Car Crash Classroom

Hi Scott,

I am a 25-year-old teacher and I got a car loan in my second year of uni. I had no idea what interest rates were, or how getting a loan worked, and just signed away on the first deal I got accepted for (which ended up being a fixed rate loan with a 17% interest rate). I have now finished uni and am teaching, earning $63,000 p.a. I want to start saving towards my first house, but I have had the car for four years and still owe $8,000! How do I go about fixing this mess?

Sarah

Hi Sarah,

Honk your horn, because you just got totally rear-ended on that deal.

You signed up to a 17% p.a interest rate, fixed for the term of the loan?

Hopefully the term of the loan is five years, which would mean you’ll be free in 12 months’ time. (Though it’s worth checking your contract to see if you can repay early without penalty.)

Unfortunately, I have no magic wand for you. However, you can be the fairy godmother to your students, by making sure they don’t fall for the same trap you did.

So what I want you to do Sarah is to stand up in front of your class and tell your students just how ‘toot, toot, chugga, chugga-d’ you got when you bought a car.

Actually, don’t do that, they’ll use it against you.

Here’s how old Barefoot would teach it.

(It involves harnessing their hormones ‒ their desire to buy a car, travel, party, and get rich!)

Here goes:I’d channel my inner Oprah and start running between the desks and yelling at the kids:

“You get a car! You get a car! You get a car!”(Sorry … got a bit carried away there. Let’s get serious.)

Okay, students. Eyes front. Shoes off. Barefoot is here.

Step 1: Research a car you’d like to buy

Don’t censor yourself ‒ it can be any car you want (new or second hand).

Write down two things:

The cost of the car, which will involve some online research.

And why you chose this particular dream machine: Is it fast? Cute? Would it make you 10% more attractive?

(The class can then vote on the cars the students have chosen.)

Step 2: Decide how you’re going to pay for it

Let’s say you earn $30,000 a year once you leave school, which gives you $2,100 a month in your hand.

You can get a car loan with super-easy low monthly repayments. Why wouldn’t you?

Or you can save up and buy something for cash (though not as flash).

Step 3: App It Up

Download ‘Money Smart Cars’, a nifty car app from Moneysmart.gov.au which automatically calculates all the ongoing costs of owning a car.

Here’s an example:

Lucy buys an adorable 2016 Suzuki Swift for $13,000 and takes out a car loan at the car yard.

How much will this car cost Lucy over the next five years?

$20,000?

$30,000?

Go to the app and type in the details. After factoring in rego and insurance, interest and running costs (including $50 a week in petrol), the total cost of owning the Suzuki after five years is … a Swift $53,765!

(That’s Oprah money right there)

Scott

Here's One For The Teachers

I looked at my bedside clock: 4:03 am.

It was Monday night (actually, Tuesday morning), and I hadn’t slept a wink.

Earlier in the week I’d launched the Barefoot Money Movement ‒ my free, independent, money school program.

I’d made my case that this country needs a financial revolution, and that it needs to start with our kids.

I pressed ‘Send’ on my column … and waited.

(I made a pact with myself that I wouldn’t check the results for 48 hours … a classic ego defence mechanism.)

Would anyone sign up to pilot my money-education-minus-the-bank-mascots school program?

A few hours later I rolled out of bed and nervously checked the stats on barefootmoneymovement.org.au

It turns out people did sign up.

By the thousands.

Teachers from every nook and cranny of this country have joined the Money Movement to ensure that their students learn the life changing lessons most of us didn’t.

Fair dinkum!

There were teachers from Melbourne. From the Cocos Islands. From America. From the UK. From Uganda. From … Russia?

Anyway, I’m absolutely blown away by the response from teachers.

So everything’s ready to go for my new program, right?

Wrong.

There's just one little problem … I’ve spent the past week talking to passionate, hard-working Aussie teachers. And the one thing I’ve heard over and over again is that it’s incredibly hard to teach kids this core life skill if you’ve never learnt it or lived it yourself.

Teachers have one of society’s most important jobs, yet they don’t get paid what they’re worth.

