The politician in front of me was leaning in, studying my face.
(For reasons that will soon become apparent, I’m not going to reveal their preferred pronoun).
We’d caught up for a quick meet-and-greet at a suburban cafe in their electorate.
Their agenda: get my endorsement in the upcoming Victorian state election.
My agenda: get more funding for free financial counselling.
After I’d finished my spiel, the politician took a sip of coffee and, without breaking eye contact, said:
“Good on you for helping out the no-hopers.”
No sooner had the words left their mouth than a look of horror came over their face. It was like they wanted to reach out, grab the words, and stuff them back down their gob.
Still, there are a lot of people who view financial hardship as a character flaw. Something that happens to people who can’t hold down a job.
Last week I helped launch the Price of Survival report by the Consumer Action Law Centre. It found that 38 per cent of people who call the National Debt Helpline in Victoria or Queensland are working or self-employed. Mortgage stress is now the top issue for callers.
No surprises there.
Households today spend a bigger share of their income on interest than they did in 1990, when rates were 17%. (So next time your old man starts on the “back in my day”, say, “hold your beer, Dad!”)
And it’s getting worse.
Last week the Reserve Bank of Australia (RBA) appeared on 60 Minutes to soften us up for (possibly) multiple rate rises.
Why do they keep lifting rates on home owners?
Two reasons.
First, because government spending is in part fuelling inflation.
(The Treasurer is instead blaming global oil prices … so why aren’t the US and UK hiking as aggressively as we are?)
And second, because they have no choice.
Their main job is to stop prices rising too fast, preferably below 3% a year. And their latest figures this week show prices are up 4.3% to September, driven in large part by housing, transport and education.
In other words, the stuff you can’t skip.
These price rises compound … and they’re devastating. And the people they hit the hardest are what that politician (who I haven’t named, and won’t be endorsing), calls the “no-hopers”.
Tread Your Own Path!
P.S. If you’re feeling like there’s not a lot of hope for you right now, call the National Debt Helpline (1800 007 007) and speak to a financial counsellor, who will help you get some clarity and control of your situation.
P.P.S. And if you’re worried about another rate rise, the best thing you can do is call your bank this week and negotiate a better rate. On an $800,000 home loan, another 0.25% rise adds about $130 a month, or roughly $1,500 a year. How likely is it that you’ll succeed? The odds are better than anything you’ll get on the Melbourne Cup.
Your Questions & Answers
Maybe Baby
Did I F*&ck Up?
Maybe Baby
Hi Scott
I’m 52 years old and I work full time as a dietitian (clearing $3,800 per fortnight) and work in aged care on the weekend (earning roughly $650 per fortnight). The only debt I have is a $280,000 mortgage. My boyfriend has a long criminal history and suffers mental health issues that prevent him working, so his income is Centrelink only. We have very different approaches to money, but I love him and he makes me happy. But will I ever get ahead with money? I would like to enjoy life rather than being tired from working.
Andrea
Hi Andrea,
Will you ever get ahead with money?
That’s a big ‘hell yes’ from me.
You're clearing $3,800 a fortnight before you even count the weekend work. Paying off a $280,000 mortgage in 15 years is about $1,100 a fortnight. You can make extra repayments and easily knock it over before you retire, and then direct your free cashflow into turbocharging your super.
You could even consider giving up the weekend work (or at least scale it back) and enjoy your fifties.
Yet the question you really need to ask is this:
“Will you ever get ahead with this bloke?”
And that’s a big … maybe from me.
Here’s my problem, Andrea:
You’re not asking me about your relationship. Which is wise, because that is not my area of expertise, and it’s also none of my business. Yet I’m very good at dealing with maybes, so let’s talk about them.
Maybe he moves into your home.
Maybe Centrelink classifies you as a couple and his payments could go to zero. You are then on the hook to pay for everything: groceries, underwear, medicine. Forever.
Maybe you break up.
Maybe he goes to see a lawyer who suggests he can claim a slice of your house and super. You’re already tired from working and supporting someone. You’re emotionally exhausted from the breakup. And now you’re dealing with financial and legal stress.
Andrea, I don’t know how likely this scenario is, but it ain’t zero. So get a binding financial agreement (and remember he needs his own lawyer or a court can throw it out).
If you were my sister, here’s what I’d tell you:
You’ve got yourself in a strong position through sheer hard work: no ifs, no buts.
The only thing left to think about is the maybes.
Did I F*&ck Up?
Hey Barefoot,
My late parents were hard-working European migrants who built up multiple rental properties for us kids. That stuck with me. I’m a single mum. My kids (now in their 20s) still live with me. I’ve been happy to support them through uni, first jobs and saving for deposits. Two of them already own their own places and are getting ready to move in. I’m proud of them. Then they started saying that parents should leave a legacy for their kids (and that they’d do the same for theirs). I kind of flipped.
I’ve worked hard not just to give them a good life but to sort my own retirement: home paid off, super beefed up, and index funds (thanks to your book). The whole point was not to be a burden on them. Now that they’re grown I want to start enjoying myself and buying a few nice things I’ve never really had. I felt like they aren’t seeing me as a person in my own right, but simply a support system. Did I f&*ck up?
Natalie
Hi Natalie,
I get that you’re feeling hurt.
My kids hurt my feelings all the time.
My five-year-old said to me the other day:
“Dad, I can’t wait to get older so I can be like you and not work.”
My wife thought it was hilarious.
I did not.
I spent the next five minutes explaining that I did work very hard and that I was in fact very successful.
“Yeah, yeah, you help people with money, I get it,” he laughed.
But he didn’t get it.
I don’t think kids ever fully understand the sacrifices you make for them. Besides, right now your kids are still young enough to know everything. One day they’ll realise what you have done for them, and appreciate the sacrifices you made.
It doesn’t sound like your kids are entitled. It sounds like you’ve done too good a job being the provider. You’re a single mum, doing it on your own, and you’ve raised financially strong, successful kids.
You didn’t mess up, you made it look easy!
However, you sound like you might have some parental guilt of your own:
You’re picturing your parents selflessly slaving away to buy investment properties for the family.
Should you do that?
No.
At the guts of it you’re asking me permission to spend your money on yourself.
Not only am I giving you that permission, I’m also firing a cracker up your clacker.
Get going!
Ages sixty to seventy are the ‘go-go’ years. That’s when you want to travel and enjoy yourself. Seventy to eighty are the ‘go-slow’ years, while eighty-plus are (often) the ‘no-go’ years.
Your kids have already received their inheritance. Now it’s time for you to do you.
Thanks for reading,
Scott.