She's On The Money - Loyalty Tax is costing you thousands each year

Episode Date: December 8, 2020

Are you paying more for being loyal? Probably. Today we discuss the hard to spot ‘loyalty tax’ costing Aussies thousands of dollars each year. Plus, we lay out exactly how to have the conversation with your bank/gym/service provider so you know what to say and how to say it when it comes to negotiating a better deal.Victoria's obsessed with it, and we know you will be too - download the Get Reminded App for FREE today and start setting reminders that future you is seriously going to thank you for. Don't forget to share your reminders on socials this week too for your chance to win one of five SOTM Budget and Cash Flow Masterclasses. learn more about Get Reminded here.Love the podcast sick and want more SOTM? We had a feeling that was the case. Join our Facebook page to share your money wins and money confessions, follow us on Insta for daily inspo to keep you on track and absolutely subscribe to our newsletter, the written recap of the pod’s key takeaways, including some bonus bits you won’t want to miss. Finally, if you’re in a money mess and need help untangling the muddle - we’ve got you sorted – simply record your question and send it through to us at [e-mail] and you may just end up on the podcast!Your hosts are Georgia King and Victoria Devine.The advice shared on She’s on The Money is general in nature and does not consider your individual circumstances. She’s on The Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. Victoria Devine is an Authorised Representative of Australia Pacific Funds Management Proprietary Limited ABN 34 132 463 257 - AFSL 339151.See omnystudio.com/listener for privacy information.

She's on the money. She's on the money. Hello and welcome to She's on the Money, the podcast for millennials who want financial freedom. My name is Georgia King. I'm a copywriter and journalism student. And every Wednesday, I sit down to chat finance with millennial money guru, Victoria Devine. Hi, V.

What a surprise. It's Georgia and Victoria on a Wednesday. Actually, I wasn't here last week, so hey, maybe it is a surprise. Okay. Or it's not. Whatever. Whoops. Bet you thought I'd replaced it with Glenn James.

Sorry, guys. I'm back. Now, today on the show, we'll be talking about loyalty tax, exploring the dangers of staying loyal to a brand instead of seeking the best deals on the market. Then later on, we'll be unpacking a money diarist who has homebuyer's regret, and we'll be addressing a money question from someone needing a little help on where to start when it comes to refinancing. Before we hop into that chat though, Victoria, money wins and confessions from the week that

was, talk to me. I have a money win. All right. So this is actually from a couple of weeks ago and I've only just thought about it and thought, you know what, this is something I'm going to share because I feel like it's relevant to loyalty tax in a very roundabout way. So during the Black Friday sales, I went shopping with one of my girlfriends, Steph, if you're listening, which I know you don't often, hello. And I really wanted to pick up a new work top. And every girl who works in corporate knows that Portman's is clearly where we go. That's not sponsored because wait till the next bit of this, if this money win. So I went into Portman's, found a cute top that I liked, perfectly worked with my outfit, decided I wanted to purchase it, but also wanted to look at the

rest of the shops because it was the first shop I'd been into. So I put it back on the rack, walked about all the other shops, completely forgot about the top, went home, decided, all right, well I tried it on know my size I'll just order it online and when I jumped online the website had 40% off but in store they only had 25% off so money win I got my discount upgraded but also I was slightly confused because I was like why am I being penalized for in-store shopping isn't that what we're trying to revive yeah I feel like you should be rewarded for in-store shopping it's so much more effort you know that's what I thought like you guys don't have to go through the process of packing it up and posting it like it's already right there like I usually don't ask for a bag

either so I wouldn't have made you give me one of those who knows but I just found it very confusing I wonder if they would have honored it still if you quoted the website price in store surely they would have well I don't know and to be honest I obviously didn't have the opportunity to try I just was a little bit confused about it and found it to be slightly opportunistic of them which I didn't love but at the same time like 40% off for the top that I bought from my guys it's cute so it's a win yeah it is a win do you have a money win or confession this week for us i do hun mine is retail related also i didn't go too wild in the black friday cyber monday sales i listened to your advice victoria i was very disciplined you don't usually so that's amazing

um so basically very long story short i scored sunglasses that were originally $385. Oh fancy. Oh fancy. I know it just shows how much retail is marked up but also it's really exciting. For someone who loves a good pair of designer sunglasses i.e me I'm really sad to hear that they could be marked down as low as $20. Yeah I mean I was pretty pleased with it as well it's got a nice sunglasses chain which is cute full of pearls. I love that. You've commented on And that one I walked in. I do love pearls. Grandma chic.

Grandma chic. But also they are very beautiful sunglasses. They were actually the first thing I commented on when you walked in the pod studio today. I was like, oh, those are so beautiful. Yeah, you did. And we generally have quite different style. Like I've never been into Portman's. I can't imagine you going into Portman's if I'm brutally honest.

