The next big thing

I like to think of myself as a ‘young mover and shaker’.

Truthfully, though, the only thing about me that still moves and shakes these days is my belly (damn you ‘dad bod’!).

In the same way, Nimble likes to refer to itself as a ‘fintech disruptor’.

It gives Nimble a sort of … mover and shaker air … financial technology, man! We’re changing the world!

Actually, no.

The closest Nimble comes to being ‘fin’ tech is that it’s a loan shark that preys on young people.

Nimble slugs millennials the maximum rate the payday laws allow: 20% of the principal, plus 4% per month.

Yet their marketing is truly masterful: their ironic hipster-cool advertising encourages young people who are short on cash to just ‘Nimble it’.

Make no mistake: the combination of charging insanely high interest rates and uneducated young customers means that Nimble is making a lot of money.

And now, for the next line, I’d like you to quietly hum the Jaws theme song to yourself.

(Dernum … dernum … dernum.)

Nimble has just revealed it has huge expansion plans: it’s applied for a fully fledged banking licence.

This is very bad news for young consumers … they’re effectively shark bait.

Yet wouldn’t it be good to teach teenagers just how dangerous this mob is, before they fall for their advertising?

Well, that’s exactly what my high school money class teaches.

Here’s how it goes:

First, we play a Nimble ad (which is actually pretty funny).

Many of the kids laugh as they watch it, and probably think to themselves “that’s a cool company”.

Then I get them to go to the Nimble website, which shows an attractive young couple fist-pumping the air, presumably after scoring what Nimble calls a ‘smart little loan’. And then I get the class to calculate the total cost.

“Let’s say you get hit with an unexpected $1,000 car repair bill, and you decide to ‘Nimble it’. How much will it cost you after nine months?”

After a little bit of maths, the kids work out that the answer is a whopping $1,560.

You should see their faces when they work out how much it costs. They literally can’t believe it.

That is the power of teaching independent financial education in schools.

From that point on, every dollar that Nimble spends on its highly targeted youth-based advertising is wasted on these kids. The game is up. They’ve jumped the shark

Tread Your Own Path!

The Ultimate Father’s Day Present

Every Mother’s Day, my wife and her girlfriends have a tradition:

They book a fancy restaurant and get all dressed up, looking a million bucks …

And then?

They offload the kids onto their husbands and spend the rest of the day drinking champers together!

So for Father’s Day this year, I figured “if it’s good for the ewes, it’s good for the rams”.

I started a brand-new tradition: me and the other husbands decided that for Father’s Day we’d put on our cleanest jeans, offload the kids, and head to a local joint for a brew or two (or three).

Nice one.

Yet there’s another Father’s Day tradition that I’ve been doing with my readers for years, and I’d like to share it with you.

See, it’s a bit of a cliche that every dad gets a mug … or a keyring … or a block of chocolate … or a tie.

But what I want to share with you today is a present that you and your dad will treasure.

And even better?

It won’t cost you a thing.

Let me explain …

You see, my wife’s father died a few years before I met her.

When our house burned to the ground, in 2014, we lost some of the last remaining photos of him, the letters he’d written, and the paintings he cherished.

How does my wife explain to me who her father was?

How does she explain to our sons who Grandpa was?

Her physical reminders are now lost in the ashes.

So, I made a pact with her that each year I’d share with you, my readers, the ultimate Father’s Day present.

The Ultimate Father’s Day Present

If you’re lucky enough to have your father still with you, here’s how you can give him the ultimate Father’s Day present. Go and see him, whip out your phone, hit ‘record’, and ask him the following questions:

1. How did you meet Mum?

2. What advice can you share with me about money, life and happiness?

3. What does being a dad mean to you?

4. What are you most proud of?

5. How would you like to be remembered?

This is not for Facebook. It’s for you and your family’s legacy. One day, it’s all you’ll have left of him.

And you’ll treasure it.

Happy Father’s Day!

