She's On The Money - Buy now, regulate never?

Episode Date: November 24, 2020

What’s the go with regulating Buy Now Pay Later and should these providers be obliged to operate with a little more integrity? We think so. But what does this mean and what would it look like in reality? Today, we take a look at it all. PLUS we bluddy WON (!!) the Australian Podcast Awards’ prize for the Smartest Podcast in the country, which makes us feel very chuffed indeed. We also took home the bronze for the best biz podcast so your girls are glowing with pride - big love to all of YOU who support us in making this podcast by listening week on week - without you, we’d be nowhere, and we are so grateful to you all. Love the podcast sick and want more SOTM? We had a feeling that was the case. Join our Facebook page to share your money wins and money confessions, follow us on Insta for daily inspo to keep you on track and absolutely subscribe to our newsletter, the written recap of the pod’s key takeaways, including some bonus bits you won’t want to miss. Finally, if you’re in a money mess and need help untangling the muddle - we’ve got you sorted – simply record your question and send it through to us at [e-mail] and you may just end up on the podcast! Your hosts are Georgia King and Victoria Devine. 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 and should not be relied upon to make an investment or financial decision. Victoria Devine is an Authorised Representative of Australia Pacific Funds Management Proprietary Limited ABN 34 132 463 257 - AFSL 339151.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 smartest podcast in the country, according to the Australian Podcast Awards. Vicky D, we took home the gold on the weekend. Lol. Yes. Incredible.

I cannot believe it. and I did have a little bit of a teary when we were announced. It was a deep moment, I believe, but it's not the award we thought we would win. I'm not going to lie. I'm pretty transparent. I did think we had a better chance in business, given we are like the number one podcast in business, not to brag,

in terms of listenership, obviously, not in terms of business quality, if you ask the podcasting awards. But the smartest, I think that's an epic compliment. We'll take that. I will take that and I'm going to run with it and I'm probably going to mention it to everybody I meet like when they're like oh what do you do as a job I'm no longer going to say I'm a financial advisor I'm going to say I'm the smartest podcaster in the country because I'm just going to stretch the award to be me individually that's what I've said as well I'm like hey mum you've given birth

to the smartest person in Australia yeah like I'm just going to really take this and run with it because I feel like if they give us an inch I am going to take the mile and why not there is kind of a bit of a funny twist here because where are we currently recording from we we are currently Georgia King sitting on the floor in my home office you have a beanie over a microphone that is not your regular microphone you've got a good glass of red in your hand because tonight I because I'm the smartest podcaster in Australia um locked myself out of our podcast studio right before we going to record. You did, but I mean, that didn't dampen our spirits. We're here, we're ready. It feels... We're innovative. Well, that's it. So if you guys would like to see a photo of how Georgia's

recording the podcast, please head to our stories because I'm going to post it as soon as this pod drops. Now we'll get into the show now, guys. For anyone who doesn't know, my name is Georgia King. I'm a copywriter and journalism student. I'm also the smartest person in Australia. And every Wednesday I dive deep into our financial conversation with Melbourne-based money whiz Victoria Devine. Hello Georgia King. Fellow smart person. Hello. Now today on the show we're tackling one of our favorite topics, buy now pay later. But what we'll be doing in this episode is taking a little deep dive into why they aren't currently being regulated in the same way credit companies are. A recent ABC article revealed that a staggering one in five people using buy now

pay later schemes miss payments and are racking up serious amounts of debt. Yet despite this and despite serious concerns from consumer advocates, very little is being done to regulate this industry, leaving vulnerable people even more exposed to being taken advantage of. V, we are going to be getting into the nitty gritty of this topic and chatting through the state of where things are at when it comes to buy now pay later and what our listeners really do need to be mindful of but before we get there and before our money wins and confessions I wanted to bring up a little bit of correspondence that we had from a few days back from a listener people who listen to the show week on week will know that last week Victoria's money win was buying children's shoes

it wasn't your money win it was no it was one of our community members money wins and they said that they had bought children's shoes instead of adult shoes and saved a bomb and we were like what a win everyone should do it forget adults shoes they're a rort by kids shoes anyway maddie got in touch i'm a podiatrist in queensland i just listened to the podcast and you wanted some clarification on the shoes well i just thought i'd touch base and just say it's not about the quality of shoes with kids shoes versus adult shoes it's more so about the amount of material in there. Kid shoes are designed for kids. So they weigh 15, 20, 30, maybe 40 kilograms versus an adult who can weigh 50 all the way up to a hundred. The materials can't handle the weight

of an adult. So therefore they can't support the foot as well. So yeah, that's the difference. Love your podcast. Thanks so much. So there you have it guys. We were wrong, but a big thank you to Maddie for sending through that memo. If anyone else wants to send through memos, we love hearing your voices. It's a bit of fun. yeah please send memos jokes corrections yeah praise for being the smartest podcast in australia literally everything is welcome but i'm also just gonna say that is not deterring me from buying children's shoes because a money win is always going to trump actual you know safety information for me i get it um money wins confessions let's move along georgia i have a money win that i have

been telling everybody this week about. I also do the entire lead up to like the story. I tell them how much I was going to pay and then I tell them how much I actually got it for and I hope that they're as shocked and as excited as me. So now it is your turn to hear this story. Are you ready? Lay it on me. Cool. So as you all know, I also have a financial services business, Zella, and in July we moved offices, which, jokes on us, was absolutely fruitless because we weren't allowed to even go into the offices aside from that is now November late November and we are now allowed to be back in our offices so I have been looking for a minimum of six chests of drawers you know those ones that go under your desk that are made of I'm assuming like really thin steel

