She's On The Money - Indexation & HECS/HELP Debt

Episode Date: May 9, 2023

HECS or HELP debt has long been described as “the best debt you can have” BUT is this still the case? With indexation on HECS/HELP set to increase on June 1st to 7.1%, what does this mean for people with this debt? Today we are getting the downlow on HECS/HELP debt and indexation, what debt we should prioritise paying off and so much more! Acknowledgement of Country By Natarsha Bamblett aka Queen Acknowledgements. 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. If you do choose to buy a financial product, read the PDS, TMD and obtain appropriate financial advice tailored towards your needs.  Victoria Devine and She's On The Money are authorised representatives of Money Sherpa PTY LTD ABN - 321649 27708,  AFSL - 451289.See omnystudio.com/listener for privacy information.

Hello, my name is Natasha Nabanunga-Bamblett. I'm a proud Yorta Yorta, Kernai, Wolperi and Awadjeri woman. And before we get started on She's on the Money podcast, I would like to acknowledge the traditional custodians of the land of which this podcast is recorded on Awadjeri country, acknowledging the elders, the ancestors and the next generation coming through. As this podcast is about connecting, empowering, knowledge sharing and the storytelling of you to make a difference for today and lasting impact for tomorrow. Let's get into it. 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. Hex or help debt has long been described as the best debt you can have. Debatable. It's very debatable. Debatable. But is it still the case?

Who described it as that? Who described it as that? Who did this? Is it still the case? I wouldn't say so. Was it just our producer or was it the internet? Oh, look, I think that it's both of those things, probably. But listen, as you said before we started recording this, V, let's talk about Hex.

Hex, baby. I think we should really- It's called Help Debt now, though. Is it Help Debt or Hex Debt? What's the- They're the same. They're the same. So I will probably accidentally call it Hex interchangeably.

So Hex is for those of us who are elder millennials, and we had Hex Debt, but it has since been updated to be called just across the board Help Debt. Help Debt. Sounds more cute. Does it? I think it's kind of cute. I don't know. Anyway, I don't care what it's called.

I'm just mad that I can't make Hex jokes. Help isn't as fun as- It's not as sexy, though, that's for sure. But we are talking about this because we have been getting so many messages. Six million of them, precisely. Six million, to be exact. I would never overestimate either. Oh, no, certainly not.

We don't do that here at She's on the Money. Absolutely not. So how scared should we be of headlines like, hex indexation, everything's rising? I don't know. Well, it makes sense that we've been getting so many messages, right? Because we are hearing all through the news that on the 1st of June, HECS is going to be indexed by 7.1%. And I guess today is the day that we are going to be talking

about that because it is wild. And when I just need to make sure that everyone is aware that I do mean the 1st of June, not the 30th of June, because a few people have messaged me because I was on Instagram stories, just like talking about it the other day. And they're like, oh, don't you mean the 30th of June when, you know, end of financial year happens? No, this happens on the 1st of June ahead of the end of financial year so that in a month basically in the next 30 days they can calculate what your repayments would be with the new level of indexation and can hit the ground running from the 1st of July basically so I'm not wrong I just feel the need to like you know back myself a little bit and be like this is why I'm correct but also people were right to

slide into my DMs because I'm consistently wrong so um if you would like to correct me you are more than welcome to so I don't yeah I feel like a dick when I correct myself right I just feel a little bit rude when I'm like um I was right I know it is oh it is a bit awkward when you have to be like oh actually I did I think this is the correct yeah like actually um I don't know if you know this but like I'm really into finance like really really into finance and while I might get dates wrong consistently if it was the 30th of June I would know because that's my birthday back. Absolutely. Oh, 30th of June is your birthday. 30th of July. Yes, sexy. I'm an end of financial year baby. Is there a better date for my birthday in the year than the 30th of June?

