My Best Friend Thinks I’m Scum

Dear Scott,
 
I am so privileged. Thanks to following Barefoot from age 17, I bought my own home in Brisbane on a modest salary when I was 24, which I am now renting out while I live interstate. At 27, I am with the man I plan to marry and we are looking to the future. Yet I feel guilty about having multiple investment properties during a cost-of-living crisis. My best friend says “all landlords and shareholders are scum”. I want to build wealth for my family and future children, but I feel bad about getting ahead when others are being left behind. Can I please get some advice?
 
Lina
 
Hi Lina
 
Congrats on your success, I’m so proud of you!
 
Now, what I tell my five-year-old daughter is that whenever someone tries to hurt you with their words it says much more about them than it does about you. They’re the ones who are in pain.
 
Your friend sounds like she’s frustrated that she hasn’t been able to achieve financial security.
 
I get it. You get it. Fact is, we may all live in the wealthiest country on earth, but there’s a growing divide between the haves (home owners) and the have-nots (renters) that is driving deep-seated resentment.
 
However, calling people names is a five-year-old’s way of looking at the world, and it’s going to lead her to becoming a bitter and twisted Greens voter.
 
If this was a playground tiff, I’d tell you to not take it personally and to try and be kind to your friend as she goes through a rough patch. However, if she continues to use you like a cat uses a scratching post, I’d argue it’s time to branch out and find some new kittens to play with.
 
Onward and upward, Lina.

My favourite podcasts (inside)

My 10-year-old son is thinking about launching his own podcast.
 
“Is there any money in podcasting, Dad?” he asked.
 
“Well, if you did one with me … I’d say yes”, I said, smiling smugly.
 
“Umm, this would be a kids’ podcast – no adults allowed!” he shot back, shutting me down.
 
Okay, so when my 10-year-old is thinking about doing a podcast, it tells me two things:  
 
First, the barrier to entry is extremely low (which explains why there are 17,000 new podcasts being created each month).
 
Second, podcasting has now gone mainstream. (Aussies downloaded one billion podcasts last year, and we are proportionately the biggest podcast listeners on the planet.)
 
So, to answer my son’s question, I decided to talk to a guy I know called Mike Fitzpatrick, who has been at the top of the broadcasting tree in Australia for near on 20 years.
 
“The biggest podcasters in Australia are earning over $1 million a year from advertisers”, said Fitzy.
 
“However … your favourite local podcast with, say, 50,000 listeners and 100,000 downloads a week, could be making around $500 a month from advertising … and of course the vast majority of podcasts don’t earn anything”, he added.
 
Interesting.
 
I explained to my son that podcasting is a lot like writing a book. Most authors spend hundreds of hours toiling away … and barely cover their costs. However, as with most rewarding things in life, money isn’t their main driver. They do it because they have a passion for the subject at hand, and they want to connect with and help people.
 
So”, I told number one son, “creating your own podcast is an awesome idea, mate.”
 
“But you’ve sold a lot of books, Dad … so maybe you could be my co-host?” he said, rethinking the idea.
 
Gotcha!
 
Speaking of which, here are my (latest) favourite podcast episodes:
 
1. Your Undivided Attention, with Jonathan Haidt
 
Every parent, school principal and politician should listen to this episode by psychiatrist Jonathan Haidt, author of The Anxious Generation. It made me deeply anxious about the horrible impact social media and AI algorithms are having on our kids. However, Haidt also gives us clear, concrete steps we can take to protect them – if we’re willing to stand up and act. (The episode is called ‘Jonathan Haidt on how to solve the teen mental health crisis’).
 
2.  The Political Fallout of Housing, with David McWilliams 
 
 You could be forgiven for thinking that the housing crisis is unique to Australia – yet the truth is that it’s a global phenomenon. This episode looks at the policy failures of older, out-of-touch politicians (who are generally landlords themselves!). If history is a guide, young, angry renters will soon ‘evict’ them from public office. Be forewarned: a political hurricane is heading our way.
 
