Dr Phil, Where Are You?

Hi Scott,

I am 27 and newly married. My husband earns over double what I do, and he does not like the idea of combining our finances. Instead, things are split down the middle, though he saves over twice the amount I am able to. Is there a way to start broaching the Barefoot ideals without having huge arguments? I am really unsettled by it.

Emma

Hi Emma,

I actually read your question out to Liz ... and she shut me down as only a wife could: “Honey, you’re not Dr Phil ... just stick to the finance.”

Bam! That’s why I love my wife -- she gives me brutally honest feedback, and most of the time I don’t even have to ask for it!

Still, I’m going to sidestep her sledge and answer your question. Reason being, I’ve had thousands of conversations with couples, and the number one predictor of staying together is whether or not they share their finances. (Okay, so another predictor would be if hubby is shagging his secretary, or if wifey is an ice addict … but you get my drift.)

It makes sense when you think about it: How do you think his plan is going to work when you leave work to raise kids? Seriously, how can you plan a life together if you don’t share your money?

Here’s what I’ve worked out: the person who doesn’t want to share has control issues (that would be your husband) -- and the other eventually learns to adapt. A study released this week by Finder.com.au found that nearly one in three Aussies keeps at least some of their spending a secret from their partner.

No winners there.

So, what should you do?

I’d suggest you have your husband read my book, The Barefoot Investor: The Only Money Guide You’ll Ever Need.

Yes, that’s a blatant plug, but there’s a good reason: I’ve structured the steps around having Barefoot Date Nights where you work on your finances as a team (with wine and garlic bread in your hand).

And if he refuses?

Well, far be it for me to play Dr Phil, but I’d suggest you take a leaf out of my wife’s book, and tell it to him straight.

Good luck.

Scott

Rich Girl Loses it All

This week we’re going to do something a little different.

See, right now, the newspapers are full of the tragedy. It’s desperately sad and heartbreaking and futile all at the same time: but the fact is, none of us can control the acts of terrorists.

So this week I’m going to focus on things you can control. I’m going to introduce you to three Barefooters — readers of this column. Each of them reached a turning point in their lives — a teenage rich kid who suddenly found herself homeless, a go-getting bloke whose financial advisor almost ruined him, and a woman who stared down her violent husband.

But the real story … is what they each chose to do next.

Rich Girl Loses it All

Courtney grew up an only child in a middle-class family.

By her own admission she was extremely spoilt, always getting whatever she wanted, whenever she wanted.

Yet when her parents separated, when she was 13, her childhood ended and things unravelled — quickly:

Courtney went to live with her father in January of that year. Tragically he suddenly and unexpectedly died in September of the same year. So she moved in with her mother.

Courtney knew that one of the reasons for her parents’ break-up was her mother’s drinking. Yet what she didn’t know was that in the year since the separation her mother had turned into a full-blown alcoholic, drinking from the moment she woke up until she passed out.

A few weeks after Courtney moved in, her mother abruptly took her keys and kicked her out. At age 14, she was homeless. For the next five years Courtney spent time on the streets, in refuges, couch-hopping, and in and out of government housing.

At 19, with $1.92 in her bank account, Courtney reached crisis point. Here’s what she did next.

“I went back to school and completed Year 12. I surprised myself when I got good enough marks to get into uni, where I’m currently studying commerce. I can only do it part time, because I work to support myself. Along my journey, I have read every single one of your newspaper columns. I have 412 of them marked ‘financial’ in case I have to re-read any of them. I feel like Barefoot is the financial parent I never had.”

The Go-Getter

Mick was always a go-getter.

He didn’t want to live an average life like other people. And the key to living the life of his dreams was to build wealth, so he hooked up with an equally go-getting advisor.

Over the next few years, Mick’s advisor took him down the ‘borrow to invest’ path, and go-gettered him from one investment turd to another.

He was losing money. The interest payments were crippling. The stress began to jeopardise his marriage. Mick had reached crisis point. Here’s what he did next:

“One day, while up in the mountains (must have been the fresh air), the penny finally dropped. My wife and I decided there and then to become debt free and take control of our lives.

