A Brighter Flame

Dear Scott,

September three years ago I bought your book, when I could least afford it. At the time I was burdened by six-figure debt (posted on the fridge door so I was aware of it every day). I did as I was directed — I took you and the book to dinner every week. I didn’t go bankrupt. I made the calls. I cried with you. And screamed at you. And learned from you. And survived.

Today I buy your book as a gift for my friends, like a scented candle but with a brighter flame when ignited. I can see the black line fast approaching — the red line is in my rear vision mirror. I answer private calls these days. I wanted to say thank you for literally saving my financial life, and please thank your darling family for loaning you to me while I was dying inside and outside a shambles.

Janine

Hi Janine,

This is probably the nicest letter I’ve ever received … and a fitting one to end on.

Thank you. You Got This!

Scott.

You Ruined My Life, Barefoot

Scott,

I read your book on a holiday at the age of 18. Now at 22 I have had full-time employment for nearly two years, am earning $45,000 a year, and have saved up $60,000 (a lot of hard work and sacrifice in that). But I feel lost. This money has brought me no happiness, just a burden in the back of my head that has stopped me living my life to the fullest while young. And it’s you who got me into this mess.

Matt

Hi Matt

I got you into this mess?

Well I plead guilty to that charge, Your Honour!

Still, steady up, cobber. You’re talking like you’re a washed-up author with four kids about to get trapped in a Winnebago for months.

Who are you comparing yourself to?

If I popped sixty thousand clams in the pocket of an average 22-year-old, they’d think they’d won the lottery.

Yet I’d argue that you’re actually luckier than any lotto winner. That’s because you’ve spent the last few years developing what I call ‘million dollar habits’. You may dismiss what you’ve achieved, but I won’t: developing a strong work ethic and a savings habit will serve you well for the rest of your very long life.
Yet what’s even more impressive is that, at your tender age, you’ve worked out something that 50-year-old coked-up lawyers haven’t:

Money doesn’t make you happy.

(Though a severe lack of it can make you very unhappy.)

So now — while you’re still just 22 — it’s time to develop a new set of habits:

Having fun!

The best things in your twenties don’t cost much: camping, sport, pashing random people at parties … and reading good books. What really helped me when I was in my twenties was reading about people who’d lived their life and worked out what was important. It’s only by studying the past that you can prepare for the future.

And trust me, Matt, your future is incredibly bright.

Scott.

My Friend’s Husband Wants To Murder Her

Scott

I have a young friend who is married and has three young children. She has an AVO against her violent husband, who threatens to kill her. The AVO has been breached. She is NOT divorced and no financial settlement has been agreed to yet. The husband has the children three days a week, and the court date to sort this out is soon. I see that under the Superannuation Industry (Supervision) Act a “spouse and ex-spouse” can get all their partner’s super, plus death benefit. What happens to my friend’s super payout should her husband kill her? How can she protect her super so that all funds would go to her children? Also, if the house is owned as joint tenants, my understanding is that the title passes on death to the survivor, is that right? I hope you can shed some light on this serious matter.

Susan

Hi Susan,

This is a very serious matter, so let me shed some light on it for you:

Her financial affairs won’t matter much if she’s dead.

The ONLY thing that matters right now is her safety (and the safety of her three young kids).

Susan, now is not the time to fret about her finances, but to stop her from being murdered.

Each week, on average, in Australia, a woman is killed by her current or former partner.

All too often women in this situation feel trapped and helpless. They are not. There are people who will help her and look after her, and they’re available 24/7 by calling 1800 RESPECT (1800 737 732).

We can — and will — sort out her finances later. Part of the value of this column is showing people each week that they are capable of moving monetary mountains.

For the moment, though, do whatever you can to keep her safe.

Scott.

This Will Be My Last Email for a While

For the past few weeks I’ve had a Billy Joel song in my head:

“You may be right … I may be crazy ... But it just may be a lunatic you’re looking for.”

You see, I’m writing this to you hunched over in the back of a motorhome that’s currently parked in the seaside town of Tin Can Bay, Queensland.

Liz and I have embarked on an epic family adventure: a 3,500-kilometre road trip that has taken us from the family farm in Romsey, Victoria, all the way up to Cooktown, Queensland. For three (or four) months. In a Winnebago. With our four kids.

