She's On The Money - MONEY DIARIES: Transcending Tax Bill Trauma

Episode Date: May 12, 2024

Today's Money Diarist is well on the way to turning around her situation after drowning in debt due to an unexpected tax bill! She and her husband traveled and treated themselves before the birth of their little boy, and then were overwhelmed by the task of sorting out their finances. Their son's special needs means this community member juggles family life and working part time as teachers aide. But with a lot of hard work she and her husband have paid off $80,000 of debt in 3 years and are very close to being debt free! Friends! If you loved this episode, then we know you are going to love Victoria's new book, Money Diaries with She's on the Money! This book has been written so you can feel empowered and see that YOU have the power to rewrite your own money story! It's coming in May but you can pre-order your copy now, click here!  Acknowledgement of Country By Natarsha Bamblett aka Queen Acknowledgements. The advice shared on She's On The Money is general in nature and does not consider your individual circumstances. She's On The Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. If you do choose to buy a financial product, read the PDS, TMD and obtain appropriate financial advice tailored towards your needs.  Victoria Devine and She's On The Money are authorised representatives of Money Sherpa PTY LTD ABN - 321649 27708,  AFSL - 451289.See omnystudio.com/listener for privacy information.

Hello, my name is Natasha Nabanunga-Bamblett. I'm a proud Yorta Yorta, Kernai, Wolperi and Awadjeri woman. And before we get started on She's on the Money podcast, I would like to acknowledge the traditional custodians of the land of which this podcast is recorded on Awadjeri country, acknowledging the elders, the ancestors and the next generation coming through. As this podcast is about connecting, empowering, knowledge sharing and the storytelling of you to make a difference for today and lasting impact for tomorrow. Let's get into it. She's on the money.

She's on the money. Hello and welcome to She's on the Money, the podcast for millennials who want financial freedom. Welcome back to another one of our Money Diaries, my favorite episode of the week, where we get to talk with one of our incredible She's on the Money community members all about their journey. Let's jump straight into it because this week I got an email and it sounded like this. Hi, She's on the Money team. Three years ago, my husband and I found ourselves drowning in debt. After travelling and treating ourselves a little too much, with no regrets, we were overwhelmed by the task of sorting out our finances.

We have a little boy with special needs who is the centre of our world and in between juggling family life, working part-time as a teacher's aide and terrible surprise tax bills, we've paid off $80,000 worth of debt in only three years. We are very close to being debt-free and we cannot wait for the next step in our money journey. Money Diarist, you just sound like a queen all round. Not only 80 grand, you're still working, you have a little special boy, like what's going on?

How good is that? Yes, we've been very busy, thank you. Welcome to the show. I'm very excited to be able to share your story. Do you want to just dive right in? Let's start with the question that I ask every single Money Diarist. Money Diarist, before we dive into your story, what grade would you give your money habits if I asked you to grade them from A through to an F?

I think at the moment I would give myself a B minus. A B minus. All right. Well, now my favorite question. Let's dive into the juicy stuff. Can you tell us a little bit more about your money story? Absolutely. So I guess our money story would start when we got married. We got married quite young and my husband and I have very different money backgrounds. So for me, I remember growing up, I was always very aware of money. My parents worked really hard and they never burdened my brother and I with any challenges they had or anything like that.

But I just remember my friends not having a care in the world and, you know, I wanted to save. I wanted to buy my own things at a young age. And when I got my first part-time job, I would always put money aside, even though it was only like $20 a week. And I'd create these little tracking sheets where I could keep track of how much I could save. so that's definitely continued on into my adult life however my husband his family moved countries

twice when he was 10 and then 18 wow so yeah he's got a very different background he's just grateful for anything he has which is such a beautiful attitude and for him if his bills are paid he wants to use the rest of his money to be generous to his friends and family and to enjoy which I really appreciate but it's definitely different to my approach like I'm definitely a saver so yeah that's how we've kind of had to meet in the middle and I feel like now we're in a great place where we are able to do that and we share the same money values. That's really sweet though he sounds like a honey this is so sidetracked but everyone wonders I want to know how'd you meet your husband? We just met through friends actually and it was one of those things where