“The first thing we did was dump the adviser. Then we offloaded the crap he’d signed us up to — the margin loan, the costly managed share funds. And then we paid off our house — in three years — and began stashing cash into super, into an index fund, and buying shares in low-cost index funds.

“Until we became debt free, I had no idea just how much of a burden it is. The best advice I could give anyone is to follow the Barefoot principles and KEEP IT SIMPLE. We all work too hard for our money to blow it by making mistakes. Funny, but through my mistakes I found financial freedom.”

He Has No Hold Over Me Anymore

Sandy was happily married for 10 years, and had two lovely children.

Three years ago she was sitting in the backyard when her husband announced, “I want a divorce”.

Like every woman who faces this situation, she was terrified:

“How am I going to support my kids?”

That fear stopped her from ‘rattling the cage’ for the next two-and-a-half years.

It kept her from having the courage to leave the house (or boot her husband out). And whenever she tried to broach the idea of finalising a property settlement he would threaten to not pay child support. Sandy knew he was controlling her. She knew she had to stand up and take care of herself. And then one night he became violent.

Here’s what she did next:

“It wasn’t until I read Scott’s book that I fully believed I could do this on my own. Now I’m taking back control. True to form, once my husband wasn’t getting his own way, the child support ceased. However, I’ve now sorted my buckets and I’m days away from the property settlement being finalised, which will allow me to purchase a home on my own.

“I’m also looking at investing for the future for me and the children. My plan is to be financial independent and not reliant upon what child support he deems fit to pay. I used to rely on it, but now — if I receive it — it will be a bonus that goes into the Grow Bucket for my children’s education.”

You Have More Power Than You Think

What I love about these stories is that they’re so different, but they share one similarity: each person found themselves in deep trouble and then took control of their situation — and changed it.

Over to you.

Tread Your Own Path!

You Ripper!

Barefoot,

I just wanted to tell you about my latest Barefoot Date Night. Like you advised I rang the bank, followed your script, and they reduced my rate from 5.35% to 4.54%, all in a six minute phone call!  I was sceptical at first, but now I'm over the moon on the outcome of the phone call. Thanks again mate!

Daniel

Hi Daniel,

Well done man!

And to encourage everyone else to follow your lead, here’s my “$22,064 Phone Call Script” from my book:

You: Hello, my account number is ______. I’ve been with you for ___ years, but I’ve applied to refinance with UBank. Their rate is ____ per cent, which is a full ___ per cent cheaper than you’re charging me. Given our longstanding relationship, I’d like you to match the offer—or send me the forms I need to switch to UBank.

Bank rep: One moment, please.(You’re bluffing, of course. However, the bank’s sales team have strict targets, backed by incentives, that they have to meet—one of which is giving profitable customers discounts to stop them leaving.)

Bank rep: We can’t match the rate you have quoted. However, we understand you are a valuable customer, so we would like to offer you a 0.15 per cent discount.

You: That’s not good enough. I’ve already got conditional approval … so in order to stay I need at least a 0.5 per cent discount. Could you please speak to your supervisor? I’m happy to wait.

Bank rep (a full six minutes later): On reviewing your case, we can offer you that 0.5 per cent discount on your current rate.

You: Brilliant! Please send me an email confirming the new rate and confirming that it will be applied as of start of business tomorrow.

Scott

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

Barefoot Confessions

Hi Scott,

I am 25 years old, newly married. I am the worst spender I know. I have about $8k debt that my husband doesn't know about.We want to start a family but I'm worried I’ll get stuck as a stay at home mum and be in debt forever. I can’t control my money. I want to pay off my debt and get my finances into order but I don't know where to start. I really need your help.

Jessica

Hi Jessica,

Where do you start?

You’ve already started, by admitting what’s going on in your head. Now you need to share it with someone who can help you -- your husband. The way you’ll get out of this mess is to fess up to the man you married, and tell him what you wrote to me: that you’re worried about being stuck as a stay at home mum, that you’re depressed, and that you self medicate by spending (okay, you didn’t say that -- I did).

