Thank God for the Counsellors

Dear Scott,

I just want to encourage you with your financial counselling studies. I left an abusive 20-year marriage and felt the humiliation of going from being a teacher and university lecturer to a shadow of a woman holding up the supermarket queue as I counted coins for groceries. I should have stayed in our house. I should have had my own solicitor for the divorce. I should have made a claim on my ex-husband’s business and super. But I didn’t do any of these things … I was in trauma mode. My life may have taken a different path if I’d had financial counselling at this critical time. I think you are brave for what you are doing, and I wish you the very best.

Sue

Hi Sue,

You totally nailed why I became a financial counsellor.

A lot of my clients have ‘trauma brain’ which affects the financial decisions they make.It can happen to anyone, even educated, highly qualified people like yourself.

And when you fall into hardship, it’s critical there’s someone in your corner batting for you financially.

Thank you for sharing your story.

Scott

What the hell is going on?

“What the hell is going on?”

It was mid-March — in the depths of the corona panic — and I was in our weekly editorial meeting.

Something weird was happening at Barefoot. While the headlines were full of people hoarding toilet paper, we were seeing a huge spike in people asking me how they could buy … shares? 

A few weeks ago ASIC solved the mystery:

The regulator found that daily share trading volumes exploded during the lockdown, driven by a “sharp increase in the number of new retail investors to the market – up by a factor of 3.4 times”.

The same thing has been happening the world over, as virgin investors try their luck trading. In the US, the three biggest brokers signed up over 1.5 million brand-new customers in the March quarter alone.

Where are they getting their money?

Well, “trading stocks” was cited as among the most common uses for the recent US government stimulus cheques in nearly every income bracket, according to CNBC.

So are they little lambs to the slaughter?

Heck no, these first-time traders are swaggering around like big daddy rams!

This week the S&P 500 had its biggest 50-day rally in history, climbing a staggering 37.7%.

And that’s ...

Despite the largest global economic downturn in our lifetime.

Despite record unemployment in the US, with 40 million people out of work.

Despite rising trade war tensions between China and the United States.

And despite the largest civil riots since the 1960s.

One more time … what the hell is going on?!

Well, share markets around the world are being driven by two acronyms:

FOMO (Fear Of Missing Out), as the US Federal Reserve does everything it can to prop up asset prices.

And TINA (There Is No Alternative), with interest rates low … where else are you going to put your money?

However, there’s one experienced investor who isn’t buying:

Warren Buffett.

The legendary 89-year-old investor has wisely accumulated a billion cash war chest so he can famously “be greedy when other people are fearful”.

And so, when the Corona Crash wiped 37% off the market, we all assumed he’d be buying up big.

He wasn’t.

Instead, he did the exact opposite, dumping his entire holding of airlines, and more recently selling billions of dollars more of his bank stocks.

At the Berkshire Hathaway annual general meeting in May, Buffett cautioned that the $137 billion cash he had on hand “isn’t all that huge when you think about worst-case possibilities”.

Gulp.

The reaction to Buffett’s caution has been savage.

Many pundits have written him off: He’s too old. He’s too cautious. He’s lost his touch. His (short-term returns) suck.

Then again, the last time the press wrote him off like this was at the height of the Dot-com Bubble …

Right before the market crashed.

And in the decade after those headlines Berkshire Hathaway’s book value per share rose by 88%, thrashing the total index return of just 12%.

So, what am I taking out of this?

Well, a couple of things:

I’m still following Buffett’s long-standing advice and regularly buying low-cost index funds.

However, I’m not getting too excited. I believe there’s a good chance Buffett will ultimately be vindicated and we’ll see shares pull back at some stage. 

I’ll leave the last line to the guy who’s delivered a 2,744,062% return over his 55-year career:

“I don’t believe anyone knows what the market is going to do tomorrow, next week, next month, next year.”

Tread Your Own Path!

Terrified of Debt Collectors

Barefoot,

I am a stay-at-home mum with three kids. When my hubby and I moved to Brissie a few years ago, we had barely any money, so we got a credit card (and he also had a personal loan from a previous relationship). We could not keep up the payments, so we went on a debt agreement, but we ended up cancelling it as we could not afford that either. Long story short, we are now around $60,000 in debt. We have been ignoring calls as we cannot afford payments, and I am terrified debt collectors will come knocking soon. Help!

Jolanda

Hi Jolanda,

Your situation sounds … utterly exhausting.

