Scott joins Tim Graham from Hotspotting

Hello everybody and welcome to today's episode. I'm your host, Tim Graham and today I'm delighted to be joined by someone who has helped thousands of people achieve their financial goals and break free from the chains of debt. Someone who literally helps an Australian family become mortgage free on their own or occupied home. Get this every 23 days. Ladies and gentlemen, it's my pleasure to introduce you to the founder of crown money, Mr. Scott Parry. Scott, thanks so much for joining us today.

Absolute pleasure. Tim, how are things?

Yeah, really good, thanks. Yourself?

Yeah, tip top. Couldn't be better, mate. Couldn't be better.

So I was thinking earlier before coming into this podcast, I, I first met you back in 2011, 2012, and I have to admit, back then I didn't really understand what you did, but now I get it. And you've got a, you know, a really unique product and business which takes a little bit to get your head around, but once you do and you can see the results of it, it's, it's quite amazing. So I'm, I'm genuine, really excited to actually show our audience what you do. But you've been in, in the finance game for over two decades now. Start as a mortgage broker. Why don't we start there, learn a little bit about your journey to begin with.

Great. Yeah. So I, I fell into finance the age of 20 and it was something where being in finance at such a young age, you're sort of so green you don't know what you don't know. And so I just sort of felt that the best way to sort of focus on any business is to simply just ask people what they want and try and find a way to give it to them. And so I sat down, just surveyed hundreds of clients of, of saying, what do you want to do financially? What's important to you? What's your number one financial goal? And for the average Australian I, it was just resounding result was they just want to be debt free, they want to be financially secure. And their mindset is if I own my home, I'm secure financially, I'm not going to lose it. If I get sick or I get injured, I'll lose my job. And so I thought, okay, that's interesting. Everyone in Australia is trying to get people into debt, but everybody in Australia wants to get out of debt. And so I thought that was a pretty good niche. So why don't we just help people own their home a lot faster than what they're currently tracking for with their traditional 30 year offset account?

Yeah, Right. It's as simple as that.

Yeah, it was, it was. And it's also one of those things where people are taking advice financially from people who are financially incentivized to keep Australians in debt for as long as possible. You know, when banks make more money the longer you're in debt. And so you've got these Australians who are wanting to get out of debt and then refinancing every three years on average to find a cheaper rate and the bank will just reset the loan term back to the start of another 30 year marathon. And so if you're trying to finish a 30 year marathon and you're going back to the start line every 3km, you're not going to finish the marathon. And so just seeing six and a half thousand families over the last two decades and not many of them have actually been successful at owning our own home. But then we, we plug them into the right program, strategy, accountability and we've become that personal trainer. But for people's money.

Yeah, right. Well, I've got to say, you know, every day you'll see an ad on Facebook or on the socials, I'll pay your house off in six years. And you know, I can sincerely say that I have seen a lot of different strategies that claim to do this and a lot of rely on investing in real estate, creating positive cash flow, funneling that money back into your owner occupier. But that's become very, very difficult to do. Those strategies work, don't get me wrong, but very difficult to do in a high interest rate environment. There's two ways that I believe you can do that. One through positive cash flow, one through capital growth, selling down the investment, paying off, you know, a large lump sum of the owner occupy. And that's all well and good, but you have capital gains to think about and all sorts of things and you're also losing another asset that could continue to grow. Your strategy is very different to that and it really flips traditional mortgages on its head.

It does, it does. It's something where you said at the start it takes a while to sort of get your head around. But you, I just believe when people zig, you got a zag. If you're doing what all the masses are doing, you're going to get the results that all the masses are getting and they're not spectacular. We know most people are living week to week. They don't have a huge safety net or buffer in place. And if they lost their job for a month or two, things would be stressed. Financially, people carrying credit card debt. And so the whole concept of that strategy was all well and good, but that was when borrowing capacities and banks didn't have debt to income ratio calculators where people are hitting their debt ceiling so much faster now, where they just can't continue to accumulate property. I mean, I sit with people all the time and I call them the dreamers. Like I want to, I want to buy 10 investment pro said, unfortunately those days are gone. Like you're not going to be able to buy 10 investment pros. And a lot of the people out there are saying that you can and that's how you're going to pay your house off. But I'm just, I'm quite blunt with people and I just think my job is to tell them what they need to hear, not what they want to hear.

Yeah. Now look, I've got to admit, like I'm a rent vest in myself and we've got quite a few investment properties where we're tapped out. Like it's, it's really difficult to go back and continue to get financed without going through, you know, low dock loans and all those types of things. So I get it. I think, you know, we had, they say you got to make, hey, while the sun's shining. That sun has started to disappear behind the clouds in the last two years.

