 --> 00:20:43,480 Speaker 3: also one of the most important parts of the show. 443 00:20:43,560 --> 00:20:46,720 Speaker 3: So get ready to take some notes. It can take 444 00:20:46,800 --> 00:20:49,080 Speaker 3: us longer to pay off a larger loan, which could 445 00:20:49,160 --> 00:20:52,240 Speaker 3: potentially cost us more so to negate this, we actually 446 00:20:52,240 --> 00:20:55,000 Speaker 3: need to weigh up before we consolidate debts if it 447 00:20:55,080 --> 00:20:57,360 Speaker 3: is an option that will save us money or lead 448 00:20:57,440 --> 00:21:00,600 Speaker 3: us to spending more. So let's do a quick example. 449 00:21:00,640 --> 00:21:02,959 Speaker 3: G If you've got a car loan and a personal 450 00:21:03,040 --> 00:21:04,880 Speaker 3: loan and a credit card and you're like, these three 451 00:21:04,920 --> 00:21:07,639 Speaker 3: things are really overwhelming, but you've only got a thousand 452 00:21:07,680 --> 00:21:10,600 Speaker 3: dollars on your credit card. Maybe just smashing that out 453 00:21:10,600 --> 00:21:13,240 Speaker 3: and getting rid of one debt instead of consolidating them 454 00:21:13,240 --> 00:21:15,520 Speaker 3: all is going to be a better solution for you 455 00:21:15,880 --> 00:21:18,520 Speaker 3: because often, and I'm going off on a tangent here, 456 00:21:18,920 --> 00:21:22,320 Speaker 3: but often when we have a car loan, that's usually 457 00:21:22,320 --> 00:21:25,760 Speaker 3: a secured loan because the loans secured against that asset, 458 00:21:26,160 --> 00:21:29,360 Speaker 3: Whereas when you go to consolidate debt, more often than 459 00:21:29,400 --> 00:21:32,159 Speaker 3: not than not able to secure that loan against something. 460 00:21:32,440 --> 00:21:36,000 Speaker 3: That could sound quite confusing in the moment, Georgia, but essentially, 461 00:21:36,040 --> 00:21:38,639 Speaker 3: when you have a secured debt, the interest rate is lower, 462 00:21:38,840 --> 00:21:41,760 Speaker 3: but when you have an unsecured debt, the interest rate 463 00:21:41,840 --> 00:21:44,960 Speaker 3: is higher. So financially, you might be better off just 464 00:21:45,040 --> 00:21:47,720 Speaker 3: keeping that car loan there because it's a lower interest 465 00:21:47,800 --> 00:21:51,320 Speaker 3: rate because it's secured, paying off that credit card, getting 466 00:21:51,400 --> 00:21:54,479 Speaker 3: rid of it, avalanching it, smashing it out and cutting 467 00:21:54,480 --> 00:21:57,760 Speaker 3: it up, and then focusing on just two loans, even 468 00:21:57,760 --> 00:22:00,560 Speaker 3: though in the grand scheme of things, the of one 469 00:22:00,560 --> 00:22:03,640 Speaker 3: loan is more comforting, financially, you might be better off 470 00:22:03,800 --> 00:22:06,439 Speaker 3: with just keeping things the way they are, So you 471 00:22:06,480 --> 00:22:08,480 Speaker 3: do need to make sure that this works for you. 472 00:22:08,560 --> 00:22:11,240 Speaker 3: But again, it's an option that could save us money 473 00:22:11,280 --> 00:22:14,680 Speaker 3: as well, So it's kind of true sides of the boarder. 