The Stock Market is Freaking Me Out

Scott,

The ABC reported the other day that “ASX tumbles $60 billion on US recession, China slowdown fears”. I know you are a big supporter of buying shares, but how is an ordinary person like me (age 25, medium income) supposed to follow your lead when the market can lose $60 BILLION in one day? It freaks me out, and makes me think it’s a lot safer to just stay away from the market altogether.

Mandy

Mandy,

Mandy, Mandy!

At your age, you should be getting down on your knees each night and praying for a share market crash.

More than that, you should be hoping that the stock market falls and stays low for decades.

That’s not going to happen, of course -- though it would be the best outcome for you. Reason being is that you have 45 years of investing left, and you ideally want to purchase your shares while they’re on sale!

Remember, the share market is not only the greatest compound investment machine on earth, it has also never failed to reach new highs. In other words, the cheaper you buy today, the wealthier you’ll end up.

Scott

Pass me a bucket

I saw the door of my study creep open, ever so slightly.

I heard heavy breathing. Whispers. And then … fits of giggles.

It was the school holidays and my sons were bored, so they decided to spy on their old man ‘working’.

And fair enough too. When I was roughly their age, I’d do the same thing with my old man, and I’d watch him counting out great wads of cash (hey, it was the 80s).

My boys, however, saw me sitting on my office floor playing with three plastic buckets.

I may as well have been in a sandpit (hence the giggles).

Let me explain: this year I’ve been working in classrooms across the country teaching kids about money, as part of my not-for-profit the Barefoot Money Movement.

My Primary School program — called ‘The Jam Jar Project’ — is a rolled gold winner:

Last month I taught it at my old primary school, and the kids nearly wet themselves.

“This is the best class ever and I have a blood nose”, one seven year old excitedly told me.

My teenage program is … not going as well.

In fact, teaching this class has been giving me a blood nose. Repeatedly.

Honestly, engaging teenagers is easily the hardest thing I’ve ever done in my career. I’m in awe of the amazing work teachers do. The volatility of the share market has nothing on the volatility of 25 teenagers. We go from boom to bust to depression … in a 60 minute class!

Yet I finally nailed it — with the help of three plastic buckets.

Here’s what I did:

I put a bucket on the table and explained to the class that this bucket represented a bank account.

Then I told them about Johnny Depp. He may be a movie star flying around in private jets, but Johnny has a hole in his bucket: money goes in, but it flows straight out the bottom. He (reportedly) doesn’t save. (Which explains why he has to keep making bad pirate movies.)

Then I picked up the other plastic buckets and put them on the table. The solution, I told the kids, is to have two other savings buckets that don’t have holes in them: one for emergencies (Mojo), and one for savings goals (Smile).

They got the concept straight away.

In the next lesson I plan to take the metaphor further, and explain that their job is to guard their buckets, and not let anyone drill a hole in them: like credit card companies, Harvey Norman interest-free deals, Nimble loans, car loans, even AfterPay. We go through their glossy marketing, and then read the fine print and show them just how big a hole these products can blow a hole in their buckets.

Here’s the deal: in a few short years these kids will be fresh meat for financial institutions, who employ some of the savviest and sophisticated marketers on the planet. While they’re still in school, they need to learn how the game works against them.

Case in point: we got the class to calculate that an average credit card would take 30 years to pay off.

The looks on their faces, as Mastercard would say, were ‘Priceless’.

Tread Your Own Path!

A Bong With Barefoot

Hi Scott,

I’ve been interested in the ‘marijuana boom’, and I’ve seen plenty of advertising from share trading companies about it. I wanted to ask your professional opinion about it and what companies might be of interest out of the many that are now out there.

Craig

Hi Craig,

Yes, the medicinal marijuana business is set to explode. Analysts are suggesting that the domestic market could be worth $6.3 billion a year (including the illegal market), and that the global market could be worth as much as billion by 2025. So it’s no wonder that people are jumping aboard the dot bong boom!

Are there any companies that I’d recommend?

No.