have a lock on it a little bit like a filing cabinet yeah just classic office classic office really chic furniture so I've been looking for those for ages and I went online thinking I'd get a good deal they range between $250 and $300 per unit which to me is an absolute rort and absolutely not within budget because $1,800 on chest of drawers just feels like it's lackluster it's anticlimactic yeah and it's for the office and I just feel like when you have an office you don't realize how quickly expenses add up and printing adds up and the amount of highlighters I go through it it's actually insane anyway so one thing led to another I tried to find a discounted version online and I decided to take a leaf out of my own book and check Facebook

marketplace and you know what I found there what'd you find office drawers for $30 per set of office drawers you didn't yes I did and they are perfect and they are in as new condition and they have two keys per office drawer which to me is just going above and beyond like who keeps the spare key that's a lot i i feel like like they are fresh as well i was just in the office when we were meant to record properly and they are honestly they look brand new and my friends i got six sets of drawers delivered to my office by two lovely men for two hundred dollars so how much is that in total that you think it was like ridiculous amounts of money i can't do quick maths why would you call me 1600 yeah it's actually 1600 i just didn't want to be put on the spot

but i've saved 1600 this week and i could not be more excited that is that is a huge win check the instagram stories for the pictures of the drawers which are really lackluster but i'm excited so given we are all friends here you should pretend to be excited for me georgia have you got something to compete with that it's not as good okay well moving on as i said last week recently moved out and with a boy exactly right um what's essential when you move out wine glasses are essential but didn't have any was going to go to kmart but didn't go to kmart went to the op shop what did i find six glasses really cute really quirky vintage twelve dollars oh money win big fan of op shopping always have been and you know it's short it's sharp that's my money win of the week

guys thank you Georgia King I really relate to that do you no let's move right along to our Facebook group Victoria favorite post from the week what was yours okay so given I get so much feedback about being mean to you I am actually going to apologize I think I I get it too I'm really sorry that I was mean to you and apparently you're mean to me but yeah we are actually like very close to being best friends guys strange relationship I will adopt you as my smaller sister as I would with everybody in our community actually but given we are speaking about community epic segue from me I have a money win from our friend Melissa and I actually love this because it was quite tenacious in addition to being an incredible money win she said she bought her first

house to buy a letter drop today she'd been actively looking since May this year which in home loan life is actually a really long time because that takes forever, but it also feels really disheartening. But she said she lost a whole heap of homes and I won't read it out because she wrote a very long money win, which I obviously read and a lot of people in our community read this week. But she said that she had dropped a minimum of 20 letters and she only got one call back and it was the house that she was actually buying. So she had put a letter in somebody's letterbox making an offer bought a house she saved 30 grand in real estate fees by skipping the middleman and it's in her favorite suburb it is her perfect house in a perfect location it is

one street from her sister two streets from the school and the shops and it's in between both of their parents she said there's so much room for growth and she did it all on her own and i actually love that because she got the perfect dream house for her that might not have actually been you know marketed in the first place well that's it you never know if you don't ask so hey pop letters in people's letterboxes honestly guys the worst someone can say is no and no doesn't mean bad it just means no they're not interested in your offer they aren't you know offended by it so I really love that there was a very cute picture of her and I'm assuming her partner popping some champagne but I would love to know what your money win from the community is this

week because i feel like this week had some epic money wins in it this week was amazing v but it is always amazing um my little money win is from tinea who has a major money win not our graphics designer graphic designer the gorgeous also tinea it's a different tinea and she's looking gorgeous in the photo that she's added here um so she's always wanted a mirror with the lights kind of framing it but she didn't have the money exactly right yeah yeah um but she didn't have the money and she's not really a makeup wearer, which I can relate to. I don't really wear it either. I'm not going to lie.

Why do you want the makeup mirror then? Okay, this is just me meaning. Maybe she just likes the look of it, you know. They are really bougie. That Hollywood vibe. Yeah, I'm here for it. So she found this mirror on her local buy, sell and swap page, which I'm assuming is a Facebook thing, for $20 dues.

That is very good. I feel like $20 is like a purchase that you think about quickly but also don't feel too much but at the same time, you still do have to think is it worth 20 bucks exactly right okay so the reason it was so cheap was because there were a few dud light globes in there but she messaged her partner asked if he could take a little look uh because he's an hvac technician which comes with how handy yeah right so he's like a licensed electrician i guess is what that means and here we are she's got the beautiful frame in the photo it fits perfectly and she saved herself 490 dollars that's an epic

money win it's a huge money win especially when you find something you really want and you know looks good especially when it's so cheap I feel like I love she's on the money for the community where we share all of our money wins and confessions but it's also like if you're at a point where you want to share it with the community you've probably been telling everybody about it as well just like my drawers like I've been telling everybody and I was so close to posting it in the Facebook group and I'm probably still going to post it in the Facebook group I just wanted you guys to hear it first on the pod yeah yeah I was just thinking with that mirror we actually have one of those in the pod studio don't we we actually do the pod studio that this week we

locked ourselves out of thanks for reminding us let's move on to today's main topic now be one of the most common celebrations we have in our community is when people shut down their afterpay or zip pay accounts yes i love that for them i'd also really like it on record that i've never told anybody in the history of ever to shut their afterpay or their zip pay accounts i think you guys have just like kind of read between the lines and decided it wasn't a good idea for you and without you even saying it yeah I literally haven't and I just really felt like it's not necessary for that to be on the record but I never gave that advice I never said go and shut your after pay accounts but what I did say was maybe reconsider it if it's not something that actually

