You’re a Shocker, Barefoot (Part 2)

Scott,

Your article ‘Prisoner’s Last Chance’, about the prisoner coming into a six-figure sum of money, is the most disrespectful article I have ever read. You tell the guy “good on you for learning how to manage your money” and give him advice on how to invest, then gloat about how you donated your books to prisoners. How shallow are you?

What about telling him to clear his conscience and pay back the money he probably stole from victims, or compensate those he has offended against. Come on! I’m disgusted in you not telling him to give his six-figure sum to victims he most likely never had the mind to compensate.

I challenge you to say in one of your articles that you offered wrong advice on this matter and should have told the person in prison to compensate those he did wrong by. Bet you won’t.

Ricky

Hi Ricky,

I bet I won’t either, cobber!

It sounds like you (or someone you love) has been wronged by someone, and you’re still bitter and beat-up about it. Here’s how the prisoner described his situation:

“I have spent most of my life in institutions, from boys’ homes to jails (I’m 59). My goal is to have enough money to buy my own home before I die, with no debt and maybe some savings. After all, isn’t that every man’s dream?”

Now, here’s my thinking:

I don’t know what crimes he did … and neither do you.

Though I do know one thing: after doing their time, everyone deserves a chance to put their lives right.

And if he can achieve financial security, he’s more likely to stay straight and not end up back in the clink.

That’ll potentially save the taxpayer the $110,000 a year it costs to keep a prisoner locked up.

That’ll also help keep the community safe.

And it may just give this bloke some peace after a lifetime of pain.

Scott

Would You Like a Credit Card With that?

Hi Scott,

My 19-year-old daughter just started a job at David Jones. To my horror, one of her KPIs is to sell the David Jones credit card to customers. In fact staff are incentivised $75 for every customer they sign up. There is a lot of pressure on her to meet this KPI, and we both feel very uncomfortable with this. I would be interested in your thoughts on this practice.

Wendy

Hi Wendy,

Would you like a credit card with that?!

Seems the beancounters at David Jones have worked out there’s potentially more money to be made flogging debt than designer duds:

The David Jones American Express Platinum Card has an interest rate of 20.74% on purchases, and a ‘competitive annual card fee of $295’.

(They seriously think that’s competitive? Who the hell are they competing with? Cash Converters?)

Anyway, this is exactly why I’m starting ‘Barefoot’s Money Movement’

Debt has been sold to us so relentlessly, so forcefully and so underhandedly that we’ve become desensitised to it.

Look, I’m not saying that DJs shouldn’t be allowed to sell debt, or that your daughter is wrong for following orders.

(That being said, if she feels uncomfortable about it, that’s a very, very good sign. Encourage her to trust her gut and her ethics. That’s a proud parent moment right there.)

What I am saying is that I’m sure as hell going to do everything I can to make sure kids coming out of school see the trap before they get upsold into the merry-go-round of misery. And in the next few weeks I’m back to my old school (in Ouyen, Victoria) to blend up some credit cards in the classroom!

True dinks!

Scott

Bankrupt but They’re Still Chasing Me!

Scott,

I am a 36-year-old single woman, earning $65,000 as an admin officer, and I have recently declared bankruptcy. However, one loan could not be erased, as it is a secured loan, and my car (a Mitsubishi ASX worth $8,000) is attached to it. It is a loan for $17,000 at a high interest rate (29% p.a.), and I still have about six years to pay it off (at $350 a fortnight). I have started using the Barefoot tools from your book (Smile, Splurge and so on), but what can I do with this loan?

Lisa

Hi Lisa,

What a car crash!

You got really bad advice. If you sat down with me at the time you were going bankrupt, I’d have told you to surrender the car to the finance company and then added the shortfall (after they sold the car) onto your bankruptcy. Then I’d have advised you to save up and buy a similar car for cash.

Instead, your repayments are $8,400 a year ... on an $8,000 car!

Look, anyone who charges a 29% interest rate on a car loan is a shark-- they deserve to be battered and dropped in hot oil, and eaten by a tubby bloke at the footy.

So, if I were in your shoes, I’d ring up AFSA (the Australian Financial Security Authority) and explain there was a mistake on your bankruptcy -- you should have surrendered the car. Then explain that you’d like to do it now, and ask how you go about it.

Buckle up!

