The Day My Dad Got a Viral STD

Hi Scott,

Recently I noticed my elderly father had gone downhill, was very quiet and was looking a bit depressed.

When I asked him, he told me that he was on a website he ‘probably shouldn’t have been’ on when the screen started to flash “YOUR COMPUTER HAS BEEN INFECTED WITH A VIRUS — DO NOT SHUT DOWN AS YOU WILL DAMAGE YOUR COMPUTER PERMANENTLY”.

He was directed to ring an overseas number to remove the virus. When he rang, they sounded professional and said they could certainly help him. He gave them remote access to his computer and requested his credit card. They charged him around $800 for the ‘virus removal’ and a further $1,200 for ‘repairs’.

Naturally he was distressed. The next day on reflection he decided to cancel his credit card. For a couple of days thereafter he was suffering from guilt and worry about any further money he might lose. Luckily, Commbank were great — they got the bogus charges refunded and gave him a new credit card. We also got his computer checked over. I always feel sorry for the oldies that don’t have someone to protect them.

Lisa

I wonder what website he was on that he ‘probably shouldn’t have been?’

Maybe collingwoodfc.com.au? Though on second thoughts, I reckon he was looking at birds ... but maybe not magpies.

I included this question because of the sheer number of people who wrote to me who’d been caught out on similar websites. (Another version of this scam happens via email, where you’re instructed to deposit a substantial amount of money to a bitcoin account within 35 days or they would release video of you watching porn, to your entire contacts list).

This scam exploits the emotion of shame and humiliation. The scammers hope you’ll pay the money, and never speak about it again, which I assume some people do. After all, can you imagine how embarrassing it would be to tell your daughter you’re a Collingwood supporter?

Scott

3 ways to spend your tax refund that’ll change your life

Did you know that the average Aussie gets a tax refund of $2,574?

Even better, this year the ‘Lamington’ (Low And Middle Income Offset) of up to $1,080 kicks in.

(The sweet spot for getting the full amount is earning between $48,000 to $90,000.

So, how will you spend a grand in the hand from the taxman?

It’s enough to buy a cheap TV from Gerry Harvey, but not enough dough to change your life, right?

Wrong!

Today I’ve come up with three ways you can spend your tax refund that will change your life.

Go, Barefoot, Go!

Don’t Pay Off Your Credit Cards

Okay, so this is counterintuitive, but if you have credit card debt don’t use your refund to pay it off.

Wait, what?

Here’s the logic: most people have been trained to see their credit card as their ‘emergency back-up money’.

Yet, if you’re in trouble, high-interest-rate debt won’t help, it’ll just make everything worse.

So here’s what to do instead: save your refund into a savings account (we Barefooters call it ‘Mojo’). Cash is the ultimate emergency back-up. Then, with your Mojo behind you, you can go ahead and confidently cut up your credit card and start paying that sucker (or suckers) off.

Escaping the credit card merry-go-round of misery will change your life.

Get a Lawyer, Son

There are only three certainties in life: death and taxes (and George Colombaris. Actually there’s just two).

So with your tax return why not protect your loved ones from the greedy tax man, after your untimely demise.

Sitting down with an estate planning lawyer and drawing up a will or, preferably a testamentary trust (plus enduring power of attorney and medical power of attorney), will help you navigate the ‘defacto death taxes’: capital gains tax, stamp duty, income tax, and (for adult non-dependent children) a 32% tax slug on your super.

Getting this sorted is the final way you say ‘I love you’ to the people you love the most.

Get a Bit on the Side

If you’ve got an idea of starting a side business, use your tax refund money to kick-start it once and for all.

These days you don’t need to put in much more than a couple of grand to get started: a basic website, some Facebook ads to attract your first paying customers. See if you can earn your money back, quickly.

A final idea, and a plug so blatant that Gerry Harvey would be proud: days ago I released the updated 2019 edition of the Barefoot Investor: The Only Money Guide You’ll Ever Need. It’s in stores now, and to date 1.6 million people have used it to change their financial lives!

Print ebook and audio available where good books are sold.

Tread Your Own Path!

