My Mother-in-Law is a Sponge

Scott,

My soon-to-be mother-in-law is bad with money. She has over $100,000 in credit card debt, as well as a couple of 60-month interest-free loans that were never paid and are now charging 29.99% interest. My fiancé (we are both 25) is considering getting a loan in his name to ‘help’ her, but I believe she will just go back to her old ways. I worry about this debt when it comes to us buying our first home or if she does not pay for the loan. Over the past two months we have already paid $5,000 for her bills. Help me!

Gillian

Hi Gillian,

There’s no such thing as one Smartie.

That’s the lesson I’ve learned from my two-year-old: I give him a Smartie, knowing full well that it sets me up for a full-blown tanty if I won’t give him a second one.

After paying $5,000 of his mum’s bills, that’s the situation your fiancé is facing (and it sounds like your mother-in-law is behaving like a toddler -- not so smartie).

Bottom line?

Your mother-in-law is financially crazy. And you’re absolutely within your rights not to invite crazy into your life -- and you sure as hell don’t need to be guilted into funding her stupidity.

However, that’s a harsh message to deliver to your fiancé.So here’s what I’d do instead:

Explain to your fiancé that your mother-in-law needs love, kindness and understanding. She needs expert guidance. She needs a financial hero who can help her … in fact, she needs James Bond! Or, more accurately, she needs to call the not-for-profit Financial Counselling Australia hotline on 1800 007 007.

However, if she’s stamping her foot, quivering her lip and demanding another Smartie, you may need to book an appointment on her behalf. You should even offer to go with her -- that’s what a loving daughter-in-law would do. The financial counsellors are the best people to help her face up to the reality of the decisions she’s made, and provide solutions for her path forward.

Now repeat after me: no more Smarties!

Scott

The Acorns App

Hi Scott

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

Tim

Hi Tim,

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

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

Whack! Whack!

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

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

Scott

You’re Wrong, Barefoot

Hi Scott,

I have been taking you out for Date Nights (well, your book) and I am up to Date Night Number Two, which is getting my super sorted. There’s a problem, though. My ex-boyfriend has said I should not follow your recommendation on the Hostplus Indexed Balanced Fund. He says that it is not diversified enough, that low fees are only one factor when deciding on super, and that there are better-performing funds available. My super is currently with Asgard. What are your thoughts?

Tina

Hi Tina,

First let me say that the Indexed Balanced Fund is what I use for my own money — but if your ex-boyfriend has found a better fund, then power to him!

Yet it seems to me that his reasoning doesn't quite stack up.

I actually swiped my super fund strategy from legendary investor Warren Buffett.

Let me explain:

When Buffett dies, he’s investing his entire estate on behalf of his wife as follows: 10% into short-term government bonds, and 90% into an ultra low-cost S&P 500 index fund, which automatically tracks the 500 largest companies in America.

That’s it!

Your ex-boyfriend’s claim that the Index Balanced Fund “is not diversified enough” is absurd.

The fund invests as follows:35% in 200 of the largest businesses in Australia -- like the banks, BHP, Rio, Telstra, Woolies and CSL.40% in 1,582 of the world’s largest businesses -- like Apple, Facebook, Google, Nike and Nestlé (and the portfolio is partly hedged to protect against currency fluctuations).

15% in fixed interest.10% is in cash.

That’s better diversification than Mrs Buffett will get!

Here’s you: ‘Yeah, but what about property?’

Here’s me: ‘Most Aussies have the bulk of their wealth tied up in very expensive residential property, so it makes sense to balance that out by investing in local and global businesses’.

Here’s you: ‘Yeah, but low fees aren’t everything. I could get better returns …’Here’s me: ‘The Hostplus Indexed Balanced Fund is the lowest cost super fund in the country, and one of the lowest cost funds on earth. It’s pretty simple: the less fund managers take, the more you make’.

Here’s you: ‘Yeah, but what about other funds that get superior returns?”

