How to Earn $6,000 in One Hour

Hey Scott,
 
My wife and I are fiercely trying to pay down our home loan. After trying to negotiate down our rate with our lender last year, we decided it was time to switch to what was, at the time, the best variable rate we could find. Fast-forward a year and there are far better rates ‘out there’, with many lenders offering enticing cash bribes. So my question is: what’s stopping me from refinancing regularly … even yearly? Is there a chance lenders might start rejecting my applications, leaving me in no-man’s land?
 
Tim
 
Hi Tim,

No, I don’t see that happening.
 
I had a Barefooter write to me about what happened when he threatened to leave his bank for a cheaper rate, and the bank called his bluff.
 
Here’s what happened next, in his own words:
 
“ANZ were offering new customers a $4,000 sign-on bonus (and a slightly better rate), so we switched. But then, a few weeks later, I saw that my original bank was offering $3,000 for new customers. Bang! Before you know it, I’m back with my original bank. For about 1–2 hours of paperwork and a few phone calls and emails, we were able to pay $6,000 off our home loan (after fees!).”
 
Nice one!
 
Last month the CEO of ANZ Bank said that the home loan market was the most competitive he’d ever seen, and some banking analysts are suggesting that the discounts and incentives new customers are getting offered at the moment are irrational.
 
Understand this: the banks aren’t flashing the cash to their loyal customers … only those who bother to switch. So the only irrational thing you can do is not spend a few minutes putting your bank under the hammer this weekend.

Scott.

Die With Zero

I’ve had a bloke living in my back paddock for the last couple of months.
 
True dinks.

His name is Oliver, and he’s a 21-year-old pommy backpacker who works on my farm, lives in his van, and does his business in our shearing shed portaloo (which, up until now, has only been used by shearers and requires a full hazmat suit to do a number two).
 
The other night he pulled out a map of Australia and said, “Where should I go next?”
 
“You’re living the dream, mate!” I told him, as I retreated to my warm home, with a flushing toilet.
 
Now the ‘sensible’ financial advice for a young bloke like Olly is that he’d be better off in the long run staying home, getting a good job, and starting to sock money away to save for a house deposit.
 
If he did that he could buy a cheap (overpriced) home in his late twenties. And if he did that he could spend his thirties and forties working even harder to try and pay it off. (As one burnt-out forty-something manager told me over coffee this week, “I spend more time mentoring the kids who work at the office than I do my own kids at home”).  
 
The sensible financial advice says that Olly will finally be able to slow down and enjoy himself when he retires, but there’s only one problem …

You see, the big taboo topic of retirement is that many retirees don’t end up spending their nest eggs.
 
They hoard it, because, understandably, they’re scared of running out of money. Yet by the time they work out they’ve got more than enough left over … they’re often too old to enjoy it.  
 
And so they die in their eighties with a big pot of money that they worked bloody hard for and sacrificed precious moments for … but never got around to enjoying.
 
That money is then left to their kids, who are then in their fifties or sixties and don’t really need it (they really needed help in their early thirties when they were starting their own family).
 
In the book Die With Zero, author Bill Perkins argues: “The number of actual experiences available to you diminishes as you age. Yes, you need money to survive in retirement, but the main thing you’ll be retiring on will be your memories – so make sure you invest enough in those.”  
 
And right now Olly is investing in memories that will last him a lifetime: he’s fallen for a lovely Aussie girl; partied on a deserted island under the moonlight; and met weird and wonderful people (my kids want to take him to school for show and tell).
 
So what’s the lesson?
 
Well, it’s not to ‘die with zero’ (as the book says). That’s fraught with danger, given you don’t know when you’re going to die, and you don’t want to run out of dough early.
 
No, the lesson is that, once you’ve worked through the Barefoot Steps and have your financial bases covered, you should spend your money on having life-changing adventures (or enabling them for your loved ones!) instead of spending your time accumulating more money.
 
After all, life is all about the memories we make with the limited time we have. And I’ll share with you my next adventure … next week.
 
Tread Your Own Path!

Do this one thing for me

Howard Marks is one of the world’s greatest investors.
 
He’s so influential that Warren Buffett says that whenever Marks writes anything he stops what he’s doing and reads it immediately.
 
Late last year Marks wrote about a major ‘sea change’ that he believes will change everything:
 
“In my 53 years in the investment world, I’ve seen a number of economic cycles, pendulum swings, manias and panics, bubbles and crashes, but I remember only two real sea changes. I think we may be in the midst of a third one today.”
 
