You’ll hate this

After reading this column, my editor, Wally, said:

“I’m confident this piece will generate the greatest amount of hate mail you’ve ever received.”

Let’s see if he’s right …

Do you know what the easiest thing I could have done this week was?

Exactly what every other financial commentator has done:

Lean into the outrage about the budget.

Instead, I’m going the other way. And I’m probably going to piss a lot of you off. Starting with Brian, who wrote to me after what I can only imagine was a solid session on the La-Z-Boy with a few reds:

Scott,

I am just so sick of these incompetent bastards. This budget is just another giant Labor tax grab. People in the top 10% of income earners pay more than half the taxes. Half! Now Albo wants to be a 47% silent partner in every small business in the country. Why would anyone bother? Young people saving for a deposit in index funds? Taxed. Family trusts helping kids through university? Taxed. Small business owners who’ve spent decades building something? Taxed at rates that would make your eyes water.

New Zealand has no capital gains tax. Dubai has no capital gains tax. And our smartest young people are figuring that out real fast. You’ve got the platform, Scott. Let your followers know what’s really going on.

Brian

Bingo-bango, Brian!

You’ve sure got a lot of very big feelings.

Thankfully, I’m a father of four. I deal with big feelings before breakfast.

Let’s get into it.

Brian and I have a lot in common. I’m a high income earner and I pay a lot of tax. I come from a family of small business owners and I run one myself. And I bristle when I see politicians crowing about their economic credentials. The fact is, this is the highest-taxing Australian government since World War Two, and that spending is putting pressure on interest rates that every mortgage holder feels.

Yet what really worries me isn’t the tax take. It’s that our outrage meter seems to be stuck at eleven.

It feels like we’re drifting towards America, where everything is viewed through a political lens and everyone is absolutely furious all the time.

And if we get angry enough we might just end up with Pauline as our PM, and the greatest economic insight she’s ever had was asking “Why can’t we just print more money?”

(Seriously, look it up.)

Anyway, let’s deal with Brian’s three beefs.

Think of the poor kids!

Plenty of young people have written to me in a panic about the changes to capital gains tax. Many were planning to use their share portfolio as a house deposit.

My view?

The CGT change is not their biggest problem.

Let's say a young investor puts $50k into an Aussie index fund. Based on historical returns, it grows to around $72k over five years. Under the new CGT rules, they'd pay roughly $900 more tax when they sell. And depending on future returns and inflation, they might actually come out ahead.

The real problem is the share market dropping 40% and their $72,000 deposit becoming $43,000. Then it takes a decade to recover, while rents keep rising and they’re still at their parents’ place eating their Cheerios. That’s why my rule has never changed: do not save for a house deposit in the share market.

Introducing my new business partner!

Brian’s “47% silent partner” line was funny on social media the first 700 times. Now it’s just annoying. And it’s wrong. The small business CGT concession regime allows the vast majority of small business owners to halve or completely eliminate the capital gains tax they pay when they sell. It’s been there for years (though the thresholds need to be increased).

The real risk is using the tax rate as a reason not to back yourself. Building something from nothing, employing people, serving your community. It’s a hard life. It’s also one of the most rewarding things a person can do. Don’t let a meme talk you out of it.

The family trust

Okay, so this one stings. You see, my kids have been nothing but a spectacular financial loss since the day they arrived. I was counting down the days until they turned eighteen, when I could finally start distributing trust income to them and claw something back. And then the bloody government snapped that door shut just as my eldest was getting close to useful.

Yet it actually makes sense. The system lets wealthy families with good accountants pay less tax than nurses and tradies. That doesn’t pass the pub test.

Finally, if you spend enough time on social media (or listen to Brian) you may start to think that Australia is the highest-taxed nation on earth. Actually, we’re in the middle of the pack, but with a standard of living in the top handful of countries on the planet. The cops don’t shake us down (mostly). Our kids go to decent public schools (mostly). And if one of them gets sick, you don’t need a GoFundMe page.

And what about the top 10% of taxpayers that Brian is so upset for?

We’ll be fine.

After all, we’re the wealthiest people in the country.

Living in one of the wealthiest countries in the world.

At the richest time in human history.

Life is good, Brian, especially when you log off.

Tread Your Own Path!

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Your Questions & Answers

• Am I Financially Abusing My Brother?

• No Show Albo

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Am I Financially Abusing My Brother?

Hi Scott,

My brother just divorced his nasty wife. She had access to all his accounts, blew through a $180,000 inheritance, ran up $25,000 on his credit card, and towards the end wouldn’t even let him touch his own debit card. He’s now living with me. He’s on a disability pension and can’t work. I manage his accounts, have set up his savings, and have tried to teach him the basics. He says it’s too hard. My sister accuses me of making it worse. Am I doing more harm than good?

Caring Sister

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Hello Caring Sister,

Your brother is lucky to have you.

Your sister doesn’t sound nice, but she does have a point.

(How’s that for having it both ways?)

Now, before you throw me across the room, I know your intentions are completely different from his nasty ex-wife’s. You love your brother. She didn’t. But, from where he’s standing, someone else is still controlling his money, his savings, and his decisions.

Now your bro doesn’t need to become the next Warren Buffett. He just needs to learn to stand on his own two feet again, but that won’t happen while you’re transferring his surplus savings for him.

Think about how this plays out long term. Your brother grows increasingly dependent on you. You grow increasingly resentful … and neither of you need that. 

My advice?

Keep helping him with the basics. Set him up with one simple account, show him how to use his card, and then step back. Let him make small mistakes with small money. That’s how people learn. And then, when the settlement comes, he’ll be ready to move out and start his new life. That’s good for him, and great for you.

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No Show Albo

Scott,

As a man who lost the family home because of my gambling addiction (a shame I live with every day), and as a father whose teenage son ‘plays’ fantasy football and gets emails and ads from sports gambling companies, I was bitterly disappointed that the government tried to bury their inaction on gambling ads. Did you get a reply from the Prime Minister?

Daniel

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Hi Daniel

I wasn’t expecting a reply, and old Albo didn’t disappoint!

He’s the most powerful man in Australian politics. He had the backing from both sides of politics, and the people – nearly three-quarters of parents (myself included) reported being bothered by their kids being exposed to gambling ads.

He had the ability to stand up and say:

“We’ve got a huge gambling problem on our hands, and the beginning of that problem is that sport is a gateway to gambling: today for three in four kids it’s a normal part of sport. That’s crap. I’m the Prime Minister of this country and I’ve had enough. No more bloody ads.”

But he didn’t.

The lobbyists won, the kids lost.

The odds never change.

Thanks for reading.

Scott.

Barefoot’s Take on the Budget

A spinner from the Housing Minister’s office called me a couple of weeks ago:

“The Minister would like to invite you to Canberra to attend the Budget. There are a few changes we’re going to announce that, let’s just say … we think you’ll be very interested in”, he purred.

“Yeah, yeah. You blokes always say that. What’s the date again?” I asked, turning off my tractor.

“It’s the 12th of May”, he confirmed.

I pulled up my calendar.

On the 12th of May I had one all-day event scheduled:

“Colonoscopy.”

Yes, I’d booked an anal probe, completely forgetting my other Canberra clean-out with Dr Jim Chalmers.

Seriously, this column writes itself. (It would be funny if I wasn't completely TERRIFIED.)