we just connected straight away got to know each other and just have never spent a moment apart since really like we just really connected and very in love still which I'm grateful for because we never could have foreseen the challenges that would come our way and yeah probably if we did it would have been a lot more stressful. Absolutely when you say challenges what are we looking at are we talking debt are we talking family tell me a little bit more about that side of your story. Yeah so once we got married we like wanted to travel and we did not have much money, but we would just save up, book a flight, save up, go kind of thing. And we loved that. And we had really not a care in the world. Like we didn't care if we came home and we had nothing,

we were just enjoying those experiences together. And like I said, in the intro, like no regrets whatsoever. And a couple of years after we got married, we fell pregnant with our son, which was a big surprise. And we'd been to America and Singapore and Fiji and an opportunity came up to go to Europe with one of my husband's best friends. And it was kind of a once in a lifetime opportunity because he'd had two friends pull out. So we were just filling those spots and a lot of things were already paid for. He just wanted some company. So I was heavily pregnant, but we were like, we're not passing that up. So obviously amazing experience and so, so grateful, but we got home, we had nothing. And I'm like, oh my goodness, we've got to buy all this stuff for a

baby now, but you know, that all works out. And then when our son was quite young, I think he was probably about 18 months. My husband was a subcontractor at the time, and we received some information from our accountant that basically said we had a big tax bill coming of $28,000. I wouldn't say we were struggling, but we were finding it hard to make ends meet. We were definitely saving a little bit, but mostly living week to week because I wasn't working. I was home with our son and that was really important for us to have that time with him so that was quite daunting that was probably the biggest challenge we've ever faced and we just kind of looked at each other and we're like you know our life's going to be very different while we pay

this off and we had some beautiful friends who knew what we were going through and offered to pay it off for us but we just felt we needed to do this on our own and we ended up coming to the decision to move in with my parents and my parents you know did not hesitate for a second they were more than happy to have us there while we worked to pay that debt down. So tell me a little bit more about how a surprise $28,000 tax debt happens like that to me is terrifying like I hate the idea that one day you wake up and wow $28,000 is owed like what happened was your husband you know not paying tax or not paying enough or like got bad advice? Like what happened? So basically what happened was we were always paying tax. I always put aside 20% from each of his incomes. That was

something we always stressed about a lot was this situation that ended up happening. At the end of the day, it was just an error. When you work for yourself, I guess your accountant will send you all of your tax return, your income statements, all of those things. And you have to look over as well as them. And to us, we're like, yeah, everything's fine. And there was an error in it, unfortunately. So we thought we'd paid quite a lot of tax and GST, but it clearly wasn't enough. And so it wasn't until things were checked at a later date that it was discovered that this mistake had been made. And luckily, like it wasn't a really, really bad situation. You get a payment plan from the ATO. There's no interest or anything like that. I was about to ask.

yeah I was about to be like surely they let you have a payment plan please tell me they do yeah I know that was my first question I'm like what are we gonna do and he's like oh there's a payment plan it's 800 a month was like the minimum don't quote me on that but it was a lot so we'd just taken out a car loan of 40 grand no yeah I was a bit hesitant to do that but we were like oh it's you know a business expense because the car would be used for work so yeah we're like oh my goodness. So that plus this is like $70,000 of debt pretty much overnight. So yeah, it was daunting. Oh my gosh. And then what happened? So you sorted out this payment plan with the ATO, started smashing that down at a minimum of 800 bucks a month. How long did that take you? Or

is this something that you're still working through? Like where does that additional $10,000 worth of debt come from when we're talking about that 80 grand that you said that you're in, in your letter into the show? Right. So we found out about the tax debt at the end of 2020 and thankfully our rental lease was up in March. So we just paid the minimum for those couple of months and then we moved in with my parents and we had it all paid off by, I think, September that year. It was between six and nine months we paid off. So we would do the minimum repayments, but we would just do as much as we could on top of that. Yeah, of course. To just smash it out. And it's such a daunting amount. Like I feel like, you know, anything from the ATO is daunting, but that was

quite confronting. It's really scary when something like that happens because you also just don't have anything to show for it. You go, oh, but this isn't because of my quote spending habits or this isn't a car loan or this isn't something that, you know, it was an asset that I could sell and get the tax down. Like, I can't do that. I actually have to pay every single dollar of this and I don't have any choice. I'm glad they set you up on a payment plan. But even that, it feels like a more serious payment plan than paying a bank back, hey? Absolutely. There's no flexibility. Like, you really need to pay that off every month. And like you said, there's no satisfaction at the end of it. It's just, oh, now we're at zero. Great. So yeah. The worst. And you know what?