Here’s the truth: feeling terrified is not conducive to making good decisions.The debt industry knows this, and they feed this feeling, because it’s the best way to get more money out of you.

That’s why debt collection companies hound you multiple times a day.

That’s why payday lenders like (Crime Converters … er, I mean Cash Converters) bombard you with text messages on short-term loans.

And that’s how someone signed you up for an expensive magic wand known as a ‘Part 9 debt agreement’.

Often these debt agreements are sold to people as a way for them to avoid bankruptcy … when the truth is that they are in fact an act of bankruptcy. In other words, you paid this mob thousands of dollars (that you didn’t have) for something that didn’t work.So what’s the answer?

It’s time to stop the terror, Jolanda, and get back in control.

Rather than ignoring the calls, it’s time to make a call:

First thing tomorrow I want you to call the National Debt Helpline on 1800 007 007.

They’ll put you in contact with someone like me — a free, independent, not-for-profit financial counsellor.

We can stop the calls from debt collectors, banks and other creditors, and negotiate a payment on your behalf.

It’s time to get you back on your feet!

Scott

A Hot Tip For You

Hey Barefoot,

I’ve got a hot tip for you. When comparing car insurance quotes online, put in your neighbour’s address instead of your own. When I was doing my renewal I gave it a go and, to my surprise, it worked! There was a $350 difference between insuring my car at my house versus five metres over the fence. 

Debra

Hi Debra,

What gives?

Was your neighbour a nice little old lady who only drove her Camry to Church on Sundays?

No, but I’m guessing that, unlike you, she was a potential new customer and your insurer was wanting to entice her in with a sweet deal! As this recession grinds the gears of corporate Australia, you can expect more pineapples like this to pop up.

The ACCC recently released a home loan report which found that “asking their bank for a lower rate, refinancing to another home loan or switching lenders, could result in interest savings of nearly $5,000 in the first year alone for an average sized new loan of $386,000”.

So the real ‘hot tip’ is to negotiate like you’re a brand new customer, and save yourself thousands. 

Scott

From $500 to $15,000

Scott

I do not have a question, I just want to say thank you. Two years ago I walked out of an abusive relationship with $500 to my name and debts that should never have belonged to me. My sister and brother-in-law gave me your book and I quickly decided this was how I would take control again. After two years of hard work and sacrifice, I have paid off all my debts and saved almost $15,000, and I am hoping to buy my first home at the end of 2020. I keep all of your columns in a folder called “YOU CAN DO IT” — and I did! 

Rachel

Hi Rachel,

I love celebrating the wins of the Barefoot community.

Yet I love it even more that right now, hundreds (if not thousands) of people in abusive relationships are reading your story and getting a little inspiration and motivation from hearing about someone who’s done it.

You Got This!

Scott

Should I Bail Out My Bro from a Million-Dollar Mess?

Hi Barefoot,

My dad died three years ago and left his house ($1 million) and super ($200,000) to my brother, and made me the executor. I was self-sufficient, so Dad told me I would not receive anything. Fair enough — I respect his wishes. Now my brother and his adult kids have almost run out of cash and are looking to me to bail them out, the way Dad always did. But I have my own family! How can I help my brother manage his affairs without preaching to him?

Hassan

Hi Hassan,

Plenty of people in your situation would’ve been bitter about not getting any inheritance, but not you. Instead, you were concerned about your brother’s needs, not your own.

That is deeply impressive.

So your next decision should continue in the same vein: it’s all about what’s best for him (and his kidults).

And giving them money is not it.

Your father’s money simply enabled his poor behaviour. It hindered rather than helped him. So deciding to give him more money would be like buying an alcoholic a beer because they’re thirsty.

My view?

Offer to help your brother to set up his basic spending buckets — and even be an ‘accountability partner’. Or, if that’s awkward, support him to go and see a free financial counsellor (call the National Debt Helpline on 1800 007 007).

Your old man understood that you were strong enough, both financially and emotionally, to make it on your own, and that’s why he didn’t feel the need to give you any money. He was right.

Your brother is the real winner, though. You’re not only someone who can be a good money mentor, but you sound like a great bloke too.

Good luck.

