The Payday Lending Pandemic

Hi Scott

As instructed I sent an email to the Honourable Mr Michael Sukkar about putting a muzzle on payday lenders. I’ve never told anyone this because it’s embarrassing, but I once fell victim to these predators when I was struggling financially. Then I found your book and got back on track. So while I'm worried about getting COVID-19, financially, I'm as healthy as I can be. And for that I thank you.

Linda

Hi Linda,

Well done for getting back on your feet, and for sending an email to the Assistant Treasurer, who is the responsible Minister for implementing reforms on Payday lenders.

Right now we’re facing a payday lending pandemic, as millions of Aussies stress about their finances.  And these predators are marketing their loans heavily on social media: ‘Need instant cash? Approved in 60-seconds!’.

(Fine print: interest rates for a one-month loan, 407.6% per annum).

Once you sign up, they use sophisticated screen-scraping technology, which allows them to time their direct debits to scoop in and take any money that hits your account ... before it can be spent on food, medicine or school books. Then they offer another loan, and the cycle repeats. Right now the Government is taking bold steps to protect our health -- and we need them to do the same to protect our most vulnerable families financial health.

My view? At the very least, Payday lenders should be temporarily put out of business, for as long as we’re out of business.

Many of my readers agree: this week I’ve received thousands of emails from Barefooters in support, so I can only imagine how many Sukkar got. Yet sadly, at the time of writing, I haven’t heard from him. Perhaps the highly paid lobbyists that these payday lenders employ really have won.

Scott

How to grab a quick 20k, but is it painless?

Truth be told, Australia was one of the least prepared countries for this crisis.

That’s because the average Aussie household is shouldering some of the highest household debts in the world, and has skint savings: half of us have less than $7,000 in the bank, according to the Grattan Institute.

So for those people who have lost their jobs or their small businesses, the government is offering you a gamble:

They’ll let you take up to $20,000 from your super, tax free, to live on.

(Specifically, it kicks off with $10,000 in mid-April, then you can request another $10,000 in the new financial year.

To access the dough, you need to be: unemployed, or getting a Centrelink payment like youth allowance, or have had your working hours or business income reduced by at least 20%.)

On the upside, you’ll have money to tide you over for the next few months.

On the downside, you could be putting your retirement at risk.

So, what should you do?

Well, with a hat-tip to the late Kenny Rogers: “If you’re gonna play the game, boy, you gotta learn to play it right”.

There’s a saying in poker: you’re not really playing the cards … you’re playing the other players.

So, let’s see who’s sitting around your table.

First, you’ve got your bank. They’ve been dealt a really bad hand. That’s why they’re giving their affected customers up to a six month ‘pause’ on their home loan (and in reality, all their debts).

Next to them sit your utility providers and telcos, who will offerpayment arrangements.

Finally, there’s your landlord, who looks like they’ll be forcedto go easy on renters who are in financial difficulty.

In other words, if you’ve lost your income, you can put on your poker face and call their bluffs.

All you need to do is contact their hardship department (pro tip: email them, their phone lines will be jammed), and explain your situation, preferably with written evidence. 

So, should you still take the $20,000, just in case?

Well, the Gambler advises “you never count your money while you’re sitting at the table”.

But I don’t agree.

See, you may think you’re cashing in $20,000 of your super money, but you’re really not:

If you’re 45 years old, that $20,000 would be worth $50,000 by the time you retire.

If you’re 35 years old, it’s an $80,000 decision.

And if you’re 25 years old, you’re really gambling with $132,000!

Why?

Because you’re cashing out your investments during a share market crash, where the price of stocks are 25% cheaper than they were a few months ago. You’re selling out cheap. And history tells us that over the long-term the stock market always goes up — through panics, pandemics, wars, depressions and recessions.

Always.

Still, I was curious to know how popular the Government’s proposal would be.

So on the weekend I asked people on Facebook: would they be touching their super because of coronavirus?

Drumroll ...

Some 64,000 people were so utterly bored that they took the time to vote on a poll on … err …  super.

Yet what’s encouraging is that the vast majority of them said ‘no’ — they wouldn’t touch their super.

For them, the long-term stakes were too high … and instead they’d decided to fold and walk away.

Of course, that doesn't help you if you’re a hospitality worker and you’ve got to put food on the table.

Your kids can’t eat compound interest.

Yet before you cash out part of your retirement savings, make sure you have exhausted every last option available to you (including eating baked beans for a month or two).

Remember, this crisis will likely last a few months — yet your retirement will last decades.

If you do have to access your super, make a pact with your future self that when you get back to work, you’ll increase your repayments to 15% of your gross wages, so you automatically pay it back.

Do whatever you can do now to avoid a royal flush of your financial future.

Tread Your Own Path!

So I have some bad news

So, I have some bad news.

I’ve spent this week fighting a virus.

It’s dangerous, it’s destructive … and it’s about to explode, and potentially infect millions of people.

Let me explain: it’s a financial cousin of the coronavirus which I’m calling the ‘Payday Lending Pandemic’.

