She's On The Money - MONEY DIARIES: Growing up with privilege doesn't mean you'll always have wealth

Episode Date: November 21, 2021

This weeks diarist is a goodie as always, she grew up privileged with no budget, and now has less than $1000 in the bank - hear our diarists real and relatable story about how she's creating financial freedom for her and her family.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 Toni Lodge and joining me for another Shot Back Money Diary is Victoria Devine. Hello. Hello and welcome to Money Diaries. Is that what you say?

Shot Back Money Diaries. Shot Back Money Diaries, which is really exciting. Before this episode started, you were telling me it's going to be a goodie. So why don't we, as always, just dive straight on in. All right, here we go. I grew up pretty privileged, often coming home to random gifts from my parents on my bed. and as a teenager being sent to do groceries, being told we have no budget. This did not set me up for success in the real world.

While I've achieved some big goals, my husband and I have less than $1,000 in the bank and we need to get into better savings habits. And we have our money diarist on the line, of course, as always. We do. Hello. Money diarist, welcome. How are you? Fine, good.

Thank you. And you were just telling us before we started recording that you've actually had a little bit of a shift in your money diary story which we would love the update on yeah so we thankfully now have more than a thousand dollars in the bank yay congratulations thank you i'm very happy about it now but it's um not because we saved or learnt any new habits it's because i got a good tax return back and i also got a yearly bonus from work so we now have just under thirteen thousand dollars in the bank how nice does that feel good yes yes I was very very stressed before but um I think all the underlying issues are still there and I'm very stressed about losing that money now

as well while there is a bit of ease when I'm swiping my card out I'm still having that little bit of stress wanting to like hang on to every cent that we have yeah well because it's that easy come easy go thing isn't it like you think oh my gosh all of a sudden this feels so much simpler I really don't want it to be taken away from me yeah yeah I'm worried about getting too comfortable which is completely understandable so without further ado let's jump straight into the money diary questions because I feel like I've got some chats I'd like to have about the emergency fund and how you're feeling about that and maybe what you structure yourself as now but first cab off the rank is what is your attitude towards money i actually have stressed

about this question oh no i'm sorry oh it's fine i just feel like it changes every day depending what mood i wake up in it's different so that's probably why i'm also quite frazzled with our money as well when i was growing up my mom she's i describe her as mrs claus as a person she is cute she's the best she's like five foot and blonde like the higher the hair the closer to god type woman so sweet she really spoiled us growing up like she just loves to give people gifts and really i don't know make them feel loved um and she has done that through money and material possessions so that's her attitude towards money whereas my dad he's worked really hard his whole life. He was the GM for really big mining companies, um, growing up. So he earned a

lot of money, but he was working so much that he had no idea how much milk cost at the grocery store. Like I never saw my dad growing up because he would come home and fall asleep on the couch and be exhausted. So he's really frugal and would always get cranky at my mom for spending so much money. So I was hiding credit card bills and things like that. So I'm almost like on two ends of the spectrum like my dad really influenced me about being stressed about money and wanting to be frugal but then my treat myself mentality from my mom is so strong so so they definitely had different money stories I'm assuming and that has shaped you into a combination of both you could say yeah definitely do you find that those two things are really conflicting in your life like

you're just like, this is the right way. No, this is the right way. Have you found what works for you personally yet? I don't think we've found what works yet. I say we, because my husband and I share every cent of our money. There's nothing that's separate. So we're trying to juggle that as well, but I definitely haven't found what works and what I feel good about. I'm an all or nothing person so when I'm treating myself I'm whatever makes me happy let's spend it the next day I'll wake up and be like I can't spend five dollars on a coffee that's insane I have to not leave the house getting petrol sometimes I feel is an unnecessary purchase so yeah okay so there's not really that level of balance there yet to have all right well this money's actually set

aside for stuff like coffees to look after myself and have balance in my life. And this is really common, by the way, this is not something money diarist that you're alone on. And I think a lot of people listening are going to be like, oh my gosh, that is me. And it's often because when we approach budgeting, we make the assumption that budgeting is about restriction and budgeting is about, you know, spending as little as possible and being really frugal and really smart with our money, where in reality, budgeting is actually about understanding where your money flows in line with your values, like how many dollars are coming in. And then if we divvied them up based on what we're spending, not on what we hoped we are spending, are we comfortable with that? And