So, here’s my promise:

Teacher Professional Development

Next year, I’ll deliver some free online professional development for those teachers who join the Barefootmoneymovement.org.au

And I’m taking this Money Movement to the top. I caught up with Education Minister, Dan Tehan during the week ‒ who I have been pitching this idea to for a while ‒ and told him that the seeds of our grassroots movement are starting to sprout. And he’s on side, commenting that “Scott Pape’s campaign to teach young Australians the importance of managing money is highly commendable”.

Finally, a big thank-you to all the teachers and principals who’ve already signed up to the Barefoot Money Movement. And if you know of a teacher who could benefit from this, please do me a personal favour and forward this on to them.

Tread Your Own Path!

Barefoot’s Money Movement

Do you want me to come to your school … and teach your kids about money?

Well, if you’re a teacher, a parent or a principal, this may be the most important column of mine you’ve ever read.

For years I’ve been saying this country needs a financial revolution ... and that it needs to start with our kids.

Kids spend roughly 2,400 days in school, yet not one of them is mandatorily dedicated to learning the practical money skills they’ll be tested on every day of their lives.

Most of us didn’t get taught this stuff either, and instead we learned our lessons the hard way. (And many of us are still learning ... given Australian families are shouldering some of the highest rates of household debt in the world.)

Our kids deserve better.

So let me tell you about my latest project, which I’m kicking off today:

‘Barefoot’s Money Movement’

My motto is: ‘Teach the Kids. Help the Parents. Change the Nation.’

And that’s exactly what I’m setting out to do.

I’ve created a brand-new school money education program for kids of all ages, based on my bestselling books.

It’s totally practical for the kids. It’s ‘plug and play’ for the teachers. And it’s mapped to the curriculum.

Oh, and it’s free, independent (no Dollarmites in sight), and totally not-for-profit.

Now my long-term goal is to roll the program out to every school in Australia. Yet to prove it works ‒ and to make it even better ‒ I’m going to pilot my classes in a small number of primary schools and high schools this year. This is a really big deal for me, and I’m going to work closely with each school I select.  

So if you’re a teacher, I really need your help.

To join the movement, go here:

barefootmoneymovement.org.au

And if you know a passionate teacher, please forward this email to them.

This is a grassroots movement, and I can’t do it without you.

Tread Your Own Path!

You Made Me Cry

You made me cry today. My 90-year-old mum had her purse stolen at the local shopping centre. When I told my seven-year-old, he immediately made her a card, put in all the money from his three jars, and gave it to his grandma. I am so proud of him. Thank you.

Melanie

Melanie,

What a great kid you have!

My biggest fear is that my kids will grow up to become entitled brats.

That’s why the ‘Money Movement’ program I’ve created for primary school kids is all about Jam Jars. The Jam Jars give the kids (and their parents) the behavioural building blocks that will shape the rest of their lives: to be hard workers, smart spenders, savvy savers, and generous givers.

The final lesson of the program has the kids brainstorming ideas of who they can help in their local community, and then donating the money in their class ‘Give’ jar.

A Cambridge University study found that adult money habits start to become fixed by age seven!

It makes sense when you think about it: as the Jesuits say, “Show me the boy at seven, and I’ll show you the man”.

Well done.

Scott

Would You Like a Credit Card With that?

Hi Scott,

My 19-year-old daughter just started a job at David Jones. To my horror, one of her KPIs is to sell the David Jones credit card to customers. In fact staff are incentivised $75 for every customer they sign up. There is a lot of pressure on her to meet this KPI, and we both feel very uncomfortable with this. I would be interested in your thoughts on this practice.

Wendy

Hi Wendy,

Would you like a credit card with that?!

Seems the beancounters at David Jones have worked out there’s potentially more money to be made flogging debt than designer duds:

The David Jones American Express Platinum Card has an interest rate of 20.74% on purchases, and a ‘competitive annual card fee of $295’.

(They seriously think that’s competitive? Who the hell are they competing with? Cash Converters?)

Anyway, this is exactly why I’m starting ‘Barefoot’s Money Movement’

Debt has been sold to us so relentlessly, so forcefully and so underhandedly that we’ve become desensitised to it.