See, this weekend, in kitchens and living rooms across the country, people are stressing out about their finances:

The single mum who works as a waitress, who just had her hours cut, and has no food in the fridge to feed her kids.

The small business owner who sits with his wife, worried about how he’ll pay his loyal staff and make the rent.

The father who drives an Uber to feed his family, who gets a nasty cough — but has no sick pay or entitlements.

They’re all terrified.

Yet there’s a small group of multi-millionaire businessmen who are rubbing their greedy little hands with glee:

Payday lenders.

See, up until now they’ve made their fortunes by preying on the mentally disabled, the addicted and the sick.

Yet this corona crisis is about to open the payday loan market up to millions of brand-new customers.

In a moment, I’m going to ask you — yes you — to help me stop them. But first I want to explain how dangerous and contagious this Payday Lending Pandemic is:

This week the Reserve Bank cut the cash rate to 0.25% ... yet payday lenders can legally charge their customers an outrageous 407.6% per annum (not a typo) for a one month loan.

And, while they’re marketed as ‘short-term loans up to $2,000’, the reality is these loans are designed to put vulnerable people into a long-term debt spiral, where one loan is used to pay off another. And another. And another.

After all, the payday lenders know that when all else fails they have a guaranteed payer:

You.

Or, more accurately, Centrelink (which we collectively pay for through our taxes).

The payday predators can swoop in and snatch their clients’ Centrelink payments before they can spend it on food, medicine or schoolbooks. And that’s exactly what they do (they also pull the same trick with people’s wages).

Okay, ready?

Now I’m going to make you feel really angry.

The Government knows that payday lending and consumer leases (hello Radio Rentals) are on the nose.

And that’s why, four-and-a-half years ago, they decided to do something about it.

So they launched … drum roll … a REVIEW.

Bam! Pow!

And surprise, surprise, that review came back and recommended that these mongrels have a muzzle put on their lending practices, otherwise known as the Small Amount Credit Contract reforms (SACC for short).

Done and dusted, right?

Oh, no, no, senor!

In fact, the Government has sat on the recommended reforms for nearly four years, and as late as last week they said they still need more time to consider.

What the hell is going on?

I’ll tell you what the hell is going on.

The businessmen who own these payday lending outfits are seriously rich, and seriously powerful.

In fact, they’re so rich, and so powerful, that they employ an army of lobbyists to influence our politicians.

And these lobbyists are good.

They’ve tied this thing up in knots for years and NOTHING has happened. Which is exactly what they’re paid to do.

Meanwhile the payday lenders can continue making hundreds of millions of dollars off the backs of battlers.

And here’s where it gets downright disgusting:

With the corona-crisis, the Government is (rightly) handing out billions of dollars in an effort to stimulate the economy and look after society’s most vulnerable.

However, some of this stimulus will actually end up stimulating the pockets of the multi-millionaire payday lenders.

That sucks, right?

Now of course there have been some heroes — not-for-profit consumer advocates — fighting the good fight against these predators, and their lobbyists.

Truthfully, though, it’s like they’ve been in the ring with Mike Tyson … for almost five years. 

I met up with one of these battle-scarred boxers — Gerard Brody, CEO of the Consumer Action Law Centre.

“After all this time we’ve almost given up”, says Gerard.

“We can’t even get so much as a meeting with the responsible Minister. The Assistant Treasurer, Michael Sukkar, is in charge of implementing these reforms, but it feels like he just doesn’t care.” 

So the lobbyists have won, right?

Wrong.

Ding, ding — it’s time for you and me to get in the ring.

We may not be able to do anything about this damn coronavirus, but we can sure as hell wash our hands of this Payday Lending Pandemic. Even better, I’ve found us a vaccine, and his name is the Michael Sukkar MP.

I just reckon the honorable member needs a little reminder of just who he’s working for.

We the people.

So, given I’ve been ‘social distancing’, I’ve had a bit of time on my hands. Maybe too much time. Enough time to track down his personal email address:

Michael.Sukkar.MP@aph.gov.au

Now here’s where you come in.

I need you to send Michael Sukkar an email right now.

In the subject line you could write: “Look after the little people, not the lobbyists”.

And in the body of the email you could write: “Do your job and put a muzzle on these mongrels right now!”

Now look, I don’t want to be a hater. I honestly believe that every politician — on both sides of the aisle — wants to look after Aussies who are under a huge amount of financial stress right now. And I know that if enough people email Michael Sukkar this weekend then he’ll take notice of us.

I’ll be back next week to answer all your questions about the corona-crisis. And I genuinely hope that, when I do, I’ll be able to tell you that millions of hard-up Aussies have dodged the Payday Lending Pandemic (even if we have to blow up the Government’s email server to do it).

It’s time to wash our hands of this pandemic — and if there’s anyone up to the job, it’s Michael Sukkar.

Tread Your Own Path!

P.S.  If you’re reading this you’re probably in social isolation, so you too have some time on your hands. Instead of reading scary headlines, let’s make some ourselves.