474 00:22:15,240 --> 00:22:17,760 Speaker 3: The second is it can leave us with the temptation 475 00:22:17,920 --> 00:22:21,240 Speaker 3: to spend more and leave you in deeper debt. I 476 00:22:21,359 --> 00:22:23,600 Speaker 3: say this because if you've had a whole heap of 477 00:22:23,640 --> 00:22:26,199 Speaker 3: credit cards and that's always been really overwhelming, and you 478 00:22:26,240 --> 00:22:29,359 Speaker 3: consolidate them all into one loan, you no longer feel 479 00:22:29,400 --> 00:22:31,199 Speaker 3: like you have a whole heap of credit cards. And 480 00:22:31,240 --> 00:22:33,800 Speaker 3: if we don't address the reason why you got into 481 00:22:33,840 --> 00:22:38,399 Speaker 3: so much credit card debt initially, you're very likely to go, oh, well, actually, 482 00:22:38,400 --> 00:22:39,840 Speaker 3: I do really want to go out that holiday. I 483 00:22:39,840 --> 00:22:42,400 Speaker 3: don't have any credit card debt right now because somehow 484 00:22:42,440 --> 00:22:45,600 Speaker 3: that consolidated debt didn't spring to mind. And you go 485 00:22:45,640 --> 00:22:48,240 Speaker 3: ahead and apply for another credit card and get that 486 00:22:48,320 --> 00:22:51,000 Speaker 3: because obviously you're good at paying back your consolidated debt, 487 00:22:51,160 --> 00:22:54,240 Speaker 3: and you end up creating the cycle again. So if 488 00:22:54,280 --> 00:22:56,320 Speaker 3: you do get more credit, you need to make sure 489 00:22:56,359 --> 00:22:58,000 Speaker 3: to stay on top of things, and you need to 490 00:22:58,160 --> 00:23:01,080 Speaker 3: again going back and telling you to do your budget 491 00:23:01,119 --> 00:23:03,000 Speaker 3: and your cash flow and being on top of that, 492 00:23:03,080 --> 00:23:06,159 Speaker 3: because that is the best thing in this situation. And 493 00:23:06,200 --> 00:23:10,040 Speaker 3: then another trap is not doing research beforehand. If you 494 00:23:10,040 --> 00:23:11,960 Speaker 3: don't do the research and check the fees and the 495 00:23:12,040 --> 00:23:14,240 Speaker 3: charges and the interest rates of your new loan and 496 00:23:14,280 --> 00:23:16,400 Speaker 3: compare them to what you'd be paying if you paid 497 00:23:16,440 --> 00:23:18,399 Speaker 3: the debts separately. You could end up in a pickle. 498 00:23:18,520 --> 00:23:23,959 Speaker 3: Again just doing your research, but also understanding whether making 499 00:23:24,000 --> 00:23:29,160 Speaker 3: additional payments is allowed. So in some loans they might say, hey, ge, yep, 500 00:23:29,160 --> 00:23:31,480 Speaker 3: we'll give you a ten thousand dollar loan for five years, 501 00:23:31,520 --> 00:23:35,160 Speaker 3: and you go, okay, that seems reasonable, but you can't 502 00:23:35,200 --> 00:23:36,760 Speaker 3: pay it off early, and if you do, that's a 503 00:23:36,760 --> 00:23:40,240 Speaker 3: five hundred dollar fee. You go, oh, that doesn't feel 504 00:23:40,240 --> 00:23:42,199 Speaker 3: fair because I was just going to put all my 505 00:23:42,240 --> 00:23:44,960 Speaker 3: debts into that and pay that minimum, but also try 506 00:23:44,960 --> 00:23:47,400 Speaker 3: and throw all my additional cash flow to that, because 507 00:23:47,480 --> 00:23:49,840 Speaker 3: Victoria said, if you've got debt, you haven't got savings, 508 00:23:50,160 --> 00:23:52,000 Speaker 3: and then you find that you're not actually able to 509 00:23:52,040 --> 00:23:55,159 Speaker 3: facilitate that because they've trapped you in that position. So 510 00:23:55,320 --> 00:23:59,160 Speaker 3: always make sure that when you're establishing a loan, you go, hey, 511 00:23:59,280 --> 00:24:01,520 Speaker 3: what if I make it additional payments? What kinds of 512 00:24:01,600 --> 00:24:04,200 Speaker 3: fees and charges will I be charged to pay out 513 00:24:04,240 --> 00:24:05,600 Speaker 3: the loan in its entirety? 514 00:24:05,720 --> 00:24:06,120 Speaker 2: Interesting? 