The following is a transcript taken from Episode 27 of the We Talk Cents podcast. The transcript is created by AI software so it might not be perfect - please forgive any imperfections or grammatical errors.
Blaize Pengilly 00:09
Personal Finance budgeting cash flow and investing don't have to be scary words. The We Talk Cents podcast is here to help you learn more about money and take control of your personal finances.
Blaize Pengilly 00:26
We Talk Cents podcast is not a financial advisor. This podcast is made for entertainment and educational purposes only. All information shared is of a general nature and does not take into account your personal situation. You should consider whether the information is appropriate for your needs and where appropriate seek professional advice from a financial advisor.
Dan Jovevski 00:45
For more information, please check out wemoney.com au slash disclaimer. Welcome to episode number 27 of We Talk Cents. I'm Danny resident finance expert.
Blaize Pengilly 00:58
G'day Dan I'm Blaize also joining you a millennial who's pretty awful with money well used to be pretty awful with money. Today's date, if you're tuning in on release day is the fourth of May in 2021. Do you want to do the big reveal to him? Because I personally am super excited about our topic today. But yeah, do you want to reveal what it is we're discussing?
Dan Jovevski 01:19
Oh, boy, it's a topic that affects us all. We're all we all pay it, whether we like it, or we don't. It's a hidden thing that pervades us through life. And it's the topic of loyalty tax. So we're gonna be delving pretty deep into the hidden costs and charges we all pay as consumers for goods and services that we may or may not use or review at a very regular frequency. I'm very excited by the topic to buyers.
Blaize Pengilly 01:49
Yes, I am so excited to talk about this loyalty tax just saying it makes me want to shake my fist at the sky because it is such an unnecessary charge. And you're right. we all we all become become guilty paying this thing that we don't really need to pay for. So yeah, I'm really excited. We have a special guest joining us to talk all things loyalty tax, what it is and how to avoid paying it. But before we get into that, as always, let's talk money news. Dan, what headlines have been captured your attention related to money this week.
Dan Jovevski 02:19
Some research from uBank suggesting it's controversial, but younger Aussies are better than saving the baby boomers. So according ubec, about 70% of millennials are more likely use a budgeting tool compared to about 66% of baby boomers as a tactic to save money. And it was an encouraging sign from the researchers that younger Australians are prioritising saving, which you know, I think dispels a lot of this. This flies around young millennials Gen Z's not being you know, good with money. The research is telling you something different. What did you think about it?
Blaize Pengilly 02:53
Oh, I have so many thoughts on this one. So that the title is literally that like millennials, better savers than boomers right. And you mentioned the comment about the apps. First of all, as a millennial, yes, I use an app for budgeting. Because my parents who are baby boomers don't know how to I got a phone call just yesterday, I'm from my father asking me how to attach something to an email. So there's no way that he's out there using a budgeting app, you know, like he wouldn't be able to operate it. So of course I do. I do understand, you know, we're very much more tech friendly. So I can understand definitely why more Millennials are more likely to use apps and boomers. And then when it comes to the saving part. I mean, I can only speak from personal experience, but I think so COVID obviously changed the world and the way that we operate. For me personally, I'm not sure if I've admitted this on the podcast before. I've told you many times that I'm not that great with money. But literally until COVID happened last year, I had no savings. I had no emergency fund, I would live payday to payday. And that's just how I thought people lived. I did not know any better. And then when COVID happened, I was sort of hit with this harsh reality that oh my gosh, Blaze your paycheque is not the key through the next, however long when you've just lost your job due to COVID. And that is so stressful. So COVID for me was definitely a catalyst in going wow, I actually I need my own backup plan. I can't just keep calling on my parents when I need it when something goes wrong, you know. So for me, that was a big change and becoming I have become a saver since then and you know, started managing my finances better, which I'm really happy about. And I'm wondering if you know, millennials, we've talked about it before they're moving away from credit cards, they move more towards options like afterpay if Millennials are coming becoming better Savers, that's awesome. And I'm excited to see that change. I would be really curious to see if you know other people have been impacted by COVID like I Have when it comes to their mindset around money?