Scott

Shaken, Not Stirred

Hi Barefoot,

I just wanted to drop you a line from the comfy living room of my first property. If you’d told me two-and-a-half years ago that I’d own this place today, I would have dropped the dirty martini in my hand! At $25 a pop, those drinks (which I had regularly) didn’t come cheap, but they sure numbed the fact that as a single, 35-year-old woman I would never own my own home! Or so I thought.My father got fed up with my bleak outlook, so he gifted me your book for Christmas 2016. To say it changed my life is an understatement. The best thing about the book is its foolproof nature ‒ no knowledge of money required. All I had to do was follow a few simple instructions, check in on my savings from time to time, and eventually I had a property deposit!Not only this, your book has taught me to be self-reliant, to take responsibility for my life, and has given me confidence about my future. I even gave up booze along the way ‒ a great move if you ever want to see money pile up at warp speed. If you’d met me in 2016, I’d have told you (probably slurring) that I was terrible with money. Your book has since taught me that ANYONE can be good with money.

Thank you.

Leah

Hi Leah,

Yes, I seem to have a booze theme this week. Well bugger it, let’s run with it:

In many parts of the country, property prices are staggering around like a drunk at closing time. However, the real opportunity for first home buyers will come in the next few years when the debt hangover really kicks in. Mark my words, this is a genuine opportunity for first home buyers ... but only those who have been soberly saving.

Congratulations on your success, Leah. You should feel proud. You Got This!

Scott

The fine print on Apple’s new credit card

Sir Richard Branson leaned across the table, smiled, and winked at me.

“It’s pretty sexy, right?”

In his hand was a credit card ‒ a Virgin credit card ‒ with an aesthetically revolutionary ‘clipped corner’.

That boozy night happened, from memory, about 16 years ago. At the time Branson was banging on about his card helping people, while simultaneously sticking it to the ‘fat cat banks’ (and making himself a boatload of cashola).

This week Apple announced it’s launching a credit card (only in the US to begin with), simply called ‘Apple Card’.

And it’s titanium, baby.

As in metal. Laser-etched. There are no numbers on the front ‒ which coincidentally makes it safe to show off on Instagram, if you’re so inclined (and the people who get this card most certainly will be).

And it’ll totally blow the mind of the 7-Eleven attendant when you plonk it down to buy some Cheezels:

Attendant looks down at shiny metal card … then looks up at you, slowly studying your face.

“Are you some kind of celebrity bigshot ... Mr Cheezel man?”

Yeah, no.

This week Apple CEO Tim Cook gushed about his new credit card: “While we all need them, there are some things about the experience that could be … so much better.”

Okay, so I’m going to pull you up on that one, Timbo. You actually don’t need a credit card. (Well, maybe if you’re spending $319 on wireless Airpods, which make you look like, to quote my old man, a “bloody drongo”.)

Strip out the metal and the marketing and this is just another ‘debt card’, and not a particularly revolutionary one: Apple’s fine print shows it charges up to 24.24% interest on the card. However, there are a couple of things they’re doing that are interesting:

The first is the tech: as you’d expect from Apple, they’ve got a great app for the card which allows you to easily categorise and track your spending, and ‘gamifies’ and personalises it to help you make better financial decisions. That being said, a lot of these features and tracking are already here in Australia with Up Bank. And within a couple of years, all banks will offer this.

The second is the card’s rewards system. They’re going with daily cashback instead of points. This makes total sense. Frequent Flyer points are s-o-o-o 2007. Banks and airlines have created their own confusing alternate currency for much the same reason that Zimbabwe issues trillion-dollar notes: to deliberately confuse the poor plebs who are forced to use it. Bottom line?

The Aussie banks will be disrupted over the next decade, make no mistake. However, I’m not sure it will be by Apple, who are just trying to fill another hole by building their ‘ecosystem’ as iPhone sales stagnate.

And remember: the Apple Card is still just a credit card. So while it’s a danger for our banks … it’s also a trap for iPhone users.

Tread Your Own Path!

Reminder: I first wrote about this years ago and highlighted the low costs. Today there are better deals on offer. How do I know? Because my readers constantly email me about them! So before you do anything, do a quick google.