“Turn out the lights, don’t try to save me!” as Billy sings.

We actually took off a month earlier than we planned … we made the snap decision to make our getaway a few weeks ago, sensing that the borders may close.

In truth it only added to the sense of adventure. After all, this was months in the making; earlier this year I went to the post office and bought a huge map of Australia and sprawled it out on the kitchen table.

Planning out the trip — pinning lots of thumbtacks on the map and googling interesting places — is almost as much fun as going. We’re going to the Big Banana, the Big Mango, heck we’re even going to the Big Bloody Prawn!

I’ve never seen the kids so excited … well, until last night anyway.

Late last night my eight-year-old stirred from his sleep and noticed the glow of my laptop.

“What are you doing, Dad?” he whispered.

“I’m writing my column … and responding to a heap of emails”, I sighed.

“Oh”, he said.

Silence.

“You work really hard, Dad. So I guess you can’t take the time off and spend it with us.”

I closed my laptop and stared into the darkness. He snuggled up and gave me a hug.

I realised that for almost 18 years I’ve ended every column with the tagline “Tread Your Own Path!”

This morning I’ve decided it’s time to actually live it. I’ll be taking a break from these columns for a while, and investing in my kids. I’ll catch you on the flipside.

Scott Pape

The Best $5 I Ever Spent

Mr Pape,

We do not know each other, yet you are the one who has single-handedly turned my life around. Last year I was stuck in $13,000 of debt on top of a large mortgage and was living pay cheque to pay cheque. I was headed towards a financial breakdown. Then I picked up your book at an op-shop, and it was the best $5 I ever spent. Reading it kept me up all night, but finally I could see how to start changing my life. Fast forward 12 months and all debts (other than the mortgage) have been paid off and I have a modest $10,000 in Mojo. You don’t know how relieving it feels to go to bed not worrying about money!

Monica

Hey Monica,

As I was reading your story, it made me think of an interview I was doing the other day.

Journo: “What are your top five tips for saving money?”

Barefoot: “Tips are the fairy floss of finance … they look good, but they evaporate in your mouth.”

The journo was not amused.

My guess is that it wasn’t the finance tips in my book that made the difference for you. Rather it was taking the time to reframe your situation and develop a different mindset about what you could achieve.

Your story also made me think about how cool op-shops are. My three-year-old daughter loves our local one. The other day, she used her ‘Smile’ money to buy a princess dress for the bargain price of $3.

Good stuff! (Oh, and there’s nothing modest about having 10 grand in Mojo.)

Scott.

Pressing Problems

Hi Scott,

I am a single mum of five children and I started my own ironing business one year ago. I would like your advice on how to stay on top of things, as all the money I make goes towards paying bills or buying groceries. I don’t have any credit cards, because I hate the idea of buying things with money that doesn’t belong to me. I’m trying to work out how to be financially healthy and become a good role model to my children. Can you help?

Jane

Hi Jane,

Let me iron out the wrinkles that you seem to have in your self-confidence:

You’re not a good role model for your kids, you’re an excellent one.

Let me count the ways.

First, you don’t spend money you don’t have.

Second, raising five kids on your own is a full-time job: many people in your situation wouldn’t work at all.

Third, you’re not only working, you’ve been smart enough to build a little business that allows you to parent and earn an income from home.

The only thing you need to do is to tell your kids what you’re doing. The old advertising rule of thumb is that people need to be exposed to a message 20 times before they’ll remember it. Same goes for you and your kids. You want to tell the humble legend of Jane, working hard for her family against the odds.

In time they’ll appreciate what you’re doing for them. One day they’ll be really proud of what you’ve done.

I’m going to send you a free audio version of my book so you can listen to it while you iron. Work your way through the Barefoot Steps and you’ll never look back.

You Got This!

Scott.

I’m 19 and Have Already Blown My Credit Rating

Dear Scott,

I am 19 years old. When I turned 18, I applied for multiple loans, not knowing that doing so would affect my future. I have recently tried to get a phone plan through Optus in my own name but they rejected me because of my history. Now I am starting to save for a home loan. I have checked my credit rating on Credit Savvy and it’s 631, and I want to bring it up to the highest it can be. But how do I do this? I have been googling for days but nothing useful has come up.

