You SUCK Barefoot

Scott,

I didn't know whether to laugh or cry when I read your answer to 'My Dream Home' (31st of January). You told Jody that her husband's wage of $45k "isn't going to cut it". Well, after 39 years earning a decent wage as a tradie, my husband was made redundant two years ago. He now works for a car dealer and only earns $43k. How do you suppose at the age of 56, he increases his income? No one is interested in employing someone his age. Or if they are, they're only offering the same miserable wage.

Renee

Hi Renee,

If you and your husband were out to dinner with me and my wife, and we were having this discussion, my wife would've kicked me under the table, given me 'the look', and empathised with you on how hard it is for older people to get decent paying jobs. (She gets social niceties like that). That part of my brain is missing. So let me dig myself a little deeper.

If you're husband has worked as a tradie for 39 years, why is he working in a car dealership for $43k a year? We're currently living through the biggest building boom in history. If a tradie with four decades of experience can't swing a gig for at least $60k, I'll bare my backside in Bourke Street. Strike me handsome!

You say: "No one is interested in employing someone of his age". That is simply not true. Stop saying it. The average age of my staff at the Barefoot Investor is 50-plus (and that's a funky, internet advice business). He's got ten years of good work left in him at least. He needs to work out how to capitalise on his experience, and exploit the superannuation tax lurks while he can!

Scott

Set Yourself Free From Credit Cards

Let me tell you about my radio interview from hell.

At the start of each year I do about twenty back-to-back interviews on financial resolutions for the new year. It’s meat and potatoes sort of stuff that I’ve been doing for over a decade (and will be doing a decade from now).

Only this year, I snapped.

I felt like Michael Douglas in that movie Falling Down, where a mild mannered dude has bottled things up for too long and goes absolutely bonkers.

I was halfway through my spiel: ‘Aussies have some of the highest household debts in the world. The average credit card debt is $4,377, and if you only pay it off at the minimum -- which is all the banks encourage you to do -- it would take you…thirty one years to pay off, and cost you $14,900 in interest...The bubbly radio host interjected and said: “Oh sure, but I still couldn’t imagine my life without a credit card...I even hide my statements from my hubby!”

“That is just so incredibly...stupid” I blurted out.(

Awkward radio silence).

Bubbly radio host: “But….how do you afford nice things?”

Barefoot: “I have this weird thing called savings”.Bubbly radio host: “Oh I could never live like that”.

Now, the radio script I’d been given had me giving her tips on how to ‘manage’ her credit card.

Bugger that. It was time to go rogue.“You need plastic surgery. Cut the damned things up and be done with them” I told her.

That’s the only advice to take for anyone who has got credit card debt right now.

See, I’ve noticed that people who try and ‘manage’ their credit card debts, are nearly always broke. They may be able to pay it down at times, but it always shoots back up.

Why does this happen? Is it because they're weak-willed? Not really. It’s because they keep their card in their wallet.

That’s like a drunk keeping a beer in the fridge for hot days.

The truth is, if you have credit card debt you are not in control of your financial situation.

In fact, the truth is that you don’t need a credit card at all. I haven’t had one for most of my adult life.

When I was young and just starting out, I couldn’t afford one. My logical brain said: ‘credit cards make everything more expensive. I can barely afford anything now, so a credit card will make life impossible’.

Now I’m older I can afford one -- but I still won’t get one.

Why?

I see it as a reverse status symbol.

I’m showing people that I don’t need a credit card. Kids learn by observing what their parents do -- and my kids will grow up watching Dad pay his own way with cash. (Seriously, how’s that for the ultimate rewards program!?).

Here’s you: “Uh, dude, you’re missing out on rewards points. Pay it off each month, and you get free stuff!”

Here’s me: Bitch, please! Credit card rewards programs are a con job. The value of each point is manipulated by sophisticated marketers to keep you spending. They have a track record of devaluing points each year (a Qantas point is now reportedly worth about 0.6 cents), while simultaneously making it harder to claim rewards (Qantas actively limits the number of rewards seats on flights). And then there’s the annual fee.

