Summer debts: “Dog-sitting can be a great way to get a cheap holiday - if you like dogs!”
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What is the main topic discussed in this episode?
Robert Wheeling, Managing Director of Rockwell Financial. Welcome to the show. Good morning. Good morning. Listen, we are coming into an expensive time of the year. A lot of people may have come home from holidays, not just with their luggage, but maybe with a bit of credit card debt loaded on as well. Back to school costs, rising energy use. And of course, we are constantly now being warned in advance of October that this is going to be the toughest budget in years. So you're going to give us some advice on how to make money last longer. Your first tip is to triage our debts, which sort of conjures up images of being in an ER suite. So what is Code Red in terms of debt?
Yeah, Code Red is that the credit card balance is looking at you with eyes that say, are you ever going to clear me? And it becomes almost this thing, this insurmountable problem that you think you're never going to deal with because... A lot of people, we get kind of trapped in the minimum payment cycle, which obviously just keeps the card alive. It doesn't really, it clears the debt eventually, but years rather than months.
And the principle behind... So that's your urgent, is that your most must treat straight away?
It is because it's the most expensive. So if you're looking at categories of debt, it's very easy to triage. The highest priority to clear is the most expensive, which is credit card debt.
What comes next?
Then it's personal loans. Overdrafts actually tend to be about 2-3% higher than a personal loan rate. Then it's personal loans. Then it's obviously the mortgage. And I suppose the mortgage tends to be the biggest amount of debt that we carry, but it's the cheapest.
Yeah, because it's over the longer term.
How should I triage summer debts and which debts are highest priority?
So like, I mean, a personal loan, if you, like, let's say you're saying, okay, I'm going to put 200 on my credit card or take 200 off my mortgage, which is the one you should be... Every day the credit card, don't even think about it. Okay.
Get rid of it. Like the thing with that in terms of triage, and I suppose the principle behind triaging is being aware of it yourself. So that you actually get a concept. I always say, if you write down the amount and the interest rate beside it, it'll be very clear as to which one you should be clearing.
Why is credit card debt considered 'Code Red' and how quickly should I tackle it?
Do you know what I'm trying to say? It could be four grand on the credit card at 23% interest versus 200,000 on your mortgage at three and a half percent. Do you know what I'm trying to say? The amount is, but the impact it'll have on your personal finances is infinitely better.
And, you know, and don't wait until the symptoms are really screaming at you. Just confront it head on.
Absolutely. Silence didn't solve any problem and inaction never solved any problem. And I think that's the hardest part for people, particularly coming off the summer holidays. Everyone's waiting for the dreaded bill to come in and it might go in the drawer. And we've all done it and it's fine. It's human nature. But by putting it in the drawer, it doesn't deal with it. So taking it out, acknowledging it, dealing with it, you will be much better off.
I've often thought I was the victim of a fraud until I go through it line by line. I realise, no, no, that was me. Some people try and maybe, you know, when they maybe are maybe panicking about debt, go, OK, I have to come up with a side hustle. I have to do that. Is that advisable or not? Or does that actually, can that add to the stress?
Yeah, I think you just need to be careful. Like, God knows the TikTok and Instagram are full of great ideas and it looks great. But first and foremost, don't forget that the primary driver of your capacity to pay down your debt is your day job. So if you take on a side hustle job and for whatever reason it impacts on the day job, well, then that's not really a side hustle. You're just creating another problem. I think if you do have the capacity, like there's loads of examples, people who do shift work, and maybe they do long days, so they could do three or four days a week. So to have the physical capacity to take an extra day, fine, but understand that that takes its own physical and mental impact.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:00–1:36
2
How should I triage summer debts and which debts are highest priority?
1:36–2:01
3
Why is credit card debt considered 'Code Red' and how quickly should I tackle it?
2:01–4:36
4
Which debts come after credit cards — personal loans, overdrafts or mortgages?
4:36–10:35
5
Can a side-hustle help pay off debt or will it worsen financial stress?
10:35–11:27