Barefoot Book Week!

Hi Scott, 
 
Book Week time again and Barefoot was the only person Hamish wanted to dress as! He has read Barefoot Kids and is now nearly finished your original Barefoot Investor book. He has all his buckets and a great plan. Keep inspiring my kids, please!
 
Nicky

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Hey Nicky,
 
I absolutely love Book Week (and Father’s Day).  
 
Every year I get kids who dress up as me (well, except for my kids, who think I’m super embarrassing).
 
Please thank Hamish for reading both books, and let him know that I think he’s a legend.
 
(And a shout-out to all the other kids who had a Barefoot Book Week too.)

Scott.

Mum Won’t Give Me $30,000 Because of YOU, Barefoot

Hi Scott,
 
My mum is withholding a $30,000 inheritance for me from my late great aunt because she thinks I wouldn’t use it the ‘Barefoot way’. I’m a 26-year-old woman, living with my partner, and we have money of our own saved up for a house deposit. I told my mum that, if she gives me the $30,000 from my great aunt, I would also put it in our high-interest savings account to earn interest until we buy a house. But she says you would tell me to invest it in shares or use it to pay off my HECS. Is that true? Until I agree to the ‘Barefoot Way’, she’s not going to let me have it.
 
Olivia
 
Hey Olivia
 
Order! Order!
 
Judge Barefoot is in the house. Please all rise, while I give the verdict:
 
In the matter between you and your mother, I find in favour of …. YOU!
 
You are up to Barefoot Step 4: Buy Your Home, so you should definitely put the inheritance towards your house deposit savings in an online saver.
 
Once you’ve done that, you’ll move up to Step 5: Increase Your Super to 15%. That’s when you’ll be tax-effectively investing long term into the share market via your low-cost super fund.

Well done, and please say g’day to your mum for me!

Scott.

Screen-free Sunday

Dear Scott, 
 
I wanted to let you know we were impressed with Screen-free Sunday and have instituted it for the second week running. (Though my kids point out that it should be followed swiftly by Mum-free Monday!) I just can’t get over how many families don’t do it, and I suspect it’s because many parents are attached to their devices too. In fact, that’s what is revolutionary about Screen-free Sunday – everyone has to participate!

Kelly
 
Hey Kelly
 
Congratulations!
 
We’re still doing it as well – and, like you, loving it! The only problem we’ve encountered is when the Melbourne Demons are playing an away game. My daughter is very much a stickler for the rules, which means we have to listen to it on the tranny!

Scott.

How I Keep It Hot in the Bedroo

“Why am I so hot?” said Liz, bolting upright in bed the other night.
 
“Perhaps it’s early menopause?” I giggled back into the darkness.
 
Silence.
 
I could feel my wife’s (mental) temperature rising.
 
“I bought us an electric blanket,” I confessed. “It’s pretty toasty, right?”
 
“That is such an old person thing to do,” she said, rolling over and giving me a warm shoulder.
 
Truth be told, this night had been a long time coming. You see, I have PTSD from staying over at my grandparents’ house when I was a little tacker. As Nana would turn up the wiry electric blanket, my big sister would hiss at me, “Remember, if you wet the bed tonight you’re going to electrocute yourself”.
 
From that point on, I slept with one eye open.
 
Thankfully, I’m over that now (plus, I figure I’ve got another 25 years till my prostate starts playing up), so I’m good to go.
 
Yet there was one real problem:
 
Electric blankets are known to cause fires, which is quite terrifying really.
 
So how do you find a good one? (I mean, one that won’t take you from toasty to toasted.)
 
Well, I bought the Dimplex DreamEasy Electric Blanket, which cost $75.
 
Why?
 
Because the Dimplex scored the highest rating from CHOICE testers, and they don’t give them out easily.
 
They looked at heaps of electric blankets and put them all through a series of safety, comfort and electrical testing, which included taking thermal images to see how they disperse heat, measuring energy consumption (mine will apparently cost $61 to run through the 92 days of winter), and even building a custom-made rig that simulates 5,000 cycles of the cord flexing and pulling under a weight of 10 newtons (around 1kg).
 
Then they performed a current leakage test. ZZZZT!

Contrast this to the reviews you get from the Wild Wild West (aka the World Wide Web).
 
A report from the World Economic Forum (WEF) found that writing fake online reviews is a well-organised multibillion-dollar business. In response to this, in 2022 alone Amazon blocked more than 200 million suspected fake reviews and Google blocked or removed more than 115 million. Yet now artificial intelligence is being used to write fake reviews en masse and pollute the internet.
 
So here’s my take:
 
The sort of in-depth testing that CHOICE does across 200+ categories – without getting a kickback or even a freebie from the manufacturer – costs a lot of money. And that’s why I’m happy to pay my $84 annual membership. Not only does it save me hundreds of clams each year, it also keeps me warm in bed each night!
 
Tread Your Own Path! 

Au Pair? Au Contraire!

