Property Hub - Investment Insights & Inspiration - Get Invested: Part 2 - Serina Bird on how to pay off your mortgage in 10 years

Episode Date: October 20, 2023

With the cost of living crunch, rising interest rates and inflation, is paying off your mortgage fast even achievable? Serina Bird believes it is.  Finance writer and ‘frugalista’ money coach Serina Bird joins us again for part 2 of our discussion on 'how to pay off your mortgage in 10 years', sharing tips, tricks and strategies to pay off your mortgage faster so you can enjoy your life. Last week we started the conversation with Serina on how the mortgage is a noose around the neck of most Aussies for up to 30 years, but it doesn't have to be. Serina unpacks insights from her latest book, How To Pay Off Your Mortgage In 10 Years, revealing finance hacks, savings strategies and traps to avoid that will appeal to both home owners and investors. Don't miss the many practical learnings in part 2 of our conversation today. NEW - Join the Property Hub community on Substack! Sign up to get Australian property news, opinion and episodes in your inbox: https://propertyhubau.substack.com/  Three easy ways to Get Invested right now: Subscribe to this podcast now, if you haven’t already, and get the inspiration delivered to your podcast feed each week Get a copy of my book, Get Invested, for FREE, and find out what it takes for you to invest in living more, working less. Go to: https://knowhowproperty.com.au/get-invested-free-ebook Join the Get Invested community. Each month Bushy sends a free and exclusive monthly email full of practical ‘Self, Health and Wealth’ wisdom that our current Freedom Fighter subscribers can’t wait to get each month. Just visit bushymartin.com.au, scroll to the bottom of the page and sign up. About Get Invested, a Property Hub show Get Invested is the leading weekly podcast for Australians who want to learn how to unlock their full ‘self, health and wealth’ potential. Hosted by Bushy Martin, an award winning property investor, founder, author and media commentator who is recognised as one of Australia’s most trusted experts in property, investment and lifestyle, Get Invested reveals the secrets of the high performers who invest for success in every aspect of their lives and the world around them. Get Invested is part of the Property Hub podcast channel, your home for property investment insights, inspiration and stories from Australia’s top property experts, investors, leaders and analysts. Subscribe now on Apple Podcasts, Spotify and Google Podcasts to get every Get Invested episode each week for free, and also get full access to RealtyTalk, Australia’s top online property show for red hot property investing news and insights direct from property industry leaders and influencers. Property Hub is a collaboration between Bushy Martin from KnowHow Property, Kevin Turner from Realty, show producer Andrew Montesi from Apiro Marketing and Apiro Media, and Australia’s largest independent podcast network DM Media.  For business enquiries, email [e-mail]. See omnystudio.com/listener for privacy information.

just to sort of kick off on on diving into the book can you tell us why you wrote it what are the key messages and who's it best suited for Serena? So it's written not for people who are thinking of buying a house although many who are may but for people who've already made that decision so they've made this that decision interest rates have gone up well you know we could all complain about it because it's pretty unfair right so um SHIT happens but like so what now. Welcome to Get Invested on the Property Hub podcast channel, the leading weekly show to help you unlock your full self-health and wealth potential. I'm your host Bushy Martin and each week I go deep with the best investors, experts, leaders and founders to find out what

it takes to break free from the grind, discover freedom and live by design. Subscribe now and join me and get invested in the life you really want. Let's get started. Hi, Freedom Fighters. This week, we continue with part two of our great conversation with Serena Byrd. Last week, we dug into Serena's own property and mortgage journey, and now we pick things up to unpack her latest tips, tricks, and strategies to help you enjoy your life more with less financial stress, based on her latest book, How to Pay Your Mortgage Off in 10 Years, Even When Interest Rates Are Going Up. So enjoy, and let's get invested. Look, really enjoyed what you've shared with us so far on your own journey.

I now want to turn to your latest and greatest book, How to Pay Off a Mortgage in 10 Years, even when interest rates are going up. So to set the scene around this, Serena, what common mistakes do you see many homeowners make in relation to paying off their home loan? Well, there's a lot. And I think one of the big ones is that they feel they need to renovate immediately and that they feel they need, like, all the best appliances. They need the brand-new fridge and they need the brand-new furniture. And it's understandable, right, because they're really excited, often particularly for first-home buyers, younger first-home buyers today. They are living at home for a lot longer than previously. So it's a whole different trend now.

So, you know, they often haven't had that flatmate experience or haven't had as much of it. They've been living with mum and dad for a long, long time. And, you know, by the time they get their house, they really want to make it beautiful before they have people over. My eldest stepdaughter, and I don't really like using that term, but, you know, she's 34 and so she's just moved into their dream home six months ago after building. So it's a lot, lot later now that they're moving in.

But that said, because of the way compound interest works, you know, it's a big snowball. So the quicker you can reduce that principle, especially early on, the better. So if you're able to wait for a little bit, it makes a huge difference. And I always remember laughing because we got this secondhand furniture. These days you could probably get a lot of furniture free, either on the curb or through by nothing. But in those days, I think it was definitely a Selbo's piece.