helps you yeah and I'm really glad that you guys are making decisions that work for you I don't know it's not obviously essential for me to disclaimer it but at the end of the day like I really love that you guys are so passionate about shutting it down because the research that i'm sure you're about to read out to me georgia because you always come prepared and i just kind of free range zip pay did you know that they made 60 of their revenue from consumers almost all being account fees what does that as in people that haven't paid on time yeah well account fees for having zip pay because they've got fees for having zip pay accounts yeah but on top of that you know they're a product that charges the retailer so you would think that maybe they'd make their money

from the retailer when they don't they make it from you guys they double it do they make anything from the retailer do you know after pay has a percentage that they charge to the retailer which is all hush hush it's very hard to find unless you are an after pay merchant in which case you can actually find that information but it's not easily available which is crazy and i just yeah anyway i will let you get on with it before i steal all your statistics i find that interesting because I guess the retailers would have the benefit of people who may not have already been buying their products, buying them because now they can use Afterpay. Absolutely. Absolutely. And let's kind of like the drawcard of Afterpay for a retailer, right? So say I have a small

business and I sell candles. The reason I would get Afterpay is because people are more likely to purchase from me and purchase a candle. And the reason it's beneficial to me as a small business is because cashflow is king, right? Like that is the same for you and I, like at the end of the day, the best outcome is having the maximum amount of money that we can possibly earn going into our bank account with not that many fees, i.e. not that many things in our budget that we have to outlay. So the drawcard with afterpay is you pay them a nominal amount, which is usually a percentage of your candle. So say you pay 30 bucks and you're paying afterpay $4. It means you get paid immediately. So the retailer or my candle business gets that full $30 at the beginning.

And then after pay, they chase the debt for that client. So it's putting the risk on them and you pay for that privilege, which is great because you have cashflow for your business. But then as a consumer, if you then over commit, the risk is on after pay, which is why they have late fees and stuff like that, because they need to manage their risk. Yeah. Okay. We will get into that because I'm sorry no no that was good and so it sounds like the retailer wins after pay wins slash buy now pay later schemes win but the consumer doesn't necessarily win anyway we will get back to that staggeringly the number of buy now pay later transactions increased from 16.8 million in the 2017 to 2018 financial year to 32 million the following year which is an increase

of 90 it's basically double so these companies are moving from strength to strength and the kicker is that they don't have to operate within the same regulations that credit card companies adhere to, which means they have no legal obligation to make sure that people using their services can actually afford to use those services. Victoria, you always say that no one plans to go into debt, and you also did a whole show in season one on Afterpay. But I was hoping as a little recap to start us off, you could talk us through what the deal is with Buy Now, Pay Later providers, including how they work and what your take is on them. So most of you guys are going to be across buy now pay later schemes because we talk about them

all the time but for any of you who don't know what they are just want some more clarification don't quite get it because they are quite complex when you start looking under the hood a buy now pay later scheme generally allows you to have your purchase now and pay for it incrementally over a set period of time. It's quite helpful in this way because instead of forking out 200 bucks for something in one go, you only have to pay out with $50 and then you can pay for the rest off over time. Now, Georgia, I was actually talking to you before this episode about how this isn't actually a new concept. So it might feel quite new because Afterpay is relatively new to the market, but I would like to just refresh your memories on our friend,

Jerry Harvey, who happens to own Harvey Norman. And I bet my bottom dollar that you guys remember your parents or someone that you know purchasing a furniture package or a fridge or a brand new tv or a kitchen aid on his 24-month interest-free payment scheme where you got to take a home that day and then pay it off and he charged you an exorbitant amount of interest if you one didn't meet the payments or two went over the amount of time that the loan was for now that was established by a company called latitude financial services which you guys would probably see a lot about in the media at the moment because they have become quite large. But I just really wanted to bring that up because I was also having a chat with my really good friend, David, who I will probably

tell you about in a couple of episodes because he's business. He's going to partner with us soon and I'm incredibly excited. But we're having this chat and it just really annoyed me that everybody thinks that it's so brand new, but there have been people out there taking advantage of us for longer than we actually comprehended. So regardless of all of this, the appeal is to make it incredibly dangerous and it can become quite addictive to buy things. So it leaves us in a position where we are paying for things that we either can't afford to pay back or we're not able to pay back over the longer term because during that period of time, while we might think, oh yeah, I'll have $50 next month to make that payment, we don't think about that payment again and pre-commit that money to

something else, whether that is going out for drinks with our friends or buying another outfit or buying a TV from Harvey Norman, we find ourselves in a position where often paying it back is actually harder than we first anticipated. That of course lands us in a sea of late fees. And fun fact, actually, they're not all fun. Afterpay charged their customers a total of $46 million in late fees in 2019, which gives you some indication of how problematic these providers are for so many people. This is also the reason why I think that there should be regulation around these things and we're going to get into that quite shortly. But in terms of what my personal take is, I think genuinely that if you are using these services properly, they can

probably work really well for people. I think for a majority of people, especially in our community, now I feel like I really know you guys. It's probably smarter to save your money first, work it into your budget and then make that purchase but in saying that I know there are going to be some people listening to this episode that go Victoria I've been using Afterpay for ages and it's a really great tool for my cash flow in that case fantastic for you but it is really still important to be aware of the traps that these schemes can actually lead us down yeah and they do tend to lead the majority down those paths as we will get to Victoria you did just say it but you do think that buy now pay later schemes should be regulated absolutely i

