Debt & Mindset

In this episode, we tackle a topic that triggers stress for many Australians: debt. 

TFS Founder Pramu Rodrigo breaks down: 

• Why avoiding debt can limit wealth-building (especially in Australia) 
• The difference between strategy debt vs stress debt 
• The Triple D framework: Debt, Discipline, Direction 
• How discipline affects outcomes like repayments, credit health, and long-term strategy 
• Why a clear plan matters before you borrow not after 

If you’re buying your first home, growing a portfolio, or simply trying to feel more confident about borrowing, this episode gives you a smarter mental model.  

General information only: This episode is general in nature and doesn’t consider your objectives, financial situation or needs. Consider whether it’s appropriate for you and seek personal advice if required. 

Any information discussed or provided in this podcast is general advice and has been provided without taking account of your objectives, financial situation or needs, you should consider the appropriateness of this advice before acting on it. If this general advice relates to acquiring a financial product, you should obtain a Product Disclosure Statement before deciding to acquire the product.

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Transcript

dream big plan smart
build wealth this is the TFS podcast where money talk gets real
and financial freedom is more than just a goal
without further ado let's dive in
hi guys and welcome to another episode of the TFS Wealth cast
I'm your host Vishi
and joining me today is our founder and Managing Director of Tomorrow
Financial Solutions Mister Pramu Rodrigo
and today we are gonna talk about mindset and risk
the discipline of borrowing
and who better to shed some light on this topic than Pramu
that's a very interesting subject we are talking about yeah
I mean you know sportsman like you
you you have discipline rooted into you yeah
and you like taking risks
you've got a crazy mindset and you know a lot about finance
so you know who else to ask about borrowing
so it's it's almost as if this episode was made tailored to you
so looks like uh
you gotta we were gonna you know people who's gonna be listening
you gotta strap it up and this this episode gonna be a long one
hopefully not too long
we'll try to keep it short but you know we can't make any promises
alright so alright guys where do we start
where do we start Vishi so bro
you know
when most people think about debt they think oh danger right
the truth is uh undisciplined debt is dangerous
so today we're gonna break down the mindset
the risk controls
and the discipline that separates stress debt from strategy debt
so you can think clearly about borrowing in business
personal wealth and long term retirement planning
so quick note before we begin guys
this is general information only
and doesn't take into account your objectives right
everyone has different objectives
everyone's in different financial situations
everyone has different needs
so you need to consider whether it's appropriate for you
and seek personal advice if needed so
you know
you can talk to us at TFS in official capacity in official capacity
of course so okay
alright
so see as you mentioned before there's many types of debts right
so we're talking about discipline and indiscipline
structured debt and not structured debt
the way I see it very simply if you can
leverage or
buy debt or get debt for yourself to make more money
that's a good debt
if you're getting a debt and after paying the debt off
you are not better off at the same point of you took the debt
you lost more than you gain right
that is a bad debt but look
now from from financial perspective when we look at it
the debt that you take for the for the house that you live in
we call it bad debt
really right yeah
but that's that's this this this
this is where you get a bit confused and and and uh
you
you need to understand how to use the debt for your for your benefit
basically this is where the a good strategy absolutely yeah
so you can borrow as a bad debt
and reinvest that into a good debt you can do it
we've seen it we have done it many times
we we borrow uh your equity
we go and invest that into an investment property
we borrow again
uh against that investment property that becomes a good debt
yeah right
so we do this debt recycling
we'll do another episode about uh debt recycling
what is it about who is it for
but what I
what I'm trying to say to you is
you can use the bad date into good date as well
but you need a strategy you gotta have a clear plan for it
so so Pramu if if I was to put this uh
let's say into framework into a framework right
let's let's let's categorize it debt discipline and direction
I call this the Triple DS you know
I I knew where you were hitting with that hahaha
I said Triple D's not double D's okay
so alright so d No. 1 debt right
uh
people need to figure out what the borrowing is for right
either it's for is it for consumption
is it for convenience or is it for asset building like you said right
and then what would you say is the 2nd D Pramu
before we get to this OK
right I hold on to the Triple D's
before we get to the Triple D's coming back
because you you come from Sri Lanka
I come from Sri Lanka oh really
you don't you don't look Sri Lanka
you know you look bit I mean he looks more
but
so when we when because our culture was was created uh
in a in a in a manner that saying do not take debt
that was literally how it been
been created as well as even right now it's
it's practice that way don't get into debt don't get into debt
so avoid debt factor is something that most of
South Asian cultures come from
but when you come to countries like Australia
the Wild West right
the avoiding debt is it's actually um not good for you
it's it's not good for you because you you won't be able to uh
evolve and grow your wealth or grow uh and and maybe succeed
right another word I could say to buy a house as an example
there are no people uh
even Australians don't just give a house to your son
they don't do that they sell the house
they retire with that money son or daughter whatever right
that's the Australian culture they don't do that yeah
so it is up to the children to find their ways
it is up to the children to uh make sure they create their wealth
that's the culture we live in yeah
now this culture the debt is an essential aspect
so you need to get into debt to get your
unless you win a lottery for your parents
alright I mean parents don't give
I mean unless the parents are from South Asian countries yeah
so you have to get onto debt
so that's why this this debt avoiding debt is not a thing here right
but in Sri Lanka so debt is debt is uh necessary for growth absolutely
but then you you go to a level where um top businessman um
billionaires
