A letter from someone on the inside

Every so often an email comes through that punches me right in the guts.

Here is a letter from someone on the ‘inside’.

Dear Scott,

I find myself in an abusive marriage, which has become worse over time. The abuse has been slow, but became drastically worse since our children were born, as I have relied on him more (I’m a stay at home mum).

I didn’t notice the red flags in the early days of dating. My husband can project being a family man and a wonderful husband to the outside world, while I have become a shell of the woman I once was.

He has punched walls, called me crazy and even gets upset at me asking him to pick up groceries. He treats me like an inconvenience. He has multiple online affairs. I am scared of what he’ll be like as our children get older. There are behaviours that he does with our kids that don’t sit right with me, but I feel powerless to stop it.

My husband significantly out earns me and would even if I had a job. He has a much better education than I do. He is also more intelligent and charismatic. I am too scared to leave because of the financial implications on my kids. My parents have told me they can’t provide any assistance or accommodation for me and my kids. I don’t want them to go hungry or end up in dangerous accommodation situations.

Anonymous.

Heavy, huh?

Let’s discuss two super-practical things to take from this letter.

First, women don’t consciously decide to shack up with abusive psychopaths, much less have kids with them. Like this woman says, she ‘missed the red flags in the early days of dating’.

So let me give you a red flag.

Before you have kids, grab my book and start doing the Barefoot Date Nights with your partner. The very first step encourages you to share your basic day-to-day spending money. If your partner flat-out refuses, that’s a red flag you probably want to talk to your mother (or best friend) about.

Reason being, as this woman says, ‘the abuse has been slow, but has become drastically worse since our children have been born, as I have relied on him more’. Stay-at-home mothers are selfless, and they often not only lose part of their identity, they also lose their income, and that can put them in a vulnerable position.

Second, women don’t consciously stay with abusive psychopaths, much less subject their kids to an abusive household. They stay because the constant abuse shatters their self-confidence, and they believe they are financially trapped. As this woman admits, “I’m a shell of the woman I once was”.

So here’s a way to slowly rebuild your confidence.

Take back control of your situation by calling 1800 RESPECT (1800 737 732), and speak to a family violence expert. Even if you’re not ready. They’ll take you through your options. Here’s one thing I’ve learnt as a financial counsellor: when you walk out one door, five new doors open. There are amazing people willing to walk alongside you, and they’re on the other side of that door, waiting.

Tread Your Own Path!

Counting my blessings

Hi Scott,

I know you probably get a million emails but I am hoping this one gets to you. I was around 30 when I read your book (7 years ago now) and I took your advice and set up my insurances through my super, upped them accordingly, and set up a good health insurance policy for my family. Fast forward 7 years and I have had cancer twice. The health insurance recommended to me by the government website has been excellent, they paid over $150K worth of surgery and chemo for me. I managed to claim my life insurance so I can invest it for my kids and I also have a decent income through the income protection insurance. Because of you my 2 young kids have a property each and I have a share portfolio which is paying for their school fees and any holidays we take. I can't thank you enough and think of you often when counting my blessings, of which I can still count many!

Tiana

Hi Tiana

In my book I wrote about facing your financial fire … you’ve done it twice! Your kids have not only grown up seeing their mum make smart financial decisions, they’ve watched you face the toughest challenges and win. What a legacy to leave for your kids!

Lost Treasure

Hey Scott,

I thought I'd take your advice and check out the Government's Moneysmart website to find my unclaimed millions. No luck, but searching under my maiden name I was astonished to find my 95 year old Dad's name! Two old savings policies he'd taken out in his late teens on commencing work. Dad's over the moon and I still can't believe I found it. There’s so much unclaimed money out there!

Betty

Hi Betty

That’s amazing … and also potentially depressing.

Let’s hope it wasn’t sitting in cash (or worse, earning nothing) for 77 years!

This is your yearly reminder to head over to ASIC MoneySmart and do an unclaimed money search. It’ll take you 2 minutes.