then if we're not, there are some tweaks that we can make. But if you're like, no, I'm money diarist, like I can have a coffee. I deserve a coffee. You know what? My limit's three a week or something along those lines, if you build that into your budget, there's no guilt because you know you're still achieving those bigger financial goals. Whereas I often find that when people say things like you've just said, it's because they don't have a strategic and super clarified goal outlined of what they're trying to achieve. So, that then when they do spend that $5 on coffee, they're like, oh my gosh, like this is just reminding me that I haven't got that bigger goal solidified and I don't know what that really looks like. So, this $5 probably could go towards

that. But in reality, you're probably fine. We just need to put a plan in place. And I'll do that for you later. I promise, Money Diarist. So, moving on to the next question. Money Diarist, what do you do for work and how much money do you earn? I'm a content manager for an insurance company and I'm on $89,000. Oh, very nice. And to be a little bit pervy, you said you share all your money with your partner. What does he do? How much money does he earn? Interesting question. During COVID, he started his own business. So he's a painter. So unsure exactly how much he earns, but he tries to pay himself about between $1,000 and $1,500 a week. Oh, cool. His business has done so well. I'm so proud. He's so busy and booked up. So, it's good. It's just we don't

actually know how much he's earning. So, that's probably also why we're a bit confused about goals and budgeting as well. Yeah, totally. And that's really common in the first year of a brand new business because money would be really sporadic. Like one month, he might have a killer month and then the next month, he might be a little bit sparser than he was. So, you kind of live it up big in the first month and go, oh my gosh, like we're doing so well. And then the next month you're like, oh my gosh, we're not doing well at all. What if this is the norm? So, I feel like the first 12 months in business, you've really just got to embrace the bare minimum. Like what is your rent? What are your bills? Full stop, end of story. We're not trying to smash it

out of the park. We're just trying to make sure our business exists in another 12 months. And if you're also in that situation, anybody listening, you and Georgia recorded a great episode called budgeting for variable income. So for anybody that's listening and maybe is a sole trader or working for themselves and your income is a bit hard to predict, that's a really good episode for anybody that is going through that as well. Just a little shameless plug. Shameless plug, like on our own podcast, just like selling tickets on ourselves. I like it. Selling tickets to the free content we produce. You're welcome. next question money diarist is what is currently your big money goal again i don't know we built

our house three years ago so we've done that paying our mortgage very comfortably it's not something i stress over there's nothing that we want to be honest um which is a nice position to be in but i i mean i don't feel like we have a safety net either yeah okay my husband does want to get into investing in property in the future and that's his big goal because being a trade that's really focused on manual labor he can't do that forever so he'd really like to build a property portfolio so I know that needs a lot of money but we just haven't because it seems so far off in the future we haven't started putting anything aside for that at all so we've got big lofty ideas and goals but we just haven't put any of that into action yet yeah and that can

be really hard to plan for because what does that actually mean and you say property but are you talking apartments are you guys going to go and subdivide a block are you guys going to go buy a house and flip it or are you going to move into another house and rent out this one like there are so many variables when it comes to property investing that it can feel so far off at the same time as going I just want a strategy I just want to know what we're doing and how it works but that's a very exciting strategy and I want to know all about your home building process but not yet Tony, I promise we'll get to it in a minute. Money diarist, do you currently have any investments? No, none. So, apart from super, we have nothing.

Awesome. I mean, we're learning and you said before that your property portfolio of the future is one of your big goals. Next question is, do you currently have any debt? If you did this interview two weeks ago, I could have happily said only our mortgage, but um two weeks ago we decided to buy a new car so we have a loan now of 56 000 for that car oh fancy what made you pick that particular car we got a tesla so i really like the environmental side of that not having to get petrol i mean there are a lot of savings as well we have solar on our house so charging the car we're currently in credit all the time for our electricity bill anyway oh so we charge the car at home and it's we haven't got our first electricity bill since

