Uncensored Money Season Three: Your Inflation, Interest Rate & Cost of Living Questions Answered

Melissa Browne: Ex-Accountant, Ex-Financial Advisor, Ex-Working Till I Drop, Now Serial Entrepreneur & Author, Financial Wellness Advocate, Living a Life by Design | 05/07/2022


Show notes

There has been a lot of talk in the news recently about inflation rates, lifestyle creep, interest rates and the cost of living. So over the next few episodes, Mel and Lawsie will unpack these topics and share practical tips you can implement straight away. 

In this episode, Mel and Lawsie answer your questions on all things related to interest rates, inflation rates and the increasing cost of living. 

During this episode, Mel and Lawsie mention a webinar on 50+ ways to save $5k in 5 months. You can find it here: https://www.melissabrowne.com.au/50waystofind$5k  

If you know you need more help with your finances make sure you join the waitlist for the next round of the My Financial Adulting Plan

If you're not already, come play over at insta at More Money for Shoes and make sure you are signed up to Mel's Money Musings and Monday Money Moments (yep, we love us some alliteration) for more tips, tricks and ideas on how to best work with your money.

Finally, if you love this episode please make sure you subscribe and leave us a review.



Mel: Women are so good at talking about so many things over branch or drinks. We can cover everything from sex to politics, to religion, to how Just Like That was a red hot mess, but how good was Carrie's outfit? But there's one subject we're still managing to avoid talking about. And that subject often is money. 
The problem is as women, we can't avoid it. That's because we are kind of sucking at it and sure we could talk about the wage gap or the super gap, but let's talk stats. Women over 55 years of age are at the greatest risk of homeless. In Australia, there are over 400,000 women over 40 today who are at risk of homelessness. As soon as women earn more than half a couple's income, they face a 20% increase in domestic violence. While 16% of all women will experience financial abuse. That's why ladies, I believe finance is a feminist issue and it's time we started to uncensor money.  

My name is Melissa Browne, and I'll be your host. A teeny bit about me. I'm an ex-accountant ex financial advisor, global bestselling author, socially awkward introvert and shoe addict. At the age of 33, I gave my entire divorce proceeds to charity. While today I have the choice to work or not. I now teach people how to increase their financial literacy and develop financial confidence through my course, the My Financial Adulting Plan. 
In this series, I'm going to be having chats with friends, partners, husbands, financial adulters, and sometimes just with you. My hope is that it will spark in you a new way of thinking, talking, and acting when it comes to money. So let's get started. 

Mel: So last month I put a call out for questions on interest rates, inflation, and cost of living on Instagram. And there were so many questions, which I loved, and we covered some of them in full episodes last month, but there were still some left. So I wanted to dedicate an episode to answering the last of them. 
And by last of them, I mean the last 20 <laugh>. Now Lawsie, I don't know that if I asked about interest rates and inflation a year ago, that I would get so many questions 

Lawsie: I do not think so. Our grocery bills weren't hurting us as much this time last year. 

Mel: Exactly when something directly affects you suddenly you're interested, which is why we're talking all things, interest rates, inflation, and answering your questions about cost of living and more today. So 20 questions. Let's go 

Lawsie: Woohoo. First one. So the first question was an overview for financial beginners, particularly for those that didn't understand it, but we have dived into detail in that in a previous episode. I'm sure that person since nerded out on our beautiful episode on that one, but do you wanna give like a quick 101 as to what it all is and why it all matters? 

Mel: I will give the one minute version. So absolutely. Please go and listen to our previous few episodes where we deep dived into this, cause you're gonna get so much more, but essentially we're looking at inflation rates at the moment by the end of the year of 7%. And usually they're sitting in about two and a quarter. 
Now two and a quarter over 10 years is just over 20%. Hopefully wages are going up in, in pace with that, but it doesn't seem too bad as opposed to 7% where 70% increase over 10 years. Wages definitely aren't rising by that. And that's just really unsustainable. So what the Reserve Bank's doing is it obviously wants to do something about lowering that inflation rates, how it does that is with interest. 
Because by rising interest rates, we have less physical money to spend because more money is going on our mortgages. So therefore we're spending less. And it, you might seem strange cause certainly in December we were being told by retailers and the government to spend. Um, but it's almost like we've done too good job. 

Lawsie: We've got too many gold stars. Now they're trying to stop it. 

Mel: Exactly. So now they're trying to wind that back. So that's it in a nutshell, but to learn more about that, go back and listen to the previous few episodes. 

Lawsie: Beautiful. The next one. You might need to pull out your, uh, crystal ball for boss… 

Mel: oh, hang on one moment. I'll just grab it. 

Lawsie: So are house and rent prices likely to increase further or will, you know, inflation and rising interest rates cause a drop? 