In Case of Emergency...

A credit card isn’t about convenience, and it sure as hell isn’t about emergencies -- trust me if you’re in a genuine crisis, the last people you need to call on are these pricks.

Ask your granddad how he survived genuine financial hardships without a high interest rate loan from a bank in his pocket.

The truth is you need to have some ‘no matter what’s’ in your life.

No matter what, I’m not going to take out a high interest rate loan to fund crap I don’t need.

No matter what, I’m going to pay my own way, and claw back my financial confidence.

Know this: the moment you say ‘no matter what’ -- and really mean it -- you no longer have a debt problem. It’s simply just a matter of time.

Now, here’s how to acquire the ultimate anti-status symbol:

Step 1: Save up $2,000 Mojo in an online account.

Step 2: Do your sums and work out how many months it’ll take to clear your credit card in full.

Step 3: Double it. (Life happens).

Step 4: Apply for a balance transfer card, and when it arrives in the mail, destroy it.

(This is critical. A zero-balance transfer offer is the financial equivalent of selling gym memberships in January: ‘roll your lard over to our card, porky, and you’ll have be in great shape in 18-months time.’ A study by ME Bank last year found that 29 per cent of people who tried a zero-rate balance transfer deal didn’t clear their card before the end of the interest free period. Don’t be a financial fatty).

Step 5: Set up a direct debit each time you get paid, and get rid of it once and for all.

In all the years I’ve been doing this -- with thousands of people -- no one has ever come back to me and said: ‘you bastard, you made me pay off my credit card, and forced me to live on my savings’.

Tread Your Own Path!

I need your help

This week marks our two year anniversary of losing our home -- and everything in it -- from a bushfire.

I made a pact with myself that each anniversary I’d remind you to take a look at your insurance. However, as insurance is possibly the most boring topic in the world, I’ll keep this ridiculously brief:

I need you to dig out your insurance statement this evening (please put a reminder in your phone, now). Make sure you are insured for “Total Replacement”. This is where the insurer agrees to pay the cost of replacing your building to the standard it was in before it was damaged or destroyed.

Most people have ‘sum insured’ policies, which cover you for a specific predetermined amount in the event of a claim. It’s easy to get screwed with this deal. You don't want this cover. Stick with a “total replacement” policy.

Happy Anniversary.

Fare Go for Uber Driver

Let’s kick off the year with an email I received from a reader who hates me:

Dear Barefoot Investor,

You really have no idea do you? Not everyone can work two (or three!) jobs like you “advise”. After you pay double taxes, it’s just not worth it. You’re giving up your family and friends, so you can work for a company that will exploit you for a few bucks an hour. You really need to get off your high horse and stop giving advice that is totally unrealistic for the average person to follow. You have no idea how real (normal) people live.

Craig

I picture Craig as a little yappy Chihuahua type-of-bloke. Just think, you’re competing with guys like him in the employment marketplace. Hardly fair is it? It’s like shooting tofu in a barrel.

Anyway, the truth is I’m not writing for people like Craig, who live in fear of hard work.I’m writing for people like Andrea.

Andrea is a 46 year old single mother who works full-time in office admin at a local TAFE.

She earns $44,000 a year.

Last year she got talking to the bloke who fixes the photocopiers at her office, and he told her about a good way of earning some money on the side:

Drug dealing.

(Just kidding). He said “Uber”.

Though he may as well have said drugs, because Andrea had never heard of Uber before.

“It all sounded pretty far fetched to be honest” said Andrea, when I spoke to her this week.

“You download an app on your phone...and then earn money from driving people around? I was very skeptical”.

She needn’t have been. Uber -- which goes by the name UberX in Australia -- is a ridesharing app that over the last few years has rear-ended the taxi industry like a hyper-aggressive kid in a dodgem car.