Please, spend 30 seconds — right now — and send an email to Michael.Sukkar.MP@aph.gov.au.

As a society we will be judged by how we look after our most vulnerable.

Let’s fight for them.

What To Do When You're Terrified

I live a very privileged life.

See, I spend my time on my farm, in the middle of nowhere, with my family.

Out here, everything is pretty calm (well, as calm as things can be with three kids under six.)

That changed on Thursday night.

The corona-crisis meant I had radio interviews booked solid forFriday, so I decided to spend the night in the city. And, since my family wasn’t with me, I thought I’d take a walk through the streets of Melbourne --at 10pm, alone.

It was a surreal experience.

I could feel that something wasn’t right … something had changed.

People hurried past me wearing face masks.

I overheard snatches of concerned conversations left and right, talking about the coronavirus.

On my walk, I passed three supermarkets. Out of curiosity, I looked inside. Each one had been pillaged — there was no toilet paper, no tissues, no hand sanitiser.

At the Woolworths on Elizabeth Street, a staff member told me, “We only got two packages of toilet paper earlier this evening, and they both sold in seconds”.

I returned to my room and went to bed just as the US share market opened — and it soon halted trading as shares went into free fall. This hasn’t happened in decades  … yet this week it’s happened twice. The next day I woke up to find that Wall Street had seen its biggest share market crash in 32years.

Make no mistake: these last few weeks will go down in history.

Our grandkids will look back on this period of market madness -- where people were tasered for toilet paper and the markets lost a quarter of their value in three weeks.

And so this week I’m breaking my own rules and devoting my entire column to just one question.

But it’s a big one (and I’ve received hundreds just like it).

Subject: I’m Terrified!

Dear Scott,

I am in my late fifties and am terrified by the current coronavirus climate. I have my own super fund and it’s dropped $40,000 in the last fortnight, from $370,000 to $330,000. I know what you are going to say -- sit tight! -- but every fibre in my being is screaming ‘sell!’.

Anne

Okay, so a few things you need to know before I answer Anne’s question:

I’ve changed her name.

And it’s a few weeks old, so her super would presumably be down much more than $40,000 by now.

Finally — and most importantly — I’m not going to be an investment jerk and just cut-and-paste some Warren Buffett quote about ‘focusing on the long term’ (from an 89-year-old, no less).

After all, it’s one thing to point to a chart … and totally next level to see $40,000 (and counting) disintegrate before your very eyes.

The fear people are feeling right now is real, and very raw.

So to Anne’s question:

Anne,

You’re facing some tough decisions, so I want you to take a few deep breaths and walk through them with me.

Make no mistake, the past three weeks have been emotionally harrowing, especially for older people.

The thing is, you’ve framed your question as ‘either/or’:  either sell and stop the losses, or hang on and hope it gets better.

Yet it’s more complicated than that …

Let’s say you make your investment decisions like a mad shopper in Coles, hurtling down the aisle and hip-and-shouldering a five-year-old girl out of the way to claim that last pack of sweet-ass Sorbent.

In other words, you’re so panicked by the ‘global recession’ headlines that you sell your super investments and move all your money to the ‘safety’ of cash.

Job done, right?

Well, no.

Here’s what happens next:

By selling out, you’ve ‘locked in’ your losses — at a time where the sharemarket is down 25% in three weeks.

In other words, you’ll miss out on the massive upswings that history tells usoccur, eventually, after every crash. You’ll have effectively switched thecompound interest machine to ‘off’.

But it gets worse ...

The tax man will come knocking on your already wounded portfolio. 

In other words, you’ll have to pay capital gains tax (CGT) of 10%if you hold your investments longer than 12 months, but 15% if held for lessthan 12 months.

And worse still ...

Your super will now be parked in cash, and it’ll therefore be guaranteed to lose you money each year.

Why?

Because prices rise faster than your money earns in interest (otherwise known as ‘inflation’).

Think of it as the financial equivalent of standing in quicksand: each year you sink a little lower.

Here’s you: “Well at least I won’t be watching my money go down the toilet before my eyes!”

Here’s me: “I completely understand where you’re coming from, and I’ve heard it all before.”

Specifically, back in 2009, in the depths of the GFC, I had retirees writing to me saying the exact same thing.

Quite a few of them sold their shares, deciding to wait till the coast was clear before they got back into the market.

You know what?

They’re STILL waiting for the coast to be clear …

And here’s the thing: I can tell you after 20 years of being in the investment game that the coast is never clear.

Truth be told, the thing that makes the stock market so scary is that you can’t control it ... as we’ve seen this week — it’s driven by the same people who hoard Sorbent and rice for a 14-day cleanse.

So, Anne, let’s instead focus on some things you can control:

One, make sure you’re in a low-cost fund with the right asset allocation for your age (if you’re unsure, it’s a good idea to sit down with a fee for service financial advisor and check).

Second, once you’ve done that, just STOP LOOKING AT YOUR SUPER. Granted, it sounds simple, but it works.