Eryn

Hi Eryn,

True story: when I was 18 years old, my mates and I thought it would be a fun idea to buy a bottle of Jim Beam and mix it with home-brand cola. And then …

Bingo, bango!

I don’t remember much about the night, though I do remember the next morning … violently.

Here’s the killer: since that day I’ve never drunk bourbon (or any spirit for that matter).

Yes, that’s right: all these years later, and I still can’t bring myself to do it.

Which is actually not a bad outcome!

Eryn, that’s how I’d frame your bad credit rating: you messed up when you were still a teenager (like we all do). However, you’ve shown me that you’ve learnt from it. Seriously, how many 19-year-olds are saving for a house deposit, and writing to the Barefoot Investor?!

Think of it as a good thing — you got it out of your system early.

So here’s my advice: aggressively pay down your debts, and then commit to saving for a deposit. Don’t worry about your credit score; it’s a vanity marketing metric from credit agencies, not banks, and therefore about as important as your Uber passenger rating.

What really matters to a lender is having a history of savings and a clean credit report. And there’s the rub … there are things you do as a teenager that stick with you for life … like, say, getting a tattoo. However, a bad credit report will legally drop off in five to seven years, which coincidentally will be about the time you’ll be hunting for your first home.

Bottoms up!

Scott.

An Open Letter to Parents

This is an open letter to parents who are thinking about helping their kids buy their first home.

In my book I was pretty blunt (and a tad dismissive) about hitting up the parentals:

“Should I get my parents to go guarantor? No way, Jose.”

And … no one listened.

In fact, Digital Finance Analytics (DFA) has found that the ‘Bank of Mum and Dad’ has around $34 billion in loans, with parents forking out on average $90,000 to their kids.

So let’s look at it from the parents’ perspective.

It’s natural to want to help your kids. They’re your flesh and blood … and the very people you’re counting on to change your incontinence pads in a few years’ time.

Besides, if you’ve done well, you should help them out, right?

My parents-in-law offer a good working example: they bought their inner city Melbourne family home in the eighties for less than a hundred grand. It’s now worth close to two-and-a-half million bucks.

Yet a decade ago their (then single) daughter would schlep over to “millionaires’ row” for dinner, and complain that she couldn’t afford even a two-bedroom flat this side of Bendigo.

Come on, help out the kid!

Well, here are three things to keep in mind before you sign on the dotted line.

First, if you’re struggling or still have outstanding debt yourself, you’d be mad to go guarantor for anyone. As they say in the airline safety demonstration, always fit your own oxygen mask first.

Second, consider what could go wrong.

The most important one being that it can cause a rift in the family. I know you think that’ll never happen, but what if your princess’s prince turns into a frog and leaps off with half your deposit? Ribbit!

Or rates could rise, the market could cool, and your kids could be left really struggling. In fact, DFA suggests that kids getting a handout from their parents are three times more likely to default on their loan in the first five years.

Finally, and crucially, you may be inadvertently robbing your kids of one of life’s great financial achievements.

Case in point: all my wife could afford was a tiny studio apartment. She painted it herself and even got her brother to install a discarded oven she found on the side of the road. It wasn’t much, but it was all hers.

Whatever you do, I’m sure it’ll be the right thing for your kids. Just go into it with your eyes wide open.

Tread Your Own Path!

The Bitcoin-Plated Coffin

Hey Scott,

We are starting up investment bonds for our child’s future (and plan to have more kids too). I noticed the provider also has a funeral bond option. Is it worth it for a guy in his thirties? Or should I put, say, $10,000 of cold, hard cash per person in my fireproof safe to cover such an event? As we know, Mr Death is awaiting his timeslot.

John

Hi John,

All this future planning has got you fired up, hasn’t it, mate?!

Well, you do not need to invest in a funeral bond.

Here’s why: any money you put in can only be used for your funeral. You can’t take it out earlier.

So, if you sink $10,000 into a funeral bond today, and let compound interest do its thing, your funeral in 50 or 60 years’ time will be absolutely epic! With the eventual bereavement bounty you will have you could afford to be carried out in a bitcoin-plated coffin as the Rolling Stones play a live acoustic set. (Oh wait.)

According to MoneySmart, funerals cost anywhere from $4,000 for something basic to around $15,000 for something fancier. Somewhere in the middle seems about right, right?

