January 22, 2025 • 32 mins
The boys kick off the new year with a recap on the financial activity we saw over Christmas. All we can say is don't make your settlement date during the holiday period!
Moving into the world of personal loans and debt consolidation, we dissect the growing trend of managing multiple debts post-holiday season.
The episode takes a deeper look at the changing travel landscape and the impact of gambling on financial decisions. With major airlines altering services and competition heating up, we examine how these changes affect consumer behavior. Meanwhile, the cultural impact of gambling in Australia and its influence on loan applications are analyzed through a hypothetical scenario. By spotlighting an individual's struggle with gambling and financial stability, we bring to life the intricate connection between personal habits and economic resilience. Join us for an in-depth exploration of these compelling financial themes and equip yourself with the knowledge to navigate the season with confidence.
Follow us for more property news and mortgage advice!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:04):
All right, welcome to the Finance Show with Joe.
He's Joe, I'm just some schmo.
Merry Christmas all.
Speaker 2 (00:10):
I think we're about 20 days late, mate.
What are you talking about?
Never too late, it's the 25thof December.
Speaker 1 (00:14):
I don't know what you're talking about how have
you been.
It's snowing outside.
I've been good, I've been good.
It was a good break.
How about you?
Speaker 2 (00:20):
I didn't have a break .
Speaker 1 (00:20):
You didn't have a break.
Speaker 2 (00:28):
No, not in the slightest.
It was possibly one of the mostchaotic Christmases I've ever
had.
As you know, the influx of ourwork has been at a level that
we've never experienced before.
Speaker 1 (00:33):
Good, times for Simple, it's fantastic.
Speaker 2 (00:36):
Don't get me wrong.
But at the same time, it isquite difficult to get
settlements across the lineduring the Christmas period.
Speaker 1 (00:44):
All the solicitors are like on holiday right.
Speaker 2 (00:46):
We've got solicitors on holiday, we've got banks
working with skeleton staff andwe also have the credit
assessment team, you know, onleave.
So who does it all fall on, ifyour loan is supposed to settle
on the 27th of December or the30th of December or the 1st of
January?
Actually, nothing ever settleson the 1th of December or the
30th of December or the 1st ofJanuary.
(01:06):
Actually, nothing ever settleson the 1st of January or the 3rd
of January.
So there's a lot of issues thatare created when it comes to the
Christmas period and this issomething I want to highlight.
And, liam, turn this into aTikTok.
Later in the year, if you areplanning to get a loan, avoid as
much as possible having yoursettlement between December 21st
(01:30):
and the 6th of January, becauseI am telling you from now, it's
going to be chaotic.
Speaker 1 (01:35):
It is going to be hell, you're going to tear your
hair out, wondering if you'regoing to get it on time.
Speaker 2 (01:39):
Why do you think I got cut off the ponytail?
Speaker 1 (01:41):
I was just ripping it out all throughout the
Christmas period.
Speaker 2 (01:44):
It was, it was crazy, it was, um, it was possibly the
most challenging time of mylife, and something that usually
takes two minutes duringregular banking periods was
taking four hours.
I'm talking about justnominating a offset account,
just nominating an account.
(02:04):
Sending the form in to a bankUsually, yep, that's the account
they structure it it was takingfour hours to get a response.
It was chaos, but thankfully wegot through it, got it over the
line.
It's the 17th of January,christmas episode, but 17th of.
January, we're going to getthere and we're very, very
excited.
Speaker 1 (02:22):
Yeah, and speaking of Christmas, we're very, very
excited.
Yeah, and speaking of Christmas, we're going through the cost
of living crisis.
Yada, yada.
It's almost become a meme atthis point cost of living, yada,
yada, but people are stillspent on Christmas.
But did you notice people wereoverspending on Christmas?
A lot more credit lines thisyear, or nothing like that.
Speaker 2 (02:38):
Credit cards.
The application for a creditcard is a lot easier than an
application for a home?
Yeah, naturally, the applicationfor a credit card is a lot
easier than an application for ahome loan.
Yeah, naturally, when it comesto a credit card, there's always
going to be some third orfourth tier lender out there
that is going to give you somesort of credit, and this can be
anywhere between $2,000 to$10,000.
After $10,000, you know there'sgoing to be a lot more scrutiny
(03:00):
when it comes to your account,your files, your credit scoring,
yeah.
But anywhere between that I caneven go to 500.
500 to $10,000 mark it's apretty easy application and they
will usually approve you on theday Now with credit cards,
you've also got the credit card.
You've got a buy now, pay lateraccount Buy now, pay later and
then you could get zip money,which is a line of credit on
(03:24):
your, not your, finances, onyour pay slips.
So it's a line of credit on yourincome.
So you can get up to $5,000from a company like Zip money.
Speaker 1 (03:32):
Yeah, I did that when they first came out.
This is when Afterpay and stuffwere just taking off and I
needed a laptop at the time andI couldn't afford it with cash
on hand, but with Zip Money Icould.
That's all closed.
Now I don't have any of thisbuy now, pay later stuff.
I'm aware of this, you areaware of this.
But yeah, it was interesting.
(03:55):
After I paid that offsuccessfully, they upped my
limit to $10,000 as if it was acredit card, and I'm like, hmm,
this feels too easy.
Like yeah, I'm like I'll pay mybills, but what if someone
who's like not good at this?
Speaker 2 (04:10):
the.
The main problems I have withafter pay, zip money and even
some credit card lenders is theywill now allow you to apply at
the store.
So if you walk into platypus,I'm not too sure of platypus but
just andypus, I'm not defamingPlatypus, I'm just going to
highlight that.
But if you wanted to buy a pairof sneakers, I'm almost 98%
(04:33):
certain they used to let youopen an afterpay account on the
spot in the store.
You know, when you go to HarveyNorman and they say 60 months
interest free, it's a creditcard.
All they're doing is offeringyou a credit.
They say 60 months interestfree.
Speaker 1 (04:44):
That's what this is.
Speaker 2 (04:45):
It's a credit card, all they're doing is offering
you a credit card for 60 monthsthat you don't have to actually
go to a bank to apply for orcall up and apply for.
They'll do it for you on thespot and they'll go yep, you're
approved.
Let's give you your couch andstuff.
And they prey on people whoaren't financially savvy or
financially vulnerable.
Yeah, that's pretty much it.
They prey on the financiallyvulnerable.
(05:06):
So you'll have an 18 year old,19 year old that walks in and
they're like I could get a 50inch flat screen tv, I could, I
could buy this stuff.
Yeah, let's do it.
And they have no idea.
Speaker 1 (05:17):
They just think it's like free money they just think
it's free money.
Speaker 2 (05:19):
They just think, oh yeah, I'll make my repayments in
in 60 months.
They have no idea what's aboutto hit them, or they're just so
desperate to like.
Speaker 1 (05:27):
you know, they've got no TV or they've got no couch
and this is the only way they'rerealistically going to be able
to afford it.
But even then, can theyrealistically afford it?
Speaker 2 (05:34):
Well, the people that are applying for these credit
cards.
They're not from the bank,they're retail shop workers
Working on commission.
They're like yeah, yeah, don'tworry about it, you can get zip
money, you can get a line ofcredit, but we saw a lot of
overspending over Christmas.
Speaker 1 (05:53):
Yeah, yeah, there was a recent study from Finder 8%
of Aussies around about 1.7million people are facing
growing credit card debt becauseof this Christmas spend.
So the national credit carddebt is about $2.7 billion and
that's an average debt of $1,600per person.
Speaker 2 (06:10):
That is crazy.
I don't like using the average.
Speaker 1 (06:16):
No, no, it blows out.
Speaker 2 (06:17):
Yeah, the average is not the best way to define
something.
We always like to use themedian.
Speaker 1 (06:23):
Yeah, because that's the actual middle.
Speaker 2 (06:24):
It's not the best way to define something we always
like to use the median.
Yeah, because that's the actualmiddle and I'm 99% certain the
median is going to be higherthan the average, really.
Yeah, because salaries arehigher than what they were when
I applied for a credit card whenI was 18.
So when I was 18, a greatsalary was $120,000 a year.
That means you've made it.
The average salary was like$55,000 to $60,000.
(06:45):
Yeah, okay, I am now 34 yearsold and you know I lodge
mortgages every single day, so Isee what the average salary is.
There's a chance.
Those credit card limits, likethe base limits, are possibly
$10,000 and above.
And when you've got screamingkids, a wife you know who might
really like some fancy things,you want to be able to at least
(07:06):
go for dinner.
You need to host a Christmasparty they all add up and with
home loan interest repaymentsbeing so high, people don't have
free cash moving around Just tospend on a big Christmas buffet
, basically.
You got a million dollarmortgage.
The average repayments on thatper month are around 6600 bucks.
