Cornered, cranky and ready to charge

My wife is currently in Africa filming a documentary about rhinos.

Which means I’m home alone on the farm with four kids. The wild Savannah has nothing on this.

“The teachers said Book Week is coming up”, announced my eight-year old daughter over dinner.

“I want to go as The Cat in the Hat!” squealed my five-year-old.

My nostrils flared. In that moment I felt a bit like a rhino myself: cornered, cranky, and ready to charge.

“You’re all going as … me”, I declared. “We’ve got the books. The checked shirts. And you can all take turns with Lucky the sheepdog.”

“But Daaad.”

Then my phone rang. It was Wally, my editor.

“Did you hear? The Prime Minister quoted you in Parliament today. He basically read your last column out word for word.”

“Wally”, I said. “Are you thinking what I’m thinking?”

“After 22 years working with you”, he replied, “I can confidently say I am almost certainly not.”

Here’s what I was thinking.

If the Prime Minister likes my column so much, let’s see if he’ll read this one out in Parliament.

I looked around the kitchen at my four little rhinos, one still wearing mashed potato on his snout. Their mum is over in Africa because there are men who slaughter rare, defenceless animals just because there’s money in it.

Well, we’ve got poachers here too. Except they’re not hunting rhinos … they’re hunting our kids.

They’re the betting companies.

They use the thing kids (particularly boys) love – sport – to groom them into gambling. Logos on the jersey. Ads on the TV. And odds in their ears before they’re old enough to shave.

Jackpot!

Per head, we lose more money on gambling than any other nation on earth.

Albo, I don’t have the money that the gambling lobbyists do to host a private donors’ dinner with you.

Yet let me tell you, Book Week is about kids dressing up as characters from a story, but the real story this week is the one our current gambling laws are letting them walk into.

It sure looks like you’re not on the right side of the debate. Otherwise you’d treat these punting poachers like the cigarette companies. You’d ban them from sport completely. No jerseys. No stadiums. No ads at the footy.

Albo, I’m totally outnumbered here at home. My wife has flown to the other side of the world to stand between the poachers and something that couldn’t fight back. You could protect my rhinos and you wouldn’t even have to leave the building.

Tread Your Own Path!

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Your Questions & Answers

• I’ll Never Read You Again

• The Accountant Who Can’t Sleep

• The Most Expensive Currency On Earth

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I’ll Never Read You Again

Scott,

You must be so proud that Albanese mentioned you in Parliament. Are you joining his party? I think I’ll just read the other finance experts in the Sunday Telegraph. Very disappointed in you.

Chris

Hey Chris,

Your email reads like one of those notes Timmy Tuffknuckles used to lob at the back of my head in Grade 3. You must have missed that the Prime Minister actually said that Barefoot is “not always part of a cheer squad for the Government”.

True, Mister Speaker!

Especially when it comes to his monumentally dumb and dangerous 5% Deposit Scheme, which I’ve been campaigning against for years. Seriously, the only cheer squad I’m in is for financial counselling and our clients. (Okay, and the Melbourne Demons.)

As Mrs Wilson used to say to Timmy:

“Eyes to the front. Hands above the desk where I can see them.”

---

The Accountant Who Can’t Sleep

Scott

I grew up watching money stress eat my family alive. As a kid I knew the mortgage was always one bad month away from disaster. So I did what any trauma-trained over achiever does: I worked from age 14, put money towards keeping a roof over my family’s head, became a chartered accountant, and bought my first property just before I turned 30.

I did everything right. One-bedroom apartment in Rosehill, NSW. Five percent deposit, LMI waived, First Home Buyer Scheme. I was proud of myself. Three years later, I’ve paid $90,000 in interest to the bank. The property has gone up, maybe, $30,000. The metro stop they promised nearby? Cancelled.

I rent somewhere else with my boyfriend. The apartment is tenanted at $580 a week and I’m keeping it partly as a safety net for my mum and brothers if they ever need it. But I keep running the numbers in my head at 2am. If I’d just rented and tipped that money into an S&P 500 index fund, would I be ahead right now? Is the Australian property dream still worth it for single-income buyers – or are we just paying a fortune in interest to feel safe?