Look, I’m not saying that DJs shouldn’t be allowed to sell debt, or that your daughter is wrong for following orders.

(That being said, if she feels uncomfortable about it, that’s a very, very good sign. Encourage her to trust her gut and her ethics. That’s a proud parent moment right there.)

What I am saying is that I’m sure as hell going to do everything I can to make sure kids coming out of school see the trap before they get upsold into the merry-go-round of misery. And in the next few weeks I’m back to my old school (in Ouyen, Victoria) to blend up some credit cards in the classroom!

True dinks!

Scott

First Home Loan Deposit Scheme

Hi Scott,

After years of saving up for a deposit and getting nowhere (I live in Sydney, and I work in hospo!), I was slightly stoked to hear about the new policy that helps first home buyers get a house with just a 5% deposit. You always say “if it sounds too good to be true, it probably is”. So what’s the catch?

Chris

Hi Chris,

When I turned 18, my teetotaling mother gave me possibly the wisest piece of advice I’ve ever received:“Nothing good happens after midnight.”

Too true, Joan. Too true.And way past midnight (in an election sense), ScoMo burped out the First Home Loan Deposit Scheme.

Here’s ... err … the guts of it:

The Government (read: taxpayer) will ‘help’ singles earning up to $125,000 (and couples earning up to $200,000) to buy a house with a 5% deposit, instead of a 20% deposit, by covering their Lenders Mortgage Insurance (LMI) bill.

On a $400,000 home loan with a 5% deposit, the LMI would cost a young couple $13,406, so it’s a huge saving.

Yet it’s also drunk policy ‒ and it has bipartisan support (Bill was quick to say he’d do it too if elected).

It’s a bit like ScoMo (or Bill) is giving you a sleazy pickup line ‒ one that sets you up for a one-night stand that leaves you with itchies and scratchies.

Look, there’s a reason banks require first home buyers, like you, to save up a 20% deposit. You’re entering into a 30-year contract, and they want to make sure you have staying power.

And if a bank that earns $10 billion a year in profits won’t lend to a first home buyer without them taking out expensive ‘default insurance’ ... why should the taxpayer foot the bill?

My view?

If you buy a home with a 5% deposit, you’re setting yourself up for a potential killer hangover … by buying a home you probably can’t afford.

Picture yourself waking up the next morning next to ScoMo (or Bill). He rolls over and whispers, “Was it as good for you as it was for me, baby?”

Don’t do it.

Scott

The School Chaplain

Hi Scott,

I know you have already had lots of positive support, but I couldn’t agree more with the priest who sent you encouraging words last week. I am a School Chaplain. The other day, a few 16-year-old students were asking me about jobs they could make a lot of money from. I told them it was probably more important they learnt what to do with the money they did earn, and then recommended your book. I was amazed when one of them turned up the next day with the book. Coincidentally the department’s network went down that day and this boy was sitting in his IT class with a teacher who couldn’t really teach IT without a network connection. Out comes the Barefoot Investor book, and the young teacher (who loves your work too) starts taking the class through some of the principles. It got me thinking ‒ how do you think it best to bring your Barefoot principles into a classroom?

Glen

Thanks Glen,

I donated a copy of my book to every school library in the country, so I’m glad they’re being read!

As for getting these money principles into schools, I’d really encourage you, and anyone else reading this, to head over to barefootmoneymovement.org.au and apply for our pilot program!

Scott

Bankrupt but They’re Still Chasing Me!

Scott,

I am a 36-year-old single woman, earning $65,000 as an admin officer, and I have recently declared bankruptcy. However, one loan could not be erased, as it is a secured loan, and my car (a Mitsubishi ASX worth $8,000) is attached to it. It is a loan for $17,000 at a high interest rate (29% p.a.), and I still have about six years to pay it off (at $350 a fortnight). I have started using the Barefoot tools from your book (Smile, Splurge and so on), but what can I do with this loan?

Lisa

Hi Lisa,

What a car crash!

