She's On The Money - Ahh, Afterpay

Episode Date: July 2, 2019

Happy Wednesday! A very warm WELCOME BACK to She's On The Money, the podcast for millennials who want financial freedom. Today we're chatting all things Afterpay - the good, the bad, the... very bad. We've got a Facebook group you can find here where you can share your missteps and success stories. We've got an Instagram page that'll keep you motivated. And we've got a newsletter that'll get you across what you need to know. Want to call the hotline and have your money dilemma featured on the show? Call us on 0435 293 886 and leave your voice message! = The advice shared on She's on The Money is general in nature and does not consider your individual circumstances. She's on The Money exists purely for educational purposes only and should not be relied upon to make an investment or financial decision. Victoria Devine is an Authorised Representative of Consultum Financial Advisers Proprietary Limited ABN 65 006 373 995 | AFSL 230323.See omnystudio.com/listener for privacy information.

She's on the money. She's on the money. Hello and welcome to She's on the Money, the podcast for millennials who want financial freedom. My name is Annabelle Lee. I'm a law student who wants to get better at all things money. And to do that, I've enlisted the help of my friend and money expert, Victoria Devine. Hello, Victoria.

Hi, hi. First of all, we just want to say a huge thank you to everyone who listened to our first episode. That was so unexpected. Absolutely unexpected. Very overwhelmed, all the emotions. Honestly, I did not expect the reception that we had, but I think it really validates why we're here. We actually had a listener post something to her Instagram story and tag us. her name was shaylin shaylin i'm sorry if i'm butchering your name she gave herself a wax burn

on her upper lip by deciding to do an at-home wax i think she was oh my gosh i saw that i saw that i felt so awful i replied to her instagram story pretty quickly i i reposted it because it was quite funny but at the same time have i started something you need to take responsibility for all the burns i'll take responsibility for my financial advice but i'm not sure about my beauty advice. She's an all-round expert, guys, not just a money expert. No, don't take it. Okay, Victoria, today we're going to talk about all things afterpay. It's every millennial's weakness and something that we all hate to love, or love to hate. But before we really dig in, let's kick things off by sharing a money win or money confession from the week.

What do you have for me this week? All right. I feel like I have a very exciting money win this week that I only get to have once a year. So it was my birthday yesterday. Happy birthday! Thank you. But it meant I didn't pay for anything for the entire day. So I had a fantastic day of going out for brunch and then I went out for dinner with my best friend and yeah. No complaints.

No complaints. I had a wonderful day and it cost me nothing. How was your weekend? Do you have a money win? I, on the weekend, I went out for dinner with my friends and on my way there, this last week mine was vehicle related and this week it's also vehicle related. Oh, I see a theme. I was gonna catch a tram but the tram stopped running for some reason so I decided to catch

an uber I usually catch the uber pool it's a lot cheaper than the other ones but for some reason I was running late and I was in a rush and my finger slipped and I ended up taking the uber black is that oh you're fancy one and I didn't realize until the car pulled up into my street and there was this really fancy driver as well and he was being really weirdly nice and then I rocked up to dinner and my friends were waiting outside for me and they were like I thought you just started a money podcast shouldn't you shouldn't you be trying to save money and I was like it was an accident but I hate being late so I it was the only way maybe you could have said that you just got the free upgrade because sometimes on uber when I'm

ordering uber x's I get upgraded to like uber select or uber black that has never that has never happened I feel like it's it's what playing a game of of bingo but sometimes I get upgraded and I feel a lot fancier than I am. I'll be going to a work meeting and I turn up in like a Chrysler 300 and I feel like a little bit more gangster than I actually am. Hey, you're gangster, Victoria. So now that that's out of the way, let's jump into today's show. Today, it's all about Afterpay, that pesky buy now, pay later service that's been attacking the millennial bank balance since it launched in 2015. Victoria, let's start simply. What's the first thing that comes to mind when you hear the word afterpay? I feel like I have a pretty emotive response to this. Give it to me.