(07:27):
Yeah, okay, you've got back in2022.
Before the rate hikes, that wastwo thousand dollars, all right
, all thereabouts.
So that's now four thousanddollars difference per month in
interest that you now have tofork out and pay yeah with
after-tax money.
So let's say your salary is$100,000.
(07:48):
You've got a million dollarmortgage which you could have
qualified for back then and now,all of a sudden you've got
$4,000 less to spend the monthon top of your after-tax income.
So, after-tax $100,000, what'sthat?
70 grand 70, $80,000?
You're the maths guy, I'm themaths guy, but I'm not the tax
rate guy.
Okay, I'll tell you thatthere's like where does that
money come from?
(08:08):
So that's why this credit carddebt is building up.
Speaker 1 (08:10):
Yeah, honestly, I kind of thought it's smaller
than I thought it would be.
Maybe people downsized overChristmas like they didn't.
Well, there's that story ofthere's two Australians right
now.
There's is right now likethere's.
The people who rate rises havenot done anything, for they're
just living like normal, andthen everyone else.
I don't know if that's.
I don't think it's a 50 50split.
I don't know what the rate is.
(08:30):
This is just more like in theair, like just the sentiment,
you know they're actuallystarting to feel at the older
parties.
Speaker 2 (08:35):
Yeah, so there was huge concern and there was a
massive uh discourse online.
Uh, between 2023 and 2024 ofthe boomer generation the older
generation not being affected byinterest rates.
They have started to feel thepinch in the last six months
because they have businessesthat aren't as profitable as
(08:55):
they once were.
Guess what.
These people also have debt.
They have debt Everyone's gotdebt.
They purchase cars, theypurchase boats, possibly
retirement homes, jet skis Idon't think 66-year-olds are
jumping on jet skis.
I'm just going to put that outthere, but you will see them.
You've actually seen them beaffected.
Speaker 1 (09:17):
Yeah, well, that's what the RBA was trying to wait
for.
That's why they weren'tdropping the rates, despite the
inflation numbers coming withinthat target band.
Yeah, allegedly, um, yeah, sothat's that's why they're
waiting, right for everyone tobe affected and everyone is
affected.
Speaker 2 (09:34):
Yeah, so everyone is affected.
And what we're seeing now,early january period, there's a
lot of debt consolidation loanscoming to us okay, I've got
three personal loans.
Okay, why?
That's the first thing I ask.
I'm like, why do you have threepersonal loans?
And then you'll even see thesame lender giving the same
person two personal loans.
Speaker 1 (09:56):
Interesting.
Speaker 2 (09:57):
It's chaotic.
Okay, so we've got thesepersonal loans, I've got this on
finance and I've got a $4,000credit card I need to pay out.
Where does the money come from?
Exactly?
Where does the money come from?
So people hope that theirproperties will grow in enough
value that we can use all theequity.
We're starting to see housingvalues drop.
Speaker 1 (10:15):
Nothing too crazy.
What was it?
Point one Because the firsttime two quarters have dropped
in value right For like a coupleof years.
Speaker 2 (10:23):
That's right, yeah, I saw that headline, so we're
really starting to see peopleget into more debt trouble than
ever before.
Hopefully the Reserve Bank ofAustralia starts dropping
interest rates so we can getsome activity in the market and
you can go to the pub and get abeer.
Speaker 1 (10:36):
Beer excess is going up in.
Speaker 2 (10:38):
February I'm fuming.
These are the things that arenow occurring and we're hoping
to be able to assist people thathave overspent at Christmas.
And I get it.
I've got a wife.
I've got 14 nieces and nephews.
I've got a large family, a lotof gifts I've got to pay for.
I've got four godchildren I'mgoing to add on to that.
(11:00):
I've got four godchildren thatI need to buy gifts for.
It is not easy.
When you've got a mortgage,when you're trying to get ahead,
when you've got people that areworking for you.
Speaker 1 (11:09):
This is not a simple task I was lucky this Christmas
is that we don't have any.
All the kids are growing up now.
There's no little kids anymore,so we don't have to buy
Christmas presents for everyonenow.
It's just like the immediatefamily and stuff like that.
Speaker 2 (11:22):
We do KK, so we do Ah , yeah, yeah.
But the problem is one of mysisters has five kids.
Speaker 1 (11:30):
Every one of her kids .
So you don't want to get thatone.
No, no, no.
Speaker 2 (11:33):
Not like that.
Each one of her kids isallocated a gift to someone.
Oh okay, her kids are under 10.
So that means she still needsto pay for five extra gifts?
yeah, she's got from her family,okay, well, yeah, so we see the
pinching.
Now, how can we help peoplewhen it comes to debt
consolidation, especially aroundthe christmas period?
(11:55):
Yeah, you really need to startlooking at possibly
consolidating and stretching foras long as possible.
So we have you can stretch alot of the personal loans that
are out there.
They usually try and get youbetween three and five years
that's what they want you at butthere are lenders out there
(12:15):
that will stretch it out toseven to ten years.
Okay.
So if you stretch it, okay,your end debt might be higher,
but your repayments are going tobe lower and right now, the
immediate is the issue, not notthe long term do you want to eat
water for dinner?
Speaker 1 (12:32):
yeah, or do you want?
Speaker 2 (12:33):
to be able to eat an actual meal, and that's what
you've got to look at.
You've got to be able to callbrokers that are out there that
specialize in personal loans,that specialize in those types
of consolidation.
We don't do it at.
It's simple.
We're mainly residential,commercial, but we've got lots
of friends out there.
You know the people from loanoptions, peter, from GPS lending
.
We've got multiple people.
(12:55):
We've got multiple people thatwe can, we can assist you with
so that they can consolidateyour debt, because that could be
the difference in paying $500 amonth in repayments or $300 a
month.
And then if your property growsin value I'm not saying
everyone has a property but ifyour property grows in value as
well in that period, what youcan do is you can then refinance
(13:15):
that debt afterwards once theinterest rates start dropping,
and then that's where yoursavings will be.
Speaker 1 (13:20):
Yeah, If people are on variable rates already and
the cash rate goes down, theirvariable rate will go down
automatically.
Speaker 2 (13:29):
Oh, my sweet summer child.
Speaker 1 (13:31):
I've got to refinance because people will have this
question right.
Speaker 2 (13:35):
So what I have learned with the bank will not
change your rate until you startcalling them.
I've got clients that are on6.8 right now.
They're with certain lenders.
If you're on a 6.8% interestrate, you're probably 60 basis
points higher than what you needto be.
You're probably paying an extra$1,000 in repayments a month
(13:58):
that you don't need to.
The bank is not there to helpyou.
The bank is there to make moneyand to pay out bonuses.
Yeah, that is it.
They're not there for anythingelse.
So if you think, oh, I've beenloyal to this bank, they've
really, really helped me no,yeah, no.
Loyalty is not the aim of thegame loyalty is 100, not the aim
of the game.
(14:18):
So when you ask that question,once the variable rate drops,
the interest rates willautomatically drop.
You're seeing lenders right nowthis very second increase
interest rates.
Speaker 1 (14:29):
Okay, just trying to squeeze the last little bit
before it goes down.
Speaker 2 (14:32):
They're increasing with a random notification that
you will get.
At 2.47 AM You'll get a randomletter that says we're
increasing your interest rate by0.1% because when it finally
comes time for the variable rateto drop oh, they dropped my
interest rate.
Wait a second.
They put it up in January.
Speaker 1 (14:46):
Why did they do that?
No interest rate changeshappened.
Speaker 2 (14:49):
So it's a very, very interesting time.
If the Reserve Bank declaresthat they're going to drop the
interest rate, you call up yourbroker or you call up your bank.
Right then, because the squeakywheel gets the oil.
Speaker 1 (15:03):
Okay, interesting See .
I personally didn't know that.
I thought it was like somethingthat they adjusted accordingly,
not obviously.
Look, I'm not surprised thatthey don't, but I guess I just
thought it was required.
Not at all.
Oh well, there you go, okay.
So speaking of consumerconfidence, well, we weren't
really speaking of consumerconfidence.
We're just speaking ofconsumers, really, because
Christmas, the ANZ Roy MorganConsumer Confidence Scale, it
(15:27):
actually rose by 3.6 points to87.5 in early January.
But that's just the traditionalnews bump Happens every year.
Well, the stats that I foundway more interesting was that
21% of Aussies say they'rebetter off financially than this
time last year, but 45% saythey're worse off.
That makes sense.
Last year, but 45% said they'reworse off that makes sense.
(15:50):
33% expect to be better offthis time in 2026, while 29%
expect to be worse off.
That's very optimistic.
Is that based in anything?
Because I don't really see why.
It seems like a downward trendoverall.
Speaker 2 (16:00):
I can't make sense of the numbers.