(It’s a bit like watching Married at First Sight — instead of getting all riled up at the antics of badly behaving bogans, just switch off the telly.)

Third, you can put your investment decisions on autopilot: you can actually take advantage of these market falls while you’re still working by automatically saving MORE money into your super while shares are cheaper (talk to your fund).

And finally, in the years before you’re about to retire, begin building up a cash buffer of around three years of living expenses (less any pension payments), so you can ride out any market bumps — like this one — without having to sell.

Anne, I can’t guarantee where the share market will be in a year or two. No one can. Yet what I can tell you is that the biggest risk you face is not the short-term movement of the share market — it’s having your super eaten away by inflation.

Don’t flush your retirement down the toilet!

Tread Your Own Path!

We Got This!

Dear Scott,

I want to thank you for the concept of ‘Mojo’. Mojo allowed me to fly immediately from Brisbane to Melbourne to be with my 95-year-old Gramps when I was told he had only 24 hours left. He held on for five days (he was always stoic and slightly stubborn!), then slipped away quickly, simply and peacefully. I feel honoured to have been able to be right next to him as he passed — it is one of the best experiences of my life. It is vital to NEVER underestimate the power of Mojo — it means so much more than just some dollars sitting in an account.

Brenda

Good on you, Brenda!

To be in the financial position to down tools and be with your family when they need it is what having Mojo is all about. Those are the moments that really matter in life. Thanks for sharing your story — my hope is that it inspires others. 

Scott

Beware the Killer Chihuahua

Hi Scott,

My wife and I are both in our early seventies, retired, and have just been given another ‘pay cut’ on our term deposits, courtesy of the Reserve Bank! I have two questions:

1) What are your thoughts on current interest rates?

2) I have half my money ($600,000) in term deposits paying a pitiful 1.5% with Bendigo Bank. What are your thoughts on moving them over to Mayfair Platinum term deposits, who are offering 5.45%?

Bruce

Hi Bruce,

You’ve asked two fantastic questions that many people are asking themselves right now. So let me answer with an admittedly weird analogy:

For me, the current level of interest rates (0.5% — the lowest on record) is a bit like camping out in the bush.

You’ve spent the day shooting your rifle at random tin cans and the like, wasting your bullets.

Night falls and you hear something rustling in the bushes: what the hell is that? A killer bear?

But you only have three bullets left.

Scared witless, you fire one off into the darkness and hope you hit whatever is making the noise.

Now you have two bullets left.

Let me explain: the bullets are interest rate cuts, which are designed to stimulate the economy. And the latest cut the Reserve Bank fired off this week will, in my view, prove to be about as effective as shooting randomly into the darkness. If anything, it’ll just serve to scare your fellow campers.What happens if there really is something bad in the (economic) bushes? Will we have enough bullets in the chamber to defend ourselves?That’s my worry.

Now, to your second question: should you move your money over to Mayfair Platinum, who are offering 5.45% on their term deposits?

I’ve written about Mayfair Platinum before. They’re heavy advertisers, and in the past have used a cute little chihuahua as their mascot. I explained how they have snapped up some (in my view) very questionable offerings, including Dunk Island (an island south of Cairns that was wiped out by Cyclone Yasi in 2011), various cryptocurrency-related companies, a food app, and a host of other investments across the world.

For my answer to your question, then, let’s keep going with my camping analogy.

You’re worried the noise in the bushes might be a killer bear. But it’s not. In fact the cutest little chihuahua comes trotting out. It cuddles up to you by the campfire and lovingly licks your face while you drift off to sleep, confident that everything is going to be a-okay. That’s Mayfair Platinum.

And then, in the middle of the night, it bites your face off.

Scott

Tiny Houses

Hey Scott,

I recently stumbled upon the YouTube phenomenon of ‘tiny houses’. Are these a great idea or a terrible one? I understand that the value probably does not go up, but it provides an opportunity to get your own place — for cash!

Jack

Hi Jack,

You’re right: tiny houses have terrible resale value.I know this because I’m looking to buy one … second-hand.

I can only assume the people who are selling have experienced the downsides of living in a confined space ...

When you take a dump, it stinks out your whole house (which is about as big as Daryl Somers’ dressing room’s dunny anyway). And, to make matters worse, you don’t have any toilet paper because some coronavirus-prepper has already raided your local IGA. Am I right?You don’t want to be turning around and booking a substantial loss on your tiny house.

So why am I buying one?

Actually I’m looking to buy a couple.

I’m going to dot them around the farm so me and the boys (okay, and the girl) can do mini-camping trips at a moment’s notice. It’s an investment in my kids, but it won’t make me any money.

Scott

The Road to Recovery

My wife slammed the door and said:

“You need to go and see someone.”

It was almost three months to the day after our house burned when things started to fall apart.

See, the world had moved on, but we hadn’t.  

And I found the black landscape that surrounded me, crept up on me and brought up black thoughts inside my head.

It was the darkest period of my life.

And it was that time that my wife booked us both in to see a counsellor who specialised in bushfire victims.

It really helped us.

