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Send us a text Welcome to the first episode of the Financial Freedom Series! In this episode, your hosts Victor Lagos and Andrew Bean dive into the topic of borrowing capacity and the big money mistakes that investors often make that can negatively impact their ability to secure loans from banks. Victor Lagos, a seasoned financial expert with years of experience working with clients to build wealth, shares his invaluable insights and strategies to help investors avoid common pitfalls th...
Welcome to the first episode of the Financial Freedom Series!
In this episode, your hosts Victor Lagos and Andrew Bean dive into the topic of borrowing capacity and the big money mistakes that investors often make that can negatively impact their ability to secure loans from banks.
Victor Lagos, a seasoned financial expert with years of experience working with clients to build wealth, shares his invaluable insights and strategies to help investors avoid common pitfalls that can kill their borrowing capacity. He draws from his own vast experience in the financial industry to provide practical advice and actionable tips.
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Victor Lagos - Lagos Financial
Ph: 0450 313 606
Email: victor@lagosfinancial.com.au
Website: www.lagosfinancial.com.au
LinkedIn:https://au.linkedin.com/in/victorlagos
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SHOW CREATED BY THE COMMERCIAL PROPERTY SHOW NETWORK
HOSTED BY: Andrew Bean
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Welcome to the Debt Financial Freedom Podcast. Everyone loves the benefits of money, but so many of us avoid the hard truths about saving and investing. We wrongly assume we don’t have enough time, capital or knowledge to be able to get to the point of having passive income streams, savings, or investments.The things we really need to know about money aren’t taught in schools. Spending less than you earn, maximising your income, budgeting, taxes, mortgages, investments and passive income - if you didn’t learn these things from your family, then you’re probably like most people who rely on credit cards, buy now, pay later and overdrafts. And then when you want to invest or buy property you will be wondering why you can’t get approval.But there is no judgment from me here - I was in exactly the same situation! Huge debt, poor financial habits and no assets to my name. Step by step I turned my situation around and now, as a certified mortgage broker for 16 years with several investment properties in my name, I’m here to help you go from debt to financial freedom. Because if I can do it, you can too.In this podcast, I will share tips, insights and strategies from my own journey and experience, as well as my clients and guest experts, who share my values and mission to help others create financial freedom. My goal in this podcast is to share raw, honest, transparent, and helpful stories that you can relate to, and that will inspire you to take control of your finances. The only ‘good’ debt is debt that brings you closer to financial freedom and I will show you exactly how to achieve this. Everything shared by me and my guests in this podcast is general in nature, and for education purposes only. None of your personal objectives, financial situation, or needs have been taken into consideration. I highly recommend you seek personal, financial, legal, taxation, and credit advice before you take action on what you heard on this podcast.
Andrew Bean: This is the
financial freedom series
designed to show you how to cash
flow your way to financial
freedom brought to you by Lagos
financial, the road to financial
freedom starts today.
Welcome to the Financial Freedom
series. My name is Andrew Bean,
and I'm here with top mortgage
broker and financial expert.
Victor Lagos, founder of Lagos
Financial how are you mate?
Victor Lagos: I'm good, Andrew,
how are you? Mate?
Andrew Bean: I'm fantastic buddy
Super pumped to have you here
with this new series made? How
are you feeling?
Victor Lagos: I'm excited,
something that's been on my mind
for a long time to help people
with their finances preparing
for a mortgage payment to buy
property,
Andrew Bean: All right mate so
today we're actually kicking off
a six part series, a six part
financial freedom series that we
have put together to help and
educate investors on how to
improve their borrowing capacity
and making themselves look
overall better to the bank.
Right. And I know that you're
the man to talk to you for that
Victor Lagos: . Yeah, well, I've
been in the game for close to 17
years now. So broker for eight
years. So yeah, happy to be on
happy to help as much as I can.
Andrew Bean: That's it, man, I
guess like, the way you need to
look at it is also like the more
debt you can take on the more
debt that actually cashflow is
not debt that puts you in a
negative position that puts you
in a positive position, the more
money and the more wealth you
can actually make. So that's
really the important piece on
this, we want to be able to help
investors and every single
person to get into some kind of
property, hopefully a commercial
property that's cash flowing, to
basically find financial
freedom, because at the end of
the day, that's why we're doing
this, we're trying to get to
financial freedom, so we can
choose what to do with our time,
instead of having to go to the
nine to five.
Victor Lagos: No, exactly.
That's why I started my own
podcast, because at the end of
the day, people are gonna get
into debt. And if they don't
have the right help to use debt
to propel them forward to
financial freedom, it can
actually put them backwards.
Andrew Bean: That's it night.
All right. So in today's
episode, we're going to be
talking about how to clean up
your act, how to make yourself
look better in the bank's eyes
in terms of like, not spending
so much money on incidental crap
and making yourself really being
able to have really good
borrowing capacity, because like
we just said, the more debt you
can take on the cash flows, the
better position, you're going to
be to actually buy more property
that cash flows and to reach
that financial goal. So mate how
many months prior to like
applying for finance? Would you
start trying to clean up your
act in terms of looking better
for lending for the bank?
Victor Lagos: Well, it depends
on your goals. So if you're
going to want to buy a property,
and you don't have a deposit,
the sooner the better, it might
take you 12 months to get there.
So if you can start managing
your money now, to prepare to
apply for finance, between say
three months before you actually
apply at that point, your mind
is should be working. And you
should be looking good ready for
a bank loan?
Andrew Bean: So you think three
months is enough for would you
start possibly doing this when
you start saving for that
deposit? Like it could be like
612 months, 18 months, even 36
months out sometimes for these
big monster deposits you need
for commercial property?
Victor Lagos: Yeah, look, if you
just think about how much of a
deposit you need, and where
you're starting from, you might
need 12 to 18 months to get
there. It depends on where
you're starting from. If you're
really bad with money, and you
got a lot of debt, you want to
start well in advance, I'd say
12 months, 18 months at least.
Andrew Bean: So when you
actually go through to apply for
finance, will the bank just go
through the statement that you
give them? Or do they have
access to be able to look beyond
like the digital records, or
basically whatever they want to
look at?
Victor Lagos: Yeah, so at the
moment, there's a thing that's
coming out called Open banking,
it's not out yet. But while it's
not, the bank will only have
access to see the statements
that you provide them. And for
an application, they usually
just want to see the account
where your salary gets paid to
are your main transacting
account. But say you get paid
and you just transfer that money
out the same day or the next day
to another account, they're
gonna want to see that account
too. But if it's just your main
account, your bills get paid
from there, but then you save
and separate accounts are not
going to ask about the other
ones. So just look at that main
one.
Andrew Bean: And so this thing
that's coming out, does that
give them access to basically
look through all your bank
records willy nilly, just like
they'll be able to know that
1150 on on a Saturday night I
ordered McFlurry from Maccas on
UberEATS.
Victor Lagos: Yeah, look, no one
knows exactly what it's going to
look like. Because open banking
will allow you so you're the
borrower to give permission for
other banks to see all of your
transactions, but more
importantly, it's going to have
a holistic view of money in
money out? And how much is your
surplus? And then what's your
affordability on that surplus.
So it's got a potential to help
a lot of people because it's
true real time data. And then
that will then allow you to work
out, I think it's gonna go to a
point where you're gonna get
interest rates, and, you know,
risk ratings based on that,
because it'll take a holistic
picture, but we're not there
yet. So right now, the way to
navigate it, to be ahead of the
curve is to manage your money.
