WEBVTT - Consolidating Debt & Refinancing 0:00:00.200 --> 0:00:19.440 She's on the Money. She's on the Money. 0:00:22.960 --> 0:00:25.959 Hello, and welcome to She's on the Money, the podcast 0:00:26.000 --> 0:00:30.160 for millennials who want financial freedom debt consolidation? What is it? 0:00:30.360 --> 0:00:31.960 How do we do it? And is it the right 0:00:32.040 --> 0:00:34.800 option for us? While it can seem like a really 0:00:34.840 --> 0:00:37.400 great option for some people, there are a few traps 0:00:37.440 --> 0:00:39.519 we need to be aware of to avoid ending up 0:00:39.520 --> 0:00:42.400 in a worse financial position than where we began, and 0:00:42.440 --> 0:00:46.040 today we're unpacking them all. My name is Georgia King, 0:00:46.080 --> 0:00:47.880 and joining me today to get to the very bottom 0:00:47.920 --> 0:00:52.240 of it all is award winning financial advisor Victoria Define 0:00:51.840 --> 0:00:57.040 the Let's start with the basics. What is debt consolidation, Georgia, 0:00:57.360 --> 0:01:00.640 Debt consolidation a fickle thing, and if you can considering it, 0:01:00.680 --> 0:01:02.480 you might be in a little bit of a pickle. 0:01:02.600 --> 0:01:05.679 Hey that rhymed, I'm a poet. Didn't know it. That 0:01:05.800 --> 0:01:06.199 was good. 0:01:06.360 --> 0:01:08.920 That wasn't good. That wasn't even scripted. In fact, if 0:01:08.920 --> 0:01:14.200 it was backspaced real quick. But debt consolidation is essentially 0:01:14.360 --> 0:01:16.440 just a way to roll a whole heap of types 0:01:16.440 --> 0:01:19.559 of debts into one debt, which can be a whole 0:01:19.560 --> 0:01:22.679 heap less overwhelming. The idea is to try and achieve 0:01:22.800 --> 0:01:25.800 a lower interest rate and lower monthly payments so that 0:01:25.840 --> 0:01:27.520 you can get on top of the debt instead of 0:01:27.520 --> 0:01:30.480 feeling like it completely gets away from you. Essentially, the 0:01:30.520 --> 0:01:32.960 idea is to try and achieve a lower interest rate 0:01:33.000 --> 0:01:35.399 as well as lower monthly repayments so that you can 0:01:35.440 --> 0:01:38.000 get on top of the debt, stop being overwhelmed, stop 0:01:38.040 --> 0:01:40.679 having a whole heap of debts coming out. It just 0:01:40.760 --> 0:01:43.520 makes your life a whole heap easier, especially if you 0:01:43.520 --> 0:01:45.440 have found yourself in a little bit of a pickle. 0:01:46.319 --> 0:01:50.040 And do we go to like a bank and say hello, sir, 0:01:50.280 --> 0:01:53.280 like I would like a big new debt and then 0:01:53.440 --> 0:01:54.600 can you put the other ones in? 0:01:54.640 --> 0:01:54.800 There? 0:01:55.120 --> 0:01:57.520 Is that how it works? You feeling that's actually how 0:01:57.520 --> 0:02:00.240 it works? But there are a couple of reasons you 0:02:00.280 --> 0:02:02.720 might consolidate your debt, So let's start there, not with 0:02:02.920 --> 0:02:04.960 just asking for it. But it's really. 0:02:04.800 --> 0:02:08.840 Important to understand exactly what debt consolidation is, how it works, 0:02:08.880 --> 0:02:11.160 and what's going on with it, and why you might 0:02:11.280 --> 0:02:14.480 want it, because a few people in our community historically 0:02:14.520 --> 0:02:16.280 have said, oh my gosh, like I have a few 0:02:16.320 --> 0:02:18.000 credit cards, so what I'm going to do is apply 0:02:18.080 --> 0:02:20.560 for an interest free credit card and then I'm going 0:02:20.639 --> 0:02:23.480 to roll my other credit cards into that, which is possible, 0:02:23.800 --> 0:02:26.400 but there's a really big trap there because the only 0:02:26.520 --> 0:02:28.679 reason I'd be like, yeah, gee, like that sounds like 0:02:28.720 --> 0:02:31.520 a good idea is if you genuinely knew you could 0:02:31.520 --> 0:02:34.400 pay that debt off within the interest free period of time. 0:02:34.720 --> 0:02:37.839 So say they say, hey, it's interest free for six months, 0:02:37.880 --> 0:02:40.000 and you go, great, no