There have been 10 million UberX rides ordered through the app, which was was launched in Australia in 2014, and amazingly for much of that time it’s operated illegally. (UberX doesn’t have government approval in Victoria, but it has been legalised in the ACT and NSW, and will soon be in WA).

Yet despite the best efforts from the taxi lobby, it’s only a matter of time before UberX becomes legal, and continues to bump the taxi industry into oblivion.

So when the photocopy guy mentioned that Uber was offering a $500 referral fee for new drivers -- and that he’d split it with her -- Andrea thought she’d give it a go. She washed her Honda (UberX requires cars to be less than nine years old), filled out the paperwork and background checks, and downloaded the app.That was five hundred trips ago.

Today, Andrea says she ‘Ubers’ about 15 to 20 hours per week - mostly in the evenings when her teenage daughter has extracurricular activities at school, or is at her dad’s. For that she brings in between $300 to $400 per week. (Uber takes 20 per cent of the fare, and Andrea pays all her expenses).

Yes, but isn’t it dangerous, a single woman driving strangers around the city in her little Honda?

“No, not really”, says Andrea.“I don’t handle cash. Everything is tracked through the app, and synced up to each user’s credit card. I would never do it if I had to handle cash like taxi drivers do...I’d feel too scared that I could be robbed by an ice addict or something.

“In fact meeting so many different people is what I love about the job. I picked up a lady one day who was an escort. She said she thought I would make a very nice looking working girl, and told me that I could make my weekly wage in an hour!”

Fun and games aside, the truth is that Andrea is one of the working poor: she ploughs away in a low-paid full-time job, but needs another job to pay her bills and mortgage, and to provide for her kid. One day she dreams of going overseas, but that’s a long, long way off. Right now, most days she gets up at 5:30 am, and her head hits the pillow at 11:30pm. That’s Eddie McGuire hours!

Still, the most interesting thing about Andrea’s story is just how unremarkable it actually is.

Right now there are 20,000 UberX drivers in Australia.

It’s strictly a side gig for nine in ten of them, who have another job.In fact UberX says that about half of its drivers are behind the wheel for less than 10 hours a week.

Some drivers only turn on the app and pick up a customer when they’re driving on their way into work -- so in effect it pays for their petrol, parking, and lunch money. Other drivers I’ve met tuck their kids into bed, and go out and work on a Saturday night to make an extra mortgage repayment.

How cool is that, Craig?

Then again, perhaps Andrea isn’t ‘normal’ enough for you. So this week I met with another Uber driver, named Lorraine. Like Andrea she’s a single mother, and also works two jobs. She spends 15 to 20 hours a week driving around in her Kia, and earns from UberX around $700 a week.

Worth it? Woof, Woof!

Tread Your Own Path!

My Daughter Is a Brat

Hi Barefoot,

How can I teach my 13-year-old daughter the value of money? She will not stop asking for an iPhone 6s. We have explained to her that we do not spend that much on presents, and we would not spend that much on a phone. She has her dad’s old smartphone at the moment and an iPad that was required for school. I hope you can explain to her that spending top dollar just to have the newest of something is not always a wise use of money.

Nicole

Hi Nicole,

There’s a simple answer to this problem: introduce your daughter to the wonderful world of work. It’s a few years too early to send her down the coalmines, but that doesn’t mean she can’t do household chores for you and get some pay for it. Get her to divide her pay equally into three jam jars: spending (iTunes), saving (iPhone) and giving (for all those kids in Africa who don’t have an iPhone). Kids learn by doing, not by being told. (They also learn by watching -- could it be she’s modelling you?)

Scott

Barefoot Says: Don't Pay Off Your Mortgage?

Hi Scott,

I have just signed up for my first mortgage at the age of 56. I saved $110k over 10 years and borrowed $175k. If I pay fortnightly I can own the house outright in just under 10 years. My dilemma is that I will have $15k from the sale of some possessions and am unsure whether to do up the kitchen and bathroom or whack it straight on the mortgage. If I put it on the mortgage, I will own the house outright in 8.5 years, but will be living with an old kitchen and bathroom for that time. What do you think I should do?

