Are Charities Ripping Us Off?

Hi Barefoot,

Do you know of any charities which do not have highly paid CEOs and numerous other well-paid staff? l would like to make a donation to charities where all the money goes to the people who need it, rather than paying managers and having only the leftovers go to actual charity. What’s your advice?

Ruby

Hi Ruby,

You need to think of it like you’re making an investment, because that’s essentially what it is.

(Instead of generating a positive financial return, you’re hopefully generating a better world.)

And when it comes to investing I’ve never once said: “I only invest in companies where the CEO and the management are paid peanuts!”

Still, while there are 2,500 companies to invest in on the stock market ... there are 56,000 registered Aussie charities! So there’s a lot of charity chaff to wade through. Here’s how I went about it when I chose a charity to support:

First, I focused my efforts on one area I was really passionate about, rather than spraying it around. For me, that was supporting people in financial hardship. For you, it will be something else. What matters is that it matters deeply to you.

Second, I researched the programs in that sector that were getting cut-through. Before I made my ‘investment’, I read through their annual reports and interviewed the senior managers: Were they switched on? Did they have a compelling vision? Did I honestly believe they had the chops to achieve their vision?

Finally, after making my ‘investment’, I have continued actively monitoring their progress, just like I do with my portfolio of shares. And I can tell you that the kick I get from supporting great people doing amazing things has been just as rewarding as my portfolio.

Scott

The man who made $54 million before lunch

Last Monday, I broke bread with a bloke who’d just made $54 million … before lunch.

True dinks.

His name is Anthony Eisen and he’s one of the founders of Afterpay.

And he’s very, very rich.

Yet a few years ago he was like any other dad living in the burbs. As he’d turn out the lights at night, he’d notice there was always one light glowing across the street. It came from the room of Nick Molnar, a kid in his final year of uni who lived with his parents.

“Probably studying for his exams”, thought Eisen.

One day Eisen got talking to Nick, who explained he stayed up all night working on his eBay jewellery store. Yet the real jewel that caught young Nick’s eye was a groundbreaking payment system for his store:

“You buy something, and then you make a series of payments … but there’s no interest”, Nick told his neighbour.

“Ummm, that’s actually been around for years. It’s called lay-by”, said Eisen.

That conversation happened about four years ago in a sleepy suburban street in Melbourne.

Today, the Afterpay Touch Group is one of Australia’s fastest growing companies, worth over $4 billion.

So, how did they do it?

Well, the genius of Afterpay is that it looked at credit from the customer’s point of view.

The traditional credit model involves screwing the customer: think credit cards, personal loans, and so-called ‘interest free’ deals. Millennials have worked this out, and shun credit as a result.

Afterpay screws the retailer instead.It charges the shop a 4% commission on goods that are Afterpaid (it’s a verb, apparently). The customer then pays off the purchase in four fortnightly instalments. And if they pay on time, there are no fees, and no interest. Think of it as a modern-day version of lay-by with a millenial twist ‒ you get the goods immediately.

Clearly it’s a better option than a credit card, or a personal loan, or anything old Gerry Harvey has come up with.

So here I was meeting up the man who started it all … and I found out that, like me, he’s on a mission to help young people with their money.

“We’re here to help people, it’s in our DNA!” Eisen told me, sounding positively Zuckerberg-ian.

“Steady up, cobber”, I replied.

Here was another fabulously rich white tech dude who was saving the world … one short-term loan at a time.It’s my job to needle these visionaries on their ‘new new’ money thing.Look, there’s no denying that Afterpay has transformed the way millenials shop.

However, I’ve learned that with these ‘new new’ things, it takes a while for the ‘bad bad’ to show up. (Case in point: Mark Zuckerberg started out with the simple, wholesome aim of ‘making the world more connected’ ‒ and look where that got him.)

Specifically, what happens when you train a generation to spend money they don’t have?

Because, make no mistake, that’s where we’re headed:The majority of Afterpay’s 2.6 million customers are millennials.

Eisen told me that the average outstanding balance for a customer is just $208.Yet many are on a merry-go-round ‒ 90% of Afterpay’s transactions are from repeat customers.

The result?

Late last year ASIC found that one in six of millenials who use ‘buy now, pay later’ services like Afterpay are in financial strife … getting overdrawn, delaying bills, or borrowing more.

And that’s why I call Afterpay the ‘marijuana of credit’ ‒ my point is that, once you get hooked on spending someone else’s money, there’s every chance you’ll graduate onto harder stuff.