My advice: put your energy and efforts into ensuring that you and your wife have adequate life and disability insurance instead.

Scott.

Losing Your Investment Virginity

Australians have officially fallen in love with the stock market.

And, according to the Australian Securities Exchange (ASX), guess which age group is leading the charge?

The Millennials.

Now there are two reasons why I think so many young people are interested in stocks right now:

The state of the housing market is just so freaking depressing, and stocks (and crypto) have been going up a lot … so it’s a chance to get ahead financially.

According to the ASX, there are 900,000 investing virgins who plan on getting in on the game next year.

So, if that’s you, here’s how to lose your virginity (and not regret it).

1. Go Marie Kondo

Last year — as lockdown hit — you probably watched Marie Kondo on Netflix, then immediately started rifling through your junk.

Here’s the thing: most people get swept up in something new for a brief moment … then forget about it.

(Seriously, go look at your sock drawer today.)

My advice?

Embrace your new-found interest in investing while it lasts. And my very best tip is to scratch your itch by sorting out your super. Seriously, it’ll take you a few hours to hunt down a low-cost, high-growth index fund, yet it is one of the most lucrative things you’ll ever do. While you’re at it, gather up any super funds you may have and consolidate them into the one low-cost fund.

Ask yourself: “Does my super fund spark joy?”

2. Don’t Bet the House

Here’s you: “I’ll boost my deposit savings by investing in the market.”

Here’s me: “Don’t do it.”

If you’re planning to buy a house in less than five years, don’t invest a cent of that money in the market.

I know you want to.

But take it from me: the returns we are seeing right now are not normal, and they will not last.

Case in point: strategists with Bank of America have estimated that, if things continue at the same rate for the remainder of this year, share funds will take in more money in 2021 than in the previous 20 years combined. Heck, Aussie shares just posted their biggest rise in 30 years.

Again, not normal. So repeat after me: “I won’t bet the house.”

3. Be Choosy

If you’ve sorted your super, squirrelled away your house deposit, and are ready to invest … go for it!

Just don’t buy Dogecoin, or you’ll end up with financial fleas. And don’t play games with financial apps that sweet-talk you with ‘super-easy’ $5 and $10 trades. Trust me, whatever you save on brokerage fees you could lose making dumb trades.

Instead, stick with boring, automated, set-and-forget investments. Pearler is a new app that’s doing good things, and the world’s second biggest fund manager, Vanguard, has just dropped its already low fees.

Barefoot says: “You only lose your virginity once. Make sure it’s with someone who’ll care about you in the morning.”

Tread Your Own Path!

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

Our Kids Have No Idea How Rich We Are

Hi Scott,

My husband and I worked really hard, started a successful business, and are now in a very fortunate position. Every single dollar we have, we have earned ourselves. My question is this: how can we ensure we instil good money values in our three children? At this stage they have no idea of our financial situation. What can we do to ensure they know that money is earnt?

Thanks, Alison

Hi Alison,

Great question!

I’ve thought about this deeply, because my kids are in the same sort of boat.

(The other day my wife was in a shopping mall when our three-year-old said “Look, there’s Daddy!” My wife corrected her — “No, Daddy’s on the farm” — before looking up and seeing my smiling mug on a billboard.)

Here are three things I’ve thought about.

First, and most importantly: our kids won’t be inheriting our investments.

Instead, each of our kids will receive a ‘Barefoot Ladder’ — meaning we’ll match, dollar for dollar, whatever they can save towards a (safe) car or a house deposit. Other than that, they’re on their own.

Second, never talk about your wealth in dollar figures (kids have no context or frame of reference).

Instead, spend time talking about, and showing them, how much you enjoy working hard, and the meaning and purpose you get from the work you do. (That’s why my kids tag along to my book signings.)

Finally, when you boil the parenting thing down, all you really want is for your kids to be hardworking and kind. If they have ‘get up and go’ and are caring human beings, you’ve done your job!

The best way to achieve that isn’t by lecturing them. It’s partly by modelling these behaviours yourself, and partly by providing them with a weekly opportunity to roll up their sleeves and experience working hard, spending wisely, and giving generously.

You Got This!

Scott.

Are You Feeling Lucky, Punk?