Dan Jovevski 05:03
I agree with you Blaize. I think you're totally right. I think there is a form of necessity here for younger people to save or given circumstances, completely different generationally from baby boomers that's spot on. And I think your story is one of many Wow, that's a really inspiring vignettes of people who have responded to circumstance, and really done Awesome, awesome work with managing their financial lives. So it's, for me, the big thing that I got out of it is just positive all round. For all parties doesn't matter what age you are really your Zoomer or a boomer, I think it's really good that the, the increased focus on people understanding their money is increasing. And you know what? I don't know about you Blaize. But I think budgeting has become cool. I think it's become, it's not per se more like going out and spending your your paycheque week to week, we will be through those situations in life. And for those who say that they don't, you know, you're the lucky, very rare few for us, or the mean mortals that are living out there that have experienced bunny shoes before, which is a vast sum of the population. I think they are awakening to their life. You know what spending a lot of money on things that we don't need. It's not It's not cool anymore. And people are really focusing by their own backyards, which is awesome to also to say. So I'm glad that we're dispelling the myths day by day about this avocado on toast generation. Yeah,
Blaize Pengilly 06:25
I still love my avocado on toast. But you know what, now I've got an emergency fund. Now I'm doing some micro investing. I'm taking baby steps and it's exciting. So yeah, well, the research from you bank that was really interesting. If you have if you're a millennial, or a boomer or a zoomer or whoever, and you were impacted by COVID, I'd really interested to see how your budgeting or saving has changed if your personal finances have been impacted by COVID. Send us a message on Instagram at get we money. And if you're a millennial that thinks you're a better save and then a boomer, we'd love to hear from you too. I think it would be interesting to hear some more stories on this topic. Absolutely. All right, Dan, let's bring in our guests. It's time to talk loyalty tax.
Dan Jovevski 07:07
Let's do it Blaize
Blaize Pengilly 07:14
Dan, you know, I love my pop quizzes. And I think this one's pretty simple. But can you finish this sentence? One thing in life is certain.
Dan Jovevski 07:27
death and taxes.
Blaize Pengilly 07:29
Yeah. You nailed it. But not all taxes, which is why we have a special guest joining us today. So joining us today to delve into the realm of loyalty tax and how to benefit from your life is a man with over 30 years of experience in marketing, mostly in areas of b2c b2b advertising, direct loyalty and digital, his co founder to startups get reminded, which is an app that reminds you of recurring purchases, and repeat booking, which is a platform for small and medium sized businesses. He joins us now tuning in via the internet from Sydney. Welcome the co founder and director of Get Reminded it is Tim Nicholas. Hey, going, Tim.
Tim Nicholas 08:17
Thank you. Good morning. Blaize. Good morning. I'm going well, looking forward to this chat.
Blaize Pengilly 08:22
Yes, as I my team, you know, it's death and taxes are certain. But the loyalty tax? We've talked a little bit about it on the show before. But what exactly is a loyalty tax? The lazy tax isn't really a tax. Could you define it for us? And tell us the various names for this phone pseudo tax that a lot of people ended up paying?
Tim Nicholas 08:46
Yeah, thanks, guys. Look, it's not a tax in the traditional sense, it won't appear on an invoice or, or any piece of paper or document where you make a purchase. It's really, actually more like a what we call a premium the existing customer would pay when they don't question the annual payment that they're about to make on an insurance policy or a mobile phone plan. So when that renewal time comes around, if you just accept the price that the provider gives you without stopping, questioning, looking to see what else is available in the market, chances are you're paying over the odds. And that differences is kind of what's colloquially called the loyalty tax. A lot of providers know that switching to another provider can be can be difficult in some industries in some circumstances. So there's a little bit of providers trading on the basis that people just won't have the wallet while at work make the time and the effort to look around and switch to another provider. They also believe in some respects that if they're offering good service, or maybe a reasonably good price, that again, the consumer won't make the effort to look because they're getting what they need from their current provider. So when that all sort of gets added up, it's like, Okay, I'm getting what I want. I feel like I'm paying, you know, a sort of a fair price, so I'll just keep paying it. And that's where you can get stung and pay a little bit too much. I kind of like to refer to it as the apathy tax. You mentioned Blaze, the lazy tax, apathy is potentially another word, because it's usually paid when a customer is a bit apathetic about all the costs, that they're paying for a range of household goods and services. So if you're a little bit apathetic about a lot of these things, the chances are, you're probably paying a loyalty tax somewhere along the way,
Dan Jovevski 10:41
in terms of just quantifying how much people pay on the loyalty tax. What sets Do you guys have in terms of what is the quantum what's the what's the amount that people actually overpay on certain products?