That’s because I have a very boring, very old-fashioned rule: I only invest in companies that make money — and none of the ASX-listed medicinal marijuana companies are making any money (in fact, most are burning cash).

Look, I have absolutely no doubt that there will be huge demand for medicinal marijuana all around the world. Yet I also have absolutely no doubt that there are literally hundreds of companies trying to meet that supply.

And that’s the (long-term) thing: growing weed isn’t that hard (heck, my old uni mate did it in his dorm room). It’s just another crop, and eventually it will become just another commodity … just with more government regulation.

Scott

He Threatened to Kill Me

Hi Scott,

I read your column on scams and wanted to share my story. I got a call a couple of years ago and knew straight away that it was a scam due to the guy’s funny accent, but I decided to play along for fun. I said yes to all of the questions and pretended to be really excited. After about thirty minutes I jokingly offered my credit card details and even the password to my online banking. I wish I hadn’t.

The guy on the other end of the phone was furious at being mocked. Straight away he went from nice to nasty and told me he was going to slit my throat! I was a bit unnerved but chuckled and said “but I thought we were friends now”. He began to threaten me by saying he knew where I lived and that his ‘boys’ would be around shortly. I doubted this but was still crapping my dacks a little.

I said I had to go now and hung up. The bloke proceeded to ring back about ten times in a row. I answered once again and tried to laugh and pretend I wasn’t worried. He told me I was the winner of the ‘Golden Casket’, along with a few more threats of throat slitting. So now when I get these calls I’m not a smart alec and say politely “not interested, thank you”.

Jason

Hi Jason,

Don’t think of them as harmless scammers.

There are reports of Australians who have been murdered in Nigeria trying to get their money back.

The truth is that they’re highly organised crime syndicates that are (collectively) making billions of dollars a year, and they have little patience for being messed about.

In the week after I registered my number with the scam website Bitcoin Profits, I received dozens of phone calls at all hours of the day and night. They’ve even worked out how to make it appear like they’re calling from an Aussie landline. Regardless, each time I politely said: ‘I know this is a scam, please never call me again’ and then I’d hang up. After a week they gave up.

Scott

Motivational Misfire

Hi Scott,

I went to a Tony Robbins motivational seminar. What I didn’t know what that prior to the main show, there was a great deal of, let’s say, warm-up speakers, talking about fluff about how to get rich.  One of the guys was selling a share trading program. He had a very impressive style, and was very amiable, very charismatic … but I wasn’t buying it!

Still, I was bored waiting -- so I thought what the hell -- I put my hand up as being interested and went up the back of the room to listen to his spiel. I must admit, what he said got my attention. He said he was selling his share trading system for a good cause: to help build homes for poor people affected by a tsunami.

I watched, I listened, I questioned, I doubted, and then I thought ... I can do this! I can make this work!  (Even though I knew Scott Pape would say “NO!”). But I knew me and I was dog determined to make it work. So I paid him $20,000 for his trading package and got down to it.

I invested extra into a trading account, extra into flying to Sydney to go to live trade events. And I invested copious amounts of time. I’m still up at 1am, still watching the market, still feeling excited. And I am still waiting to see my return. I read your stuff, I read their stuff, I read loads of information. Guess what? I am still down $20k … and you know what, I am grateful for the experience.

Lisa

Why would Lisa say that she’s ‘grateful for the experience’ … of dusting twenty grand?

It almost sounds like she’s been kidnapped into some sort of cult!

Actually, that’s kind of what has happened. Lisa has Stockholm syndrome (definition: “Feelings of trust or affection felt in many cases of kidnapping or hostage-taking by a victim towards a captor”). The guru has worked hard to get Lisa to buy into the reality that she’s going to get rich.

The gold-plated guru says the only thing stopping her living this amazing life is knowledge.

And only he has that knowledge ... yet he’s willing to do her a favour and sell it to her for $20,000.

So if the trading program doesn’t work, it’s the guru’s problem right?

Wrong.