My Stealth Campervan

Barefoot

I am 48 and on a low wage. Do you know of any way I can get my super (about $30,000) out of the hands of my ‘park-and-pray’ financial advisor? So far my only options look like having medical bills for cancer, being unable to pay my mortgage, or setting up a self-managed super fund. I want to use my super to build an off-grid ‘stealth campervan’. Once I have this in place, I—can live very well below the poverty line!

Eve

Hi Eve,

Just when I thought I’d had every question, you pop up! I’ve had people want to take money out of super for lap band surgery, but never a stealth campervan. (If you were morbidly obese you could access your super, but then you may not fit into the campervan. But I digress.)

There are strict rules on accessing your super early, and none of them involve buying a campervan to live off-grid. However, $30k is a modest goal even for someone on a minimum wage, and you have 20 years to achieve it before you retire, and you’ll also be building up your super.

So I’d suggest you keep your super in a low cost fund … and start saving!

Scott

How to Find a Great Accountant

Scott,

I am 51 and newly divorced, and for the first ever I feel the need to get some tax advice from an accountant. But how do I find one who is trustworthy and not just after as much of my money as they can get?

Janelle

Hi Janelle,

The cost for basic compliance work -- like tax returns and SMSF auditing -- has fallen dramatically.

Why?

Because pretty well everything is now data-matched and automated, so there’s honestly very little value they can add.

However, in your case it sounds like you’re looking for an accountant who can act as a money mentor as you start your new life. That’s a very smart idea (even better, unlike many financial advisors, accountants charge by the hour).

So how do you find one?

The same way you find a good hairdresser: ask your friends.

That being said, bad tax advice is worse than a bad haircut, so I’d also suggest you jump on to the Tax Practitioners Board website (www.tpb.gov.au) and search for a few accountants in your area.

When you have a few options, send each of them the following email:

Hi,

I’m looking for a caring, experienced accountant. I’m newly divorced and need help making sure my tax and assets are structured correctly. Moreover, I need you to explain the basics so I can have a better understanding of the financial decisions I make. To make sure we’d be a good fit, I’d really appreciate you replying on the following:

First, could you send me a short bio about yourself.

Second, could you send me an engagement letter explaining your terms and how you charge: is it by the hour or can you provide a fixed-fee quote — and what is and is not included in this fee?

Then you wait.What do you want to see from their response?

That they get back to you quickly (preferably under 24 hours), that they sound polite and professional, and that their expertise lines up with your needs.

Good luck.

Scott

Coles Mini Money

Hi Scott,

I’m sure I’m one of hundreds of people emailing you about this, but thought I’d better, just in case. As someone who is slowly paying down $70,000 worth of debt using your book, I was horrified when my three-year-old son opened a Coles ‘Mini’ with a pretend credit card inside. And the best bit ‒ the QR code on the back takes you straight to Coles financial services. What a disgrace!

Tammy

Hi Tammy,

The Coles Little Shop phenomenon reminds me of the Tazo card craze of the mid-90s.

As a kid I remember working at Woolies (okay, mainly standing around, trying to flirt with the checkout girls), and seeing grown men hunting the aisles for ‘limited edition’ plastic pog Tazos.

“Buy Woolies shares instead, toy-boy”, I thought to myself.

The Little Shop is big business for Coles: analysts estimate that it has boosted their profits by around $11 million.

I had a look at the pack (cheap plastic that would cost a few cents to make in China), and saw the card you spoke of.

It’s actually a Mastercard Coles Gift Card, so it’s not a credit card. However, retailers love prepaid gift cards because they get the money up front, and all too often the card gets lost in the sock draw, thrown out, and never fully spent.

There’s a reason big financial corporations (hello Coles Financial Services, and CommBank) give kids plastic toys with their logos plastered on them. It’s smart marketing and excellent brand association for them.

Yet this is also why I get my kids to use good old jam jars and coins for their pocket money: it makes money visual (“The more I work, the more money goes into the jars”). That way I -- not the marketers -- get to control the message.