do credit cards have to do work around mandated responsible lending criteria they can't just actually approve anyone for a credit card historically they could though they're no longer allowed to do that though ASIC which is the australian securities investment commission licenses and regulates banks credit unions and brokers to make sure they don't allow you to access credit if you actually can't afford to pay it back and this is a really important piece because at the end of the day if you're not mandated like where are the rules it kind of becomes the wild west and i just don't think that that's fair on people because i'm assuming that for most people who sign up to afterpay they just assume that these companies and i keep saying

afterpay it's because it's the biggest one there's afterpay there's zip pay there's open pay there's so many different types of pay there's a new one called klana like there are so many they have different branding. They all say that they're putting us first, but none of them, Georgia, are putting us in a position where we are having our credit scores checked, where we are being referenced and making sure that we can pay it back. And for some of us, we genuinely don't have the financial literacy to be in a position where we say this isn't the right product for us. We assume that because we are in Australia and the most Australian thing in the entire world is to have each other's back right we just assume that everyone will and that's sadly not the case

so although buy now pay later schemes are wrapped up a little bit differently they really are just another form of credit and a very very easy way of sliding into completely unplanned debt at the moment these guys can literally do whatever they want as I called them before it's the wild west which in my opinion is pretty unfair and as I said before not everyone has a good enough financial education to understand whether this is helping them or hindering them well that's the thing like with the way they market themselves you're not silly for thinking that they are helping you out because that's what they want you to think absolutely and it's really sad but a senate inquiry in early september this year surmised that by now pay later platforms can self-regulate and

don't need to be mandated to do so so lots of consumer groups are arguably justified in being worried about this and I'm worried about this and I definitely think it's a really big issue for Australians, particularly the younger generation, particularly the younger generations of Australians who are actually responsible for 61% of all buy now pay later transactions and they're also the ones who are missing the most payments and racking up those late fees. And what is a young person? What is classed as a young person? It is someone under the age of 35 but I didn't really want to say that because if you're listening to this and you are older than 35 like you're still young and hot my friends yeah 100%

um now there is like a little bit of light at the end of the tunnel well sort of so ASIC said in this report that the previously announced regulatory changes will come into effect in October of next year can you talk us through what will likely be happening so yes a few changes are going to go ahead but again I'm quite opinionated as you guys know and I don't believe it's quite enough. So buy now, pay later schemes, sorry, buy now, pay later providers will need to identify in advance what types of consumers their products are suitable for. So they are to quote Georgia King, direct distribution to that demographic, which essentially means they are only to directly market to those demographics. But I would argue that that's kind of up in the air. Like how do

directly market to someone who's over the age of 35, not 34. So I don't know, but they're also going to be in a position where they need to consider the proportion of late fees that they're dishing out and review and change the design or the distribution of their product so that people aren't slugged with too many payments they actually can't meet. Now, let's be honest, this is better than nothing, but again, quite opinionated, it's not enough. When I was reading, V, there was something about a code of conduct in there can you expand on that a little yes so the buy now pay later industry is in the process of writing a code of conduct but self-regulation isn't ideal either as it won't cover all buy now pay later players but the ones who follow it so it's kind

of a choice there are lots and lots of new buy now pay later providers popping up literally every week but what they're proposing at this stage only covers a total of eight businesses and we don't yet know what that code even looks like. Okay I read as well that a massive number of Australians are taking out loans to meet what they owe after pay to avoid those late fees stacking up. Would you say that's a good idea or just bad news? Look I think it's bad news because it means these buy now pay later schemes are actually getting people into debt that they can't service and if you're in a position where you need to then reach out and get a personal loan and take on an interest rate on a loan it means that you're clearly not making the payments for your buy now pay later scheme

so for me i think that's a really terrible thing but at the same time if you feel like you are drowning in buy now pay later debt it is probably a very good idea to reach out to someone to consolidate a debt so that you're not paying late fee after late fee and you actually deal with it properly it is worrying that that is even a thing that people have to do though right it's insane because arguably lots of these people who do get after pay, Zip Pay, KANA, Open Pay, whatever we want to call it, are in positions where they probably wouldn't have been approved for a credit card in the first place.

Which is why they should be regulated. Okay, so we have harped on about the negative side of which there is a lot going on in there. But are there any redeemable qualities to after pay and other by now pay later services? I mean, it's a good question. and I covered a lot of this in our episode in season one so if you want to go back none of my opinions from that have changed but Afterpay has signed up to the AFCA which is the Australian

Finance Complaints Authority which is really important but it's really not enough without the rules laid out by the Credit Protections Act which we mentioned earlier so it's essentially them signing up to take on a little bit more authority but at the same time it's kind of like authority for what because there's no rules this is the wild west my friends they also don't charge any interest. So if we're trying to pull out all of the good things about buy now pay later schemes they actually don't charge any interest which is a great thing if we think about it pragmatically. Fees only come into play if you're late on your repayments and I mentioned in season one in our after pay episode that I've actually got a girlfriend who uses these systems

religiously. So she'll go on the iconic for example and order five different dresses that she wants to try on knowing she has something on the weekend that she wants to you know purchase address for she'll keep one of them send four back and she's only ever been charged you know 50 bucks to do that she doesn't get charged the full amount in that situation yes she's using it really responsibly she has an income where she could pay that debt if for some reason she didn't send her package back but to me that's arguably a very big risk but she uses it so that she doesn't have like 700 going out of her account that then arguably needs to be refunded so for her it's a cashflow tool and I think it works really well for her. But to me, those people are so few and

far between. And I haven't asked her recently, but I'm not sure if it's caught up with her at any stage or made her do any impulse purchases. Another thing that I will say is that these providers can genuinely be a really good short-term solution for those in need. So I've spoken about it again on the other podcast, but sometimes people genuinely need these for medical services that they couldn't have otherwise accessed, dental appointments, things for their children, in which case I think it's a fantastic service if you just don't have the cashflow.

