Speaker 1: Just before we get started, we'd like to acknowledge and
Speaker 1: pay respect to Australia's Aboriginal and torrest Rate islander people's.
Speaker 1: They're the traditional custodians of the lands, the waterways and
Speaker 1: the skies all across Australia. We thank you for sharing
Speaker 1: and for caring for the land on which we are
Speaker 1: able to learn. We pay respects to elders past and present,
Speaker 1: and we share our friendship and our kindness.
Speaker 2: She's on the Money, She's on the Money.
Speaker 1: Hello, and welcome to She's on the Money, the podcast
Speaker 1: for Millennials who want financial freedom. Welcome back to another
Speaker 1: one of our Friday Drinks episodes where I'm getting really
Speaker 1: sick of doing this intro, so I'm going to make
Speaker 1: Georgia organize another one for next week. But as you
Speaker 1: guys know, this episode is all about celebrating you and
Speaker 1: getting to reflect on the week that was, talking about
Speaker 1: our community sharing their money wins and sometimes a few
Speaker 1: of their confessions, and we adore it, honestly, Jess, George
Speaker 1: and I. Even though George this week is remote because
Speaker 1: she forgot what a recording and now is in a wardrobe.
Speaker 1: We always talk about you guys, and your successes and
Speaker 1: sometimes your little confessions regardless of where we are. Let's
Speaker 1: start with you, miss jessic Garci. How was your week?
Speaker 3: It was good, spopping along living the dream.
Speaker 1: She brought a cricket into the She's on the Money
Speaker 1: office today.
Speaker 3: Yeah, we're making stickers.
Speaker 1: It's fine, Yeah, okay, loving it and a Lisa, our producer,
Speaker 1: and I learned what a cricket was. We also learned
Speaker 1: what a weeding tool was and what smart vinyl is.
Speaker 1: It's very cool. We will boast a photo, but in more.
Speaker 1: She's on the money news, jess what happened this week
Speaker 1: on our money Diary? This week's diarist had three kids
Speaker 1: and three jobs. Just for that nice little bit of symmetry.
Speaker 1: And it's just working her little too, trying to such
Speaker 1: a hustler, Yeah, trying to get towards the financial freedom
Speaker 1: she wants, which I think is incredible. She really wants
Speaker 1: to build up on her assets, which we love to
Speaker 1: see it. And yeah, it was just really interesting to
Speaker 1: talk to her about how she kind of balances, you know,
Speaker 1: the financial desires that she has and the goals that
Speaker 1: she has against the ies challenges of working in so
Speaker 1: many different places and obviously the time that that takes
Speaker 1: along with having three kids, who I believe were all
Speaker 1: under the age of three. Yeah, it was insane. I
Speaker 1: was like, excuse me, what are you a supermum?
Speaker 4: Like?
Speaker 1: How absolutely wild?
Speaker 3: Here.
Speaker 1: I am being like, oh my gosh, there's no way
Speaker 1: I'm ever going to find time to have a baby,
Speaker 1: and she's like, what do you mean, YaST time, hips, time, hips, jobs,
Speaker 1: hips of everything. I was honestly in awe, But I
Speaker 1: think that money Diary was really nice because I feel
Speaker 1: like we haven't had that many mums on the pod.
Speaker 1: I mean, we've had lots of young women who are
Speaker 1: doing really cool things, but hearing from a mum's perspective
Speaker 1: how she was balancing all of that and still putting
Speaker 1: herself first, I was very impressed. But you know what
Speaker 1: else impresses me? Jess investing, which is what we spoke
Speaker 1: about on this week's Wednesday episode, Georgia King break it
Speaker 1: down for us.
Speaker 2: Hello, I thought you were going to segue that Vie
Speaker 2: by saying, you know what else impresses me? George's set
Speaker 2: up this week, I'm coming at you from Ed's wardrobe
Speaker 2: down at Blake Gowery, so apologies for the audio quality.
Speaker 2: It is what it is. I'm a potato.
Speaker 4: Definitely check out our Instagram because we will put up
Speaker 4: a photo so you can see exactly what we see.
Speaker 4: The first option Georgia gave us was tuning in with
Speaker 4: a karaoke microphone, so it's only going up from here.
Speaker 2: It's still an option, ladies, still an option. So on
Speaker 2: Wednesday's show, guys, we discussed varying types of investing platforms,
Speaker 2: and we spoke about micro investing platforms versus robo advice
Speaker 2: versus share training platforms, and it was a really interesting chat.
Speaker 2: I mean it was between the two of you, but
Speaker 2: I loved listening because it was really interesting for anyone
Speaker 2: who's thinking about investing slash, for anyone who has maybe
Speaker 2: started micro investing but they're thinking about taking that next step,
Speaker 2: if you will. So yeah, it was a really good,
Speaker 2: good listen, And if you are on the fence about investing,
Speaker 2: or you are thinking about graduating to something a little
Speaker 2: bit more serious, then I'd definitely give it a listen.
Speaker 4: I thought it was really interesting as well because we
Speaker 4: kind of phrased it v in terms of primary school,
Speaker 4: high school, and university and the idea that you can
Speaker 4: kind of graduate up if you want to. But also
Speaker 4: we chatted a lot about the fact that different platforms
Speaker 4: offer people different benefits, and you know, depending on what
Speaker 4: you want, you might just stay with one platform forever.
