Your Debt Doesn't Define You

Order Kerney Whalbury and a waddery woman. And before we get started on She's on the Money podcast, I would like to acknowledge the traditional custodians of the land of which this podcast is recorded on a wondery country, acknowledging the elders, the ancestors and the next generation coming through as this podcast is about connecting, empowering, knowledge sharing and the storytelling of you to make a difference for today and lasting impact for tomorrow.

that D word. I am talking about debt. And it's one of those topics that can feel like a little bit of a dirty word, right, But here's the thing debt is so common. In fact, I got in a lot of debt. And I mean, I've been thinking, I know plenty of incredibly successful people who have dealt with debt at some point or another in their lives, right including me. I at one point got myself into some

pretty serious personal debt. I was in more than forty thousand dollars worth of personal debt between a personal loan that I probably shouldn't have been approved for and a credit card. And the reason I did was because I was living beyond my means and at the time I was so ashamed of it. I was so overwhelmed by it. I literally would like to my housemates at the time about it. And I can tell you now, it was eight hundred and fifty three dollars each and every single

month that I had to pay back. That was the minimum amount, and at that point in time, like I was earning just over that amount. So I was earning like, I think about sixty thousand dollars a year, and it was absolutely financially crippling. I just I couldn't see a way out of it, and I judged myself and was so ashamed of how I got here. I thought it was a reflection of who I was as a person. I thought that it made me a terrible human being. And I mean, at that time, I lacked a lot

of financial literacy and I just didn't understand it. And now, looking back, I just want to scoop up past me and go, well, you were just doing the best that you could with the tools and the resources that you had at the time, and you made some decisions. They weren't bad decisions, but you made some decisions that weren't in line with your values because you didn't know how to live life in line with your values, because you

didn't have the financial literacy you deserved. And to me, looking back on past Victoria, all she did was spend more than she earned. That didn't ever make me a bad person. That didn't ever mean I wasn't smart or intelligent. It didn't have anything to do with myself worth. But that's how it felt, right. And I mean, you're probably thinking at the moment, like vuhy, you're ruining my Saturday with a story about debt and you historically not being

very good at money. But debt is not exactly a feel good topic, right, But I want to flip the narrative on that today. I want to empower you when it comes to debt. I'm not saying go get you more. But debt isn't just a financial weight, right. It can weigh heavily on your emotions, and it can weigh really heavily on your self worth. And as I said before, I have been there. Debt has this way of making us feel like we have messed up. But here's the

real truth. Debt does not define your worth. Repeat after me. Debt doesn't define your worth. And also wealth doesn't define your worth. Right Like, rich people or people with heaps the money in their bank are not worth more than other people, So why would people in the opposite position be worthless. Debt can feel, I guess, really heavy because of the emotional baggage that it often carries. It's more

than just a number in your bank account. It's more than just like that debt statement that you get in the mail or in your emails. It can feel, genuinely, and I say this from an empathetic point of view, it can feel like a personal failure, especially when society loves to put so much pressure on us being financially perfect. But spoiler rella. Literally, nobody is perfect. We all are on our own financial journeys, and if debt is a

part of that, that's cool, that's fine. I feel like we go through seasons in life, and right now, if you're in debt, that's just a season of your life that you are going through. And that's cool because if you're in the middle of winter and it feels really cold, you can zoom out a little bit, as you know, I love to say when in doubt, zoom out, but you can zoom out a little bit, and you just

know that someone's coming. And like, if there's no rain during the winter, the flowers aren't going to bloom in summer. There have been numerous studies that have highlighted the undeniable connection between debt and mental health. I don't know why more people aren't talking about this, and the results are consistently painting a very upsetting picture. Right Financial debt doesn't just impact your wallet or your ability to create wealth or buy a house or move in with your partner.

