My Husband Sold My Home From Under Me

Scott,

My husband sold our family home without my knowledge ... Yes ... S.O.L.D. I.T! To give you some background, I am 36 years old and work in childcare, earning $45,000 a year. He and I separated some months ago -- it was a slow decline but the time had come. A few weeks ago he asked me if we could reconcile our marriage, and I said I was not sure. He replied with, “Well, I’m done and I have someone coming to buy the house”. He then completed the sale with a 30-day settlement. He is telling me I will get nothing. What can I do?

Rita

Hi Rita,

He’s not taking the separation well, is he?

Understand that he’s not basing his argument on sound legal opinion, but on lashing out irrationally after being rejected.

The first thing you should do is consult a family lawyer -- immediately -- and explain what’s happened. If your property was in joint names, he can’t just sell it from under you!

The second thing you should do is move on. As part of the divorce there will be a division of assets, including proceeds from the sale of the house, and it will also take into account any custody and child support arrangements. Onwards!

Scott

Pay the Tax, Not the Tip

Last week Bill Shorten told us he thinks there are two types of taxpayers:

“Those that fly economy, and those that fly first class” (i.e. who can minimise their tax).

(Hats off to the speech writer who came up with this analogy … who doesn’t hate those wankers that fly up the nose of the plane with their reclining beds, and champagne, while the rest of us squeeze in next to a big Tongan bloke and eat warmed-up dogfood with plastic knives and forks.)

So where do you sit on Bill’s, errr, tax jumbo jet?

Well, let’s defer to former flight captain Kerry Packer, who told a parliamentary enquiry in 1991:

“I am not evading tax … of course I’m minimising my tax, and if anybody in this country doesn’t minimise their tax they want their heads read, because as a government I can tell you you’re not spending it that well that we should be donating extra.”

Problem is, since Kerry said that, governments have systematically clamped down on ways to minimise tax:

The Libs stopped kids being used as a tax deduction and put caps on how much you can put in, and have in, super.

And this week Labor announced they’ll crack down on income-splitting via trusts, as well as increasing the top tax rate to 49.5% and hitting negative gearing.

My view?

Both sides are guilty of fingering the economic pie … instead of working out ways to actually grow it.

Seriously, we’ve lived through a once-in-a-lifetime mining boom and all we’ve got to show for it is a tin-can internet plan (NBN) and half a trillion ($500 billion) on the government credit card? And they need more of our money!?

Truth is, even with these proposed changes, you can avoid paying the top rate of tax (see my answer here).

Yet let’s be pragmatic. There’s a price for living in the greatest country on earth. So pay the tax.

Just don’t tip ’em.

Tread Your Own Path!

Are Family Trusts Dead?

Hi Scott,

I own a small business (cleaning), and for the first time in years I have the mortgage paid off and a bit to invest. Last week my accountant had me set up a family trust, costing me just over $2,000. So you can imagine how shocked I was this week when I heard Bill Shorten talking about killing trusts! Should I take my money out again, or leave it in, or what?

Craig

Hi Craig,

You’re a bit early aren’t you, cobber?

I mean (Tony Abbott) hasn’t even called the next election and you’re acting like it’s a done deal!

Now, Bill Shorten’s argument is that it’s unfair that people who use trusts can split their income to lower their tax, whereas everyday workers can’t.

Fair enough. It’s actually pretty hard to argue with that.

Yet the ability to split the trust income with unemployed members of your (adult) family is really only a small side benefit to having a trust. (How many of these family members do you have?!)

The main reason you would have a trust is to protect your assets. The second is to avoid getting whacked with the top marginal tax rate. See, even with these proposed changes you still have the ability to cap your tax rate below 30% (versus the top marginal tax rate of 47%) by distributing income from the trust to what’s known as a ‘bucket company’ and then using the franking credits to eventually lower your income.

Anyway, back to your question. The bottom line is, trusts have been around since King Henry VIII … they’re not going anywhere!