Scott

RIP Betty

I’m so sorry for the loss of your beloved sheep dog Betty. Thank you for all that you do -- your writing always makes me smile. My husband and I have been ‘doing Barefoot’ for over 18 months now. We have paid off over $18,000 of debt in less than 12 months -- cleaned the slate. We appreciate your voice, and your generosity. Thanks a million, or at the very least $18,000, and enjoy your family time off.

Lisa

Hi Lisa

Thank you for the kind words -- and congratulations on cleaning the slate!

Then again, I had a bloke write in and ask me what losing my faithful old sheep dog had to do with finance.

“Everything”, I wrote back to him.

Some things are more important than money … and sometimes it’s nice to be reminded of that. Yet he was in the minority: I was amazed at the number of Barefooters who reached out and expressed their condolences. For those who did, thank you.

Scott

The day I got scammed on Bitcoin

“Mr Pape, are you ready to make a lot of money?” a stuffy British accent asked me over the phone.

“Maybe, but I’m not feeling it”, I replied.

“Mr Pape, are you aware that Bitcoin is currently surging? My other clients made 63% … just last week.”

“I want you to get me … motivated”, I whispered to him. “I want you to yell … at the top of your lungs … ‘I will make you reeech’.”

Silence.

“I will make you rich”, he nervously repeated.

“Louder.”

“I WILL MAKE YOU RICH!” he yelled, so loud that he forgot to sound British, and revealed his Nigerian accent.

Now I was motivated!

Yet I’m getting ahead of myself, so let me take you back to the beginning.

A few weeks ago my mate Tom Gleeson won the Gold Logie. Yet that wasn’t the only (dubious) award he won.

Tom unwittingly became the latest celebrity to be used to front a fake crypto scam called ‘Bitcoin Profits’.

The scammers not only stole pictures of him (and Waleed Aly), but they also nicked the ABC’s logo (and the logos of other media outlets) to fool people into thinking they were on the ABC News website.

Truth be told, this scam has been around for years.

They’ve used me in their ads before. And Kochie. And Richard Branson. And James Packer … but now a comedian?

So I decided I'd have a bit of fun with them.

I registered my mobile number with the scammer site, and dutifully received a phone call within 15 minutes from a man calling himself ‘David Clark’ (how Anglo a name is that?) -- the man who would eventually (with some encouragement from me) scream “I will make you rich!”

From the get-go, David was trying everything he could to get me to place a trade with his automated crypto trading program. David assured me (in his best British accent) that I was “absolutely guaranteed to make money”.

Of course, I didn’t take the bait.

Yet a reader, who I’ll call Bill, did.

Bill runs a small family business in country New South Wales and works gruelling 90-hour weeks.

Late one evening he read the Bitcoin Profits article, and the tales of instant easy riches, and thought to himself,

why not give it a go?

Like me, a few minutes later he was on the phone to a fast-talking ‘British’ account manager.

Unlike me, Bill gave over his credit card details and made his first trade.

Guess what happened?

The automatic crypto trading program worked: he doubled his money!

Bill was told to immediately top up his account with his credit card, so he could make even more money.

This process of winning, and topping up his account, kept going for the next two days.

All up, Bill transferred $28,000 into his trading account … while his winnings climbed to $50,000.

So, Bill had made a quick $22,000, right?

NO! WHAT THE HELL IS WRONG WITH YOU? CAN’T YOU SEE WHERE THIS IS GOING?

Bill had been scammed.

When he twigged, he felt physically ill.

Then he frantically called his bank, Westpac, who traced the funds to a company in (of course) Nigeria.

He then reported them to the NSW Police, who basically told him there was nothing they could, or would, do.

“I just wish they would at least warn people about this scam … there’s another lady I know who lost $60,000 the same night as me!” lamented Bill.

I promised Bill I’d do everything I could to help.

Okay, while that stops short of going to Nigeria, I can ask you, my readers, a favour.

Let’s collectively give these scammers a Hard Chat: tell everyone you know to avoid Bitcoin Profits.

Tread Your Own Path!