Here’s Buffett: “I believe the long-term results from (investing in low cost index funds) will be superior to those attained by most investors — whether pension funds, institutions, or individuals — who employ high-fee managers”.

Scott

Reminder: I first wrote about this years ago and highlighted the low fees. Today there are cheaper index super funds on offer. How do I know? Because my readers constantly email me about them! So before you do anything, go to YourSuper.gov.au and compare super funds first.

ScoMo’s $250 million air kiss

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

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

You remember that, don’t you?

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

And then … everything went quiet.

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

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

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

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

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

So what can you do?

Start saving for a deposit on your own.

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

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

Chop, chop, ScoMo!

Tread Your Own Path!

The Scary Stepmother

Dear Scott,

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

May

Hi May,

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

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

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

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

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

He wants Satisfaction, goddammit!

Here’s what I’d say to him:

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

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

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

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

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

He’s got this.

Scott

You’re Wrong, Barefoot

Hi Scott

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

Linda

Hi Linda,

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

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

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

Scott

Banker Bait

Dear Scott,

My 18-year-old daughter lives at home, pays no board, works full time, and is saving for her first property. She also wants to buy a new car ($20,000) so she can get a credit rating, which will make it easier to get a home loan. Should she keep driving the old car and put all her money towards the house deposit, or get the car loan and take a bit longer to get into the property game?

Fiona

Hi Fiona,

Congratulations on raising such an ambitious daughter!

Now it’s up to you to teach her some common sense:

Spending $20,000 on a brand-new car will not help her buy a home in any way, shape or form.

Instead, she’ll just end up forking out roughly $30,000 for a car that will only be worth $10,000 in five years’ time.

The idea that you need to take out a loan so a bank will lend you more money is absurd.

Just like Sam Dastyari, the credit reporting agencies have done their darndest to convince everyone they’re more important than they really are.

Now it is true that if you’ve got something bad on your credit file it can be a red flag to lenders. But for a cleanskin, like your daughter, it’s really not a big deal.What is a big deal for lenders is:

1) a stable income that can comfortably meet the proposed repayments;

2) a verified savings history; and

3) a meaty deposit (I recommend 20%).

If your daughter can tick those three boxes, she’ll get her loan.

Scott

Should I Buy an F45 Fitness Franchise?

Hi Scott,

I’m a 26-year-old woman working full time in a job I hate. Quite frankly, I am sick of working for the man! Now, I have never had my own business before, and I am a little apprehensive, but I love fitness, and I also love F45 (a new high-intensity interval training fitness franchise). It is rapidly growing on a global scale, with 750 studios around the world already. The cost to open a franchise is $150,000, plus $1,700 a month in fees (plus rent, wages, taxes, etc). I do not have the capital, so I would also need to apply for a business loan. Do you think this is a good idea?

Mandy

Hi Mandy,

A mate of mine does F45 -- short for ‘Functional 45-minute’ training -- and fair dinkum he never shuts up about it.

But let’s get one thing straight: if you buy a franchise you’ll still be working for the man -- but in this case it’ll be the ex-finance dude who dreamed up the F45 franchise model. I imagine he’s currently lifting gold-plated barbells from all the money he’s making … and good on him too! All I’m saying is that in this equation he’s the entrepreneur -- and you’re the worker.So, would I buy an F45 franchise?

No, I wouldn’t.

And it’s not because I could risk having a cardiac arrest if I actually did F45 -- it’s because I’ve put the franchise through its paces, just like I would with any investment.

So let’s you and I do a money workout:

First, let’s look at the sector. Australia’s gym market is one of the most competitive and saturated in the world, according to IBISWorld. (Why are we so fat, then? Is it the chicken or the egg? Or maybe it’s the chicken and egg sandwiches.) Simply put, there are a lot of businesses fighting it out for our fitness dollars.