having it but theoretically we will be paying maybe 30 a quarter now wow that's a really so when you said that i was like oh that wouldn't work for me and then i'm like you had a whole plan that's like an incredible plan that you guys sat down and went hang on we're always in credit with our power anyway so this could be a huge money win like you said earlier having to get petrol feels like such a burden because you're like we're paying for something and obviously the environmental factors as well but I love this little like when you started saying that I was like okay and now I'm like oh my gosh I was so worried about it because I've actually never had a car loan before um I was very lucky my parents brought my first car and then my second car they

took the money out of their mortgage and I was paying them back every fortnight but once we decided to buy a house they said don't you've paid us half don't worry about the rest just focus on your savings how nice yeah it was we're very lucky because we get a lot of support from them and it's really helped us I guess get a leg up in other areas of our life so I was hesitant to get this car because yeah never had a car loan before I just finished paying off my hex debt I was really liking not having debt at all any kind of debt yeah and it's nice to say you're debt free but from my understanding you've obviously thought about this it wasn't like oh so we're walking down the street with the coffee and we saw this car just couldn't resist now I have a really big car

loan. You were like, ah, actually we've done the research. We have worked out that we're actually going to save a whole heap of money on petrol. Like, I don't think it's the worst idea. I've got some questions about that. I will leave it till we get to the second part of the show though. So next question is, do you currently use shop vacs? Sporadically. I guess it goes along with my attitude towards money. When I want to treat myself, I'll use it. Otherwise I'll ignore it for months. So how do you use it? Is it something that you're like, all right, well, it's just on my browser. And if I am shopping online, I add it on. It's not something that

you're, you know, we had a money diarist recently who was like, oh no, I will buy absolute. She probably would have tried to buy the Tesla on Shopback if we'd given her the opportunity, I think. Yeah. It's just connected to my browser. If I'm shopping and it pops up, I'll use it. I've actually never withdrawn anything from it. So, it's just sitting there. Just bopping along. Yeah. Yeah. So, there's no rhyme or reason. I'm probably not using it to its full advantage, to be honest, because yeah, very sporadic in what I do. Fair enough. Money Dyrus, the next question is what is your best money habit? I think about purchases that I make a lot, the big purchases. So like the car loan, I really had to think it over. We've been talking about it for three plus

months maybe even longer than that uh and I don't buy really expensive items like with clothes I'm not out there buying designer things even though a lot of my friends have the nice Louis Vuitton handbags and stuff happy to go to Colette or something like that get a $50 handbag yeah totally yeah I'm spending I guess within the brands that are within our means yeah fair and in comparison to that, what is your worst money habit? We don't keep track of what we're spending and we only have two, well, we have one bank account really. So, there's everything just gets pulled. It's really hard to keep track of what you're saving, what you're spending. Yeah. What's going in and out. Don't really have an idea. Yeah. Yeah. And that's again,

so, so common money diarist. I will sort that out for you. We're going to get you set up later on our budgeting cashflow masterclass, because I think that that is going to revolutionize the way that you do your budgeting. Obviously I reckon it's pretty impressive. I built it. So like, obviously I've got a few tickets on myself, but I've had literally thousands of people do it and go, oh my gosh, like I only had one bank account and felt guilty about coffee. And I'm like, oh, money diarist is going to love this. And final question before we go to a quick break, If we asked you to give yourself a money grade, what would you give yourself? I think a C plus just because we've been able to do some really big things,

but we're quite lucky in the way that we've come about those big things. There hasn't been rhyme or reason or determination on our part to get those things done. Yeah, cool. All right. Well, let's have a chat about that after this quick break. All right, Money Diarist, we are straight back into it. And I've got questions probably not in the realm that you think I do. And the reason is because I have had so many questions about this recently and that's on car loans. And you've said that you've recently taken one out. Can you tell us that process, how it worked, but also how much are you paying each and every single month? Because that sounds like a really big car loan to me. Yes. I found the process just as stressful

as getting our mortgage, to be honest. Oh my gosh. Felt like the same amount of paperwork and the same amount of phone calls. It was intense. And I'm the only one on the loan because my partner is a sole trader with just 12 months under his belt. So it was just on me. A lot of paperwork asking about our expenses. Our expenses came under the average. So I had a lot of follow-up phone calls as to why you were like i'm frugal it's not that weird i just said oh we've got solar we don't pay electricity bills um there were just a few things that were confronting i guess because i asked what the average expense was and she was like oh we can't tell you what the average that we get oh no they won't disclose that no they won't let you know what the average is because