And they had these really bad cushions on the four-seater dining setting. dining setting is um building the lily a little bit it wasn't that exciting it was a you know a wooden thing but underneath someone had written with big big marker pen you know mum dad and the name of the kids and then over time the kind of cushions disappeared and people would come over and they kind of laugh about this you know like this big house and you know mum dad and the kids but you know until we could afford nicer furniture that did fine so you know i guess that's the biggest uh biggest mistake is you know having too big of a mortgage to start with um and then spending more on things which is understandable because everyone wants most people want a really

lovely home but you know spending too much to make it look good too quickly 100 having to have a now rather than that delayed gratification yeah you know i was very similar to you when when i came out of my first marriage we had zero uh and when my now uh partner in all things sonja got together i remember the place we live we couldn't even afford heating or cooling so in the heat of winter we're sitting there with our beanies on with with with steam coming out our mouth and i remember laughing about it uh because it's like well we're here now but we know where we're going and by making this sacrifice we know that things are going to get a lot better down the track if you can actually gamify the exercise so that you're actually enjoying this and you know that

you'll laugh about it in the future I think it makes it a lot easier rather than have to keep up with the joneses and have the latest and greatest and most expensive everything right here right now so we're so a really good exercise then I guess it's a really good segue into the book then because I'm just to sort of kick off on on diving into the book can you tell us why you wrote it what are the key messages and who's it best suited for serena so i actually wrote this because i was approached to write it so leslie williams from major street publishers contacted me in i think it was about mid-february i'm trying to think of the date it wasn't valentine's day so i think it was before that we had a big um multicultural festival here in canberra and i

remember it was that weekend so she contacted me on a thursday i sent a few ideas across to her via email we had a meeting on a Friday and nutted out the book chapters on that Friday and she sent over a contract on the Monday it all happened very quickly and um I'd been noticing the cost of living crisis obviously because I write about frugal things but had sort of felt a little bit like um not quite helpless but sort of wasn't quite sure how I could be helpful because a lot of people are really in in distress and it's really important to get the tone right with that and um you know she was really adamant that you know something needed to be written that uh she recalled the success of anita bell's book your mortgage and how to pay it off in three

years and i can't remember when that was published but it must be over 20 years ago i remember reading and it was it was so influential for me personally i still remember key parts of it so it was sort of time to do something with a more modern slant that was more relevant and i must admit while i was overjoyed about doing this and i had to write it quickly i was also a little bit nervous and I guess this goes into the point of who the audience is and who the about the tone and I know that first home buyers particularly often feel really like they've been patronized that they've been spoken down to they feel very anxious you know with the cost of their mortgage and they feel like they'll never be able to repay I didn't want to come across as you know

a slightly older woman talking down to them and insinuating that this cost of living crisis and the housing affordability crisis is all their fault, I really wanted it to be more compassionate and also practical. So it's written not for people who are thinking of buying a house, although many who are may, but for people who have already made that decision. So they've made that decision.

Interest rates have gone up. Well, you know, we could all complain about it because it's pretty unfair right so um shit happens but like so what now like you know what happens now and i i was really insistent on having um a younger editor um and the editor she was just brilliant and i really just wanted to make sure that it wasn't tone deaf and it's very much a bit like a choose your own adventure like i mean i'm pretty frugal and not everyone is necessarily going to immediately overnight adopt my lifestyle um but it definitely gives you quite a few I believe will give quite a few insights that will get people thinking uh particularly even compound interest like I mean

I know it's pretty obvious and you obviously work on finance and have had lots of guests but why people really don't know what that means until they start seeing a few graphs um and and the interesting thing in terms of audience is why I thought most of the readers for this book would be a younger audience uh sort of people in their 20s and 30s um and usually i write or podcast for a slightly audience an old slightly older audience more in line with myself i found that it tended to be mums buying the book for their kids which was pretty awesome so actually it fits both demographics yeah i've got to say having read the book cover to cover i think it's got a really good tone It's got wide applicability.

And as you say, people can cherry pick what feels right to them, but you've given them such a really good menu of ways that are going to enable them potentially to be able to knock off big holes in the home and paid off years earlier in a way that suits them without feeling they're being talked down to or patronised in any way, as you mentioned earlier. So I think you've absolutely achieved that goal in spades. Thank you.

Serena. So congratulations on that front. But I guess sort of now getting into the book, why is paying your mortgage off such a sound financial strategy, do you think? Once again, another good question, because often people feel like, you know, their mortgages are set and forget for 25 to 30 years, increasingly 30 years.

And because the interest rate is actually, you know, often lower than projected returns from other things that, you know, it's kind of the boring safe option but there are a number of reasons to do that it's a compound interest is the big one uh as i mentioned before it's like this big snowball and so the quicker you pay it off the better so like you know one dollar paid off now isn't just one dollar it's like one dollar over that 30 years and it doesn't equal 30 years it's complicated the way it gets treated because you know the interest is still going up but certainly the quicker you get into paying off that principal the less interest you're going to pay over overall i mean if you

don't pay it off quicker you'll end up paying more than what you paid for your house in interest and so once you start playing around uh with online mortgage calculators and you see it's not just the time it's the interest you save you go whoa that's a lot of money yeah so that's a big one uh the second one is uh that it's you know it's that emergency fund it's that contingency fund you know uh assuming you have a way to access that those funds uh you know whether you've got a facility or an offset account you know you and you know and obviously sometimes some banks for various reasons have in at various times not allowed people to withdraw but if you're regularly repaying you can usually withdraw so if you have something that comes up in your life suddenly and