Yeah, I don't see it changing in the short term either. I don't think things go back to there. I mean like when the rates were at 2, 3%, people's boring capacities were a lot stronger than what they are today. I think this is the new normal. And as a result of that, people's hitting their borrowing capacity so quickly because rule of thumb, super ballpark figure, don't quote me on this, but you can borrow about five times your gross salary. Okay. So if you're on 100 grand, you can borrow 500. And so when you do those maths, well, that final grand doesn't buy a lot of house and 100 grand is not a bad income. And so there are obviously a few other factors that come into that number of kids, etc. Etc. But just as a rule of thumb, that's where things are at. And so if you're looking to borrow and buy 10 properties, like the debt on that and what your income is, it's just not going to be anywhere near enough. And so I believe that my sort of strategy, so to speak, for a lot of clients is to pay off your house before you retire and accumulate one investment property for every child. You've got before you retire, not so you have to pay them off. And so if you're 40 years of age, you've got 25 years to accumulate two properties if you've got two kids and so that not to sell them to pay house off. I'm paying your house off anyway. And so our average client pays a house off in 12.3 years. And so the whole sell the investments to pay the house off I think is flawed. I much rather I'm going to buy a whole guy where we pay the house off, we accumulate the two properties. One could be in three years time, another one could be in seven years time or 11 years time whenever that borrowing capacity opens up. But if you just buy two investment properties before you retire, you let that compound over two, three decades, they're going to be very positive cash flow by the time you retire. It's going to fund your retirement. But it's a kid's inheritance. Yeah, will not be able to afford to buy a property when they get to our age. That's just, we know that. And so I always Wish My dad 40 years ago bought me a property that I was going to inherit. And so I look at hindsight, we're all multi millionaires with hindsight. And so just being able to set the kids up is I think what most families want to do. And if you can just buy each kid an investment property so that if and when you do pass away, they inherit that plus the debt free house, it works for you now tax wise, it works for you in retirement, cash flow wise and it's going to work for them by being the biggest leg up that they're going to have in their financial life.

Yeah, well listen, obviously you've got a presentation that we're going to go through today. So if you want to get that up on screen, that'd be great. But while you're doing that, something you said at the start of your presentation, Scotty, rings true for me that whilst I work in the real estate space where we are talking about growing portfolios, that aspirational idea of owning a lot of property doesn't resonate with everybody. As you said, some people, that's a stressful thought to own multiple investment properties. It's really just the comfort of going I don't have any debt on my home when I go into retirement. And I think that's something that is going to resonate with a lot of our audience that, you know, it's not just about having to, you know, go into extra debt in order to pay off your mortgage. It's about being able to be a bit more strategic about paying debt down on the owner occupier.

Yeah. And I'm not too sure if too many people look at this, but the faster you pay your mortgage down, the bigger your borrowing capacity becomes. Because occupied debt is not tax deductible. It absolutely decimates your borrowing capacity. If you can have that home loan paid down from 600, for example, down to 300, then within sort of 5, 6, 7 years, you've got an extra 3, 4, 500,000 borrowing capacity, which I think is a really good strategy. Obviously, with debt recycling, there's so many things to do as we're paying off our owner occupied home and everyone's so focused on getting you into those debts. But let's just really get back to our knitting and say, okay, let's just own our own home. Because a lot of people don't see what I see, and that is 60% of Australians are retiring with a mortgage at the moment. So what does that mean? You get to retirement and you've still got a mortgage. You know, you can't afford those repayments in retirement. So most people will then cannibalize their super fund to pay off their home loan. That then decimates your super balance, which is your lifestyle is now crippled because of that. And then when your super runs out, you go into the pension, 6, $700 per week, you're existing, you're not doing much on $600 per week.

And so there's no holidays to Europe. You'd be going to Wagga Wagga once a year.

You're not going to Europe. And what that does when you're existing in retirement, you've got your whole life and you've just sort of had to then pay off this house. A lot of people say, oh, but I'm going to downsize. Now that's a great theory. However, what I'm seeing is people are trading what is they're selling the bigger house, buying a smaller house in a better location for roughly the same price.

Yeah, they want to downsize on size but not quality.

Yeah. And they usually go to a better location because on a smaller block. And obviously they want to be closer to amenities. So that's what I'm sort of seeing. Not there are always outliers. I'm not saying this is everybody, but that's the general thing that I've been seeing over the last five, 10 years in the market. Okay, so our average client saved 21% of their income compared to the average Australian saving only 6.9%. That now with the rate rises has dropped. Got the latest data last month at 3.7%.

Yeah, I'm not surprised.

Average Australian saves 3.7 cents in every dollar they make, which is, is concerning. Our clients are at 21%. So yeah, a huge uplift. Why don't, why do we able to get that? Because once again, like that personal trainer at the gym. Why do you get fitter at a gym with a personal trainer compared to you just having a gym? Membership accountability, accountability and guidance, coaching, etc. Etc. Average clients paying over 30,000 a year off their principal. The average train I'm seeing at the moment is only paying 10,000 a year off their principal. So we've got some great case studies which we want to go through here where we're sitting with a client, they meet me, I'm looking at their loan statement. They're paying $10,000 a year off their home loan. Then 12 months later, after joining a homeownership plan, they're paying 30,000 year off their home loan. Same income, same debt level. How do you explain that? And so our clients 2 to 300% better off within the first 12 months is what we're finding. So since $2,350 million in principal reduction for our clients, average clients getting out of debt 12.3 years. Every 23 days I get to pick up my phone and call a client. And so you paid your house off today? Yeah, and that is my favorite part of the job. Some people cry happy tears, some people don't believe me, want me to check the numbers. I mean, people being debt free for so many people don't even think it's a reality. And the thing that you've got with.