Confessions of an Afterpay Junkie

Dear Barefoot,

As someone who fell down the Afterpay rabbit hole and got stuck in a cycle for three years, I completely agree with what you are saying. I added up every single purchase I had made and found I had spent a disgusting $19,338.39 since April 2016! Seeing that figure was both humiliating and eye-opening. I realised I have a problem, so I have sent Afterpay an email to block any further transactions and to close my account when the current orders are paid off. I am gutted and ashamed that I have thrown away so much money ‒ I look around and cannot even tell you where it went. Afterpay is toxic.

Anna

Hi Anna,

Let’s look at the bright side: at least you didn’t do use a credit card.

I deal with shopaholics all the time, and their biggest bill is interest to the bank. However, what it sounds like you’re saying is that AfterPay got you into a merry-go-round of misery. At least you didn’t graduate from the weed to the heroin.

As I’ve said before, maybe in the future we’ll have before-and-after photos like they do with meth heads:

Before: This is excited Anna, aged 23, buying the cutest diamante collar for her pet pug on Afterpay.

After: This is agitated Anna, aged 24, buying dog food (for herself) with a Nimble loan.

Look, you’re never going to win if you don’t learn to stand on your own two feet and pay your own way. So good on you for getting clean!

Scott

Bailing Out My Boyfriend

Hi, I’m a huge fan!

My boyfriend is currently working overseas, and we plan to ‘go Barefoot’ when he gets back so we can tackle our debts. My accountant suggested we first pay off the personal loan my boyfriend got, which he consolidated his credit card debt into -- a loan that was only possible with my name on it. The accountant suggested using my inheritance, which I currently have in our joint offset account. Trouble is, my boyfriend now has another credit card and I worry I would be bailing him out again! What should I do?

Mel

Hi Mel

Your accountant is just looking at the digits:

The interest on the personal loan is costing you more than the offset, so you could save money by extinguishing that debt. And given you’ve already contracted an STD (Sexually Transmitted Debt) -- that is, you’re now both jointly and severally liable for repaying the loan -- it makes total sense financially.

However, if I were in your situation, I wouldn’t repay the loan.

(Actually, I wouldn’t have co-signed the personal loan in the first place, but I’m a little Judge Judy like that.)

First, because you don’t want to set up the expectation that you’ll reward his dumb behaviour.

And second, because you’re already giving him a helping hand. By keeping your inheritance parked in your joint offset account, you’re already effectively lowering your mortgage repayments, giving him a fantastic opportunity to ditch the credit card and domino his debts.

I’d sell it this way: this is an excellent way to show his commitment to both the Barefoot plan, and you!

Scott

The Best Thing I Ever Saved For

Dear Mr Pape,

I bought your book while in severe financial difficulty — I actually had to save money for six weeks just to buy it! Anyway, I am 10 months in and will never look back, having managed to pay off $25,574.23 worth of debt. I still have a fair way to go, but I am churning through it. Thanks heaps!

Callum

Hi Callum,

Dude, you could have loaned it from the library!

What I love about your email (okay, testimonial), is how detailed you are with your digits:

You haven’t just paid back ‘twenty five grand’, you’ve calculated it down to the cent!

A report this week by NAB found that 20% of Aussies said they don’t have even a cracker saved up.

Don’t let that be you.

If you’re following my plan, you should have nailed the first step: open your separate Mojo account, with an initial $2000 deposit. And if you don’t have a spare $2000, look around your house and see what you can flog on Gumtree.

Scott

Why Afterpay is the marijuana of credit

I think of Afterpay as the financial equivalent of marijuana.

Young people absolutely love it, and old people are doing a lot of finger-waving about the dangers of getting hooked on the newest financial drug to hit the streets.

This week the financial equivalent of a teacher, ASIC, busted into the school locker rooms (quick, hide the bongs!) and attempted to clear the air by holding its first review into the phenomenon that is ‘buy now pay later’, otherwise known as ‘young people’s layby’, otherwise known (by me) as ‘financial weed’.

Here’s some of what ASIC found:

The majority of Afterpay customers are millennials.

One in six of them are in financial strife … getting overdrawn, delaying bills, or borrowing more.

And these services are hot: the number of transactions has risen from 50,000 a month in April 2016 to 1.9 million in June 2018, with the collective tab now at a whopping $900 million plus.

Now, understand there’s nothing really revolutionary about Afterpay — men in grey suits have been dreaming up new ways to get people to spend money they don’t have since long before Bob Marley rolled his first spliff.