Yeah, that's fair. I'm sitting here in my shorts and my boots. I also can't imagine wearing Gorman's. So there's that. Yeah, that's true. Retail chats. Shall we move along to our Facebook group, Victoria? Yes.

The wonderful Facebook group. Have you got a favorite post this week? I do. And this week, it's a little money win, but it's one of my favorite money wins because I think we can all do this and, you know, uncover a little bit of a money win for ourselves. So this one's from my friend, Abby, and she said, money win. I bought a body shop facial scrub and started quote running out of it. She then went to Kmart, bought some travel tubs and cut the container open and scooped everything out into a pot. Now she has heaps of leftover product and she doesn't have to go buy a whole new scrub, which she says would have cost me way more than the $4 it cost me.

It came up for some containers. And I just feel like that's an epic money win because so many of us don't cut open our containers and get the remnants of our product. Yeah. You squeeze and you squeeze and you can just never. Yeah. And I feel like I'm such a hacker when it comes to that. Like I will cut everything open and like break it or however you need to do it.

Cause some foundations like you guys know what I'm talking about and I know you do can't pull the lid off. So you have to get like a butter knife and like pop it off. And I am definitely that. Yeah, I bet that's really satisfying as well. It totally is. But I've also found these really awesome little scoops. So you can buy them on eBay and they're called, I think, makeup spatulas.

And they are literally like mini versions of spatulas. They are made of silicon and you kind of put them into your makeup container and it scoops out the bottom. So if it's like a really thin makeup bottle, you can get to the bottom of it. Cool. Anyway, I'm imagining like a whiz fizz little spade. It's kind of like that, but like actually looks like a spatula. and actually looks like you're doing tiny baking for a mouse but it's not and I bought them from probably a seller on eBay for 99 cents and that's a money win from me again stunning from you you're

welcome have you got a Facebook money win for us so mine is from Jade who has a again it's another small money win but it's a money win we love so she loves entertaining but platters can be super expensive especially when you're buying nice crackers so instead of buying a small box of crackers for six dollars she bought some lebanese bread and slapped a bit of oil and moroccan seasoning on there popped in the oven for 15 minutes and she has a big box of crackers five times the size and even tastier have you done this before i haven't but i actually really liked this money win and i think i might seek some inspiration because as someone who buys gluten-free crackers often those are so expensive and like rice cakes get boring so i'm gonna give it a crack with some

pita bread that i got that is gluten-free dip it in some hummus love that they're also good pizza bases they totally are pita bread actually makes the best type in my opinion of pizza base and i think that's yeah yeah i agree also i was about to call this bougie yeah but do you know what i learned this week from my friend amy what do you know what bougie actually means bourgeois no it actually means middle class turns out i've been calling everything middle class and so now i need to take this word out of my vocabulary. I actually thought it meant like luxurious lifestyle, but turns out bougie is a French word or it comes from a French word that means middle class. I thought it was higher than that. I remember in history class, this is going to be boring

content for you guys. I feel like the proletariat was like the middle rung and then above that was the bourgeois and then maybe it was, it got into your royal. You know what? I don't really know the answers. I did well in history. I thought the same, but it literally comes and I've just googled it right here hot off the press comes from a french word that simply means of middle class status oh god well we've been saying it wrong this whole time how am i gonna call things bougie now you have to cut it out of your vocab huh no more shots for you guys uh all righty guys let's head into the main chat of today's show recent rba and aprodata revealed that owner occupier home loan customers who have been with their bank for more than four years are paying

on average a variable rate of 3.64% while new customers are paying only 3.23%. Now, this difference may not sound like much. I don't think it sounds like that much. But as we will learn in today's show, this gap is actually costing loyal Aussies thousands of dollars per year. Now, V, I'm not going to do my big preamble today, which I do usually do. You're the expert, you know, I try to be. But frankly, this topic does just confuses me a little bit. So to start us off, what actually is loyalty tax and why should our listeners care? Because I said so. Very good but also I can completely understand that this might be a confusing topic for a lot of you but don't stress because I want to make it really clear and I hope it's super easy to follow. To start with

loyalty tax is not real tax I've just decided to call this episode loyalty tax but it refers to the tax or the extra money that you pay when you stay with a company whether that is a home loan provider, a bank, your gym or even your energy company instead of shopping around for a better deal at competing companies who could save you thousands of dollars over your lifetime. Now usually banks offer more substantial discounts to newer customers which kind of sucks to entice them to choose their business over any other business. This system makes sense and is great for newcomers at the very beginning of that relationship. However for customers who have been loyal for years and years they're missing out on the discount offered to newbies and are essentially

not being rewarded for remaining loyal to lenders or companies. Now because I like research the Reserve Bank of Australia released some data quite recently which completely backs up all of this. Their data showed that home loans that commenced four or more years ago had an interest rates 40 basis points higher than new loans. FYI basis point is like 0.40 so like that's a basis point and if you were to put that into a dollar figure for a home loan balance of $250,000 that would mean that people with those older loans would be paying an extra $1,000 of interest repayments every single year. To be honest, I find that quite crazy. So basically, the banks are looking after their new customers while neglecting the old and, I would argue, quite loyal ones.