3. The Stupidest Thing You Can Do With Your Money, with Freakonomics (Stephen J. Dubner)
 
This episode is labelled “Wall Street’s worst nightmare”, and it tells the story of the index fund revolution. Once you listen to it you’ll never go near a ‘wealth platform’ again. It will also leave you questioning why most not-for-profit industry super funds don’t invest this way. Maybe they’re too busy building their own empires with their members’ money?
 
Tread Your Own Path!

I’m All Alone

Scott,
 
I am a 22-year-old single mother with a six-year-old child. I recently escaped significant domestic sexual abuse and violence. My abuser is currently on trial for attempted murder. In order to keep myself and my son safe, I had to leave behind my support network. I received some compensation for the abuse, and I have saved most of this money. However, I am unsure what to do with it. I am considering investing it for my son’s future or maybe a home eventually, as I am afraid of having nothing to pass on to him or fall back on. I would appreciate any advice on how to invest this money, as I do not have parents to guide me. Thank you for taking the time to read this. I admire your work, it is truly inspiring.
 
Belinda
 
Hi Belinda,
 
I’m so sorry for what you’ve been through. You’re not like other 22-year-olds. You’ve seen life. You’ve been through a lot. And that makes you stronger than the average woman your age.
 
My advice?
 
Don’t stress about giving your son money in 20 years’ time – instead, focus on the here and now.
 
The best return you’ll get on your money is not having to worry about it. So I’d suggest you open up an online savings account and deposit three months of living expenses (we Barefooters call it Mojo).
 
After that?
 
Spend money on getting a secure and safe rental in a good neighbourhood.
 
I’d also open another online saver, nickname it ‘House Deposit’, and put some money in it. I don’t know how much you’ll be able to put in there, but it doesn’t really matter. What does matter is that you’ll see it each time you open your banking app and know you’ll eventually buy a home for you and your son with that money. It’s begun. You’re going places. It’s only a matter of time.
 
And after that?
 
I’d spend money on making positive memories with your son. Holidays with the two of you in a caravan park. Cricket pads. Scout camps.
 
Finally, spend $5 on a notepad from Officeworks. Write your story down as it unfolds. Then give him that to him at age 22 and it’ll inspire him to go out and make his mark, just like his mum did.    
 
Happy Mother’s Day!

Look Me in the Eye

Hi Scott,
 
We’ve just returned from a meeting with our financial adviser. It was the first time I’d met him face to face. He never really acknowledged my presence and spoke directly to my husband throughout the meeting, which made me feel uncomfortable – because it’s my money too! The statement of advice (SOA) has us in 16 different products. When I asked him why we needed 16 different products, he turned to my husband (not me!) and explained that this was normal and that each fund had been specifically selected to maximise our returns. My husband (a landscape gardener!) dismissed me and said “You just don’t understand investing”. I read you every week, so I thought this might be a good question to get your thoughts on.
 
Dina
 
Hey Dina,
 
Your experience reminds me of a meeting my wife and I had with an accountant many years ago. He turned to her and quipped, “Liz, I think there is plenty of money for shoes!” That meeting ended then and there, and we never saw him again.
 
You asked a very intelligent question, which unfortunately your husband clearly didn’t know the answer to … but I do. The reason the adviser has selected 16 different funds is that he wants to make your portfolio so complex that you’ll be forced to stick around and pay his fees each year. (There’s an old saying in the finance world: “Complexity is job security”). You do not need 16 different funds to maximise your returns. I have four diversified index funds.
 
Your husband is incredibly lucky to have such an insightful person by his side.

My Mother Lives in a Chicken Coop

Hi Scott,
 
I’m in the US but feel like your column and book apply to us over here too, and it’s my favourite tool! The problem is my mom is a serial multi-level marketer. She has lost a lot of money over the last couple decades but keeps truckin’ on, mainly due to social security checks that come from her having been married to my dad for 20 years (they have now been divorced for almost 30). She’s in her 70s and we live in the mountains. She literally lives in a converted chicken coop – she has no running water but does have a composting toilet (and at least the coop has electricity). It’s cold and snowy here. She’s broke and freezing most of the time, kept warm by whiskey and pickleball. Do I give up or build her a house and risk my family’s money? When do you stop trying to help your mother?!
 