This is just the latest incarnation. (Case in point: when I was at uni the bank gave me a student banking package that bundled in a credit card with a $3,000 limit ‘just in case’, and effectively trained me to see their credit limit as my money. See? Same, same but different. Even the excuses are similar: “Oh, but if I pay off my credit card in the 55-day period, it’s free!”)

My opinion?

The actual terms on Afterpay are not that bad. As long as you pay off your instalments on time, you won’t be charged any interest or fees. So, as far as consumer credit drugs go, it’s not too heavy. Your financial life won’t be ruined by taking out a few Afterpay loans.

So chillax, right?

Well, no. See, the reason I compare Afterpay to weed is that it acts like a a gateway financial drug: it’s effectively training young people to rely on the bank’s money rather than banking on themselves.

Case in point: Afterpay claims their average purchase is $150.

A hundred and fifty clams!

Seriously, if you need instalments to cover $150, you need to check yourself before you wreck yourself.

And, once you get hooked on spending someone else’s money, there’s every chance you might graduate onto harder stuff — other millenial credit-drug dealers who really rip you off.

Who knows? Maybe in the future we’ll have before and after photos like they do with meth heads:

Before: This is a fresh faced Emma, aged 18, buying a pair of pink pumps on Afterpay.

After: This is a stressed out Emma, aged 23, buying scratchies with her Nimble loan.

Seriously, you’re never going to win if you don’t learn to stand on your own two feet and pay your own way.

And that’s why the ‘buy now, pay later’ phenomenon … is true to label.

Get hooked on this junk and you’ll pay a very high price later.

Tread Your Own Path!

Eat, Pray, Dump

Hi Barefoot,

So I get a message from my wife at 2am while she is in Morocco (finding herself): “I think I’m going to move to Morocco, I’m so sorry.” This really was not expected, nor in my plan for the future. Now I am having to deal with all the financial responsibilities on my own, without a second income. I have a half-renovated house, our combined debts, and now legal fees to deal with the separation. I am 34 and earning good money ($140,000), but it feels like I have caught an STI from an overseas holiday that I didn’t even take!

James

Hey James,

It sounds like your ex-wife took the ‘Eat, Pray, Dump’ tour!

Seriously, I can’t imagine what it was like to get that text ‒ you must be going through hell. And while it probably feels like you’re the one here in Australia cleaning up the financial mess, you are both responsible for seeing this out.

So a couple of practical things: if you haven’t already shut down any joint bank accounts, credit cards or redraw facilities, do so immediately. Also, keep good notes on your finances, and engage a family solicitor.

You don’t mention kids and, given your age, it sounds like it may have been a short marriage. This will be taken into account, and should make things much simpler in coming to a final property settlement.

Obviously you are facing a financial setback, but at your age, and with your income, it’s something you will overcome. So think hard about whether you want to keep the house or sell and make a clean break … your ex-wife certainly has.

Thank-you for reading,

Scott

My Aunty Has 15 Credit Cards

Hi Scott,

My aunty has got herself into trouble with credit cards. She is not savvy with money and I really do not think she understood what she was doing. After a lifetime of work, she has $10 in her purse – and $211,000 in debt across 15 cards. She has been cash-advancing to make the minimum payments for years. I think most of the debt is interest, and she has nothing to show for it (no car, holidays or smashed avo). At this rate she is going to lose her home. Is there anything I can do to help her?

Max

Hi Max,

It sounds like your aunt is going bankrupt … or at risk of going bankrupt.It also sounds like she has a gambling addiction.

Now you don’t say whether your aunt has any loans against her home, but she’ll eventually be forced to sell it. If the credit card company, or a debt collector who has bought any of her debts (for cents on the dollar), works out that there’s a chance she may have money left after she pays out her secured mortgage, they’ll carve her up.

Your aunt is facing two battles that you can help her with, but I can’t fight for her:

First, you can help her get some independent financial advice.

Encourage her to sit down with a community-based financial counsellor (call 1800 007 007). They’ll help her weigh up her options (either a debt agreement or bankruptcy). They can also investigate the inappropriate lending she’s received. No one should have a $211,000 credit card debt. There are responsible lending laws in place to stop people getting themselves into this mess.

The second, and most important, thing you can do is get her some psychological support.