The kind of bank on, good joke, Victoria, older loyal customers not having the energy to switch or hunt for a competing offering at a lower price. And in most cases, that call does pay off for them, but I don't believe it should. And why should our listeners care about this topic? Because I said so, but also because obviously our listeners who are looking at buying homes or changing their energy or phone company or have had their home loan for a really long time, you guys should care about this topic because it directly impacts your finances. And so many people are just ignorant to this and are losing out without even really knowing it.

By having an understanding of how these things work and how lenders work and how loyalty tax works, we're able to make sure that we are looking after ourselves and our finances and that we're not being taken for a ride or punished just for being loyal. For those of you who aren't close to buying your first home yet, I do think it's also a really important conversation for us to have and for our community to listen to so that they can be aware down the track should they choose to go into the housing market. But also loyalty tax extends far out of just home loans into every other aspect of our life, which we're going to get to very soon, but I think it's great that we're doing this deep dive and I'm actually really

excited about it because so many of us could save so much money. Exactly right. So when I was reading for today's show, I found that according to this ASIC report that has been widely written on as well, that the average difference in interest rates paid by new and existing variable rate customers was 0.26 as of September 2019. So can you tell me, V, what that actually looks like? Because that doesn't really sound too substantial to my tiny pea brain, but I'm assuming it is substantial. Otherwise, we wouldn't be doing a podcast on it. First things first, you don't have a pea brain and I don't like self-deprecating.

Any kind of humor wasn't funny. But I do get why it doesn't sound like much, G, but we aren't actually talking about a loan of 20 bucks here. These loans are hundreds of thousands of dollars. So the stakes are way, way higher. And that seemingly small percentage actually translates to a really massive difference in what customers will pay and it usually turns out to be thousands of dollars a year that we're paying that we could instead be saving or paying in down our home loan with. The report you're

talking about there George actually also found that customers with existing owner-occupier loans with principal and interest repayments who had those loans for more than five years were paying 0.40% more than new customers. So if you were to refinance and move your $400,000 home loan across to a different lender you could literally save more than $1,500 in the first year and almost $31,000 over the whole home loan period which I'm probably going to get you to agree with me here just so I feel good but I think we can all agree that that's a huge amount of money that we could be investing or putting towards another home loan like that's literally a family car like that's a lot of money that's a nice family car that's a couple of Mazda 2s which is what I drive stunning

stuff. Presumably, V, it would get worse the longer you're with the same bank for, right? Because you might be locked into those rates. Yeah, talk to me. Correctamundo. So the difference does widen the longer that you remain loyal to your lender, which again seems odd to me as there should be some kind of reward for being loyal. And you said it before, V, but just to be really clear before we keep on unpacking this topic, loyalty tax isn't an actual tax, right? No. And as I said before, it's definitely not real tax. It's like how I jumped up and down about the pink tax a couple of episodes ago. It's not something that the ATO is going to make us pay, thankfully, but it is lenders and other brands and organizations placing a greater priority on

their newer customers. Now, I know that that's not what they are planning on doing and they're essentially just trying to get more customers on board. But at the end of the day, that when we really condense it down and put it really simply means that you could be a new customer for someone else and get a better deal. Yeah, exactly right. So you did touch on this before, but when I was reading for this very podcast, this very topic, it was mainly talking about home loans and that's not going to be relatable for everyone in our community because not everyone has a home or even wants to buy one. Talk to me about why this is relevant for everyone and how it does kind of spread across different industries and service providers and why we really need to be caring

about this subject. I mean, I could personally attack you here, Georgia, and ask you why you're still paying $80 for a phone plan when you could be paying $45. But I'm not going to do that because I'm a really good person. And as I always say, the worst thing that anyone can say is no. So there is never any harm in asking your service providers, whether that is your bank or your gym or your energy provider or your, you know, utilities or internet connection for a better deal as it'll either go really well and you'll save some money or it won't and nothing's going to change but there's literally nothing to lose here. Loyalty is honestly such a great trait and in every aspect of life I support it but when it comes to your money being involved you need to do what is right

for you and your finances and if these service providers or lenders aren't servicing you properly then we really need to have our own backs and be willing to walk away and find a better deal. In terms of approaching your lender, your service provider, how do you go about that? You just talk to the customer service team and just stay cool, calm and collected? What's your advice there? I think it's just about jumping on the phone and asking for a good deal. At the end of the day, there's no harm in asking. And I think it's important here to do your own research.

