We Lost Our House, But We’ve Got This

Hi Scott,

Your latest column came just as we were getting a grip on losing our house in the NSW fires. Thanks for sharing your fire story ‒ it helps to remember others have been through this too. Having our finances in order has made this much less stressful. People have also been so generous ‒ we have been overwhelmed by the support. Although my own copy of your book is now up in smoke and probably drifting out over the Pacific somewhere, it has done its job and we’re grateful for what you do.

Thank you, Scott. We’ve got this.

Nate

Hi Nate,

Well done!

Do you want the good news or the bad news?

The good news is: like me, you have your Mojo, and so you’ll hopefully be okay financially.

The bad news?

Having your money sorted doesn’t give you a free pass on dealing with any of the emotional stuff you’ve been through.

I learned this the hard way: in the immediate aftermath of the fire that burned my house down, I did what most blokes do ‒sprang into action and did everything I could to get things back to normal … right now!

Looking back on it, I can see it was really a symptom of the stress I was under. Honestly, it wasn’t until my wife sat me down and suggested we speak to someone that I started to loosen up.

I’m not telling you to see a psychiatrist — most Aussie blokes would rather drink a shandy than see a shrink — but I am suggesting you sit down with a few mates every now and again and talk through how you’re feeling.

Scott

Milking the Cows

Hi Scott,

My uncle is a dairy farmer who lost everything in the Gippsland bushfires. But he still has to milk the cows every day, so he can’t get away from it. Even though there’s the $75k fund for him, we’re concerned it’s not going to last long. I also worry about his mental health too. What can we do for him?

Casey

Hi Casey

(I can picture my editor now saying “this isn’t finance!” And you know what? He’s right. And you know what else? I don’t care.) Look, I know just how tough fire-affected farmers have it right now.

Generally it’s the farmer’s wife who comes in to see me, and they often say the same thing: that their husband hasn’t left the farm since the night of the fires — they can’t as they have too much work to do.

As one cocky told me: “the cows won’t milk themselves.”

Can you imagine how hard it would be to work and live in a place that’s been decimated by fires?

Well, one idea, which came from the local community, is to get students from the agricultural colleges to do a few days work placement at these farms. The students could take over the farm so the farmers could get away with their family somewhere that’s not black and burnt, for some much-needed respite.

So, Casey, it may be time for you to take the udders by the hand and help out your uncle!

Scott

Greetings from fire-affected Cudgewa

I raised my hand to volunteer as a financial counsellor in fire-affected regions … and promptly had it slapped down.

“Are you mad?”, she said.

I was standing in front of the woman who was in charge of deploying financial counsellors to disaster zones.

Her beef?

“You’re a bushfire survivor yourself. What happens if all those emotions get triggered again?”

I assured her I’d be fine, and I was soon on my way to the Victorian-border town of Cudgewa, which had been ravaged by bushfires. And that’s where I’m writing to you from today.

She was right about one thing, though — I have been hit with plenty of emotions doing this job.

Let me share some of them with you.

First there was … shame

On the drive up I looked at the dashboard:

44 degrees.

“This is unbearable”, I whined, and then repeatedly hit the little snowflake button to crank up the air-con.

And then I turned a corner … and saw a chain gang of Blazeaid volunteers ‒ most of them in their seventies ‒ who were covered in sweat, and dirt and ash, as they put up fences for farmers trying to contain their livestock.

What a snowflake I am, I thought.

There was … kindness

When I arrived in town, I was invited to speak at a community meeting to discuss all the help that was available to the hard-hit community.

The bloke next to me was a young tradie with a hipster moustache and tatts.

Over the Christmas break, like all of us, he’d sat and watched Australia burn.

But what can one young bloke do?

Turns out, a lot.

He put a note on Facebook saying, “If anyone needs a hand rebuilding, I’ll give it a go, for free. And if any tradie wants to join me, let me know.”

And guess what?

Plenty did ‒ 14,000 of them, in fact — all offering to help, for free.

There was … relief

I set up a desk in the middle of a basketball court and was officially open for business.

People started shuffling in. I could see in the way they walked up to me that many of them were struggling.

They certainly weren’t in the right headspace to read through a 35-page insurance product disclosure statement.

(Seriously, are you ever?)