Second, one of the key selling propositions of the F45 franchise is that there’s not a lot to it -- two trainers, four walls, and a bit of equipment. Easy to start … and easy for potential competitors to start too. And what about when ‘F6’ comes out? (Seriously, I could totally blitz 6 minutes of training.)

Third, while F45 is going bananas right now -- the business is just five years old. What will it look like 10 years from now? Fitness is a faddish industry (hello Zumba, Tae Bo, and pole dancing fitness). Heck, F45 is itself a gentler version of CrossFit, which is now reportedly starting to run out of puff.

So, here are a couple of questions you need to ask yourself:

How quickly could you earn back your upfront costs (a $150,000 loan plus $1,700 a month)?

Even better, could you avoid borrowing (which always ramps up the risk and makes life more complicated) and instead -- as we Barefooters call it -- ‘swing on the trapeze’. That is, keep your day job, start a morning and weekend fitness bootcamp, and make a go of it for the next 12 months to test it out. If it’s a winner, quit your job and go for it!

Scott

If you’ve got an ING card, read this

The other day, ING sent me a mass-marketing email with the subject line:

“Scott, refer a friend and you can both get $100.”

Now, given that my book recommends setting up a couple of ING accounts …

And given that my book has sold over 500,000 copies …

And given that ING has just announced they’ve achieved “a record 50% jump in customers this year” …

… why the hell am I even writing to you? Why aren’t I sipping a Bacardi in the Bahamas?

Oh that’s right — old dumbo here doesn’t accept any kickbacks.

To be serious for a second: I have no allegiance of any kind to ING. My only allegiance is to my readers, and I only recommended those ING accounts because they have zero account fees and zero ATM fees, and they pay a (relatively) high rate of interest.

Why am I telling you all this?

Because I feel a responsibility to keep these bastards honest.

And this week ING announced some changes to the accounts.

So I feel it’s appropriate to check them out:

First, they’re now offering zero ATM fees globally (speaking of the Bahamas). Coupled with the fact that ING already offers the wholesale exchange rate from Visa without a clip — which is why I’ve found I get a better rate than with cards from other banks.

Second, and more importantly, they’ve also eliminated international transaction fees on all overseas purchases — a saving of 2 per cent. Big news if you buy online (which somebody in my house seems to do quite regularly).

The fine print is that you need to deposit $1,000 a month into your account and make five transactions — in other words, make it your everyday account. And why wouldn’t you? It’s an all-in-one ripper: good for everyday banking, good for buying crap online, and good for holidays overseas.

Just be warned: do not take their upsell on their sleazy new credit card … after all, that’s what’s cross-subsidising all this fee-free generosity!

Tread Your Own Path!

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.

Can I Trust My Parents-in-Law?

Hi Barefoot,

My parents-in-law (both in their 60s and retired) have put a proposition to my boyfriend, and I am very uncomfortable about it. He is in serious debt, with credit cards and personal loans. In two months they will lose their cheap rental home (they’re renting from a friend, who is now selling the place).

So they want my boyfriend to buy a home in his name for them to live in. They say they will pay him $5,000 a month and cover all other costs. For income they have four pensions -- two for themselves and two ‘carer payments’ they receive for having two people in their 80s living with them. They say it will not cost him a cent, so he can pay his debts and, when they all die, he will have a house. They all think it’s an amazing idea, but alarm bells are ringing for me!

Abbie

Hi Abbie,

Ding! Ding! Ding!

I’m hearing the same alarm bells!

I could be wrong, but it sounds like your parents-in-law have been moved on from mooching off their mate … so they’re looking around for their next meal ticket, which just happens to be your boyfriend.

Make no mistake, they’re looking out for themselves -- not for their son.So, at the risk of being the party-pooper, let me poop all over this plan:

First, retired pensioners can’t underwrite a mortgage -- especially when part of their income is supplemented by carer payments which may go to God at any stage.

Second, it sounds like your boyfriend would have trouble qualifying for a mortgage, given you say he is in ‘serious debt, with credit cards and personal loans’. And even if he can score a loan, it doesn’t mean he should.