The good thing is that you’re fronting up to him with an $8,000 debt. That’s not a lot of dough in the scheme of things. If you work together as a team, you can pay it off by the end of the year.

However, let me give you this warning: if you continue to keep this a secret from your husband, things are going to get a lot worse. Your debts will grow in line with your depression. The truth is that your current financial situation is a symptom of what’s going on in your head.

Luckily for you, you have a bloke that loves you, and wants to help you.

Let him.

Scott

My Sister is Scamming My Dad

Hi Scott,

My dad has gone guarantor on a loan for my sister and her partner, so she could buy a property worth over $1 million. I know she has at least two other properties that dad probably does not know about; all of which she could have sold to overcome her "financial woes". She has been conning the family out of money for years. It is highly likely dad will not outlast the life of the loan. My question is: can the bank hold up the process of settling the estate because of the guarantor thing? Dad's plan was to evenly split his estate between all his children and give some to charity but there won't be anything left if my sister has her way!

Megan

Hi Megan,

To answer your question correctly, I’d need to read both the bank guarantee that your father signed, and his will. Yet that’s a job for a specialist estate planning lawyer, who can take into account all of these issues and plan your father’s wishes accordingly. The only problem is, a lot of men don’t like thinking about their wills (some believe it’s tempting fate).

So you need to give your old man a bit of motivation. If I were in your shoes, I’d give him the heads up: as it currently stands the reading of his will may resemble a scene from the Game Of Thrones. Gently explain to him that it will be much better if he sets everyone straight now once and for all … no matter what he decides to do with his money.

Scott

The Chicago Bull

Hi Scott,

I have a terrible credit rating. I'm 45 and only have a couple of thousand dollars in savings, and $6k in super. I also have have $15k in credit card debt. I earn $800 a week. My question is, when is the right time to enter the housing market?

Chris

Chris,

You’re like a middle-aged tubby little fella limbering up to have a crack at the NBA! Dude, you’ve got no savings, fifteen grand in plastic, and you’re earning below the average wage. Right now you’ve got as much chance of buying a house than being drafted to the Chicago Bulls. So let’s keep it real. You first need to increase your income, then knock out your debts, build up your savings, and only then will you be ready to shoot for the stars.

Scott

Scott’s Hot Date

Dear Scott,

At 17 I am currently completing my VCE studies, but will soon have to make my own way in the world. I have $7,000 in savings and was hoping you would be able to help me find the right way to invest it so I do not just burn through it right after graduation. I am constantly anxious I will not have enough money to do all that I want, namely paying for living expenses, travel and study.

Holly

Hi Holly

Where were girls like you when I was seventeen? I would have dated you in a heartbeat!

Keep at least $5,000 in an online saver account (which Barefooters call Mojo). The return you’ll get on your Mojo is peace of mind. When you graduate, look at getting a full-time job over the summer -- preferably one that you can continue when you go to university.

If you’re living at home, you should be able to save up a few thousand dollars for your upfront expenses next year. Depending on your parents’ income, there’s also a chance you could get Youth Allowance.

My final tip is a strange one. In fact, you’re probably going to think I’m completely bonkers, but think about doing it anyway: go to kiva.org/team/thebarefootinvestor and lend some money (as little as $25) to a struggling businesswoman in the third world.

There is no need for you to be constantly anxious. You’re not only well ahead of most girls your age, you’re also one of the wealthiest women on the planet. You’ve got this.

Scott

Death, Taxes … and HECS

Hey Scott,

In your book you mentioned that HECS debt dies with you. My wife passed away in 2011 -- and the $15,000 she owed rocked up bang on settlement of her estate. So I paid it, on advice from my lawyer. Is there any way to get this back if I paid it unnecessarily?

Harry

Hi Harry,

The executor of your wife’s estate was legally required to lodge a tax return up to the date of her death, which would have included the compulsory HECS-HELP debt repayments up to that date. The balance of her HECS-HELP debt would then have officially been written off by a (weeping) ScoMo.

