She's On The Money - Let's buy a home

Episode Date: August 20, 2019

Today we're talking all things first-home buying and mortgages. For one, how in the world do I get one? Who can I trust and how much money do I actually need? Buying a house is a big thing for all of us. It's a huge financial hurdle but, more than that, it's a huge mental one, too. So, let's work through it all together! Do you love the podcast SICK and want more SOTM? Of course you do! 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 DEFINITELY subscribe to our newsletter, the written recap of the pod's key takeaways, including some bonus bits you won't want to miss... In a money mess and need help untangling the muddle? We've got you sorted - simply record your qualm and send it through to us at [e-mail] and you may end up on the podcast! The advice shared on She's on The Money is general in nature and does not consider your individual circumstances. She's on The Money exists purely for educational purposes only and should not be relied upon to make an investment or financial decision. Victoria Devine is an Authorised Representative of Consultum Financial Advisers Proprietary Limited ABN 65 006 373 995 I AFSL 230323.See omnystudio.com/listener for privacy information.

She's on the money. She's on the money. Hello and welcome to She's on the Money, the podcast for millennials who want financial freedom. I'm one of your co-hosts, Annabelle Lee. As you might know, I'm a law student and a millennial who's on a mission to be better at everything money, and I'm probably not alone. Luckily, each week I get to pick the brains of my friend slash money expert, Victoria Devine.

Oh, hi, Victoria. Good morning. Now, I have to say, it makes me so happy to see all these amazing money wins in our Facebook group every single day, which, by the way, is growing incredibly fast. What are we at right now? 14,000 people. That is crazy. But the money wins are my favorite part of She's On The Money.

so as always let's share a couple from the week do you have one so I do this one's from Mary she said hi girls here's a small money win from me I usually get my nails done every three to four weeks and they cost me anywhere between 60 to 100 dollars every time expensive I know so I decided to just cut them short and do them myself this will save me almost a thousand dollars every year whoa and I don't think they look amazing but with a little practice I think I'll get there so I really love this one because I think nails is something that we as women often justify and it's actually a really big cost so the fact that Mary stepped back and had to think about whether it actually is aligning to her goals and decided maybe it's not and wanted to save a thousand

dollars more a year like that's incredible and I think that she should be really proud of that I really like that she actually did the math and calculated the thousand dollars because it's nice to find the sum that you're saving so you can be like yes yes have that in my bank account exactly And maybe she could take it one step further and make sure that that $60 to $100 she's paying every three to four weeks actually gets transferred into her savings instead of being, you know, just left in your bank account to be spent on something else. Maybe automate that so that you are actually saving the additional $1,000 a year instead of hypothetically. So you feel really good about it, but it actually happens. Great tip. I've got one from Millie who said,

Cleared out a heap of textbooks that have been sitting on my bookshelf gathering dust and traded them into my uni's co-op bookshop, which buys back your old textbooks, and got just over $200 for them, which went straight to the savings account. This is something that I need to do. So I feel like this is great motivation for myself. I can't begin to tell you how many textbooks I have at home, and I didn't even know you could do this. So I feel like that's something I'm actually going to try and do maybe next weekend.

I also Googled this, and it turns out there are websites you can sell your textbooks on as well. I actually didn't know. And uni textbooks are really expensive, so you'd get a fair chunk back. Yes, I remember doing business a little while ago and some of my textbooks were more than $200 each. That was insane.

And especially, I don't really use my textbook very much, so I hope none of my tutors or lecturers are listening. Neither. I often use the PDF. And Control F, like, that's kind of how I work. Exactly. Victoria, today on the show, we're talking all things first-term buying and mortgages.