problems. But you've got a 0:02:40.080 --> 0:02:43.320 ten thousand dollars credit card that you need to pay out. 0:02:43.480 --> 0:02:45.680 Are you actually going to be able to pay that out? 0:02:46.080 --> 0:02:47.800 Or are you going to put yourself in a sticky 0:02:47.840 --> 0:02:50.840 situation where you consolidate your debt into this one interest 0:02:50.840 --> 0:02:52.919 free credit card and then it stings you with a 0:02:53.000 --> 0:02:56.920 higher interest rate after that six month introductory period. So 0:02:56.960 --> 0:02:59.519 we need to be really smart about the decisions we're 0:02:59.520 --> 0:03:01.720 making because in the short term, you ain't go, oh 0:03:01.720 --> 0:03:03.080 my gosh, this is going to make me feel so 0:03:03.160 --> 0:03:06.639 much better, but long term, it's a really bad financial decision. 0:03:07.000 --> 0:03:10.880 So keeping in mind your goals for debt consolidation, so essentially, 0:03:10.960 --> 0:03:13.639 debt consolidation is picking up a whole heap of debts 0:03:13.639 --> 0:03:17.120 that you have and transferring them into one individual debt 0:03:17.280 --> 0:03:21.000 with one single facility, so that you can potentially make 0:03:21.040 --> 0:03:24.920 it a whole heap more manageable. The sticker here, though, Georgia, 0:03:25.040 --> 0:03:28.520 is that it's not actually available to everybody. So sometimes 0:03:28.600 --> 0:03:31.560 if your debt is one of those things that is 0:03:32.040 --> 0:03:34.920 overwhelming and something that is really hard to deal with, 0:03:34.960 --> 0:03:37.920 and you've tried to go through debt consolidation before and 0:03:37.920 --> 0:03:40.320 they've said no, you're actually too risky for us to 0:03:40.400 --> 0:03:43.680 want to do that, the next best step I genuinely 0:03:43.760 --> 0:03:46.320 would consider is calling our friends at the National Debt 0:03:46.320 --> 0:03:49.720 Helpline because they know exactly what next steps to take, 0:03:49.960 --> 0:03:53.160 and unfortunately they're not always the same. They change dependent 0:03:53.200 --> 0:03:55.560 on situation, and they'll be able to help sort you 0:03:55.600 --> 0:03:58.760 out there. But essentially, if you're considering debt consolidation, it's 0:03:58.840 --> 0:04:01.360 usually because you have a few different debts. You might 0:04:01.360 --> 0:04:04.040 be overwhelmed, or you might just be on top of 0:04:04.040 --> 0:04:06.760 them and just want one easy repayment as opposed to 0:04:07.080 --> 0:04:09.480 having your car loan coming out having a credit card 0:04:09.480 --> 0:04:11.640 than your partner having a credit card, And like, maybe 0:04:11.680 --> 0:04:13.720 you have a small personal loan that you're paying back, 0:04:13.960 --> 0:04:17.279 maybe it's just easier so debt consolidation is definitely something 0:04:17.279 --> 0:04:19.599 to have a think about and work out if it 0:04:19.680 --> 0:04:23.080 works for you in your personal situation. Okay, so there's 0:04:23.120 --> 0:04:25.359 pitfalls to be mindful of, but we will get to 0:04:25.440 --> 0:04:28.080 them a little later on in the show. So how 0:04:28.360 --> 0:04:31.760 does it work though? Do we call up our financial advisor, 0:04:31.880 --> 0:04:33.280 do we take a trip to the bank. How are 0:04:33.320 --> 0:04:35.279 we actually consolidating these debts? 0:04:35.320 --> 0:04:37.159 So the first thing is to think what type of 0:04:37.200 --> 0:04:40.200 facility you would like to achieve, So you don't necessarily 0:04:40.240 --> 0:04:42.680 have to call your bank. You could call a bro 0:04:42.839 --> 0:04:45.359 car or someone who can do that for you. To 0:04:45.440 --> 0:04:47.800 be honest, the best step would be researching and I 0:04:47.880 --> 0:04:49.440 know I don't want to say it on the podcast, 0:04:49.640 --> 0:04:52.839 just google it, but literally google debt consolidation and see 0:04:52.839 --> 0:04:55.960 what types of options are available because they could be 0:04:55.960 --> 