So if your lawyer instructed you to pay off the entire debt, you got the wrong advice. I’d be calling the lawyer up and explaining the situation, and asking them to lodge an objection with the Tax Office so you can have the funds returned. And I’d expect the lawyer to do it gratis.

Scott

We’re in a Pickle

Hi Scott,

My boyfriend bought a one-bedroom apartment in Brisbane’s inner city three years ago for $404,000. We are in desperate need of more space and would like to sell, but a recent valuation has put it at $320,000. With $350,000 still owing on the mortgage and only $20,000 in savings, this puts us in a pickle. Renting the place out will not cover the mortgage, and by the look of Brisbane’s property market the value may continue to decrease. What is the best way to deal with this situation?

Anita

Hi Anita,

The way you’ve written your question tells me you want to sell: you’re ‘desperate’ for more space, renting the place isn’t an option, and you’re worried the apartment will drop further in price. All of these things may well be true, and if they are, you should save up the shortfall and sell. However, it was only three years ago that your boyfriend bought this joint. So before you crystalise the significant loss, I’d want to understand why he bought it in the first place. What was his plan at the time?

Scott

The Secret Credit Card

Dear Scott,

I am at my wits’ end. My husband is a spender who leaves me to pay all the bills, including a car loans of $17,000, a mortgage of $239,000, and an ever-spiralling credit card debt -- currently $38,000. Actually that’s not quite right. I have just discovered he has another credit card on which he owes $20,000! Of course I asked him how we can possibly pay this back, but I still have not heard an answer.

Nikki

Hi Nikki,

He’s cheating on you.

Financially, he’s cheating on you.

You haven’t given me enough information on your financial situation, but experience tells me he’s addicted to something -- most likely gambling.

So, I want you to do three things:

First, go to the bank, and put a stop on all the credit cards (ask him if there are any others), and request detailed account statements.

Second, sit down with your husband. Don’t bother asking him how he’s going to pay the money back -- he has no freaking idea -- if he did, he wouldn’t have racked up a $58,000 debt in the first place. Instead, just go through the statements, and work out where he’s spending the money, and why.

Finally, and based on how the chat goes, you should book in to see either a gambling counsellor (1800 858 858) or a financial counsellor (1800 007 007), and definitely a relationship counsellor (1300 364 277).

Scott

Parents, You’re Doing it Wrong

When I was fifteen I would sit in English class and read the Financial Review.(This, of course, made me wildly popular with the ladies.)

Looking back on it I was always going to become the Barefoot Investor: I started working when I was in primary school (for coins!), and had built a prized share portfolio by high school.

Most teenagers don’t give a snapchat about managing their money.

That was confirmed this week by the results of an international financial literacy survey of nearly 15,000 students which found that, on average, 15-year-old Aussie kids struggle to understand financial basics.

“Australian students performed significantly lower in financial literacy than [international] students with similar performance in mathematical and reading literacy”, said the report.

And parents, you know what that means, don’t you?

It means that there’s a real possibility that your grunting, moody, Xboxing teenager could still be fronting up for Coco Pops when they’re in their dirty thirties …  possibly accompanied by their fiscally challenged boyfriend.

That’s actually not too far of a stretch: nearly 25 per cent of people aged 20 to 34 continue to live with their parentals, according to the latest HILDA study. And here’s the kicker: research by AMP found that a kidult (aged between 18 and 24) costs a middle-income family $678 a week, or $35,256 a year.

Froot Loops!

Well, allow me to lay out a Barefoot Bootcamp for your teenagers. Do these three things, and you’ll be able to lovingly boot your kids out when they can grow a beard (or date a man with a beard):

#1 Open Up Your Wallet

I’ve always said that the best way to raise financially fit kids is to be financially strong yourself.

Whether you like it or not, they’re modelling your behaviours: do you fight about money? Do you turn off lights when they’re not needed? Do you gamble?

When your kid turns 18, you don’t throw them the keys to the Jag for the first time, do you?

Of course you don’t.

