Yep, looks like most of us are in for a heck of a festive season credit card statement again! The Reserve Bank has quoted that we racked up a cool $18 Billion over last year’s festive season and this year is shaping up to top that. They also revealed, $50 billion in credit card debt is being paid off by 15 million Australians. Glad I’m not paying that hefty sum off on my own!
So what are we going to do about it? Let’s get real, we’re probably just going to keep spending, hey. Luckily, there‘s an Aussie company out there, called RateSetter who are the first and only company in our fine land, who provide peer-to-peer leading to everyday Aussies.
These guys actually want to help us by reducing interest rates for festive season spending and have provided some quirky and entertaining financial tips to downsize your debt. Imagine a January credit card statement of zero! Sounds too good to be true, but Ratesetter reckon their financial fitness plan will steer you in the right direction.
‘Weigh yourself’ to assess how financially (un)healthy you are
Take a minute to assess your financial health. Be realistic with yourself to determine the health of your finances. Will your wallet benefit from some fin-tervention? Often, the first step to financial recovery is acknowledging the state of your debts.
Trade in your personal trainer for a financial planner
Consulting an independent professional before undertaking a new financial regime is a worthwhile investment in your long-term financial health plan. Get someone to cast an expert eye over the big picture of your financial fitness – including your credit card debt – and you’ll find that you can put their in-depth knowledge and professional skill to work.
Take a finance detox and stay away from ‘junk food’
Whilst it’s called the ‘silly season for a reason, consider detoxing your wallet by cutting out non-essentials like take away food, bottled water and that daily coffee. It’s amazing how much small purchases we all consume, actually mounts up to over a year.
Get finance app friendly
Take advantage of the many free budgeting apps available on smartphones and tablets. These are perfect tools for those who want a little daily assistance to keep on track.
Making sure that ‘hidden calories’ aren’t blowing out your financial diet
Are your interest rates sabotaging you? If you’re struggling to get back in the black, it might be time to review what your credit cards are really doing to your financial diet. Try considering ‘healthier’ alternatives to credit cards, such as a peer-to-peer personal loan where you get to determine your own preferred rate. You can consolidate your credit card debt and pay lower interest rates with a peer-to-peer loans.
Sounds almost achievable hey? So if you want more information on peer-to-peer loans to reduce your festive season debt and to get some home grown, Aussie financial advice check out RateSetter.com.au.
Image via google images
Most of us have some sort of financial stress in our lives, whether it be credit card debt, mortgage repayments or wanting to save for the future but finding it unattainable. Tammy May has always wanted to change that by helping people take control of their finances. In 1999, the South Australian businesswoman founded MyBudget when she was just 22, and today, the company manages over $425 million of salaries and employs around 250 people. Tammy has won both EY Young Entrepreneur of the Year and South Australian Business Woman of the Year awards, and this year made the BRW Young Rich List.
SHESAID chatted with Tammy to get her best money saving tips, financial advice for women in their 20s, 30s, 40s and 50s, and how she fits being a mum into her busy day.
Congratulations on making the BRW Young Rich List! Tell us about your journey from starting MyBudget to becoming one of Australia’s most successful businesswomen today?
Thank you. Certainly when I started MyBudget I didn’t have any grand plans to become a successful business person. I actually started MyBudget to help people, to assist people to eliminate the financial stress in their lives and improve their financial position. That being said, deep down I always thought that by doing something so profoundly good for people that it would grow and become a success. I am very proud of the team I have working with me. They truly care about our clients and come to work every day to make a difference. MyBudget wouldn’t be where it is today without them.
Definitely the journey has had some tough times, for example it has been difficult educating the market about what we do and the difference we make in the community and in people’s lives. Despite the challenges we have faced I have always remained unwaveringly passionate about what we do and been dedicated to improving our clients financial positions.
I normally drop my kids off to school in the mornings on my way to work. I find this is a good time to have a chat to them about their day ahead and any after school activities they might have on.