Well. And that's why we started
this podcast.
Andrew Bean: Yeah, it's awesome.
Man. I did notice like, it's
probably happened for like,
probably the last three or four
years or something. When you're
looking at the your statement in
your bank records. There's all
different icons and stuff and
little pictures to make it a lot
more easier to understand. Is
that for the bank to understand,
or is that for us to understand?
Victor Lagos: Yeah, definitely
being sold to us like it's for
us to categorize expenses are,
the thing about managing money
is that you're not going to
figure it out only looking
backwards. There's a lot of apps
that track your expenses. You
can order categorize, it can
have these little icons to show
you what you spend it on. But
not until you have an
understanding of how much money
do you actually need between now
and next payday? Can you
actually get ahead. And that's
where people get unstuck. Those
apps don't show you that. Some
of them do have predictive
billing. But I personally use
another app. It's called timely
bills. There's a few out there.
Yeah, there's been like pocket
book and money, brilliant lot of
them get bought out by banks,
but the one I've been using his
timely bills. So that way, you
can actually see how much money
so you get paid today. And then
between now and next payday,
you've got rent, you got
electricity, phone bill, all
this stuff that has to come out.
If you don't track that, you
just see the paycheck. So say
you get paid two grand, you're
like, awesome, I got two grand
available. So then you go spend
a grant. And then all these
bills start coming out. It's
like, Oops, I actually didn't
have a grant to spend, like 300
bucks. Right? So that's what the
banking platforms are lacking.
So that's why we have to be
proactive to see. So once you
know exactly what's going to
come out between now and then.
And you put money aside for your
day to day spending in a
separate account, ideally, then
you can start investing the
difference, or you can have a
down debt. That's how I did it.
Andrew Bean: So is the timely
build, is that a paid app? Or is
Victor Lagos: It's free. So you
have to manually put in Yeah,
that free?
it's really good. So you
actually just put in the amount.
It even has icons as well, by
the way, you can select the
provider and say when it's due.
And I've started putting
everything in the even like
property expenses. So then I now
know that if when a bill is due
how much it's going to be. And
the good thing is in the app,
you can actually tick it off
when it's paid. So you just go
tick paid and instead of getting
a negative feeling, because this
what happens with people, they
get a bill. And they're like,
Oh, we're gonna pay a bill. But
why are they feeling negative?
They got a service for that,
right? They just had internet
for a month, or they just had
electricity for a month or
three. So why should they feel
negative is because it's sent to
them by email, and then they
didn't know what's coming. But
if you know that is true, and
you have to pay it, you have a
little tick box. It's like a
little dopamine hit. So you end
up getting like a positive
feeling to pay a bill. So yeah,
that's where it really helps to
recondition yourself.
Andrew Bean: Yeah, I remember
when my fiancee and I a long
time ago, when we're saving for
our principal place of
residence, we obviously that we
live in Sydney. So we needed to
save a fair chunk. And we got
excited when we'd be able to
like pay all our expenses. And
then you saw like, okay, I can
put away like three or 4k this
month sweet, like we're going to
start seeing like build up and
build up and build up. So it is
quite exciting. But I think it's
also one of those things that
maybe with this app, like you
have to keep your finger on the
pulse. If you look at it every
day, like something that you pay
attention to every single day is
front of mind, and you're more
likely to actually keep on going
and keep on saving. So you
started a CrossFit gym, the
first month is going to suck,
like so bad, then after you've
done it for like two months,
you'll probably start seeing
noticeable change in your body.
And then you'll start like
seeing Abs or you'll start
seeing a few muscles come up.
And that's when you get more
spurred on to do it. So I think
the app I mean, I'm definitely
going to download that after
this session. Because keeping
your finger on the pulse because
I'm not sure how long or how
many times a day or how many for
how frequent people check their
bank balances. But I do it
pretty much every day because
I'm already always like, want to
see progress. So that might be a
game changer for that.
Victor Lagos: Yeah, look, it's
helped me I use a different app
before but I've been doing it
for at least two and a half
years, maybe even three years
now. And that was a game changer
for me because I always knew
that I was going to have enough
money for my bills when they're
due. And then I knew what was
left. And I would transfer that
money into other accounts. So
then, you know, obviously the
word budget. People don't like
that word budget. But yeah, if
you know what your cost is to
live like your groceries and
having an account like you said
you're married. My wife and I
had personal accounts that we
would have our personal
spending, because you still got
to have some freedom to spend
money the way you want, but up
to a certain limit, right? If
you got access to your main
account, you can easily
overspend. So then it's like a
weekly allowance. So then if I
want to buy her flowers, she
doesn't know about them. Right?
Yeah, because she doesn't have
access to your account. If she
wants to buy something from me
for my birthday, I won't know
what you bought. So it's
important to have that freedom
as well up to a certain limit.
And then you can adjust it as
you go. That's the thing. People
think that oh, once I've set a
budget, it's stuck. Now I can't
live freely. The key is to be
able to spend the way you want
to spend and not feel poor, but
still save up money, and then
another layer to that you have
to automate it. Alright, and
we'll talk more about automation
later.
Andrew Bean: Yeah, well, I
totally agree with that, like
having a separate account or a
bucket for spending. And I
remember a little while ago,
actually was quite a while ago,
when we're in our saving mode,
they say like you put x amount
away in that account. And no
matter what you have to spend
it, even if you just spend it on
something, you just have to
spend, it has to go to zero
every single month. So it feels
like you're not holding back,
you're not feeling like you're
missing out. So you can still go
out there. And you can go have a
really nice night, or you can go
spend $100 on a big night out
with your mates and stuff like
that, and not feel bad about it.
Victor Lagos: Yeah. But I think
the key is that you can do what
you want with it. It's guilt
free spending. So some people
want to put money on crypto,
that's just what they enjoy
doing. But you got to want to
have access to all your savings
to data. But if you've got a
personal account that you're
putting away $50 bucks or $100 a
week or whatever, and you build
that up, and you can go invest
in different little things. You
can if you want or if you want
to pay back your joint debt. Or
if you want to add it to your
combined savings, you can but at
least it's your choice. And
you've got to have that guilt
free spending as well.
Andrew Bean: Yeah, I did notice
that Bitcoin has actually gone
up not that I have anything
invested in Bitcoin, but I do
have a bit of a paper trading
for fun. And I bought us some
bitcoin at like, I think it was
like 17,000. Us. And now it's
you know up a little bit. So not
a good investment in my mind.
But still Just for fun.
Victor Lagos: Look, I used to
put money into crypto and I
don't anymore. And you know, you
talked about earlier about using
your net banking account every
day checking it? Well, when
you've got a crypto or multiple
crypto wallets. And you're
seeing the news, and you're
seeing all these updates on
YouTube, because you're
following those people. They're
always talking about the price.
So what it does is it takes you
on an emotional rollercoaster.
Yeah. So that's when I realized
I don't want to invest in
anymore because it's going up
and down. And it's taking all of
my attention and my emotions
with it. And it's not stable.
And it's not income producing,
yeah, versus defy and what not.