You got really bad advice. If you sat down with me at the time you were going bankrupt, I’d have told you to surrender the car to the finance company and then added the shortfall (after they sold the car) onto your bankruptcy. Then I’d have advised you to save up and buy a similar car for cash.

Instead, your repayments are $8,400 a year ... on an $8,000 car!

Look, anyone who charges a 29% interest rate on a car loan is a shark-- they deserve to be battered and dropped in hot oil, and eaten by a tubby bloke at the footy.

So, if I were in your shoes, I’d ring up AFSA (the Australian Financial Security Authority) and explain there was a mistake on your bankruptcy -- you should have surrendered the car. Then explain that you’d like to do it now, and ask how you go about it.

Buckle up!

Scott

The Good Reverend

Hi Scott,

I’m just following up on your question last week, ‘Does Jesus Despise the Barefoot Investor?’

As an Anglican priest I love your books -- they are against debt, they are about living within your means, and they are about being generous. Yes, perhaps I would add a few Bible quotes to back up your principles, but it has been a book I’m happy to recommend. And, yes, there is a danger in making an idol out of money, but in this age our culture makes a bigger idol out of keeping up Instagram photos of so-called success.Blessings,

Rev. Stephen Bloor

Thank you, Reverend

I’ve actually had a lot of Christians write to me echoing your sentiments this week.

(Okay, and the odd religious nut who said I was going to hell. Seriously they did, claiming I run a cult!)

Thanks for recommending my book, I love hearing from people who've used it to get themselves out of debt and back on their feet.

Scott

A Pig Gave me a Fridge Magnet!

The other day my son came home and announced he’d received a ‘present’ … from a stranger at the local park.

“A pig gave me a fridge magnet!” he squealed (as only a five-year-old can).

His younger brother picked up on the excitement and lunged for the prize. And then it was on for young and … slightly younger. All over a freaking fridge magnet. (Then again, that’s all part of the bro code.)

As I separated the two hay-balers, I saw that this was no ordinary fridge magnet.

The pig was actually … a local bank employee dressed up in a costume.

Which bank?

No, not that one.

This swine came from Bendigo Bank, and he was apparently the star attraction at the local community event … getting selfies with the kids. Now I’m sure there were some parents who were taking photos with the pig and having a lovely family time. But, as my kids would soon understand, I’m not like other parents ‒ I get a little intense when it comes to school banking.

For me it was like my son coming home with a packet of Marlboros:

“The cool cowboy gave it to me, Daddy … and a lighter!”

And wouldn’t you know it, the Bendigo Bank boar turned up at my son’s school with bank-branded bags, colouring books and pencils. At this point I’m breathing into a paper bag: if I see that corporate clown around town, I’ll put a skewer up his clacker and an apple in his mouth!

Okay, so I’m joking … but the fridge magnet went in the bin, thus reuniting the boys against a new enemy ‒ their old man: “So unfair, Dad!

Here’s the deal: for the last 15 years, I’ve just been carrying on like a pork chop about this issue.

And, thankfully, other people are finally starting to get their snouts out of shape about it.

Earlier this year  the Australian Education Union (AEU) wrote a letter to the federal Education Minister, Dan Tehan, demanding that banks be banned from classrooms. As AEU president Correna Haythorpe put it: “There’s no place for private corporations to go into schools and try and trap children into banking with them for the long-term future.”

You know what?

We need a financial revolution in this country, and it needs to start with our kids.

Oink! Oink!

Tread Your Own Path!

We’re Rich!

Scott,

My husband (30) and I (24) have inherited an eye-watering $6.5 million! We have paid off our mortgage, bought an investment property and cleared our debts, yet we have no idea what to do with the rest of it. (We have locked it up in our high-interest account while we decide what next.) Now that we have the financial freedom to enjoy our weekly wages freely, we want to be wise with our next move. What do you suggest?

Tim and Sarah

Hi guys,

You have reached your ‘enough’ figure at a time when most couples are still trying to scrape up a house deposit.

That’s the first bit of advice: understand that you have ‘enough’. More money won’t make you any happier from this point on. In fact, as you’ve probably worked out, having lots of zeroes in your bank account is actually bloody stressful, right?