Mel: Yeah. So as you said, this is crystal ball stuff. And certainly with the first parts of house prices, I often have this question couched to me like this at the moment. Should I wait until house prices drop and because interest rates are going up? And the presumption is that house prices will drop because interest rates are going up. And certainly that's what we should. That's what we think is probably gonna happen. However, if we went back to the beginning of COVID, every economist would've said that house prices will drop 20 to 40%. In fact, almost every economist was saying that yet, what we saw is that house prices, in fact increased by 20 to 40% now. I'm not saying that trend is going to continue. What I'm saying is that we don't know what's gonna happen. And I think it's a very dangerous game as a, as anyone that's been waiting until they dropped over the last two years will tell you to try and time the housing market to try and time the share market. 

Instead it's about time in the market. So if you are looking at buying a house and let's be honest, houses should be a long term investment. So if you're looking at 10, 20 years, yes, you may buy at its peak. Yes, it might drop slightly. But even if we look across to the UK during the GFC prices dropped by 40% over there. That didn't happen in Australia because we have this weird love affair with property. Certainly house prices have roared past there since. So if you're in it for the long term, then it doesn't matter. As to rent prices, we've been in this twin storm of rising house prices, but also in many places, rising rent prices. 
Um, so if you are renting and if your rent has gone up in the last 12 months, you are not alone. Prices have increased for a while now. And unfortunately this is something we can predict with a little more certainty and that is we don't see them slowing anytime soon. So according to Call Logic figures for April 2022, um, median weekly rents across Australia are 9% higher than they were at the same time looks last year. Some's been more. So for example, Brisbane's 12 and a bit 12 and a half percent more. Um, Tasmania on the other hand, outside of Hobart again has seen 12.2. In Hobart itself is between nine and seven. So it depends where you are as to what increase you saw. Sydney apartments definitely, um, saw a drop during COVID. So they're probably the same with Melbourne. So some of these increases are just going back to normal if you like. But certainly with rising cost of living in other places, it shouldn't be any surprise that we're also seeing this in rent. Where they'll start to slow down is as investors come back to the market. We saw stock disappear, we saw investors nervous about buying properties, that starts to happen more as supply starts to increase and demand drops. That's when we'll see rent prices start to slow. But in the meantime, if that's you, and you're seeing that increase in rent, you might look at: could I move to a suburb where it's cheaper? Could I downsize where I am now? Do I wanna go in with others, even though that wasn't something that I was hoping to do for 12 months or two years just to make it cheaper? Um, I would start to question what, what can I do instead? And the question is always, what are you prepared to suffer for? 

You know, that's always my question when it comes to money and finance. And one of the things you might decide is, you know what, I wanna get into a house. I wanna stop off the rental treadmill. Maybe I'll house sit for a while. So there, if you are someone that's renting going, I have no options and rent's going up, you do have options. So there are house sitting sites that you can jump onto where they'll match you up and you can just strip that whole cost out. 

Lawsie: Definitely and even sharing. You might be living by yourself at the moment. You've got a studio or one bedroom place with one bathroom and you might go, all right. What if I was to have a two bedroom place with two bathrooms? I still feel like I've got my own space, but I can share with them. So yes, the overall rent for that might go up, but because you can split it with somebody. Then you are still saving money as well, but again, you've gotta be prepared to want to do that. And yeah, it's gotta fit in with everything else that you're doing as well. 

Mel: Exactly. Uh, number three Lawsie, I'm gonna throw to you. How do you get the best deal when refinancing in this current market? 

Lawsie: Make a best friend in a mortgage broker is the advice here. So, absolutely. Unless you've got loads of time on your hand and you wanna go and shop around the best interest rates and deals and everything with all the different banks, um, talk to a mortgage broker. There's no doubt lenders out there as well that you haven't even heard of. And they may have a great rate that you feel comfortable with. So talk to a mortgage broker. And if that just even seems too much hassle and you don't wanna do that, then it consider even just talking to your bank about, can you get a better deal on your existing loan? Which of course would save the hassle of having to refinance. But yeah, definitely get in and have a look and have the mortgage broker, if you can, do the work for you to see if there is a better rate for you, and then they can assist with that whole, the whole refinancing process as well.  

Mel: And we've had lots of people ask the question recently, certainly inside the My Financial Adulting Plan, where we're actually up to the property investing week this week, they they've been asking the question. When interest rates are in rising can you still ask your bank for a better deal? 

Mel: And the answer's absofreakinglutely. You can . So it doesn't matter if interest rates are going up or coming down, you can still go and ask your bank. Is this the best deal you can give me? An average of 0.5% decrease just from asking the question. And if you are not sure and if you want you're handheld with that, that's certainly one of the big wins we have with people inside My Financial Adulting Plan, where we give you scripts and all sorts of stuff. So make sure you jump on the wait list for that. But that leads us into the next one, Lawsie. Would you lock in the interest rates? Get your crystal ball out now. 