Fighting in the Jungle

Hey Scott,

My mother and her partner owe money left, right and centre -- in fact the sheriff is chasing them for more than $100,000. But they live in a caravan and are ‘on the run’ (not so much Bonnie and Clyde, more like postcard bandits). So both my brother and I are having the sheriff roll up at our houses looking for them. And we regularly receive letters from banks looking for them. What can we do to fix this situation? 

Fiona

Hi Fiona,

I see your postcard bandit analogy, and I’ll raise you.

They remind me of Hiroo Onoda.

Hiroo who?

He was a Japanese soldier in World War Two, stationed in a jungle in the Philippines.

Unfortunately, no-one told him the war was over, so he spent 29 years in the jungle believing it was still going.

In the same way, your mum and her partner still believe they’re fighting a financial war against their creditors.

The reality is that if they’ve got a sheriff chasing them they’ve already had a court judgement against them.In other words: the war is over, and they are the casualties.

The creditor has 15 years to chase them for the debt (well, in Victoria, other states differ). And during that time the creditor can enforce the debt by seizing their goods, garnishing their wages, or forcing them into bankruptcy.

So what can they do?

Well, they can pay the debt off in full (though that’s unlikely), negotiate to pay the debt off in instalments, or raise the white (financial) flag.

Regardless, the sooner they can call in the cavalry -- in the form of their local community-based financial counsellor (1800 007 007) -- the better.

Scott

The Old Black Dog

Today I want to tell you a story about the dog that’s on the cover of my books.

(If you've read my latest book, you might think you know how this story ends … but trust me, you don’t.)

Her name is Betty, and she’s an old sheep dog from the Mallee.

Betty was kindly given to me years ago by my uncle, who told me she was the hardest-working dog he’d ever had.

No-one knew exactly how old she was, because she’d been passed from farmer to farmer for years.

And now she was at my farm.

The first night we bought her home, I put her food in a shiny new doggy bowl.

Betty cocked her head and wouldn’t eat it.

“Maybe she’s feeling insecure about her new environment, and she’s off her food”, proffered my animal-loving wife.

My uncle had other ideas: “Just tip the food on the ground.”

Betty dutifully started chowing down.

It was the same deal with her newly bought kennel (with an expensive sheepskin for warmth).

Betty sleeps on the dirt underneath the ute … so she won’t miss one minute of work.

And work she does. She’s unstoppable.

Betty is a legend in our family.

And years from now we’ll use her story to teach our kids about life:

Kids, you may think you want cool clothes, an Apple watch, or a fancy car.

But you really don’t.

What you really want is to be loved and respected.

And marketers manipulate these deep-seated desires to get us to buy their stuff.

Yet it’s a trillion-dollar lie.

The truth is that to be loved and respected … you don’t need status symbols, or gadgets, or fancy brand labels.

No.

If you want to be loved and respected, just do two things: be kind, and be a hard worker.

Even then, some people may still not love and respect you ‒ but the right people will.

Betty died this week.

For a sheep dog (age unknown), who was passed around from owner to owner, Betty finally found her home.

Rest In Peace, Betty.

You were loved and respected.

Tread Your Own Path!

P.S. I’m off for a couple of weeks for the school holidays to hang out with my kids.

And the Judge’s Gavel Fell

Scott,

I have a court judgment against me for a $10,000 credit card debt, along with other credit card and personal loan debts that have accumulated to over $20,000. Over the last three years I have recovered from addiction and mental health issues, as well as homelessness. Through hard work I have finally landed myself a stable job in the industry I studied at uni for, earning $96,500 a year. Still I cannot get ahead. I would like to go bankrupt to wipe the slate clean and start again. Is this a good idea?

Natalie

Hi Natalie

Rising strong!

Congratulations on your continued recovery. That shows courage and perseverance. You’re a fighter.

Yet bankruptcy, in my opinion, is not an option ‒ you’re earning too much dough!So what should you do instead?

First things first, get a copy of your credit file and see what’s on it.

Then, you have a couple of options:

You could contact your lenders (specifically, their hardship departments) and disclose that you took out the debt when you were suffering from addiction, mental health issues and homelessness. If you can provide supporting documentation from doctors and case study workers, you may be able to have the debt waived on hardship and compassionate grounds (and there may also be ways to have the $10,000 court judgement waived as well).