Scott.

Hiding My Savings from My Hubby

Hi Scott,

My hubby racked up debt under both of our names from a repeatedly failed business idea. I’ve told him it’s risky and not to do it anymore, but he just resents me for ‘not supporting him’. He’s a financial bully. I have now left work and had a baby, so he can’t get money from me at the moment (he always tells me to give him money). Yet I secretly saved lots of cash before I left work. I keep it in a UBank USaver, but is it still best kept there? Do you have advice for people like me who have a financially reckless spouse?

Lisa

Hi Lisa,

‘Financial bully’ is another name for ‘abuser’.

You absolutely did the right thing saving up a secret stash before you went on maternity leave – without it you’d be in a very vulnerable position.
What advice do I have?

First, being married doesn’t mean you should have to put up with being bullied.

Second, I’d suggest you both see a relationship counselor to get to the bottom of these issues. Unless you confront it head on, things are unlikely to change.

Finally, if he refuses to get counselling, you should go and see a financial counsellor yourself (1800 007 007) and get some strategies to help build up that potential getaway fund … which is okay in UBank or any other account that he doesn’t have access to.

Scott

Save my mum, please!

Scott,

Help, Help, Help please. I need to save my mum from certain death! I know this sounds dramatic but the situation is dramatic. Last June, my parent’s house was damaged by a storm and it’s still not fixed. My elderly mother’s been suffering massive panic attacks since this enormous tree fell on their house and then in January my father suddenly passed away, adding to her stress. Do you have any advice on how to get RACV Insurance to deliver the service my parent’s have paid for? My siblings and I fear the stress will kill her and soon!

Cathy

Hi Cathy,

I understand.

The RACV should have assigned your mother an assessor, a claim number, and contact details.

I would take what you’ve written to me – though put it in her words – and have her email it to the RACV, and request an urgent review and response within ten business days.

If she doesn’t get an adequate response, email me back, and I’ll take it on for her.

Scott.

I Don’t Pay My Best Employee

Today I want to introduce you to the best worker I’ve ever had.

His name is Robbo, and he started working for me about six months ago.

Each morning I get up at 5am and head over to the barn to start work … yet I’m always beaten by Robbo, who’s already well into his workday, quietly getting the job done.

Robbo is the nickname I’ve given to my robot mower.

When I first got Robbo, a landscaper mate of mine mocked me:

“You paid a grand for that thing? Geez, they saw you coming!”

Today he’s the one eating grass. My lawns look like a freaking bowling green.

In fact, they’re actually a little too good. People either think we have a full-time gardener, or that I’m that manic neighbour who edges his path and keeps plastic bottles on his lawn to ward off weeing dogs (you know the guy).

If you read the reviews on robot mowers they’re almost universally positive. “Why didn’t I get one of these years ago?” they say.

Probably because they weren’t invented. They’ve been around since the nineties, but they really took off a few years ago, mainly in Europe, where there are millions of them.

My prediction?

Jim’s Mowing needs to sharpen up their offering.

But don’t weed-whack me, Jim! It’s just that I can foresee that robot mowers will gradually fall in price … and in a few years you’ll have one.

That’s because they’re essentially a plastic Tonka truck (about the size of a vacuum) with a $6 cutting blade, powered by the same 20-volt battery that goes into your cordless drill.

All you need to do is lay down guidewire around the perimeter of your yard (or not – the latest robots do this automatically via GPS). It’s all hooked up to an app on your phone which assesses rainfall and calculates the growth rate of different sections of the grass (via artificial intelligence). Then it works throughout the night cutting a few millimetres off your grass with each turn (which acts like a fertiliser), before it heads back to its charging base.

For me, it means I can spend more time with my kids (who really should be mowing the bloody lawn themselves!). In fact, I’ve just now hired ‘Rodney’ – a robot vacuum – to work night shift at the barn.

Tread Your Own Path!

I Was on FIRE and Now I Just Want Out!