Lawsie: Oh, I have it sitting here right here, wrapping my hands over teapot. Again, the answer to this one is gonna be, it depends. No one knows for any certainty around what's gonna happen. Yes. We're all saying interest rates will continue to rise, but to exactly what extent it is the crystal ball. So if you are nervous about it, you might decide to lock in some of your mortgage. Generally we don't see people lock in all of it cause you still there's something about having that flexibility that if interest rates don't go up as much as you thought or they come down, like at least then you've still got part of your mortgage that you can play with, um, when it's on that variable interest rate. So yeah, it's gonna depend on your comfort factor. If you're someone that's really nervous about it and wants that certainty of, I know this is what my mortgage rate payments are gonna be. Then you may wanna jump in and lock a rate in, but again, shop that rate around and make sure that it is a good rate. And be aware that you're gonna be paying more than what the current variable rate is. Then just kind of work out what, what split, how much are you gonna have fixed and how much are you gonna have variable?  

Mel: Yeah. Yeah. I'm with you. I mean, it's not something I necessarily would do cause you are going to be paying more. But you're essentially betting that long that over that period, the rates will go past that or you're buying you're purchasing that sleep at night factor. And for some people where maybe they're on really limited incomes or maybe it's just about holding that sleep at night factor because of that. If I was going to do it, I wouldn't be doing all of it. So you might do say half and then have the other half variable. So you can still pay extra, have an offset account and do all that sort of. 

Lawsie: Definitely, um, moving off interest rates. Now, what has history shown as I guess for what gets the biggest hit with inflation? Is it fuel? Is it food? Where are we at? 

Mel:Yeah, the answer is it depends cause it also depends what else is going on globally. When it comes to food, for example, we are in a perfect storm at the moment of weather. As you and I talk today, there's flooding that's happening all over the place. We saw this year, flooding in the Northern Rivers. In the last 12 months some of those areas have experienced three lots of floods. And if we go back to, and it just two and a bit years ago, we looked at bushfires as well, and then globally, there's there's weather that is affecting our food supply. So. it's really hard cause part of this is inflation because of COVID and the pandemic, but some of it is also due to supply issues and some of it is due to weather events and that is where it's kind of hard to look back on history. As if we looked back to the last pandemic, it really was when we had world wars. So we just came out of that. And of course there were supply issues simply cause of that 

Lawsie: Yeah. 

Mel: So what I would say that you, what usually hits the biggest with high inflation in, and it's usually your cost of living. So that means housing, energy, fuel and food. So it's the four big ones. So that's usually what's gonna hit you the biggest. It's often not necessarily the extras because people aren't necessarily spending on that, but where they're noticing it is in those four big places. 

Lawsie: Yeah. Um, on another question that we've got for our interest rates, again, what tips would you have for planning for future Reserve Bank actions? Ie. interest rates going up, which we've been saying, or you been saying for a while one, that they were gonna go up and two, that they'll continue to go up. So how can we plan for that? 

Mel:So I've been saying two for two years now, when interest rates go up. Now we've had it in Australia. We've had over a decade of falling interest rates. That's not sustainable. You know, when you get down to 0.85%, 0.5% Interest rates, you just can't sustain that. There's nowhere to go. And when we saw that across to America, across the ditch New Zealand, when we saw them start to increase interest rates, we knew it was only a matter of time before it happened here. But you can still plan for it because there are more. The thing I know that I know that I know is that more interest rate rises are coming. So my prediction is 1.25% for the rest of the year or between 1 and 1.25. I may be wrong with that. I'm hope I'm happy to be wrong. Certainly I'm seeing economists who were saying that they saw a continuation of interest rate rises in 2023. Now saying that they think in 2023, it will be hold. So they think that interest rates will get to 3% and then a hold to wait and see. And now there is even talk of rate decreases in 2024, depending on what happens, if getting inflation under control. 

So again, you can see the experts are changing their mind every moment, you know, I'm seeing it every quarter at the moment, experts revising their expectations as to what they're gonna see next year. What you can do though, today is if it was me and what we've been suggesting is that you pay your mortgage back as if the interest rate was 1 to 3% higher and you paid into your offset account. So just say you interest rate was 2.9%. I would jump onto a mortgage calculator and see what the repayments at 3.9% would be if I'm paying at $2,000 a month. And if the new repayment was $2,500, then I'd pay that extra 500 bucks straight into my offset. That means when interest rate rises, when interest rates rise, I'm not gonna freak out cause I'm already paying that higher amount and then I'd increase my repayment again, but also I'm building a buffer so that if life happened I have that there, ready to go. So I would be doing that.  
The other thing I would be doing that we've already mentioned is I would be asking every single year for a, for a cut on my interest rate, particularly if I was a great customer, meaning I paid on time and I had more than 20% equity in my home. 

Lawsie: Perfect. Yeah, I think that's all super important stuff to be doing. I love this next question. 

Mel: This one's so random. And I always wanna ask you this one. I'm gonna be so curious. On a scale of one to the world is ending (this is genuinely the question) are we really heading into, and I think this is a finance term Lawsie, an absolute shit storm? 

