Lady in the Red

Greer McDonald is sick of living pay-to-pay. A product of her Generation “Y-Not” spending habits, Greer’s debt brings new meaning to a misspent youth. Her aim now is to debunk money myths and get Kiwis to take control of their finances by learning through her bad choices.

The finale: How I got rid of dumb debt

02:36pm 03 Jun 2011 81 comments

BY GREER MCDONALD

UnicornHow did I do it? That's the number one question I've been asked as I near the end of my financial freedom journey and look forward to a life free from unwanted interest payments and that little negative sign appearing before my bank balance amount. 

My gut reaction is to say "I dunno, it just happened" but you know what? It didn't just happen. 

I'm not going to sugar coat this for you and say it's all rainbows, unicorns and glitter-coated poo. I did it, myself. At the end of the day, I'm the one who had to reach rock bottom ($10,000+ of spiralling, multiplying debt) and commit to making a change. I'm the one who had to actively look for the areas of concern, crunch numbers, find solutions and then make them happen. I believe in magic, but money fairies, the ones I thought paid the bills I ripped up and threw away, don't actually exist. This much I know is true.

Luckily, through my journey, I've had people actively trying to help me.

You lot, my friends, family, colleagues, financial experts, self-proclaimed experts (there's a lot of them) and the folk at Sorted (and yes, this is a shameless plug for the Retirement Commission's brainchild) have been really helpful.

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Reader question: Riding the student loan wave

10:17am 01 Jun 2011 71 comments

GREER MCDONALD

In today's reader question, Ms A asks:

Student"You're probably going to hate me for this but I'm going to ask it anyway....I have a $25,000 student loan and I'm about to finish Uni at the end of this semester.

I also have $25,000 which has been given to me to pay off said student loan. Which is better for me to do? Pay off the student loan and get the 10 per cent kick back in doing so, or leave the $25,000 in a term investment and let it grow while my student loan is being paid off at no interest....?? What would be the most lucrative option?"

Hannah, from EnableMe, replies:

Speaking financially, not morally, invest the funds elsewhere and earn some interest you can play with now.  I'm guessing you will be able to access the kickback at a later date and in four years you would have achieved the same outcome from interest earned (assuming 3 per cent interest rate), and if the kickback is still offered, pick up that discount as well. 

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One world trip and no debt

10:29am 30 May 2011 29 comments

BY GREER MCDONALD

Oops, I forgot to say hooroo! Sorrrrrrrrrrry.

So I've been quiet for more than a month because I went off on my world trip: New York, London, Italy, Hong Kong... all in the name of work and a little bit of play. cash

Well I'm home - and I managed to have a fantabulous time without any nasty credit card bills to fear the arrival of. It's a great feeling!

There were a few financial lessons I learnt though:

- Cash, cash, cash

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Feeding credit to the debt whore

08:53am 18 Apr 2011 74 comments

BY GREER MCDONALD

Last week-ish I went home to Hamilton to see the parentals.

As per routine, Dad presented me with my pile of mail that gets sent to his house for safe-keeping from various agencies.

The usual suspects were represented: IRD (a student loan update informing me I am in fact still several thousand dollars in debt. Thanks folks!) and a couple of letters from my bank, ASB.

The first, dated January 26, congratulated me on making my final payment on my loan. It also reminded me that my loan insurance ceased on the date the loan was repaid. Cool. 

The second letter, dated the same, congratulated me on repaying my loan (again). It also again mentioned the insurance but this time said I may need to visit my local branch to arrange an alteration or cancellation. 

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Reader question: Should I consolidate debt?

09:07am 05 Apr 2011 34 comments

BY GREER MCDONALD

Rebecca asks:

I have a question.  When you went to your financial advisor did they recommend anything about consolidating your consumer debt?  I don't mean into one of those dodgy loans you see on TV, but rather through a bank loan?  I have a couple of credit cards with waaaaaayyyyyyy too much on them and I'm considering taking out a bank loan to cover both of them. Just wondering if there is any advice you could glean on that front.

Answer from Hannah at EnableMe:
 
Ok - it is all about interest, term of the debt (how long it will take you to pay off) and cash flow.  These three things, although not always directly related can have a big effect on your lifestyle.

Debt conAt enableMe we prescribe repaying the debt as quickly as possible, paying the least amount of interest possible, provided you can afford it.  The interest rate and how long you have the debt for, is what drives the overall cost (what you end up paying back overall).

A lot of people are happy to pay less each month, and get fixated by this, instead of thinking, "How many months am I going to carry this?" or "What does this mean I pay back overall?".  They are happy with this, usually because they don't acknowledge the true cost of the purchase - this is more common than you think.

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