I Am Never Looking Back

Dear Scott,

Six years ago I left my ex, due to him punching me. It was the right thing to do, but it certainly set me back financially. That is why I have found your book so amazing. I already feel much better about my situation. I have my new fee-free accounts set up with better interest rates, have been on the phone to my super, and have split my money into ‘buckets’. This is the start of financial control, for my sake and my children’s. While I still feel anxious ‒ as a single parent with a mortgage and $8,000 of debt (personal loan and credit card) ‒ I feel more in control, and I know I’ve got this! I am never looking back.

Tanya

Hi Tanya,

What you’ve done is taught your kids two amazing life lessons.

First, that domestic violence is not acceptable.

Second, that you are strong enough to stand on your own two feet financially.

Thank-you for reading,

Scott

Your Book Is Stressing Me Out

I started reading your book last night and was discouraged when I read about your SMSF strategy. About two years ago, on advice from a financial advisor, my husband and I set up an SMSF, and we have since purchased a property with it. It was extremely stressful to set up, and the cost of ensuring compliance is ridiculous. My question is: should we close it (and how do we do this?),  or would the financial and emotional cost be too high?

Prue

Hi Prue,

I must admit it doesn’t look so good.

For one thing, I’d be very wary of having the bulk of my super assets tied up in one investment property.

I’m yet to see a case where someone has bought a residential investment property via an SMSF that was actually a good deal for the client. Often they’re a three-way play — an accountant, a financial planner, and a property developer who share in upwards of $50,000 commissions they load onto the purchase price of the property (plus the SMSF fees, plus the borrowing commissions).

I’d also be very wary of the adjectives you’ve used in describing the process thus far: “extremely stressful” and “financial and emotional costs”. Sounds more like a colonoscopy than holistic advice.

But I don’t have all the facts. So if I were in your shoes I’d get some second opinions — firstly a valuation on the property from a local real estate agent, and secondly an assessment of the SMSF from an accountant with no links to the guys who set it up. Once you’ve assembled the facts, act quickly. I’ve never seen more time turn a bad property into a good one.

Scott

AFL Player Needs Help

Hey mate,

I am a professional footballer. I received a copy of your book through the Players’ Association, and it is honestly the first book I have read from start to finish ‒ overnight! I have learnt a lot from your book after being in almost $1 million in debt. My situation is as follows: I earn $220,000 a year, I own my own home (no mortgage), have $40,000 in a term deposit, $300,000 in an investment trust, and $200,000 in super. My question is, now that I am approaching 35 (I won’t be a footballer forever), how can I maximise my percentage growth?

Tim

Hi Tim,

I wish all the professional sportspeople I have dealt with were in as good a financial shape as you!

Look, so long as you don’t do anything stupid with your investments (read: Bitcoin, investing in a start-up, punting on property), and so long as you resist the need to upgrade to newer flashier digs ‒ you’ll be able to live out the rest of your days very, very comfortably.

You’ll never have to worry about money again: you have your home paid off. You have $40,000 in a term deposit, which I’m going to call your Mojo. You have a decent amount in super. You have $300k in a family trust (that’s hopefully invested in a low-cost share fund). If you tick the dividend reinvestment plan (DRP) box and let compound interest do its thing over the next 30 years, it’ll likely grow to $1.5 million in today’s dollars.

The main thing you need to maximise is your income after you hang up your boots. That’s where I’d be investing ‒  in education, training and career counselling ‒ because you’ve got everything else sorted. Well done!

Scott

Escape to the Country

Scott

I keep falling in love with the idea of moving to the country. Whether it’s you or a happy-go-lucky couple I recently met, it seems many people are singing the praises of the ‘simple life’ ‒ ditching expensive inner city rents for a modest country abode with a manageable mortgage. But is the country life only suited to freelancers who have flexibility and work from home, or is it still worth it for those of us in our early 30s who will face a long and possibly dreary commute?

Roxy

Hi Roxy,

You’re falling in love with the ‘idea’ of moving to the country. Understand that the grass never looks greener than when you’re stuck in the concrete jungle, tailgating a Kia Rio.

Now, if you can run your own show (like I do), living in the country is bloody brilliant.

The Australian Wellbeing Index has repeatedly shown that people living in regional Australia are among the happiest in the country. Part of that is because you can avoid becoming what I call a ‘postcode povvo’. 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. Struth!

However, the grass starts to look a bit patchy if you have to commute back into the city each day. 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.

My view?

I’d look at it as a three-year plan.