What could end up happening is your deeply-in-debt boyfriend becomes your deeply-in-debt husband, and you both end up on the hook providing a home for his deeply dependent parents for for the next 30 years.

Ding ... Dong … don’t do it.

Scott

Ripping Off a Pensioner?

Hi Scott,

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

Chantelle

Hi Chantelle,

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

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

Scott

Million Dollar Payday

Dear Scott,

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

Max

Hi Max,

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

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

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

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

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

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

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

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

Scott

10 Years Without Money

Hi Scott,

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

Doug

Hi Doug,

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

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

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

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

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

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

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

Thank you for reading

Scott

Three Is Enough, Barefoot!

Dear Scott,

You seem like a smart guy, but I think your wife is even smarter in wanting to limit the number of children you have to just three. The environment is freaking out, and curtailing the number of children born into our consumer society is one of the greatest contributions anyone can make. And all that money you save by not having those kids can be donated to worthwhile charities that help the environment, animals and people instead!

Jessica

Hi Jessica

You must be a real hoot at a baby shower.

I’m naturally an optimist, and on almost every measure right now is simply the best time in history to be alive.

Case in point: in his book Abundance: The Future Is Better Than You Think, Dr Peter Diamandis reveals that in the past century the average lifespan has doubled, and the average income has tripled. At the same time, food is 10 times cheaper, electricity is 20 times cheaper, transport is 100 times cheaper, and communications are 1,000 times cheaper!

Besides, a wise person once told me “no one ever regrets the kids they have … only the ones they don’t”.

Scott

Should I Sell My Investment Property?

Scott, I’m torn!

Back in 2008 I bought my first home for $126,000. I have paid it off since then and started renting it out in 2012, when I moved into my husband’s home. My rental property is now worth about $150,000 and, to be honest, I do not think it is ever going to rise much in value. The only upsides are that it is relatively easy to find tenants for it ($220 per week) and I make about $5,000 a year from it. I am considering selling and using the proceeds to invest in shares, and to renovate our home. Or should I just keep it? It would be nice to rent it to a single mum with four kids!

Ally

Hi Ally,

What an awesome achievement!

In years to come, how powerful would it be to show your kids -- especially your daughters -- the home that Mum saved up and bought on her own, before she met Dad? Who cares if it’s a poky little joint? Stories are powerful, especially for kids.

Having said that, if you’re not emotionally invested in the property, I’d probably sell it, cop the tax, and move on.

What tax?

Well, it’s likely you’ll be up for capital gains tax (CGT), though you’ll only pay it on any gain you’ve made since 2012 (when you moved into your current home). Better yet, that capital gain will be further discounted by 50 per cent as you’ve held the property for over 12 months.

So why sell?

Well, you’re already questioning the likelihood of future capital gains, and you wouldn’t hold on to it just for the 3.3 per cent rental yield ($5,000 a year). Besides, let’s face it, being a landlord can be a triple pain in the rump -- hello renters, repairs, and real estate agents.

If I were in your shoes, I’d sell the place, make a tax-deductible donation to a woman’s shelter in your area, spend as little as I could on renos on your current home, and put the bulk of it into super.

Scott

Amazon wants the keys to your house.

Oh, and the retail giant also wants to install a camera at your front door to track people coming in and out.

Seriously.

‘Amazon Key’ is a security camera and locking system that lets you get deliveries inside your home when you’re not there.

Here’s how it works:

When the Amazon delivery driver arrives at your front door, he (or she) scans your package. If the package is approved, the door unlocks, and the camera starts recording. Now here’s the cool part: you can watch the delivery driver from your phone … and apparently even talk to them:

“Put the ice-cream in the fridge please cobber.”

After the driver has dropped off the package, the door automatically locks behind him. (And if you’re busy working you’ll get an email with a recorded video of the drop-off.)

Amazon Key costs $249 and is currently available in 37 cities across the US — but if it’s successful you can be sure it’ll be quickly rolled out here in Australia.