who who who who came to that level of being a billionaire
it's by borrowing money because it's tax free money yeah to right
so there's a saying say there's a saying called
use other people's money to make money for yourself
so which is in the bank right
you go and ask the money from the bank and use that money
invest it and make money for yourself
so very simple mathematics guys
if you borrow hundred hundred dollars
if you go and invest that hundred dollars
you promise the bank that you're gonna pay hundred and ten
make sure you make your one
but if you go and make hundred and twenty dollars
that ten dollars is yours
thanks to the bank's money thank you bank right
so Debt is very good in that equation
if you do it smart if you do it smart yeah
there's no point of getting hundred dollars
and you promise the bank that you're gonna pay hundred and ten
and you go and invest that in a
class or anything that you don't have even a 10 bucks to pay
that's right that's that's bad debt
that's a bad investment then that that debt becomes a bad debt yeah
right but if that debt gives you a $10 that you never had good debt
it's a good debt so so avoiding debt is not
avoiding debt is very bad in Australia yeah
um
that's one of the 3 Ds 3 Ds right
that's why that's why I wanted to
you know we gotta explain that to our listeners first um
the debt is good when you use it right now
it's not limited to Australia it
it it
it's all over the world right
any top businessman you you go and ask the question
are you putting your capital are you investing your own money
I'm I'm talking about the top guys OK
yeah
they were saying no way
so Pramu when you
when you invest in property
yeah do you use your own money
for investment property absolutely not equity and the banks money
banks money why would I need to put my money there yeah
so your money you keep it in savings
so I mean my
my my money that I have earned paying after paying tax
which is called net net income or
or net savings right
I put it into my bad debts to pay the bad debts off quickly
okay
because your bad debt is the house that you live in yeah
yeah right
so as soon as I can get $0 owing to the bank of my house debt
where I live
I don't have bad debt yeah
exactly and then you save
you actually save on the interest component you would be paying
absolutely right you can then tell the bank okay
now I've shown you I paid my debt off
can you give me another borrow against it again yeah
maybe half a million dollars because I want to invest yeah
the bank might ask what are you planning on investing
the might have I'm done well
I'm I'm okay with my property investment so it'll be in property
give me 500,000
then I'm not gonna use that 500,000 and buy a Lamborghini
which I can if I want to yeah
but it's not going to it's not gonna be a good debt
it's not gonna be a good debt
unless you figure out a way that Lamborghini is gonna make you
I mean you know
if you know if if if you weren't married you know
if you weren't a married family man
that Lamborghini would be an asset to some people in some sense
you know it's gonna so see see don't listen don't listen no
if you're talking about something else if you're a young bachelor
but again I'm talking about if you're a young bachelor
if you really have that kind of money and you invest in a Lamborghini
what if you actually start renting your Lamborghini out on
on Monday to Friday and just use it on Saturday Sunday
now all of a sudden that Lamborghini is making you money yeah
but then I have to get it detailed and cleaned and you know
I mean the
person who rents
it will pay enough money for you to detail and clean it yeah
true so if you if you make a business out of it
you know you can create certain bad assets to good assets as well
there you go guys that's why I said
you know we're all about strategies here
and if you want a personal strategy for yourself
you know who to call so circling back to where dead what you asked
yeah uh dead discipline and direction
so now we're going to the so now we
so we are over with one of the DS debt right
so so going back to your other question about the Triple D's
so Triple D's so Pramu reflected a bit on debt now Pramu
uh for the 2nd D hmm
you know discipline you're you're a sportsman
yeah right so discipline
like I said at the start of the podcast is something that's uh
rooted in you
so you know
if if if you could take us back to how playing cricket
how sports helped you build this unshakable discipline that you have
and how that helped you in your business and
you know
I don't know I
I I
I won't call myself unshakable discipline
there are so many areas that
so he's been shook he's been shook
alright we got that out of the way
that's why he's hosting now
not me so um
so discipline it's actually the discipline is not for me personally
discipline it's
it's not actually from cricket
discipline is is the discipline for me
I Learned and I witnessed it thanks to the school I went to
the college I went to St Thomas's College
you know um
St Thomas'college Mount Lavinia
Mount Lavinia it's one of the
 I hear it's one of the top boys schools in Sri Lanka
Royales don't get upset with me
it is a number one school in
in Sri Lanka um
I think we had probably I would say we are top ten again
my opinion top 10 in the world okay
if you wanna comment you comment
I still believe it's top 10 in the world amen
um discipline came from from from from
from my college
um
even even little things like Vishi
I don't know what happened in your days in me
by the way he's a
he's a Thomian too he went to the same school but many years later
many years later
so even little things like in the morning
you coming in coming
coming to school right from the gate there's
there's prefects
um
they check they
they they have a look at your hair
to see whether it's been cut properly right
are you are you within the rules
check you whether you've shaved you know
have you shaved if you're growing your beard those days
have you have you done have you have you have you have you
have you have you use use the razor
they check that they use and they did I remember back in our days
 they check whether you polish your shoes right
the shirt tuck in right oh yeah
hundred percent I mean
in in Australia when summer days comes all the all the students
oh man this this eats my head right
the shirts are out but it's okay for them because that that that's
that's what they been discipline to do oh
and some of the methods that prefects used to use to discipline us
yeah that's over here would be categorized as harassment
there were questionable things back in the day but um
but the things little things like that right
when the bell rang 8 7:30 you can't be at the gate
you gotta be in class
you gotta be in class you're ready to go at at 7:30
so that means you gotta be in class
taking your books out taking your pen out