0:04:58.159 one available at your bank. So say you've got a 0:04:58.200 --> 0:05:01.279 personal loan and a car loan and your credit card 0:05:01.320 --> 0:05:03.520 with NAB, maybe you want to just go straight to 0:05:03.600 --> 0:05:06.200 NAB and say, hey, could we consolidate these together? What 0:05:06.240 --> 0:05:08.400 can you do? It's completely up to you. 0:05:08.360 --> 0:05:11.359 And your situation, but there are also people out there 0:05:11.680 --> 0:05:14.039 that are going to be able to help you consolidate 0:05:14.080 --> 0:05:16.599 debt and put you in a better financial position. So 0:05:16.680 --> 0:05:19.360 do we need to worry about our credit score within 0:05:19.440 --> 0:05:20.000 that process? 0:05:20.040 --> 0:05:22.279 But do we need to check that out before? Yes, sir, 0:05:22.880 --> 0:05:25.400 very important. So you need to make sure that you're 0:05:25.480 --> 0:05:28.840 eligible for a debt consolidation. As I said before, there 0:05:28.839 --> 0:05:32.360 are some people that actually just aren't eligible for debt consolidation. 0:05:32.560 --> 0:05:35.040 It might be because you currently don't have an income 0:05:35.080 --> 0:05:36.760 and when you got the loan you did and they're 0:05:36.800 --> 0:05:39.400 not willing to service that because they're deemed too risky. 0:05:39.760 --> 0:05:42.320 So the first thing I would say, obviously look into 0:05:42.320 --> 0:05:45.480 what debt consolidation is. Understand it, listen to this podcast, 0:05:45.600 --> 0:05:49.599 you genius, and then go get your credit history. So 0:05:49.800 --> 0:05:52.359 jump on and get a free credit report. As you 0:05:52.360 --> 0:05:55.600 guys know, there's Equifax, there's Experience, there's Ilion and then 0:05:55.680 --> 0:05:57.839 you know, you remember from last season we worked with 0:05:57.839 --> 0:06:01.080 our friends at Wiser. They provide free credit score checks, 0:06:01.120 --> 0:06:04.280 which is really important. And once you understand your. 0:06:04.200 --> 0:06:07.120 Current position, then it would be all about working out 0:06:07.160 --> 0:06:10.800 which lender would work best for your personal situation. So 0:06:10.920 --> 0:06:13.560 a broker might be best position to assist you with 0:06:13.640 --> 0:06:16.200 that because they can pad out the story that you're 0:06:16.200 --> 0:06:19.120 going to the bank with because in a lot of situations, 0:06:19.320 --> 0:06:21.320 the bank's going to want to know why you want to. 0:06:21.320 --> 0:06:22.480 Consolidate that debt. 0:06:22.720 --> 0:06:24.719 So when it comes to debt consolidation, they're going to 0:06:24.720 --> 0:06:27.480 want to know your motivation behind actually applying for that, 0:06:27.880 --> 0:06:29.320 not just saying, oh, can I have. 0:06:29.279 --> 0:06:30.760 A debt consolidation? Have three debts? 0:06:30.760 --> 0:06:32.680 They're going to go why, and you'll say, oh, well, 0:06:32.720 --> 0:06:34.640 actually it makes it more reasonable so that I can 0:06:34.680 --> 0:06:37.320 save more, or so that I can make it easier 0:06:37.400 --> 0:06:39.800 or more manageable. So they're going to want to know 0:06:39.880 --> 0:06:43.360 your motivations as well, because if your motivations weren't as 0:06:43.400 --> 0:06:45.800 pure as most peoples, they're going to say no. So 0:06:45.880 --> 0:06:49.440 I think it's really important to understand your eligibility, get 0:06:49.440 --> 0:06:51.800 your credit score, and make sure that you're somebody that 0:06:51.839 --> 0:06:54.680 a bank might lend to before considering that. And as 0:06:54.720 --> 0:06:56.920 I said, if all else fails, our friends at the 0:06:57.000 --> 0:07:00.839 National Debt Helpline will help you with this. Again, never sponsored, 0:07:01.000 --> 0:07:03.520 They're just good eggs doing good things, putting you guys 0:07:03.520 --> 0:07:06.480 in better financial positions, which ge we love. 0:07:06.560 --> 0:07:09.480 That's what we're all about. So would you