There are so many clients of ours who have achieved spectacular debt reduction results. This is because we have been able to implement a system that keeps you accountable, just like a personal trainer but for your finances. The difference it has made and continues to make to people’s lives and financial position is what it is all about for me. It is what drives me to help as many Australians out there manage their money more effectively and efficiently, just knowing how much better the quality of their lives and their relations are as a result of the Money Management Program.
I went and saw a couple who were referred to me by an existing client, and they were in desperate need of some financial guidance and help. I sat down with them, and we started to analyse their financial position, it wasn’t pretty! They had 6 different loans all with repayments due on different days and it was hurting their cash flow. They had 2 maxed-out credit cards on 16% interest, 2 car loans, a personal loan, and their home loan. Their total income was just over $6,400 per month, but their total debt repayments were close to $4,200 per month. This meant that they only had $600 left per week to pay for all groceries, electricity, gas, petrol, school fees, car registrations, and land rates. Holidays were not even an option as things were tight for this young family of 4.
I reviewed their loan structure and asked why they were banking their income into a savings account.
What was the income doing for them? NOTHING
Was it making them any money? NO
Was it saving them any money? NO
So why would you bank your hard-earned pay into an account that does absolutely nothing for you? When it sits in your savings account (even though it usually isn’t for too long before it’s all spent) it earns you 0.1% interest. That is 1-tenth of 1%. Ridiculous!
I educated this couple on the benefits of reversing the flow of their money, to get their income starting to work for them. The first step was to have their income banked into their Crown Premium Home Loan Account, where it instantly reduced the principal owing as well as the amount of interest payable. I then set up a weekly payment to their savings account for them to cover all their food, fuel, and entertainment.
So, rather than banking their pay into a savings account and then paying the mortgage, we reversed the flow of money, so they were banking their pay into the mortgage and then paying the savings account.
The difference the new banking structure made to their cash flow and repayments was phenomenal. They went from a repayment of $4,200 per month, down to $2,800 per month. That $1,400 per month saving is the same as them getting a part-time job that paid $300 per week!
At one point she asked her husband how long ago he had been referred to Scott by his friend. There was an awkward silence of about 5 seconds where he was deciding if he should tell her the truth, then he took a big gulp of air and said “I got Scott’s number about two years ago… I just hadn’t got round to contacting him until now…”
BOOM! Did sh*t hit the fan or what!! She starts screaming at him saying he has nearly cost them their marriage by waiting this long before they got some guidance and financial help. She threw her glass of water all over him and then stormed out of the room crying. I was a little shocked but could definitely see where she was coming from. Going through all of this financial stress and paying $1,400 more in repayments for 24 months than you needed would frustrate most of us!
About 2 weeks after meeting with the couple and sorting out their finances and debt structure, the husband gave me a call on the mobile. I was happy to get an update on their situation, and to ensure he and his wife were doing ok since I’d left.
“Mate, you’ve saved my marriage. You have taken all the financial stress out of our relationship. That was all we ever talked about as a couple, how little money we had, what were we going to do, how were we going to pay for the next car registration or land rates, just continual worry after worry with no light at the end of the tunnel. Now we have an extra $1,400 in our pocket each month, you and your team are taking care of all the money management and all we have to worry about is spending what is in our savings account each week. You have given us hope, and we’re excited again. It really is like the biggest weight has been lifted off our shoulders”.
Very grateful and appreciative of the call. I was reminded that the number 1 reason for marriage failures in Australia is finances/financial stress. If I can help Australian families by removing their financial stress, the difference in the quality of their lives for not only them but also their children is phenomenal.