Tim Nicholas 10:51
Yeah, well, when you look at the numbers, they can be kind of scary, they can be very large. So there's been a couple of government studies, a Triple C studies that have looked into this 2019, there was a New South Wales Government study, they actually said that about 10 million Australian households, which is probably more than half right, are affected by insurance related loyalty tax. In that context, then I put $1 figure on it. And I'm not kidding, I have indicated that this could be costing policyholders over $3.6 billion. So that's, that's, that's, and that is just an insurance module that is not across all these other categories where it does apply. In the banking industry. A similar sort of scenario where the RBA in 2020 actually did publicly state that lenders were charging many borrowers a loyalty tax, and they were urging homeowners to shop around and this is when 2020, if you recall that interest rates, especially on home loans, were really coming down at a rapid rate. The APR ceded a home loan price inquiry in late 2020. And they actually qualify that by saying that if you're on a home loan, and you had your loan for less than a year, the differential might be quite small about point 3%. But then they sort of tear it down to people who have a home loan of over 10 years. And that differential was extended to over 1%. Now, 1% doesn't sound like a lot on a home loan. But as we know, every percentage point total of that the the less you pay, the less you're being charged, the less your overall home loan is going to be. So if you've got a loan over 10 years old, and you're probably just sitting with your bank and not stopping and thinking, you know, could I be on a better rate, chances are, you're paying more than you should be. So especially right at this moment, when home loan interest rates are at record lows. So that that's sort of specifies you know, where insurance and loans and banking where people just sticking with their current provider, and they're paying above the odds, the general research that we see indicates that about 75% of Australians stick with their current service provider across a range of all these services. So the majority of people are sticking with an existing provider, probably paying too much. And, you know, like you guys, it's all about being on a mission to help consumers be aware, and be more knowledgeable, and give themselves the opportunity to start shopping around the industries that they really are, if you've got a service in these industries that you are on a contract, you really need to shop around. And that's energy, that's mobile, it's insurance, and it's banking, with banking, it's especially loan products and home loans in particular. So in a nutshell, there's a lot of money at stake, there's a lot of money going back into providers pockets that could be coming back into consumers pockets. And that's what the loyalty tax really does mean, in dollars and cents for people.
Blaize Pengilly 14:07
If we're ever paying in so many of these different industries. Why are we doing it? Is it because we're lazy? Is there any, like underlying psychology as to why we end up paying is it? Is it that we're being tricked by these providers? Why is it that we so often end up overpaying? Is it a lack of knowledge? What what's the driving cause? Do you think?
Tim Nicholas 14:30
Yeah, well, look, I think you've touched on a few of them that are, you know, valid for a whole range of different people and because, you know, human nature is what it is that we all act in different ways when it comes to these sorts of things. And, you know, people will react differently to, you know, getting a speeding fine, or, you know, being late for a meeting. So it's the same sort of behaviours, how do you train yourself to ensure you don't speed or you Don't get late for leading, in the case of this loyalty tax concept, there is a large degree of apathy, apathy and laziness that does exist out there. But I also think there's a degree of shyness or anxious or nervousness on the part of people to actually make that phone call and talk to a provider and ask them for a better deal. Right. So that is a little bit intimidating for for a lot of people. And we'd encourage people to, you know, look for techniques and ways to be able to overcome that, that that type of behaviour, you've also got this other factor, which is probably more of a, you know, 21st century thing is that we're all so busy, and we've got so much going on in our lives, and, you know, short attention span. So our whole being is being sort of, you know, bombarded with the, the world around us and our daily tasks and our big commitment. So in a lot of respects, I think, you know, people just push it to the back of their mind, it goes to the back of the drawer, and then pay, they just don't, you know, the time is up to make that payment, and they go, you know, damn, I'll just do it, don't even stop and think about it. Because to give themselves, the time to do that little bit of extra shopping around, is, is kind of time they don't have or they don't want to make for themselves, so they don't do it. So, you know, so you've got these real combinations of factors going on. And for some, it might be a couple of them. But for other people, it may be just simply one of them. And one of them is the driving force behind why they're not shopping around.