they want to know what yours is not what the average is so i i actually thought we might have gone over because when I was writing all of our expenses down, it seemed like a lot, but yeah, clearly not. So that was good. And then Tesla has a partnership with Macquarie and Peppers where the interest rate is at 2.99% for their loans. Oh, that's much lower than normal. I'm pretty sure a fixed rate average car loan starts at about 6.49%. So that's significantly below that. Yeah, we did a lot of research with our bank and called our bank manager and discussed our options with them and then our mortgage as well. And we decided that option was better because of that interest rate. So, our fortnightly repayments are $350. Oh, that's not as bad as I thought. I

mean, I'm not here saying everybody, it's not as bad, go get one. It's just, I assumed for a car at that price that you'd have a higher fortnightly repayment. Does that loan have any kind of balloon on it? Yes. I forgot to mention that it has $17,000, I think is the balloon. And we did a bit of research about resale on Teslas and what they're going for now and looked up a few old ones. So we're pretty confident if in five years when the loan ends that we would like to sell, that we will get that much or more back for the car so long as we take care of it. Of course. And if you're listening along and you're like, wait, what? I thought we're talking about car loans, not balloon animals. A balloon is a payment that is held out till the end of

the loan period so that you have lower fortnightly repayments, fortnightly, monthly, however you're paying it. So instead of say, you know, our money diarist paying five or $600 a fortnight on her car loan, she would be paying the 350. But when that car loan term comes to the end, you've got to pay out a full $17,000. And it's really important to take that into consideration because the amount of people I have spoken to who are like, oh yeah, there was a balloon, like that's okay. And I'm like, do you know that's a lump sum payment at the end of your loan term? And they're like, what? No, I just thought that a balloon was just like some technical term. And I'm like, no, it is a payment that you're going to have to come up with. And money diarist, as you said,

like you're either going to have to sell the car, you might have to refinance, but in an ideal world, you'd have those savings to extinguish that loan completely. But if you've got a car loan, you probably don't have a $17,500 savings account that you want to drain to pay off the car in five years, right? Yeah, no way. So, it's important when it comes to stuff like car loans that we do have a strategy in place. Now, money diarist, to completely pivot, you said that you share finances with your partner, which a lot of people do. And you said as well that you are married. which is very exciting. But how did you get to that point with your partner? And at what point in your relationship were you like, you know what, let's share every single cent?

It was when we decided to build a house together. So, we had a joint bills account before because we had lived together for three years prior to deciding to build a house. But yeah, it was only at the point of getting a mortgage that we thought, hey, let's join everything together. It was actually because we spoke it to my parents about how they've managed their mortgage before and learnt about offset accounts and how they manage their spending. And that made sense for me because I'm actually the one that manages our money and bills. So, that concept was the easiest for me to understand. So, I thought, hey, let's just do the offset model and we'll join it all together. Yeah. Awesome. And how have you found that? Like setting it up for some people can be

really daunting being like, oh my gosh, they're going to be able to see every single thing that I spend. Have there been any friction points or questions or queries about how each of you are spending money? Not from my side, but it's probably because my partner doesn't, he doesn't look at our accounts really like it's not an issue because like when he can see it he doesn't yeah he just spends until it declines and then I get a phone call even though he has full access and he's like hey can you transfer some money so oh my gosh what a naughty boy I feel like that's such a man thing to do as well like oh it'll work out I'll just call my wife and she'll fix it up yeah yeah he's uh he's naughty but he just doesn't I guess he puts it on me because he knows that I

get worried about how much we're spending and I'm really keeping track of bigger expenses so to explain it how we manage our money I guess is we have the offset account then we have a credit card that we pay off in full every month straight from the offset account because all of our money pulls into the offset he just knows that I pay off the credit card bill on the due date every month so he knows that money is there for him to spend and I will let him know if we're spending it looks like it's going to go down faster than the next bill payment comes around. Yeah. Okay. And has that system been working for you guys? I know before you said that you feel a little bit anxious about money, but that seems like a pretty clear system. Like why do you think