So tell them what the interest rate you're looking for is. now this is not good at all but I do know that a number of banks cannot if you call them refinance you unless you mention the better rate that actually exists so they will literally make you verbally say hey so I saw the deal on your website for 2.59 can I get that and if you don't and you just say hey can I get a better deal they aren't able to offer you that which is insane to me. And I think that, you know, doing a little bit of research is going to put you in a better position. Also think it's really important to bring up their competitors and say, well, actually your competitors are doing X, Y, and Z because often they won't want to lose a consumer. So

asking if they could price match is a really good idea. It's also really important to be on top of these things and find a way to keep track of them. Because at the end of the day, it's like car insurance. Car insurance goes up every single year. And every single year I have had to call my car insurer say hey I just re-quoted myself on your website and I found that it was $150 cheaper what's the go and they'll be like oh yeah no problems we'll honor that and it seems crazy to me that I have to make that call but at the end of the day so many people don't know that they can make the call because when you get your car insurance in the mail they issue it as an invoice they don't issue it as a statement to let you know that it's you know a reoccurring subscription

they literally make it look like you have a call to action you've got to pay this and you'll be in a lot of trouble if you don't like it's a mental thing as well and i think it's really important to take that into consideration and always make sure you've got a better deal but it's also off topic again but so relevant it's also so easy to forget what you paid last year because they're smart they don't put what you paid last year on and say well georgia you paid a thousand dollars in insurances with us last year it's now twelve hundred dollars they don't do that they just issue you with a statement that looks like an invoice for twelve hundred dollars and you might go oh that feels expensive but oh maybe it's what i paid last year you don't even think about it so

you need to find a way to track these things and make sure that you're on top of them that's really interesting i bet a lot of our listeners are yeah having aha moments there because i just had one um the same again victoria rant i'm so sorry but the same happens with energy providers so often they'll give you a discount for the first 12 months but if you don't call them and say hey i'm just wondering can you re-honor that they will not give you the discount for the rest of your policy they'll just give it for the 12 months they don't even mention it they just bump you back up to the original rate and you might forget that you need to do it because 12 months is actually a really long period of time and you won't remember what it is. So if you're on a direct debit,

your direct debit just might increase and you might not even notice it. So we actually need to be really vigilant when it comes to these things and actually look into them. Same thing happens with phone plans, Georgia. I have read too much in, not attacking you, sorry, but I've read too much into phone plans. And there are a couple of phone plan providers that when you finished paying off your handset you actually have to call them to stop paying for the handset and if you don't you continuously are charged for the handset repayment they would make so much money from that wouldn't they exactly so many people wouldn't change it oh wow so i think it's really important to be on top of your finances in this way and i know lots of you maybe haven't

thought about it because you just see these things as set costs but these aren't set costs you can always shop around for a better deal. You can always, you know, jump into the Facebook group and go, hey, who are you with? Are they good? At the end of the day, I think there's this massive misconception around mobile phones as well, because 10, 15 years ago, I'm from Tasmania, humble brag. But whenever I went home, my phone wouldn't work because it was only Telstra. But now it doesn't matter at all for me. And I'm sure this isn't true for everybody because, you know, regional areas are, you know, functioning differently. But at the end of the day, my Vodafone plan works just as well in Tasmania. And so I think there's this misconception

that not all phone providers are equal. And, you know, if you travel home for the weekend or, you know, you are from regional Victoria or regional Australia, you end up in a position where you have to be with the best provider. Maybe it's worthy of re-reviewing that because that was so 15 years ago, friends. Yeah, that's true. That is still in my heard that Telstra is the best and I'm always scared that I'm really bad with directions so I'm scared that my maps won't work wait is that even Telstra is that like that oh yeah that would be your internet connection but at the end of the day I feel like let's maybe have a thread in the Facebook group about what we could switch to and how good they are yeah brilliant also if your phone

plan doesn't work you can actually ask for a refund because it's not a usable service yeah FYI friends she's so smart um there probably is also a perception that the big businesses you just kind of and the big banks you can't question them what they say goes but that's not the case at all and they're also never they're never going to call you and be like george how are you going hun we've actually got this sweet deal am i going to save you hundreds of dollars on your bill why would they do that it's not in their best interest yeah so we do really need to look um look after ourselves absolutely not for ourselves and you know what i'm going to do for you guys because this stuff is hard like having our own backs like we we listen to a podcast we get really

motivated we turn off the podcast georgia isn't being motivating in your ears anymore and you sit down you go i really should call them what do what do i say so i'm gonna make you guys a script of how to ask for a discount politely because we don't need to be rude about these things if you find yourself in a position where like my gosh i didn't even think of that i've been overcharged for years like that is not the girl who works in the call center's fault you do not need to take it out on her. She is probably a lovely lady, a lovely person. I just think that we should just be polite and you are more likely to get further with, you know, being kind and being polite and just asking for a better deal. And I don't think it's a bad thing if someone

says, oh, look, I can't do that for you. On loyalty tax, how can we steer clear of it? How can we avoid paying these taxes? So we do, as I said before, we do need to be vigilant. The more vigilant you are, the more across your finances you are, then naturally the more in control you are going to be. A lot of us are, let's be brutally honest here, too lazy to want to think about shopping around or negotiating with our lender because it can seem like a lot of effort. But we need to remember that those lenders literally want our business, that they have a vested interest in keeping us on their side. So talking with them about how you can make a loan that works for both of you, yourself and the lender, isn't actually as scary or as tedious as it sounds. You also really