So I remember after that first episode, a number of people reached out to me and said, look, I'm on Centrelink and I didn't have the cash, but I needed to buy my daughter school shoes. You do you. Like I genuinely think that if you are using it responsibly and using it as a budget tool, this could be a really great addition.

But at the end of the day, you're seeing the amount of debt people are going into the amount of late fees that tells me that not everybody is as responsible as the people that message us and tell us that they are using it responsibly well that's exactly right and that's what the stats that we've gone through today show us that a lot of people aren't using these responsibly and that's something that we really need to call out and that after pay aren't going to be slapping on their billboards you know Absolutely. Yeah. So my next question here, Bea, is what you would say the role of credit cards within this conversation is. I know to add a little competition into this field, many banks

have actually introduced no interest credit cards. So is that a better option for our listeners? Should they go down that route? I mean, you probably should do my budget and cash flow masterclass and never need anything again, but that's beside the point. So as an alternative to Afterpay and other buy now, pay later providers, some of the big banks now do actually offer interest-free credit cards and they charge a monthly fee instead, which varies depending on the balance that you have on the card. So NAB, for example, have a $1,000 credit limit and you pay $35 a month with a $10 monthly fee on your balance. And say you had $2,000 on there, you would pay a minimum of $75 a month with a $15 monthly fee included in your balance. And then

for three thousand dollars for example you'd be paying 110 a month with a 20 fee included in your balance so similarly to a buy now pay later program let's call it a program i keep calling it a scheme because it's a scam a scam but it's it's not a scam my friends but you won't be charged anything if you pay what you owe off the difference is that these cards can be used wherever master card or visa is accepted so they essentially give you access to a wider range of retailers and they also have a continuous line of credit which I'm not gonna lie is terrifying to me look we all know how big the big banks are like I'll give you a hot tip they're huge so they could quite seriously enter the buy now pay later area properly if they really wanted to

let's be honest and they could walk all over the current providers who have the edge on being the first ones to do it but banks have arguably an unparalleled access to finance in a way that Afterpay and the like just can't beat. So it would be interesting to see what they do in that space and how over the next few years they're planning on competing with them, because I know they arguably would be having these conversations internally because it would be really silly not to. I don't know if you guys saw the Afterpay share price skyrocket this year. What are we talking? Okay. So if we talk about it, I think that they peaked in like late February at maybe like nearly $40 a share and then in March which is when a lot of people started buying them there

was like a little bit of hype around them they dropped to $8.90 a share ish like I'm sure it went lower but that's just my memory of it and now Georgia they're up to close to $100 like I don't know if they're $100 today but I guarantee it would be around that so they absolutely have shot up but the reason they've shot up is because they're being profitable and can we please remember how they're being profitable guys it's from your late fees this actually makes me so angry that is ridiculous and i hate that that profit does come to the detriment of consumers um exactly and most of the consumers are people like you guys in our community so it feels like our job to share this information with you if you decide to continue to use these things that's fine i actually just

want to put you guys in a position where you're making educated decisions. Like there's no right or wrong when it comes to money. And I think that that is so important to remember because you do you. Like that is so fair. Your values might not be my values, but my values are putting you in a position where you're making an educated decision. And if you want to, just like one of my girlfriends, continue to use Afterpay because it makes sense to you, then fantastic. That company is doing great things for you but if you are finding that those payments are spiraling you out of control and making you make really big impulse decisions and putting you in a position where you are not confident with your money then maybe you really need to think about whether they are the right

product for you yeah and that's exactly right we want you guys to be as educated as possible that's what our platform is for so there's never any judgment in anything we say absolutely not it's just it's just us putting it out there and making sure it's as unbiased and true to what is the reality as possible i guess absolutely even though i seem to lack the ability to be non-biased but that is beside the point my friends um the other thing i wanted to ask you v was about a couple of articles i read in buy now pay later schemes providers services like after payers founders talking about how the lack of regulation is a good thing for them because it allows them to continue to be innovative and like they're leaders in the space and they were painting it

in this really uh amazing empowering like business savvy way I was just like oh this feels dodgy what's your take on that I'm not gonna lie I have epic amounts of respect for the afterpay company they have come from nothing and made an epic splash they are not doing arguably the wrong thing it is just the way that we are starting to use them and essentially take advantage of them in a way so for me yes they can be more innovative and that's fantastic for them and it is really great but I would then argue where does ethics come to play in this how does ethics actually play into the financial services space what does that mean how does that work and you know we shouldn't be putting our personal ethical opinions on things but like what's the baseline of ethics like

the medical industry has a code of ethics we don't have that for them why why can't they abide by the same legislation that I need to abide by as a financial advisor exactly the credit card companies have to do it so why not them I think it speaks to a lack of regard for the the needs of the consumer I think it's not good but you guys are probably picking that up anyway um we'll move on here this is a little bit off center v and i think you did speak about this in our first episode on after pay back in season one but can it actually damage your ability to get a loan after pay and other by now pay later services look short answer yes when i put that first episode out the royal commission hadn't wrapped up yet so since the royal commission things have changed slightly

