Love Me Two Times, Baby

Hi Scott,

I am 24 and earn a good income. My partner and I are getting serious, but she owes $12,000 ($10,000 car loan, $2,000 credit card) and this is annoying me as I have no debt. I am looking to use $10,000 from my savings ($70,000 in total) plus $2,000 from her next paycheque to pay off the debt. I see this as the best option so we are able to save her entire income and increase our savings for our first home. But I am also worried that, even though she says she has learnt her lesson, she will not lose those bad habits. What would you do?

Matt

Hi Matt,

You’re certainly getting serious … 12 grand of serious!

Look, there’s absolutely no way I would pay off her debt. As in none. No way. Uh-uh. Talk to the hand.

First, because what happens if you guys break up?

That’d just be awkward.

Second, because it would rob her of the opportunity to prove how serious she is about buckling down and paying off her debts herself. If she makes a go of it, that’s a good sign. And if she doesn’t, that’s probably a good sign too.Good luck!

Scott

My Son is $120k in Debt … and Wants Me to Save Him

Dear Barefoot,

Twelve months ago my wife and I separated, so I am now ‘starting again’. We have nine children, and my eldest son has asked me to go guarantor, or have a joint loan, so he can consolidate his $55,000 credit card debt. He also has two personal loans amounting to about $70,000. He earns about $120,000 a year, and I earn about $100,000 myself. I gave him your book for Xmas but I fear it is not enough. His situation is crushing ‒ what can I do?

John

Hi John

You have nine kids?

That’s very impressive. I have a 66 percent fewer kids than you, and my life resembles the Teletubbies.

Now, with nine kids you’re in danger of setting a very expensive precedent by bailing out your eldest. Even if you could afford it, I still wouldn’t recommend it. Your son is in desperate need of a life lesson, and if you go the hook for him you’re denying him that opportunity (at best) and screwing yourself financially (at worst).

It takes a lot of guts for a parent to sit back and let their children learn from their experiences. Be courageous.

Besides, your son’s problem isn’t the interest rates he’s paying — that’s merely the symptom. His problem is that he has out-of-control spending. The sooner (and more brutally) he works that out, the sooner he’ll start behaving like an adult, take responsibility for his actions, and move forward.

There are no magic wands, but all the answers he needs are waiting for him in the book you’ve already given him.

Scott

GoFund My Lifestyle!

Dear Scott,

A young relative of mine, a single mum with a one-year-old, is in such a bad state that she posted her financial hardship story on a ‘crowdfunding’ website. The only donation she got was from her own mother — which (to me) says her mum is happy for her daughter to beg! She owes money for bills, a car and other things — and has even been to one of those debt companies you see on TV that ‘help’ you pay your bills, but to no avail. I genuinely want to do something, but I have learnt from trying to support her mum over the years that you can’t help those who won’t help themselves. So I am writing to you to get some constructive advice. I can’t sit by and watch her become homeless!

Nadine

Hi Nadine,

So you’re annoyed that her mum took your hard-earned money and started weeing it up against the wall!

Now you’re wondering if the apple doesn’t fall from the tree.And you know what? You’re probably right.

However, if you genuinely want to help this young woman, you’re going to have to really connect with her.

So, let’s you and I look at life from her perspective:

She’s a single mother, deeply in debt, unable to pay her bills, and now resorting to begging for a buck. Trust me, she doesn’t need your judgement — she’ll be judging herself more harshly than you ever will.

The bottom line is that she’s scared she’ll never get out of her situation … just like her mum.

What she really needs more than anything (much, much more than a handout that enables her bad behaviour) is someone in her corner who truly believes in her. Someone who believes she has what it takes to eventually dig herself out of the hole she’s dug herself into. Right now she probably believes it’s a hopeless situation.

So take her out for coffee and show her page 189 of my book. It’s a profile of a single mother who I nicknamed ‘Mojo Mamma’ . This young mum was once all alone, with thousands of dollars in debts, and trying to escape a bad family. It took her years of hard work, studying at night, and scrimping and saving.

But she made it.

And today that woman is one of the strongest people you’ll ever meet.

Even better, her young son is going to grow up knowing how much of a fighter his mother is. Now of course your support and encouragement may not work … but how amazing would it be if it does?