RIP Tim Fischer

Hi Scott,

Thank you for sharing your memories last week about Tim Fischer. That can’t have been an easy thing for you to do. I grew up in the bush myself and have a very strong appreciation for Tim. I am also the daughter of a farmer who was incensed with the change in gun laws after the Port Arthur Massacre. But after seeing Tim speak at a community function Dad came home and packed up the gun shed: “It’s just not necessary”, he said. Then I was in the USA for university just after the Columbine shootings ‒ I could not have been more proud to be Australian. Tim was a giant.

Cass

Hi Cass,

Thanks for sharing your story.I received hundreds of emails from readers about Tim, and it made a tough week a little brighter reading through the stories of people just like you.

This week I spoke at Tim’s funeral, and it was one of the greatest honours of my life. He was a decent man who left Australia a better place. That’s all you can ask for at the end of your life, right?

Scott

My Baby Sent Me Broke

Hi Scott,

Over the last two-and-a-half years we have had two babies and a wedding. Our first baby came earlier than planned so it wasn’t covered by private health, and we made the silly choice to pay for it out of pocket. Then, over a couple of years on one income ($240,000), we have accumulated two credit card bills totalling a hefty $60,000. We have now read your book and managed to pay off two large loans using your method, but we do not know how to get these credit cards paid off. Please help!

Katie

Katie,

Look, I’m all for blaming my kids for everything (especially on a Sunday morning), but $60,000?

Seriously?

The cost of having a kid in a private hospital, assuming no complications, is about $10k.

Other parents have weddings and babies, but they don’t have $60k on the never-never.

You’re earning $13k a month in the hand, but you’re broke.

Why?

Because you’re spending too much.

If you’re looking for a magic wand, you can go to MyBudget (see above).

But if you ask me, you’ve already proved to yourself twice that you can pay down debt, so three times is a charm.

Besides, you guys are high income earners ‒ you could have this debt paid off within the year.

Even better, you’ll set a great example for your kids.

Scott

I Owe MyBudget $1,250

Hey Barefoot,

I signed up with a money managing agency MyBudget because I felt that some financial structure and discipline would be good, and also to make my parents happy. Unfortunately, the model did not work for me. I do not think it is okay for someone with mental health issues to be told they cannot see their psychologist because there is no money for it, or they cannot have their prescriptions filled at the chemist for the same reason.

At the time, I signed a contract for 12 months but I found it far too restrictive and inflexible, and started managing my money myself again after only a few months. The trouble is, I ended up owing MyBudget approx $1,250 in fees and charges.I was asked to pay within a timeframe but I never did, as I couldn’t afford it. Now I am following the Barefoot steps, I don’t think I can say I am truly debt free and don’t owe a cent to anyone until I clear this. So I would like your advice as to what to do ‒ pay up, or assume that MyBudget have written off the debt?

Tara

Hi Tara

I wouldn’t pay them.

Then again, I don’t think anyone should pay them.

First, because they’ve built their business on the back of broke, vulnerable people.

(For those who don’t know, MyBudget is the financial equivalent of having a personal trainer come around, lock your fridge and dish out the food to you.)

Second, because they charge too bloody much.

(Over a thousand dollars upfront, as well as ongoing fees.)

Quick quiz: if MyBudget are running your budget, guess who gets paid first?

If you answered “my psychologist”, or maybe “the chemist for my prescribed medicine”, you would be wrong.

Third, because no one should hand over the responsibility of managing their money.

Seriously, if what you’re saying is true ‒ that their budgeting person said you should scrimp on mental health and prescriptions ‒ that’s kind of … crazy.

So I’d write a letter to them explaining your issues and saying that you got awful service, and because of that you’d like them to write off the debt (and provide you with a letter confirming they’ve done it).

And if they say no, I’ll take it up on your behalf.

Note to readers: if you’re having problems with debt, you should ring 1800 007 007 and speak to a community-based financial counsellor. They offer an independent service, and best of all they don’t charge $1,250 … they do it for free.

Scott

This week I lost a mentor

It was 2pm when I arrived at the Peter MacCallum Cancer Centre in Melbourne.

I’d been going since 5am, driving in from the farm, then having back-to-back meetings … and back-to-back coffees.