Scott

My Niece is Winning!

Scott,

I bought a copy of your book for my niece, who has told me it is the best birthday present she ever had. She has thrown away her credit card and is talking to me about banks and super, and she is excited! A remarkable financial turnaround for a beautiful young woman who has had a difficult path through life, through circumstances outside her control. I love this girl so much and now I can see a more positive future for her. Thank you.

Karen

Hi Karen,

I’m sending your email straight to my grandmother in Ouyen (okay, I’ll print it out and post it ... she doesn’t have email). Thank you so much for helping me spread my message, and pass on my congratulations to your niece. She’s got this!

Scott

The Day I Got Pregnant ...

Hi Scott,

My partner and I married in April 2016. A month later it came out that he had massive debts from online spending. He had lied to me for the last 10 years. We had counselling, and he proceeded to pay off everything except a BIG debt of $40,000 (he runs his own business and earns $150,000 a year). Money is still a major issue, though he says paying off the debt is priority number one. Now, unexpectedly, I am pregnant, with around $10,000 in savings. Yet the day I confirmed my pregnancy with the GP, he bought an $800 briefcase. I am terrified -- what can I do?

Vickie

Hi Vickie,

If he’s earning $150k in his own business, he’s obviously no dill -- he’s just depressed. His spending is a symptom of that depression. However, by deciding to have a family with him, his out-of-control spending is now your problem too.

So if I were in your situation, I’d sit down and call him out on his bulldust: he’s got a problem, and he needs to deal with it:

First, by getting help from a professional (call Beyond Blue).

Second, by working with you. From now on you share the one joint bank account, you have an equal vote on where the family money goes, and you have a regular monthly Barefoot Date Night where you plot and plan and scheme about all the things you’re going to do to secure your family’s future.

Let him know you believe that he has it in him. Then hold him to it.

Scott

Heartbreak Motel

Dear Scott,

My husband and I are in our thirties, have two kids, have a $70,000-a-year household income, and owe $190,000 on our home ($240,000 value, we live in Tassie!), with $80,000 in an offset account. We now have an opportunity to invest in a business as 25 per cent owners in an accommodation/wedding venue. The asking price is $1.5 million-plus, with four partners putting in 25 per cent ($500,000 each) and an additional $500,000 for improvements. The profit from previous years is around $200,000 per annum, with future bookings into 2019. We are unsure if we should take this opportunity (as silent partners) or just continue to pay off our mortgage. Please help.

Tash and Simon

Hi guys,

This sounds like a real stinker of an idea.

In fact, let me count the whiffs:

Whiff one, you can’t afford it. You’re simply not earning enough to take on more debt. (Though that’s my opinion ... not the opinion of a bank that wants to flog you more debt.)

Whiff two, you’re getting into bed with not one, not two, but three partners!? You may start out wanting to be a silent partner, but trust me you’ll eventually have to raise your voice.

Whiff three, if the business has a downturn you may have to put your hand in your pockets, or reduce your dividends. And this is at a time when you’re still repaying your debt. And you can’t afford it in the first place.

Look guys, this venture smells worse than my son’s teething nappy (and the end result will be just as messy).

Life is difficult when you’re raising young kids, and living off one income. To quote Jon Bon Jovi, “You’ve got to hold on to what you’ve got”. Keep your life simple. Pay off your mortgage. Take time to smell the roses.

Scott

Money Ménage à Trois

Hi Barefoot,

Last year I bought a 50 per cent share in a rural property with a married couple (who I was in a polyamorous relationship with). We then embarked on a 12-month-long complete home renovation. Sharing finances with them was very hard to get used to. Now we have split up I do not know whether I should stay invested in this property or push for them (or another party) to buy me out. Please help!