say, is 0:07:09.520 --> 0:07:12.520 there a difference between going directly to a bank and 0:07:12.560 --> 0:07:15.360 going through a broker in terms of who has our 0:07:15.600 --> 0:07:18.400 who has our best interests at heart? Like, will the 0:07:18.480 --> 0:07:21.520 banks be more likely to kind of rip us off? 0:07:21.720 --> 0:07:23.920 So you're always going to be the one that has 0:07:23.960 --> 0:07:26.560 your best interests at heart. I don't think in this 0:07:26.680 --> 0:07:29.520 situation a bank is necessarily going to rip you off. 0:07:29.600 --> 0:07:31.840 But if you're going to take the time to consolidate 0:07:31.880 --> 0:07:34.440 a debt, i'd want to be talking to a broker 0:07:34.840 --> 0:07:37.320 because talking to a broker means you're going to have 0:07:37.400 --> 0:07:40.280 access to a whole heap more options than just the 0:07:40.360 --> 0:07:43.400 options that one bank has access to. I think you 0:07:43.520 --> 0:07:46.000 also need to look at your motivations, right So if 0:07:46.000 --> 0:07:48.840 you're just like, oh, yeah, I'll just refinance that because 0:07:49.080 --> 0:07:53.200 you're being financially irresponsible, I want you to go deeper. 0:07:53.360 --> 0:07:55.160 I want you to care about your budget. I want 0:07:55.200 --> 0:07:57.200 you to care about your cash flow. If you have 0:07:57.280 --> 0:08:00.160 a whole heap of different debts with various lenders and 0:08:00.200 --> 0:08:02.240 you can actually manage all of those, it's just you 0:08:02.360 --> 0:08:05.440 being a bit unorganized. I would argue that if you 0:08:05.520 --> 0:08:08.880 have a couple of really low interest credit cards, consolidating 0:08:08.920 --> 0:08:11.000 it just to make it an easier payment might not 0:08:11.040 --> 0:08:13.640 be best for you. You actually just need to use the 0:08:13.720 --> 0:08:17.160 snowball method or the avalanche method to actually smash down 0:08:17.200 --> 0:08:20.400 those debts and put yourself in a better financial position. 0:08:20.760 --> 0:08:23.240 The other thing I'd really want you to look at 0:08:23.680 --> 0:08:25.840 is why are you in this debt in the first place, 0:08:26.160 --> 0:08:29.440 and is consolidating it and taking that pressure off actually 0:08:29.440 --> 0:08:31.160 going to put you in a position where you get 0:08:31.160 --> 0:08:34.560 into debt again or are you going to consolidate it 0:08:34.559 --> 0:08:36.440 because you're like, Nope, final straw, I'm not going to 0:08:36.440 --> 0:08:37.560 get myself into any debt. 0:08:37.640 --> 0:08:38.320 This makes it. 0:08:38.240 --> 0:08:40.560 Easy so that I have a lower monthly repayment so 0:08:40.600 --> 0:08:43.280 that I can save and create financial freedom for myself. 0:08:43.320 --> 0:08:46.079 So I want to know exactly why you want that, Georgia, 0:08:46.360 --> 0:08:48.920 not necessarily is it a good idea or not? Like 0:08:49.160 --> 0:08:51.400 are you putting yourself in a better financial position by 0:08:51.440 --> 0:08:51.760 doing it? 0:08:51.920 --> 0:08:54.880 Yes or no? And also how are you going to 0:08:54.960 --> 0:08:59.560 plan to not do it again? Okay, you said that 0:08:59.559 --> 0:09:03.160 that it's refinancing. Is debt consolidation refinancing it they're the 0:09:03.200 --> 0:09:03.559 same thing. 0:09:03.720 --> 0:09:06.559 Essentially, you're refinancing a loan, so in the same way 0:09:06.600 --> 0:09:08.160 that you might have a home loan and a couple 0:09:08.160 --> 0:09:10.360 of years after you established that loan, you might go, oh, 0:09:10.440 --> 0:09:13.040 there's a better, more sexy option out there, I want that, 0:09:13.160 --> 0:09:15.319 and you go back to your broker. You are actually 0:09:15.360 --> 0:09:19.360 refinancing a debt. So what would happen is, let's say 0:09:19.440 --> 0:09:22.040 bank A has said, yup, gee, I'm going to consolidate 0:09:22.080 --> 0:09:25.200 your debt. I'm going to do that for twenty like, 0:09:25.240 --> 0:09:27.719 you'll get a