That sea change is what we’ve experienced this year: sustained higher interest rates.
 
Marks argues that the last 40 years of falling interest rates have provided investors with a wonderful wind in their sails. And, as a consequence, many people still believe that interest rates of 2% are normal.
 
They are not.
 
Inflation has put an end to our smooth sailing. Rising interest rates means we’ll soon be moving into much more treacherous waters.
 
So what does all of this mean for you?
 
Well,you need to understand that the economic winds are now blowing against you (and all of us).
 
So let’s focus on you, and where your ship is heading.
 
Yes, I’m talking to you.
 
You’ve been putting off making that financial decision, right?
 
Perhaps it’s selling that dud investment property … or downsizing from your current place.
 
Maybe it’s reaching out to your super fund’s financial advisor about your retirement … or making the call to get a better home loan rate.
 
Hopefully it’s to sell your Dogecoin … or perhaps it’s calling the Small Business Debt Helpline (1800 413 828) to admit you haven’t paid your business taxes and ask for their help.
 
Heck, it could even be to finally make the ultimate (diamond ring) investment.
 
You may tell yourself that it’s not the right time, or that you don’t have all the facts, or that you’re too busy.
 
Yet deep down you know they’re all excuses.
 
So, whatever you’ve been putting off, I want you to do something – anything – towards it this week.
 
Call your bank. Break up with your stoner boyfriend. Buy some index funds.
 
And then email me at scott@barefootinvestor.com and let me know what you did (big or small).
 
I promise I’ll read it.
 
So go on, name your ‘one thing’ you’ve been putting off, and then set sail!
 
Tread Your Own Path!

So My Wife Has a Boyfriend …

Hi Scott,

I was reading your article ‘So My Husband Has a Lady Friend’ from last week, and it struck me that this is exactly my story. Except it’s me, the husband, who has discovered his wife is having ‘catch-ups’ with her ex-boyfriend from before we met. I’m gutted. She is already talking about getting her name off joint accounts and is asking about separate bank accounts. I’m very worried because I run my own business and don’t know how this will affect it, as well as the equity we’ve built up in our home (we have put most of the retained profits from the business into the mortgage). Is there any advice you can give dads out there, as this doesn’t only happen to women – it can happen to hardworking, loving, supportive blokes too.
 
Terry
 
Hi Terry
 
Thank you so much for reaching out to me – I can’t imagine how tough this would be for you.
 
So let me be blunt:
 
Whether you work it out with your wife or not, the next year or two is going to suck.
 
You’re going to be put through the wringer emotionally, and you’ll need a lot of time to focus on you. Yet, if you’re the chief ballboy and bottle-washer for your business, something’s going to have to give. It could be your mental health, or the health of your business, or … both.
 
So here are three meetings I’d suggest you have:
 
First, sign up to a free Small Business Mentoring Service in your state and get some help setting up procedures and strategies that will allow you to step away from the business when you need to.
 
Second, talk to the NewAccess for Small Business Owners service (1300 945 301). It’s a government-funded program that matches you with a mental health coach (all the coaches are former small business owners, not bureaucrats) who will have really practical ways to help you manage stress and overwhelm.
 
Finally, see a family lawyer – this week –   and explain exactly what’s going on.
 
Good luck.

Scott.

The Farmer

G’day Scott,
 
My name is Sam Williams, I’m 13 years old, and I own a business – a Poll Dorset sheep stud. We’ve had an exceptionally wet couple of years – the sheep have wet feet (which causes lameness), they have skin issues due to moisture, and my first lamb went a little crazy in the yards and broke its neck and died in my arms.
 
It has been hard, very hard, but it’s my dream. My parents have worked so hard to be supportive and constantly say they don’t want me to have to work to breaking point like Dad, while still appreciating the values and work ethic it takes to get there. I was wondering if you have any words of advice for me, and does it matter if I am forced to sit still for a bit as our finances are tight?
 
Sam 

Hi Sam,
 
There’s no doubt your parents are proud of you … I am too!
 
Now let me tell you a little secret, Sam. I bought my farm so that my four kids would learn the lessons and values you’re living: hard work, resilience, and an understanding of where money (and food!) comes from.
 
Now, to your question.
 
I don’t think it matters if you’re forced to ‘sit for a bit’ if money is tight. Sometimes it’s the best thing to do, given prices have come down quite a bit (I sold some lambs the other day and got absolutely fleeced).
 
More importantly, don’t lose sight of the bigger picture either, Sam.
 
While everyone is getting excited about the future of artificial intelligence, for me a much more fundamental fact is that we need to work out a way to feed billions of people sustainably.
 