let's face it we often do i mean i've got you know expensive orthodontic stuff this year but sometimes other things happen quite unexpectedly uh you know it could be you know touch wood for instance getting older parents into aged care homes quickly you know you've got this ready cash that's there and it is much better than say just putting it in a bank account because it's bringing down that principle so it's a really sound investment it's also a really good tax-free way of saving in in a way too so there are some tax advantages to doing that as well so there's a number of reasons too and it gives you that kind of buffer that kind of economic buffer and then later you can invest in other things but just sort of get a bit of security in your home first

yeah i love that but i want to focus on the the 10-year horizon for a moment yeah as we've said a couple of times already on average six hundred thousand dollar loan at six percent uh then you know the monthly payments for a pni loan are about three thousand six hundred bucks a month now that just to put some shape around that i'm taking this directly out of out of the book that means that the total cost of the loan is going to be nearly $1.3 million and the total interest payable is just under $700,000 based on that. So they're pretty big numbers in the course of what you've just said in relation to, you know, paying more in interest

than you've actually potentially paid for the property. But sort of based on the average $600,000 P&I loan at 6%, how much extra do you need to repay every month to pay it off in 10 years? Have you got a feel for that? Yeah, so based on my calculations, which I all did at themoneysmart.gov.au, I think I worked out it was like, and quote me if I'm wrong, because you've been looking at my book more quickly, more recently than me,

I think it was 6,661 a month, which sounds horrendous, right? It sounds horrid. But that said, if you are, say, two people working together, you know, if you can manage to live off one loan, if you can take on some secondary work, if you can live super frugally, if you can Airbnb a room, if you can have flatmates, you can sell a car, like there's all these different ways that you can get closer to that number. Now, you may not manage $6,661 per month in mortgage repayments, because let's face it, that is quite a lot. But anything more than that baseline of about $3,597,

and of course, everyone's mortgage will be different. This is just, you know, an example, we just kept it static so people can see that, is definitely going to make a difference, both in terms of how you pay off your mortgage quicker and off the interest saved. So there's a whole lot of little decisions that you can make along the way that are going to have a huge impact on your mortgage. 100%.

And I think it's worth reinforcing the point you've already made that a dollar paid off isn't a dollar because if you expand that out based on the snowball effect from compounding interest, it's tens of thousands of dollars over the term of the loan. So what might feel like a small incremental increase in the repayments has a massive impact at the other end of the equation, both in time and interest costs. So it's worth keeping that in mind in that context.

But you've touched on a couple of these already, so I'd like to sort of dive into them a little bit. Can you sort of break down for us what are the best goal setting and mindset strategies and hacks to actually reduce your mortgage then? well there's there's quite a few um so i might just focus on a few that i like so i kind of um think it's really important to understand a little bit about neurolinguistic programming which is a really fancy way of saying are you the sort of person who likes to talk about seeing things or hearing things or experiencing things and you'll usually know because you know

you you usually have a preference um if you're the person who likes to see things you know write a graph look at graphs look at how they work um put a graph up about you know where you need to be track your progress that's a pretty good way to keep on track um if you're the sort of person who who really gravitates towards sounds like you know say your goal out out loud every night before you go to bed which is kind of a napoleon hill uh think and grow rich kind of strategy really and that's what he advocates you know looking at your goal saying it out loud feeling it you know believing it to be true and it does something you know subliminally to your brain that you know then the next day you go about your day you're sort of consciously or unconsciously looking for

opportunities to save money to get to that goal and then the third one is because I'm more of a kinetic learner myself and we're pretty rare is I have to do something a little bit more than both of those it's often kind of a combination of those two in addition to those two I actually have to feel it so and experience it so it might for instance be going into a bank branch or looking online about how you discharge your mortgage thinking about how it would feel when you kind of see that zero balance thinking who you might invite to a party to celebrate or what that party might look like so knowing a little bit about your preference can also help them to set your psychological tool tools in terms of setting that out so I think that's pretty important

yeah and I just think believing it's possible because there'll be so many people who say no you can't do it that's impossible yada yada yada and you know there's a lot of pressure to go out with spendy friends because australia we love our food we love our culture you know there's always someone who's like let's go for a weekend away let's go visit a winery buy lots of wine uh you know let's go to a restaurant spend lots of money you know if you've got that really clear goal it's really going to help 100 and and beautifully uh summed up there i mean i'm a very visual uh learner and communicator so just like you said i'm into vision boards and and others that really make that happen uh but putting yourself in the space and feeling it there's that intentional

exercise attracts what you need to do and you start seeing more of it so i think you know beautifully summed up in in that regard one thing i wouldn't mind you talking a bit more about because something i enjoyed in the book was avoiding loyalty tax i think it's a great expression. Can you put a bit more shape around that for us? Yeah, well, I forget where it currently sits at. The ACCC used to put out regular kind of notifications around this. I think Professor Alan Fels used to talk about how many billions of dollars Australians would pay every year on the loyalty tax. And I'm not sure where it's at, but it's particularly important when it comes to mortgages, because often banks or other lenders, because increasingly it's not just banks,