It gets better though. As I lay on the cold operating table on Tuesday, my backside blowing in the breeze, the anaesthetist appeared hovering over my head:

“I just want to say I’m a huge Barefooter. Your book changed my life. You took some time off the column, but I’m glad you’re back. Now go to sleep … deep sleep …”

Meanwhile in Canberra, as a nation we collectively clutched our coits as Dr Jim pulled on his rubber gloves.

The changes to negative gearing and capital gains will make property investing less attractive. I’m happy to cop that if it takes a bit of heat out of house prices. My kids need somewhere to live one day. So do yours.

He also tightened the squirrel grip on trusts and capital gains tax. But you’ve already read a thousand boring headlines about all this since Tuesday so I won’t go on. 

Yet here’s what I actually think mattered:

The Government did not touch the two tax-free foundations of the Barefoot Steps: your family home and your super. In other words, even though some rules changed on Tuesday, the Barefoot plan did not.

Finally, I know this is a lot. But if you’ve been sitting on the fence about calling your doctor and getting a full ‘Barnaby Joyce’, just make the call. Book it in. It’s the same rule as investing: the best time to pull the trigger is when you’re terrified.

Tread Your Own Path!

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Your Questions & Answers

• Albo Buried This on Budget Day – Let’s Dig It Up

• We Are Going Under … 

• Against All Odds

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Albo Buried This on Budget Day – Let’s Dig It Up

So I didn't make it to Canberra this week. Yet it turns out that Albo and I had something in common this week: we were both busy burying things somewhere the sun don’t shine. So, for the first time ever, I'm flipping the script — I’m not answering the first question, I'm asking it!

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Dear Anthony,

All the headlines this week are asking whether you lied about negative gearing. I don’t care. You saw an opportunity and you took it. Good on you.

Here’s my question: why couldn’t you be bold when it came to our kids?

Australians are the world’s biggest gambling losers – forty percent worse than the country that comes second. That doesn’t happen by accident. It requires fresh-faced kids. And over a third of 12- to 17-year-olds are already gambling. Gamblers Anonymous is now seeing teenagers at its meetings.

The late Labor MP Peta Murphy handed you 31 recommendations, and her dying wish was urgent reform. You had bipartisan support. You sat on it for 1,050 days. Then, while every journalist in the country was buried in the budget lockup and I had a camera up my clacker, you quietly slipped it out.

Now, you could have gone on The Today Show and said:

“These companies have hijacked our sport and they’re targeting our kids. I’m banning the ads.”

(And I think every parent in the country would have fist-pumped their Weet-Bix off the table, even the ones who love a punt.)

But you didn’t.

Is it any wonder voters are done with the party machine? You’re the most powerful man in the country, Anthony. You just proved you can be bold when you want to be.

So why not for the kids?

Scott

We Are Going Under … 

Dear Scott,

My husband and I are both 53, earning $120,000 each. Our 18-year-old is at uni and still lives with us. We have two younger boys (16 and 14) with ADHD, both on medication, both seeing specialists, and studying with tutors because they have difficulties at school. The medical bills are brutal.

We owe $35,500 in unpaid school fees and carry a $1.25 million mortgage. Fifty percent of our income goes to the mortgage alone. Some months we spend more than we earn. On top of that, both my husband and I have some pretty serious medical issues – and yet we’ve been skipping seeing specialists for fear of even higher bills. My husband took a new job to earn more money, but he’s not sure it will last. The tension at home is constant. We yell at each other about cheese.

We’ve seen a financial counsellor, who told us nothing new. We have tried the Barefoot buckets but there is not 10% left to put in any bucket. We don’t know whether to sell the house, rent it out, hold on, or let go. Scott, we are drowning. Please guide us.

Maria

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Hi Maria,

I want to share something with you.

Many years ago, at a deserted beach, I got caught in a rip.

It happened so gradually I didn’t notice at first. I thought I was in control. Then I realised I was moving steadily out to sea.

At first, I panicked. I screamed and waved at the lone surfer on the shore. I stripped off my clothes, thinking it would help me stay afloat. It did. But only for a minute.

Then I got so tired I remember thinking I couldn’t go on. That I’d just let the waves take me.

That’s where you are right now, Maria. There are no boats coming. No one else can make this call. But if you're asking me what I'd do in your situation, here's the lifejacket:

Sell the house. Rent. Demolish the debt. Regroup.

You couldn’t afford it even if every one of you was in perfect health. But you’re not. Every person under your roof needs medical treatment, counselling, or extra tuition. These are needs, not wants.

And the private school? You’re paying overdue fees and private tutors. If they can’t get your kids across the line without backup, what are you actually paying for?

One rate rise, one car noise, one bad day at the new job, and you get sucked under and don’t come back up. You’re skipping seeing specialists for fear of bills. That terrifies me more than the mortgage.

Right now you have choices. That won’t always be true.

Reach out and grab the lifejacket, Maria.

Before the rip takes you.

Against All Odds

Hi Scott,

I’m a 25-year-old woman looking for help with my super. I was kicked out of home when I was 16, and due to this I have no parental figures to ask for guidance. After all that trauma, I’ve finally got to a place where I’m financially stable (mainly thanks to your book, The Barefoot Investor, which has been a godsend). I’m now looking to set myself up for retirement. I’m wanting to know what’s the limit to insurance on my super fund. How much in weekly fees for insurance is too much? I’ve got just under $30,000 in my super fund. I work a blue-collar job (parts and accessory fitter). I’m unsure what cover I need and what fees I should settle for. Please help, and thank you.

Sarah

Hey Sarah,

It sounds like the trauma you faced as a kid has defined you, in a good way. You want security, and from the questions you’re asking I have absolutely no doubt you’ll never be financially vulnerable again.

You are a winner.

Now, to your question:

Blowing out 25 candles kickstarts your super fund charging you for default insurance cover.

Is it worth it?

Bloody oath. Default insurance super starts off pretty cheap, around $300 a year for a combined policy that covers you for dying, being left totally disabled, or losing your income if you need extended time off work.

Of course, without kids or dependants you don’t have to worry too much about dying … it’s the cover for being ‘nearly dead’ (disability, loss of income) that’s important for you.

You got this.

Thanks for reading.

Scott.

A toxic mix of pain and devastation

This week I was asked to debate whether AI should be used in financial counselling.

I was on the 'yes' side.

Sitting in front of me were 1,000 financial counsellors, arms folded, all thinking the same thing:

This bloke's trying to replace me with a robot.

And who can blame them?

Still, this horror movie has been playing for a hundred years, and it always ends the same way:

The job apocalypse has been "five years away" … for the past one hundred years.

Case in point:

In 2016, the so-called godfather of AI, Nobel prize winner Geoffrey Hinton, declared we should stop training radiologists immediately. He said it was ‘clearly obvious’ that AI would replace them within five years.

Today?

There is a shortage of radiologists. Last year there were 4,000 unfilled roles in the US alone.

Why?

Well, AI became their assistant …  not their replacement.

Which brings us to today’s hype cycle:

The founder of ChatGPT is warning that AI will be so devastating we'll all need a government handout to survive. I’m highly sceptical … at least in the next five years. I don't know about you, but my interactions with the chatbots remind me of this meme:

Wife: "Did you do the dishes?"

Me: "Yes."

Wife: "Why are they still dirty?"

Me: "You're right to push back on that. I didn't actually do them."

Wife: "I hate you."