Hey Scott,

When it comes to insurance, I am struggling to find the line between ‘necessary’ (like life insurance) and ‘unnecessary’ (like do I want to gamble my hard-earned money on whether my house will burn down?). If one of us were to die, I don’t think the life insurance money would console the surviving partner. Yet they may face financial hardship without it. So do I gamble, or bite the bullet and just accept it for what it is?

Fred

Hi Fred,

Playtime is over.

It’s time for you to put down your twinkies so we can do some adult-ing.

You need insurance.

Listen, I’m no shill for the insurance industry but, as someone who’s lost their home and contents to a fire (and two cars to rats!), I can tell you the only gamble you’re taking is not having enough.

Here’s my rule of thumb: only insure against things that will financially knock you out.

Example 1: You’re worried that your $30 Kogan hand wand blender could start smoking while you’re whipping up your famous fried twinkies. Should you pay $9 for the extended warranty insurance?

Answer: No.

Example 2: An electrical fault occurs and your $450,000 home, along with $60,000 in household contents (including your hand wand), burns to ashes. Should you pay $100 a month for house and contents insurance?

Answer: Hell, yes.

Final example: The average Aussie will earn $2.07 million over their working life ($2.9 million if they have a degree). What will life look like for your partner if you lose that income?

Answer: Bad.

So let me give the last word to infamous insurance salesman Dirty Harry:

“You’ve got to ask yourself one question: Do I feel lucky? Well, do you, punk?”

Scott.

Your super, your choice

I got absolutely belted for last week’s column.

My crime?

Innocently suggesting that people with uncomplicated tax affairs (read ‘employees’) could save themselves the $400 they spend on an accountant, and instead lodge via the ATO app on their phone, which does the job in a few minutes.

This did not go down well in accounting circles.

Neil, a suburban accountant, wrote to me saying: “You’re nothing but a government stooge for promoting their tools. You should be ashamed of yourself. You disgust me.”

WHAM! Neil sure wants to give me a bit of negative gearing alright, SMACK BANG in the kisser!

(On second thoughts, maybe Neil’s the accountant you want. He’ll FIGHT for every deduction.)

So, while I have Neil’s attention, let’s put another pot on the stove and get his blood boiling.

This week the Government has released another tool, this time for superannuation.

And you know what? It’s pretty darn good.

It’s called ‘YourSuper’ (ato.gov.au/yoursuper) and it helps you compare super funds.

Actually, its real value is that it’ll tell you whether you’re in a dud fund.

And that one bit of information is incredibly valuable: it can stop you from having hundreds of thousands of dollars of your retirement savings smoked by high fees and poor performance.

The fact that it took the Government 30 years to create a website that tells consumers this vital information is absolutely outrageous. Still, credit to Senator Jane Hume for pushing it through and finally getting it done.

If you access it through your myGov, you can check for lost super, consolidate your accounts, and shop for a cheaper fund (costs are the one thing that investors can control).

It’s another nail in the coffin for hopeless funds that should have been shut down long ago … and that’s good news in my book. It’s not perfect, and only covers MySuper products at this stage (more funds will be added over time). And the data on the dud funds won’t be out until later in the year … but it’s a great first step.

So here’s my tip: when you’re lodging your return in a month’s time, check out YourSuper … after all, it’s the same site, right Neil?

Tread Your Own Path!

Thanks From Spider-Man

Hi Scott,

Here is a pic of my five-year-old, who started the Jam Jars last year and saved up enough to replace his broken Garmin band (he accidentally cut it with scissors at school last week) with a Spider-Man band. He received a double-edged lesson in saving AND in looking after his things.

I read both The Barefoot Investor and The Barefoot Investor for Families a year after becoming a single mum. You revolutionised the way I conceptualise saving and I’ve since gone on to buy a house and build up my Mojo. “Don’t spend more than you earn.” It’s such a simple lesson, yet it’s not a lesson I was ever taught growing up.

Lisa

Hi Lisa,

What a little champion! This is the reason I came up with the Money Movement — I want this for every Aussie kid. You made my day.

Scott.

The ASX Game

Dear Scott,

My daughter recently brought home a consent form for me to sign. She is in Year 12 and, as part of Pathways and Wellbeing (PAW) this semester, the students are learning about investing in shares by playing the ASX Sharemarket Game. They are given $50,000 virtual money to invest over a 10-week period. Since reading your book in 2020, I have been investing in the ASX but not trading. My concern is that it is not focusing on long-term investment. So should I sign the form?