for one how in the world do I get one who can I trust and how much money do I actually need but before we get there as always it's time to share a money win or a money confession from the week how'd you go this week Victoria all right so I have another confession Annabelle tell me the look on your face is like oh I feel a little bit bad about this because this is incredibly self-indulgent I love going to the snow which is something that you know I prioritize it's value to me but this weekend I went on another snow trip just to Hotham this time not international just a weekend away but I think backing up from a previous trip to the snow less than two weeks before that I feel like I probably shouldn't have but I had a really good time with friends we've

been planning it for more than a year actually because there's a snow group that we have that we go to the snow with every single year so I'm not sad about it but it's a bit of a money confession from me because the winter like yeah true but over the last month i have spent a small fortune on snow related expenses so that's a that's a confession from me this week and it also means i'm packing my lunch every day for the next month great what about you i have a money win to counterbalance thank you i for the first time ever i sent a complaint to a company i bought eyebrow tint oh yeah no I bought it in um Woolies or Kohl's on one of those and I opened it and it was not eyebrow tint it was some weird like orange concoction and it was not what I was supposed to

get you don't want orange eyebrows no strange yeah I know right and so I sent an email to the company and they sent me two new packets oh check that out and then they refunded me check that out so I think I'm gonna be complaining more often I feel like complaining where it's valid is fair but i really dislike it when people complain just to get things for free that that kind of ticks me off because i've seen it a couple of times where people have been like oh well if you just complain they'll give you something for free i think if you actually had a faulty product absolutely deserved but if not i'm not one for confrontation as well i was like should i email them my sister was like yes you need to email them this is not that's the type of email i would have sat on for

a really long time too because i would have felt bad about it yeah for sure okay so victoria buying a house is a big thing for all of us. It's a huge financial hurdle but more than that it's a huge mental one too. The first place I want to start is with dollars in our bank account. How much of a deposit should you save and what are the downsides to not putting away 20%? So we've all heard 20% be thrown around and that's because 20% is ideal but I'm going to be a little bit of a downer here and say that what people don't realise is that in an ideal situation you have 20% plus costs. if you're a first home buyer those costs are a lot less if you're purchasing under six hundred thousand dollars you're going to get a stamp duty concession and that's a massive saving

of approximately thirty five thousand dollars if you are a home owner already though you're going to have to cough up all of those costs so what are those extra costs so those costs are stamp duty legal fees you've got application fees and stuff like that and usually that ends up being between five and ten percent of the purchase price all up and that is if you want to avoid lmi so lenders mortgage insurance and or you don't have a guarantor. Yeah so you'd say about 30% then saved? In a perfect world you'd have 30% saved because then you're going to have some surplus at the end of your mortgage and you're not going to be left with absolutely no money in your account once you have a home. So you mentioned mortgage lenders insurance what is that? So LMI is an

insurance that you need to pay if you have less than 20% deposit so it's called lenders mortgage insurance. And you need to be really aware that that's not an insurance to protect you. It's actually an insurance to protect the bank. So because you're purchasing a home for less than 20% deposit, it actually means that you're a riskier lender or you're a riskier person to lend to. So the bank wants you to cough up some extra money so that they can pay for insurance in case you're not able to fulfill your commitment. Right. So is it true that you'll be able to buy property with a 5% deposit from next year? You can actually already do this. So you can purchase a home with a 5% deposit, but all you need to do is pay LMI. It doesn't mean you have

access to all of the lenders though. You're still going to need to come up with costs and stuff. So it's never going to be a straight 5%. I'm ready to go. I'm purchasing a home because bottom line, 5% is not enough. I'd be looking at least 10% total to secure a mortgage. As I mentioned, 5% home loans already exist and you do need to pay LMI when borrowing more than 80% of a property's value. So that's the kind of rule around LMI and it can be expensive. So if you purchased a home that was $400,000 with a 5% deposit, so that would be $20,000, you'd be looking at about $12,700 as an LMI premium. And that's an estimate that I've used with a calculator that I can link into the group this week so people can have a bit of a play around with it.

Thank you, Victoria. So if we can purchase a home with a 5% deposit, what is the first home buying scheme then? It's something that's being brought in by the government so that people who are purchasing properties can access property for 5%. And I've mentioned you can already do this. It just has a number of other things that go into it. And the scheme essentially makes low deposit home loans cheaper. So at the moment, if you are taking a loan and you only have 5% of a deposit, you're actually not able to access a lot of the low interest rate loans out there. You're going to end up with a higher interest rate loan because you're a riskier lender. So the scheme makes low deposit home loans cheaper and it's administered