With what you do, Scotty, which is a bit different to the property investment side of things, is, you know, when somebody buys an investment property, you know, it can be years before they know whether or not they've actually made a good decision.

Yes.

With you, after sometimes even three months, they can literally see their principal going down and they know I'm on the right track here. And I think that's very exciting.

That's exactly right. So the first 90 days are critical for everyone to get that validation. They've also told friends about this and their friends, oh, you do it first and then let me know. And so we meet with every client after 90 days, we then say, hey, this is a 90 day snapshot. That's what you're doing with your Old structure and money management system. That's what you've done with us. First 90 days on average, 200% better results. And that's when I get the okay, this is moving forward. I'm finally making progress. And I think financial progress equals happiness. As long as people feel like they're moving forward, they're happy because they're working their guts out. They know they can't possibly earn any more money than what they're earning. They're grinding, their time's fully spent and as a result if they're not moving forward, that's where they start to get frustrated. Like is this my life now? Is this it for the next 30 years? And so yeah, that home ownership for us is everything. And it's so basic, it's so simple. I, I mean why most people don't do it. It's quite labor intensive. Like we've got a team of 20 people who help with all the cash flow management. It's very, I mean most financial planners should be doing this to be honest. But yeah, they don't because it's, it's not that there's no money in it. The best answer for that, a lot of press over the last two decades like journalists, TV stations. How are you doing this? What are you doing differently? Why is this working? This is image down here is one of my favorites. In my office, just a wall of all my clients credit cards. I would probably comfortably say I'm Australia's leading plastic surgeon. I've got more credit cards than anyone else on this, on this in this country. And I think that's the best thing we can do for, for a client is get them onto a cash diet. A cash based system. Credit allows you to spend more money than what you normally would earn. That's why people have credit card debt. And I think the studies are coming out saying that Australians are spending about 14% more when they use credit as opposed to cash because their psychology, their behavioral psychology is different. Not saying they're paying interest, they're just spending more. And so I always say this to new clients. How much you think you spend on groceries? I'll say $3 per week. I'll say okay, this week take $3, cash out and then go grocery shopping with no cards and see how you shop differently. And that's just a really good short experiment.

I'm going to pause on it for a second. So you're saying if I went to Woolworths with, with cash versus going and using card, I'll support her spend 14 less on cash. Yeah, yeah, amazing.

That's.

Here's the next question. Will I still accept cash there. You're not necessarily saying cash, but it's savings. It's not, not.

Yeah, yeah. I mean it is something where they do accept cash and it's something where, if you find a, a checkout person these days because they've outsourced that to us. So yeah, not doing us any favors. So a lot of reviews, I mean people seeing these on Google reviews, people were seeing our websites, our case study videos from clients who are sitting there in their home with no makeup, not reading from a script, saying, yeah, I paid a hundred thousand dollars off my home loan last year. That's pretty tough to believe. But has someone paying, they must be earning huge money. No, no they're not. They may be earning 150, 250,000 a year tops. Like we don't have super high net worth earning $1 million a year. Our average clients are sort of on about the 180 to 250 mark as a family combined income. And so Those numbers of 100,000 per year come off the mortgage is quite unbelievable. But we, we show you all the data and as like your mortgage is reverse compound interest, so everyone knows they're super compounds. And you're getting interest on interest on interest, but your mortgage is reverse compound interest. And what that means is every single month as your debt comes down, your interest comes down, more money comes off the principal and this gets faster and faster and faster. And so that last year of your mortgage term, which is the 12th year, for example, your interest cost could be $90 for the month, but the rest of your principal through your income credits are actually starting to make huge dents. And, and that's why our clients are paying a hundred thousand dollars a year off their mortgages. Towards the end of that, that home ownership plan, clients, I mean, this guy here on the left, 37 years of age, paid his house off. I just wanted a gift, you know, having no mortgage at the age of 37 or your income for the rest of your life. He was a police officer, said, mate, I'm not, not enjoying the police force. Being an umpire in life, he learns a few new words each week at workplace. So he said, I want to get out of here and just start my own gym. Like, what are your thoughts? I said, man, you do whatever you want. You're debt free. You are free from mortgage prison. You have all your cash flow to put towards lifestyle experiences, investments. So, so he did that and is living his best Life. This is a case study video. I'm not too sure if it's going to be laggy. Do you think we should play? It goes for one minute.

Yeah, look, let's give it a go.

Okay.

If it. If it's.

Yeah, just let me know. I can pause it.