The guru can only do so much, so Lisa needs to work for it, and prove it to herself. And it may be that Lisa requires even more knowledge from the kind guru, in terms of high priced live trading events.

So just for this week everything is upside down:

It’s usually my answers where the learning happens, yet today the lessons come from the questions.

Scott

The Double Rip

Hi Scott,

I need you to look into a company for me.I was on the phone talking with a "Financial advisor" from a company called TradeMote. I first encountered this company in March this year when I saw a clip on Facebook. It was of an interview on Sunrise (Channel 7). They were interviewing an average bloke who happened to invest in a Bitcoin company and in a very short time had amassed a small fortune.

I am 62 years old and had recently retired and had withdrawn my Superannuation. I thought I would try this investment because it was only around $200 investment. I was contacted by a lady who sounded quite genuine. She asked me what my financial goals were and I told her a figure I made up on the spot.

In a very short time the investment she required from me turned to $5000 to "secure" my position. A few days later another $5000 was required to "secure" my position. I was able to log on to my TradeMote account and saw how fast the account was growing. Then they wanted a $20,000 investment to "secure" my position.

When I tried to transfer the funds my bank (Westpac) contacted me and said they weren't going to allow the transfer as the account I was transferring to was on their watch list. When they contacted me again to see why I hadn't transferred the money I told them about the banks response and I also said I wanted to take the profit out. They eventually said I could do that but they needed a copy of my Passport and a bank statement.

I told them there was no way I was going to supply those documents and why couldn't they just transfer the funds to the account I had sent the funds from? I stopped answering their calls and in a very short time my account was virtually zero!

Then, I was contacted a few days ago by another advisor who said he was concerned that I had lost that money and for an investment of $10,000-$20,000 he would work to get my money back. I haven't been able to find this company on any scam lists but their website certainly looks real?

If you can check this company out I would be very grateful.Kind regards

Dennis

The number of people who contacted me in a similar situation to Dennis was frightening.

I call this scam the ‘double rip’:

The same scammers contact the victim (posing as a different company) and offer to help get their money back … as long as they deposit more money.

Another version of this is where the victims are contacted by official sounding lawyers (also the same scammers) who say they are conducting a class action on behalf of victims, and they require seed funding to take them on and get back their money.

This scam works because they’re targeting victims that easy targets (they’ve already been duped once), and in many cases they’re highly emotional and are intent on chasing their painful losses.

Scott

The Day My Dad Got a Viral STD

Hi Scott,

Recently I noticed my elderly father had gone downhill, was very quiet and was looking a bit depressed.

When I asked him, he told me that he was on a website he ‘probably shouldn’t have been’ on when the screen started to flash “YOUR COMPUTER HAS BEEN INFECTED WITH A VIRUS — DO NOT SHUT DOWN AS YOU WILL DAMAGE YOUR COMPUTER PERMANENTLY”.

He was directed to ring an overseas number to remove the virus. When he rang, they sounded professional and said they could certainly help him. He gave them remote access to his computer and requested his credit card. They charged him around $800 for the ‘virus removal’ and a further $1,200 for ‘repairs’.

Naturally he was distressed. The next day on reflection he decided to cancel his credit card. For a couple of days thereafter he was suffering from guilt and worry about any further money he might lose. Luckily, Commbank were great — they got the bogus charges refunded and gave him a new credit card. We also got his computer checked over. I always feel sorry for the oldies that don’t have someone to protect them.

Lisa

I wonder what website he was on that he ‘probably shouldn’t have been?’

Maybe collingwoodfc.com.au? Though on second thoughts, I reckon he was looking at birds ... but maybe not magpies.

I included this question because of the sheer number of people who wrote to me who’d been caught out on similar websites. (Another version of this scam happens via email, where you’re instructed to deposit a substantial amount of money to a bitcoin account within 35 days or they would release video of you watching porn, to your entire contacts list).

This scam exploits the emotion of shame and humiliation. The scammers hope you’ll pay the money, and never speak about it again, which I assume some people do. After all, can you imagine how embarrassing it would be to tell your daughter you’re a Collingwood supporter?