through a thing called the National Housing Finance and Investment Corporation and it partners with lenders. The important thing to remember here though is it's actually only accessible by 10 000 people each year so it's not a massive thing and i know that in our facebook group we have a lot of conversations about this and a lot of people have asked about how they can utilize it but there are a number of things you need to hurdle over i suppose to be able to access it and so the first thing is if you earn more than 125 000 a year as an individual you can't access it and that's 200 000 as a couple the access to the scheme is capped at 10 000 borrowers and there's obviously a lot more people a lot of people at all no not in the grand scheme of

things because it's australia-wide and the value of eligible homes under the scheme varies by region so if you're purchasing in melbourne versus regional victoria or even queensland the amount that you can borrow is different and often it might not be reflective of the type of home you want to purchase so if you've been saving for a really long time and you have 20 percent and you think that this scheme is going to allow you to you know get a better home it might not actually put you in that bucket and you still need to apply for it so if you want to talk to a broker about it you absolutely can. Maybe you can access it, but at the same time, I'd probably just be talking to a broker upfront to begin with about what your options are because you don't just need this

scheme to be able to borrow money at 5%. Right. What kinds of things should you be wary of before meeting with a broker then? Are there any tips and tricks you'd recommend for success? I think this is such an important one. And the first thing I'll say is referrals are golden. So if you've had a friend or a family member that's borrowed before and had a really great experience with a broker have a conversation with them because often if they've had a great experience they're probably going to provide that to you as well you need to keep in mind as well though that if you get recommended someone it doesn't mean that they're a perfect fit for you go and meet someone i say this about financial advisors as well it's kind of like a gp if you're

not comfortable having a chat with them and you're not comfortable divulging all of your personal financial information they can't actually help you to their full potential a broker should actually have your best interests at heart so you should walk in and walk out feeling really excited about the process and like you have a lot of clarity on what's going on so you shouldn't walk out wondering you know oh I'm still not sure about the process or I don't know what my expectations are a good broker in the first meeting will be able to tell you exactly what's expected of you and be able to give you an estimate of what they're looking at be really wary of brokers who work directly with banks because they're not taking into consideration all of your options

they're just taking into consideration options that are from one place and that's potentially not putting you in the best possible position and if you want some rules around what to ask brokers for ask them for at least three options so a good broker will put three different options on the table from three different brokers and if they're not doing that it's a bit of a red flag so legally they only have to show you one option but that's not putting you in the best possible position and it's not giving you the option of choice. Also on that, making sure they're independent. I mentioned before that brokers who are aligned to banks are potentially not putting you in the best possible position. So find someone who has a license and has access to a number of different products.

So not to plug my own business, but the brokers within Zella have access to more than 45 different lenders. So it's not like they only have access to CBA or ANZ or just the big four banks. There are so many different options that we have access to that you know if you can't access a home loan straight through a bank because maybe you have not a great credit history or you have something that's maybe not as complimentary as you'd like it to be or your savings history isn't as clear as you know what they need for a really clean loan we have access to a whole heap of other things and if you're looking for a broker that's really important because it puts you first. I think it's also really important to make sure that you're not just being loyal to a bank because you feel like

you've been with them for a really long time so for example and I really like CBA but if you've been a dolomite kid you might want to just go get your home loan through CBA but that's potentially not the best option for you so maybe that's why I'm still with CBA by the way yeah like I'm still with the bank that I set up with originally I do have a couple of other external accounts but I feel like I'm still with the bank that I started with purely out of loyalty and maybe a little bit laziness, if I'm honest, because I haven't changed. But if you're getting a home loan, you need to ensure that you've checked all of your options and you are absolutely in the best possible position. So how do I know if my broker is any good then? Do they just need to give me

those three options or? No, I think that you need to walk away from the conversation feeling educated and empowered. So each of those three options, they give you an explanation for why they gave you those three options and the different, I guess, situations that will occur because of those loans so have they actually made sure that that puts you in the best possible position did they explain every single option to you did they talk to you about the different options like an offset or a redraw facility did they explain to you the difference between a fixed loan and a variable loan and why each might work for you for different reasons I think when you know you know I know that's a feeling yeah it's a feeling but a good broker is going to put you in