Still, I seem to be in the minority. That very morning that I met Eisen, the Senate inquiry into the ‘buy now pay later’ industry had left Afterpay off the hook from tougher regulation, which predictably caused the share price to rocket. In turn, Eisen, already one of the wealthiest men in Australia, was $54 million richer that day, at least on paper.

At the end of our lunch the waitress came over with the bill.“I’ll pay”, said Eisen.

“No, I’ll pay … with cash!"

Tread Your Own Path!

P.S. Afterpay is a hot button for plenty of people ‒ I’ve been inundated with emails. So this week I’m devoting my questions to it. And to kick it off, someone who is clearly a fan ...

Single Mum Is a Loser

Hi Scott

I am a 32-year-old single mother trying to save for my own house. I’m working full time and completing my degree online, so I moved in with my grandparents to get some help. My daughter and I currently share a bedroom, all in the name of saving. But I feel hopeless and useless. I have recently been looking at Metricon HomeSolution as a way of getting into the housing industry. Do you recommend this?

Fiona

Hi Fiona,

I agree, your instagram feed would totally suck: all you do is work and study, and you live with your grandparents and share a room with your kid!

#Loser.

However with as little as $2,000 down, you can have lots of instagram-worthy pics of you and your daughter in your very own, brand new Metricon home.

#Winner.

Actually, last year Metricon HomeSolution was fined by the regulator for misleading advertising. It turns out that buyers actually need to come up with a 5% deposit, which is financed through an unsecured personal loan, often arranged through one of Metricon’s associated finance brokers.

#Ripoff.

My job allows me to look through people’s financial filters, and here’s what I’ve seen:

Some of the biggest financial losers are young couples with the nicest Instagram accounts; they live in Metricon house-and-land-package homes, with a leased Audi, an interest free Harvey Norman television, and Afterpay’d accessories. I even have a name for them: Postcode Povvos.

In my eyes, you’re a winner.

While other people desperately try to show strangers on social media they’re successful - you are living it.

So do me a favor: whip out your phone and record a message to give to your daughter when she’s 18. Tell her about how you’re feeling right now: the struggle and sacrifice of working and studying, and being a mum. Tell her why you’re doing it, and what your hopes and dreams are. Then show her your little shared room.

I guarantee you two things:

First, when it comes time for her to look at that video, you’ll have your own little home.

Second, she’ll realise just how brave and amazing her mother really is.And that’s the ultimate ‘like’, right?

Scott

Australian Scholarships Group Made Me Cry

Thanks for warning people last week about ASG. I wasn’t surprised you don’t recommend them. My husband and I had our first baby quite young (21) and at the time went to a baby expo to check out all the latest things. We wrote our names down for a ‘competition’, only to start receiving calls from ASG. We somehow got talking and then a guy came out to my mum’s house (where we were living while saving money) to talk to us about it. We said we could not afford it but might look into it later.

Anyway, the guy started calling me every day, then a couple of times a day. I ignored the calls, but then he called me 45 times in one hour! I was bawling my eyes out, so my husband called the head office and told them he would call the police if we were contacted again. It was horrible. I have told anyone who has ever mentioned them since to never go near them.

Justine

Justine

Hi Justine

He called you 45 times in an hour? That is intense. He really wanted that commission! This sales culture is why I’ve been so hard on ASG … here’s hoping the new CEO (who I interviewed for last week’s column) cleans up their act.

Scott

Down the Rabbit Hole

Hi Scott,I have a spinal cord injury and am paralysed from the chest down. I am self-employed and lucky enough to have a wonderful wife and two great kids. Health-wise I probably have 10 good years left, as I have been in the wheelchair now for 20 years and kidney problems tend to happen at the 30-year mark. I am 46 and earning $80,000 and I want to put my kids through private school, but I also want to see them grow up, not just work and come home exhausted. What is your advice?

Chris

Hi Chris,I’d seriously consider not sending your kids to private school.Why?Because you say you have 10 good years to spend with your kids.Personally, I’d rather spend less time working -- and less time stressing about work -- and invest that time into your kids. If I were in your situation, I’d do two things. First, set up a direct debit into an online saver, so that you put your savings on autopilot. Second, spend that money on experiences you can do with your kids: travel, sporting events, hobbies.Good luck, and good health.