Blaize Pengilly 16:43
Yeah, well, I suppose you know, it comes down to a lot of convenience. It's convenient to just keep doing what you're doing, because nothing has to change. And then I mean, as a millennial, this is me speaking for myself, but also to, you know, there's a meme at the moment where as a millennial texting someone back and then they start receiving a phone call, and they freak out and fight, throw the phone away, because we don't like confrontation. So you know, I suppose there's the element of it's convenient to just stick with what you're doing. And then also, if you want to avoid the confrontation of going, Hey, I think I might actually be paying too much, or, hey, I think I could be getting a better rate, you have to sort of have the right tools, I guess, to approach either your current provider, or a new provider to find yourself a better deal as well. So convenience and confrontation would probably be major ones holding people back from getting themselves a better deal. Yeah,
Tim Nicholas 17:33
it's a nice kind of alliteration, the convenience of it and the confrontation of what am I you know, how am I going to cope with this circumstance? And that confrontation might be an internal one, you know, you kind of tussling with your own emotions and what you've got going on in your life at any given time. So, yeah, it's, it's an interesting one, and getting helping people to get the tools to be able to manage this, I think is something that is a really valuable opportunity.
Dan Jovevski 18:02
The more I think about it, I mean, this this topic of lazy taxes being covered by We Talk Cents and talked about extensively by the people. And I think if you really take some of those numbers 3.6 billion on insurance, we know here at WeMoney, that that 75% of people are we paying on personal loans, that 85% overpaying on home loans. This is a massive amount of money that Australians are excessively paying where they could be spending that money doing better things in their life. And to your point that you've just touched on when the technology is making things a lot easier for people to get a better outcome or even understand the mouth of overpaying with their current providers. Tim, before we get into the steps to negotiate a better deal, I just wanted to take a pause here and maybe ask you a question. What does this mean for the industry? Do you think as the ease of looking at better deals and switching around? What is this going to mean to the business models, some of these providers because their business models rely on people paying lazy tax? If we don't pay the tax, some of these businesses may not survive? What do you What's your thoughts on that?
Tim Nicholas 19:08
Well, I mean, they're big businesses then and really, you know, we're talking about, you know, multiple multinationals or national corporations that make a lot of money anyway, so even if for argument's sake, you know, if even if we could help the 10% of the people to look at getting a better deal, I don't think it's going to affect the bottom line of those businesses too much. What I do think though, it's going to make those customers potentially more loyal to their existing customer, their existing service provider, because if they, if they do, you know, contact their existing provider and they do manage to negotiate something better for them, I think that engender is more loyalty and it's really all about, you know, how do you how do you keep those existing customers not spend, you know, so much money time effort, marketing to acquire new ones when you've got already quite a large and successful cohort of existing customers. So, at the end of the day, you know, the pool is still going large or the the our populations growing, you know, everyone is, is doing the same sort of things. We still need banking, we still need mobile, we still need energy. It's just getting potentially dispersed across a few more providers. But look, personally, I can't see the business model of those those big providers being challenged by this, I think it might knock some of the cream off their their profit margins, but I think the cake is still a pretty sizeable cake for them to just to stay in business and operate profitably and successfully.
Dan Jovevski 20:40
We can stop eating cakes, and maybe just starting instead.
Tim Nicholas 20:45
Yeah, that's right. Yeah, exactly.
Blaize Pengilly 20:49
Tim, it's interesting how you mentioned about customers becoming potentially more loyal through this process. And I would say so, a couple of episodes ago, we discussed phone plans and whether or not prepaid or postpaid was better value. And I'm a prepaid gal. And I actually took that episode as an opportunity to go hang on, am I getting the best deal with my phone plan, contacted my provider did little bit of research realized I wasn't on the best deal, even though when I signed up, you know, five years ago, I was I went on the web chat. And we you know, within 15 minutes I had, they'd offered me a deal that wasn't publicly available. I was saving $10 a month, which is $120 a year, which was fantastic. And after it, I came out feeling like a total winner. I was like, heck, yes, I don't really have to do anything that automatically changed it for me. I'm saving money. And now I'm definitely on the best deal because I did my research. And I feel more loyal to that company. And I'm more excited to be part of their company, even though they were just ripping me off a little bit, you know, so it's an unusual thing in your brain, but I still feel like a winner I'm like, extra 10 bucks every month you know, I can invest that or buy myself a milkshake so it's it's interesting. the psychology behind it I find
Tim Nicholas 22:05
You've encapsulated very well Blaze, he really has your particular circumstance just sums up the the problem of the law to tax on the one hand and the potential solution on the other end the feeling that you get if you come through that, and you've actually achieved something that saved you a bit of money.
Blaize Pengilly 22:24
Yeah, it would have been nice. If you know, if I worked for them. I would be suggesting that they contact their customers like myself and go, Hey, Blaize, you've been really loyal? Why don't we offer you a better deal rather than me having to initiate it like that would have made me an absolute number one their biggest fan? But I still feel like I've won even though I did have to approach the myself.
