It seems with the rise of online shopping as well as Instagram everyone is trying to keep up with the Jones’. I myself have never accumulated any debt due to having a stone cold fear of never being able to get out, but since so many of my readers love an online fashion shop or two I decided to discuss the very real issue of debt for fashion’s sake. Speaking to Sarah who kindly shared her story with me I got a lot of insights into money management and how to stay afloat.


Online shopping can be addictive! How did it all start?

I work in PR which means I’m always heading out to events and regularly need something to wear. The influencers and celebs who attend these events are always wearing the latest designers and looking fabulous so I often panic shop online. I regularly jump online to websites like The Iconic who can deliver within 3 hours and buy $500 worth of clothes so I had options. I’m also a sucker for a discount. If something was $400 and is now $180, it feels like a bargain that I need to make the most of. I would always return 80% of the clothes I bought but the refund would rarely go back on my credit card, but on my debit card instead. I found myself often racing to the hair dressers for a last minute blow out before an event to feel as glam as the other girls. It might sound like unnecessary spending, but when you work in this world you do feel compelled to present yourself in your best light. 


What were the main things you accumulated debt on?

Travel was a big one. My family lives overseas so trips home to see them once or twice a year would end up on the credit card. I’ve been to Europe 4 times in the last 4 years. Let’s be honest, you don’t go all the way to Europe and skimp on your trip. I got my first credit card when I was 24 and heading to Malaysia to visit friends one Christmas. I put last minute flights on it, I shopped while I was there and put all my holiday expenses on it. When I got back I started to pay it off, being quite diligent at first, but it would get to halfway through the month and I put put my groceries or my Uber rides on the credit card. I found my card started to stay at its maximum limit all the time so I did a balance transfer to a NAB card that was interest free for 24 months. This seemed like it would be so easy to pay off but what you don’t realise is if you then use this card, the interest rate is ridiculous. So what started as being monthly payments of $55 to pay off a $2,500 balance transfer, they soon went up to $250 per month because of the interest and hidden charges. In the end this card was blocked because it had accumulated another grand in fees and interest! I kept telling myself that card wasn’t to be worried about because I could pay it off with two months of being frugal based on my salary, but that’s why it would get paid off then I’d spend on it again. 

I’d been reading up on rewards cards and thought at least that way, my next Christmas vacation was going to earn me something when I spent money. Once again, I fell down the rabbit hole, even faster this time because I felt like I was earning air miles and in theory ‘saving money by spending money’. ANZ even let me extend the limit on this card from $6k to $10k when I had the debt on two other cards to consider. Looking back it’s quite shocking that they allow you to borrow more money when you already owe so much. But that’s not the case at all! Before I knew it I had a total of $20k worth of debt that I’d accumulated over three and a half years. 


How did you get out of it?

A friend of mine told me about Castle Debt Solutions and the option of going onto a Debt Agreement. I had absolutely no idea what it was and to be honest it sounded too good to be true. When I sat down with Castle Debt Solutions to work through my situation, they explained that I would only need to pay back $17k of the $20k I owed and that this would go into an agreement that meant I paid the remainder back over 5 years. This sounded like a long commitment but when I thought about the fact that I only had to pay $70 per month back it seemed like a no-brainer. Finally I had a solution to my debt that meant my cards were cut off so there were no more fees or interest for the 5 years that I pay this all back. It seems so simple but no one knows these agreements exist because the banks want to keep taking your money and are happy to let you continue to spend. 


What would your advice be to a girl your age going through this right now?

Firstly, I wouldn't recommend getting a credit card in the first place unless you know you can pay it off each month. The interest just costs you so much more that you don’t notice at the time until you’ve spent a fortune.Going through my weekly expenses with them also allowed me to find lots of simple ways to save money, like getting out of my phone contract and going on a Boost Mobile prepaid plan for only $40 per month compared to my Optus contract that was $110 per month for almost the same amount of data! 

Castle Debt Solutions will work through your personal situation with you to find the solution that works best for you, be it the Debt Agreement I have, or various other formal and informal solutions. 


What are the red flags you should notice that tell you you need help?

If you have more than one card maxed out and keep thinking “I’ll pay it off next month”, stop and speak to Castle Debt Solutions. Don’t get sucked into reward schemes, research shows that only 40% of Australians actually benefit from rewards cards.

When you start putting your day to day expenses like groceries and Ubers on your credit card, this means you’re relying on it too heavily. 


Finally having made you way out of it, what are you tips for online shopping and staying within budget?

  • Always use your debit card - don’t spend money you don’t have because it’s so much easier to go crazy and think “I’ll deal with that later”

  • Don’t spend above your means, just because it’s on sale, doesn’t mean you can afford it

  • When you’re looking for a new look, don’t buy the whole look. Buy a new accessory or a new skirt to feel like you look different for that event. You’ll do something cute and new when you style it but save on all the extras!

  • Don’t fill your basket up with 10 items with the mindset of “I’ll return half of it” - often you won’t so just purchase one or two and then return and purchase something new if they don’t work

  • When buying flights online use comparison sites like Skyscanner and make sure you browse in a ‘private’ browser in Safari or ‘Incognito’ on Google. You’ll get the best deals because the airlines and booking websites don’t know you’ve checked those prices 3 times already on another site.