After I arrive at work, I get myself organised for the day, starting with a daily 15 minute huddle with my senior management team. Generally I spend most of my day in meetings relating to marketing and communications, and sales (depending on the day I may also have finance and human resources meetings) or strategy sessions relating to the company in general. In between meetings (and sometimes during) I eat lunch at my desk (I try to eat healthily where I can). Occasionally I will go out for a lunch meeting.
After the working day is finished (normally 6pm) I go home to have dinner with my partner and kids, or go to watch their sport and try to get to the gym when I can.
Your business helps people get out of debt and take control of their finances. What’s the first thing someone should do if they’re in debt?
Budgeting is the most important tool for taking control of your finances, and getting out of debt. The first thing you should do is to create a budget – this will give you an idea about where, when and how much you’re spending. It will show where you can trim spending and free up some cash to pay back your debts faster. Make sure you include all of your income (if your income varies, use an average from your ‘year to date’ figure on your payslip) and everything that you spend money on. And most importantly, make sure your budget is flexible.
Life doesn’t always goes exactly according to plan, so you need to make sure you leave a buffer for unexpected expenses – this is the only way that it will be realistic and work for you.
Do you think women are taking more of an interest in their finances these days?
I personally think women are becoming more independent every day and part of that independence involves understanding and taking control of their finances. Our statistics also show that women are 80% more likely to be the one looking after the finances in a relationship. From paying the bills, managing the cash flow to organising finance. It tends to be the responsibility of the woman. So yes, I believe they are taking more of an interest – which is fantastic.
What is your best piece of financial advice for a women in her 20s/30s/40s/50s:
* 20s – Try to avoid using credit for bad debt (e.g. shoes, groceries, holidays etc). Use a debit card instead. Avoiding credit cards in your 20s will set you up with good spending habits for life.
* 30s – Begin paying extra repayments on your mortgage. Both consistent and ad-hoc additional repayments such as bonuses and tax returns work to reduce the principal on your mortgage faster. The earlier in the loan term you begin making additional repayments, the greater the benefit in terms of time and money saved will be.
* 40s – Take stock of your financial goals. Review them regularly. Your goals now will be different than they were in your 20s and 30s. Seek professional advice to ensure you are on the best path for financial freedom in your later years.
* 50s – Make adult children pay board. If your grown-up child is working and still living at home then rent should be paid either as a flat rate or percentage of their salary. Establish rules to lighten any friction that may come later.
Most of us are saving for something, whether it be a holiday, a car or a house. What are your top money saving tips to achieve your goals
Make sure you have regular savings in your budget. Putting your savings in a separate bank account, that you cannot easily access is a great way to avoid the temptation to draw on them. If you want to increase the amount that you can afford to put aside for savings, you need to look for ways to cut down your spending.
– Shop around for cheaper rent, phone, and insurance deals.
– Plan your meals, buy in bulk and compare prices at the supermarket. Growing your own veggies can also save you some money.
– Eat breakfast at home and take your lunch to work instead of buying. Use the coffee machine at work instead of buying take-away coffees.
– Make your own cleaning and beauty products – there are some great websites out there that provide recipes.
– Have a BBQ at home instead of going out, and ask your guests to bring a plate.
– Car pool or take public transport to work instead of driving – this will cut down your fuel and parking costs.
However you choose to go about it, budgeting is key.
What is your advice to someone wanting to start their own business today?
Make sure you are passionate about your business idea. It’s that passion that gets you through the tough times and allows you to keep going. It’s also important to surround yourself with positive like-minded people. Where possible try to seek out the absolute right people to assist you and experts who know more than you do. My last piece of advice is that you should have a business plan, even if it’s just written on a piece of paper.
Who inspires you both in the business world and beyond?