they've tightened up significantly and you do hear stories of people being rejected for home loans because they have an outstanding zip pay balance which to me is crazy but it is so worth taking note of even those providers who don't require a credit check and it doesn't impact your credit score for anyone wondering about that lenders will take buy now pay later purchases into consideration and consider them as a line of credit because like credit cards you're borrowing money you do not have usually to fund items you do not need which is why they should be regulated this has been quite a heated episode it has and i'm just so wildly heated up about this because i genuinely think that so many of us using them convince ourselves that nah that's not me i

won't get out of control i'll continue to use it and then you find yourself in even more trouble 100 also the psychology of this fee i do have one last question but i'm going to sneak this one in as well. Why do you think we are also obsessed with after pay? What is it about buy now pay later that really appeals to us? Instant gratification versus delayed gratification. I'm going to ask you right now to look that up and put it in our newsletter. There's actually the, have you heard of the marshmallow challenge? Yes. Yeah. So it's like these tiny children, they're put in a room with one marshmallow in front of them. And they said, if you eat that marshmallow now, you won't get any more when I come back. But if you don't eat that marshmallow and you wait, when I come

back, you'll get three more. The kids are like, Oh, that's such a good deal. But some of them literally couldn't do it. And they'd eat the marshmallow and be like, whatever. I don't care about the later ones. Like this is the best thing I've ever eaten. And some of them were really reserved and then, you know, sit back and just go, okay, no, no problems. Like I'm totally Tai Bay. So that would be me. And I'd just sit back and be like, okay, cool. Well, I want a total of four marshmallows. So I'm awake for this, but everybody works differently. Everybody has a different personality. And some of those kids like kind of picked up the marshmallow, licked it, put it back down some of them like sniffed it and made sure that they actually didn't want to eat it

like all of us have different levels of control and that is human nature but at the end of the day buy now pay later schemes are going to play into you as an individual if you are someone who really thrives on instant gratification and that means getting the item now and not considering future you that's something that you and I talk about all the time and that is putting future you first like they are so important they deserve your respect and they deserve you to start putting them first because the sooner you start putting future you first the sooner you're going to feel like you've been put first by yourself love that from you deep that was that was nice I think the red wines are hitting the girls please don't tell anybody that we're drinking their red wine my

laugh was really hearty then as well beautiful I just wanted to add in there as well that like it feels so much better when you save and save and save and then you splurge on that item that you've been so looking forward to rather than saving a quarter of what it costs buying it then. And then you've got the item and then you still have to continuously pay for it. And it's like, that is just not what anyone wants to be doing. So I don't know, just bear that in mind as well.

But my last question here for you, V, is what would you love our listeners to take away from this episode? And what do you want them to be mindful of when it comes to Buy Now, Pay Later? I just want you to be mindful of your purchases and whether they're actually relevant to something you absolutely need right now. I don't think this episode should be taken as buy

now, pay later, programs are awful and terrible and going to destroy you. I think it's more, please understand that some personalities aren't going to work. And I'm going to be really honest. And this is not me being on my high horse. It's just how I manage my life. And I used to be in personal debt. Like that's something that I've been through. So don't get me wrong. I know how it feels I know where you've come from. But I think that if now, you know, nearly 30 year old me, terrifying, had Afterpay, I'd probably use it really responsibly. I cannot say that 21 year old Victoria would have used it responsibly because she racked up a personal loan and didn't pay anything off apart from the minimum repayments for a very long time. So I think future me in

this situation is arguably more educated than 21 year old me, but 21 year old me wouldn't have second guessed it, I would have just thought it was a fantastic way to look really great every weekend. Which is why it is so risky. Yeah, I think everyone has gotten the gist of today's episode, but now it is time to move across to the listener question. I have a question about a friend of mine who I feel is getting herself into a bit of trouble with afterpay. She always has the newest and best clothes and takes a lot of pride in that kind of stuff, but I'm worried she's taking it too far. I know she has no money and I'm worried that it's going to spin out of control. As her friend, I feel I should intervene, but I'm not quite sure what to say. She hates

talking about money and tells me that it makes her anxious, and I don't want to patronize her. Thanks. This is a massive dilemma, Victoria. I don't think I quite know what to say. Have you got any thoughts to kick us off? I feel like this is actually a pickle. Is that a thing that we say now? Yeah, it's a pickle. Can that actually become a... A sotum catchphrase? Can that be a sotum catchphrase I'm open to it I really like the pickle we're in a pickle how do we work this out but genuinely this is so something that I'm sure a lot of you have been through because it's very hard to not notice your friend's new outfit or pair of shoes or bag or the consistency of those things coming in and whilst we can't pry on everybody else's financial situation who knows

maybe Georgia King has a trust fund she hasn't told me about I do think that caring about your friends is something that is really important and I always talk about you know the importance of being kind but sometimes being kind isn't easy sometimes being kind is really hard and this conversation could come off as you know being really condescending and it could be you know your friend getting up in arms and arguably when you make someone feel uncomfortable they get immediately defensive so I think starting to have conversations with your friend around money and not going immediately to the issue that you want to talk about is probably a really great way. So without being self-promotional, start recommending that she listens to episodes