I hope you get a big chunk of return for your birthday. No, I always end up owing money. It is actually a joke, but that is okay. Thank you for those well wishes though. Let's talk about debt. So V, you've probably heard on the news the term student debt avalanche. It's dramatic, isn't it? It seems dramatic and I'm also like I'm not yet scared but like should I be scared? Why aren't you scared? I just don't know how it works. With a headline like that they're trying to make you scared and you're still like nah take it take it I can take it. Because like to me I feel like avalanche that's nothing. It's 30 bucks a month I'm like I don't really mind to be honest but like should I be more worried about this? We should I mean at the end of the day when they're

talking about the student debt avalanche it is proposed that on the 1st of June the student debt here in Australia on the 1st of June is going to increase by $5 billion this year because of that 7.1 level of indexation. So that's a lot of money. And I mean, for you, you might go, whatever, it's 30 bucks. But to a lot of people, 30 bucks is a lot of money. And when you're paying back your HECS debt, especially if you're on a lower income and you're not maybe, you know, in one of those high marginal tax brackets, but you're in the bracket where you're starting to pay back your debt, it just feels like it stacks on a little bit. Like it genuinely feels like you're getting nowhere and I mean you are I promise but it just feels like you're going backwards and I think that

there's just this I don't know it's just a unspoken concept of hex versus help that it's there to help you and it feels like you're kind of being kicked while you're down like you already have hex debt you already see it on your pay slip coming out you already know that that's money that's not going into your back pocket we know how we feel about debt in general yes we've spoken about the difference between good, bad and okay debt here on the podcast. But I just feel like we're all just a little bit salty with indexation because for so long, we've just talked about how hex slash help debt doesn't have an interest rate associated with it, right? So when you hear that, Bec, you smile and nod and go, yeah, great. But it is indexed. So it kind of feels like we're

being kicked while we're down. Does that make sense? Kind of. But I guess like what my question is, is what is indexation and what are the basics of it? Stunning question. So indexation basically just means an adjustment to a price or a wage or other value based on the changes in other prices or a composite indicator of prices, right? So we spoke about it a couple of weeks ago on the podcast where indexation is basically how much something increases in value over time. And my favorite example of this, which I didn't give you, I saved it for this podcast. The Macca's cone. Oh. The Macca's ice cream cone, right? Yes. So like, do you remember back in the day? I don't know if you ever had this luxury, but my mum would

give me a 50 cent coin. Silver. It was silver. I don't know if anyone's seen silver coins these days because they can't buy you anything anymore. But I get a 50 cent cone from Macca's. I actually remember when they were 30 cents I feel like they went 20 cents I feel like it was 20 but last time I spoke about that publicly everyone was like they're 50 cents so we're just gonna call it 50 cents right so I do remember probably late primary school I was paying 50 cents for a Macca's cone after school we go to swimming lessons and then we get a Macca's cone as like our little treat little treaty treat for you know going to swimming lessons as though it's not already a privilege to go to swimming lessons like Victoria Devine anyway you're right I feel like it used to be 20 cents at

some point, but this is beyond the point. It is now what, like $1.50? $1.50? I think it's like more than $1. Oh, blow me down. I feel like in different locations around Australia, somewhere you're going to say, oh, they're $1, somewhere else they're like $1.50, right? Okay. So that has increased in price over time. But are you getting the same product, Bec? I would say... Identical product. Identical. It's just nowadays it costs more to produce. It's going to be more expensive. So the dollar that you used to have back in 1998, when I was seven years old and going to swimming lessons and paying 20 cents for a cone, I could have bought five of those ice cream cones for a dollar. But today, if I gave you a dollar, you could only buy one. And

in some locations, you wouldn't even be able to buy one. You'd need another 50 cents to get there, right? So a dollar today is not worth what a dollar tomorrow is worth. And that's what that saying means. So indexation is that increase in price. So it's the difference of going from 20 to a dollar and you kind of don't get any more value out of that product. You're still getting the Macca's Cone. There's actually no more value. It's not any better today than it was back then because it's probably the same recipe. So like nothing has changed about it except the price and that's what inflation is. It just means that a dollar back then was actually quote worth more because you could buy more with that dollar than it is today. So at the end of every financial year,

the government will tally up how much inflation goes up and then add that to your heckstent. Yeah. Okay. I see. I see. So it's kind of like across the board as well. I mean, milk, eggs, bread, everything goes up. But the reason it goes up is because things start to cost more. The world starts to cost more. Bec, you start to earn more. Like the world does increase over time. And when we look at it, the RBA, which is the Reserve Bank of Australia, they're kind of in charge of making sure that's consistent for us. And the reason we want it to be consistent is so we can consistently afford to grow as an economy. Inflation on average increases about two or 3% each and every single year, which is good. That's nice. It's actually