Liz

Hi Liz,

At your age, I wouldn’t be making additional repayments on your mortgage. Instead, I’d be pumping your money into super (and talking to your super fund about starting a ‘transition to retirement’ pension strategy, so you pay less tax). The idea is that you can draw down on your super tax-free when you retire, and pay off the mortgage via a lump sum. I’d be inclined to keep the $15,000 in a Mojo online savings account and only spend money on renovations if chipped plaster falls on your head.

Scott

The House of My Dreams

Dear Scott,

I love reading your columns and would love your advice on what to do. I’m married with two boys (one newborn) and we have savings of $12k, with no debt. My husband earns $45k, and our family assistance payments will finish in January. I go back to work in April (after six months off) on a part-time salary of $52k. We’d love to buy our own home and send our boys to a private high school, but a 20 per cent deposit seems so far away with average house prices of $500,000. I feel very disheartened. Should we just invest our money instead?

Jody

Hi Jody,

This is the story of our time: people on average incomes increasingly can’t afford to live in capital cities. Actually, your family is far below the average income, so you need a plan to address that. Your husband needs to earn more: $45k isn’t going to cut it, I’m afraid. Together, you need to work out a realistic five-year plan to increase his income. Long term, that will give you the biggest bang for your buck, particularly if you continue living like you are now and save the extra he earns.

Scott

Ashamed, Scared, What Next?

Hi Scott,

My husband earns $150k, which is a lot of money, yet with four kids aged 10-19 we are still struggling. We have lived modestly for the last three years and are better for it. We have even entered into debt consolidation to take back control of our $80k credit card debt. So here are our vital stats now: debt consolidation $65k, novated car lease balloon payment $12k, mortgage $414k (value $550k), other $30k. What should we do?

Amy

Hi Amy,

You know things are cra-cra (and not in a good way) when you have a $30k line item labelled ‘other’. I’m not a big fan of debt consolidation; it’s often sold as a magic pill (and it does reduce your interest costs), yet the real magic is your behaviour. If that doesn’t change, nothing changes.

Now, you say you’re living ‘modestly’. I’d like you to live ‘aggressively’. Because to get out of the stinking hole you’re in, you need to get angry. You need to swear off debt and say to yourselves ‘never, ever again’. Then you have to back it up with action: line up your debts from smallest to largest and knock them over, one by one.

You’ll know you’re on the right track when you take a second job at night to get debt-free quicker.

Scott

Help! No One Turned Up to My Auction!

Hi Scott,

I recently wrote to you about whether to sell my one-bedroom unit in a reputable bayside suburb and invest the money, with a view to buying a ‘home’ in 3-5 years. Unexpectedly, nobody turned up for the auction, not even a nosy neighbour. The advertising and conveyancing fees still need to be paid regardless of whether there’s a sale or not (a $4,500 lesson for me). This has hit my savings hard. You live and learn!

Barry

Hi Barry,

If no one turned up to your auction, you either hired a dud agent or you priced it too high (or probably both -- the two go hand in hand). So let’s cut to the guts of it: you’ve decided to sell your property. The job of your agent is to go out to the market and find you the best possible price the market is willing to pay. If you don’t want to accept that, that’s your problem not the agent’s.

Still, I wouldn’t pay him anything until your property is sold and settled. He gets paid when you do. That being said, I’d never ever agree to pay an additional fee for an agent’s advertising costs -- seriously, all you’re doing is paying to promote their agency. It should come out of their heavily negotiated commission. (Note to real estate agents: kindly send your hate mail via barefootinvestor.com)

Scott

Advisor says, ‘DON’T PANIC’

Hi Scott,

My wife and I are 60 and 62. About a year ago (many years too late!) we realised we needed some financial guidance and approached a financial adviser who our accountant recommended. He told us he believed he could make us $60,000 pa from our $380,000 super, and set us up in an SMSF (Self Managed Super Fund). So far we have lost $110,000. He says “don't panic”. Do you have any advice?