Yeah, that'd be fine.

Having my bills paid automatically. I don't worry about money anymore. 50,000 off.

50,000, as opposed to 3 and 3.

And 12 months from the previous year. And it's very easy to do. I found it very manageable. Now I've just about paid it off. I've got about two grand. How exciting. Yay.

2014, 2015, we knocked. Knocked 107,000 off in one year. In one year. Which is obviously a direct result of us coming on board with you some 12, 13 years ago. I think it is.

We're a lot better off now than what we were two, three years ago. And it's. Yeah, I just think it's great. If you're at the start of it, take the lead. I was really nervous because I've always worried about money. From the first month, I saw us take off more than we'd taken off in, like, 12 months prior to that.

Since we started it with, as we said, we're from 320,000 to basically 100,000 in four years.

We've been with you. Yes. We had one quality. Now we have four properties and amazing lifestyle. And you're going, how can that happen with you? You that happened. And we tell other people we're going, we need to. We need to. And they're going, but how can this work? Because we've been brainwashed. And this is the new way of doing it. You know, you actually want us to prosper. We had people that your clients told us about this five years ago, and we just armed and armed, armed. And we were stupid. We should have done a billion. I think my last sticker said about $8,000. Well, $8,000 off for that month.

$8,000 off the principal in one month. 12 or so years ago, when we first sat down, I said, you're gonna. You're gonna knock $100,000 off your mortgage in one year? I would have said, I want to say bullshit.

Well, if that's not a good testimonial in itself, that's amazing. You know, I've got to say, I really do enjoy, you know, a testimonial shot on an iPhone. Like, these are real people sitting there in the comfort of their own home. And you can see on the look on their face, how delighted they are with the results.

Yeah, that's the thing. I so many people say, oh, we, we saw your, your case studies and they look real, they look believable because they are real and they are believable. People can smell like we. Our moves are super high these days.

Yeah.

And that's raw. It's literally, you can see the iPhone footage. No one's wearing any makeup. It's. No one's reading from a script. And you can just tell in their mannerisms. I mean, unless they're the best actors in the world. Exactly. That this is them saying this is is what I found and this is what's unfold. So what we bring to the table for our clients on this home ownership plan is we need to change their cash flow structure because their current one usually isn't getting the job done. I mean, we'll sit down and review what they're currently doing and if we can't improve it, we'll tell them to keep doing it. But most of the time they can improve their cash flow structure. We find them a better home loan and more importantly, we set debt and cash flow goals for them. What does that mean? That means, okay, we want you to have six months worth of living expenses and loan repayments saved by the first of July. And then everyone's got a target to aim at. They know exactly what they're sort of striving to achieve. And we find people outperform when they've got a target as opposed to just floating around and not knowing where they should be or where they're heading. None of our clients have credit cards. As we discussed. We review all their fixed expenses. By the way, for you frequent flyer point heads out there. I know, but I don't frequent flies. Yeah, yeah, yeah. Bank west have a platinum debit card where you get frequent flyer points using your Visa debit card with Bank West. So you don't need to be using the credit for the Qantas frequent flyers. Bank west will sort that all out for you. So, yeah, that's just some food for thought.

I think. You are the, the points game is as strong as it used to be. You got to spend 80000 to get a toaster. I think.

Yes, it's exactly the truth. That is actually I, I say a kettle. So it's. And so yeah, that has been watered down. I mean back in the anset days are a pretty good deal, but they've just like all things have worn them down. So one of the other key things we do for clients is we review their fixed expenses, we review their gas, electricity, phone bill. Where can we get cheaper fixed costs? Where as long as the sort of they provide us with the gas, electricity or the broadband. But if we can reduce those expenses, we create more surplus. Accelerates debt reduction strategies to increase income. So we got like we call it salary coaching. And so we coach people on how to get pay rises, what script to use, what to say. The downside about this is my own team use this against me. So yeah, devastating. But it is something where we feel it's a lot easier to get someone a 10 pay rise and it's to chop their expenses by 10%.

Yeah.

So always trying to increase their income, getting investment fit. And so our job is to increase your borrowing capacity as fast as you possibly can. We've got Crown Money University where there's 32 five minute videos on everything we've learned about banks and money over the last two decades. All the stuff you should have been taught in school. We sort all that out and making sure we are salary sacrificing once your borrowing capacity has been exhausted. Okay, so when you are salary sacrificing that reduces your borrowing capacity. When you hit that debt ceiling that we've just been speaking about, that's when the salary sacrificing should be kicking in because you can't be borrowing anyway.

Yeah, that makes a lot of sense.