Tim Nicholas 22:47
Yeah, I think that's the missing ingredient. Actually, what you just touched on was they won't contact you, you do need to make the effort to reach out to them.
Blaize Pengilly 22:55
Yeah, if they did that, Oh, my gosh, I'd be probably getting the logo tattooed on my head be their biggest fan. So when it comes to actually, when it comes to stopping, paying the royalties act, say you want to negotiate a better deal? What are the steps? How is it best to approach your current providers? Is it best to look elsewhere? straightaway? What are your suggestions on on cutting it out? And yeah, how often should you do so?
Tim Nicholas 23:26
Well, firstly, I'd say just everybody should realise and accept that asking for a lower price or or what's your best deal kind of question shouldn't be something to be embarrassed about. Like it's not, it's not a thing where you know, you're in the, but in the in the adverse position, you have to be confident that you are the customer, and is the customer, you actually do have a degree of power in that relationship, even though they might not want you to get the sense that you do so, you know, carry that confidence with you when you make the contact? Secondly, I'd say and you touched on this place before is work out what is the probably the best deal for the circumstances that you're on. And across all of these different providers, banking and energy and mobile, we all have our own usage patterns. So really understand what your usage pattern is, and do a bit of research to find out, okay, on that basis, what's the best price out in the market, because if you don't understand the value of what you're paying, then it's really hard for you to actually understand whether you're going to get good value when you go into any kind of negotiation. That's kind of like a basic of negotiating tactics. And if you've done that research, again, like you, you describe those, you can be in a position where you're actually going to be able to compare apples and apples because you need to know some of the industries don't make it as easy as It could be for you and energy's fallen into this trap over the years and you know, paying for, you know, off of peak and peak and in what time does that kick in and, you know, your usage across those different time zones, that can be a little bit tricky to work out perhaps. So they've they've definitely, there's been some moves to make that as a simpler kind of understanding for the consumer. So you need to be able to compare apples and apples. And then then thirdly, it's about how do you want to choose to connect to your providers. So Blaize, you talked about live chat, and really, that is becoming in the last few years, a much more set, much simpler way of contacting an organisation, because you don't have to have the potentially the intimidating phone call, I'd always say the phone calls the best and most direct way to get an answer. Because you can, you know, sit there with a couple of notes and ring up and talk to someone and and hopefully that person can can answer your questions and get you through to, you know, the deal that you want, but live chats popular, it also allows you to do a little bit of online checking whilst you're on live chat. And that's another slight advantage of live chat, because you've got a bit of a grace period to answer questions, whereas on the phone, you feel like okay, I've got to have my answers ready to go every with every question. But life can have a little bit more flexibility to if you learn a little bit of information to just go and do a bit of checking, perhaps on the company's website or another website. And look, lastly, always start by talking to your existing provider. And again, Blaize, I think you did this, he talked to the current service provider and see what do you like and offer you because if you don't have to move, you, you really are a bit more of an advantage, because you don't have to go through the whole setup account setup process with a new provider, which is the handing over of personal information to another company, if you can stay with whom you are life just a little bit easier, and also less time in the in, in the mix for you to to save the money, you can save $10 with the current provider versus going to a new provider to save $10 you know, you know, without any question, without a shadow of a doubt, it's better to say that $10 with your current provider, because they've already got all your details, they just changed your account plan. and away you go, you haven't had to do any more. Switching, of course, involves a lot more effort, which if you can avoid. And I think you know talking about how to negotiate it's really that post negotiation, satisfaction level, that that high that you get when you walk away going, you know, I've just saved myself a bit of money. I feel I feel better in myself, I've achieved something today. And the sun shines a little brighter when you do that.