the best possible position because they want you to refer other clients and other work to them so for them to do a bad job is a really bad thing yeah so when you know you know but also just make sure that they've got their credit license and that they are a registered broker and not just someone working to plug things in right and once you have your deposit how much would you recommend someone keeps in their bank account because that's the thing we probably forget you can't just put every dollar you have into a house? You need like an emergency fund, a safety net, how much would you recommend that should be? So that's completely dependent upon who you are as a person and what you value. So some people might want a $2,000 emergency fund whereas other people might want

another $10,000 sitting in their account to make them feel secure. So that's really personal but it's also a part of the broker's role. So their job is to ensure that you have a surplus at the end of the transaction and that your loan is covered and all fees are paid for and that you don't come up short so a good broker will make sure that that doesn't become an issue for you but also you need to be realistic with yourself if you are moving house and you're purchasing a brand new home are you going to be purchasing furniture are there any other expenses that you would consider to be additional to the cost of moving and purchasing a home that you want to do do you want to put in a new sink in the kitchen where is that cash going to come from and should

it happen now or should you maybe move in wait a year and see what happens exactly there are so many other costs that come with moving even like the moving van so that is something that I don't think a lot of people take into consideration there was actually a post this week in the Facebook group about how much moving costs and one of the girls was saying that she had hired a van and it cost her nearly two thousand dollars to move house so I think you probably should have a look at how much that's going to cost you and even getting some quotes from removalists so you can factor that into your budget in as clean a way as possible exactly so you're a financial advisor if listeners i am what's your take on buying apartments off the plan lifestyle preferences

aside do you think it's a wiser financial decision to look for something older that can be renovated the block style i feel really bad because i want to laugh at this because maybe i have a really harsh opinion of it but my opinion is apartments off the plan are never a good idea scrap them off the plan just yeah put them off your plan they're just too risky you have no history there's often a lot of complaints about off the plan apartments not being finished up to the standard that you would have expected in the first year there's often a lot of repairs that need to be made there's currently an oversupply in the big cities at the moment of apartments and your apartment is only ever going to be worth what next door's apartment is there's no room for growth in an

apartment you can't just tack on another bedroom or you know renovate and create another bathroom to add value so it kind of is what it is and developers build on huge commissions so they are in this game to make money so often the value that you paid up front is not reflected for a really long time in the purchase price or in the sale price so it's not great I mean there are probably a lot of women who are listening to this or people in general who are listening to this and they have purchased off the plan they're really happy with their their purchase and they're really happy with the apartment they've got but I think as a general rule that's not where we should be looking so yes looking at something older that could potentially be renovated is great but looking for properties

in smaller blocks so if your budget allows for an apartment maybe find an apartment block that has six to ten apartments in it not 150 yeah and look at things that you know are the room sizes bigger I think as apartments are becoming more and more popular the square meters of the house or the square meters of the apartment are getting much smaller and you end up living in shoeboxes. So looking at older apartments, not necessarily that you can renovate, but have a lot of space and are going to work for you is probably the right decision. And they probably make for a better investment as well, right? Absolutely. And I think that that's one of the things you really need to take into consideration. Why are you purchasing this apartment? Is it to live in

for the rest of your life? Or are you purchasing a two bedroom apartment to potentially sell in 10 or 15 years to upgrade the home that you want. So a lot of people think, oh, well, I can't get into the property market. I'm never going to afford the house of my dreams. And often it takes a number of steps. Often it takes purchasing your first two-bedroom apartment, then maybe a three-bedroom apartment, then a small house, and then upgrading to the house you want. It is not linear. It is not something where you go straight to being able to afford the $1.5 million home in the area you want. It's about progressing and buying small and making money in that way as opposed to just purchasing your house of your dreams up front. So is property

the best investment if at all do you think? I dislike that question so much because you're not that sorry. I think that property is technically not the best investment of all. Property over the last 30-40 years has been fantastic and so many people have made a lot of money because of how much property has increased in value. So we aren't looking for property in the next 10, 20, 30 years to increase in the same way that it has before. We've all had our parents say, oh, why haven't you purchased property yet? I bought my first home for $22,000 and sold it for 30. And you go, yeah, a property isn't going to cost me that much in comparison to what they earned. Back then, houses were costing maybe three times an annual salary, whereas now