In terms of reducing our clients expenses. All of our clients get discounts to all the major shops, Coles, Woolworths, Amazon, jb, hi Fi, Dan Murphy's. And so just once again trying to help reduce expenses, create surplus trap that surplus in the home loan. I mean in terms of the everyone's looking at rates. I think you need to look at the actual total cost alone. You're looking at the wrong numbers. Everyone's so focused on rate now. This is the game the financial services industry play. They dangle a cheap rate out in front of you. You think oh I can get a cheaper rate. That's going to change everything. And that's why average Australian refinances every three years to find a cheaper rate. But they reset the loan term back to 30 years and it's actually more expensive in terms of the amount of money coming out of your pocket over the duration of that loan. So we're just educating people say hey, look at the total interest cost for a loan. How much is going to come out of your bank to pay that loan off in full? That's the number you should be looking at. No One ever talks about it, no one ever shows you it. Everyone's talking rate. And it's relevant, absolutely relevant.

You pay a loan off in 15 years versus 30. It doesn't matter what the rate is.

Yeah, exactly. Offset accounts don't work. I've just never seen anyone pay off their, their offset account, pay off their home with an offset account because of this one reason. So you see the 15 year loan, 15 year term. That 15 year term is when the majority of the interest is being paid to the bank. So banks front end load your loan, that means they get the majority of your interest upfront and then they start to allow you to reduce your principal after about 15 years, which is where the blue line with the offset account starts to stretch away from the red line without the offset account. Now this is a half a million dollar loan with a $50,000 offset account, cash from day one. That'll smash it down by five years. So you're still in debt for 25 years even though you got 50 grand, your office account from day one. And so what happens with people with an offset account is they're refinancing at the three year mark. There's no difference between that red and blue line. And I go back to the start of the marathon, three years back to the start of the marathon. And so I've never once in my entire career seen a client who's held their loan for 15 years without refinancing. And that's when the offset account really starts.

I think there's a psychological thing about having the money available in your offset as well that I've seen. You know, customers, offset doesn't grow, right. They, they build it up by an extra $10,000. They go, 50,000 is my comfort level. We can go on a holiday, it drops back to 50,000 and it doesn't tend to grow. So what you're saying is accurate if I'm refinancing every three years or I'm, you know, going into a bigger home and a bigger mortgage, which people tend to do, you know, that offset is really doing nothing for you. It might as well be off the principal.

Yeah, 100%. And from that perspective, you're also looking at people who, with the offset account, people spend what they have direct access to. And that offset account example that you just mentioned is perfect. Like you got 50,000. All of a sudden we start justifying to ourselves, well, we do need a car upgrade. We've been working hard. Or the, the European holiday. And so I always ask people, how much did Your offset account increase over the last 12 months. It's a very important question to ask because it is something where once again, I'm just generalizing. I know there are some of you out there who are just absolute wizards, but this, I'm just talking about General Australia, like the everyday Australian with their two and a half kids. It's something where their offset account doesn't grow. Especially this cost of living crisis. Like it's just tough to get surplus. So with our clients paying off the house in 12 years or so, on average at the 10 year mark, our clients usually got about 180,000 owing on that half million dollar loan. With the offset account you still have 400,000 owing after 10 years. Yeah, that's if you never refinance, that's your home. With the loan you're gonna have 400,000 owing after 10 years, whereas we're going to be sitting around 180. What does that mean? That means an extra 220 in borrowing capacity. An extra 220 less of debt, less interest, etc. So very briefly what we want to do is get all their income going to this home loan account. It's very unique. It's a transactional home loan account where we have all of our clients direct debits coming out of the home loan account. Okay. So you can't get that from your bank. This is where sort of, we sort of have that uniqueness, so to speak, is we design a loan like this. And so we design a loan so that we're automating everyone's expenses. Expenses. Gas, electricity bills, phone bills, everything's automated. Money's always in there. And that home loan is where we're having all of our direct debits come out of directly. Not the offset account, this is the actual home loan account. Then every week, food, fuel and fun going into a separate VISA debit account with your existing bank. So if you're with anz, cba, NAB bank west, whatever it may be, that's your existing VISA debit account. We plug that into your home loan and then every week your living expenses hit your spending account. So we're separating your income from your living expenses. Very important to do for you to become a conscious spender. And what that means is we're spending consciously. We've got a set amount of money to last a set period of time. That changes your behavioral psychology when you're spending. Then one of the other key factors which are built into this is if you need any extra money for like monthly, quarterly, annual expenses, what Are they birthdays or Christmas, car registration, holidays, those sort of things, which aren't direct debits and not food fill or fun. We put a 12 hour time delay on those expenses. So you say, scott, want to go to Bali? And then $2,400 for flights 12 hours later, the 2400 is in your spending account. And so by putting that time delay on that request, it once again starts you to think consciously about it. Do I really need it if I can't get it instantly? Because you know as well as I do, just transferring money between accounts on your phone is seconds. And so we're just trying to put like security guards in place to save you from yourself. And if we can save you one impulse by a year, we feel we've done our job. So we manage that home loan account with you, we become your family cfo and we're really just trying to make sure that every single dollar you have works as hard as possible for you. But we trap the surplus in your home loan account and interest saved is interest made. And I don't think there's any better investment than to save interest on your home loan debt.