Scott

I’m Freaking Out Here!

Hi Scott,

As I write this, the Dow Jones has suffered its “biggest fall in history”. They are saying on Sunrise that our market will plummet today. I feel physically ill. I am 62 years old, earn $110,000 a year (I work in logistics for a government department), and am due to retire in three years — or at least that was the plan until today! I feel so stupid. This was the year I was finally going to sort my super, work through the steps in your book, and get on top of it all. But have I left my run too late? What should I do? Help! I’m panicking.

John

Hi John,

Thanks for your email, which brilliantly captured the madness of Monday’s market.

It’s like you wrote it on a plane just as the oxygen masks fell from the ceiling: “Captain Kochie says the market’s plummeting!”

But then after a few scary bumps the pilot’s voice comes over the PA saying “sorry about that, folks, we just hit some unexpected turbulence; everything is back to normal now”.

So adjust your tray table, resume your in-flight viewing, and notice that Kochie has gone back to dancing with the Cash Cow.

Okay, enough with the analogies.Monday saw some brief market turbulence, but there will most certainly be a crash at some stage.

That’s because, historically, the Australian stock market crashes every 10 years or so.The good news is that it’s not too late.

What I’m saying, John, is that you need to harness the fear you were feeling when you wrote me this email on Monday, and make sure you strap on your financial life jacket right now.

Here’s what to do:

First, get rid of any debt you have. Interest rates have never been lower — but that won’t always be the case. The time to get out of debt is right now.

Second, get rid of any dodgy investments you have. They fall into three camps: the ones your brother-in-law talked you into, the ones you’ve borrowed money for that aren’t paying their way, and anything you don’t understand. Ditch ’em.

Third, my advice to anyone over the age of 60 who is preparing to strap on the sandals and socks is to start aggressively building up three to five years of ‘Retirement Mojo’ — a cash buffer of living expenses. (If you think you’ll get a pension or part-pension, that’ll reduce the amount you’ll need to save to reach your buffer.)

Better yet, put it on autopilot — contact your super fund and request that all future super contributions go to a cash and fixed interest investment option.

Why would you do this?Well, my old finance professor called it ‘sequencing risk’ — which is a fancy way of saying that a market crash in the final years leading up to your retirement has a significant impact on the future income you can generate from your nest-egg.

I learned this first hand in 2008 when I saw many retirees watch in horror as their super got smashed. What did they do? They sold out at the market bottom … and locked in their losses.

Think of last Monday as a test-run, John. When the real crash comes, you want to be able to say yourself: “That’s Day 1 — it’s a good thing I have 1,825 days (five years) of living expenses set aside to ride this sucker out.”

That way you won’t end up having to rely on the Sunrise Cash Cow!

Scott

I Was Robbed … by the Police!

Hey Barefoot,

I have managed to rack up a large sum ($15,000) in parking and speeding fines. Not being able to come up with the money, I tried to pay fortnightly, but the ‘hardship’ rate was unreasonable; and when it caused food to be taken off my table, I refused to pay. I have not driven for three years now, and the sum has magically jumped to $25,000. I am helpless to argue for a justified repayment plan or a fair total, and the lack of licence is destroying my career potential. I feel robbed by the WA Police!

Nick

Hi Nick,

Fair suck of the sav, cobber! The only person robbing your career is the hoon who racked up 15 grand in fines, and then couldn’t cough up the dough (even on reduced ‘hardship’ terms).

Also, there was no magic involved with your fines jumping $10,000. If you google “what happens if I stick my thumb in my mouth and don’t pay my fines for three years?”, you can clearly see the escalating fiscal repercussions of your decision.

So there are two pieces of advice I’d give you:

Call the National Debt Line on 1800 007 007 and see what your options are — there may be a chance for you to do community work to pay off the debts, if you have no other means.

And, most importantly, sit down and make a life-changing decision. Are you going to play the victim for the rest of your life, or are you going to take responsibility for your actions and make something of yourself?

Or let me put it another way, sport. If you keep avoiding the problem, there’s every chance you’ll wind up with a free pair of striped pyjamas, enjoying an extended sleepover with a bunch of other thumbsuckers.

