December 20, 2018 is_admin

Are you triggered?

Gareth Daniels is an Authorised Representative, GWM Adviser Services Limited, Australian Financial Services Licensee

Language in general and the ways in which specific words are used is fluid and open to change over time. Think of the way that ‘bad’ and ‘wicked’ have become accepted to mean ‘good’ and ‘cool’. One example that has recently started annoying me is the way that my children (and all their mates) say that two teams are ‘versing’ each other. I always thought that it was ‘versus’ as in Hawthorn versus Geelong. Or that the two teams were playing each other. My wife tells me that I am already sounding like an old man and to get over myself!

You may have come across the term ‘trigger warning’ or that a person has been ‘triggered’. This term actually dates to the early post-traumatic stress studies that came out of WWI. It references the idea that reminders of trauma can trigger a debilitating physical, emotional and mental response. Over the last ten to twenty years it has become more and more common and can be seen in use when discussing substantial issues such as discrimination and racism.

Well I am going to give it yet another use here; what reality is going to trigger you in to action in regard to your relationship with money?

Seemingly innocuous transactions through a ‘have it now pay for it later’ system have begun to create a material negative impact on people’s finances such as their ability to get a home loan.

How Afterpay could impact your chance of getting a home loan READ HERE

The article linked above sights cases of people being turned down for a mortgage as they did not meet the banks servicing criteria because they had a live Afterpay account. The eye opening thing for me is that the women featured in the piece didn’t even need to use the Aftepay service as she had enough money to pay for her items outright. A well-meaning (although misguided) friend encouraged her to do so. Beyond the stated idea about the ease of spreading the payments the truth is that the process tacitly encourages us to spend more.

The article linked below goes further, reporting that research shows that people using this modern lay-by equivalent will also buy more expensive items, possibly ones that they can’t truly afford.

Afterpay, Zip Pay and others cause financial strife for ‘young’ shoppers: ASIC READ HERE

None of us want to be told directly what to do, especially if we know deep down that the thing that seems hard or that we can tell ourselves is unfair is in reality true and correct.

I am constantly reminded that I get better behaviours and choices from my kids when they feel they have reached a decision on their own rather than me simply telling them that they must do something.

I am not belittling the important issues that, when discussed, warrant a true trigger warning. I know that I am making an exaggerated point; I am doing so deliberately.

However, we must listen to the facts that are being presented, and if they are coming to us from multiple sources and conveying corroborating information to us then we ought to listen.

Lending criteria is getting tighter. We must be able to prove accurately that we can service loans. Spending less than you earn is an adage. Paying for something on credit, or through a payment system that’s lets you have it right now even if you can’t afford it right now has never been a successful way to manage your spending habits and it will have a consequence as you move through life.

It’s about a reality check. It doesn’t matter if it’s Afterpay or Zip Pay or a misuse of a basic credit card (insert your preferred method of buy now pay later here). It is recognising that it will have an impact on you. It may stop you from getting a home loan or you may get the loan but not at a competitive rate. It is pushing you further into debt and inducing all the stress that this causes. You may miss out on something that is truly to your benefit such as an important life experience or the ability to take a course that will further your career… whatever piece of information it takes to trigger you, lets take some action as you will be the beneficiary!

 

Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Opinions constitute our judgement at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document. Before making a decision to acquire a financial product, you should obtain and read the Product Disclosure Statement (PDS) relating to that product. Past performance is not a reliable guide to future returns. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way.
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