Hi Scott,

I am 21 and got sucked in by the FIRE movement. I put $50,000 (my life savings!) into diversified high-growth index funds last year when values were reaching historic highs. Now everything's starting to crash, and my parents have been encouraging me to sell my shares and move the funds into a savings account before it drops further (in doing so, I would make a loss of at least $7,000). I had originally invested this money for the long term, with the aim of selling the shares in five to ten years’ time. Do you think my parents have the right idea?

Sarah

Hi Sarah,

No, I do not think your parents have the right idea.

I think your parents love you, and they want to cocoon you from the risks of the big bad world.

(And as a parent myself I totally understand their motivation.)

Now, this is important: the really important life lessons – the ones that shape you – happen when things don’t turn out as you planned.

And, Sarah, you’re having one right now.

The FIRE (Financial Independence Retire Early) movement involves living frugally in your 20s and 30s and investing up to 70% of your income into low-cost index funds so you can retire in your 40s (or earlier).

For me it’s the financial equivalent of the grapefruit diet. It gets impressive results, but it’s incredibly hard to sustain over the long run. It’s just too hardcore for most young people.

However, its underlying principles – save hard, and invest long term in low-cost index funds – is absolutely, positively the right way for you to go.

With that said, here are three things for you to think about:

First, you say you plan on selling your shares in “five to ten years’ time”. That’s not enough time to benefit from the power of compound interest. Ideally you want to hold your shares throughout your life, reinvesting the dividends along the way.

Second, even though it seems bad, the share market actually isn’t down that much right now. There’s every likelihood that you’ll suffer a 50% drop in the value of your shares at some stage. That’s the price you pay for getting high long-term returns. So shop for shares the same way you do clothes: if you work out prices are down and shares are on sale, get excited and buy more.

Finally, if the reason you’re wanting to sell is to buy a house, DON’T SAVE IN THE SHARE MARKET. Instead park that money in an online saver or term deposit.

Know this: there are millions of people reading these words, wishing they were you: a young intelligent woman at the start of her adult life with a well-stocked share portfolio, and loving parents.

You Got This!

The Hard Road

Hi Scott,

Five years ago my brother died of cancer, then a month later my fiancé of six years left me – after he had finished spending the last of my savings (he was a drug addict and terrible with money). I was a 29-year-old woman making a starting wage of $16 an hour, struggling to get back on my feet. Then a year later a workmate recommended your book, and it changed my life.

Fast forward to today and I have paid off all my debts and have a combined $50,000 in shares and cash. I come from a very poor family that always struggled financially, so I feel like a millionaire in comparison to my previous life. Words can’t convey how grateful I am. Thank you for changing my life!

Tanya

Hi Tanya

You’ve walked a hard, lonely road: death, debt, heartbreak and betrayal … but you’ve made it.

I’ll let you in on a little secret: you probably feel better than most millionaires, because research has found that money only gives you a short-term sugar hit. It doesn’t make you happier over the long term (even though we all think it does). Yet what you’ve achieved on your own has built your self-confidence and transformed the way you look at the world – and that is truly life-changing.

You Got This!

Scott.

Tiny House, Big Dreams

Hi Barefoot,

In light of the current housing crisis, my partner and I are looking into buying a ‘tiny house’ to live in. We believe this will allow us to live without the stress of a huge mortgage or crazy high rent. We would initially look at renting land from someone while paying the tiny house off, and then eventually sell the tiny house and buy our own land when our needs change. What do you think about tiny house living?

Lucy

Hi Lucy,

I’ve changed my mind on tiny house living. My wife and I lived in a Winnebego with four kids for five months and we loved it. However, if we were still living tiny today I’m quite sure I’d be in a mental asylum right now. In other words, what made it fun was that it had a time limit. I don’t know many people who live their entire life in a tiny house … and very few families could do it long term.

So what do I think?