I took a deep breath and strode confidently into a private patient room and greeted my old mate, former Deputy Prime Minister Tim Fischer.

My first thought was that he looked really crook.

My second thought was that I started feeling really hot … was there a heater on in here or something?

And then?

And then I fainted. Out cold. On the floor.

Tim was watching all this unfold, and quickly hit the emergency button at his bedside.

The nurses came sprinting into the room and made a beeline for Tim’s bed.

“Not me, I’m fine! It’s my young, fit-looking friend over there who needs help!” he said, pointing at me.

When I came to, Tim was laughing and taking photos of me on his iPhone

“You’re always trying to show me up!” he said.

That afternoon, as I drove home, Tim called me from his hospital bed:

“How do you feel? Do you need a good doctor? I have a good doctor. I can call him now. It’s no trouble, really …”

I can’t think of a better story to explain my friendship with Tim, who sadly passed away on Thursday.

Today I want to talk about the difference Tim Fischer made in my life.

Our First Meeting

I first met Tim roughly 15 years ago — and it wasn’t by chance.

I actually cold-emailed him (and a bunch of other heavy-hitters) about joining the advisory board of a financial education program I was developing for Aussie kids.

Not only was Tim the only person who bothered to reply — he suggested that we meet up to discuss it.

A few days later he arrived at our meeting clutching his trademark Akubra in one hand, and a dog-eared copy of my first book in the other.

He’d come prepared.

Over the next hour I gave him my pitch: where I was from, what I was about, and the change I wanted to make.

Tim listened intently, sizing me up as I spoke. It’s fair to say that he saw something in me that I didn’t see in myself.

“An ambitious project like this is going to take you many years … but it will be worth it,'' he told me.

(He was right: it would take another 15 years to get it off the ground, and it has been worth it.)

What I didn’t know at the time was that Tim would become one of my closest mentors.

Many More Meetings

Over the years we met up at my farm in Romsey, at his joint in Albury, and everywhere in between.

(And I mean everywhere. When he was the Australian ambassador to the Holy See in Rome … he snuck me and my girlfriend in, and even allowed us to stay (in sin) at the Australian embassy. Though I got back in God’s good books by later marrying her.)

At these meetings we’d talk about finance, economics, politics, power, the media … and farming.

Yet for all those high-powered conversations, the thing I remember most is that he would always take the time to ask: “What’s going on with Liz? How are the kids? How’s your dad? How much rain are you getting?”

Above all, he had a confidence about him.

And he had a habit of filling you up with his confidence in you. I would leave each meeting believing that I could pull things off. It made me want to stretch further, try harder and do better.

Over the years he gave me lots of good advice. However, as with the very best mentors, I didn’t just learnt from the advice he gave me — or the many doors he opened for me — but by watching him.

Especially in the last week of his life.

Our Final Meeting

This weekend Tim and I were due to run a town hall charity event in my hometown of Ouyen which was being recorded for ABC Local Radio.

We called it ‘Living the Rich Life in Regional Australia’. (It was Tim’s idea of course.)

Yet a few days ago Tim rang me and told me that he had to pull out — doctor’s orders.

I replied: “Look, I totally understand … and I think we should cancel the event. After all, this is your baby … your brainchild. Without you there, it just won’t be the same.”

His reply was classic, confident Tim:

“You will NOT cancel! You will NOT quit!

“We have the opportunity to tell the story of Ouyen — and how to live the rich life in regional Australia — to thousands of people. And you never know who’ll be listening … it could spark an idea or give inspiration for someone else living in a small town.

“Besides, I’ll twist your arm — I’ve already filmed a video that outlines my thoughts on what towns need to do to thrive.”

I played that video (which he’d shot from the hospital grounds!) at the event.

Before I played it, I pointed out a few things to the audience:

First, Tim’s body was riddled with cancer. He must have been in excruciating pain as he was making the video. Yet he never let on. Not once.

Second, this was the final week of his life. And he devoted part of it to making a video helping people in the bush get a better shake of things.

You can’t fake that.

Look, I’ve been in the media for years, and met some very self-important people — big shots, politicians, media stars — who say one thing in public but are totally different when the cameras turn off.