Scott

My Financial Planner Hates You

Scott,

We’ve just come back from seeing our financial planner, and I am a little rattled! Our super fund is competitive in terms of earnings but its fees are 2% pa. When I questioned the fees (our pension balance is $1.1 million, so around $22,000 each year), he said that what matters is returns, not fees. And when I mentioned that I had read your book, he got quite angry and dismissive. He said that it is not so hard to beat the averages (because index funds hold lots of dud stocks). He waved away my concerns and said there were numerous errors in your book. He got a little worked up, so we did not want to push things with him. Just wanted to let you know! 

Jeff

Hi Jeff,

I totally understand his reaction.See, I wrote the second best-selling book ever in Australia (the first was Fifty Shades of Grey). And my book also delved into bondage, dominance, and sadism — of the financial fees variety. I showed the masses how the game is played (and how they’re played).

Here’s the rough sum: a balanced portfolio will provide an income of around 4% per annum. That means, in your case (paying 2% in fees), you’re losing around half your potential investment income each year.

And remember, you’re taking all the risk.Also remember that actively managed funds (like the ones your advisor is hawking) fail to match simple low-cost index funds over the long term after fees, according to every study that’s ever been done on the subject.S

o it’s not surprising he’s being defensive: remember, the fees you pay are his income.

Look, I’m not anti-advisor. In fact, I say repeatedly in the book to seek out a financial advisor who’ll give you personal advice tailored to your situation.

My motivation for writing the book was to empower my readers to ask the right questions (which you did). And the truth is, the best advisors want their clients to be educated and informed.Maybe it’s time you found one.

Scott

You Got Ten Grand?

“Do you have $10,000?”

I was sitting in the back of an Uber when my driver grunted this muffled request through his face mask.

“Sorry … what?”

His piercing eyes stared back at me through the rear-view mirror.

I started to feel a little nervous. 

Why was this dude asking me for ten grand?

And why were the doors locked?

And why the hell was Phil Collins playing on the radio?

In frustration my driver pulled down his mask and repeated (clearly this time), “You’re the Barefoot Investor, aren’t you? What do you think I should do with the $10k I took out of my super?”

Ah-ha! Now it all made sense. In fact, I’ve been getting that question a lot lately.

One financial counselling client of mine, in his mid-30s, took his $10,000 and gambled the lot inside of a week.

He plans on doing the same with the next $10,000 he can apply for.

(Though this time he assures me he’s going to win.)

Over 1.75 million applications for a total of $14.3 billion have been approved, and I’ve come to realise that people are doing it for three main reasons (other than to feed their addictions):

First, there are people who are using it for the purpose it was intended: maybe they’ve been laid off or have lost hours and they want a cushion for what promises to be a very long winter.

In that case, I’d keep the money in a high-interest saver — preferably with a bank you don’t owe any money to (otherwise they may suggest you swipe it to ‘help’ pay off your loans). There are some sweetheart teaser offers at the moment, like Macquarie Bank’s online saver, which pays 2.65% for four months before reverting back to 1.35% p.a.

Second, there are young people who are saving for a deposit.

Depressingly, Treasury figures show that almost half a million people under the age of 30 have accessed their super. Now I understand the motivation to own a home, but I don’t really like raiding your super to do it. In this case, if you’ve satisfied the requirement for early release, it also means you need to work on boosting your income so you can get a loan.

And finally there are people like my Uber driver, who admitted that he didn’t need the money:

“I just figured it was better off in my hands than theirs.”

He was in his mid-50s and explained that he planned on retiring in a decade or so.

Well, if you’re going to invest the money in the share market you need to take at least a 10-year timeframe.

Reason being, in the current climate there’s a very real possibility that you could be underwater for many years.

And the best place to invest in index funds for the long term is … via your superannuation fund!

Tread Your Own Path!

Hello, I’m calling on behalf of my idiot husband...

I picked up the phone at my financial counselling office. It was a woman, breathing very heavily:

“I need to speak to a gambling counsellor.”

“Do you have a gambling problem?” I asked.

“No, it’s not for me. I’m not that stupid. It’s for my idiot husband.”

Turns out she’d just caught her husband of almost 20 years gambling on his phone.

He broke down in tears and admitted to her that he’d been gambling heavily for the past five years.

“How much has he lost?” I asked.

“Four thousand dollars”, she said bitterly.

“As in … total? That’s it!? Are you sure?” I asked, with both my eyebrows fully cocked.

“Yes, I am sure. I told him, “If you’re lying to me, I’ll cut your nuts off!”

Intense.

Then again, if my wife had threatened me with that, I’d have low-balled her too.

(Pardon the pun.)