But to keep it simple, when you
invest in property, you're
leveraging, you're borrowing,
you're contributing your
savings, but you're it's an
income producing asset, and
you're getting capital growth if
you invest well, as well. So
yeah,
Andrew Bean: well, that's the
big issue with like, stocks and
shares and crypto and stuff like
that is it's so liquid, that you
can make a decision on an
emotion straightaway. Whereas we
property, if you decide to sell
a property, that's a good like
30-60 days, potentially, and
you're committed, there's many,
many different choices, you have
to make along the way to
actually sell a property, you
know, like, I want to sell it,
okay, I've got to find an agent,
I've got to find a seller, I've
got to do all this kind of
stuff. So there's like, I've got
to have a solicitor like there's
lots of little mini choices and
selections that you have to
make. So you can actually sell
that property. It's not just a
click of a button. But in
future, if you use like NF T's
for like property, which people
are starting to do, were you
like sectionalize it or are you
like, you basically can buy into
a property through using an NFT.
It might become more liquid like
that. And then also with the
ways that the conveyancing can
be done online, even now or like
in future through the blockchain
Potentially, it could,
unfortunately become more
liquid. So it could become a
more emotional asset as well.
Victor Lagos: Yeah, I mean, it's
already emotional as it is right
for people that you know,
residential. Residential,
exactly selling I guess so
you're right. If they could buy
and sell on the same day, man, I
don't know. It'd be hard because
there's people living in there,
right.
Andrew Bean: Yeah. So what do
you think about putting together
some kind of how to use App
something like that? Or how to
use timely build, and then we
can set it up as a free giveaway
for the listeners? What do you
reckon?
Victor Lagos: I'm happy to do
that. Actually. I can do some
screenshots and Yeah, show you
how to utilize that a little
better. Yeah, yep. Yeah, it's
not too difficult. Give it a go.
But yeah, for sure. We can do
that for the listeners, because
it has really changed the way I
look at money. It's given me a
positive feeling when I pay
bills. I always have enough and
even if you don't like say you,
you had your investment property
and not enough money that month
because you had to fix the water
heater, like you mentioned,
right? But of course, now you
know that you need to move money
into that. Right, yeah, cuz
you've got something due. But if
you didn't monitor and you're
relying just on the cash flow on
the property to pay all the
costs, you could easily fall in
arrears. And if you're preparing
yourself for future finance, one
of the things you'd never want
to have on any other accounts is
arrears, or late payment fees.
Those are the things that banks
as soon as I see that, they
don't want to touch you. They
want an explanation. Sometimes
things do happen, like admin
issues. But if you don't move
regularly, you don't put your
money in the right account, and
you're late on things,
especially financial
commitments, like loans and
credit cards and whatnot, forget
about it, you shouldn't be
applying for a loan, you're not
Andrew Bean: So you're saying
that any kind of late fee, so I
ready.
actually have had a few times
where like, because we have like
different accounts, especially
in offset accounts and stuff,
where we'll have like your MIDI
bank or like something like
that, and your private health
color coming out of, and for
some reason, it's like a couple
of dollars short, and it goes to
a late payment or something like
that. I know, that's bad, what
ramifications like realistically
does that have?
Victor Lagos: It depends on what
you're applying for, and the
bank that's looking at it. So
some banks actually don't want
to see your bank statement. So
about two or three years ago,
that's all they wanted to see.
There was a thing about
expenses. And I don't know if
you follow this, there was a
court case with Westpac and
Asik, I think was APRA. Maybe.
And it was about the court like
the Chavez thing, basically
saying that people can adjust to
living expenses when they commit
to a property right or a
mortgage. So then they started
to hold back on that, because it
adds more workload to the bank
to constantly check bank
statements and go through line
by line. So if you go to a bank
that doesn't ask for them, and
your expenses, or what you're
declaring reasonable for your
household, then yeah, late fee,
they won't even know it exists.
But if you go into the same bank
that that late fee was charged
from, of course, they're gonna
see it they're gonna ask about,
and if it's a logical reason,
like, I had money on the other
account, just forgot to transfer
the one off, it's fine. We just
got to cover it off in
commentary. But if it's every
month, and yeah, you're always
late, and you're constantly
putting money from another
account, you're borrowing for
somewhere else, then yeah, it's
a red flag. It means like, if
you can't even stay on top you
your private health insurance, I
can stand up for mortgage
payment.
Andrew Bean: Yeah, it's just
because, um, it doesn't happen
often. But it's happened
probably like three times in the
last 10 years. So like it, it
has happened. And it's just
purely because like, for some
reason, we because he split up
the money in different buckets,
like you were saying, and for
some reason, that's been
overdrawn. Like on one occasion,
I'm like, Oh, my God, like this
better not screw my, my whole
credit rating. I'm not gonna
hold these my whole career on
one transfer for private health
insurance. Yeah
Victor Lagos: . To be honest,
it's not going to and I think
timely bills will help you a lot
with that. Because that only
happens because you forgot that
that was due and you didn't have
enough money even if it's $2
difference. And that's what
happens when you allocate money
into different buckets into
other bank accounts. You need to
make sure that that main account
where will your bills get taken
out from always has enough to
cover what's up? So sometimes
you get excited, you know, I
want to put 4 grand in savings
like awesome, it's so exciting.
So 4 grand in this account, but
then you know, $500 of that you
probably should have left
because you got Yeah.
Andrew Bean: If you have ever
tried to run numbers in your
cash flow calculator, you'll
know how important it is to have
the right inputs. stamp duty
alone can vary wildly depending
on what state you are buying in.
That's why you need to know the
exact figure loggers financial
have a full suite of calculators
ready for you to start crunching
your numbers today. Go check out
your borrowing power budgeting
income tax refinance
calculators, repayment
calculators, or my personal
favorite, the stamp duty
calculator just to name a few go
to lagosfinancial.com.au That's
L A G O S financial.com.au To
start using these calculators
today.
So might like in terms of
charges on your account. What
are the worst types of charges
you can start putting on your
account apart from late fees as
already touched on that but
things like what does the bank
absolutely not want to see you
spending your money on?
Victor Lagos: Okay, I'll tell
you a few. One is gambling. So
if they can see you're going
into the casino to be online
gambling, even crypto, some of
them do see crypto as gambling
that's a red flag for sure.
Another one which is like an
instant decline would be payday
loans Cash Converters and you
know these pawn shops and stuff
that they give you give you
financier that that anyone who
needs that type of finance means
that they can't live within
their means. So they're always
chasing the tail, not even
living paycheck to paycheck,
because that paycheck doesn't
get them to the next one. They
need to get along Don't to cover
them to the next paycheck. So
yeah, that's a no go, believe it
or not excess alcohol. So if
someone's spending too much on
alcohol, that's also a red flag,
you can drink as much as you
want. But I had a customer that
was legitimately buying wine
through COVID. He was collecting
that flag and, you know, made
some commentary about and
they'll find if someone's going
to the pub all the time. Well,
it's a pattern. And they know
that if you're going to keep
spending that much, you can't
say you drop that, because
you're probably an alcoholic,
potentially.
Andrew Bean: So what I'm hearing
is buy your alcohol from Aldi to
mask what you're actually
buying. That's what I'm hearing.
Victor Lagos: That's not what I
said. But yeah, probably a good
strategy. That a separate store
like in the same company,
Andrew Bean: yeah. Fair enough.
So what are the good
transactions? What are they
actually want to see you doing?
Like? How do we boost the red
box, so that ticks in our box,
Victor Lagos: okay, so what
they're really just looking for
more than anything is that your
pay is consistent. So they want
to see your pay matches the
amount on your pay slip. And the
date that you get paid is the
same that you got paid on the
pay slip, and the amount doesn't
drop, right? Because someone
might be permanent. But then all
of a sudden, in the last three
months, their pay has gone down
and it's gone up, well, that's a
sign that you might be casual,
or that you've got, there's no
consistency in your pay. So
that's the number one thing
they're looking for to verify
that you actually get paid the
amount that you've that you've
declared on your pay slip.