Or you could choose to negotiate a realistic repayment schedule. On your income you’d pay if off inside of a year.

You Got This!

Scott

I’m Not the High Earner Anymore

Dear Barefoot,

For the last 16 years with my partner I have been the higher earner, and at times he has been unemployed. We have always pulled through together but I have mostly carried the financial burden. This year he has nailed a great contract and will earn 50% more than me. I don’t know how to begin a conversation about where that money is going to go. I don’t want to sound like I am holding a grudge, but I also don’t want him building a tidy nest-egg while I have little to show for the sacrifices I have made. What do I say?

Delia

Hi Delia,

Just blame me.Seriously, here are the exact steps you can take.

Step 1: Buy a copy of my book.

Step 2: Announce: “I’m reading this book and it says we need to go on a Date Night to discuss our finances.”

Step 3: With a beverage in hand, say something like “for 16 years we’ve been a team ‒ we’ve looked after each other financially ‒ but for the first time in our relationship I feel financially vulnerable”.

Step 4: Tell him, “The book says one way couples in long-term committed relationship can work through this is to open a joint transaction account, with a no-questions-asked pre-agreed spending limit. The book has instructions on the best account to set up, and we can do it before the entree arrives.”

Step 5: Then stop talking. Listen to what he says.Bottoms up!

Scott

You Offended me Last Week

Hi Scott,

I just read your Q&A and saw your column on ‘Why NAB employees read my book’.

I am a little offended by what you wrote. You are making out that all bank employees are evil people trying to stooge customers out of money. I have been working for NAB for nearly 20 years, yet I did not have a good grasp of my finances before reading your book.

I had a NAB home loan above 4.5% ‒ being young and naive I thought NAB would look after their employees and never realised there were better deals out there! After reading your book a couple of years ago I made the move to UBank to a home loan under 4% and have now secured a 3.35% loan.

There are many people working for NAB who do not understand finance and are in the same boat as most of your readers. There may be quite a few bankers out there who set out to do the wrong thing by our customers, but I think it very unfair that you make us all out to be like this.

NOTE: If you make this email public can you remove my name from it. Most of my team are barefooters but if management see this they may make it hard for the team. Some managers take the hard line whenever anything negative is said about the company by an employee.

Regards,

NABer

Hi NABer,

Given NAB has around 35,000 employees, it would be a bit rich for me to label them all as evil … which is why I didn’t. And clearly most are honest, hard working people like you.

What I did (comically) poke fun at is that many people in the bank’s call centres would be on sales targets, and a call from a Barefooter would be a yorker (in cricket terms … or perhaps a bouncer) if they don’t get what they want.

This week my inbox was chock full of people (like you!) who successfully used my ‘bitch don’t switch’ home loan script to score a much better deal on their biggest expense.

Thank you for reading,

Scott

Reminder: I first wrote about this years ago and highlighted the low fees. Today there are better bank accounts on offer. How do I know? Because my readers constantly email me about them! So before you do anything, google the best accounts on offer now.

Changing Our Kids’ Lives

Hi Scott,

My parents were terrible with their finances (and still are, sadly), so I learnt from them that ‘credit is OK’ and got myself into all kinds of trouble. Then, two years ago, I read The Barefoot Investor, and my partner and I are now very close to paying off all our debts. A few weeks ago I read The Barefoot Investor for Families. We have two children, aged 3 and 5, so we started the jam jars with them. Today we all went to Target, and when we were in the toy section, instead of saying “Mummy, can I have ...” they were saying “I’m going to save up for this”. How powerful is that? We are determined for our kids to be financially savvy, and now we feel we can do it.

Layla

Hi Layla,

Thanks for writing and telling me of your win. You see, I got a letter from another parent this week who told me that I was corrupting the youth of Australia. Her basic argument was that making kids work for money is too full on: “Why not just let them be kids ‒ they’ve got the rest of their lives to worry about money?”

That’s certainly one approach, yet for me it’s code for “Don’t worry, shnookums, here’s twenty bucks”.