Lawsie: It's the best question. I love it. I wish I had a better answer to this one, given the creativity of the question, but look, I don't think we are. I think it's just about people are more aware of it. We see so much more about it. Like you said, you know, 12 months ago, no one would've even thought about inflation and interest rates. And now it's a thing that everybody is talking. All the time. So I think there's absolutely that there's that hype about it. And we're seeing it in the media cause the media know that we're all affected by it as well. So there's lots of, interesting clouds floating around with all of this. But no, I don't think that we're going to be heading into an absolute shit storm. 

Mel: So, what would you rate from one to 10? What do you think if one is it's utopia and every, you know, everything's brilliant? 

Lawsie: Look, I just think it's just one of those things. It's just a bump. Let's sit right on the fence and just go right with number five. Like I just, I think it's, we're all feeling it. You and I have had enough conversations about it. I'm like, oh my God, have you seen how much stuff's costing at the moment, but it's just then about going, okay, well I just need to adjust it. Maybe I can't invest and do as much as what I wanted to do. I've just gotta pull it back a bit or I've gotta look to be able to be bake in other savings. So I just think it's just with all of this, you could totally get yourself into tears for reading every media headline and going down that vortex of, oh my God. This is the end. Or you can bring it back to you and just go: this is, it is what it is. What can I do? That's gonna work for me and my finances, and then just put some action in place and just, I don't know, don't look at news sites cause you don't wanna be feeding that all of that negative talk in your head. 

Mel: agree. Mm-hmm And I would add to that, that the economy isn't linear. You know, it doesn't just gradually keep going up and up and up every year. You know, if we look at the last a hundred years, there've been major bumps, like 50% bumps, whether it's the great depression in the thirties, whether it's the GFC, whether it is the tech crash, whether it was at the beginning of COVID, whether it is now there was, so there is probably a dozen, at least different bumps where the people in that time, I bet were saying, oh my gosh, the world is ending. It's a shit storm, et cetera. Certainly if we are in the UK or America during the GFC, they were seeing that times 10 with house prices dropping that we just didn't see in Australia. So yes, the share market's crashing. Yes, property prices are through the roof and now potentially falling. Yes, rental rates are are wildly increasing. Interest rates were also increasing, but also five years ago, interest rates were at 8%. We just need to bear some of these in mind as well. Um, so interest rates were always going to come back up. 
These things will rectify themselves. We're also at a time where unemployment is at an all time low. Uh, so there's real positive things happening at the moment as well. We've gotta forget that it's all doom and gloom. It's easier to start a business and have extra income than ever before. So it's just looking for the opportunities and not believing. I’m more concerned about climate change than I am concerned about what's happening with the economy, cause the economy will write itself. The planet doesn't have the ability to right itself. I'm more concerned with what's happening in America with gun control and Row vs Wade. There are so many issues that I think is a shit storm. I don't think what's happening in our economy is a shit storm, even though it may feel like it when we are living our day to day life. 

Lawsie: How would you say inflation affects your purchasing power for a house deposit? 

Mel: Mm, So it's inflation and interest rates. So rising inflation is pushing up rising interest rates. So if interest rates are going up, that means our borrowing power is going down. Meaning the amount that I can borrow is less, um, in Australia, the banks will already put a 3% buffer on whatever interest rate it is at the time. So they're already going have that buffer there. So they're going to assess you as if interest rates were even higher than they are now. So how it will affect your purchasing power is, is interest rates go up, you'll be able to borrow less, which means then you can buy less. 
If house prices increase, then obviously that's problematic. But if we see a slowdown in housing prices, then that's less of an issue. And again, that's why you wanna speak to a mortgage broker before you are ready. Cause you might think I need a 20% deposit when actually you might have access to stamp duty concessions. You might have access to government funded schemes where you only need 5%. You might have access to new schemes that they're talking about with teachers and nurses, where the government will co-own your house. Like, there's so many options now that are available to you that it's speaking to a mortgage broker before you're ready so that you start to realize what's my borrowing. Then going into the market to see what could I afford and then either reassessing your expectations as to what you can buy or realising, huh? Maybe I could do it before I thought I could. 

Lawsie: which is always a nice surprise. 

Mel: Exactly. At number nine. Lawsie where, where can you make cuts in your budget as living cost rise? And I feel like we just did a big thing on this recently. 

Lawsie: I would like to say that we have a webinar and a download that you can look at. That has more, I was gonna say 50, but I think it's about 65 different ways to find more money. So yes, absolutely. Some of that is around making cuts in what your cost of living is. But other things are also the other side of that equation of, well, how can you get more cash? Because cutting expenses is one thing, but you'll find, especially with your day to day living expenses, there's a limit to actually how far you can get those down. So we'll put the link in the show notes to the webinar. You can also see just different ideas and things for you to bring in extra dollars, which will help offset those increased cost of living. 

