Vanessa M, I Had To Refinance My House:

Today’s inspirational person is someone who would like to remain anonymous. However, she has an interesting story to tell. For the purpose of this interview we will call her Vanessa M.

Vanessa, as we are in a new decade, let’s ask some questions regarding that. Put your mind back to Jan 1st 2000 and now think of today. How have your views on money changed?
In 2000, I had two part-time jobs, a 12-year-old son who I raised on my own, I lived in sub-standard rental accommodation, but I owned my own car. We also had a holiday each year, went to the movies, ate out at times, went to festivals, had birthday parties, etc. We didn’t spend much on things, like clothes or household items. I used credit cards for the essentials like car repairs and services, petrol, food, etc.

I now have one full-time job, my son is independent, I no longer have credit cards, I still have the same car, and I’ve bought a house so now I have a mortgage.

Now that you have read the book what specific changes have you made in your life?
I had already got rid of my credit cards six months before reading your book. I collect all my receipts now instead of most of them, but now I also analyse my expenditure so I have a much better idea of where money is going. It’s also made me think twice before I spend money. I’m working to save the $2500 nest-egg first before I pay out the $1600 left on my personal loan.

What chapter did you get the most out of and why?
Chapters 4, 5 and 6 are where I’m up to at this stage. I’m collecting receipts, working out where my money is going and applying the tips that I wasn’t already using out of the 51 that you’ve provided, and I’m avoiding the debt traps.

How do you now feel about credit cards and debt?
I usually receive at least one letter every week trying to get me to take out another credit card. These letters go straight in the bin. I don’t ever intend to have another credit card or personal loan.

For years I’ve read books about money management and they usually just spend a sentence or two saying that first you need to get rid of your bad (i.e. consumer) debt. They never tell you how to do this first difficult step – Adam’s book does!

Do you now notice other people making the same mistakes you used to make with money?
Yes, particularly young people starting out who feel that their first home has to have everything that their parents’ home had. They forget that their parents may have spent 20-30 years acquiring what they have. There’s such intense marketing of so many consumer items and everything is much more disposable than it was even 20 years ago. The biggest worry is the very long interest-free periods, with those shops also offering very accessible credit cards. By the time the interest-free period is over, the item is usually worn out, so you get a replacement and the debt cycle starts all over again.

Tell us the best decision you have made with money?
To have a Christmas Club account and put in a bit extra so that I’ve got spare money for the festivals we have in Adelaide in February and March.

Tell us the worst decision you have made with money?
Getting a credit card with a $10,000 credit limit when all I needed was $300 to add to the $700 I’d already saved for my new washing machine.

If you could go back in time to your 21st birthday what would you tell yourself to do going forward?
Save 10% from every dollar I’ve ever earned, start superannuation then rather than waiting till I was 33, save a nest-egg that I never dip into (or if I do, I repay it quickly), don’t get a credit card and save for things like cars and holidays rather than taking out personal loans.

Has the Global Financial Crisis affected you in any way and how?
Yes, I had to refinance my house and I had to change from a part-time job to a full-time job so that I could manage my mortgage payments.

Have you any saving tips for the readers of the newsletter that they can use in their own life?
Watch your grocery spending. For me, it’s the second largest regular expense after my mortgage. You can save quite a lot every week by doing things like: reading the unit cost of items now that supermarkets put this on the shelves, mixing cheap kitty litter with the dearer one which my cat prefers, putting cheap tinned fruit into the more convenient screw-top containers that the dearer fruit comes in, and only using items like vinegar, bicarb soda and Gumption for housecleaning. When you’re out, take tap water in your water bottle, and also always have snacks like a piece of fruit, nuts or sultanas in your bag – this saves a little money often and really adds up. Save a few coins every day in a jar or piggy bank so that you always have some spare cash in your house.

Can you tell us a story where maybe not keeping your budget up to date has got you into trouble?
Not really as I’ve always managed to get by, but often that means living from pay packet to pay packet. It also means that when I run out of something, like milk, I have to wait until payday to replace it. The piggy bank tip means that this happens a lot less now, but I’m hoping that by continuing to use Adam’s methods, those days will be definitely in the past.

Thanks Vanessa M (anonymous)