twenty thousand dollar loan. We would then 0:09:27.880 --> 0:09:30.600 use that money to pay off your credit cards and 0:09:30.640 --> 0:09:32.600 pay off all of your other debts, so you then 0:09:32.679 --> 0:09:35.480 only have one debt remaining, so it kind of all 0:09:35.480 --> 0:09:38.560 gets rolled into one place. They're not extinguishing it for you. 0:09:38.559 --> 0:09:40.840 We're not talking our way out of any debts. We 0:09:40.880 --> 0:09:44.640 are actually just putting ourselves in a position where we 0:09:44.760 --> 0:09:48.720 have just one repayment instead of many. Talking about that 0:09:48.840 --> 0:09:51.920 for a hot second, though, if you're in a credit 0:09:51.960 --> 0:09:55.240 card pickle, or you are in a situation where you've 0:09:55.280 --> 0:09:59.080 got a personal loan that you are struggling to repay debt, 0:09:59.120 --> 0:10:03.400 consolidation is a really great way to negotiate. So I 0:10:03.440 --> 0:10:05.400 know that this is a little bit left field and 0:10:05.400 --> 0:10:08.120 a bit off center, but important to know still, if 0:10:08.200 --> 0:10:10.400 you're going to consolidate a debt or you are going 0:10:10.400 --> 0:10:12.400 to pay it out, or for some reason you have 0:10:12.440 --> 0:10:14.600 a whole heap of savings you just haven't paid that 0:10:14.760 --> 0:10:17.360 debt out. Then is a really good time to pick 0:10:17.440 --> 0:10:20.640 up the phone and say, hey, can't afford it, can't 0:10:20.679 --> 0:10:23.320 pay back that loan. The bank are going to go, 0:10:23.360 --> 0:10:26.520 oh my gosh, like we want to recover whatever's possible. 0:10:26.760 --> 0:10:29.400 So you say, can we come to a different settlement. 0:10:29.520 --> 0:10:31.800 So so you have a twenty thousand dollars personal loan 0:10:31.840 --> 0:10:34.520 and you go, guys, I'm really struggling to pay this back. 0:10:34.760 --> 0:10:37.360 Can we come to a settlement number? Like what would 0:10:37.400 --> 0:10:40.440 you take today if I just paid that loan out 0:10:40.480 --> 0:10:43.160 in full instead of me going back and forth and 0:10:43.240 --> 0:10:45.720 like maybe missing payments, Like what is the best you 0:10:45.760 --> 0:10:49.360 can do? And in some situations they are able to 0:10:49.440 --> 0:10:52.679 actually cut that loan down, so instead of you paying 0:10:52.720 --> 0:10:55.360 that twenty thousand dollars back, they might say, gee, all right, 0:10:55.360 --> 0:10:58.560 if you pay today, it's fifteen grand, which is a 0:10:58.720 --> 0:11:01.280 very great option. And if you don't ask, you don't 0:11:01.360 --> 0:11:03.640 get I don't think there's any shame in calling up 0:11:03.679 --> 0:11:05.800 and being like, well, what could we negotiate out of that? 0:11:06.120 --> 0:11:08.320 Like if I've got the cash sitting there, or if 0:11:08.360 --> 0:11:10.600 I have access to be able to pay you out today, 0:11:11.080 --> 0:11:13.320 what would that look like. How can I get out 0:11:13.320 --> 0:11:15.560 of this debt and save some money at the same time. 0:11:15.760 --> 0:11:17.360 Kind of feels like a no brainer to me. 0:11:17.720 --> 0:11:22.360 No, that's smart. Okay, So back to debt consolidation, the consolidation, 0:11:23.040 --> 0:11:25.679 What are your thoughts on it? As a financial advisor? 0:11:25.720 --> 0:11:29.520 Is this something that you are recommending to your clients frequently? Absolutely, 0:11:29.640 --> 0:11:32.120 It depends on what the situation is like. If you 0:11:32.160 --> 0:11:34.440 came to me and we do our fact find process 0:11:34.520 --> 0:11:36.439 g and then we find out that you've got a 0:11:36.440 --> 0:11:39.000 whole heap of credit cards with really high interest rates 0:11:39.040 --> 0:11:42.280 and you're actually a good little saver, but you know, 0:11:42.360 --> 0:11:45.120 you've just got these credit cards. Debt consolidation could be 0:11:45.120 --> 0:11:46.960 a really powerful tool for you because you're a good 0:11:46.960 --> 0:11:47.960 