That’s where the smart money is going right now. And with your hard work, country ethics and down-to-earth nature, there’s absolutely no reason you can’t be someone who leads the industry into the future.

Scott.

The Magic of Manifesting Money (Without Hard Work)

Hi Scott,
 
You need to share this book with your audience. It’s called "The Magic of Manifesting Money: 15 Advanced Manifestation Techniques to Attract Wealth, Success, and Abundance Without Hard Work".

I read it last Sunday, and then strange things started to take place. My little business scored three new clients which will bring in $15,000, and my husband got a call from an organisation that had found an old long-forgotten insurance policy worth $3,000! Money is energy, and you just have to tune into its frequency.

Taylor
 
Hi Taylor
 
Whenever I read about these ‘magical’ money books I think about the favela (slum) I visited in Brazil a few years ago. It was built on the side of a mountain. Tens of thousands of families living in tiny tin sheds, ruled by violent gangs with bigger guns than the police. Surely all these wretchedly poor people needed to do was simply think the right thoughts and they’d magically grow rich?
 
Oh no, señor, it’s not that easy.
 
My worry is that if you buy into the belief that it’s the universe’s job to kiss your ring then you’ll be less likely to do the thing that really manifests success (and money): a well-thought out plan backed by hard work and a commitment to taking massive action.
 
At Barefoot, I’ve noticed a pattern: the most hardcore people who follow my book tend to sort themselves out inside of one year and, if they keep going, become successful (in their terms) in around six years.
 
The results people manifest frequently astonish me … but there’s nothing magical about it.

Scott.

My Ultimate Father’s Day Present

Scott,
 
Last year on Father’s Day you advised readers to sit down with their father and ask them five questions on video. My father was 75 and was over for dinner on Father’s Day so I did this and recorded his answers. Two months later he was diagnosed with stage four prostate cancer, and last week he passed away after a four-month battle. Tomorrow is his funeral and we will be playing this video. This footage is the last video of my father truly happy without the fear of a terminal cancer diagnosis. My family and I can not thank you enough for giving me the idea to ask my father these questions, and I strongly urge everyone to do the same as we truly cherish this video.

Nathan
 
Hi Nathan
 
I’m really sorry for your loss.
 
However, I’m thankful you’ve given me the opportunity to give people a nudge to do what I call the ‘ultimate Father’s day present’.
 
If you’re lucky enough to have your father (or mother!) still with you, whip out your phone, hit ‘record’, and ask them the following questions:
 

• How did you meet Mum?

• What advice can you share with me about money, life and happiness?

• What does being a dad mean to you?

• What are you most proud of?

• How would you like to be remembered?

There are a few things in life that cost nothing but are truly priceless. You now have one of them.

Scott.

The ‘Die with Debt’ Strategy

Dear Scott,

I feel a bit disturbed when a different strategy recently came to my attention. If you don’t have any children (or don’t plan to, which is becoming more common) and are therefore not worried about what you might pass on to your children when you die, then you should borrow as much money as you can and pay back as little as possible. Get a mortgage to buy a beautiful house, get loans to go on holidays, buy things that bring you joy, live it up a little. Just enjoy your life to the fullest without worrying about working too much. Just pay back a little to keep the lender off your back but don’t worry about how much you are borrowing, or how much interest it would add up to over the years … because you get the money, spend it, enjoy it and then you die with no one left to pay the debt. Win! Or is it?
 
Debbie
 
Hi Debbie,
 
This is the sort of ‘strategy’ that people come up with at the pub … after six schooners.
 
It is true that, if you die without enough to repay your debts, they’ll generally be forgiven. (Though not if the debt is in joint names – the lender will chase the surviving person.)
 
Sounds simple, right?
 
It most certainly is not.
 
Can you imagine how stressful it would be to be old and financially stressed about keeping up your repayments? To be getting hassled by banks or debt collectors?
 
Besides, the vast majority of people want to leave a legacy, or at least square the ledger before they meet their maker.

Scott.

What you’re about to read is going to get me into trouble

What you’re about to read is going to get me into trouble.  
 
So I’m going to cut to the chase: to all the marketing managers of the products I’m about to mention, please email my assistant: idontcare@barefootinvestor.com 
 
When I was a kid, I used to try and hide my school report from my parents, hoping they’d simply forget (this was in the days before email, and helicopter parenting).
 
Yet my plan was always foiled by my older sister, who was the dux of her class, and waited in anticipation all year for her brief bath in the parental sunshine.
 