Scott

3 ways to spend your tax refund that’ll change your life

Did you know that the average Aussie gets a tax refund of $2,574?

Even better, this year the ‘Lamington’ (Low And Middle Income Offset) of up to $1,080 kicks in.

(The sweet spot for getting the full amount is earning between $48,000 to $90,000.

So, how will you spend a grand in the hand from the taxman?

It’s enough to buy a cheap TV from Gerry Harvey, but not enough dough to change your life, right?

Wrong!

Today I’ve come up with three ways you can spend your tax refund that will change your life.

Go, Barefoot, Go!

Don’t Pay Off Your Credit Cards

Okay, so this is counterintuitive, but if you have credit card debt don’t use your refund to pay it off.

Wait, what?

Here’s the logic: most people have been trained to see their credit card as their ‘emergency back-up money’.

Yet, if you’re in trouble, high-interest-rate debt won’t help, it’ll just make everything worse.

So here’s what to do instead: save your refund into a savings account (we Barefooters call it ‘Mojo’). Cash is the ultimate emergency back-up. Then, with your Mojo behind you, you can go ahead and confidently cut up your credit card and start paying that sucker (or suckers) off.

Escaping the credit card merry-go-round of misery will change your life.

Get a Lawyer, Son

There are only three certainties in life: death and taxes (and George Colombaris. Actually there’s just two).

So with your tax return why not protect your loved ones from the greedy tax man, after your untimely demise.

Sitting down with an estate planning lawyer and drawing up a will or, preferably a testamentary trust (plus enduring power of attorney and medical power of attorney), will help you navigate the ‘defacto death taxes’: capital gains tax, stamp duty, income tax, and (for adult non-dependent children) a 32% tax slug on your super.

Getting this sorted is the final way you say ‘I love you’ to the people you love the most.

Get a Bit on the Side

If you’ve got an idea of starting a side business, use your tax refund money to kick-start it once and for all.

These days you don’t need to put in much more than a couple of grand to get started: a basic website, some Facebook ads to attract your first paying customers. See if you can earn your money back, quickly.

A final idea, and a plug so blatant that Gerry Harvey would be proud: days ago I released the updated 2019 edition of the Barefoot Investor: The Only Money Guide You’ll Ever Need. It’s in stores now, and to date 1.6 million people have used it to change their financial lives!

Print ebook and audio available where good books are sold.

Tread Your Own Path!

My Stealth Campervan

Barefoot

I am 48 and on a low wage. Do you know of any way I can get my super (about $30,000) out of the hands of my ‘park-and-pray’ financial advisor? So far my only options look like having medical bills for cancer, being unable to pay my mortgage, or setting up a self-managed super fund. I want to use my super to build an off-grid ‘stealth campervan’. Once I have this in place, I—can live very well below the poverty line!

Eve

Hi Eve,

Just when I thought I’d had every question, you pop up! I’ve had people want to take money out of super for lap band surgery, but never a stealth campervan. (If you were morbidly obese you could access your super, but then you may not fit into the campervan. But I digress.)

There are strict rules on accessing your super early, and none of them involve buying a campervan to live off-grid. However, $30k is a modest goal even for someone on a minimum wage, and you have 20 years to achieve it before you retire, and you’ll also be building up your super.

So I’d suggest you keep your super in a low cost fund … and start saving!

Scott

How to Find a Great Accountant

Scott,

I am 51 and newly divorced, and for the first ever I feel the need to get some tax advice from an accountant. But how do I find one who is trustworthy and not just after as much of my money as they can get?

Janelle

Hi Janelle,

The cost for basic compliance work -- like tax returns and SMSF auditing -- has fallen dramatically.

Why?

Because pretty well everything is now data-matched and automated, so there’s honestly very little value they can add.

However, in your case it sounds like you’re looking for an accountant who can act as a money mentor as you start your new life. That’s a very smart idea (even better, unlike many financial advisors, accountants charge by the hour).

