An Unusual Request

Hi Scott,

I have an unusual request. 
 
Before reading your book, my husband Derek’s after-work hours were taken up largely by games on his phone and Netflix. Now he reads investing books every evening. It has been amazing to see him transform! We have paid off our house and are investing our savings, with our portfolio growing rapidly. We have a one-year-old son who is the luckiest boy in the world to have my husband as his father. So to my request: please tell my husband “well done!”
 
Sally

Hi Sally,
 
It’s got nothing to do with me, and everything to do with becoming a father and realising what’s truly important.
 
Your hard work and dedication have given you the ultimate form of wealth: time to spend with your kids. 
 
The only test you have is the urge to upsize your home. Remember, though, that kids don’t care about the suburb you live in, the car you drive, or your title at the office — all they really care about is spending time with you.
 
Your husband has worked it out.
 
Happy Father’s Day, and good onya Derek!

Scott

Dad Ditches Wife for Kids?

Hi Scott,
 
My lovely husband and I (both in our forties) are doing our wills. Unfortunately, this is a pressing matter as he has terminal cancer. When it comes to dealing with his illness he is a legend, but with finances he is a freaking nightmare. Luckily, his life insurance will pay out $2 million. But this is where the problem lies — he wants to divide it equally between me and our three teenage kids, which they’ll each get when they’re 25. This leaves me with just $500,000 to support myself and the kids until then. My husband is the main breadwinner and my income does not even cover our rent. What should I do?

Belinda

Hi Belinda,
 
I’m so sorry for your situation; my heart goes out to your family. 
 
The simplest option — and the way I have my own will set up with my wife — is to have everything go to the surviving spouse. That allows them to make the decisions for the children going forward.
 
Yet it may not be the best option.
 
That would be the both of you sitting down and planning it out together, ahead of time.  
 
And that’s exactly what you can do. You may not know this, but a terminal diagnosis should mean that your husband will have access to his payout 12 months before his death (or 24 months — check your insurance policy). That should be enough time for you to work things out together.
 
Now this is his legacy that he’s writing, and it’s understandable he wants to ensure that no-one misses out. 
 
So here’s how I’d frame the discussion with him:
 
If he wasn’t sick, and you won $2 million in the lotto tomorrow, what would you do with the money as a family?
 
Here are some ideas that spring to my mind: 
 
First, you’d likely buy a nice, secure home for the family to live in. No more renting, and no mortgage either.
 
Second, you’d make sure the entire family had reliable, safe cars (when the kids get their licences).
 
Third, with no mortgage, you’d probably reprioritise your work and spend more time with the kids. 
 
Finally, you’d put some money aside for your kids’ education or to help them with a home deposit, or both.
 
Yet leaving kids with a large inheritance may not be the best way to achieve these things. It might be a better idea to match them dollar for dollar as they save for their first home. That way you’re helping them but also encouraging them to work hard and save — qualities that will serve them well, long after you’re both gone.
 
Ultimately, my hope is that your husband finds some comfort watching his legacy take shape.
 
My thoughts are with your family.

Scott

My Doom and Gloom Dad

Hi Scott,
 
My dad and I are classic doomers. Dad would often speak around the dining table about the looming subprime mortgage crisis — among other things, like public debt, and the devil in credit cards — when I was a teen. Now I am a Millennial who turned 30 this year.  
 
I have a modest but secure(ish) job in the Queensland Public Service, and was rattled to see my superannuation wiped by the corona-crash. Naturally, I went to my father for advice. He told me a huge crash is coming and to put my super into cash. However, I have seen it recover very quickly. So is my dad an economic genius or is this all pure coincidence? 

Jim

Hey Jim,
 
How lucky are you to have had serious, meaty discussions over the family dinner table growing up!
 
Now, no one can predict the future, yet you should internalise the real message your old man is giving you: 
 
“Life is risky, so be sensible with your money.”
 
But what about his suggestion to move to cash?
 