Rachel
 
Hi Rachel
 
Happy Mom’s Day!
 
Thank you for being so American. (The average chicken coop in Sydney rents out for $1,800 a week.)
 
Seriously, though, your mum is now 70 years old and is unlikely to change. That chicken has flown the coop. Just make sure she doesn’t get any of your eggs.  

The anti-budget

Today, for the first time in over 20 years … I’m breaking with tradition.
 
I’ve decided I’m not going to next Tuesday’s Budget lockup in Canberra.
 
(My editor is not amused.)
 
Tuesday is Daddy-day with my three-year-old, and we have a very busy day planned on the tractor, digging random holes around the farm that I will invariably forget about and end up driving my ute into.
 
Besides, the Budget has always been poor man’s prime-time political theatre.
 
The Government’s spin doctors spend months in focus groups conjuring up a catchy name for their signature splurge – which they hope will get them re-elected.
 
(This year it’s ‘Made in Australia’, apparently.)
 
Then they get turfed out, and the next mob dismantles it.
 
 Plus, all the rosy economic forecasts they make in the Budget can’t hide the fact that many people feel like they’re living in a recession right now.
 
Bottom line?
 
Don’t look to Canberra for help – they’ve got enough problems of their own.
 
Instead, focus on what you can directly control, and I guarantee you’ll move mountains. That’s why this year I want to start a brand new Budget tradition. On Tuesday night I want you to dust off an old copy of my book and have a Barefoot Budget Date Night.
 
Yes, I know it’s probably been a while since you’ve looked at Betty the sheepdog and me, but there’s a special type of compound interest that comes from getting together to plot, plan and dream … as a team (and if you’re single, bring along a friend).
 
Specifically, on Tuesday night I want you to write down which Barefoot Step you’re currently on, and then pick just one thing you can do in 30 minutes or less that will help you move to the next step.
 
It could be sacking your scheissenhausen super fund, dominoing your debts, getting a cheaper deal on your insurance (they can do better, trust me) or, most importantly, rebalancing your bucket percentages after all the rate rises and rental increases.
 
Best of all, you can do it with a nice bottle of wine or a fancy meal (or both), with no Elbow or Mr Potato Head in sight. Now I haven’t passed this by a focus group, but I’m calling it … the Barefoot anti-Budget.
 
Tread Your Own Path!
 
P.S. Send a Barefoot Budget Date Night selfie to scott@barefootinvestor.com!

Should I Pay $2000 for Two Zoom Meetings?

Hi Scott,

My husband and I were referred to a financial advisor by a friend. The first Zoom meeting was a free introductory session – the next covered how they wanted to invest our money and what their fees were. We decided their fees were too high ($27,000 per annum!) so emailed to say “thanks but no thanks”. Now they have now sent us a bill for $2000, which we don’t want to pay. We haven’t signed anything, so I’m just wondering if this is normal for a financial advisor to charge.

Denise

Hi Denise,

Tell them to stick their bill up their Zoom.

You didn’t agree to it, and you haven’t signed a contract.

Fuggedaboutit.

And thanks to everyone for reading. Let me know your thoughts.

Till next week!

Scott.

I Turned $15,000 into $8 Million

Hi Scott,

I don’t have a money question to shock you, but more a story you’ll probably shake your head at. Many years ago, I turned $15,000 into $3.2 million in crypto. It took just over two years, and when I got there I was clueless as to what to do with that much money. I had every opportunity to turn it into real goods and services here in country Victoria. But, because it was the start of a bull run and YouTubers were saying it was going to go way higher, I held on to make more money. In fact, I locked the funds away in a smart contract where I could not access them.

Then the ride really began. The feeling was incomprehensible when it hit $8 million … saddening back at $6 million … sickening at $4 million … total denial at $1 million … and I stopped looking below $500,000. I felt embarrassed. Ashamed. I went on an emotional rollercoaster I never knew existed.