It happens to a lot of people. And that's why I'm so passionate about like, she's on the money stuff and we obviously do the business Bible because it is actually on you. And I know that you said, oh, there was an error in it. And like, that could have come from anywhere, but it's just, you need to be in a position where you can read it too and go, actually, that's not quite right. Even if you didn't know how to submit all of your forms or you didn't know how to do a full tax return yourself. Like I want to put people in the position where they can look at a tax return form and go, oh, actually that doesn't add up so that they don't end up in your situation because it's trash. Like that's not fun. You probably had a million and one other things

that 28 grand could have gone towards and unfortunately it didn't. Exactly. And that's why I'm so grateful for the podcast because like before that we were definitely like the kind of people who thought, okay, well let's just ignore that and hope it goes away. But the podcast has empowered me to, you know, just look at what's happening with our finances. And there's no secrets. There's no room for hiding. It is what it is. And the black and white is right in front of you. So now I have no issue looking through any of those documents and I just want to be informed about where we're at. Yeah, I love that so much. It makes me genuinely so happy because I just look at it and go, all right, well, I've seen people in these situations where

the tax thing has scared them off so much that they don't do subcontracting work anymore. or, you know, they change roles or they don't, you know, pursue having their own small business anymore because they're like, I'm not smart enough or I'm not good enough or I was too silly with it and I couldn't be responsible when that's not the case at all. It's just about education. And I'm sure, you know, now money diarist, you just read through it and you have a look and you go, oh, that doesn't make sense. I'll do a bit more research as to what that means. But it actually is quite logical. You just have to be taught the language. And that's what we're trying to do with She's On The Money is like, give you the tools so you can read something and go,

oh, that makes sense. One plus one equals two. No worries. I can see. So tell me, you said that you were very close to being debt free. What does that mean? How long have we got to go? And what does the journey after that look like? So we have almost paid off our car. We also had another tax bill after that $28,000 one, which was $12,000. We paid that off quite quickly as well. And then my husband had no work for six months. So that was really hard. We used up our savings to get through that time. So I feel like it has been like one thing after another, but we're finally in a place where we've moved out of my mum and dad's now. And we are very, very, very close. I think within the next few weeks, we'll have our car paid off. So we'll owe that.

That's so exciting. Yeah. Thank you. It feels like that though. Hey, when it rains, it pours. Like when one thing happens, I feel like it's a domino effect and you're like, wow, this must just be an entire season of my life because it's one thing after another. And when it's money stuff, you're just like, can you give it a rest? Like I'm done with this. Like I'd like to just feel a little bit comfy for a little bit of time. Oh, definitely. I can definitely relate. I want to know now, you mentioned that you're still working. Tell me, what do you do for work? How much money do you earn? So I am a teacher aid

And currently I am just working casually. I went back to work in the middle of 2022. I was offered a contract three days a week, and that was a lifesaver because that was the time when my husband wasn't working much. And the last financial year, I think I earned just 18,000, but this year I've decided to take a break because it's the last year before our beautiful son goes off to prep. So I just really want to have that time with him and have the flexibility to say yes or no to the work, depending on what my family's needs are at the time. So yeah, very grateful for that. What will that look like? You mentioned that your son has special needs. What are they and what kind of financial impact does that have? Yeah, so our son has autism level three and ADHD

