Читать книгу Sort Your Money Out - Glen James - Страница 13

 Never, ever consolidate debt. I'll tell you soon why this is a very bad idea.

 There's good debt, bad debt and ‘life debt’.

 I'm not a fan of car loans. The car yards have signs that read ‘Cash for cars’ — this should be your life motto too!

 Keep making only minimum repayments on your mortgage until you are out of consumer debt.

 Consumer debt is money that's borrowed to pay for products which are then consumed (e.g. personal loans, credit cards, buy-now-pay-later programs, store cards, car loans and holiday loans).

 Don't worry about HECS/HELP debt … for now.

 The truth about credit scores: should you be concerned about them?

 In my view, BNPL (buy now pay later) products are the payday lenders of this generation and can cause you to think you are good at managing money — but honestly, they are financial cancer.

 I would only consider loans from family and friends if you have absolutely no other option — and make sure everything is in writing.

 Debt and mental health: overspending can put you in a dark place, but it's okay to seek help.

 If you want to skip the summary about types of debt and all that, page 16 has my 5 steps to get out of debt.

My view on debt? I don't like it. I don't buy into ‘good debt’ or ‘bad debt’. While many financial commentators talk about these two types of debt, for me it's all one category: the category of ‘I'd rather not have it or need it’.

According to the Financial Review, in May 2021

31 per cent of Australians reported being under financial stress, meaning they had difficulty paying for essential goods and services. This was higher than the 26 per cent who say they are just making ends meet.

In March 2021, the Financial Review also reported that ‘[b]orrowers with high levels of debt-to-income experience high levels of mortgage stress and are more likely to default’.

Being debt free is a major goal for so many people. It's important for two reasons. The first is a hard and fast reason: if you have consumer debt you're overspending and to make things worse, you're paying interest for overspending. It's like you're playing poker and are about to double down, but you're on the Titanic so things are about to get much worse. It's a lose-lose situation. It also makes no financial sense to be in consumer debt, borrowing for items that are going down in value. We all know this but many of us have been caught in the trap. This is because it's more about behaviour than ‘sense’, which leads me to the second reason that it's important to be free of consumer debt. You will become a different person; you will likely cease to be just a consumer and be more focused with your life. Your spending plan will be in order, you will have more money to put to things that matter (future you!) and you will honestly feel like you're making progress in your financial life.

Now you may be asking yourself, ‘What about investing? What about shares? What about buying a property?’ No. No. No. Everything else is on pause. Because nothing else matters if we can't get your debt and spending habits under control first.