Mel: And there's some fantastic technology you can use to help you with that. And we covered all that in the webinar and we covered all the big ones. So we looked at food, housing. We looked at fuel, energy, eating out, drinks, entertainment. We looked all across the gamut, but it might also be, and I think the theme for this episode has gotta be, what are you prepared to suffer for? I remember back in the day we helped a client realise that they actually couldn't afford to keep all three boys in private school. So they kept one in that particular private school. Cause I think he was in Year 10 or 11 but they pulled the other two out and sent them to a great school, just not the ridiculously expensive private school that the other one had gone through. All are now doing great. But if they hadn't decided that at that time, they would've found themselves in such financial strife. So I think it's asking the question: What's what do you value? What's important to you? And you may choose not to cut there, but for everything else, then make the hard decisions. 

Mel: I feel like we've already answered this, but let's just talk about it briefly again: how long will interest rates keep going up for and how steep will the inclined be? So my predictions are for another 1 to 1.25 this year/ I think we'll see 0.5 in July/ This will have already come out. So let's see if I'm right. So I think we'll see 0.5 in July. I think we'll see another 0.5 later in the year and maybe one more 0.25. Then I think the Reserve Bank will hold for at least six months to see how that how that worked. If in inflation rates start to come down, which there's talk of, we are absolutely gonna hit 6 to 7 by the end of the year. Cause that's sort of baked in those events are already happening. In order to stop a train, if you hit stop, it doesn't just stop dead instantly. It might take 200 meters for it to stop. That's what we are looking at. So those inflation rates will happen, but we're looking to next year so see what's the effect of all those interest rate rises. So I think the first six months of the year, if you start to hear inflation rates of 2 to 3%, you could feel comfortable thinking, I don't know that we have many more rises coming. If they were still high, then. That's where there might be more rises in the second part of the year. But certainly experts are suggesting maybe none next year. But again, you just gotta keep your eye on inflation rates. 2 to 3%, the Governor Philip Loew in Australia has come out and said, that's what he wants to see it in order to stop putting interest rates up. So that’s the flag that you are looking for. 

Lawsie: The next question was what to do if your salary doesn't go up and this person had flagged that they're also looking for other jobs. And I think, I mean, I'd go back and look at our webinar as well because there's two sides to the equation. Like we said before, it's you can either look to your income. So yes, if you can't get it out of your salary, can you start have a side hustle? Can you pick up some extra gigs, you know, working in local pub or being an Uber driver or anything like there's so many different ways if you're prepared to put in the time that you can increase your income. And then also looking at what can you do to reduce your expenses? Cause I think we're all guilty of allowing our cost of living to go up as our income goes. And I think it's also on the back of COVID and where we've had this thing of haven't really been able to go out. There's definitely been that sort of bounce back where people are spending more. So I think it is just, it has being critical and going through your expenses and going, okay, what do I need to keep? What can I change? What can I cut out together? Cause there's certainly yet not having a salary increase isn't your only option with this. So I would, yeah. Check out that webinar for heaps of other ideas. 

Mel: I agree. Um, and this person has said, yes, they're looking at other jobs. So obviously that would be one of it, but it would be, what else can I add on to it? So is it a second job? Is it consulting? Is it a business? But also in that webinar that will put the link for, I talked about so many other things from renting assets you already had that you might not realise that you could rent out, everything from your caravan to your trailer, to your car, to your driveway, to a spare room in your house, to your swimming pool, to your clothes, to the stuff in your shed to. You know, I have a projector that I use once a year for work. If I wasn't so lazy, I could rent that out and probably get 250 to 400 bucks a pop. So you will be stunned at what you have, that you could either rent, sell, et cetera. 
I did a wardrobe cleanout on the last two weekends. Popped them onto an app called Depop. This is not an ad for them. It's just something that I'm trialing and I've used a bunch of different places. I've sold six or seven things so far so. I made about seven, a hundred bucks less they take 10%, less postage. So I think it's about 500 bucks in my hand for two weekends work. But again for me, the reason I'm doing it is sustainability. You know I'm wanting to have that circular economy where I know it's going into good hands, where people will continue to use it and have that, um, that circular economy going. 
So if you want more ideas, go check that webinar. Cause we had so many ideas in there and if you don't have a lot of time, we've given you stacks of ideas as well, whether it's cash back or doing surveys online. So much more, or evenif I was in a car and I had to commute each day to work, I would try and pick up an Uber trip each way. Just say I did that three, four times a week that might pay for my fuel on my car. So it's what am I doing anyway? And can I find income for that? So highly recommend you look for that webinar. It was the good, and if I say so myself, 

Ok Lawsie, number 12, how to get ahead of the game? How to prepare for it? I feel like this is that same theme. I feel like honestly we've kind of answered that through everything we've talked 

Lawsie: Yeah. The only thing I would add to that is if you know that you are particularly worried about lifestyle creep. If you know you're gonna get a promotion or you've got a bonus, like actually have a plan for that before you get it. You might go cool, when I get that, I'm gonna put 50% to investing and 50% to my holiday account or whatever the thing is for you. But having that in place and having a system around it. So as soon as it happens, you move that money into the different accounts that it needs to go. So you're not just tempted or just being lazy and just leaving it in your account. And invariably, you'll spend it cause you'll go, oh, awesome. Oh yeah. I like those pair of shoes or I like this. And then sudden. You're gonna start to see that exactly, that lifestyle creep, where your income's gone up and you just raise your spending to match it. So I think it's just about being prepared as well just being savvy with your finances in general will absolutely keep you ahead of the game. 