Look, I have no doubt this poor woman was in shock and denial. 

And I also have no doubt that her husband’s losses would rise as she put down her butcher’s knife.

Here’s a ballpark of what he may end up fessing up to, courtesy of Graham, a real-life case study from Financial Counselling Australia:

Graham thought he and his wife were tracking along nicely. His wife enjoyed the occasional ‘flutter’ on the weekend. Besides, she couldn’t do too much damage — she only earnt $672 a week.

Then he got flattened when she confessed to running up $130,000 in debt.

They may well lose their home.

You probably know that we Aussies are the biggest punters on the planet ... but you may not appreciate that the biggest losers are the families of gamblers.

And the winners?

There are three:

The gambling companies (obviously). The governments (tax revenue). And … the banks.

You see, credit cards used for gambling are a huge money spinner because gambling is a cash advance, which attracts a higher interest rate, charged from day one.

Last month Financial Counselling Australia called on the Australian Banking Association to follow the lead of the UK, which last month banned credit cards being used for gambling.

A handful of smaller Aussie banks have already done so, but none of the big four banks have yet ... though they say they’re “considering it”.  

Thankfully, self-isolation has meant that with the casinos and pokie-dens closed, we’re no longer gambling.

Yeah right!

Aussie spending on online betting increased a massive 142% in the last week of April compared to a normal week, according to analytics group AlphaBeta.

My view?

It’s high time the big banks put their nuts on the line and banned credit cards being used for gambling.

Do it for Graham. 

Do it for my ballsy client. 

Do it for every kid who has a parent afflicted with this terrible disease.

Tread Your Own Path!

Nursing My Debt

Hi there,

I know you are probably sick of hearing this … but thank you so much. Four months ago I picked up your book.I am a single dad who works as a nurse, owns his own home, and works three jobs to make ends meet. I was $3,000 in credit card debt, had $750 of my rates outstanding, and a measly but annoying $220 of my car insurance still to pay. Well, today I domino-ed the last of these debts as I paid off my credit card. I jumped around my bedroom listening to the song ‘Celebration’ by Kool & The Gang … I was so proud of myself! 

Sam

Hey Sam,

How impressive are you?

You’re working three jobs -- including one of society's most important jobs -- just to get ahead for your kid.

In my book Barefoot Investor for Families, I encourage parents to do a family backyard ‘bill burning ceremony’ -- literally setting fire to a paid off bill, credit card or loan.

They’ll likely remember that night 30 years from now, and the underlying lesson: work hard and get out of debt.

Celebrate good times, come on! Thank-you for reading

Scott

Student Super

Hi Scott,

EmmaI am 18 years old and have just landed two casual jobs, so I need to set up a super account (after finding out that all of my past super from a part-time summer job in 2016 was reduced to $0.14 and then taken by the ATO!). I have several friends who swear by Student Super as it has zero fees for balances under $1,000. What’s your take? I would really like to have super that does not get reduced to nothing again.

Emma

Hi Emma,

Can I just say how much you rock for asking me this question at the start of your career?Seriously, if I wasn’t a daggy father who works in finance I’d do a TikTok dance for you.

Actually, maybe not. So let’s talk money:

You’re right, Student Super do have zero fees for balances under $1,000, which they should be applauded for.

But they need to make some kabana, so after your balance rises to $5,000 you’ll pay $78 plus 0.99% p.a.And that’s way too expensive, especially given you have 50 years or more (!) to compound your money.

It won’t take long to burst through the $5,000 barrier. Student Super knows this, which is why they’re trying to lure you in on the front end ... knowing they’ll make it back big time on the back end.

So, here’s what would be on my super shopping list:

Ultra-low fees … preferably under 0.5% p.a. no matter how much you have in the account.

The option to invest your money into a high-growth index fund.And no life insurance until you have dependents (cats don’t qualify).

Don’t worry about fancy apps or snazzy calculators: so long as your fund continues charging low fees, the less you hear from them, the better. Good luck!

Scott

Mailbox Bandit

Hi Scott,

A couple of years ago thieves ransacked the mailboxes in our small apartment building. We were all shaken up at the time but I forgot about it until last year when I was knocked back for a car loan. The reason? Someone had been running up buy-now-pay-later loans in my name! It took me months to clear my name — a total nightmare!

Eliza

Hi Eliza,

It was probably just kids messing about.