What is it? Oh, it's a really negative feeling. Maybe not a series of words, but I just feel like when you talk about afterpay, I immediately think bad credit. I think bad debt. And I'm not sure if that's a product of my experiences or my perception of the product. I'm not saying it's right or wrong, but my immediate thoughts are negative. That's the really conflicting thing. A lot of my friends love using Afterpay. They use it all the time, but then there are these negative connotations that come with using it. Are those connotations fair, do you think? I'm not sure if my negative connotations come from a place of financial education because I work as a financial advisor, because I also have friends who use it all the time and absolutely

love it. I've got one girlfriend who is consistently using Afterpay on the Iconic and loves the fact that she can get all these dresses, have them delivered to her house, try on the ones that she wants to keep, keep those and send the rest back. And she's never had to have the whole amount of the cost of all of those dresses come out of her account at any point in time. She's a really good saver. She's someone who is really good with her money. So for her, I don't think afterpay is a negative. I think it's something that she's using just because it's convenient for her at that point in time. On that note, let's start with the positives then. how can afterpay be used in a positive way for non-essential items? So I think my friend is a

good example of someone who's using it, but is also in a positive financial position. She's really self-aware of when she's using afterpay, what for, why, what her payments are. I could ask her in a split second, what's on your afterpay? How much do you owe? And she'd tell me what she owes and why she owes it. Whereas I think a lot of people are actually getting a little bit out of control with Afterpay. So they are using it as a tool to potentially not take responsibility for their spending. So they're just not looking at the bigger picture. They're not going, all right, well, I still owe $200. They're saying, oh, that's easy. That's just $50 now. I've got $50 in my account. Where there are a lot of people who are in positions where they're using Afterpay because

they don't have the money in their account and they're hoping that by next pay, they will have the money. I think it's a different situation. So my friend is really good with using Afterpay and uses it in a way that benefits her financial position because she wants to not dip into her savings to afford something that she knows next month she's going to have the money for. So I feel like some people are using it as a tool to budget their spending. So instead of spending $200 right now out of your pay cycle, you get to break it up. And if that's something that you're using as a way of budgeting, then fantastic. But I also think there are a lot of people who are getting into a lot of trouble because they're not budgeting around that. They're not taking responsibility

for their financial position. And they're, for example, purchasing an item for $200 and potentially only seeing it as $50. Now, I will worry about the rest later. And when later comes, they've already made a number of other afterpay purchases and things kind of compound out of control. Yeah. So it requires more effort, I guess, to use it responsibly, which a lot of us, I think maybe I'm too lazy to think so far ahead. I think it's, I don't know if it's lazy or if our generation have their heads in the sand or if it's just, or if we're being enabled to make financial decisions in the moment. So personally, I really like Afterpay as a company, as a business. It's revolutionized the way that purchasing online is

happening. It's even revolutionized the way purchasing in-store is happening. However, I don't think people are taking responsibility for their financial position at all by using it so I think something else that we probably should touch on really early on in this conversation about after pay is that it's about to be rolled out into GP clinics I didn't know that yeah it's about to be rolled out into situations where people who potentially don't have access to you know two or three hundred dollars they need for a medical procedure or a scan or a specialist appointment that they need are going to be able to access Afterpay and I think it's pretty classist of us to think that Afterpay is only for buying retail items. So I'm actually reading now that

Afterpay is expanding its footprints into GP clinics and radiology and pharmacies and all that but it's already been rolled out into over 1100 dentists and optometrists nationally. So what does this mean exactly? Does it leave people with more out-of-pocket expenses or is it better for them in long term? I think it's a really interesting question because used appropriately, Afterpay could be a tool that enables people to get access to medical procedures that they need in the here and now, whereas I think it could potentially leave more vulnerable patients in a position where they're paying for services they might not need or choose elective services that are not within their budgets. So, you know, you mentioned that Afterpay has rolled out in 1100 dentists.

I think that's fantastic because dental hygiene is so important. You know, we had a big giraffe that used to come around to school. Harold. Yes, Harold. I forgot about Harold. So he used to come around to schools and talk about how important it was. But the one thing I think of when I think of dentists is how expensive it is. But how are people actually using it in dentists?