that's absolutely not the case and it's becoming far less accessible. And if we had the same amount of growth in the property market that we've had over the last 30 years apartments are going to be worth millions of dollars and it's not going to be it's not going to be sustainable because our income growth is not going up at the same rate yeah so what are some of the danger zones when it comes to applying for a mortgage then what are some things that might jeopardize someone who's applying for a loan so if you're in a position where you've saved up enough money for a deposit and you're having chats with a broker some things that can get in your way is undisclosed debt so we talked about this in the after pay episode. So, you need to be incredibly upfront with your

broker and disclose any debts that you have and any lines of credit you have access to. So, even if your credit card is sitting at $0, but you've got a $10,000 limit on that credit card, that's $10,000 that you're not going to be able to borrow on your mortgage. So, a lot of our clients end up reducing their credit card limits or potentially closing credit cards that they don't need to really mitigate that so undisclosed debt is massive overspending and lifestyle is another one so if you've saved up a deposit that's honestly not enough you need to have a really good savings pattern and you need to have a really good track record essentially so if you're living within your means and you are able to save and you are obviously able to pay off a mortgage fantastic

but if you have saved all of your money and you have a house deposit but you're still living your best life and you're getting uber eats every night and your lifestyle is matched to your income a bank is going to look at you and say hey you're not actually going to be able to afford a mortgage because you're spending all of your free cash flow even though you've got the deposit so that's not enough and also changes in employment so that's a massive one that I don't think a lot of people know about so if you're within probation a lot of lenders aren't going to be willing to lend to you because you're in a really risky period of your employment and you could have your employment terminated without any real cause or any real notice yeah so that's to a lot

of lenders really risky some still consider it especially if you've got a really good history of employment so like you're in your last role for a fair few years and you can prove that you know this role was the right move for you but changes during the loan process can often make things messy and I would definitely recommend having a chat to your broker if that's something you're considering doing. Okay so do you think there's too much pressure on young people to buy these days? Do I need to buy in order to set myself up for financial freedom? Because I definitely want to buy a house but I'm not sure if I made that decision on my own or whether that's something that I've just thought that I should be doing since I was a young kid. That's such a good question

and I think there's a mass amount of pressure on us to purchase homes. If you look at what our parents did and our grandparents did historically, living the great Australian dream included purchasing a home, paying it off and then saving for retirement. Unfortunately, that's not going to be the case for many people. So there are people listening to this that property isn't going to be the best investment for them at all because their income isn't going to support what they need to purchase or what they would like to purchase. There are so many asset classes that can help you invest and property isn't the only one. So I think the pressure on us to purchase homes is a little bit unnecessary but I think we do need the pressure on us to

be investing for our futures so it depends on what vehicle we choose to do that if that's property fantastic investment is all about choosing the asset that you're most comfortable with if that's shares fantastic if it's property great all we need to do is make sure that it's actually aligned to you achieving your goals do you think that people like go more towards buying a property because it's like a tangible asset that you can see and live in if you want to yeah so the share market you can't touch you can't taste like it's not something that you can look at and go oh that's my house I feel really proud of that it's often really internalized because you're not going to post on the street a picture of your share portfolio and you're like oh check this asset out

yeah I mean I can make a poster for you if you would like but I think that people feel really safe with property because it's an asset that even if the market completely crashed and your house was worth nothing, you still have a house. And I think that's something that a lot of people value and a lot of people say, well, I really want a house anyway. I don't care if it means that the property market is going down because I'm going to hold on to it for a really long time. I think that there's a really big misconception that shares can completely lose their value. Absolutely, they can, but something in our economy has to go absolutely drastically wrong. And if our shares are losing value to the extent that people are worried about, our property market is also going

to suffer significantly. Hi there, you've called the She's on the Money hotline. Do you have a money problem you want help solving? Do you have a money dilemma you just want to chat about? Victoria is here to help. Each week we'll be playing your hotline questions to help make sense of the money mess you may have found yourself in. Give us a call on 0435 293 886. and you might find yourself on the show. Hello, friends. It is Mish here from your sister podcast, Shameless. As you both know, I am self-employed.