Brendan

Hey Brendan,

When I was at uni, I once shared a house with a couple. But there was no poly-anything going on. (Actually, who I am my kidding … my university days were Han Solo.) Whenever they were fighting they’d both bitch to me about each other. And then when they made up, they’d gang up on me. It was terrible … but hey, I was only renting. You are joint owners in a property, tenants-in-common … and if the relationship is over, so is the house. Either have them buy you out (after getting two written valuations), or sell the house and go your separate ways.

Scott

What’s Wrong with Ethical Investing, Barefoot?

Hi Scott,

I am currently reading your book. It interests me to read how lovingly you speak about your family, yet I have not come across any mention in the book of investing ethically, socially or environmentally. You suggest readers should switch to indexed super and stock funds, but do these align with your values? Having said that, I am currently getting ripped by high fees on a well-known ethical super fund. So what is the best and cheapest way to invest ethically?

Helen

Hi Helen,

Your ethical fund is ripping you with fees? That doesn’t sound too … ethical.Still, as an investment option within superannuation, socially responsible investing (SRI) is so freaking hot right now. It’s the financial equivalent of a paleo-approved, gluten-free, organic kale and almond milk combo shake (and you get charged through the nose-ring for both!).

My view? I think you need to be careful about outsourcing your ethics to a bunch of … finance guys. That being said, I strongly believe in ethical investing, so much so that I have an ethical fund: it’s called the Pape family portfolio, where we make our own investment decisions, based on our own convictions.

Scott

Why are people stealing my book?

Every father wants to be a hero to his son.

So, a few weeks back, I took my four-year-old to a bookstore to show him my bestseller.

Only problem? I couldn’t find a single copy anywhere (not even in the bargain bin).

“Your book. It isn’t here, is it Daddy?” he said, consolingly.

This wasn’t going well.

Thankfully a shop assistant recognised me and said “follow me”.

She took us out to the storeroom and showed us a sign pinned to the staff noticeboard (see pic).

“Barefoot Investor … Because of theft, NO copies will be kept on the floor.”

True story.

I didn’t know how to handle this one with the boy: “Daddy’s book is popular … with thieves.”

Yet I’m taking it as a win — even with the pilfered copies, the book has still sold over 300,000 copies!

And its success has meant that I’ve received thousands of follow-up questions on the book, far too many for me to answer individually (though I try!). With that in mind, here are the top questions people ask me.

“Is this really how you manage your money?”

Yes it is.

I’ve lived the nine Barefoot Steps

Liz and I have set up our buckets. We have a shared bank account. We do our Barefoot Date Nights.

And that’s why I believe the book has resonated so strongly with people — I know it works.

The steps won’t make you rich overnight, but they will give you a clear path that will keep you and your family safe.

“You need more than $250,000 to retire on!”

Well, having more money is certainly better

In case you haven’t read my book, my chapter on nailing your retirement sets out my ‘Donald Bradman Strategy’, which says that to enjoy a comfortable retirement you don’t need $1 million … or $2 million.  

As a minimum, I argue you need three things to have a comfortable retirement where the money doesn’t run out:

A paid-off home, around $250,000 in super combined (or $170,000 if you’re single), and the ability to continue working a few days a month (which you should do, no matter how much dough you’ve got, to keep the grey matter ticking over and to get you out of the house).

Some people got all ‘Tony Abbott’ about the fact that I advised people to rely on getting the age pension.  

Let me defend myself:

First, the average Aussie approaching retirement has around $200,000 in super, so my strategy is giving them something realistic to aim at … rather than simply just throwing up their hands in the air.

Second, let me be very clear: I do not encourage planning to rely on a government handout. In fact, I wrote the rest of the book so you can set yourself up to not need the Donald Bradman Strategy!

“Can’t I just use my offset account for my Mojo account?”

Sure you can.

(I have received literally hundreds of emails from people who tell me they could be $48.50 a year better off by using their offset account for their ‘Mojo’ — my word for savings.)

It’s just not how I do it … but the most important thing is that you have Mojo!

Again, the power of this book is that it’s what I’ve actually done in my life.

And, personally, one of the things that really helped me was giving each of my accounts a name.