a sign of a growing economy. Like that means that we're healthy as a country, right? So that's good to see. This year it's 7% and it's because we've gone through so much turmoil in the last couple of years, that's kind of like now hitting us like a ton of bricks. And so we're feeling the wrath of what has happened previously. And the RBA historically has tried to like protect us from that. So the way that they're trying to protect us from that is by increasing the cash rate. So the cash rate is how much they're lending the, let's call it the government's money, how much they're lending the government's money out to the big banks. So by increasing the cash rate, it costs the banks more to borrow the money from the RBA to give people mortgages and business

loans and personal loans and home loans. And when home loans and business loans and personal loans increase in the amount of interest you're paying, that means you're less likely to take it out, right? So if I said, Bec, you can buy a house today, it's going to be like 1.5% finance. Like you're going to get an interest rate that's really low. You go, so money you in. That's a good deal. I can afford that. That's only 1.5%. But now today it's much higher than that. And a lot of interest rates are at 5%, you start to go, oh, I don't know if I could afford those repayments. I don't know if that's going to work for me. So you as the consumer, the person that gets the mortgage or gets the personal loan or gets the business loan, you're less likely to take it out.

And if you're less likely to take it out, what that means is the economy starts to slow down because there's less people like you making big purchases and throwing money around. So the economy starts to go down a little bit and that's what they're trying to do so that we can curb that growth or the inflation over time. So if you're doing less in the economy, like you're not buying as much, things are a bit more expensive. You're kind of like holding your purse a little bit closer to your chest going like, oh, I don't know if I want to, you know, pay for that this month. It means that there's less business going on in the community and less business going on in the country, which means ultimately the economy isn't doing as well. And that's what they're trying to

create. Does that make sense? Yeah, that does make sense. So like things are just kind of like slowing down and they're doing it on purpose because they want people like you to be borrowing less money. Yeah. Okay. So I guess for me, and I've said this before, I do have a help debt. I've never finished a course. So I've just started all these things. That's literally the worst. Like, I mean, not the worst that you've done. I'm sure you've got a lot out of it, but the amount of people in our community I've spoken to are like, I have a help debt, I don't use it. Yeah. Like I went to uni and I did this and now I don't even work in the area. Or my friend did this course. I thought I'd do that course. And then it was a terrible course

and I didn't enjoy it at all. Now I have $30,000 worth of fakes. Absolutely. I feel like I've started like five or six subjects and never finished any of them. So I just have all this money and no qualifications, but that's okay because we're still here to tell the story. You know what? We're happy about it. We're making content out of it. It was worth it. It was worth it. And you know, I learned that if you learn something, it's not a waste no matter how you did it or whatever, you know what I'm trying to say. I think it was my mom. I'm not sure who it was. I want to give her credit for it though. She always says it was either a blessing or a lesson. I love that. And I feel like that's good because it always reframes something as

if it was kind of terrible, let's just call it a lesson. Exactly. Let's just call it a lesson. It makes me feel so much better about it. Perfect. So I mentioned this is the start of the episode. I kind of am not stressing about the, I suppose, like the indexation on Hexdebt or Helpdebt. I want to stop you there because I want to hear why. Like, why do you not feel that pressure when obviously a lot of people in the media are jumping up and down and going, oh my gosh, what's going on? Why? So this is the thing. I don't know what that looks like. So for me, help debt remains the same. And I'm so ignorant because I have no idea. But for me, I think that, you know, I'm just going about my business. I'm paying like two bucks a week in hex debt when my

employer takes it out of my pay slip. And then this is going to happen. My hex debt is going to go up and my pay slip will be exactly the same. So I don't know where the fear is, but I could be completely wrong. It could be changing my take home income. I don't know. All right, Bec. So we just took a really quick minute away from the podcast so I could get out a few calculators for you and organize what this looks like. And now I'm scared. No, don't be scared. But I do think it's really important to understand where you stand and how that works for you. So my favorite website, and I have put it in the show notes before, it's paycalculator.com.au. And the reason I like this is because it's up to date with what's going on on the ATO website. But in all honesty,

it's better than the ATO website. It's a privately owned website. I mean, this guy, whoever owns paycalculator.com.au is a wizard because everybody in the industry or in my industry uses this website as kind of like a really good base level calculator to just like go, oh, I'll whip it out, see what's going on, you know, pop in your income, see what that looks like. Anyway, everybody uses it, but it's covered in ads and you just know he's raking it in because every single time someone in our industry goes there or you go there, he's making money. So I just feel like that was a genius thing from him. That is genius. Exactly. So if you go to this website, you can basically put in your salary and then click options. So you could click your