It seeps into every single corner of your life with significant impact on your mental and physical health. So, whether it is stress or anxiety or even depression, the weight of debt can be overwhelming, and research across the board says that the more debt people seem to accumulate, the worse off their mental health outcomes seem to be. So

let me give you an example. In twenty nineteen, there was a study that found that individuals with high levels of debt reported significantly higher levels of stress and anxiety. Another study was done at about the same time showed that unmanageable debt often led to depression, and it highlighted that it's actually not just the amount of debt, but help people perceive their ability to manage it that can actually trigger serious mental health issues. So debt doesn't just

impact your mood either. It can disturb your sleep. And I can attest to this, like literally, when I was in debt, I used to stay up all night and I didn't know why at the time, Like obviously I was thinking about my debt, and I was stressed about my debt, and I was wondering how I was going to pay it off, and like if I wanted to do something, I was like, oh my gosh, how am I going to afford my debt payment? And this, But there was a study in twenty twenty that linked financial

stress to disrupted sleep patterns, which often worsen anxiety. I mean, everything's worse at three am. Right. Relationship strain is also really common when you are in debt. It's the number one thing that couples fight about, right because emotional struggles can actually lead to being emotionally distant and even fighting with your partner. And some people that are in debt actually turned to very unhealthy coping mechanisms. They might get

involved in substance abuse. And it was actually highlighted in a study that linked financial stress to an increased likelihood of using alcohol and drugs and all of this. It actually just shows us and distills down the relationship between debt and mental health, and it shows us that it is a very in vicious cycle, and it's one that affects more than just the dollars in your bank account. Right. But let me tell you right now, as I said before,

debt does not define you. And I know that if you're listening to this, you're like, yeah, but why do I still feel like trash about it? V? I get it, I've been there. Having debt actually doesn't make you an irresponsible human being. It doesn't mean that you're bad with money. I think there's a massive misconception that if you are in debt, you must be bad at managing money, and that is actually not the truth. Like for some people it might be let's be honest, but it's not actually

the truth. It's not a reflection of your car. It's just a financial tool. And if you haven't been good at using those tools, because no one taught you how to use the tools, I can teach you how to use the tools and you can get back in control and you can control your life instead of that feeling of being in debt controlling your life. So let's talk about some numbers for a hot second. Did you know that here in Australia, consumer debt is actually in the trillions,

not billions, trillions. That's credit cards, personal loans. Obviously mortgages fall into a part of that. Honestly, debt is a part of life for most Australians. So if you're feeling like you're the only ones struggling with it, and you're a bit like past Victoria and you're like, I don't want to talk about this, you're definitely not alone. Life happens,

right and we can't control it. And I mean over the last few years going through COVID, we literally have seen it play out for us, whether it's medical bills or trying to put yourself through university to give yourself the best possible chance to create the life that you deserve or you wanted to, you know, invest in homes you've got a mortgage. Debt is often just part of that journey. Debt. It's not actually good or bad. It's

actually very neutral. It's a tool, and it's a bit like a hammer, right, and what you do with that tool is what matters. So think about, like I guess, your hex debt or you know, any debt you went into to study and mortgages. These are often called and I often refer to them as good debts because they're actually helping you build something. So whether that is your education or it's your home, you're kind of investing in

your future. And these are what I would call, I guess examples of debt that is opening doors for you. I mean, it might feel all consuming and overwhelming, but like skip ahead thirty years, if you have a really good education, it is very likely that you are going to have a higher income. It's not to say that you have to have a really good education to have a high paying job. We see on money diaries all

the time people absolutely killing it without an education. We also see people purchasing homes and their mortgages stressing them out of their brains. But if they've bought in a really good area and they pay off their mortgage over you know, a thirty year period, they're not paying it off earlier. But like that thirty years of paying back a mortgage is really stressful. They pay it back, they're in a really secure financial position. They own the roof

over their heads. Right. But sometimes we take on debt that we have to take on because we're going through a really rough patch. So maybe there was a whole heap of unexpected costs, or you really needed a credit card to cover an emergency. That's actually okay, Like I get it. There is no such thing as being financially perfect. It doesn't make you any less capable or any less responsible. Life happens, and sometimes debt is just part of life happening.