of the podcast. Start talking about money more openly. Start sharing your money goals. Often when people are in situations where they're using buy now, pay later programs, they don't have larger financial goals. And that is something that if you do have larger financial goals, you're going to start thinking about more. So maybe recommend that they sit down and have a chat about you know the goals that they have or like what are you trying to achieve or you know oh my gosh something's in my way and I really want to you know get rid of that maybe talk to them about barriers that you've got so that they feel open to share their journey there's something really special about showing your vulnerability so that your friend or the person you're talking

about actually reciprocates well that's it you're kind of planting that seed because otherwise it could seem kind of like an intervention and it could be quite scary and you're right she would totally go on the defensive but I feel like this question kind of extends to like if your friend has a boyfriend that you know is just bad news and it's like do I have that conversation with them or do I not like I feel in my heart like my values would tell me to speak to that friend openly and honestly depending on your relationship if they are your best friend then I feel like it is almost your role to do so but at the same time they're going to do what they want to do but when it comes to money i think just starting gently definitely getting involved with shoes on

the money i feel like our podcast again not to be self-promotional but i feel like it is a really gentle way of having these conversations about money that we've not had before and i feel like a lot of people have come to our podcast and to our community and have felt oh wow like money isn't so scary after all we're all going through this together it shouldn't be scary it should be just something that we talk about in the same way that we talk about loving dogs like i'm so open about that conversation but at the end of the day these are really hard conversations to have if you've never had them kind of like speaking a different language and no one's comfortable speaking Japanese if it's your first day you might know how to say hello but that is literally the

extent of your knowledge but the more you immerse yourself in it the more you understand the more you feel like you're empowered by that and to me I think it's just really important to care for your friends and I think maybe preface it with that and just be like hey I really care about you and I just wanted to point out that I just feel like maybe that's something that isn't that great for your future yeah and something else that I think is really important is not expecting a response from that person like just put it on the table drop it walk away it is not something that they need to justify or talk to you about unless they're really comfortable to do so but I think the way I would approach that is hey Georgia I just really need to get this off my chest I really

want to talk to you about this you don't have to come back to me with a response right now you don't even have to come back to me with a response at all I'm not expecting it I just want to let you know how I'm feeling because your friend's not ready for that conversation you've probably been mulling it over in your head for the last week at least they're not ready though because they didn't expect you to say that so don't expect them to come straight back it's the same with any conversation whether that's your partner your parents like don't expect people to be as prepared for a conversation as you are when you've had all of the foretime to prepare I guess the moral of the story here is that we're both very supportive of having that conversation. She might not respond

that well, but I think it is important as her friend to let her know that you're there, assuming she's a girl. I'm not sure if she was. But yeah, I think that's the moral of what we're trying to say here. Yeah, absolutely. And I think it's just about being kind to your friend and being kind to yourself. And like, my friends, if you're in that position and you're finding yourself in a space where you are spending unnecessarily like let me be that friend you don't need to do that like at the end of the day you're not putting future you first and she's or he's or they are really really important. Hey I'm a 23 year old Kiwi and this is my military money diary. Now let's take a sneak peek into the financial lives of perfect strangers. It's time for money diaries. I used to be a

terrible saver and a terrible spender I used to really like live in the moment and I'd spend my money really frivolously and I always would tell myself that the experiences made it worth it but the problem was that I would just go into debt without a second thought and I seriously didn't think about how it would impact my future at all and it kind of makes me a little bit sick thinking about how much I worked throughout my student years and how little I saved and I have nothing to show for it but yeah I've completely turned that around thanks to she's on the money which is really cool and I have a completely different attitude towards money now which is security and I guess coming from that place of financial insecurity of being a really broke student like

I literally would be skipping meals and I remember eating the most sad little meals of like plain potatoes because I had nothing else and now I'm a lot more protective of my money because I know what it was like to really struggle. What does our Kiwi money diarist do? How much does she earn and how much is in her accounts? I'm a legal officer in the military which is basically being a deployable in-house lawyer in uniform and I am a recent grad so I earn about $72,000 a year. That includes a 4% contribution that my employer makes to KiwiSaver which is the New Zealand fund that you can use for your first home or retirement I have $16,000 in my KiwiSaver at the moment I have a $3,000 emergency fund and then I have a fully funded sinking fund which is about a thousand

dollars for me personally and I have $600 in my main account and then $500 in my long-term savings which has taken a bit of a hit because I've made a couple of big purchases in the last few months I bought a new car which was $5,000 and I had to get a new laptop which was $1,800 but that's the first time that I've ever been able to pay for things outright and not had to go into debt which was pretty cool because I'd been saving. What are her thoughts on investing? I'm really wanting to start investing. I've never felt stable or secure enough in my finances to start or even my own abilities to start but yeah Victoria her passion for it has like really inspired me which I'm sure she'll be happy to hear so I really want to start but I am finding it hard because I guess I've come

from a place of real financial insecurity in the past so it's quite hard for me to put money towards something that I'm not 100% confident in so I really want to grow my confidence in that. Does she have any debts? Just last year I was still a really broke student and I had over $5,000 of debt But over 2020, and thanks to She's On The Money as well, I've paid it all off. Thankfully, I didn't have any credit cards or anything with interest on it. I just had an overdraft. I had afterpay and lay-by, which I closed for good, thank the Lord. I also had $1,500 of a $9,000 Invisalign debt left to pay and just a little bit owing to

people that had helped me out. But yeah, completely paid that all off, which is such a freeing feeling. and I don't feel stressed about money now, which I'm very blessed and privileged to feel. Now I just have my student loan, which is sitting at $43,500, which covered me doing my bachelor's and then my master of laws.