There’s power in being intentional about things, and you tend not to dip into an account that has a name on it (the more emotional the better).

When my house burned down, I went to my Mojo account and drained it.

“Should I keep my credit card … just in case?”

You could do that … but it’s like a drunk keeping a beer in the fridge just in case a ‘mate’ comes around.

The truth is that credit card ‘rewards’ for all but the highest spenders are a gimmick … and their value gets eroded with every passing year (some points are worth as little as half a cent each).

Yet showing your kids that Mum and Dad can get through life without relying on someone else’s money?

In the words of the MasterCard ad … priceless

“How do I get my partner on board?”

Right now people all over the country are going out for their Barefoot Date Nights.

If you can’t rope your partner in with the promise of booze and good food, what else can I do?!

“Will you be updating the book?”

Yes. I’ll be updating it every year. In fact I’ve just finished the 2017/18 update, which will be released for Father’s Day.

There’s also an audio book version that I’ve laid down.

And finally …

“What happened to your alpacas?”

I’m pleased to announce that Pedro and Alberto, my two highly protective alpacas, are still very much alive and spitting!

Tread Your Own Path!

The Day Our Lives Turned Around

Hi Scott,

In December last year -- after struggling with personal debt of over $55,000, no job, and rent that had zapped my entire savings -- I took a train into the city with my wife (who had been holding the fort for us both on her $80,000-a-year job). We walked around for the whole day and decided something had to change -- WE had to change. So we bought your book. Seven months on and, for the first time ever, we are in control of our lives. We now spend a lot less, I am in a great job, and we have already killed $14,000 of the debt. Thanks, mate!

Lucas

Hey Lucas,

What an epic story. It’s simple to buy a book, it’s easy to read it, but it’s a lot harder to actually act on it. And that’s what you’ve done and that’s why you deserve all the credit.

Enjoy the date nights mate!You got this!

Scott

My Totally Independent Financial Advisor … Sucks

Barefoot,

My wife are in our early 50s. Adult kids. We earn $180k a year combined, with $200k left on our mortgage, $200k in savings, and $350k (combined) in super. This week my wife and I met with a financial advisory firm who claim they take ZERO commissions and proudly claim their independence from EVERYONE. All good so far, but when we saw their fee pricing … bill shock moment! They want $7,500 up front as a project fee, then $600 per month thereafter. They were admittedly thorough in their fact-finding about our situation, but we just cannot accept their price as a good value proposition. Curious as to your thoughts.

Warren

Hi Warren,

Well done for seeking out an advisor that takes zero commissions. However, let’s be honest: your advisor is not truly independent … he has a vested interest in advising you to write him a $600 cheque each month!

However, it may be worth having them review a simple, set and forget plan: pay off your mortgage. Review your insurance. Build up a three month Mojo fund for emergencies. Then continue working hard, but save harder: salary sacrifice $25,000 each into a low-cost super fund. Invest the rest via a family trust into low-cost index fund that you can distribute tax-effectively to your adult kids.

Think of it this way: if you invest the $600 a month into shares, in 20 years time it could be worth $330,000.

Scott

IVF Has Left Me $15,000 in Debt

Hi Scott,

I believe my situation is unique. I am 42, single, earning $85,000 (including super), and about to embark on IVF cycle number seven, as I have not yet met Mr Right and at my age have no time to wait for him. IVF has left me with a debt of $15,000, and after my next cycle I will (if I am careful) have $10,000 left in savings, which will pay the rent for six months if I fall pregnant. I will then need to save more and pay off the debt throughout my pregnancy. Would love your advice as I really need to get ahead and it is tough.

