Sarah Jane Miller blogged about her experience paying off thousands of dollars, and is now an evangelist for having a good relationship with money. The Wireless asked her how she got started.
Is it too easy to get into debt, do you think, especially when travelling/studying/not earning very much?
I think it’s very easy to get into debt when you have cheap credit available and no concept of how to budget or live within your means. When I was studying and in the few years I was working in hospo, it seemed that it was super easy to get into debt - credit was cheap, the bank automatically gave students an overdraft, and I needed to get a student loan to help pay for my rent and food. Of course, I maxed out credit cards and overdrafts and student loan really quickly, because I used to have a really bad attitude towards money. I think the reason I got into so much debt during the short time I was travelling was because I was really unhappy, and I got into the habit of op-shopping to dull the pain. It’s amazing how much money you can spend on second hand stuff that you like ironically.
How much harder is paying back debt than saving? Is it?
I think that once you’ve budgeted a certain amount of money to pay back debt or save, it becomes unimportant which you’re doing - if you take the money out of the ‘spending’ equation, you don’t think about it as it isn’t yours to spend.
Relatedly, sparkly unicorns make for less crushing drudgery, yes?
The Debt Unicorn was a bit of a joke - related to me blogging my debt-paying-back-journey - but it was deeply satisfying colouring it in, badly, each time I paid of a chunk of money.
What tips and tricks do you have for saving? How do you make it easier? How do you set realistic goals?
The main tip I think for any kind of personal finance thing is understanding what you’re spending and how you’re spending it - what’s usually and sole-crushingly referred to as a ‘budget’. I have a really good understanding of my expenses and what needs to be paid for each week, and then add however much I want to save on top of that. Whatever is left is spending money. Paying the bills up front means that there’s no surprises.
When you’re working out your budget for the first time it’s also really important to work out how much debt you have and own that, instead of feeling a sense of fear or dread about it. Debt is awful but I found that when I worked out exactly what I owed and to who then I could begin to pay it back a bit at a time. For the record, I think that at peak debt I owed something in the area of $9000 (not including student loan) to the Government and to various banks. That bank debt didn’t include finance for any big ticket items, it was all credit card.
When I was first paying back my debt, I read a lot of blogs about being thrifty and saving money, and wrote a bunch about it as well. I really think that writing stuff down and knowing that other people were grappling with and overcoming the same issues was helpful. It’s amazing when I look back at it how much I had to learn about how NOT to spend money. So my best ones are
- If you see something, and you feel the urge to buy it - walk away, think about it, and come back in 24 hours if you still want it. And frankly - if it’s gone, it’s gone, no big deal. I’ve never died if I’ve found that it’s been sold to someone else.
- It’s true what they say about the amount of money you spend on espresso coffee. I try and cut mine down to two or three a week now. I returned to study a couple of years ago and I would bring a thermos to class with coffee in it. Geeky, but it saved me a bunch.
- In a similar vein - making your own lunches saves a heap. I usually try to make something delicious in the weekend so that lunches are interesting and I’m not tempted to go out and buy something.
- Divide your bills over your pay period and pay off a tiny bit each week. For example: I get paid fortnightly and each fortnight I pay half of the contract cost of my mobile phone. That way I never get surprised with the bill.
When I was paying back my debt, I think I was much more realistic about my goals - because I was aware of the fact that it was a long term thing and I couldn’t just blast it for a couple of months. My goal in saving for this trip has been a little less realistic - I have been testing my savings mettle for sure.
You’re saving for a trip right now? How are you going about it?
Sarah Jane Miller Photo: Unknown
I am indeedy saving for a trip - and this is the first time that I’ve really saved for anything substantial, including my move to Australia (which was paid for by a long-suffering ex).
I started saving in late February, bought my tickets in May and am leaving in September so it’s been rather whirlwind. Basically I have stuck to the budget that I’ve been working off for the last few years, but reduced my weekly spending amount and bumped up the amount going into savings. So despite the fact I work a really good job, I am super broke most of the time.
However! I am going to Europe and I am travelling by myself, and paying for it myself and I think that’s a really amazing achievement, especially when I think about how much debt I was in five years ago. It’s all very “Independent Women Part I”.
It feels incredible to be liquid for once in my life, and to be looking forward to something so exciting.
Do you think about the distant-future much? Are you in Kiwisaver or a similar scheme? Are you planning that far ahead?
I think about retirement fairly frequently because of some recent family financial stuff that I’ve had to deal with. My father retired with no money, and I don’t EVER want to be in the situation of being completely reliant on government super or the goodwill of my family.
My partner is pushing us towards the future in the form of saving up a hefty house deposit which I will get on to as soon as I get back. I joined Kiwisaver when I started paying back my debt, but I’d love to have an independent retirement savings scheme as well. I think though, having somewhere I could live that I owned outright would be the best thing in terms of stability for retirement.
I should also pay off my student loan - I worked out on the Sorted calculator that it should only take me another 7 years at the minimum rate, and that doesn’t seem too awful. I don’t usually count the student loan as debt - maybe not the best attitude, but it is definitely taking care of itself, and it’s not earning any interest, so...
How worried are you – how much time do you spend thinking about – having or not having enough money to do the things that you want?
During my early research I read something to the tune of - if you don’t want to worry about money, you should know exactly how much you have and where it’s going. I’m trying to live that.
I don’t always have the money I need right now to buy the most expensive things or dine out a lot, but I’m trying to keep my eyes on the prize and look forward to this amazing trip that I’ve planned. When I get back, I’ll be debt-free for the first time in ten years and I think that I’ll buy some shoes without agonizing over the decision for a change, which is nice.