Scott

Happy Campers

Hi Scott,I am camping with my husband (first time ever) and have stopped to read your Barefoot email. I was really pleased to see your praise for financial counsellors. They really are unsung heroes and great advocates too. As a social worker, I know how often these invariably calm and focused people help those who are vulnerable and in dreadful debt (not always large amounts, but soul-destroying high interest). They systematically help people begin to navigate a way out and to regain hope in their futures.

Sam

Hi Sam,I tried to get my wife to go camping once … didn’t work out that well. We’re coming off the largest debt boom in history, and as a wealthy nation we need people like financial counsellors (and social workers) who can help our most vulnerable Aussies. Everyone needs someone fighting in their corner. The Minister for Social Services’ office contacted me after last week’s column to arrange a fireside chat. I’ll keep you posted.Thank you for reading,

Scott

I Didn’t Get Paid!

Hi Barefoot

Interesting column last week about super not being paid. In my office almost everyone has not been getting super since November last year, and some for 12 months. But, like you said, it shows up on our payslip as being paid. A few people have approached the boss as far back as last year, and as recently as two weeks, and the boss said that there was a ‘glitch’ with MYOB and that the money is in the ‘cloud’.

Mel

Hi Mel,

It doesn’t sound like a glitch ... more like you’re getting stitched.

Times change but the bulldust stays the same: it goes from ‘the cheque’s in the mail’ to ‘the money’s in the cloud’.

Well, after 12 months of not being paid super, it’s about time you made it rain ‒ with your boss’s money!

I’d suggest you go to the ATO website, lodge a complaint, and have them investigate.

Legally, employers have to pay super at least four times a year.If your boss is looking to the clouds to pay your super, it tells me that:

One, the business is struggling. Or two, your boss is a crook.

Neither bode well for getting a gold watch in 20 years’ time.

Time to start looking for another job.

Scott

Tithing Is NOT Mandatory!

Dear Scott,

I read with interest your recent answer to a question from a woman who said that tithing was ‘not negotiable’ at her church. As a Christian, it sickens me that the church would do such a thing. It is between you and God ‒ not you and your pastor. The apostle Paul says to give according to what you have been given (1 Corinthians 16:2). Personally, I choose to tithe, as I have been convicted by the Lord and can easily afford it (though I could pay off my house quicker if I did not). But it is NOT mandatory.

Edward

Hi Edward,

I actually had a lot of readers respond to last week’s tithing question, and they all agreed with you:God doesn’t charge a 10 per cent toll on your wages before he’ll open heaven’s boomgates. (I chose your comment because you quoted scripture. So, on behalf of all my fellow sinners, thank you for the Sunday School lesson.)

That being said, one of the fastest ways to break the curse of entitlement, materialism and Kardashian-ism is to support a worthy cause that you truly believe in. Better yet, studies repeatedly show that we get more pleasure from spending money on other people than on ourselves. Still, no one should be guilted into doing it, nor should they put their children’s basic needs before it.

Scott

Tithing for the Church

Hi Scott,

I am a single mum of three. I earn $86,000 a year, pay $624.10 per fortnight in child support (my hubby doesn’t work as he is a stay-at-home dad to our teenage kids), and owe $275,000 on the mortgage. I am a teacher and tithe 10 per cent  of my salary each fortnight to the church (non-negotiable commitment). But I just cannot fill my buckets — what would you suggest?

Janice

Hi Janice,

When you factor in your non-negotiables — child support, mortgage repayments and the tithe — you’re already coming close to spending 60 per cent of your take-home pay! And that’s before you pay the other non-negotiables, like electricity, food, fuel, council rates and toilet paper.

If I were in your situation, I’d seek guidance from your pastor. If you’re a teacher, maybe you can pay your tithe by working for the church? Or perhaps you can do some tutoring? Either way you need to increase your income (or decrease your outgoings) until your teenage kids are off your hands.

Thank-you for reading.

Scott

Why Advisors Hate Barefoot

Hi Scott,

My husband and I would like to share with you a conversation he recently had with our financial adviser.

Husband: “My wife and I have been looking into our shared finances. We think we are paying too much for financial advice on your managed super fund. We will be switching to a ultra low-cost super fund.”

Adviser: “Sounds like your wife has been reading the Barefoot Investor.”

Husband: “I bet that’s the bane of your life.”Adviser: “Yes. Hmf. Well, our fund is better because …”

You can guess the rest. We are so thankful to you, Barefoot!