person to lend to. 0:11:48.480 --> 0:11:51.280 It just because you have debt doesn't actually make you 0:11:51.320 --> 0:11:53.240 a bad person to lend to, which I think is 0:11:53.240 --> 0:11:56.920 a really common misconception when they say you're a bad 0:11:56.960 --> 0:11:58.800 person to lend to. And I mean, that's probably not 0:11:58.800 --> 0:12:00.440 the right language, but we're going to go with it, guys, 0:12:00.480 --> 0:12:02.520 because that's how we would talk about it, just you 0:12:02.600 --> 0:12:02.880 and me. 0:12:03.080 --> 0:12:03.360 Yep. 0:12:03.520 --> 0:12:06.679 But it doesn't make you a bad person. It actually 0:12:06.800 --> 0:12:09.720 just means are you somebody who pays back your credit 0:12:09.840 --> 0:12:12.880 on time? So say, GEU went and got a credit card, 0:12:12.880 --> 0:12:14.560 and your friend went and got a credit card at 0:12:14.600 --> 0:12:18.239 exactly the same time, and you paid yours off consistently 0:12:18.320 --> 0:12:20.959 every single month with absolutely no bumps in the road. 0:12:21.000 --> 0:12:23.120 You always paid your fees, there was never any question. 0:12:23.480 --> 0:12:25.959 But your friend did the same thing, but just missed 0:12:25.960 --> 0:12:28.680 payments here and there and kind of was like, oh whatever, 0:12:28.840 --> 0:12:30.440 Like I just won't pay it this month, I'll just 0:12:30.520 --> 0:12:33.200 pay it next month, or got a couple of additional 0:12:33.280 --> 0:12:36.000 late fees and stuff like that that shows up on 0:12:36.040 --> 0:12:38.480 your credit report. So just having a credit card or 0:12:38.480 --> 0:12:42.040 not doesn't necessarily make you a bad person to lend to. 0:12:42.600 --> 0:12:44.560 It actually puts you in a position where they go, 0:12:44.640 --> 0:12:47.360 all right, so she took on that responsibility. Could she 0:12:47.440 --> 0:12:50.720 handle it in your situation, Georgia, and I gave you 0:12:50.760 --> 0:12:54.800 the good outcome here, just Jeph, you're responsible goal pow. 0:12:55.400 --> 0:12:58.240 But in your situation they might look at that and go, oh, 0:12:58.240 --> 0:13:00.200 she always paid it back, no, no problems at all. 0:13:00.200 --> 0:13:05.040 She's a responsible goalpal. She's a responsible girl, whereas your friend, 0:13:05.559 --> 0:13:08.240 even with exactly the same credit card, just by missing 0:13:08.280 --> 0:13:11.200 a few payments and maybe not being as responsible, that 0:13:11.280 --> 0:13:14.560 would put her in a position where a bank might say, nap, 0:13:14.800 --> 0:13:17.720 you can't be held responsible or something like this because 0:13:17.720 --> 0:13:20.640 you haven't been able to prove it historically. So it's 0:13:20.679 --> 0:13:24.120 not necessarily just having debt. It's actually how you deal 0:13:24.160 --> 0:13:27.040 with it. And that's why I jump down people's throats, 0:13:27.080 --> 0:13:29.040 and I don't mean to. I'm not aggressive in real life. 0:13:29.080 --> 0:13:30.600 Last Georgia, I'm five to two, Like. 0:13:30.559 --> 0:13:33.280 I'm really not that scary if you're not able to 0:13:33.320 --> 0:13:35.880 make a repayment on something and you're like, look, you 0:13:35.920 --> 0:13:37.880 know a lot of people have gone through this recently 0:13:37.920 --> 0:13:41.800 where financially the pandemics hit us really hard. Instead of 0:13:41.840 --> 0:13:44.760 burying your head in the sand, call your electricity company, 0:13:44.840 --> 0:13:48.040 call the credit card people. Have the payments deferred, instead 0:13:48.040 --> 0:13:51.440 of having a instead of having a default on your 0:13:51.440 --> 0:13:54.760 credit report, Like you can protect your credit score just 0:13:54.880 --> 0:13:58.560 by being open and honest and truthful and calling them 0:13:58.600 --> 0:14:00.760 and saying, hey, gee, it's so worry you know how 0:14:00.800 --> 0:14:03.240 I owe you fifty bucks, I'm not able to pay 0:14:03.240 --> 0:14:03.920 that this month? 