need to remember that you're probably not the first person that they've spoken to that day about literally the same thing. So why not just give them a buzz, have an interaction that they'll walk away from and be like, wow, Georgia was so positive. That was a really nice call. I'm glad I could get her a better deal. So if you are listening to this episode and you're thinking, I probably should be listening to this, my suggestions would be as follows, my friend. First things first, request a lower rate. Negotiate with your lender and see what they're able to offer you. See what they are offering new customers and what those interest rates are. Throw in a few competitive comparison rates and just bluntly tell them that you're thinking of going elsewhere unless they can help

you out. If they can't, then I think it's time to just see you later. Boy, bye. Next, refinance. if your lender isn't on board or your product provider isn't on board and they don't really want to help you out then refinance or opt for another lender or another company that you can work with who wants to help you out and who you value it's also a really great time to do a little bit of research if you're looking into a bank why not have a look for a bank that actually works for you yep so for me ethics are a really big part of my banking and my you know investment journey so I'd be looking into well okay what bank can I change to that not only is going to give me a bang in rate but it's also going to be even more aligned to my values. So you would save a

categorically if they're like nah girl no discount for you today. Say boy bye. No definitely don't do that that would be incredibly rude. I think first things first you need to put everything on the table for them. I don't think it's a bad thing to quote show your cards and say hey you know I've been doing a little bit of research I'm sure a lot of lenders are actually going to want to hurt me because a lot of you might be like hey I listen to a podcast like maybe don't throw me under a bus but also at the same time I wouldn't be sad if everybody knew more about she's on the money and arguably the incredible refinancing work we're doing but I would essentially just be getting on the phone and saying hey I've got this right just wondering if we could have a chat about

negotiating it down and if they say yeah no problems like what were you thinking have a couple of options that you can go to them and say hey well i was thinking x or i was thinking y now i have seen people be successful doing this with bank lenders with personal loans friends i have seen people do this with their gym membership where they go hey i noticed you had a new onboarding process and i don't know why i can't just have that and actually being successful i've seen people do it with their phone plans i've seen people do it with their energy providers like there is not one thing that is not negotiable and if they decide it is not then that's okay and you can go on your merry way maybe it was worth a crack or maybe you are going

to change lenders but I do think it is really important that you know that when you tell a lender on the phone often for them in policy they have to go into retention mode so don't just say can I have a better deal I would actually and I don't like the word threaten but I would actually threatened that you're going to leave so in that conversation not just saying hey I'd love a discount it's like hey I've seen this other company that is going to give a better rate and if you can't match it I'm planning on leaving because they won't just go into let's give Georgia a better rate mode they're going to go into client retention mode and sometimes you end up being transferred to a completely different segment of the business who can match that to make sure that

you as a client stay on board right probably telling everybody too much hey interesting Interesting. Why do you think, Bea, that this isn't a conversation that we're having very commonly? We've never really had this conversation. I've had a lot of aha moments today. Why do you think that we're not talking about this and why are people just choosing to stay with these businesses blindly? Because they don't know any better. At the end of the day, lots of you would have had no idea that loyalty tax was a thing, arguably because it's not. It's actually just a really nice name. I don't know if it's nice, but it's just a name that we've given to this concept of staying with someone and having to pay more increasingly over time. At the end of the day,

this kind of stuff does take effort. It does take a little bit of work to seek out comparison. So for lots of us, we just don't have the energy or the passion for finance, quote, unlike me. So I get why lots of people just let it slide and they settle for paying more instead of going down the seemingly harder route of challenging their lender and of course, refinancing. I do get it, but I do think it's a little bit of a cop-out, so sorry friends, as this is not just spare change we're talking about. It's potentially tens of thousands of dollars, maybe even more, and I want our community to be as educated and inspired enough to want to be proactively seeking out these things and making sure that they're getting the best deals possible so that they can use that

saved money efficiently towards their path to financial freedom. Alrighty, well you guys heard it here first. Take charge of your finances, see if you can get a better rate on your home loan, gym membership service provider and if they're not cutting it take your business elsewhere what are we saying see you bye bye bye bye bye hey ladies so i've had a mortgage for seven years now but i feel like i'm seeing a lot of great deals around at the moment and feel like it could be time to refinance my question is though how do i actually do this and how expensive is it usually I really want this decision to be a money win and not a confession thanks all right Vicky D this is actually a question that I was going to ask you in the show so lucky I didn't who's Vicky D who

are you addressing I'm not okay with it but that's okay because do you know what I do like helping people with their mortgages I think this is really important and the best suggestion I've actually got is go and see a mortgage broker at the end of the day they are going to be able to compare all of these deals for you and refinance for you so you're in a better position or tell you that you're not able to refinance if you're in a financial situation. You've just started a new job. Even if you're earning a little bit more money, sometimes they won't refinance you because you're still in probation. So there's lots of things to take into consideration when planning a refinance. But I think it's really important to understand that a broker gets paid by the bank.