Mole.
 
Well, the Government just released a (long, confusing, boring) report card on your super fund card - it’s called the APRA External Report (www.apra.gov.au), and the worst super funds are hoping that you never read the report.
 
So let’s dig in.
 
OnePath was like my Year 8 report card: a total and utter sh…earing show (as my father would say). OnePath was singled out by the regulator for having no less than 33 dud super funds.
 
Thirty-three!
 
OnePath was joined in veggie maths by BT Funds Management, Colonial First State, Auscol (Mine Super), Perpetual Super, MLC Super – whose report cards revealed “significantly poor performance”.

Some of the funds that were singled out for charging high admin fees include Verve Super (who market to women), Spaceship Super (who target millennials), Student Super (who need a detention), and the ironically named Cruelty Free Super (well, except for their barbaric admin fees).
 
And last but not least, Equity Trustees appear to be really struggling with their pencil grip, after being singled out by the regulator for both high fees and poor returns.
 
Am I being too harsh?
 
I don’t think so.
 
There is currently around $10 billion of our retirement savings sitting in underperforming funds. Many of them are not taking on new customers – because, well, who the hell would actively choose to join them?! However, they’re still more than happy to continue milking their existing customers with high fees and/or poor performance.
 
Why?
 
Because, unlike their customers, the people that run the funds are making seriously good profits!
 
Their only way of keeping this going is to hide their report card, and hope you forget to ask.

Don’t let them.
 
Tread Your Own Path!

So My Husband Has a Lady Friend …

Hi Scott,
 
My husband has met a new lady friend. We got through Covid without killing each other (or the kids), but this year has been horrible. I’m totally stressed out that in November our home loan repayments will jump $1,200 a month, and so I’ve been telling him we need to buckle down and stop spending. But he has no idea about money. In fact, just to tick me off, a few months ago he joined a very expensive gym which he flat-out refuses to drop. And today I’ve learned that he’s been messaging a woman there that he ‘trains’ with. I’m at boiling point, and I want him to leave. But what do I do then?
 
Hi Natalie,
 
I am not a relationship counsellor.
 
However, I’ve helped enough people in your situation to know one thing for sure:
 
After the initial shock wears off, you’ll know in your gut whether it’s going to work out … or not.
 
And if you decide it’s over, here is what you do next:
 
First, lock everything down.
 
Change all your passwords and PINs, and lock down your phone’s privacy and location tracking settings. Then find as much financial information as you can: you’re looking for copies of your marriage and birth certificates, and any information on shares, property or superannuation.
 
Second, call your bank’s hardship department.
 
Let them know what’s going on (and if there’s been any family violence tell them that too). Ask them to put a freeze on all joint accounts, including credit cards. And, if you have a redraw or a line of credit on your home loan, have them change it so you both have to sign before making transactions. Then, open a new bank account in just your name that he can’t access.
 
Third, see a family lawyer.
 
Actually, you should meet with a family lawyer even if you’re still sitting on the fence with the relationship. Reason being, the first meeting will be free, and you’ll be able to get answers to many of the questions that are swirling around in your head as you lie in bed at night.
 
Finally, whatever happens, make sure you reach out for support – it sounds like the next 12 months could be rough, and you don’t need to do it on your own.

Scott.

Leaving a Cult

Hi Scott,
 
I’ve known about the Barefoot Investor for years, but I couldn’t buy your book as I was being severely controlled physically and financially by my parents, who raised my siblings and me in a religious cult that considered living in poverty as absolute for being a devoted follower.
 
My parents literally took every cent I earned for over a decade and coerced us into paying off their five personal investment properties. Last year, after getting a good legal team and a Supreme Court hearing – and breaking free of the cult I was born into – I purchased your book as a birthday present to myself (celebrating birthdays was forbidden in the cult).
 
My husband and I are now working through the Barefoot Steps together and I have purchased your book for my siblings and their partners, as well as the few close friends who haven’t shunned me after I escaped the cult. I’m truly happy for the first time in my life and have control over my own finances. Thank you.
 
Rebecca

Hi Rebecca,
 
There are no winners in this situation … but a couple of sinners. 
 
Your parents applied a religious lens to justify their behaviour, but they were really motivated by greed, power and control. (Though you don’t need to be in a cult to practise monetary manipulation. I meet plenty of women in abusive relationships who have been forced to take out car loans … but don’t have a licence.) 
 
Standing on your own two feet financially will be part of your recovery, and it’ll help rebuild your self-confidence. Welcome to the … Barefoot ‘cult’!