These people are expected to make financial decisions that may well shape the rest of their lives, while suffering from a bad case of ‘bushfire brain’.

So here’s what I told them:

“You need to focus on yourself, your family and your friends. Let me focus on your finances. I’ll call and negotiate with your insurance company, talk to your bank, and check out all the grants you’re entitled to. Then I’ll come back with a plan that’ll help put you back in control.”

You could see the relief on their faces.

There was … regret

Last Saturday night I headed to the local pub for dinner.

On the way, I walked past a house and saw a bloke sitting on his porch with his head stooped low. I waved, but he didn’t look up.

And I didn’t think much of it, until the next day ...

… when I walked past again and saw an ambulance parked in his driveway.

I immediately feared the worst. After all, research shows that after a disaster like a fire communities will experience an upsurge in gambling, family violence, drug use … and even suicide.

Thankfully, he’d just taken a bit of a turn, and the ambos were all over it.

Yet I couldn't shake the feeling of regret that I didn’t stop and take 30 seconds to say, “Hey, how are you doing?”

And finally ... I was humbled

On Friday night we had an informal ‘Beer with Barefoot’ at the Cudgewa pub, and I shouted the bar (country people sure can drink!). 

And get this: towards the end of the night a local bloke named Josh — who’d lost his family home and everything in it — presented me with a gift: a framed photo (see pic) he’d taken the day after the fires.

Yes … he gave me a present. How amazing is that?

Tread Your Own Path!

Photo Credit: Joshua Collings

Diary of a Bushfire Victim

On a scorching day in February 2014 my wife, our 7-month-old son and I stood looking at the smouldering rubble that was once our home.

We had absolutely no idea what lay ahead for us.

Today I’m going to share with you what happened over the next 12 months, in the hope that it might give some hard-won advice to the 1,800-plus households who are facing their ‘day one’ right now.

One Week On: Kind People Will Send You Junk

Liz came back from the post office with a trolley full of stuff:

Strangers sent heartfelt letters, gift vouchers, brand new clothes and toys.

Yet among the many packages we received there was one that really ‘stood out’:

Someone had sent us what looked like a wooden carving.

They’d attached a scribbled note around the base with a lacker-band that read:

“This beautiful piece of art has been sitting in our storeroom gathering dust for years ... and we’d like you to have it”.

Right.

“Is it just me, or is this thing kind of … suggestive?” asked Liz, holding it out in front of her.

“Well, it’s a wooden knob, honey.”

And history repeats: relief workers have told me recently that some fire-affected communities have makeshift rubbish dumps for the junk that people have sent to fire victims.

That being said, it’s likely the first bits of mail fire victims will likely receive will floor them: the Red Cross sent us a cash cheque, and a hand-knitted ‘trauma teddy’ for our son.

Makes me tear up just thinking about it.

And then there was the junk mail ...

Two Weeks On: Bad People Will Try and Take Advantage of You

We had someone (who’d clearly read Rich Dad, Poor Dad too many times) who dropped leaflets into our mailbox, offering to buy our property on the cheap.

There were also leaflets offering short-term loans.

You see, the smell of smoke is like perfume to payday predators (who by law are allowed to charge up to 400% interest per annum). Makes me dry-retch just thinking about it.

And history repeats: right now, consumer advocates are warning people to watch out for (unregulated) insurance claims management firms who promise to manage the insurance claims process in exchange for a percentage of the insurance settlement.

One Month On: You’ll Realise Your Insurance Payout Isn’t Enough

Yes, even I got caught out.

Our house was covered.

Our contents were covered.

Our farm fences were … partially covered.

I mean how expensive is 10 kilometres of fencing?

Quite a lot, in fact!

(Thankfully the awesome volunteers from BlazeAid swung to our rescue and helped rebuild our fences.)

And that’s why I’ve made a point of annoying people about checking their insurance every year.

In fact, a few years back I even fronted a Victorian Government campaign called ‘Insure It, It’s Worth It’.

The stats are horrifying: half of Australians don't have enough home insurance for when disaster strikes.

What does that mean?

It means that statistically many bushfire victims will not be able to cover the cost of their rebuild.

(And the cost of rebuilding will skyrocket — often upwards of 20% — as a result of having to comply with new bushfire building codes, and a general spike in building costs.)