Over time I forgave myself for not being content with $3.2 million and for getting caught up in FOMO. Today, I rarely recommend crypto to people I know. I feel like my experience is similar to the time I got pummelled by the ocean thinking I was better in the surf than I actually was.

John

Hey John,

As they say in therapy, thank you for sharing.

It shows real insight and wisdom that you were able to forgive yourself.

So here’s another way to think about it: if you wrote to me saying you’d turned $15,000 into $200,000 (or however much the crypto is worth now), I’d say you were the luckiest man around.

And I’d focus on the big jackpot you’ve got sitting in your lap right now … in 25 years’ time, you’d give up all your money to wake up and be the age you are right now.

It’s time to create your own luck.

Scott.

A Helping Hand

Hey Scott,

My name is Hepa. I’m just responding to that question last week from Sarah the freelance graphic designer. If it’s all right with you, could you please pass on my contact info to her. I’m also a freelance graphic designer and I make between $100,000 and $130,000 a year. I am happy to help her by showing her how I find clients and how to charge more for her projects, and maybe even get her to help me if I ever get more work than I can handle. Sad to hear how much she’s struggling. I grew up with a single mum in the same situation so if there’s anything I can do to help, I’d love to.

Hepa

Hi Hepa

You’re awesome.

In fact, the entire community of Barefooters is amazing. This week I was flooded with emails from readers wanting to help Sarah (who is paying 85 per cent of her income in rent!).

What I love about your offer is that it’s a hand-up rather than a hand-out. Everyone needs a mentor. Everyone needs someone who believes in them. I’ll put you guys in contact.

Thank you so much.

Scott.

Port Arthur

I’ll get to the millionaire in a moment, but right now I want to talk about something important …

The Port Arthur massacre, in 1996, shocked our country.
 
A crazed gunman killed 35 people and wounded 23 others.

In the days following the tragedy, we were collectively shocked, devastated and outraged.

And our politicians heard us: in less than two weeks they unveiled a policy so big and bold – banning semiautomatic weapons and locking down guns – that countries the world over still point to it today.

The level of emotion over the last few weeks about family violence has been Port Arthur-like.

And this isn’t a one-off event: a woman is killed by an intimate partner every four days.

I look at the photos of these women and imagine the horror of their last minutes on earth. I think about how I’d feel if it were my sister. Or someone I work with. But most of all I think of the scared and scarred little children who have lost their beautiful mum.

Police are currently being called out to a domestic violence event every two minutes. One in three women has experienced physical violence since the age of 15.

We said ‘enough’.

A roundtable summit was called.

Now was the time for the Government to lead and be bold.

And Albo strode out of the summit with … a reheated Scomo policy?

Morrison had the Escaping Violence Payment, which offered up to $5000 for women, and Albanese has the Leaving Violence Payment, which does the same thing.
Now it’s better than nothing.

Yet it doesn’t come close to tackling the big issue: our housing market is a complete dumpster fire.

Many years ago politicians decided it was a better vote-grabber to give tax breaks to investors to provide private rentals, rather than build more public housing.

It’s time to admit that it hasn’t worked.

There are way too many women living with violent jerks because they can’t afford to move.

Last month Anglicare found that, even for educated women earning a higher salary (think teachers or nurses), just three per cent of the rental properties are affordable.
And those cheap rentals have eager-beaver applicants lined up around the corner.

“We’re giving out blankets to women to sleep in their cars”, Anglicare told me this week.

And Homelessness Australia found that just 3.7 per cent of women who flee domestic violence are able to secure long-term housing.

We’re better than that.

So, how could the Government really address it?

Well, let me suggest three ways.

First, by temporarily limiting immigration while the rental market is in crisis.
Second, by cutting negative gearing and the 50 per cent reduction on capital gains tax (CGT) for investors.

And finally, by funnelling those tax savings into building public housing that looks after the most vulnerable people in our society – women and their kids who are fleeing family violence.