Blaize Pengilly 28:00
Tim This reminds me of we had a we had a guest from Scott work, which is a negotiation consultancy in our episode 12. So if you haven't listened to Episode 12, do listen back because it was a really fantastic episode. He taught us negotiation tactics, and one style that he did that I really, really liked and has stuck with me and I've used his he blames a third party. So he said, if you're nervous about approaching and you want a better deal, say wanting your home loan, he goes, you know, call up, Hey, mister bank, my wife has seen that bank z has has this much better Home Loan Rate. And she really wants me to switch but I said to where Give me a minute, let me call the bank and see if I can find a better deal. Because then he in that scenario, he he's providing the solution. And he's blaming the problem on his wife. And I'm not saying we should blame our problems on using that tactic was a good way to you know, relieve the anxiety of doing it yourself. And also you're providing a solution to the provider, which I thought was a really unique and pretty clever way to approach a negotiation deal
Tim Nicholas 29:07
is that's a very clever way. And I mean, you can make it even simpler by saying that, you know bank Zed is harassing me to go with them, and they keep offering me this deal. But I want to stay with you. What can I do? What can you do for me? Without you know, bringing someone else into that picture? Why? You can just say, you know, this other provider, I keep the I've got my email address or phone number and they keep offering me a deal. What can you do? So there's a few different ways that that actual phone call or that that connection can be can be made. And I think people feel like they need to do it. If it's a phone call. If they're on live chat or they're sending an email, perhaps you don't need as much background to why you're asking. It's just I'm asking for but if you if you're talking to a live person, it might make you feel a little bit Lower eddies Bye, bye bye the sort of intro to a thing yet something else is going on in my life, can you help me,
Dan Jovevski 30:08
I actually remember doing that with my current telecommunications provider, I went to the online chat and I thought, oh god, he's adrenaline going to kick some call center in an intimate detail that could remove something number, and other all mine. And it took about 10 minutes. And at the end of it, I was shocked, I was going Hang on. This is this is there's gonna be some type of catch here. But it was incredibly easy and painless. So the more more companies do that, Tim, is it anything? Is it anything that you can't negotiate?
Tim Nicholas 30:36
Well, I think he can't, he can't negotiate. If you're, if you if you're looking around and going, Well, actually, I'm in the best position that I think I can be. And I think it's more about your own circumstance, I, I can't find a better deal out there. So there's no real point to do that negotiation. The other thing is, where if you've got multiple products with one provider, and they're already saying, hey, Tim, you know, you've got product day with us, and B, and C. So we're giving us this lovely discount, I don't know that it's probably you're in a position to go back and say, Well, I want more off. Because you are actually already been given, you know, some level of loyalty discount, which was actually kind of a yin and yang thing here. Loyalty tax, we've been talking about loyalty discount comes in, where a lot of, say insurance companies you've got, you can have multiple insurance products with them. And they are giving you a good discount. And you do think I am you are being rewarded for, you know, buying more than three policies with them. So that's probably a position where you might not, you know, really be in a position a strong position to go and negotiate something less.
Dan Jovevski 31:57
It was good to make sense, Tim. And sometimes you can, you can push you
Tim Nicholas 32:03
can push, it's good. But you know, there's an old adage, right, that they can only say no. If you want to ask, you should ask
Blaize Pengilly 32:12
if no is the worst thing that can happen?
Tim Nicholas 32:14
No. Yeah. Like, if you're not afraid of no, maybe that should be the title of this. Do not be afraid of no.
Blaize Pengilly 32:21
Yes, I love it. If you're not afraid of no, you may as well ask because you could be getting yourself a better deal. And no, it's nothing to be afraid of. Because everything just stays the same as it currently is. So you can either get a no or you can get, it can be better.
Tim Nicholas 32:35
Or you can walk away feeling pretty happy with yourself.
Blaize Pengilly 32:37
And if you do get a no, you should still be proud of yourself for taking the initiative to and having the confidence to approach your provider. And also taking the initiative to be better with your finances, and to find yourself a better deal. So really, if you do get a no, it's still a win, because you've still done something for yourself. Because you're going out, you're putting yourself out there for it.
Tim Nicholas 32:59
Absolutely. And that no, today might be a yes from someone else tomorrow. So if you've got the confidence to ask, When the time comes on each of the different, you know, service contracts, you've gone. It one no doesn't mean everyone else is gonna say no.
Blaize Pengilly 33:15
Which is awesome.