Speaker 4: You don't necessarily have to graduate all the way through
Speaker 4: to the point we have a financial advisor managing a
Speaker 4: multi billion dollar portfolio for some people, so love to
Speaker 4: be in that position. Oh yeah, me too, manifesting that
Speaker 4: for all of us. But you know, if something really
Speaker 4: services your needs, it doesn't necessarily mean that just because
Speaker 4: it's not the furthest along or the most advanced.
Speaker 3: That it's a bad thing.
Speaker 4: So I think it was really cool to chat about
Speaker 4: what these different platforms offer so people can make an
Speaker 4: informed decision about what might work for them and they're
Speaker 4: wance and their needs.
Speaker 1: Yeah, and I find it really interesting as well, because
Speaker 1: obviously we get asked a lot of questions about this,
Speaker 1: and we're not able to answer what is the best
Speaker 1: because that doesn't exist. There's no best one platform. There's
Speaker 1: just the best for your personal situation, and we don't
Speaker 1: know what your personal situation is, unfortunately, because that would
Speaker 1: make our lives much easier. But we see all the
Speaker 1: time on money Diaries money dorists using a whole plethora
Speaker 1: of platforms like they might be using Raise and Spaceship.
Speaker 1: And then recently, Jess, we interviewed a money dirist who
Speaker 1: was like, Yeah, I've got Rais and I've got Spaceship,
Speaker 1: and I'm currently on Shares's and i also have self
Speaker 1: Wealth and I was like, great, get it. Like we
Speaker 1: use them all in different ways. So I think understanding
Speaker 1: the difference between each level, or you know, the difference
Speaker 1: between micro investing and share trading and what robo advice
Speaker 1: actually is, is really powerful and helps you pick the
Speaker 1: right one for your situation because too often we just
Speaker 1: don't know what we don't know, Like, how do you
Speaker 1: know what these platforms actually do? I'm going maga spreadsheet.
Speaker 3: We love a spreadsheet. Put it in a spreadsheet. It's
Speaker 3: very common phrase now of us.
Speaker 1: I feel like it is because that then what we do,
Speaker 1: and then we fawn over the spreadsheet instead of actually
Speaker 1: doing the work. We probably should work on that. But George,
Speaker 1: take us through what you think are the hottest takes
Speaker 1: from our Money Wins and Confessions thread. This week we.
Speaker 2: Had some really good ones, guys, I think in last
Speaker 2: week's show, maybe we said we were going to do
Speaker 2: all confessions.
Speaker 1: Yeah, I said I wanted to hear confessions.
Speaker 2: So I threw that in the bin and I'm doing
Speaker 2: wins because they were, honestly, so many good ones.
Speaker 1: There weren't many confessions, Okay. Well, I was like, I
Speaker 1: want to feel heard. I want some relatable content. I've
Speaker 1: been a bit naughty with money recently. I want to
Speaker 1: hear some confessions. And You're like, straight in the bin
Speaker 1: with that.
Speaker 4: So George, make a confessions thread separately. Yeah, I don't
Speaker 4: need you. We're going to do it on our own.
Speaker 4: Tell us though, what were some of the wins this week?
Speaker 2: All righty guys. So the first win it comes from Brian.
Speaker 2: She said, I just moved to the Sunny Coast from Townsville.
Speaker 2: I'm four months pregnant and I've just landed a contract
Speaker 2: position which will take me right up to when I
Speaker 2: need to stop working. The new workplace knows i'm pregnant,
Speaker 2: so everything is out in the open and it will
Speaker 2: qualify me for pay.
Speaker 1: On your brand. Very money, win.
Speaker 2: Money win. The next one comes from Demirah. After reading
Speaker 2: the first three chapters of She's on the money. I
Speaker 2: realized I had no idea of the interest rates attached
Speaker 2: to my savers accounts. I've called my bank to change
Speaker 2: my emergency fund and short term savings from a flexi
Speaker 2: saver zero point four or five percent perannum to a
Speaker 2: goal saver account that's one point one five percent perannum,
Speaker 2: and then I'm getting.
Speaker 4: For free money.
Speaker 1: I love this, Oh my gosh. And the fact that
Speaker 1: she's already doing stuff after only reading three chapters of
Speaker 1: my book Guys clearly the best book ever exactly.
Speaker 2: I thought you'd like that one.
Speaker 1: I've got a few tickets. The next one.
Speaker 2: Comes from Chelsea. I became a single mum of three
Speaker 2: last year. I'd set a savings goal to reach by
Speaker 2: the end of the financial year to finally give me
Speaker 2: peace of mind for emergencies, and I finally reached it
Speaker 2: last week.
Speaker 1: Oh my gosh. Yes, how good is that? Also, how
Speaker 1: good is it that that's so quick after becoming angle
Speaker 1: mum of three to be able to get to that goal. Like, Yes,
Speaker 1: I love this.
Speaker 2: It was very good and it was really cool to
Speaker 2: see everyone in the community getting around that post as well.
Speaker 2: It was one of the most popular in the threads
Speaker 2: so well done to you, Chelsea, a massive achievement. The
Speaker 2: next win comes from Campbell. I was offered a new
Speaker 2: job with a forty thousand dollars salary increase, and if
Speaker 2: I pass my probation, they will give me a company
Speaker 2: car and a fuel card forty k.
Speaker 1: I'm in the market for a new job now, Camber,
Speaker 1: pass on the deets of your employer, because if your
Speaker 1: probation doesn't work out, maybe I've got a hot shot
Speaker 1: our jokes. No one would hire me. I'd fire me,
Speaker 1: yess like, if I was an employee here, I would
Speaker 1: have already been fired.
Speaker 3: There's a reason she's the boss an employee.
Speaker 1: See you buy.