So this year has been my time to take some of my hard-earned experience and give back: I’ve been working as a not-for-profit financial counsellor in bushfire-affected regions.

As part of that effort, earlier in the year I was summoned to Canberra for a roundtable on how best to help fire victims. I happened to sit next to Anna Bligh, former Premier of Queensland, and now head of the banking lobby.

She told me that it was around the 12-week mark that depression started to set in after the Queensland floods -- which matched perfectly with my own experience.

Well, we’re now approaching three months after the fires … the time when it all starts to fall apart. And, tragically, the community where I’m helping out has had its first suicide since the fires.

It’s a reminder that, while the nation has moved on to Toilet-Paper-Gate, there are plenty of people still dealing with the aftermath.

My experience told me that the media would move on quickly. But I wanted to tell the real story of recovery and what happens when the cameras stop rolling. So I kept them rolling — I had a documentary crew follow me to show the real, unglamorous reality of getting back on your feet. The Road to Recovery launches tonight on Foxtel.

I agreed to do the show for three reasons:

First, to raise awareness of the vital work that (underfunded) financial counsellors do in the community.

Second, to raise money for the Financial Counselling Foundation (I donated 100% of my time, and the network agreed to donate all advertising revenue).

And, finally, so that, even when the media world did move on, those impacted by the fires wouldn’t feel like the world had forgotten them.

I wanted to tell the story of what happens after a disaster … and what the road to recovery really looks like.

Tread Your Own Path!

Better Than Any Shopping Spree!

Hi Scott,

I am living proof that ‘paying it forward’ can work. I was sitting in a cafe with my son one day having lunch. He has cerebral palsy and is unable to feed himself, so I was feeding him and we were having a lovely time, oblivious to the world around us. When I went up to pay, the owner told me a complete stranger had already paid for our lunch, and had asked the waiter to pass on the message that I was an amazing mum. I was brought to tears by this kind gesture. Fast forward one month and my son was in hospital having an operation. In the recovery room, I overheard a lady asking the nurse about how to catch public transport to her hotel. She was from a rural area and was with her tiny daughter, who had just endured an operation. I went up to her and asked if I could please pay for a taxi for them. I explained that I was paying it forward and that it would be my pleasure to assist her. We hugged and had a bit of a cry. It was a moment of connection with a complete stranger. Better than any shopping spree!

Jenna

Hi Jenna,

Since writing that column, I’ve been overwhelmed with lovely responses like yours from people telling stories of how they’ve paid it forward — and they’ve all told me the same thing: the high they got from being kind far outweighs the small cost of helping someone else.

I’ve chosen yours because it shows how kindness has a knock-on effect. Maybe that lady you helped will pay it forward to someone else? Thanks for sharing, and whoever paid for your lunch was right — you do sound like an amazing mum!

Scott

Too Broke to Go Broke

Dear Scott,

I am one of those ‘bastard bosses’ you talk about — I am still about $40,000 behind on my employees’ super (including mine — I have not paid myself any super, ever). I am also going broke. After six years of trying everything to stay afloat, including selling all my personal assets, my company ceased trading at the end of last month.Now I am trying to work out what the hell to do from here. By the time I liquidate what’s left, there should be enough to pay out the employees’ super, but there will still be about $150,000 in debt, mostly to the ATO. I’ve been advised to hire a liquidator, to do things correctly and end up with more to pay to their super, but I have been told it will cost about $15,000. I know it’s all on me — but do you have any advice on what I should do next?

Simon

Hi Simon,

I don’t think you’re a bastard boss -- you gave it a go and you couldn’t make it work. Fact is, more than 1,000 small businesses go broke each week in Australia, according to data analysts Illion.

One option you have is to pay your employees their super, directly into their funds, with any money you have left.

As for the ATO, there are two ways to go: appoint your own (expensive) liquidator, or wait for the ATO to eventually appoint their own. And if it works out that you’re personally liable, then really your only option is to negotiate a settlement with the ATO, or declare bankruptcy. My take?

The person who told you to see a liquidator was bang on. If you don’t, there’s a risk that you’ll open yourself up to even more trouble. It’s time to let the nightmare play out.

Scott

My Son is a Thief

Hi Scott,

Today my 8-year-old son stole $40 from my 10-year-old daughter’s purse, and then shouted all his friends at the school canteen. I am not sure how to deal with this one correctly so that both of my kids learn a lesson. Any advice from one dad to another?

Ted

Hi Ted,

That’s a doozy, dude.

If it were me, I’d get my Judge Judy on, arrange a kitchen table court, and dole out some tough justice.

First, I’d give your daughter the $40 back — after all, she’s done nothing wrong.

But there may be a lesson for her: 40 bucks to a 10-year-old is like $500 to you and me, so ask her whether at least some of that money would be better off in a bank account. (If she says yes, all you need to do is create a separate online saver in your name, and nickname it after her.)

She gets a shiny new account. Win!

Then I’d tell your son that he needs to pay you back the $40 … plus interest. (Personally, I’d make him pay it back double … but my wife says I’m often too hard on my boys.)