Are they going and getting their cavities filled or are they going and getting some really nice veneers? What does that look like in terms of how people are using it? So I guess it really comes down to whether it's being used for GP clinics, your pharmacy or the dentist, it really comes down to how people are using it, whether they're using it responsibly or maybe they need some more education around it. So yeah, so what I'm gauging here is you can't tell someone not to use it at all. Absolutely not. And it's not a bad service. At the end of the day, it's a bit like getting your car fixed, right? Say I go in to get my car serviced and I was expecting it to be $150 checkup, but they tell me that my brake discs are gone. Is it a smart thing

for me to leave the car service place without having paid for that? Am I putting myself at risk or am I better off if I use a service like Afterpay where I can pay a lower upfront fee for a service that I'm going to need that puts my safety first and then pay it off over the long term by factoring it into my budget? Is that where this should be at? Or am I using it because I wanted new rims on my car? And that's maybe something that an individual has to assess for themselves. But it is so popular. We do know that. We know that over 2 million Australians have used Afterpay. Why do you think modern day lay-by companies are so popular, particularly amongst women? I know a lot of my girlfriends use it, but I don't know if a lot of my guy friends do.

I think it has a lot to do with impulse purchasing, but also kind of that keeping up with the Kardashian style. Well funny you mentioned the Kardashians. Kim Kardashian's brand KKW Beauty was one of the first adopters of Afterpay in the US which shows a lot about how social media plays a role and celebrity plays a role in this whole Afterpay thing. I think it's really interesting and I've been speaking a lot with clients recently about Instagram culture and wanting to keep up with friends and you know we see these memes floating around Instagram and Facebook which are along the lines of how do millennials afford their lifestyles and it being a game of guessing how I think it's really interesting that we have all of this pressure

on top of us to you know have that Gucci belt or have a pair of Gucci sneakers and keep up with the trends that Instagram influencers are putting on the table for us when in reality that's not normal it is not normal to walk around with a $700 belt around your waist when you're earning $50,000. But a service like Afterpay makes it a lot easier to justify it to yourself. I think it's dangerous in that way because it's enabling people to make purchases that are outside of their means and they are not giving it long-term thought because instant gratification is such a stronger feeling than long-term savings. And I think people really need to step back and have a think about, is this a purchase that I would make in six weeks? You know, you see a really beautiful

dress online and afterpay makes it really easy to purchase is it something that in six weeks you would still purchase for yourself if not have a think about it and regardless of whether you can afterpay it now maybe sit on that decision for 24 hours have a think about it is it aligned to my goals is it aligned to what I need to do do I really need a new dress for the weekend a lot of the time when I leave it I just forget about the product and I don't actually like I don't actually need it I don't want it in a few days or weeks down the track yeah I posted something the other day on our Instagram actually about putting 24 hours between you and your spending. I saw that. Yeah and making sure that you're asking yourself a couple of questions before purchasing

it and I guess it's my way of trying to talk people out of purchases they don't need to make but at the same time these are things that we all should be thinking about before purchasing something that is a non-essential. So do you think then that Afterpay would be thriving in a time where Instagram didn't exist or wasn't as popular? I think that it would be silly of me to say that this product wouldn't be something that people wanted to use regardless of the time that we're in. Like think back to when I was, you know, five, six, and my mom used to put, you know, toys on lay-by at the Target toy sale so that she could line them up for Christmas. And I remember that being such an exciting thing to do where, you know, we'd get to go pick toys for our cousins

and I'd get to pick a toy for my sister and we'd put it all on lay-by. Lay-by is when you get the product after you pay. Yeah. So after pay is essentially a reverse lay-by. So it's buy now, pay later. I think it does take the effort out of the transaction and it really goes back to that instant versus delayed gratification. So lay-by, you would think about what you were going to purchase. You would go, all right, I need this product. I can have it in eight weeks. I can have it in 10 weeks with 10 payments or four payments or however many payments it was going to take. But your gratification on that product was delayed because you didn't receive the product until you had fulfilled the goal of paying off that purchase. Whereas Afterpay works in reverse.