Mel: Number thought 13, we've answered this on a previous episode, but I've included it here anyway. Um, would love to hear your thoughts on HELP debt now it's increasing. So it increased in July to, I think, about 4%, uh, 4.5. If you were gonna pay that out in the next 12 months, then if that was gonna happen already with your salary increase, then you might choose at that to prepay it. But if you've got five years to go, yes, it's a lot this year, but then if inflation drops back down to what we expect next year of 2 and 3%, then so will the increasing of that HELP debt? And if you can then get a better return either by paying off your mortgage or simply investing in other places than that, then, I mean, long term inflation should be at two and a quarter percent. The fact that you've gotta bump in a year shouldn't make us react and be reactive when it's actually not right long term. So that for me, unless you could get rid of it in a year and you were already going to get rid of it with the repayments that you're paying from your salary. I wouldn't be looking to pay that quicker. 

Lawsie: Yeah, it's still okay debt. Like I think it's just one of those. Yes, it's gone up, but there's worse debt you can have, but there's still also other things that you can do that over time, we'll give you a greater return than the extra that you're paying on your HELP debt. 

Mel: And as you said, it's okay debt. So if you had bad debt, if you had credit card debt, I would actually null my suggestion in there. if I had a credit card that I'm paying 20% on suddenly four and a half percent is a bargain so I’d be paying that off first. 

Lawsie: Cool. So the next question that you alluded to before was what are the opportunities in the current market? 

Mel: and that's the thing. We're in a bear market at the moment. We're looking at a recession. Absolutely all the media articles at the moment are around the sky is falling and chicken little, however, there's always opportunities in different markets. And there are opportunities in a recession as horrible as it is to think, and there's opportunities in a bear market. So when the share market is falling, that can mean that prices are less. So do we know how much further it's gonna fall? No, but if I'm dollar cost averaging it, meaning if I'm investing regularly, then my purchasing ability for those shares or for that ETFI'm investing in at the moment, I'm gonna get it cheap. So the opportunity is that I'm getting more bang for my buck. I'm getting more units in my ETF and more shares that I'm purchasing. So that's an opportunity. And definitely if interest rates continue to go up, there will eventually be some distress sales. And as awful as that is, that is also an opportunity. So if I was looking to enter the market or if I was looking to pick up an investment property, that might be something I keep my eye out for. And I wouldn’t wait for that to cause we don't know if it’s gonna happen. But certainly I'd keep my eye out for it. 

We'll see the same with businesses as well. They'll be people where they've just had enough. It's been too hard the last couple of years, and they're selling businesses basically just to get out. We saw this in childcare 6 to 12 months ago, where you could just take over the lease. You didn't even need to buy the business. You just had to go in and take it over. So there are opportunities in. As well, plus just the fact that there are new things that people are talking about. There are new things that people are wanting. There are new ways that they're behaving. So if you've always had a brick and mortar business, then you may consider adding an income stream of online, so that you could offer a cheaper thing to mass which is kind of like what we're doing with our courses. Where it's not one on one, you can offer a cheaper price because you're going to multiple people and you've got that wider market because that's something we've seen in the last couple of years, people are far more accepting of. So there's always going to be opportunities. It's just making sure that we've got the cash ready for it. 

Lawsie: Definitely. I like it. Yeah. Not all doom and gloom. Um, which actually is very interesting going into the next question. 

Mel: And so I'm buying up shares in my Super fund at the moment that have paid beautiful dividends for a while. And so I see that I'm getting them cheap because they're kind of 30% down at the moment and I want them for income. Yeah. So perfect. 

Lawsie: Love it. Um, so yeah, and I guess also that ties into our thing of what's worth paying attention to in the media and what's just fear mongering. 

Mel: Yeah. What would you say to this one? This is an interesting 

Lawsie: I don't pay a lot of attention to the media, to be honest, I'm quite happy living in my sheltered little cave and occasionally I'll emerge. I think it's just about putting the filter on. If you're looking at social media, like I could be paying attention to all these things and be tempted to spend, to buy all these things that are getting fed into my feed, or I can just ignore them. And I kind of view the media as the same. I'll hear about things. Like I'm not totally locked up in my little cave but I kind of just glance over it cause it's building up that hype and I'm just not interested in the drama with it all. Just give me the facts and figures. Okay. Interest rates have gone up by X amount. Okay. I know what that means. And you said it before, like it's finding people that you like or trusted sources and then following them and getting information and then being able to take your own actions from that. So it could be from economists. It could be from just different people that you like what they actually do and what they talk about, or it challenges your thinking. And I would rather lean into that and listen to podcasts that I choose. I just don't listen to the media for that exact reason, that there is so much hype and fear mongering and all those kind of things. 

