How To Pay Off Debt & Save a Deposit

https://www.youtube.com/watch?v=qBVNwxREUSA One of the hardest things as an investor is paying off debt and saving your deposit. When you don't already have those income generating assets it can be a really difficult process to do. But there are some tips that can help you along that journey. 0:00 - Introduction1:30 - Simon's Saving Story4:25 - #1: Get Realistic With Your Situation and Set Goals5:27 - #2: Pay Yourself First7:32 - #3: Reduce Expenses or Keep Them Low10:50 - #4: Make It a Habit13:33 - #5: Increase Your Income16:50 - #6: Delay Gratification17:47 - 2 Years Ago21:45 - #7: You Have To Sacrifice24:10 - It Gets Easier As Time Goes On Recommended Videos: Buying Our First Property: Our Current Plans The 15 Minute Budget Transcription: one of the hardest journeys as an investor is actually paying off your debt if you've acquired debt and then going ahead and saving your deposit when you don't already have those income generating assets it can be a really difficult process to do but there are some things that can help you along that journey some tips that both myself and simon have applied to really tackle this in our own lives and today we want to share those with you so hey simon thanks for coming on today no worries how you doing man yeah really good so in this we're gonna look at each of our situations so for simon he was able to purchase three properties in 18 months which is a huge achievement and he saved the deposits for his first two investment properties himself so really diligently saved over a number of years and for me i found myself in a situation where i went through a separation business went through a downturn i ended up in a whole bunch of debt like crippling levels of debt and i've been able to pay off tens of thousands of dollars worth of debt in the last couple of years and so i'll be sharing my examples on paying off debt and you know being in a really bad debt situation and simon will share his examples of not being in that bad situation but actually the next step which is saving the deposit and going ahead with that so simon do you want to start with your story when you decided to start saving your deposit and what steps you put into place in the beginning yeah so i really only started about three and a half years ago um actually earning enough of an income where i can really save a lot so i moved up to the sunshine coast from sydney at the beginning of 2017 and um that was the first time that i had had a full-time income prior to that i was at university or basically just around and surfing but just living up living the life to be honest and um i did always have really good saving and spending habits which was something that was incorporated from my parents from a super young age basically from the first job that i got they always encouraged me to save 10 to 20 cents out of every single dollar that i earned so that was something that i always did and for somebody that never earned a strong income but still wanted to travel and go out with friends and and have those choices i needed to when when i was only earning a little bit of income i still needed to make sure that i was saving a bit of money so i could enjoy my life so i already had those really good budgeting and savings habits but then when i came up here and i finally started to earn a good income i still maintain the same spending habits and saving habits that i had so even though my income had dramatically increased my expenses and my lifestyle stayed relatively similar which was one of the biggest things for me so creating that budget creating those saving and spending habits is super important um it's just not going to do it itself like it just really isn't like you need to sacrifice and you need to put these little things that stuck in place but it really enables you to get to where you want to be a lot faster and it's definitely allowed me to do that and you know even as my incomes consistently increase nowadays i like to buy myself a little toy here or there because my income kind of increased a fair bit like the other week i just bought myself a little moped scooter to cruise down to the beach with because my house is just around the corner from the beach i don't want to have to drive um and you know but that's completely fine but prior to that i was so regimented and so strict with my budget minimizing my expenses in my life you know never use after pay i would i don't have credit cards i would never finance a car loan and i would you know not enjoy all the luxuries of life to make sure that i can enjoy those luxuries in life for a much longer time than the average person yeah so what i'm going to do now there's so many good tips in there and little things that you do is that i'm going to break them down into the each of their components and then we'll riff off of those and talk about those so i think the first thing to start out there is to actually like get realistic with your situation so paying off debt and saving a deposit are actually i guess extremely similar things to do paying off debt i think is harder because you've got that negative effect of the interest saving a deposit that's bad saving deposits a bit more exciting because you've got you know some interest coming in but basically they're the same in that you're taking money from your everyday life and you're putting it somewhere whether to pay off debt or you're putting into a savings account to go towards your investment so the first thing i think is to i guess set your goals and get realistic of what they are so if you've got debt then that means writing down every single line item of debt that you have i know that was a big step for me to just say okay i'm not going to be in denial anymore i'm going to sit down and write down every single debt that i have tally them up and just go oh what have i done when it comes to saving a deposit it's a bit more exciting than that you can say okay what what sort of property do i want to buy how much do i want to spend and what percentage do i need of that whether it be 20 10 you can kind of work out how much you need so doing that and then simon what you talked about next is just paying yourself first and having a set amount of money go away each and every pay cycle that goes towards paying off debt or goes towards actually investing and so simon i think something you said that was really good was when you weren't earning a lot of money you still put money aside it wasn't for investing it was for traveling and stuff like that but you had that habit in place of paying yourself first and i think paying yourself first is definitely a habit and definitely one that allows you to pay off debt and allows you to save a deposit so much easier and then as your income increases you pay yourself first more money would you agree 100 you know always i think it's best to work it out as a percentage of your income like what my parents taught me as opposed to going a set amount work it out as a percentage you know how much it you know you've got to be realistic with this so how much your expenses in life because you need to pay your expenses you know you can't live for free and then you know understanding you know what sort of discretionary spending do i do i have on average per week what sort of percentage of my income is that and then going all right well you know there's all of this surplus income let's make sure that we do that what sort of percentage is that and then you know just increasing that percentage because it's unlikely that your expenses are going to increase dramatically um but you know that that income can increase a little easier yeah and so for me i've definitely done that running a business my income is a bit more sporadic i'm not paid every single week for night or month the exact same amount but i do percentages so percentage of revenue that comes into the business percentage goes towards you know paying the tax that i have to pay in gst percentage goes towards paying off debt which will eventually save towards my deposit as well so i have that percentage then i have to live off the rest the next tip um that kind of goes in line with this is to either drastically reduce your expenses or keep your expenses extremely low so as you said you're a uni student living off uni student money and then when you got a full-time job you continued to live like a uni student in a lot of ways so you kept your expenses really low for myself i dramatically reduced the expenses in my life cut everything to the bone so everything from phone bills to internet to even moving back in with family to save on rent so that i could pay off my debt faster there's a lot of different ways that you can do that but when it comes to paying yourself first i'm paying myself first then i've got a budget which i'm living off and trying to live off frugally and then any extra money that i have left over if the business does really well or if you get a bonus or you've got some extra income left over that i also use to pay off debt or i would use to save a deposit yeah and that's one of the big things that i've done with my life now that i do get paid profit share and dividends from the business so the way that i've set up my my life is uh my income pays for everything everything in my life my mortgages my insurances rates water living expenses absolutely everything my discretionary spending um so just my weekly fund money um and then a hundred percent of the dividends that i get which is about 50 of my income goes to investing and goes to paying off debt or goes to savings so as soon as i get paid um my my dividend which is just a bulk payment you know once a month or once a quarter bang straight into a savings account because i know that my income my wage supports my lifestyle all of my expenses which is great so that's been a really positive way for myself yeah and this is one of the great things about paying ...