She's On The Money - FRIDAY DRINKS: BNPL being introduced to credit reports

Episode Date: January 27, 2022

HELLO AND HAPPY FRIDAY FRIENDS! This week we're answering listener questions, and chatting all about how Equifax are adding Afterpay data to it's credit reporting in the US. How long do you think it'll take before this gets adopted in Australia?!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. Today is Friday, which means it is time to sit back with the girls with a bev in hand to unpack our favorite moments of the week, and of course, to celebrate you, the incredible She's On The Money community. As always, we'll be sharing our favorite money wins, we're going to discuss what's

making news in the finance world, and we're going to be helping to answer a juicy money question, which this week is all about debt prioritization. But first, it's time to recap the... But first, it is time to recap the week that was Jessica Ricci. Talk us... Jessica Ricci, talk to us about Monday's Money Diary episode. So, this week's episode was a little bit of a toughie. We spoke to a lovely girl who has been living kind of remotely with her partner after having some really tough struggles with her family. She experienced a level of emotional abuse, which obviously is a huge challenge that she had to overcome and kind of, I guess, re-centering herself at ground zero and building

her savings back up as she became a bit more independent and being remote. Obviously, that's a huge challenge. She's also going back to study as well in the financial services industry, which we love to see it. Very exciting. But all of those things, it's a lot to take on at once. So it was really great to hear how she kind of worked to overcome it. And she was so positive as well about her future, despite having dealt with so many setbacks over the past couple of years. I think this episode was a really important one, Jess, because when we were talking to our diarist, I think so often we just jumped to the conclusion that if you say, oh, you

experienced emotional and financial abuse, you automatically assume it was a partner. but in this situation it was actually her mum yeah and it was you know quite a deep running issue that had existed for a really long period of time and as she said it was something that she just thought was really normal and she hadn't really had any experience outside of that because like if you've grown up in one house why would you know what's going on in another house and now it's all kind of coming down on her I would say like a ton of bricks the realization of what's going on and she had to burn through her emergency account to get out of that situation and now she's building back up but the thing that you and I loved the most Jess and we said this to her so

you guys if you've listened you would know this she just seemed so grateful for everything like she's so grateful and so happy about the entire world and just that you know it was on the way up and like her tenacity was so impressive yeah for someone to have gone through that situation and always had a parent that just doesn't believe in you or someone that's so close that doesn't believe in you and your ability to you know take on further study or go to university or start a business and she clearly wasn't supported in any of those things but just she did start a business she ran it herself until she couldn't anymore and then she's going back to uni like I'm just so impressed that she believed in herself enough to know that that was possible because I think it's

so easy to just be like all right well they might be right especially if you're so subjected to it so often like it just I was really impressed with her I found her really inspiring and I'm so glad that she got to share her story with our community yeah the optimism I think was something that I was so impressed by and we spoke to her about this and she you know has made a few choices I won't spoil the episode but she had done something recently she said that you know she wanted to be able to use that thing that she'd done to help her friends which it just was really kind and genuine I think and you know people as you said can get really down on themselves in a touch situation, which is understandable, absolutely. But she's clearly been very resilient. And I think

that's super special. All right. Speaking of people who have a lot of tenacity, Jess, it is now time to throw to George. Georgia King, what happened on Wednesday? Hello, girlies. On Wednesday, we spoke about pet insurance, which I feel like is a topic that has been on the list for a long time. The people have been asking for it. They've wanted your opinions, Vicky D, which you did provide. We basically spoke about whether or not it's worth it, what we need to be mindful of, because there are certain exclusions that people aren't necessarily aware of. So, we flagged all of those. We also discussed some strategies for people who don't want pet insurance or maybe can't afford it. So, that was really helpful as well. And I also picked your brains about budgeting

for pets fee. And you've got about $1,000 there at your little house. I wish I had 1000, alas, I only have three, but I'm working on it. So we're rallying for Steve to let me have another dog, but I really think that's quite far off. So we'll see. Time will tell. Need some more pet insurance. All right. So that is the week that was, but George, that isn't the only thing that happened this week. As always, we have asked the community what their money wins of the week were, and you have picked a few to showcase on the show. So, George, what are you bringing to the table this week? There are some absolutely inspiring wins this week, as always, girls.