First, swing on the employment trapeze by building up some freelance work.Second, after that, look at renting in the country for 12 months to try it out. (That’s what we did. While I’m from the country, I shacked up with a woman who was born and bred in the hipster suburb of North Fitzroy, where even the ducks have their own bike lanes. So we both had to be certain that country life would work for us.)

Finally, if after all that you’re still in love with the idea, make the move!

Scott

Mortgage or Super?

Hi Scott,

On page 156 of your book it says: “So with your home deposit saved and your house bought, it’s time to give your super contributions a boost.” Could you please settle an argument for my husband and me? Do you mean house bought as in mortgage paid off, or do you mean purchased but still paying off the mortgage?

Kirsten

Hi Kristen

After you buy your home, you boost your super.

As the little girl on the taco ad says, “Why not do both?”.

To clarify, here are the relevant Barefoot steps:

Step 4: Buy your home.

Step 5: Increase your super to 15 per cent.

Step 6: Boost your Mojo to three months of living expenses.

Step 7: Get the banker off your back.

Now, there are three reasons you should follow the steps and the little Mexican girl:

First, for the average wage slave, super is still the best tax dodge going round.

Second, you’re diversifying your nest egg ‒ most people end up retiring with too much home and not enough super.

Third, it puts your retirement savings program on autopilot. The current compulsory employer contribution of 9.5 per cent isn’t enough ‒ you need 15 per cent if you want to spend your golden years swilling sangria in Spain rather than necking a stubby in Shepparton.

Finally, if you follow the Barefoot Steps, you’ll use your ‘fire extinguisher’ account to eventually hose down your home loan quicker (Step 7), which will have you livin’ La Vida Loca sooner.

Thank-you for reading.

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

My First Year as an Adult

Dear Scott,

Just over a year ago I was a 17-year-old high school graduate with literally $0 to my name. Luckily, I managed to find a farm job over the summer break before starting uni. My boss, a charismatic Canadian lady, had just finished reading your book. She bought copies for her children and, to my surprise, one for me. I am sure you can imagine my first thoughts — what does a 17-year-old girl need with a finance book?

Nevertheless, I decided to give it a go. Reading your book made me feel like I had been living in the dark. There were so many things I should have known! I was taken aback by how easy it was to read and how everything was explained in a way that even I, who knew nothing about finance, could understand. Back then I had one everyday bank account and no super fund. Fast forward to now …

I have switched to a low-cost super fund. I have set up two daily accounts (‘Expenses’ and ‘Splurge’) and two long-term accounts (‘Smile’ and ‘Fire Extinguisher’), and have $3,000 in ‘Mojo’. I love my ‘Barefoot Date Nights’!

In the past year I have saved, using your methods, for a $3,000 trip to Japan, a $3,000 car, a $1,000 trip to Brisbane, a $1,000 University Games tournament, and $2,000 for braces … and I still have $4,000 of my original money from the farm job. I have no debt, I receive no money from my parents, and I don’t worry about money.

The Barefoot Investor has helped me survive my first year out of home, and my first year as an adult. I owe you a tremendous thank-you. If not for the Barefoot Investor, I’m not sure where I’d be today.

Jess

Hi Jess,

You just nailed why I wrote my book.

See, most teenagers don’t have much confidence. Especially teenage girls. And especially when it comes to money.

Let me tell you what typically happens next:

You turn 18, and the world is waiting to reinforce your belief that you’re no good with money:

Advertisers spend billions of dollars targeting you to buy stuff you don’t need, to impress people who (you’ll eventually come to understand) don’t really care about you. Social media makes you feel like a loser if you’re not living an expensive Instagram-filtered life. And your bank will send you a credit card ... and then begin upping the limit.

And within a few years your negative beliefs will become a self-fulfilling prophecy:

“See, I am a loser with money! It must be true! Just look at my credit card statement!”

And then these negative beliefs feed on themselves. They colour your entire life. They keep you stuck in jobs you’ve outgrown, in relationships that aren’t good for you. And life passes you by.

But that’s not you, Jess.

You have confidence. You’re a strong woman. No one messes with you. Keep treading your own path. You got this!

Scott

How to Invest in Shares With No Risk

Hi Scott,

My partner and I are quite young (both 28) and have bought our first home already. We are now looking to invest in the share market, and would like to take out a ‘protected equity loan’ to do so. Yes, the cost of it is high, but after that you own the asset. We are in it for capital growth over time, so we can accept breaking even for 10 years or so, particularly with the potential for tax minimisation. The trouble is, I know you do not think highly of this product. Could you please explain why?