Meg

Hi Meg,

Yes, you should sign the form!

This sounds like fun … and I think your daughter will end up a winner.

Do you know why?

Because she’s going to have a secret helper with the ASX game:

Me!

Here’s how I’d suggest she plays:

Put $25,000 in the Vanguard Australian Shares Index ETF (ASX code: VAS). Or, if she prefers a greener option, the Vanguard Ethically Conscious Australian Shares ETF (ASX code: VETH).

Then put $25,000 in the Vanguard MSCI Index International Shares ETF (ASX code: VGS). Or, again, if she wants a sustainable option, try the Vanguard Ethically Conscious International Shares Index ETF (ASX code: VESG).

With those two investments she’ll own shares in the largest companies in Australia and the world, and all for rock-bottom fees. She can school her teacher and explain that the overwhelming evidence suggests that she’s all but guaranteed to outperform her stock-picking pals over the long run (though I’m talking years ... not weeks).

Then she can use the next 10 weeks to read The Barefoot Investor. In fact, I’ll donate a signed copy to the school library!

Scott.

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

Bonjour Barefoot!

Hello Scott,

I am a French mum of four. I learned about you through a podcast of a young lady who calls herself Madame Fauchée (fauchée in French means broke!). So I wanted to buy your two books. But it is impossible to get them in France, so I bought your mp3s and listened while riding my bike to work. Your books are so interesting! I wish I had read them earlier. Now I would like to get my sons into them — particularly my youngest, who is 16. Is it still possible to do the Barefoot family with a 16-year-old? Finding a job at this age is not easy in France, especially at this time of Covid.

Merci, Suzanne

Hi Suzanne,

Frais!

(My son is learning French at school at the moment and he tells me that means ‘cool’!)

In Australia I’ve been piloting a program in high schools for students who are the same age as your son.

The program is called ‘The Bucket List’ and it involves students saving up for something on their bucket list (it could be a bike, travel, or moving out — whatever chews their croissant).

The way they get their money is by working (a key lesson!), at which point most kids fold their arms and say “There aren’t any jobs!” (It’s not just a French thing). However, there’s always work for teenagers, (because they’re cheap!). The trouble is, most don’t apply, or put in much effort.

So I get kids to do my Zero to Hero Résumé (which is also in my Barefoot Investor for Families book). The aim is to get them to write down positive things about themselves and learn how to sell themselves at a job interview. For your son, the aim is to have him earn his own money, set up his Barefoot buckets straight away, and start saving for a goal. You want him to get that feeling of winning, quickly.

Another challenge from the Bucket List program is to get your son to help you cut the costs of your household bills by negotiating a cheaper energy or phone provider. You could even offer to pay him a commission.

Here’s the end game: most parents complain about their teenagers — they’re lazy, they sleep all the time, and they have no idea about money or the real world.

I want you to brag about your son while he’s in earshot — how good he is at saving you money, how hard a worker he is, and how he wants to get a part-time job. He may act like he’s not hearing you, but he will take it in.

Au revoir!

Scott.

The Bucket List

Hi Scott,

This email was timely for me, as I sat in my high schooler’s classroom for a parent info night and glanced around me. Your photo was enlarged and plastered on the walls, along with some actual buckets — Splurge, Smile, Mojo and Grow. I smiled, knowing that mine was not the only voice of reason my 12-year-old and 15-year-old are hearing. I am so thankful you’ve made it into mainstream classrooms, and I hope to see your program adopted nationwide. And of course I’ve signed your petition. Thanks for everything!

Tania

Hi Tania

Thanks so much for signing my petition, and thanks also to all the Barefooters out there: we got over 100,000 signatures.

It’s also awesome that my buckets are in a classroom!

I showed my kids your picture and they were way more impressed than with the bestseller list that I strategically left out on the kitchen benchtop.

You Got This!

Scott.

I Blew $10,000 on Binary Trading

Hi Scott,

About four years ago I invested $250 in Skyline Markets and learnt how to do binary trading. It seemed very profitable and they hounded me to go to the next level by investing $10,000, which in hindsight I should not have done. Then — lo and behold — they stopped contacting me and the website closed down.