Scott

‘Zero Balance’ Is a Trap

Hi Scott,

I need your help as I am 34, on maternity leave and near broke … though still inspired by my five-month-old baby. I should be secure, relaxed and focusing my energy on the bub (despite the sleepless nights). The trouble is, in my 20s I racked up credit card debt to the value of $7,000. Years ago I took out a ‘zero balance’ transfer to another bank and it has now grown to $17,000! I am ashamed, but have come clean about it with my partner. He just handed me your book and I am now in ‘debt domino’ mode, gradually paying it down on my $88,000 wage. But what else can I do?

Natalie

Hi Natalie,

Well done for facing your debt demons. Trust me, everything gets easier from here.

Doing the Debt Domino (paying off your debts smallest to largest) will build up your self-confidence while systematically knocking down your debts.

However, before you start knocking down the dominoes, I’d like you to check how long it’s been since you made a repayment. Reason being, if you haven’t touched it for six years you may find that it’s a ‘statute-barred’ debt and you may not be legally required to repay it (note: your credit rating will be shot if you don’t pay, but that will eventually go away too).

Now, do me a favour and pass me over to your partner. Go on, do it. I’ll wait. Hey, Champ!

Well done for giving your partner my book -- it’s a great first step, but you need to do more.

See, this amazing woman is not only the mother of your children, but your partner in life. You need to work together on knocking out these debts as a team. There’s only upside for you: first, you get out of debt quicker; second, you build strong financial habits that will ultimately change (or prune) your family tree; and third, you’ll have a happier wife … and a happier life.

Scott

Burning Through the Bucks, Baby

Dear Barefoot,

I am 35 and engaged to the most generous guy, who I love. But we have spent $31,000 in two months! We earn $330,000 p.a. combined and have equity of $850,000 in our two properties, which we will sell next year so we can get a nice home with a small mortgage. Recently I did an audit and found we had spent $31,000 on … nothing! Meals out, weekends away, events at home, clothes, bond, removalists, some double rent for a period. I want to be debt-free in five years. Kick us up the pants!

Amanda

Hi Amanda,

Honestly, on your income you probably don’t need a kick up the pants -- you’re going to be fine ...… so long as you continue earning $330,000 a year. But if the money dries up, things can go into reverse pretty quickly.

It’s a three-step trap that I’ve seen plenty of high-income earners -- doctors, lawyers, footballers -- fall into:

First, buy expensive toys (boats, cars, and cash-draining McMansions).

Second, spend like a Kardashian -- and only invest in money-losing ventures that ‘lower my tax!’.

Third, get hit with one of the big D’s: divorce, disease, disability … or a downturn where you lose your income.

It’s more common than you’d think: recent research from Digital Finance Analytics (DFA) found that 30,000 households living in wealthy suburbs like Sydney’s Vaucluse (median price $4.5 million) and Melbourne’s Brighton (median price $2.6 million) are at risk of defaulting on their debts.

Truth is, wealth isn’t what you earn, it’s what you save.You want to impress me?

Don’t humblebrag about the $31,000 you’ve peed into your Prada handbag over the past couple of months.

As financial philosopher Shania Twain says, “That don’t impress me much”.

Instead, buy a house you can afford, pay it off, then show me your plan for how you will eventually replace some of your income through passive income, i.e. your investments.

Thank-you for reading.

Scott

My Partner’s Secret Debt

Hi Scott,

I have read your book and love it. Using your formula I have already paid off a long-term debt. Unfortunately, my partner and I have separate finances (her choice) and I recently found out that, in the time I paid off my debt, she racked up another for twice as much. Frustrating! We both earn OK incomes (combined $200,000), but are still renting at age 37. As we have three kids, I really want to get into our own home in the next four years … how do I convince her?

Jake

Hi Jake,

Uh-oh.

So you two have made the ultimate commitment -- three puppies -- and yet she’s still keeping you in the kennel when it comes to sharing her bank account with you?

As Dr. Phil would say: “Hmmm”.

And now you want me to tell you how to convince her?

Honestly?

I only have one party trick. I wrote about it in my book. It’s called a monthly Barefoot Date Night.