Second thing is they want to see
that the expenses that you've
declared for your outgoing
costs, your day to day living
expenses, especially the fixed
costs, like we talked about
bills, people guess a lot of
stuff. But if you're way off,
they're going to compare that.
So if you say you spend $100, on
private health insurance, but
you're actually spending 400.
And I see that in your in your
transaction, they're gonna ask
the question, if you say I only
spent 300 bucks on childcare,
and they see 1500 That month, or
they're gonna question that. So
they're just looking for
consistency from what you
declare, and what documents you
provide all the stuff about
going to the grocery store, or
going out to dinner. They don't
really care about that. Because
let's face it, like you could
have a big event to birthday,
its anniversary, and you can
spend a lot that month. But that
doesn't mean you can do every
month. So they logical, right?
They're not gonna say, Oh, look,
they spent, you know, $500 on
dinner, let's account for that
every month. Well, it's just
that month. So it's more the
fixed costs. And then they're
also looking for debts that you
that you may not have disclosed
in your financial statement,
your financial position. If you
say you don't have credit cards,
and all of a sudden there's a
credit card payment. Well,
what's that, oh, even tell
you've got, you know, by now pay
later afterpay or zippay. So
things like that. But as long as
your pay is coming in, and as
long as you're also not going in
the negative. So over drawing
the account, so there's always
some money left, then you're
good.
Andrew Bean: Yeah, cool. So with
that timely app, can you
actually share that with your
partner as well, because it's
obviously a big thing. It's not
just one person, like working
the finances, it's usually a
team of people like a husband
and wife,
Victor Lagos: I'm sure there is
a paid version. And I'm sure you
can do a lot more with it. I
just use it myself just to
manage what the bills are. So it
doesn't manage my expenses. That
is something that I need to
figure out. And I can tell you
the strategies that my wife and
I did for that, because
everyone's got their own way of
managing their discretionary
spend, and you can share your
story, you guys figured it out.
But my wife and I actually went
to a park and we printed out
three months of bank statements.
And we brought a highlighter,
and we we brought a pen. And we
started to understand how much
have we spent in the last three
months on going out? Whether
it's birthday party or dinner or
whatever. Like that was kind of
a wake up call, right? Just to
see if that well, we've actually
spent that much in the last
three months and you know,
averaged it out per month, then
we decided how much do we want
to spend. And then that was the
amount that we committed to
spend for going out together. So
we had a joint account for going
out. And then we worked out our
individual amount, and how much
we want to have every single
week for ourselves. And to be
honest with you, it wasn't much
it's like $50 bucks a week, it
wasn't we had to adjust it
sometimes, you know, borrow
money from a different account.
But then we set up separate bank
accounts. So then on payday
money will go to joint going out
account, money will go to the
grocery account, money will go
to our individual spending
account. And more importantly,
and this will you talked about
earlier, we'd have a savings
account when we stuck to this
set budget. And we obviously our
main account, which is what we
talked about the bills coming
out of that there's always
enough money to cover the bills,
but everything else got
dispersed into other accounts.
So then we'd watch our savings
go up and up. So then what
happened was my wife will get a
pay rise, and I'd get a pay
rise. But all that will change
in our budget is our saving more
now. Because all the expending
is the same. And there's
something I read a while ago
saying that wealthy people earn
more but spend the same, whereas
everyone else earns more and
spends more. Alright and that's
it. that people fall under,
they're making more money, but
they start living a lavish
lifestyle. But if you're saving
more as you earn more, then you
can buy property. Or you can
invest in other other things.
Andrew Bean: It's like keeping
up with the Joneses like you
have lifestyle creep, that's
what they call it, you know, you
see everyone in a nice car, not
potentially in a nice house, but
like renting a nice house, and
you think I need that nice car
to where I am literally about to
upgrade my car, because we have
children, and more room is
required after five years of
having kids. So definitely
looking into a new car, but it's
just like, it's like that. It's
like lifestyle creep. And you've
really got to watch out for
that. And it's actually Robert
Kiyosaki actually talks about
this, where you pay yourself
first. So like, if you're
working like 38 hours a week,
you don't want to just be
working to pay other people you
actually want to pay yourself,
he would famously pay himself
first, and then not have enough
money for his bills, he put
himself in a position where he
had to work out how to figure
out like to make more money. So
unless he made more money, he
wasn't gonna be able to pay this
bill. But the most important
thing was paying himself first
into that savings account.
Victor Lagos: No, actually, I've
read that book Rich Dad, Poor
Dad. And for me, the thing that
stuck out was building your your
assets and reducing your
liabilities and building the
income producing assets. So not
things like cars or your home
which are because a depreciating
asset, of course, it's not
income generating and your home.
It's not tax deductible, it's
not income generating.
Andrew Bean: So it's a liability
because you're paying for to
load unless someone else or
paying for it and paying for
itself. Yeah,
Victor Lagos: I agree. It's a
cost, right? It gives you
shelter. So that's the benefit,
but it's costing you money every
single month. And if the rates
go up, that's another cost. But
one thing I wanted to touch on,
which also helped me because
it's a psychology thing as well,
right? What people don't realize
is they end up spending more
than what they earn, when
they've got access to credit,
like credit cards, buy now pay
later, or even payday loans if
they've gone down that path. So
they end up spending more than
they earn. So doing this money
management that we talked about
is so that you can spend less
than you earn and invest the
difference, or save the
difference. But the way that I
understood it, that helped me
was, every time you spend on
credit, you're actually stealing
from your future self, say you
want to buy a new car, and you
take out a car loan, 30, grand,
40, grand, whatever, that
feeling of driving a new car,
she was great. But it doesn't
last, it might last a few weeks,
soon as the car gets dirty. Kids
vomit on the seat, or you put a
dog in the back or whatever it
is, it doesn't give you that
same feeling anymore. Your past
self got to enjoy the feeling of
that brand new car, but your
future self is the one paying
for it. Right? If you just have
someone like oh, now I gotta pay
for this. But you're the one
that got to enjoy it not me. Now
it's just a car, I'm just
getting from A to B, but a cars,
okay, because obviously, it's
something that you need for the
family and whatnot. But I'm just
talking about in general, like
if you bought yourself a, I
don't know what
Andrew Bean: role it was
something crazy, like just a
flash, you know, you just link
to build up your Instagram
account.
Victor Lagos: Exactly. And it's
instant gratification, right?
They feel good then in the
moment, but even the Rolex won't
feel that good after a while,
because you might scratch it,
and you don't want to wear it
anymore. Because you don't want
to damage it. So if you flip it
on its head and say, you know, I
do want a Rolex, it's important
to me, but I'm not going to
borrow the money to get it, I'm
going to save for it. So you
manage your money the same way
we talked about. And then you
start putting away money every
week. And you can set up a bank
account, like the good thing
about Australia's bank accounts,
a free, you can have multiple
accounts, they don't charge you
overseas. In Europe, they charge
you monthly fees for every bank
account you've got. Whereas here
you can have like seven, eight
sub accounts with no fees. And
you can literally call it a
Rolex account, if you wanted to
re label it. And you can put
away even 100 bucks a week or
whatever it is that you can
afford to put aside every week.
So you get a positive feeling
because you see it grow, right.