So, what happens then?

Well, insurance companies have the call on whether they repair, replace or cash settle a claim.

And when there’s a shortfall between the payout figure and the cost of the repair or rebuild, the insurance company will generally tally up a cash settlement.

And then?

And then they’ll send a cheque … but probably not to you.

What?!

Yes, in many cases not only are people underinsured, they will also have a mortgage. And when you have a mortgage, the bank is the legal owner of your home.

It’s a total disaster.

Know this: with most insurance policies there may well be additional things to claim, like payments for temporary accommodation, and other disaster allowances.

And it’s in this situation that financial counsellors shine; they’ll stand by you, and work with you.

Three Months On: The Easter Eggs Start to Crack

We ran on adrenaline for about three months.

And then, around Easter, the Duracell bunny ran out of puff.

I’m not ashamed to admit that I started to get really depressed. (It’s actually quite common: an expert I was speaking to recently said the 12-week mark is when people need some extra help.)

You see, everyone had moved on with their lives.

Except us.

We were reminded of it every day: the smell, the blackness, and sleeping in someone else's bed.

When we were at our lowest, three things helped:

First, on the black, scorched land we planted an apple tree.

Second, Liz bought a sign (and Blu-Tacked it to the wall) that said: “Home is wherever I am with you”.

Sounds corny, but it really helped me put things in perspective. It was the first thing I saw when I walked in the door each night. And when I wrote my book — based on our experience with the fires — I dedicated it to Liz, with that message on the first page.

Third, we went to see a counsellor who specialised in bushfire recovery.

One Year On … and Beyond: There Are People Who Can Help

In truth, I spent the first 12 months desperately waiting for everything to go back to normal.

You know what I ultimately learnt?

Things don’t go back to normal.

Instead, you’re forced to find a new normal. And sadly, for many, it’s very different from the life they enjoyed before the fires. And all too often these people fall through the cracks and face years of ongoing hardship.

That’s what inspired me to spend 2019 becoming a community-based financial counsellor.

And right now there are counsellors who are being deployed to fire affected areas.

I’m one of them.

We won’t be with you for just a week, or a month, or three months, or even a year … we’ll be with you all the way, for as long as it takes.

Hang in there.

Tread Your Own Path!

Disaster Numbers
Insurance Law Service -- free legal advice and support: 1300 663 464
NSW - Disaster Response Hotline: 1800 801 529
Victoria - Disaster Legal Help: 1800 113 432
Queensland - Bushfire Legal Help: 1300 004 924
Lifeline Australia - phone 13 11 14 for a free 24-hour crisis support service

My thoughts on the fires

“It’s over … isn’t it Dad?”

His lip began to quiver.

“Yes ... I’m afraid so mate”, I said, putting my arm around him.

This happened just last Monday. We had the car packed, ready to head to the remote enclave of Cape Conran, East Gippsland, for a family camping trip.

For the last few days Liz and I had been nervously watching the Victorian Emergency app. Fires had sprung up around the area, yet the officials were, at the time, only advising ‘caution’.

Little did we know that in 24 hours the area would become a disaster zone.

Needless to say, our trip was cancelled — but that’s nothing compared to what others have gone through in the past month.

I don’t know about you, but I’ve been overcome, watching our country burn.

The tragedy of people losing their lives.

The animals burnt alive.

The livestock that has to be put down.

It’s all just … too much.

Each night I sit in my living room watching the news; the media chases down victims, wanting to capture the heartbreaking moment when they return, only to find they’ve lost everything they own.

“How do you feel?” the reporter asks, sticking a microphone in their face.

I’ll tell you how I felt when it happened to me.

Rage.

Yet what the cameras don’t show is what happens next. Often one of the first people they’ll turn to is a not-for-profit financial counsellor.

That’s what happened to me back in 2014, when my own home burned to the ground:

I walked into my local library, which had been transformed into a makeshift emergency centre for fire victims. I stunk of smoke, and sweat — and looking back on it now — I was simmering with anger.

Yes, we’d lost our home — and everything in it — but I resented the idea of being a victim. The only reason I was there that day was to get a special pass so I could get through the roadblocks and visit my farm.

The woman I spoke to was a not-for-profit community-based financial counsellor.