I am inspired by many different people. On a personal level, my Nana truly inspires me. She is strong, funny, loving and kind. Professionally, I am inspired by Dale Carnegie and his principals. So much so that myself and many of my executive team have undertaken the Dale Carnegie Training Course. He was truly an amazing man! Certainly also business people like Richard Branson, Steve Jobs, Oprah and many more.
‘Buy now, pay later’ is practically the mantra of the modern world, but you can give yourself a hangover that lasts a lifetime if you use debt to indulge.
A little like a dodgy eye-liner effort, you may need to apply more and more to mask your previous mistakes. But a debt mess is far more difficult to erase.
Here are the five questions that tell you if you’re getting in too deep.
1. Do you find it difficult to distinguish between needs and wants?
It’s possible you ‘need’ far fewer things than you think. Indeed caveman convention (well we now follow their diet) says survival requires just food, shelter, clothing and water. But even in those core categories, your expectations may belie your limitations. We’ll happily pay $15 for fancy water for goodness sakes!
2. Do you regularly make unplanned, impulse purchases on credit?
One of the best ways to keep your finances under control is to plan and cost your spend in any given pay period. If something is going to be unaffordable with one pay, you should spread the cost – stashing the cash – across however many it takes. If you don’t trust yourself to wait until you have the money, use lay-by so you have to. Yes, many shops still offer it.
3. Do you spend more than you earn each pay period?
This is a big warning sign as it means you go backwards each and every time… and the only way to do that is to use credit. You need to live within your means. In fact, you need to live well within your means – smart budgeting is about having a surplus of money each period that you can save for the future.
4. Are you struggling with – possibly growing – debt?
The larger your debt the larger your repayments, which means the less money you have left to live. And pretty soon you may be forced to reach for the credit card again to pay even for the essentials. Potentially a HUGE warning sign.
5. Do you owe more money than what your assets are worth?
A bigger picture consideration but also a critical one; this means your net worth is negative, and possibly going backwards each and every day – hardly good money management or prosperity planning.
Perhaps you could get away with answering ‘yes’ to one or two of the questions above, but any more than that and your future financial security – and that of your family – is in jeopardy. If you answered ‘yes’ to all of them, you need to contact your creditors to ask about more lenient repayment terms or easier ways to defeat your debt. This is the surest way to ensure your current predicament doesn’t dog you forever. Even if your answers were all ‘no’, it’s almost certain your money (rather than you) could be working harder.
Nicole is the founder of TheMoneyMentorWay.com and developer of the 12-Step Prosperity Plan, an achievable and even enjoyable blueprint to take Aussies from worry to wealthy. Nicole’s writing has earned her top personal finance awards in both the United Kingdom and Australia. Her career credits include founding and editing The Australian Financial Review’s Smart Investor magazine, and reporting and editing for the magazine arm of the UK’s Financial Times. Author, qualified financial adviser and Fairfax’s Money Matters columnist for the last decade, Nicole is a regular on television and radio. She talks money without the mumbo jumbo. Follow her on Twitter at @NicolePedMcK.
- Regularly transfer money into a locked savings account.
- Distribute your money to your needs first, and your wants second.
- Plan and budget in advance when you want to make purchases.
- Pay credit card debt off after each purchase you make.
- Address money drains as soon as they become apparent ? e.g. unreliable car, huge mobile phone bills, excessive clothes
You may need a financial overhaul if you:
- Regularly spend more than $50 on drinks in one night.
- Find that you?re always counting down to payday.
- Make more than one or two impulse purchases a week.
- Make expensive purchases when you know you can?t afford them.
- Plan and budget in advance when you want to make purchases.
- Spend over $10 a day on lunches.
- Find you buy a lot of stuff you don?t use
- Rely on your credit card as a source of cash flow
- Shop till you drop every payday.
from Get On With It the sassy new book for independent single women by Sue Ostler (Allen & Unwin). Learn to love your own life, develop your career, take control of your finances and enjoy everything you want!
Buy a copy of this book from the SheSaid BookShop.