And then eventually you have
that whatever it costs, say it's
10 grand by the watch, you
eventually get the 10 Grand, and
you go buy it outright. So now
you have a positive feeling
throughout the whole process,
because you were saving, you get
the positive feeling because you
just bought it. And you save
that to get it there. You get to
carry that fill in because you
now know that you worked, and
you put money aside to get that
watch. And you get to wear it
the rest of your life had no
debt tied to it. Yeah, so you're
giving to your future self by
saving?
Andrew Bean: Yeah, that's
awesome. What do you think about
saving, so you're saving for an
asset Right? Or you're saving
for something like a watch or a
car or something like that. But
you keep on saving and saving
and saving, but you buy a cash
flowing asset, that then you can
take out a loan, and then that
buys the car and pays for the
car. So you have the asset, and
then you also have the car and
then that actually the asset
pays for itself over time. So
you have both of those things
and one of them is obviously
producing cash flow, producing.
Seeing potential capital growth
in the future. Obviously, the
car's not going to do anything
for you, except for make you
feel good and get you from A to
B. It's going to depreciate over
time. But that's a very common
way to do it too. What do you
think of that way?
Victor Lagos: So you're saying
that you get the property first,
and it goes up in value? And
then you buy a car with a?
Andrew Bean: No, no, no, I'm
only talking about like cash
flowing real estate like
commercial property. So you're
saving and saving, and instead
of dumping the money, it's a
it's a really expensive car. So
it's like a $300,000 car like a
Lambo or something like that. So
you're saving up that money, but
instead of buying the Lambo
first, you buy a warehouse, and
that warehouse is paying you
$60,000 a year. And then you can
take out a car loan because the
car loan is only $40,000 a year.
So your net $20,000, the
property is paying itself off,
and it's paying for you to have
that car as well. So you get the
best of both worlds.
Victor Lagos: That's an awesome
strategy. Because while it's
paying for itself, as well,
you're getting the growth,
right, of course, it's
speculation, I understand that
you can't guarantee growth when
you're investing in property.
But say you did invest in a good
area. And if you just look at
stats and in whatnot in that
area, and it's grown over time,
the longer you hold a property.
So you're using the bank's money
to get you that asset. So
whether it's $600 grand or
whatnot. So that's just they're
going up in value, the tenants
paying the rent that's covering
the cost, which is just the
mortgage, because they're paying
the rent, and they're also
paying the outgoings directly.
And if there's still enough
money, that you can now fund the
car, as well. So it's paying the
car loan repayment. Now all of a
sudden, you've made your initial
contribution or your initial
savings work so much harder for
you. That's leverage. So you've
leveraged other people's money
to help you build your wealth,
and give you the lifestyle at
the same time. So I think that's
yeah, if anyone can figure out
how to do that, well, they've
got enough money set aside to
buy an asset that's going to
generate that much. hat's off to
him.
Andrew Bean: Yeah, that's it. I
mean, so I mean, the only way
that you can really, you know,
guarantee capital growth is by
force appreciation on commercial
property where you're increasing
the income. So that's really the
only way. And that's the only
way I think I never think of
like the market going to make me
or like speculating on the
market. So capital growth, it's
how can I force income onto this
property to guarantee the value
going up? So that's kind of how
I think about it.
Victor Lagos: Yeah. And that's
something that you help a lot of
your, your clients with, look
for value add strategies, and I
think that's important before
you buy a property or commit to
something is to know, what are
the value add strategies that
you can implement as soon as you
own that? So you can already
predict and project your money
based on that future income? And
then of course, like you said,
you know that that property is
going to be higher value for
that reason. So yeah, it's not
based on the market itself. It's
just based on the rent.
Andrew Bean: Yeah, no
speculation there. So maybe in
terms of like, say, you do want
to, like buy some fast food, or
you want to go out and buy a new
outfit or something like that?
Do would you recommend
potentially drawing that money
out from the bank actually
drawing money out, and so you
would pay that with cash, so
there's no like digital record
of what you've bought for the
bank to like, scrutinise,
Victor Lagos: I'd say it
probably doesn't make a
difference. Because if you take
the money as cash, and then go
spend it on clouds, the bank
would just see it as an expense,
right. And if you just spent it
on clothes, they're just gonna
see it as an expense. So it's
not like it actually lets them
see it differently. If anything,
if they see too many cash
withdrawals, that might raise a
flag, because they don't know
what to spend, especially if
it's large amounts for a couple
of 100 bucks here, and that's
fine. But if you're taking out
two grand every single paycheck,
and there's no record of how you
spend your money, it's gonna
raise a flag if the bank sees
that, because they're gonna
understand how do you spend your
money? Yeah, and nothing I
didn't touch on is that there's
a requirement for brokers and
for banks to report things under
the AML act AML. CTF. So anti
money laundering and
counterterrorism. That's
something that they always look
in, they've got algorithms and
things that actually check
account. So if there's money
coming in, and money going out
and being moved to multiple
accounts, that's a red flag,
even for me it was broke, if I
see something like that.
Andrew Bean: So yeah, fair
enough. While we're on the topic
of creating like a bit of a
history of like, actually using
credit, is it ever a good idea
to take out a credit card, just
to get the credit history up,
even though you're not going to
use it much like because if
you've never had a credit card,
you never borrowed any money?
How do they look at you
differently? Like how does that
change like what they want to
do? Because I guess, in their
eyes, you kind of what have you
been doing just sitting in a
corner just tweeting, you know,
Froot Loops or something?
Victor Lagos: It's funny you say
that not the for loops of it.
That is funny, but the funny
thing is about the credit file,
so there are some people who
have never taken up any debt at
all. And they get to their late
20s. And then they realize, you
know what, I've saved up some
money. Now I want to actually
buy a house or property for
investment. If they've never had
a credit file, then it can flag
to the bank. And they'll ask the
question like, how is this
person 28 years old, and they
don't have a credit for, it
doesn't mean they won't approve
it, it just means that we've got
to explain it. Because it's,
you've got no credit score. And
Australia has moved on to
comprehensive credit reporting
or positive credit reporting,
they call it in America. And
that's where they give you a
score based on you staying on
time for your debt. So they keep
a record of that, you can
actually see if you're late on
any repayments, whereas before
only used to keep a record if
you defaulted, for example. So
having a credit file does help
because you have a credit score.
And if you've got a credit score
of over 800, you're pretty much
in the top tier of a borrower,
if you're below 600. There's
some negative stuff on there. If
you never had a file, then yeah,
I don't even know what your
score will be to start with,
what I would say is doesn't have
to be a credit card, it can be
like, you know, Is it money or
something like that with the
$1,000 limit. It can even be a
phone bill, like a mobile
contract, that creator or
utility bill, if you move out of
home, something just to create
your file. And as long as you've
got a file, then that's okay,
you don't have to take out debt
in order for you to get that
score. So that's something to
keep in mind. But if someone
does want to have a credit card,
I'd recommend getting good with
money first. What I mean by that
is we talked about managing
money, if you're borrowing money
from anywhere, because you can't
afford to cover your expenses
between this paycheck and the
next one, a credit card is not
going to help you with that.
Better not get one. But if
you're always ahead and you've
got savings, put aside, a credit
card can make it easier for you
just to manage a lot of
different direct debits and
whatever. And then you can clear
that as long as you clear the
balance in full every month. And
some banks will make you fill
out a form to do that some will
look through it not through
their bank, some you have to
call up, because they don't want
you to clear it in full, they
want you to carry the balance
and pay interest rate interest
on it. So that's when I would
say it's worth it. And in terms
of limit, me personally, I'll
just go to the minimum, which is
six grand, which gives me reward
points, right? Whereas some
people can go lower. But if it's
not giving you reward points,
all it is is just temptation to
use money you don't have,
because why else would use it?