Walking the dog, polishing shoes, taking out the garbage, whatever … until he pays off every single dollar.

The final lesson is for you: lock away the jam jars till payday!

Scott

Why I’ve been buying shares in the share market ‘bloodbath’

“No wrestling in the kitchen!”, I yelled.

If I’d told them once, I’d told them a thousand times.

They just wouldn’t bloody listen!

My eldest son grabbed his younger brother around the waist, lifted him up, and attempted to do a signature ‘Stone Cold Steve Austin’ power move.

The problem was his little bro had obviously been bulking up on his Weeties, and under the weight they swayed one way, and then the other, and then ...

It was all too much, so he let go and his little bro’s face smashed straight into the corner of the dishwasher.

In the fake world of wrestling, it was a total knockout!

Yet there was nothing fake about the scene I was confronted with. There was blood absolutely everywhere, literally soaking his white shirt red.

“Kiss it better! Kiss it better!” he wailed, as his little lip flapped in the air.

I stood there for a few seconds in shock, staring at the gruesome scene. And, just as I was about to save the day, Liz rushed in, simultaneously screaming, scooping him into her arms, and scolding me for letting it happen (mums sure can multitask).

We rushed him to the hospital, and when he came out to the waiting room he looked like one of those girls who’s had a bad lip-filler job.

Kinda pouty.

Well, last week the stock market got a smack in the gob … and there was apparently a lot of blood spilt too:

“$1.5 trillion wipeout: Global markets plunge as virus panic grips investors”, screamed the headline in the SMH on Tuesday.

Crikey.

Of course another way you could write that headline is: “Share prices fall back to levels not seen in …  57 days”.

Look, I don’t want to make light of the current health crisis, and first and foremost that is exactly what this is.

Yet will investors still be talking about this in 10 years time?

Highly unlikely.

Here’s the truth: short-term uncertainty is the price you pay for higher long-term returns. 

When you look back at the last 30 years of the stock market on a chart, it’s a beautiful picture:

A $10,000 investment into Aussie shares in 1990 would be worth $136,000 today ‒ an annual return of 9.1%.

And that’s why I’ve been taking advantage of the pouty prices, and buying up stocks.

Because the truth is, investing is a little like parenting: 

One day you’ll look at a photo of you and your kids from 30 years ago … and you’ll smile and you’ll have forgotten about all the fighting, the sleepless nights and the wrestle-mania moves gone wrong.

These are the good old days.

Tread Your Own Path!

Cashier Kindness

Hi Scott,

How fantastic that you shouted that guy his meal! I was myself behind a lady in the queue at Coles recently and saw she had her groceries scanned and bagged, and for good measure her son had started tucking into some snacks from the bags. She then realised that her card was not in her wallet, and started fretfully taking the bags back out of the trolley. Without hesitation I handed my card over to the cashier to pay for the lady’s shopping, and I would not allow her to pay me back either. Best $70 I’ve ever spent, helping out a fellow mum during a crappy part.

Melanie

Hi Melanie,

One night I went to a chew-and-spew and found that I’d forgotten my wallet.

It was chopsticks at midnight over an $18 pad thai … I seriously thought the restaurant owner was going to call the cops on me. (And it would have been much worse if my little tacker was tucking into some san choy bau!)

So I can completely understand how that woman was feeling.

Today we rush around so much that occasionally you forget your wallet … and isn’t it nice that for that woman, at that moment, you were there as a smiling face?

The truth that all givers know is that the giver always gets the most out of it.

Hopefully she went home and explained to her kid that even in this day and age of division … isn’t it good to know that there are good people who can help?

(Unlike the owner of the  Chinese restaurant … a big chop-suey to you, Mel!)

Scott

Living the ING Life

Hey Scott,

Long time reader, first time asker! I would love your thoughts on ING's latest superannuation offering — ‘Living Super’.

Stephanie

Hi Stephanie,

Not much.

It’s kind of like walking into your local pub and choosing between the 35 craft beers they have on tap.

They all have flashy logos and pompous names, but they all taste pretty much the same. Yes, ING allows you to buy individual shares, but industry funds offer the same thing.

And, while their portfolios are made up of sensible index funds, they’re really not that cheap.

(When you’re buying index funds, cost is one of the major factors.)

Bottom line: there are cheaper, and better, products out there in my opinion.

Case in point: arguably the best fund manager in the world is the not-for-profit Vanguard, and they’ll be coming out with their own super offering later in the year.

Hold my beer!

Scott

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.

How to Blow $50,000

Dear Scott,

My fiancé and I work in hospitality, earning around $55,000 each. We love the industry we work in, but unfortunately it does not pay well. We are saving to go to Vietnam next year, but after that we need to save for our wedding and honeymoon, which will be about $50,000 in total. After that we need to save for a house deposit. We have a baby, and my fiancé works days and I work nights so childcare costs are minimal. But getting a second job is out of the question. What is a good way to save as quickly as possible?

Emma

Emma!

Are you on drugs? Or …  are you planning on supplying drugs at your wedding?