No, seriously.“Scammers pay kids to go and raid letterboxes” said ACCC chairwoman Delia Rickard in an interview last year.“It is remarkably common”, she declared.

(When I was a kid I delivered junk mail on my BMX for 3 cents a catalogue. I wonder how much the crims pay these days?)

I’ve long thought of my mailbox as being like my mother’s drip tray.

“What’s a drip tray?” my Millennial readers ask.

It’s a tub used to store recycled fat. Really.

Example: the oil from the Sunday lamb roast would become the fat for Tuesday night’s snags.

Sure, it was a thing when my mother was growing up, but times change, Mum! Buy some freaking oil for god sakes, and make sure it’s the activated almond oil stuff that Paleo Pete promises will cure the coronavirus.So why am I paranoid?

Because identity fraud is so prevalent: one in four Aussies have been victims of identity crime at some point in their lives, and collectively it costs us over $2 billion a year, according to the Australian Institute of Criminology.

That’s why, in addition to putting a temporary ban on our credit reports (see last week’s column), Liz and I have set up a joint email for all our bills. The only thing you should be getting in your locked postbox is birthday cards from your aunties … and junk mail delivered by a hard-working kid.

Scott

It all began with an email from a stranger

It all began with an email from a stranger:

“I was walking in a park ... and I found your wife’s credit card.”

Interesting!

However, my wife doesn’t have a credit card … 

… or does she?

“Of course I don’t!” she grumbled, and then added: “And you’re going to write about this ... aren’t you?”

“Of course I will!” I laughed.

(Nothing bad ever happens to me, it’s all just fodder for this column.)

Still, something smelled a bit off.

For one, the stranger found the credit card in the suburb my wife grew up in.

And for two, the coronavirus may have created mass unemployment but scammers have never been busier:

There’s the boost to JobSeeker, multiple coronavirus cash supplements and juicy JobKeeper payments to scam.

And the icing on the cake?

Super funds are doling out $20,000, and most people don’t even know how many super accounts they have!

Seriously, corona is like Christmas for crooks!

And it’s not just me saying it. IDCARE is a not-for-profit organisation that helps victims of identity fraud. Its founder and Managing Director, Professor David Lacey, told me that their caseload has jumped by a third since lockdown started.

Here’s why you don’t want to get scammed: Professor Lacey told me that the job of clearing your name after identity fraud takes the average person 27.5 hours of listening to ‘hold music’ at various banks.

I Never Thought It Would Happen to Me

After all, Liz and I are very security conscious:

I treat any papers with my private details on them like financial germs that could infect me.

Instead, Liz and I have a shared secure email that all our bills go to.

(And when we went full digital I scanned all the old mail I had lying around — and destroyed it. On the farm we have a 44-gallon drum as an incinerator … but if you’re in a more urban setting a $40 shredder from Officeworks is fine, though not nearly as fulfilling.)

What’s more, we’ve put ‘bans’ on our credit report.

What’s a credit report?

It contains your personal information and credit history — good, bad, and otherwise.

Banks use this as a check to determine whether they’ll lend you money.

(Your credit report is maintained by credit reporting agencies — there are three in Australia and the biggest is global conglomerate Equifax.) 

Know this: if your identity is stolen, your credit report is where it will show up first.

Also know this: if you Google “ban my Equifax credit report”, you can request to have a ban put on your credit report. And legally they also have to tell the other two credit reporting agencies to follow suit on your behalf.

That way no one can access your credit report, meaning scammers can’t run up credit in your name.

The only sticking point, if you do choose to ban your credit report, is that you have to write to Equifax (a) whenever you apply for a loan (to lift the ban, so the lender can check your history), and (b) every 12 months, since bans only last for a year.

I’ll tell you this: I’m putting the ban on mine.

Now you may be wondering what happened with that credit card the kind stranger found.

Well, she sent it to us — via our secure post office box.

After speaking to the head of fraud at the bank that issued the card, we worked out it was a case of mistaken identity.

Very lucky for us. Very unlucky for the other Liz.

Tread Your Own Path!

You Made a Mother Cry

Hi Scott,

Your Mother’s Day column brought a tear to my eye — touching stories of strong women taking control of their lives. My husband and I read your book a few years ago and it completely changed the way we manage our money. Recently the coronavirus has hit us hard, as my hours have been drastically reduced and our side business has ground to a halt, but you have us covered. Our three-year buffer in the bank means we can sit back and wait for things to improve. A deep bow of respect to you, and to your Mum!