Well, I wouldn’t do it.
 
That’s because I worry that all this money-printing will at some stage lead to inflation: if inflation averages just 2.5% per year, then after 15 years a third of your purchasing power is gone. After 30 years, more than half the real value is gone. 
 
You need to outrun inflation, and historically the best way to do that is by investing in the share market.
 
Know this: investing, like parenting, is the ultimate act of faith. 
 
Things are never clear. There are no guarantees. You just put your best foot forward. 
 
It sounds like you have an awesome dad. So learn from his wisdom, plan for the worst, and hope for the best.

Scott

The multi millionaire and the $20 book

I’ve got a friend who is super successful, and very, very rich.

He sold his business for $300 million, owns a resort, and hangs out with dignitaries.

I was talking to him one day and he told me something that shocked me:

“Looking back on it all, my most cherished memory has been reading Harry Potter to my kids each night.”

Not the mega deals. Not the mega mansions. Not the pointy end of the plane. Reading a $20 book to his kids.

And you know what I thought?

I wondered if he’d ever told his kids that.

See, dads don’t always open up. We’re all too often busy being the breadwinners, the hunters, the gatherers, the planners, the fixers. Yet what we really want is to spend time with our kids, and let them know we care about them.

That’s all that really matters in the end.

So this Father’s Day I want you to give your dad the ultimate Father’s Day present: a chance to open up to you.

If you’re lucky enough to have your father still with you, whip out your phone, hit ‘record’, and ask your dad the following questions:

• How did you meet Mum?

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

• What does being a dad mean to you?

• What are you most proud of?

• How would you like to be remembered?

Each year people write to me telling me (often in tears) how it really was the ultimate Father’s Day present.

And then, throughout the year, people who have lost their father tell me they cherish the video they made.

So, as you thumb through Instagram or Twitter for the millionth time today, stop and do this.

One day, it’s all you’ll have left of him. And you’ll treasure it.

Happy Father’s Day!

cough, cough, cough

“Cough, cough, cough.”

My wife rolled over in bed and shot me a dagger: “What was THAT?”

For the next few minutes I successfully stopped myself from coughing, but it felt like my head was going to explode.

Then it burst out again: “Cough, cough, cough.”

“First thing tomorrow, you’re getting TESTED”, huffed my six-month-pregnant wife.

And the next morning I dutifully did.

The lady came out to my car sporting full HAZMAT get-up, two oversized earbuds, and a rough curbside manner:

“This is probably going to hurt”, she said from beneath her facemask and protective visor.“You really shouldn’t say that, because …”At that point she stuck the swab deep into the back of my throat. Then, as I was dry-retching, she poked the other stick so far up my nostril it felt like it hit my eyeball. Then the other. And a few seconds later it was all over.  “It hurt, right?” she said.When I arrived home I was a little shaken up, so I stretched out my arms for a reassuring cuddle from my three-year-old daughter. She took a step back, folded her arms, scrunched up her little face, and grumbled: “Daddy is sick.”I was officially the leper of the family.  As my cough intensified, it slowly dawned on me that, despite doing all the right things (self-isolating on the farm, wearing a facemask in public), I had contracted the ‘Rona’.

My next 36 hours were full of anxiety. I sat up in bed ‘doom scrolling’ — reading  depressing reports about the virus. Soon I’d have the shame of adding to the Premier’s daily ‘COVID count’ (AKA ‘Dan’s Daily Disease ’n’ Death Diatribe’). I felt totally out of control. 

And that’s when it hit me: people stay up at night with the same worries about their debts. In fact, Beyond Blue came out with research this week finding that financial stress and mental health are intimately linked.  It’s well known that when you’re struggling mentally the first step is to call Lifeline on 13 11 14. It’s less well known that when you’re struggling financially the first step is to call the National Debt Helpline on 1800 007 007. (My hope is that one of the things that comes out of this pandemic is that the National Debt Helpline will be just as well known as Lifeline or Beyond Blue.)