Yes, I was scammed, but now I think I am being scammed again. A financial outfit from London has been ringing and emailing me saying that my initial investment of $10,000 went into an escrow account and is still there in my name. To get this back I have to pay them $1,000, which I will get back immediately when they transfer the money (now $13,440) to me. I am being scammed again, aren’t I?

Sue

Hi Sue,

Yes, you are.

If you haven’t done it already, report it to Scamwatch.gov.au (both the original scam and the latest ‘return rip’). Then chalk it down to experience, and move on with your life. Don’t give it a second thought. And from now on don’t answer emails or telephone calls from people you don’t know.

Scott.

Is three grand coming your way?

This week I spoke to the ATO.

Rarely is that an interesting conversation … however, this time, I asked them the one thing that people really care about: how much does the average Aussie get back at tax time?

“We don’t have that figure”, said the ATO.

“Well you better get it, then!”

Two hours later, they sent the response:

“As at the end of 17 June 2021, the ATO has issued more than 10.83 million individual 2019-20 refunds, totalling more than $30.53 billion with an average refund of $2,820.”

Fair enough. Of course, yours will be different.

The ATO also added who they were shaking down (my words) this year: anyone claiming work-related expenses, rental deductions and income, or capital gains from cryptocurrency (or losses, depending on when you bought Dogecoin).

Oh, and YOU. They’re targeting you.

You see, the ATO’s supercomputer collects 650 million separate transactions — cross-referencing bank accounts, share certificates, Centrelink payments and more.

Yet in certain circumstances they also employ a strategy used by jealous exes the world over: they get on Facebook and Instagram and see what you’ve been spending your money on. (They won’t confirm it … but they don’t deny it.)

Maybe that’s why 74% of Aussies use a tax agent or accountant — which typically costs $400, according to the ATO.

Now if you’re a business owner, an accountant can be invaluable. Same if you have complicated tax structures like family trusts. Yet if you’re an average wage earner, it might be time to kick H&R down the block.

Seriously, if you’re a wage earner with a simple set of affairs (i.e. most people), you should get a new accountant. In fact, I have the perfect guy. He’s reliable. He won’t get you in trouble. He’ll come to you. And best of all, he’s free.

It’s called ‘myTax’ — the ATOs supercomputer’s brother from another mother. With myTax you can do your return on your phone in around five minutes, because the system pre-fills your information. So all you need to do is double-check the info, enter any deductions, and hit ‘submit’.

Ah yes, but what about those deductions?

Well, the ATO now has an app for that too … it’s called, well, the ATO app. And it’s actually pretty good.

(And if you’re one of the millions of Aussies who’s worked at home this year, here’s a shortcut for claiming work-related deductions: You can skip all the complex calculations … and just multiply the hours you worked at home by 80 cents per hour. The ATO app can walk you through it.)

Best of all, you’ll get your refund … whatever it is … pretty quick too, within 14 days after you lodge.

Tread Your Own Path!

I Have Done a Bad, Bad Thing

Hey Scott,

I have read your book four times and am hooked. My partner and I have set up our Barefoot Date Nights, renamed our bank accounts, cut up our credit cards and rejigged our super. And I am confident we are on the right track, with some savings and absolutely no debt -- not even 10 bucks owing to a mate. But I have done a bad, bad thing. A while ago I skimmed off the top of our Fire Extinguisher and Smile accounts, just to get through the last few days before my partner’s monthly pay. But now I am doing this every month. I feel so guilty. HELP!

Alice

Hi Alice

Well done on getting things sorted!

There’s no reason to feel guilty. If you’re short each month, you may just need to allocate more money to Splurge (the percentages I gave in the book were a rough and ready guide). Yet I’d still do a gut check and see whether what you’re spending that money on is really moving the dial for you. After all, the aim isn’t to be in a strict budget straitjacket, but to consciously spend your money on things you love.

Regardless, it sounds like you need to do a monthly date night with your partner, so you can nut this out together. Liz and I still do ours. These days though we only talk about our buckets for a few minutes (while looking at our banking apps on Liz’s phone), discuss any big ticket purchases we have on the horizon, and eyeball each other that everything is okay financially, and then move on to more exciting things. It takes time to get to that place, but if you commit to doing it each month, you’ll get there.

Scott.