salary includes superannuation or it doesn't, or you could click student loan, which is what we're talking about here. So many people just like you, they don't know what they're paying. All they see is these headlines and get really stressed out about like, oh my gosh, I'm going to be paying 7% indexation. Like I already can't afford a house. I already, you know, struggle to buy a good coffee every frigging day. Like what's going on? So when it comes to calculating your repayments, it's actually based on income thresholds and those are different from your marginal tax bracket. So your marginal tax bracket is kind of the most normal one, which sits in that 32.5 cents per dollar, which most people are in in our community because it sits between 45,000 and 120. Like

that's a really wide bracket. People often think that that bracket then applies to your HECS, but it doesn't. It's different from that. So if you earn under $48,361, you don't pay any of your HECS back. After that point, it starts to increase. And the first amount that you pay back is 1%, then 2%, then 2.5%. And that is the repayment of your income. It's a percentage of your income, not a percentage of the debt that you owe, right? So if you earned $48,000 to $55,836, you pay back 1%. If you're between 55, and I'm just going to round these down, but 55 and 59, it's 2%, 59 and 62, it's 2.5, 62 to 66, it's 3, and so on and so forth. Let's pretend for a hot second that you earn an income between $70,493 and $74,722. That means that your repayment rate

is 4%. So if we calculated that out, and I've just popped in a random number, and I can do this for you offline so it's your specific income, Bec, but I've pretended that you're on $73,000, right, which I feel like is a pretty normal income for our community. That means that every single week from your paycheck, you would have a student loan amount of $56 coming out. That's $56 that you're paying towards your help or HECS debt that's not going into your back pocket. The second that your HECS or help debt doesn't exist, that $56 goes back into your personal account and you start being paid it, right? Right. So that to me is a fair whack of money because like 56 bucks,

that's half my grocery bill. Like that's a lot of money. I think it's a lot. Fortnitely, that's $112. Every single month, that's $243. And then every single year, Bec, that adds up to $2,920. Like that's a lot of money. I see.

$2,920. I could go on a holiday to Bali, I reckon, in this economy. The flat's probably going to cost $2,900. But we don't want to stretch that out. You could go to Woolworths. I reckon with Jetstar, we could get there. But moving on from that, I think it's important to understand what that means, because if you actually increased your salary back and you were between a different tax bracket, like let's say you earn $84,000, that student loan repayment

goes up. So now on a salary of $84,000, you're actually paying back 5.5%, which to me is a fair whack. So 5.5% each and every single week is $89. Every single fortnight, it's $178. Every month, that's $386. And every year, that's $4,620. So this isn't something that we should be blinking at. Like from little things, big things grow. And I know you said, oh, it's just like 30 bucks a week or whatever. And that could be true for your circumstance. But 30 bucks a week, Bec, ends up being $1,560. Okay, I see. And we know that a lot of people are still struggling to get $1,000 in their emergency funds. So it ultimately, to me, is a lot of money that we should be caring about. And I think that

it's something that we do need to discuss. And whether you're paying back more or less isn't really about the conversation right now. The conversation I'm having is I really want you to understand what your payslip means. I really want you to be in the position where you just know what those repayments are. And I mean, it's not a decision you're making. You have to pay that back. It's coming out before you even get your money back. But what we want to understand is, is that something that's hindering your ability to create wealth in the future? And right now for your personal situation, I don't think it is. I think it's fine. You're bopping along, you're having a good time. Like I know the financial position you're in, you shared it on

the podcast before, like you're not about to buy a house in the next six months. So it's not something that we need to be worried about because it's not impacting your borrowing capacity. So personally, I don't think you do care. So do we worry about the 7%? I mean, yes, we do. And the reason we do is because we want to understand what that means for you pragmatically. And pragmatically, all we need to understand is what does that mean for you, Beck, right? So 7% of $30,000 is actually $2,100. So that 7% is going to mean that you go up to $32,100 instead of the $30,000. And Bec, we just said before that if you're on an income of $74,000 or $73,000, your student loan repayments every year are about $2,920. So you just paid $2,920 off. And what

that's going to feel like to you is that you only paid $820 off that year. Even though every single week that 56 bucks was coming out of your account, it just increased. So no, there's no interest on that. Like you're not paying an interest amount on the repayments that you have, but that amount that you owed increased by 7% because of indexation. Right. I see. Okay. So I guess like I have two questions, but they're kind of linked. So my thought is that if the amount you pay on your HECS is dependent solely on your income and not how much you have in HECS, I feel like that's a good thing. But also on the other side of that, I'm thinking if this is a common thing that your HEC state kind of goes up on a yearly basis, depending on how the economy