Scott.

ING Totally Sucks!

Hi Scott,
 
Let me count the ways that ING sucks. Their customer service absolutely sucks. Their security sucks (a four-digit passcode, really?), and now they are dropping their international ATM rebate, which TOTALLY sucks because I’m heading overseas soon. Are you still in the ‘orange army’ or, like me, do you think it sucks too much?
 
Angela
 
Hi Angela,
 
So I had my own sucky experience with ING a while back.
 
They called my wife about suspicious transactions on our account.  
 
It turned out the suspicious transactions in question were actually payments we received.
 
Odd, right?
 
Yet it gets odder.
 
The dude from ING kept asking what the payments were related to, and my wife answered that she honestly had no idea. Then I remembered I’d sold some sheep troughs on eBay, and that was the transaction in question. It was all very … sheepy.
 
So what do I think of ING?
 
Well, these days ING is a lot like U2. The Joshua Tree was an awesome album, edgy and original … but now they’re just a little bit same, same, lame. There are better accounts on offer. 
 
Still, their online saver is currently paying 5.25%, and they don’t charge transaction fees. And as for them ditching the foreign ATMs, well, I’m as likely to use that as I am to listen to All That You Can’t Leave Behind.

Scott.

My Business Banking Set-up

I’ve spoken a lot about how I manage my money … you know, the Barefoot Buckets, the orange cards, and the super-cheap index funds.
 
However, I don’t think I’ve ever discussed my money set-up for how I run my business. And I don’t think I ever would have, except for the fact that I was roped into doing a talk for small businesses in my hometown this week.
 
Here’s what I told them:
 
Some people get excited about designing their logos, websites and socials. Yet when I started my business I looked at the most common ways small business owners go broke, and set out to avoid them.
 
I call them the ‘three Bs of business’ … bastards, bust-ups, and borrowing too much.

Firstly, the bastards (the Australian Taxation Office).
 
It’s true, the biggest killer of small businesses – at least early on – is none other than the ATO.
 
My golden rule:
 
Thirty-five percent of every dollar I earn gets transferred immediately into that online savings account, which I’ve nicknamed ‘tax man’. (Side note: When I was setting everything up, I went with a totally different bank for my business – actually a credit union – to keep things separate from my personal stuff. I have a basic business transaction account, and an online saver, which currently pays 4.6% p.a.)
 
Why 35%?
 
Well, it accounts for my company tax and my GST (which many small business people forget about).
 
It’s a conservative number – too conservative – because I always have extra money sitting in that account after paying my tax. And when I’ve paid my taxes I take that surplus and invest it into the business to make more money.
 
My accountant, ‘Old Stubby Fingers’, tells me I should be more ‘sophisticated’ and use the tax savings to manage my cashflow.
 
He’s right, of course.
 
But I don’t like doing budgets, much less trying to stick to them. And I hate having heart palpitations when my BAS is due. (So stick that in your spreadsheet and smoke it, Stubby Fingers!)
 
Secondly, bust-ups.
 
I can count on one hand the number of business partnerships that have lasted the distance. Most don’t, because relationships are tricky … especially when there’s no sex, and there’s money on the line.
 
So early on I decided to not take on any business partners. Never. Ever.
 
And, thirdly, borrowing too much.
 
This is why I run my business without debt.
 
The upside is I don’t have to hock my home for a business loan (the banks almost always want a personal guarantee).
 
The downside is that it’s my back up against the wall, and the buck stops with me.
 
And that’s why I have a fourth ‘B’ – burn money.
 
When I first met my wife, she was slightly petrified that I ran a small business. (Her parents were academics, so she had no concept of ‘you only get to eat what you kill’). So each month I work out my ‘monthly burn number’, which is all the fixed expenses of the business that I have to pay to keep things running, including paying myself a basic wage plus super.
 
My aim is to have three months of burn money sitting in my business transaction account, and I try not to let it dip below that amount on a month-to-month basis. Having an accurate burn number burned into my brain keeps me both hungry (at the start of the month) and humble (when I have a good month).
 
Then, anything left over and above my three-month burn figure goes into blasting through the Barefoot Steps … and these days into shares.
 
 Yes, it’s simple. But it needs to be, because being in business is bloody hard!
 
 Tread Your Own Path!

Barefoot OnlyFans?