Speaker 2: The next win comes from Charlotte. I went to an
Speaker 2: island mysterious with some friends for the weekend. I used
Speaker 2: public transport and paid five dollars versus the fifty dollars
Speaker 2: my friends spent the taxi. I only turned up maybe
Speaker 2: ten minutes later than they did, and I'm so proud
Speaker 2: of myself.
Speaker 1: On your Charlotte, I'm impressed. I'm glad you had a money.
Speaker 1: I don't understand any of that. How do you get
Speaker 1: to an island using a taxi? I'm just there's a
Speaker 1: lot of context missing here. Where's the way that I
Speaker 1: read it?
Speaker 2: You're fine, and Charlotte, don't let me get you down.
Speaker 1: Where's this island? I don't know? Did you go to
Speaker 1: Tazzy for the weekend?
Speaker 4: Who knows?
Speaker 2: Philip Island? Not sure? Okay, guys. The final win of
Speaker 2: the day comes from Tammy money win. My partner and
Speaker 2: I bought a house at the beginning of this year.
Speaker 2: He earns about three times as much as what I do,
Speaker 2: so we've just recently rediscussed the split of our mortgage
Speaker 2: repayments and bills and expenses. My ex would have expected
Speaker 2: me to pay half, no matter the difference in our incomes,
Speaker 2: but my partner now is so open to discussing finances
Speaker 2: and working as a team so that I'm not struggling
Speaker 2: on my smaller wage equity.
Speaker 1: Yay, Oh my gosh, that's a very good place to
Speaker 1: leave it. I feel like those wins are very good.
Speaker 1: Let's go to a quick break and when we get back,
Speaker 1: we've got a listener question. We've got some content to
Speaker 1: share with you, and George's going to tell you a
Speaker 1: little bit more about her cupboard den.
Speaker 4: All right, girls, last week it was announced that Australia's
Speaker 4: inflation rate has risen to five point one percent over
Speaker 4: the past twelve months, which is well above the target
Speaker 4: and people have probably already seen that at the petrol pump,
Speaker 4: at the grocery store. It basically just means it's more
Speaker 4: expensive to be alive right now, which sucks. But a
Speaker 4: lot of people are wondering what this means specifically for
Speaker 4: their help debt, because help is obviously an indexed cost,
Speaker 4: but with the inflation rate rising so rapidly, they're concerned
Speaker 4: that HEX may not still be the cheapest debt you'll
Speaker 4: ever have. So there's been a lot of questions in
Speaker 4: the Facebook group saying, oh my gosh, I pay off
Speaker 4: all of my help debt right now. Someone posted and
Speaker 4: said it was going to be more expensive than their
Speaker 4: mortgage interest rates. There seems to be a whole lot
Speaker 4: of kerfuffle the So I thought I'd come straight to
Speaker 4: the horse's mouth.
Speaker 1: I love that you think I'm the horse's mouth one.
Speaker 1: I'm not a horse too. I have absolutely nothing to
Speaker 1: do with the RBA. I'm just a financial advisor who
Speaker 1: interprets things on the internet in her own very unique way.
Speaker 1: There are other parts of a horse that I could
Speaker 1: arguably call you that a.
Speaker 3: Much less so rude.
Speaker 1: Have I done something this week?
Speaker 4: Is that not for saying? Would you like to go
Speaker 4: to counseling like a horse's ass? That's a saying, is
Speaker 4: it not?
Speaker 1: Okay? Well I didn't I didn't think that when you
Speaker 1: called me that. I was just trying to be fun
Speaker 1: and funny. We're trying to edit a show here and
Speaker 1: you're just calling me name. That's fine, Sorry, that's fine,
Speaker 1: that's fine, take it off, fine, all right. So it's
Speaker 1: definitely not straight from the horse's mouth. I actually identify
Speaker 1: it as a unicorn. But if we want to talk
Speaker 1: about it, HEX at the end of the day doesn't
Speaker 1: have an interest rate on it, but it is indexed
Speaker 1: by CPI each and every single year. So CBI is
Speaker 1: a consumer price index, and that's how much the cost
Speaker 1: of living increases each and every single year. And we
Speaker 1: know if you've been listening to the news, it has
Speaker 1: been everywhere because people are honestly scared, and they should
Speaker 1: be because it is really overwhelming and it can be
Speaker 1: really detrimental that we have had the highest increase in
Speaker 1: indexation since two thousand and one.
Speaker 4: I was going to say in ten years, but that's
Speaker 4: in twenty years. Oh my lod it is.