Jen

Hi Jen,

I’m used to getting hundreds of questions, but last week’s Mother’s Day column melted my inbox — in a good way!

And you know what? I agree with you: there’s so much negativity in the media right now that it’s nice to focus on the one person in your life who’s really selfless — your mum.

After all the doom and gloom lately, it was really lovely to share some positive stories for once. Thanks for sharing yours.

You Got This!

Scott

You’re Wrong, Barefoot!

Scott,

I was not happy with your answer to Rebecca a few weeks ago. You disagreed with her husband, who told her it was “better for us to have control of our money rather than a superannuation company”. If that company was such as AMP, with poor growth, ongoing fees and other rip-offs (as exposed by the Royal Commission), then her husband’s suggestion may have been the better way to go.

Peter

Hi Peter,

That’s like saying:

“You drive a Holden Barina. It’s a terrible car. So instead, you should sell it and ride a horse.”

Who says you have to drive a Barina?

Most people have the ability to choose a good super fund with low fees.

My view is that if you don’t like your super fund you should be looking to move to a better fund rather than flogging a dead horse.

Saddle up!

Scott

How a Teenager Works 5 Hours … and Gets $1,500

Hi Scott,

I am an 18-year-old and have been laid off from my job at a swim centre because of the coronavirus. The company had applied for the JobKeeper payment, which I have tagged along on. I just found out that, even though I only worked five hours a week, I will be getting $1,500 each fortnight! How do I go from managing $150 to managing $1,500? I was thinking of keeping the $150 I normally make and saving the rest. What would you do?

Sabrina

Hi Sabrina,

Now that’s what I call Corona Cash!I have to tell you, as a taxpayer, I’m a little peeved about this.

But, as the Barefoot Investor, I’m proud of the fact you’re contacting me to do something smart with it.

Most 18-year-olds in your situation would go to Bali!

(Oh actually, you can’t do that, can you? Ha! Well, at least you can go take a trip on Bendigo’s world-famous Talking Tram, so long as you adhere to social distancing ... only four people per carriage. Rock on!)

Still, you’ve got the right idea: keep living off the income you’re used to, and use the rest to set yourself up financially.

My advice would be to stash away $2,000 in a Mojo account, for when it’s time to move out of your parents’ place.

Then, set up your buckets (including one you nickname ‘Sabrina’s House Deposit’) and start saving for your own place.

You may feel that’s a long way off, and it is.However, each time you flick open your banking app you’ll see it slowly growing.

Thanks for making my tax dollars actually do something productive!

Scott

My mother saved my life

Anna Jarvis was by all accounts a ferocious lady.

In the spring of 1908, she held a ceremony to honour her late mother ... and all mothers.

The day was deeply meaningful for her. So much so that she crusaded for a day that would pay homage to the all-too-often under-appreciated role that mothers play in our society.

In doing so, Anna Jarvis became the Mother of Mother’s Day.

Yet, just like Coca-Cola hijacked Christmas (ever wondered why Santa’s dressed in Coke’s corporate colours?), it didn’t take long for business to cash in and commercialise Mother’s Day.

Upon realising her precious day was being prostituted for profit, Jarvis simply shrugged her dainty little shoulders.

Oh NO she did not!

She lawyered the hell up and took on the suits: Jarvis believed she owned the intellectual property of Mother’s Day, and she defended her rights to the end. Newsweek reported that she once had as many as 33 simultaneous Mother’s Day lawsuits on the go.

She devoted the rest of her life — and every cent of her savings — to fighting for what she believed in.

Remember, this was back in the time before women were allowed to vote in the United States. Jarvis was just one woman taking on the might of huge conglomerates, with the sole and selfless aim of keeping her day pure.

So, on this Mother’s Day, in a hat tip to Anna Jarvis, we’re going to celebrate dedicated, courageous, ferocious mothers who never back down.

Tread Your Own Path!

P.S. And if you’ve bought your mum some chocolates, servo flowers or a Hallmark card, don’t feel too bad. While Anna Jarvis died stone cold broke in 1948, her medical bills were apparently paid for by “people in the floral and greeting card industries”. 

My Mother Saved My Life

Scott,

My first memory of receiving advice from my mother was something along the lines of “don’t feed your sister found objects from the garden”. The second piece of advice was “always, ALWAYS, no matter what, have your own bank account, and always, ALWAYS, have enough savings to move in a hurry”. I happily fed my sister gravel for a while longer, but always kept my own bank account. When I was blindsided as a new mother by domestic violence, her advice got me out safely, quickly and untraceably.