is going and things like that, it almost feels like, is there any point in trying to like pay it off faster or anything? Because it just feels like you're running on a treadmill. Yeah, it's really frustrating. You get to the end of the year, you've paid X amount off, and then the government's like, here's some more. And then you just end up a little bit better off, maybe even worse than you were the year before, you know? Yeah. And it makes me really, really frustrated because that's an amount that you feel a bit sick about, but it's not the government trying to screw us over. Let's be honest. Like, it's just not the government going, oh, do you know

what? We want to increase Beck's stuff by 7%. I mean, they could choose not to. So the Greens were actually proposing a law that would freeze indexation for $74 billion in help loans, which has been rejected by the Senate committee, which I think is a little bit rude. That's why I think it's so much of a hot topic and the media are picking it up because obviously, would it help the economy to freeze help debts? Probably because people are already stressed. We're already not getting pay rises. It's why as she's on the money, we're going to be going into even more career content because I'm getting so frustrated with people just not being paid what they're worth. People not being able to afford the groceries that they were last year. People

not knowing their worth because they don't have the confidence to ask. I just think that the government could be doing more for us. But I guess let's have a quick look back at what indexation has looked like historically, because indexation is calculated each and every single year. And basically, it's not always the same. So in 2018, indexation on our help debt was 1.9%. In 2019, it was 1.8. In 2020, it was 1.8. In 2021, it was 0.6%. In 2022, it was 3.9. So it increased. And the reason it increased is because inflation in general was increasing. And what they do is they take the average inflation rate for the past two years and then apply that. So they've done that again this year. And that's why we are predicting it's going to be 7%. That number

hasn't come from nowhere. That's come from us going, okay, well, if the inflation rate last year and the inflation rate this year is this, this is what that 7% looks like and where it's coming from. So that doesn't mean that 7% is going to happen again. It might go back down. And in a perfect world, if the RBA is doing exactly what they should be doing by, you know, helping to slow down economic growth and helping to bring down the rate of inflation, next year it won't be so much. So it won't be the same thing each and every year, but there's always going to be a level of indexation that is applied to help or hex debts because that's what we signed up for sure okay if only i had read the t's and c's before

starting a million courses yeah i just feel like even if you'd read the t's and c's you would have been like whatever i don't care that's true actually i wouldn't be like i don't know what any of this means anyway sign up no no we're gonna i'm glad we're best friends now because i could just be like your financial fairy godmother and i could text me and be like v hey, is this a good idea? And I'd be like, no, it's not. I am so grateful. You'll probably do it anyway, let's be honest. I mean, maybe that's very true. I'm an old dog and it's going to be hard to learn new tricks, but we're going to get there. I think this is a really good time to go to a quick break and we'll see you guys on the other side. All right, V, we are back and ready

to talk about Help Hex, Help Debt. Let's talk about Hex, baby. Let go. You know what, Sam probably isn't going to cut that out. He's one of our producers. I hope he doesn't. You know what? Neither do I. Let's move on. Let's make a song. No, let's not. After this. Okay, sure. Let's not. I'm going to stick to podcasting. Yeah, that's fair. That's a fair career choice. I've got a Facebook podcast. You do have a Facebook podcast. Thank you. So let's talk about help debt fee. I think we were just about to talk about the interest and I don't know what these terms mean, but you can go ahead. Yeah, let's deep dive into it. Let's deep dive into it. Why not? Yeah. So we want to talk about interest again,

because I think it's important to touch on it. I mentioned before that HELP slash HECS debt doesn't actually attract an interest rate. It just has an indexation rate. So it's basically to take into account the different costs of living and the way I see it, and I'm not defending the government on this because I just don't think they should do it. If I'm being really honest, I just think that they should wipe it and be kind, but whatever. They're doing it so that their dollar that they lent to you for your education isn't worth less when they get it back. Oh, those dirty dogs. I know, right? But like, it makes sense if I explain it like that. Like if I said, hey, Beck, I'll pay for your degree. It's $30,000. I'd like $30,000 back. But as we explained before, a Macca's Cone