And I can tell you that, over 450,000 copies later, it works unbelievably well. Not only will it get you on the same (financial) serviette, but you two will be stronger and happier when you’re working towards a shared financial goal -- especially when it’s something as amazing as buying your own family castle.

That’s how I’d sell it to her anyway (and then I’d bribe her with great food and wine).

And if that doesn’t work?

Well, maybe it’s time to stop talking and start watching: after all, money talks and bulldust walks.

I’ve learned that if you want to know what someone values, look at what they’re spending their dough on.

So the question is, Jake, what’s your partner spending her dough on?

Scott

Chasing Ghosts

Hey Scott,

I am a 32-year-old soon-to-be father (with my beautiful fiancée). In the past, my spending was out of control, causing me to rack up $55,000 in credit card debt and a huge car loan. Now all of that bad debt is history and we will soon be settling the purchase of our first house in the suburbs. But I feel that the ghost of reckless consumerism still lingers in my past. How do I stop this poltergeist from infecting my children and plunging them into a life of bad debt?

Nick

Hi Nick,

You’re not the first bloke who was a little loose when he was younger. And you’re also not the first bloke who has cleaned up his act in the face of the impending Triple Ms (marriage, mortgage and midgets).

My view?

You’ve clawed your way out of a heap of debt and got yourself in a position where you and your fiancée are buying a home for your family. There’s nothing loose about any of that, mate. Besides, the fact that you’re admitting you’re packing your dacks about the awesome responsibility (and privilege!) of providing for your family tells me you’re up to the challenge.

Finally, remember it’s not your money anymore. It’s your family’s. You’re not a single bloke, you’re a team! So do the Date Nights I speak about in my book -- once a month get a babysitter (or grandparents), take your wife out and, over a glass of wine, make joint decisions about your finances. It’s one of the best things you can do for your marriage -- and your stress levels!

Scott

What’s a Girl with Bad Credit to Do?

Hi Scott,

In my early twenties I had a drug addiction which resulted in me having my car repossessed and taking out huge loans I could never repay. Three years on, I am in a reliable job (earning $55,000 p.a.) and have paid off all my debts. However, as you can imagine, I have terrible credit. I want a chance at buying a house, but what’s a girl with bad credit to do?Please help! 

Tegan

Hi Tegan,

You’ve been able to beat drugs and you’ve been able to repay your debts, so I have no doubt you’ll eventually buy your own home. You’re a fighter!

I’d suggest you grab a copy of your credit report (go to www.checkyourcredit.com.au and following the links to get a free file sent out in the post) and make sure any debt you’ve repaid is marked as ‘settled’. If not, you can ask your creditor to do it for you.

Honestly, though, there’s no way to ‘clean’ your bad credit file, despite what those dodgy ‘credit repair’ companies claim. It’s really a waiting game: overdue accounts and defaults drop off your file after five years, while more serious matters last for seven years.

What’s done is done. Instead, focus on increasing your income and boosting your savings. You’ve got this!

Scott

Should I Dob in My Brother to the Cops?

Dear Scott,

For the last year or so, my younger brother has been doing some online share trading. Long story short, he has lost it all -- hundreds of thousands of dollars. In the process he has nicked money from some of my family members, which has wiped out their savings. He even took a loan out in the name of a family member without them knowing! Given he is family, is it better to keep this amongst ourselves or to involve outside parties?

Hamish

Hi Hamish!

‘Nicking money’ is like $20 from your mum’s purse. You’re talking about wiping out their life savings!

That’s not nicking, that’s fraud. And the fact that your mother used to change his nappy doesn’t change the fact that he’s committed a crime.

It sounds like he’s an addicted gambler, yet rather than sitting in front of a pokie screen he sits in front of a trading screen. It’s the same thing (and has basically the same odds).

What would I do if I were in your shoes?

Well, I’d tell your brother that he needs to do three things: first, he needs to get legal advice (and so should your family, even if no charges are ever laid. It will bring home the gravity of what he’s done). Second, he should get professional help for his addiction. Third, when he’s sorted out, he needs to start repaying the family debts by getting a job and earning some real income.

If he doesn’t do these things, I’d consider handing the matter over to the authorities.