Me: "You're absolutely right. This one's on me. Ready to clean?"

The fact is that these language models are three years old: they're still techno toddlers.

Will AI get better?

No doubt. Hundreds of billions of dollars that are currently being invested in AI says it will.

Yet here's what the AI hype merchants miss entirely:

For all the technological advancements, we are lonelier than we have ever been. Anxiety diagnoses have doubled in a decade. Two thirds of us don't trust what we read online, as AI fakes flood our feeds.

We spend our nights sitting alone, heads down, scrolling on our dopamine casinos.

We are starving for human connection.

Which is why a financial counsellor, a real one, sitting across from you, listening without judgement, helping you make sense of your money when your life is falling apart …

Cannot be automated.

AI will crunch the numbers, but it won't hold your hand when everything goes sideways.

And the more artificial the world gets, the more valuable people who actually give a damn become.

Tread Your Own Path!

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Your Questions & Answers

• New Tax Changes Could Create A Toxic Mix of Pain and Devastation

• What’s Your Take on the NDIS?

• Barefoot the Crooner

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New Tax Changes Could Create A Toxic Mix of Pain and Devastation

Hi Scott,

I'm just reading about the government's proposed changes to capital gains tax in next week's budget. It seems like utter madness from the Labor government that will hit your readers hardest. One expert called it "a toxic mix of pain and devastation" that will force landlords to sell investment properties. And they're doing this during a cost of living crisis when research found that nine per cent of mortgage holders would default if there are one or two more rate hikes. Clearly making things more expensive for landlords like me will make us jack up our rents. It's just commonsense!

Terry

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Hi Terry,

I'm not sure if you're from the housing lobby, the Liberal Party, or if you've just stumbled onto my column for the first time in 22 years and haven't worked out that I've spent the better part of two decades arguing against negative gearing and every other form of taxpayer-funded landlord welfare.

For far too long, first home buyers have had the footprints of investors on their backs.

A toxic mix of pain and devastation?

Please.

If that's what happens to your investment portfolio after a few tax tweaks, you've got bigger problems than I can help with.

As for the figure of '9% of mortgage holders at risk of defaulting if there were one or two more rate hikes' ... well, I have a few things to say about that.

First, if they're that skint, they should sell their homes immediately and get out of the market while they still can. They don't own their home. The bank does.

Second, these people most certainly are not my readers.

We're way too smart for that.

What’s Your Take on the NDIS?

Hi Scott,

I'd be keen to hear your thoughts on the NDIS cuts. There are so many strong opinions in my media feeds that this is either … killing people with disabilities, or finally fixing the people taking advantage of the system. What are your hot takes? How does the government either recontextualise the spending as future saving or argue that people with a disability should pay for their own care?

Frank

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Hi Frank

I fully support the founding idea of the NDIS: as a nation, we look after people with profound and life-changing disabilities. How we treat the most vulnerable in our society says everything about the values of our country.

However, it's been incredibly badly run.

You kind of expect that with the government, but this has been a cock up of monumental proportions.

There are people who gamed the system and got in early who arguably don't need the support, and now there are genuine cases who are getting knocked back. And then there are billions of dollars of rampant fraud … and our politicians just shrug their shoulders?!

That is not acceptable.

My view?

The entire system needs to be redesigned so it fulfils its original aims. We need to weed out every single fraudster, make them pay back the money they stole, and put the worst of them in the slot.

And, at the same time, make sure the people who genuinely need services get them.

No more shrugging. The NDIS is too important.

Barefoot the Crooner

G'day Scott,

My wife and I read your book, applied the steps, and came out the other side owning everything. Not a cent owed to anyone. You changed the course of our lives, and our kids' lives. Thank you. If you'd been as famous in the 80s as Leif Garrett, I would've had your poster on my wall instead of his. 

We're two years from retirement and we've just seen a financial planner, a proper one, Master in Financial Planning, member of the FPA. First thing he said? "You've read Barefoot's book, haven't you?" He's been fantastic. But here's where my gut started talking. He's recommending we ditch our low-fee industry super fund for an ASX-listed fund charging $8,000 a year in fees, with a promise we'll be $100,000 better off over three years. My wife is front row at the Leif Garrett concert, screaming "I Was Made for Dancing." Me? I'm still in the car park. Is this too good to be true?

Lenny

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Hi Lenny,

So I googled Leif Garrett. He was quite the dreamboat in his day. Thirty years on though, he looks as washed up as ... me.

Having read and applied Barefoot, YOU are the dreamboat, Lenny. You've done all the hard work yourself and you're now on track for an awesome retirement.

And since you've already mentioned me, feel free to forward this to your financial planner.

In fact, I'll address this to him directly.

Dude.

You and I both know that the only thing you can guarantee Lenny is reducing his nest egg by $24,000 in fees over three years (and then keeping the siphon going on and on until he dies!).

His low-cost industry fund offers dozens of investment options. You could build him an index fund portfolio inside his existing fund and put the $8,000 back in his pocket where it belongs.

Lenny's wife is front row at the Leif Garrett concert ... and you're in the back, rifling through her handbag. Even Leif had more dignity than that. And he's been arrested. Twice.

Thanks for reading,

Scott.

My marriage is on a knife edge

“You’re not going to like this”, said the bloke at my local farm supplies store.

The price of PVC pipes I need for the farm had just increased 40% across the board.

“Because of the rising cost of oil, which is a key component of the pipes”, he said.

“Well, they can stick that in their pipe and smoke it!” I said, like I was Tommy Tough Knuckles.

Silence.

He knew, and I knew, that I had zero choice but to cop it in the pole and pay up.

Welcome to the biggest oil shock in living memory.

Everything on the farm is more expensive. Which means tonight’s dinner was likely grown by someone with a maxed-out overdraft and a diesel bill that makes your eyes water.

“It’s still possible that if the Middle East conflict resolves everything will turn out okay”, said Reserve Bank Governor Michele Bullock last month.

Sure.

And it’s also possible my kids will remember Mother’s Day is coming up and they’ll buy a present, wrap it, and make a cute card, ahead of time.

But it’s unlikely.

I’m much more certain that the people in charge are making it up as they go along … which is why “they’ll sort it out” is not currently in my investment strategy.

It’s clear that Donald Trump has no idea how to get the Strait open. He’s sent a barrage of angry tweets, threatened to wipe them off the map, and the Iranians have been like, “LOL”.

It’s also very clear that our government is about as prepared as my kids on Mother’s Day morning. They went from assuring us we had plenty of fuel reserves to Albo flying around Asia with a jerrycan begging our poorer neighbours for a day’s worth of fuel.

The only politician I ever truly trusted was my dear old mate, former Deputy Prime Minister Tim Fischer. I remember he once leaned over to me and said:

“Scott, the entire world is only three meals away from World War Three.”

He was being deliberately provocative. But his point was dead serious: food security, like cheap petrol and toilet paper, is something we take completely for granted ... until Bryan posts on Facebook:

“I’m a stockpilin’!”

Right now, fuel and fertiliser costs are pushing the price of nearly everything higher.

And when inflation climbs above 3% the Reserve Bank lifts rates.

Their aim is to slap the economy in the face – to slow things down by making your mortgage so uncomfortable you cancel Netflix and rediscover the true horror of free-to-air television.

But here’s the problem: even stripping out fuel and food, inflation is already running above 3%.