So, our first one comes from Victoria. Great name. What a legend. Is that her win? Yeah, that's it. Same name as VD. So, she wrote, money win. My sister bought a new laptop over the weekend and used my shop back.

Apple has a 5.5% cash back at the moment. So, I made $123 doing absolutely nothing. Oh, my gosh. wait I don't understand why your sister didn't just sign up for their own shop back account like that makes no sense you would have got 10 bucks from she's on the money you would have got 120 bucks back from apple like that is questionable but at the same time maybe victoria is a sneaky sneaky money winner she's like just order it on my laptop and the chrome extension was already on what a genius our next win is from vanessa lee so she had a quarantine clean out and made 200

on Facebook Marketplace. She also cashed in $45 from Shopback and then she split the money with her partner and they invested in shares while the market's down. Triple win. What a savvy, savvy person. I love that. It's like the trifecta. Exactly right. Cherie has a money win, gals. She was going to get a ceiling flower piece for her wedding and it came to a cost of over $800. Oh my gosh. What? For flowers on the roof? Yeah, I don't really know what that means, but I guess- Oh, I'm planning my wedding. I know what that means. That's Spenno. It is Spenno. I mean, actually, is $800 for flowers at a wedding Spenno? I mean, for one thing of flowers, that feels Spenno. Yeah, that's not even the flowers on the table,

in the hands of the ladies. I'm not across it, but- Seems expensive. Yeah, the flowers in the hands of the ladies, they're adding up at the moment. Spenno, yes. So, instead of paying this $800, she bought some hanging tea candles and flower garlands, and it has cost them $120, dollars and they've made it themselves and it looks just as impressive. So that's a little DIY hack for all the brides out there. I love that. Steve said I couldn't go and steal bushes from along the train tracks for our wedding. He said we had to have actual flowers, which I was really disappointed about because I was like, this would be the money win of the year. Imagine me getting

to post, hey guys, look at my flower arrangements, stole them from the train tracks. Like that would have worked really well for me. Turns out Steve wants actual flowers at his wedding. Rude. The next win is from Zoe. So, money win. She's been offered two full-time jobs this week, if you don't mind. If you don't mind. Yeah, exactly. So, she gets her pick. Yep. Yep. Very good. But the money loss is that her husband got a driving ticket. But that's like not her money loss. What do you guys do? Didn't he know it was going to be a good money win week and then he went and did that? What do you guys do when you get, not when you get a fine, when your partner gets a fine do you split it with them or do they cop that fee oh absolutely not i mean you're not going

to be fair no not if you got the fine and did the wrong thing to be fair of the two of us i'm definitely the one more likely to get the fine but i would never turn around and be like hey james would you mind just coughing up a little bit of cash to put towards this i was not as my bad habit yeah have you got a little bit of a lead foot jessica ritchie oh i do not like i'm not hooning up and down the streets or anything like that but i drive a lot more than james does So, I think like statistically, I'm just like more likely to. Oh, so it's statistics, not driving style. Okay, all right.

Well, Steve and I actually share finances. So, I'm always a bit miffed when it happens because it comes out of our joint account. I have pitched the idea that it comes out of his spending account because I actually do live by the cash flow plan that I have in my book. That's literally what Steve and I do. So, I pitch the idea that it comes out of his like food, fuel and fun account. He's like, no, that's none of those things. I'm like, it is like that's an unexpected cost that I shouldn't have to wear. Kind of rude. But

at the same time, like it is what it is, I guess. But the thing that I get really miffed at is the last time Steve got a speeding fine was actually in my car, which means it came to me. And then I had to go and ask Steve to do all the paperwork to get it transferred into his name. And he was being a bit lazy with the paperwork and it was taking too long. And I was just getting really antsy because i'm like i'm not copying this i'm not taking your demerit point absolutely not i have a perfect driving history i'm not making it look like i don't and he's like oh just take it it's one no that's illegal it's not happening no no no move on george what else okay the next one is from angelique so she switched to nab to avoid comm banks four dollar monthly transaction

fee ew why do they still have that it's 2022 right that's also quite steep four dollars a lot of money yeah what are you trying to stoff off a coffee here's what it equates to so it saves her 48 a year by the time she's 65 she will have avoided paying 1728 to the bank she's done the she did the maths what if she's on the money in legend exactly right uh the next swing girls is from tegan so she deleted menu log door dash and deliver her bank account now actually has money in it lol she wrote i love that for you it's good i hope you're still eating babe yeah exactly our final win guys is from jemma it's a bit of an inspirational one you may have seen it in the group it was an independent post and it did garner a lot of traction what must be good they