“Look, you’ve got a young family — a little baby — and you’ve just lost everything. That’s a big hit, so let’s take a few moments to talk about how you’ll cope financially”, she said firmly.

“Just give me my pass”, I snarled.

She leant in, gently put her hand on mine, and whispered:

“Honey, I know it will be difficult for you, but you’re going to need to let people help you over the next 12 months.”

I needed that.

And so do the people who are going through the same thing right now.

I’ll tell you … it’s times like this that inspired me to devote 2019 to becoming a financial counsellor. And so, now that I’m qualified, I’ve put my hand up to be deployed with the disaster relief effort.

It’s a privilege. An honour. And something that gives meaning to what I went through six years ago.

I know I can fight their insurers, stand up for them with their bank, and generally make sure that money issues don’t compound their grief and loss.

Yet what I also want to give them is some perspective, and some hope.

You see, six years ago our farm was declared a disaster zone (see pic).

Practically everything on it burned to the ground.

We felt like things would never, ever get back to ‘normal’ again.

Yet slowly, it did.

Fast forward to today.

We did end up going camping this week … on our own farm.

Right now the Australian Red Cross is supporting communities affected by fires, and you can go here to donate.

Empty out the Give Jar.

Tread Your Own Path!

Thanks From My Family

Hi Scott,

I got your book three years ago and since then have put your simple solutions into action. Fast-forward to this year, the hardest year of my life. My wife and I had our first little boy in January and could not be happier, but unfortunately my wife developed postnatal depression and was even suicidal at times. Thanks to the ‘Mojo’ account we had set up, I was able to take three months off work to care for my family. So thank you from the bottom of my heart.

James

Hey James,

I’m really glad things are working out for you.I might get a lot of hate mail, but messages like yours are the ones that keep me going.

The truth is I don’t write for everyone, and that’s okay. I only write for my tribe, the people who get what I’m about. They aren’t flashy. They work hard, avoid debt, maintain their Mojo, and look after their family. They think long term and keep things simple. Just like you and me.

You faced your financial fire, mate, and you got through it.You Got This!

Scott

Your Investment Advice Stinks

Dear Scott,

I am a financial advisor and, while I like your advice on saving, I think your advice on investing stinks. A young person following your super fund recommendations would end up losing hundreds of thousands of dollars over their lifetime because of your weird fetish about always choosing the lowest fees, irrespective of asset allocation. Someone under 45 should be completely invested in growth assets, yet the fund you recommend in your book is one-third invested in defensive assets.

Evan

Hi Evan,

You are correct!

And that’s why my book, under the heading “What investment option should I choose for my super?”, says:

“A ‘balanced’ fund isn’t a bad option to start with. But if you’re under 45, invest in the ‘growth’ option.”

Thanks for giving my book a light skim, Evan.

Scott

You're a Phony

Mr Barefoot,

You, mate, are a phony. Your book does not give any hard plan to succeed. All it does is give lots of homilies and hope signals. What a wanker. You are so far up yourself it’s a joke. You are a joke. Your mother must have thought you could do anything without even trying. 

Kevin

Hi Kevin,

I’ve read this question half a dozen times and I still can’t work out what you’re talking about.

Kevin, you’re like the crazy guy standing out the front of 7-Eleven yelling randomly at strangers.

Oh, and leave my mother out of it!

Scott

You're Out for Yourself

I can tell there’s an ulterior motive to your constant bank-bashing. You act all high and mighty about getting the ‘money-grubbing’ banks out of our schools, but all you’re trying to do is weasel your own way into the classroom with your Barefoot Investor brand. It all smacks to me of self-interest — I certainly don’t want you in my child’s classroom.

Tim

Hi Tim,

It’s good to question everyone’s motives:

Am I trying to build my brand? Flog books to kids? Develop a marketing database?

No, no, and no.

I’ve put over $200,000 (so far) of my family’s money into creating my financial education program, and I don’t plan on having my Barefoot Investor branding on anything when it gets officially rolled out. It’s all not-for-profit.

So what’s my motivation?

The same thing that made me become a not-for-profit financial counsellor.When I went into finance, my dad gave me this advice:

“Just be sure you don’t become a wanker … look after the battlers, son.”