Tim Nicholas 33:17
Blaize Pengilly 33:18
When it does come to checking, is it something that so I mean, we've we've spoken a lot about things like insurance and phones, which are either paid, you know, monthly, or they usually annual premiums, how often should you be checking to see if you're, if you're if you can get a better deal? Is that something that you set a date in the calendar for and you check every policy on that day? Or is it every time it renews how like, what's a good way to go about checking when, when you can be getting a better deal, it will differ based on the relationship you've got. So
Tim Nicholas 33:53
a number of contracts and policies on an annual renewal rollover basis, and the price may change when it hits that that renewal date. So you absolutely need to know when that is. Some things are on a rolling, you know, just auto debited off your credit or debit card, they're just paying per month, and they keep the price up maybe on an annual basis or or ad hoc basis. And therefore, there's no potential or there's no actual hard renewal date. But you absolutely should be conscious of I need to just do a little checking, say in a year's time when you sign up to see whether you're still using it, whether the price is still the same whether it's still value for money for you. If you're on a really long term arrangement, such as alone over many years, then that's that's almost one way you kind of set and forget it because you just keep paying it off every every month for whatever the cycle might be. And then The you just don't think about, well, am I paying over the odds? So you really do need to create some sort of personal habit of in two years or in four years, I should check this. So, you know, it's going to be different for everybody. And it will extend over quite a different time period based on the different commitments financial commitments that you've got. With Tim,
Dan Jovevski 35:28
a lot of this little lady, we talked a lot today about pick up the phone. Right? Have you conversation 2030 minutes, when who has got 20 to 30 minutes these days? You know, I certainly. And I'm sure a lot of others find out as well. And what really sort of boil these problem down to its core essence, you know, these the friction involved in the pain and the anxiety to go through the steps to get a better outcome? Because it was so simple, right? Just imagine a world where it was only a click to Cuba outcome, you'd have to speak to anybody, you didn't have to do anything. Just imagine, just imagine how many people will be going out there and clicking like crazy to get better outcomes?
Tim Nicholas 36:11
We're not in that will. That is the his absolutely consuming Avada. But it doesn't exist?
Dan Jovevski 36:19
Not yet. Not yet, Tim. And And I'm just wondering, this is an important point where you've, you've raised a lot of key items, around points of friction inertia of the institutions, banks, telecommunications companies, Internet service providers, all relying on the initial review, just paying out the director but not being able to do much. But to get a better deal, it does take a bit of effort. What tips do you have for people to overcome this inertia and this friction in this process of getting a better outcome?
Tim Nicholas 36:53
The number one tip is to know when the right time is to make the phone call or give yourself that 1015 minutes. And if you can allocate that almost, I guess, on a monthly basis, you you will you will get ahead. Some some industries have actually made it a bit easier to switch in recent years. And generally, that's been through government legislation, the mobile phone companies. In particular, if you recall, once upon a time, you couldn't take your phone number from company to company wouldn't take the same device from company to company. They are legislation came in to really enforce the mobile phone companies to accept your phone except your number. And you can bring your own number to any phone company nowadays. So those sorts of things have happened in the insurance space, they've been forced to, or they're now starting to be forced to put the cost of last his policy onto your renewal policy so that you can see the differential right now that's a really big thing. Because if you didn't know what it was you paid last. So if you can't go through that little effort of scrolling back through your your credit card statements, or your your bills, whatever, to find out what you paid before, then you actually are not being made aware. So the real tip is to know what you've paid the last time. And I think the next most important tip colour length goes back to that research that is to really understand your usage pattern. And if you know what your usage pattern of all these different things are how you pay off your loan. You know, how you use energy, how your phone, how you use your phone, how many shows you watch on some streaming service, A, B, C, and D and D if you've got them all in your house, you know, one of them might be lying, sitting there dormant, never never touched. So understand your usage pattern. And then you'll be a little bit more savvy about which ones you can either cut altogether or negotiate try and negotiate a better deal. That was a long term product like a loan. The tip is got to be you must keep an eye on it. If you're just watching through the media general reporting about where interest rates are at what they might do. Are they going down? are they likely to go up? What's going to happen next year? Are there fees time? I know that's not something that's in the conscious most of most people, but they do talk about it in the media. And you do need to have your alarm radar sort of going to get up there's my homeland, maybe I should be thinking about that. And then get around to do something about it. So force yourself to do it, put a diary note in put a time into a calendar that says I need to do this then the government legislation is starting to move in the consumer side you but it's been a long, slow process. And they've been somewhat dragged kicking and screaming to do that because the big service providers have resisted it for so long. But we asked while we're getting there, in terms of reducing friction points, making it easier to switch energy is a good one nowadays. If you want to switch energy, you literally can Do it with with a few clicks, few tell the new energy company you want to go with them, tell them your account details of you previous think they can do it pretty, pretty well for you without too much effort on your part. So look for some of those frictionless switching opportunities. And that'll also help to make it a less painful situation if you are going to change.