So brace for a slap. Probably several. Think of it as an episode of MAFS, except the contestants all bought their homes on Albo’s 5% deposit scheme.

Now things could ease, if the Middle East settles down. Maybe.

Yet here’s the principle I keep coming back to, the one that has never once done me wrong: “Hope for the best. Plan for the worst.”

What does that mean right now?

Sit down this weekend and ask yourself: if my mortgage rate went up another 1.5%, and my groceries cost another $200 a month, could I handle it? If yes, sleep easy. If no, go to your bathroom and dust off an unread copy of The Barefoot Investor.

And what if it all blows over?

Well, I called my supplier to ask if the pipe prices would be coming back down.

He just laughed at me.

“That’s a pipe dream.”

Tread Your Own Path!

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Your Questions & Answers

• My Marriage is on a Knife Edge

• Did I Get Fleeced by My Vet?My Marriage is on a Knife Edge

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Hi Scott,

My husband refuses to do Barefoot Dates. My pay goes into his account. I only have a second card on his credit account and can’t withdraw cash. He’s run his own business for 21 years and put nothing into super. Our marriage is on the absolute knife edge. We’ve been in counselling for seven months and nothing is changing. My dad passed away and I’ve put the money from his house into a term deposit. We have three kids (two teenagers and one brand-new adult), and my mum lives in our granny flat. I want us all to have a stable home, whatever happens. Everyday account: negative $600. Savings: $10,000. Term deposit: $250,000. I have no idea what to do.

Tracey

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Hi Tracey,

So you have two teenagers and an adult ... but your husband has another child too.

You.

He’s treating you like a child.

Your pay goes into his account. You’re not allowed to withdraw cash.

There’s a very good reason your marriage is on a knife edge: he’s using your money to bully you.

So, I’ll give you the same advice any dad would to a daughter he loves: don’t let anyone push you around.

First, go and see a family lawyer and work through your options.

Second, the next time you’re in counselling, get it out on the table.

Finally, think about your dad.

He left you $250,000.

That’s your freedom. Yours, and his grandkids’.

Did I Get Fleeced by My Vet?

Hi Scott,

I’m a first-time pet owner and my cat has nearly sent me broke. She got into a fight with another cat and badly damaged her eye. The first vet visit cost $500, and after a night of giving eye drops every hour I turned up to the animal eye hospital as a sleep-deprived, tearful mess. Two choices: try to save the eye, or remove it.

I chose the expensive, hopeful option. I’d been awake all night, running on panic and eye drops, thinking complete nonsense: How will I tell my girls I’d lost the cat's eye? Will other cats bully her? Feline self-esteem issues? None of it was rational, but in that state it felt like the only decision I could live with.

It cost $7,000, pulled from my Mojo and my daughters’ savings. Then the eye went bad anyway and had to be removed – for another $3,000. She’s now a very lovable one-eyed cat. But a year later, with my accounts still in recovery, I can’t help wondering: is this just what vet treatment costs, or was I taken for a ride because I was distressed and desperate? Are vet costs regulated at all, or are bewildered first-time pet owners just easy pickings when emotion takes over?

And what’s the Barefoot view on pet insurance? Better to insure, or keep a solid Mojo and accept that sometimes your cat turns into a $10,500 pirate?

Lucy

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Hi Lucy

I may get in a fight and lose an eye over this:

The last time I wrote about the high cost of pet surgery, the CEO of the Australian Veterinary Association wrote an open letter taking me to the kitty litter.

Miaow!

Honestly, the corporate buy-up of local vets seriously pisses me off.

They’ve jacked up their charges.

They push their upsells hard.

(“While you’re here, Mr Pape, we’d suggest a dental hygiene treatment for your sheepdog – oral health is very important for kelpies. It’s an $800 fee, but it could save you a lot of money in the long run”, advised the vet nurse. “Do you know how many bones I could buy for eight hundred bucks?” I barked.)

And when you have bill shock they push expensive branded pet insurance which often only covers 60% to 80% of the bill, caps your claims, and comes with gaps, excesses and exclusions.

Still, you decided to spend ten bangers on your cat: that’s on you, not the vet.

The cost of pet ownership has become so high that families need to seriously think through the costs before Mittens is brought home: ASIC’s Moneysmart says a dog costs $3,200+ a year and a cat about $1,715 ... and that doesn’t include vet bills if your pet gets sick (which it will) or loses an eye. Then you’re up for labradoodle money.

My view?

Self-insure with Mojo, if you’re disciplined enough to leave the money alone when your cat is staring at you with her one remaining eye. Buy insurance if you know you’ll fold like an Aldi card table under pressure.

Above all else, go in with your eyes wide open.

Thanks for reading,

Scott.

Are you okay?

“Don’t make me stop this car!” I roared at the kids in the back. And then, for possibly the first time ever, I actually followed through.

I stopped the car. The kids froze.

I took a long breath, looked out the window, and noticed a half-boarded-up pizza joint.

“Let's get some pizza”, I said.

Inside, it was empty. No phones ringing. No music. Just a tired woman behind the counter with tattooed-on eyebrows, staring straight through me.

“One family-sized Margherita, please."

We sat at faux-wood tables while I flicked through a Woman’s Day magazine:

From October 1987.

The headlines were perfect:

“Take 2 inches off your hips in 2 weeks.”

“Which makeup colours make you prettier?”

“AIDS HYSTERIA: How much fear makes sense?”

Every second page was an ad for ciggies, or pictures of women in leotards smoking Alpine menthols.

The magazine smelled like the vinyl backseat of our old Ford Falcon. Warm. Faded. Casually sexist.

This week, an ANU study found nearly three in five Australians believe that life was better 50 years ago … and I was holding their evidence.

Okay, so let’s not pretend 1987 was all apricot chicken. HIV/AIDS was coming for everyone. The devil had slipped secret messages into AC/DC songs (if you played them backwards), and kids risked getting square eyes watching too much Scott and Charlene (ask your parents).

Yet flicking through those musty pages I was struck that there was nothing on side hustles, investment properties, or the hand-wringing of how your kids will ever afford a home.

Makes sense.

Back then a house cost about three times the average income. A family home was something you worked towards, and paid off – then set your sights on a shiny new Commodore.

Yet just as that magazine was hitting the printing presses … everything changed.

The share market crashed. 

Interest rates rocketed to 17%. The economy did the Locomotion. Finance hit the front pages, and never left.

And then? Well, then came the biggest borrowing binge in history … and it’s still going strong 40 years on.

Houses now cost a staggering ten times the average income.

Every year we borrow more, we stress more, and we lie awake wondering how our kids will ever afford something as basic as a roof over their heads.

On paper we’re wealthier. But we’ve never been in more debt, or more stressed and depressed.

The pizza came. It was horrific. The kids looked at me. I looked at them, and said: “You get what you get and you don’t get upset.”

They had no choice but to eat what they were served. That’s how life works!

Tread Your Own Path!

Your Questions & Answers

• My Husband’s $100,000 Gambling Debts

• Is HESTA Super Going Broke?

• Welfare Check: Are You Okay, Barefoot? 

