A simple - but not always easy - key to becoming financially independent is to spend less than you earn. The fact that less than 15 per cent of Australians can do that is proof of the lack of financial literacy in this country. But it's not fair to put all the blame on people's lack of financial savvy - they are targeted by companies relentlessly pursuing their discretionary dollar from all sides. The marketing keeps changing, but the principles do not. Credit cards were bad enough, but they do at least give the option of paying the balance in full each month to avoid charges. The latest trap is buy now pay later (BNPL). BNPL schemes work on the principle that you buy something today and pay for it over the next few months. You might also like: But like credit cards, every BNPL is actually designed to get you out of your financial depth. And there are no credit checks at all with BNPL schemes, so irresponsible spenders, who would usually be saved from further debt by their bad credit rating, can be dragged even further into debt by BNPL. Worse still, the latest idea gaining traction is that it's not fair for a worker to have to wait 14 days to get paid. Now, plenty of organisations are offering to let you get your pay in advance and on demand. One advertisement shows a couple dining out in an expensive restaurant ... the guy chooses something cheap because he is broke, until the ad shows him how to get his salary immediately and spend up big on the menu to impress his date. Their website says, "There's no interest or hidden fees. Just a 5 per cent fixed transaction fee and flexible repayments, with instalments across four pay cycles." Let's do the maths on that. Suppose somebody borrowed $1,000 with repayments over eight weeks - the fee would be $50 for a loan of $1,000 for two months. That's the equivalent of paying $300 if you took the loan for a year (just multiply by six), or an effective interest rate of around 30 per cent. American Express is the latest entrant to this grubby world with the launch of Plan It. The spiel is: "Remember using lay-buy to hold an item you wanted to buy? With Plan It™, you don't have to wait! Take home that new outfit or gift right away, then pay it off in equal monthly instalments." It is touted as an interest-free product with a low monthly fee. Their website includes a do-it-yourself calculator, which tells me that $1000 paid off over 12 months would require a monthly instalment of $93.74, made up of a principal repayment of $83.34, and a $10.40 "plan fee". In simplified terms, that means you pay $124.80 to borrow $1000 for a year. According to my loan calculator that's an effective rate of 22 per cent; it's worse than what they charge an overdue credit cards. Don't kid yourself! Credit cards, BNPL and advance access to your pay are all expensive ways of spending money you don't have. This is the very opposite of keeping something out of everything you earn. The reality is that when you borrow, you are spending money you don't have, and committing future income to repay that loan, and more. It's an expensive way of mortgaging your future. If you can't live on your present income, how can you possibly survive on a future income that is reduced by loan repayments? Once you get trapped in debt, it typically takes a huge effort to get yourself back on track. Don't fall for it! If you don't have the money to buy it now, wait until you do. Your future self will thank you. Question I am 61, my wife is 55. We have about $700,000 in superannuation between us and are looking to sell the family home and then downsize to the Sunshine Coast where we both have jobs to go to. The move will enable us to add around $200,000 to her super which means we would have a new home worth $1.5 million and about $80,000 in cash. If I retire at say 65, and my wife keeps working, do I regard myself as an individual for a pension, as she is not retired, or are we a couple? We need about $80,000 a year to live on. Do we make up the shortfall between what we need and what my wife earns by making regular withdrawals in super, or should we just start a pension from my super fund? Answer For Centrelink purposes you will be regarded as a couple, with all your assets included irrespective of ownership. The exception is superannuation, which is not counted until your wife reaches pensionable age. It would therefore be prudent to talk to an advisor as your retirement gets closer and work out how much money should be held in your wife's superannuation and how much money in your own. You will be tested under both an asset test and an income test, but given that of your financial assets would be held in your wife's superannuation you're most likely fall under the income test rules. Therefore, her income may be the deciding factor. Question I'm a single 64-year-old female with limited superannuation. I have an inheritance of $190,000 and a mortgage of $223,400. I am a nurse but presently unemployed and receiving income support due to a hip replacement. Should I pay the whole amount into my mortgage or put some in super? Selling and downsizing is not an option. Answer Given your age and the fact you are unemployed, I think depositing most of the money into your mortgage would be the best strategy. Just make sure the amount is treated by the bank as "repayments in advance" which would leave you the freedom to make withdrawals back out of the loan account in the future if necessary. Question My wife and I, both aged 60, have a self-managed superannuation fund. We both retired earlier this year. Now I've been asked to consult to a company, not my previous employer, on an as-required basis. Due to the nature of the work it is hard to predict how much income it will produce. My wife will be employed by me. Are we allowed to start an account-based pension even though our income is irregular, and we may stop work at any time? Answer You have reached your preservation age and having retired and satisfied a condition of release you can access your current superannuation without restrictions. There is nothing to prevent you returning to the workforce in any capacity you wish, and you are free to draw your current superannuation by an income stream, or by lump sums. Contributions cannot be made to a fund in pension mode. This would require the setting up of an accumulation fund inside your SMSF. Keep in mind that any superannuation made after you start working again is preserved until you stop working once again or reach 65. Given you have a SMSF, getting professional advice is essential. Question I am a 52-year-old Australian citizen with an Australian passport, now living in the United States. I have not worked or lived in Australia since 2005, however I do still maintain a postal address and bank account. I do have a question about qualifying criteria for early release of funds from a super account. I am wishing to liquidate my HostPlus Superannuation account and recently reached out to them enquiring whether the funds in my account can be released prior to maturity and if releasing said funds, will incur any penalties. HostPlus replied with a very comprehensive response, but I am still unsure if I am eligible. There did appear to be a loophole. I am gainfully employed in the United States, upon request, a letter of employment, my postal and residential address, my United States resident Card (Greencard) and Social Security information can all be provided if required. Answer Superannuation expert Stuart Forsyth says you are not eligible to withdraw your super under this condition. The loophole you mention is for people on temporary work visas and the amounts paid to them are taxed by the fund when they are paid. You are an Australian citizen and therefore you were not a temporary resident holding a visa when you built up your balance. You could possibly have applied under the Covid release rules, but it is now too late. You have to satisfy HostPlus that you have met a condition of release, which may require you to wait until you are 60 or 65 depending on your situation at the time.