Well, here’s how I’d think about it if I were in your shoes.

Let’s say you have $5 million, which you decide to invest in a low-cost index fund (via a family trust for asset protection).

I want you to think of that investment the same way I think about my family farm (stay with me here!). Twice a year your ‘farm’ will deliver you a golden harvest, in the form of dividends, and it will grow each and every year.

In my case, the land value of my farm goes up, down and sideways (just like share prices), but I don’t care, because I’ll never ever sell my family farm. Besides, it’s the harvest that puts food on the table.

In your case, your ‘farm’ should deliver you around $275,000 pre-tax a year.

Yes, there will be the occasional ‘drought’, and lean times -- but as long as you own the farm, you collect the harvest.

And that’s the lesson: you plant once, and then you can harvest forever.

And that is why you have more than enough.

Scott

The Kind Landlord

Hi Scott,

I would like to tell you about one of our tenants.She was an excellent tenant for four years, but fell behind during the last year and was not able to claw her way back. So I gave her a copy of your book ‒ and in the last eight weeks she has paid her arrears in full, and even started saving for a house deposit.

But what made me cry was what she told me next. Her son’s marriage break-up had left him in serious home loan arrears, with the bank threatening foreclosure – and he also lost custody of his children. He had attempted suicide twice in a week, and his survival could only be described as fate. He rang his mum to ask whether she could stay with him for the weekend. Armed with knowledge from your book, she worked with him through his finances. He has now been able to pay all his arrears and overdue bills, and can focus on repairing himself emotionally.

Your book has helped millions of people with their money. But in this case I think the effect has been rather more profound – with two households at risk of losing everything being able to stay in their homes.Yours,

Jane

Hi Jane,

As the election gets into full swing, it feels like landlords are being unfairly demonised as the enemy of the renter.

Not you.

Thanks for sharing.

Scott

St George Bank Swanns Around

Hi Scott,

I am having all sorts of problems trying to cancel the credit card insurance that was added to my St George credit card when I first took it out. I was told that, as I was a single mum, I would not get the card without it. It is just under $90 per month! I cancelled it over a month ago and they are still debiting my card. St George say it’s not them and to call Swann Insurance, who say it’s not them. In the meantime it has overdrawn my account. Please help.

Louise

Hi Louise,

The St George Bank website says: “Please note Credit Card Protect is no longer sold.”Do you know why they’ve stopped selling it?

It’s not because for years it was known in the industry as ‘junk insurance’ and was hard-sold to unsuspecting customers. That’s exactly why they sold it in the first place ‒ they made a fortune out of it!

No, the reason the banks stopped flogging it is because it got the Royal Commission treatment, and, as a result, banks and insurance companies could be looking at stumping up more than $1 billion in refunds.

The Consumer Action Law Centre has set up a free website that makes it easy to claim: demandarefund.com

Yet you don’t have time to wait.

I can’t imagine how distressing this must be for you. You’re a struggling single parent, and you’ve done the right thing, but still had your account has been overdrawn over Easter ... and then probably been hit with more fees!

And it sounds like they’re giving you the run-around: I mean, who cares about a lowly single mother, right?

So let’s you and I take this to the top.

Ross Miller is the General Manager of St George Bank.

Here’s an old party trick: when you mention a bank executive’s name in print, it pops up in their media tracking service. Which means this column will soon land on his desk.

So, Ross Miller, I think you should refund this single mother all the outrageously expensive premiums she’s paid, plus any overdrawn fees or penalties.

Over to you, Ross Miller of St George Bank.

Scott

Filthy from Head to Toe

Hi Scott,

Thanks so much for your last column. My son and I went on our first camping trip these holidays and it was honestly the best holiday ever. I set a limit of $250 from my Smile account, which paid for food, petrol and admission to the Buchan Caves. He spent the whole time exploring, throwing the biggest stones he could find to make the biggest splash he could, and rolling down dirt piles. He was filthy from head to toe, asleep before his head hit the pillow every night, and already planning our next trip before we left the campground. It was amazing, and what’s more we were out of range so I had to turn my phone off -- and did not feel a twinge of guilt.