You can’t be seriously considering spending an entire year’s wages on one day!

Fair dinkum, I’m tapping the keyboard so bloody vigorously right now that I’ve woken up the dog, and she’s moving gingerly to the back door. (She knows the score.)You wrote to me for my advice, so I’ll give it:

I think you’ve got your priorities completely out of whack:There is zero correlation between how much you spend on your wedding and how long your marriage will last.

There is, however, a high correlation between money worries and divorce.

If I were in your shoes I’d first use that money to build up your Mojo, then put the rest towards a deposit on a home.

What about the wedding?

Well, you’re in hospitality, so why not ask your workmates to help you plan a rustic, authentic backyard wedding?

Years from now it’ll become your family legend: you started with nothing, and created something amazing. 

Scott

Have you Googled yourself lately?

Picture this.

You wake up one day, flick on Sunrise, and Kochie is in a flap:

“Overnight the internet was hit with the biggest coordinated data hack inhistory. Everyone is exposed”, he warns.

You whip out your phone and check your accounts, but it’s too late:

All your secrets have already been flushed out into the world: all your (private) messages, all your (private) photos, all your passwords, all your credit card and bank details … everything is out there.

Here’s you: "Yeah … nah. That is not gonna happen.”

Here’s me: “I have three words for you: Jeff. Freaking. Bezos.”

Word has it that the wealthiest person on the planet clicked a dodgy WhatsApp link that hacked his phone.

The result?

The internet got to see a pic of a very different type of ‘package’ that Jeff had delivered to his girlfriend.

(Suffice to say the old boy was Amazon ‘Primed’.)

Here’s the point: Bezos has built a trillion-dollar internet business. Yet even he got hacked.

Right now your kids are swiping at your phone with their grubby, jam-stained fingers,poking around at one of the hundred apps you’ve downloaded and long forgotten about.

So the question is: are you feeling lucky, punk?

I’m not.

And you shouldn’t either: according to the Government’s Australian Cyber Security Centre, Australians are reporting cybersecurity incidents every 10 minutes — and in 2018 almost one in three Australian adults was affected by cybercrime.

So here are three things that I do to avoid getting hacked.

Dumpster Diving

I have a rotary phone, a fax machine, a pager on my belt, and a CB-radio in my ute.

I’m joking.

(Alright, so I do have the CB in my ute, but that’s none of your damn business, Victor Charlie, Charlie).

While you’d think going to the olden days may save you from being hacked, the truth is it’s even more dangerous: the easiest way to steal your identity is not to hack into your computer … it’s to simply fish through your rubbish bin.

So I do whatever I can to stop receiving snail mail, and instead get everything emailed instead. When I went full digital, I scanned all the old mail I had lying around — and destroyed it. (On the farm we have an incinerator … but if you’re in a more urban setting a $40 shredder from Officeworks is fine.)

Always Use Protection

On all my accounts I’ve turned on two-factor authentication (Google it). I also use Dashlane to securely store my passwords, Malwarebytes to protect my computer, and TunnelBear as a VPN (to keep web browsing secure). For about $100 a year, it’s cheap insurance.

Also, my social media accounts don’t give away my location. (Unlike Terry the Tosser: “Here we are inMykonos #richlife” … and back in Melbourne your house is getting robbed,#thuglife.)

Stay Alert

I have a premium alert service set up on my credit file (and given I have no credit, it shouldn’t be dinging too much). However, if you get scammed, your credit file is one of the first places it will show up, as scammers apply for credit in your name.

Here’s the deal: you don’t have to be mega-rich to be scammed -- in this interconnected world, we’re all targets.

So don’t wait for the big hack to come to realise you weren’t covered.

Because,as the Amazon founder himself will tell you: 

There’s no returns policy once your junk is on the internet.

Tread Your Own Path!

My House Burnt Down, Now I Really Am Barefoot

Hi Scott,

I know you probably won’t read this, but you were ‘on my list’. You see, since my house in Mallacoota burnt down, I have been shown the most amazing acts of generosity and human kindness, and I have a list of the people I want to thank.

So while I go through the emotional process of figuring out my new life, thanks to your book I am not immediately worried about money. That’s huge! My partner and I are even contemplating taking a six-month hiatus and travelling around Australia. Seems like good timing while we don’t have any ‘stuff’.

Emily

Hi Emily,

Welcome to the ‘no stuff’ club!

The truth is that, as for all of us, almost everything you buy will end up in a rubbish tip, but in your case you’ll receive a cheque for it!

When it happened to my wife and me, we felt an overwhelming sense of freedom, like a weight had been lifted off our shoulders. Which it had — we literally didn’t have any clothes.

Seriously, though, over the following 12 months we didn’t really buy anything, and it changed the way we thought about ‘stuff’ forever — for the better.

Go travelling, and make some memories!

Scott

Beware of 60-Year-Old Hussies!