Tammy

Hi Tammy,

You’re going to be fine.

You can turn on the lights and you’ll see there’s nothing bad lurking in the closet.

From what you’ve told me, you could sell this apartment and probably break even. That’s a much better spot to be in than a lot of people who stretch themselves on a 5% deposit end up in. For them the nightmare is real, and it never ends.

Now, the 2am maths:

Stop doing them.

You can’t go back in time, only forward.

However, in order to sleep soundly you need to understand how you got yourself into this situation.

And it’s completely understandable: you grew up watching your parents struggle with money. You swore you wouldn’t follow them. So you bought a place before you should have, and tried to make the numbers fit afterwards.

The real lesson from your parents wasn’t ‘buy a property’.

It was to ‘be financially secure’.

You’re clearly a smart, driven person. You’ll hit whatever you aim at. Just make sure it’s the right target this time.

---

The Most Expensive Currency On Earth

Hi Scott,

I read your book while I was in prison. It was the first time in my life I had so much "free time": eating without paying, not worrying about rent. Of course, taxpayers paid for it. I paid with something far more valuable: time. The most expensive currency there is.

When I was at my most vulnerable, I became addicted to something I didn’t even recognise at first: other people’s approval. Trying to fill that emptiness led me to the worst decision of my life: transporting drugs. I was punished for it, and rightly so. I read almost every book in the women’s prison library in Perth. Yours was one of only two books I bought after my release.

English isn’t my first language. I grew up during the collapse of the Soviet Union, and I was deported back to Europe just as the world shut down because of Covid. I arrived home alone with about $1,000 I had earned working in prison. After three-and-a-half years behind bars, I had no job, no plan, and no idea who I was anymore. My family and many of the friends I thought would always be there disappeared when I got into legal trouble. I felt like a stranger in my own country.

Then I met my partner. Now we live in Denmark. Six years into my freedom, I’m still rebuilding. I adopted some of the habits from your book, opened a Mojo account, have Date Nights with my partner, understand how to do investments. Now I’m doing an internship that will hopefully lead to paid opportunities as well.

What I really wanted to say is this: your book kept me sane. Today I’m once again facing financial uncertainty. But every time I see your book on my shelf I feel calmer. It reminds me that this season is temporary. Every face has a story, and every story has a face. And I just wanted you to know that your words mattered. They helped someone you will probably never meet.

Eleanor

Hey Eleanor,

English may not be your first language, but you certainly have a way with words.

When I was training to be a financial counsellor, one of my first placements was at a women’s prison. It was a bloody tough gig. The women I worked with were racked with shame and guilt, and for many of them it stopped them from making any financial progress.

And my motivation wasn’t just for the women inside. It was for their kids, and for the rest of us on the outside, because someone who walks out with a plan and a Mojo account is a lot less likely to walk back in.

Here’s what I learned from my time working on the inside.

You can keep judging yourself for the terrible choices you made a long time ago. But all that does is keep you locked in a different kind of prison, one you’ll never be released from.

Or you can judge yourself by the actions you take today. And look at what you’ve done. You’ve rebuilt yourself from a thousand bucks and a library card. You’ve got a partner, Date Nights and an internship to show for it.

You’re right, Eleanor, seasons are temporary.

Bring on summer, I say.

Thank you for reading!

 Scott.

Albos war on landlords

It was like something out of a movie. A horror movie.

It was well past midnight on New Year's Eve in downtown Tokyo. I had checked into a capsule hotel.

I was lying flat on my back, and every breath hit the ceiling of the capsule-coffin and bounced straight back onto my face, creating a claustrophobic loop of ramen-tainted air.

"So this is what my final night will feel like," I thought.

Yet this is Japan, so of course it got weirder.

Just inches from my nose, a camera with a blinking infrared light was pointed directly at my head, recording my every movement and sound.

I slid out of the capsule — careful not to rupture a hernia — and trudged to reception.