0:14:03.960 --> 0:14:06.160 Is there anything that we can do? And more often 0:14:06.160 --> 0:14:08.480 than not, they'll say, okay, no problems. What if we 0:14:08.600 --> 0:14:10.560 just pushed it out by fifteen days, would that be 0:14:10.600 --> 0:14:12.760 all right? And you go, oh yeah, actually I get 0:14:12.800 --> 0:14:15.760 paid next Friday, like I could pay it then, and 0:14:15.800 --> 0:14:17.840 they go, great, no problems. We'll push it out for free, 0:14:17.920 --> 0:14:21.120 no fees associated with that, no defaults on your account, nothing, 0:14:21.120 --> 0:14:23.240 we don't have to chase you up. And you're putting 0:14:23.280 --> 0:14:26.400 your future self in a better financial position, even though 0:14:26.440 --> 0:14:29.360 you can't afford it today. So it's all about and 0:14:29.560 --> 0:14:32.320 I feel like a broken record not putting your head 0:14:32.320 --> 0:14:34.480 in the sand when it comes to debt or payments 0:14:34.520 --> 0:14:37.800 that you owe. But I guess back to debt consolidation. 0:14:38.320 --> 0:14:41.000 I have recommended it to some clients. I've even helped 0:14:41.040 --> 0:14:44.480 some of my clients facilitate that happening with their brokers. 0:14:45.120 --> 0:14:48.800 But I also have had to have some fickle conversations 0:14:48.800 --> 0:14:51.520 with clients, sat them down and said, actually, gee, you 0:14:51.560 --> 0:14:53.160 and I both know you can pay this off, so 0:14:53.280 --> 0:14:55.640 pull your finger out and get it done, Like, stop 0:14:55.680 --> 0:14:59.120 trying to rely on a different solution instead of just 0:14:59.240 --> 0:15:02.800 buckling down and paying off the debt. So I as 0:15:02.840 --> 0:15:05.360 a financial advisor. I'd like to think I'm a good advisor, 0:15:05.760 --> 0:15:08.120 but I'm definitely not going to always be like, oh, 0:15:08.400 --> 0:15:10.800 let's do the easiest option, or let's do the option 0:15:10.880 --> 0:15:13.840 that makes you feel the most comfortable, because sometimes to 0:15:13.840 --> 0:15:16.560 put ourselves in a better financial position, we have to 0:15:16.600 --> 0:15:18.000 be a little bit uncomfortable. 0:15:19.000 --> 0:15:21.840 All Right, before we head into the break V, we've 0:15:21.880 --> 0:15:26.120 obviously just been chatting about credit scores. Does debt consolidation 0:15:26.400 --> 0:15:27.920 impact your credit score? 0:15:28.480 --> 0:15:31.280 Yes, potentially, because you're taking on a new debt. Again, 0:15:31.400 --> 0:15:34.560 it's all about how debt consolidation is going to be 0:15:34.600 --> 0:15:36.920 dealt with. Are you actually able to meet that fee? 0:15:37.040 --> 0:15:39.200 Like what did it look like before? And that's something 0:15:39.200 --> 0:15:41.440 that you can talk through with a broker and work 0:15:41.480 --> 0:15:44.840 out what that means. But essentially, I would assume the 0:15:44.920 --> 0:15:47.880 reason you're consolidating a debt is to be more responsible 0:15:48.080 --> 0:15:51.360 and pay potentially more awful lower your rate of interest 0:15:51.440 --> 0:15:54.040 that you're paying on that, which from my perspective is 0:15:54.040 --> 0:15:56.440 a step in the right direction. Yes, so long term 0:15:56.480 --> 0:15:59.160 it will have good impacts on Yeah, because we're. 0:15:59.000 --> 0:16:02.320 Trying to get out of debt right, moneywin the perfect 0:16:02.360 --> 0:16:04.600 place to head to the break I think VD, But 0:16:04.800 --> 0:16:06.880 after the break, we will be chatting through the pros 0:16:06.960 --> 0:16:09.960 and cons of debt consolidation, and we'll be chatting through 0:16:10.000 --> 0:16:12.600 some alternatives if it's maybe not the right option for you. 0:16:12.880 --> 0:16:16.960 Spoiler, you can consolidate your debt con you still have 0:16:17.040 --> 0:16:19.119 the debt, so you're after the break. 0:16:18.920 --> 0:16:19.840 Well wrapped. 0:16:24.880 --> 0:16:28.160 All right now into the rest of the show. What 0:16:28.200 --> 0:16:31.479 would you say are the main benefits of debt consolidation. 