What you’re doing, on the other hand, is teaching your kids self-reliance. More importantly, you’re giving your kids self-confidence, and there’s no age restriction on that. I’ve always said that an amazing thing happens when kids save up and buy something on their own steam. It’s not only a proud parenting moment for you, but it’s a life-changing experience for them. You got this!

Scott

Help, My Husband’s a Hoarder!

I just finished my first Barefoot Date Night with my hubby. My problem is that he is a hoarder, and the look on his face when he heard your advice about selling our stuff on Gumtree was nothing less than horror. And without selling a heap of stuff there is no way we will have a Mojo account. He earns way more than I do (as I have gone back to university) and I have already sold most of my stuff to pay for textbooks and such. What should I do?

Lee

Hi Lee,

So what you’re saying is “with my drop in income I feel vulnerable, and I want some financial security”.

And what your husband is saying is “I don’t really care”.

Is that too harsh?Probably (especially if he’s actually got a thing for hoarding).

I’m sure he does care … he just doesn’t need to think too deeply about it, because you keep things separate. He may not even realise you’ve had to sell some of your stuff to buy your university books.

Yet this approach isn’t working for you now, and it won’t help you achieve your joint life goals.

So if I were in your shoes I’d have another Date Night and put the issue fair and square on the menu:

As a couple, what do we value more: our stuff or our financial security?

Scott

The 4 cheapest home loans on the market in June

Why NAB Employees Read My Book

The other day I got this email from Trevor:

“Catching the city-bound Frankston train this morning, I had to chuckle at a NAB employee reading The Barefoot Investor. I wonder if it’s part of NAB’s mandatory training?”

What Trev is referring to is a script in my book that I call the “$22,064 phone call”, which gives you the exact words to say to get a cheaper rate from your bank.

Yet with 1.6 million copies sold, it’s now a well-worn script!

You can almost picture the bank’s call centre staff gnashing their teeth when they realise they’ve got a Barefooter on the line. They instantly know exactly what the customer wants … and how the call will end if they don’t get it.

Last week I spoke about getting rogered by your bank, as they sneakily cut their savings rates in the month before the Reserve Bank dropped its rates.

Well, on the other side of the bank’s ledger, things are getting cray cray, in a good way.

Example: NAB-backed UBank is offering a one-year fixed rate at 2.99%.

Smoking rate, right?

Sure, right now. But a year is a long time in Reserve Banking ‒ and this week they’ve indicated another cut (or two) is on the cards.

That’s why I recommend staying variable, and screwing down the cheapest rate you can.

So what are the best deals right now?

According to my fiercely independent research, the cheapest variable mortgage is Reduce Home Loans at 3.09% (or 3.19% with an offset account). Reduce Home Loans, by the way, is actually a white-labelled (rebadged) loan from the Bendigo Bank.

(Let’s spare a thought for Bendigo’s head of marketing, who just spat out his morning coffee at having this revealed in the paper.)

Other cheapies are financial tech outfits TicToc at 3.27%, Loans.com.au at 3.28%, and Athena at 3.34%.

These rates are generally only for eligible borrowers. (Think of it like striking up a conversation with a hottie at a bar. Unless you’re a good catch ‒ more than a 20% deposit or equity, a stable job and all your teeth ‒ they won’t even look at you.)

Still, home loan rates are at the lowest levels in history, and competition for borrowers is cutthroat.

Bottom line?

This is a once-in-a-lifetime opportunity to get the banker off your back.

So please do me a favour. Take out your phone. As in right now. Go on. Ask Siri to remind you to call your bank this week. Borrow my book from the library, and use my original well-worn script. Then, after you’re done, email me (scott@barefootinvestor.com) and tell me how much you saved.

Tread Your Own Path!

Reminder: I first wrote about this years ago and highlighted the low costs. Today there are better deals on offer. How do I know? Because my readers constantly email me about them! So before you do anything, do a quick google.

The Best Bank Accounts After the RBA’s Rate Cut

Interest rates are officially at their lowest level, ever. Which means things are grim for savers.

So today I’m going to make sure you are not getting rogered by your bank.