that you're still feeling anxious around money and you're not tracking what you're spending? If from my perspective in what you've just explained, you're pretty on top of it. It's because I can't see how much we're saving because when he does need money, Sometimes with friends, he'll go out and need some cash. He'll transfer it to an empty account to take it out of an ATM or we will run down the credit card faster than the next bill payment's due. So, we'll just put $1,000 on it and keep doing that out of this big sum of money. So, I think that it doesn't give us any controls or it doesn't hold us accountable. You just see that big sum of money and you're like cool I'm fine I know what bills are coming up I've got the money

for the bills so the rest of it is fair game yeah and that seems to be the problem that a lot of people run into because they're like Victoria I don't need a budgeting cash flow plan because I have one like I have cash in my account why would I make all these other accounts that you keep recommending because it just doesn't make sense like I've got the money and it's like yeah but you just told me that you don't feel comfortable with it. You just told me that you're not feeling empowered by that and that you don't know what you're saving. So something's got to give. And clearly, regardless of how efficient that system sounds, because it is. And, you know, we've spoken on the show before about credit cards, and I obviously don't love credit cards. And it's not

because what you're doing, Money Diarist, is a bad thing. If you're actually paying off your credit card each and every single month, great. There are so many people that they do do that and they're building up, you know, nice amount of points and they're able to, you know, go on extra flights each year or like get some additional flybys like our friend Jess, who is going to get a KitchenAid mixer very soon because she's just so good at scanning her flybys. But it's a really slippery slope for a lot of people. And I know personally, if I had a credit card, it would not be a very good idea. It doesn't mean that we don't have one, like my partner and I have one for really big expenses, but I choose not to keep a copy of it in my wallet because I know that I'll just be a

bit cheeky and be like, oh, but I really like that skirt. I'll just pop it on there and we can work it out later and it'll be fine. And in reality, that's not how I want to manage my money. I want to be really in control of it. And if I want to purchase a skirt, I want to have a quick look at my spending account and I can go, oh, I can afford that. And then there's no repercussions of the decisions that I'm making because it was my spending money. Like that's okay. It didn't impact Steve. It didn't impact our saving or investment goals. It didn't impact us being able to pay our mortgage. And it meant that I feel pretty good because I got a new skirt, but it was all in the budget. And that's very exciting. So I think that a lot of people really

do underestimate the power of what a budget is. And earlier I said, the important thing when it comes to having a budget is actually not that you restrict yourself. Like money diarist, I wouldn't want you to go, all right, Teresa, we need a budget. Let's write down what we're going to spend on groceries. We're going to spend $50 this week on groceries. When in reality, you usually spend like $150. It's not going to last. It's not going to be sustainable. You're going to be like, this is a terrible system because I really like buying those things at the supermarket and my lifestyle is not being maintained. So, it was never going to work out that way. So, I think it's really important to put ourselves back in the driver's seat and go, what does that actually

mean? Let's budget for the things that we actually want to spend on. So, what money diarist, what are you going to do about that? You've written in as a diarist, you've said, hey, I'm not feeling very in control of this process. Have you tried other budgeting methods? Have you thought about what the next steps will do? Or are you just like, do you know what? I don't even want to think about it. I just know what underlyingly stresses me. I have tried in the past to set up spending accounts for just weekly stuff that I know my partner and I spend on ourselves. So I did pitch that idea. Hey, let's give ourselves $150 for the week so I can grab coffee. And if I want an almond croissant, I can get an almond croissant and he can stop at like the servo and get whatever

gross energy drink that he wants in the morning and none of us feel like that we shouldn't be doing that but um he was at the time and I haven't spoken to him about it in about a year and a half but um at the time he was very much why would we take money out of the offset it needs to be there to be pulling for that interest and I disagree but I kind of left it because I thought let's leave it for now i've broached the conversation it's an argument i'm not willing to have right now yeah so i guess me writing in is probably because i want to do something similar again and i'll probably get him to listen to this as well sorry i think it's just with him he's very much out of sight out of mind since we've been together he's got in really good habits but when