don't often get approved often we provide the feedback that you need to post your wins in the thread so who let that one through let it slip through it's worth it i promise so she wrote one thing i have learned from this group and the podcasts is knowing your worth and not settling for something just because it's better than nothing i recently landed a new job but once i received the contract it was 38 000 less than what it was advertised as what yep so surely that's illegal i would have thought so anyway she continues i contemplated taking it based on the other perks but i knew i was worth the advertised salary package i put all i have learned from the podcasts and other members to negotiate the salary with them and it worked.

They matched it. She got the full salary. And then she finished off by saying, I never would have done this without the group or the podcasts. I always felt that what they offered is what I deserved. So, chase those goals and never doubt yourself, ladies. How beautiful is that? Oh my gosh, what a queen. What an absolute queen. I love that. I think that's so important. And I can see why that got not let through the cracks. Like that would have been like rearing through the front gates. I would have like, I would have proved that, but I think Jess did. So good one, Jess. Good one. All right, G, I feel like those have been some epic wins, but we have a very good listener

question. If you hold on just a minute. All right, straight back into it, guys. It's Friday and that means it is time to answer your most burning finance career and life questions. If you need help untangling a naughty dilemma, no matter how big or small, send us through a voice note to podcast at she's on the money.com.au and we'll help you find the answer you've been searching for now let's take a listen to today's money question hi guys so my question is about paying off debt while you have expenses for children um the context is that my partner and i we unfortunately had to take on some debt during covid we are working to pay off and we are on track to pay it off by the end of this year my daughter attends a catholic primary school

and we have the option to pay her fees annually in February, the amount being $2,800 or we pay monthly as we did last year, it's just under $300 per month. So my question is, are we better off saving and paying her school fees annually and then snowballing what we would have paid monthly onto debt or do we just continue to pay monthly and save what we can to smash off the debt quickly? Thanks. What do we think, ladies? VD, I'm going to throw straight to you because I have no idea what she should do in this situation. Help. Look, I have a lot of questions and I feel like I don't have enough information on her personal situation to make a call in this particular circumstance. So we can draw a number of conclusions, right? So if you've got personal debt and you've taken

on maybe like a personal loan during COVID, which is fine. Lots of people had to, at the end of the day, we're doing the best we can. And I don't think it is a bad thing that you put your family first and you were like, okay, I need to get a personal loan to get through this period. Like that is a very common thing that happens during that period of time. But personal loans will run anywhere between 10 and maybe 17% in interest, depending on where you've got them and maybe whether it's secured or not. Again, I have no idea what your personal circumstance was, but when it came to the school fees, let's pretend it's not school fees. Let's just pretend it's a debt, right? So you owe X amount for this education. You can either pay it upfront or you can pay the

$300 a month. Is there any interest on that at all? Because if there isn't, I'd probably be not prioritizing paying that off in a lump sum and actually taking that lump sum, paying it off your debt. So, you're paying less interest over the long term and then paying the $300 each and every single month so that you're in a situation where you're carrying less debt and therefore incurring less interest. I don't know if that's applicable for your situation, but that's what I would be looking at if it was my own personal situation and I had a debt that I needed to pay off or a payment plan that I needed to pay off as well as carrying some debt. So, I think it's always about looking at, well, what is the interest going to be incurred? I think it's

really important to look at what the interest being incurred is because on that $2,000 or $3,000 for school fees, that on a debt, if it's at 17% or even 10%, is going to be pretty significant. So, we actually want to get ourselves out of that and paying off debt is an investment in itself. So, I think from my perspective, that would be my question. But Jess, I believe we have an episode on debt prioritization. When was that? It was a little while ago now, but it's a really good one. We cover a number of different debt repayment methods. I know that she mentioned snowballing. There's a few different other options people can look into. As you were saying, with the interest in comparing, if people find that concept a little bit confusing because we're