ready for the subject by 7:25
technically speaking so that that's the discipline that
I learn and I witness
and speaking of subjects when teachers give homework
you don't do your homework
exactly right so
so then then then fast track myself into
you know you growing up and and you starting playing cricket
now cricket is something that you
you can't survive if you don't have discipline right
that that that game is all about discipline early mornings
late nights
you take the game itself got six six balls in a over to bowl yeah
right if you bowl a no ball
you gotta bowl again you bowl a wide
you gotta bowl again and you have to so in each ball
you gotta just you have you have three stumps to aim yeah
and you got a batsman swinging a bat ha ha ha
stumps are not moving stumps are stationary yeah
so there are a lot of elements in in
in in
in the game of cricket that you learn discipline
and each batsman is different
so their batting style is different
so you got to change your bowling approach
absolutely to tackle each batsman absolutely I mean
I love I love that game it's a beautiful game
it's a very complex game um
some of our listeners from
from from countries that who have who doesn't play cricket
they were like what what what what what the hell is cricket is
but now obviously cricket is worldwide
a lot of people knows about this game
but it's a very very complex game
right so
so to to survive in a complex game
you you must have discipline and it's not just the physical aspect
right it's also the mental aspect
cause some absolutely ha ha
sometimes just to get in the no
for example if you're a batsman yeah
just to get in your head
the wicket keeper behind you is gonna say things
you know like about might bring your parents into the banter and yeah
yeah that
that might aggravate you and you might want to
you know take all that frustration out on the ball
absolutely right so you need to sledging right
you gotta you gotta
you gotta go through the sledding period
but but you know
I'll ask you a question you
you you know
you practice practice practice
you train train
train one month later
right now you
you got the opportunity to go and uh
uh you know
bat one month later right
you for all four weeks you've been training yeah
first ball you get a beauty of it
you're out
oh man
right so that kind of discipline
I mean you have to have so much of discipline in your mind
so you you
you also you learn how to win
but you also learn how to cope with the losses
absolutely the cricket is
is all about winning and losing and
and good days and bad days
just like in business just like in business
just like in life borrowing money
you know there are
we talked about good debts and bad debts
it exists so discipline is
is is a must for the sport which I played cricket
and I also believe discipline is a must for business
whatever the business you do right you
you could do any business in the world
you could even start a business tomorrow
if you don't have discipline
your business may not survive six months yeah
so so by discipline okay
what what
what what if I tell you
if you can give some tips to the listeners
who maybe have their own businesses
or who want to start their own businesses yeah
what is some advice some uh
some tips you can give them about being disciplined in business
some stuff that's worked for you and what you do on a daily basis
um look
it depends it
it it
it depends with the business that you do
it depends with with
with with the transaction that you're
what you're doing you know
if it's a e commerce business is very different
different types of disciplines in play
if it's a service business is different
um if your product only based business
totally different yeah
but I can talk to you I haven't done product business right
so I can't talk to you about product business
but I can talk to you about service business
I've done different kinds of service business
oh even in school
even in your school days you've never done like a product business
you know um
one of my friends and I
we tried to do a product business and it didn't go well
ha ha
so you know
I realised it nah
that's not for me so
um but um
what I'm trying to say is in
in in
in service business I think it's one of
one of my other episodes we talked about it as well
service business is all about
delivery and the output and the
so what happens from your delivery
and the output is the satisfaction of your customer right
that is the ultimate goal not the revenue
revenue is inevitable
so if you focus on the revenue only you gonna
I can guarantee you you gonna stuff up your output
I can guarantee you that you might do it maybe three
four times you know
oh yeah you know
I was only focused on revenue and
and I did but I can guarantee you
you gonna stuff up there has to be one stuff up on service business
yeah is enough for you really
oh yeah I mean
think about it you get a bad service
what happen bad service review
you will review I mean
you're a TikTok guy
you'll go to the bloody world and start talking about it
then how many people will
will get to know about it
I mean yeah
I mean that business is gone
I'm inconvenienced by but it happens in the real life yeah
right
not just TikTok when people go for for uh
you know uh
gatherings
their family gatherings friends gatherings
they gonna talk about my don't go to that that bloke
he's not it's crap this is what he did to me
they will they will talk yeah
so so you can't control of that you have no control of that
so service business is all about the output
the quality of it and and
and that quality
that output must have a satisfactory your customer must be satisfied
so by any means necessary
by any means necessary you I mean
I'm I'm serious about it yeah
I'm really serious about it I mean
you guys know how how how crazy I get sometimes so yeah
right because a customer comes first no matter what
even when the customer is wrong
they're always right customers are human they can make mistakes
but but they
we have to do the right thing no matter what
so it cannot be limited in I never believe in this 9 to 5 thing
it cannot be limited to 9 to 5 or Monday to Friday
whatever the customers available
or whatever the time the customer is available
we gotta be available because we are in the service business
hundred percent yeah
if you're not available to to to give a service
what's the point of you
useless useless
so you go to the other person
so discipline is a must now
for you to go down the path of giving
that satisfaction for that client
what are the things you must do to satisfy your client
satisfy the client so you gotta make sure your service I mean
he's think he's thinking he's this
this guy is thinking all wrong things in his head
I mean he's he's a he's a Gen Z
I can see his face and you know he's satisfied the client 
