Month: June 2018

I have a feeling I could be seen as the killjoy of the century by stating that one of things we need to unlearn about money is desire.

What do I mean by this? Well, it’s nothing to do with physical passion, but everything to do with want, rather than need.

It’s something that took me a long time to grasp the concept of – and to be honest, at times I still struggle with it.

A classic example for me has always been cars. Since a teenager in Gunnedah admiring V8 Commodores, I have always loved sports cars. I promised myself by the time I turned 25, I would be driving a BMW. This was due to the fact that as a kid, my family watched Sale of the Century. I always equated smart people, and ultimately winners, as having this car as it was the ultimate prize.

This has resulted in me spending a large portion of my time obsessing over how I was going to have this car. Funnily enough, this is closely related to another unlearn lesson around belief, but more on this next week.

I believed I would get there, and I did – a week before my 25th birthday I took delivery of a bright blue Series 3 Sports.

If only that was the end of the story. Alas, no. I can say that since then I have owned seven sports cars.

Now when I say owned, what I should say, is financed. The funny thing about cars is that the new car smell and feeling wears off. It usually took me only a couple of years before I was eyeing off the next car, and desiring that feeling of new again.

The flipside of this desire however, is the fact that you never actually own anything. And it finally dawned on me that owning a car was not an asset – it was a liability.

Too often it is easy to want the newer things – the bigger TV, the latest outfit, new golf clubs, or a bigger house.

What this desire does, however is trap us. I found I was working to pay these cars off – trading them in and starting at ground zero again. Too often the things we want end up being the things that stop us attaining financial freedom, because I have learned in my forties that the person with the cash wins. Not the person with the best cars, outfit or home. Because a lot of the time, these things are paid for on credit – and ultimately end up costing us way more than the asking price.

So now, we drive our people mover with pride (fully owned after five years of paying it off) and my Mercedes convertible (okay, something things never change!!) for the long term. I don’t look at other cars or spend time thinking about what next.

I also put more focus on buying investment pieces (whether it be clothes, bags or anything else) that I love and that will last. A funny thing I have noticed over the past twenty years of working with some incredibly wealthy people in finance is that most of them are obsessed with getting value. They drive cars for 10 years, live in the same houses and only buy when things are a bargain. While I used to question why I now know the answer – it is the obsession with finding value, eliminating desire for things that really trap us, and slowly accumulating wealth that creates long term financial freedom.

And freedom after all, is what we all desire.

I heard a frightening statistic this week: that our national debt level is 130 per cent of our GDP (gross domestic product). Quite simply, as a nation, we are racking up debt faster than we are producing.

Or, in old fashioned terms, we are spending more than we earn.
Anyone knows in managing their own budgets, that spending more than you earn ends badly. Usually with a diminished lifestyle as you need to sacrifice in order to pay back what you are have already spent. If you can…

Another equally disturbing statistic is that 30 per cent of households are responsible for 85 per cent of household debt. Wow – this is a big spending 30 per cent of our population.

No doubt it’s what’s been driving property prices up in major cities like Sydney and Melbourne. Combined with the fact that 40% of bank loans have been interest only (although the government is now decreasing that to 30 per cent,) this means that only a few factors in the combination need to change for a series of cascading events to occur.

Reading big picture statistics like this can sometimes paralyse you with fear and a feeling of “what can I do?” It’s obvious we can’t change the habits of a whole nation, but what we can do is think about our own situation and make a checklist for the what if happening.

What if interest rates rise? What if house prices drop? What if another GFC came into play? What if you lost your health? What if you lost your ability to work? What if your business failed?

Bear with me; I am not trying to put you on a downer, what I am trying to do is give you a sleep-at-night feeling. Because if you have answers, plans and assurances around all these questions, then you won’t be caught out if circumstances change.

Chances are you do have a plan already. But the household debt tells me that many Australians are used to a good economy and prosperous times; which at times can mean that the worse is not planned for or taken into serious consideration as it has not been needed previously.

If you don’t have a plan, perhaps it’s time to see a financial adviser. If you don’t know one, start with a search on the FPA website and ask them these questions:

• Are you a Certified Financial Planner (CFP)?
• How do you charge?
• What do you specialise in?
• How will we work together?

If you find the answers are to your liking, it just may help you answer those what ifs, and sleep better at night. For if the whole nation is not covered, at least you and your family are.

I started this journey to help Australians prepare for their financial future. I’m motivated because I know so many amazing people who can help. And I learned the hard way, what it’s like to be under financial pressure, pay for a life that keeps you on a treadmill, and feels like it’s going nowhere.

I want to help you unlearn money, question your limiting beliefs and reinvent your life. More about how your beliefs impact your financial future, here.

According to ABS data release in 2017, Australians household debt to income ratio now stands at a record 188.6%.

Around 3 in 10 households were classified as ‘over-indebted’ with mortgage holders and high income earners particularly susceptible.

Debt and the pressures it brings to life can be debilitating. Anyone in Sydney who has kids at private school and a mortgage most likely knows what this feels like. Debt however, is not just the problem of capital cities. If you are leveraged with a business, have run up credit cards, or have taken out a personal loan, you might be feeling the pressure of making ends meet.

Which is why unlearning your limiting money habits, and reinventing your future is so important. Those of you who are in debt still have time to make the pension irrelevant for your retirement.

Turning it around starts with two simple questions:

1. What do I really want from my life moving forward?
2. What could I change to get what I want?

You can start answering questions like this in your free Reinvention Journal, here.

While the questions are easy, the actions may not be as simple. For example, the actions may be selling the house of your dreams to get out of a massive mortgage, or changing your kids school to lower the fees (and yes, my husband and I have done both).

These may feel like impossible choices, but over time, if you really think about what truly gives you joy, and what is causing you stress, you might find it’s not as hard as you think.

Whatever your actions are, the first step toward changing your financial future, is recognising what you need to unlearn, or change. You can take my free, five pillars test to understand what’s holding you back.

This is the first step in many, toward getting on the right track to a future that has less debt and stress, and more joy.

I look forward to taking this journey with you.