Righty-o. So what does this all mean?

First point: this is just another reason that Amazon is fast becoming the ‘everything store’.

In the coming months Amazon Home Services is rolling out 1,200 different services — from cleaners to dog walkers — who will all sync into the Amazon Key system.

The bottom line for Aussie businesses is brutal: if you don’t have the chops to compete globally, then the best companies in the world will eventually come Down Under and cut your lunch (and most likely deliver it by drone).

Second point: is this ‘1984’?

Are consumers seriously going to allow a conglomerate to set up a camera in the privacy of their homes?

Sure!

In fact, Amazon Key perfectly complements Amazon Alexa, the voice-activated speaker that is constantly listening in to your conversations (and awaiting your Amazon orders), and the cute-looking Alexa Alarm Clock, which has an in-built camera and microphone (in your bedroom!).

Yeah, but what about letting strangers into your home?

Well, think about the intricate security system most of us have now: you keep a spare key under the doormat so that Sally (surname unknown) — the cleaner you met for 10 minutes as you showed her through your pigsty of a home — can get in. Good old Sally wouldn’t use your toothbrush to clean the toilets, right?

… Hang on, give me that security camera!

Tread Your Own Path!

Romantic Comedy or Horror Movie?

Hi Scott,My partner comes from a wealthy family. We are engaged, are having a baby, and have joint finances. Four years ago he was briefly engaged to someone else and he bought a house with a $50,000 inheritance from his grandfather. At the time, he and his parents agreed to a caveat to protect his asset from her. Wise move, and it worked. Fast forward to now, and I have been jointly paying for this same mortgage for a long time, on my wage of $110,000 a year. We want the caveat removed; they don’t. Advice?

Tess

Hi Tess,This sounds like the plot of a made-for-TV romcom. You meet the man of your dreams, but his meddling parents don’t approve of you!While I’m only getting your side of things, here’s what I’m reading:One: it was originally your fiancé’s inheritance, so it’s his money, not his parents’ money.Two: you’re now helping pay off the mortgage, so your name should be jointly on the title, if it’s not already. What’s more, if you can get the caveat lifted, you may find that you can get a cheaper deal on your mortgage.Three: the difference between you and his last squeeze is that you’re pregnant with his child -- their grandchild.In other words? Dude’s on the hook for 18 years, as Kanye would say.Besides, in the grand scheme of things, $50,000 isn’t a huge amount of money -- it’s more about the principle of your in-laws treating you like a fly-by-night floozy who’ll one day shake down their son.My advice? Just like in all good romcoms, your fiancé needs to stop being a mummy’s boy, stand up to his parents, and defend your honour!Thank-you for reading,

Scott

‘Zero Balance’ Is a Trap

Hi Scott,

I need your help as I am 34, on maternity leave and near broke … though still inspired by my five-month-old baby. I should be secure, relaxed and focusing my energy on the bub (despite the sleepless nights). The trouble is, in my 20s I racked up credit card debt to the value of $7,000. Years ago I took out a ‘zero balance’ transfer to another bank and it has now grown to $17,000! I am ashamed, but have come clean about it with my partner. He just handed me your book and I am now in ‘debt domino’ mode, gradually paying it down on my $88,000 wage. But what else can I do?

Natalie

Hi Natalie,

Well done for facing your debt demons. Trust me, everything gets easier from here.

Doing the Debt Domino (paying off your debts smallest to largest) will build up your self-confidence while systematically knocking down your debts.

However, before you start knocking down the dominoes, I’d like you to check how long it’s been since you made a repayment. Reason being, if you haven’t touched it for six years you may find that it’s a ‘statute-barred’ debt and you may not be legally required to repay it (note: your credit rating will be shot if you don’t pay, but that will eventually go away too).

Now, do me a favour and pass me over to your partner. Go on, do it. I’ll wait. Hey, Champ!

Well done for giving your partner my book -- it’s a great first step, but you need to do more.