sometimes I don't know if I'm doing a podcast
with a millennial or a baby boomer
let's get serious about it
the discipline you the question you asked me in the service business
what do you need to do to uh uh
to make sure that your customer
is hundred percent satisfied of the service that you have provided
whether it's a uh
whether if you're running an advisory service or whether
whether you are facilitating right
the things that you must do is first of all
understand the customer need
is this customer
that the service that I can provide will be satisfied
or do I need to upskill myself to do this
so there are so many things that you have to do before
now for you to do them
you might you may even need to go down and have a look at your actual
day how your day is planned structure
structure so Vishi I can get get into really detail
I mean integrity about this thing
I don't think we we will have time for it
oh no that's right that's an episode on its own so
so so discipline I'm
I'm gonna get into a lot of trouble
if you go down the path of that episode
you know so I don't wanna I mean
uh uh
where would where where do you think I would start hahaha
probably coming to work on time hahaha
so
you you must have discipline about the
the service that you're about to give it to the customer
to make sure that that service is
is delivered in the correct way so the customer can satisfy
so it's a it's a chain of action yeah
right so discipline is a must
now we we go we are we are talking about creating wealth
we are talking about you know
borrowing from banks to create wealth
again you must have discipline because if you
if you don't have discipline about your debt
you borrow money from a bank and then you realize oh
you know what this month I'm not gonna pay just I'll pay next month
yeah yeah
what would happen I mean
you've been working in this uh
business for some time what will happen
credit score what will happen to the credit score Vishi
it's gonna get can I say can I say the word I wanna say
it's gonna then then you know
we can't it's gonna get beeped yeah
it's gonna go down yeah
and what happens when your credit score goes down
you wanna take another loan
you're gonna get high interest rates high interest rates
banks are not gonna want your your your your risk to banks
so you will start borrowing very expensively
which means your wealth that you could create to the
the profit that you should be having reduced
why
because you did not have discipline there we go
do you wanna move into the right direction as well or yeah
I wanna I wanna go into the 3rd D cause that 2nd D felt personal
hahaha
I guess someone taking shots at me hahaha alright
Pramu I wouldn't say this is the big D from the 3 D
this would be like the the little D the middle D okay alright
so D No. 3 ladies and gentlemen is direction yeah right
so Pramu can you elaborate a bit on direction
the importance of having direction
so you think this is not important
no no
I I mean it's important uh huh
but then if you had to we were talking about debt discipline
I I I said discipline is the biggest D
it's the No. 1 OK D if you don't have direction yeah
you won't have discipline yeah
true true I can see that direction is also an important d
so that's why you know they're called the three DS so
direction is it it it's about understanding where you need to be yeah
right I mean
I can tell you
Vishi you can be a millionaire tomorrow and you go home and you think hey
tomorrow I'm gonna be a millionaire and then I wake up tomorrow ha
you're not a millionaire ha ha ha hello 
ha ha ha right
so you need to break it down for yourself how can I be a millionaire
what are the things I need to do right
so when you when you note these things down
as we discuss in another episode
taking taking notes no
we we we take we we write down the notes so so it it's
it's it's in your subconscious mind actually
that does help taking down notes and consciously you're doing it
so my handwriting improved as well
so I'll ask a question from you about this direction right now
which direction about what we're talking about about the podcast
you see fellas you know sometimes I had to go through with Gen Z
you know it's not that easy
hahaha
gotta keep them in line hahaha
that's OK OK
my question for you Vishi so obviously we're having a a you know
it's a Friday night
we we we are enjoying a nice whiskey today now if I tell you
this particular whiskey can't say the names because they
they did not sponsor us yeah um
this particular whiskey taste so good Vishi okay
now it's I'm I'm creating a what am I creating atmosphere
I'm creating atmosphere
I'm creating a picture for you this whiskey tastes good okay
but if I pour that whiskey to you as you can see the glass here
what do you see apple juice
you see the apple juice yes
yes you see you it looks like apple juice
but when you taste it what happens
it's nice it's smooth you know do you want me to take a sip yeah
I mean you if you want you can but but it's
from from from visualization to experience
experience that becomes a reality feeling feeling yeah
becomes a reality reality yeah
no oh you just took me on a journey
exactly
so so now you can see it and I tasted it exactly now you feel it
I feel it you felt it now what are you doing now
I'm enjoying it enjoying it so that is called direction damn
that's 40th D damn
so you have to know what are you going to be doing with your debt
you need to know this
if you don't know
what are you gonna do once once you have that so yeah so basically
before you get a loan
you need to know what you're gonna do with that loan
absolutely right and to know what you're doing
and to follow what you're doing with that loan
you need to be disciplined
yep to make sure you get that outcome that you plan for
absolutely so in that case
all three D's work in line they work together they work together
alright alright
so there you go folks the Triple DS triple DS 3 DS
you know debt discipline and direction so with that being said Pramu
when it comes to debt you know
uh
a lot of people get stressed
like we said at the start
right because
you know it's
it's an emotional decision
you know a lot of people
they don't have direction
so their purpose is unclear
they don't have they don't have buffers right
very important I don't think a lot of people even think about
buffers before they get into debt
and also it's a lifestyle change as well to some people
like for example first home buyers
if it's a if it's a couple
let's say
who love to travel every year and then they're buying their first home
they need to understand that they'll have to cut down on that life
right
if you know
they're one of the average income mm
mm earners mm
they need to cut back you know
they're like going on dinners every weekend
they need to cut back
uh so what is some
you know uh