21% are better off than whatthey were last year.
The chances of this arepossibly because their
properties rose in value.
Yeah, okay.
Because we haven't seen muchwage growth in the last 12
months and we've seen interestrates stay steady around that 6%
(16:22):
to 7% rate.
So, with 21% believing thatthey're better off than last
year, this could be becausetheir properties rose in value,
whilst rents have leveled off.
If they owned investmentproperties, there's a
possibility that they got ahigher rent.
Yeah, um, especially leadingtowards september, october.
Um, but the 45 saying thatthey're worse off than the start
(16:47):
of 2024,.
That makes 100% sense to me.
And that's just because you andI both know Woolworths recorded
record profits last year.
Coles recorded record profitslast year.
You know we had Woolworths andColes price gouging based upon
supply chain issues.
Supply chain issues Justbecause of a war in Ukraine.
Speaker 1 (17:08):
Which doesn't make any sense.
We grow all our own food.
Speaker 2 (17:12):
I'm not going to get into that, but I do 100%
understand that 45% of peopleare in a worse position because
we can see retail spending isdown.
We can see hospitality spendingis down.
We can see a lot of companiesconstruction companies, building
companies because of theiractual supply chain issues they
(17:34):
have collapsed and we're evenseeing now this is the one that
really caught my eye recently.
The star is going bankrupt.
Speaker 1 (17:43):
Yeah, I'm not going to say I'm not crying over that,
but yeah, no, it is crazy thata casino is going bankrupt.
Yeah, I'm not going to say I'mnot crying over that, but yeah,
no, it is crazy that a casino isgoing bankrupt.
Speaker 2 (17:49):
Where in the world?
I think the only person that'sever bankrupt at a casino was
Donald Trump.
Outside of that, it's Sydney.
Speaker 1 (17:59):
It's also like they have no competition because the
crown can't open right.
No the crown is open, like thecasino, though.
Speaker 2 (18:05):
No, the casino is open, oh okay, but it's only for
people that have spent ahundred thousand dollars and up
yeah, so it's a high rollerthing it's a high roller.
It's two levels.
Okay.
You can't walk in unless you'vespent a hundred thousand
dollars with crown in pastcalendar year.
Oh, so they are struggling aswell.
So you have all these placeswith discretionary spending
(18:25):
going down.
So I can completely understandpeople are pulling back.
They are in a worse positionbecause back in 2020, 2021, yeah
, you were locked inside and youknow there was COVID, but you
could buy whatever yeah but youhad the government gifting you
anywhere between $500, $750tax-free, and then, on the back
(18:46):
of that, you also had employersmaking record profits in that
time.
Okay, if you remember,properties were selling for
$400,000 one week, $500,000 theweek after.
Speaker 1 (18:55):
Yeah, and 0.1% interest rates or whatever.
It was something crazy.
So.
Speaker 2 (19:00):
I 100% understand the sentiment of consumer
confidence in that area, that45% being a lot lower than what
it was last year, Because lastyear they could have walked in
and thought oh you know what?
Inflation is going to come down, this year Interest rates are
going to go down, Everything isgoing to be okay.
That didn't happen.
That did not happen in 2024.
Speaker 1 (19:19):
And I can completely understand why people have lost
all will or all optimism for2025 because property prices
don't go down no we have toomuch of a supply issue when it
comes to property in new southwales and with construction
companies going and going bust,it's not likely to go the other
way anytime soon it's not.
Speaker 2 (19:39):
And then you have states like victoria that are
introducing this land tax scheme.
So you have people who hadinvested there in the past, now
losing money on properties, yeah, okay.
So they possibly feel worse off.
And then the only people thatare really excited are the
people that bought in Perth thistime last year.
That's it.
(19:59):
If you purchased in Perth,you're like yeah, okay, all
right, you know what that's?
Speaker 1 (20:03):
the 21%, the 21% that say those are Perth purchases,
yeah, yeah, the people that arebetter than what they were last
year.
Speaker 2 (20:10):
that's everyone from Perth.
Okay, so that is where I seethat data.
Now, the data that is veryinteresting is the 2026 data.
Speaker 1 (20:20):
Yeah, they think so a third of people think they'll
be better off.
Yeah, that makes sense.
It's optimistic.
I can see why.
To an extent because obviously2025, the cash rate is predicted
to go down at some point.
Speaker 2 (20:34):
Don't get me started on that, but yes, continue.
Speaker 1 (20:36):
Yeah, no, that's a story for another day.
But, just like in general, cashrate's supposed to go down.
So therefore, theoretically,your payments should be less.
Therefore, you have more moneyin your pocket.
Yeah, theoretically, yourpayments should be less.
Therefore, you have more moneyin your pocket.
Yeah, but everything else sofar is still going up.
Everything else is still goingup.
Your woolly shop is going up,your beer shop is going up, all
these other things that you'respending money on are going up.
(20:56):
So I just don't really see whyand wages are remaining stagnant
.
Speaker 2 (20:59):
I just think Australians haven't had a good
run for a while.
Speaker 1 (21:02):
Or at least post-COVID.
Speaker 2 (21:03):
But then again, no one's really had a good run
post-COVID, no, but even beforethat, just the last good run
Australians really had wasbetween 2016 to 2018.
But, then the bushfires startedto happen, and then we had the
COVID, and then as soon as wegot out of COVID, everything
started to go up in value andthen everyone's stuck in their
room and nobody could travel,like Australians have been
(21:25):
beaten okay.
Speaker 1 (21:27):
It's crazy that people aren't okay.
You say people aren't going totravel.
People are still going onholidays.
Everyone's still going overseas.
I don't know where they'regetting this money from nowhere
near as much as what itpreviously was.
Speaker 2 (21:36):
So etihad and emirates now send their worst
planes to australia, becauseaustralians do not spend
anywhere near as much on travelas they used to.
Yes, the peak seasons will befull, but if you see Etihad,
they only run, I think, fourflights out of Sydney a day now
(21:57):
it used to be a lot more thanthat.
Then you have operators likeQatar trying to buy into the
market.
So then Virgin will finallyhave some not Virgin, so Qantas
will have some competition herein Australia.
I, I know what you're saying.
Oh, where are these peoplegetting their money from?
It's the same people traveling.
Speaker 1 (22:13):
There's actually less flights I've just found a quick
, just a quick, thing um 32 risein outbound travel in june
compared to the previous yearyeah, but the previous year was
just out of.
Yeah, it was locked down, youknow.
Speaker 2 (22:26):
So 2021, 2022 and then 2023 okay, maybe we'll go
travel, I don't know, maybewe'll get it stuck in lockdowns.
But 2024 it is expected thatpeople will travel.
People treat covid like it's aregular cold.
Now it's completely differentto what it was in 2020, 2021
shout out to brian, who neverthought it was a real thing.
But like those are the thingsthat we are seeing Less travel
(22:49):
in and out of Australia.
We're seeing less in andoutbound flights from the major
airlines.
I'm certain Qatar is trying toincrease.
So then Qantas has somecompetition, but we don't know
if that's going to happen.
Qantas is.
I'm pretty sure.
Qantas did not make as muchmoney in 23, 24 as they had done
in previous years.
Speaker 1 (23:09):
I mean in part that's their own fault.
They've been mismanaging thatcompany now for a while and it's
been very public post-COVIDLike they've pissed off a lot of
people, especially with the.
They can't even get a flight ontime.
Yeah, so Qantas used to beunblemished.
You wanted to fly with Qantas.
They've never crashed a plane.
Speaker 2 (23:26):
Oh, jesus Christ, man , don't say that out loud.
I'm so scared of flying.
Oh, are you really?
Speaker 1 (23:35):
I'm sorry.
Well, like nothing's ever badhas happened on a Qantas flight
except now yeah, knock on wood,except for these delays and
cancellations and stuff, whichis obviously incredibly
frustrating.
So their brand name is reallyin the toilet right now.
So this is a good time for anyuh competitors to jump in, it's
true?
Um, back to the topic.
Speaker 2 (23:55):
Back to the topic.
Less about contours, back tothe topic at hand.
Do we see consumer confidencerising?
I think, just like with theinterest rates, and just, uh, in
2022, 2023, you would have seenme do a,001 TikToks.
They need to stop the raterises because people don't feel
the effects for three to sixmonths.
Speaker 1 (24:13):
Yeah.
Speaker 2 (24:13):
People don't know how much more things are going to
cost them.
They don't actually comprehenduntil six months later.
Speaker 1 (24:21):
Because you don't literally feel it in your wallet
yet.
Speaker 2 (24:23):
Yeah, You'll feel it immediately, but you'll be like
like, oh, it's just a little bitextra this month that's, that's
what.
Speaker 1 (24:28):
That's what I mean.
