We share a fabulous and inspirational story about a 30 something young person who has come to terms with her bad relationship with money management and turned it around as she is saving a deposit for her first property purchase. You might be surprised at how Emily Power is doing it.
Kevin: You might have heard about a story that revolves around a young lady in her 30s receiving pocket money from her parents. She’s a property reporter with Domain, Emily Powers, the young lady concerned, and Emily joins me now.
Good morning, Emily. How are you?
Emily: I’m good. Good morning. I’m well. How are you?
Kevin: I’m very well. Tell me what’s happening here. Is this how you’re getting into the property market?
Emily: This is. This is how I’m wiping old debts and getting into the property market.
Kevin: Well, good on you, I say.
Emily: Thank you. Now, this pocket money is from my own salary, and I’ll tell you how it works. Each fortnight, my salary goes into a bank account that only my parents know the Internet banking passwords to, and from that, they fling me $400 a fortnight out of that as my salary. And I live on that.
Now, I don’t live at home; I rent. So out of that bulk salary comes my rent, my bills, health insurance, car repayments, all those sorts of major things. And with $200 of that a week, I buy my groceries, I put petrol in my car, I pay for my public transport, any toiletries or incidentals, and if there’s a little bit left over, I will have takeaway coffees, maybe a night out with my friends, which I did last night, for example. We had a $10 bowl of noodles and I had a $5 ice cream afterwards. That’s my big night out. Because I’m saving for a home.
I was a fashion writer before I worked in real estate, and through a series of events in my life – I had an ovarian tumor, needed treatment, there was a big medical bill, then became a fashion writer – and already having a medical debt in my 20s, I started unbridled spending on my credit card. I felt I had to keep up appearances. I wanted to look the part of the fashion writer.
I clocked up $14,000 in credit card debt over five years. It got to mid last year and I said to my parents, “I’m so far behind the 8-ball in terms of having a property. Not only am I in debt, but I can’t possibly start saving until I turn my habits around and my balance sheet around.”
Kevin: Was it last year this all started, Emily?
Emily: Yes, it was – in August last year I started. It was my dad’s idea, too.
Kevin: So, roughly eight months down the track so far?
Emily: Yes. That’s right.
Kevin: And how’s it going for you?
Emily: You might be surprised to hear I don’t know how much is in the account. I have no idea how much I’ve saved, because I don’t want to know. I had such an unhealthy relationship with money for so long, I decided that I don’t need to know what’s in that bank account; I just need to focus on developing good, frugal habits around that $200 a week that I have.
I said to folks that I only want to know when there’s enough for an apartment deposit. I’m aiming to save $50,000 in two years.
Kevin: $50,000 in two years.
Emily: I’m about a quarter of the way through, I suppose, if you do the math. I’m on the way. And I’ve wiped my credit card debt. It’s gone.
Kevin: Well, you’re well and truly on the way if you’re a quarter of the way through, and I think we calculated roughly six to eight months you’ve been doing it.
Kevin: You’d better hit Fairfax up for a pay increase, too.
Emily: I don’t know if that’s going to be possible. But I’ll keep working hard. I’ll put my head down and my bum up and hope.
Kevin: We’ll put in a good word for you. Can I ask you, also, have you inspired any of your friends to do the same thing?
Emily: No. I have to admit I haven’t. They all think I’m a little bit crazy, although some of them are in admiration of me but feel that it would just be a bit too hard for them to do. Reactions to this method have been mixed on social media. A lot of people have slammed me, called me immature and an embarrassment to myself.
Kevin: Really? Some people are so unfair, aren’t they?
Emily: But while I haven’t taken it on board, I’ve certainly listened to the criticisms, because there’s no doubt that I did have a terrible relationship with money and I’m in this position through my own fault. Others, however, have been in admiration and decided to look forensically at their own finances.
I think money is a very uncomfortable conversation to have. If by me speaking out about it encourages another young person who has credit card debts – and we all know that there are many of us who do – if it encourages them to talk to somebody they trust, whether it’s a parent, a grandparent, or go and see a financial planner and turn things around for themselves, then it’s all been worth it if just one person decides to turn themselves around.
Kevin: Emily, we saw you on The Project, of course, and I understand you got a very funny text from your grandfather after that.
Emily: Yes, I did. Gorgi Coghlan, one of the panelists, asked me whether any sugar daddies could get in touch with me if they felt they could improve my financial balance sheet, and I said, “Yeah, why not? Give me a call.” My grandfather who’s such a card – he’s 90 – texted me afterwards and said, “Emily, I saw you on the show. Well done. There could be some sugar daddies out there. Just be careful. Chat later.”
Kevin: Good on him.
Emily: Yes. I have my family in support of me. It was my father’s idea, and that conversation in August last year where I’d hidden from them everything that I’d been doing financially, and to pour it out on the table and have him come up with a solution that is working so well for me…
Kevin: I think you’re an inspiration, Emily. I really do. Just before I let you go, have you decided what you want to buy? I know you said an apartment; is it going to be a new one?
Emily: No, I’ve decided not to go off the plan. I’d like to buy something older and add a little bit of value to it – something around the inner ring Melbourne suburbs, maybe Carnegie. It’s too expensive for me to buy in close, but somewhere with a little village shopping strip, an older apartment and I’ll attempt to do it up a little bit, as well, add some value hopefully. So part of that $50,000 I want to save could be some money I could dip into to add improvements. That’s the plan.
Kevin: Well, good on you. We’ll touch base again and see how you’re getting on. Emily, all the best and thank you for giving us some time this morning.
Emily: Please do. I’d love to update everyone how I’m going and hear from others who might be on the same path.