I think you need to work out where you want to be eventually. Is it in a home on land? If that’s the case, the only reason you’d buy a tiny house is if it were dramatically cheaper than renting. After all, your house is on wheeIs so it’s going to lose money over the long term.

Scott

Robbing Peter to Pay Paul

Dear Scott,

I've written some pretty damn good questions to you before and you've never answered them. Hopefully, I'm not wasting my time with this one. My husband is not putting his money where his mouth is. He runs his own business and is the sole breadwinner for our family. We have read your book and set up buckets with our income going into mortgage, daily expenses and splurge. This year his business has been slower and the percentage going into our mortgage has not covered the monthly repayments. On top of this, I have discovered he hasn’t been putting the percentage we agreed upon into the mortgage and has instead been skimming it into our daily expenses. If the mortgage isn’t paid each month, I want to know about it! And I definitely want to be involved in any decisions about ‘robbing Peter to pay Paul’. How do I make sure the money goes where we have agreed it should?

Wendy

Hi Wendy,

I want you to re-read the first two sentences of your question.

(Go on, have a read, I’ll wait.)

It’s kind of … gruff.

Is that the same tone and approach you use with your husband?

If so, that may be part of the problem.

(After all, it’s not like he’s siphoning off the cash to blow on wizz fizz and hokey-pokey.)

Wendy, like it or not, you’re a small business family, and he needs to know that you’ve got his back.

Here are a couple of suggestions on what you can do together:

Set up buckets for the business – especially for paying tax and suppliers. Separating the business from your personal finances is really important. Ultimately, the business needs to pay at least as much as he’d get working for someone else; otherwise, what’s the point?

Once you have your buckets set up, and a clear picture of what the break-even earnings of the business are, work together to set some sales goals over the next year.

Finally, if things get really tough, call the Small Business Debt Helpline (sbdh.org.au, 1800 413 828). They’re experts. They’re confidential. And they’re free.

Scott.

The Stress Test

If you’re stressed about your money right now, you’re not alone.

Australians’ mental health is actually in worse shape now than during the Covid lockdowns, according to a new study by KPMG and Smiling Mind.

Our biggest source of stress?

The rising costs of practically everything … especially interest rates.

Here’s the thing: when it comes to our mental health, Australians are good at asking for help. We are, after all, the second largest users of antidepressants in the world.

Yet when it comes to dealing with money stress?

Not so much.

But ignoring things won’t make it any better … nor will doom-scrolling. The only thing that’s guaranteed to get you back in control is for you to take action.

So let me give you three action items you can do right now.

The first action item is to pick up your phone, google MoneySmart’s ‘Mortgage Calculator’ and see what your repayments would be if interest rates went up another 2%.

(Hang on, why 2%? Because the bulk of the senior bank economists predict rates will rise 1.5% over the next 12 months. Having said that, these are the same guys who all once famously lost a financial forecasting contest with my golden retriever … so let’s be conservative.)

Write down what your monthly repayment would be, and then …

… act as if it’s this figure already.

Get into a bit of role-play for the evening:

What would you have to do to meet your repayments?

Then check your home loan. Here are some numbers: the average variable rate is 4.55% … or 5.10% if you’re with one of the big banks (but why would you be?). If you have more than 20% equity in your home, you should call up your bank and bitch (rather than go through the hassle of switching). A good variable rate to demand is 3.5%. Do that and you’re three-quarters of the way there.

The second action item is to review your spending.

Disclaimer: I’ve never stuck to a budget in my life, so I’m afraid I can’t help you with a rigid spreadsheet. Instead, I’d suggest that you review your Barefoot Buckets and spend consciously … which means be lavish on things you love and use a lot (hello Dunlopillo) and vicious with anything you don’t (goodbye Netflix).

The third and final action item – regardless of whether or not you have a home loan – is to get a payrise. Yes, I know the thought of asking for more money probably makes you feel a little queasy, but this is a total non-negotiable. Besides, everyone else is doing it. With inflation burning through 7% of your wallet this year, you need to get at least that much of a payrise, or you’ll be going backwards.