Angie

Hi Angie,

On first glance these things look like the best thing since sliced (gluten-free) bread.

Here’s how Westpac describe their protected equity loan:

“The potential of Australian shares. The certainty of capital protection at maturity.”

Let’s say you take out a Westpac protected equity loan of $1,000 and invest in an Aussie share fund. If in five years’ time the shares are worth less than $1,000, all you need to do is hand them back to Westpac, and just walk away Renee (or Angie -- word up to those 90s kids who got that music reference).

Hot diggity dang! Who doesn’t want the potential of shares with the certainty that you won’t do your dough?

Sign me up!

Trouble is, there’s no free lunch in the stock market, and Westpac sure ain’t handing out gluten-free dinner rolls.

The devil with these loans is the interest rate you’re charged. Westpac builds in the cost of the capital protection (otherwise known as a ‘put option’), then adds a bit of gravy.

How much gravy?

Well, Westpac charges an interest rate of 8.95%.‘Trời ơi!’, as my Vietnamese friends say.

Bottom line?

These fancy loans are dreamt up by bankers and flogged by financial planners with one goal: to make them fat ongoing fees … not to help you.I’ve been Barefoot for years now, and I’ve come to understand a few things:

First, most people make dumb decisions just to save tax.

Second, most people don’t have the ticker to invest in the market with their own money, let alone with borrowed money.

Third, most people borrow at the wrong time. Like right now, when the market has been going up for over a decade and everything appears ‘safe’. The time to go ‘balls in’ (as my father would say) is straight after a crash, precisely when no one wants to invest in the share market.

So what should you do?Stick to the Barefoot Steps.You’ve bought your home at a young age -- well done!

That’s Step 4 done and dusted. Now it’s time to move on to Step 5 and increase your super contributions from the basic 9.5% (paid by your employer) to 15% by salary-sacrificing some of your pay packet (up to the $25,000 cap per person per year).This has two benefits:

You’ll get a genuine tax deduction (possibly slashing your top marginal tax rate by almost two-thirds) and, if you choose a super fund with ultra-low costs, your returns won’t be eaten away by some banking fairy.

Scott

The 3 Smart Gifts I’m Giving this Christmas for Under $30

Christmas shopping sucks, right?

Not for me.

Years ago, I cracked the Christmas shopping code: buy people books.

They’re the ultimate present, they cost under $30, they don’t need a separate card (I simply scribble a Merry Christmas message on the inside cover), and my local bookstore will even gift wrap them for me.

Job done!

Here are the books I’ve got in my Santa sack this year:

How to Get Rich

Felix Dennis started out with nothing and rose to become one of the wealthiest men in Britain. Then he died of cancer from smoking too many cigars. Several years before sucking his last stogie, he sat down in one of the most expensive homes in Europe and wrote How to Get Rich. It’s vulgar, manic, cutthroat, and one of the most brutally honest accounts of what it really takes to build a fortune. And what you have to give up to do it …

Raising Boys

Okay, so this one doesn’t have much to do with finance, but I’ve got two boys … and a baby is due in a few weeks (and no, we haven’t googled what we’re having). Anyway, there’s a reason that Steve Biddulph’s Raising Boys has sold over a million copies, and that’s because boys are crazy and we parents need all the help we can get. This book navigates you through the testosterone-charged challenge of growing great boys. It’s helped me a lot.

I’ve Got This!

And last, you guessed it, I’ll be giving away my own book: The Barefoot Investor: The Only Money Guide You’ll Ever Need. (Side note: at wileycompetitions.com/barefoot, my publisher is running a little promo where they’re offering $5,000 in Mojo to one person who gifts the book in December.) I estimate that 80% of the sales so far have been from people gifting it to their family and friends. Why? Because the Barefoot Steps work, and they keep you safe. And that’s a pretty cool Christmas present to give, right?

Tread Your Own Path!

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

The First Home Super Saver Gets Up!

Hi Scott,

I heard you on Triple J this week talking about the fact that the First Home Super Saver Scheme has finally been passed by Parliament. My parents, being traditional hardcore Asian parents, are telling me I have to open one up. But realistically it will be 10 years before I buy a house (I am 23). What do you think I should do?

Mandy

Hi Mandy,

Honestly, I thought the First Home Super Saver Scheme was as good as Sam Dastyari’s political career (dead and buried). Yet after seven long months the Government took some legislative laxative and passed it into law.