there's a lot of non-traditional lenders in the market will offer these fabulous rates to new customers so it's not just the honeymoon rates because often there's honeymoon rates for the first six or twelve months it's more generally these these fabulous you know rates but then you know they won't they'll start to not pass on say interest rate cuts or they'll pass them on too much when the interest rates go up over time so after a couple of years you'll find that they're not so competitive and um people are too scared to do anything about this because it's really sort of scary and it's daunting and they just sort of go oh well it was the best at the time we just get busy like our life gets busy um so we don't have time to shop around and see if there's

a better deal and you know maybe if we could switch and there are costs quite a lot of costs involved in switching mortgages it's kind of like your last ditch thing but certainly i've done it and I've done it more than most people will, but when I calculate the savings, I'm like, yeah, hell yeah, I'm going to change. Or just calling up your lender and just asking, you know, I'm on the best kind, am I on the best kind of deal? You know, and if not, why not? Now, I thought I was pretty pushy because I sort of do this, I don't know, every six to 12 months or so. But I met someone recently who does it every single month. And he's actually banking with one of the big four and he's got a great rate and you know you don't have to be rude about it

uh you just have to you know be persistent and you know and and know that you know that the way that the whole mortgages are structured it's the new entrants are getting a better deal than you and you're not being rewarded for your loyalty absolutely beautifully said and you know we as you as you know we've got a finance breaking team so that's our bread and butter we're we're constantly asking our clients, lenders, what are they prepared to do? And, you know, one thing I can suggest to anyone listening, it doesn't take long to jump online and find out what a current cheap rate is. If you just go to your existing lender with that rate and say, what are you prepared to do to match? Otherwise, you're going to lose me. You'll be amazed at what most lenders

are prepared to do. Mind you, we have seen a slight change in that environment in recent times because a lot of the banks are now aware because the rates have gone up so strongly and borrowing capacities come back the banks know that a lot of clients aren't in position to be able to refinance even if they could because their borrowing capacity is no longer there so that makes it challenging and they've almost become like golden handcuffs to some degree but the real key there I think as you've really well mentioned is to review this regularly because you know 70% of all the home loans written in the country now are done through finance brokers, Serena, which is a big chunk of them,

and a good finance broker who knows his salt and has access to, you know, there's about 40 different lenders and about 2,000 different loan solutions available in the market right now. And it's not difficult without incurring a lot of your time and headache to get a good finance broker to do that homework for you and do a cost-benefit analysis to see whether It's actually, you know, what is the true cost of the change

and what's the break-even time on getting back to getting in front of them. Yeah. So it's, you know, doesn't take a lot of effort. There's plenty of opportunities there and you'd be surprised at how much people can save. It's not uncommon for our team to be saving, you know, $1,200 a month just by refinancing someone's loans

to somewhere else. So it's a pretty big payday if you're prepared to take that step. So beautifully said. Now, one thing that I love about you and always loved about you, Serena, is your focus on food and what you share with us in that regard. And you've got some really good tips on this whole exercise. Can you suggest some of those in relation to that whole aspect that might help us reduce our harm line? Well, thanks. I'm a bit famous at the moment for my $100 a week grocery challenge.

And actually, when I wrote my first book, The Joyful Frugalista, I talked about a $50 a week challenge. But a few things have happened. One is I've married a man with a big appetite. And my children, who were previously very young and didn't eat much, are now teenage boys. You know, how dare they eat? You know, next thing they'll be wanting to breathe, you know. It's terrible like that. And, of course, inflation has been a real kicker with that.

Why I do this challenge, it's not because we are starving necessarily. necessarily but it's actually to reduce our waste I have so much food like in my cupboards in my freezers in my fridge people give me a lot of things I'm very blessed like that and then plus I like cooking and over time I've developed quite a lot of frugal cooking hacks and in fact in the past I have shared a lot of budget recipes including three years ago when we first met a little bit less so now, but that's really how I started blogging actually really is blogging about frugal food. For instance, you know, as we speak, I've got, you know, my sourdough starter brewing, you know, bubbling away in the kitchen. That'll be another, you know, loaf of bread that

I'll be making. I'm really into sprouting at the moment. So I've got some of the sprouts, of all the seeds that are sprouting. I make my own kombucha. I make my own yogurt. um starting the veggie patch uh just a bit challenging living in an apartment but still possible i'm cooking with a lot of my own um homegrown um parsley you know and did a you know a big bulk shop on the weekend at costco so there are certainly a lot of ways uh that you can eat within in budget and be more mindful of your food and and and your waste a lot of it's about eating seasonally menu planning uh you know moving away from processed and packaged food and also recognizing that there are times when we're just exhausted so always having something that's ready

to make in the freezer or an easy go-to meal because often that's easier than being organized enough to decide what you want to have delivered or by takeaway it like it just reduces the mental load 100 i love all of that and it's a really good rate and what really interests me about the combination of those exercises, as you say in the book, there's potential savings of $150 a week by doing that. Now, if you put that $150 into the average mortgage, then as you well state in the book, that's going to save nine years and four months and reduce your interest bill on the loan by over $250,000. So again, just by some very simple exercises there, there's a means of making a really big impact uh the other area that i really enjoyed was you know rethinking uh transport