So there you have it: three practical, positive and empowering action items that you can do right now to take back control of your money. Let me know how you go!

Tread Your Own Path!

We Retired on the Amount You Suggested …

Hi Scott

I read your ‘How much you really need for your retirement?’ column a few weeks ago, and I cut the article out and pinned it on my office wall at home. It made me feel amazing, and I breathed a sigh of relief. My husband and I retired with around the amount you mentioned in your column. Now, three years on, we are going well. We have been on a road trip to Darwin, and we enjoy the simple things like catching up with family and friends. Our cup is full. It’s not about what you have, but about who you have in your life. Thank you.

Lara

Hi Lara,

No, thank you! You’re living proof that the ‘million dollar myth’ is just that.

I got smashed with negative responses, but this one from Divya, a pre-retiree, made it all worthwhile:

“I am an immigrant from a poor background, and I used to feel paralysed and ashamed that I ‘have not made it’. That shame translated into me not taking productive action about my wealth. Yet I now realise that I’m actually doing well financially, maybe even very well, and that it’s worth respecting the efforts I’ve put in over the past 10 years, and taking care of what I’ve got! Thank you from the bottom of my heart.”

Here’s to everyone working hard, saving hard, and nailing their realistic retirement number!

Scott.

Chilled to the Bone

Scott,

I felt chilled to the bone when I read about that poor family who lost their house deposit to scammers. Is there anything we can do for them? They have seven kids! It just doesn’t seem fair that the bank would only refund them $5,000 and the cops say ‘too bad’. There has to be justice!

Raj

Hi Raj,

I feel like I need to take a cold bath and scrub myself clean after the week I’ve had.

I’ve been inundated by readers sharing their scam stories with me. I also spent the week researching what could be done.

Here are some back-of-the-envelope calculations:

Last year Aussies lost $227 million to payment redirection scams. Yet we also know that roughly a third of people are too embarrassed to report they’ve been duped, so let’s call it $300 million.

Five years ago banks in the Netherlands introduced account name checking and it reduced this type of fraud by a staggering 81%! So that would save consumers a massive $243,000,000.

Yet that’s the customers’ money, and who gives a toss about them?

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

How many of the bank’s staff hours are chewed up dealing with those $300 million in losses?

From chasing the scammers, to dealing with the heartbreak of customers who lost their life savings, and even sometimes, maybe, kinda, partly refunding them.

It’d have to cost the banks tens of millions, at least.

It seems like common sense to me. Kind of like, if your bank makes you give them the account name of the person you’re transferring money to – it’s because they’re actually going to cross-check it.

So I had a commonsense chat with Stephen Jones, the Minister for Financial Services, this week.

I asked him if he could, say, get all the bank chiefs in a headlock and not let them go until they all agreed to check account names, and in doing so save their customers as much as $243 million and untold amounts of heartbreak.

He said that’s a really good question and one that he’ll be asking the banks. But he thought my headlock idea was taking things a little too far. I also gave him the details of the young family with seven kids who were scammed out of their deposit.

Let’s hope commonsense prevails.

Scott.

Chasing a Ghost

Dear Scott,

Just before Covid hit, I paid a $3,000 deposit for a new fence. Then Covid hit, and everything stopped. After restrictions were lifted we got in contact with the fencer and he started all the excuses under the sun about why he wasn’t able to start the job. He finally admitted he was not going to do it. We asked for our deposit back, we still have not got it. We have told him we will take the matter to small claims court but this has made no difference to him. The trouble is we only have his first name, his bank account details, his phone number and his company name. What can I do?

Danielle

Hi Danielle,

You can do an ASIC search on his company name and find his registered details, and with that possibly take him to a small claims tribunal (like VCAT in Victoria).

So by all means, give it a go.

Having said that, he sounds like a crook. And it also sounds like this isn’t his first rodeo. So you could end up spending a lot of time, energy and emotion chasing this guy … and you still may never get the money back.