515 00:24:06,840 --> 00:24:08,640 Speaker 3: What if you got it down g to like two 516 00:24:08,680 --> 00:24:10,399 Speaker 3: grand and then you got your tax back and that 517 00:24:10,520 --> 00:24:13,040 Speaker 3: was two grand and you could extinguish that loan completely 518 00:24:13,600 --> 00:24:16,080 Speaker 3: and you're really excited about it, but then you find 519 00:24:16,080 --> 00:24:17,960 Speaker 3: out that there's actually a whole heap of fees and 520 00:24:18,040 --> 00:24:19,800 Speaker 3: charges by exiting the loan early. 521 00:24:19,840 --> 00:24:24,200 Speaker 2: Cheeky ye, not fair is fair? No? On that kind 522 00:24:24,240 --> 00:24:27,080 Speaker 2: of line of thought. Us scams a thing in this. 523 00:24:27,080 --> 00:24:30,280 Speaker 3: Space, sadly, yes, So if you go down this path, 524 00:24:30,480 --> 00:24:32,960 Speaker 3: make sure it is legit. You can do that by 525 00:24:33,080 --> 00:24:35,720 Speaker 3: googling them. You can do that by checking with your broker. 526 00:24:36,160 --> 00:24:39,720 Speaker 3: Going through a broker will obviously avoid scams, but there 527 00:24:39,720 --> 00:24:41,720 Speaker 3: are some scammers out there who will make you pay 528 00:24:41,760 --> 00:24:43,359 Speaker 3: fees up front to set up the loan and then 529 00:24:43,359 --> 00:24:45,520 Speaker 3: they actually never follow through and give you the money 530 00:24:45,560 --> 00:24:47,159 Speaker 3: that you're required to pay out the other loans, and 531 00:24:47,200 --> 00:24:49,439 Speaker 3: it's a bit of a circus. We did speak at 532 00:24:49,480 --> 00:24:52,040 Speaker 3: length about something really similar in our Scams episode, so 533 00:24:52,080 --> 00:24:54,159 Speaker 3: if you miss that one, head on back. But it 534 00:24:54,240 --> 00:24:56,560 Speaker 3: can be really hard to get your money back from scams, 535 00:24:56,560 --> 00:24:59,280 Speaker 3: so please please please do your due diligence and to 536 00:24:59,359 --> 00:25:02,680 Speaker 3: avoid any type of scam, obviously head to our favorite website, 537 00:25:02,680 --> 00:25:04,800 Speaker 3: which is the ACIC website, and make sure that the 538 00:25:04,840 --> 00:25:07,960 Speaker 3: credit provider or brokers are actually licensed and legit. 539 00:25:07,760 --> 00:25:10,959 Speaker 2: Which is hot tip there. And then also if you 540 00:25:10,960 --> 00:25:12,879 Speaker 2: have a home like you own a home or have 541 00:25:12,920 --> 00:25:15,520 Speaker 2: a home loan, it could impact that if things go 542 00:25:15,640 --> 00:25:18,239 Speaker 2: pair shaped. So remember that if you have put up 543 00:25:18,240 --> 00:25:20,919 Speaker 2: an asset as a security on a loan, that that 544 00:25:20,960 --> 00:25:22,880 Speaker 2: could potentially be taken away if you don't pay off 545 00:25:22,880 --> 00:25:25,440 Speaker 2: that loan. So make sure that you are putting yourself 546 00:25:25,440 --> 00:25:28,280 Speaker 2: in the best possible position. And you know, my summary 547 00:25:28,280 --> 00:25:31,080 Speaker 2: would be get a little bit of advice, reach out, 548 00:25:31,280 --> 00:25:33,480 Speaker 2: have a chat, talk to some people, and make sure 549 00:25:33,520 --> 00:25:36,520 Speaker 2: that you're not just making a late night decision because 550 00:25:36,560 --> 00:25:39,040 Speaker 2: you're really stressed about it and you just applied online 551 00:25:39,240 --> 00:25:40,119 Speaker 2: at two am. 552 00:25:40,359 --> 00:25:42,600 Speaker 3: Yeh, think about it. Take a few days to work 553 00:25:42,640 --> 00:25:44,600 Speaker 3: out what the best possible decision for you is. 554 00:25:45,200 --> 00:25:48,600 Speaker 2: All right, So to finish off today V If debt 555 00:25:48,640 --> 00:25:51,760 Speaker 2: consolidation isn't the right option for us, what are our 556 00:25:51,800 --> 00:25:54,080 Speaker 2: other alternatives? So many options? 