Yeah, Scott, just for the people that are listening on the podcast and maybe can't see the scream, just let's go over this one more time. So you've got all of my wages are going directly off principal first. So you're paying principal first and interest later, is that right?

Yep.

So my, my wages go directly into paying principal off and it's essentially, is it a redraw account that's, that's set up so the funds come out of the, the mortgage onto that spending card. And I love the fact that at no point in today's presentation, if you even use the word budget, it's a spending plan more than a budget, because budgets are boring. We're sending money from the mortgage onto this card for your spending, which has already been pre planned for the month, and then the interest is charged off the principal balance every month as well. Is that right?

That's it. And all your direct debits are coming directly out of your home loan account.

It sounds simple.

It is. That's why it works so well. Honestly, I wish it was so complicated. I could claim it that I'm some sort of neuroscientist. But the reason why this has worked, I developed this 23 years ago and like my superpower is making complicated things simple.

And, and I think, to go back to a comment you made at the start of today's presentation, you know, there's nothing stopping somebody to going out and doing this themselves. That's, that's fair, isn't it? The difference between getting the results really comes down to that, you know, personal trainer mentality, right? Somebody there month on month to keep.

You accountable and set targets and measure you and weigh you in and coach you on what you can be doing to increase income, reduce expenses. There's so much around that home ownership plan where this is not just a loan. And I think a lot of people say, oh well, I can just do this on my own. We probably can try, but obviously you can't direct debit out of your home loan account, etc. Etc. But from that perspective is the key to this is in my eyes and my experience is the coaching that comes with how to improve your current numbers that you don't have the IP or experience around. And so people come to us at mate, you know all the shortcuts. You've been doing this for 23 years. I'm not going to try and recreate, reinvent the wheel. I just want a fast track. And so put me on a fast track where you always say to a client, you try this for 12 months. If after 12 months we haven't been able to get you a better result than what you're doing by yourself, we refund everything, all your fees, the works. I mean there's no way you should see a finance a personal trainer for a year and at the end of the year you're fatter. Like there's a chance you should be paying that personal trainer. And so I'm a performance based business. I get you the results or you don't pay. And I think it takes a lot of risk off the table for a lot of families. Okay, so data, I mean this is like my two favorite numbers on this page. And for those listening, it's a savings rate, is we measure every client savings rate. I don't know anyone in Australia who does that. I think what you earn is relevant. I think what you keep or what you earn is everything. And so everyone's so focused on their income, doesn't matter. I've got lawyers earning $440,000 a year who when they meet me, they were spending 460,000 a year. And so I'm about savings rate. What percentage of your income do you keep? And so that's what we talked about at the very start. The average savings rate in Australia is 3.7%. We're hitting 20s with most of our clients. That's our average client. And so obviously some are more, some are less. I think the Chinese know if you can save 50% of your salary for 10 years, you'll never have to work again.

Wow.

Very difficult. And so savings rate, we track, we measure, we want you to improve that. And we always know that what gets measured gets managed and gets improved. And so when you know that you're being weighed in at savings rate, if we can help increase your income, reduce your expenses, we increase your savings rate, accelerate your debt reduction. And my second favorite number on this page is estimated debt free date. I literally have a live tracker on exactly what day I'm going to call you to say you paid your house off today day.

Wow.

And so this client's on the 4th of September, 2032. I'll be calling them and saying, today's the day we've got a debt free call. You're free from mortgage prison, you've got all your income to do whatever you want for the rest of your life. And that is unbelievably free as a person. I mean, some people working jobs where they don't have to work that same job anymore, they can actually take a bit more relaxed job, have more time with the family, the kids and choose how they do that. So this client here, before, they met me on their old loan, we're doing 7,600 a year in debt reduction. First 12 months with us, they did 20,000, 21,694. So that's 300% better. Same income, same debt level. And you can see all the graphs there for their loan balance plummeting.

The one thing that, that doesn't show on there, Scotty, which I think is a huge one, is your mental state when you see that. If you think of the opposite of that, and it's the, you know, the old mouse on a wheel, isn't it? Like we feel like we're not getting ahead. And that in itself keeps people up at night. Seeing principle come off at that level has got to give people so much peace of mind.

Huge peace of mind. I got a crazy story where I had a client of mine, went over to their place, went through all their numbers and had a few debts, car loans, personal loans, credit cards, just the usual stuff. Very stressed environment, wife and him. You could see there was a bit of tension there. And so we, I sort of ran through all the numbers and showed them. So you're going to have this house paid off in 13 years and you're going to pay 32,000 off the principal in the first 12 months compared to 9,000. And the wife's eyes just sort of lit up. I mean, that most women want that security of home ownership. Like, that's really a key driver for them. And so he then. So she then said to him, how long have you had Scott's details? Because most of my business is by referral. And he said, oh, he. I hesitated. And he goes, three years. And she picks up the glass of water, throws it at him.

I'm like, whoa.

Okay, this is getting crazy.

Oh, God.