Look, I don’t want to sound too woo-woo, but sometimes you just have to let these things go …

So if it were me, I’d put that energy into finding a good tradie who’ll build you a good fence.

(And know that, one day, that guy’s going to get his nuts nailed to a fence.)

Scott.

The email came through with the subject line ‘REGRET’

The email came through with the subject line ‘REGRET’.

Scott,

My partner and I are both professionals in our early thirties. We bought a house last year and we hate it. We are struggling to adapt to a slower pace of life in the suburbs and have learnt we don’t need as much space as we thought we did. We feel stupid for spending a ton of money on something we can’t stand.

What are our options?”

Erica

Strewth!

There’s more emotion in Erica’s email than a midnight meltdown from my 18-month old:

They hate their new home … they feel stupid … they can’t stand it.

Well, the dream of owning your first home is a lot like parenting a newborn … the thrill rubs off disturbingly quickly … and then the reality of the responsibility sets in:

I’ve signed up for a lifetime of this?!

It’s not hard to understand why Erica is spitting the dummy.

This time last year everyone was FOMO-ing off their face. Interest rates were at all-time lows. The Reserve Bank had committed to no rate rises till 2024. Property prices had risen 30% since COVID. And that’s when Erica and her partner got property-pregnant. And that’s also when everything changed.

Today, the value of her property is going down, and the cost of her mortgage is going up. Way up. In the last three months her repayments have shot up by an extra $565 a month (based on a $600,000 loan).

And some experts are warning that house prices could drop by as much as 25%, leaving people like Erica who bought at the top in a ‘Mortgage Prison’ and unable to refinance their loan in a few years.

So what should Erica do?

Well, my advice would be to stop listening to experts about the economy. As a new property-parent you have zero fluffs to give. All it will do is freak you out and psyche you out.

I know you think you’ll never make it. But you will. You’ll grind it out, meet your mortgage repayments, and eventually get ahead. And then, in a few years, you’ll have forgotten about all the pain you went through, and you’ll trade up your family and do it all over again!

Tread your own path!

Why ING Sucks

Fiona is a young high school maths teacher who has a lot on her mind.

She’s knee deep in planning her wedding, so her head is full with nuptial numbers:

The guest list, her wedding dress, flowers, bridesmaid dresses … bridesmaids.

One afternoon recently her phone rang.

It was a private number.

As with most people, Fiona’s reflex was to ignore it and let it go to voicemail, but then she remembered she was expecting a call from a supplier about the wedding, so she answered.

Turns out it was Telstra.

“The Telstra rep seemed to know all my details, and they ran me through the privacy stuff. Then they told me that my internet server had been compromised and that I was vulnerable to hackers”, she told me.

Fiona was a little suspicious … but the rep directed her to a Telstra website and asked her to put in her IP address. Sure enough it showed that she had in fact been hacked.

“O.M.G!”

From there, she was directed to open her emails, and then her ING banking app.

The Telstra employee (who had given Fiona her Telstra employee ID for verification purposes) asked her to write down a long series of numbers that she would need to give to the technician that would be visiting her house the next day and reset her internet.

While Fiona was busy writing down numbers, her fiancé arrived home from work and went to the study to do some banking. A few moments later he stormed out and to the lounge room and waved his ING app in her face.

The $20,000 they’d saved up in their ING account to pay for their wedding?

Gone.

Fiona had in fact been talking to a scammer all this time.

“Please make me look silly to your readers,” Fiona pleaded as she told me her story. “Because I am silly. I thought that these scams only happened to Boomers!”

Yet here’s what got my goat:

The scammers hit her account every 30 seconds, each time taking random amounts:

$546, $990, $7.50, $1,000, $99.

And they kept smashing the account until all $20,000 was drained.

Yet get this: the account name the money was going to was spelt “Drothy”.

OH COME ON!

We’re not in Kansas anymore, ING!