And it's actually our plan to deal with debt that is going to change the trajectory of our lives, not necessarily whether we have it or not. I mean, I don't want to talk about myself too much, but I was in forty thousand dollars worth of personal debt. It felt all consuming, overwhelming, And I think if you look at what I've done, obviously I am an absolute outlier and what I have done is very different to the norm.

But like, I managed to get myself out of that hole with good financial literacy, and at that time I had still a sixty thousand dollars income. I did get a pay rise at that point. I think I was earning closer at eighty thousand dollars. But I got out of that debt. I saved up for my first home deposit with my partner having not made any of the money that I've made. Throusella and Cheese on the money, Like, life happens, and we can create a plan that puts

you in the best possible position. You don't have to have something that is life changing to change your life. Right, And let's talk a little more about this idea of good versus bad debt. Right, So, a mortgage that helps you to build equity in your home, or like your hex debt that sets you up for a better career in the future, are really good examples of good debt

because they lead to I guess, long term gains. But on the other hand, you've got bad debt, I suppose, so those high interest credit cards where you're purchasing things that you don't really need and you have the ability, and a lot of people do to spiral out of control if you're not careful. And I mean I have not met one person, and there are hundreds of thousands

of you in our shoes on the money community. I've not met one person that said, Victoria Devine, I got a credit card because I just really liked the idea of spiraling out of control and spending beyond my means. I just one day wanted to wake up with an amount of debt that's dropped me from sleeping well, enjoying life and you know, having a good relationship with money. Not one person says that no one gets a credit card with the intention of misusing it, right, no one

does that. But even if you ended up in that position, there's usually a reason for it, and the best way to get back on top of that is to deep dive into why, when, where, how, and not judge yourself for it, Because even if you have bad debt. It's not the end of the world. It's just that other chapter in your financial story. And with the right plan, you can manage it. We can get out of debt. We can, you know, create a plan. We can see

the light at the end of the tunnel together. But I think so many times when you are spiraling out of control, you just overlay this idea that you are terrible at money and that you're not very good at it, and what you need to do is just bury your head in the sand and not deal with and that's actually the worst thing that you can do. So we've talked about debt and how it doesn't define your worth, and I hope that you listen to me about that, but don't get it twisted. It is just a financial tool.

Money is neutral. And I guess people in our community and you, my friend, you are not going to let debt define you. And if you feel like it is defining you right now, we are going to change that narrative and we're going to change it today. So I guess the question now is what do you do when you've got debt that feels overwhelming. I don't just want a motivational talk from victoria that says it doesn't define me,

that it's neutral. That doesn't help anybody, right, I mean it might get you interested in changing, but like, we need some tools, So stick around. I'm going to go to a really quick break and on the flip side, I'm going to tell you exactly how to change that narrative. Welcome back, my friends. Now let's have a chat about managing debt without the shame, because that's seemingly where a lot of us end up getting stuck. When debt feels overwhelming and all consuming. It is so easy to feel

so powerless. But my friends, here's the thing. Tackling debt can actually be, or I think it can actually be really empowering because you're not just managing I guess a responsibility that you have, your taking control of your financial journey. You are putting few to you in the best possible position,

and I promise she's gonna thank you for that. Like, can you imagine if today you're looking back on your journey and you're like far out, Like I cannot believe that I was so good to current me because I paid off all that debt and I'm not in it right now. That's such a win, and you're putting yourself in that position. I would say, and I've said it before on the podcast, I believe that looking after your finances is the highest form of self care that can exist.

So taking steps to handle your debt, whether it is small steps like creating a budget, or big steps which feel overwhelming, like negotiating with creditors, or just being really proactive, it's a way of looking after yourself and looking after your future. Because I promise once you take that step, you'll realize it's not as big and scary as it currently feels. And I know that you've got this. I know that you are able to do this, and I'm here,

our community is here. You're not alone in this process. You're not doing it by yourself. So if it is feeling like if you're listening to this and you're like V it's actually insane, Like I actually can't deal with this, this is all too much, you know what I do? I'd start by calling our friends at the National Debt Helpline. I'll obviously put their number in the show notes. It's a not for profit service that I have worked with before. I love them. I think that they are absolutely incredible.