557 00:25:54,160 --> 00:25:56,480 Speaker 3: Okay not heaps, but like there are a few and 558 00:25:56,520 --> 00:25:59,320 Speaker 3: they're going to work for your friends. So first things first, 559 00:25:59,359 --> 00:26:01,560 Speaker 3: we want to smash our debt. And I always say this, 560 00:26:01,640 --> 00:26:04,480 Speaker 3: and do you know my partner Steve makes so much 561 00:26:04,520 --> 00:26:06,919 Speaker 3: fun of me because I actually what a legend. 562 00:26:07,440 --> 00:26:08,920 Speaker 2: I actually talk like this at home. 563 00:26:09,000 --> 00:26:10,919 Speaker 3: I'm like, yeah, cool, So we're going to have our 564 00:26:11,000 --> 00:26:12,400 Speaker 3: mortgage and we're going to have this and we're gonna 565 00:26:12,400 --> 00:26:14,320 Speaker 3: smash that out. And he's like, oh, you sound like 566 00:26:14,359 --> 00:26:17,639 Speaker 3: a financial babebae. I don't know how to break this 567 00:26:17,720 --> 00:26:20,320 Speaker 3: to you, but but you want to smash out your 568 00:26:20,359 --> 00:26:22,840 Speaker 3: debts and create a plan to reduce your debts as 569 00:26:22,880 --> 00:26:25,840 Speaker 3: fast as possible. Two of my favorites are the snowball 570 00:26:25,880 --> 00:26:28,960 Speaker 3: method and then the avalanche method, whatever works for you. 571 00:26:29,400 --> 00:26:32,119 Speaker 3: The next is a creator budget and cashflow plan so 572 00:26:32,200 --> 00:26:34,840 Speaker 3: that you can get out of debt sooner. I'm biased, 573 00:26:34,920 --> 00:26:37,560 Speaker 3: I reckon that my budget and cashflow plan is arguably 574 00:26:37,600 --> 00:26:40,040 Speaker 3: the greatest budget and cash flow plan to ever be 575 00:26:40,119 --> 00:26:43,400 Speaker 3: created by Victoria Divine. See how I looped that back there. 576 00:26:44,560 --> 00:26:47,920 Speaker 3: But definitely sit down, ride out your budget, Understand what's 577 00:26:47,920 --> 00:26:50,320 Speaker 3: coming into your bank account and what has to go out, 578 00:26:50,359 --> 00:26:53,320 Speaker 3: and what surplus cash flow you have to contribute to 579 00:26:53,520 --> 00:26:55,840 Speaker 3: that debt to get out of it sooner, and. 580 00:26:55,880 --> 00:26:56,920 Speaker 2: Take it a step further. 581 00:26:57,200 --> 00:26:59,480 Speaker 3: Work out how long it's going to take you to 582 00:26:59,480 --> 00:27:02,000 Speaker 3: get out of debt if you contribute another one hundred 583 00:27:02,000 --> 00:27:04,600 Speaker 3: dollars or another two hundred dollars each week or month 584 00:27:04,640 --> 00:27:06,960 Speaker 3: or a year or however long that's going to take you, 585 00:27:07,200 --> 00:27:10,040 Speaker 3: because that can be really motivating, and it can also 586 00:27:10,600 --> 00:27:13,919 Speaker 3: drastically change the time period. Like I know that if 587 00:27:13,920 --> 00:27:17,360 Speaker 3: you're paying minimum payments on your credit card, it'd take 588 00:27:17,560 --> 00:27:19,600 Speaker 3: fifteen years to paid off. But if you paid an 589 00:27:19,600 --> 00:27:22,440 Speaker 3: extra one hundred dollars a month instead of just the minimum, 590 00:27:22,480 --> 00:27:25,080 Speaker 3: it might be back in like four years. So it's 591 00:27:25,119 --> 00:27:27,840 Speaker 3: one of those things that could shave so much time 592 00:27:27,880 --> 00:27:30,439 Speaker 3: off it and make