Here are the basics:

First home buyers can now divert extra money into their super (maxed at $15,000 per year), and then draw it out as a deposit on their first home. The maximum they can save is $30,000 per person ($60,000 a couple).

For someone earning $65,000 a year, after three years of using the First Home Super Saver Scheme they’ll have $6,314 more than if they’d saved via a standard bank account.

So I’d certainly use the First Home Super Saver Scheme if I knew I was going to buy a home in a couple of years and I’d already saved up a big deposit. For an average-earning couple it’s an extra $12,628. I wouldn’t kick it down a drainpipe if I was walking along the street and saw it. Do it.

However, if I were in your shoes, Mandy, I honestly wouldn’t bother. There’s ‘legislative risk’ to doing something 10 years out (i.e. Krusty the Clown could be our PM in 2027). Instead, I’d focus on getting your buckets set up and sorted.

Scott

Daddy’s Girl

Dear Barefoot,

My father monitors my money from afar and, as a 25-year-old woman, I feel I am being treated like a child. He thinks my partner and I are financially illiterate, and disagrees with us having joint bank accounts (he and Mum keep their money separate). He does not have my account passwords, but he does ask for updates on my money, and has forceful discussions with me about my budget — talk about pressure! Reading your book, I want to take control of my money, but I know this will be very hard for Dad. How do I tread my own path?

Jessica

Hi Jessica,

Your old man just wants the best for you, but he’s got boundary issues.

You’ve probably worked this out by now, but forceful conversations about money are rarely about money — they’re usually about control — and it sounds like your father wants to control you just like he did when you were a kid.

Of course you’re now an adult, living with your partner, and your financial situation has nothing to do with your dad.

My suggestion would be to give him a copy of my book for Christmas. This will show him you’ve got your head in the right space financially. Then explain to him that if you ever need any further advice he’ll be the first person you ask.

Scott

Help! My Wife’s a Ball-Breaker

Hey Scott,

My wife and I are currently following your teachings. However, we have come unstuck on overtime payments and additional income. I am working a second job, and doing overtime in my main job, to increase the amount of ‘fun money’ I have. But the wife says these extra funds should just be put on the home loan and I should not have access to them. I have searched but cannot find what you say to do with overtime and additional income. Can you please enlighten us?

Corey

Hey Corey,

You should check the index of my book — under ‘B’ for ‘ball-breaker’.

(Only joking.)

Then again, she could be right. If your mortgage is eating up more than, say, 40% of your income, I’d definitely side with her — it’s time to put in the overtime and pay that sucker down.

But if it’s under control, I’m on your side. You have every right to a bit of ‘fun money’.

The reason I lay out the Barefoot Steps is to get people to focus on the big moves that will get them to financial security. However, some people get a little overzealous, and get so focused on reaching the end that they forget about stopping to smell the … Bintang in Bali.

Bottom line: money in marriage is a team sport, so you should both have a say on how you spend your money.

Scott

The Barefoot Movie

Hi there,

I am successfully following your instructions on splitting my income -- 10% to ‘Splurge’, 10% to ‘Smile’, 20% to ‘Fire Extinguisher’ and $3,000 in ‘Mojo’. I see in the book it says that Mojo will grow, but I cannot find any instructions on how to add to it. Is this something we add to later in the process, or have I missed something?

Wendy

Hi Wendy,

You’ve shot off an email at page 132, haven’t you!

You just need to keep reading. In fact, you remind me of trying to watch a movie with my wife. She sits on the couch next to me whispering, “Why did he kill her? I thought she was on his side?” To which I reply, “I don’t know either -- let’s wait and find out”.

So let me lay out the closing credits for you. My book is organised into 9 Barefoot Steps that you complete in order, one by one:

Step 1: Schedule a Monthly Barefoot Date Night

Step 2: Set Up Your Buckets

Step 3: Domino Your Debts

Step 4: Buy Your Home

Step 5: Boost Your Super to 15%

Step 6: Boost Your Mojo to 3 Months

Step 7: Get the Banker off Your Back

Step 8: Nail Your Retirement Number

Step 9: Leave a Legacy

The power of the Barefoot Steps is that they focus on you doing just one thing at a time.

You won’t get overwhelmed.Just move through them one at a time.

Thank-you for reading!

Scott

Jimmy Barnes and I go head to head

“Last year industry outsiders Jimmy Barnes and Scott Pape taught the book industry how to sell books”, wrote the Bookseller + Publisher recently.

Yee-haw!