They are people just like you and me. They provide free, independent and confidential support to help people tackle their debt problems. I promise they are not lenders and they don't have anything to sell or they don't make money from you. They are legitimate professional financial counselors that are there to offer you guidance and practical advice on managing debt, and they have seen it all. I promise going to them it shouldn't be embarrassing going to them and laying it

all out on the table. They'll go, yep, no worries, what else? And when you say no, that's it, you'll be like, oh, it's not as bad as I thought it was going to be. So don't be afraid of them. I promise. They are just like you and me, and you know what, they're probably better than me. They spend their entire life working for a company that helps people just like you get out of debt. Like they're on your side. They're not going to crucify you for where

you've been. They're just going to help you create a bright future. The other thing I would say here, which can feel really overwhelming, is don't be afraid to reach out to creditors. I mean, at the end of the what's the worst they can say no, feeling intimidated. I get it, But many creditors are very willing and very able to work with you on new payment plans that

are way more manageable. Or if you're struggling with a heap of debts, you might want to consider, and you've probably heard about this before, debt consolidation, and this can really simplify things by pulling all your debts together into one payment, often with a lower interest rate, that feels less overwhelming. One of the key things I want you to tackle when it comes to your debts is also

to understand the different types of debts you have. It's so often that I talk to people and I'm like, oh, are you in debt? They're like, yeah, it's so bad. And then I hear they've got a mortgage, and I'm like, that is a wealth creating debt. Not all debts, my friend, are created equally, So things like credit card debt with high interest rates are very different to a mortgage, which could have a lower interest rate over a long period

of time. That helps you create wealth. And understanding what you owe and why is going to help you make much better decisions moving forward. So one of the things I also wanted to talk to you about was interest free loans, and I have spoken about them on the podcast before, but often they could seem like a great deal. I have met so many people and spoken to so many people in our community who think that this is

going to be the answer to their problems. You can take all of your credit cards with high interest rates and you can transfer them to this, you know, interest free loan. But more often than not, there is a catch because even though you're only making minimum repayments set by the lender, you might not be in a position to clear the debt before the interest free period ends, and then they're literally setting you up for failure in

the long term. And even though you might be like me, but like my interest rate's seventeen percent, if you read the fine print on a lot of these interest free loans, after twelve months or after twenty four months, it jumps to like twenty two percent interest and that's worse for you, Like, that's going to absolutely cripple you. So what I would be doing is everything literally to avoid surprise interest charge, and I would take control. So let's have a look

at debt consolidation. Maybe we can actually use an interest free loan to our advantage. But please make sure that you're either able to pay off the balance before the period closes, or you're able to increase your monthly contributions to that debt to wipe them in time. And when it comes to borrowing any type of money, I think my biggest call out here is please, please please always read the fine print. Now let's talk about by now, pay later. You guys know how I feel about this.

Say you're using after pay to buy a two hundred dollar handbag that you've got your eye on. It's on the iconic and you're all over it. In most of our brains, the math is, all right, well, that's actually just like four payments of fifty dollars, and that's so much more palatable. But your brain actually, and this is scientifically proven, your brain actually anchors to the smaller amount of fifty dollars and it makes you feel like that's

all you're spending. And if you have been in the after pay traps before, I can almost guarantee that if I asked you what that dress you bought was, or what that bag was, or whatever you put on after pay, I can almost guarantee you don't remember the full price. You just remember what payment came out, and that's what anchoring is. And before you know it, you add another cute top to the cart as well, because what's the difference between fifty and seventy dollars? Right? So only seventy dollars.