so yes can you can you share a little bit about your thoughts around that as well yes i've got really detailed calculations in my book and i'm not going to remember all of them on the podcast um but um i guess there's a couple of main things there firstly we look at what happens if someone gives up you know a second car and it's been a number of years since i've done the maths and i say I the royal way it's really my husband who helped me a lot with this we did this collectively but I was actually shocked from memory in the past I've sort of calculated roughly that having a second car even if you don't drive it is about a hundred dollars or so but it's much more now from memory it was like closer to somewhere between 160 and 180 dollars a week just by having

it sit there and not do anything and that really just shocked me just and then you know if you're actually you know using it regularly if you're driving long distances you know the cost of petrol has gone up quite a lot you know particularly in recent months it's a big feature of 2023 so even driving a car is very expensive now so they are all huge costs so just by switching you know to walking cycling using public transport you can save a fortune and when you think about it if you live somewhere in a in a city and i'm i'm blessed that i do um i'm walking distance to um you know canberra cbd so we walk a lot and we cycle a lot uh so we actually don't use our car unless with their sort of appointments to different places or visiting my in-laws who are on property outside

of canberra or car trips you're already saving several hundred dollars a week like just there and then yeah just there just there and so i mean if you need two cars like that's fine but if you don't like just really think about it like what's it doing in your garage and if you're not using it consider renting it out because there's lots of platforms now where you can rent it out either rent out your car space or rent out your car yeah beautifully said and you talk about carpooling and car sharing and yeah trading the second car for a motorbike there's some great options there that They're also going to keep us fit at the same time, which is a good exercise.

And, you know, when we looked at the motorbike exercise, for example, and compared to the car, there's about $106 a week saving in doing that, which, again, is a bit over five and a half grand a year. And just by doing that, you can slice a further seven years and four months off the mortgage and save yourself over $200,000 worth of interest. So, again, a dollar means more than a dollar exercise, I think. Yeah.

reinforcing here because there's some little simple things we can do you're going to have other benefits that are going to have a major impact on and smashing that home line over time so uh so that's brilliant uh the other thing i'd love for you to comment on is your take on the latte debate and the impact of taking away copies what's your thoughts there well i'm a little bit of a head of the curve on the latte debate and i've got a whole um chapter devoted to this and i i know there's a couple of other people like vince who are very strong in that it's okay to drink coffee camp but look how it all came about for me was years ago there was um oh i forget what the program was there's a money a cable money tv and they asked me to come on and they gave me this

questionnaire about you know how much i spend on key things including coffee now i'm not a coffee drinker i've recently gone back to occasionally having decaf coffee but i'm one of these sort of people that if i drink coffee i just really don't sleep i run around all day i do things really fast but really badly and i make lots of mistakes and so when i was pregnant with my first child who turns 14 in a couple of days i just stopped drinking coffee altogether because you know it's it's recommended to reduce your consumption during pregnancy anyway and i knew i wasn't very good with it so and it wasn't that hard so i completely gave gave it away so i couldn't put coffee down but i do drink tea so based on an old tea bag that i often shared with my husband with

a bit of milk no sugar I think I worked out it was like two or three cents I've got a whole table in my book comparing different tea brands and how much they cost in various iterations I've you know worked out how much it costs for the energy to boil a jug but let's just say you're not going to pay more than 10 cents for a cup of tea made yourself compared to going out and getting a barista made coffee which is going to be quite expensive so you know I you know went on and I talked about all this and it sort of became a bit of an issue and then when I or a bit of a sort of hot topic and then when I published my first book The Joyful Frugalista I was invited on to Sunrise for a segment and we were in Coles and they were sort of looking at angles and I said well you know

what you know I often do talk about the savings with coffee and you know even if you invest in like a quality instant coffee like Bacona which is often on special you're already saving this amount of money so why don't we do that as an interest so I sort of got a little bit glib and I sort of went and you can save hundreds and thousands of dollars you know by switching to coffee um and then later that week I was at a friend's place for a housewarming and he said I saw you on tv and I was like oh did you now because you know all very proud of this segment and he said I saw you on the project I was really confused because I didn't have a segment on the project I was like no you must be wrong it was like sunrise he's like no no no the project and

what I realized had happened was you know they often do a parody of various uh you know media things that have happened that week and so they'd taken that sunrise clip and they'd made fun of me and the amount of coffee that I thought they thought I might have drunk um anyway and I was mortified and I was really upset hubby told me just to laugh at myself and get over it but like it really did take quite a while to get to that point but being a writer I went right I'm gonna you know get my own back here and so I started to crunch the numbers and I thought well for a lot of people they're probably stuck in a job like a public service job for instance I shouldn't say stuck because I have a lot of colleagues who love what they do but say 42 years like it's just a

random number and say you have one cup of coffee every day and at that stage it was four dollars and of course now you're lucky if you get a coffee for four dollars and of course with most people they don't just stop at a coffee they'll have a croissant I used to love the scones that you know the spinach and feta scones or the other date scones they were so good or the egg and bacon roll or you know whatever it is but you know we're all human right you get a lunch while you're there banana bread whatever it is um so it's not usually one coffee and that's it it's usually coffee plus snacks and then you might come down a few more times during the day I mean I've had friends who said oh this is my third coffee it's just been such a nightmare day you get in that