Mel: It was exactly that. I think you've just gotta be really careful who you're listening to. So for example, I might not be listening to the Daily Telegraph or to the Daily Mail. I'm not gonna listen to them. It’s gonna have some serious Clickback headlines. The media exists to sell advertising. We need to be aware of this. So it's having voices that you trust when it comes to this. So one of those might be ours. Because we're ex accountants, ex financial advisors and we invest ourselves. So we know what we are talking about. For me it's also following economists and property experts that I trust.  So Property Before Prada is a Melbourne based brokers. Love them. They're on social media and they've got really great information that they release. It's helpful rather than click bait. Pete Wargent is another one, W A R G E N T. He's global property expert. So for me, and he's always about stats and data rather than emotion. So I'm gonna go to him. Stephen Koukoulas is another one. So The Kouk every single week puts out a two minute thing on Twitter on what he thinks has happened with the economy last week and what his thoughts are for the next week. And why so interesting. It's just digestible and it's again, without all the BS and emotion. So it might also be subscription. There's free ones that you can have like Live Wire. Um, and I still read things like the Australian Financial Review, just so I can get that balanced or alternative views, but I'm not just gonna one source and it's people that I know and that I trust, um, that are gonna tell me that, not just what I wanna hear or not just make me scared. 

Lawsie: But I think they're realistic, I think. And I think what's really important too, is to make sure that you've got a balance view, cause it can be very easy to just stick in that narrow lane of, I only listen to these three people or I'm not gonna listen to any, you know, no media or whatever. I think you still have to have that balance view. So you're aware of what's going on and to challenge your own thinking. So you don't suddenly go down one road and suddenly realise you’ve missed all of these other things, cause I've been so focused.  

Mel: And I think you also need to challenge the qualifications of the people that you're listening to. So for example, in Fairfax, in the money section, there's someone that writes there at the moment that they're calling a money expert. They're not, they're a journalist, so we just need to be really critical when it comes to who we're listening to and who, and what they're being touted as cause there are too many things and people popping up that are calling themselves money experts when in fact they're actually not. I like the Girls That Invest, they're across in New Zealand and they're advertising their latest book at the moment. And how they're advertising is that there's been no books on investment written for women. I'm like, oh, that's actually not true. There’s been some incredible books coming out of the US in the last decade written for women that are extraordinary. I know I've passed on a bunch to you. There's been some incredible ones from Australia, there's some great ones from the UK. Like there are so many, so it's also having that filter and knowing what's BS and what's not, and that's just a teeny little example. But if you were only following them and they were your only new source, you might read that and go, oh my gosh, I can't believe that there's none when there really is. 

Mel: Uh, next one Lawsie will house prices fall again? Or are we headed for a new norm?  

Lawsie: So yes, in some areas we have seen prices fall and no doubt in other areas, they will fall at different points and stuff too. So it's just about being aware they may, but like you said we're talking about it earlier on, don't just sit there and hope that it's gonna happen. Still just keep going about and doing everything that you wanna be doing. Cause if you still wanna buy a particular house in a particular suburb and you've got all your reasons around it, you don't wanna miss out because you're thinking you are waiting for prices to fall and they continue going up. 

Mel: Yeah. Ok question 17, it says we're feeling the pinch, but aren't sure what we can do.  

Lawsie: We created a webinar just for you. 

Mel: Exactly. And I wasn't gonna put this one in. But I felt like this, it was just phrased differently. And I know a lot of people are feeling this. So I think already we've given you so many different things you can be doing, but if you want another 67 things go and watch the webinar and that's gonna give you a whole lot of practical tips. Cause the thing is, I think this question comes to the heart of why. If too many people are putting their head in the sand or they're just thinking, oh, just concentrate on paying off the mortgage and just do that and nothing else or, screw it, I'm just going to go traveling and pretend it's not happening. Like we need to take action, but it's the often we aren't sure what action we can take, which is where that webinar and the download is perfect. Cause it's a whole stack of practical things you can do. 

Question 18 is how to navigate this stress solo. So everything costs more when it's just one income and doing it alone and there's more and more people living solo. Certainly that was curiously that's something that happened during their pandemic where our household numbers have gone down, cause I think people were like, Ooh. I just wanna be on my own. I can't do people, especially not when I'm working from home. Lawsie, what's your thoughts on this? 