I've only been self-employed for about, oh, a year now, and I really want to buy an apartment with my partner in the next 12 months. Mish is in stable employment, but I've only been self-employed for a short amount of time, and I've heard so many rumors that you have to be self-employed for two years before you can look at getting a loan. Is that true? Because if it is, I'm kind of screwed. Or is there anything I can do to maximize my chances of getting a loan while I am self-employed? Thanks, guys. Michelle Andrews, welcome to the Shoes on the Money podcast audio space. What do you think

she should do? I think that that's a really good question and it's something we get asked a lot. so yes you technically need to have at least two years of saving pattern or of proof of employment for a bank to want to lend to someone who's self-employed so we always talk about how much harder it is when you're self-employed to get a loan and that's often because income during that period of time or when you're self-employed is really variable it's like one month you could earn a thousand dollars the next month it could be ten thousand dollars and we don't know actually what that looks like but we also don't know what the future looks like and that's what the bank's worried about. So if you're employed and you have, you know, a pay-as-you-go salary and someone is

depositing a set amount of money each month into your account, that's seen as a lot more stable than it being all on someone who's self-employed to derive their income. So if Mish wants to purchase a home, I think the most important thing to do is actually talk to a broker and work out how to show that her income is consistent and it's got a good trajectory. So obviously we love shameless so if we can all support them obviously Michelle will buy a house sooner but I think it's also really important to be in a position where you can prove that your income is reliable you can prove that your income is stable and it's going to continue on so that could be anything from providing copies of your last tax returns to even including business schedules or proposals

or your workflow or copies of documentation that prove that not only are you working now but work is going to continue into the future. And when people are able to do that, banks are often far more likely to lend to you. The problem people have when they're self-employed is that they often don't keep good records and they're not good at bookkeeping and they're not good at proving their income because it's kind of sporadic. And they also often match their income and their lifestyle together. So if one month they earned $10,000, they're often really likely to get into a treat yourself kind of mentality in comparison to the month where they had $1,000 coming in. So I think it's important to not only show that your income is consistent, but your lifestyle remains consistent

when you earn more money and you can show a really good savings pattern. Right. So it's possible for self-employed people to secure a loan, but it's just maybe a little bit harder. Yeah, there are just a fair few more hurdles that you need to jump over. But if you're good at keeping records and your business is going well, I don't think it should be an issue at all. And if you're a bit confused about that have a chat with a broker they'll be able to outline everything that you need and you can even say hey here's an additional thing does this help does it not like your broker is your best friend in this situation there you go mish hope that helped now let's jump into our money diary segment let's go

today's money diary is from 28 and learning a woman whose relationship with money has changed drastically since her early 20s i've had like i've had a really um tumultuous past with finances so growing up my dad was very like we he just had this real mindset that we're never going to have money so don't even try don't you know don't imagine any life better than this it is just we just don't have money and that's just how it is and then my mum was the complete opposite they weren't together and she was like let's not you know let's not worry about what's in the bank let's just spend it all and let's just get credit cards if we don't have any and just spend spend spend spend spend so I had you know this half life where I was in this like real poverty mindset

and then another life where it was like there was just no respect for money so when I got a job and so finished uni got a job got out on my own moved out of home I just had no understanding I had no financial literacy and got myself into a lot of debt so about four years ago I was like $27,000 into the credit card debt and personal loans couldn't pay my rent like was borrowing money from my little brothers to pay my rent every week and would make just enough money to get by like I remember one day I worked at a hospital and I accidentally rocked up to the wrong shift and payday was the next day and so I rocked up to the wrong shift and they said no no you're not until this afternoon you'll have to go home and come back and I burst into tears and I was like

I literally only have enough petrol to get home one more time so I sat in the my god I'm getting emotional I sat in the work car park for nearly eight hours until the next shift because I wouldn't have been able to afford to drive back because I didn't have that sort of money so that was like that was horrible and that was like so low and I wasn't I just couldn't do anything with my life I was really trapped financially so I eventually I wanted to change it I just didn't know how and I started dating somebody and he was a little bit older than me about three years older and just had always lived at home and was really financially literate. And I was very private and secretive about my finances with him. And then one day I kind of opened up and said he wanted to go on a