habit but we just did the calculations based on one and I did the calculations a variety of ways but the most the thing that shocked me the most was that if you went down with your mates every morning and they all got a coffee and you just went for a chat and then had a cup of tea instead and you invested that money salary sacrificed it into your superannuation over 42 years you come away with 1.3 million so that's kind of where I stand on the latte debate and then um you know I was still feeling like this was sort of like no one quite believed me and then a couple months later Susie Orman then did this whole piece about how you were and excuse my language but this is what she said you know peeing your money down the drain to the tune of about 1 million dollars based

on what would happen if you put the money into the US equivalent of superannuation instead. So that's kind of where I stand on it. And it's not to say that drinking coffee is bad. It's about discretionary spending and habitual, you know, habitual discretionary spending. My father, for instance, as he was recovering from depression, he would walk every morning to his local coffee store.

He would sit there. He'd read a paper. It was incredibly important for him. you almost have you know spiritual experience significance and some people talk about coffee being like that for them and if that's the case for you that's fine but like what else are you doing that's the kind of habitual spending is it the takeaways on friday is it buying bottled water australians are the second largest consumers of bottled water in the world even though we have really safe drinking water uh is it uh getting in your car and driving somewhere rather than

walking like what are the things that you're doing that are discretionary expense expenses that you do regularly that you can look at and you can cut out yeah beautifully said and i mean unfortunately i'm trying to kick the the coffee habit i i love my coffee and i'm a d i'm a decaf man now because i'm like you i'm i'm i'm uh belting around making dance in the ceiling if i yeah i drink real coffee during the day these days but what i love about uh what you've shared there again pick pick your poison and pick where you can slice from but just knocking 35 a week out of the equation and putting that $35 on the home loan, there's another three years and nearly 85 brands worth

of interest you've saved just by doing that. So, again, it's just, you know, what seems like a little thing can have a massive impact. The other thing I'd love for you to share with us, Serena, which, again, is something I loved in the book, is your debit gold card strategy for discretionary spending. Can you just share a bit more on that one? yeah so every fortnight hubby and i give each other an amount of money we've just given

ourselves a raise actually for many years for about six years we'd give each other we'd put a hundred dollars each we've now raised that to 120 most people i know who do this do about 150 so like i said we're differently on the frugal uh sort of spectrum and we put this on a separate card and we spend that on whatever we want to spend it on ourselves i don't have to justify it to my husband he doesn't have to justify it to me he'll often sort of um whinge a little bit or complain about the amount of op shop things i buy especially jewelry and clothing but you know what it's my money on my card i can do what i like with it but i use that to buy coffees you know lunches with with with friends um you know op shopping you know random purchases for things

i might just suddenly want and so forth and because i'm frugal and i don't actually buy a i've actually got quite a lot of money on my card why we call it uh the gold card is because and we've just changed but for many many years we were actually using our quantas card so people don't often know that um these kind of frequent flyer cards uh have a built-in uh like a debit card function and it's designed for when you travel overseas the interest rate and the fees for overseas are not necessarily that great. There are better ways of doing it. But for domestic use, it's usually, you know, no ATM fees

and it's usually pretty good. And it looks like a credit card. So that's why we did that. But I have actually now changed to another bank, which also has that similar colour. So we've got like a bright orange kind of card. It's not the one you might think of and changed to that just because now with interest rates going up,

We want that benefit of getting a bit of interest. Yeah, I love it. So you're combining the benefits of both there. It's very similar. For our clients, we implement what we call the kick-ass automatic saver system where you just need three accounts, an offset account where everything goes into a credit card that never leaves the house.

It pays all your normal and committed regular expenses for council rates and other things. And then what you're left with in the discretionary spend is your living debit card and that's all you need to focus on because once that's gone, no more until your next payday. What you're doing is putting the bulk of your money where it needs to be, which is either paying off the home or accumulating in that offset account while you're very simply

managing the discretionary spend on things that you want to rather than just thinking, oh, I've got heaps of money in the account, we just keep spending without thinking about it. So I love that. And I also love, you know, there's a great section in your book where you talk about making some extra money for your mortgage through housemates, hosting a student Airbnb. And given the rental crisis that we're currently in,

as a way for hardworking Aussies to help contribute to the large number of new skilled migrants that are coming into the country, what a great way to help solve that problem as well as pay off your mortgage. Because again, as you talked about in the book there, you know 650 bucks a month is going to if you put that into the home line it's going to slice nine years and four months off the equation so again some really good tips on on how best to do

that and the other thing I want to sort of focus on now because there's always this feeling oh gee if I'm putting everything into into the mortgage you know I'm going to be living on the smell of an oily rag how can we still have fun and live a little while paying off our mortgage early oh i don't have fun i'm not joyful at all well well the gold card is one of those already so you know you've got your own designated money that you can do that but i do have a whole chapter called taking a break uh in the book where i look about you know we'll talk about traveling uh cheaply and experiencing things you know the reality is that you know often first home buyers not all but often they are younger people and there's a lot going on in their life at that time