That sounds pretty bold to me, Albo.

Tread Your Own Path!

What To Do If You Know You Want To Leave

A woman came to me this week telling me she was contemplating leaving her partner after years of abuse that had, in her words, “totally shattered my self-confidence”.

Here are the exact steps I gave her.

First, safety is your priority
If you’re living with a controlling bully, they may suspect you’re thinking about leaving. That’s when the threat of violence can really ramp up. You need to protect yourself.

So, reach out to the wonderful people at 1800RESPECT line on 1800 737 732 and let them know your situation. They’ll give you advice on entitlements and may be able to find temporary accommodation in the event you’re forced to flee.

Second, put a lock on everything
Change all your passwords and PINs (especially on your email), and, importantly, lock down your phone’s privacy and location-tracking settings. Women are being tracked by their partners like never before. Don’t assume it’s not happening to you.

Third, call your bank’s hardship department
Explain to them what’s going on. They’ll open a bank account in just your name that he can’t access. And the best banks will even provide some ‘getaway money’. I know I’m tough on the banks, but they really do want to help.

Fourth, get digging
Go through any files (either paper or on the computer) and find as much financial information as you can. You’re looking for copies of your marriage and birth certificates, your mortgage or rental details, and any information on shares, property or superannuation.

Finally, go and see a family lawyer
The first meeting will be free, and they’ll explain that you’re entitled to a share of the assets. Many controlling men threaten that they have the financial power in a separation. Your lawyer will call their bluff.

The Golden Child

Hi Scott,
 
My parents ended up losing their jobs last year, and still had debts amounting up to a total of $80,000 (a mixture of credit cards and fixed-term loans). I have been making repayments for these and, by my calculations, I should be able to finish paying them off by October this year. I’m trying to figure out the best way to help them after this. They’re both receiving Centrelink retirement payments each month, which are minimal. I would like to supplement their income, though I am worried about how they’d be spending it. Is it advisable to open up a joint bank account with my parents?
 
Annie
 
Hi Annie
 
Let’s stop for a second and acknowledge your sacrifice:
 
You are an amazing daughter!
 
I’m sure your parents really appreciate what you’re doing (and if they don’t – remind them).

If I were in your shoes, when October rolls around I’d establish some boundaries … and cut off the money. Still, that’s easy for me to type and incredibly hard for you to do. 
 
To soften the blow, I’d encourage them to have a meeting with a Financial Information Service Officer (FISO) at Centrelink, and have them do a Statement of Financial Position and a budget that shows them how they can live off their pension.
 
I don’t know if you can afford to keep funding your parents’ lifestyle, and what ultimate long-term effect will be on your retirement. Yet I’d encourage you to think about this deeply. As they say on the aeroplane safety message, you need to fit your own mask first. 

Scott.

Barefoot-Approved Home Loans?

Hi Scott
 
I was scrolling Instagram the other day and I came across a group called Unbiased Mortgage Brokers who have “Recommended by the Barefoot Investor” at the top of their page. Before I book an appointment, I just thought I’d check that you do actually recommend this home loan provider.
 
Jerry
 
Hey Jerry
 
Thanks for checking!
 
I’ve never heard of them. However, I am very happy to give you a recommendation: stay away from Unbiased Mortgage Brokers, and anyone else (other than financial counsellors from the National Debt Helpline) claiming that I recommend them.

Scott.

The End of Cash

Hi Scott,
 
I’ve heard some talk lately (a lot more than the normal conspiracy theories) around the removal of coins and then notes from the Australian monetary system – moving Australia to a completely cashless society. The discussion between Linfox, the Government and the banks all revolves around how expensive it is to ‘move’ coins around the country for regional post offices, banks, corner shops, etc. The proposal is that the $1 and $2 coins will become notes again to reduce weight, and that later notes themselves will go. This whole concept is so very scary. It would mean a lot more traceability of payments and business transactions – and the ATO would see everything!
 
Lyn

Hi Lyn
 
It’s always puzzled me why paying for something with cash doesn’t carry a surcharge like cards do.
 