Scott

My Best Hate Mail of 2019

I get to about this time every year … and declare email bankruptcy.

Yet before I do there are a few ‘special’ emails that I collect throughout the year that deserve a special reply:

My hate mail.

Yes, I may have a bestseller or two, but it sure ain’t all exclamation points and semicolons here at Barefoot.

So let’s kick things off with the winner of my angriest email of 2019, kindly sent in by a bloke called Rodney.

(If you’ve ever dealt with someone mean, my answer may help you a lot.)

Take it away, Rocket Rod!

Subject line: You’re a Leech, Barefoot

I do not know how you can claim that the financial spin you spew out is all yours. I learnt the same processes as a kid, and I am in my 60s. You do not own common sense. Perhaps you spend too much time conning the education system into paying you. I wager these kids will not even know how to fill out a cheque, let alone stamp and write an envelope. (And by the way, we were taught these things in state school in about Grade 4.) Also, I’m not impressed by you and your feeding on those in hard times — I think people who do that are called ‘leeches’. Have a great day.

Rodney

Yes, that’s an email I received, and he really did end it with ‘Have a great day’.

Now, given Rod has made some assumptions about me, it’s only fair I make a few assumptions about him:

I reckon Rodney wakes up in the morning, turns on the wireless (hello, Alan Jones), and starts to get angry.

Real angry.

He yells at the radio. He barks at the cat. And he types angry (two-fingered) emails to me.

Now, at some stage you’ve probably had a Rodney in your life: maybe it was a jealous co-worker, or a bitchy friend-of-a-friend talking trash behind your back, or even a troll on social media.

The problem is that all this stuff can rob you of your self-confidence. And that can lead you to stay in jobs you don’t like or relationships you have outgrown, and it wastes the precious time you’ve got on the planet.

Years of dealing with haters has taught me that the best thing you can do is to delete them and move on with your life, and never give them another thought.

That’s the grown up thing to do.

Yet if you really want to mess with them, here’s how I do it, in three simple steps:

Step one: Call them up (that’ll completely freak them out).

Step two: Say, “I just want to be honest and let you know that your comments really upset me. What made you choose to behave like that?” (You’re being honest, vulnerable, and making them justify their behaviour.

Step three: Stay completely silent … lean into the dead air if need be … and let them fill it with their ramblings.

I’ve done this with trolls in the past, and it always plays out the same way: it becomes clear they hadn’t thought too deeply about me. I’m just caught in the crossfire of their deep-seated issues and insecurities. By the end of the call you end up pitying them.

Bottom line: Rodney doesn’t hate me nearly as much as he hates himself.

And that’s how I deal with haters — well, other than devoting an entire column to them …

Tread Your Own Path!

A 12 Year-Old Steals The Show

Hi Scott,

I am 12 years old and I have dysgraphia and ADD. My dad has been doing Barefoot for 12 months and now we are able to go to Bali for a holiday ... just me and him. My grandma has promised $25,000 to me from an inheritance she received from her uncle. I want to invest it in shares but Grandma keeps telling me they are too risky. How can I convince her to put some of the money into shares instead of the bank? What can I say to her to let me invest even a little bit? I have saved $600 on my own already!

Corey

Hi Corey,

I have to admit I didn’t know what dysgraphia was, so I googled it:

“Dysgraphia can appear as difficulties with spelling, poor handwriting and trouble putting thoughts on paper.”

Dude, you’re doing great!

Seriously, I’ve employed people way older than you who can’t express themselves half as well as you can.

You need to use those communication skills to help educate your grandmother.

Ask her about all the tough times that have happened in history: the wars, the depression, recessions, and financial crashes.

Well, over the past 120 years, the Aussie share market has returned, before inflation, a 10% per year return.

Next, go to the ASIC MoneySmart website’s compound interest calculator:

Type in $25,000 and then 10% for the return, which, over the past 120 years, is the long-term (pre-inflation) return that Aussie shares have achieved.

When you’re 30 (18 years) that $25k could be worth $140,000.

By the time you’re 60 (48 years) that $25k could be worth $2.5 million.

She’ll be one proud grandma.