That's not that much. And after pay his own website actually brags. So if you go to the after pay website and then go to like I'm a small business and have a look, they literally brag to potential merchants that work with them, the average order increases by eighteen percent. They know that you're going to spend more because you're not spending your own money. So while this might be interest free and you might go this is a really good tool for MeV where a costs more is actually

in the amount that you're justifying to spend. And I think that just understanding these things can help you make better choices. And some people might be listening to this and going the I'm actually really good at after pay. I use it as a cash flow tool, and I've also spoken about this as a lot before as well. Then the great this tip is not for you, and

that is fine. But there are people who don't know this, and there are people in our community who after pay just doesn't work for And I'm one of those people. I know that anchoring works very well on me. I think it's very related to being a little bit neurospicy, where that's the first number I saw, that's all I'm going to remember and moving forward, that number actually makes me feel a lot better about myself than two hundred.

So I know what I'm going to anchor too, and I know that to have the best financial health personally, something like after pay or any by now pay later is just not going to fit into my financial plan or my financial modeling. Right. The other thing we need to get really real about is your finance habits or your money habits. And I'm actually here talking about just

being brutally honest with yourself and be really hard. Like I remember coming to the conclusion that I'm just not good at money and debt, and this is before I became a financial advisor. I wasn't good at handling money. And how do you handle money? Are you super self aware about how you make money choices or are you a bit head in the sand, Like, are you able to avoid going further into debt and start gaining control of your life? And that can be a big shift

because often that involves complete lifestyle shift. So if you're going into debt because you're spending more than you earn, often that is reflective of you living a lifestyle that's actually beyond your means. You might go there. I don't really want to change that, Like I love brunch with my girlfriends, like I love going and buying new activewear, Like this is just for me. I'll work it all

out later. Like it does involve being brutally honest with yourself, and that can sometimes be a little bit painful, but I promise by doing that, you're putting yourself in the best possible situation. Let's talk about credit card debt as an example. So, like a zero percent balance trans to somebody who is like me might seem like a golden ticket, but it only works if you transfer the balance and take to that card with a pair of scissors and stick to that repayment plan and pay it off during

that interest free period. And people in our community have done that. It's been a brilliant strategy for them. But if you're prone to spending and you're just gonna justify to yourself, which we've all done, like, oh my gosh, actually I I'm going to keep this card in my wallet just in case, for just in case splurges. This is I promise you, this is going to spiral you

out of control. And I know that this sounds a little bit lame, but maybe if you're not ready to cut the credit card up completely, you do that thing where you put it in a container of water and chuck it in the freezer, so the card still exists but you can't really access it. Maybe that would work for you, so that the card still exists but you can't really use it, and if you want to use it, it's going to take you some serious thought about how

to get back to it at some point. All right, let's pivot away from that and talk about two of the most popular methods for paying down debt. Right, so you've probably heard about them in our community. It's the snowball and then the avalanche methods, and both can be super effective, but they work in completely different ways and are actually suitable for different people. And I think this is where you need to know yourself you need to know your personality type and who you are and what

might work now. I don't think it will come as a surprise. I am an instant gratification girly at heart, which is why this first method that I'm going to talk about, the Snowmall method, that's for me, so let's talk about it. It's all about quick wins and it is perfect for people who need a little extra motivation to stay in the game. The idea is relatively simple. What the plan is is you focused on your smallest debt first and then just throw every extra dollar that

you have at it. So we're not going to worry about our interest rates for now. We're actually going to think about psychological wins or the fact that you're going to get instant gratification, because what you're going to do is you're going to take your debts and then you're going to list them in smallest balance to largest balance, and then you're going to make minimum repayments on all of them. So we're not going to stop paying back our debts, but we're not going to make just minimum

repayments on the smallest one. For the smallest one, you're actually going to take any additional money that you have and pay it off as quickly as you possibly can. And then once that first stet is gone, you're going to take that money that you were using to pay that debt off and you're going to pay the next

smallest debt. And it's kind of like building a snowball of momentum, and bit by bit you keep adding what you were paying before to the next one in line, and boom, your debt actually starts disappearing bit by bit. And for me, it's such a satisfying feeling that every time you pay something off, it's kind of like a

victory lap that keeps you going. Like I'm the type of person that instant gratification works for, So if you're somebody who like me, I just thrive on seeing results quickly and I need a consistent sense of accomplishment to stay on track. This snowball method, my friend, is for you. I think it's actually perfect if you're just really overwhelmed by debt, because knocking out those smaller balances I think really builds confidence. But it's also not too technical, like