Two working-class men who — let’s be honest — couldn’t give a Khe Sanh about a semicolon are now rubbing our dewey decimals up against famous authors like Tom Winton (or whatever his name is).

My book has officially been in the bestseller charts for 52 weeks in a row, and has sold over 500,000 copies.

(Catch me if you can, Jimmy!)

Okay, so now that I’ve bragged about the book, let me tell confess how dumb I really am:

This time last year I told my wife that books were ‘dead’.

“No one buys books anymore. It’s all about ebooks and audiobooks downloaded on Amazon”, I told her.

Wrong!

In the UK and the US, sales of ebooks plunged by nearly 20% last year, while sales of physical books were up 7%.

And Australians are some of the biggest book buyers per head in the world: according to Nielsen BookScan, collectively we spent close to $1 billion on 53.6 million books in 2016 … and this figure didn’t include ebooks or audiobooks.

My own experience backs this up: over the last year The Barefoot Investor has topped the charts for both ebooks and audiobooks … and yet roughly 90% of total sales were still of the dead-tree variety.

And it gets better: the bulk of these books have been bought from … shock horror! … local bookstores.

There’s a good reason for this: I’ve purposely never sold my book on my website, even though I’d get a higher clip.

Why?

Well, when I published my first book as a young and unknown author, it was booksellers who helped sell it. They recommended it to their customers, and in so doing helped me build a following. So this time round I wanted to return the favour by getting people to go out and buy the book from bookstores.

And buy they did, with many scooping up multiple copies as presents for family and friends. And that makes sense when you think about it: when was the last time you handed someone a gift-wrapped ebook for Christmas?

Tread Your Own Path!

Uber’s Dirty Little Secret

If you’ve got an Uber account, you really need to read this.

You may have heard that last week Uber fessed up to the fact it had been hacked in October last year — with the names and contact details of 57 million of its user and driver accounts being stolen. But instead of making the breach public, they paid the hackers $100,000 to destroy the copied data.

Trustworthy fellows, those hackers. I’m sure they did what they said … even used the recycling bin, right?

Here’s you: “Uber are clearly morons … but how does this affect me?”

Here’s me: “The Australian is reporting that ‘more than one in ten Aussies may have been affected’.”

So how do you know if you’re the one in ten?

Well, Uber is continuing to dig its hole — they’ve decided not to contact customers whose data has been breached, and instead have said they’re “monitoring the affected accounts and have flagged them for additional fraud protection”.

Poor form!

It’s like if you find out you’ve got an STD. The right thing to do is to ring up your former partner and say, “Look I probably deserve a slap, but you’d better get tested … because I’ve got the clap”. Uber is doing the equivalent of checking in on your ex’s Instagram every now and again to ensure none of their bits are mysteriously falling off.

For the record, if this hack happened next year, Uber would be toast. That’s because laws to be introduced next February will force organisations to contact victims and report data theft to the Australian Privacy Commissioner.

So what can you do if you have an Uber account?

Three things.

First, you should assume that your details have been breached.

Second, you should change all your passwords. If you’re normal, you have one password that you use for everything. Stop doing that, and start looking into encrypted password vaults like LastPass.

Third, you should check your credit file, which you can get for free if you write to the credit agencies.

Actually, for $79.95 you can get your file plus an alert system that pings you if any changes are made to your credit file for 12 months, via MyCreditFile.com.au.

Hang on, can you trust MyCreditFile.com.au?

Err, well, it’s a product of credit reporting agency Equifax (formerly Veda Advantage), which earlier in the year suffered one of the biggest data breaches in history.

Tread Your Own Path!

The Acorns App

Hi Scott

I wanted to get your thoughts on the Acorns app and whether using this would be just as good as, if not better than, using a ‘Smile’ saver account for Mojo. I want to see my money grow quickly but am unsure whether using Acorns is relatively risk-free and worth it?

Tim

Hi Tim,

Hold your nuts Timbo, because I’m about to whack you in the acorns:

You say you want to ‘grow your money quickly’, but it needs to be ‘relatively risk free’?

Whack! Whack!

I’ve spoken about the Acorns app before. Basically, it’s the investment equivalent of putting training wheels on a bike (with a bell and pretty streamers on the handlebars). The app scoops up small amounts of money from your account and then invests it into Exchange Traded share Funds (ETFs) — and charges an extra layer of fees to boot.

It’s a bit of a gimmick, and I wouldn’t advise committing serious dough to it, and I certainly wouldn’t be keeping my short-term savings in the share market. In other words, the Acorns app is a Frown account, not a Smile account.