My Husband’s $100,000 Gambling Debts

Hi Scott,

Over the last four years I have paid nearly $100,000 dollars of my husband’s gambling debts. He still has $55,000 dollars to pay on a personal loan, and he says he needs $6,000 immediately to tide him over. He refuses to show me evidence of his transactions – I suspect he owes more than he is telling me. My salary goes into the offset account but he keeps his account separate.  If I don’t pay his debts, he stops paying for groceries and stops contributing to the mortgage. I turn 50 this year. I am afraid for my emotional and financial wellbeing, and for that of our son.  However, I don’t have the family or social support to separate immediately. I am trying to get my head around this situation without losing myself.  I need to protect myself and my son financially while I work out what to do. I would really appreciate your help.

Sally

---

Hi Sally,

You must be absolutely exhausted.

Here’s the brutal truth: this isn’t over. It won’t stop until he puts his hand up and gets help. And even then it’s a long, hard road back through the financial wreckage this has caused.

You are dealing with a disease that is designed to take every cent it can get its hands on. I see the damage it causes every day.

My advice?

It’s time to be ruthless. For your son.

Do not pay another dollar towards your husband’s gambling debts.
Do not give him any money. Pay the bills yourself.

As long as you keep covering for him, this will continue.

Then, make two appointments. First, call a financial counsellor (National Debt Helpline: 1800 007 007) and get a plan in place to protect yourself. Second, see a family lawyer so you can understand your options.

Hope is not a strategy. You’ve carried this for four years. That has to stop. And it starts by getting the right people around you. Reach out to me this week, and I’ll help.

Is HESTA Super Going Broke?

Hi Scott,

I’m so mad at my super fund, HESTA, right now. I’m 44 and I’ve been with them for years. I have $250k with them, but I’m ready to jump ship after recent reports that their administrator (Grow Inc) has significant debt. Not to mention the argy-bargy HESTA put a lot of members through when they switched to said administrator last year.

I have no trust in their ability to safeguard and invest my super anymore. But I also found out that Vanguard Super also uses the same administrator, so I’m nervous about moving my funds just to land in the same pot of trouble.  Am I being too hasty? Or has HESTA bollocksed it up enough to warrant a move?

Cheers,

Sash

---

Hi Sash,

Your money in HESTA is safe.

However, I’ll leave it to you to decide whether you want to put up with their half-arsed service (and why Vanguard recently decided to YOLO with Grow).

Could you imagine if CommBank came out and said:

“In an effort to save us a bit of dough, we outsourced our entire customer administration process to a dinky little outfit … and it appears they’ve stuffed things up. So you won’t be able to access your bank accounts for the next seven weeks. Starting now.”

They’d be taco meat by Tuesday.

Well, that’s effectively what HESTA said (and did) last year!

My view?

Super funds have got their outsourcing completely arsed about:

They spend thousands of millions each year flying around the world first class trying (and failing) to pick winning investments. (This despite the fact that the evidence is unequivocal: they should outsource their investment decisions to a low-cost index, and return those thousands of millions of dollars to our accounts).

Yet they have outsourced the very thing that their customers need: reliable, safe and seamless access to their money! This explains why rolling over your super fund is harder than getting a council permit to build a shed.

It’s a total disgrace.

Welfare Check: Are You Okay, Barefoot?

Hey Scott, just wanted to check in. Haven't seen any newsletters or articles in the Herald Sun lately. RUOK? Missing your wise words.

Deb

Hi Deb,

Thank you for checking in ... and to the many readers who wrote asking the same thing.

I can confirm I am okay!

I've been writing this column for 23 years. When my first son was born, I asked my editors if I could take school holidays off to spend time with him. They reluctantly said yes.

Twelve years on, I'm still holding that boundary. In fact, it's even more important to me today. After all, I only have six more years with him at home.

That's wealth to me.

Thank you for reading.

Scott.

My Husband Knows Best?

Scott,

My husband is wanting to create a self-managed superannuation fund, and wants to put 80% of this into the stock market into high-risk assets that are US listed, with high volatility, mostly tech and crypto correlated. My husband and I have never put money into the stockmarket and do not know much about it, other than what my husband is learning from the people encouraging this. They are even suggesting which assets to invest in. They are promising that he will be able to create ‘intergenerational wealth’ through doing this, which has him excited. My husband and I have no savings, and have not put enough time and energy into planning our future financially. We are both in our late 40s. I am trying to convince my husband that we need to seek independent financial advice before we make a big mistake. I feel sick. Please help!

Zara

Zara,

You know that line, trust your gut?

Your gut is working perfectly.

The people “encouraging” your husband to invest your life savings, and “suggesting which assets to buy” are salespeople (at best) or scammers (at worst). Financial experts don’t promise “intergenerational wealth” to people with no savings and no investment experience. Spruikers do.

Here’s what’s actually being proposed: two people in their late 40s, no savings, no investment experience, hand their retirement money to a self-managed fund and punt most of it on high-volatility offshore crypto-correlated tech stocks. Based on the advice of weirdos on the internet.

Is your tummy rumbling?

Mine sure is!

Your husband isn’t stupid. He’s had his greed gland rubbed by people who are very good at making this sound exciting and easy.

So here’s what I want you to do. Show him this column. Then show him the ASIC MoneySmart website and look up the people who are “encouraging” him. If they’re not licensed to give financial advice in Australia, they cannot legally tell him what to buy. Full stop.

You are not trying to kill his dreams. You are trying to save his retirement.

So am I.

Are we heading into a recession?

Hi Scott,

I am really scared about where interest rates are heading. My husband and I bought a $780,000 ‘fixer-upper’ last year not too far from where you live! We took a pay cut to do the tree change but we have been hit with successive rate rises. Now I am reading that the government is predicting that inflation will go to 5%. We could be hit with multiple interest rate rises this year, which could send us into recession. I am really worried. We can’t afford any more rate rises so should we fix our home loan now?

Ellie 

Ellie,

Good news: if the government is predicting inflation will hit 5%, they will almost certainly be wrong.

(They are wrong about most things.)

My standard suggestion is to find the cheapest variable home loan you can with an offset account, and go hammer and tongs at paying it down. This works whether rates go up or down. Get the banker off your back as fast as possible.

That said, it sounds like you’ve got a few too many undies swinging from the Hills Hoist. If you need certainty right now, talk to your lender about fixing part of your loan. Just know you’ll likely pay a premium for it.

Finally, are we heading into a recession?

Honestly, I have no idea.

But it sounds like you’re already experiencing one. 

Plan accordingly.

My brush with fame

We have a Japanese exchange student living with us.

She’s from Shibuya: home to the busiest pedestrian crossing on earth, surrounded by 10-storey singing billboards and 40 million things to do on a Tuesday afternoon.

She landed on our chestnut farm.

Population: us, and some very confused chestnuts.

For the first week, she was polite about it. 

By last weekend, she was craving the city. So we drove into Melbourne and, at her request, joined the annoyingly long queue at Lune croissants.

This is what Japanese people do. They queue. Joyfully. With the patience of a St Kilda supporter.

She paid $7 for a croissant, and ate it like it was the best thing that had ever happened to her.

I waited out the front wearing a Demons scarf and a look that said, “Hurry up, I want to get to the footy”.

And then a beautiful young woman approached me, phone in hand.

“Would you mind walking behind me?” she asked.

I just stared at her.

(Beautiful women do not stop me in the street and talk to me.)

“I’m an influencer”, she said matter-of-factly. “You look like a local. Just walk past me as I shoot my video, but keep it natural”, she directed.

So I did.

My kids were watching my performance from inside the bakery.

“Are you famous, Dad? You were just on a video!” my daughter said.