Thank you, Marie (mum to a little boy who got to be dirty for a few days and had a ball!)

Scott says ...250 bucks! That’s one night at the suburban Mantra, with food poisoning at the all-you-can-eat buffet.

Give me damper on a stick and boiling billy any day. (And a few frothies around the campfire when the kids are gone to bed.)

Good on you, Marie.

And thank you for reading.

Scott

Does Jesus Despise the Barefoot Investor?

Hi Scott,

I’m a committed Christian, and I’m also a committed Barefooter, which is why I felt a bit conflicted recently when I saw a blog post by a pastor on the Gospel Coalition website entitled: “Does Jesus despise the Barefoot Investor?”

He writes that your book should be setting off alarm bells for Christians because it encourages people to look to money for their safety rather than the Lord. Have you read the article, and, if so, what are your thoughts?

Daniel

Hi Daniel,

No, Daniel, I had not.

I’m used to hearing from disgruntled AMP financial planners … but now God’s trolling me?

Good Lord!

So, what do I think?

Not much, to be honest. He says my book “should be setting off alarm bells for Christians”, and he thinks that the Mojo account is sacrilege, calling it “a modern day idol”.

I figured he was using my name for clickbait (okay, so we’re both sinners in that regard). Yet, just to be sure I wouldn’t be turned away at the Pearly Gates, I forwarded the article on to my mother, a deeply religious woman who not only goes to church on Sundays but backs up on Tuesday nights too.Here’s what she said:

“You don’t make a god out of money! And you help a lot of people that no one even knows about.”

God bless.

Scott

Where’s the Beef?

Hi Scott,

I am a proud and very passionate vegan who normally couldn’t give a stuff about investing. (Okay, so your book really helped me, but I have never get my head around investing in businesses that harm the planet for future generations). However, some of my vegan friends have been telling me about an amazing company called Beyond Meat that has perfected plant-based meat, which some food critics weren’t able to tell wasn’t meat. It’s backed by Bill Gates and a host of other smart people. Should I follow their lead, and if so how do I invest?

Bree

Hi Bree

As a farmer, I’ve been watching Beyond Meat for a while.

And I’ve been saving up your question until they had their IPO (initial public offering), so I could tuck into it like a juicy Sunday roast.

Grab your fork, Bree. Let’s chew some investment jerky!

Beyond Meat’s signature product is the Beyond Burger patty, which has 20 grams of protein, and by all accounts smells, tastes and even bleeds like a real burger (because of beetroot juice ... rather than blood). It’s a plant-based product, not meat grown in a lab. Coles actually stock their products at selected supermarkets, and in the US their burgers are sold in thousands of supermarkets and restaurants, like TGI Fridays.

It’s a massive market.

Aussies are some of the biggest meat-eaters in the world, consuming around 100kg per person per year!

(Think about your pipes, people!)

Globally, meat consumption has increased from 70 million tonnes in the 1960s to more than 330 million in 2017, according to the United Nations.

Why?

Because the world population is growing, and this is the wealthiest time in human history … and wealthier people eat more meat.

However, there are environmental impacts -- depending on who you believe, producing 1kg of beef requires somewhere between 550 litre of water (beef lobby group) or 100,000 litres (Greens Party). And then there’s the growing backlash from animal welfare and vegan groups.

So it’s not surprising that food conglomerates have been shovelling millions of dollars into producing a low-cost alternative. Beyond Meat debuted on the NASDAQ this week, and its share price rocketed 163% on the day.

In 2017, insiders were buying in at a reported valuation of million.Today, investors are buying in at a valuation of .6 billion!

Key point: insiders like Bill Gates and Leonardo DiCaprio got in to Beyond Beef at very, very low prices.

Now they’re selling their shares to the general public (via the share market) at very, very high prices.

They’re all eating rib eye … but are investors getting the ‘mystery sausage’?After all, Beyond Beef is still very much in start-up phase and has yet to turn a profit (in fact, last year the company lost million).

So what’s my advice?

Call me old-fashioned, but I personally don’t invest in companies that don’t make money, regardless of how attractive the future looks (and the more attractive the future, the more competitors a company will have).