PhD and that has been a huge challenge for us it's not what we planned for at all I don't think anyone does but he was diagnosed at a young age so we were able to access NDIS funding really early on we did pay out of pocket for therapies for a couple of months which was obviously hard but we knew he needed it and it was very beneficial and now like obviously all of his therapies and things like that are covered, which we're so grateful for. But I feel like the financial implications are more just the fact that I can't work full time. I can't even really commit to part time work at the moment because his needs are high and I need to be available for him if he's not able to go to kindy that day or something like that, because some days he just needs to

be at home in his safe space. Yeah. And that's what I was going to stretch into. I was hoping that you would mention the impact on you not being able to work. And like, obviously, that's a choice for a lot of families but you seem motivated to want to work and get back into the community and do all this stuff but obviously you're unable to what will that look like when he's at school or is that something that you just don't know yet? Yeah I think we definitely don't know luckily he attends a program one day a week at the school where he'll be attending and that's why we've moved is to be closer to that so I'm very confident that he will settle in beautifully because he's kind of familiar with the environment. Oh, that's so good. Yeah, it's amazing. So I'm

really, really hoping that once he's settled into school next year, I can continue with my teacher aid work. And we're just going to have to see how it goes, obviously. But we're in an area where there's a lot of local schools. So I think even if I just do casual for a while, that'll be fine, too. Yeah, how good. I love that you found something that fits in. And teachers' aides are so undervalued and I would argue very underpaid given how much work you end up doing but I think that that's such a special role for someone in your position where there's that level of flexibility but also you probably have a level of empathy that not a lot of people do because you're going through a situation like you know how to deal with autism and ADHD and probably respond

a lot better to those kids than someone who doesn't just have that first-hand experience so they're lucky to have you too. Oh, thank you. I love my job. It's amazing. And yeah. It's so sweet. All right. I want to know what are your big money goals? What are you and your husband currently working towards? Well, obviously the first one is being completely debt free for the first time in our whole relationship. I think we'll just soak that in for a little bit. That's big. Yeah. Are you planning to celebrate? Like what will we do when we get out of debt? Surely there's something has to be. Well, I'm going to set aside $500 and I think we're going to just spend the day together, go out for a lovely lunch and do a little bit of shopping. And I feel like

things like that last few years, you know, every dollar is counted and we've had to be so careful. So I just want a day where we just do whatever we want and then get back on track with our goals. Yeah, I love it. But you do have to celebrate these things. I think that they're so important to celebrate because it's kind of like a pivot point, not only in your relationship, but in your like financial journey and you want to remember that you want to be like remember the time we got out of debt completely like that was special like that was cool yeah definitely and what else are you currently working towards apart from the debt free goal so we would love to buy a property just to really help our son to have you know a home base that he can always come back to and where

he feels safe and supported and obviously we feel that home is where the heart is and we know wherever we move he'll be okay because he's got us but we would just love to have that for him where he can grow up and create memories and one day once we're in there we would love to have a pool for him because water is his favorite thing in the world and I think that would just be amazing to have access to that every day that would be so sweet I love that and I know that you're up in Queensland so having a pool in Queensland would be elite like I'm coming over one day I want to to ask about that because I feel so many of us in different stages of our lives, like you might be quite young and you're like, I never want to own property. Was that you? And then just life has

happened and pivoted and you're like, actually that level of stability and that goal has now become quite attractive given our lives are very different to what they were when I was, you know, 22 and didn't care so much about the property market. Like at what point did you realize that was like, oh, actually we didn't want this, but now we do. Absolutely. Yeah. So we were definitely not interested in buying a home. We were kind of like, why would we? Like we can keep traveling. And after having our son, that was definitely a turning point. And I think also the obstacles we've faced over the last few years, we've realized how much we can achieve. I never thought we could pay off, you know, almost $80,000 of debt in a couple of years, but that's also shown me,

okay, well, we can probably save that much. Yeah, 100%. I love your mindset at the moment because so many people get swallowed by debt and don't see it as an achievement. Don't get me wrong, being in debt, it feels awful. But if you can create a plan and you go, before you mentioned your tax debt, you had to pay $800 a month off. If you can create that type of plan, the second that's paid off, if you can consistently contribute that to now a savings account, like that all becomes yours instead of it becoming the tax man's, instead of it becoming a debt repayment, it's now your money to create financial freedom with. And I think it's so much easier and, you know, people aren't going to like to hear this, but once you've been in debt