They don't get paid by you. So the way it works is the new bank will pay your broker a commission for bringing them new business. It is not additional money that you pay as a consumer. Using a broker doesn't increase the expense of your mortgage. It actually just means that your broker will get a percentage of the mortgage that's written because it is not a lead that that bank needed to go out and get themselves. It was a lead brought to them by that broker. So that broker should be remunerated for bringing the bank new clients without them having to advertise. So they see it as kind of like the advertising, right? So for me, I think the best thing you could do is actually go and have a chat with a mortgage broker. Say, look, I've got a

$500,000 home loan at 4% and the broker will say, cool, fill in this fact find, give me all your personal details and I'll let you know what your options are. The important thing here is to go to an independent broker though. You don't want to go and see a bank's broker because at the end of the day, it doesn't mean they're not intelligent. It just means they will only put in front of you that bank's product. So say you went to bank A, they're only going to give you mortgage options that are available at bank A. Whereas for example, without being self-promotional, but it makes sense because if you want a recommendation for a mortgage broker, hit me up friends. At the end of the day, we have access to pretty much everybody under the sun, including credit unions and, you

know, non-bank lenders. So you end up in a position where literally every option is evaluated for you, heaps are wiped off the table and then you'll get presented with the top three so someone else is literally going to do all the hard work for you without you having to pay a cent and I think that's an epic money win and there's no bias in there because they're not acting on behalf of a bank right absolutely not and I think that that's something that people think is true but every single home loan that a broker would refer you to would pay them the same amount because it's the same amount of loan so there's no value for bank a to be chosen over bank b by a broker they just want the best deal for you because at the end of the day, if you refinance away from that broker's

deal and go and get another one, they will lose money. So it's in the broker's best interest to make sure that they are putting you in the right deal the first time and then essentially nurturing your relationship. And I would fully expect that if you had a broker that wrote your deal and then a couple of years later, there was a better one, I would expect them to come to you and say, hey, Georgia, I know that there's a better deal for you. Do you want to go through this? And you going, yeah, sure, mate. I'll just give you updated information. You're going to save me thousands of dollars. Fantastic. The important thing to make sure that a refinance remains a money win for you though, is to make sure that your loan terms remain the same. So say you put

yourself in a position where 10 years ago you got a mortgage and that mortgage was 30 years. That's pretty standard. You go to a new broker and they say, Georgia, I can refinance you to a new deal. and you go fantastic broker thank you you might be saving two percent but at the end of the day you're starting your 30-year period again and therefore you're going to be paying interest for longer that's actually not a better deal it might sound like a better deal because your monthly repayments are less but you're paying more for that property over the long term terrible plan so what you want to do is go to that broker and say i actually want a 20-year plan so you will pay that home off in the same amount of time that you were going to pay it off in the first place

but you get a better interest rate for it. So for me, that's a really, really important point to make sure that it is a money win and not a confession. And can you refinance more than once in your lifetime? You can refinance as many times as you want, but at the end of the day, it is paperwork and stuff that you want to go through. So I'd probably not recommend it any more than every two years or so. But at the moment, obviously the market has dropped significantly. so now's the time if you haven't refinanced in a while to probably hit up your local broker yeah brilliant so how long does it actually take then like months it could take a week to refinance at the end of the day it's really dependent on how quickly your broker can find a deal get the

submissions in at the moment I know that these things are taking a while I talk to brokers literally every single day because I obviously work with them and at the moment because COVID happened and now heaps of people are wanting to refinance there's really long wait times and it can take up to two weeks for your deal to be looked at but at the end of the day I've had people refinance in a week and I've also seen clients that have taken three months to refinance because they're sole traders or small businesses and the amount of information that their bank just takes forever to get through. So that's why we want a broker on our team because they do all the hard work and they'll just ask you hey Georgia can you shoot through another copy of your ID or

whatever it is. And you don't have to follow up with the bank all the time because they'll do it for you. Perfect. All right. Well, that sounds like the perfect solution. Definitely refinance and definitely chat to a mortgage broker to do so. If it's right for your situation and make sure that you talk to a broker that you trust as well, because not all brokers have been created equally. And you'll, have you got recommendations? You said that before that you've got some people I do. If that's something that you would like to hit up our website for, we can match you with a broker that will make sense for you in your life. Hi, I'm the 26-year-old regretful homebuyer and this is my Money Diary.