Brian

Hi Brian,

I’d panic.I think that’s a perfectly acceptable emotion to be experiencing right now. After all, your financial advisor sounds like a crook. Seriously. I don’t know of any professional who would suggest to a client that they could generate a $60,000 a year return from a $380,000 investment. That’s a 16 per cent return. If that’s really what he told you, he’s not only an incredibly bad money manager, he’s a bloody liar. Truth is you went looking for a princess and you ended up kissing a toad. If it were me I’d stomp on him.

Scott

How can we be lovers if we can’t share money?

Hi Scott,My husband works full time earning $87,526.00 p.a. while I work 27.5 hours per week and earn $38,818.00 p.a. We have two children, aged 18 and 15. My husband's wages are paid into an account in his own name, while mine is paid into a joint account. My husband gives me $750 per week from his wages and together with my wage I am expected to cover all of our expenses (home loan, insurances, utilities, school fees, children's expenses and groceries). Should my husband be contributing more?

Candice

Hi Candice,

No, I don’t think he should be contributing more. Honestly, I think you should have both your wages go into the one account -- so you can make spending decisions like a family. What I’d want to know is this: he’s bringing home $1,165. If he’s giving you $750, what’s he doing with the $415 a week?I annoy a lot of people when I say this, but it makes absolutely no sense to me that a husband and wife (who have children and are still on their first marriage), would separate their finances. None whatsoever. In all the years I’ve been doing this, I’ve never seen separate finances work out well. How can you share your dreams and goals if you don’t share your money?

Scott

“We’ve got it all covered...unless our kids want to go to school”.

Hi Scott,

I’m completely stressed out. My husband and I are planning on building our new home, and we’re worried that we won’t have enough money when the build is over (let alone now!). Our land cost us $445k, and the house will be $280k. Our basic expenses will total $1,300 a week (which at this stage does not include our kid’s school costs of $5,000 a year). Hubby brings in $1,100 a week, I bring in $300. My question is this: should we bail now and sell the land, or wait until it is built?

Sandra

Hi Sandra,

A couple of obvious observations: you’ve got $100 a week left over, so long as the car doesn’t break down, the fridge doesn’t go on the blink, and... your kids don’t go to school. Seriously Sandra, your numbers are tighter than Clive Palmer's shirt buttons.

Having just built a home, I can almost guarantee you that it’ll cost more than you’re budgeting for. It’s an incredibly expensive, draining process. The bottom line is that if you’re stressed out now, just wait until you’re a few months into the build.

If I were in your situation I’d press ‘pause’, until you can increase your household income. You should only go into this with at least one month’s worth of living expenses -- call it $4,000 -- and a weekly buffer of $300 a week (preferably more). That means either you go full-time, or your husband picks up more work. It also means your kids go to a public school.What if you can’t do that? Simple. Sell the land and buy something you can afford. Bottom line, don’t sacrifice your family for a pile of bricks -- your kids will love you no matter what home you’re in.

Scott

Squirreling away my nuts?

Hi Scott,What do you think of the new app ‘Acorns’? Apparently it’s a new smart way to invest without too much thought. (Or perhaps it’s just a lazy approach?) I'm skeptical, but intrigued at the same time!

James

Hi James,Let’s back it up a bit. For those of you who don’t know, the Acorns is the hottest thing in finance since Commsec’s Craig James appeared in the buff in a Men's Health Magazine. The app was launched last year in the US and reportedly has 700,000 users, and it’s growing faster than Tom Petrovski’s caveman beard. Now it’s in Australia.Essentially the app allows you to invest your pocket change into the share market. Let’s say you buy a copy of Men's Health for $9.00. You could tell the app to push the $1 into your Acorn account and invest it. You can also tell the app to invest $5 or $10 each day, or month.Importantly, there is no minimum amount you need to invest, and the costs are cheap (unless you only buy one magazine for the year): members with account balances up to $5,000 get charged $15 a year, and anything over that cops a fee of 0.275 per cent of the balance per annum.It’s a good deal, and I like it. But watch out. You see, I think the big banks offer their own Acorn inspired apps in the not too distant future. It’s a great loss leader to capture kids, and later upsell them. The banks love getting their hands on your nuts, and having a nibble. Hold on to your acorns!