just kind of surface level touching on it right now, there's a full length episode that covers all of that. So, go back and have a listen. We knew this question was coming, so we prepared that far in advance. Genius, if you ask me. But yes, I think it's really important to always look at your debts, putting them in a list and working out what types of interest you're going to incur on any of them. And that's why often in the She's On The Money community, people don't really prioritize paying off HECS debt because it doesn't really incur any type of interest. So, it's here or there whether you pay it off now, but a personal loan can and has been known to put you further into debt if you're not prioritizing it. So that will be where my priorities were at. Do you reckon

that covers it, George? What would you be prioritizing? I think you've nailed it. I don't really have anything to add to this. You know me, I have no experience with debt, but I guess the only thing I would add onto that was I felt like there was a little bit of shame in her voice when she said like we had to go into debt when like during the pandemic, but that's certainly nothing thing to be ashamed of because the last two years have been a shit show. And yeah, you'll find your way out of it and you're in the right place. So you'll be absolutely fine. That was a really good pick up, George. I definitely picked up on that. And I do think that that was worth bringing up as well, because I think so many of us carry a lot of guilt over things that are arguably beyond

our control. Like there is no point feeling guilty about stuff like that, especially when you're on the path to getting out of it. You're asking questions like this. Clearly, you're on top of it. You're fine. It will work out. I promise. Well said. So, this week, we're going to chat about a little spicy topic that we all love to get on this one, the old buy now, pay later. We know how much I love that. We're probably not very popular in the offices of a few well-known businesses, but I thought it was really interesting because I read an article this week that said, buy now, pay later products are now actually being considered by Equifax when they generate your credit score. This article was referring specifically to the US. I believe it comes in

as of February, but it's a big thing because here we've said in the past when we've touched on afterpay and it's a big point of, I suppose, almost contention sometimes when it's debated back and forth is that the debts aren't generally in Australia accredited towards your credit score. so you can have mass amounts of buy now pay later debt and it may not show up on your credit score and that's a big selling point for some of these companies where they say oh like it's fine like if you want to take out a loan you want to take another one another one another one another one no problems it's not going to impact your credit score you're all good girlfriend despite the fact that you're digging yourself into this hole of debt whereas now Equifax is leading the charge

it seems like and saying actually that's a line of credit that you owe and we're going to consider that when we generate your credit score because it does impact your ability to pay back a mortgage or a personal loan or a car loan. And I do remember we had a comment once on a content piece that we put up where someone said, buy now, pay later isn't debt. And I just wanted to highlight here, get in front of the bus and say, I know that it's not a loan that you've taken out from the bank, but when you utilize a buy now, pay later platform, you are accessing money that is not yours and you then owe that money, you have to pay it back. That is by definition a debt. Yeah, exactly. Exactly. But it doesn't feel like that, right? And that's half

the point. They're like, oh, we'll pay for it upfront and you just pay me back in four. Like if a friend did that, Jess, if I was like, I'll take you out to lunch, you got to pay me back in four. It was 20 bucks, $5 a week for the next four weeks. One, can you imagine that happening? that would be very funny. But two, that means that you owe me money and there's a line of credit owing to me from you, Jess. That's what a line of credit is. It's a line of payments that you need to make to fulfill a bigger number. And I just think that so many people forget that fact when they're like, no, I didn't get a personal loan. I'm like, oh, but like you've got afterpay and you still owe them money. So, you personally loaned money from somebody else.

I think that's part of what I personally find really frustrating is a lot of the companies, and I'm not going to say all because there's always exceptions, but a lot of the marketing that we see from these businesses really taps into that instant gratification desire. And there's platforms now that are specifically aimed at allowing you to break down your payments for dinner at a restaurant, or they encourage you to shop when you go out with your girlfriends. and the marketing I think really plays into it. And again, we've spoken about this before. We've done a whole episodes. If you want to go back and listen, feel free. But I personally think it's a really great move that they're adding it on. And I know that that might be a bit unpopular with

people who are frequent users of the product who say, oh no, like it's not going to impact my ability. I can still pay back my mortgage. I can still do this. I can still do that. But should we look at this as a step in the right direction in terms of potentially tightening up some regulation around these services? We know how much I love regulation. I am the most black and white person you will ever meet. There is right and there is wrong. And I really struggle with the gray area in between, which is maybe why I became a financial advisor because I'm like, no, you can't do that. I was a kid in primary school dobbing people in for not wearing their hats. Honestly, I'm fun at parties, but I think it is absolutely a step in