Lawsie: Yeah, I think it's actually a really interesting question cause there's no way that you can deny that it does cost you more to live by yourself as opposed to living with someone else, be that a partner be that a roommate or a flatmate. And I think it also comes one of the things that it comes back to is what you've been saying the whole way through. What are you prepared to suffer for? I know like we use the example. If you're living by yourself in a one bedroom, one bathroom place, you might consider moving in with somebody else. But the rules might be that you both have to have your own room and your own bathroom. So you still can feel like you've got more space, but you are gonna be able to make a saving with that, or it's doing other things like. If you've got a friend that's in a similar situation and you buy similar things, you might go, well, let's go and, you know, buy some things in bulk that's way too much for one person, but then you can split it and then save things that way. So I think you've just gotta be a little bit more creative, but it's not gonna be easy. And I think you've still gotta be prepared to be able to do the work, think outside the box and put that into plan and into action to actually save those dollars. Um, and then it's, it's also just doing the things that we've spoken about. Goes to everyone anyway, like let's shop around for interest rates. If you've got a mortgage looking at the best deals that you can get for anything from your insurances to your phone plans, to all of those things, because yes, you might still have those expenses and we're all still gonna have those expenses, but you still wanna be getting the best deal that you can get. I think it is just being disciplined with that as well. And just seeing where you can save money. 

Mel: Yeah, I think if you are a solo, you have to be ruthless about what you are willing to cut and what you are prepared to not. So you need to really understand your values and you really need to challenge everything. So whether it's energy to internet, to subscriptions, that's where you need to become ruthless around those sort of expenses. With the but with your grocery bills, it's exactly right. You could do that bulk shopping with someone else, but you could also do a cook up with others as well. You know, I've got glass pyrex containers that I put single meals into, and then I freeze so that I can just grab that out. I'm often by myself. And certainly my husband goes overseas for a few months a year, or has the last couple of years without me. So I don't wanna think about eating and I don't wanna cook for myself a lot of the time. So grabbing those dinners or lunches means that I'm not having to think. And it's a cost of living that's reduced by just that pre-work. And if you did that with other people, you're not having to eat the same thing all the time or you might buy a small freezer or something to add on so that you can really, I mean, I've got three freezes full of the stuff. 

Lawsie: Next level. 

Mel: I am next level, but for me, admin and cost of food just is such a big stress that I don't wanna have to think about it. I just wanna go grab my single meal. And I don't wanna pay frozen meals cause they're expensive and they're crap. And I don't wanna pay takeout cause it's expensive and it's crap. So by doing that, it's a huge, um, difference, but I would challenge everything. And I'd also say for you, it's really important to have community. And that community so that you can share costs as well. So I would challenge when I've got a cost. How could I share this? Could I share this in my community? And that might even come down to cars. You and a friend might live in the same suburb. You might be solo. You might go why on earth do we have a car? Each this is stupid. Hey, do you wanna share the cost of a car? Or what could I share with the community either from ride share or what do I need to not own that I could just rent when I need it instead of owning. So I would challenge the assumptions around what we have to own and what we could just rent or use occasionally, et cetera, 

Mel: At number 19, do different fixed rates, if it's much higher than variable, indicate what are the bank's planning? 

LawsieExactly what you're reading into it, that they're saying that the interest rates are gonna be going up. So yeah, your fixed rates are really, they're almost like the storyboard of where the banks think everything is gonna go. So if you're seeing them just start to go up, you know, the banks are never going to be doing anything that's gonna affect their bottom line. So if they're going up, then you know that the banks are thinking, they're not like your average variable interest rates and things are also gonna go up. And so it's just about, again, going back to those earlier points that we spoke around, if that makes you nervous, if you want certainty, that's when you might wanna be jumping in and locking in a rate, if you're worried about it, or just at least being prepared and doing the things that you said before around paying that, you know, one to 3% higher than your current interest rate and paying that into your offset account. So you're prepared. So when they do go up, you go, yeah. Okay. That’s not ideal, but I'm prepared for it and I don't need to feel financial stress about it.  

Mel: Yeah. The last one's an easy one. Should I be locking in things like electrical plans and mortgages? So mortgages asked and answered. So what about electrical plans though? And phone plans and internet plans and anything I could possibly lock. 

Lawsie: I think if you can get a good deal and you think it's gonna be a good deal in the long term, then why not? Like we're all up for saving dollars but I wouldn't rush out to do it if you didn't think it was a particularly good deal. So, yeah, I think it just comes down to the dollars and the timeframe that's involved and how that fits into you and your circumstances. 

Mel: Yeah, cause essentially it's a little bit of a gamble, but certainly if we are seeing, all the talk is that electricity rates are going up and if I could lock it in on a cheaper rate for a couple of years, I would absolutely be doing that if you could. A mortgage we've already answered that differently. 
So I wouldn't do necessarily all of that mortgage and you're paying a premium for it. But often with electricity plans and internet plans and phone plans, you're actually often getting a cheaper deal by locking in because you're locking in and getting a loyalty discount. So I would be getting all of those things I would cause my answer would be:  am I a hundred percent gonna use this? And the answer is yes to electricity internet phone. So they're the three things that I'd lock in and get the loyalty discount. Potentially insurance as well.  

So as we have been talking about, we're answering your questions on interest rates, inflation, and cost of living. If you want to know more, I did a webinar the end of June on more than 50 ways that you can find 5k within five months. So that's gonna be in the show notes. Head there now. Because all, most of what we've talked about, we're gonna have far more information and lots of practical information for how to make cuts, how to find income there. 

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