'I lived on noodles and mouldy bread to avoid bankruptcy.'

Sarah Nulty, a twenty-something, independent career girl went from enjoying her amazing life, to living on noodles and mouldy bread to avoid bankruptcy. “It was a very different world back then in terms of lending responsibilities and requirements of the banks.”

“They could give finance out to whoever they wanted.” including to Sarah, who ended up with several loans amounting to tens of thousands of dollars.

It was 2002, and Sarah says she didn’t understand money At all.

“We didn’t learn about money at school, and it wasn’t something I was taught at home.” Still, her single mum did her best, working two jobs just to put food on the table. “So she was very careful with her money, but she never taught that to us. I think she wanted to protect us from that, so she didn’t have those conversations with us.”

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Sarah Nulty is a financial advisor, who almost went bankrupt at a young age, inspiring her to become a financial planner.Stresses the importance of educating daughter Annalise (six years old) on the value of money. Sarah started teaching her daughter from age four, gives her pocket money ($6 per week) in exchange for chores. They are also CommBank customers, with Annalise also a Dollarmites account holder. 

Sarah says she finished school, got a full time job straight away, and the next thing she did was get a loan. “I wanted a car which wasn’t fully insured, it was only third party insured because as a teenager I didn’t want to have to part with any more money than I had to.”

That was the first loan, a personal loan for around $8000, which was closely followed by another loan for a better car, bringing her debt level up to $13,000, followed by a credit card.

Why did she get a credit card? “Because I could,” Sarah says. “It wasn’t like a wanted a credit card, I was aware of them, I just wanted more money than I had.”

“Because, of course, I was independent, pig-headed, and wanted to move out of home as soon as I could. That meant paying rent, groceries and everything else and I just didn’t earn enough to support myself so you get into credit cards.”

It was a move to Melbourne that exacerbated her financial problems, with the higher cost of living landing her in approximately $28,000 in debt on an annual income of around $36,000 working as a bank teller.

Soon, Sarah had trouble paying all of her bills. "It was spiraling. And that was the thing that got me to near-bankruptcy. It got to the point - especially credit card debt - it's just getting out of control and you can't even meet the interest repayments."

"Before I knew it I couldn't afford to pay my rent, I was a couple of months in arrears, and I would come home and I would have a letterbox stuffed full of letters that I just refused to even look at, they just stayed there."

She'd also written off her car in an accident and was therefore servicing the personal loan for that vehicle, even though it was gone.

Her "bottom" was having to leave her home, sleep on a friend of a friend's couch for a few weeks, but says what saved her was the fact she worked in a bank - the Commonwealth Bank at the time - and she had access to a lot of amazing advice. "Because I was young, I was only 22, all the women in the branch looked after me like they were my mother."

Sarah says they helped her consolidate all her loans into one affordable payment. "That was the only thing that saved me. Otherwise I would have gone bankrupt. And I hadn't told my mum because God knows she didn't need the stress of it."

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The risk is, after consolidating debt, is ending up in even more debt, but Sarah says she was scared straight due to how poor her quality of life became while she paid off that debt, working two jobs and subsisting on "noodles and mouldy bread".

Sarah says by the time she met her future husband she was in much better shape financially. She was earning more by then and had even bought a house with her mother. Then, much to her horror, she found out her boyfriend was in financial strife himself due to a failed business and problems with a business partner.

"I was able to help him get out of his bankruptcy," she says.

That's why their family is so cohesive financially. "We're both pretty cautious now - and in saying that I do still have debt, it's not like I avoid it, I have a credit card, I have a large mortgage and I have a car loan but I manage them all very well."

Their daughter Annalise, now six, is learning a lot about money from her now-financially savvy parents. Sarah uses a system of buttons to reward her daughter for doing chores and she can then redeem them for rewards.

Annalise also has a school Dollarmite account which teaches her to save in exchange for non-monetary incentives such as reward points for her school.

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