Andrew Bean: So what's your
credit score out of it's out of
1000? Or something?
Victor Lagos: No, I think it
goes all the way up to like 1200
Plus, so anyone who's ever 1000
has got a really good, a really
good score. But a good school,
yeah, 800. and above, and you
can go to a website, there's a
couple of them. Credit savvy and
other one is get credit
score.com.au. And it's free,
they will probably send you some
marketing emails, but you can
keep track of your school, it
doesn't actually do a credit
check. So it's not imprinting on
your file, like you're applying
for finance. It's just a seeker
view. It's like just you wanting
to see it. And then you can just
see what your score is. Yeah, so
and that could also help you if
you've got something bad
sometimes people have fallen
behind or something like years
ago, they moved addresses and
don't even realize they've got
something negative mark on
there, by looking at your score.
If it's under 600, then you need
to get a copy of your report
ASAP.
Andrew Bean: Yeah, so I guess
it's one of those things, I
mean, just unpacking a little
bit further. So it doesn't put
any kind of like mark on your
record where you can see it,
someone's check this I mean,
like, you know, how when, if
you're applying for loans for
like different things from all
different people that actually
puts a flag or some kind of tick
or mark on your account or
something.
Victor Lagos: Yeah, so if you
apply for finance, then it's not
really a problem. It doesn't
affect your score, whether
you're approved or declined,
because they don't update it.
And so this wasn't approved,
right, it just shows that you've
applied, it only starts to
reduce your score if you keep
applying elsewhere. And this is
really important, because some
people who come from migrants
that come to Australia and in
their countries, that's how they
get financed, they go around to
different banks, and they try to
negotiate their rates, and then
they apply for loans, because a
bank is not going to give you an
interest rate unless you apply.
So sometimes you don't realize
that by talking to a banker, or
checking for right online, that
they're actually applying for a
loan, that leaves a mark on
their credit file. And if they
do that three, four times in a
week or in a month, their score
is going to drop significantly.
So it's important to not apply
for loans. So working with a
mortgage broker, like myself, I
will actually check your file,
do an assessment on it. And I
used to work for a bank. So I
used to do credit assessments on
behalf of the banks. I know what
they look for, to work and
answer all these questions. So I
do my assessment first without
putting any application for. So
if I need to do a credit check,
it doesn't impact the file, like
the credit file, like it's an
actual application is just to
see it. And then I can send a
copy to my customers and they
can have a look at it as well.
It doesn't cost them anything,
but only obviously do it
sometimes if it's required, but
I don't always do credit checks
because sometimes they don't
need to do
Andrew Bean: Yeah, awesome. I
mean, because there's all these
like, like websites where they
say like oh you know 24 like
finance, like, they'll let you
know in, you know, 24 hours or
48 hours. And then some of them
do say does not like put a
credit mark, like a mark on your
credit score. Is that actually
true? Or is that just like to
try to hook you into actually do
it?
Victor Lagos: Well, I haven't
seen specifically what you're
talking about with the ads. But
if you are getting finance, then
it is leaving an imprint on your
credit file.
Andrew Bean: And what have you
just given me like you go
through like a questionnaire
that was like, give you a couple
of assets and liabilities and
what you get paid and what you
want to actually what you're
trying to get how much money
you're trying to borrow, then
they come back to you. And I'll
give you a call until you yes or
no or what assets you haven't
Victor Lagos: Yeah, there are a
few of them this personal loan
lenders and short term business
lenders. And they might have a
tool initially, which will do
like a quick check, which may
not be an application. But the
next stage to that is for them
to actually give you an offer
that will actually ask you
usually to provide bank
statements. But they're not
going to ask for bank statements
or you download them from your
net bank, they actually going to
ask you to plug in your
credentials using a tool, which
is similar to open banking, but
it's using another tool, and
that just shares all your data
to them from that particular
bank account. So that is an
application that we'll put out.
But in the in the beginning, we
just getting a quote, It depends
on on the lender, some of them
will do one application first,
others will just do what's
called a seeker and you got to
check the fine print. If it says
Seeker, then that's not going to
impact your credit file.
Andrew Bean: It's no secret that
getting financed for a
commercial property can be a
difficult task. If you're
looking for a rockstar mortgage
broker, to kickstart your
financial freedom. Well, look no
further. My man, Victor Lagos
from Logos, Financial has you
covered for all of your
commercial financing needs, go
to lagosfinancial.com.au. That's
L A G O S financial.com.au, for
a free consultation to get you
on the path to financial freedom
today.
And so with credit card, just
want to go back to that in terms
of like max limit, what would
you suggest would be the maximum
that you should have the minimum
you can actually get? I think
it's you got to base it on
1.what's the minimum limit for
that particular card. So you
know, you might want an Amex but
an Amex is, you know, $15 grand,
Victor Lagos: but if you're
wanting to apply for finance and
buy a property $15 grand will
actually hinder you in terms of
your borrowing capacity. So you
may need to rethink that and get
another credit card from another
provider. That gives you like a
lower limit like $5k or $6k. But
I think a good rule of thumb
would be only have a limit that
you can clear with one month's
pay. Yep. So that way, you can
never get into trouble. So as
soon as you go $15k and above or
something like that, and you
can't clear it, you're going to
carry you can temptation there
or something can happen where
you can access more money that
you can afford to cover and
clear and you're gonna be paying
interest. And then you're in a
hole basically trying to get out
Andrew Bean: Back a long time
ago, when I first got into the
property and investing and
things like that. There was a
lot of talk about offset
accounts. So we have offset
offset accounts. We have split
mortgages, and the idea was to
have a credit card, you pay your
wage your your money into your
offset account, because you're
offsetting your loan, and then
you pay everything with a credit
card, and then you clear the
credit card every single month.
Is that still a good strategy in
your mind in you know, 2023? Or
does that really need to be
updated? Because the offset
account doesn't really do too
much?
Victor Lagos: Yeah, I have heard
of that strategy. It's actually
been promoted a lot from
different does get promoted a
lot. Yeah, yeah, it does. I
personally don't think it's that
effective, because it's too easy
to spend more than you would
normally spend. So because it
all comes down to visibility.
All right, we talked about
earlier, allocating money for
certain buckets. But if you have
a credit card that you put
everything on, you don't really
have visibility of how much you
spend for certain things. So you
sort of focus in on available
funds, rather than the balance
as well. So if you've got a
$20,000 card, and you've put two
grand on it, you still see
$18,000 available on that bank.
So in your mind, like, Oh, I got
a 18 grand, I haven't spent that
much. But if imagine you had a
$2.5 grand limit, and you look
on it says should I make a $500
left? Now all of a sudden,
you're not thinking the same way
about spending, because you're
like, I'm nearly maxed out here.
That's why I think it doesn't
work because you end up spending
more and I think I did read an
article recently. I don't
remember where it was, but it
was
Just trying to statistics of how
much people actually end up
spending more, because they have
a credit card. Yeah, if they
didn't, they'd actually spend a
lot less, which makes sense,
even though they think they're
managing it. Well, when you have
everything on the card, you
can't categorize it the same
way, you can't bucket it the
same way. Yeah, so it makes more
sense to not have it for that.