in 97 is not worth what a Macca's Cone is today, but the same value is there. They're basically saying we just want the value of our dollar back so that we can, you know, put that money into something else and not have it be worthless. And you kind of go, oh, that makes sense. Like that's a pretty, pretty sexy explanation. Like if I borrowed money from a friend and they were like, oh yeah, okay. Can you just like, if you want to borrow the money from me, can you just make sure like there's no additional fees or charges or anything that get charged to me? Because individually I shouldn't be missing out if I'm lending the money to you. And I mean, we're not friends with the government, but that's okay. Actually, it's a really good point. And I

hadn't thought about that. I suppose like what would happen to the government? Would we just like crumble as a society if they were to just like freeze it and we kind of paid back the HECS debt and it was worth less than when they lent it to us? There's a lot of debate about this. And I mean, that's probably why the Greens got so up in arms and they were like, it's not going to impact it. Like, I feel like from my perspective, and I mean, I've shared this perspective on the podcast before, we're so lucky to live in Australia, right? Like we have a beautiful economy, we have beautiful infrastructure. We have a really great healthcare system. We have roads that we can drive on that are safe. There are rules in place and there are people to protect us, right? How good

is that? But there are a lot of things that a lot of people don't agree with. I mean, we could start a conversation about the doll. We could start a conversation about how government money is being channeled into the wrong education places. We could be starting a conversation about how there are a million schemes that need funding and don't have it. But essentially, I just think that the government is maintaining this so that they still have money to go around because they just don't want their dollar to be worth less tomorrow than it is today to them and they essentially from my perspective they're seeing helping you out as a privilege they're seeing it as like okay well i helped beck out she didn't have to cough up 30 grand to go to university i'm gonna just ask for

that money back and that's a fair way of doing things obviously the same is not true in other countries, like in America, like they have to get very expensive student loans that are worth a whole heap of money and have a whole heap of interest associated with them. And then on the flip sides, there are countries that have a completely free education system. In fact, Australia used to have a free education system where university was free and this, which that happened again. So essentially what I think that they're trying to do is get back the money because they just don't have enough of it to go around at the moment. And I think that from their perspective, they're doing the right things. But from a community perspective, I think they could be doing more.

Amen, sis. Mic drop. I don't know if that's a mic drop. I just, you know what I mean? I feel like we've all got our own opinions on how things work. And I just think that that's where it gets political. And this isn't a political podcast, right? I just think it's a podcast about doing the right thing and being good people. And, you know, I just think that students and people who have HECS debts are having a bit of a hard time. What could we do about that? It's not really a political conversation for me. It's not going, oh my God, the Greens are Labor or Liberal. Like the Greens had this idea to freeze indexation for $74 billion. And I nodded and smiled and said, you know what,

that's a pretty good idea. I think people would like that. Yeah, absolutely. And I'm sure there will be absolutely no consequences whatsoever. So at the end of the day, I've gotten all this information. What does this actually look like for helplones? Well, obviously, I am stats girl. I've done some maths because I love to do maths. I also love to stop the podcast halfway through so I can do some sly maths and come back. You guys don't have to wait because we edit all of the waiting time out, but Bec does. So I will sit patiently. You do.

You smile and nod. But from the 1st of June, most Australians with an outstanding student loan debt will actually see their balances shoot up by hundreds or even thousands of dollars, Bec, if the indexation rate does go up by 7.1%. So I calculated that really quickly for you, but I've got a few examples. So if you've got $10,000 left on your loan, it's going to increase by $710. For every $10,000 in debt you have, it will consistently increase by $710,000. So if you have a $25,000 loan balance, it would increase by $1,775, Bec. And if you had a $50,000 loan, it would increase by $3,550. And Bec, do you want to

know how much my HECS debt is going to be increasing by because, you know, we've been a little pervy. We're being a little personal. Go on. So I still have $80,000 worth of HECS debt. So I'm going to be slammed with $5,680 worth of indexation. Oh no. That's a trip for two to Bali at least. Yeah, at least two. At least. But again, I feel very grateful to have that system in place. And I mean, there's actually no way that I could have personally afforded to go to university and get the degrees that I have without the help and heck system. So am I mad that that's the case? No, not really. I feel like it's, you know, part and parcel of the system that we are using. I mean, could I be mad about it? Yeah, it's a lot of money. But again, I think that I'm just trying