Speaker 1: A long time. But since two thousand and one, and
Speaker 1: that is five point one percent since January this year
Speaker 1: till March, so that is actually quite overwhelming. Hopefully it
Speaker 1: doesn't continue to increase, but economics professionals are saying that
Speaker 1: it is very set to increase because the cost of
Speaker 1: living is increasing and they're expecting you to be paying
Speaker 1: you a dollar more for your coffees in the morning,
Speaker 1: which all makes sense, and it all comes back to
Speaker 1: everything we've been through over the last few years and
Speaker 1: distribution of product, and we could go on and on,
Speaker 1: but at the end of the day, helpedebt or hextet
Speaker 1: as somebody who's a little bit of an older millennial
Speaker 1: refers to it as is indexed in that way. I'd
Speaker 1: be interested to see how the government actually applies this though,
Speaker 1: because so many people are going to be bucking at
Speaker 1: the bit. Is that a good horse analogy? Thank you,
Speaker 1: thank you, because I'd like to see how much they
Speaker 1: pass on of that. So a lot of the time
Speaker 1: they just apply it automatically and you accept it because
Speaker 1: it might be like one point nine percent or two
Speaker 1: percent and you just go whatever, like that's fine CPI,
Speaker 1: no worries. But now it's five point one percent, people like, well,
Speaker 1: it makes no sense. My strategy was to not pay
Speaker 1: down HEX, and now I'm going to have to because
Speaker 1: that five point one percent right now, if that gets
Speaker 1: applied to my help debt, Jess, that's going to be
Speaker 1: higher than my mortgage repayments in terms of like cost
Speaker 1: of how much it's costing me. And I know that
Speaker 1: we say it has no interest, but at the end
Speaker 1: of the day, if that's how much my debt is
Speaker 1: going to increase, even though it is in line with CPI,
Speaker 1: that's still an increase I'm not willing to swallow. So
Speaker 1: I don't know how other people are feeling about it,
Speaker 1: but we will have to wait and see, because if
Speaker 1: we look at historicals, they have always increase it by CPI. However,
Speaker 1: I do feel as though the government, especially given its
Speaker 1: in an election year and we're about to go into
Speaker 1: an election, are going to announce something to say that
Speaker 1: potentially there'll be a cap on what gets passed on
Speaker 1: to HEX.
Speaker 3: Does that make sense, Yeah, it sure does.
Speaker 4: And so for a little bit of context, indexation for
Speaker 4: the twenty twenty one year for HEX help loans annually
Speaker 4: with zero point six percent, which was the lowest it
Speaker 4: had been in a very long time. It looks like
Speaker 4: it's averaging, you know, kind of two and a half
Speaker 4: to three percent over the last couple of decades. Yep.
Speaker 1: Literally, it is Australia's worst inflation spike since two thousand
Speaker 1: and one jes which is when GST was introduced. That
Speaker 1: makes sense because obviously the costs of goods and services increased.
Speaker 1: Albeit from my perspective, GST is a goods and services
Speaker 1: tax which you guys would see, and if anybody has
Speaker 1: a business that earns over seventy five thousand dollars per annum,
Speaker 1: that is applied to the product that they sell or
Speaker 1: the service that they render. So it makes sense because
Speaker 1: it's obviously costing more. But from B to B, so
Speaker 1: business to business, if I'm charging HEX, I'm also receiving
Speaker 1: HEX and you pay that and it's kind of like
Speaker 1: a left pocket, right pocket. But if you're a general
Speaker 1: consumer and you're now paying GST on a product, you're
Speaker 1: not claiming GST each in every single year. You're not
Speaker 1: a business owner. So in that year products basically cost
Speaker 1: you ten percent more if the business didn't account for
Speaker 1: that increase in price.
Speaker 4: It's kind of like the same concept right where we say,
Speaker 4: you know, if the cost of living is increasing and
Speaker 4: your salary isn't, you're losing money effectively. Yeah, so it's
Speaker 4: the same kind of concept. So it'll be announced on
Speaker 4: the first of June. The indexation and the estimates or
Speaker 4: the calculations or the projections or whatever you want to
Speaker 4: call it, that someone who is a lots better than
Speaker 4: me has put together are predicting that it will be
Speaker 4: at around three point nine percent, which is obviously a
Speaker 4: huge jump, and I can totally see why people are
Speaker 4: freaking out if that's the case. And if it does
Speaker 4: jump so significantly, obviously we cannot provide advice, but would
Speaker 4: people need to be reconsidering their strategy jeez, when it
Speaker 4: comes to help debt if it does go up so high.
Speaker 1: I would be, Yeah, I absolutely would be. And the
Speaker 1: reason I would be is because I just don't want
Speaker 1: more money looming over my head. In saying that, it
Speaker 1: would be individual to each and every single person, and obviously,
Speaker 1: like your situation, Jess, is very different to mine, and
Speaker 1: whether I pay more or you pay more. It's completely different.
Speaker 1: But I think the interesting thing there is how banks
Speaker 1: might account for it. So hex and help debt is
Speaker 1: one of the only debts that banks look on and
Speaker 1: just go okay, like, Jess, it's not consumer debt, it's
Speaker 1: not bad debt. You're not going to be, you know,
Speaker 1: negatively impacted for this, but it will decrease your serviceability
Speaker 1: because what happens when you go to the bank is
Speaker 1: they go, okay, Jess, like, let's sit you down, and
Speaker 1: you've done this recently. We're obviously real creepy on your
Speaker 1: property journey watching you from afar, but also lack not
Speaker 1: that far. And what happens is you go to the
Speaker 1: bank and you go, okay, hey, here's my income and
Speaker 1: here are my expenses. And one of the expenses they
Speaker 1: take into consideration is your help debt. And because you
Speaker 1: have to repay that on your basis or you might
Speaker 1: be repaying it monthly out of your annual salary, they
Speaker 1: just take that into consideration as a cost. And obviously
Speaker 1: the more costs you have, the less serviceable alone is.
Speaker 1: But they're not penalizing you for having that, They're just
Speaker 1: taking it into consideration into your cash flow. They're not
Speaker 1: going to go, oh, yes, you have helped itb therefore
Speaker 1: you're less serviceable. They're actually look at it and go, oh, yes,
Speaker 1: you have helped it. That means that you know, maybe
Speaker 1: two hundred bucks a month is going towards paying that off.