Hi Scott,

My mum passed away two years ago, and it seems like my 80-year-old dad is being swooped on by several single women 20 years his junior. He lives alone in a lakeside community several hours away from us (my two brothers and me). We are concerned that he will be swindled out of his house and savings, so we have suggested he get his will and power of attorney (POA) sorted. We honestly cannot see what these women see in him, but his ego might tarnish his ability to protect his assets from clever predators. Do you have any family asset protection strategies that we should be aware of?

Dan

Hi Dan,

If you were my son, I’d give you a clip around the ears: “We honestly can’t see what these women see in him.”

Way to cut down your old man!

Then again, if you are dealing with the power of 60-year-old ‘predators’ (your words, not mine!), you’ll have your work cut out for you.

That being the case, I don’t feel qualified to answer this question, so I’ve called up my lawyer, Brett Davies. Here’s what he had to say:

“If your father is of ‘sound mind’, he is free to deal with his assets as he sees fit.“If it is clear he is of ‘unsound mind’, then you are free to use a POA. In fact, in most states you are duty-bound to do so, to protect the person who gave it to you. But the POA is only to help your father — you cannot use it solely to protect your inheritance.

“If he is of unsound mind, you can act against his direction, as he would lack mental capacity. For example, you could have bank accounts moved out of his control. But be careful — if you are wrong (i.e. your father is of sound mind) then you have broken the law. When in doubt, it may be prudent to go down the path of an administration order, which is when a court decides mental capacity, not you.”

Barefoot translation: by all means let your old man enjoy himself, just make sure he protects his nuts. 

Scott

Cashing in on the Coronavirus

Hi Scott,

I’ve been watching (from afar!) the spread of the coronavirus, and I am worried that people are underestimating the long-term financial repercussions if it is not contained soon (and I don’t trust the Chinese government’s figures). Despite this, the Australian share market is up this year, but I am growing increasingly worried. In fact, I am thinking that, with the market now at record highs, it might be time to take some money off the table and wait for a correction before getting back in. What are your thoughts?

Nick

G’day Nick,

First, let me lay my cards on the table:

I don’t know much about the coronavirus.I don’t know whether it will become the next global pandemic that Bill Gates sagely once predicted “could come from China and infect up to 30 million people within six months”.

I don’t know if it will trigger a share market correction.

Traders have already factored into their decisions that the ‘factory of the world’ is effectively shut, that our biggest source of tourists is not delivering at the moment, and that the bushfires have devastated major parts of Australia. Yet that’s all old news.

It’s what happens next that matters to the share market, and, just in case you’re slow on the uptake, I DON’T KNOW ANYTHING.

So, what do I know?I know … that over the past couple of hundred years we’ve endured a lot of bad things: wars, recessions, depressions, pandemics — and through it all the stock market has never failed to hit new highs. Case in point: $1 invested in the share market in 1888 would have grown to $226,560 today.

I know … that it’s impossible to profitably trade in and out of the markets. That’s because if you decide to sell you have to be right twice: first when you sell and second when you eventually buy back in.

I know … that the bulk of your long-term returns will come from dividends, not share price movements. That’s why I focus on the income I receive four times a year and not the value of my portfolio.

Oh, and I also know that I can’t catch the virus from drinking beer. Other people aren’t as sure: since January, Google searches for the phrase ‘Corona beer virus’ rocketed 2,300% globally.

Don’t drink and trade, Nick!

Scott

A weird way to spend $40 that’s guaranteed to make you happy

This wasn’t going well.

“You want to do what?” asked the waitress.

“I’d ... like to pay for that guy’s lunch”, I said, pointing to a 50-something dude sitting in the corner.

“Do you know him?”, she asked.

“No, I’ve never met him.”

She crossed her arms, cocked her head, and eyeballed me:

“So ... why are you paying for his lunch?”

“Because it’s a nice thing to do”, I mumbled.

“That is … so  … weird”, said the waitress, holding out the EFTPOS machine.

Okay, so that wasn’t the reaction I was expecting.

Still, the moment I walked out of the restaurant I had a spring in my step as I thought about the chain reaction I’d just set off. The dude would go up to pay, and be given the good news. Then he might choose to pay it forward. And on, and on, like a Mexican wave.

Hokey?

Abso-freakin-lutely.

Then again, I spent $5,000 on a 10-day family cruise that gave me the runs (and the kids head lice).

Buying a stranger a meal cost me $40 and it put a smile on my dial that lasted the rest of the day.

Here’s the deal: collectively we donated $500 million to the bushfire efforts last month.

It felt good to give, right?

That’s because the ‘science of spending’ tells us that we get a bigger kick out of spending money on other people than we do on ourselves. In other words, there’s a genuine psychological benefit to being generous.

So now you’ve got a taste for it, why not take a few more swigs from the kindness cup?

Now, you could be a weirdo like me and buy lunch for some random, or coffee for the guy behind you in the line. 

Or you could just buy a few extra tins of baked beans at the supermarket and donate them to Foodbank (I’ve recently seen how valuable these can be for fire-affected communities.) 

The generosity was the best thing to come out of the horrific bushfires, so let’s make it stretch!

Tread Your Own Path!