Speaker 2 (24:29):
Like you don't feel it immediately, it's just, oh,
it's just a little bit extrathis time yeah, and but six
months later you'll be like, ohmy god, my rates used to be this
.
I used to pay this much.
I'd have this much money leftover.
You know what I'm not going tobuy spend money on this.
So even if they cut it cut theinterest rates, whether it's
next month or the month after,god knows when you're not going
to see much more confidence.
You're not going to see peopleget excited until around July,
(24:50):
august you might see a suddenspike.
You might say, oh, there wasrecord numbers at this auction
on the weekend.
Okay, once interest rates comedown, but it's an anomaly, but
it's an anomaly, and then thingsstart to get normal again.
and things start to get normal.
That's why I was soaggressively agitated About the
rate rises.
About the rate rises in 23 and24.
One thing I want to highlightDid you see that photo going
(25:14):
around of Guy Sebastianperforming?
So, pauline Hanson.
Speaker 1 (25:19):
Oh, it was the Gina Reinhart thing, gina Reinhart.
Speaker 2 (25:21):
And then Philip Lowe was in the background.
Speaker 1 (25:25):
Yeah, I've seen a few things about that because
they're meeting.
Speaker 2 (25:30):
Philip Lowe isn't part of the Reserve Bank of
Australia anymore.
No, why is he hanging aroundthose individuals and why did we
allow someone like that to bein charge of our interest rates?
The everyday livelihood he'shanging out with the billionaire
.
Yeah, gina Reinhart is a andnobody knows how much money she
has, but she's got billions ofit.
(25:50):
Okay, yeah, we know.
So, if that's who he'sassociating with, it just does
not make sense, right.
Anyways, I'm not going to getinto the interest, no, no.
Speaker 1 (26:03):
So what I wanted?
There was another interestingthing just to cap off this
conversation this optimism.
33% of Aussies think they'll bein a better position this time
next year, but only 9% of themthink that the economy is going
to improve over the next 12months.
How?
Speaker 2 (26:19):
it doesn't.
Did they release this survey onJanuary 1st, when everybody was
kicking off their newsresolutions?
Speaker 1 (26:24):
Oh, maybe that's it yeah.
Speaker 2 (26:26):
They.
They said oh yeah, you knowwhat?
I'm going to get this undercontrol.
I'm going to get this undercontrol.
I'm going to get this, it's alljust.
Speaker 1 (26:31):
this is all just news resolutions.
Speaker 2 (26:33):
I'm going to be in better shape.
I'm going to a new g-wagon,jesus, but like that's, that's
that's probably what that is.
Speaker 1 (26:46):
That's the possibility of that if nine
percent expect it to be better.
Speaker 2 (26:48):
Yeah 29 expected to be worse.
Okay, so 91 of people thinkthat's either going to stay the
same or be worse yeah, which isnot optimistic it's not because
you're supposed to grow as anindividual and as a country yeah
, that's the thing, I don't knowwhat.
Speaker 1 (26:59):
Yeah, so people themselves think they'll be
better, but the country won't be.
It's an interesting they'rekeeping these things thing, I
don't know what.
Yeah, so people themselvesthink they'll be better, but the
country won't be.
It's interesting, they'rekeeping these things separate
when I don't think they reallyare.
Speaker 2 (27:07):
I just want to highlight.
If you want to raise yourconsumer confidence in yourself
and the people around you,you've got to and this is the
inspirational part of Joe you'retalking.
You've got to be better asyourself.
Yeah, you want to have moreadvantages next year get a good
morning routine get your moneyunder control.
Okay, be motivated as hell.
(27:28):
Attack your goals, because youshould not have your money
dependent on the economy.
You should be able to createregardless, because we still
live in a great country.
Yeah, that does allow for thatyeah, 100.
Speaker 1 (27:38):
There's still opportunity out there.
It's just you're not just goingto find it on the corner,
though.
You've just got to work for ita little bit more.
And for our final segment,we've got a very fun little tip.
All right, we've got a mate.
Speaker 2 (27:50):
No, no, no.
So this is a new thing Michaeland I thought of, because we've
actually got listeners on thisshow, which is cool.
Yeah, shockingly.
Speaker 1 (28:03):
They just hear you and I ramble.
It's great.
Speaker 2 (28:04):
I don't know why anyone would listen to me.
So we thought to ourselvesevery single week oh sorry,
every fortnight we're going tobe doing a client profile and
we're going to try and decipherwith me on the spot no practice
what I would do in this scenarioto be able to assist somebody
with a mortgage.
Speaker 1 (28:21):
Yeah, and sometimes it'll be funny's.
Sometimes it'll be funny,sometimes it'll be serious and
actually helpful, and sometimesthe answer is I can't help you.
This is a bad financialsituation.
All right, so let's start itoff.
So, andy, he's a Wooliesmanager.
He earns 60K a year.
He wants to buy an apartment.
The problem is he's worriedthat his gambling habit is
(28:41):
affecting his borrowing capacity.
How would you approach this?
Speaker 2 (28:45):
Jeez and crackers.
Okay, so if this guy's earning$60,000 a year and he wants to
buy an apartment, is theapartment to live in or is it
the apartment to?
Speaker 1 (28:53):
The apartment's to live in, the apartment's to live
in he can't borrow.
He can't borrow, he can'tborrow.
Speaker 2 (28:57):
Okay, Depending on where the apartment is in
Australia.
Obviously, the maximum at anypoint in time, even without the
gambling issues and those sortsof things, the maximum he's
probably going to be able toborrow is $280,000 to $320,000.
Absolute maximum.
You're not finding anythingwith that.
It could possibly be less thanthat, so usually calculate it at
(29:17):
about 5.5.
I don't know if this client'sgot credit cards.
There's chances he does,because if you're telling me
he's got a gambling problem,okay.
Speaker 1 (29:26):
He's probably got a line of credit somewhere.
Speaker 2 (29:27):
He's probably got a line of credit and he's probably
linked it to his sports betaccount.
Okay.
Speaker 1 (29:32):
Would it change if he was at 80K?
Speaker 2 (29:35):
It would change.
He would be able to obviouslyborrow more.
He could possibly purchase foraround 500.
So you're looking at apartmentsin fairfield, liverpool,
holsworthy.
Okay, I don't know if there'sapartments in holsworthy, but
it's something you're lookingsomewhere in western sydney?
yeah, um, but if he's got agambling habit, does he have a
deposit saved?
Um, let's say he does.
(29:57):
Okay, if he's got a depositsaved and we have to verify it
via genuine savings that he'sbeen able to save a deposit so
he can qualify for the firsthome guarantee there's a good
chance we're going to be able tosee his gambling habits.
And if we see that the gamblinghabits are really striking,
then we can't help him.
But and I digress but if he'sdoing a $20 multi a week, which
(30:24):
I know some people have theself-control to do, yeah, my
brother does.
Speaker 1 (30:28):
He does literally $2 bets just for the fun of it.
Speaker 2 (30:32):
Okay, I'm not going to get into that, but if he's
doing $20 a week, okay, maybe wecan negotiate that.
If this guy's got a seriousgambling problem and we can see
him withdrawing cash everysingle time he's going to a pub,
if he's going to the star, ifhe's going to you know, bank
sale sports, anywhere like that,or if we could see Sportsbet
consistently leaving his account, then we can't help it.
(30:55):
What we can do is recommendcalling the gambling hotline and
freeze his accounts andpossibly if he's got a friend
around or if he's got hisparents or if he's got a brother
, give them authority on theaccount, okay, to make sure that
this person can't withdrawmoney.
So we have a client right nowthat has a bank account, father
(31:18):
has authority over the bankaccount and two people need to
sign off if withdrawals are evermade.
The reason why we've set it uplike this, or they set it up
like this, is so that the clienthas $400 every single week
going into that bank account tosave as a deposit and then he
receives his weekly paycheckafter that.
So that way, over the last fouryears, he's actually built up
$160,000 deposit.
(31:39):
No, it was $80,000 deposit.
Heaps of money, that's a lot ofmoney.
Yeah, so he's been able tobuild up that deposit, but
that's because his dad hasforced him into it and he
actually can't withdraw moneyfrom that account unless both
individuals sign off, yeah, okay.
And that's a great way to beable to help someone like this,
because if they don't haveaccess to the money, they can't
(32:00):
spend it.
Yeah, okay.
Speaker 1 (32:02):
Because gambling is a big thing in Australia.
Do you find a lot of clientshave, like you can see, their
gambling habits when they'reapplying for loans and stuff
like that?
Speaker 2 (32:10):
Surprisingly, the clients that I deal with day to
day when it comes to first homebuyers or when it comes to
people purchasing an investment.
Surprisingly I don't see it,but that's because when you're
purchasing a property, it is alarge purchase, so you don't
often see the sports bets, youdon't often see the TABs and
stuff.