What good would a money podcast be without the pervy bits? It's time for Money Diary. Let's get into it. So I bought my first house when I was 21. It was a unit and it was in an area that was kind of a bad area. So no one was really looking there, but they tried to build a new subdivision on the border. So I bought there. It was extremely cheap for what it was. and yeah I was really lucky a few years later I decided I wanted something more me more newer closer to the city and I sold my unit and I got a really good profit and instead of probably doing

the smart thing and buying something probably more within my means I bought something which was extremely expensive and pretty much maxed me out in my borrowing capacity so my repayments are around 40 percent of my income a fortnight I have to budget really hard with everything I do I can't just go out for dinner spontaneously I can't just buy a top spontaneously I have to really think about everything and most people I know that get a mortgage it's with a partner so everything's halved and that's not the case with me everything I have to foot so I'm just really regretting buying something even though I love it but that is really pushing me. What does she do to earn money? How much does she earn and how much is sitting in her bank account right now? I work in

human resources in the government. I earn between that $65,000 and $70,000 a year and at the moment I have a few different accounts. So I have around $6,500 in an emergency account, about $1,200 in a bills account and around $600 in a spending account, which is like, you know, my food and petrol and fun stuff that I try and do. And what exactly happens to that money after it's deposited into her account? Instead of going into one bank account, it goes into three different bank accounts straight away. So $1,200 goes into my bills account, around sort of like $600 goes into my spending account. And I think like $200 goes into a savings account, which I use my investments and $130,000 go into like my emergency fund because I want that to go up to $10,000. So

yeah, I'm trying to keep plodding away and putting money in that. Okay then. So how does 28 and getting better feel about investing? Does she invest? And if so, how? Well, I've only really started investing in the last month just from listening to this podcast and a really nice guy at my work who's kind of tried directing me in the right direction. So I opened up an account with an online brokerage. So I've got around 1400 in that at the moment. So I'm trying to contribute to that every fortnight. And then I also set up a raise account, which I've got the roundups organized through my bank accounts to go into there. And I'm hoping to have 1000 in there in a year's time. So yeah, I'm really trying to learn what I'm supposed to be doing. I don't want

to go too fast too soon and get overwhelmed. So yeah, slow and steady. What about debts like credit cards or personal loans? My only debt that I have is my mortgage and it's really big for one person. Well, for where I live, it's big. So that's $370,000. So yeah, that's kind of a big chunk of my money. I did finish paying off a car loan. So two years ago, I bought a brand new car. Probably shouldn't have because from listening to this podcast, I mean, I probably should have looked at something secondhand and not so expensive but when you're young you just want the flashy new car so I paid off that in two years and I was really happy with that so yeah really just my mortgage at the moment what is her best money habit um I've been op shopping a lot so I have

like in my mind why do I want to be spending money on work clothes when I'm going to work to make the money like it just didn't seem right to me so about a third of my wardrobe is now thrifted stuff so for example I went down today and I got a new dress tags on it and a new work top for $15 and whereas the tag on that dress was $70 and if I'd bought the top which was a portman's top it might have been about $30 $40 so I'm trying to really do that and I mean it's good for the environment as well I'm trying not to give into fast fashion and all the different trends that keep coming out I'm just trying to go in there and buy basic sort of things that I know I'll love and if I get 10 straight down the middle of it, it's not the end of the world. And what about her worst money habit?

This is probably something I actually enjoy though. I like food. So like today I went and bought a $7 loaf of rye bread when I could have just gotten a $2 or $3 loaf of rye bread. But when you see the fancy stuff, even though it's double the price, it just looks so nice. Like the fancy honey, the fancy jam, the fancy cheeses. So I like to buy that sort of stuff, like the gourmet sort of things. So what's today's money diarist actually saving for? what's her big money goal well my big goal is in a few years well I mean few I mean like five to ten I want to have a family so I'd like to be around for my family so that's why I'm starting to invest now and trying to get up like my emergency fund and my savings because when that happens I don't

want to have to go back to work in three to six months I want to actually be able to have that time because I've generated a passive income and maybe even go part-time after that for a while and actually just enjoy that part of my life, not have to just go straight back into the workforce. And what grade would you give her money habits? I've achieved a lot in a short amount of time. Like I said, I bought my first house when I was 21. I sold and bought my second house when I was 25

and that was with a 20% deposit. But given that I haven't found my happy medium and I still check my bank account every day and stress over my spending and my saving, maybe a B plus just because I'd like to feel comfortable and not have to check my bank account all the time. And yeah, just be happy with what I'm spending and not have to overthink it so much. Alrighty, Victoria Devine. Thank you for using my Crevecton full name. Now our 26 year old regretful home buyer. I have lots of notes here. Once again, what did you,

what did you take away from her story? I took away from her story that not all the glitters is gold. And I think it's a really great story to be sharing. I mean, not great for her. We'll sort her out. But at the end of the day, so many of us have this Australian dream in our heads that we want to purchase property and we have our eyes set on the prize and we've got our blinkers on and we don't think about anything other than securing a mortgage. Like we stick our heads down, we get our savings on, we've saved our, you know, whatever it is for our home deposit could be $50,000. It could be $100,000. We're so excited to get that mortgage. And then we remember that it's a 30-year commitment. Yes. And we've got to save that amount every month to pay off our