However, if I were in your shoes, I’d probably have a crack: it’s something you’re passionate about, and if you believe in the company and the change it makes, put your money where your tofu is. You can buy shares through your bank’s online international share broker. The ticker code is BYND.

Scott

Single Mum Slays a Dragon

Last weekend I ruined a man’s breakfast.

True dinks.

It all began when I answered a question from Louise in last week’s newspaper.

Here’s a recap:

Louise read my book, went on a Date Night (by herself!), and dutifully checked her bank statement. She found that she was being whacked $90 a month for credit card insurance.

She’d been told -- when she applied for a credit card -- that the only way the bank would give a single mum a card was if she got credit card insurance.

That was a lie.

For the uninitiated, credit card insurance is what Vanilla Ice is to hip hop: a total marketing conjob concocted to fleece unsuspecting people of their money. And that’s not just my view either -- the Royal Commission labelled credit card insurance ‘junk’ and called for it to be banned.

So, for the next month Louise tried to put her policy on ice, ice baby. Yet that was easier said than done -- her bank, St George, bounced her from one department to another, and all the while kept billing her.

Just before the school holidays the bank agreed to stop the payments.

A win!

And Louise could do with a win.

She’s a single mum.

She’d just been laid off from her full-time job.

And her little girl has a very serious illness.

But you know where this is going, don’t you?

Yes, during the school holidays, when money’s always tight, St George hit her account and swallowed up the little money she had. That left her account overdrawn (then again, on the upside, more fees for St George!).

So in my reply last week I went straight to the top: I googled “who the hell is the CEO of St George Bank?” and up popped the smiling face of Ross Miller, the General Manager. I gently suggested (to a few million readers) that he pull his finger out and do something.

I can only imagine poor old Roscoe choking on his morning cornflakes as he read the paper and saw his name in print!

In any event, he got straight on to it. And I mean straight on it -- on a Sunday no less, when banks are all closed, and counting their billions.

The result? Louise not only got her junk insurance cancelled, she got a full backdated refund, paid into her account first thing Monday morning.

Alright, stop, collaborate and listen.

After Grandmaster Hayne recommended that government and regulators act to stop the selling of junk insurance, consumers could be up for up to $1 billion in refunds. So if you’ve been sold junk add-on insurance, head over to demandarefund.com and get your money back.

Rock on, Roscoe!

Tread Your Own Path!

ING Is Not Ethical

Hi Scott,

Love your work. However, I was disappointed to see a news piece in the weekend paper about super funds being less than transparent about their ethics. I was also disappointed to discover that ING invests in coal. Saving money is important to me, but so is using my money ethically. So my question is: can you recommend a truly ethical super fund and bank? And could you consider taking ethics into account when you make recommendations?

Janice

Hi Janice,

Can I recommend an ethical super fund and bank?

No, I can’t.

It would be unethical of me to presuppose other people’s ethics.Some people are like you – they really care about the environment. Others couldn’t give a Clive Palmer.

My job is to educate, empower, and find the best deals without fear or favour.

Then you – the end user – should apply your own criteria.And that’s why I don’t rate ‘ethical’ or ‘socially responsible’ investments.

The article you mentioned cited research from an environmental group called Market Forces which found that some ethical super fund options, from the likes of Hostplus, CareSuper and AMP, don’t disclose the companies they invest in. For example, AMP’s ethical fund holds fossil fuel mining companies.

Then again, AMP argued that it ‘only represents 2% of the portfolio’.

Interesting rebuttal.

That’s like dating what you think is a straight-laced marrying type, only to find he’s just gone on a week-long crystal meth bender. “But I only get on the gear when my bro Tino is in town! It’s, like, 2% of my year. I’m totally legit 98% of the time, babe.”

Right.

My main tofu with ethical funds is not about what they invest in, but that the majority are ‘free range’ in how they charge. “A sizeable number of ‘sustainable’ funds produce sub-optimal returns at relatively high fee levels”, according to SuperRatings.