to see it from a more positive light of like, that's the cost of, you know, me being able to get to where I want to be in life because Lord knows I wouldn't have gotten anywhere without those degrees. Amen. Well, could you be sad about it? I could be sad about it. Like I could just be a little sad that, you know, I'm in a bit more debt. But honestly, I see my Hex debt as something that has helped me in the past few years. It has got me to where I need to go. There was a period of time where it made me feel physically sick when I logged into my portal. Don't log in. Yeah, it was more than a hundred grand. And I'd be like, whoa, who let that happen? Whose idea was that? and it's kind of like you, right? When I started my degrees, I just didn't think about how much

debt I was racking up. Like I was not interested in finance. We've talked about this publicly before that by the time I was 22, I was in like, I think it was $44,000 worth of personal debt. Like I was really good at that. And that didn't worry me at the time until I started learning more and more about finance. And I kind of was like, oh, I might need to pull my socks up. This is a lot of money. And like, I got out of that. It took a lot of work and a lot of time, but it's one of those things where now things like this mean a bit more to me because I'm grateful for them. But when I took them on, I had no concept of what that would look like for me in the future. And I think a lot of people are in that circumstance. Yeah, absolutely. It is good

to know that it hasn't been this high historically and hopefully won't be the case in future years. It's actually not sustainable if it was in future years. Right. Because if it was in future years, the economy is a bit screwed, babe. Like there's a lot more going on than help and ex-debt repayments, I promise. If indexation kept up at that rate, there's going to need to be some serious change and the government would get involved. I promise it's okay. And they would drown in our tears. They would. They would. So should people start trying to pay down their help debt before the 1st of June?

Bec, you should know better than asking a personal advice question on this podcast. This podcast is general advice only and you shouldn't actually take my advice on anything because that would be financially irresponsible. I have a license to uphold, Bec. That's fair. Now pretend. But pretend. Here, okay. So there are a few things that I want you to think about.

So first things first, we know that every single person's situation is different. And if you're stressing over it, but you can't afford it, please stop stressing. It is what it is. Let's not stress about the things we can't change. Like, what's the point? Absolutely. If it's something that is stressing you, then maybe we can look at it in a bit more depth. But I think making sure that you're comfortable with it and you know what it means and how

works is basically what everyone can do, whether we contribute more or not is a different conversation. But given what we've discussed for the first time in a long, long, long time, it actually might be worth for some people to be making extra contributions to their HECS debt. It's something that personally I will not be doing. And the reason I'm not doing it is because I don't need to do that to achieve the goals that I currently have. So if my goal was to buy a house and I knew that by paying down some of my hex debt would mean that my ability to lend more money would increase, then maybe it would be worth it for me. Maybe I could do that. But if you're in that circumstance, shameless plug for Zella Money, please go. We'll put the link in the show notes

to talk to one of our brokers. If you are in the position to be purchasing a house or you think you're in the position to purchase a house and you're thinking about your hex debt repayments, go and talk to a mortgage broker so that they can look at your whole circumstance and they can sit you down and be like, yeah, back in your situation, it would do this for you. And you go, great, I will do that. Can I tell you that on a podcast? Unfortunately not. But what I can tell you is that it might change it. For some people, it might not, because it's going to depend. How much HECS debt do you have? How much can you afford to repay? What is your current deposit for the home that you're looking to buy? Do you have a guarantor loan? What do all these things actually

mean for you? There's no one size fits all response to that. And I am very sorry. I wish there was. And it made content creation so much easier. If I could just make a podcast and be like, all right, guys, so indexation's coming out on 1st of June. This is what we're going to do. These are all the answers to every question. These are the answers. Bec, you're going to do X. And if you're not in X position, do Y. Do you know how much easier content creation would be? Life would be. The community would love it. But do you know what? You've got to do some of the work yourself.

Unfortunately. But the girls at Zella Money can basically do that for you and kind of calculate it based on your personal circumstances. Also, they'll do it for free. So that's kind of a money win. Oh my God. As I said, and I've said a million times before, I would always prioritize paying off personal debt first. So things like personal loans and credit cards and any other personal debt, I would also look at bumping up your emergency fund because your emergency fund is going to be that fund that means that you can get out of a pickle real quick. Someone the other day called

it a squirrel fund. And I thought that was real cute because like squirrels, they like hide away all their nuts for the winter and then they live off their nuts in the winter when things aren't as good. That's what our emergency funds are for. That's very cute. Anyway, we want a squirrel fund. We want to make sure that we're not in any personal debt. And at that point, we can consider whether making additional contributions to our HECS or HELPDET is a good idea. Perfect. Again, it's going to depend on whether you're going for a home loan or not as to whether that is worth it. Or you know what? Could just be stressing the bejesus out of you, Bec. You could be so stressed over your hex debt. And no matter how many times you listen to me or how many times