Speaker 1: That means we're not going to consider that two hundred
Speaker 1: bucks as money that could pay off your mortgage, which
Speaker 1: makes sense when you allocate it that way. And I
Speaker 1: think that in our community a lot of people have said,
Speaker 1: oh my gosh, no, they penalize you and will lend
Speaker 1: you less, and it's like, well, yes they will, but
Speaker 1: they're doing that because at the end of the day,
Speaker 1: you have a debt to repay, and that's a pre
Speaker 1: tax debt that has to be paid. It's not like
Speaker 1: a choice. But from my perspective, I'd be interested to
Speaker 1: see how that changes, because if it increases in cost,
Speaker 1: I e. It's going to cost me five percent or
Speaker 1: something ridiculous for having my help debt there and the moment,
Speaker 1: if I'm not paying off more of that help debt,
Speaker 1: maybe in the future will prioritize that. But at the
Speaker 1: same time I might not because it's not consumer debt,
Speaker 1: and it doesn't have a timeline on how fast you
Speaker 1: have to pay it back. And I have a whole
Speaker 1: heap of assets that are performing above and beyond that
Speaker 1: three to five percent, because we don't know in stone
Speaker 1: what they might increase it by, but we know that
Speaker 1: the last quarter has basically been five point one percent.
Speaker 1: So let's be super dramatic for a hot second. If
Speaker 1: it increases by that, a lot of other things are
Speaker 1: going to follow suit. So it won't just be your
Speaker 1: hex stebt. It will be your home loans, it will
Speaker 1: be your consumer debt loans, it will be borrowing, it
Speaker 1: will be so many other things. And I think that
Speaker 1: we would need to look at that in the grand
Speaker 1: scheme of things as opposed to just looking at it once, right,
Speaker 1: Because if it's going to cost you more, but like
Speaker 1: you now have a higher mortgage, it doesn't change your
Speaker 1: financial goals at all. You might go, well, I am
Speaker 1: paying more for HEX, but if I pay that off now,
Speaker 1: I'm not paying off my mortgage, or I'm not putting
Speaker 1: money aside for that home to deal I want to
Speaker 1: save for, and therefore I'm pushing that goal off into
Speaker 1: the future. And a lot of us just want to
Speaker 1: achieve things now, so I'd be interested to see how
Speaker 1: it falls. But the most important thing is that you
Speaker 1: understand how that might impact you, and what that might
Speaker 1: mean for you, and how that's going to basically impact
Speaker 1: your cash flow, because at the end of the day,
Speaker 1: that's what it's going to do, regardless of what your
Speaker 1: financial goal is.
Speaker 2: So off the back of that V, we know that
Speaker 2: the higher your salary, the more HEX you have to
Speaker 2: be paying back, right yeah, So then from their V
Speaker 2: if you do have that larger salary and your boss
Speaker 2: is like, here's here's some extra for that cost of
Speaker 2: living increase, then your HEX repayments will go up further,
Speaker 2: right yes, But then if you're not receiving that and
Speaker 2: you are on that lower income, then that's a complete
Speaker 2: headache as well. So how do you manage this no
Speaker 2: matter your situation? Like it's crazy?
Speaker 1: So first, let's talk about the compulsory repayment threshold. So
Speaker 1: you only have to start paying back your HEX step
Speaker 1: this year in twenty twenty two if your income is
Speaker 1: more than forty seven thousand and fourteen dollars, and next
Speaker 1: year between the twenty twenty two to twenty twenty three
Speaker 1: financial year, that's going to increase to forty eight thousand,
Speaker 1: three hundred and sixty one dollars. So if you're below
Speaker 1: that threshold, you don't have to worry about hex just
Speaker 1: yet because you won't be paying it back unless you're
Speaker 1: doing voluntary contributions. But at the moment, the repayment rates
Speaker 1: are banded, So for example, if you're earning between seventy
Speaker 1: seven thousand and eighty one thousand ish, you're paying back
Speaker 1: five percent, and if you're getting more income, you're going
Speaker 1: to pay back more. But if the inflation rates end
Speaker 1: up being applied directly to your help debt but you
Speaker 1: don't get a salary increase, you won't be paying back more.
Speaker 1: It'll just mean that the money you do pay back
Speaker 1: is going less far. Does that make sense? So you'll
Speaker 1: be paying back quote less percentage of what you owe,
Speaker 1: but the same amount of money will be leaving your
Speaker 1: account each and every single month. Does that make sense?
Speaker 1: So it's going to mess a few people up as
Speaker 1: especially if they get increases, but it won't be as
Speaker 1: significant as I think a lot of people are making
Speaker 1: it out to be. I think we get really stressed
Speaker 1: about it because a lot of us go, oh my gosh,
Speaker 1: there's a help debt lauding over me. But at the
Speaker 1: end of the day, it is quite manageable. And there
Speaker 1: are actually percentage repayment rates that exist for bands, and
Speaker 1: you can look them up on the Australian Government Study
Speaker 1: Assist website and they outline it also that there's complete clarity.
Speaker 1: But I think it's more about understanding what your compulsory
Speaker 1: repayments are for your salary band and what that might
Speaker 1: mean if you increase, because the problem I foresee is
Speaker 1: if you increase sages you were on eighty one thousand
Speaker 1: dollars and you were like, great, well I'm only paying
Speaker 1: five percent, but you now are earning eighty two thousand dollars,
Speaker 1: You're now paying five point five percent. I think understanding
Speaker 1: those bands is going to be much more powerful than
Speaker 1: worrying about how much percentage these CPI is going to
Speaker 1: impact your actual HEXTEP Does that make sense? It's actually
Speaker 1: about what's going to leave your bank account and.