Grab the Tin Man and Toto and go bite these buggers!

Seriously, you’d think that Australia’s fifth largest bank – which trousered $549 million in profits after tax last year – would have tipped even just a little bit of that dough into having the most basic banking safety features … like, say, a trigger that detects when a customer is potentially getting scammed and puts a temporary lock on the account?

Nope.

Yet it gets worse.

After a lot of back and forth and tears from Fiona, ING agreed to pay her half the money back.

Half?

That makes absolutely no sense to me.

Either ING believes it’s not their problem, in which case they would tell her (politely) to go jump. Or they admit they should have detected the fraud and pay the money back.

So which is it?

You can’t get half up the duff, Drothy!

In fact, ING’s behaviour is depressingly very bank-like:

“When customers get scammed, it’s a lottery if they get reimbursed by their bank. Sometimes it’s 50%, sometimes it’s 75%, sometimes we find they get nothing”, says Gerard Brody from the Consumer Action Law Centre.

ING’s logo is a lion, which is kind of apt.

In The Wizard of Oz the cowardly lion is given a dish of courage to drink, which instantly transforms him and allows him to protect Dorothy.

Time to lick the bowl, ING.

You’re Australia’s most recommended bank. Start acting like it.

And if, dear reader, you’re thinking “There’s no way I would have fallen for a Telstra scam”, then you really need to read the following question and see how you would have fared …

Tread Your Own Path!

Rich Kid, Poor Kid … Worried Mum

Hi Scott

We have twin girls and we recently went all in on the Barefoot pocket money strategy. One of the twins is highly motivated when it comes to jobs and earning her pocket money, while the other doesn’t care for it at all. Like AT ALL! Her ‘currency’ is connections, not money. She barely gets any pocket money each week and we’re not making up the difference, but she still doesn't care. What do you do when financial or future motivation is not an incentive for a kid?

Worried mum

Hello!

So you have a kid who isn’t materialistic in the slightest and values people over money?

Sounds like an awesome kid to me!

Here’s what I’ve learned: lecturing and hassling your kids doesn’t work.

That’s why my brand new book (due out in November) is written directly for kids.

I gave a review copy to a kid who sounds exactly like your daughter. He’s not motivated by money at all … yet he read it cover to cover and started plotting out his own small business, not to buy stuff, but to donate to Foodbank.’

Scott.

A Scammer Stole Our Family Home!

Hi Scott,

My husband and I have seven kids, aged from one to 13. Five weeks ago we finally took the plunge and bought a big family home!

After the deal was done, our solicitor, Jenny, called and directed us to pay our deposit of $165,000 to the trust account. Then at 6:47am the next morning Jenny emailed us with a ‘correction’ to that account. I thought that was a bit weird, so I emailed back to confirm. Jenny came back almost immediately. All good.

So my husband took the morning off work and went to the bank to wire the money to the account. He paid the $35 bank transfer fee and made sure the teller checked and rechecked the numbers. That night we celebrated!

Then, two days ago, Jenny called to ask us where the deposit money was! Unbeknownst to her, hackers had taken over her computer and communicated with us from her exact email address, posing as her, using her exact language!

So we immediately called the police. They did an investigation and found that the scammer is in Kenya, so it was out of their jurisdiction. They also told us that Interpol doesn’t deal with ‘small amounts’. “There’s nothing you can do”, the police told us.

We have spent hours on the phone to our bank. They have given us $5,000 on the proviso that we drop any action against them. To say we are gutted is an understatement. Please alert all your readers to the risk of hackers accessing online transactions.

Nathan and Natalie

Hi Guys,

My heart absolutely breaks for you.

Here’s what you learned the hard way … that most people don’t know:

When you transfer money your bank always asks for the name of the account that you’re transferring the money to. Logically, you’d think that’s so their systems match and verify the account name.

But they don’t.

You could write ‘IMA BANK ROBBER’ in the account name and it’d still go through.