See, this amazing woman is not only the mother of your children, but your partner in life. You need to work together on knocking out these debts as a team. There’s only upside for you: first, you get out of debt quicker; second, you build strong financial habits that will ultimately change (or prune) your family tree; and third, you’ll have a happier wife … and a happier life.

Scott

How Should I Save for My Baby?

Dear Barefoot,

Firstly, I want to say thank you. I have been following the Barefoot system and this year my husband and I got pregnant with our first child! I am self-employed and had planned to work until a few weeks before he was due and then take advantage of government maternity leave. But he had different plans and arrived 10 weeks early; he’s still in the hospital ICU but thankfully doing well. More so, thanks to your book, we have two months of living expenses saved up and therefore can focus on our amazing little man rather than worrying about work. My question is: a friend has suggested that, rather than buy him gifts, we should drop some money into an account for him -- is Westpac’s ‘Bump Account’ worth looking into?

Emma

Hi Emma,

I don’t know what you’re thanking me for -- you did all the hard work.

(Then again, I have always said that Barefoot Date Nights are a wonderful aphrodisiac … and given we’ve sold 480,000 copies … that’s a lot of lovin’ going on.)

Now, to your question.

The Westpac ‘Bump Account’ really should be called the ‘Dump Account’, because it seriously has a stronger stench than your little one’s nappy.

Here’s how Westpac puts it:“On our 200th anniversary, every child born in 2017 is eligible for $200. If your parent opens a Westpac Bump Savings account in your name, we’ll deposit $200 into it which you can withdraw when you’re 16.”

Okay! Let’s rip off that soggy, boggy nappy off!

First off, you (the parent) have to wait 16 years to get the money.

Second, you’re dropping your kid into the bank’s sophisticated marketing funnel -- which will go into overdrive when they’re 16, rebellious, possibly Emo, and desperately lusting after a new iPhone 24.

Third, the interest rate they’re offering is trickier than a teething poo:

The base interest rate is a stinker 1.5%, and to get the advertised rate of 2.3% you’ll need to make a monthly deposit, ensure your account balance is higher at the end of the month than at the beginning, and keep your balance above $0 at all times.

Finally, and most importantly, if you’re saving long term for your kids, you’d be better off investing the money into shares via a low-cost index fund or a listed investment company (LIC).

In other words, dump the Bump -- your kid can do better!

Scott

My $297,641.32 … errr, investment?

The first time, my wife flung her arms around me and, through tears of sheer joy, whispered “we’re pregnant”.

The second time, she raced up behind me and squealed with delight.

The third time, she pushed open the bathroom door, locked her eyes on me, and pitched the plastic preggo stick square at my noggin. (To be fair to her, it was a Friday night and I’d just got home from the pub … so I wasn’t exactly on my A-game.)

That was twenty-two weeks ago.

For the record, we’re over the moon to be having a new baby … it’s just that Liz was wanting a few months before going back into the ‘baby bubble’. (Fun fact: at our pre-marriage counselling session, Liz put down that she wanted three kids … I put down six. Time will tell who wins.)

Here’s one thing I do know: unlike buying a slab of beer, it doesn’t get cheaper the more kids you have. According to a study by Suncorp, the average Australian parent spends $297,600 raising a child to age 17.

Hang on — $297,600? That’s a very specific number. Maybe Simon from Suncorp followed Junior around with a Casio every day of his life. And then on his 17th birthday Simon hit ‘equals’ and triumphantly announces, “You cost me $297,641.32! But hey, I’m your dad, so let’s round it down to $297,600.”

Either way, it’s a huge number.

Worse, Suncorp’s research suggests it costs $984 per month for the first two years of your child’s life. That’s a huge whack of dough for any young family, let alone for those of us who want six kids (no wonder Liz threw the stick at me!).

So in celebration of our currently baking baby, this week I’m answering questions from new parents and parents-to-be.

Tread Your Own Path!