Good luck.

Scott

The Day I Got Pregnant ...

Hi Scott,

My partner and I married in April 2016. A month later it came out that he had massive debts from online spending. He had lied to me for the last 10 years. We had counselling, and he proceeded to pay off everything except a BIG debt of $40,000 (he runs his own business and earns $150,000 a year). Money is still a major issue, though he says paying off the debt is priority number one. Now, unexpectedly, I am pregnant, with around $10,000 in savings. Yet the day I confirmed my pregnancy with the GP, he bought an $800 briefcase. I am terrified -- what can I do?

Vickie

Hi Vickie,

If he’s earning $150k in his own business, he’s obviously no dill -- he’s just depressed. His spending is a symptom of that depression. However, by deciding to have a family with him, his out-of-control spending is now your problem too.

So if I were in your situation, I’d sit down and call him out on his bulldust: he’s got a problem, and he needs to deal with it:

First, by getting help from a professional (call Beyond Blue).

Second, by working with you. From now on you share the one joint bank account, you have an equal vote on where the family money goes, and you have a regular monthly Barefoot Date Night where you plot and plan and scheme about all the things you’re going to do to secure your family’s future.

Let him know you believe that he has it in him. Then hold him to it.

Scott

The Day Our Lives Turned Around

Hi Scott,

In December last year -- after struggling with personal debt of over $55,000, no job, and rent that had zapped my entire savings -- I took a train into the city with my wife (who had been holding the fort for us both on her $80,000-a-year job). We walked around for the whole day and decided something had to change -- WE had to change. So we bought your book. Seven months on and, for the first time ever, we are in control of our lives. We now spend a lot less, I am in a great job, and we have already killed $14,000 of the debt. Thanks, mate!

Lucas

Hey Lucas,

What an epic story. It’s simple to buy a book, it’s easy to read it, but it’s a lot harder to actually act on it. And that’s what you’ve done and that’s why you deserve all the credit.

Enjoy the date nights mate!You got this!

Scott

Why Young Women Are Miserable

The email subject line simply read: “Crisis”.

It was from Jess, a 26-year-old, university-educated Melbournian who wrote that her life was “a disaster”.

Her email was brief, punchy, and melodramatic. Just the way I like ’em.

She also left her mobile number, so I gave her a call … at 8.51 pm on a Thursday night.

Barefoot: “It’s Scott Pape, the Barefoot Investor.”

Jess: “No way.”

Barefoot: “Way.”

Jess: “You’re calling about my email?”

Barefoot: “Yes. Apparently your life is a disaster.”

Jess: “Well, that’s how it feels. I’ve got about $6,000 in debt across three cards that I can’t ever seem to pay off … and I hate my job.”

I spent the next 15 minutes talking Jess off her $75,000-a-year ledge.

Why Young Women Are Miserable

Seriously, if I had a dollar for every broke young woman who emailed me … well, I’d have enough money to pay Jess’s debts off.

Yet it turns out that this runs deep:

This week the National Australia Bank (NAB) released its quarterly wellbeing index and, shockingly, it found that young women aged 18 to 29 are the most unhappy people in the country.

To be more accurate, the survey found that young women have the lowest wellbeing score of all the 48 groups surveyed, and that almost 50 per cent of young women reported they suffer from high anxiety.

Anxiety is worrying about stuff that hasn’t happened yet.

And, like Jess, a lot of young women look into their futures and see a lot to be worried about: they’re living through a unique time in Australia’s history where houses are severely unaffordable, debts are at record highs, and they’re getting married later.

Women are biologically inclined to seek out safety and security — eventually most women (but not all) will want to have children. And that explains why the NAB survey found that one of the biggest positive impacts on overall wellbeing and happiness is having your own home.

And if you can’t see a way of achieving this, it creates a lot of anxiety.

The Triangle of Happiness

The big shift for me happened a few years ago, when I lost my own home.

It was the first time I got it — in my gut — just how important safety and security are to happiness.

Deakin University Emeritus Professor Robert Cummins says the key to wellbeing is what he calls the ‘golden triangle of happiness’:

You need to have a sense of purpose.

You need to have strong personal relationships.

And you need to have a sense of financial control.