“Her Chanel handbag”, said Liz, “is worth more than your ute.”

I watched the influencer for a while after that.

She photographed her croissant from six angles. She laughed at things that weren’t funny. She looked stressed directing me … until the camera came on, at which point she looked like she was having a lune of a time.

She never took a bite … which, in hindsight, was the most honest thing about the whole production.

Back on the farm, every bill feels like it’s doubled. Fuel. Feed. Insurance. Even Lucky’s dog food is starting to look like a luxury item.

Our exchange student flew in from one of the most overwhelming cities on earth, rocked up to a bakery in Melbourne, paid $7, and had a genuine perfect moment.

She was just there. Munching on her croissant. In the sun.

The influencer was there too … kinda. She was performing. She wasn’t present. 

In this cost-of-living crisis, everyone’s telling you what to cut back on. I’d suggest the last thing you cut is the stuff that’s actually real. If you’re going to cut something, cut the fake stuff … 

Keep the croissant.

Tread Your Own Path!

Shiver Me Timbers

Hi Scott, 

I have a friend who offered to manage my superannuation for me. So I transferred all $173,000 from Australian Super to his SMSF. Long story short, he started trading with an overseas firm (Swipe Capital) and it was a scam. It’s all gone, plus around $50,000 of my savings I put in too. I’m really angry with my ‘friend’ who I thought knew what he was doing but traded with an unregulated company overseas. All my Google searches about this company say the same thing: ‘red flag’ or ‘scam alert’. Where do I stand in regard to the $223,000 I’ve lost – can the government do anything, or is it gone forever?

Lincoln

Lincoln,

Your super was with the equivalent of a Sydney ferry, large, boring, and packed with the public – and your mate stowed you both on board a pirate ship, with Captain Feathersword at the wheel. Shiver me timbers!  

Your mate walked you off the plank, but you do need to take some responsibility here, mate. You handed control of your super to a friend, and that’s where you got peg-legged. Aghh!

You could speak to a lawyer about whether your friend breached his duties as a trustee. But if he’s been looted too, then chasing him may cost more than you’ll ever recover. So by all means report it to ASIC and SCAMwatch, but do it knowing there’s a very good chance the money is gone.

They’ve stolen your money. Don’t let them take everything else with it. People who get scammed lose more than money. They lose their confidence, their peace of mind, and sometimes their will to keep going. Call IDCARE on 1800 595 160. Talk to someone who gets it.

Guard your mental health like treasure.

Travelling in a Time of War

Hi Scott,

With all the recent flight disruptions in the Middle East, I’ve realised how messy things get when something goes wrong. I booked through a third-party site, and now neither they nor the airline want to talk to me unless my flight is actually cancelled. Meanwhile, people who’ve had flights disrupted are being bounced back and forth between airlines, booking platforms and insurers. It’s made me wonder whether we’re taking more financial risk than we realise when we book flights. Is it better to book directly with the airline? Are flexible fares worth the extra money? And how do you protect yourself from losing thousands if things go sideways?

Bill

Hi Bill,

Yes, it’s a hell of a mess at the moment.

Here are three tips to make sure you don’t end up playing a prolonged game of call centre bingo.

First, don’t cancel your flight. Ever. Make the airline do it, or you hand away every right you have.

Second, book direct with the airline wherever you can. If the trip is more complicated, a good travel agent can help sort things out when it all goes sideways. But avoid the cheap third-party booking sites. That’s where people end up stuck in the great ‘not our problem’ loop.

Third, flexible fares are worth the extra money. Cheap flights are expensive when things go wrong. That's why these days I avoid the star jump deals on Onestar (Jetstar).

Finally, stop assuming your travel insurance will save you. Most policies exclude war and civil unrest. Read the terms and conditions before you buy it, not after your flight gets scrapped.

Money Is Ruining My Marriage

Scott,

I’m approaching my 10-year wedding anniversary and I regret the day I combined our bank accounts. Two months after our honeymoon I was pregnant, we’d bought a car on $20k finance and put a deposit on an off-the-plan home. Since then my ability to earn and spend has been stunted by raising kids and a husband who became obsessed with controlling all spending, with no regard for my needs.

I’m back to full-time work now, earning just under $100k. He earns $200–250k. We have a mortgage of $620k. Spending is lean. Yet I’m still being controlled when it comes to my own money. I’ve been honest with him about wanting to separate our finances. He needs help with his scarcity mentality and we need a third party before this ends in divorce. I feel trapped.

Sarah

Sarah,

Let me give you the key that will unlock the trap:

Open your own bank account today. Deposit your pay into it. You don’t need his permission.

You’re a 40-year-old woman earning $100,000 a year. You don’t need permission to spend your own money.

What you’re describing has a name: coercive control. It’s not a budgeting problem. It’s not a scarcity mentality problem. It’s a power problem. Yes, you need a marriage counsellor. But I want you to open that account before you even book the appointment.

Because here’s what I know after 22 years of reading letters like yours: women who take back control of their own money stop asking, and start deciding. They stand differently. They speak differently. And sometimes (not always, but sometimes) that shift changes everything around them too.

Maybe he comes with you. Maybe the counsellor helps him understand what he’s been doing. Maybe the marriage has a future. But none of that starts until you stop asking for permission.

If you need someone to talk to before you’re ready for counselling, call 1800 RESPECT (1800 737 722). They understand financial abuse better than most.

You already know what to do, Sarah.

You just haven’t given yourself permission yet.

You won’t like this

Warning:

There’s a good chance you’re going to hate what I’m about to write.

I’m okay with that.

This week I got an email from a bloke I’ll call Barry, who put the boots into me good and proper:

“I’m sick of your crap. You have no idea how hard it is for normal people like me. I’m 49 years old. Three kids. I earn $87,000 a year. We have an $800,000 home loan and the Reserve Bank is punishing us with higher rates. I can barely afford to fill my second-hand Mazda to get to work. Our groceries have gone up $100 a week. The game is rigged for people like me. Everyone is against us. Your buckets and compound interest only work if you have money to put in them. I’m not 18, I’m nearly 50. Wake up.”

(For the record, I don’t mind a bloke sticking the boots into me. I’ve built a career on it.)

I’ve pissed you off, haven’t I, Baz?

Good!

Come on, cobber. No one put a shovel to your head and forced you to take out an $800,000 loan.

And there was nothing in your wife’s tarot cards that said “Interest rates will never go up”.

Come to think of it, I’ve been saying this in my column for, well, years?

Now the easiest thing I could do right now is what every other finance commentator has done this week and point the angry stick at the heartless Reserve Bank, the record spending government, the greedy supermarkets and the gouging oil companies.

And yes, Barry, there is plenty to point at. But none of it will help you pay a single bill.

You still get to choose where your energy goes.

You can burn it on interest rates, petrol prices and grocery bills, all the stuff you can’t control. Or you can put it to work.

I am not saying you caused your situation.

I am saying you are responsible for what happens next.

You’re 49. You’re not dead, dude!

You’re old enough to know better – and still young enough to fix it.

You’ve got 15 years to turn this around. I reckon you can do it in 10:

I’d set up my Barefoot Buckets properly and get serious about filling them. Every extra dollar gets a job. That might mean selling stuff, taking on extra work, or doing the jobs you have been putting off – selling your kidney (or the cat) on Marketplace if you have to. Kidding. Probably.