Speaker 4: So to people maybe need to be looking at their
Speaker 4: budgets now and going okay, potentially I'm going to be
Speaker 4: taking home less because more is going to be allocated
Speaker 4: to my HEX repayment, So just being aware of maybe
Speaker 4: where that wig or room is and if there are
Speaker 4: things that should you need to cut back, you can
Speaker 4: don't panic. We obviously can't really do too much until
Speaker 4: those rates are officially announced, but I think it's really
Speaker 4: great to see that so many people in our community
Speaker 4: are aware of this change and how it's going to
Speaker 4: impact them and impact their HEX or their help. Sorry
Speaker 4: I'm showing my age and knowing that that might have
Speaker 4: a flow and effect to other parts of their cash flow.
Speaker 3: And their budget as well.
Speaker 1: Absolutely agreed, And I think the other thing to take
Speaker 1: into consideration is if you are struggling financially, you can
Speaker 1: actually contact the ATO and have your compulsory repayments deferred
Speaker 1: if you need that. So I don't want anyone to
Speaker 1: feel like they are, you know, up up the proverbial
Speaker 1: creek without a paddle. But from my perspective, it's really
Speaker 1: important to just be super aware of your budget and
Speaker 1: what that means and how that works, because talking to
Speaker 1: the ATO is going to be arguably a bit more powerful,
Speaker 1: and pretend deferring a payment might actually take a little
Speaker 1: bit of pressure off. So I think it's important that you, guys,
Speaker 1: actually understand your rights and what you can do, and
Speaker 1: if you're really stressed and overwhelmed, you can always reach
Speaker 1: out for help.
Speaker 2: Super convenient here, ladies, that this whole chat has been
Speaker 2: about inflation, because that ties perfectly to this week's listener question.
Speaker 1: Don't spoil it. I'm going to intro it this week
Speaker 1: because gee, you're in a cupboard and your audio equality
Speaker 1: is absolutely terrible. It's literally like she's in a cupboard
Speaker 1: or something, Jess. But it is Friday, guys, which means
Speaker 1: that it is time to answer your most burning finance,
Speaker 1: career and life questions. If you need help untangling a
Speaker 1: knotty dilemma, no matter how big or small, you can
Speaker 1: send us a voice note directly through our website. We
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Speaker 1: She's on the money website and click the button that says,
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Speaker 1: the answer that you have been searching for. Now, let's
Speaker 1: pressplay on today's money dilemma. Hi, girls, I was just wondering,
Speaker 1: if the RBA increases the interest rate, does that mean
Speaker 1: that my bank account will automatically have a higher interest
Speaker 1: rate or is that not how it works? Thanks, long
Speaker 1: story short to this, the answer is yes and no.
Speaker 1: So no, because when the RBA increases its interest rate,
Speaker 1: the banks are actually under no obligation to immediately increase
Speaker 1: that and that's what we saw quite recently when they
Speaker 1: didn't pass on the recent RBA increase to mortgages and
Speaker 1: stuff like that. They just left it at the status quo.
Speaker 1: So it's actually at the bank's discretion to make that decision,
Speaker 1: and whether they increase it by the full amount or
Speaker 1: a percentage is completely up to them, and I'm sure
Speaker 1: they have all of these analysts working in the background
Speaker 1: working out the impact of increasing the mortgage rates, and
Speaker 1: it's important for them to take that into consideration regardless
Speaker 1: of what the cost of money is. So when the
Speaker 1: RBA increases the interest rate, it means they're increasing the
Speaker 1: amount it's going to cost the bank to borrow the
Speaker 1: money to lend to you. So they usually would pass
Speaker 1: that on. But have a think about how many mortgages
Speaker 1: exist and how many people have been through hardship over
Speaker 1: the last two to three years given COVID, and how
Speaker 1: many people might be, you know, still scraping through and
Speaker 1: only able to just make the bare minimum repayments on
Speaker 1: their mortgage. If their interest rate increases, they might end
Speaker 1: up in a bit of a pickle and have to sell. Therefore,
Speaker 1: the bank then loses the mortgage that they had, So
Speaker 1: they need to weigh up the pros and cons of
Speaker 1: whether they actually pass that percentage rate onto you or
Speaker 1: pass a little bit of it, not the whole amount.
Speaker 1: But they need to work it out at the same time.
Speaker 1: As a business, if something is costing you more, you
Speaker 1: need to be able to pass that cost onto a consumer.
Speaker 1: And I don't want to disteal it down. It's quite complex,
Speaker 1: but say there's a cost of a cup of coffee.
Speaker 1: Jess and I go out and I buy my oat
Speaker 1: latte and at my local cafe, I think it's like
Speaker 1: four dollars eighty for my local oat laste, which is great.
Speaker 1: But imagine if oat milk increased in price and it's
Speaker 1: now costing the cafe far more money to give me that,
Speaker 1: and they're no longer breaking even when I pay four
Speaker 1: dollars eighty for my coffee, they genuinely need to pass
Speaker 1: that on to remain a stable and good and profitable business.
Speaker 1: So therefore my coffee is now going to cost five
Speaker 1: dollars fifty instead of four dollars eighty, and it costs
Speaker 1: me more, but it means that the cafe or in
Speaker 1: this instance, the bank, can keep moving and grinding and
Speaker 1: keeping up with everybody else, So it makes sense that
Speaker 1: they would pass it on. From my predictions, I would
Speaker 1: assume that they would actually have a bit more now
Speaker 1: surround passing on the full increase, because it just doesn't
Speaker 1: make a lot of sense to throw a whole heap
Speaker 1: of people into financial hardship. In saying that inflation has
Speaker 1: always increased around wars because of you know, animosity and
Speaker 1: people not being sure of what's going on, and the
Speaker 1: cost of general transport and everything increasing. Wouldn't be surprised
Speaker 1: if it does increase, But I'm waiting to see what
Speaker 1: type of support the government's going to come out with
Speaker 1: I genuinely cannot see how that much of an increase
Speaker 1: will be passed directly onto consumers.