The research clearly states that money doesn’t make you happy, but it also shows that not being in control of your finances will make you very unhappy. In fact, Professor Cummins and his research team found that financial insecurity produces similar feelings to those of physical torture!

Cummins found that low-income earners who rated themselves at least an 8 out of 10 for being in control of their finances were far happier than those who were earning substantially more but rated themselves as not as in control of their finances.

Raising Strong, Financially Fearless Women

On paper Jess looks the goods:

She went to a private school.

(“We paid for her to go to a good school … we did our job!” say her parents).

She got good marks in Year 12, went to university, and graduated with a degree.

(“She got good marks … we did our job!” says the school).

Yet now, five years later, she’s tearing up talking to a total stranger about how her life is “disaster”.

Here’s the rub: at no stage of her education did anyone teach her how to manage her money, introduce her to the spirit-strengthening power of saving, or sit down and explain just how amazing the opportunities in front of her are.

And that’s why I’m so very, very passionate about shaking up the current schooling system — kicking out the credit card floggers and their ‘edu-marketing’ (Hello Cred!), and bringing honest, empowering financial education to girls (and boys) in our schools. And I’m going to do it. You just wait and see.

Tread Your Own Path!

The Slippery Slope to Ruin

Barefoot,

A few years ago I was on a high income, with $60,000 in savings for a home. But after being made redundant two years ago I have blown so much money gambling. I have been sliding down the slippery slope to where I find myself now, on a low income struggling to pay my credit cards and personal loans (which I used to be able to service comfortably on my income). I have $40,000 in credit card debt, $12,000 in personal loans, and around $20,000 of other debt. Should I seek access to my super? If not, what can I do?

Max

Hi Max,

Let me guess: you got caught up in sports betting, right?

The number of young men in the same boat (and the betting companies actively target young blokes) is frightening -- it really is the new pokies.There are only two winners out of this devastation: the gambling companies, and the government (via taxes). For its sins, the government trickles a bit of their winnings into gambling crisis services, which can help with your all-too-common situation. You’ve paid for their services over and over again, so call them on 1800 858 858.Now, you may be able to access your super based on financial hardship. The minimum you can get is $1,000 and the maximum is $10,000, and you can only make one withdrawal in any 12-month period.

However, you shouldn’t, for a couple of reasons: first, if you still have your addiction (or you relapse), you could end up gambling it away. Second, without any assets, it’s highly likely you’ll be advised to go bankrupt, and if that happens, your super will be protected.So repeat after me: “I will NOT access my super.”

Max, you already know that the odds are stacked against you. All you can do now is fight.

To see what that looks like, read on.

Scott

We’re Waging a War!

Dear Scott,

My hubby and I have read your book and are on a ‘Barefoot warpath’. However, we have one big problem. Our mortgage is far beyond 60% of our combined incomes.  It’s actually more like 85%! And we earn decent money -- I am on $95,000 and he is on $115,000. We have two young children, aged eleven and five, who want things all the time. Can you recommend a saving strategy without simply saying “you bought a house that was too expensive”? We know this. Also, we live in Perth, so it has lost value. It is not finished yet either, and we are now having to do the renovations ourselves. What can we do?

Jan

Hi Jan

You may be on the warpath, but the enemy has you surrounded.

I get that you’re looking for reassurance, but you’re asking me to recommend a savings strategy when 85 per cent of your combined income is going towards your (unfinished) home and you have two school-aged kids who ‘want things all the time’. I’m good, but I’m not that good!

I can only guess that you bought the home when you were on a higher household income, because there’s no way a bank could-a, should-a, would-a lent you that money on your current income. I actually can’t work out how you’re keeping afloat (perhaps you have a lump sum you’re living off that you haven’t disclosed). Either way, unless you can increase your income dramatically and quickly, you’ll eventually lose your home.

That’s the only way I can see you could lose the battle while still standing a chance of (eventually) winning the war. Right now, you need some good soldiers on your side, and there are none better than Financial Counsellors Australia. Call them on 1800 007 007 and have them represent you with your bank’s hardship department.

Scott

Will Interest Rates Rise Eight Times in the Next Two Years?