the right direction at protecting the consumer. So, it's not me going, oh, I just want everybody to be regulated. I actually just want you to be in the best possible position. And let's use you, George, as an example. If you go, you know what, I really want an Afterpay account. And you go to their website and you sign up and then potentially they run a credit check on you. That credit check is going to determine whether you're somebody that they want to work with or not, whether you're a responsible person at paying back loans. They go and they would do their credit check and go, okay, Georgia doesn't have any other debt we'll give her an account like that just seems quite straightforward to me that then you can start using that and as we know there are a lot of

people in our community who are really good at using after pay and other buy now pay later companies like we're not saying that that's the worst thing in the world but what we're saying is it is so easy to go down a slippery slope with so many people not seeing it as debt or maybe seeing it as the easy way and you know really playing on your ability to moderate your impulses Like for me, it would be a bad thing because I can be quite impulsive, but the idea that they don't credit check now just doesn't feel like they're putting you in the best possible position as a consumer. And if I look at the Afterpay website today, it literally says, quote, at Afterpay, we never do credit checks or report late payments. They don't believe in it and that's

fine. That's their choice. But what about just that example you just gave of somebody who was already in mountains of personal debt and then they want an after pay account because like their credit card keeps declining like is that putting that person in the best possible position I just I just don't think so so for me that's why I want credit checks so it puts you in the best possible position it's not so that your debt can be managed or you know followed up on it's literally so that you don't get in more debt than you need to get into because it is a really for free flow. And when you are in a lot of personal debt, you become quite desperate and you will sign up for other platforms and you will sign up for other entities that can lend you money

because you end up borrowing from Pete to pay Paul. Yeah. And so, obviously, this current change that we're talking about, it won't impact that. So, it's not going to require buy now, pay later people to credit check you. But do you think that as a byproduct of the fact that having multiple buy-now-pay-laters or a significant buy-now-pay-later debt will impact your ability to get what I'm going to call a more substantial loan. So, the fact that you might use Afterpay to take get $100 dress every now and again is now going to have bearing on whether you can get a home loan or a business loan or a car loan. Do you think that that will work to discourage people or do you think we're going to have a number of people that are going to be taken by surprise when they

go to get a loan and the bank says, hey, really sorry, you use Afterpay or you use ZipPay, we're actually not going to give that money to you. I can go two ways on this. So, I've got quite, I guess, diverse, you would say, opinions on this. So, the first opinion is that it's legitimizing the debt. So, you're going to see it in line with personal debts and credit cards and stuff like that if you weren't seeing it that way previously. So, I'm hoping that would mean that people take these debts more seriously and maybe are a little bit less likely to use them. On the flip side, I think putting it beside a credit card and a personal loan for banks means that there's not a one or the other. It's not, oh, does Jess use Afterpay? It's more,

okay, well, Jess uses Afterpay and she's really responsible with it. It's not a hidden thing that they're looking for in addition to your credit report. Whereas right now, Jess, you can probably speak to this pretty well because you've just gone through a pre-approval process. But when you go to be pre-approved for a mortgage or a larger debt, they're going to want your credit report, which is fine, but they will also ask for three months worth of bank statements. And that is currently how banks are working out if you're using any type of buy now, pay later companies. They're not not knowing about it, but they are finding it in your bank accounts. And then that's being taken into consideration with your budget and your cashflow and working all of that out. So, I don't

think it's going to change whether or not you can get a mortgage just because it's added to an additional report, but I do think it makes it a more legitimate debt that you might, you know, think twice about in the future because before it was like, oh, that doesn't even come up on your credit report. Like, it's fine. So, how soon is this going to, or will it even happen in Australia, V? Is this coming our direction? Look, Equifax exists in Australia, so I wouldn't be surprised if they roll that out globally, but they're obviously trying it out in the US and they'll work out what that looks like and how that works. And I'm assuming they're probably doing that so they get through all their teething issues just in one country before taking it global,

which would make sense. But I absolutely think it's coming. There are a lot of people in Australia asking for it. And in the name of being transparent when it comes to debt, it just makes sense. Going back to that thing about credit checking by buy now, pay later companies, I know you said after pay don't do it. Out of curiosity, how common is it for buy now pay later businesses to just give you the money without running any kind of check? Pretty common. So, I've done a bit of research and from my research, there are obviously a number of different companies. We've got ZipPay. They say they might perform a credit check when you apply for an account and they have also said that if you fail to meet your payments or have a serious credit infringement, they might