there's no maths involved. You just look at which one is the smallest and start paying that off aggressively. But if you're a bit more of an efficiency girly and you're all about cutting costs and putting yourself in arguably the best possible position, then the avalanche method might be more on your page. So this one actually focuses on paying off the debt with the highest interest rate first, which is obviously going to save you the most amount of money in the long run. As I said, this

one is arguably the quote better method. But for me when I was paying back my debts, the snowball method worked better for me because again, instant gratification curly. So how do you do the avalanche method? What you're going to do is, instead of focusing on what the smallest debt is, you're actually going to list your debts from the highest interest rate to the lowest interest rate, and we're going to go after the most expensive debt first. So once you've got your list, you're going to make

minimum payments again on all your debts. We're not going to not pay any off except for the one with the highest interest rate, and that one you're going to throw all your extra cash at it until it has gone. It might take a little bit longer to get that first debt knocked out completely. But financially, this one actually makes the most sense because you're cutting down on all

of those sneaky interest charges. When that I guess first high interest debt is paid off, then you're going to take the money that you were using to paid off and roll it into the next high interest debt and you just keep going from there. It might not feel like you're making progress as fast as the snowball method,

but you'll be saving a lot more over time. So if you're somebody who is more motivated by saving money, and you know, having the most control you could say, and you can actually handle the patients it takes to focus on the long game, then I would say this one's definitely for you. It's also the best option if you've got a really high interest debt, like maybe a big credit card balance, because that interest up really fast.

But when you're picking the method, I think the most important thing that you do is actually think about you and your personality and what's going to motivate you. So, yes, you might save a bit more interest in the avalanche method, but even the fact that you are considering a method to pay off your debt means that you're going to save money in the long term. For me, the Stoneball method made sense. I'm sure if I went back and

calculated it, I could have saved some interest charges. But like I see that as the payment for actually finding the motivation and getting it done. Like, I don't think I missed out on that. And if you wanted to get technical, yes I could have left out money. The Avalanche method might have been better. But at the end of the day, I got out of debt and that was the main goal, and that is what I'm most

proud of. I'm running out of time here really quickly, so I just wanted to, I guess touch on something a little bit fluffier, and it's more of like a little reminder for you. You are more than your debt. It is actually just a number on a piece of paper. It doesn't define who you are or what you're capable of, or your thoughts, your feelings, you're belief your values. It doesn't define who you are or what you're going to

create with this life that you've been given. Every single person's financial journey is so different, and having debt doesn't take away from your value or your potential or the ability to be successful in the future. I was forty thousand dollars in debt. I was up to my eyeballs.

I would cry about it all the time. Eight hundred and eighty three dollars I was paying back each and every single month, and I had nothing extra Like that was a chapter for me, a chapter that was really sad, and I didn't feel my best, and I felt like it defined me. But I feel like I'm a very good example of coming out the other side. So does being in debt define who you are? Absolutely not. I think what matters the most is actually how you're planning

on moving forward. It's not about perfection or creating a debt free life tomorrow. It's actually about understanding that debt is just part of your financial story to chapter, and you actually have the power, like the complete power to write the next chapter in a different font. So be kind to yourself, show yourself some compassion, and know that tackling your debts, I would say it's very brave, but it's also a really important step and one going in

the right direction. I think that being in debt it can be overwhelming and all consuming, but I promise it doesn't define who you are. I have run out of time now, so I'm going to stop going on about it. But I think that you are brilliant. I think that if you have listened to this entire episode, hopefully it resonated with you. And if it did strike a chord with you, please don't forget to subscribe because it helps me to continue to bring this content to you on

a weekly basis. And I hope you have a beautiful weekend and I will see you bright and early on Monday for a money diary. Bye. Shared on She's on the Money is general in nature and does not consider your individual circumstances. She's on the Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. If you do choose to buy a financial product, read the PDS TMD and obtain

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