Speaker 4: So if they're trying to keep mortgages low for people
Speaker 4: so that they can afford them, does that mean that
Speaker 4: they're also likely to keep interest rates on savings account
Speaker 4: slow because, as you were saying, they've got a break
Speaker 4: even somehow.
Speaker 1: Yeah. Absolutely, In fact, this increase means that savings is
Speaker 1: going to go even further backwards. So I wouldn't expect
Speaker 1: an increase in what you're going to be paid to
Speaker 1: have a savings account open to increase at all. I'm
Speaker 1: concerned about mortgages, but at the same time, I think
Speaker 1: we just have to wait and see what that actually means.
Speaker 1: Because this is the biggest annual inflation rate that we've
Speaker 1: had for twenty years since UST was introduced, and it
Speaker 1: can be overwhelming and it can be really scary. But
Speaker 1: if you went through a mortgage broke out, or even
Speaker 1: if you just went to the bank directly to get
Speaker 1: a mortgage, they wouldn't have assessed your mortgage at two
Speaker 1: percent or whatever you're paying right now. They would have
Speaker 1: actually assessed your cash flow at five or seven percent.
Speaker 1: If you recently had your mortgage refinance, depending on how
Speaker 1: long ago that happened, and that means that you technically
Speaker 1: should be okay and not in any financial hardship to
Speaker 1: service that mortgage because we did the cash flows we
Speaker 1: organized it. The bank was like, do you know what
Speaker 1: what happens if the interest rate increases? Will just still
Speaker 1: be able to pay her mortgage? Because they don't actually
Speaker 1: want to put themselves at risk that if the interest
Speaker 1: rate increases then they lose you as a customer. They
Speaker 1: need to assess you as being able to pay the
Speaker 1: highest possible amount that they predict is going to happen,
Speaker 1: and then they take you back down to two percent
Speaker 1: and actually give you a mortgage that you're able to
Speaker 1: comfortably service. So I'm hoping that that's the case for
Speaker 1: most people, But I would be really interested to see
Speaker 1: how this pans out, because there's a lot going on
Speaker 1: in the world at the moment post COVID, We've got
Speaker 1: a war going on. We don't know what the future
Speaker 1: looks like, but this is all played into the increasing
Speaker 1: interest rate.
Speaker 2: So this is maybe a strange question, but from what
Speaker 2: I can garner, it seems like at the moment it
Speaker 2: is a really tough time to be I mean, obviously
Speaker 2: we're extremely privileged, but it's a very expensive time to
Speaker 2: be living in Australia. What does it look like overseas
Speaker 2: at the moment in terms of costs of living? Have
Speaker 2: you guys got any numbers for me?
Speaker 4: So I've got inflation rates in a couple of other countries.
Speaker 4: General consensus is we're kind of sitting in the middle.
Speaker 4: We're not the best, We're not the worst, you know,
Speaker 4: happy medium, maybe like fifth or sixth place if you're
Speaker 4: running a relay with ten people. So a couple of
Speaker 4: other countries that you might want to compare us to,
Speaker 4: And if you are interested in seeing this in text form,
Speaker 4: check at our Instagram because we popped this up this week.
Speaker 4: Spain's current inflation rate is nine point eight percent wild
Speaker 4: the US is eight point five, the UK is seven.
Speaker 4: Our friends across the ditch in New Zealand are at
Speaker 4: six point nine. Sweden, where everyone seems to want to
Speaker 4: be living, is six, and then obviously we come in
Speaker 4: at five point one.
Speaker 1: So we're not that badly off, especially when we compare
Speaker 1: ourselves to the U and to New Zealand. I feel
Speaker 1: like those are the two locations that I would go,
Speaker 1: you know, pragmatically, oh wow, it's worse off there. But
Speaker 1: it's interesting as well because we're coming into an election
Speaker 1: year and the RBA is kind of laying low because
Speaker 1: they don't want to scare us, but they have officially
Speaker 1: come out recently, and I think that that's why the
Speaker 1: media is picking up on it. So they've said that
Speaker 1: the COVID stimulus will be dialed back. So I think
Speaker 1: that that sent a few people into a spin because
Speaker 1: obviously we've had, you know, some smooth coasting when it
Speaker 1: comes to interest rates, but at the same time, we
Speaker 1: need to keep up with what's going on in the world,
Speaker 1: and we can only live in a bubble of having
Speaker 1: very low inflation for a very long period of time
Speaker 1: because look at what's going on around the world, it's
Speaker 1: so much higher. And that's just the outcome of the
Speaker 1: world that we live in. And I know that that's
Speaker 1: not what people want to hear, and they want to
Speaker 1: hear some hack to avoid it and what that means.