you listen to other podcasts, it's just something that like keeps you up at night. Maybe making additional contributions is something that fits within your goals, makes you feel good. You do you, sis. You do you. You do you. But what I want you to be able to do is tell me what your payments are, what they look like, how it impacts you as an individual, what it actually looks like if you paid off more debt. Because a lot of people might go, oh, I really need to get rid of my hex debt before I get a home. That's actually not true. I bought a house with $100,000 worth of hex debt. We work with people every single day that have very large hex debts and still get homes. That's comforting. So it's really important to understand that doesn't

need to be completely diminished before you do that. That's why I want you to talk to a broker because the amount of people that I have spoken to that are like, oh my God, V, like I paid off $80,000 worth of my HECS debt. I go, far out. That's so sick. Like, that's so good. And then they say, so I'm going to now start saving for a house. And I kind of go, oh, good. Smile and nod, like, because there's nothing I can do about that circumstance. But in reality, if they had the capacity to pay off an $80,000 home loan, they had the capacity to save $80,000 and they could have probably already been in a house and just started paying off their HECS debt a bit more now that they have the property. And obviously, when it comes to investing, the sooner you're in

the market, the more time you have for compound interest to play into it. And sometimes that's the best outcome. Am I saying that that's right for every single person? No. But that's why you need to be educated because if you're stressing about your HEX debt, I can almost guarantee that the reason you're stressing about it is because you don't know enough about it. You don't know the semantics of that HEX or HELP debt, but you also don't know how it impacts you financially and that makes people stressed. So, talk to someone, listen to some more podcasts, go and talk to a mortgage broker about how that actually impacts you because, Bec, you know, we calculated what your HECS debt looks like and how much you're paying back. You're like,

yep, okay. I feel like you said, yep, okay, because that was about what you expected anyway. Yes. You were fine with that. Yeah. And you're also not looking into any other big goals. But would you be stressed about it if you were on the home buying process and you're like, oh, I don't know what that looks like? if I didn't know and I guess I don't really know that much. You kind of do now. We just did a whole podcast. But I wouldn't know the process of like buying a house very well. But the idea that

you have a debt might make you stressed about achieving something else. I think that would probably stress me out a little bit. Mo' money, mo' problems. Exactly. Exactly. But essentially, I guess the crux of this is I just want you guys to be educated. I hope that this has given you the level of education that you deserve. But also there are going to be a whole heap of resources on our Instagram soon. I'm probably going to make a whole heap of TikToks because I keep being told off by the team. She loves a TikTok. Well, I don't. I don't love making them, but my team keep bullying me into making more. So I will do that. But I just, I want you to be in the best possible position to make the best decision for you. And that is honestly all I can do. I love that.

V, is there anything else before we shut this down? Yeah. Okay. So first things first, obviously education is the key. I could go on about it forever. If you don't know what's going on with your HECS or help debt, you can check it through your MyGov login. So that's just like the tax officer's online platform. You guys should know what MyGov is. If you don't, please Google it and make sure that you log into that and have a look because that's not just got your HECS. It's got your tax information. It's got your Medicare information. It's kind of like your personal hub. The simplest way to make a repayment on HECS is actually just through BPAY. It's so easy. I'm not saying go do it right now. But what I am saying is like, I think a lot of people assume it's this

really complex process. It's not. It's just a BPAY repayment. Like you just transfer it like you would be transferring your mate when they bought the pizza. Easy. Really easy. So if you are considering making a repayment and you're like, oh, I'm really stressed about this or I only have a little to go. Make sure you're making that repayment well before the end of May to make sure it's processed in time to avoid any additional indexation that might be applied to that. So just Be in really early because when it happens, it's going to happen on the 1st of June. So you want to make sure that you are getting that payment in ASAP if that is your plan. I love that.

I'm done. Are you done? I could keep going on and on, but I think we need to be done. And I could keep listening. No, you couldn't. You're sick of me. You are so sick of me. I think it's a lot to absorb.

Let's go and have a little tea, have a little walk. We deserve it. Yeah. We deserve a treat. I think we deserve a treat. Everybody deserves a treat. Have a good day. We will see you guys on Friday.

See you soon. Bye. 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. If you do choose to buy a financial product, read the PDS, TMD

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