And I would make a plan to earn more, starting now and over the next 10 years. You are not stuck. Plenty of people lift their income over time. It takes effort, a bit of strategy, and sticking at it longer than feels comfortable, but it is doable.

None of this fixes things overnight.

When we lost everything in a bushfire, the place was black. Burnt. It stank. It was overwhelming. So we planted an apple tree. Not because it fixed anything. It didn’t. But it was a start. You don’t fix a mess like that in a day.

You just start.

Then you show up again tomorrow.

Tread Your Own Path!

Kohler Ad is a Scam (and so are you)

Hi Scott,

My wife and I have followed the Barefoot Investor program for years. It got us out of a pit of debt and we've been debt-free ever since. I'm now happily retired. The other day I saw a 'news' article on social media quoting both you and Alan Kohler endorsing a new AI platform. Is this something you're involved in?

Reg

G'day Reg,

It's a scam.

The other day I rang Bushy – a bloke I know who does stonework – about a job at my place.

"Am I talking to the real Scott Pape?" he asked.

Huh?

"Because you and Alan Kohler are on my Facebook feed promoting crypto scams," he laughed.

Bushy wasn't wrong.

Scammers use AI to create fake news stories featuring well-known Australians (like me and Alan) supposedly revealing a "secret investment platform". The ads often look like an ABC article, complete with the logo and a fake interview on 7.30.

Click the link and things move fast.

Another reader this week told me she clicked one of these ads. Within seconds the phone rang. A friendly voice congratulated her for "getting in early" and asked for just $400 to start.

Then came the hook: all they needed was the 16 digits on her bank card.

Thankfully her husband overheard the conversation and said the magic words:

"Hang on… is this a scam?"

She hung up. Good move. Because if you hand over those details, the scammers won't just take $400. They'll take everything they can.

For the record, I do not run secret crypto trading platforms. Neither does Alan Kohler.

And if you ever see an ad online claiming we do, there's only one thing you should do.

Don't click.

The Iran War is Killing My Retirement

Hi Scott,

I am very stressed about the Iran war, and the impact it will have on my superannuation. I am 61, still working, and looking to retire in the next four years. Therefore I check my Australiansuper balance if not daily, every second day! I spent the last 60 years not giving a cuckoo about the share market, and now it keeps me up at night. Experts are suggesting that this is the start of something much bigger. I am thinking of moving my super to cash until this blows over. It would help me sleep at night.

Yasmine

Hi Yasmine,

You wrote: "I spent the last 60 years not giving a cuckoo about the share market."

That might actually be the smartest investing strategy I've ever heard.

Because when retirement is four years away, every wobble in the market suddenly feels personal. It's like waking up an hour before your alarm. Every creak in the house suddenly sounds like a burglar.

On Monday, as I was sipping my coffee, I read this headline:

"More than $100 billion was wiped off the ASX in less than an hour in a horror morning for Australian investors."

I actually love these headlines, because they are just so… thirsty.

Let's decode it:

"$100 billion wiped off" (seems like a lot)

"in less than an hour" (seems quick)

So was it a horror morning for Australian investors?

Nah.

Another way of writing that headline is:

"Sharemarket down to levels not seen since… Christmas."

Even accounting for Iran and the $100 billion wipe out, over the last year  the sharemarket has delivered a 14% return, when you factor in dividends (which you should).

Ho! Ho! Ho!

So I have some advice for you to get more sleep.

First, stop checking your super balance every week. It's like planting an apple tree … and then checking on it each morning and wondering whether you should pull it out and replant it somewhere sunnier in your garden.

Second, build up a cash buffer within your super fund. Money you can live off when you retire. Book in to see a financial adviser at AustralianSuper. 

Something like three years of living expenses is a good number.

Sleep well.

I am in tears as I write this

Scott,

I am in tears as I write this. I'm 43 and a qualified nurse. My husband is a lawyer. We own our home and two investment properties. We are asset rich, cash poor, mortgaged to the hilt. I need dental treatment. Implants are just the start. It will cost upward of $30,000. I'm a nurse, and I fully understand the impact bad teeth have on your health. Not to mention embarrassing, and at times painful. I've put my kids first and my health last. So here I am. 

The investment properties cover their own costs, but that's it. Both have gone up significantly in value, but the bank won't let us refinance. We don't want to sell either. We'd lose half in capital gains. Our primary mortgage is $7,000 a month. Childcare $3,000. We don't have fancy cars. I shop at Kmart. There's nothing left. So do I dip into my super (I have $416K)? Fly to Thailand? What should I do? Don’t just say ‘nothing’.

Sue

Hey Sue,

Seems like you’ve spent your entire adult life dismissing yourself and your needs — so I sure as hell ain’t going to do that. You’re not talking about getting flashy veneers for Instagram, but treating a genuine health concern that will have real ramifications for you as you get older.

Stop asking for permission. You’re a grown woman. There is no question you need to get this done — the only question is how to pay for it sensibly. And sensibly rules out super. Taking $30k today could easily be $200k at retirement.

So that’s a hard no.

What about flying to Thailand? 

If I were in your shoes I wouldn’t do it. Yes it may be cheaper, but if something fails, fixing it here could end up costing more than doing it locally.

Let me pick at something you wrote:

“I've put my kids first and my health last. So here I am.”

Here you are.

What lesson are you teaching your kids … that money is more important than your health?

Sue, it’s time for a little drilling: you’re a professional couple with over a million dollars in assets, but you can’t pay for your health?

If I were in your situation I’d sell one of your investment properties.

Pay the damn capital gains.

Pay for the dental work.

Maybe give yourself some breathing room so you don’t feel so stressed all the time.

Smile.

You deserve it.

Two padlocks

I've been thinking about putting a padlock on my diesel tank.

"Do it," urged Kathryn, my personal assistant. "Diesel's going to four dollars a litre."

She showed me texts from mates driving around Lancefield trying to stockpile diesel in 44-gallon drums.

 
Wait, why are people prepping?

Well, maybe because they listened to Energy Minister Chris Bowen, a man who believes in hot air and wind, who assured us this week:

"There is no need for panic buying."

Better make it two padlocks.

It's easy to write this off as the toilet paper panic of 2020, except this time the thing running out actually runs everything.

The Strait of Hormuz is a sliver of water between Iran and Oman, two places most Aussies would struggle to find on a map. Still, it carries 20 per cent of the world's oil. That makes it the jugular of the global economy, and right now someone has their hands around it.

Here's how it hits farmers like me:

When oil prices surge, the tanker that rolls up my driveway to fill my diesel tank costs more. So farmers swear a lot. The fertiliser to grow the food is already up 30 per cent. So farmers swear some more. The truckie who moves the harvest needs to charge more. By the time your food hits the shelf, every single hand that touched it paid more to do it. That's inflation.

Here's how it hits you:

Prices are already rising at 3.8 per cent — well above the RBA's 2 to 3 per cent target. Higher oil prices push that higher. Higher inflation means the Reserve Bank reaches for interest rates. So if you've got a mortgage, that distant rumble you can hear?

That's not thunder.

My wife, meanwhile, has moved on.

She test drove a new electric car this week. We've got solar on the roof, and a battery going in soon. We drove past a servo on the way home.

Diesel: $2.60 a litre.

She didn't even notice.

Felt good!

Tread Your Own Path!

Have You Checked Your Super Lately?