we first got together he hadn't done his tax in like six years so it's just if it doesn't hurt him ignoring it then he'll probably ignore it like he's he's fine at the moment so he doesn't see a reason to change but um it's stressing me so that I'll probably need to bring it up again yeah and that's absolutely fair did you know money diarist you can have more than one offset I did not know that you can have as many offsets as you would like to have and did you also know that you can attach debit cards to offsets. No, I had no idea about that. Boom. Imagine if that structure could be set up completely. So, your partner gets everything he wants. You're right. The money's always against the offset, but if you're going to spend it,

you actually have a debit card with that amount of money on it. So, that's not to say that every single mortgage product is going to enable you to do that, but there are heaps of mortgage products that if they allow an offset, it's very, very likely that they're going to allow you to open multiple and have different debit cards associated with them so that you can use offset accounts as you would any other normal bank account. Because I think that when we first get our first mortgage, a lot of us just assume that the offset is this like holy grail account that sits in the sky and you know, you can't touch it. Like you've got to actually go online to move money from that to your normal accounts. When in reality, you can actually have debit cards associated with that

spend directly from that or create a number of them so that all of your goals and all of your separate saving goals are still offsetting the mortgage. Because that makes sense, right? Like, why would we take it out to save it when those savings are actually helping us create a better lifestyle outcome in the long term? It's so funny you say that because we have a meeting with our bank manager tomorrow and we might actually be getting rid of the offset because of the fixed interest rates so I might ask him about the numerous offset accounts because yeah it's something that my husband was like oh I don't know about this I know we'll save money of our interest if we just fix the whole loan but I really like the offset account so yeah and that's

just it like it's really important to work out what works for you and I'm not going to be too pervy and ask which bank and when and where and how, but it's one of those things where that would just be that bank's rules. You need to actually, my advice here would be have a conversation with a mortgage broker, not a mortgage broker who works for the bank, one that's completely independent and has access to a full suite of mortgage products. So they can sit down and say, money diarist, what are your goals? What do you want? And you'll go, okay, cool. I want a variable interest rate. Obviously interest rates right now are really low. So I want to make use of that. also I want a fair few offset accounts so that would be a non-negotiable and they will go and

find the right mortgage product for you because often when it comes to the big four banks they don't have as much flexibility as you would like them to have and that's why I don't have my mortgage with one of the big four banks because it just didn't work for me I tried I bank normally with one of the big four banks just because I'm lazy and that's the bank that I've always banked with. And I just haven't moved away from it. Don't have any fees on my account. So why fix something that's not broken? But I remember going through that entire process. And obviously I have deep relationships with mortgage brokers. So I fully comprehend all of this, but I remember going through that process and assuming that, do you know what? Just out of ease, it would be best

to have our mortgage with the bank that all our accounts are with. And that's not the case now, purely because it wasn't going to work for the things I wanted to get out of it. So money diarist, in addition to talking to your bank manager, have a chat with a good broker. That's, I never even thought of doing that. So definitely we will put that on the list. I will set you up, my friend. I will absolutely set you up. Awesome. Well, it feels like this has come at the perfect time for you, Money Diarist. And again, I know that we've said this a few times recently, but this feels like one that we would love to check in with again in a couple of years, because it feels like you're right on

the edge of change. And that's so much exciting stuff's going to come for you guys that I feel like we should check in with our money diarist again. Keep in touch. I think we're best friends now. I'm convinced. Of course, of course we are. But yeah, we should check in with you again because it sounds like only good things are going to happen and that you guys are like fully on the right track, especially I can't believe you've got that meeting tomorrow. How exciting. I know. What a coincidence. The world works in very funny ways. I know it all came at the right time. Oh, I'm really excited for you. And I'm going to hook you up with one of my broker friends so that you can have a chat with them and make the right decision and get your structure

done. But as always, that is all we have time for today. So just before we head off, we'd like to acknowledge and pay respect to Australia's Aboriginal and Torres Strait Islander peoples, the traditional custodians of the lands, the waterways and the skies all across Australia. we thank you for sharing and for caring for the land on which we are able to learn we pay respect to elders past and present and we share our friendship and our kindness the advice shared on she's on the money is generally 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 any financial decision and we promise as always that victoria divine is an

Authorised Representative of Australia Pacific Funds Management, Proprietary Limited, ABN 34132463257, AFSL 339151. See you next week, guys. Bye.