You get the product upfront, you get to satisfy your instant gratification. However, you're still stuck with a bill for something that maybe in three or four weeks you're not using or you didn't feel like you needed. And because it's already used, you can't return it. It's not worth the pain that you go through after. Exactly. Whereas a lay-by is kind of building up to a purchase and you're, you know, chipping away at a larger goal. And then that item is the reward for the goal that you've put in place for yourself. So I feel like it takes that away. But I think it would be naive of me to say that afterpay wouldn't exist in a world where Instagram didn't because lay-by was and used to be so popular. So what do you think young people aren't aware of then when it comes

to using Afterpay because so many young people are using it, perhaps maybe irresponsibly at times. So we've touched on why it satisfies Insta gratification and how people aren't really considering the ongoing monthly payments. We've also talked about how people are using it effectively, like my friend, how she's, you know, putting it into a budget and making sure that one Afterpay debt is paid off before she even considers a new one. I don't think people understand how it impacts their credit rating. I don't think people understand how Afterpay affects their goals, how it affects their future wealth, how it affects what they're planning to do for the rest of their lives. And that sounds quite dramatic. But at the same time, if you're

living in a world where you are getting things immediately, you also adopt that feeling onto larger goals. So I can buy a dress right now. This is really great. It's here if you've bought it off the iconic. Sometimes within the day, I'm never going to afford a house because we don't have the commitment to long-term goals and saving for five, six, seven years for your first home, even 10 years for your first home, then seems like a really ridiculous thing to do. You mentioned credit rating. We're going to talk about that right after we hear from you guys. Hi there. You've called the She's on the Money hotline. Do you have a money problem you want help solving do you have a money dilemma you just want to chat about victoria is here to help every

week we'll be playing your hotline questions to help make sense of the money mess you may have found yourself in give us a call on 0435 293 886 and you might find yourself on the show but for now here's a whole bunch of you with the same issue hi girls uh i'm 20 and i think i'm an after pay addict i currently owe around 780 dollars in upcoming payments which is definitely more than i have to my name to this date i think it's difficult because i think for me it's a lot about keeping up and it's become a bit of a coping mechanism to deal with the fact that i don't have the means to remain as you know relevant in terms of clothes and fashion. I've also been buying flights on a recently bit ad hoc.

I'd love some advice on how to call it. I know it's, you know, can't really be as easy as just the way it would be up in practice. And I think it would help me kind of get out of debt, which would be great considering I'm a student not earning a lot of money. Thanks so much. Love the first episode. So it sounds like this listener is aware of the fact she's in a bit of strife. Does this listener's story stack up with the worst you've ever heard? Like are there other horror stories you've come across? I think it's actually quite common to be in that position. Like I'm not going to say it's the worst, but it's also not the best. So I've come across people in the last year or so who have been paying back thousands of dollars on Afterpay because it's all

added up. And I'm not saying that these people just go out and get an Afterpay account and then a week later they're able to access thousands of dollars worth of credit. These things creep up on you over time. So, with Afterpay, I cannot say from experience because I haven't actually used it. As far as I'm aware, each time you transact with Afterpay, your credit level increases. Your credit can essentially increase over time. So, this person would have, you know, started with a $300 limit and then it would have gone to four, five, six and now she's up to a point where she is paying back $1,000 a month. So, this person's situation isn't completely out of, you know, out of line with what I've heard previously, but I do think it is time for her to potentially just

close down her Afterpay account if you can't use it responsibly. If it is not contributing to you bettering your life in a non-possessional way, I think it needs to go. Okay, so there are rumours floating around that Afterpay debt can hurt your chances of getting a mortgage. Is that true? What does it do to your credit rating? I think it's really interesting because so many people are going to have an opinion on this because they are using Afterpay and they had no problem getting their mortgage through or they had no problem refinancing. And you hear a lot of anecdotal stories, especially on threads in our Facebook group about people saying, oh, well, I had no problem with it. Just tell your mortgage broker. And then other people saying, oh, my mortgage

broker told me to close down the account. So when you're talking about credit and it potentially impacting you being able to get a mortgage, they are saying that for a couple of reasons. So, Afterpay is a line of credit, regardless of what you would like to classify it as, regardless of what their website says, Afterpay is a line of credit and it will impact whether you're able to finance something bigger. So, that means that if you're committed to a monthly repayment, it's going to need to be taken into consideration when working out how much you can afford on a mortgage each month and whether a bank is willing to lend to you. So, when we talk about credit and what mortgage brokers look at and what the banks look at, they actually look