You spend many (frustrating, potentially lethal) hours sitting beside them with the ‘L’ plates up. Their first experience driving comes with you clinging to the seat beside them.

It should be exactly the same with money.

Look, your kids are being actively targeted by the predators of the banking industry (especially if you signed them up for one of those cute little Commbank Dollarmites accounts). You need to make sure they’ve got their money miles up while they still live with you.

The best way to teach your kids about the reality of money is to give them responsibility.

Challenge them to find a lower-cost energy provider — and make a game out of it. If they can get your household bills down by $500 a year, split the difference.

Show them your bank statements, and again challenge them to find a better home loan rate, or (gulp) calculate the amount of interest you’re being whacked on your credit card.

Actually read your super statement, and have your kids calculate the amount of fees you’re paying, and see if they can find a cheaper alternative via superratings.com.au. Then head over to moneysmart.gov.au and check out their managed fund fees calculator to visualise the amount of money you could save by switching.

These are the real-life lessons that will stick with your kids.

#2 Flip it Good!

These days kids get participation trophies. Everyone’s a winner!

Uh-huh.

Kids need to understand that the world isn’t there to serve them — it’s the other way around.

Thankfully there’s an easy fix to this counter-culture: make them get a part-time job.

Every teenager should have a part-time job … preferably with a boss who doesn’t treat them like a unique special snowflake, and one that gives them a bit of acne from flipping greasy burgers.

Again, making them work isn’t really about the work, and it isn’t really about the money — it’s just another tool to give them real-world financial education. They learn to show up on time and work. To get along with other people. To deal with a tough boss (hopefully). To read an employment contract, and, if you’re doing your job right, to choose a good super fund.

This shouldn’t be an elective — it’s an essential part of their formal education. When I’m hiring a young person for my business, I can always pick who has had a part-time job through school. They’re more resilient.

#3 She’s Got a Ticket to Ride

Straight up, buying your teenager a brand new car amounts to child abuse.

Don’t do it.

The pull of owning your own wheels is strong with teenagers — especially boys. Use it. Again, hopefully you’re seeing a theme here. It’s not about the car, it’s just another tool for teaching.

So sit down and challenge your teen to save up for their first car. In reality this could involve you matching them dollar for dollar, so they don’t end up driving around in a 1966 XP Falcon like I did (safety features? Lap seatbelts). Have them research the running costs of various models, how much it costs to insure, and how to negotiate a good price.

I’m biased of course, but I see these financial literacy findings as just as important as the final year marks.

Why?

Because it’s the one skill every student will be tested on — daily — in the real world. A below average grade in money management colors your entire life; what you do for a career, the amount of time you have to spend working, the stress you will endure over your working life, your relationships, your health, and ultimately what your last days look like. This is important stuff … so start testing your teens today.

Tread Your Own Path!

A Woman Is Not a Financial Plan

Dear Scott,

I am 22 and have independently bought my home ($207,000 owing), have $5,000 in Mojo, have $7,000 in other savings, and have no debt besides HECS and the mortgage. My (fairly new) boyfriend earns $53,000 and has a car loan of $25,000 and few savings. He is kind and generous but a spender, whereas I am a saver. As the relationship gets more serious, how can I protect my assets and encourage him to develop healthier financial habits? To reverse your saying, a woman is not a financial plan!

Natalie

Hi Natalie,

If you end up shacking up with him, you could protect yourself by having him sign a cohabitation agreement. Though that would be kind of weird -- don’t you think?

It’s a bit like buying a dog that you’re secretly worried will one day go feral and bite your hand off.

Better to just not sleep with dogs.

Still, let’s give the bloke a break. He could just be young, dumb, and full of credit. He wouldn’t be the first fella to fall into the trap of trying to impress a young filly by flashing his (borrowed) cash.

So, explain to him that this approach may work with girls -- but it doesn’t wash with a confident woman like you. If he really wants to impress you, tell him he can start by becoming debt free. And if it works out you can’t teach an old dog new tricks, drop him off at the pound.