So how do you find one?

The same way you find a good hairdresser: ask your friends.

That being said, bad tax advice is worse than a bad haircut, so I’d also suggest you jump on to the Tax Practitioners Board website (www.tpb.gov.au) and search for a few accountants in your area.

When you have a few options, send each of them the following email:

Hi,

I’m looking for a caring, experienced accountant. I’m newly divorced and need help making sure my tax and assets are structured correctly. Moreover, I need you to explain the basics so I can have a better understanding of the financial decisions I make. To make sure we’d be a good fit, I’d really appreciate you replying on the following:

First, could you send me a short bio about yourself.

Second, could you send me an engagement letter explaining your terms and how you charge: is it by the hour or can you provide a fixed-fee quote — and what is and is not included in this fee?

Then you wait.What do you want to see from their response?

That they get back to you quickly (preferably under 24 hours), that they sound polite and professional, and that their expertise lines up with your needs.

Good luck.

Scott

Coles Mini Money

Hi Scott,

I’m sure I’m one of hundreds of people emailing you about this, but thought I’d better, just in case. As someone who is slowly paying down $70,000 worth of debt using your book, I was horrified when my three-year-old son opened a Coles ‘Mini’ with a pretend credit card inside. And the best bit ‒ the QR code on the back takes you straight to Coles financial services. What a disgrace!

Tammy

Hi Tammy,

The Coles Little Shop phenomenon reminds me of the Tazo card craze of the mid-90s.

As a kid I remember working at Woolies (okay, mainly standing around, trying to flirt with the checkout girls), and seeing grown men hunting the aisles for ‘limited edition’ plastic pog Tazos.

“Buy Woolies shares instead, toy-boy”, I thought to myself.

The Little Shop is big business for Coles: analysts estimate that it has boosted their profits by around $11 million.

I had a look at the pack (cheap plastic that would cost a few cents to make in China), and saw the card you spoke of.

It’s actually a Mastercard Coles Gift Card, so it’s not a credit card. However, retailers love prepaid gift cards because they get the money up front, and all too often the card gets lost in the sock draw, thrown out, and never fully spent.

There’s a reason big financial corporations (hello Coles Financial Services, and CommBank) give kids plastic toys with their logos plastered on them. It’s smart marketing and excellent brand association for them.

Yet this is also why I get my kids to use good old jam jars and coins for their pocket money: it makes money visual (“The more I work, the more money goes into the jars”). That way I -- not the marketers -- get to control the message.

Scott

RIP Betty

I’m so sorry for the loss of your beloved sheep dog Betty. Thank you for all that you do -- your writing always makes me smile. My husband and I have been ‘doing Barefoot’ for over 18 months now. We have paid off over $18,000 of debt in less than 12 months -- cleaned the slate. We appreciate your voice, and your generosity. Thanks a million, or at the very least $18,000, and enjoy your family time off.

Lisa

Hi Lisa

Thank you for the kind words -- and congratulations on cleaning the slate!

Then again, I had a bloke write in and ask me what losing my faithful old sheep dog had to do with finance.

“Everything”, I wrote back to him.

Some things are more important than money … and sometimes it’s nice to be reminded of that. Yet he was in the minority: I was amazed at the number of Barefooters who reached out and expressed their condolences. For those who did, thank you.

Scott

The day I got scammed on Bitcoin

“Mr Pape, are you ready to make a lot of money?” a stuffy British accent asked me over the phone.

“Maybe, but I’m not feeling it”, I replied.

“Mr Pape, are you aware that Bitcoin is currently surging? My other clients made 63% … just last week.”

“I want you to get me … motivated”, I whispered to him. “I want you to yell … at the top of your lungs … ‘I will make you reeech’.”

Silence.

“I will make you rich”, he nervously repeated.

“Louder.”

“I WILL MAKE YOU RICH!” he yelled, so loud that he forgot to sound British, and revealed his Nigerian accent.

Now I was motivated!

Yet I’m getting ahead of myself, so let me take you back to the beginning.