After all, there’s a huge cost to taking cash: think of the shopkeepers who have to walk to a bank holding more money than a homie in a rap video. Or Armaguard, who have two pistol-packing blokes driving around in an armoured tank.
 
Now the truth is that we basically already live in a cashless society: according to the Australian Banking Association, cash is being used for less than 13% of payments, and it’s sure to continue dropping in the future.
 
So we’ll get rid of cash?
 
I don’t think so, as much as the ATO would love it.
 
A good case study is Norway, which is the world’s most cashless country, with only 2% of payments being made with cash. Yet Norway is currently legislating the right for its citizens to continue paying with cash to ensure that they are “prepared for emergencies” (like when the artificial intelligence robots shut down our digital payment systems and have us dance like monkeys for their entertainment).
 
While I don’t see an end for cash, I do see a future where there is a surcharge on paying with cash.

Scott.

The Betrayal

Hey Scott
 
We have – well had –  a much-loved receptionist. She was like a second mum to our child, even taking paid time off to go to the grandparent/important person day at her school. She was paid above award wages and has been looked after with bonuses and gifts for the last 17 years. Here is the kicker: I caught her stealing! Cash out of my wallet – on my birthday! The look on her face as I watched from the door was not one of guilt or fear of getting caught, but quiet intent, as if it was normal activity. I pretended not to notice, but I was shocked to my core. This was right before she went on holiday. While she was away, I called the local detectives and asked for advice. Here’s where I have a conflict: do we prosecute or not?
 
Sally

Hi Sally,
 
Should you prosecute?
 
HELL YES.
 
If I were in your shoes I’d want to see her face a (pre-morning coffee) Judge Judy.
 
And I’d also employ a forensic accountant to look over your accounts and see if she’s stolen money from the business, not just your wallet. If they find anything, you should hand that over to the cops and add it to the rap sheet.

I know the hurt and betrayal must be weighing on you, and the prospect of a drawn-out drama might fill you with dread, but I’d encourage you to see it through – not only as a sense of resolution for you but as a way of helping her next boss.

Scott.

How I invest my own money

On Sunday night, after the kids were fast asleep (for the third time), I lay in bed and opened my calendar to check what I had on for the week ahead. And up popped my favourite ‘event’:
 
“Check your dividends, Big Boy!”
 
"OH YEAH!" I exclaimed, loud enough to startle my sleeping wife.
 
She squinted at me: “what is it?!”
 
“It’s dividend week!” I told her wide eyed.
 
“You’re … a weirdo,” she sighed, and rolled back over to sleep.
 
One hundred percent, though she knew that when she married me. Yet, I thought you might find it interesting to hear how I invest my money.
 
Let’s get into it.
 
These days I have roughly 95% of my net worth in a handful of low-cost exchange traded funds (ETFs).
 
Which ones?
 
An Aussie shares index fund, and a couple of international shares index funds.
 
That’s it.
 
While I’m classified as a ‘sophisticated investor’ I believe in my bones that keeping things simple is the ultimate high net worth strategy – and one which will deliver higher returns than the vast majority of professional fund managers. Even better, it means I spend as little as four hours a year managing my investments.
 
How?
 
Well, to start off, I don’t have a trading app on my phone.
 
Why not?
 
For much the same reason that I don’t have social media apps on my phone: when I’m on the throne, the only thing I want to be scrolling is toilet paper, not TikTok.
 
I don’t want to check my share prices every day, or even every week. It’s a trap that leads to stress, and overtrading, and ultimately, to flushing your returns down the toilet.
 
Here’s what I do instead:
 
I have all my investments on autopilot, automatically buying a set dollar amount of the above funds each month. (It used to be expensive to do this, but today you can trade for a few bucks, or in some cases for free.) 
 
When you buy, you can google their historical payout dates and put them in your calendar, like I do. And that means I check my share prices just four times a year … like this week when my dividends come through. That way you can do something more productive with your time … even scrolling TikTok on the tot! 
 