But an offset account can be
powerful. So some people do the
card thing for bills, and then
you know, it's interest free
money, while their money sits in
the offset, and then
automatically, once a month, it
will direct debit from that,
it's called a sweep, they'll
clear the card in full. And
that's gone. I'd say that's a
good strategy just for maybe
your fixed costs. So you know
what your bills out, right?
Everything that is going to come
out, they're fixed. If you have
that coming from your credit
card, then you know that you're
using the bank's money, which is
interest free, while your money
sits in the offset saving you on
interest. But you're not
overspending, because you're
just spending what you're gonna
spend anyway, right? Yeah,
you're not using it to go for
the midnight macaron, or
whatever it is that you might
end up buying a Rolex or
whatever, you're not going to be
tempted because you made a
decision, or your other costs,
your discretionary spending all
your groceries and all that
stuff is being paid from an
actual bank account, which you
set a limit for per week, and
only that the bills come out of
credit card. Does that make
sense?
Andrew Bean: Yeah, definitely. I
mean, because we've been doing
like this way, like for quite a
while now, probably at least 567
years or something like that.
But I've been looking at it
unlike I mean, it doesn't seem
like it's really making much of
a difference. Like unless you've
got a really large portion of
your mortgage up against that
loan to offset it. It's really
not doing that much. So I mean,
we've only, we've only got a
half $1,000 limit on our credit
card. And we clear it every
month. And it's never goes close
to even using that. But I just
not I'm not seeing the value in
it anymore. And it just annoys
me having a credit card. So I
might be changing that very,
Victor Lagos: I think yeah, just
doing the other thing with
very shortly.
Andrew Bean: Yeah, that's it. So
mate obviously, you would
timely bills and having
different accounts for and
bucketing your funds that way. I
think that's much simpler and
not even needing a credit card.
And then you think you just feel
freer, and you have full
visibility of how much you spend
that month.
suggest that you should close
credit cards when you're
applying for finance, how long?
Or how far out? Should you start
closing credit cards. And you
know, as soon as I have it
either packed
Victor Lagos: Sooner, the
better. So depending on if
you're carrying a balance or
not. So some people actually
have credit cards that they just
have open, but they don't even
use them. They're just there,
they might use it occasionally
aren't going to keep that open
if I'm traveling overseas or
whatever. But that can reduce
your borrowing capacity a lot by
having a credit card open even
if you never use it, because the
bank was looking at worst case
scenario. Yeah, how much can you
spend up to if you want it to,
and that's the limit. If you
don't use the funds, closer cut,
like just doesn't make sense.
And if you can reduce the limit
to something, the lowest
possible do that if you need to
keep it open for whatever
reason. So sooner the better if
you carrying a balance, so
there's someone who at some
point needed to use the funds
and hasn't been able to clear it
with one paycheck, then you need
to have a way to structure your
money. So you can pay that debt
back faster. And one way to do
that is a balance transfer, you
say you got one credit card,
you're paying 20% interest on
it. And you go to another bank,
and you apply for another credit
card to pay out that card. So
it's like consolidation or a
refinance. But they call it a
balance transfer. So then that a
new card provider will pay out
the old card, but they don't
enforce that you close it.
That's the problem. So this is
where people fall into a trap.
And I fell for this many years
ago. So say you've got a five
grand card, you apply for
another five grand card, that
one pays that one out, now you
go into 0% interest for 12
months or two years, whatever
the offer is, but you don't
close the other card. So now
you've got $5,000 available
here. So then you go and spend
on that card. So now all of a
sudden you're 10 grand worth of
debt. So that's where it's not a
good strategy. If you don't
close that card, you need to do
that immediately. So as soon as
you've balanced transferred,
close that other card, now
you've got $5,000 owing 0%
interest, he start hammering
that debt down. Every time you
make a payment, it goes all to
the principal. It there's no
interest anymore because you've
balanced transferred. But if you
kept it at 18% and then you
started making the same
repayments every week, there'll
be interest as well. Just gonna
take you longer to pay it off.
Does that make sense?
Andrew Bean: Yeah, definitely.
The reason that I like to have
the credit card when there's
like no balance on it is like
the what do I need three and a
half $1,000 Quickly, like a
buffer like our emergency, three
and a half $1,000 is nothing
like so. It's even silly to have
that anyway. But the other time
that we've had a reasonably
large like I guess it was a
credit card was we renovated our
kitchen and it was from IKEA.
And they were like okay, well
you can take out a $15,000
credit to pay for this IKEA
kitchen and if you pay it off
over three years
Have you pay absolutely no
interest on it. So I'm like,
alright, well, I'm pretty good
with money, I'm pretty sure if I
just pay it off every month, I
would be able to pay it off
within the three years. And lo
and behold, we stuck to it, and
they didn't get $1 off us of
interest. And then as soon as we
paid it off, like we are
shutting this credit card down,
we are not having it. And we did
it. And like it was like, if
you're diligent, and you have
the discipline to be able to pay
it off all the time, and we were
only paying off like, probably
like three $400 off a month, and
then obviously got less and less
or more and more, I can't
remember. Yeah, but you just
have to be diligent with the
plan. And it worked out great.
But I'm sure there are lots of
people that had the same like
opportunities through IKEA. And
I think that company was called
hum, possibly, that had the
offer. But I'm sure there are
people that have it. And that
catches them. Because it's human
nature that if you can get it
now, like get it now and you
feel like you've got that
reward, like you said before,
like it's costing your future
self. And it's just a trap. It's
a big trap of people.
Victor Lagos: Yeah. And it
actually is costing your future.
So even if you don't pay any
interest on it, and you manage
it like what you did, if you
went and applied for a loan to
buy a property in that time,
it's affected you because now
they're going to look at that
loan as a commitment. And that's
going to reduce your borrowing
capacity, even if it was
interest free. So yeah, for sure
it does. I get it. And it does
help. But you're right. Many
people have tried that. And they
get to the end, and they haven't
actually paid off the full
balance. And now they're paying
a huge amount of interest on it.
This has been going on for years
with Harvey Norman, all these
different providers. Yep, GE
money used to do it. Now, Tom,
it is a big trap. So get away
from the instant gratification
thing. I don't want to steal
from my future self. I want to
actually give to my future self.
And just wait, put money aside,
you know, save for the old labor
is actually a good thing.
Because, yeah, you wanting to
buy something and you're putting
money away, but you don't get to
walk out with it. Yeah, by now.
I mean, you walk out with it
now, but you're paying later. So
I actually liked the old labor.
It's better.