Not Tim.

He was the real deal.

I think Australians worked that out about him.

And they loved him for it.

Rest In Peace, mate.

Cancer Can’t Beat Me

Dear Scott,

One minute I was living the high life at a business awards night in Cairns – two weeks later I was diagnosed with breast cancer. I heard the big ‘C word’ and felt the walls come crashing in around me. What followed was six months of high-dose chemo, an operation, eight weeks of radiation, and another six months of preventative chemo. Yet I am happy! I am living in the present moment, and above all else my finances are in order — no credit card debt and only $80,000 left on my mortgage. The trick was that (before my illness) I’d read your book, many times in fact. You have saved me so much worry, Scott. I have also had the courage to put all my financials in order for my family. Thank you, sending positive vibes your way!

Janelle

Hi Janelle,

In a week that’s been dominated by front-page doom and gloom finance headlines, your story stands out like a shining star. People waste a lot of effort thinking about things they have zero control over, but putting off the things they have total control over, like getting your own situation sorted. Here’s to your continued health and happiness Janelle. You Got This!

Scott

$2 Shares?

Hi Barefoot

You have been sitting on my bedside table for a full 12 months! Yet, after a year of my fiancée threatening to not turn up to our wedding unless I read your book, I have read it and am raring to start investing. I am a Commbank customer (have been since my mother signed me up as a Dollarmite!), and I would like to know your thoughts on Commbank’s new app ‘Pocket’. It looks pretty good, and it only charges $2 to buy $50 worth of shares.

Chris

Hi Chris,

I’m always happy to help the groom make it past the broom!

I had a play around with Commsec’s new app ‘Pocket’, and I actually think it’s pretty good.

It’s clearly aimed at first-time investors who don’t have a lot of dough. As you’ve mentioned, you can kick off your portfolio with a $50 investment and only be charged $2 a transaction (though you’d want to invest more than that, otherwise it works out to be a hefty 4% fee!).

There are seven different ‘themes’ you can choose to invest in, which sounds cool, though they’re really just regular off-the-shelf exchange traded funds (ETFs). Still, they’re a much better deal than investing in an expensive CBA-Colonial managed fund.

Okay, that’s the positive. Now for one big negative.

The only reservation I have with all these investing apps is that they can lead to you checking your balance too much. Behaviorally, the best thing you could do is to delete the app off your phone and forget about it for a few years while you focus on your fiancée. Then you could give ‘Pocket’ a try.

Scott

I am FURIOUS

Hi Scott,

I am FURIOUS.I study full time (business at UTS) and work round the clock in real estate to support myself, while all my uni friends bludge off the Government. Last year I earned $48,000, and to my absolute disgust my accountant tells me I’ll be up for HECS even though I am still studying! This is wrong on so many levels. You should do something about this.

Sarah

Hi Sarah,

As Tony Jones says on Q&A, “I’ll take that as a comment”.

What old stubby-fingers your accountant was telling you is true. The Government has reduced the amount you need to earn to start repaying your HECS debt to $45,881, regardless of whether you are still studying.

Is that unfair?

I don’t think so. Your HECS debt is effectively an interest-free loan, tied to the general rate of inflation. So it’s a lot better than the massive student debts that burden students in America.

My advice?

Don’t be furious, and quit comparing yourself to your friends: it’s a recipe for unhappiness.

Besides, paying tax is a good thing: it means you’re earning money. And the more money you make, the quicker you’ll get rid of your HECS debt!

Scott

Why is Nike targeting my kids?

Did you know that Nike is launching a Netflix-style monthly subscription for kids’ sneakers?

It’s called the ‘Nike Adventure Club’, it’s aimed at two-year-olds to 10-year-olds, and it kicked off in the US last week.

There are three tiers of subscription: $20, $30 or $50 a month. Meaning that parents who sign up get a brand-new pair of sneakers once a month, once every two months or once every three months respectively.

Sidenote:

What kid needs a new pair of Nike sneakers each month?