Mandy

Mandy,

Your situation reminds me of the young people that write to me who desperately want to buy a house they can’t afford. They scrape and borrow too much and eventually get over the line … only to realise just how expensive the ongoing costs are. The only advice I have is to think beyond the pregnancy: you’ll get 18 weeks maternity leave at $695 a week before tax. You’ll need to work out your maternity leave entitlements with your employer. After that you should receive Family Tax Benefit A and B, plus some rent assistance. Financially, you’re setting yourself up for a very hard road. But you obviously know that. If you’re going to do this, make a vow to do it without debt. No credit cards. No personal loans. Debt makes everything more stressful, and more expensive. You’re obviously a very determined person. Good luck.

Scott

What Young People Should Learn from Their Parents

In last week’s column you talked about young people and money. My husband and I encounter many young people, some even in their thirties, who do not know the basics about saving, super, banks, financial advisers, etc. We spend a lot of time talking them through stuff they should have learned from their parents. We are thrilled you want to change the school system to teach kids about earning, saving and giving – the proper way, with no ‘sales pitch’. Go for it! We are behind you!

Kathleen

Hi Kathleen,

I received a massive response from last week’s column. There were two main camps: teachers wanting me to kick off my program at their school, and Barefooters like you. After years of doing this, I know that many of my readers mentor young people. What an absolute privilege, right? It’s one way to positively change a person’s life. I’ll have more information on the program over the next few months. Watch this space.

Scott

How to ruin your financial life

He didn’t even introduce himself.

An old bloke just walked straight up to me, poked his knobbly old index finger into my ribs, leaned in, and said:

“They don’t listen to you, do they!”

“Huh?” I replied, cowering like a schoolboy (I was at a function, and I didn’t know this old codger.)

“I’ve been reading your questions in the newspaper for years … and they don’t listen to your advice!”

He did have a point. Maybe my message just isn’t getting through. After all, each week I try and give people honest, commonsense advice to help them out.

Fat load of good that does!

So this week let’s try something different — a bit of reverse psychology.

If people don’t respond to good advice, maybe they’ll listen to some bad advice?

So in honour of the old bloke, let me give you half a dozen ways to totally screw up your financial life.

How to Lose Your Shirt in the Share Market

Buy shares based on the tips of your brother-in-law (a 43-year-old IT helpdesk employee who ‘dabbles’ in shares, porn, and sporting memorabilia).

Yet what if you are not lucky enough to have a brother-in-law who has outspoken views on things he knows very little about?

Easy.

Just read scary newspaper headlines: “Sell Everything!”, “Prepare for a Cataclysmic Year!”

(The Royal Bank of Scotland made these headlines in January 2016. Since then the US stock market has jumped 35 per cent, while our market is up around 18 per cent … not including dividends.)

And after you’ve bought some shares, make sure you watch them right throughout the day.

Do not take your eyes off them for a second.

The minute the shares go up, buy more. The minute they go down, sell.

Okay, so now let’s focus on losing money in something you are an expert in: property.

You’ve been living in a house your entire life … right? How hard can it be?

Let’s roll.

You: Property Mogul

If you buy an investment property, don’t buy a good-quality family home from your local real estate agent.

What do those losers know?

Instead, go to a wealth-creation seminar, preferably hosted at a suburban Holiday Inn conference room.

You want a tanned fellow from the Gold Coast who’ll teach you the ‘secrets’ the rich have been keeping from Domino’s-Pizza-munching plebs like you.

Ideally, you’d like a complicated strategy that involves you purchasing ten properties in ten years and will have you retired at 40 and living off $229,345 a year!

Go ahead and buy a property from the spruiker using ‘OPM’ (Other People’s Money), interest only (remember, the more debt you have, the wealthier you are). Location? Preferably South-East Queensland, though what matters most is that the property you buy at the seminar is located somewhere far, far away. While you’re at it, use their legal representatives and mortgage broking ‘team’. It’s so much easier than worrying about all those annoying details yourself.

Yet the real money is made (and lost) in business.

You’ve read Donald Trump’s The Art of the Deal, and look where he ended up.

Okay, so he did get a multi-million dollar loan from his father, but screw it — let’s do it!

How to Go Broke in Business Without Even Trying

Start a business you have no experience in, preferably in partnership with your ex-boyfriend … preferably funded with credit card debt.