They do come up, I would sayone in 10.
But when you're dealing withthe personal loans, the car
(32:30):
loans, the asset loans that'swhen you really start to see it
Interesting, that's interesting.
But anyways, guys, thank you somuch catching this episode of
the finance show with joe.
As always, I'm joe I'm someschmo.
That came out right and we'llcatch you on the next episode.
All right, welcome to the Finance Show with Joe.
He's Joe, I'm just some schmo.
Merry Christmas all.
Speaker 2 (00:10):
I think we're about 20 days late, mate.
What are you talking about?
Never too late, it's the 25thof December.
Speaker 1 (00:14):
I don't know what you're talking about how have
you been.
It's snowing outside.
I've been good, I've been good.
It was a good break.
How about you?
Speaker 2 (00:20):
I didn't have a break .
Speaker 1 (00:20):
You didn't have a break.
Speaker 2 (00:28):
No, not in the slightest.
It was possibly one of the mostchaotic Christmases I've ever
had.
As you know, the influx of ourwork has been at a level that
we've never experienced before.
Speaker 1 (00:33):
Good, times for Simple, it's fantastic.
Speaker 2 (00:36):
Don't get me wrong.
But at the same time, it isquite difficult to get
settlements across the lineduring the Christmas period.
Speaker 1 (00:44):
All the solicitors are like on holiday right.
Speaker 2 (00:46):
We've got solicitors on holiday, we've got banks
working with skeleton staff andwe also have the credit
assessment team, you know, onleave.
So who does it all fall on, ifyour loan is supposed to settle
on the 27th of December or the30th of December or the 1st of
January?
Actually, nothing ever settleson the 1th of December or the
30th of December or the 1st ofJanuary.
(01:06):
Actually, nothing ever settleson the 1st of January or the 3rd
of January.
So there's a lot of issues thatare created when it comes to the
Christmas period and this issomething I want to highlight.
And, liam, turn this into aTikTok.
Later in the year, if you areplanning to get a loan, avoid as
much as possible having yoursettlement between December 21st
(01:30):
and the 6th of January, becauseI am telling you from now, it's
going to be chaotic.
Speaker 1 (01:35):
It is going to be hell, you're going to tear your
hair out, wondering if you'regoing to get it on time.
Speaker 2 (01:39):
Why do you think I got cut off the ponytail?
Speaker 1 (01:41):
I was just ripping it out all throughout the
Christmas period.
Speaker 2 (01:44):
It was, it was crazy, it was, um, it was possibly the
most challenging time of mylife, and something that usually
takes two minutes duringregular banking periods was
taking four hours.
I'm talking about justnominating a offset account,
just nominating an account.
(02:04):
Sending the form in to a bankUsually, yep, that's the account
they structure it it was takingfour hours to get a response.
It was chaos, but thankfully wegot through it, got it over the
line.
It's the 17th of January,christmas episode, but 17th of.
January, we're going to getthere and we're very, very
excited.
Speaker 1 (02:22):
Yeah, and speaking of Christmas, we're very, very
excited.
Yeah, and speaking of Christmas, we're going through the cost
of living crisis.
Yada, yada.
It's almost become a meme atthis point cost of living, yada,
yada, but people are stillspent on Christmas.
But did you notice people wereoverspending on Christmas?
A lot more credit lines thisyear, or nothing like that.
Speaker 2 (02:38):
Credit cards.
The application for a creditcard is a lot easier than an
application for a home?
Yeah, naturally, the applicationfor a credit card is a lot
easier than an application for ahome loan.
Yeah, naturally, when it comesto a credit card, there's always
going to be some third orfourth tier lender out there
that is going to give you somesort of credit, and this can be
anywhere between $2,000 to$10,000.
After $10,000, you know there'sgoing to be a lot more scrutiny
(03:00):
when it comes to your account,your files, your credit scoring,
yeah.
But anywhere between that I caneven go to 500.
500 to $10,000 mark it's apretty easy application and they
will usually approve you on theday Now with credit cards,
you've also got the credit card.
You've got a buy now, pay lateraccount Buy now, pay later and
then you could get zip money,which is a line of credit on
(03:24):
your, not your, finances, onyour pay slips.
So it's a line of credit on yourincome.
So you can get up to $5,000from a company like Zip money.
Speaker 1 (03:32):
Yeah, I did that when they first came out.
This is when Afterpay and stuffwere just taking off and I
needed a laptop at the time andI couldn't afford it with cash
on hand, but with Zip Money Icould.
That's all closed.
Now I don't have any of thisbuy now, pay later stuff.
I'm aware of this, you areaware of this.
But yeah, it was interesting.
(03:55):
After I paid that offsuccessfully, they upped my
limit to $10,000 as if it was acredit card, and I'm like, hmm,
this feels too easy.
Like yeah, I'm like I'll pay mybills, but what if someone
who's like not good at this?
Speaker 2 (04:10):
the.
The main problems I have withafter pay, zip money and even
some credit card lenders is theywill now allow you to apply at
the store.
So if you walk into platypus,I'm not too sure of platypus but
just andypus, I'm not defamingPlatypus, I'm just going to
highlight that.
But if you wanted to buy a pairof sneakers, I'm almost 98%
(04:33):
certain they used to let youopen an afterpay account on the
spot in the store.
You know, when you go to HarveyNorman and they say 60 months
interest free, it's a creditcard.
All they're doing is offeringyou a credit.
They say 60 months interestfree.
Speaker 1 (04:44):
That's what this is.
Speaker 2 (04:45):
It's a credit card, all they're doing is offering
you a credit card for 60 monthsthat you don't have to actually
go to a bank to apply for orcall up and apply for.
They'll do it for you on thespot and they'll go yep, you're
approved.
Let's give you your couch andstuff.
And they prey on people whoaren't financially savvy or
financially vulnerable.
Yeah, that's pretty much it.
They prey on the financiallyvulnerable.
(05:06):
So you'll have an 18 year old,19 year old that walks in and
they're like I could get a 50inch flat screen tv, I could, I
could buy this stuff.
Yeah, let's do it.
And they have no idea.
Speaker 1 (05:17):
They just think it's like free money they just think
it's free money.
Speaker 2 (05:19):
They just think, oh yeah, I'll make my repayments in
in 60 months.
They have no idea what's aboutto hit them, or they're just so
desperate to like.
Speaker 1 (05:27):
you know, they've got no TV or they've got no couch
and this is the only way they'rerealistically going to be able
to afford it.
But even then, can theyrealistically afford it?
Speaker 2 (05:34):
Well, the people that are applying for these credit
cards.
They're not from the bank,they're retail shop workers
Working on commission.
They're like yeah, yeah, don'tworry about it, you can get zip
money, you can get a line ofcredit, but we saw a lot of
overspending over Christmas.
Speaker 1 (05:53):
Yeah, yeah, there was a recent study from Finder 8%
of Aussies around about 1.7million people are facing
growing credit card debt becauseof this Christmas spend.
So the national credit carddebt is about $2.7 billion and
that's an average debt of $1,600per person.
Speaker 2 (06:10):
That is crazy.
I don't like using the average.
Speaker 1 (06:16):
No, no, it blows out.
Speaker 2 (06:17):
Yeah, the average is not the best way to define
something.
We always like to use themedian.
Speaker 1 (06:23):
Yeah, because that's the actual middle.
Speaker 2 (06:24):
It's not the best way to define something we always
like to use the median.
Yeah, because that's the actualmiddle and I'm 99% certain the
median is going to be higherthan the average, really.
Yeah, because salaries arehigher than what they were when
I applied for a credit card whenI was 18.
So when I was 18, a greatsalary was $120,000 a year.
That means you've made it.
The average salary was like$55,000 to $60,000.
(06:45):
Yeah, okay, I am now 34 yearsold and you know I lodge
mortgages every single day, so Isee what the average salary is.
There's a chance.
Those credit card limits, likethe base limits, are possibly
$10,000 and above.
And when you've got screamingkids, a wife you know who might
really like some fancy things,you want to be able to at least
(07:06):
go for dinner.
You need to host a Christmasparty they all add up and with
home loan interest repaymentsbeing so high, people don't have
free cash moving around Just tospend on a big Christmas buffet
, basically.
You got a million dollarmortgage.
The average repayments on thatper month are around 6600 bucks.
(07:27):
Yeah, okay, you've got back in2022.
Before the rate hikes, that wastwo thousand dollars, all right
, all thereabouts.
So that's now four thousanddollars difference per month in
interest that you now have tofork out and pay yeah with
after-tax money.
So let's say your salary is$100,000.
(07:48):
You've got a million dollarmortgage which you could have
qualified for back then and now,all of a sudden you've got
$4,000 less to spend the monthon top of your after-tax income.