at the three Cs of credit, which is potentially something that people haven't heard of before. So these include four factors, character, capacity, capital, and conditions. And I think afterpay also plays a lot to character. So character, meaning what type of person are you? Are you the type of person that does take up fast loans? Are you the type of person that is relying on afterpay to service debts and immediate needs? Are you after instant gratification? If so, banks are judging on that. They are looking, especially in this time after a Royal Commission, after things have been cracked down on, people are looking at your character and whether you're someone that they do want to lend money to. So it's not just about whether you are

good with your money and budgeting it. Afterpay is seen as a tool that is used by people who can't budget, then finances effectively. And if you're looking for a home loan, do you want to be put in that bucket? No, that was a hypothetical question, but no, we don't. So you've actually mentioned this to me before off mic, and I found it really interesting. What happens when you don't disclose your afterpay debt to the bank? It's essentially undisclosed personal debt. If you don't tell a bank about a debt that you have, they're not going to be very happy about it. I think there are so many different factors that come into this, but not disclosing debt is a massive red flag to a bank. If you're not disclosing your afterpay, why didn't you disclose it? I think it's one thing to

go, okay, I have afterpay and your mortgage broker might go, all right, Annabelle, if you're applying for this mortgage, you've got afterpay, let's put together a letter that says why you use afterpay and that you've closed the account and that account has been closed because you no longer use it and you just used it to purchase a couple of things, but you're good otherwise financially. that's very different to you hiding something again that plays to character have you told yeah no have you told them everything you needed to tell them so i have people in the she's on the money community that i've had conversations with who have had their mortgages declined because they've forgotten to disclose that they have afterpaid debt because they didn't see it as debt

they went through the application process they filled in how many credit cards they had they filled in whether they had a personal loan or not but these people genuinely did not consider Afterpay as a line of credit, therefore didn't disclose it. And unfortunately, had their mortgages declined or their applications for loans declined because they didn't tell the bank about it. Of course, that wasn't the only call we got on today's topic. One in four millennials are using Afterpay in 2019, meaning a whole lot of you are struggling in the same way. hi there um my name is sarah i was just interested in like if you could discuss some strategies to use services like after pay in a productive way because the way i've seen it before

um it's kind of just an excuse to kind of binge spend and buy things on a whim so i was just wondering how you can use something like that in a productive way thank you hi i can't seem to get it into my head that just because i'm buying it on after pay doesn't mean it doesn't cost the same amount that it says on the screen i seem to think that because i'm after paying something for 13.95 a fortnight or a week it somehow isn't a hundred dollars or like fifty dollars and i don't know how to train myself to know this will still cost the same two hundred you're just basically swindling myself and making myself pay it in the long term do you know if that made much sense i love the podcast thanks guys

hi ladies well my biggest issue is afterpay so afterpay is my weakness it turns into like my little treat I kind of justify making not ridiculous purchases but treating myself per se and I use afterpay and it ends up building up bigger and bigger and bigger and then it's almost not treating myself and I'm not realizing exactly how much I'm spending so I'm wanting some advice and try to stop that whole treat yourself situation but saving money at the same time and not getting into that afterpay. Thanks, ladies. Bye.

Based on how she's on the Money Hotline, it really does seem like many women are struggling with a kind of afterpay addiction. Do you think that's an accurate assessment, Victoria? I think it would be an accurate assessment because if people are saying they feel addicted to something, they're saying that they're feeling a rush when they purchase things. So that plays then into the psychology of afterpay

and whether there is a psychology of afterpay or whether there's a psychology of instant gratification. So Afterpay enables us to buy things on a whim. It enables us to not have to part with cash. And parting with cash is really hard. If someone took out of your bank account and gave you $200 for the week and said, this is all you can spend on your groceries and your discretionary items, how would you feel having to break a $50 note every time you wanted to purchase something? Most people would be a little bit more reserved in their spending when they genuinely have to hand over cash, when they feel as though they are losing something, whereas afterpay makes you feel like you're gaining

something and not losing a lot. So then let's talk about retraining our activity and habits when it comes to afterpay. If women are listening to this and are really struggling under a heap of afterpay debt, what would you recommend? I think if they're really struggling, the first thing to do is actually go back to episode one, do your earn, spend, own and owe and have a really good think about the goals that you want to put in place for yourself. So let's forget for five minutes that you've got the after pay debt. Have a think about what you want to be achieving. What are you saving for? Are these materialistic things a part of your spending plan? Are they a part of the goals that you're setting yourself for the next 12 months? Once you've worked that out,

then have a good think about, all right, is this debt in line with what I want to be achieving? Yes, it is. No, it's not. How does that work? And then work towards your goals as opposed to just seeing after pay in isolation. I think this comes back to what we were saying before about women having their heads in the sand and how we've gotten to this space financially as a collective. We're in a position where we want to empower ourselves financially.

