Hi everyone, as you may know by now I am incredibly protective of you and your
financial future. Because I want you to thrive and I want you to be excited
about your future. And I want you to realistically create financial freedom
and independence for yourself. I also want to protect you from bad financial
advice that is going around. So that you understand when you hear this. Not to
listen to it and actually to educate that person back. Alright the first bad
bit of advice I'm hearing going around at the moment. And that is not to worry
about paying off your student debt. Well that is wrong you definitely need
to pay off your student debt. Ideally as quickly as possible.
First of all yes there is no interest rate applied to this loan. However, it is
indexed and if you took a loan of say twenty thousand dollars in student debt
and let it just index over time over a 10-year period. You'll end up $7000
deeper in debt. So your debt would have gone from $20,000 to $27,000. Also when
it comes to borrowing money, and applying for your first mortgage to buy your
first home in the bank. You have to come clean and disclose what student debt you
might have. And most definitely the bank will look at that, and they will reduce
your borrowing power. Which may mean you can't buy that ideal dream home that you
thought you could afford. So get on the front foot get ahead of the curve and
pay your student debt down as quickly as possible. Bad advice number two that's
going around. And look this isn't that bad but I don't agree with the
calculation behind it. And that is the financial bucket ratio formula. Where 20%
is supposed to go to a fun account and 30% is supposed to go to a responsible
account. And I think this is a very responsible way of acting. However not
everyone can has a one-size-fits-all. That formula might work well for some
people but not everyone else. And those people that, that formula doesn't work
for may get discouraged and give up in actually trying to be responsible with
their cash flow. My advice here is actually to work a system that works
best for you. Now if I was to give you a strict rule where you had to do 20, 20, 30,
40. You know perfect 100 percent ratio. That's not gonna be right
for everyone. Someone who is young say living at home with very little living
expenses. Can afford to save potentially 60% of what they're earning. However a young
family with say, three children and maybe one working person. Can not afford to
save that same ratio or percentage of their salary. My advice to you is to stop.
Have a look at your budget, and work with the parameters that you've got. Obviously
you always look to find ways that you can increase your savings, and increase
your investing, and increase the money into your fun account. But work with what
you've got. Review it regularly and always look to
improve it. Bad advice number three and this is probably the one that irritates
me the most is. Don't even bother trying to pay off your mortgage, it's just a
ridiculous dream that will never ever happen. Well that is not true, and that is
so incredibly dangerous and financially irresponsible to even plant that seed
in anyone's mind. Of course you can pay off your mortgage. The bank would never
lend you that money in the first place if you couldn't. And I'll tell you what,
the earlier you start making extra repayments on your home loan. The more
effective that's going to be in saving you a lot of time and a lot of money. So
much so that I actually did a little bit of research, and I've got some hardcore
numbers to crush that theory. Now the average mortgage in Australia is around
about four hundred and eighty eight thousand dollars. Now if I took an
average term of 30 years, and an average interest rate of around 6%. And I told
you to skip that daily coffee habit, which is about four dollars a day. This
would save you approximately, conservatively a hundred and thirty
dollars a month. Now if you were to increase your mortgage repayments by a
hundred and twenty dollars per month. You would actually save sixty seven thousand
dollars off your home loan. And you'd pay your mortgage off three years earlier. So
anyone that ever tries to tell you that. Tell them to shut up and look at this
video. Bad advice number four, and fortunately I'm hearing a lot less of
this as people come to terms with the reality of our government system. And
that is not to worry about your superannuation or
retirement savings accounts. And that the government look after you. Well have you
looked up what the average pension income that the government pays? It's
pretty bad. I don't know many people that could
actually live off solely off the government pension. You've got to be a
self-funded retiree, if you want to have a comfortable enjoyable and long
retirement. Trust me on that. And then the fifth and final bit of bad
financial advice that is going around. And that is that people don't need to
worry about their finances because they are going to inherit lots of money.
Particularly from the baby boomer generation as it retires and passes on.
Now if you're going to inherit a lot of money, that is fantastic I'm really happy
for you. But let's be real about this. There are a couple of different things
that could happen. One is we could have a state duty where the government decides
start taxing inheritances. And the amount of money that your were entitled to is
now significantly smaller. And then another thing to seriously consider is.
If you do inherit all this money do you know how to make sure you make the most
of it? Do you know how to protect it? Do you know how to grow it? Do you know how to get the
most amount of benefits out of this money. If you don't have those basic
tools, that basic level of knowledge and understanding and education. You may end
up risk blowing it all yourself. So do your little favor whenever you hear
someone give you some financial advice. Even though they may have their best
intentions. Think about it clearly and properly, and think about it isn't really
good advice for me? Or is it really advice that they should be giving
themselves? Alright everyone if you've heard any bits of these bad advice I
hope you now know exactly what to do. So you don't fall into the trap of this bad
guidance. I'm sure they mean well but it can be incredibly destructive, and really
hold you back in life. And you lose valuable time. So do something about it.
And of course please put a comment in the comments box below if you hear about
any other bad advice. I'll let you know whether it's good advice or not. I
promise. Alright everyone see you next week for
Money Monday or later in the week for Lifestyle Love. Ciao for now.
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