Speaker 1: But I think it's just about really understanding that. I
Speaker 1: think that a lot of us are going to have
Speaker 1: to have some hard conversations because you know, as a
Speaker 1: small business, I'm going to have to review that and
Speaker 1: make sure that my employees are looked after in line
Speaker 1: with what the increased cost of living is, because I
Speaker 1: don't think it's fair on new jests that I pay
Speaker 1: you the same I did last year, but stuff's costing
Speaker 1: you more. Therefore your lifestyle is suffering. It doesn't make
Speaker 1: any sense to me. But I mean, you work for
Speaker 1: shees on the money, so you would expect me to
Speaker 1: be on top of that. But if you work for
Speaker 1: a small to medium sized business, it's very likely that
Speaker 1: they're not having these conversations because they're not increasing their
Speaker 1: revenue and they're going to have to increase salaries. So
Speaker 1: I think that a lot of us are going to
Speaker 1: have to say, all right, well I need to talk
Speaker 1: to my boss because I do need a raise. I
Speaker 1: do need to have this conversation, and I am worthy
Speaker 1: and I definitely deserve this. It's not a I'm doing
Speaker 1: more work and I need to be remunerated. It's like, well, actually,
Speaker 1: can you at least do it in line with CPI cheers, mate, like, yes,
Speaker 1: things are more expensive, Yes it sucks, but what can
Speaker 1: we do personally to put ourselves in the driver's seat
Speaker 1: as opposed to sitting at the back of the bus.
Speaker 3: I love that.
Speaker 4: I know it's a tough conversation to have, but you
Speaker 4: don't want to keep suffering at the hands of something
Speaker 4: that's really got nothing to do with you, right, Yeah, Like,
Speaker 4: how do we.
Speaker 1: Shift this mentality of like, oh my gosh, I can't
Speaker 1: believe this is happening to us to how do we
Speaker 1: make the most of this situation? And if that means
Speaker 1: that you sit down with your boss and negotiate a
Speaker 1: higher salary to make sure that you are accounting for this, Like,
Speaker 1: we're not just negotiating a higher salary so that you've
Speaker 1: got more money to save. Yes, we're negotiating a higher
Speaker 1: salary so that you can keep up with the increase
Speaker 1: in lifestyle costs that you're going to experience without having
Speaker 1: any choice. Like, this isn't asking for you know, something
Speaker 1: above and beyond. You're asking for the bare minimum from
Speaker 1: your employer. I would like to be able to maintain
Speaker 1: my lifestyle in the same way I have last year.
Speaker 1: Like that makes sense, right, just seems fair. It just
Speaker 1: seems fair. So I think that we really need to
Speaker 1: take back the power in that way and go you
Speaker 1: know what what am I going to do to make
Speaker 1: sure this works? And we also need to have some
Speaker 1: level of sympathy if you are working for a really
Speaker 1: small business whose margins aren't increasing. I think having those
Speaker 1: conversations around what you can do and how that might
Speaker 1: work for you is definitely worthy of having because I
Speaker 1: know that small business owners are going to be listening
Speaker 1: to this and they're like, Victoria, don't promote my staff
Speaker 1: to ask this, Like I can't afford it. Everything is
Speaker 1: the bare me in a moment the moment like I
Speaker 1: have no profit, I have no this or that. Like
Speaker 1: I get it. But at the same time, what can
Speaker 1: you negotiate with your employees to make sure that they're
Speaker 1: in the best possible position, Because if it's not cash,
Speaker 1: it could be time, it could be more holiday time,
Speaker 1: it could be you know, other benefits and other things
Speaker 1: that come into play that mean that they feel value.
Speaker 1: Don't you think that that's the most important thing here?
Speaker 4: So can you work from home to save money on
Speaker 4: petrol because petrol so expensive and paying for parking?
Speaker 1: Can your employer pay for some of your parking? Can
Speaker 1: your employer do something that takes the pressure off like,
Speaker 1: if they have corporate spots, can you be allocated one
Speaker 1: of them? If you know, again you said it before,
Speaker 1: can you work from home or regularly? That's basically what
Speaker 1: everybody wants coming out of the pandemic. But like, I mean,
Speaker 1: let's blame the interest rates for wanting to work from
Speaker 1: home as well. Think it's about flexibility and what does
Speaker 1: that actually mean? Maybe, And I've got a girlfriend who
Speaker 1: did this recently where her employer said no to a
Speaker 1: raise and she clapped back and was like, no problems.
Speaker 1: I was just wondering, can I only work four days
Speaker 1: a week?
Speaker 3: Genius?
Speaker 1: And she did and they approved it because they were like, well,
Speaker 1: we didn't have budget, but like, yeah, if you want
Speaker 1: to work four days a week, like she's just gotten
Speaker 1: a whole day a week back. Yeah, that means that
Speaker 1: she can allocate it towards something else that's going to
Speaker 1: make her happy. And she's not going and doing a
Speaker 1: side hustle or another job or anything in that time.
Speaker 1: She's literally just using it to have the lifestyle she
Speaker 1: wanted to achieve. So I think it's about being a
Speaker 1: bit creative, Like do you talk to your employer about
Speaker 1: that or even if you don't want a whole day?
Speaker 1: Do you just go, hey, you don't have to pay
Speaker 1: me more, but can I just not come in till
Speaker 1: ten every day?
Speaker 3: Yeah? Like there's a whole range. I feel like there are.
Speaker 1: So many things that you can do and you can
Speaker 1: you know, have as a part of your contract that
Speaker 1: so many people aren't pretty too.
Speaker 4: Yeah, and that will hopefully ease that financial burden.
Speaker 3: The world kind of feeling a little bit right now.
Speaker 1: Exactly all right, Well, I think that that is it
Speaker 1: from Victoria's rants, and I just want to pick people
Speaker 1: up and be like, no, you can do it too.
Speaker 1: It's okay. But I think that is all we have
Speaker 1: time for today. So all right, George, back over to
Speaker 1: you in your small Harry Potter cupboard.
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Speaker 1: See you next week, guys, ye hye guys,