Barefoot,

This week I nearly had a heart attack when I read in the newspaper that economist John Edwards says that interest rates may rise eight times (!) in the next two years. There is no way my family could support this on my husband’s wage (I am a stay-at-home mum), be able to service our mortgage ($550,000) and afford to put our two children through school in a few years time. Can you please tell me that this guy is joking?

Erica

Hi Erica,

Is he joking? Well, let’s see: he’s an economist. He’s middle aged. He’s wearing a sober suit, sensible glasses, and he’s not smiling. I’m pretty sure he wasn’t doing a stand up routine.

However I think he was taken out of context. Edwards is smart enough to know that no one can predict the future (least of all economists, who on the whole are no better than dart throwing monkeys). What he was trying to say was that interest rates would move higher (at some point) in the future.

Here’s the interesting thing: anyone under the age of 45 -- and that includes you and me Erica -- has never experienced a recession in their adult lives. We have no reference point for it. In fact, our only experience is that housing prices go through the roof, and interest rates fall through the floor. People think it’s normal. But it’s not … not even close.

The truth is we’re living through one of the greatest booms in modern history. Eventually it will end (though only the monkeys know when). The only advice I’ll give you is to start preparing for higher home loan rates immediately. The worst that could happen is that Edwards and I are wrong ... and you pay your home off quicker.

No jokes.

Scott

Sinking Not Swimming

Scott,

My stepdaughter is a single mum in her early forties, with two kids. She earns $60,000 working three days a week, and has never owned property. She has $10,000 saved. She wants her bank to second-mortgage my house for a deposit for her in country Victoria on a house worth $350,000. I have $102,000 in credit card debt and (at most) $100,000 equity in my house. I am struggling with my own debt but I feel sorry for her and would like to help. I am widowed from my second husband. What should I do?

Linda

Linda,

It’s beautiful that you are wanting to help out your stepdaughter ... but with $102,000 in credit card debt you are clearly not in any financial shape to help anyone. It’s like someone who can’t swim diving into the sea to rescue a drowning person. Who’s going to rescue you?

Scott

I Got This!

Hi Scott,

I want to thank you. Reading your book helped me take financial control. I am a single mum of three. But in seven months I have paid down $10,400 in debt, saved $2,000 in ‘Mojo’, put aside $1,000 for Xmas, registered my car, and purchased a new fridge and drier -- all without having to use my credit card. In 12 months I will be DEBT FREE. Thank you! I am sleeping easy at night for the first time in years and can now make a better future for my kids.

Aruna

Hey Aruna,

I can feel your excitement dripping off the page. You’re in control, you’re winning, you’re unstoppable!

You may think your kids aren’t paying attention … but I promise you they are. Well done!

Scott

Something I Said I’d Never Do

Hi Scott,

I am 28 and and earning $70,000 a year. I am also $10,000 in debt because I did something I said I would never do: took out a personal loan. I have been desperately trying to pay it off, but it seems with every fortnight’s pay something comes up -- my car needed servicing, my bed broke, and now I have to buy an expensive bridesmaid’s dress. I feel overwhelmed, like I am never going to get out of debt.

Gemma

Hi Gemma,

You haven’t actually asked me a question, so I can only assume you are wanting me to:

a) Listen empathetically as you vent about your first world problems, while I gently stroke your hair and whisper “it’ll be okay, honey”.

Or,

b) Give you a kick up the backside.

I’m going with option B.Y

ou say you’re “desperately” trying to get out of debt, but I’m calling your bulldust.

Make a freaking decision!You’re either totally committed to getting out of debt, or you’re not. It’s this indecision that’s causing your overwhelm.

Once you’ve made the decision that you absolutely, positively will get out of debt, the rest is a cakewalk:

If your bed breaks (not a bad problem to have in your 20s by the way!), all you do is lay the mattress on the floor until you can afford to buy a new one. Simple!

If you’re asked to be a bridesmaid, you tell the bride that you can’t afford it. Or tell her that it’s such an honour that you’ve decided to work overtime for the next 12 weeks to pay for it (and make your additional extra debt repayments).

Here’s the thing that no one tells you about getting out of debt: it’ll build a confidence in you that will change the course of your life. Just ask Chris.

Scott