"What's the camera for?" I grumbled.

"It's to track your sleep," the attendant said, bowing.

"But I don't want my sleep tracked."

She smiled politely. 

"These are the rules."

I wouldn't normally stay in a capsule hotel, but I was here with my eldest boy, and he's 12 and flexible. He'd just finished primary school, and to celebrate we went on a father-son trip. 

I'm well aware that very soon the hormones will kick in and he'll soon communicate with me through grunts. Yet for this trip, we had the best time. And without his mother as the sensible voice of reason... it was loose.

He found a ramen joint in a back alleyway that served what looked suspiciously like raw chicken.

He looked at me. I looked at him.

"Sure, why not?"

Japan is weird. But here's what's weirder:

The camera wasn’t the real shock. What happened in Japan’s financial markets was.

In the 1980s they had the mother of all wealth booms.

In the 1990s they had the mother of all debt busts.

And since then they've had the mother of all borrowing binges to ease the pain. The government  kept piling debt upon debt for decades, and kept rates ultra-low to keep it manageable. They had the highest debt levels in the developed world. Everyone warned them. For years. Nothing happened.

Until this month.

While I was sleeping in my surveillance capsule, Japan's bond market had a meltdown. Yields that should take months to move exploded in a single day. Bloomberg called it a "once in 1.4 million year move." The US Treasury Secretary had to call Japan's Finance Minister to say: "Your bond crisis just hit our markets."

Here's why that matters to you:

In Australia it’s not the government that has the debts, it’s our households, and it's one of the highest in the world. We've got massive mortgages, cheap rates, and we think we're different.

Japan thought they were different too.

For 30 years, they got away with it. Then one Tuesday, the market said:

 "Not anymore." 

I’m not saying Japan is about to collapse. What I am saying is that things that look safe for decades can break in an afternoon.

My takeout from Tokyo? 

Don't confuse thirty years of calm with safety (oh, that and don't eat raw chicken, or stay in hotels with a camera pointed at your snoring noggin).

Tread Your Own Path!

ING Sucks … Right?

I was sitting on the tractor when my phone beeped.

“You’re all over my feed!” texted my mate.

He’d sent a Facebook post with a picture of me and Albo and the line: 

“Barefoot blasts Albo! I’ll bet my sheepdog's left testicle it's wrong."

Woof!

There were 1,900 comments. Struth!

So, in the interest of balance, this week I'll answer a question from Tim, who thinks I'm a complete and utter moron.

5% Deposits Are GOOD, You Moron!

Scott,

I've been reading your column for years and I think you've finally lost the plot. You're bagging Albo's 5% deposit scheme like it's some sort of scam, but here's what I don't get: I've got $35k saved for a $700k house. You're telling me I should wait YEARS to save up $140k for a 20% deposit? By then, house prices will have shot up another 20-30% and I'll be completely priced out. Meanwhile, my rent keeps going up and my landlord just sold the place out from under me.

The way I see it, this government scheme is my only shot at getting into the market before it's too late. But, according to the Barefoot Investor sitting in his paid-off mansion, I should just keep renting and “save harder”. Easy for you to say, mate. So why don't you explain to me how waiting years to save more money, while watching house prices run away from me, is somehow the smarter move?

Tim

Hi Tim,

If I'm ever tempted to go into politics, I'll re-read your letter. It'd cure me instantly.

Right now you're on Australia's most depressing treadmill: running flat out while prices (and rents) keep rising faster than you can save. You're absolutely knackered. And then Albo shows up with a way to get you off … right now. 

It's a vote-winner!

My view? 

Albo has helped you off the treadmill … and straight on to the stepper machine. 

And this machine is way harder:

Your house and contents insurance is up 20%. Step. 

The council rates come in. Step. 

Your hot water service carks it. Step.

Now let's crank it. 

A $665k loan at 6% = $3,987 a month, or $47,844 a year. 

At 7%? You'll need to find another $5,244. 

At 8%? Your calves are burning.