When I was a boy, I scored my older cousin’s Dunlop Volleys. Problem was they were about four sizes too big, which meant that every so often I’d kick the footy and my shoe would fly off and hit my cousin in the short and curlies.

When I protested to Dad, he got on his knees and pressed down on the empty toes of my shoes: “Plenty of room to grow into these”, he cheerfully announced.

(Nowadays my wife worries that our 18-month-old doesn’t have enough ‘arch support’. But I digress.)

Marketers are following the lead of tech companies and moving to subscription-based payments.

Today you can pay a monthly subscription for Amazon books, but what about renting your bookshelf?

Well, you can.

Ikea has announced it’s trialling a furniture rental subscription service across 30 countries. (Which makes perfect sense, especially if you’re a renter. When your lease ends you can just hand back your hacked-together bed, rather than throwing it out or trying to sell it on Gumtree for a few bucks.)

Businesses are clearly attracted to subscriptions for the lucrative recurring revenue: why bother going through the costly exercise of selling to the same customers over and over again, when you can charge them a small monthly fee?

Case in point: scrappy start-up Dollar Shave Club took a razor to global giant Gillette by launching a monthly shaver subscription. They quickly signed up 3.2 million customers to a monthly autobill, and in less than five years sold the business for a cool $1 billion to Unilever.

The final reason businesses like subscriptions is that they build a deeper relationship with the consumer:

“One of the things [Nike CFO] Andy Campion gets excited about, is that we are now building relationships with kids from two years old”, says Dave Cobban, general manager of Nike Adventure Club.

Okay, so that’s next level corporate creepy (hello, Dollarmites).

Then again, these guys really do ‘Just Do it’: their $60 kiddie shoes really only cost about $2, and are probably sewn together by Nike’s other youth-based stakeholders … dirt-poor Bangladeshi kids working in sweatshops.

Whatever the motivation, one thing is clear: subscriptions are here to stay.

Tread Your Own Path!

The Stock Market is Freaking Me Out

Scott,

The ABC reported the other day that “ASX tumbles $60 billion on US recession, China slowdown fears”. I know you are a big supporter of buying shares, but how is an ordinary person like me (age 25, medium income) supposed to follow your lead when the market can lose $60 BILLION in one day? It freaks me out, and makes me think it’s a lot safer to just stay away from the market altogether.

Mandy

Mandy,

Mandy, Mandy!

At your age, you should be getting down on your knees each night and praying for a share market crash.

More than that, you should be hoping that the stock market falls and stays low for decades.

That’s not going to happen, of course -- though it would be the best outcome for you. Reason being is that you have 45 years of investing left, and you ideally want to purchase your shares while they’re on sale!

Remember, the share market is not only the greatest compound investment machine on earth, it has also never failed to reach new highs. In other words, the cheaper you buy today, the wealthier you’ll end up.

Scott

Pass me a bucket

I saw the door of my study creep open, ever so slightly.

I heard heavy breathing. Whispers. And then … fits of giggles.

It was the school holidays and my sons were bored, so they decided to spy on their old man ‘working’.

And fair enough too. When I was roughly their age, I’d do the same thing with my old man, and I’d watch him counting out great wads of cash (hey, it was the 80s).

My boys, however, saw me sitting on my office floor playing with three plastic buckets.

I may as well have been in a sandpit (hence the giggles).

Let me explain: this year I’ve been working in classrooms across the country teaching kids about money, as part of my not-for-profit the Barefoot Money Movement.

My Primary School program — called ‘The Jam Jar Project’ — is a rolled gold winner:

Last month I taught it at my old primary school, and the kids nearly wet themselves.

“This is the best class ever and I have a blood nose”, one seven year old excitedly told me.

My teenage program is … not going as well.

In fact, teaching this class has been giving me a blood nose. Repeatedly.

Honestly, engaging teenagers is easily the hardest thing I’ve ever done in my career. I’m in awe of the amazing work teachers do. The volatility of the share market has nothing on the volatility of 25 teenagers. We go from boom to bust to depression … in a 60 minute class!

Yet I finally nailed it — with the help of three plastic buckets.