Scott

Super Sucks, I’m Outta Here!

Hi Scott,

I have a pre-tax income of $64,000 a year, and my wife does not work. In December 2016 I will be able to withdraw $195,000 tax free from my AustralianSuper account. I plan to invest most of this money in the share market. My question is, am I better off to buy the shares in my wife’s name, my name or joint names?

Regards,

Steve

Hey Steve,

Why would you want to do that? You should keep the money in super, where you pay no capital gains tax and and no tax on income once you’re in the pension phase (and by the way, you can still invest in direct shares through your super via their ‘member direct option’). It’s the best deal ever. Super at your age is the equivalent of a packet of Tim Tams that never runs out -- don’t stuff it up!

Scott

Sisters Are Doing it For Themselves

Hi Scott,

I’m a 37-year-old married women with two kids. My husband works at one of the major banks and looks after all things financial. Only recently have I thought about investing. Although I have faith in my husband to manage the finances, I want to be able to independently manage my own stocks. But I don't know where to start. Any advice would be helpful!

Toni

Hi Toni,

I always say that a man is not a financial plan, but in your case he’s your wingman. You should be doing this as a team. First, because marriage is a team sport, and with something as important as money you need to be on the same page. And second, because I’ve seen too many families lose a partner, and the grieving widow has no freaking clue how to manage the money.

Scott

Bouncing Back from Bankruptcy

Hi Scott,

I’m 42 years old old and I feel I have one shot left. I'm just three months away from my bankruptcy being removed from my credit file -- a failed relationship, and a failed business, behind me. I now have $50k saved. I earn about $145k and have had a great secure job for the last three years. So I am at a crossroads. Who will give me a loan? What is the best way to get my financial future back on track?Thanks

Gary

Gary,

Fella, you don’t have just one shot left -- you’re not even at the halfway mark! Instead, think of your experience like you’ve graduated from the university of hard knocks. And yes, you’ll find plenty of lenders who’ll lend you loot, but that shouldn’t be your focus -- that’s what got you in trouble in the first place.

You’re earning good money, almost $150k a year, so you’ll be fine as long as you stick with the program. What’s the program? Keep the $50,000 for emergencies in a Mojo account. Boost your super by salary sacrificing an extra 6.5 per cent of your pay (an extra $628 a month). Buy a modest home you can afford, with a 20 per cent deposit. Pay it off quickly. You can’t not win with this plan.

Scott

I’m probably going to die (soon).

Hi Barefoot,

I’m facing a dilemma: whether to retire now or to keep grinding. I am 66 and my husband is 68 -- he retired some years ago -- and we have about $1 million in superannuation. Our home is worth around $450,000, no mortgage, but the house is pretty run down and needs some major renovation work. I had a mild heart attack six years ago. Although I do try to look after my health, I cannot change my DNA. My mother died of heart attack at age 68, but my father lived to 87. What would you do?

Pam

Hi Pam,

If you want to work out the odds of when you’ll meet your maker, fill out the (free) in-depth questionnaire at www.mylongevity.com.au. It’s similar to what actuaries at insurance companies use.

Whatever the website spits out at you, I wouldn’t advise betting on living until you’re 68. That’s only two years away -- though it would certainly make your financial planning much easier, and a lot more fun!

I’d plan on living until you’re 100. The worst thing that could happen is that you die early, with too much money. Either way, you’ve already saved up enough money to enjoy a comfortable retirement -- around $65,000 a year (indexed to inflation), which should last you until 100 (if you live that long!). If you want to be really conservative, you could work a few more years to pay for the renovations. But I’d say you’re sitting pretty.