such a difference. And again, to 593 00:27:30,480 --> 00:27:34,480 Speaker 3: quote myself or more accurately, to quote Paul Kelly, from 594 00:27:34,520 --> 00:27:38,040 Speaker 3: little things, big things really do grow. And so even 595 00:27:38,040 --> 00:27:40,159 Speaker 3: if you can only afford a few more dollars on 596 00:27:40,200 --> 00:27:43,199 Speaker 3: your credit card, I absolutely would recommend looking into that, 597 00:27:43,320 --> 00:27:46,480 Speaker 3: because the minimum payment is the minimum. We don't want 598 00:27:46,520 --> 00:27:48,840 Speaker 3: to just be paying the minimum if we can afford it. 599 00:27:49,200 --> 00:27:51,040 Speaker 3: The next year is Georgia and it's one of the 600 00:27:51,040 --> 00:27:53,800 Speaker 3: final ones. Don't beat yourself up. Being in debt is 601 00:27:53,840 --> 00:27:55,480 Speaker 3: not a bad thing. It does not make you a 602 00:27:55,520 --> 00:27:58,480 Speaker 3: bad person. It doesn't even mean that you made bad decisions. 603 00:27:58,760 --> 00:28:01,119 Speaker 3: It just means that you spent more than you earned. 604 00:28:01,320 --> 00:28:03,360 Speaker 3: That's not a bad thing. Like if a friend came 605 00:28:03,359 --> 00:28:05,200 Speaker 3: to you and said, hey, Jay, I've got some personal debt. 606 00:28:05,400 --> 00:28:07,600 Speaker 3: You're not gonna judge them. You're just gonna go, hey, 607 00:28:07,680 --> 00:28:09,240 Speaker 3: how do I help you get out of this? Or 608 00:28:09,440 --> 00:28:10,960 Speaker 3: is there something I can do to help or do 609 00:28:10,960 --> 00:28:11,320 Speaker 3: you want to. 610 00:28:11,320 --> 00:28:12,080 Speaker 2: Talk about it? 611 00:28:12,119 --> 00:28:15,159 Speaker 3: Like, being in debt does not inherently make you a 612 00:28:15,200 --> 00:28:15,920 Speaker 3: bad person. 613 00:28:16,280 --> 00:28:17,480 Speaker 2: And I have so many. 614 00:28:17,240 --> 00:28:21,680 Speaker 3: Conversations with friends and family and people in my community. 615 00:28:21,560 --> 00:28:24,000 Speaker 2: That say, oh my gosh, I'm so embarrassed. You shouldn't 616 00:28:24,000 --> 00:28:27,040 Speaker 2: be embarrassed, friend, Like you really shouldn't, Like you're not 617 00:28:27,119 --> 00:28:29,040 Speaker 2: a that I just I feel like I could go 618 00:28:29,080 --> 00:28:32,000 Speaker 2: on about this all day. Debt is not a bad thing. 619 00:28:32,359 --> 00:28:34,639 Speaker 2: It is just a reflection of the fact that you 620 00:28:34,760 --> 00:28:37,240 Speaker 2: spent more money than you earned. And that is as 621 00:28:37,240 --> 00:28:39,680 Speaker 2: simple as it gets. And the longer we spend beating 622 00:28:39,680 --> 00:28:42,320 Speaker 2: ourselves up about it, the longer we spend not paying 623 00:28:42,360 --> 00:28:45,160 Speaker 2: it off. And again, if you need to have another chat. 624 00:28:44,960 --> 00:28:46,600 Speaker 3: With somebody and you just don't know where to go, 625 00:28:46,760 --> 00:28:48,640 Speaker 3: we couldn't recommend a chat with our mates at the 626 00:28:48,720 --> 00:28:52,600 Speaker 3: National Debt Helpline anymore. They are literally beaming angels that 627 00:28:52,680 --> 00:28:54,840 Speaker 3: we your doore and you should give them a buzz 628 00:28:54,880 --> 00:28:56,280 Speaker 3: if you're in a bit of a pickle. 629 00:28:56,120 --> 00:28:58,440 Speaker 2: One hundred percent. And if you're not already, come and 630 00:28:58,520 --> 00:29:01,120 Speaker 2: join us in the Facebook group because there's conversations about 631 00:29:01,120 --> 00:29:04,600 Speaker 2: debt happening in there every single day, So come join us. Yeah, 632 00:29:04,640 --> 00:29:07,320 Speaker 2: there's some good eggs in there giving good advice. I heard. 