Sarah

Hey Sarah,

What a powerful story.

Your mum’s financial advice helped you and your child find safety.

And now you’re paying it forward ...

See, this column is read by millions of people. So, statistically, there are thousands of women reading these very words who are in the dangerous situation that you once found yourself in.

Now maybe they didn’t have a wise mother like yours. And maybe they don’t have access to cash to make a quick escape. Yet what they need to hear on this Mother’s Day is that a lack of cash shouldn’t stop them from escaping.

That’s because there are amazing women who help mothers and their kids find safety and financial security, and they’re available 24/7. Just call 1800RESPECT (1800 737 732).

How’s that for a Mother’s Day gift?

Lockdown Love

Hi Scott,

Let me tell you about my mother. After living through the Depression, seeing her only brother go to war (sadly, he died at Kokoda), and raising eight children on one income, my amazing 96-year-old mother is now in a nursing home in lockdown. Does she complain? Not one word. She has learnt how to use a mobile phone so she can ring us daily so “we won't worry”.

Louise 

Hey Louise,

There’s so much wisdom we can learn from your mother and her ‘silent generation’.

The Great Depression left its mark on them … it taught them that the world can be a risky place.

And, unlike us, they didn’t look to pandering politicians who promised to ‘fix things’; instead they just got on with it.

That steely self-reliance seems to have also created a strong sense of looking out for other people, as evidenced by your mum still looking out for you!

Milking It

Dear Scott,

My mother was born in 1930 on the wrong side of WWII. Her stubborn resilience and stories from her childhood shaped who I am today. She survived starvation by sneaking into abattoir yards in Hamburg and milking the cows, then bartering the milk for food! This experience translated to our family having a large garden, an orchard, chickens and a house cow. We learned how to milk, grow veggies, and make cheese, yoghurt and bread. Great life skills!

Christina

Hey Christina,

A mum’s gotta do what a mum’s gotta do, right?

And yours snuck into an abattoir and squeezed the last drop of milk out of the poor old girls. That is hard core!

Back then, growing your own food was the difference between your kids eating or not. Today it’s a wholesome hobby that brings you together as a family. Either way it creates an amazing legacy and teaches kids the value of being truly self-sufficient.

Hunger is the mother of invention!

Sound Familiar?

Hi Scott,

Mum taught us financial literacy without us knowing it. We had backyard chooks, and sold our extra eggs to the neighbours. Mum ‘allowed’ my brother, and later on me, to take over the care of (and profits from) the chooks, on the condition that we recorded all financial transactions. And if we needed more money? Well, we had to find another job, or new clients. Sound familiar?

Lorraine

Hi Lorraine,

Your mum was a smart woman.

The hardest thing about teaching money skills to kids is making it real.

Yet that’s exactly what your mum did by creating a little micro-business for you and your brother.

She made entrepreneurship simple and real … and laid a golden egg!

It doesn’t need to be any more complicated than that, which is why I’m ripping off that exact idea with my two-year-old daughter.

A Very Proud Mothers Day

Hi Scott,

Thank you for kicking my butt into gear. A couple of years ago I was a single mum, drowning in debt, with a rip-off mortgage rate. After reading your book, I sought advice from a beautiful lady called Margaret at Anglicare Financial Counselling. Then I smashed my credit cards, refinanced with another bank (who gave me $2,000 cashback, which became my Mojo) and set up my buckets. I am now sending my daughter to a private school, once an unachievable dream. When the corona crisis hit, for the first time in my life I did not have to worry. Hand on heart, I have you and Margaret to thank for that.

Danielle

Hi Danielle

I’m so proud of you.

Yet you know who else is proud of you?

Your daughter.

She’s been watching you scrimp, and struggle, and save.

You may be sending her to private school, but I’d argue that you’re already giving her a first-class education in grit.

One day she’ll fully appreciate the sacrifices you’re making, and what an amazing woman her mother really is.

Happy Mother’s Day, you got this!

---

Finally, a huge thank-you to everyone who sent in stories of their mums (and, to be fair, there were just as many dudes who wrote in). And even if your question didn’t get published, here’s one final tip that would make old Anna Jarvis smile: take the email you sent to me, and forward it on to your mum today. She’ll love it.