holiday. And I was like, just so you know, I can't do that. I don't have any money. I have this much debt. And he was like, we need to figure this out. And so kind of taught me quite a few things. I ended up moving back in with family and over 18 months paid off all my debts. and then 18 months later we had saved up enough money to buy a house so it totally turned it around okay so we know 28 and learning has a complicated money story but let's talk specifics how much does she earn and how much has she got saved so I work as a midwife and I also teach midwifery at university so I've been doing that been a midwife for seven years and teaching for four years this past year I've worked on a casual basis across four different facilities so I've

made about 76k, but that's not including any paid sick leave or annual leave. So it's a little bit less than I would have made if I was on a contract. In my bank account at the moment, I have about two and a half thousand in savings. I have this little like a $500 buffer account where if I need extra money that I don't have, I can pull it out of that and I'll just top it back up next pay. And then my partner and I have like a joint savings account that's pretty empty at the moment, but we're about to start adding to it now. We know how 28 and Learning gets paid, but what exactly happens to that money after it's deposited into her account?

That is something that has changed recently as well. So I used to not, I honestly used to not look. Like money would come in and I would just ask my partner, like, how much do we owe for this? I'll just transfer it to you. I was like afraid to check my bank balance and I would just like spend until my card got declined. So I've really worked on that. Now I have a really, it's like a half-banked plan. Like I, half of it, I know what I'm doing and the rest is a little bit touch and go.

So what I try to do, money comes in about maybe 2k minimum a fortnight. I put 870 into like a joint expenses account. So that's mortgage, groceries, bills for the house. I put 350 into a joint savings. I pay off my, I've got a tax debt, which I can talk about. So I pay that off a hundred bucks of pay, a hundred bucks a fortnight. I put 140 into my own personal savings, which is a long-term savings. And then I put whatever else I can spare into my like more short-term savings account. To me, it feels so comforting and it's really important to me that I've got just extra money sitting there, even if it's not earning interest or anything, just so that I know I'm not broke. I'm not, I'm never going to be stuck in a car park, unable to drive home ever

again. How does she go with investing though? I do want to invest. I'm very interested in investing and I've actually been reading a lot about it this last year. What I'm trying to figure out is where should I be investing my money? Should I save up and aim to get another property for investment purposes? Or is it better to put it into stocks and shares? So I'm absolutely interested in it and I'm saving for the purpose of investing, but I just don't know where exactly that's going yet. And what about her debts? So I have HECS. I have 17 and a half K left there. So I have been paying that off on my mortgage. I've got 320 K outstanding. I only have $600 left on a tax debt. So I salary packaged for about four years at work because I got more money in my

account on a fortnightly basis, which I was loving, but wasn't acknowledging that I wasn't paying enough tax to pay HECS. So every year for the last four years, I've had a tax debt, but this week I've got actually tax coming back to me so that'll be awesome so yeah that's nearly completely done that'll be paid off with the tax refund this week I've got a a Lombard's finance card so it's like this five-year interest-free card and that's how we bought a bit of furniture for our house and also put a bit of money from it I got married in February so a bit of money from the wedding went into that so 03k on that which will be paid off this week with the tax and that's actually it for debts. I own my car, I don't have any credit cards, I don't have any personal loans.

That's not what it was always like though. Just six years ago, today's money diarist was in a very dire situation. $27,000 of debt to the bank. I had about four grand to my brother, about a thousand to my mum. So it was well over 30k, 22 years old. So I bought a car that was $15,000 just because I could I didn't really need to spend 15 I could have spent five I was frivolous like I just I remember getting a credit card because I had my rego coming up and I thought to myself I can't be bothered saving for that I'll just put it on credit and then I just kind of got this like buzz from spending money that wasn't really mine and I just shopped like my wardrobe was ridiculous I went to like Mr. Zimmy every weekend every time they released a new piece I

was buying a new piece and it was just ridiculous I was like I was living this lifestyle that I absolutely couldn't afford and then I would get a credit card to pay off my credit card and then if I wanted to go on a holiday I would you know email the bank and say look can I get a consolidation loan to pay off my credit cards and then I wouldn't pay off my credit cards and I would go on a holiday and it was just a horrendous cycle and eventually I was borrowing money to pay rent and then borrowing money to pay back the landlord and it was just it was horrible it was really really depressing I'm so passionate now about educating particularly women from an early age about their finances and about like these little choices that you make a $1,000 credit