and you've seen how much actually goes out and you go far out, $28,000 is so much money. and then you realize I could create that for myself. I feel like there's a really powerful turning point for us where we go, actually, I'm going to get out of debt and I'm going to turn all of this around. And some of the most incredible journeys I've seen have been from people who have been in debt to people who are now investors or now owning property or absolutely killing it financially because they know what it's like to be on the other end of the scale. And they just go, never again. And they just have this deeper level of motivation. Do you think that's going to be you guys? Absolutely. Yeah. It's created big motivation for us to work out what we want to do. And it's

been, like you said, very empowering to know that we can achieve our goals and to just put that into action, make it practical, make it happen. I love it. All right. Let's go to a really quick break. And on the flip side, I've got a lot of questions for you. So guys don't go anywhere. All right, Money Diarist, we are back and I want to talk about investments. Do you have any? If you don't, what's the plan for the future? So at the moment, I have between $4,000 and $5,000 in my super and I have $400 in shares. So I'm just trying to contribute a little bit each week to that, which is exciting. I love that you're on this journey, but you're also like, no, I'm prioritizing investing. Tell me why you picked shares and I guess how you got started. Did you

just put some cash on there. And then how did you pick which investments? I feel like that's the biggest question from our community at the moment. Yeah, I'm still definitely working it out how to choose wisely and all of those things. But I think just listening to the podcast, obviously Sharesies has mentioned a lot and having access to the free $10. I was like, I'm not going to turn away free money. It's free money. Hey, yeah. Yeah, exactly. So I did that and I just kind of thought, oh, let's just have a look. And you know, if it goes nowhere, it's okay. It's $10. So yeah, it was free $10. Obviously not super educated in this at all, but I get little dividends paid back into my account from certain ones that I've

invested in. So, you know, at the moment, it's not the right time in our life for me to be putting a lot into that, but I'm like, okay, I can see this actually works. I've learned from the podcast that, you know, if I just keep my money in there, just keep chipping away at it, popping what we can forward in each week, it will grow and I'll have something to show for it in the future. Yes, I love that. And I feel like sometimes people just go, oh, it's not worth it. I don't have heaps and heaps of money. But you can see that you've learnt the process, you've learnt the plan, you've seen the dividends, and it kind of proves to you that it's possible and that you can do it. You don't need to be, you know, a stockbroking genius to be able to jump in on

the action. You can just go, all right, this works. And at some point in your life, you can turn that up, but I'm sure that'll be after you buy property. But that's so exciting. I'm glad I asked about it because it's just very relatable to be at that stage. Yes, definitely. Next question I have is how much debt are you still in? What does that look like? And do you have any other debts floating around? So we have no other debts apart from the car loan and we've got $10,000 owing on that. And that is due to finish June next year. So when we pay it off, we'll be paying it off about a year early. Oh, exciting. Congrats. And how did you end up paying it off early? Are you just smashing down the debt or is that just part of the plan? Like how did you decide, all

right, we're going to get rid of this before the time is up? We have just been saving. We haven't done extra payments just because it was a little bit tricky with the way the loan is set up. So we've just made extra payments into our savings account that we will just do one final payment very soon and just finish that off. Ah, how exciting. All right. You have gone from being $80,000 in debt to now only $10,000, but with a plan to get rid of it. What do you think your best money habit is? We need to learn from you, my friend. So I would say my best money habit is I'm really good at budgeting and, you know, I know what's coming in and coming out at any given time of the week or whatever. So I have a, you know, general budget that we stick to, but I always

check each week, you know, do we have something extra? Do we have a wedding coming up that I need to put aside money for a gift for whatever? So I do have a lot of different accounts. Like we've got gift fund, rego fund, all different accounts like that. But for me, it's just so good to have it all separated and I can see what we've got for each necessary item. Yeah, that's so exciting. I love budgeting as well. I am biased, but I would say that's one of my best skills because it's automated. Do you automate your budget or is this something that you go in and manually change things and flip them around? Like what does that budgeting process look like? I don't automate it. I probably could. I like to just do it myself and know it's done