And here's the kicker: with only 5% equity, one bad year – job loss, health scare, divorce – and you're wiped out. You can't refinance, can't sell without tipping in cash. You're trapped. Mate, with maximum debt and minimum buffer, you're one bad year away from disaster.

And that is why I'd be such a bad politician.  

There is no way I'd pass a policy that I wouldn't let my own kids do – it sets them up to fail.

Yet it gets worse. 

This does the EXACT OPPOSITE of what the policy promises: Government guarantees don't create more houses, they just pump more borrowed money into the same pool of properties. More buyers with more leverage chasing the same properties equals higher prices.

So what would I do if I were Albo for a day? 

Well, it seems to me that first home buyers are grinding away on the treadmill, while investors are gliding past them on a government-funded escalator – tax breaks on the ride up, tax breaks on the ride down, and immigration keeping the whole thing moving. 

So, I'd do everything I could to reframe housing as something for living in, rather than speculating on. 

Which is why I'll never be a politician. Because I have no easy answers, and no spin, Tim. 

You're right though: it is easy for me as a home owner to say "save up for a bigger deposit".

Regardless, here's the truth: I'd rather cop a spray from you now than cheer you on while you climb onto a step machine that's designed to break you.

Tread Your Own Path!

Finally some good news for first home buyers

Finally some good news for first home buyers! 

Albo popped up on the socials, grinning through his hipster glasses like your drunk uncle at Christmas lunch, boasting:

"First home buyers, mark your calendars. We're making it easier for you to get your foot in the door sooner. On October 1, 5% deposits start."

That’s this Wednesday.

So is this the week Albo helps you get “a foot in the door”?

Well, if you supersize into a 95% home loan, I think you’ll be lucky to jam your pinky toe in a dog flap.

However, the Treasury doesn’t agree with me. They’ve forecast that letting millions of young people in on a 5% deposit will only push up house prices by a teeny-tiny-itty-bitty 0.5 per cent over six years.

Phew!

Though I’d bet my sheepdog Lucky’s left testicle that they’ll be wrong. Because the Treasury's forecasts are almost always wrong. (Relax Lucky, your balls are safe.)

And that’s the rotten core of this policy. It’s dressed up as a helping hand, but it’s really just a shove into bigger debt. Instead of making homes more affordable, it will push prices higher and encourage first home buyers to borrow more and save less. That’s subprime lending, Australian-style.

So picture it: young buyers sprinting to save while house prices climb faster, while a conga line of politicians, mortgage brokers and real estate agents egging them on – straight into becoming postcode povvos.

What could possibly go wrong?

Well, when interest rates rise, many of these postcode povvos will hit the wall with a double dose of rising repayments and negative equity ... and it's taxpayers who will be on the hook to bail them out.

Now, Albo isn’t an economist. He just occasionally plays one on TV around election time. Yet he does know how the numbers work in politics. Two-thirds of voters own a home, most want prices to go up, and plenty of MPs on both sides own more than one property. Albo’s done the maths, and he’s making sure his roof at the Lodge stays secure.

That’s what really stinks. It’s not just a dud policy, it’s insulting. It tells first home buyers they’re being helped, when in reality they’re being pushed further away from owning a home. And if this scheme becomes entrenched, it will lock in that disadvantage for generations.

One day renters will wake up, realise the game is rigged, and evict their legislative landlords.

Mark your calendar.

Tread Your Own Path!

Photo: Nova

The trouble with Trump

Less than fifty days ago, my inbox was chock-a-block with emails like this one:

“HELP! My share portfolio is getting smashed! On the news last night Alan Kohler said that Trump’s Liberation Day tariffs are much higher than the Smoot-Hawley tariffs that caused the GREAT DEPRESSION! Is it time to sell?”

At the time the share market was 16% off its highs, and it suffered its biggest one day drop in five years.

What happened next?

Well, as I predicted, Trump folded like a cheap Aldi table, pausing the tariffs for 90 days. This caused the market to roar back as if nothing had happened.

And all those worried emails?

They stopped coming. 

Do you know what this reminds me of?