Hi Scott,
 
I’d like to learn to do forex cash trading as a side hustle to supplement my income (so eventually I might be able to move to part-time work and have more time to spend with my daughter, who’s eight and was diagnosed with anxiety last year). Can you recommend any online trader training and trading access platforms? I’ve started searching for options but am bamboozled by the plethora of trader-training companies out there. And it bothers me that some of them take ongoing commissions and monthly fees as well as significant training charges ($5,000 to start with!), not to mention all the hard-sell emails and phone calls I’m now receiving! Any advice would be much appreciated.
 
Linda
 
Hi Linda,

You dabbling in forex is like me joining OnlyFans as a side hustle.
 
No one is going to pay to see me wobble my dad-bod around the farm. After all, I’m competing against very good-looking people (who also know how to milk a cow).
 
Just like you will be competing against billion-dollar hedge funds and the biggest financial institutions in the world, both of which not only employ the best traders but spend millions on their AI trading algorithms.
 
My thoughts?
 
You will lose, and with fast-trading forex the odds are that you’ll get wiped out quickly. Stay away from the gurus cold-calling you – they’re all bad news.

Scott.

Patronising, Condescending and Out of Touch

Scott,
 
Reading Jim Chalmers’ last week set my teeth grinding, but what really made my blood boil and shoot flames from my ears was his answer to Emma about rent rises.
 
Jim’s suggestion that she “report excessive increases to a relevant state body” shows just how safe he is in his house, and that he doesn’t have to worry about landlords. We all know that we can “report excessive rent rises” but we also know that landlords find loopholes to exploit (like “we’re doing maintenance on the property” or “we’re selling and you have to leave”) and then relist it at a much higher rent a short time later. Our landlord did this to us to the tune of $80 a week after we’d been living there for four years (making minimal maintenance requests and always being a month in advance with the rent).
 
Jimbo blithely says the “government is trying to bring in tax breaks to get more rental properties built”. That’s not helpful, Jim, that’s patronising and condescending and shows how elitist and out of touch you are. People need real help right now.
 
Dana
 
Hi Dana,

This week I got a window into what it’s like to be Jim Chalmers (or any politician for that sake) – and I did not like it one bit! My inbox exploded with angry readers … and it was the renters were really up in arms.

I agree with you: I don’t think Jim understands what it’s like to be a renter on a low income right now.
 
Then again, to be honest, neither do I.
 
The housing market is fundamentally broken in this country, and it has been for years. Jim is smart enough to know that there are no short-term magical fixes: any steps to ‘protect’ renters can either be sidestepped (as you point out) or can result in landlords jacking up their rents to compensate.

Scott

What Drugs Are They Smok’n?

Scott,

I struggle to relate to the questions you get. A couple earning $160,000 a year can’t save 20% for a deposit, or a single mum edging up to $100,000 a year is struggling financially. What kind of expensive neighbourhood and lifestyle are you readers living?
 
I’m lucky if I earn $50,000 a year, and we are a single-income family with five young children. Yet we have been able to save up a 20% deposit and have purchased a house, which we are currently renting out (yes we have a mortgage that will take years to pay off, we just didn’t over-capitalise).
 
We travel the country in a little pop-top caravan, homeschooling our kids while I work online. I don’t believe in sponging off the government either, so we don’t put our hand out for welfare payments.
 
You don’t need to be earning big bucks to have a valuable life in this country, and kids don’t need to go to some posh school or have after-school care to get educated or be successful. Being able to spend time with those you love is what makes you truly rich.
 
Darren
 
Hi Darren,
 
You’ve discovered what a lot of people eventually work out when it’s too late:
 
Debt enslaves you.
 
And that if you can avoid being in too much debt you’ll be happier.
 
Life is short, and the time you have with your kids is even shorter.
 
You Got This!

Scott.

Admit It: You Were WRONG, Barefoot

Scott,
 
Late 2020, hubby and I were renting a granny flat in Sydney for $520 a week. He saw on the news that house prices were set to rise as much as 30% and said we needed to buy our first home ASAP. The boom had started. We managed to scrape together a 5% deposit and bought our townhouse 15 minutes from the Wollongong CBD for $565,000. Our house is now worth about $750,000. There is NO WAY we would have been able to buy our house with a 20% deposit if we ‘waited’! And, because we bought at a time when rates were at a historic low, we got that benefit too, locking in 1.98% for three years. Again, if we had waited we could have ended up buying now, when rates have more than doubled. You are not always right, Scott. You KNOW there are scenarios where your rules do not always apply ... and this was one of them.
 
Linda
 
Hi Linda,
 
So were you lucky, or smart?
 
The thing I’ve learned about people who make money through luck is they tend to believe they’re smart, and you can’t convince them otherwise.
 