some strategies that uh
or or what I'm trying to say is
what is some advice you can give these people
let's say first time buyers
let's take first time buyers as an example
you know they have a very uh
flamboyant lifestyle you know
very active lifestyle a lot of friends
fam uh parties
adventures that they go on
and now they've just got married
and they are committed to buying their first home
mm right so
so now this you know
they're talking about stress versus strategy
mm so what is a good strategy for them
what would you do
that's a good question
what would I do rather than me giving a advice to someone
I don't know what's their financial situation
what exactly you're doing
but what would I do now before I got my first mortgage
let's go to there 20 years ago
yep 20 years ago no
not 20 years he forgot his beard
not 20 years he's not that old guys
I'm just joking nowhere near uh
probably uh
it's about uh
13 years ago yeah
13 14 yeah
so 13 14 years ago myself and Sonali and you know
we we had a very simple lifestyle
we could travel to Sri Lanka whenever we want
we could travel anywhere if we want to
um but again
we travel anywhere but it's not something that we will
we don't have the
enough funds to do the things that we are doing right now
in other countries
but it was it was easy
so rent cost goes away you know
after that nothing much serious and also back in the day
properties weren't that expensive as well
I mean relatively back in the day the
the income was not that great as well so so you do
you know that is what I wanted to hear yeah
so a lot of people compare
you know oh
you could have bought a house back in the day
it wasn't that expensive but then they don't
I mean factor in the inflation then
you know I mean
guys come on right now you have so many options
you have I mean you got Uber
you got Uber Eats you got you got I mean
in Sri Lanka they got pick me
I mean the
the the the list goes on while you work
you can do this and earn more money right
it's a back in those days
the the the the opportunities were limited
right but how the lifestyle change
it's not scary
it is called if you gonna opt in to have a stress free life
when you're having a mortgage
you need to learn how to compromise
one of the biggest not just that yeah
it comes with compromise plus
you need to learn how to earn more money money
so earning more money means you working a bit hard or working smart
whatever the way that works for you do it
that is very important because a mortgage
you are in Australia you are getting a mortgage for 30 years
so 30 year mortgage
if you take it when you're 30 or whatever 25 let's let's go 25
I mean you will only pay this mortgage off when you're 55
lot has changed in 55 yeah
there'll be little use running around
yeah some sometimes you
you know you
you you
you your children may have children just about to
you never know your little use multiply right
so that's that's that 30 is a long time
right
I mean Sri lanka doesn't give 30 year loan terms
I think now they just got into 20 year loan terms
so some some banks but they only give 15
and some banks only used to give only seven years
why why is that is is that no
the Australians have a debt is not good ah
okay that's the thing debt is not good
so I thought Australians have a longer lifespan than Sri Lankans
or life expectancy than Sri Lankans
that's why the banks are worried to give long no
nothing to do nothing to do
30 year loan 30 year term that you get
getting for your mortgage as your first home by the way
if you if you really think about it
that is a very stressful situation you're in yes
right
right
and if you're if you're in your 40s you get a 30 year loan mortgage
then the last payment of your mortgage is
it's when you when you when you hit 70
so so so it's right
I mean you can't even say yeah
so but but but
but but but we gotta understand we gotta understand Australia
Australia gives an opportunity through mortgages to create wealth
that you could retire if you
if you do this in 25 retire by by 50
when I say retire by 50 with a passive income
it gives an opportunity by borrowing
so it is actually a stress free situation if you do it right
so that's where the strategy comes into play
that's where the strategy comes into play
you gotta have the right strategy
you need to know like we discussed before debt
discipline direction
you you
you you need to know the direction
so you're saying without the right strategy debt
so you can have you know
you you
you can get the debt discipline and direction right
yeah but if someone's given you the wrong strategy yeah
it could take you I mean
with the right strategy
you can achieve your goals in let's say 20 years
whereas with the or or 10 years with the wrong strategy
you can still achieve your goals if you
you know if you have your debt discipline and direction
but because of that wrong strategy it takes you 20 years yeah
you know the so more
you know Australian mortgages itself it says
you know I will give you 30 years to pay us yeah
they are giving you the wrong strategy to pay
pay them in 30 years because
because they can earn more money from you
absolutely when it comes to interest
they're not doing it because they love you yeah
and you know just just if you guys want to know uh
you can go to our we have calculators that we use on our website
and one of those calculators is called the repayment calculator
you can just go check it out
and that'll actually show you an extra repayment
an extra repayment calculator
so if you go use the repayment calculator
it'll show you how much you'll be paying in interest
over a 30 year period right
and it'll blow your mind you'll be like
damn that's a lot of money
and then you go look at a extra repayment calculator
where you can pay extra every month on your mortgage
but it'll actually show you how much you can save in the long run
so I think it's very important
uh for some listeners
cause a lot of people don't know that such calculators exist
yeah so you guys can check it out on our website
 tomorrowfs.com.au
I'll just talk to a member of our team
and they will actually help you calculate that
and give you some clarity on that exactly
it's very important for you to have that clarity
you know yeah
um and also coming back to strategy from now
especially these days you know
with all these Google ads
Facebook Instagram ads
you see a lot of people putting ads saying oh
talk to me I'll give you the right strategy
buy 10 properties in 10 years
buy 10 properties in 10 years
actually these days going to buy 10 properties in five years though
yeah and some of these guys don't even have their first property
so do you really think a person like that is the best
suited to be giving you the right strategy
but but but but to be fair look
there are there are so many
so many other professionals out there who can give that strategy