Here’s what I did:

I put a bucket on the table and explained to the class that this bucket represented a bank account.

Then I told them about Johnny Depp. He may be a movie star flying around in private jets, but Johnny has a hole in his bucket: money goes in, but it flows straight out the bottom. He (reportedly) doesn’t save. (Which explains why he has to keep making bad pirate movies.)

Then I picked up the other plastic buckets and put them on the table. The solution, I told the kids, is to have two other savings buckets that don’t have holes in them: one for emergencies (Mojo), and one for savings goals (Smile).

They got the concept straight away.

In the next lesson I plan to take the metaphor further, and explain that their job is to guard their buckets, and not let anyone drill a hole in them: like credit card companies, Harvey Norman interest-free deals, Nimble loans, car loans, even AfterPay. We go through their glossy marketing, and then read the fine print and show them just how big a hole these products can blow a hole in their buckets.

Here’s the deal: in a few short years these kids will be fresh meat for financial institutions, who employ some of the savviest and sophisticated marketers on the planet. While they’re still in school, they need to learn how the game works against them.

Case in point: we got the class to calculate that an average credit card would take 30 years to pay off.

The looks on their faces, as Mastercard would say, were ‘Priceless’.

Tread Your Own Path!

A Bong With Barefoot

Hi Scott,

I’ve been interested in the ‘marijuana boom’, and I’ve seen plenty of advertising from share trading companies about it. I wanted to ask your professional opinion about it and what companies might be of interest out of the many that are now out there.

Craig

Hi Craig,

Yes, the medicinal marijuana business is set to explode. Analysts are suggesting that the domestic market could be worth $6.3 billion a year (including the illegal market), and that the global market could be worth as much as billion by 2025. So it’s no wonder that people are jumping aboard the dot bong boom!

Are there any companies that I’d recommend?

No.

That’s because I have a very boring, very old-fashioned rule: I only invest in companies that make money — and none of the ASX-listed medicinal marijuana companies are making any money (in fact, most are burning cash).

Look, I have absolutely no doubt that there will be huge demand for medicinal marijuana all around the world. Yet I also have absolutely no doubt that there are literally hundreds of companies trying to meet that supply.

And that’s the (long-term) thing: growing weed isn’t that hard (heck, my old uni mate did it in his dorm room). It’s just another crop, and eventually it will become just another commodity … just with more government regulation.

Scott

He Threatened to Kill Me

Hi Scott,

I read your column on scams and wanted to share my story. I got a call a couple of years ago and knew straight away that it was a scam due to the guy’s funny accent, but I decided to play along for fun. I said yes to all of the questions and pretended to be really excited. After about thirty minutes I jokingly offered my credit card details and even the password to my online banking. I wish I hadn’t.

The guy on the other end of the phone was furious at being mocked. Straight away he went from nice to nasty and told me he was going to slit my throat! I was a bit unnerved but chuckled and said “but I thought we were friends now”. He began to threaten me by saying he knew where I lived and that his ‘boys’ would be around shortly. I doubted this but was still crapping my dacks a little.

I said I had to go now and hung up. The bloke proceeded to ring back about ten times in a row. I answered once again and tried to laugh and pretend I wasn’t worried. He told me I was the winner of the ‘Golden Casket’, along with a few more threats of throat slitting. So now when I get these calls I’m not a smart alec and say politely “not interested, thank you”.

Jason

Hi Jason,

Don’t think of them as harmless scammers.

There are reports of Australians who have been murdered in Nigeria trying to get their money back.

The truth is that they’re highly organised crime syndicates that are (collectively) making billions of dollars a year, and they have little patience for being messed about.

In the week after I registered my number with the scam website Bitcoin Profits, I received dozens of phone calls at all hours of the day and night. They’ve even worked out how to make it appear like they’re calling from an Aussie landline. Regardless, each time I politely said: ‘I know this is a scam, please never call me again’ and then I’d hang up. After a week they gave up.