Now, if you’ve got to the bottom of my answer, and you’re thinking to yourself, ‘you’re being a bit of a hard arse Barefoot’, read the next question.

Scott

Why Are You Randy?

Dear Mr Pape,

I enjoyed your book. However, as a non-native speaker, there were things that confused me. Could you please explain what “Paint me red and call me Randy” means?

Yu

Hi Yu,

I have no idea what it means either.

Thanks for reading.

Scott

No Such Thing as a Silly Question

Hi Scott,

I am loving your book and have one (probably silly) question. My husband and I, both 40, are tackling a $45,000 credit card debt on $70,000 a year combined income. Most of it is business credit card expenses -- his small business has had a very quiet start to the year. Do we redraw this amount from our mortgage (we have $300,000 in equity), pay off the credit card and start again, or keep chipping away?

Kelly

Hi Kelly,

Yes, you can refinance the debt onto your mortgage to get a lower rate.But there are a few things to remember:

First, it’s no magic wand. You’re eating into your family home, and there are only so many times you can do this.

Second, you’re turning a short-term debt into a long-term debt.

Third, you’re putting a bandaid on a deep gushing wound.

The wound was caused by your husband’s flailing business. Paper-shuffling your debts doesn’t mean it won’t happen again. So I’d sit down with your husband and have what comedian Tom Gleeson calls a ‘hard chat’. If the business doesn’t improve by Christmas, it’s time for hubby to get a job.

Scott

Tax Rules

Hi Scott, I am returning to work post-children. I recently started looking for a part-time job, during which time my husband asked me to do his books and admin work. I am legitimately doing two days’ work a week. When we visited an accountant my husband suggested paying me a wage, but the accountant said this is not possible under PSI tax rules (an associate for non-principal work). Is this true?

Danielle

Hi Danielle,

He can pay you … he just can’t claim a tax deduction for it under the PSI taxation rules. (For those of you reading along at home, Danielle is not talking about tyre pressure -- PSI stands for Personal Services Income). Simply put, your husband can’t claim a deduction for the salary he pays you, because you’re not involved in the principal work. Sounds like you have a good accountant!

Scott

Pay Off Your Home in 10 Years

Hello,

I read a book about property investing by Konrad Bobilak and there is a chapter on how pay your house off in 10 years with no extra payments. The deal is using a 55-day credit card, keeping all your earnings in an offset home loan account, using your credit card daily, and setting up an automatic transfer before 55 days to pay back from the offset to the credit card. But in your book you do not mention this. I am confused -- what should I do to pay off my mortgage quicker?

Des

Hi Des,

What you’re referring to is a ‘sweeper strategy’: parking your salary in your offset account, spending everything on a credit card, and then sweeping your entire credit card balance clean before your credit card repayment is due.

It looks awesome on a spreadsheet, but I’ve seen it harm more people than it helps. Reason being, most people end up spending too much on the credit card and get whacked with a backdated interest bill. Then, instead of saving interest you’re paying it.

Here’s you: “I won’t miss a repayment … ever.”

Here’s me: “You probably will at some stage. The Australian Bureau of Statistics suggests that about two-thirds of credit card holders miss a repayment at least once a year.”

My advice?

Get an ultra-low-cost variable home loan, forget the credit cards, and focus on making extra repayments each month.

Scott

I'm in Love

Scott,

I’m in love! I met a guy six months ago, and he’s now moving into my house and wants to put his income into paying down my mortgage while we use my income to live on. I am on $105,000 and he is on a $90,000 base (more with overtime). He has no debt, while I owe $330,000 on my home, $250,000 on an investment property (barely breaking even), and $20,000 on my credit card (from a holiday). We are going to get married eventually, but the plan is to live together and pay down my mortgage for a couple of years until we need more space for kids. The trouble is, I do not want him taking on my debt. So should I sell and start again together?

Melanie

Hi Melanie,

“I feel it in my fingers, I feel it in my toes, when love is all around me” …… you’ll probably make dumb money decisions.

Seriously, I’ve had little lambs last longer than you’ve known this bloke. (And you know what eventually happens to them, don’t you?)