by 10 properties in five years
there are so many professionals out there
but these
these professionals don't really aren't in the mass market media
no so so no
the so I think what we
what we should highlight is
because we have so much of information out there
don't get yourself caught up with the wrong advice
exactly do your own research as well yeah
because you have that opportunity to do it you have so many AI tools
absolutely you've got podcast you've got YouTube videos
I mean we are giving certain strategies here as well
which which most case not most cases every case
we charge a lot for some of the top 10 strategies
but we give it for free here some of the strategies we give for free
yeah exactly
and and every episode we only uh
give the strategy as long for the length that uh whiskey runs dry
so the moment our glass is over
we're done it's on to the next episode
so so um
yes there are so there
there are many strategies you can apply for yourself
but you also need to understand those
whether those strategies will actually work for you
because the strategy that will work for
a person with a five property portfolio won't
work for someone who's just buying their first home yeah
I mean even if you break it down to a level
if we when we take a couple or a household income of a $1 million
versus a household income of $200,000
do you really think the one million dollar strategy will work
on $200,000 no
it won't exactly it will never do it
even if they cut down everything good about their life
it will never do it you can't you can't do it
so but they can get to the level of that one million dollar
household income when you do the strategies that
that exactly available for that particular household
it's all about again
that's where that direction and discipline come into play
you need to focus on your journey
yep can't look at someone else's journey and get uh
demotivated or try to catch up fast yep
it's not gonna it's not gonna work in your favour
no you've seen many people go down
it's gonna it's gonna bite you in the can I say a** a**
I mean you already said it yeah
it's gonna it's gonna bite you in the a**
yeah so um
first of all when it comes to strategy
just just make sure that you get a good understanding
whether this strategy works for you and for your lifestyle
so yeah Pramu so now if if you would get
talk a bit about you know
some some risk controls that people can use right
I'll ask you this question
if you could give us five risk controls that'll help people on there
you know let's say since we're having this conversation here
let's continue a couple first time buyers okay
now they bought their first property okay
let's say household income
joint household income 200,000 okay
so they bought their first property
what are some risk controls that if it was you
that you would put into place okay
first first thing I would do you know
copy what the banks does as well by the way
copy what the banks copy what the banks because
because bank
banks do a service ability calculator before they give you the loan
okay do the same thing at home for yourself yeah
so you got a loan uh
for 30 years at a rate of 5.5% as an example in the current market
go and do your budget at 6.5% or 7% whether you can pay yeah
so do do it more than the rate you would actually get absolutely yes
okay right yeah
that that'll give you a we call it a stress a
I think the whisky is doing very well stress stress test right
so this this stress test will tell you what is that maximum amount
that you can pay if the rates goes up to hold on to the asset okay
okay okay
so so this is good so this is you
you this is thinking thinking ahead
this is thinking ahead
so what is that maximum amount I can afford if the rate goes up to 8%
can I still hold on to this asset yeah
you do that first now let's say you found a place that even at 7%
I can easily hold this asset and and still have some savings
okay now
5.5% rate versus 7.5% rate is a 2% different
what if you start paying that difference into the loan
as a additional contribution
it's a repayment it's a repayment as a additional contribution
whenever you feel like it
so you're knocking off your principal down
and when it comes to extra repayments from just
you know just in case anyone's having any doubts
does the bank charge you a fee for extra repayments
or does it vary from bank to bank
if you're on a fix rate yeah there is a amount that you can pay extra
for the period of that fix
right so if you have to fix it for two years
there's a there's a maximum amount they will let you do as repayment
but if you're on a variable rate
by the way yeah
as many extra repayments as you like it's up to you I mean
you win a you win a lottery tomorrow you pay pay it down
they don't charge you extra money for it yeah
so there you go guys
for anyone who was who's had any uncertainty around oh
I don't wanna make extra repayments
cause the bank will charge me an extra repayment fee
there you go if you're on a variable rate
yup you don't have to pay anything but
but but
but you have to understand it's it's
it's not always good to go on variable as well
because sometimes variable rates are higher yeah
so that means you're paying higher interest rate
if you can then figure out okay
if I want to pay low interest
because that's how you win this game right
paying paying low
you pay low interest you fix it
how can I save extra money once the fixed rate is over
you take that chunk
they're lower so that's another strategy they can use right
so while they save that money
they can they can either put it in a savings account
or we can earn maybe a little bit of interest on it yeah
um but but um
there are so many strategies like that to play from a fixed um
home loan and a variable home loan
there you go these are strategies people pay for that you're listening
you're getting right so okay
so so you mentioned for them to check their service ability
on a higher rate than what they would be getting on their actual loan
yeah right right
and if anyone wants to you know
if people are confused about how they can actually go and do this
serviceability
good news for you
we actually have a calculator for that as well on our website
so you know it's called the Serviceability Calculator
it's very intuitive just go on the website and just yeah
check in the numbers the just
just stress test yourself pretty much to see what you can afford
what you can actually play with it right
and play with it yeah
so that that also covers the the second point where
it gives you I mean you're putting self buffers
yeah right
that is another thing that is very important
the the most important thing is the structure of your loan
so the the the the most important part uh
that you need to understand is the structure of your loan
right if you don't have flexibility to pay down your loan quickly