Scott

Motivational Misfire

Hi Scott,

I went to a Tony Robbins motivational seminar. What I didn’t know what that prior to the main show, there was a great deal of, let’s say, warm-up speakers, talking about fluff about how to get rich.  One of the guys was selling a share trading program. He had a very impressive style, and was very amiable, very charismatic … but I wasn’t buying it!

Still, I was bored waiting -- so I thought what the hell -- I put my hand up as being interested and went up the back of the room to listen to his spiel. I must admit, what he said got my attention. He said he was selling his share trading system for a good cause: to help build homes for poor people affected by a tsunami.

I watched, I listened, I questioned, I doubted, and then I thought ... I can do this! I can make this work!  (Even though I knew Scott Pape would say “NO!”). But I knew me and I was dog determined to make it work. So I paid him $20,000 for his trading package and got down to it.

I invested extra into a trading account, extra into flying to Sydney to go to live trade events. And I invested copious amounts of time. I’m still up at 1am, still watching the market, still feeling excited. And I am still waiting to see my return. I read your stuff, I read their stuff, I read loads of information. Guess what? I am still down $20k … and you know what, I am grateful for the experience.

Lisa

Why would Lisa say that she’s ‘grateful for the experience’ … of dusting twenty grand?

It almost sounds like she’s been kidnapped into some sort of cult!

Actually, that’s kind of what has happened. Lisa has Stockholm syndrome (definition: “Feelings of trust or affection felt in many cases of kidnapping or hostage-taking by a victim towards a captor”). The guru has worked hard to get Lisa to buy into the reality that she’s going to get rich.

The gold-plated guru says the only thing stopping her living this amazing life is knowledge.

And only he has that knowledge ... yet he’s willing to do her a favour and sell it to her for $20,000.

So if the trading program doesn’t work, it’s the guru’s problem right?

Wrong.

The guru can only do so much, so Lisa needs to work for it, and prove it to herself. And it may be that Lisa requires even more knowledge from the kind guru, in terms of high priced live trading events.

So just for this week everything is upside down:

It’s usually my answers where the learning happens, yet today the lessons come from the questions.

Scott

The Double Rip

Hi Scott,

I need you to look into a company for me.I was on the phone talking with a "Financial advisor" from a company called TradeMote. I first encountered this company in March this year when I saw a clip on Facebook. It was of an interview on Sunrise (Channel 7). They were interviewing an average bloke who happened to invest in a Bitcoin company and in a very short time had amassed a small fortune.

I am 62 years old and had recently retired and had withdrawn my Superannuation. I thought I would try this investment because it was only around $200 investment. I was contacted by a lady who sounded quite genuine. She asked me what my financial goals were and I told her a figure I made up on the spot.

In a very short time the investment she required from me turned to $5000 to "secure" my position. A few days later another $5000 was required to "secure" my position. I was able to log on to my TradeMote account and saw how fast the account was growing. Then they wanted a $20,000 investment to "secure" my position.

When I tried to transfer the funds my bank (Westpac) contacted me and said they weren't going to allow the transfer as the account I was transferring to was on their watch list. When they contacted me again to see why I hadn't transferred the money I told them about the banks response and I also said I wanted to take the profit out. They eventually said I could do that but they needed a copy of my Passport and a bank statement.

I told them there was no way I was going to supply those documents and why couldn't they just transfer the funds to the account I had sent the funds from? I stopped answering their calls and in a very short time my account was virtually zero!

Then, I was contacted a few days ago by another advisor who said he was concerned that I had lost that money and for an investment of $10,000-$20,000 he would work to get my money back. I haven't been able to find this company on any scam lists but their website certainly looks real?

If you can check this company out I would be very grateful.Kind regards

Dennis

The number of people who contacted me in a similar situation to Dennis was frightening.

I call this scam the ‘double rip’:

The same scammers contact the victim (posing as a different company) and offer to help get their money back … as long as they deposit more money.

Another version of this is where the victims are contacted by official sounding lawyers (also the same scammers) who say they are conducting a class action on behalf of victims, and they require seed funding to take them on and get back their money.

This scam works because they’re targeting victims that easy targets (they’ve already been duped once), and in many cases they’re highly emotional and are intent on chasing their painful losses.

Scott

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