You’re right to be worried about the state of her mental health. The debts she’s racked up is a symptom of what’s going on in her head. Something is seriously wrong and she needs professional help. Money comes, money goes, but this really is life and death stuff.

Scott

High Income Earners Completely Out of Control

Scott,

We are what many would consider ‘high income earners’, earning $255,000 a year ‒ and yet we are completely out of control. Our five years of DINK (Double Income No Kids) lifestyle came to a halt when we had three kids in two years, and we are now floundering month to month. I am struggling to change my shopping habits (expensive everything), and we have a large dream house that we started building before our unplanned children arrived. What can we do?

Bec

Hi Bec

I was reading a magazine profile the other day on Johnny Depp.Instead of buying his smokes himself, he has his assistant do it ‒ and gets them to scribble out the health warnings and horrific pictures of blackened lungs with a biro, so he doesn’t have to think about the health consequences. So far it’s working out well for him.

If you’re on a high enough income, you can apply Johnny’s smoke experiment to your money. You’d be surprised how many couples I meet who are in your situation and do just that. As long as the money keeps flowing, you’ll be able to smoke through your prime earning years.

However, it will catch up with you eventually. It always does. The damage you’re doing to your finances isn’t hit or miss. The black shadows, the worries that wake you up in the middle of the night ‒ and cause you to tap out a confessional email to me ‒ won’t go away. Eventually they’ll consume you.

My inbox is full of people who are 20 years down the road you’re on. They’re in their fifties and have suddenly been richoched into reality by a divorce, disease or retrenchment. They’re left bitter and twisted, and scared that they now can’t live any other way.So right now you’ve got a choice. It’s not too late. What you’re doing isn’t working. You’ve admitted that yourself. For the sake of your family -- and to be good role models for your kids -- it’s time to start doing something that will work.

This week I want you to have your first Date Night and set up your buckets. Then, start moving through the Barefoot steps together. They’ll work for you, just as they’ve worked for thousands of couples (and many on far less income than you). The steps work every single time. Not because there’s any magic, but because they’re based on good old fashioned common sense.

Email me next week after your Date Night, and let me know how you go ...

Scott

I Faced My Financial Fire

Dear Scott,

On November 23rd last year, I finally came to my senses and left a violent relationship ‒ then began my ‘financial fire’. My ex-husband immediately did three things: clear out our bank accounts, redraw on our mortgage, and direct his salary solely to his account. At that time, my baby girl was only 10 weeks old, I was on maternity leave at half-pay, and I was drowning in unsecured personal debt.

Yesterday, October 1st, I settled on my new property. I am now a sole homeowner, and my girls (aged 3 and now 1) and I have our very own home. We can start again and move on with our lives. This is all because in December last year ‒ at rock bottom ‒ I read The Barefoot Investor. I set up my buckets, returned to work, and got myself a damn good lawyer. I have gone from financial hardship to no debt, except the mortgage. Words will never be able to express my gratitude!

Melanie

Hi Melanie,

Each week a handful of people write to me to say “STOP PROMOTING YOUR BOOK!”. Luckily, I’ve long given up listening to the ‘full caps crowd’. Why? Because I know there are women in domestic violence relationships who are reading this right now, and they need to know there is hope. Melanie, thank you for being a shining light, not only for all the women reading but for the young women you’re raising.

You got this!

Scott

This morning I arrived home from a family holiday from Bali

I’ve just arrived home from a family holiday.

As I opened my front door, I quickly realised I’d brought home a souvenir from Bali: bacteria.

Yes, I’m typing this bent over with a bad case of ‘Bali belly’. Yet nothing bad ever happens to a columnist, so I’m using my tummy troubles as an analogy for how the world financial markets are feeling right now:

Queasy.

And worried about what’s coming down the err … pipes.

Case in point, here are the headlines that greeted my arrival back into the country:

“House prices to fall 15%: Morgan Stanley”

“ASX plunges ‒ $50 billion bloodbath”

Pass the bucket!

However, I view these headlines as about as reliable as consulting Dr Google about my tummy troubles:

“Bloating? Cramps? Vomiting? You could have stomach cancer! And possibly rabies!”

So what is really going on with investment markets, and, more importantly, what should you do about it?

Well, at long last the markets have started paying attention to the fact that global interest rates are on the rise.