Scott

So, we have $160,000 of Credit Card Debt

Hi Scott,

Love reading your column each week, and this has taken me way too long to write to you. My husband and I earn $147,000 between us and have got into serious debt over the years through bad business decisions and other reasons. We have our own home with a mortgage of $346,000, and two investments properties -- on one of them we owe more than what it is worth now, and the other we could sell outright (valued $150,000). We have credit card debt of $160,000 and two personal loans of $70,000. What should we do?

Thank you

Denise

Hi Denise,

Most people who write to me need a little plastic surgery with their credit cards -- you need a total brain transplant! You’ve got $230,000 in personal debts, so you’re essentially tied to the railway tracks while the train thunders down the hill. It’s now or never.

I’d sell the investment property, but make sure you allow for any capital gains tax (CGT). Use it to pay off the bulk of your credit cards. Then I’d lodge a hardship variation for each of your remaining debts -- aim to negotiate a freeze on your repayments for six months. Use that six months to work three jobs so you can come out of the blocks with a fighting chance. Toot! Toot!

Scott

Your Stuff is Just Common Sense!

Dear Mr Barefoot,

Your stuff is just plain common sense. How stupid do you think we are? Ringing the bank for an interest rate cut is hardly rocket science. There’s no magic secret, no code to crack. Congratulations on convincing us all that you had the secrets for so long -- but I’m done now.

Justin

Justin,

After writing this column for over a decade, I’ve been waiting for this day to come. I knew that someone would catch on, and you my friend, have cracked my code. My advice doesn’t change. People ask me a million different questions, but I tell it straight -- what works and what doesn’t. Still, I have tens of thousands of people who’ve followed my basic, commonsense advice who are now living wealthier and happier lives because of it. Maybe that’s my secret?

Scott

Are We Going to Be Okay?

Hi Scott,

I am feeling a bit overwhelmed. My partner and I are both 30 and have a combined income of $140k. We owe $690k on our home, which is worth $860K. We also owe $350k on an investment which is worth $470k. We owe $20,000 in personal loans, own both our cars and have about $20,000 in savings. We are getting married next year at a cost of $40,000 and then want a baby. Scott, I’m nervous. I’m worried about losing my partner’s income ($50k) and feel we could be in trouble. I feel we have done okay at our age, or am I dreaming?

Mark

Mark don’t tell me about your freaking problems… tell your wife-to-be.

Seriously, that’s at the heart of every good relationship -- especially when it comes to finances -- honest communication. Tell her you’re freaked out about how you’ll pay for everything -- the marriage, the mortgage and the midgets. Then sit down together and work out how to tackle it as a team.

Understand that there is no correlation to how much you spend on your wedding and how long it lasts. I got married three years ago, and it was one of the best (and scariest) days of my life. What made it awesome was the people, the music … and the booze. We had it in our backyard, with a mate as our photographer. We spent more than we thought (everyone does), but we paid for it in cash. So should you. The best thing you could do for your marriage is to build up to three months of Mojo as a financial backstop: $40,000 should do it...

Scott

Time to Go to MyBudget?

Hey Scott,

My wife and I are in a bit of a financial mess that we can’t seem to get on top of. With a $300k mortgage, a $15k car loan and $10k in credit card debt, I can’t see how we’ll ever get on top. I keep seeing the ads for MyBudget and I’m wondering if that’s the answer for us? What do you think? Worth a visit?

Matt

Hi Matt,

Stop looking for fairy princesses waving magic financial wands. Managing your money is the old 80/20 rule: the biggest barrier to you getting on top of your money isn’t a lack of knowledge, it’s developing the necessary habits that will stop you spending money you don’t have, and valuing saving over stuff. If that doesn’t click, no amount of high-priced handholding from MyBudget or anyone else is going to help: they’ll just drive you deeper in debt with their fees.

Scott