Scott

Extinguishing Financial Fires

Hi Scott,

My mother’s home in Nymboida (northern NSW) was tragically lost in the bushfires that ravaged the community last weekend. My mother has spent the last 30 years building a beautiful home yet, within hours of evacuation, the entire place was wiped out. We contacted NRMA for a house and contents claim, only for them to insist we itemise everything — yet it’s all gone! In your book you mention you were able to demand payment in full after your house burned down. Is there a script that we can use to achieve the same?

Mel

Hi Mel,

Give your mum a hug for me.

Your mum has just gone through a significant, stressful life event — so understandably she may not be in the right frame of mind to make far-reaching financial decisions, let alone battle an insurance company.

There are two things to consider: reimbursement for your contents, and managing the rebuild process.

While I haven’t read your mum’s policy, most insurers have what’s known as a ‘sum insured’ value. Once they’ve established her home has been destroyed, they should pay that figure out as a lump sum for contents almost immediately. Don’t let them play games with your mum: go back to NRMA and tell them that it’s far too traumatic to make her itemise everything she’s lost. Tell them to pay up the contents insurance pronto (and if they give you any stick, write back to me).

But when it comes to getting a lump sum for her rebuild, I’d be wary. Yes, I did it, but I was confident of managing the entire rebuild myself (and investing the proceeds in the meantime). However, if the onus of the rebuild is on your mum (rather than having the insurer manage it), that could be pretty stressful … and that’s the last thing she needs right now. Let the insurer deal with it.

Scott

My In-Laws Lied

Hi Scott,

My retired in-laws are bad with money — in fact they had to sell their still-mortgaged house to pay off a $50,000 credit card debt. While they sold (over a six-month period), we paid their mortgage from our own house deposit account. And then they bought a new mortgaged house they could not afford, and lied to us about how much it cost! They will not listen to reason, and I am sure history will soon repeat. Do we help them again and sacrifice our financial future, or do we refuse and feel heartless for letting them suffer?

Casey

Hi Casey,

If I were you, my index finger would be in plaster from all the finger-waving I’d be doing at these financial fools. However, I’m not you, and I don’t have to sit across from them at Christmas lunch.

Ultimately, this isn’t about your parents-in-law, it’s about your marriage. Your husband would be conflicted: he’s caught between his parents and his wife.

So, to your question: do you keep helping them?

Three words: no, no, and no.

Again, easy for me to say, hard for you to do. So I’d suggest you go on a date night with your husband and explain that you’re willing to forgive and forget their past financial faux pas (because really what other choice do you have?).

However, from this point on, you want to make a pact that you won’t enable their poor behaviour again. Besides, as the flight attendant says: “In case of emergency, fit your own breathing device first.”

Then brace for impact!

Scott

Dead Broke in a Beamer

Christmas came early for my kids this year ...

Daddy finally got a job.

(Well, to be accurate, 220 hours of community service as part of my Financial Counselling qualification.)

On my first day, the three of them surprised me by getting up really early and having a celebratory breakfast with me (possibly with the aim of making sure I really did have a job to go to).

And when I returned home that night I was greeted — for the first, and possibly last, time — like David Boon coming home with The Ashes.

“Didja have a lot of meetings, Dad?” asked my six-year-old, beaming with pride.

In the schoolyard, real dads go to work and have meetings. (Not bum around the farm in their trackie dacks.)

It doesn’t matter that he can see me on TV, hear me on the radio, and watch me do book signings with lines a hundred deep: when I’m wearing a tie, carrying a keep-cup and battling the morning traffic, I am THE MAN.

So now that I’m a couple of hundred hours into this job I’ve learned that it’s like being a (financial) E.R. doctor.

No one wants to be sitting in front of me.

They’re often embarrassed, humiliated, angry, scared ... and completely strung out about their finances.

My job is to sit them down, calm them down, and assess their situation.

It’s basically financial triage: you patch them up, stem the bleeding, and send them back out (where you can). Or, if you deem their situation terminal, you tell their creditors and cut deals on their debts.

(This of course sounds sexy but, trust me, if your life gets to the point where a bank is willing to write off your debts, you’ll be celebrating with spuds and spumante.)

Above all, what I’ve learned is that this job is relentless.

Debt in this country is an epidemic, and people of all shapes and sizes stream through the door.

Like a bloke in his 40s that I saw today.

He arrived to our appointment in a BMW X5.