Tread Your Own Path!

Au Pair? Au Contraire!

Hi Scott,
 
I’m 19, au pairing in the UK and preparing for a three-month backpacking trip around Europe. Living the dream, right! Except that by the time I get back to Australia I’ll have just about used up my savings. I have this little voice whispering in my ear that I should be working towards setting myself up for the future, and travelling definitely doesn’t feel like I’m doing that! I have an index fund and I save as much as possible, but I am having that classic existential crisis of what the bloody hell to do with my life now! And by ‘now’ I mean when I go back to Australia (and reality). So, what snippet of wisdom do you have for me, Scott?

Mindy
 
Hi Mindy
 
You know that little voice whispering in your ear?
 
It’s a very good thing. Most broke people don’t have that voice (instead they have advertisers and influencers whispering in their ears).
 
However, I don’t think you should listen to it for the next year or two. Fact is, you’re only 19 once, and this is your time to go out and experience all the amazing things this world has to offer.
 
Case in point: I often employ backpackers to work at my farm … they camp at the shearing shed, sleep in their vans, eat on camp stoves and have cold showers. Yet they look at me with my wife and four kids, and the basketball, ballet and cricket practice … and pity me!
 
When you’re travelling you’re growing as a person, both from gaining a more worldly perspective and from learning how to make your money stretch, which will pay dividends throughout your life.
 
My view?
 
Don’t bank dollars, bank experiences for the next few years. Australia will still be here when you get back!

Scott.

Lovestruck

Hi Scott,
 
Last year I got caught in a romance scam and lost $240k. I was just so stupid to send money to the stranger, but I thought there were lots of signs to believe him. I haven’t told any of my family about this. I’m 56 years old, a single mother and working full time as a nurse. I didn’t have $240k, so I sold my house (making $100k profit) and then took out three loans for the rest. I also moved into my adult daughter's house, so my current expense is the bare minimum and I am so grateful. I would appreciate it if you could give me any advice on how to pay this off quickly.
 
Kelly
 
Hey Kelly,
 
Each week my editor wades through hundreds of questions and gives me five (or so) to look at.
 
He wrote a note on yours that simply read “awful”.
 
Indeed.  You’re paying $140,000 off at high(er) interest rates, you’re living with your daughter, and you’re a dozen years from retirement.
 
Here’s what I’d suggest.
 
First, don’t let them rob you again: these scammers took you for $240,000 – but don’t let them take your self-respect. The fact is that romance scams are a multibillion-dollar a year business. You’re not the first, and (sadly) you won’t be the last.
 
Second, don’t suffer in silence. This is too big to shoulder on your own. You owe it to your daughter to explain what’s happened.
 
Finally, go and see a free financial counsellor (call 1800 007 007). The banks are running a mile from all this scam business, but there may be a 1% chance that they’ve lent irresponsibly, and if I were in your situation I’d be chasing down that 1%.
 
Thank you for sharing.
 
Scott

Are you smarter than a 10-year-old?

Last year, while I was fanging around France in an oversized motorhome with way too many kids, the Reserve Bank of Australia (RBA) ran its first ever large-scale survey to test the general public’s understanding of economics, by way of six multiple choice questions.
 
The results will SHOCK you.
 
The RBA found that “being male, older, of higher income, having a degree, having studied economics or finance, or being engaged with economic news are associated with higher scores”.
 
Well, slap me with a seasonally adjusted wet lettuce leaf, Guv’nor!
 
Then again, my 10-year-old son aced the first five questions. (Admittedly, he’s pretty smart – when I read him bedtime stories he often corrects my pronunciation.)
 
In fact, he did so well on the RBA quiz that I wondered whether he’d got some financial knowledge via osmosis from his old man.
 
“Well, the first five questions don’t require any real financial knowledge … it’s just logic”, he said matter-of-factly, “though the final question on the RBA needed technical knowledge that I don’t have.”
 
No pressure – but let’s see how you go.

Are You Smarter than a 10-Year-Old?