A few things:

First, keep everything separate until he puts a ring on it. If you want to live in sin (as my grandmother calls it), charge him rent, and pay that straight off your mortgage. Easy.

Second, get rid of the credit card debt pronto. (Seriously? On a holiday? WTF?). Do the sums on your investment property and then ask yourself the ultimate question: would I buy this property again today? If not, get rid of it.

Now’s the time to get on top of your debts. But don’t do it for him. Do it for you. Repeat after me: “This man isn’t my financial plan.”

Finally, it sounds like you’ve fallen hard for this bloke. The best way to see if he’s as committed to your future as you are (other than checking his phone) is to sit back and watch what he does over the next 12 months. If he’s serious he’ll be working and saving like a man possessed. “Come on and let it show!”

Scott

Let’s Hear It, Barefoot

How come your book does not come as an audiobook? I am sure there are many visually impaired younger people who would love to learn from you. You have podcasts available on iTunes, so where is your audiobook?

Pete

Hi Pete

I chose your question because it provides me with an excellent opportunity to shamelessly plug my wares. As luck would have it, I recently recorded the book for Amazon’s Audible service. (They were going to get James Earl Jones to narrate it ... but I put my foot down.) It’ll be available next month.Happy listening.

Scott

Paid Off the House … What Next?

Hi Scott,

My partner and I both turn 32 this year, and by January 2018 we will have our home paid off in full, all on a combined $150,000 a year. We are already thinking ‘what next?’ and would appreciate your advice. We think we will both put an extra 10 per cent of our wages into super, build up our Mojo, and save for an overseas trip. We are also considering buying an investment property or getting into the share market. And one more thing: we intend to start a family in the next year or two. Where is the best place to put our money?

Ella

Hi Ella,

O.M.G.

You paid off your home in your early 30s?

If you were standing in front of me, I’d give you both a big bear hug. Better yet, let your family and friends give you one -- plan one hell of a par-tay for January 2018! Seriously, paying off your home is one of life’s great achievements. Celebrate it.

(For anyone keeping score at home, you’ll notice that Ella gave the month she would be debt free. She’s focused on her numbers. This didn’t happen by accident.)

Okay, so what should you do now?

Well, first, avoid the Instagram-envy of thinking you have to trade up to a more expensive home. The ultimate status symbol isn’t a flashy home or car -- it’s having the freedom to travel and spend quality time with your kids (when you have them!).

Being debt-free at such a young age, you can’t help but become incredibly wealthy. I’d suggest you go through the Barefoot Steps: boost your pre-tax super contributions, and build up your Mojo to cover three months of expenses (which will be much less without a mortgage). Then, I’d look at setting up a family trust and investing in low-cost share funds (consider buying an investment property when the market crashes). If you’re able to invest just $30,000 a year, you’ll be looking at a nest-egg worth over $5 million by the time you retire.

Scott

The Gambler

Hi Scott,

My situation is complicated and I need your advice. I am in my early 40s and have been with my fiancé for seven years. We do not live together but have bought a block of land (in his name) and are building a house (in his name), and will move into this house together. I have contributed money to this, but my issue is that he has a gambling addiction that he is in denial about, and he lies and deceives me. He believes that it is his money and that I should not say anything. I am fearful I will lose everything.

Hayley

Hi Hayley,

Yes, your situation is complicated, but it has a simple -- though brutal -- answer: don’t marry an addicted gambler.

Your fiancé has a long road ahead of him, but he hasn’t even taken the first step -- admitting his problem. The alarm bells should be ringing in your head: he deceives you, and he believes your money is his, and you have no say over anything. It’s highly likely he’ll gamble the lot.

If I were in your shoes I’d do three things. First, lovingly and supportively explain to your fiancé that he needs to get help with his addiction -- or you’re leaving. Second, sit down with a financial counsellor (1800 007 007) and get their help in removing your name from any joint accounts you may have with him. Third, talk to a solicitor and see if there’s an option for getting a financial settlement … before he blows the lot.

Scott