Focus on ‘brand positioning’ (business cards, a fancy office, an agency-designed website) before you even think of finding any customers. If your product is as good as your friends on Facebook think it is (38 ‘likes’ — you GO girl!), customers will beat a path to your door.

And what if you can’t think of an idea for a business?

Easy. Just buy a franchise, like Pie Face, or 7-Eleven.

They always work out well.

Harness The Secret

Money can be attracted through your mind.

(Picture me rubbing my temples as I write this).

Let’s be clear: God wants you to be rich.

The 800 million people in sub-saharan Africa? … not so much.

But you? … Sure.

Now, one way to awaken the spiritual money muse is to always keep $2,000 worth of cash ($5 notes) in your wallet. It’s a sure-fire psychic signal to the universe that you are bathed in abundance.

And it works! Every time you open your wallet you’ll see your riches … and so will the sketchy dude waiting behind you at the Taco Truck on King Street.

Now repeat the affirmation: “please, take my money, just don’t hurt me”.

How to Find the Wrong Financial Advisor

Once you’ve got a bit of dough … you need to share it with someone. So it’s time to find the most expensive financial planner you can find.

Judge them on (a) their car, (b) their office, (c) their pinky ring.

Let them know you’re a player.

Explain that you want the most expensive super fund they have. Your retirement is no time to be a tightarse.

And when they explain it to you in terms you don’t understand – nod like an idiot.

And make sure you invest in things you don’t understand.

And if someone cold-calls you about an investment opportunity, under no circumstances should you Google them.

Who cares what other people’s experiences have been?

Let’s be honest, the interwebs is just full of freaks that like cats anyway. If you are tempted to go near Google, the only keywords you should use are: “get rich”, “lifestyle design”, “Barnaby Joyce”, and “Multiple Streams of Income”.

Let’s be honest though, the real reason to get rich is so you can exert control over your family, right?

Well, I’ve saved the best to last.

How to Ruin Your Relationships

If you’re dating, don’t talk to your partner about their financial situation, or their views on spending and saving.

Didn’t your mother teach you anything?

It’s rude to talk about money — and unless you’re loaded it’s not going to help you in the sack anyway.

Split everything down the middle except for: your secret shopping money, your secret mistress money, and your secret betting money. Oh and keep a little set aside that your partner doesn’t know about, just in case you have to run. Because you will, eventually. And divorce will be the final crowning achievement of your financial life.

So there it is: six simple ways to completely screw your financial life.

Are you listening? Don’t make me have to poke you in the ribs.

Tread Your Own Path!

Why Young Women Are Miserable

The email subject line simply read: “Crisis”.

It was from Jess, a 26-year-old, university-educated Melbournian who wrote that her life was “a disaster”.

Her email was brief, punchy, and melodramatic. Just the way I like ’em.

She also left her mobile number, so I gave her a call … at 8.51 pm on a Thursday night.

Barefoot: “It’s Scott Pape, the Barefoot Investor.”

Jess: “No way.”

Barefoot: “Way.”

Jess: “You’re calling about my email?”

Barefoot: “Yes. Apparently your life is a disaster.”

Jess: “Well, that’s how it feels. I’ve got about $6,000 in debt across three cards that I can’t ever seem to pay off … and I hate my job.”

I spent the next 15 minutes talking Jess off her $75,000-a-year ledge.

Why Young Women Are Miserable

Seriously, if I had a dollar for every broke young woman who emailed me … well, I’d have enough money to pay Jess’s debts off.

Yet it turns out that this runs deep:

This week the National Australia Bank (NAB) released its quarterly wellbeing index and, shockingly, it found that young women aged 18 to 29 are the most unhappy people in the country.

To be more accurate, the survey found that young women have the lowest wellbeing score of all the 48 groups surveyed, and that almost 50 per cent of young women reported they suffer from high anxiety.