1. As far as you know, during a recession in an economy, there would normally be an increase in:
 
a) imports
b) unemployment
c) economic growth
d) business spending

2. Say wages in the economy increased by 5 per cent and prices increased by 7 per cent. As far as you know, in terms of the goods and services they can buy, a worker would be:
 
a) better off
b) worse off
c) neither better nor worse off

3. As far as you know, all else equal, which would usually increase total spending in the economy? An increase in:
 
a) tax rates
b) consumer caution
c) the savings rate
d) business investment

4. As far as you know, all else equal, a decrease in interest rates provides an incentive for people to:
 
a) save more and borrow more
b) save less and borrow less
c) save more and borrow less
d) save less and borrow more

5. As far as you know, which monetary policy would the RBA most likely adopt if the economy moved into recession during a period of low inflation?
 
a) increase income taxes
b) lower the cash rate
c) decrease purchases of government bonds
d) reduce spending on public infrastructure projects

6. As far as you know, what is the Reserve Bank of Australia’s target range for inflation?
 
(a) 0–1 per cent
(b) 1–2 per cent
(c) 2–3 per cent
(d) 3–4 per cent
(e) 4–5 per cent
(f) 5–6 per cent
(g) 6–7 per cent
(h) 7–8 per cent
(i) 8–9 per cent
(j) 9–10 per cent
(k) don’t know / uncertain
 
Answers: 1 (b), 2 (b), 3 (d), 4 (d), 5 (b), 6 (c)
 
And here’s how you did compared to the great unwashed:

Now there was one thing that really caught my eye in the wash-up … while the RBA found that wealthy white dudes got the highest scores, it also revealed that “persons aged 18–24 years, unemployed persons and those without a degree had the lowest scores”.
 
Bingo.
 
Young people leave school without knowing this stuff … so they never learn it.
 
Given the RBA’s operating costs were $500 million last financial year, surely they could snaffle a few deniros to set up and run a program and teach all Aussie school kids basic financial life skills?
 
Tread Your Own Path!

HECS Freedom for First Home Buyers!

Scott,
 
You stuffed up last week in your column on higher education. The big headline from that report was that banks should NOT be allowed to take your HECS debt into account when you’re applying for a home loan. The report blasted this practice as unfair (as a young couple with HECS debt ourselves, I’d say greedy). You should have done so too!

Louise
 
Hi Louise,
 
Nah.
 
I read the recommendation and I thought it was … daft.
 
Look, I’m no friend of the banks, but I’m on their side on this one.  
 
After all, who are a bunch of academics to dictate a bank’s lending practices?
 
If the banks are looking at your expenses and drawing a red line around your HECS debt, it’s because they know it’s a factor in you being able to repay them … and that it’s a non-negotiable expense that scales up the more you earn.  

Scott.

Let’s Talk about Bill Gates

Hey Scott,
 
I love your column and read it every time! I do have a question though: you’re extremely quiet on the global situation that’s been happening since the plandemic. WHO, WEF, global elitist groups calling the shots over health, food, money, energy, climate scams, digital currency, cashless societies, global vaccine passports. You get my drift, I’m sure. I would LOVE to hear your opinion! Is that why you took your family around Oz and overseas?
 
Mandy
 
Hi Mandy
 
You are right, I am extremely quiet about these things … and there’s a very good reason for it. Look, I know a guy, who knows a guy, who used to work for a guy, who swears what I’m about to tell you is true:
 
One of the richest men on the planet has created a social media website that is fed by an artificial intelligence algorithm that targets unsuspecting anxious-prone people and feeds them with a never-ending supply of wild conspiracy theories and outright lies. Some say that his evil aim is to keep these people chained to his website day in and day out so he can make a fortune from advertising.  
 
So that’s why I stay off social media and instead read books. The one I’d suggest you read is Factfulness: Ten Reasons We’re Wrong About the World – and Why Things Are Better Than You Think, by Hans Rosling. 
 
Trust me, you’ll love it. After all, it’s one of Bill Gates’ favourite books.

Scott.