mortgage. And we realised that maybe that wasn't actually the type of lifestyle we wanted to live. So I know that it sounds silly, but the thing I would do before you even start saving for a home loan, I think it would be really important to research on average what a home loan would cost you every month and make sure you can meet that commitment before you even plan to buy because at the end of the day if I said to you Georgia okay well I know you've got this lump sum of money you could buy a house but that's going to cost you five thousand dollars a month you might go oh but I but I don't want that but if you don't have that knowledge you go great I'm going to buy a home I don't want to rent anymore so I think it's really important to take into consideration the implications

of actually purchasing a home and the fact that it's not just mortgage repayments you have to pay rates you have to pay water you have to pay stamp duty and they've recently changed all of the rules around stamp duty so we might do a cute little bonus episode soon around what that actually means for us when they release more information but at the end of the day there are so many additional costs that come with owning a property that we need to take into consideration not many people do so that's again one of my rants on property ownership and just making sure you know what you're taking on but it genuinely sounded like she was getting on track and knew what she was talking about. This guy is helping her out with her finances. But at the end of the

day, it sounded like she was tracking along well. Yeah, I 100% agree. It sounds like she was doing everything amazingly. And I mean, she bought her first home at 21. Like she's clearly a savvy little saver. I think there's also something to say here around her other options. So she was saying that she regrets buying it, but I didn't have a lot of clarity around whether she lived in it or not. So maybe for her, the outcome could be that she rents out the house until she can afford to pay it off because then she'll have somebody else paying her mortgage repayments or a portion of, and she can put herself in a position where she just goes and lives in a share house for a while. And I have lots of people and friends that are doing that because they

genuinely couldn't afford the mortgage if they lived in the property. And I think that's a savvy way of maybe having your cake and eating it too. Yeah. Smart. And we did that whole episode on rent vesting season two i think it was yeah so that go back and listen to the rent vesting episode and also just make sure you're across your budget and cash flow at the end of the day if you're not across your budgeting and cash flow you're not actually able to properly budget and you will always feel like you're treading water and not yeah um two more things v what's your take i don't think i've asked you this before your take on new cars have i asked you this question I'm of two minds right as somebody who currently drives a 2006 car that I bought in my graduate

year with personal debt like honestly I can't talk it was a second-hand car but like I went into personal debt for it and we shouldn't do that friends that was a dumb move but that is okay I genuinely don't believe in buying brand new cars purely because of how much value they lose the second they walk out the door drive out the door whatever you want to call it But I think it's really important to take those things into consideration. Some people adore that. Some people, that's their life goal and they just really want to buy a brand new car and I can't talk them out of it.

That's fine. But at the end of the day, so many people get really great deals either on demo vehicles or they, you know, get a car that's maybe one year old and was a corporate vehicle and then it's already depreciated. At the end of the day, I just, I don't love the idea that our community would be investing their money in a depreciating asset. if I said to you Georgia hey great idea why don't you buy this asset for $30,000 and great you're going to lose 15% of that $30,000 every year you'd be like Victoria that's a terrible idea I would

never do that he'll be like but you did when you bought that car yeah so I think it's really important to understand what that actually means and the power of our dollar and where else it could be used but at the end of the day if you dream of car my friend please share with me what you're buying like I'm not judgmental about it I just want you to be educated in the decisions that you are making 100% she also had a couple of good quotes in there she said why am I spending money on clothes to go to work when I go to work to make money I thought that was quite I love that and it hits me right in my soul as somebody who loves to buy corporate outfits but it's so true I think that you know something that's really important is a capsule wardrobe for me to make

sure that I limit my workout fits but then also just buying really good basics so they last yeah and remind people what a capsule wardrobe is if they don't remember where you keep a minimal wardrobe where everything in that wardrobe matches each other so you don't just have one random skirt that doesn't go with any of your tops you have one skirt that really would match all of your tops so you can kind of mix and match and often people will choose maybe like 30 items or 50 items or even a hundred items which very quickly adds up like by the time you add in you know tops and bottoms and pants like it actually adds up really quickly which is crazy but they have a really minimalist amount of clothes that just match everything and to be honest it kind of becomes

like a work uniform and that's what I do brilliant she also loves food she's a girl after my own heart seven dollars on rye bread I support her and she loves fancy cheese so you know what more If that's her downfall, I think that she can come over whenever she wants. Exactly right. I think that is all we have time for on today's show, Vicky D. Just before we head off, we'd like to acknowledge and pay respects to Australia's Aboriginal and Torres Strait Islander peoples, the traditional custodians of the lands, the waterways,

and the skies all across Australia. We thank you for sharing and for caring on the land which we are able to learn. We pay our respects to elders past and present, and we share our friendship and our kindness. now for the boring stuff the advice shared on shoes 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 and we promise victoria to

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