633 00:29:07,320 --> 00:29:09,280 Speaker 3: Gee it's not us, by the way, it's actually the 634 00:29:09,280 --> 00:29:12,160 Speaker 3: community sharing their stories. So I love it over there. 635 00:29:12,200 --> 00:29:14,240 Speaker 3: But as always, I think we've run out of time 636 00:29:14,280 --> 00:29:16,800 Speaker 3: on this one, Georgia. But just before we head off, 637 00:29:16,840 --> 00:29:20,040 Speaker 3: we'd like to acknowledge and pay respect to Australia's Aboriginal 638 00:29:20,080 --> 00:29:23,680 Speaker 3: and torrest Raight islander people's. They're the traditional custodians of 639 00:29:23,760 --> 00:29:25,400 Speaker 3: the lands, the waterways and. 640 00:29:25,360 --> 00:29:28,600 Speaker 2: The skies all across Australia. We thank you for sharing 641 00:29:28,640 --> 00:29:29,840 Speaker 2: at the caring for the land on. 642 00:29:29,800 --> 00:29:32,200 Speaker 3: Which we are able to learn. We pay our respects 643 00:29:32,200 --> 00:29:34,520 Speaker 3: to elders past and present, and we share our friendship 644 00:29:34,520 --> 00:29:35,360 Speaker 3: and our kindness. 645 00:29:35,600 --> 00:29:38,040 Speaker 2: And remember, guys that the advice shared on She's on 646 00:29:38,080 --> 00:29:40,440 Speaker 2: the Money is general in nature and does not consider 647 00:29:40,560 --> 00:29:44,240 Speaker 2: your individual circumstances. She's on the money exists purely for 648 00:29:44,400 --> 00:29:47,080 Speaker 2: educational purposes and should not be relied upon to make 649 00:29:47,120 --> 00:29:50,760 Speaker 2: an investment or a financial decision. And we promise Victoria 650 00:29:50,800 --> 00:29:54,480 Speaker 2: Divine is an authorized representative of Australia Pacific Funds Management 651 00:29:54,680 --> 00:29:58,000 Speaker 2: Proprietary Limited ABN three four one three two four six 652 00:29:58,040 --> 00:30:02,000 Speaker 2: three two five seven AFSL nine one one. And guys, 653 00:30:02,040 --> 00:30:05,400 Speaker 2: before we do leave you to your day, I'm going 654 00:30:05,440 --> 00:30:08,240 Speaker 2: to ask you very cheekily that if you do love 655 00:30:08,400 --> 00:30:11,120 Speaker 2: the show and you want to support your girls, and 656 00:30:11,200 --> 00:30:14,080 Speaker 2: please do leave a review. You just scroll down to 657 00:30:14,120 --> 00:30:16,400 Speaker 2: the bottom of the show and you can plug in 658 00:30:16,480 --> 00:30:18,920 Speaker 2: whatever you want. You could leave it a nasty one 659 00:30:19,000 --> 00:30:21,240 Speaker 2: if you want as well. Don't promote that don't don't 660 00:30:21,240 --> 00:30:25,080 Speaker 2: please don't and also like great five stars if you 661 00:30:25,600 --> 00:30:29,080 Speaker 2: like it anyway, that's enough desperation from me. Remember as 662 00:30:29,120 --> 00:30:32,360 Speaker 2: well that V's Budgeting and cash Flow course has an 663 00:30:32,360 --> 00:30:36,280 Speaker 2: exclusive little discount for our listeners. If you just type 664 00:30:36,320 --> 00:30:40,320 Speaker 2: in pod fifty that's Pod five zero, you'll get fifty 665 00:30:40,360 --> 00:30:43,080 Speaker 2: dollars off when you sign up to the Court Jasper 666 00:30:43,120 --> 00:30:45,880 Speaker 2: being a friend of the show precise simondo great money. 667 00:30:45,880 --> 00:30:48,720 Speaker 2: We welcome, guys, I think so see you next week. Guys, 668 00:30:48,760 --> 00:30:49,400 Speaker 2: in sync,