A Hole in My Heart

Hi Scott,

Last March I came across your book in a store in New Zealand. Since then, it has completely changed how my husband and I use our money. We have paid off $8,000 on a credit card, and this year our loan will get hammered using our ‘Fire Extinguisher’ account. But the biggest help was earlier this year. My cousin’s two-year-old daughter relapsed with leukaemia, with no more options left for treatment. My cousin and I are very close but he lives far away, in Ireland. With our Mojo, we were able to drop everything and be there for his daughter’s final weeks. I was able to support my cousin and his wife through the hardest time of their lives. With tears in my eyes and a huge a hole in my heart, I thank you for giving me that gift. 

Mandy

Hi Mandy,

That is a beautifully written, emotional response -- and it shows exactly why people should get things together. None of us know what’s going to happen next. And to be in the position where you could do what you did is one of life’s great gifts. The events that have already happened this year — fires, floods and pandemics — have taught me that right now is a really good time to have a Mojo buffer. You never know when you’ll need it.

Thank you for reading,

Scott

If We Are Heading into a Depression, Do This

Hi Scott,

I have been reading people saying that all this stimulus (especially in the US, where the Federal Reserve is printing trillions of dollars) will soon lead to massive inflation, and then recession. Even the world’s biggest hedge fund manager, Ray Dalio, says we are heading for a depression. And I have to say I agree. I am a long-time reader and have heard you say before that your advice does not change. But surely it must now, given this unprecedented moment in economic history?

Kevin

Hi Kevin,

I agree, it does look like we’re heading into a very deep recession.

Yet will that lead to a full-blown economic depression?

Honestly, I have no idea.That’s because the global economy is far too complex for black-and-white economic predictions.Personally, I cringe when I hear the word ‘depression’ bandied about.

Why?

Because it’s a very emotive, click-baity word that’s not particularly useful.

After all, if you’re a small business owner who was already struggling to stay afloat before we went into lockdown, the next few years could feel like a depression to you. On the other hand, if you’re cashed up and ready to buy, a market downturn can be a life-changing experience.

And that’s the rub: it’s your financial situation that matters most, not some arbitrary classification that an economic historian may, years from now, use to describe this economic period.

So what’s my advice?

Back yourself, son! You seem convinced that we are heading into depression, so start preparing for it immediately. Begin to aggressively pay off your debts, squirrel away a sizable savings buffer, and start looking for extra ways to earn dough.  Or, in other words, start following and applying the Barefoot Steps.

Scott

I tell you, I’ve never seen anything like it

I’ve never seen anything like it.

Last week my inbox was overflowing, and this email, which l received from reader named James, summed up the reaction to my column on 93-year old gardening guru Peter Cundall:

“Thanks for writing about Peter Cundall. I already admired him but now I hold him in awe. Amazing bloke and national treasure. Your best column ever in my humble opinion.”

As I’ve been out on the farm this week toiling away with the kids, I’ve been thinking a lot about Peter.

Partly because he’s emailed me most days with advice on our orchard. He’s convinced us to go nutty -- we’re planting a lot of chestnut trees!

Yet more so because all the things I and many people respect about him — his resilience, his stoicism, his kindness — all of which were forged in the depths of the Depression.

Okay, so maybe we don’t have it anywhere near as tough as Peter did. 

Yet we are living through a moment in history right now — and our kids are watching us.

Which means that now is a golden chance to teach your kids lessons that will last them a lifetime.

That doesn’t mean you need to scare them, or lecture them. Rather, use this uncertain time to explain to them about how risky the world can be … and the importance of working hard, the safety of saving, and the dangers of debt.

The silent generation -- people like Peter who were raised in war and depression -- came out stronger because of it.

Now, I’ll get to your questions in a moment, but first, keeping with the family theme … 

Next Sunday is Mother's Day

It creeps up on you, right?

Well, there’s one person who doesn’t forget: your mum (and possibly the wife of your children).

So whip out your phone and set a reminder to send her some flowers (see, I've got your back!).

Also, for next week’s column I’m looking for your best Barefoot mum stories.

So if you have a great story about your mum — how she’s raised you, the sacrifices she has made, how she’s been a true Barefooter (or how you’ve helped her become one) — I want to hear it.

Head over to: https://barefootinvestor.com/askbarefoot/

Everyone whose stories I publish next week will receive a signed copy of The Barefoot Investor for Families.

Tread Your Own Path!