Personally, I’d rather invest in a low-cost fund and be tens of thousands of dollars better off. Then I can choose to donate the difference to causes that I care about.

Then again, they’re my ethics, not yours!

Scott

Reminder: I first wrote about this years ago and highlighted the low fees. Today there are cheaper index super funds on offer. How do I know? Because my readers constantly email me about them! So before you do anything, go to YourSuper.gov.au and compare super funds first.

My dirty boys weekend

I’m back!

I spent the school holidays roughing it.

(No, really.)

I went on a father and sons trip, camped out in a national park and let the kids range free.

The boys climbed trees, fell out of trees, and ate damper on sticks that weren’t first thoroughly disinfected with wipes.

It was sensational ... and also a bit loose.

One morning I sent Liz a picture of the boys warming themselves around the morning campfire:

“Put their jackets on and get them each a beanie or they’ll catch a cold!” screamed the reply text.

(Terri Irwin she ain’t.)

As we made our way home, the boys were clearly impressed with squeezing into a tent, doing their business behind a tree, and not showering.

“This was the best holiday ever”, announced my six-year-old.

“The best EVER”, parroted his three-year-old brother.

“The best ever?! But what about the time we went to Fiji and I chartered that boat with the marine biologist (which cost me four hundred bucks)? Or when we hired that villa in Bali and went to the water park?”

Blank stares in the back seat.

“Can we go through McDonald’s drive-through on the way home?”

“Yes … but don’t tell your mother.”

As parents we can get stuck on the idea that we need to spend a lot of money – especially in the school holidays – to create memories with our kids. Yet what they really want hasn’t changed that much in generations: outdoor fun, and uninterrupted time with their parents.

Case in point: this week the World Health Organization (WHO) recommended that kids under age five should have no more than one hour of screen time per day.

(What that means for us adults, who spend eight hours a day glued to our screens at work, and then thumb through Instagram till our head hits the hay, is a class action suit for another day.)

Still, Silicon Valley tech millionaires – who got rich getting us all hooked on screens – worked this out long ago: Bill Gates didn’t let his kids get a mobile phone until they were 14, and Steve Jobs famously wouldn’t let his kids near an iPad. And in Silicon Valley some of the most popular schools are those that are ‘screen free’.

In a world of increasing distraction, technology and busyness … parents are still the killer app!

How to Prepare for the Coming Stock Market Crash

Hi Barefoot,

My husband and I are two to three years from retirement. Someone told him there will be a financial downturn this year in Australia and our superannuation will be hard hit. Should we move our super somewhere safer?

Clara

Hi Clara,

It sounds like your husband has been hanging out with a tarot card reader (or an economist).

(For my money, tea-leaf readers have slightly more accurate stock market forecasts, and a much better wardrobe.)

Okay, enough of the jokes!

The truth is that when you hit 60, you’re going to stress about money.

It’s unavoidable. Seriously, everyone over 60 I know stresses about the stock market.So let’s talk about how to prepare for it:

The first risk you’ll face is that a stock market crash happening just before, or shortly after, you retire.

(My old finance professor called this ‘sequencing risk’ — which is a fancy way of saying that a market crash in the years leading up to your retirement will have a significant impact on the future income you can generate from your nest-egg).

The second risk is that you’ll freak the hell out, sell at the bottom of the market, and go to the ‘safety’ of cash.

The third and final risk is that you’ll leave that money in cash, and get robbed by rising prices (inflation).

The best way to reduce all three risks is by doing the following:If you’re over 60, start aggressively building up three to five years of ‘Retirement Mojo’ — a cash buffer of living expenses. (If you think you’ll get a pension or part-pension, that’ll reduce the amount you’ll need to save to reach your buffer.)

Better yet, put it on autopilot — contact your ultra-low-cost super fund and request that all future super contributions go to a cash and fixed-interest investment option. However, you should keep the rest of your nest egg in growth assets (within your super fund) to keep your nest egg ahead of inflation.

That way, when the next crash does come -- and it will -- you’ll be able to say to yourself: “That’s Day 1 — it’s a good thing I have 1,095 days (three years) of living expenses set aside to ride this sucker out.”

Scott