However, we are doing things that are working completely against our goals. if anyone could sit in front of me and say, Victoria, Afterpay has helped me achieve my goals by A, B, C, and D, I would be shocked. Afterpay is such a frivolous thing to use. It enables us to purchase things that we don't necessarily need. I haven't seen anybody in our Facebook group that tells me they're using Afterpay for things that are essential. I've literally not seen it. People aren't saying, look, Victoria, I'm struggling with my grocery bill and I afterpaid it. Some of their biggest clients include The Iconic and Kylie Jenner. Are we really spending money on the things that we need or are we spending money on things we just want?

I actually read somewhere that shoe brand Steve Madden said that not only have their sales increased, so too have the average items and spend per transaction when shopping with Afterpay. So beforehand, purchasers were spending a certain amount and now that Afterpay has come in, it's noticeable that they've been spending more. I feel like I sound like a broken record, but instant gratification. Why would you want one pair of shoes when you could have two? I want two. I do too, because people's spending is increasing. I think the average transaction size on Afterpay at the moment is $150. And that is actually quite high, or I think that's quite high. We don't just walk into a shop and accidentally purchase $150 dress or $150 pair

of shoes. For me, that purchase is considered and I do go, all right, how many times am I going to wear this, but maybe my take on things and maybe the way I approach finance is different to the norm. Maybe people are spending $150 on things, but I think it's time to have a really good think about that and potentially start a culture of change. Okay, now for the fun stuff. Each week, we're bringing you a money diary. Let's do this. Today's money diary is from a healthcare professional whose relationship with money might make you a little envious. So if I was to introduce myself at a money masquerade party, I would say that I'm 28 and careful. I'm that way because I've always been very conscious of money growing up in a household which was very

savings focused and there wasn't really a lot of money to go around. It was always something that yeah, I grew up with a consciousness of and therefore when I started making my own money, I've just always been really careful with it. Okay, so down to the nitty gritty stuff. How much does 28 and Careful earn and how much has she saved? I take home approximately $90,000 a year. My savings account, I've got an offset account for my mortgage. So I count that as part of my savings account.

So I've got $20,000 in that. And then I've got around about $1,500 saved for an emergency and then maybe another two grand saved for bills. So we know how 28 and Careful gets paid. But what exactly happens to that money after it's deposited into her account every fortnight? So the day after I get paid, the money comes directly out of my bank account without me. I've just set up direct debits. So I have a set amount that comes into each of those different accounts every fortnight.

So it's not really something that unless I check each fortnight, I don't really keep a track of it necessarily. It's just whatever I have left over from my pay, I use for everyday use. I save $650 every paycheck and I take home approximately $2,400. So it's around about yeah 25% that I'm saving. Now let's talk about investing. Does 28 and Careful invest and if not why? So I don't invest as much as I wish I did. I have had stocks in the past but I don't currently own any, but I do have a raise account, which has, that's got around about 1500 in it. And other than that, I do really rely on my savings accounts in saying that though I do have a mortgage. So my biggest asset is the house that I own. What about 28 and careful's debts?

Yeah. So my mortgage is sitting around about 500,000, which I share a joint responsibility with my partner for. I don't have any credit card debt. My HECS debt is sitting around about 15,000. I think it'll come down. It'll be more like 10 actually after this financial year, but yeah. So I do have a credit card, but I don't have any outstanding balance on that. And personal loans. I have a bit of a philosophy not to have a personal loan because I think to myself, well, if I can't afford it now, then I just shouldn't have it unless it's absolutely necessary and it never been anything that's been dire or necessary. When we asked 28 and Careful what her best money habit is, she didn't hesitate. I would say my best money habit was setting up the direct debit

every fortnight. It's something which requires a little bit of effort for, took maybe 10 minutes to set up for all my accounts. I also have my main savings account is not linked with my everyday banking. So I can't see it every day. So I find that that really works very well because it's not a visible thing unless I go out and try and get into that account. It's not something where I go, oh, I've got X amount of money where I can use it for whatever. Like it's just kind of absent. My big savings goal has changed a little bit since having the house. It's a really funny thing when you've worked really hard to save towards the house for such a long time. Like that was my main goal for between five to 10 years. So I would say that I'd be saving for a car now.