you gonna be you you you gonna lose
so when I say
majority of the banks
in Australia will give you a very easy and very flexible
structure to pay down your loan quickly
but then there are lenders out there who will restrict you
who will lock you because they wanna keep you for because they
they wanna make sure that they'll make bare minimum out of you
yeah right
so you gotta be very careful
so you have to understand what lender what what loan structure
what loan type I am I'm taking right
I'm not just talking about the conventional lending here
there are unconventional lending that that
that been used by so many people in Australia
so very important to have a right structure for you to win this
so so just to clarify with that
you're not saying you know
you should always go with the four big banks
cause like we said there are so many other lenders there
but you need to just make sure that because when you said that
you know there are clients we have clients who say oh
I only wanna stay with the with one of the four big banks because
you know I don't trust these other lenders
four majors yeah right
yeah but that's not what you're saying no
that's not what I'm saying exactly
that's not what I'm saying
I I think that that that's the whole episode together
because the types of loans
structures of loans
lenders contracts
totally different game
but you understand what you're signing what you're getting
hundred percent yeah
my advice or my my
my point of view is I will never take a loan that I'm stuck
yeah I gotta have flexibility to pay it off quickly
because if I decide to sell the property
I need to have that flexibility to sell the property yeah
I I I can't be controlled by by by the lenders and no
hang on you can't sell the property for the next 5 years no
why right
so so things like that then then the other most important part is uh
this is there is another so
so the last one is the most most most important right
this one is second most important
you you
you you need to you need to have a plan
you need to you diversification of how to pay this loan
how are there different ways you can pay this loan down
apart from the income
right so I'm talking about as an example capital growth
OK so capital growth as a very very simple example
if you buy a property for 600,000
you got a mortgage to pay the six
you know $500,000 in 30 years if the property goes up in value for
maybe million dollars so you gain 400,000
in five years
right this this will also talk about the most important part
you should be the one that we talk about
you should have a flexibility to sell it for $1 million
pay that whatever the balance may be 450 or whatever you got yeah
and right and have the rest of that 550,000 in your pocket
what will that give you and also because it's it's
it's their principal place of residence
they don't have to pay capital gains
absolutely so you put 100,000 initially
and then all of a sudden you created 400,000
I mean you're going home with five 50 total with
with that hundred
so now you could possibly buy even better house if you really want to
but if you got you have to play it right
so you need to know how to
pay down the loans in a different ways too
one last thing I will tell about how to pay down the loans in
in in a quick manner as well
think about you accessing the equity rather than selling the property
let's say out of that 400 and whatever you
you access $200,000 you have a good income
you're maintaining your income
your your discipline to have your job right
you go and borrow further money from a bank
and go and buy another investment property
that investment property will start giving you maybe about
let's say in five years later
so now now 10 years gone ah
that five years later that property doubled
let's say you invested in 500,000 uh
you know total investment was 500,000 property you're selling yes
you will pay some capital gain tax you
you come home with about 400,000 or $350,000 in 10 years
what do you think your loan balance would be
big loan balance right
not not much though if you really think about it yeah
you already start paying from like 10 years gone
that investment property just paid your home loan
you pulled out the equity from that investment property
because you did it at the right time
you waited and you invested in the right property
that property gave you good capital growth
you sold it yes
you paid the capital gain tax
took the money paid down the loan
now you're debt free another
another outcome
another key factor that I
I picked up on that is
it also depends on the type of property you buy absolutely yes
so you need to apart from just doing some you know
apart from just having a really good financial structure and strategy
you need to have you need to actually buy a good property because if
if you buy a property in an area
or a property that is not gonna appreciate
yeah right
as much in the next 10 years
then that strategy and structure is useless is useless
so you need to have a strategy for the property itself yeah
and also that comes down to
like you know most of the properties
some properties might even be overpriced in the market right
it'll be flashy you know already
someone else making the money so you're paying for making the money
you know
really attractive good salesman real estate agent might be you know
just to put it in plain English a piece of shit
so I mean it'll be a flashy piece of shit
I mean Vishi not just that no
you're talking about stamp duty right
you're paying for for
for for
for the government as well yeah right
so there are the cost involved
so so buying the right property is very important
because that cost
you pay to buy the property needs to be recovered very quickly
now we are talking about
so we'll do a separate episode about the property
how to buy them this is so many episodes came out of this yeah right
it's a brilliant one actually
it's a brilliant brilliant subject
so it's a whiskey I'm telling you Pramu
it's a it's a business strategy when it comes to property yeah
right so
so so
if you don't have a proper strategy to buy a property
hold it and milk it milk it
milk it for your benefit like a cow
like a cow right
yes property
if you're not getting the best out of that in property or whatever
the property you buy if you're living in or investment
that property is a dud
what's the point of it
so so the strategy is very important location
you have to do some research
come on there's enough information do that
then it this
this whole thing brings down to the most important part
that a lot of people don't do
in my opinion whatever I've seen
they don't have exit strategy
ah
exit strategy I don't think I honestly
I don't think a lot of first home buyers
even think about an exit strategy
cause they're just you know
there's a lot of emotion oh