A few weeks ago my mate Tom Gleeson won the Gold Logie. Yet that wasn’t the only (dubious) award he won.

Tom unwittingly became the latest celebrity to be used to front a fake crypto scam called ‘Bitcoin Profits’.

The scammers not only stole pictures of him (and Waleed Aly), but they also nicked the ABC’s logo (and the logos of other media outlets) to fool people into thinking they were on the ABC News website.

Truth be told, this scam has been around for years.

They’ve used me in their ads before. And Kochie. And Richard Branson. And James Packer … but now a comedian?

So I decided I'd have a bit of fun with them.

I registered my mobile number with the scammer site, and dutifully received a phone call within 15 minutes from a man calling himself ‘David Clark’ (how Anglo a name is that?) -- the man who would eventually (with some encouragement from me) scream “I will make you rich!”

From the get-go, David was trying everything he could to get me to place a trade with his automated crypto trading program. David assured me (in his best British accent) that I was “absolutely guaranteed to make money”.

Of course, I didn’t take the bait.

Yet a reader, who I’ll call Bill, did.

Bill runs a small family business in country New South Wales and works gruelling 90-hour weeks.

Late one evening he read the Bitcoin Profits article, and the tales of instant easy riches, and thought to himself,

why not give it a go?

Like me, a few minutes later he was on the phone to a fast-talking ‘British’ account manager.

Unlike me, Bill gave over his credit card details and made his first trade.

Guess what happened?

The automatic crypto trading program worked: he doubled his money!

Bill was told to immediately top up his account with his credit card, so he could make even more money.

This process of winning, and topping up his account, kept going for the next two days.

All up, Bill transferred $28,000 into his trading account … while his winnings climbed to $50,000.

So, Bill had made a quick $22,000, right?

NO! WHAT THE HELL IS WRONG WITH YOU? CAN’T YOU SEE WHERE THIS IS GOING?

Bill had been scammed.

When he twigged, he felt physically ill.

Then he frantically called his bank, Westpac, who traced the funds to a company in (of course) Nigeria.

He then reported them to the NSW Police, who basically told him there was nothing they could, or would, do.

“I just wish they would at least warn people about this scam … there’s another lady I know who lost $60,000 the same night as me!” lamented Bill.

I promised Bill I’d do everything I could to help.

Okay, while that stops short of going to Nigeria, I can ask you, my readers, a favour.

Let’s collectively give these scammers a Hard Chat: tell everyone you know to avoid Bitcoin Profits.

Tread Your Own Path!

Fighting in the Jungle

Hey Scott,

My mother and her partner owe money left, right and centre -- in fact the sheriff is chasing them for more than $100,000. But they live in a caravan and are ‘on the run’ (not so much Bonnie and Clyde, more like postcard bandits). So both my brother and I are having the sheriff roll up at our houses looking for them. And we regularly receive letters from banks looking for them. What can we do to fix this situation? 

Fiona

Hi Fiona,

I see your postcard bandit analogy, and I’ll raise you.

They remind me of Hiroo Onoda.

Hiroo who?

He was a Japanese soldier in World War Two, stationed in a jungle in the Philippines.

Unfortunately, no-one told him the war was over, so he spent 29 years in the jungle believing it was still going.

In the same way, your mum and her partner still believe they’re fighting a financial war against their creditors.

The reality is that if they’ve got a sheriff chasing them they’ve already had a court judgement against them.In other words: the war is over, and they are the casualties.

The creditor has 15 years to chase them for the debt (well, in Victoria, other states differ). And during that time the creditor can enforce the debt by seizing their goods, garnishing their wages, or forcing them into bankruptcy.

So what can they do?

Well, they can pay the debt off in full (though that’s unlikely), negotiate to pay the debt off in instalments, or raise the white (financial) flag.

Regardless, the sooner they can call in the cavalry -- in the form of their local community-based financial counsellor (1800 007 007) -- the better.

Scott

The Old Black Dog

Today I want to tell you a story about the dog that’s on the cover of my books.