So, after-tax $100,000, what'sthat?
70 grand 70, $80,000?
You're the maths guy, I'm themaths guy, but I'm not the tax
rate guy.
Okay, I'll tell you thatthere's like where does that
money come from?
(08:08):
So that's why this credit carddebt is building up.
Speaker 1 (08:10):
Yeah, honestly, I kind of thought it's smaller
than I thought it would be.
Maybe people downsized overChristmas like they didn't.
Well, there's that story ofthere's two Australians right
now.
There's is right now likethere's.
The people who rate rises havenot done anything, for they're
just living like normal, andthen everyone else.
I don't know if that's.
I don't think it's a 50 50split.
I don't know what the rate is.
(08:30):
This is just more like in theair, like just the sentiment,
you know they're actuallystarting to feel at the older
parties.
Speaker 2 (08:35):
Yeah, so there was huge concern and there was a
massive uh discourse online.
Uh, between 2023 and 2024 ofthe boomer generation the older
generation not being affected byinterest rates.
They have started to feel thepinch in the last six months
because they have businessesthat aren't as profitable as
(08:55):
they once were.
Guess what.
These people also have debt.
They have debt Everyone's gotdebt.
They purchase cars, theypurchase boats, possibly
retirement homes, jet skis Idon't think 66-year-olds are
jumping on jet skis.
I'm just going to put that outthere, but you will see them.
You've actually seen them beaffected.
Speaker 1 (09:17):
Yeah, well, that's what the RBA was trying to wait
for.
That's why they weren'tdropping the rates, despite the
inflation numbers coming withinthat target band.
Yeah, allegedly, um, yeah, sothat's that's why they're
waiting, right for everyone tobe affected and everyone is
affected.
Speaker 2 (09:34):
Yeah, so everyone is affected.
And what we're seeing now,early january period, there's a
lot of debt consolidation loanscoming to us okay, I've got
three personal loans.
Okay, why?
That's the first thing I ask.
I'm like, why do you have threepersonal loans?
And then you'll even see thesame lender giving the same
person two personal loans.
Speaker 1 (09:56):
Interesting.
Speaker 2 (09:57):
It's chaotic.
Okay, so we've got thesepersonal loans, I've got this on
finance and I've got a $4,000credit card I need to pay out.
Where does the money come from?
Exactly?
Where does the money come from?
So people hope that theirproperties will grow in enough
value that we can use all theequity.
We're starting to see housingvalues drop.
Speaker 1 (10:15):
Nothing too crazy.
What was it?
Point one Because the firsttime two quarters have dropped
in value right For like a coupleof years.
Speaker 2 (10:23):
That's right, yeah, I saw that headline, so we're
really starting to see peopleget into more debt trouble than
ever before.
Hopefully the Reserve Bank ofAustralia starts dropping
interest rates so we can getsome activity in the market and
you can go to the pub and get abeer.
Speaker 1 (10:36):
Beer excess is going up in.
Speaker 2 (10:38):
February I'm fuming.
These are the things that arenow occurring and we're hoping
to be able to assist people thathave overspent at Christmas.
And I get it.
I've got a wife.
I've got 14 nieces and nephews.
I've got a large family, a lotof gifts I've got to pay for.
I've got four godchildren I'mgoing to add on to that.
(11:00):
I've got four godchildren thatI need to buy gifts for.
It is not easy.
When you've got a mortgage,when you're trying to get ahead,
when you've got people that areworking for you.
Speaker 1 (11:09):
This is not a simple task I was lucky this Christmas
is that we don't have any.
All the kids are growing up now.
There's no little kids anymore,so we don't have to buy
Christmas presents for everyonenow.
It's just like the immediatefamily and stuff like that.
Speaker 2 (11:22):
We do KK, so we do Ah , yeah, yeah.
But the problem is one of mysisters has five kids.
Speaker 1 (11:30):
Every one of her kids .
So you don't want to get thatone.
No, no, no.
Speaker 2 (11:33):
Not like that.
Each one of her kids isallocated a gift to someone.
Oh okay, her kids are under 10.
So that means she still needsto pay for five extra gifts?
yeah, she's got from her family,okay, well, yeah, so we see the
pinching.
Now, how can we help peoplewhen it comes to debt
consolidation, especially aroundthe christmas period?
(11:55):
Yeah, you really need to startlooking at possibly
consolidating and stretching foras long as possible.
So we have you can stretch alot of the personal loans that
are out there.
They usually try and get youbetween three and five years
that's what they want you at butthere are lenders out there
(12:15):
that will stretch it out toseven to ten years.
Okay.
So if you stretch it, okay,your end debt might be higher,
but your repayments are going tobe lower and right now, the
immediate is the issue, not notthe long term do you want to eat
water for dinner?
Speaker 1 (12:32):
yeah, or do you want?
Speaker 2 (12:33):
to be able to eat an actual meal, and that's what
you've got to look at.
You've got to be able to callbrokers that are out there that
specialize in personal loans,that specialize in those types
of consolidation.
We don't do it at.
It's simple.
We're mainly residential,commercial, but we've got lots
of friends out there.
You know the people from loanoptions, peter, from GPS lending
.
We've got multiple people.
(12:55):
We've got multiple people thatwe can, we can assist you with
so that they can consolidateyour debt, because that could be
the difference in paying $500 amonth in repayments or $300 a
month.
And then if your property growsin value I'm not saying
everyone has a property but ifyour property grows in value as
well in that period, what youcan do is you can then refinance
(13:15):
that debt afterwards once theinterest rates start dropping,
and then that's where yoursavings will be.
Speaker 1 (13:20):
Yeah, If people are on variable rates already and
the cash rate goes down, theirvariable rate will go down
automatically.
Speaker 2 (13:29):
Oh, my sweet summer child.
Speaker 1 (13:31):
I've got to refinance because people will have this
question right.
Speaker 2 (13:35):
So what I have learned with the bank will not
change your rate until you startcalling them.
I've got clients that are on6.8 right now.
They're with certain lenders.
If you're on a 6.8% interestrate, you're probably 60 basis
points higher than what you needto be.
You're probably paying an extra$1,000 in repayments a month
(13:58):
that you don't need to.
The bank is not there to helpyou.
The bank is there to make moneyand to pay out bonuses.
Yeah, that is it.
They're not there for anythingelse.
So if you think, oh, I've beenloyal to this bank, they've
really, really helped me no,yeah, no.
Loyalty is not the aim of thegame loyalty is 100, not the aim
of the game.
(14:18):
So when you ask that question,once the variable rate drops,
the interest rates willautomatically drop.
You're seeing lenders right nowthis very second increase
interest rates.
Speaker 1 (14:29):
Okay, just trying to squeeze the last little bit
before it goes down.
Speaker 2 (14:32):
They're increasing with a random notification that
you will get.
At 2.47 AM You'll get a randomletter that says we're
increasing your interest rate by0.1% because when it finally
comes time for the variable rateto drop oh, they dropped my
interest rate.
Wait a second.
They put it up in January.
Speaker 1 (14:46):
Why did they do that?
No interest rate changeshappened.
Speaker 2 (14:49):
So it's a very, very interesting time.
If the Reserve Bank declaresthat they're going to drop the
interest rate, you call up yourbroker or you call up your bank.
Right then, because the squeakywheel gets the oil.
Speaker 1 (15:03):
Okay, interesting See .
I personally didn't know that.
I thought it was like somethingthat they adjusted accordingly,
not obviously.
Look, I'm not surprised thatthey don't, but I guess I just
thought it was required.
Not at all.
Oh well, there you go, okay.
So speaking of consumerconfidence, well, we weren't
really speaking of consumerconfidence.
We're just speaking ofconsumers, really, because
Christmas, the ANZ Roy MorganConsumer Confidence Scale, it
(15:27):
actually rose by 3.6 points to87.5 in early January.
But that's just the traditionalnews bump Happens every year.
Well, the stats that I foundway more interesting was that
21% of Aussies say they'rebetter off financially than this
time last year, but 45% saythey're worse off.
That makes sense.
Last year, but 45% said they'reworse off that makes sense.
(15:50):
33% expect to be better offthis time in 2026, while 29%
expect to be worse off.
That's very optimistic.
Is that based in anything?
Because I don't really see why.
It seems like a downward trendoverall.
Speaker 2 (16:00):
I can't make sense of the numbers.
21% are better off than whatthey were last year.
The chances of this arepossibly because their
properties rose in value.
Yeah, okay.
Because we haven't seen muchwage growth in the last 12
months and we've seen interestrates stay steady around that 6%
(16:22):
to 7% rate.
So, with 21% believing thatthey're better off than last
year, this could be becausetheir properties rose in value,
whilst rents have leveled off.