Anxiety is worrying about stuff that hasn’t happened yet.

And, like Jess, a lot of young women look into their futures and see a lot to be worried about: they’re living through a unique time in Australia’s history where houses are severely unaffordable, debts are at record highs, and they’re getting married later.

Women are biologically inclined to seek out safety and security — eventually most women (but not all) will want to have children. And that explains why the NAB survey found that one of the biggest positive impacts on overall wellbeing and happiness is having your own home.

And if you can’t see a way of achieving this, it creates a lot of anxiety.

The Triangle of Happiness

The big shift for me happened a few years ago, when I lost my own home.

It was the first time I got it — in my gut — just how important safety and security are to happiness.

Deakin University Emeritus Professor Robert Cummins says the key to wellbeing is what he calls the ‘golden triangle of happiness’:

You need to have a sense of purpose.

You need to have strong personal relationships.

And you need to have a sense of financial control.

The research clearly states that money doesn’t make you happy, but it also shows that not being in control of your finances will make you very unhappy. In fact, Professor Cummins and his research team found that financial insecurity produces similar feelings to those of physical torture!

Cummins found that low-income earners who rated themselves at least an 8 out of 10 for being in control of their finances were far happier than those who were earning substantially more but rated themselves as not as in control of their finances.

Raising Strong, Financially Fearless Women

On paper Jess looks the goods:

She went to a private school.

(“We paid for her to go to a good school … we did our job!” say her parents).

She got good marks in Year 12, went to university, and graduated with a degree.

(“She got good marks … we did our job!” says the school).

Yet now, five years later, she’s tearing up talking to a total stranger about how her life is “disaster”.

Here’s the rub: at no stage of her education did anyone teach her how to manage her money, introduce her to the spirit-strengthening power of saving, or sit down and explain just how amazing the opportunities in front of her are.

And that’s why I’m so very, very passionate about shaking up the current schooling system — kicking out the credit card floggers and their ‘edu-marketing’ (Hello Cred!), and bringing honest, empowering financial education to girls (and boys) in our schools. And I’m going to do it. You just wait and see.

Tread Your Own Path!

Hedging Against My Shaky Marriage

Hi Scott,

We have $300,000 in the bank, and owe $42,000 on our mortgage. We have two kids (ages 6 and 7), but our marriage is shaky. If it fails, I want to keep the family home with my husband, and I would move, then we would split time with the kids equally. We are considering buying a block one minute’s walk from the family home, and building there. If our marriage works out, the home would be an investment. If not, it would be my home, because being close would be important for me. I am worried that if we do not buy now, we might not be able to afford to do so later if we do need two homes. What do you think?

Sally

Hi Sally,

Now I could be wrong, but here’s my theory on what’s prompted this: your marriage was already on the rocks, but you’ve inherited $300k. How else do you get to have $300k in the bank and $42k still owing on your mortgage? That makes about as much sense as your plan: your marriage is shaky … but you’re contemplating building a brand new house together?

This is a terrible idea. (If my editor allowed me to write in all caps I would, but he doesn’t, so I’ll stick with the italics, but just know that my left eye is twitching uncontrollably at the moment). After all, if you actually separate -- and I think you already know you’re going to -- who’s to say he’ll follow the plan? My advice is to sort your relationship out first -- before you commit to this big, messy purchase. The best investment you could make right now is relationship counselling.

Scott

Any Advice for an Overwhelmed Widow?

Hi Scott,

It is with a heavy heart that I write for advice. Last week, my best mate of many years suddenly decided to end his life, leaving behind young wife and two primary school aged kids. He also left behind a financial mess. I have told his wife to call and get everything ‘frozen’ while she comes to grips with it all, but is there any other advice you can give her?

Tom

Hi Tom

What a heartbreakingly sad situation. I’m so sorry for your loss.The admin that’s required after someone dies can be overwhelming… especially if you’re grieving.

However, the first thing she should do is contact her husband’s super fund. The final payout is called a death benefit, and it’s a combination of his final balance and any insurance held at the time of his death.