What is her best money habit? I think my best money habit is that I've always been very minimalistic. Like I really don't like owning a lot of stuff. I find shopping and having things quite overwhelming and I live in barracks, so that kind of helps. Like I don't have a lot of space.

So I don't often get swayed by sales or like unnecessary luxuries, I guess. What's your worst money habit? I used to be a terrible saver, but that's in the past. I think now my worst habit was I have a lot of disposable income that I leave in my main account every fortnight. I put about 50% of my take-home pay into savings and student loan, etc. But then I keep that other 50% just sitting in my account, mostly because of that fear of being called out or unable to pay for things or help other people out and I think that just

comes from my history with finances so it makes me feel more confident and secure having it just sitting there and to be honest there's a good part of it it keeps me on track with my savings because I don't end up dipping into it but I think I definitely could budget a lot better and probably save more if I just had a bit more control over it what's her big money goal I would love to hit $10,000 in my savings account. That would be a huge achievement because I've never saved more than $5,000. And I also just really want to start investing. And what grade would our Kiwi military money diarist give herself? I would say a B. I used to be like below a D, like a Z right at the bottom, but I definitely have improved heaps over the last year. And

I think when I have a longer history of saving and start investing, then I will feel more confident and probably bump up my score a little bit. Victoria, our military money diarist, what did you make of it? I want her to be my little sister. Am I allowed to open adoptions for siblings? Is that cool? Can the entire She's On The Money community become my sibling? I have 110,000 little sisters.

I love that. Like little sisters, little brothers, little thems. Like I love this. I don't know if my little sister is going to agree with that though. Like Alex, please let me know if you actually listened to my podcast and got this far into it please like let me know if I'm allowed new siblings but I really liked her and I just felt like she was such a she's on the money advocate like girl I love you but what I found really interesting was that she was able to save she was able to spend but she still felt

anxious about it because she didn't have a plan so for me the number one tip I would give her is create a plan around your money because she said that she was leaving 50% of her income in her spending account just because it makes her feel safe and I totally get that at the end of the day you should be managing your money in a way that helps you sleep well at night but if you don't have a plan you are not able to maximize how much you can save and invest she said she wanted to invest and I'm going to make a grand assumption she lives in barracks which is a very privileged position to be in just because obviously a lot of stuff is supplemented or paid for because that's the way these things work because she's literally putting her life on the line for us which is epic

and something definitely worthy of recognition for me I think it's definitely really important to have a plan in place and without I feel like this episode's so self-promotional Georgia King but I'm actually going to send her a login to the cash flow and budget masterclass because I think that is actually the answer like the way it steps you through and obviously I've thought about this for more than a year how to create it but the way it will step her through creating a plan is going to help her make her money work for her instead of she just being a little bit anxious about it no one deserves to be anxious about money 100 i think it's really interesting as well how much she's changed over the last 12 months like last year last year she was in 5k of debt she's paid

it all off and now she's she's got it all going on i don't think i wrote enough notes of everything that she's got happening but I think 3k in emergency 600 somewhere 500 in a long-term savings she bought a laptop I've written a lot of notes she bought a laptop she bought a car she's in no debt like she is epic and that's an a plus to me like you're an epic person and I just feel like it is so important to celebrate those money wins and not be anxious and I don't know I just feel like that's so cool also cheers for all the credit you gave us friend yeah like we don't deserve it at the end of the day if you're a part of our community the most important thing that you can remember is that we didn't do this you did this so many people will be listening to

this and our information and our knowledge and whatever else we've got is falling on deaf ears because they're not ready to make the change if you are changing that's all on you you did that that's why we celebrate you yeah oh beautifully said fee do we think it's time to wrap the show have you got anything else to add i do just before we head off i'd like to acknowledge and pay respects to australia's aboriginal and torres strait islander peoples the traditional custodians of the lands the waterways and the skies all across australia we thank you for sharing and for carrying on the land which we are able to learn we pay our respects to elders past and present and we share our friendship and our kindness the advice shared on australia's

smartest podcast she's on the money is general in nature and does not consider your individual circumstances she is on the money exists purely for educational purposes and should not be relied upon to make an investment or financial decision and we promise victoria divine is an authorized representative of australia pacific funds management propriety limited abn 34132463257 afsl 339151 and a big thank you to ryan john our producer for putting together today's show also mad congrats ryan john has just been announced as the breakfast summer radio host on kiss fm with lauren phillips which is epic and like now we can say we know famous people yeah does that start that starts next week it starts next week oh good on you ryan we love you but you know what

else we love our she's on the money community so if you'd like to join us where our community shares money tips and tricks literally every single day free of judgment search she's on the money and join us on facebook if facebook's not what you think you can also find us on instagram we're at she's on the money aus also on tiktok we're probably trying to get in all of the social platforms but most importantly we are on your team the last thing i wanted to say which we definitely should have said earlier was a big thank you to everyone who voted for us in the podcast awards uh listener award i guess absolutely absolutely that was epic we were in the top 10 i mean we can't compete with life uncut because that's arguably my favorite podcast and i get

why it was number one yeah but like we tried and i'm so grateful for you we got lots of votes so We're, yeah, very grateful, I guess, as we always say, of you guys. And, yeah, just really appreciate it. Sending so much love. We are very happy campers this week. So with that, let's wrap. See you next Wednesday, friends. Bye, guys.