Talking Debt

I can only assume if you’ve found your way to this page you’re looking for tips to better handle your debt.

Short of signing up to companies that manage your money and give you an “allowance” there are really only two ways to better manage your finances:

Applied knowledge and consistency.

It’s one thing to know all the how to’s in the world but without taking action it’s essentially useless. Your life will only change when you’re ready to change.

Money is a highly emotive topic, most people find talking about sex easier than talking about money. So here are my best tips to help you win the financial game.

1. Communicate. Learn to communicate with people that are in it with you, so partner, kids, parents. The more we talk about how we’re preparing for our financial future the better we can tackle obstacles that come up as a family.
   

2. Build an emergency fund. Having money in an account that is hard to access is imperative for your peace of mind. If you are made redundant, are in an accident or need emergency time off work you still need to be able to afford the basics.
   

3. Good vs Bad. Pay down your really bad debts first (credit cards, personal loans, etc). You can do this by using the snowball method or avalanche method.
   

4. Good debt. Unpopular opinion alert! I very rarely see anyone discuss this but it’s my personal belief is that there is no such thing as good debt. Especially if you’re not backed by a few million in the bank. A lot of investors will leverage their debt to invest in other options (houses, stock market, super) but what happens when we have the next GFC or the next covid and people can’t afford their rents or mortgage payments? My priority isn’t making huge money, my priority is peace of mind and to build slow wealth. If you have a paid off home and no other debt you’re more wealthy than a huge number of these “investors”. Most of them only tend to discuss their assets worth instead of their true net worth. So if someone “owns” 10 houses how much do they own outright and how much does the bank own?
   

5. Read the terms and rates. So many people get caught in the sneaky trap of taking out loans without understanding how much these companies will make out of you over time. Some of these pay day loan companies charge over 45% interest on loans. And that’s if you pay it on time and only use it once. If you end up strapped for cash and fall behind in bills, you can get hit with late fees and compounding interest! Make sure you really understand what you’ve signed up for and use online calculators to get an idea of how much interest you’ll be paying!
   

6. Comparisons. Stop comparing your life to others because one, it’s the thief of joy and two, most people aren’t transparent about their true personal and financial situation so you end up hearing and seeing only their highlights reel. You don’t know if they’re just living in debt to create the illusion of a perfect life.
   

7. Get honest with yourself. When you’re shopping stop and think about if you truly need an item. If you’ve decided that you really really want it then think about can you truly afford it? If you have to buy things through a buy now pay later scheme or on a credit card, and you can’t pay off the balance straight away then you probably can’t afford it. It only takes one thing to happen and you suddenly can’t pay these small loans off. That creates additional stress for essentially no reason.