Personally, I don’t think the value of your home matters that much (though prices in Wollongong have come back 14.5% in the last 12 months, according to realestate.com.au).
 
In other words, you’re talking paper profits – let’s instead talk bangers and mash:
 
You’ve said that you’re not a saver, so you don’t have much money behind you. In the next few months your repayments are going to skyrocket. Will you be able to make them?
 
The most important question you need to ask right now is “How long will my luck last?”

Scott.

Albo should have known better

WHACK!
 
Last week I got the Treasurer to answer readers’ questions, and the verdict was swift and brutal:
 
Old Jimbo may have been Barefoot for the day, but readers thought the bloke had bunions!
 
Yet for me it was his advice to a young first home buying couple – that they only needed to save up a 5% deposit (thanks to the Government’s First Home Loan Deposit Scheme) – that caused my left eye to twitch and made me sweat all the way down to my mangoes.
 
My view?
 
Look, it’s not going to win me any votes, but I believe that if you can save only a 5% deposit … then you really can’t afford a house.
 
Yet in 2021, then-Treasurer Josh Frydenberg basically said “hold my beer”.
 
He expanded the First Home Loan Deposit Scheme (FHLDS) to ‘help’ low-income single parents, and lowered the deposit required to just 2%!
 
Then came Labor.
 
Now Albo was famously raised by a single mum in public housing. So he must have known in his bones that this was a very dangerous policy. And that it would not just legitimise but actually incentivise vulnerable people to make a highly risky financial decision … at a time when interest rates were at record lows and house prices were at record highs. However, in the heat of the election he too joined the 2% down party with his shared equity ‘Help to Buy’ scheme.
 
What could possibly go wrong?
 
Well, let’s fast-forward a few years and hear from Jane, who wrote to me a few weeks ago.
 
“Scott, I went against what you recommended, but the government said they were helping me buy a unit with a 2% deposit for my child and me. I’m a low income earner and also an immigrant with a parent overseas who I’m providing for. I’ve made it work so far by taking on extra work on the weekends. But the fixed rate with my bank changes over (higher!) in a few months and I’m terrified. Do you think moving banks will help keep the variable rate manageable when it’s my turn at the cliff?
 
The fact is, Jane has about as much chance of moving banks as Peter Dutton has of being Prime Minister.
 
For the record, I called Jane and put her in contact with a financial counsellor in her area who will work with her – and her bank – to try and find a way forward.
 
But it won’t be easy.
 
She pretty much had zero equity in the joint to begin with, and it went down from there. So not only is she deeply in the red but, more importantly, her interest rate is about to triple, and her repayments could take food off her table.
 
I don’t blame her for wanting to buy her home, and provide financial security for her kids.  The problem is she trusted that the politicians were acting in her best interest … not theirs.
 
Now let me get off my soapbox and introduce you to someone who not only thinks I’m dead wrong … but can prove it.

Tread Your Own Path!

Jim Chalmers goes Barefoot for a day

Today I’m doing something that I’ve never done before in nearly 20 years of writing this column …
 
I’m letting someone else answer my readers’ questions:
 
And that someone else is Treasurer Jim Chalmers.
 
I caught up with the Treasurer this week ahead of his Grand Final (the federal budget) and added an even harder task to his plate: the job of being Barefoot for a week.
 
To ease him into the job, here’s the advice I gave him.
 
First, don’t be boring.
 
Second, really, please don’t be boring.
 
Finally, don’t give us the party line. Instead, give us the ‘Jim at a party, three bourbons down, telling it straight’.
 
Over to you, Jimbo.

Your Questions & Answers

• First Homebuyer Hell

• From a Sleep-deprived Mother of Two   

• The Pineapple Project
  

First Homebuyer Hell

Hi Barefoot (Jim)
 
My husband and I are in our late 20s and have been desperately saving for a first home. I’m a nurse and he’s a teacher, and we earn just under $160,000 a year combined. We’ve tried so hard to save up a 20% deposit but with house prices, and rents, going up so fast it feels impossible. We want to have kids soon and be close to our family (who all live in Sydney), but I can’t see that we’re ever going to make it. The system is just broken beyond repair. How can we plan our lives when we don’t even have the stability of the roof over our heads?
 
Bec and Steve
 
The Treasurer responds:
 
Thanks for the work you do teaching and nursing.  I get it – when you’re under the pump it’s hard to save for a house.  We’ve got two ways to help – one that’s up and running and one that’s on the way, but both of them are about helping you buy a house without needing the full 20 per cent.  
 