correctly though. Oh, that's definitely a thing. That's good. Yeah. So I just go through, you know, when the pay comes in, I'm like, okay, cool. Let's distribute those necessary funds to those accounts so yeah no makes absolute sense flipping the narrative though what's your worst money habit so I asked my husband this because I wasn't sure what to say and he answered very quickly that I definitely don't treat myself enough that's been a bit of an issue for us oh what a honey he's always saying like just go and get your nails done just do this but I think I definitely have a little bit of an obsessive personality and I'm like no I either do it every week or I don't do it at all like I'm either budgeting for this

or I'm not so yeah I'm like that I'm an all-in kind of girly like it's all or nothing for me like if I am getting my lashes done I'm getting them every two weeks and we are committed to the cause I don't want them one off because I feel like I'll get used to them like if I've budgeted just once I'll be like well now I don't want to get rid of them like if I can't afford it ongoing like I can't afford it because I can't afford it mentally to be taken off me. Yes, I'm the same. Like it's easier to not do it than to miss out one time. Yeah, no, I agree. It's so silly though. Hey, because you're like, oh, but like getting your nails done once should be a little treaty treat. Exactly. So yeah, that's definitely my worst money

habit. I think I still stress, I still have that scarcity mindset of, oh my goodness, like there's a bit of trauma there, I think from what we've gone through. So yeah, I think I still think, oh no we're going to get another tax bill but it's all done my husband has a wages job now so it's not going to happen. Oh okay so that really takes the pressure off especially that side of things and also the stability is probably very attractive hey? Oh yes definitely. Subcontracting can be quite tough because albeit really good rates it's not consistent. Yes exactly like he was earning such good money but I would prefer a consistent pay each week any day than yeah you know sporadic payments literally all right money dice at the very start of the show you said you

thought you were a b-minus and I'm hearing a lot about how good you are with money and you're smashing down debt and like basically being a queen juggling family life and work and your husband's work and everything else in between do you still think you're a b-minus if so why If not, what do you think you are now? Look, I probably could be a little bit more generous with myself. I think I'm definitely in the B range. Like I'm still working on getting our budget to the best it can be. So, you know, I feel like we've got a bit more room for improvement and I think, you know, what we've achieved has been amazing. But I think once we get to that next stage and I can see that we're able to save for a home and pay a deposit, then I'll definitely

put myself up into that A range. I love it. Well, I can take you immediately to at least a B plus, maybe an A minus, because I'm going to gift you my money masterclass. You've said a couple of times that you want to just get a little bit more on top of your budgeting. And I don't mean to be biased, but I'm pretty good at it. And I made a whole money masterclass so that I can basically do it for you. And if you love a spreadsheet, this one is all automated for you. And then obviously has a whole heap of videos to get back on top of it. And at this point, I feel like they might be really constructive for you and your husband to sit down and do because it goes through a lot about like money stories and money mindset so that this next chapter of your money life can

be you know starting exactly on the same page and maybe having deeper discussions about you know where he's come from because you mentioned before he moved countries twice and you know you're meeting in the middle I reckon we could make that middle a little bit clearer so that you can both be super excited for the next chapter ahead so I'm going to give that to you because I just think it's going to help. Thank you so much. I'm so excited. Well, after the show, I'm going to slip into your emails and make sure all of that is set up. But I'm excited that you think that you're on the way and that we are both on the same page. But my dear, unfortunately, that is all we have time for today. It has been an absolute pleasure getting to know you. And as I said at the very

start, before we even started recording, you just look so familiar and you sound so familiar. So I am convinced we've crossed paths before, but I know the community is going to love your story as much as I have loved hearing it. So thank you so much for sharing it. It has been an absolute pleasure. Thank you so much for having me. I really appreciate it. The advice shared on She's on the Money is general in nature and does not consider your individual circumstances. She's on the Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. If you do choose to buy a financial product, read the PDS, TMD and obtain appropriate financial advice tailored towards

your needs. Victoria Devine and She's on the Money are authorised representatives of Money Sherpa PTY LTD ABN 321 649 27708 AFSL 451 289.