I wouldn't get a loan because unless it was something that was absolutely needs to happen right now necessary, we're aiming to spend somewhere around about 20 to 25,000. And that will be like shared between my partner and I. And her worst money habit? My worst money habit it would have to be the money that I spend on food. This sounds so bad. Between five and ten dollars a day, so across a five-day work week, that's 25 to 50 dollars. That feels like, it feels like a lot to me. It feels like a lot. I'm getting better at it, but I don't do enough preparing or pre-preparing of food before work and therefore it's just too, it's too easy to go downstairs. even coffees, like that sort of thing. It's just, it's too easy to spend money unnecessarily.

So how would today's money diarist rate her own relationship with money if we forced her to give herself a grade? Probably an A, because I think that the fact that I don't invest is something which I am conscious of and I do want to change. I just feel like tying my money up in an investment at the moment would be stressful as well, just in case something happened. And I've got a lot of things like a car and a few extra bits and pieces that I need to pay for in the foreseeable future. So I think that there's room for improvement. I also pay the minimum amount on our mortgage at the moment as well. So I wish that that was, I think that there's a few areas where I need to get a bit better, but I feel like I'm pretty comfortable. Victoria, what struck you

most about 28 and Careful's money diary? I think she's amazing. So do I. I think she's incredible. look at what she's doing and what she's already achieved at only 28 to have a mortgage and also be so educated on how it works like she was saying she was using her offset and she's gonna save for a car and how she's not using any personal debt and doesn't think it aligns to her goals she is actually the person i want everybody listening to she's on the money to be and i hope that she's like got this stupidly good grin while listening to this because honestly she's honestly she is goals. I think she's a 10 out of 10, but much like last week's money diary, if she thinks she's an eight, I'm not going to argue with her if she feels like she's got a lot more to achieve.

She mentioned she had $20,000 in an offset account for her mortgage and I had no idea what that was. What is it? So essentially an offset account is a bank account attached to your mortgage where you can put additional funds that offsets the amount of interest you're paying on your mortgage. So say you've got a $300,000 mortgage and $20,000 worth of savings. By putting that $20,000 into your offset account, you're essentially not having to pay interest on that $20,000 in your mortgage. That's smart. Yeah, it's quite intelligent. And I think that people who do have mortgages, if you've also got savings, put them in your offset account. And if you don't have an offset account attached to

your mortgage, potentially go and talk to your banker or your mortgage broker about getting one. Right. So what's one thing she could improve on then? Because she's doing a lot well. I don't know if I have a lot of advice for this girl. I think that investing, she said that she wasn't investing because she didn't want to tie up a whole heap of money, but she's already using raise. She is already investing. Potentially once her raise gets to maybe $5,000 or $6,000, transferring that into a different type of share portfolio might be an intelligent decision to make. Investing isn't something you have to have a lot of money to do. You don't need to tie all your capital up. You don't need to be, you know, investing tens of

thousands of dollars. It can be small, but over the long term, it will have a really big impact on your wealth. So I think that that's the one thing that, you know, if I was sitting across from her, I'd want to have a proper conversation about and say, well, what do you think investing is versus what it actually is and how that actually looks for her? Can we also just talk about she's spending $5 to $10 a day. I don't want to talk about that. That is, I'm sorry, $5 is what I spend on my Uber. It's delivery charge. Yeah, on extra fees. That is incredible. I'm very impressed, but also slightly concerned that she thinks that's a lot. I know. I would hate for her to go through my finances and I'm probably not going to allow that. That's all we have time for

today unfortunately just before we head off let's quickly wrap the boring but important stuff the advice shared on she's on the money is general in nature and does not consider your individual circumstances she's on the money exists purely for educational purposes only and should not be relied upon to make an investment or financial decision and yes don't worry we promise victoria divine is an authorized representative of consultant financial advices proprietary limited ABN 65006 373 995 AFSL 2303 23 We did it.

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