(If you've read my latest book, you might think you know how this story ends … but trust me, you don’t.)

Her name is Betty, and she’s an old sheep dog from the Mallee.

Betty was kindly given to me years ago by my uncle, who told me she was the hardest-working dog he’d ever had.

No-one knew exactly how old she was, because she’d been passed from farmer to farmer for years.

And now she was at my farm.

The first night we bought her home, I put her food in a shiny new doggy bowl.

Betty cocked her head and wouldn’t eat it.

“Maybe she’s feeling insecure about her new environment, and she’s off her food”, proffered my animal-loving wife.

My uncle had other ideas: “Just tip the food on the ground.”

Betty dutifully started chowing down.

It was the same deal with her newly bought kennel (with an expensive sheepskin for warmth).

Betty sleeps on the dirt underneath the ute … so she won’t miss one minute of work.

And work she does. She’s unstoppable.

Betty is a legend in our family.

And years from now we’ll use her story to teach our kids about life:

Kids, you may think you want cool clothes, an Apple watch, or a fancy car.

But you really don’t.

What you really want is to be loved and respected.

And marketers manipulate these deep-seated desires to get us to buy their stuff.

Yet it’s a trillion-dollar lie.

The truth is that to be loved and respected … you don’t need status symbols, or gadgets, or fancy brand labels.

No.

If you want to be loved and respected, just do two things: be kind, and be a hard worker.

Even then, some people may still not love and respect you ‒ but the right people will.

Betty died this week.

For a sheep dog (age unknown), who was passed around from owner to owner, Betty finally found her home.

Rest In Peace, Betty.

You were loved and respected.

Tread Your Own Path!

P.S. I’m off for a couple of weeks for the school holidays to hang out with my kids.

And the Judge’s Gavel Fell

Scott,

I have a court judgment against me for a $10,000 credit card debt, along with other credit card and personal loan debts that have accumulated to over $20,000. Over the last three years I have recovered from addiction and mental health issues, as well as homelessness. Through hard work I have finally landed myself a stable job in the industry I studied at uni for, earning $96,500 a year. Still I cannot get ahead. I would like to go bankrupt to wipe the slate clean and start again. Is this a good idea?

Natalie

Hi Natalie

Rising strong!

Congratulations on your continued recovery. That shows courage and perseverance. You’re a fighter.

Yet bankruptcy, in my opinion, is not an option ‒ you’re earning too much dough!So what should you do instead?

First things first, get a copy of your credit file and see what’s on it.

Then, you have a couple of options:

You could contact your lenders (specifically, their hardship departments) and disclose that you took out the debt when you were suffering from addiction, mental health issues and homelessness. If you can provide supporting documentation from doctors and case study workers, you may be able to have the debt waived on hardship and compassionate grounds (and there may also be ways to have the $10,000 court judgement waived as well).

Or you could choose to negotiate a realistic repayment schedule. On your income you’d pay if off inside of a year.

You Got This!

Scott

I’m Not the High Earner Anymore

Dear Barefoot,

For the last 16 years with my partner I have been the higher earner, and at times he has been unemployed. We have always pulled through together but I have mostly carried the financial burden. This year he has nailed a great contract and will earn 50% more than me. I don’t know how to begin a conversation about where that money is going to go. I don’t want to sound like I am holding a grudge, but I also don’t want him building a tidy nest-egg while I have little to show for the sacrifices I have made. What do I say?

Delia

Hi Delia,

Just blame me.Seriously, here are the exact steps you can take.

Step 1: Buy a copy of my book.

Step 2: Announce: “I’m reading this book and it says we need to go on a Date Night to discuss our finances.”

Step 3: With a beverage in hand, say something like “for 16 years we’ve been a team ‒ we’ve looked after each other financially ‒ but for the first time in our relationship I feel financially vulnerable”.

Step 4: Tell him, “The book says one way couples in long-term committed relationship can work through this is to open a joint transaction account, with a no-questions-asked pre-agreed spending limit. The book has instructions on the best account to set up, and we can do it before the entree arrives.”