Meg

Hi Meg,

Just for kicks, let me visualise the rest of the conversation:

Adviser: “You’ll get better returns from our actively managed fund, which employs some of the finest fund managers in the world and has a history of outperforming the market.”

Meg: “Go on.”

Adviser: “Fees are important, but they’re not the only consideration. You need to consider long-term performance.”

Meg: “Do you have access to exclusive hedge funds?”Adviser (panting): “We most certainly do!”

Meg: “Well, did you read about the million-dollar bet Warren Buffett made in 2007? He bet that a basic no-brainer index fund that simply tracks the market would outperform the most elite hedge funds over 10 years. Guess what happened? The $1 million invested in the expensive hedge funds gained $220,000 … the ultra-low cost index fund gained $854,000.”

Adviser (closing his folder): “I’m late for my next appointment.”

Scott

Ripping Off a Pensioner?

Hi Scott,

My mother received around $300,000 as an inheritance. Being financially illiterate (after a lifetime of illness and living on disability pension), she went to a NAB financial planner, who put her money into a superannuation account with MLC. The good part is she is still eligible for her Disability Pension. The bad part is that NAB charges around $2,500 per year for their ‘advice’, and MLC charges around $3,000. Is it a rip-off?

Chantelle

Hi Chantelle,

There is no way anyone on a disability support pension should be paying $2,500 a year ongoing for advice. (Besides, if your mum is under the Age Pension age, whatever she has in super is exempt from the asset test). What she should do is go and see a free Centrelink Financial Information Services Officer (FISO), who will help her maximise her pension -- for free.

As far as the cost of her super goes, it’s about average: over the next decade, she’ll end up paying over $50,000 in fees. (If people paid their super investment bill the same way they do their quarterly power bill, it’d be a bloody outrage, but it’s all out of sight, out of mind.) If she can ‘fight the power’, I’d suggest she switch to an ultra-low-cost industry fund.

Scott

Million Dollar Payday

Dear Scott,

I am 24 years old and I earn $40,000 a year working part time. Today I received a lump sum of $1,000,000 (after costs) due to being run over by a car seven years ago. I need to pay around $5,000 a year in ongoing medical costs. How should I invest this money, and is it worth setting up a trust and a ‘bucket company’ that reinvests in itself?

Max

Hi Max,

First up, you won’t have to pay tax on the payout itself, but you will pay tax on any investment earnings you earn on it. Now, would I invest the money in a trust and then distribute the investment income to a company?

Possibly. The trust will give you asset protection benefits, and the company acts as a ‘bucket’ to theoretically cap your tax rate at the company tax rate of 30 per cent. But know this: it’ll also gobble up a few thousand dollars a year in fees to your accountant.

However, let’s not put the cart before the horse.I

f I were in your shoes, I’d keep it simple:

I’d buy a nice little unit for cash (say $500,000).I’d put $15,000 into Mojo (high-interest online saver account).

I’d put $25,000 into term deposits with different maturities to cover any medical costs within the next five years.

I’d also kick $25,000 into your super.

Then I’d invest the rest ($435,000 or thereabouts) into good-quality Aussie shares (either via a trust, or in your own name), tick the ‘Dividend Reinvestment Plan’ option (so your dividend earnings are automatically reinvested rather into more shares), and let your money compound.

Scott

10 Years Without Money

Hi Scott,

Ten years I have been a monk and therefore ten years without money. Now, at age 52, I am leaving the monastic life and coming back into the regular world. (Scott, I notice you are a bit older, wiser and chubbier than when I last saw you on TV all those years ago.) I am earning $52,000 a year but have no assets or savings. I am not sure I will ever have the chance to buy a home, but I would really welcome your advice on how to build up some wealth. The world has changed a lot, I see.

Doug

Hi Doug,

My wife calls me her ‘Barefoot Buddha’ (mental note, when your wife and your work are commenting on your chubbiness, it’s time to hit the gym).

Anyway, you’ve got a couple of good things going for you:

First, you don’t have a wife, or children, so you can focus 100 per cent on yourself.

Second, you’ve spent the last decade without an iPhone, a butler’s pantry, or KFC. In other words, you’ve broken the chains of materialism!

Having said that, you still need financial security, so your priority should be to increase your income so you can sock away three months of living expenses in a Mojo account.

And the house? Well, if you’re willing to move to a rural area, you could eventually afford a cheap home, too. (They’re cheap in Manangatang, and if you can stick it out in monastery, you’ll be a shoo-in for Manangatang.)