Yet this shouldn’t come as a surprise to my regular readers … I’ve been banging on about it for years.

In fact, way back in 2015 I wrote an article entitled “2018, The Year First Home Owners Get their Revenge”, in which I urged young people to start aggressively saving up for a 20% deposit so they’ll be prepared to take advantage of lower house prices.

And for people approaching retirement I’ve long advised to save up a buffer of two to three years of living expenses in cash (less any government pension payments) in their super, so they aren’t forced to sell when the real crash comes.

That’s the real rib-tickler: for all the doom and gloom headlines this week, global interest rates are still incredibly low, and they’ve only just begun rising. In my tummy analogy, what we’re experiencing is merely an uncomfortable rumbling.

Yet the truth is that we Aussies, by taking on record household debt at a time when interest rates are at record lows, have already swallowed the bug. As a result, plenty of overstretched people may well find their financial lives will end up in the toilet sometime in the next decade.

The most important thing to take out of this week is to ask yourself: am I prepared?

Trust your gut.

Tread Your Own Path!

The Second Chance

Hi Scott,

I was so excited when I read last week that you donated some of your books to a father doing time in Bathurst Correctional Complex. I just wanted to say thank you. Having someone in your position say “everyone deserves a second chance … and many people inside are parents” means a lot.I work for a non-profit volunteer group called Second Chances SA. We work with prisoners, their children and their families to help them create a better future for themselves. It’s not easy, but it’s just so important for the kids. They’re the innocent victims of their parents’ crimes. It’s not their fault!

Helen

G’day Helen,

You’re in luck.At the beginning of my new book I make what I call ‘The Barefoot Pledge’.

It was inspired by my old man. When I told him I was writing another book he said: “Just make sure you don’t become a wanker. Look after the battlers, son.”

So for every 10 copies of the book that I sell, I’m pledging to donate one copy to a parent in hardship.

And having a parent in the clink would certainly be bloody hard, so I’m going to send you through some books.

Thanks for the hard work you do.

Scott

Shout-out to the Heroes!

Hi Scott,I do not have a question but I just wanted to thank you for your support of financial counsellors! They are the heroes of humanity in the financial sector. You have a big following and an influential voice, and it is a credit to you that you use it to give a financial shout-out to the people who willingly take on the giants of financial bullying. A financial counsellor helped my parents in a way that I could never express thanks for ‒ and that counsellor goes home with a pay packet that could never express her worth!

Toni

Hi ToniI’m hoping that one recommendation from the Royal Commission is that more money is made available to get more financial counsellors on the ground. The banks make a lot of money, yet it’s the financial counsellors who mop up a lot of their mess. Fingers crossed!Thank-you for reading

Scott

A Total Disaster

Hi Scott

I am a 50-year-old widow with an eight-year-old. After nursing my partner through cancer (he lost his battle on Boxing Day), I have just refinanced my house to consolidate some credit card debt. I have also borrowed an additional $100,000 to invest. My financial planner suggested this as a way of getting my mortgage down. Now I am starting to panic about maybe doing the wrong thing, but I don't see any other way of reducing my debt quickly and setting myself up for retirement. I am really nervous.

Rachel

Hi Rachel,

I’m really sorry for your loss.

Now I don’t know your personal situation, only what you’ve written. So, like everything I write, this is general advice from a guy who doesn’t have a vested interest in flogging you anything.

I’ve had the privilege of working with many widows over the years, and if I was sitting across from you there is absolutely no way I’d advise you to borrow $100k to invest.

Why?

Because your partner just died, and you have a young child. This is not the year to be making major financial decisions. It’s the year to hold on and grieve.

Yet I totally get that you’re clutching for security when your life has been turned upside down.

However, this isn’t the way to do it. The truth is that debt always makes life more complicated. It always makes life more stressful. And heaping on more stress right now is the last thing you need.

You have 20 years (or so) before you retire ‒ so there’s no need to panic. Amazing things can happen when you work diligently towards a commonsense goal, but the first thing to focus on is getting yourself right.

Scott

Should We Refuse to Pay?

Barefoot,

My husband and I (stupidly) bought a timeshare in Vegas back in 1997 ‒ we had just got off a plane and were feeling very jet lagged! We have tried a gazillion avenues to offload it ‒ we even offered it to a number of charities for free. My question is: if we stop paying the maintenance fees, will that affect our ability to get into the US when we travel there (we have family there)? Alternatively, do you know how we can offload it?