Andrew Bean: Yeah. See, the old
laborers haven't labeled
something for a long time. It's
crazy. Are there any other ways
that you would suggest that how
to like put yourself better in a
bank size? Like, what are the
other suggestions that we have
like consolidate debt? Or like,
what do you have for me,
Victor Lagos: consolidating debt
definitely helps. So even hex
that so a lot of people carrying
X and they're like, Well, I
don't need to pay back my hex
only pay back when I earn a
certain income. But that
actually does impact your
borrowing quite a lot. So if you
can clear that ASAP, or
consolidate it into one, if
you've already got a property,
and you've got equity, which a
lot of people do, because they
bought in the last two or three
years, or before that nobody
held that property, they can
borrow at, say 5% interest or a
little bit less than that. So
under-occupied, and they can
clear their credit card and
clear the personal loan to the
car loan and clear the hex and
have it all consolidated into
one, they can still pay that
portion faster. So sometimes the
downfall is you're going to
spread out over 30 years,
compared to say five years on a
personal loan or a car loan. But
if you split the loan, and
sometimes people do this who are
smart with money, so say you owe
500 grand on your home loan, and
you're consolidating 100,000
worth of personal debt? Well,
you're going to clear all that
other loans, not pay high
interest on him, and you're
going to prove your borrowing
capacity. But now you've got a
mortgage of 600,000. So what you
do is you keep the 500,000 as
your regular home loan that you
already owed before, and you
have a second loan, a loan split
for 100 grand. So now you know
that 100 grand relates to all
your other debts that you
consolidate it. So when you're
making in your managing your
money, you can start to automate
and pay back that 100 grand as
soon as possible. So still pay
the minimum when you're 500
grand, because you're gonna have
to pay that anyway. Right? But
hammered down that, that 100
online, don't put in your offset
page straight to the loan. And
another thing that helps is to
ask your employer to do it. So
they've got sophisticated
payroll systems that you can
actually just say, Can you pay
this amount to my normal bank
account, but pay this amount
into this other account. So you
can give them the BSB and
account number of that
consolidated loan, and then
they'll pay that amount straight
out of your pay, so you never
even see it out of sight out of
mind. And that that would just
get paid every single payday,
right and you start living off
of what's left, and then
disappear. So 100 grand, you end
up paying what four and a half
percent on 100 grand over five
years, or however long it takes
you depending on what you can
pay to it compared to having
hexie Carla, and they're paying
high rates there. And then
ultimately, you might end up
paying the exact figures but the
amount of interest you'd pay
back will be significantly less.
And that saving can now go
towards your home loan. Because
then 100 grand will be gone and
all of a sudden you've just
freed up a whole bunch of cash
flow. And now it goes to your
home loan. You start building
that up. So that's her. It's
like this compounding effect.
The more you start it, you start
to get that compounding effect
and then that can help you to
build more equity, and then the
loans coming down values going
up, you got more equity. And you
can use that to buy commercial
property or an income producing
asset.
Andrew Bean: Yeah, that's
awesome. I don't think people
know that like a credit card
debt or like the interest on
that is like 1819 20%. Like it's
through the roof interest, like
it's crazy. And so when you're
looking at debt, should you
attack the debt that has the
highest interest first?
Victor Lagos: Yeah, for sure.
And that's why I mentioned the
consolidation or the balance
transfer. Because if there is a
strategy that you can get that
highest interest rate to a lower
rate sooner than later, and then
pay it down, then you're going
to be paying off the principal
faster. But if you can't do
that, for whatever reason, you
can't get a balance transfer,
you can't consolidate to a lower
rate, then yes, just redirect
all your extra repayments to
that highest interest loan
first. And that could also be
through your employer or a
dedicated debt repayment
account, right, because some of
them don't accept me as being an
account number they need to be
paid. So then you open up like a
debt repayment bank account, and
you automate. So you set up an
automatic transfer for a set
amount to go every single week
into that account, or every
single paycheck. And then from
there, you set up a BP or a
direct debit, and you pay that
straight to the credit card, the
highest interest rate. And that
will that will disappear. I did
that once the debts are gone.
You keep up that same amount
that you were automating. But
now you redirect it to savings,
or you redirect it to something
that you're saving for
specifically where it's a
property or having a baby or
going overseas. But at least you
can expedite that. When you
realize that you all your money
is now being put to savings and
you don't have any more debt.
That's the most liberating
feeling. And then the only debt
you ever take is leveraged debt
where it's income producing and
tax deductible, then it's not
bad debt is good debt.
Andrew Bean: Yeah. Awesome. And
do you help your clients look
through debt and like figure out
the best ways to consolidate it?
Victor Lagos: Yeah, definitely.
If there's equity there, I
always propose the idea to do
that. And if they don't use a
credit cards, I always get them
to reduce the limits, then are
they most of my customers, they
want to build a portfolio. So
they need borrowing capacity and
borrowing capacity has has been
squeezed because of interest
rate rising. So whatever they
can do to drop that out, I'll
help them to do that.
Andrew Bean: Yeah. So if you're
up to your eyeballs in debt, and
you don't know what to do, then
Victor should be able to help
you out, give you a solid
strategy, you know, and have a
timeframe, and I'm sure he's,
you know, has the accountability
to keep you on the right track.
So definitely try that out. Meet
me should be good.
Victor Lagos: Yeah, I just want
to say one thing is that, as a
broker, it's great that banks
pay me for the commission for
introducing business to them. In
a weird way. I'm incentivized
for people to borrow more,
because I get paid more. Right.
So some brokers, I don't know
them personally, but I know they
exist, they will focus on
getting people more debt,
because they get paid more,
right. But for me, it doesn't
matter how much debt you get.
What matters to me is that
you've got the right debt, and
that you're actually paying down
the bad debt. So if you've got
lower loan amounts, doesn't
matter if my pay is affected by
that, because I know that I do
right by you, you're gonna come
back to me, you're gonna refer
your friends and your family.
All right, you're gonna be my
client for life, you know, we
build a long term relationship,
because I'm doing right by you.
But that's also how I think. So
I want to help people get to
that financial freedom, and
they're not going to get there
by accumulating more and more
personal debt, it's just not
going to happen. They need to
get to a point where they spend
much less than they earn, and
they invest a difference. And
they use the power of leverage,
and use other people's money to
help them grow their wealth.
Andrew Bean: Yeah. 100%. All
right, man. Well, I guess that
kind of wraps up the first
episode of the financial freedom
series mate. Where can listeners
go to find out more about you,
and also your awesome services.
Victor Lagos: So they can follow
me on pretty much any social
platform, or you go to my
website, which is Loggos,
financial.com, Maria, and I have
my own podcast called debt to
financial freedom. And you'll
find me on all the podcasting
platforms as well as a YouTube
channel. So yeah, and of course,
from there, if you wanting to
have a chat, there's my email,
my mobile number will be there
as well as a calendar booking.
So if you want to book a chat
with me, schedule a call, see
what's possible for you. And
even if it's not the right time
for you to borrow. I'll help you
as much as I can to get you on
the right track.
Andrew Bean: Also, man, and did
you have a free giveaway for the
listeners as well? Yeah. So I
Victor Lagos: really do believe
that commercial property is a
way forward, because of the
predictability of the income,
it's going to go up long term
tenants, and your listeners will
know a lot about commercial
property. So I don't need to be
preaching to the choir. But a
lot of people don't understand
the benefits of commercial
versus residential. So I've
created a guide, which is what I
believe are five benefits of
commercial versus residential.
So yeah, I'm giving that away.
listeners can download that
there'll be a link, I'm guessing
in your description. You can put
that in there. There'll be able
to just provide the email and
I'll get that sent out to them.
Andrew Bean: And we're also
going to put together a how to
use saw guide for the timely
build up best and worst ways to
use the app. A lot of the best
ways I'm sure. And Victor's
going to literally to springing
this on him now he has he did
not know about this at all. Give
me some homework. The second
free giveaway I'm gonna use
download the app bar right now
and I'm looking forward to
Victor's how to, to use guide as
well that he'll be sure making
at some point, not because he
wants to because I basically put
him on the spot.
Victor Lagos: If it helps
people, I'll definitely put it
through and I know it's helped
me so for sure. To help us make
it as easy as possible. Yeah.
Awesome, man. Thanks for having
me on. Really appreciate it.
Andrew Bean: All right. This has
been a financial expert Victor
Lagos and Andrew Bean on the
Financial Freedom series.
Thanks, guys. Thank you. Thanks
for listening to the financial
freedom series. This show has
been produced by the commercial
property show Network