One’s called the First Home Guarantee (up and running) which can help you buy a home with as little as a five per cent deposit; the other’s called the Help to Buy scheme (coming). In the rental market there are tax breaks coming this Budget to encourage people to build more rental properties as well.  Big challenge, not uncommon, doing what we can.
 
 
From a Sleep-deprived Mother of Two   
 
Hi Scott (Jim),
 
I'm a single mum with two kids (and two cats and a dog), and I’m really struggling. My landlord just let me know he’ll be increasing the rent by $150 a week, due to the “changes in the housing market”. How will I survive? I’ve just moved into a permanent job, but my increase from four to five days means I will lose my Family Tax Benefit. I’ll probably also have to pay more after-school-care fees because I’ll soon be earning $100,000 a year. But it’s just ME on my single income paying for everything. What should I do?
 
Emma
 
The Treasurer responds:
 
Thanks for this and congrats on the new job. $150 a week is ridiculous. It’s worth talking to your local tenants union to find out what your options are. The options will differ depending on what state you’re in but could include reporting excessive increases to a relevant state body. Apart from that, we recognise rent’s a big part of the pressure people are feeling right now.  We are trying to get the parliament to agree to building more properties, we’ve got some tax breaks coming so that investors build more as well, and besides that we are making your after school care cheaper from 1 July, by increasing the subsidy – hope that helps you make ends meet.
 

The Pineapple Project
 
G’day Jim,

I thought I’d add in a question of my own …
 
If the RBA gets its way, in the next few years there will be plenty of businesses that go bust, and lots of people who will lose their jobs. That is, after all, how to slow the economy.
 
Now here’s the jam, Jim: there is really only one place that Aussies who get the wrong end of the economic pineapple can turn to for free, unbiased, confidential financial help: a community-based financial counsellor.
 
There are 750 financial counsellors across Australia. Yet they are already overrun. People are being turned away. However, if your government put up the dough to double the number of financial counsellors, it would mean an additional 50,000 families would get the help they need to get back on their feet this year. Will you commit to that funding?
 
Scott Pape
 
The Treasurer responds:
 
There’s no doubt financial counsellors do a fantastic job. They help people who are in real financial strife to make the case to get a debt waived or get a better rate and that makes a massive difference in people’s lives. As a Government, we recognised how critical these services are, particularly during natural disasters and we’ve delivered extra funding over the last year to employ more financial counsellors in flood-impacted communities. We’ve also been working with industry on a way to make funding of these services sustainable over time which is something that my colleague Amanda Rishworth has been leading.

The Wrap-up
 
It’s a bit of a cliche to say “thanks for taking time out of your busy week” … but the dude’s got his first federal budget to deliver next week! So, Jim, thank you for taking the time to answer people’s questions.

However, I don’t agree with encouraging people to put down a 5% deposit (I’ll have more to say on that next week). And as far as your answer to my question … that was one hell of a word salad, mate. Should I just take that as a ‘no’?
 
Good luck with the budget and, as my old man says, “Just look after the battlers, son”.

Thanks for reading.

Scott

Have You Changed Your Mind on HECS?

Hi Barefoot,
 
My hubby has $85,000 in HECS debt, and I’m wondering what your thoughts are on the HECS-HELP debt saga. The Greens are trying to freeze the indexing to inflation. You have always suggested that we don’t rush to pay off our HECS-HELP debt because it’s an ‘interest-free loan’, but I am wondering if you still think the same way now.
 
Tania
 
Hi Tania
 
Look, I hate inflation like the Greens hate fossil fuels (and Barnaby Joyce).
 
Both the Labor government and the coalition Barnabeyed the Greens proposal to freeze indexing student debt inflation. Now the whole concept of inflation can be a really hard one to get your head around … but HECS debt lays it bare in all its brutality:
 
For many years the indexing has been bugger all (in 2021 it was 0.6%) – yet this year it’s a whopping 7.1%. So your husband’s debt will be indexed up by $6,035.
 
So, have I changed my mind: should you make extra repayments?
 
Well, that’s obviously totally up to you. However, I’d flip the Greens’ advice and pay back any bank debt (that attracts an interest rate) first before you repay any HECS debt.
 
What I think the Greens are picking up on is how the current economic climate is screwing people on low incomes (which includes students). Rents have increased at the fastest pace since 2010, and the cost of most things is skyrocketing.
 
But despite all that, given that HECS is an income-contingent loan (i.e. you only start repaying it once you earn $48,361), I’d be more inclined to put your money in Mojo as a buffer, than make a voluntary extra repayment to the government.