Yet just as I started to peak out, my phone buzzed.

It was a text message: “COVID-19 virus was NOT DETECTED.”Phew!I threw down my phone and fell into a deep sleep. Well, until I was woken by my wife in the middle of the night:“Cough, cough, cough.”Tread Your Own Path!

Beyond Blue and Financial Counselling Australia have launched a public awareness campaign to encourage people in financial stress to seek support. Learn more at www.beyondblue.org.au/financialwellbeing

My Wife is too Spiritual to Work

Hi Scott,

My wife and I have been married almost 16 years and we have school-aged kids. I have always encouraged her to contribute to the family budget. And she has, but earns just a few hundred dollars a month with her holistic medicine business. She is a very spiritual person and does not believe in hard work. Our Date Nights get stuck — we just cannot buy a house and develop financial independence. Should I persevere, or respect her right to work as little as she wants?

Barry

Hi Barry,

If I were in your shoes … actually I wouldn’t be in your shoes, because before we got hitched my wife and I signed up for marriage counselling. The pastor asked a lot of very direct questions, like: “How much do you want to earn?” and “What role do finances play in your life?”

Bad luck, Baz! That ship sailed 16 years ago, and now you’re up a creek without a paddle.

Now I don’t have a tarot card, but I’d suggest there’s something deeper going on with her. The “I can’t work because I’m a spiritual person” is an excuse. After all, Jesus was a chippie who got on the tools (though he didn’t work on the Sabbath). Something’s going on. Yet arguing with her is unlikely to work.

So what can you do?

Well, don’t make it about her. Instead, focus on your kids.Kids model their parents, and she’s teaching them to avoid work and shirk financial responsibility.

How will that shape their lives?

What consequences will that have for them?

Here’s the deal: hard work has its own reward. You could even say the feeling of doing a great job … is spiritual.

Scott

Indigenous Woman, Hear Me Roar!

Hi Scott,

I am a young professional Aboriginal woman from Cape York. In the past I made some foolish investments, but a few years ago I picked up your book. I loved it, though I struggled to get my hubby to read it. So I played him your audio-book in the car. He was so excited, given how easy it is to follow. 

Long story short — we are now on our way to financial freedom! We no longer have credit cards or a car loan, we have refinanced our mortgage, and our renters are paying our mortgage off for us. We also have a joint account and have started our little guy on the jam jars. I would love you to do a ‘Barefoot Walkabout Tour’ once COVID is out of the way. 

Tania

Hi Tania,

This makes me so happy. Well done!

We have a shameful history of finance companies ripping off Indigenous communities (especially when it comes to funeral insurance). One not-for-profit group that is making a huge difference in this area is MoneyMob Talkabout, who employ Aboriginal elders to teach financial education in remote communities. Check them out at moneymob.org.au.

The Horses

Dear Scott,

My mother-in-law took out funeral insurance way back in 2004. Since then she has paid approximately $29,000 ($72 per fortnight), but if she were to die the payout would be $17,700. I cannot find a legal way to get them to stop taking more of her money. They will stop when she is 90, but sadly she is 70 and has Parkinson’s. Any ideas?

Sarah

Hi Sarah,

You know what I dislike more than those mindless morning television shows?

The ads that pay for them.

A big infomercial flogger is funeral insurance, and they really press on your emotions to ‘not be a burden to your family’. The Royal Commission showed that the companies that sell this type of insurance are the WORST.

Let me count the ways:

First, you often end up paying more in premiums than the value of the cover.

Second, the premiums often rise as you get older, when you can least afford them.

Third, if you stop paying, in most cases, you won’t get your money back.

Fourth, if your mother-in-law had invested $72 a fortnight into a low-cost index fund for the last 16 years, she’d have $63,000 by now. That could afford a helluva funeral (she could even have Daryl Braithwaite tow her coffin out on a horse while singing The Horses).

So what can she do?