Melanie

Hi Melanie,

You’ve been paying this timeshare for 21 years ‒ you’d get less for murder!

It’s like an ugly chihuahua ‒ you can’t give these things away.

As for payment, I’m afraid you signed up to Hotel California: you can check out any time you like … but you can never leave.

In other words, you signed a legally binding contract to continue making payments, and timeshare operators reserve the right to sue you for payments you fail to make, and they often do in Australia.

As for overseas operators, well, I’d think it’d be unlikely they’ll chase you, but I’d definitely seek legal advice as to what the ramifications are.What a nightmare!

Scott

Ground zero of the mortgage crisis

Let me take you to ground zero of the mortgage crisis.

Right now the National Debt Helpline (1800 007 007) is receiving so many calls that they’re at breaking point.

The helpline refers people in the most dire situations on to community-based financial counsellors ‒ yet the demand is so intense that the wait time for someone to actually sit down in person and help has stretched out to three months!

(And it’s only getting worse. As I reported last week, a study has suggested that one million people may find themselves in mortgage stress if ‒ when! ‒ interest rates move upwards by just 0.1%.)

Hang on, who are the financial counsellors and what do they do?

These guys are the unsung heroes of the financial services industry. They’re free to use. They’re independent. And in your darkest hour they’ll stand shoulder to shoulder with you and fight for you when no one else will:

For the guy who’s just been diagnosed with a terminal illness …

The mother who grabbed her kids and fled from her violent husband in the middle of the night …

The young woman with a brain injury who doesn’t understand the (deliberately confusing) payday loan contracts …

The father who was laid off from work and is just trying to keep food on the table …

Yes, the ongoing Banking Royal Commission has shown us ‒ over and over again ‒ that we need these heroes.

Yet the truth is that the financial counsellors are having their own financial crisis: there are not nearly enough of them on the ground. I believe so passionately in what they do that I’ve donated 10% of my book royalties to the Financial Counselling Foundation … yet it’s a drop in the ocean.

There is only one man who can truly help: Dan Tehan.

Dan is the man, because, as the Federal Minister for Social Services, his portfolio funds the community-based financial counsellors. Dan has made recent announcements on financial counselling funding, but this only extends existing funds and doesn’t grow the services to meet demand. You need to fund ’em, Dan … it’s a growth industry!

So here’s my call to you, Dan Tehan. The financial counsellors need someone to stand shoulder to shoulder with them and fight for them when no one else will.

Now’s your chance, Minister. Make us proud.

The Reality Check

Hi Scott,

I’m in trouble. I am 33 with three young kids, and waiting for my divorce. The thing that is holding it up is our family home, which has been on the market for eight months. My kids and I moved out six months ago to live with my parents in Brisbane, so it is sitting vacant. We took advice from our first real estate agent, who said that we could get $720,000. He was hopeless. After five months we did not get one offer!The new agent started out all happy and confident. He convinced us to list it for $670,000. So far the only offer has been $570,000! We have a $660,000 mortgage ‒ I cannot leave with debt. This week he suddenly changed his tune and is now saying the property is at risk of going ‘stale’ and we need to drop our price. I am sick to the back teeth of real estate agents! What can I do?

Fiona

Hi Fiona,

A divorce doesn’t happen overnight, right?

It can take years of bulldust, blaming and baggage before you finally admit to each other that it’s over ‒ and make the decision to move on with your life.It’s the same situation with your home: it’s time to break up … with your price.

It’s been on the market for eight months with two different agents, and the only offer you’ve received is 20% below your original price. That’s the (real estate) universe telling you that your price is too high. Buyers don’t give a toss what the house has cost you, only how it compares with other properties on the market.

So what should you do?Focus on the things you can control.

Your real estate agent’s job isn’t to dig you out of your financial hole.

His job is to go out and find you the very best price in the current market.

Your job (and your ex-husband’s) is to decide what to do next.Houses aren’t like bread: they don’t go stale. However, it is true that, if a home sits on the market for months, buyers may start to think there’s something wrong with the property, or something wrong with the vendors.

And they’ll lower their offers accordingly.

Sitting around waiting to break even sounds like it’s already broken you.It’s time to act.

Scott