Scott

ScoMo’s $250 million air kiss

Right now Parliament House reminds me of a seedy share house I lived in when I was at uni: no one could quite work out who lived there, or where they came from, and everyone was busy screwing each other.

Poor old Malcolm. With the current state of his house, it’s understandable he hasn’t been able to get his housemates together to deliver on the ‘First Home Super Saver Scheme’.

You remember that, don’t you?

It was announced by our Treasurer, Scott Morrison, on Budget night (way back in May) as a $250 million ‘air kiss’ to housing affordability. As ScoMo crowed on the night, “Most first home savers will be able to accelerate their savings by at least 30%”.

And then … everything went quiet.

Yet I’ve been dutifully following it up … like Pauline chasing a burqa. In July, I called Treasury and asked what the hell was going on. It was clear to me that the Government needed a legislative laxative — the scheme was having trouble being passed into law.

“Not correct”, said a spokesperson for the Treasurer.

Before adamantly adding: “The First Home Super Saver Scheme will be passed in the spring session of Parliament”.

Well, on my farm, spring has sprung, and my lambs have been sold at market.

It’s bah-bah for them, and if they can’t get it passed soon, it’ll be bah-bah for the First Home Super Saver Scheme.

So what can you do?

Start saving for a deposit on your own.

And the best way to do this is to set up your Barefoot money buckets, including a ‘Fire Extinguisher’ online saver account, and then start allocating 20% (or more!) of your take-home salary towards getting your deposit.

Sure, it’s not as tax effective as what was on offer on Budget night, but you can start right now — instead of sitting like a lamb waiting for the grass to grow in Canberra.

Chop, chop, ScoMo!

Tread Your Own Path!

The Scary Stepmother

Dear Scott,

I need help to do a ‘full life’ money plan for my 21-year-old stepson -- and I am getting migraines! Here is how I picture it: he puts 12.5% of his wage into super, gets married at 25, has a good job, takes out a 30-year mortgage, and has two kids (reports show that two kids at private school costs $800,000 by the end of Year 12!). He then retires at 67.5 years old and has a ‘reasonable life quality’ of $42,500 income a year, with around $500,000 saved in super. Is all this possible? Can you help?

May

Hi May,

I just read your question, and I’ve got to be honest … you’re kind of freaking me out right now.

Your heart is obviously in the right place, but you may as well be lecturing him about the danger of venereal diseases.

First, you’re never going to convince a 21-year-old guy that he’ll one day be 67.5 years old.

Case in point: a young Mick Jagger once said, “I’d rather be dead than singing ‘Satisfaction’ when I’m forty-five”.

Second, no 21-year-old bloke wants to have, as you put it, “a reasonable life quality”.

He wants Satisfaction, goddammit!

Here’s what I’d say to him:

Most things don’t matter that much, but there are a couple of things that really do:

Make sure you do well-paid work that you enjoy, and become obsessed with saving money.

Let’s deal with work first: fact is, you’re going to spend 90,000 hours of your life at work. Add in sleeping, Facebook and sitting on the can, and there’s not much time left over. You’ll spend more time at work than you do with your family and friends. So you better make sure you enjoy it, and you better make sure you get paid well.

And saving: if you want to stay poor, do what everyone else does and focus on spending your money. If you want to become wealthy, focus on saving and investing your money. When you have savings, you’ve got freedom. You call the shots. You’re in control.

Then give him a copy of my book, encourage him to work hard, and have him follow the steps.

He’s got this.

Scott

You’re Wrong, Barefoot

Hi Scott

I love your Q&A column, but it’s very shortsighted of you to say “no-one ever regrets the kids they have”. I know many women who had children because they felt they HAD to. Having a child is one of the biggest gambles a woman can make, so please don’t reduce it to nothing just because, as a man, you don’t have to risk your health, body, future earnings and career to do so. I get that you are a family man, but please don’t go around spouting nonsense like this. You’re smarter than that.

Linda

Hi Linda,

The women who work for me (all mums) went crazy over your question -- some for, some against.

I certainly wasn’t suggesting that having children is ‘nothing’. (My wife is currently in her third trimester, coming into a sweaty summer, and our two young boys have worked out there’s an intruder about to enter the house, so our life is anything but the Brady Bunch.)

All I said was “no one ever regrets the kids they have … only the ones they don’t”. And I think the vast majority of parents would agree with that … well, eventually.

Scott