(Or ‘Drothy’, take your pick.)

Yet hang on, don’t the banks invest billions of dollars a year into cutting-edge artificial intelligence so they can cross-sell you credit cards every time you log on? Surely matching the account name would be a pretty basic code for them to add on?

Well, it turns out it is, and it works!

Five years ago banks in the Netherlands introduced account name checking and it reduced this type of fraud by a staggering 81 per cent.

So … why aren’t our banks doing it?

Well it seems it’s just not a priority for them.

But it is for me.

Nathan and Natalie, let’s make a ruckus this week, and see what happens.

Stay tuned.

Scott.

Dude, I’m HEXED!

Hello Scott,

Looks like I’m one of three million (presumably young) Australians pooping their pants about the recent announcement of a HECS index increase to 3.9%. I’ve got a whopping HECS debt of just over $53,000 (for my two degrees which currently see me sitting in a casual position earning $26.50 per hour). In the past you’ve advised to focus on other debts or investments, rather than HECS. Does this still stand?

Lina

Hi Lina

You’re right, inflation has increased the cost of everything, including the indexation amount on HECS.

In 2021 it was just 0.6%, this year it’s 3.9%, next year … who knows?

That being said, it’s still the best debt you’ll have: your repayments are contingent on your income and, while it is tracking inflation, it’s not attracting a commercial rate of interest.

Now I don’t have a full picture of your financial situation, but it makes sense to prioritise other (higher rate) debts over your HECS.

Finally, you need to look at your return on investment:

You spent $53,000 on your education and your (admittedly short-term) return is a casual position earning $26.50 an hour?

Now that is something worth pooping your pants over.

Scott.

So about last week ...

Wow-wee!

Last week’s column – on how much you need to retire – triggered an avalanche of reader responses.

“That’s WAY TOO LOW!”

“Are they eating baked beans in retirement?”

“You need AT LEAST $1 million to do anything half decent in retirement!”

Let’s recap:

Super Consumers analysed the actual spending data of retirees, and concluded that the average home owning Aussie couple in their late 50s needs $402,000 to fund a comfortable retirement. And to be clear, that figure takes into account the rising cost of inflation, medical expenses and aged care costs.

That figure shocked a lot of readers.

‘Why was it so much less than the ‘magical million’ that always gets bandied about?’ they asked.

Well, it’s because that ‘million dollar’ retirement figure has been largely influenced by the super funds lobby ASFA (Association of Superannuation Funds of Australia), who calculate their figure for a comfortable retirement at $640,000 for a couple and $545,000 for a single.

Yet that’s not a realistic figure for the average Aussie.

In fact, according to Super Consumers, that ASFA figure is only achievable for the top 20% of retirees. And that also explains why the government’s independent Productivity Commission advised policymakers to simply ignore it!

However, the media has not ignored it – it has instead entrenched it. And in doing so it’s created a much bigger problem that affects millions of retirees, both wealthy and poor: they spend the little time they have left worrying about money, and hoarding it, instead of enjoying it.

My view?

The million dollar retirement number is a myth. It’s basically like telling a thirty-five year old, “look I’ve crunched the numbers, and if by now you’re not earning $200,000 a year, well I’m sorry but you’re going to live a crap life”.

Bugger off!

As long as you own your own home, you can live a meaningful, purposeful, retirement with much less money. After all, we have the amazingly good fortune to be living in the greatest country on earth, with a strong social safety net based on the aged pension plus subsidised medical and aged care.

And the truth is that whether you’re 35 or 65, once you’ve comfortably covered the basics, having more money won’t necessarily make you any happier.

Case in point, I spoke to a retiree this week who admitted he’d spent the best years of his life working in a job he hated so that he had ‘enough’ money to retire. Now, five years into retirement, he told me the things that really made him happy are: catching up with his daughter, watching the footy with his son, walking along the beach at low tide, and sitting on the porch in the afternoon sun. And none of them cost him a cent.

Tread Your Own Path!