disclose it to a credit reporting body, which in comparison, when we said after pay, they're not doing that currently. There's Hum and they say they might check your credit score, but they don't. And they also say that when they do check your credit score, it quote, won't affect your credit score or leave a record on your file, which means that they're doing a soft check, if any kind of check. Klarna, which we know has, I guess, had a bit of a surge in the last 12 to 18 months, I reckon. This one wasn't around. That's the pink branded one. They say they do perform a credit check when you apply, which I think is relatively responsible from them. And they also say that, you know, if you don't make repayments or there's a serious credit infringement, they

will pass that information on to a credit reporting body. So, they're operating in exactly the same way as a personal loan, which, you know, I don't think that there's a right or wrong. But when it comes to buy now, pay later, as you know, I don't love, love any of them. But I think that's a relatively responsible thing for a credit reporting body to do. But when it comes to like open pay and pay right and all of the other ones that you can find, I couldn't find any other buy now pay later company that says openly, yes, we will check your credit. Like in all of their terms and conditions and product disclosure statements or PDSs as we've been calling them, I think during this episode, they say they reserve the right to, but don't. Whereas Klarna says, no,

if you sign up, we will run a credit check, which I just think is a responsible thing to do. It is a responsible thing to do from Klanovi, but don't you think that is just such a red flag for all of the other companies? They don't care about you. They want your late fees. Like, it's just, that's exactly how I feel about it. I was trying to be maybe not as colorful with it, but I just can't not be. Yeah, look, I feel like I try so hard to be diplomatic about this topic because at the end of the day, like if you look from my perspective as somebody who invests, you look at Afterpay, what a killer business. Afterpay recently sold actually to, you know, the company that does Square, like those Square reader pay terminals. Square bought Afterpay for

$39 billion. Wow. That's a lot of millions. That is so much money. So, you look at it in the terms of an investor and you go, what an epic company. I would love to see what they're doing next. And they're obviously quite technologically savvy and they're on top of it when it comes to developing apps and rolling this out internationally. It's genuinely impressive. But when it comes to my She's On The Money community, I kind of get like angry mother hen about it because it's not putting you guys in the best possible position as consumers. It is not educating you. It is not teaching you what is good debt or bad debt or okay debt. It is not teaching you how to manage your own impulses it's not teaching you a good solid budget and cash flow system in actual fact

it's probably teaching you the other it's like can't afford it i have to pay it like you're not teaching me the foundational skills that everybody deserves to have and if we have these products they're just from my perspective in a way you know praying is probably very dramatic but like they're kind of preying on your naivety they're like okay well if you don't understand you're going to think that this is a good thing and you know we'll brand it really nicely and give you an app so you can keep track of it. And that's something that, you know, over the weekend, guys, you might have seen this last weekend, me going on an epic rant about Afterpay's new company, Afterpay Money, because it's saying that it's a budgeting and financial literacy tool when

it's not. It's another debt tool. And it's implementing this brand new product that is supported by Westpac, which again, I feel like is a very strange step because as much as Westpac as a bank is managed, you're still not having to go through the credit check process. Whereas if you went and got a personal loan from Westpac, you absolutely would. Why would that be different if Westpac is lending its entire license to Afterpay? Anyway, different story. But they've implemented a new product called Retro. So Jess, you could download the app and have Afterpay money and that's actually enabling you to put historical purchases on Afterpay. So you could go out for dinner and go, all right, well, there you and I spent $150 on dinner. Actually, I want that $150

back. I want to afterpay that. So now you can access afterpay for things that aren't even on afterpay. You just get to pick things from your banking. You just get to pick things from your bank statement and then afterpay it. And then you've got a line of credit there and there's no credit checking process. So for me, that seems like a really big red flag as well, because it's not just companies that have afterpay. You can now afterpay anything like that. Just it's scary, guys? I think for me, new products and new innovations like this, I understand from a business perspective why they're doing it, of course. But as someone who historically has had pretty significant credit card debt, and again, acknowledging that not everyone is going to be