Actually, the Great Depression. 

Black Monday, October 1929, is etched in world history. You’ve probably seen that iconic photo of the poor bloke trying to flog his luxury car for $100 on the streets of New York. The sign on the bonnet read: “Lost all on the stock market”.

Yet here’s what most people don’t know:

By April 1930, the stock market had bounced back … it was up 48% from the October lows.

US President Herbert Hoover boldly declared to the world that “the worst is over”. 

Phew!

Yet, as soon as those words left his lips, the market began puking.  

Violently. 

And it kept chundering for the next two long years. When it finally lifted its head from the toilet bowl, the share market had dropped a staggering 89% from its 1929 peak.

Now let me be very clear: I am not saying we are on the verge of the greatest crash in history.  What I am saying is that humans have short memories. (Okay, and that US presidents cannot be trusted.) 

Arguably the world’s shrewdest banker, JP Morgan chief Jamie Dimon, agrees. He’s worried about the Trump tariffs, even in their reduced form, arguing that the US hasn’t felt their effects yet. “The market came down 10 per cent, it’s back up 10 per cent. I think that’s an extraordinary amount of complacency”, says Dimon.

The fact is that Trump has three more years in the Oval Office, and what about this guy says, “I’m just going to go about things quietly, diligently and make no waves”?   

My guess is that he’ll get even crazier as the days tick down.

Now, if you’re like me and you got through the Trump tariff tantrum without checking your portfolio, you’re probably good to go with whatever comes next. However, if you were one of those people sending me anxious emails fifty days ago – consider this your ‘do over’.

As Warren Buffett warned investors last week, while the long-term trend is up, “you will see a period in the next 20 years that will be a hair curler compared to anything you've seen before”.

Plan accordingly.

Tread Your Own Path!

Here’s what happens next to house prices

So the election is done and dusted.

Albo has been given the rose by Australia. He is our most eligible political bachelor. And, if the Internet is true (and I’m sure it is), I saw a picture of Dutton working at McDonald’s.

So where are we at?

Well, I caught up with my old mate Louie Christopher from SQM Research, who’s predicting that in this  calendar year property prices are going to rise …

By up to 10%!

And do you know who that reminds me of?

My young pup Lucky. 

I throw her a bone … and she pounces on it, like a first home buyer at an auction in an outer suburb.

And just as she’s about to grab that juicy bone … I kick it just a little bit further.

“The first home buyer deposit policies are stupid … they will just push prices higher”, says my mate Louie.

Indeed they will.

Yet what clenches my sphincter is that Albanese, Chalmers and Dutton knew it.

None of them would sit down at Sunday lunch and tell their sister (if she was a single mum on a low income) to go out and buy a house with a 2.5% deposit. Nor would they tell their own kids to sign up for a 5% deposit loan. 

Instead, they’d say: 

What if interest rates go up? What if you lose your job? What if you can’t make the repayments?

However  it’s a totally different thing when it’s campaigning for faceless voters.

So, as they bask in their glory and buy a burger from Dutts at Macca’s, I think Albo and Jimbo should read this question I got from one of their constituents, Sarah, this week:

Hi Scott,

Two years ago I purchased my first property using the Government’s single parent grant, which meant I only had to save a 2.5% deposit and the LMI was waived. Buying this property was a huge achievement as a single mum on a low income. Unfortunately, with the rise in interest rates and cost of living, I can no longer sustain the cost of my mortgage. My daughter and I are really struggling. What options do I have?

In the coming week I’ll put on my financial counsellor hat and help Sarah.

It’ll be a good warm-up. After all, come January 1, when Labor’s 5% deposit policy kicks in, there will be a lot more Sarahs coming through the door. 

Make no bones about it.

Tread Your Own Path!

My thoughts on the election

In the holidays, I spent $60 in fuel and tolls driving my thirsty ute across Melbourne … 

… to save $30 on a camping dunny. 

True story. 

That’s right, I literally burned more fuel than I saved … to buy a glorified bucket with a lid. (It’s for a camping trip – hey, we’ve four kids that aren’t strong enough to use a shovel.)