And there’s a lot of it going on:

For example, did you know that, according to comparison site Mozo, banks cut rates on 59 separate savings and term deposit accounts in the month before the latest RBA decision?

That explains why the Financial Review this week reported that 80% of savings accounts are actually losing money after the effects of inflation.

They’re like the Oliver Twist of finance! More? You want more interest? (Ask your parents.)

Okay, so let’s talk basic transaction accounts.

I like a ‘Mark Waugh’ (all-rounder) type of account, which is why I have steadfastly stuck with ING’s Orange Everyday: it has zero fees (including no international fees), makes it easy-peasy to maintain my buckets, and pays decent interest. (Although today ING dropped the maximum interest rate on the account to 2.55%, in line with the RBA’s rate cut last week.)

Yet I’m not paid to promote anyone, so what about the competition?

ME Bank is good, though their tech feels like it was built by the same team who made the Sputnik.

On the other hand, Up Bank (a division of Bendigo Bank) has great tech and offers competitive rates on all your buckets … but it’s still a work in progress as they roll out their feature set.

Now let’s talk Mojo (savings) accounts.

I use UBank’s USaver, which pays 2.87% ‒ although you have to keep contributing $200 a month to maintain that rate. Still, if you’re boosting your Mojo, that works.

And the competition?

Well, there’s a bunch of online savers that pay bonus interest bribes, but they all fizzle out after a few months and revert to lower ongoing rates. Then again, the best of them revert to rates between 1% and 1.8%, which is still better than the vast majority of accounts out there.

Finally, if you want to lock in your money, the best 12-month $100,000 term deposits are with Arab Bank and Teachers Mutual (both at 2.7%), though it’s a slippery-dip from there (say a prayer for the retirees!).

Fact is, cash is trash at the moment, and it’s only getting worse.

Roger that!

Tread Your Own Path!

Reminder: I first wrote about this years ago and highlighted the low fees. Today there are better bank accounts on offer. How do I know? Because my readers constantly email me about them! So before you do anything, google the best accounts on offer now.

Dollarmites Out!

Yay! You made it into the Yarraville West Primary School newsletter:

“After consideration, school Council has decided that Yarraville West PS will no longer host the CBA Dollarmites banking program. Financial literacy is important, perhaps now more than ever. There are independent educational initiatives available for your family to investigate together, such as the federal government’s MoneySmart or books, and Scott Pape’s Barefoot Investor for Families.”

Thanks for educating our educators!

Susan

Hi Susan,

Thanks for sending this through!

Just to clear things up, my new school program isn’t about me selling books (I’ve sold enough already, and anyway, I’ve donated a copy to every school library in the country).

This is a not-for-profit program, and it’s funded from my own pocket (no funding from banks!). That way, I’m free to explain to the kids how much of a rip-off credit cards are, why Nimble loans suck, and the hidden cost of UberEats.

Now, since I launched the Barefoot Money Movement a few weeks ago, I’ve had thousands of teachers apply to pilot the program later in the year, from schools across the country and around the world.

My biggest discovery?

We are truly blessed to have so many hardworking teachers educating our kids.

Seriously, they’re passionate about their students and are determined to ensure they learn these lessons.

It’s been a very humbling experience.

Thank-you for reading,Scott

Scott

You’re a Shocker, Barefoot (Part 2)

Scott,

Your article ‘Prisoner’s Last Chance’, about the prisoner coming into a six-figure sum of money, is the most disrespectful article I have ever read. You tell the guy “good on you for learning how to manage your money” and give him advice on how to invest, then gloat about how you donated your books to prisoners. How shallow are you?

What about telling him to clear his conscience and pay back the money he probably stole from victims, or compensate those he has offended against. Come on! I’m disgusted in you not telling him to give his six-figure sum to victims he most likely never had the mind to compensate.

I challenge you to say in one of your articles that you offered wrong advice on this matter and should have told the person in prison to compensate those he did wrong by. Bet you won’t.

Ricky

Hi Ricky,

I bet I won’t either, cobber!