we're buying our first home
can't wait to get in forever home
it's our forever home there's no exit strategy
that's where a lot of people go wrong in my opinion
because if you can figure out an exit strategy for your
even for your first home
you're gonna you're gonna win
so you all of a sudden you have a direction towards your success
okay direction direction direction right so
when you know
when you when you when you
when you when you fully understand the exit strategy
of the debt that you're taking to buy
the asset to
of the debt that you're taking to invest in a business or or or
or buy a business right
whatever whatever you wanna call it
you gotta have exit strategy because what are some exit strategies Pramu
I mean very simple exit strategy you're not gonna live forever right
you're gonna you're gonna pass
you're gonna die at some point
so that's the reality so that's the reality right
let's start with that so are you gonna keep this home until you die
it's not gonna work
so figure out a way how to cash out and enjoy your life as well
or pass it on to to to others to do the same thing
which means your family members
again it comes to the you know
your your your your choice
this is this is this is my choice
this is this is what I would do and look
you're a loan ranger 
right so then
then if if you also you can
you can you can bring down so rather than keeping the
the the whole house for for 20 years
you can you can have a exit strategy in five years
I'll buy this property now I'll wait
I'll pay the mortgage I'll you know
I'll do everything I need to do to pay down this mortgage
I'll refinance I'll invest a little bit as well in five years
I'm gonna sell this I'm gonna buy another one yeah
right that's another exit strategy
and then
we can even break it down to even shorter term of an exit strategy
I'm gonna go and I'm gonna buy the right property
I'm gonna use the equity leverage it
I'm gonna buy more investments or I'm gonna invest in business
use that to pay down this loan in five
six years time basically that's you know
you need to have a long term vision a long term plan and that's yeah
a direction yeah
you know the big d comes into play exactly
and then the big supporting d is discipline okay
now you've got the direction you've got the plan and
and the steps you're gonna take to achieve your goal
your plan exactly like as I said
this is the longest episode that we have done
but I'm gonna give you one point on this right
if you know how to restructure your debt at the right time
you will not have a home loan for more than 10 years so how
how can people know when it's the right time
like you know when the equity is ready to be drawn even with that
again how like is there a set of why
why why do you think people don't do this a lot
because they're afraid
because they're afraid that they can't make the repayment yeah
they don't know how to do the numbers correctly so that the I mean
simple way of investing is buying an investment property
earning rental income
but why is it always has to be a property that you need to invest
that's where I wanted to come to yeah
it's not just property that they can use that equity on
it's anything it's it's anything I mean
come on
go and go and buy a small business or or invest in a business I mean
look if you're a car guy
you can even buy a car that will appreciate in value like a
like a Ford Mustang I don't know I mean yeah
I mean things like that yeah
right but you have to be smart about it
you need to know exactly the things
you need to know the asset classes
you need to know where you gonna invest yeah
there are so many so many things you can do
it can invest in businesses yeah
I mean business is always passive income
if you if you invest in the right business with the right people yeah
right don't get caught to make sure though
make sure that business has you know
make sure they follow the triple D's
at least make sure they have the two big Ds
discipline and direction direction and discipline very important
so so what I'm saying
what I'm what I'm trying to say at the last point is
if you know how to restructure them at the right time
your debts restructure your debt at the right time
you will definitely gonna win
last example for that would be you had your property your first home
you buy your first home
you waited in the house for for for five years
you paid down your home loan right
you paid down very well yeah
let's say you you
you managed to do about 25% capital reduction because you were very
very disciplined right
now instead of you selling it
you refinance it or recycle that debt into an investment debt
and then you start getting more capital tax deductions from that debt
and you go and invest in a in a in a property that will uh
that will give you a little bit more luxury or or lifestyle purpose
but at at the same time
it'll do the same thing because now you invest a little bit more yeah
so when you invest a little bit more
what happen Vishi your return is also if you do it right
yeah is higher yeah
and also like you like you said
if you do it right so with your first property
you have direction if you have discipline and if you've done it right
then you will also become a bit more financially literate
absolutely right you will be more in control of your spending
absolutely of your wants and your needs yup
so you're after the first property
the next property is gonna be much easier
and then it only gets easier from there
and you know very well how to pay down mortgages
exactly you come with experience
you're an experienced guy now
exactly and then after that
you know
you can become one of these buyers agents and give people advice
buying your first property
your next property exactly
I mean it's you know it's so many
so many business opportunities comes up if you do it right
just like we did this podcast
we did it right we gave you the right advice
and with that being said ladies and gentlemen
you know let's uh
it's been a long podcast so to recap on longest one yeah
it's the longest one you know
hopefully it's not gonna get longer
so to recap on what we did today guys
what we spoke about you know it was it was the
we we really dug deep with this podcast
you know we spoke about uh
the Triple D's when it comes to debt
you know so you've got debt
but to figure out whether it's good debt or bad debt
you need direction and you need discipline yup so right debt
have discipline towards the debt yeah
and have a direction what you gonna do with it
what you gonna do with your debt and that is how you grow your wealth
so guys with that being said
thank you for tuning in to today's episode of the TFS Wealth cast
and we'll see you on the next one
take care take care konnichiwa
thank you for tuning into another episode of the TFS Podcast
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