Step 5: Then stop talking. Listen to what he says.Bottoms up!

Scott

You Offended me Last Week

Hi Scott,

I just read your Q&A and saw your column on ‘Why NAB employees read my book’.

I am a little offended by what you wrote. You are making out that all bank employees are evil people trying to stooge customers out of money. I have been working for NAB for nearly 20 years, yet I did not have a good grasp of my finances before reading your book.

I had a NAB home loan above 4.5% ‒ being young and naive I thought NAB would look after their employees and never realised there were better deals out there! After reading your book a couple of years ago I made the move to UBank to a home loan under 4% and have now secured a 3.35% loan.

There are many people working for NAB who do not understand finance and are in the same boat as most of your readers. There may be quite a few bankers out there who set out to do the wrong thing by our customers, but I think it very unfair that you make us all out to be like this.

NOTE: If you make this email public can you remove my name from it. Most of my team are barefooters but if management see this they may make it hard for the team. Some managers take the hard line whenever anything negative is said about the company by an employee.

Regards,

NABer

Hi NABer,

Given NAB has around 35,000 employees, it would be a bit rich for me to label them all as evil … which is why I didn’t. And clearly most are honest, hard working people like you.

What I did (comically) poke fun at is that many people in the bank’s call centres would be on sales targets, and a call from a Barefooter would be a yorker (in cricket terms … or perhaps a bouncer) if they don’t get what they want.

This week my inbox was chock full of people (like you!) who successfully used my ‘bitch don’t switch’ home loan script to score a much better deal on their biggest expense.

Thank you for reading,

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.

Changing Our Kids’ Lives

Hi Scott,

My parents were terrible with their finances (and still are, sadly), so I learnt from them that ‘credit is OK’ and got myself into all kinds of trouble. Then, two years ago, I read The Barefoot Investor, and my partner and I are now very close to paying off all our debts. A few weeks ago I read The Barefoot Investor for Families. We have two children, aged 3 and 5, so we started the jam jars with them. Today we all went to Target, and when we were in the toy section, instead of saying “Mummy, can I have ...” they were saying “I’m going to save up for this”. How powerful is that? We are determined for our kids to be financially savvy, and now we feel we can do it.

Layla

Hi Layla,

Thanks for writing and telling me of your win. You see, I got a letter from another parent this week who told me that I was corrupting the youth of Australia. Her basic argument was that making kids work for money is too full on: “Why not just let them be kids ‒ they’ve got the rest of their lives to worry about money?”

That’s certainly one approach, yet for me it’s code for “Don’t worry, shnookums, here’s twenty bucks”.

What you’re doing, on the other hand, is teaching your kids self-reliance. More importantly, you’re giving your kids self-confidence, and there’s no age restriction on that. I’ve always said that an amazing thing happens when kids save up and buy something on their own steam. It’s not only a proud parenting moment for you, but it’s a life-changing experience for them. You got this!

Scott

Help, My Husband’s a Hoarder!

I just finished my first Barefoot Date Night with my hubby. My problem is that he is a hoarder, and the look on his face when he heard your advice about selling our stuff on Gumtree was nothing less than horror. And without selling a heap of stuff there is no way we will have a Mojo account. He earns way more than I do (as I have gone back to university) and I have already sold most of my stuff to pay for textbooks and such. What should I do?

Lee

Hi Lee,

So what you’re saying is “with my drop in income I feel vulnerable, and I want some financial security”.

And what your husband is saying is “I don’t really care”.

Is that too harsh?Probably (especially if he’s actually got a thing for hoarding).

I’m sure he does care … he just doesn’t need to think too deeply about it, because you keep things separate. He may not even realise you’ve had to sell some of your stuff to buy your university books.

Yet this approach isn’t working for you now, and it won’t help you achieve your joint life goals.

So if I were in your shoes I’d have another Date Night and put the issue fair and square on the menu:

As a couple, what do we value more: our stuff or our financial security?

Scott