Remember, you’ve got at least 20 years of full-time work ahead of you. Repeated studies have shown that, once you earn over $75,000 a year, money doesn’t make you any happier. But you’re only earning $52,000, so you have $23,000 worth of happiness to gain!

Thank you for reading

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

It’s 2am and I Can’t Sleep

Hello Barefoot,

I am typing this at 2am -- I cannot sleep. My husband and I have a household income of $200,000 and have three small kids -- but we never see them, as we work in the city and live 60 kilometres away. The three-hour daily commute is taking its toll on us all. The house is great, and affordable, but a long way from work. Yet moving to a house big enough for all five of us that is close to the city would put us into mortgage stress. We are stuck -- what do we do?

Jenny

Hi Jenny,

Do you want the money or the box?

On one hand, a study from a university in Sweden found that relationships where one partner commutes longer than 45 minutes are 40 per cent more likely to end in divorce.

On the other, Deakin University Emeritus Professor Robert Cummins and his team have found that financial insecurity (read: mortgage stress) produces similar feelings to that of physical torture.

And you’re stuck in the middle!

Or are you? You see, it may not feel like it -- especially at 2am -- but you do have choices.

You can choose to ditch your commute and seek out jobs closer to home -- even though they’re likely to pay less. (Perhaps one of you could try this option while the other continues to commute.)

Or you can choose to spend less, and spend more time with your young kids. This is what I’d work to if I were you.

Besides, the proof is in the pudding: the Australian Wellbeing Index has repeatedly shown that people living in regional Australia (Woop Woop!) are among the happiest people in the country.

Happy travels.

Scott

Borrow to Buy Shares?

Hi Scott,

My husband and I are both 40, have two very young girls, and have owned our home outright for three years. We are now down to one wage ($100,000), but have also managed to also put away $90,000 in savings. With an eye to growing our wealth, we have borrowed to invest in shares -- on the advice of our financial adviser. But we are worried that the interest each month is less than the dividends received, and think we could have been saving this money instead and investing our own cash. What is your take on this?

Natalie

Hi Natalie,

Getting the banker off your back is (financially) the best thing you could have done for your family.

Well bloody done!

Truth be told, you’ve got the one character trait that almost no broke people have: a savings mentality.

Now, the strategy your financial advisor has you on is negative gearing (in this case shares, not property). And while the gains from borrowing to buy shares can look awesome on a spreadsheet, the truth is that most people don’t have the ticker to stomach a stock market crash with borrowed coin.

There are two major purchases that money can buy you from hereon out: the financial security of never having to worry about money again, and the freedom to spend time with your family and friends. Here’s how to achieve them:

First, save up three months of living expenses in a Mojo savings account.

Second, max out your pre-tax super contributions of $25,000 each year. That’ll give you both a tax deduction and a secure retirement. If you go back to work, do the same (i.e. $25,000 for each of you).

Third, set up a long-term share investing program to fund your kids’ education, awesome family adventures, and weird hobbies. Invest in the lower-earning spouse’s name and, if you’re a nervous investor, do it without debt.

Scott

My Husband Is My Banker

Hi Scott,

I am a 31-year-old stay-at-home mum of two kids. My hubby has a new job (paying $130,000 p.a.) and has arranged for payroll to pay the money into his account each fortnight. Once paid he direct-debits money into my account to pay all bills for the fortnight. He also has a (maxed out) credit card on his online banking which he adds to. He works long hours and deserves some spending money, but I honestly do not know how much he spends each fortnight! Please help me address this issue without ruining us.

Eliza

Hi Eliza,

This is going to sound like a blatant plug (because it is), but the easiest way to address this issue is to get a copy of my book. The book is set around Barefoot Date Nights, where the two of you sort out your finances as a team (with a wine in your hand). The book explains why married couples should share the same account. If he baulks at the idea, well, he has the rest of the dinner to explain why he doesn’t trust you enough to share money with you. Good luck!

Scott

Am I Foolish to Pay off My Home?

I owe about $80,000 on a house worth a bit over $500,000. I am 29, earn $100,000 p.a, have a wife and two kids, and no debts other than the house. A person I respect said it is stupid to have equity sitting in a home and even stupider to own a home outright. He has used the equity in his home to buy real estate and make about $600,000 for ‘doing nothing’, as he puts it. He said at my age it is foolish to pay off my home. I must admit I am tempted, but what do you think?