So let's just wrap this up. I'll let you. About two weeks later, I get a phone call from. He said, hey, how you doing? I was like, yeah, good. How things like, mate, I don't know what you've done to my wife. I said, I promise I haven't touched her. What are you talking about? We're having sex again. Ever since she left, we're having sex again. I said, wow, this is great. I'm stoked for it, dude. And so that's what. That. Taking the financial stress out of a relationship is everything. They can go back to being a husband and wife. And so one of my guys has been with me for 10 years, works with me. He's just, yeah, an absolute legend. He's one of the financial coaches. They sort of asked me pretty regularly, in my eyes, why do you keep working, mate? You've been doing this for 23 years.

You.

Financially, you've got all these investments, like, you don't really need to be sort of doing this. And I sort of answer to that is if I can just help one child grow up in a household where his mom and dad haven't broken up because of money. Because 50% of marriages break out, 70% of the ones that do break up. Money's the number one leading cause. So if I can take the financial stress out of that relationship, that home and that kid grows up with his family still being together, man, that's amazing. Like, you do that for one family. That's your life work, you know? So that's why I. I do what I do. And as a result of that, we just. Yeah, have just perfected this to a point where the simplicity is why we get the results and why we can take so much stress out of that relationship.

Amazing. I love that.

What I love is this next page, which is really. We take a photo of everyone's house. We don't stand out the front with our phone. We have a photo of everyone's house. And I want to visually graph your homeownership dream because most people are visual and so like numbers on the screen, all well and good, but like this is your house in the purple is how much the bank owns and then the rest of the house, what you own. And so every year I want to see less and less purple and more and more of your house so you can start to visually see the bank's equity going down and your equity going up. And so that's really powerful for a lot of our clients. All the charts, these debt free dates which are coming in live based on their income expenses throughout the month. And this is the strategy really. We, we start to put through this milestone, step by step strategy on how do we get to home ownership. We build up a $2,000 emergency fund, we save a month's worth of living expenses and loan repayments. We then make sure there's no other debts, save three months worth of loan repayments and living expenses. So safety nets buffers in place. Pay the debt down by 10%, increase super contributions, start to increase savings rates, start getting pre approvals from vessel properties until we actually own our home. And so that whole process is usually 12, 13 years, but we don't wait until we're debt free to start investing in property. That's a very important lesson because the price of that property in 12 years time is going to be very different to what it is today. And so we want to accumulate those assets, allow that compounding effect to take hold for as long as possible. I bought 10 investment properties and I bought one every year for 10 years. And my biggest regret is not buying two every year for five years. Yeah, because I missed out on that. Compounding that, that tenth property I bought, I missed out on sort of nine years of compounding.

I think something interesting with that is that it's typically fear that paralyzes people and stops people from investing. And most of the time somebody in the partnership, in the, in the marriage is more fearful than the other and that it's the mortgage at home that is the big fear. That's what's keeping them up at night, that's what's stopping them from going and investing. Because they're like, we've got so much debt on our own home at the moment. I want to see that come down before we go up. So by going through a strategy like this, paying down debt faster, you'll start to invest sooner, Correct?

Exactly. And I work with a lot of property groups around the country and they have a lot of clients who are coming back to them with the peace of mind of I know exactly what I can afford in terms of cash flow. And so that's when talking about fear most families I don't know if we can afford this investment property. I've been managing cash flow every single week of every single month the last two years. I know your average surplus cash flow position is 1827 per month. I know your savings. Right. I know everything. And so there's no risk that you can't afford it because I know all your numbers. And that's why people have that fear is because they don't know their numbers is and so our jobs to give them the data so they never have the hesitation of I don't know if we can afford this. I can assure you after two years of track record or 18 months or six months, I know exactly what your surplus cash flow position is month on month. I know what your savings rate is. And based on that your investment probably might be a negative cash flow gear of 500amonth, 800amonth. That means your debt rel is going to slow slightly but the accumulation of that asset and getting the compound growth over 10 or 12 years is going to be well and truly outweighing that that cash flow short.

And that comes down to the fact that we, we can't save as much as property can grow.

Yep, 100%. And you're getting the growth on the using leverage, you're getting growth on the asset which is a 600000 asset. And if that suburb that you bought that property and does 10% in just one year, you've made 60,000.

Yeah.

Versus looking to try and save that and just sort of cut expenses and live a pretty frugal life there. So, so yeah, it's really important just to give people that peace of mind. And so today tonight did a story on us a while ago where we helped a client pay off the house and their investment property. Before they would have just owned one house keeping their existing home loan there. So yeah, we a lot of our clients are sort of acquiring those two investment properties as we talked about. They're paying off the house in 10 years, the first investment property and the second investment pro within that 30 year period.

So if I understand that Scotty, you're saying we run this process on the owner occupied. We pay that off in 10 years. But then you continue with the same process on the investment and obviously with using rental income on the investment as well. That's got to. I mean I would think it does.