Blaize Pengilly 40:21
So in summary, today, we have discussed a lot about loyalty tax today and how to get out of it and, and all those sorts of things. So in summary, a lot of us what was the stats was at 70% 80% 75
Tim Nicholas 40:36
to 80% of people just sticking with their current provider.
Blaize Pengilly 40:40
So the majority of people are overpaying and not getting the best deal from either their current provider or the best deal in the market. So the best way to do is negotiate with your current provider. Be polite when you're negotiating, because you're probably not speaking to the person that made the policy, you're probably speaking to someone through a phone call or through a web chat that has no real power on what policy, what the policies are. Don't be afraid to ask. Because if no is the worst thing that can happen, then so be it. But you might get a much better outcome if you if you have the confidence to go out there and ask. And then if you can't get a better deal, shop around, save yourself dollars, because that money that you're paying the extra money is better off in your back pocket than it is with an organisation. Would that be an accurate summary of all things loyalty tax, Tim,
Tim Nicholas 41:32
that's a very good summary. And the the sort of the thought to leave you within that way is that when you've made that call, and you've got that discount, or you've got that rebate, you kind of get a lot of personal satisfaction out of it as Blaize. You experienced? Yes. So there is really a good outcome here that you are going to feel a lot better. And if you've done it a few times, and you've added up a saving here and a saving there and it turns into three, four or $500 saved over a year. That's absolutely a worthwhile outcome.
Blaize Pengilly 42:07
Yeah, for sure. Get the party popper on standby because you will want to celebrate if you've had a successful win in negotiating yourself a better deal. Thank you so much for joining us today. It has been really fascinating learning more about the loyalty tax. If our listeners want to find out more about you or get reminded where can they go?
Tim Nicholas 42:27
Thanks place. So get reminded is a free app on the apple and the Google Play Store. Get reminded is the app that is going to help you start saving some money on loyalty tax, because the whole idea of get reminded is for you to have one app that you can put the future date, expiry date or review date of all of those service contracts that we've been talking about for energy for mobile, for insurance, for Polo, for loans, etc. so that you get a nudge you get a little message on your phone and email it says hey, it's time for you to review and renew that particular policy contract or document.
Blaize Pengilly 43:09
Your awesome second reminder, the handy tools sought to remind you when you should start shopping around so you can avoid paying the loyalty tax.
Tim Nicholas 43:16
Yep, so to get reminded on the app store, or go to get reminded.com.
Blaize Pengilly 43:21
Beautiful, Tim, it has been a pleasure having on the show. Thank you so much for joining us.
Tim Nicholas 43:27
My pleasure. Appreciate the time. Thank you Blaize. Thank you, Dan.
Dan Jovevski 43:30
Thank you, Tim.
Blaize Pengilly 43:33
This podcast is produced by WeMoney. WeMoney is a financial wellness app. It's free to download and free to use and helps you manage your money better. Dan, what have you been using in the WeMoney app this week?
Dan Jovevski 43:48
In the WeMoney app this week, I have been scrolling up or down the community feature. And I've been looking at everybody who's come out of school holidays and topic up again for back to school items, which has been pretty amazing seeing the awesome mums of WeMoney. Talk about their back to school halls and getting getting expired inspired from all that one. So that that's what caught my eye this week.
Blaize Pengilly 44:12
If you want to check out the community WeMoney feature or track your own spend, or you'd like help budgeting if you're one of those millennials that would like to use a budgeting app like we mentioned in the news earlier, feel free to give away money ago. You can download it from the App Store or the Google Play Store. And if you use the code word podcast on download, you'll get $5 when you collect an account.
Dan Jovevski 44:41
Thanks for listening to another instalment of We Talk Cents. We'll be back again next week with another instalment of some money news and an awesome guests. If you would like to learn more about way bunny or download the app, you can do that right now by going to the Google Play Store or the Apple App Store. And if you use the code referral code podcast You'll get $5 for signing up.
Blaize Pengilly 45:02
If you'd like to get in touch or have any questions about the show, or any feedback, we love hearing from you. So please send us a message via Instagram, which is at get we money. I'll chuck a link in the show notes so you can reach out directly. Until then, I hope you have a fantastic week ahead and we'll catch you next time for another instalment of We Talk Cents. See you later. See ya bye
The author is not a financial advisor and the information provided is general in nature and was prepared for information purposes only. This article should not be considered to constitute financial advice. Accordingly, reliance should not be placed on this article as the basis for making an investment, financial or other decision. This information does not take into account your investment objectives, particular needs or financial situation.