Hi Scott,
 
I’m 19, au pairing in the UK and preparing for a three-month backpacking trip around Europe. Living the dream, right! Except that by the time I get back to Australia I’ll have just about used up my savings. I have this little voice whispering in my ear that I should be working towards setting myself up for the future, and travelling definitely doesn’t feel like I’m doing that! I have an index fund and I save as much as possible, but I am having that classic existential crisis of what the bloody hell to do with my life now! And by ‘now’ I mean when I go back to Australia (and reality). So, what snippet of wisdom do you have for me, Scott?

Mindy
 
Hi Mindy
 
You know that little voice whispering in your ear?
 
It’s a very good thing. Most broke people don’t have that voice (instead they have advertisers and influencers whispering in their ears).
 
However, I don’t think you should listen to it for the next year or two. Fact is, you’re only 19 once, and this is your time to go out and experience all the amazing things this world has to offer.
 
Case in point: I often employ backpackers to work at my farm … they camp at the shearing shed, sleep in their vans, eat on camp stoves and have cold showers. Yet they look at me with my wife and four kids, and the basketball, ballet and cricket practice … and pity me!
 
When you’re travelling you’re growing as a person, both from gaining a more worldly perspective and from learning how to make your money stretch, which will pay dividends throughout your life.
 
My view?
 
Don’t bank dollars, bank experiences for the next few years. Australia will still be here when you get back!

Scott.

Holy Moly!

Last week I challenged you to do ‘one thing’ towards what you’ve been putting off, and then email me and let me know what you did.
 
Strike me pink!
 
Sitting back on the farm, tapping this little note each week to you, it’s easy to forget how many of you there are out there in the wilds. (My inbox got absolutely destroyed … in a good way.)
 
Here are some of the things people have got off their rumpus and done:
 
“I’ve been a stay-at-home mum for almost seven years. My ‘one thing’ is I’ve now enrolled in TAFE to reskill myself”, says Tania.
 
“I got suckered into a high-pressure sales pitch for a super fund years ago. I knew it was a bad idea, but I felt so ashamed and stupid that I just ignored it. This week, I called them up and transferred to AustralianSuper”, said Paul.
 
“I’ve had the Vanguard Aust app on my phone for close to 12 months, but fear of the unknown has stopped me from doing anything. Now I’ve transferred $500 from my savings to Vanguard and will invest it in their International Shares Index Fund. It’s a pretty exciting feeling to be a first-time investor”, says Billy.
 
“I have made the list of outstanding debts and paid the first one off – the dreaded credit card. Already a sense of relief has washed over me. One small step but a step in the right direction nonetheless”, says Tom.
 
“I quit my executive role and took a $50,000 pay cut to be with my family more – and I couldn’t be happier!” says Linda.
 
“We have spoken with our bank and reduced our mortgage interest rate by 0.5%, as well as changing our repayments to fortnightly instead of monthly. It costs nothing and will saves us $$. Small steps, but they all help”, says Daniel.

“For years we felt we were inseparable from the hooks sunk into us by our financial adviser. But not today. We sat down with a known, trusted and experienced fee-for-service professional who was able to clearly lay out a pathway to extract ourselves from our SMSF (and cut some very expensive ties with our existing adviser)”, says Col.
 
“Today, after your email, I’ve decided to do a digital detox on my phone. I’ve deleted the three key apps that lead to 3.5 hours a day on the phone screen”, says Susan.

Bingo Bango!
 
Thank you to everyone who wrote in. The answers have had a deep impact on me (and my kids … I’ve been reading some out at the family dinner table). We have so many amazingly determined and inspiring people in our community. I’m still reading through them all, and I look forward to reading about your wins too.
 
You Got This!

Do this one thing for me

Howard Marks is one of the world’s greatest investors.
 
He’s so influential that Warren Buffett says that whenever Marks writes anything he stops what he’s doing and reads it immediately.
 
Late last year Marks wrote about a major ‘sea change’ that he believes will change everything:
 
“In my 53 years in the investment world, I’ve seen a number of economic cycles, pendulum swings, manias and panics, bubbles and crashes, but I remember only two real sea changes. I think we may be in the midst of a third one today.”
 
That sea change is what we’ve experienced this year: sustained higher interest rates.
 
Marks argues that the last 40 years of falling interest rates have provided investors with a wonderful wind in their sails. And, as a consequence, many people still believe that interest rates of 2% are normal.
 
They are not.
 
Inflation has put an end to our smooth sailing. Rising interest rates means we’ll soon be moving into much more treacherous waters.
 
So what does all of this mean for you?
 
Well,you need to understand that the economic winds are now blowing against you (and all of us).
 
So let’s focus on you, and where your ship is heading.
 
Yes, I’m talking to you.
 
You’ve been putting off making that financial decision, right?
 
Perhaps it’s selling that dud investment property … or downsizing from your current place.
 
Maybe it’s reaching out to your super fund’s financial advisor about your retirement … or making the call to get a better home loan rate.
 
Hopefully it’s to sell your Dogecoin … or perhaps it’s calling the Small Business Debt Helpline (1800 413 828) to admit you haven’t paid your business taxes and ask for their help.
 