Yet I also scored four uninterrupted hours in the car with my 11-year-old son – a day of good chats and dodgy servo snacks. 

Priceless! 

As we drove out the farm gate, we passed what used to be golden paddocks where sheep would graze and old blokes would give you a dusty nod from the top of their tractors. 

Now? 

Sardine tins. Sold at caviar prices. 

The northern fringe of Melbourne — where we live — is growing faster than my inbox after a long weekend. But the roads? Still the same goat tracks, just with more SUVs and road rage. 

As we hit peak-hour gridlock, my son let out a theatrical sigh.

“Perfect,” I said. “More time to read election billboards.”

We passed Clive Palmer glaring down at us blowing his own trumpet.

“Is that our version of Donald Trump?” my son asked.

“Sort of. If Trump was raised on talkback radio and meat pies.”

As we snaked our way down the highway we passed billboards of ‘dead-eyes’ Dutton, and ‘tiptoe’ Albo. Seriously, these two have all the charisma of suburban accountants debating depreciation schedules. 

“All the billboards mention the cost of living”, remarked my son.

Spot on, mate.

And the biggest cost? The roof over our heads — rent or mortgage. That’s where the squeeze is. 

Australian homes are now some of the least affordable on Earth. And to afford them we’ve racked up world-class debt. Back in the mid-2000s, the average house cost four times the average income. Now it’s more than eight.

It’s clear that we’ve priced ordinary Australians out of their own neighbourhoods.

So what are the bold economic plans we’ll be voting for in the election?

Well, Labor wants to slash deposits to 5 per cent. Which is as dumb as it is dangerous. Remember, the US subprime crisis was created by politicians making it easier for broke people to buy homes. 

Not to be outdone, Dutton, the so-called economic conservative, is promising to allow first home buyers to raid their super and write off their mortgage interest. 

It’s madness. 

Both policies are like turning up at an auction and handing everyone a suitcase full of cash. It doesn’t make homes cheaper. It just lets buyers bid higher — and history shows they always do.

And the result?

It drives house prices higher. It drives rents higher. 

It seems like both sides have designed their housing policies to fit on a highway billboard: 

Big font. Feel-good slogan. Eye-roll logic. Paid for with borrowed money. 

And in doing so they’ve turned the great Australian dream into a financial trap. (Welcome, postcode povvos!)

After a long day of driving we got the portaloo and made it back home. Yet I couldn’t shake the feeling that our national housing plan was cooked up in the same aisle as the dunny bucket: cheap, flimsy, and bound to leak. 

Tread Your Own Path!

The Greens Party Listens

Hi Scott,
 
You seem to be singing from the Greens playbook. This week they are shrewdly threatening to not pass the government’s Help to Buy scheme unless they agree to stop negative gearing and freeze rents. Plus, their stunt on calling out the number of pollies that own investment properties (most of them) was also very Barefoot. So, are you a member of the Greens party?
 
Sarah
 
Hi Sarah
 
I’m a V8-ute driving, gun-owning, farmer, who has proudly never eaten tofu. So no, I’m not a member of the Greens party (or any other political party for that matter). However, that allows me to sit on the (barbed wire) fence when it comes to politics. So, I think the Greens should be congratulated for not supporting the Help to Buy scheme because it’s a dud policy that will incentivise broke people to buy homes they can’t afford.
 
However, their policy proposal of freezing rents is Barnaby Joyce-like embarrassing.
Think of it from the landlord’s perspective: if the government limits what rent they can charge, what incentive do they have to spend more money maintaining the property? And what’s stopping them from bypassing these laws and getting a higher rent from Airbnb?
 
Look, there are no easy answers to our housing crisis – and it’s something that’s happening the world over. Yet if I was a politician for a day, I’d wave my magic wand and scrap all the first homeowners grants and policies like Help to Buy that simply serve to push prices higher, and instead spend the billions on rebuilding public housing so vulnerable kids (and their parents) have a secure roof over their heads.