Hi Scott,

I read your column about Mary (“I’m Still Standing”), who lost the majority of her lifetime super savings through the First Guardian Master Fund collapse.

I’m the government-appointed CEO of the Compensation Scheme of Last Resort.

Around 12,000 people were impacted by Shield and First Guardian, but only 2,000 have lodged complaints with the Australian Financial Complaints Authority (AFCA). What happened to the other 10,000? 

If you received dodgy advice, you may be eligible for compensation. Lodge a complaint with AFCA. And encourage everyone to check their super balance now! Love your work. Keep giving the bad guys a hard time.

David Berry, CEO, Compensation Scheme of Last Resort

Hi David,

Your job is to compensate Aussies who have received dodgy financial advice?

Bloody hell, you’d be busier than TAL’s funeral insurance public relations team.

Here’s my best guess on where those 10,000 missing victims are:

They have no idea it happened.

The vast majority of people who got screwed innocently clicked on a Facebook ad offering a free super comparison or review. They were taken to a page that asked for their phone number. Then a smooth-talking spiv convinced them to move their super into a dog-turd super fund. 

Then their money went ‘poof’!

And here’s the thing about super: it’s the one account we never check. It just sits there while we get on with life. Which is exactly what these crooks were counting on.

So let’s give a brother a hand.

There are a couple of million Barefooters reading these words right now.

So I have a favour to ask of you.

If you, or someone you love, ever clicked on a social media ad and switched your super, or if a financial advisor has switched you into a super fund, go here right now to find out if you’re affected:

takeyoursuperback.com/ 

The Worst Car Loan Ever?

Hi Scott,

My nephew borrowed $51,681 from ‘Infinity Finance’ for a car at 18.35% interest. After 12 months of paying $1,327 monthly (that’s nearly $16,000 paid), he came into some money and asked for an early payout figure. They said he owes $53,511 – that’s nearly $2,000 MORE than he originally borrowed. They’ve given him seven days to ‘take it or leave it’. Is there any world in which this is legal? What do we do?

Aunty Pat

Hi Aunty Pat,

Your nephew has just learned the most expensive lesson an 18-year-old can learn:

Don’t swim with sharks.

Let’s look at the maths:

He borrowed $51,681.

He’s already paid almost $16,000.

And after a full year of repayments … they say he still owes $53,511?

Bloody hell.

Now, how does that happen?

Simple. These lenders pile on things like early termination fees, establishment fees, monthly account fees, and interest that compounds faster than rabbits. It’s all buried in the fine print.

If he keeps the loan, he’ll end up paying close to $70,000 for a car that’s probably worth $35,000 today. Half his money. Incinerated.

So here’s what you should do:

Tell him to prepare himself for a bit of biffo.

He’s about to scrap with a company whose entire business model depends on 18-year-olds not reading the fine print. So he should call the National Debt Helpline on 1800 007 007 and get a free financial counsellor in his corner.

His first punch is to call Infinity Finance and tell them he’s disputing the loan on responsible lending grounds. An 18-year-old, fifty grand, 18 percent?! That’s got ‘Barefoot Investor national newspaper article’ written all over it.

Then throw a hook: while he’s got them on the phone, make them a ‘full and final’ settlement offer well below their payout figure. I’d open at $45,000.

However, I’m guessing these guys don’t mind a scrap and they love their money, so they may well say “bring it on”. If they do, it’s time to go for his knockout punch: lodge a complaint with AFCA (the Australian Financial Complaints Authority). The moment he does, Infinity Finance has to stop any debt collection action. They can’t chase him. They can’t threaten him. They just have to sit there and wait.

Oh, and tell your nephew one more thing from me:

When someone offers a teenager a $50,000 car loan at 18% interest, they’re not selling a car.

They’re selling a life lesson.

Unfortunately, this one costs about $35,000.

Jeffrey Epstein and Vanguard

Scott,

As a mid-life woman, I have been impacted by predatory behaviour in the workplace and I identify strongly with the women who were treated as prey in Epstein’s network. I am really disturbed to read about the links of this network to Vanguard. Are you able to recommend some alternative low-cost ETFs that are more ethical about how they do business, like Future Group, which holds Future Super?

Matilda

Hi Matilda,

Your question made me sweat like Bill Gates.

Jeffrey Epstein is linked to Vanguard?

I couldn’t believe it. This is one of the most boring companies in finance. Its founder, Jack Bogle, was so tight he kept a penny jar by the photocopier.

He must be rolling in his grave right now.

So I took a deep breath, held my nose and googled.

Nothing.

I asked ChatGPT.

Nothing.

So I called Vanguard and asked them point blank.

“Is it true you have links to Jeffrey Epstein?”

“I don’t think so”, came the confused response. “Have you heard otherwise?”

“Well, I got a tip-off from a reader who’d obviously done some serious research ... though it doesn’t appear to be on the internet, or in any newspapers, or anywhere else that I could find.”

And as I said that, I realised something.

Research isn’t really your thing, is it Matilda?

Because if it were, you would have also googled the ‘ethical’ alternative you recommended to me, Future Super. 

Here’s what I found when I did:

It seems Future Super has its own problems: greenwashing allegations, high fees – and ASIC fined them for misleading marketing in 2023. So your ‘ethical’ alternative has about as much credibility as Elon Musk’s email to Epstein on Christmas morning asking for an invite to one of his parties (google it).

Matilda, the whole Epstein tragedy is about innocent young women giving their trust to people who hadn’t earned it, and didn’t deserve it. Don’t make the same mistake with your money.

Ding Ding Ding

“The unfolding war in Iran took a deadly turn today …” squawked the radio in my ute.

I glanced at my son in the rear-view mirror, strapped into his booster seat, and switched it off.

We had business to attend to.

“Were here, mate,” I said, without needing to.

He was already wriggling out of his booster seat like a magician escaping a straitjacket.

For a brief moment we stood holding hands, watching a giant conveyor belt swallow empty bottles one by one.

Every time it swallowed one:

‘Ding.’

Ten cents.

‘Ding. Ding. Ding.’

Forty cents flashed on the analogue scoreboard.

Something stirred inside me that I genuinely cannot explain. I am a grown man. I have written books about money. But standing there at that collection depot with my five-year-old son, I felt five years old myself.

My mind started racing. We should go to Bunnings and get one of those Gorilla trailers. We could raid Romsey for every yellow bin in sight and make out like bandits.

DING!

My son felt it too. He squeezed my hand and then began shovelling bottles like he was feeding one of his hungry orphan pet lambs.

I told one of my newspaper editors about it. She went to the tip recently herself, fresh off a camping trip that was apparently very well hydrated. She fed the machine for twenty minutes and walked away with twelve bucks.

“All that work,” she said. “For twelve dollars.”

Same machine. Same ding. Completely different reaction.

We heard treasure. She heard an hourly rate.

And that's the shift: at some point money stops feeling like treasure and starts feeling like homework. The numbers get bigger. The feeling gets smaller.

The first dollar you ever earned felt like all the money on earth. You remember it. Today your mortgage repayment does not feel like anything, even if it’s the smartest financial move you’ve ever made.

I’m not saying go fossick for bottles. I’m saying if the only time your kids ever see you with money is when you’re paying bills and sighing, that’s the story they’ll grow up believing.

They’re watching how you feel about it.

My son collected forty-three bottles. He made $4.30.

“This was the best day,” he said on the drive home.

The radio stayed off.

Tread Your Own Path!