It sounds like you (or someone you love) has been wronged by someone, and you’re still bitter and beat-up about it. Here’s how the prisoner described his situation:

“I have spent most of my life in institutions, from boys’ homes to jails (I’m 59). My goal is to have enough money to buy my own home before I die, with no debt and maybe some savings. After all, isn’t that every man’s dream?”

Now, here’s my thinking:

I don’t know what crimes he did … and neither do you.

Though I do know one thing: after doing their time, everyone deserves a chance to put their lives right.

And if he can achieve financial security, he’s more likely to stay straight and not end up back in the clink.

That’ll potentially save the taxpayer the $110,000 a year it costs to keep a prisoner locked up.

That’ll also help keep the community safe.

And it may just give this bloke some peace after a lifetime of pain.

Scott

You’re a Shocker, Barefoot

Mr Pape,

Your ‘shock/horror’ credit card piece in the Sunday Times was one of the most irresponsible financial articles I have read for some time. My wife and I (73 and 78 years old respectively) have been using credit cards for everything since they came into existence. Each month we only have one bill to pay, and it is paid on time every month ‒ very convenient! A more positive article would have explained the virtues of credit cards and how to use them wisely.

Wayne

Hi Wayne,

You don’t seem to understand how this column works.

It’s not my job to explain the virtues of credit cards and how to use them wisely!

(I’ll leave that to Commbank, who teach this to nine-year-old kids who attend their schools education program.)

Now, you gave me a backhander by saying I wrote “one of the most irresponsible financial articles” you’ve read for a long time. (I can imagine the bankers reading this would be giving you a golf clap: “Hear, hear! Finally someone gave it to Barefoot! You’re a jolly good sport, Wayne old boy!”)

Well, let’s talk about financial irresponsibility:

As you know, the banks do their best to lure people, especially young people, into taking up credit cards.

The reason is obvious: while interest rates have fallen to an all-time low, the average credit card interest rates haven’t budged from 18% since Alan Border donned the Baggy Green.

Yet at least the original Bankcard didn’t have a membership fee. Annual fees on today’s credit cards have been increasing by more than 20% per annum to an average of $135 a pop, according to Canstar.

At the same time, the value of credit card rewards points have been slashed. Last year a report by comparison site Mozo found that they were virtually worthless, plummeting a staggering 96% since 2016.

Look, I get that some people ‒ like you ‒ pay off their cards on the due date and get a 55-day interest-free loan.

However, the truth is that for most people ‒ particularly the young and the vulnerable ‒ they’re a debt trap.

Wayne, it’s these people who are subsidising your interest-free loan. So who’s being financially irresponsible, sport?

Scott

The Great Australian Finance Experiment

My five-year-old son is obsessed with maths.

The other night he worked out that the maths app game we play each night is charging us a recurring fee.

He was ropeable: “You need to delete this game off the iPad, or we’ll keep getting billed. Do you understand, Dad?”

I nodded.

Chip off the old block.

Anyway, it wouldn’t surprise me if he eventually studies finance at university.

And if he does, he’ll almost certainly (as part of his ‘financial history’ class) look back at this monetary madness we’re living through in 2019.

I picture him coming back to the farm, scratching his head:

“Dad, what the hell were you guys thinking?

“The housing market was slowly deflating after the mother of all housing booms … but then you started cutting interest rates to almost zero?

“And at the same time you loosened lending criteria and encouraged young people to buy a home with just a 5% deposit?

“How did you think it would end?!”

Okay, so I’m putting it on record that I don’t think any of this is a good idea.

Yet I’m clearly in the minority: this week the media predictably cheered that the average homeowner would be $58 a month better off with the latest rate cut.

They’re missing the point.

Having to cut rates to the lowest levels in history ‒ with the promise of even more to come ‒ is a sign that we’re in deep trouble.

Rate cuts are supposed to act like cocaine … yet after this many hits, their effectiveness is wearing off. (The Verve sang it best: “Now the drugs don’t work, they just make you worse.”)

Just like I can’t fathom my father paying 20% on his home loan in the early nineties, I’m sure my son will be baffled by our rock bottom rates today. Either way, this is a massive financial experiment that we’ve all signed up to … and the effect could be felt for generations.

Tread Your Own Path!