Tom

Hi Tom,

Dude! Well done! You’ve got yourself in a position that most 59-year-olds would like to be in -- at age 29!

(I’m so impressed with you, Tom, I’ve pulled out three exclamation marks! What the hell, let’s make it five!)

Okay, so now let’s deal with your friend.

You need to understand that they’re talking about their own personal experience … yours may be different.

So let me share with you my personal experience.

The day I paid off my home was the proudest (financial) moment of my life.I don’t want to get too Oprah on you, Tom, but it really was a life-changing moment: life became a lot simpler.

See, whether you admit it or not, debt always makes things more complicated, and more stressful.

But once you’ve got the banker off your back, you have the freedom to call the shots. For me that meant being able to ‘invest’ more time into hanging out with my kids, and less time stressing about ‘stuff’.

And being around my family is what makes me truly happy … that’s what makes me feel rich.

My advice?

If you can wipe out your mortgage in the next few years, you’ll then have the ability to redirect your repayments into building up your long-term nest egg, via pre-tax super contributions. It’s simple. It’s tax effective. And if you stick at it over your working life, you’ll end up seriously wealthy.

Scott

What Would ‘Rich Dad Poor Dad’ Do?

Hi Scott

My husband and I (in our late 30s, two kids) both run our own small businesses. We work part time and are not earning steady money, about $60,000 combined per year. Our incomes never meet our expenses -- NEVER -- and now we have stopped paying our mortgage because we are so tired of ‘the game’, as I call it. My question is this: is it really worth all the effort to own your own home? ‘Rich Dad Poor Dad’ author Robert Kiyosaki calls a home your biggest liability -- not an asset! Do you agree with him?

Katie

Hi Katie,

Please insert your thumb into your mouth and begin sucking it while I pat your head and gently whisper: “Being a grown-up totally sucks, doesn’t it?”

The ‘game’ you say you’ve opted out of is called ‘being an adult and facing up to your responsibilities’. You made the decision to buy a house and take out the mortgage … so you either sell your home and rent, or you continue honouring your commitment.

It sounds like you’re not earning enough money in either of the business (presumably because you’re both only working part time?). If they aren’t making you enough money, and you see little prospect of improvement, by all means get out of that game. Either way, my advice is simple but brutal: one or both of you need to get a job so you can put food on the table for your kids, and avoid losing your home.

Now to your actual question: Is it really worth all the effort to own your own home?

Well, I agree that maintaining a home is expensive, and at times it can be a huge drain on your cash. But I still think it’s worth it.

Yes, creating your own castle involves sacrifice, hard work and a commitment to providing stability for your family. Yet that’s what being a parent is all about, right?

Finally, what would ‘Rich Dad’ do? I have no idea, though I do know he filed for bankruptcy in 2012.

Scott

How to Make $500 Without Even Trying

Recently my editor emailed me a request:

Editor: “Can you give us your top tips for saving on power bills?”

Barefoot: “Okay. How about ‘turn off your bloody lights!’.”

Editor: “Errr … do you have anything else?”

Barefoot: … (No reply)

Truth is, I don’t do money-saving tips:

“If Jenny uses her Hills Hoist instead of her clothes dryer, she could save $384 a year on her power bill!”

Seriously? Jenny didn’t twig that the giant golden ball in the sky could dry her clothes … for free?

Yet I get it, power prices are insane. This week we learned that Australians are paying the highest power costs in the world … twice as much as the Yanks! (Hang on, aren’t we basically a giant coal pit?)

And a report by the Australian Energy Market Commission found that almost half of households haven’t switched their plan or retailer in the past five years … a ‘lazy tax’ that costs on average an extra $507 a year on power and $285 on gas.

So this week I decided I’d buck the trend.

I typed ‘cheap power’ into Google and started dutifully scrolling through the 136,000,000 results it served up.

The top pages were power comparison sites, and they reminded me of walking through a market in Bali:

“Hey Mister! You want free power?”*

“$2 gas for you!”*

(*Just sign up for a horribly confusing bait-and-switch plan that will see you rolling over and being charged an average $278 more for power the year after your deal expires.)

Thankfully, I came across a government website that makes it really simple:

https://www.energymadeeasy.gov.au

It may not be sexy, but with a copy of my last power bill, and a few clicks, I saved $540 a year. (And then I put a note in my calendar to remind myself to go back to the site next year.)

Power to you!

Tread Your Own Path!