Heck, it could even be to finally make the ultimate (diamond ring) investment.
 
You may tell yourself that it’s not the right time, or that you don’t have all the facts, or that you’re too busy.
 
Yet deep down you know they’re all excuses.
 
So, whatever you’ve been putting off, I want you to do something – anything – towards it this week.
 
Call your bank. Break up with your stoner boyfriend. Buy some index funds.
 
And then email me at scott@barefootinvestor.com and let me know what you did (big or small).
 
I promise I’ll read it.
 
So go on, name your ‘one thing’ you’ve been putting off, and then set sail!
 
Tread Your Own Path!

What Drugs Are They Smok’n?

Scott,

I struggle to relate to the questions you get. A couple earning $160,000 a year can’t save 20% for a deposit, or a single mum edging up to $100,000 a year is struggling financially. What kind of expensive neighbourhood and lifestyle are you readers living?
 
I’m lucky if I earn $50,000 a year, and we are a single-income family with five young children. Yet we have been able to save up a 20% deposit and have purchased a house, which we are currently renting out (yes we have a mortgage that will take years to pay off, we just didn’t over-capitalise).
 
We travel the country in a little pop-top caravan, homeschooling our kids while I work online. I don’t believe in sponging off the government either, so we don’t put our hand out for welfare payments.
 
You don’t need to be earning big bucks to have a valuable life in this country, and kids don’t need to go to some posh school or have after-school care to get educated or be successful. Being able to spend time with those you love is what makes you truly rich.
 
Darren
 
Hi Darren,
 
You’ve discovered what a lot of people eventually work out when it’s too late:
 
Debt enslaves you.
 
And that if you can avoid being in too much debt you’ll be happier.
 
Life is short, and the time you have with your kids is even shorter.
 
You Got This!

Scott.

You’re a Total Jerk

Scott,
 
Your answer to last week’s question from the 90-year-old man, wanting to see whether he should implement your financial plan (‘Old Dog, New Tricks’) would have to be the most insensitive, egotistical slap-back I have ever read in your column. The man is asking a question about finance, not asking for family therapy. He genuinely wants to get a sense of purpose, build his nest egg, and still feel there’s a reason to go on. Telling him to focus on his family and friends not only doesn’t answer the question ... it implies: “What’s the point of looking forward? You’re nearly dead anyway.”
 
Angie 
 
Hi Angie
 
My answer to the old fella’s question was the most insensitive and egotistical thing you’ve read in my column?
 
Hold my beer.
 
So you think the reason for him to go on is to … make more money?
 
He already told me he was financially secure. His problem – which he admitted to – is that he’s nearly dead.
 
That’s life. He’s probably not buying long-dated milk these days!
 
Yet what you got right is that he wants a sense of purpose. And that’s why my financial advice was – where it is prudent – for him to give away some of the excess money he was planning to leave in his will to his loved ones while he’s still alive. That way he gets to watch the joy and hear about the experiences his gifts bring.
 
After all, Angie, we all want a sense of purpose. Some people get it by giving away money to their loved ones in the golden years of their lives. Others get it from writing angry emails to strangers on the internet.

Scott

I Don’t Pay My Best Employee

Today I want to introduce you to the best worker I’ve ever had.

His name is Robbo, and he started working for me about six months ago.

Each morning I get up at 5am and head over to the barn to start work … yet I’m always beaten by Robbo, who’s already well into his workday, quietly getting the job done.

Robbo is the nickname I’ve given to my robot mower.

When I first got Robbo, a landscaper mate of mine mocked me:

“You paid a grand for that thing? Geez, they saw you coming!”

Today he’s the one eating grass. My lawns look like a freaking bowling green.

In fact, they’re actually a little too good. People either think we have a full-time gardener, or that I’m that manic neighbour who edges his path and keeps plastic bottles on his lawn to ward off weeing dogs (you know the guy).

If you read the reviews on robot mowers they’re almost universally positive. “Why didn’t I get one of these years ago?” they say.

Probably because they weren’t invented. They’ve been around since the nineties, but they really took off a few years ago, mainly in Europe, where there are millions of them.

My prediction?

Jim’s Mowing needs to sharpen up their offering.

But don’t weed-whack me, Jim! It’s just that I can foresee that robot mowers will gradually fall in price … and in a few years you’ll have one.

That’s because they’re essentially a plastic Tonka truck (about the size of a vacuum) with a $6 cutting blade, powered by the same 20-volt battery that goes into your cordless drill.

All you need to do is lay down guidewire around the perimeter of your yard (or not – the latest robots do this automatically via GPS). It’s all hooked up to an app on your phone which assesses rainfall and calculates the growth rate of different sections of the grass (via artificial intelligence). Then it works throughout the night cutting a few millimetres off your grass with each turn (which acts like a fertiliser), before it heads back to its charging base.

For me, it means I can spend more time with my kids (who really should be mowing the bloody lawn themselves!). In fact, I’ve just now hired ‘Rodney’ – a robot vacuum – to work night shift at the barn.

Tread Your Own Path!