“Why does this guy need to see me?” I thought to myself.

He sat down, threw his fancy keys on the table, and buried his face in his hands.

He confessed that he’d leased the car five years ago and now couldn’t afford the final balloon payment. (And if you don’t know what a balloon is — don’t feel bad — neither did he.)

The upshot was that he was broke, and the Beamer would soon be repossessed.

Yet you know what?

To the outside world he’s THE MAN. He’s got an awesome car that he drops his kids off to school in.

By the time he came to see me, it was too late for him to avoid his mistakes.

But it’s not too late for his kids.

And what this financial tour of duty has taught me is just how much we need a financial revolution in our schools.

My client grew up thinking that success meant leasing a $100,000 Beamer … and he paid the price.

I want his kids to grow up knowing that success is driving a $15,000 Toyota … that you own outright.

Tread Your Own Path!

A Lifeline for Those in Financial Strife

Hi Scott,

No help needed! I just wanted to thank you. I work for Lifeline Australia and I talk to countless people who want to end their lives because of the financial trouble they have got themselves in. I cannot wait to be able to refer your non-for-profit service on to people in their time of crisis. You will change many more lives, just like you have changed mine.

Madeleine

Hi Madeleine,

Thanks for your kind words.Australia may be the second wealthiest country on earth (behind Switzerland), but we also have some of the highest rates of household debts in the world.Financial stress tears families apart and causes a lot of misery. Lifeline plays an important role in helping these vulnerable people. Thank you for the work you do.

Lifeline: 131 114

Scott

We Bought a $3,000 House

Hi Scott,

My wife and I are some of the many victims of first homebuyer advertising.You know the ads — “If you have $3,000, you can buy a home!” And as a young couple we did not fully understand the impact of getting a loan to get a loan. We bought our home in 2014, at the top of the Perth market. Five years on and our house is valued at $70,000 less than what we owe. I have a well-paying long-term job ($200,000+) and my wife stays home and looks after our four wonderful children, but we are depressed.What options are available to resolve this?

Jarrod

Hi Jarrod,

For those of you playing along at home, you may wonder how Jarrod could buy a home for $3,000.The answer lays in his statement, “we did not fully understand the impact of getting a loan to get a loan”.

The $3,000 claim is just advertising spin to get potential postcode povvos through the door.

Then they’re hit with the reality stick:

You still need to come up with the deposit, so the developer’s finance arm will often arrange a high-interest unsecured personal loan to cover the deposit, on top of the mortgage (which is also much more expensive than what most people pay, because you have no history of savings plus an expensive personal loan to repay!).

But it gets worse.

These cheap starter homes are built in cheap starter suburbs, and they’re generally the first to drop in value when there’s a downturn. And that effectively locks buyers in: they can’t get the capital growth to refinance, and so they’re forced to continue struggling to pay off their expensive loan. It’s a vicious circle. Three grand to be in the doghouse!

So, given it’s a stinky sandwich, what would I do in your situation?

Well, if you’re content to stay in the home long term, it doesn’t really matter what the value is in the short term.What matters is clearing your debts. And in that regard you’re more fortunate than many postcode povvos — you’re earning good dough, so focus on knocking off the personal loan you took out for the deposit. Pronto.

Scott

Taxing Question from a Woolies Worker

Hi Scott,

I am one of the thousands of people Woolworths has underpaid over the past decade, and I am now waiting for them to pay it back. The first payment will supposedly be made before Christmas. I do not know at this stage how much I will get, but it could be quite a bit.

My question is: what can I do so that I do not pay a HUGE amount of it in tax?

I have moved on from the job and just do not want the Government taking everything. Could I get Woolworths to pay the tax perhaps?

Tim

Hi Tim,

I highly doubt that Woolies is going to pay your tax.

However, I spoke to the ATO this week about it. They said you’ll be entitled to a tax offset to ensure you don’t pay more tax than you would have if you’d been paid correctly at the time.

And how is that worked out?

All you need to do is include the lump sum payment (including any amounts of tax withheld from them) in your tax return and the ATO will calculate the amount of any offset.

And what about your super contributions?

Woolies will also have to pay you additional super, which may cause you to go over your contributions cap. If that happens, the ATO will either disregard the excess or allocate it to another year.