0:16:31.880 --> 0:16:34.200 I would say that there are a few, and the 0:16:34.320 --> 0:16:37.680 number one benefit I believe would be the feeling of 0:16:37.720 --> 0:16:41.720 being more in control and that piece where you feel 0:16:41.760 --> 0:16:44.880 a lot more liberated and less constricted, and with a 0:16:44.880 --> 0:16:47.560 plan for your finances moving forward and a clear idea 0:16:47.600 --> 0:16:49.200 of when you're going to be out of debt is 0:16:49.240 --> 0:16:52.520 really empowering. Often with credit cards, even if you can 0:16:52.680 --> 0:16:56.720 quote afford the minimum repayment, that's really stretched out, it 0:16:56.800 --> 0:16:59.120 is a really long period of time that you'll be 0:16:59.160 --> 0:17:03.920 paying that back, and debt consolidation is essential if you're 0:17:03.920 --> 0:17:05.960 in a situation where you've got a number of different 0:17:05.960 --> 0:17:08.320 credit cards and you're paying the minimums, because at the 0:17:08.440 --> 0:17:10.520 end of the day, it's going to be thirty years 0:17:10.560 --> 0:17:13.280 before you actually pay those off. Whereas with a debt 0:17:13.320 --> 0:17:15.520 consolidation of personal debt, you could be out of it 0:17:15.560 --> 0:17:18.800 in ten years in comparison, So you're not just doing 0:17:18.840 --> 0:17:21.360 the best thing right now to feel less stressed. You're 0:17:21.400 --> 0:17:24.240 doing the best thing for future you as well, because 0:17:24.320 --> 0:17:26.880 the second that debt is gone, the second you can 0:17:26.880 --> 0:17:30.200 start creating financial freedom. And I say this all the time, 0:17:30.359 --> 0:17:32.359 and I want to keep saying it because I still 0:17:32.400 --> 0:17:35.639 get that question, should we be saving while we're in debt, 0:17:36.080 --> 0:17:38.480 which you know obviously you were going to ask me 0:17:38.560 --> 0:17:40.520 right then and there, won't you charge up? Yes, the 0:17:40.600 --> 0:17:43.439 answer is yes and no. Oh, yes, you should be 0:17:43.480 --> 0:17:46.639 saving for an emergency account. The reason we want an 0:17:46.680 --> 0:17:49.880 emergency account, Georgia is because we really want to put 0:17:49.920 --> 0:17:53.080 ourselves in the position of power, so if another debt 0:17:53.160 --> 0:17:55.840 comes up, or another cost comes up, we don't have 0:17:55.880 --> 0:17:58.040 to put it on debt again. Yeah, like if re 0:17:58.119 --> 0:17:59.919 JO came out, you'd be like, oh my gosh, like 0:18:00.320 --> 0:18:02.520 I've been smashing down this debt. I have no money 0:18:02.560 --> 0:18:06.440 set aside for something like that. So being in control of. 0:18:06.359 --> 0:18:10.359 Your budget and your emergency fund is essential. But during 0:18:10.400 --> 0:18:11.960 this period of time where you are. 0:18:11.840 --> 0:18:15.400 In personal debt, yes, having an emergency account is important, 0:18:15.520 --> 0:18:17.719 but we're not saving for our home deposit. We're not 0:18:17.800 --> 0:18:21.359 saving for our future life. We aren't saving for things 0:18:21.960 --> 0:18:23.960 like that that are above and beyond, like we're not 0:18:24.000 --> 0:18:26.120 planning for our next holiday. I'm not saying you can't 0:18:26.160 --> 0:18:29.320 do those things in collaboration. Like if you've consolidated your 0:18:29.320 --> 0:18:31.520 debt and it's all well and good and you know 0:18:31.560 --> 0:18:33.920 what that payment is, and you've integrated into your life 0:18:33.960 --> 0:18:36.040 because you're good at budget and cashlow, because you clearly 0:18:36.040 --> 0:18:39.680 did my masterclass, that's a different story. But if you're 0:18:39.680 --> 0:18:41.800 in mountains of credit card debt and burying your head 0:18:41.840 --> 0:18:44.600 in the sand, stop trying to save and pay the minimums. 0:18:44.880 --> 0:18:47.320 We need to get rid of that debt because paying 0:18:47.320 --> 0:18:50.120