you know they might want to get married they might want to you know go to China got to go traveling like I did when I was in my early 20s for instance uh you know they might want to go backpacking travel the world and especially now after we've gone through COVID like people are like well you don't know what's going to happen so you know carpe diem you know seize the day so it's unrealistic to think that you will never have these experiences and some of these experiences can be so formative and so important um you know for instance you know my children a eurasian they're taiwanese australian my husband's taiwanese you know i had a career working on uh china taiwan issues for many years and i would never have had all of that

if i didn't take myself off to china when i was 22 i think 21 21 22 um and then later to to taiwan so you know you do have to have a bit of balance there but i've got some great tips on how to do that cheaply and how to do that affordably and i'd also say too there's a bit of a mindset with this as well we're often conditioned to think particularly in this kind of package tour world and that said i'm going on a great discount trip a deal trip next year to europe and we're really looking forward to it it's already book paid for good deal we're happy with it um that the more money you spend equals a better holiday yeah and the reality is it's not always the case uh we have a lovely cruise over Christmas and it was a beautiful cruise more expensive than I'd normally

pay but it was also a really important family event and the amount of whinges like there's this Facebook group it was filled with whinges and you know I'm there experiencing the service from the waitstaff many of whom were new because um you know they everything closed down during COVID it was only just being stood up so they were doing their best but didn't always have the training um or the systems in place um you know I'm there eating the food I'm there seeing the scenery um everything from my perspective is pretty good but those same people can be really upset about that so just to know that you know your happiness and joy it is a mindset it doesn't have a dollar figure just because you spent a lot of money on a holiday doesn't mean it's actually

more fun um sometimes the fun things happen you know like quite spontaneously uh and unexpectedly like on sunday we had neighbors and friends around and um you know just had a barbecue in the backyard out and we had the candles out and we had these like mini sort of flame things in safe conditions i might add to um we were very aware of um you know the current bushfire uh threat and that was really fun and didn't cost a lot of money so it is your happiness is very much a mind mind mindset thing 100 agree and just sort of uh reinforcing that point that the the best holiday that my wife Sonia and I have ever had is a trip we did to Europe years ago and we were on a really tight budget, like a really tight budget,

but that forced us to go to places and do things and try different types of accommodation that we never would have if we'd gone down the vacuum traveller hotel route. You know, we did homestays and the connections and relationships we built as a result of that. It's just awesome in comparison to following the sort of completely planned out itinerary in the normal places to say. And I think Sonia and I, Sonia is currently delving

into a frequent flyer exercise where she's delving into cards and it's an Amex type exercise where on normal expenditure you can potentially double or triple the frequent flyer points and there's some really good programs out there now that you can then use those points for travel experiences which is creating an opportunity for expenditure that you're going to make anyway but giving you the opportunity to travel and enjoy it without any extra expense.

So, again, it's where there's a will, there's a way, and if you can get creative about it and focus on the experience rather than what it's going to cost, then life can be a lot more exciting. So I love that. Now, I guess just to circle back to a couple of my opening comments in the introduction, I'd love your thoughts and your views on paying off your home loan first before investing. What's your read on that school?

Yeah, so I do talk about this in the book and I try to be a little bit careful about this because often like when people buy a house, they also get interested in investing and they sort of want to do everything. Like it's, oh, yeah, I should be investing in shares as well as investing in the house and I should be doing super and I should be doing all these things. And my take is not to say that you can't invest in everything, but just to sort of keep it simple.

Like there's something so incredibly empowering about having a really clear goal. And while a lot of the research does say that other classes of investment, particularly shares, over the long run will do better, somehow psychologically we make those sacrifices to pay the mortgage and make the additional payment in a way that we might not for other classes and I don't really know why that is it's just it's a fact so um I would say that you particularly who've just bought a house you know either recently uh you know maybe this year on the you know in the last couple of years just knuckle down for a bit and just really focus on that and then focus on that hard and then once you've got a little bit more equity and you're a bit more secure you're in a situation when you can take better greater

risks because you know often the higher the return the higher the risk I mean you know this is usually taught as investing one-on-one but to be honest it's not always the case sometimes they're overlooked opportunities but you know generally the higher the risk the higher the return you know if you've got quite a lot of equity in your home because you've been paying off your mortgage and you do then make a small investment in something risky like angel investing for instance and it doesn't pay off it's not catastrophic it's not the end of the world but if you have only just you know started your mortgage and then you do all of these sorts of things and then you go oh i shouldn't miss the crypto boat and i shouldn't miss this and you shouldn't do that it can then

lead to some big problems so i just sort of think particularly in the early days have a really clear goal make paying off your mortgage you know priority because the benefits to be gained you you know, from, you know, getting down that compound interest are huge and do it. And, you know, there is no such thing really as a sure thing because, you know, I guess, you know, there is an opportunity cost here, you know, if you're focusing on your mortgage at the expense of other, you know, classes investment with higher return, but it's pretty good. You know, if you're going to make additional repayments on your mortgage, you're not really going to lose money other than, you know, the opportunity cost or something else, but it is a kind of a sure

thing it's a bit like you know bird in the hand sort of thing so that's kind of where i i stand on this and and i do think it is important because i think there are so many flashy kind of investments around now it's really easy to get distracted and um not saying you can't do those things but just have one clear focus first and just really nail that yeah well said i think it's about creating the happy habits and the daily disciplines through making those repayments that then will enable you at some point once you're in a better position to be able to invest in other things, whether it be an investment property or shares or what have you.