Happen a lot faster. Oh you've got actual interest as well. As the depreciation depending on the property. And so with the rental income, the deductions in the interest coming back in tax as well as depreciation, et cetera, you are paying off that second investment party if it was the same value a lot faster. And so for, for most, I mean it's an interesting point. I say to a lot of clients, once they have paid off their home loan, we can take the foot off the accelerator now like we don't need to grind to get this investment property paid off. It would be nice to be paying some of it down whilst we don't have any owner occupied debt. And the reason for that is because the more we pay it down now, the more positive cash flow it's going to be for you in retirement. And so the lower that debt is on that investment pro when you go to retire, the less interest there will be, the higher the cash flow is going to be off the property. So I, if you don't have any unoccupied debt. I am big on, on paying down investment debt just to boost cash flow, boost equity. It's for savings. You can get the money back one day if and when you sell.

Yeah, amazing.

And so yeah, all of our stuff is, is referrals and so we just give you a financial strategy, a home ownership plan, the structure, the wealth tracking. We have software which tracks your net worth, your property prices, your loan balances, your super funds, categorizes all your expenses for you automatically. And so that's how we coach using this wealth tracking software. And everyone gets their own personal financial coach which gives them that guidance and support and accountability every single month. Every single month. We don't charge any ongoing fees. Like you know how financial planners charge five grand a year? No, we just charge an implementation fee and then we get paid by the bank. And as a result you're not sort of stuck with a 5,6000 dollar financial planning fee like the planners are charging. So it's, it's really that implementation that we, we set up and then we're good to go and then we're mapping, graphing, tracking and weighing you in every single month. And so putting you back in control financially is, is really the key.

Amazing.

So that's us, that's what we do. I mean I said you've known about that 12, 13 years. So we do go back a long way. But it's just, it's really every year we're trying to work out what could be doing more of how can we help people. And so like I said Salary coaching, really, really good, good idea. And we just always trying to help clients improve their financial position in any way, shape or form.

Amazing. So I suppose a couple of questions for you Scotty. This, this process works really well. When it works well, when are the times that it may not work for people is, are there times where this isn't suitable?

Yeah, definitely. So those times are really where there's no surplus. And what I mean by that is you've got a single mom, two kids, she's working sort of part time, just not a lot of surplus. And so our sort of traditional client, I call them Henry, I earner, not rich yet Henry. And so our Henry's where we can trap surplus. You know, they're sort of of, they're comfortable, they know they could be fitter financially. They're just easy come, easy go. We know those sort of people where they are sort of on those salaries to 150, 180, 200 and sort of they've got good cash flow but it's not really utilized or working for them. Whereas the single mom or single dad where they've got two kids, they've got the home loan, like it's just, it's survival. And so for those guys we can't really create the surplus. I mean we can do a bit, but not to a point where we're going to pay the house off in 12 years. So I think for those people, whether it's that's tight like when I say tight like, like some people don't even qualify for the refinance of the home loan because their debt to income ratio, the bank won't lend them enough money just to refinance their own home. So those are ones where unfortunately for us we don't sort of, we're not.

In a position, I mean in order to get into this you do need to be able to refinance for the first time to get into.

That's right.

If you're unable to do that now, is it still worth people that feel like they could be in that situation reaching out and having a chat with you?

Yeah, well, I mean we run everyone's numbers. There's no cost for us to run your numbers. It's just something where that is, I think prove for me the most frustrating part is the people who need our help the most, which is that exact person I talked about, the single parent with a few kids and a mortgage, like they're doing it tough. And I feel these are the ones who deserve our help the most. However, they don't qualify for our help because the bank won't lend the money to refinance. And so I've always said if you can afford your current loan, why does it have to go through a credit approval process like you're already paying your current loan. So what's the problem? And so that for me is probably one of my bugbears with this industry is if the computer says no and as you know, like these banks have just jacked their servicing rates. So people are being serviced at 9% rates, but the rates aren't at 9%. Imagine what they are. So that would probably be be a group where we really struggled to help, unfortunately.

Okay, that's fair enough. So for anybody who did want to reach out and learn a little bit more, Scott, what's the best way to get in contact with you?

Yeah, I'll give you some for the show notes, some links we can get people will set up onto the Wealth Portal software. I will give you email and Also website so www.crownmoneymanagement.com and and then from there, if you check out the show notes, you can also have a look at our software. We can that up for you. You can have a look at how it all works. Just that Wealth Portal that we talked about, all your financial set up on one app, giving you your net worth, your assets, your cash flow, everything tracked nice and cleanly.

Fantastic. Well, Scott, I'm sure that there'll be plenty of people that will be reaching out to you after today's presentation. I certainly learned a lot. I hope all of you that are listening at home have learned a lot as well. Scott Parry, thank you very much for your time today. We look forward to having a chat with you again soon.

Thanks, Tim. See you soon, mate.

Good on you. And for those of you listening at home, if you like what you heard today, be sure to give us a follow wherever you're listening or watching on YouTube or on podcasts. Flick us a subscription so you can be sure not to miss out on any future content. Thank you very much and we'll see you again next time. Bye.