Well, these products are often sold by slick salespeople with predatory practices. If that happened to her, she may be entitled to a resolution.

You’re thinking “but my mother-in-law is a pensioner with Parkinson’s, she won’t stand a chance”. And that’s why I want you to put me in contact with her this week, and I’ll take this on personally.

It’s time to whip these nags!

Message in a Bottle

Dear Mr Pape,

I have $10,000 in a bottle buried for my only granddaughter, who is two. I want to buy her a car when she turns 18, but I may not be here by then as I am nearly 68, and I also realise it will not be worth much by then. I would like to know how I could grow it better. 

Loving granny, Mary

Hi Granny,

Money in a bottle?

That reminds me of a guy I know who does a lot of cash jobs. Over the years, he has buried some of this cash in his large yard. Yet one day he went to dig it up and, lo and behold, he’d forgotten where he’d buried it.

So he got what he uncharitably called a ‘yokel’ (local) to find it for him, being careful to describe it as “just an old box of papers”.

“I’ll pay you ten bucks an hour … but no bloody lunch breaks!” he snarled, as he left in the morning in his Merc.

That evening when he returned home, he couldn’t believe his eyes: the yokel had dug up every inch of his expensively landscaped yard. Seriously, there were more craters in it than the moon. And yet, despite his hard work, the poor yokel never did find the box. (Or so he said.) True story!

And the moral of the story is that keeping your money in a bottle is not a good idea. You have 16 years to grow it: I’d suggest thinking about investing it in the share market via a low-cost fund. You may also want to investigate a share investment bond, which allows you to nominate what age your granddaughter can receive the money, and for what purpose. Do that and the only bottle you’ll have to focus on is champagne at your granddaughter’s 18th.

Scott

Dodgy Banks, Dodgy Accounting

Hi Scott (you dirty misandrist haha!),

I am hoping to get your thoughts and advice on these dodgy banks. Years ago, I bought a home for $535,000, with a 5% deposit, initially paying ‘interest only’ on my home loan. (So a ‘loan to value ratio’, or LVR, of 95%.) Cut to today and I have brought the loan amount down to $460,000. So I thought I’d do the Barefoot thing and ask my bank for a better rate than the 3.97% I am currently being slugged with. Yet when I called them to review my loan, they said that because my house price has fallen (I live in Perth) they now consider my LVR to be 120%! I expected them to reduce my rate once my LVR was sub-80% of the original loan and house valuation. My question is: can they move the goalposts like this? It is absolutely shattering!

Steve

Hi Steve,

Better grab two Panadol and a Berocca, Steve. This one’s going to be rough.

Here’s the deal: you bought your joint when the property party was in full swing.

Your bank was feeling liquid and loose! How else can you explain that they let you buy into a new suburb with just a 5% deposit and an interest-only loan? Now it’s the morning after, and the hangover has set in.

In your case the bank has revalued your property down from your original purchase price, $535,000, to around $380,000. And that’s how you get the 120% loan to value ratio — you’re only looking at the ‘loan’ part of the ratio while the bank is looking at the ‘value’ part.

Bottom line?

You’re upside down. 

If you had to sell in a pinch, you’d be out of pocket. As would the bank (and banks hate losing money).

The situation you find yourself in is why I steadfastly recommend people save up a 20% deposit.

You’re in no position to negotiate a better rate, so there’s no hair of the dog for you, my friend.

It’s tough, but you need to ride the porcelain bus, then get cracking on paying down that loan.

Scott

Jimmy the Gold-Digger Responds

Hi Scott,

Having my gold question answered by you just knocked me off my old sneakers, and I was not offended whatsoever! On the contrary, I was overjoyed and showed your reply to my wife. She was overjoyed that you agreed with her about owning shares instead of gold. As a reward for my honesty, she wants to buy me a bar of gold bullion. I will be stroking gold soon and might even take it to bed. Maybe it will help me sleep better than a weighted blanket. