MMS #7 | Bad debt - the junk food of the financial world. How to tackle it?!

11/05/23 • 16 min

In this episode of Money Made Simple, Liv and Jennie are tackling debt! This episode is part one of two, focusing first on what we call the "bad" type. Acknowledging that things aren't always as black and white as "good debt" or "bad debt", they explain why they are making this distinction and what the implications of bad debt are, in the short and long term.

This week's episode covers:

What exactly we mean by "bad" vs "good" debt
The long-term impacts of bad debt
The pros and cons of credit cards and buy now pay later (BNPL) schemes like Laybuy or Afterpay
Some handy (and maybe not so obvious) tips for tackling debt
How credit cards MIGHT sometimes be useful (hint - you need to be REALLY disciplined!)

Resources we mention in this episode:
Sam Stubbs' Money Made Simple ebook
We hope that by the end of this episode, you can start to differentiate between different types of debt, and their impacts on your finances over the long term. In this way you can start to cut bad debt out of your life, for good! And live happily ever after (too far, we know, felt cute). %)

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Disclaimer: This podcast contains personal opinions and is intended to provide educational information only. It doesn't relate to your particular financial situation or goals and is not financial advice or recommendations. Simplicity New Zealand Limited is the issuer of the Simplicity KiwiSaver scheme and investment funds. For product disclosure statements please visit Simplicity's website simplicity. kiwi.

This week's episode covers:

What exactly we mean by "bad" vs "good" debt
The long-term impacts of bad debt
The pros and cons of credit cards and buy now pay later (BNPL) schemes like Laybuy or Afterpay
Some handy (and maybe not so obvious) tips for tackling debt
How credit cards MIGHT sometimes be useful (hint - you need to be REALLY disciplined!)

Previous Episode

MMS #6 | Why KiwiSaver contributions are so damn important

In this episode of Money Made Simple, Jennie and Liv chat aaalllll about KiwiSaver contributions. They provide an overview of what the four different contribution types are (and how they work), how to keep track of them, and most importantly how to make them work harder for you... so you can grow the retirement nest egg you deserve!
Key outtakes from this episode include:

Check your employee contribution %, and use tools (linked below!) to make sure that it suits your needs (eg. for your first home purchase or to get to your retirement goal)
If you can, make sure you qualify for the maximum Government Contribution - it is literally free money.
If you have a windfall, consider using some or all of this as a voluntary contribution - it could have a big impact to your long-term balance
If you experience an income and expense crunch, consider a savings suspension, but do this wisely - there can be significant consequences

Resources we mention in this episode:
- sorted.org
- simplicity.kiwi (Retirement Calculator)
Hopefully you'll finish this episode understanding exactly how KiwiSaver contributions work, and feeling empowered to make them work hard for you (and not the other way round!).

Next Episode

MMS #8 | Good debt - is there such a thing? We think so... And here's why

In this episode of Money Made Simple, Liv and Jennie flip last week's episode on its head and chat about "good" debt, in part two of the debt conversation. They explain why borrowing money for certain things in life can actually improve your financial standing (remember: net worth!) in the long run.
This week's episode covers:

Two particular types of debt that are considered good
The value of post-secondary education (and we don't just mean Uni) in terms of dollars and cents
How student loans actually work - and how much better they are than back in Jennie's day!
The tricky topic of home ownership in NZ - and why it's so entrenched as the Kiwi dream
Why there's such a HUGE difference between mortgage debt and consumer debt - for several reasons
Our personal stories around home ownership

Resources we mention in this episode:
Sorted.org calculators
Hopefully by the end of this episode you'll have a SUPER clear idea around what types of borrowing you don't need to be afraid of, and how to use debt that will quite literally "pay off" in the long run.