like me or fall down that hole, I think the thing that sometimes we forget is that these businesses that offer lines of credit or loans, even when it comes to a mortgage, their priority is keeping you using their product. And so, that's why credit cards offer incentives or points. That's why Afterpay is offering discounts when you shop at stores and now you can retro purchases because they want to keep you using their app and as much as you can use that product responsibly. When you sit back for a second and go, why are they working so hard to keep me as a consumer, to keep me using their product? It's because you're generating them income. Even if you're not paying your late fee, they're making money off of you. We know that they take a high percentage

from businesses when you use afterpay to purchase a product. And it's a lot for a small business sometimes. It's a lot for a small business. About 7%. And a lot of small businesses have come out and said that they actually can't offer buy now, pay later as an option because it costs them so much and eat so significantly into their profit margin. And I think just it's good to think a little bit critically about are you after paying something because you genuinely need it to break up your cash flow or are you doing it because it's convenient? And I think if it's the latter, can you restructure to work without it? And it's applicable to all buy now pay leaders because you're becoming a product of a service that is

profiting off of people's inability to manage their finances. It might not be you specifically, but that is where the large majority of their profits do come from. And they're using new products and new services and some very questionable marketing at times to get you to stay and to get you to use their platforms. And I don't mean to sound like we're witch hunting them because we're absolutely not. But I just, I personally know how easy it is to fall down that debt hole. And I would hate to think that someone would fall prey to the same thing because they've got a big marketing budget. And I know that because we've been approached by them before. You're like, because they wanted to give us some of that marketing budget.

But it's true, right? And Jess, that was so on point. Like, you don't even need me anymore. You can run she's on the money. But that's just it, right? Like, it really worries me that they are building this trust by using language that you're really comfortable with. And you see Afterpay starting to use topics like money stories and your values and your goals and setting those goals and achieving them. And you know, they've got goal achieving trackers in their apps now, but you're right. Like everybody wants something. Why would I keep the app? I think something else that is really actually quite smart is something that one of our She's on the Money community members has done. And I don't know if I'm allowed to share their name

because they actually sent me a DM and said, I had a massive Afterpay problem, but wanted to still have that type of service. So they actually saved up an amount, made a separate bank account called Afterpay, and they've been dipping into that and then making repayments back to it. So it's not another company. It's their own savings. If they miss a repayment, it's not the end of the world because it's their own mini fund. It's not their emergency fund. It's sitting separate to that. But like, is that something you guys could do? I mean, it's a very privileged position to be in, to be able to save that up and put it to the side. But if Afterpay is something that you just like the convenience of, or you just like the ability to pay it off in a few payments. Is that a thing

that could work for you? I just feel like so many of us have Afterpay and use it. And I guess we're using Afterpay a lot because they are the biggest, like when we're having this conversation, all buy now pay laters. But I guess when we have this conversation, a lot of people are just using it out of convenience. It just doesn't hurt as much. Like it doesn't hurt to choose Afterpay instead of seeing $200 go out of your account for a new dress for next weekend. But I guarantee you, if you didn't have access to that, you know, line of credit, you'd think twice about the purchase. You'd be like, oh, do I really want to see that $200 go on? And you might go, ah, if I still want it tomorrow, I'll go get it. And then maybe you don't want it tomorrow. So I think that impulse

control in this is really important as well. And Jess, that's another thing we've done an entire podcast on and talked about, you know, controlling your impulses and putting 24 hours between you and you're spending and good savings, hacks, tips and tricks. Like this isn't something that is new to us, but I do think it's a conversation that needs to go on. Like we can't just stop having this conversation because we've spoken about buy now, pay later before. I think we can probably wrap it there. I feel like the moral of the story is after pay is the devil. I'm kidding. I just, I joke. No, that's not the moral of the story. Georgia, you're going to get us in even more trouble with them that i arguably am already like as just said before like i'm probably not their

favorite person that's all right though i wouldn't want to be a favorite person um let's move on to the end of the show to the end of the show we go george because that actually is all we have time for today so just before we head off we'd like to acknowledge and pay respect to australia's aboriginal and torres strait islander peoples they're the traditional custodians of the lands the waterways and the skies all across australia we thank you for sharing and for caring for the land on which we are able to learn with our respect to elders past and present and we share our friendship and our kindness see you next week guys