To get the ball rolling, she’ll need his death certificate (or, if that’s not yet available, the interim death certificate), his passport, his driver’s licence (or birth certificate), a copy of his will (if there is one), and letters of administration (if applicable). Generally, banks and other financial institutions will need a death certificate before they can start the process of settling accounts.

From experience, she (understandably) won’t be in any state to make rational financial decisions for at least a few months. What she needs is someone who can help her get a clearer picture of her financial situation. And that’s the job of a best mate.

Note to the reader: I’ve offered to help them through this process.

Scott

How Would You Invest a Spare $10,000, Barefoot?

Hi Scott,

I’ve just turned 28, and after reading your book I came to the realisation that my savings have been sitting in my bank account for several years doing nothing. I have no investments whatsoever, but I do have $10,000 I could invest. Based on your previous advice, I am looking to invest $5,000 into AFIC and $5,000 into Argo. Is this a good idea, thinking about the long term (30-40 years)? And if I continue to add to them over time, is that better than adding the money to my super?

Rick

Hi Rick,

If you’ve read my book, you’ll see that I set out a time-tested plan: do a monthly date night (Step 1), set up your buckets (Step 2), domino your debts (Step 3), then start saving a 20 per cent deposit for a home (Step 4). Step 4 is where you’re up to at the moment.

So right now you have $10,000 sitting in a bank account. I want you to give that account a nickname, call it “my house deposit”. I know it sounds like I’m making you suck pea and ham soup, but make no mistake, the act of naming something is powerful. It gives you clarity and purpose.

If you’ve been Barefoot for a while, you’ll know that I love low-cost index funds as investments, but everything at the right time. Now, after you buy your home, you’re onto Step 5, where you boost your pre-tax super contributions from the standard 9.5 per cent to 15 per cent (or up to the annual cap of $25,000). If you can do that before you’re 35, your retirement will be soupy.

Scott

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

The Slippery Slope to Ruin

Barefoot,

A few years ago I was on a high income, with $60,000 in savings for a home. But after being made redundant two years ago I have blown so much money gambling. I have been sliding down the slippery slope to where I find myself now, on a low income struggling to pay my credit cards and personal loans (which I used to be able to service comfortably on my income). I have $40,000 in credit card debt, $12,000 in personal loans, and around $20,000 of other debt. Should I seek access to my super? If not, what can I do?

Max

Hi Max,

Let me guess: you got caught up in sports betting, right?

The number of young men in the same boat (and the betting companies actively target young blokes) is frightening -- it really is the new pokies.There are only two winners out of this devastation: the gambling companies, and the government (via taxes). For its sins, the government trickles a bit of their winnings into gambling crisis services, which can help with your all-too-common situation. You’ve paid for their services over and over again, so call them on 1800 858 858.Now, you may be able to access your super based on financial hardship. The minimum you can get is $1,000 and the maximum is $10,000, and you can only make one withdrawal in any 12-month period.

However, you shouldn’t, for a couple of reasons: first, if you still have your addiction (or you relapse), you could end up gambling it away. Second, without any assets, it’s highly likely you’ll be advised to go bankrupt, and if that happens, your super will be protected.So repeat after me: “I will NOT access my super.”

Max, you already know that the odds are stacked against you. All you can do now is fight.

To see what that looks like, read on.

Scott

Thank You Barefoot

Scott,

We spoke way back in 2010. That was the year when my husband died, I had a six-month-old baby, and I could not afford my mortgage repayments. Since then I have treated your (first) book like a bible. Now I have tripled my super, am building up my savings, and am working towards being financially independent. I just wanted to say “thank you”.

Alex

Hi Alex

Six years ago your family tree probably looked like a shrivelled up little sapling.

Today it’s not only strong but it’s growing into something magnificent!

Make no mistake, your actions over the past six years have literally changed your family tree forever.I’m proud of you.

Scott