card doesn't sound like much but it can ruin your 20s and that might put you back for a really long time and for me it also really ruined my self-esteem like I was so embarrassed about who I was in it from a financial perspective and it was such a secret, lonely thing. And it just made me not feel confident in myself. So now I just feel on the other side of that. I've got so much more self-esteem. I'm so proud of who I am and where I've come from and where I'm at right now. And I won't go back there. So does 28 and Learning have any good money habits she's especially proud of? So I've started this thing where I save $10 a day every single day. So I've set it up with my bank account that it gets automatically deposited so whatever I'm saving on top of that is is

separate but this ten dollars a day is kind of like my it's not so much like it's a big amount of money but it's like the mindset behind it so it's like I'm investing in me every single day in some way shape or form I'm investing in growing my wealth as a person and also my money literacy um, every day. So that's something that's like an absolute non-negotiable $10 a day until the day I die is going away for savings. What about her worst money habit? It's probably that, which I'm getting so much better at, but it was, it was just ignoring everything. So refusing to check bank accounts. And, and if someone would say, you know, let's go out for dinner this weekend, I wouldn't actually check if I had the money, I would just do it. And if I didn't have

the money there I would transfer it across from an account that I really shouldn't be taking it from so I think just being closing my mind to things or actively being oblivious to my financial circumstances but I'm getting a lot better at that what's 28 and learning actually saving for what's her big money goal at the moment so I'm her I've got like my personal savings account that is so I can do some travel next year and that is probably only need like five grand for that one and then longer term just saving like I said I don't know if it's going to be for another property or for investment but I just want to have like a portfolio somehow that makes me feel like I've got wealth you know I have some sort of an abundance that gives me the freedom the ability

to feel like you know I'm not trapped in any way I'm able to be generous I'm able to travel and do the things that I want to do so I don't have like a particular number or exactly know what that looks like yet, but I just know I want to put money away so I can do something amazing with it. So how would today's money diarist rate her own relationship with money? If we forced her to give herself a grade? Honestly, I probably would still give myself like a C. I feel like I have so much to learn and I don't have heaps in my account right now. So yeah, like I said, 28 and learning, I have only come, I think what in my opinion is halfway. I've got that next little bit to go still. I am so proud of her what do you reckon Victoria me too I'm so impressed to hear that she has not

only changed her money habits but she's changed her mindset so I think it's one thing to really just start saving and knuckle down but you can tell she's now prioritizing things she's set some short-term goals she's set some long-term goals she's gone from this really toxic mentality of saying that she was actively being oblivious which I know for sure so many people listening to this can relate to because I think it's something that we are really good at you know if it's something that we don't feel empowered by it's really easy to just sweep it under the table and say I'm not even going to consider it I'm not going to think about it I'm not going to check my bank balance I'm not going to check my credit card statements and I think it's really easy to put yourself in

that bucket but you know what's really hard pulling yourself out of that and saying this isn't what I want my future to look like this isn't who I want to be in 10 15 20 years and she honestly i'm just so proud of her she is so aware of what went wrong which i think is really rare people just kind of choose not to think about it yeah and i think people don't really want to understand their own money stories because that's so confronting so when someone sits you down and says hey like let's understand where you're coming from and where you want to go and maybe why these things are as such it's really challenging like it puts you in a position that makes you feel really uncomfortable and I think it's fantastic that she's pushed through that and she's now you

know she said she's still got so much to learn she said that she doesn't have heaps of money in her account but I don't think that that's what matters I think her grade of C is maybe a little bit harsh because she's absolutely on the right track like she's not in a position that she's in mass amounts of consumer debt like listening to her story and seeing how in debt she was and now where she is is nothing short of inspirational that's all we have time for today on that wonderful note just before we head off as always let's quickly wrap the boring but important stuff the advice shared on she's on the money is general in nature and doesn't consider your individual circumstances she's on the money exists purely for educational purposes only and

should not be relied upon to make an investment or a financial decision and of course we promise victoria divine is an authorized representative of consultant financial advisors proprietary limited So join our Facebook group where, get this Annabelle, nearly 14,000 women are sharing tips and tricks every single day free of judgment. Just search She's On The Money on Facebook and join us. If Facebook's not your thing, you can also find us on Instagram. We're at She's On The Money AUS.

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