Basically, the ATO understands you’ve been sold some broken eggs, and they’ll try and unyolk them for you.

Scott

Help! I'm with 28 Banks

Hello Scott,

I am with 28 different banks (including credit unions). Some charge monthly, some are purely online. I was wondering what you would recommend as a single bank — who I’m probably with already — to consolidate it all together. I am also with MyBudget, who are helping me with my unpaid bills. I am 35 years old and earn $82,000. What should I do?

Brad

Hi Brad,

You seriously have 28 different banks?!

What do you use for a wallet — a suitcase?

People see you down the street: “There’s Brad at the ATM again, rifling through his suitcase of debit cards ... trying to remember which one has the money on it.”

Then again, some people collect stamps, or tattoos, or husbands, so whatever floats your boat.

Now you can have 28 banks if you really want … but one MyBudget is way too many.

MyBudget is just awful.

If you’re broke and can’t pay your bills, you sure as hell can’t afford to spend thousands of dollars a year on a glorified budgeting app. (I wonder if MyBudget suggests that their expensive ongoing fees are the most important bills that need to be paid?!)

Now, after years of promiscuous banking, you want my advice on being a banking bachelor?

Well, you should give your rose to whichever bank you want. After all, all authorised deposit-taking institutions (ADIs) are covered by the Government’s deposit guarantee up to $250,000, and none pay any interest worth crowing about these days. Yet if you really want to get a handle on your money you need to focus: after you’ve chosen your one and only, set up different savings and spending buckets, and begin banking on yourself.

Scott

My Year of Being a Tafe Student

It all began on a Date Night last year, when Liz said to me:

“You’ve sold over a million copies of your book … what’s next?”

“Well, I’ve been thinking a lot about that”, I said. “And I think I’d like to go to … TAFE.”

Liz stared at me blankly.

“I’d like to study for a Diploma of (not-for-profit) Financial Counselling”, I continued.

“So”, she replied warily, “this will be a correspondence course you’ll do at night … after the kids are in bed, right?”

“Well … not exactly. I’m thinking I’ll head back to class … just like my old uni days.”

At this point, Liz began chewing her food very slowly, and raised her eyebrows.

“But you’re a married man, with a full-time business, and three children under the age of six!” she protested.

“Precisely!” I said.

So this year I’ve been one of those super-annoying mature-age students.

It’s been a lot of fun … I’ve sent selfies to my staff as I enjoyed a lazy beer on the lawn on a Thursday arvo while they worked (losers!) … but I’ve also learned a hell of a lot.

I have the finance part covered, obviously.

Yet learning the art of counselling people who are, in many cases, suffering severe stress and trauma — they may have fled a family violence situation, lost their home, or fallen gravely ill — is both challenging and rewarding.

Helping people who can never repay you is a real honour.

And now, a year on, I can happily say that I made it through my lectures (both in class and when I arrived home late … where my new-found counselling skills have come in handy).

There’s just one thing left for me to do before I graduate. The course has a practical component that I’m still completing: I’m required to spend 220 hours volunteering in the trenches … more on that next week.

Tread Your Own Path!

Sleepless Barefooters

Hi Scott,

My wife and I recently welcomed our first child, a boy.

While at the hospital, I noticed your book was in the hospital library with the caption ‘Great Books to Read Aloud to Babies’.

We have a copy at home that I have tried reading to our son, but he does not seem too interested right now!

Anyway, I wanted to ask for your advice on what type of bank account I should set up for him.

Regards,

Anna and Steve

Hi Guys,

Congratulations!

But I don’t think babies need bank accounts.

f you’re just going to use it for some grandparents’ birthday gifts and a few bucks here and there, you’d be better off creating an additional online saver in the lower-income-earning spouse’s name, and then nicknaming that account after your child. (That’s important -- names have power -- if you don’t, you’ll probably forget after a while and end up spending the money.)

However, if you’re thinking about saving long term for his future (10 years plus), you definitely don’t want to have that money in a bank account: better to invest it in the share market. I write about that in my book too.Feel free to read all about it in your rocking chair. However, I’d suggest you stick with Where’s The Green Sheep? and save my book for a few months’ time when you and your wife can tackle it together on a date night at a restaurant!

Scott