If they owned investmentproperties, there's a
possibility that they got ahigher rent.
Yeah, um, especially leadingtowards september, october.
Um, but the 45 saying thatthey're worse off than the start
(16:47):
of 2024,.
That makes 100% sense to me.
And that's just because you andI both know Woolworths recorded
record profits last year.
Coles recorded record profitslast year.
You know we had Woolworths andColes price gouging based upon
supply chain issues.
Supply chain issues Justbecause of a war in Ukraine.
Speaker 1 (17:08):
Which doesn't make any sense.
We grow all our own food.
Speaker 2 (17:12):
I'm not going to get into that, but I do 100%
understand that 45% of peopleare in a worse position because
we can see retail spending isdown.
We can see hospitality spendingis down.
We can see a lot of companiesconstruction companies, building
companies because of theiractual supply chain issues they
(17:34):
have collapsed and we're evenseeing now this is the one that
really caught my eye recently.
The star is going bankrupt.
Speaker 1 (17:43):
Yeah, I'm not going to say I'm not crying over that,
but yeah, no, it is crazy thata casino is going bankrupt.
Yeah, I'm not going to say I'mnot crying over that, but yeah,
no, it is crazy that a casino isgoing bankrupt.
Speaker 2 (17:49):
Where in the world?
I think the only person that'sever bankrupt at a casino was
Donald Trump.
Outside of that, it's Sydney.
Speaker 1 (17:59):
It's also like they have no competition because the
crown can't open right.
No the crown is open, like thecasino, though.
Speaker 2 (18:05):
No, the casino is open, oh okay, but it's only for
people that have spent ahundred thousand dollars and up
yeah, so it's a high rollerthing it's a high roller.
It's two levels.
Okay.
You can't walk in unless you'vespent a hundred thousand
dollars with crown in pastcalendar year.
Oh, so they are struggling aswell.
So you have all these placeswith discretionary spending
(18:25):
going down.
So I can completely understandpeople are pulling back.
They are in a worse positionbecause back in 2020, 2021, yeah
, you were locked inside and youknow there was COVID, but you
could buy whatever yeah but youhad the government gifting you
anywhere between $500, $750tax-free, and then, on the back
(18:46):
of that, you also had employersmaking record profits in that
time.
Okay, if you remember,properties were selling for
$400,000 one week, $500,000 theweek after.
Speaker 1 (18:55):
Yeah, and 0.1% interest rates or whatever.
It was something crazy.
So.
Speaker 2 (19:00):
I 100% understand the sentiment of consumer
confidence in that area, that45% being a lot lower than what
it was last year, Because lastyear they could have walked in
and thought oh you know what?
Inflation is going to come down, this year Interest rates are
going to go down, Everything isgoing to be okay.
That didn't happen.
That did not happen in 2024.
Speaker 1 (19:19):
And I can completely understand why people have lost
all will or all optimism for2025 because property prices
don't go down no we have toomuch of a supply issue when it
comes to property in new southwales and with construction
companies going and going bust,it's not likely to go the other
way anytime soon it's not.
Speaker 2 (19:39):
And then you have states like victoria that are
introducing this land tax scheme.
So you have people who hadinvested there in the past, now
losing money on properties, yeah, okay.
So they possibly feel worse off.
And then the only people thatare really excited are the
people that bought in Perth thistime last year.
That's it.
(19:59):
If you purchased in Perth,you're like yeah, okay, all
right, you know what that's?
Speaker 1 (20:03):
the 21%, the 21% that say those are Perth purchases,
yeah, yeah, the people that arebetter than what they were last
year.
Speaker 2 (20:10):
that's everyone from Perth.
Okay, so that is where I seethat data.
Now, the data that is veryinteresting is the 2026 data.
Speaker 1 (20:20):
Yeah, they think so a third of people think they'll
be better off.
Yeah, that makes sense.
It's optimistic.
I can see why.
To an extent because obviously2025, the cash rate is predicted
to go down at some point.
Speaker 2 (20:34):
Don't get me started on that, but yes, continue.
Speaker 1 (20:36):
Yeah, no, that's a story for another day.
But, just like in general, cashrate's supposed to go down.
So therefore, theoretically,your payments should be less.
Therefore, you have more moneyin your pocket.
Yeah, theoretically, yourpayments should be less.
Therefore, you have more moneyin your pocket.
Yeah, but everything else sofar is still going up.
Everything else is still goingup.
Your woolly shop is going up,your beer shop is going up, all
these other things that you'respending money on are going up.
(20:56):
So I just don't really see whyand wages are remaining stagnant
.
Speaker 2 (20:59):
I just think Australians haven't had a good
run for a while.
Speaker 1 (21:02):
Or at least post-COVID.
Speaker 2 (21:03):
But then again, no one's really had a good run
post-COVID, no, but even beforethat, just the last good run
Australians really had wasbetween 2016 to 2018.
But, then the bushfires startedto happen, and then we had the
COVID, and then as soon as wegot out of COVID, everything
started to go up in value andthen everyone's stuck in their
room and nobody could travel,like Australians have been
(21:25):
beaten okay.
Speaker 1 (21:27):
It's crazy that people aren't okay.
You say people aren't going totravel.
People are still going onholidays.
Everyone's still going overseas.
I don't know where they'regetting this money from nowhere
near as much as what itpreviously was.
Speaker 2 (21:36):
So etihad and emirates now send their worst
planes to australia, becauseaustralians do not spend
anywhere near as much on travelas they used to.
Yes, the peak seasons will befull, but if you see Etihad,
they only run, I think, fourflights out of Sydney a day now
(21:57):
it used to be a lot more thanthat.
Then you have operators likeQatar trying to buy into the
market.
So then Virgin will finallyhave some not Virgin, so Qantas
will have some competition herein Australia.
I, I know what you're saying.
Oh, where are these peoplegetting their money from?
It's the same people traveling.
Speaker 1 (22:13):
There's actually less flights I've just found a quick
, just a quick, thing um 32 risein outbound travel in june
compared to the previous yearyeah, but the previous year was
just out of.
Yeah, it was locked down, youknow.
Speaker 2 (22:26):
So 2021, 2022 and then 2023 okay, maybe we'll go
travel, I don't know, maybewe'll get it stuck in lockdowns.
But 2024 it is expected thatpeople will travel.
People treat covid like it's aregular cold.
Now it's completely differentto what it was in 2020, 2021
shout out to brian, who neverthought it was a real thing.
But like those are the thingsthat we are seeing Less travel
(22:49):
in and out of Australia.
We're seeing less in andoutbound flights from the major
airlines.
I'm certain Qatar is trying toincrease.
So then Qantas has somecompetition, but we don't know
if that's going to happen.
Qantas is.
I'm pretty sure.
Qantas did not make as muchmoney in 23, 24 as they had done
in previous years.
Speaker 1 (23:09):
I mean in part that's their own fault.
They've been mismanaging thatcompany now for a while and it's
been very public post-COVIDLike they've pissed off a lot of
people, especially with the.
They can't even get a flight ontime.
Yeah, so Qantas used to beunblemished.
You wanted to fly with Qantas.
They've never crashed a plane.
Speaker 2 (23:26):
Oh, jesus Christ, man , don't say that out loud.
I'm so scared of flying.
Oh, are you really?
Speaker 1 (23:35):
I'm sorry.
Well, like nothing's ever badhas happened on a Qantas flight
except now yeah, knock on wood,except for these delays and
cancellations and stuff, whichis obviously incredibly
frustrating.
So their brand name is reallyin the toilet right now.
So this is a good time for anyuh competitors to jump in, it's
true?
Um, back to the topic.
Speaker 2 (23:55):
Back to the topic.
Less about contours, back tothe topic at hand.
Do we see consumer confidencerising?
I think, just like with theinterest rates, and just, uh, in
2022, 2023, you would have seenme do a,001 TikToks.
They need to stop the raterises because people don't feel
the effects for three to sixmonths.
Speaker 1 (24:13):
Yeah.
Speaker 2 (24:13):
People don't know how much more things are going to
cost them.
They don't actually comprehenduntil six months later.
Speaker 1 (24:21):
Because you don't literally feel it in your wallet
yet.
Speaker 2 (24:23):
Yeah, You'll feel it immediately, but you'll be like
like, oh, it's just a little bitextra this month that's, that's
what.
Speaker 1 (24:28):
That's what I mean.
Speaker 2 (24:29):
Like you don't feel it immediately, it's just, oh,
it's just a little bit extrathis time yeah, and but six
months later you'll be like, ohmy god, my rates used to be this
.
I used to pay this much.
I'd have this much money leftover.
You know what I'm not going tobuy spend money on this.
So even if they cut it cut theinterest rates, whether it's
next month or the month after,god knows when you're not going
to see much more confidence.