But creating that habitual commitment to that exercise is the first thing because, you know, I'd much rather people be paying off their home loan and blowing it on going to the pub on Friday night or socialising over the weekend. So, you know, very well, very good point made there. Now, always at this point in the exercise, Serena, and you'll probably remember from this when we did it last time, but I'm going to get a different twist from you this time,

jump into what I call the ambush fast-forward, the ambush round where I'm going to give you the blindfold and cigarette and hit you with some quick questions. So to kick that off, Serena, what's your current favourite quote and why? Oh, I don't think I have one, or maybe I do. Actually, I will give my own quote one day at a time, one thing at a time. which is something that really got me through being suddenly single

and divorced and everything else. Beautiful quote and pretty self-explanatory. Apart from your own awesome books that you've authored, what's the top book that you'd currently recommend we read and why? Oh, I like your books. The one with the black and the gold, I forget the title. The Freedom Formula, that's the one. That's right, with the back-to-front writing.

I really like that. it's just so really lovely and honest you have to read that book excellent thank you very much i didn't expect that part but i'll i'll take the compliment thank you and now back on the investment arena what what's the worst and best piece of investment advice that you've ever received serena i guess the worst investment advice was just before the a the gfc we had someone advise that we mortgage the property to the hilt and buy shares we didn't do it but it could have been catastrophic but actually if i could had a second really bad uh piece of investment advice it wasn't for me it was actually my nana she was moved downsizing sold the family house moved to

retirement village also around that time and a financial advisor advised her to invest in a real Estate Investment Trust, which then within a year was frozen and she never saw any of her money again. Oh, that's terrible. What about on the flip side? What's the best piece of investment advice that you've ever received? I guess getting into property. You know, I guess, you know, talking to other people

who were property investors, especially where we were and just really getting into that. Yeah, definitely. And learning about index funds, you know, the precursor to ETFs, and I wish I'd done that sooner as well. Yeah, no, great advice. Coming back to the habits thing we've touched on a little bit during the chat, what's a personal money habit,

a happy money habit that you employ that's contributed most to your annual success? I'm going to be, this is a bit of a cliche, and that's shop around. And I say this because I know one producer who hates it when people say that. But, for instance, I wanted to buy some perfume on the weekend for our anniversary. It was my gift to myself.

and the online price was $10 cheaper than what was in store. So same product, but just really shop around. And we just had to buy a new dishwasher and what we got was about $300 cheaper just by spending a little bit of time doing a bit of research. Yeah, brilliantly said. Again, we've got to break through this instant everything now routine. Just do a little bit at home.

It doesn't take much and ask the hard question to keep a lot of your hard-earned in your pocket. Final question then to sort of bring our great conversation to a summary today, Serena. What are your key mortgage reduction takeaways and must-do actions for homeowners? I think really just get in the habit of making additional repayments and do it from the beginning.

Like, don't wait. Like, so many people are like, oh, but, you know, I've only just done this and I still want to buy the new furniture and I want to do this. Like, do it straight away. like even if you can only afford an additional five ten dollars like do it because you never know the time that you might need access to those funds so every single thing you can do like um like we're talking about coffees before like often i would you know be in a line with a friend

who would want to go down for coffee and i'll just go for a walk with them and that you know say five dollars they would spend i would go back up and put that on my mortgage money i didn't spend so you know get into that habit of prioritizing making all those additional repayments yeah beautifully said now awesome uh now for those like me in the audience who really resonated with your message today serena how can listeners find out more and get more involved with you they can find me on most social channels so the joyful frugalista on insta my website joyfulfrugalista.com and my podcast the joyful frugalista as well love it uh and great place to have a listen i have a good listen to uh your your podcast myself as a an avid uh podcast listener

i really get a lot of uh really useful uh and actionable tips out of doing that so i encourage everyone to do that uh now uh do you have a a challenge that you'd like to give the get in festive listeners in in relation to your latest book sorry yes i would like to challenge them to implement one tip from my latest book how to pay your mortgage off in 10 years now you may not have read the book yet but we've talked about a lot of things and i would like you to share it on instagram so when this this goes live i will also be sharing this and so leave a comment and then i will have a book to give away to you brilliant absolutely love it so i'm really going to encourage everyone to take some action because it's it's the staff that stops most people

so make sure you do something don't just listen to it do something and uh serena's giving you a great opportunity to do exactly that uh for those that are looking to buy the book where's the best place to get it serena all goods bookstores and online and also through uh my website awesome look uh always love catching away this arena you've got great energy and you always share some really useful and actionable uh stuff that can make a big difference over time really appreciate you coming on the show and let's keep the conversation going thank you so much for inviting me we could chat all day i know you could absolutely okay we'll talk again thank you thanks for tuning in to get invested on the property hub podcast channel your home for

property investment insights and inspiration and don't leave yet until you've taken the next step towards living by design by getting my award-winning book get invested absolutely free when you sign up at knowhowproperty.com.au or bushymartin.com.au and finally make sure you subscribe to property hub to get your weekly dose of get invested inspiration along with every episode of realty talk australia's leading property show for red hot property investing news and insights direct from industry leaders and influencers. Remember to always get invested in your knowledge and I look forward to seeing you next time.