You're not going to see peopleget excited until around July,
(24:50):
august you might see a suddenspike.
You might say, oh, there wasrecord numbers at this auction
on the weekend.
Okay, once interest rates comedown, but it's an anomaly, but
it's an anomaly, and then thingsstart to get normal again.
and things start to get normal.
That's why I was soaggressively agitated About the
rate rises.
About the rate rises in 23 and24.
One thing I want to highlightDid you see that photo going
(25:14):
around of Guy Sebastianperforming?
So, pauline Hanson.
Speaker 1 (25:19):
Oh, it was the Gina Reinhart thing, gina Reinhart.
Speaker 2 (25:21):
And then Philip Lowe was in the background.
Speaker 1 (25:25):
Yeah, I've seen a few things about that because
they're meeting.
Speaker 2 (25:30):
Philip Lowe isn't part of the Reserve Bank of
Australia anymore.
No, why is he hanging aroundthose individuals and why did we
allow someone like that to bein charge of our interest rates?
The everyday livelihood he'shanging out with the billionaire
.
Yeah, gina Reinhart is a andnobody knows how much money she
has, but she's got billions ofit.
(25:50):
Okay, yeah, we know.
So, if that's who he'sassociating with, it just does
not make sense, right.
Anyways, I'm not going to getinto the interest, no, no.
Speaker 1 (26:03):
So what I wanted?
There was another interestingthing just to cap off this
conversation this optimism.
33% of Aussies think they'll bein a better position this time
next year, but only 9% of themthink that the economy is going
to improve over the next 12months.
How?
Speaker 2 (26:19):
it doesn't.
Did they release this survey onJanuary 1st, when everybody was
kicking off their newsresolutions?
Speaker 1 (26:24):
Oh, maybe that's it yeah.
Speaker 2 (26:26):
They.
They said oh yeah, you knowwhat?
I'm going to get this undercontrol.
I'm going to get this undercontrol.
I'm going to get this, it's alljust.
Speaker 1 (26:31):
this is all just news resolutions.
Speaker 2 (26:33):
I'm going to be in better shape.
I'm going to a new g-wagon,jesus, but like that's, that's
that's probably what that is.
Speaker 1 (26:46):
That's the possibility of that if nine
percent expect it to be better.
Speaker 2 (26:48):
Yeah 29 expected to be worse.
Okay, so 91 of people thinkthat's either going to stay the
same or be worse yeah, which isnot optimistic it's not because
you're supposed to grow as anindividual and as a country yeah
, that's the thing, I don't knowwhat.
Speaker 1 (26:59):
Yeah, so people themselves think they'll be
better, but the country won't be.
It's an interesting they'rekeeping these things thing, I
don't know what.
Yeah, so people themselvesthink they'll be better, but the
country won't be.
It's interesting, they'rekeeping these things separate
when I don't think they reallyare.
Speaker 2 (27:07):
I just want to highlight.
If you want to raise yourconsumer confidence in yourself
and the people around you,you've got to and this is the
inspirational part of Joe you'retalking.
You've got to be better asyourself.
Yeah, you want to have moreadvantages next year get a good
morning routine get your moneyunder control.
Okay, be motivated as hell.
(27:28):
Attack your goals, because youshould not have your money
dependent on the economy.
You should be able to createregardless, because we still
live in a great country.
Yeah, that does allow for thatyeah, 100.
Speaker 1 (27:38):
There's still opportunity out there.
It's just you're not just goingto find it on the corner,
though.
You've just got to work for ita little bit more.
And for our final segment,we've got a very fun little tip.
All right, we've got a mate.
Speaker 2 (27:50):
No, no, no.
So this is a new thing Michaeland I thought of, because we've
actually got listeners on thisshow, which is cool.
Yeah, shockingly.
Speaker 1 (28:03):
They just hear you and I ramble.
It's great.
Speaker 2 (28:04):
I don't know why anyone would listen to me.
So we thought to ourselvesevery single week oh sorry,
every fortnight we're going tobe doing a client profile and
we're going to try and decipherwith me on the spot no practice
what I would do in this scenarioto be able to assist somebody
with a mortgage.
Speaker 1 (28:21):
Yeah, and sometimes it'll be funny's.
Sometimes it'll be funny,sometimes it'll be serious and
actually helpful, and sometimesthe answer is I can't help you.
This is a bad financialsituation.
All right, so let's start itoff.
So, andy, he's a Wooliesmanager.
He earns 60K a year.
He wants to buy an apartment.
The problem is he's worriedthat his gambling habit is
(28:41):
affecting his borrowing capacity.
How would you approach this?
Speaker 2 (28:45):
Jeez and crackers.
Okay, so if this guy's earning$60,000 a year and he wants to
buy an apartment, is theapartment to live in or is it
the apartment to?
Speaker 1 (28:53):
The apartment's to live in, the apartment's to live
in he can't borrow.
He can't borrow, he can'tborrow.
Speaker 2 (28:57):
Okay, Depending on where the apartment is in
Australia.
Obviously, the maximum at anypoint in time, even without the
gambling issues and those sortsof things, the maximum he's
probably going to be able toborrow is $280,000 to $320,000.
Absolute maximum.
You're not finding anythingwith that.
It could possibly be less thanthat, so usually calculate it at
(29:17):
about 5.5.
I don't know if this client'sgot credit cards.
There's chances he does,because if you're telling me
he's got a gambling problem,okay.
Speaker 1 (29:26):
He's probably got a line of credit somewhere.
Speaker 2 (29:27):
He's probably got a line of credit and he's probably
linked it to his sports betaccount.
Okay.
Speaker 1 (29:32):
Would it change if he was at 80K?
Speaker 2 (29:35):
It would change.
He would be able to obviouslyborrow more.
He could possibly purchase foraround 500.
So you're looking at apartmentsin fairfield, liverpool,
holsworthy.
Okay, I don't know if there'sapartments in holsworthy, but
it's something you're lookingsomewhere in western sydney?
yeah, um, but if he's got agambling habit, does he have a
deposit saved?
Um, let's say he does.
(29:57):
Okay, if he's got a depositsaved and we have to verify it
via genuine savings that he'sbeen able to save a deposit so
he can qualify for the firsthome guarantee there's a good
chance we're going to be able tosee his gambling habits.
And if we see that the gamblinghabits are really striking,
then we can't help him.
But and I digress but if he'sdoing a $20 multi a week, which
(30:24):
I know some people have theself-control to do, yeah, my
brother does.
Speaker 1 (30:28):
He does literally $2 bets just for the fun of it.
Speaker 2 (30:32):
Okay, I'm not going to get into that, but if he's
doing $20 a week, okay, maybe wecan negotiate that.
If this guy's got a seriousgambling problem and we can see
him withdrawing cash everysingle time he's going to a pub,
if he's going to the star, ifhe's going to you know, bank
sale sports, anywhere like that,or if we could see Sportsbet
consistently leaving his account, then we can't help it.
(30:55):
What we can do is recommendcalling the gambling hotline and
freeze his accounts andpossibly if he's got a friend
around or if he's got hisparents or if he's got a brother
, give them authority on theaccount, okay, to make sure that
this person can't withdrawmoney.
So we have a client right nowthat has a bank account, father
(31:18):
has authority over the bankaccount and two people need to
sign off if withdrawals are evermade.
The reason why we've set it uplike this, or they set it up
like this, is so that the clienthas $400 every single week
going into that bank account tosave as a deposit and then he
receives his weekly paycheckafter that.
So that way, over the last fouryears, he's actually built up
$160,000 deposit.
(31:39):
No, it was $80,000 deposit.
Heaps of money, that's a lot ofmoney.
Yeah, so he's been able tobuild up that deposit, but
that's because his dad hasforced him into it and he
actually can't withdraw moneyfrom that account unless both
individuals sign off, yeah, okay.
And that's a great way to beable to help someone like this,
because if they don't haveaccess to the money, they can't
(32:00):
spend it.
Yeah, okay.
Speaker 1 (32:02):
Because gambling is a big thing in Australia.
Do you find a lot of clientshave, like you can see, their
gambling habits when they'reapplying for loans and stuff
like that?
Speaker 2 (32:10):
Surprisingly, the clients that I deal with day to
day when it comes to first homebuyers or when it comes to
people purchasing an investment.
Surprisingly I don't see it,but that's because when you're
purchasing a property, it is alarge purchase, so you don't
often see the sports bets, youdon't often see the TABs and
stuff.
They do come up, I would sayone in 10.
But when you're dealing withthe personal loans, the car
(32:30):
loans, the asset loans that'swhen you really start to see it
Interesting, that's interesting.
But anyways, guys, thank you somuch catching this episode of
the finance show with joe.
As always, I'm joe I'm someschmo.
That came out right and we'llcatch you on the next episode.
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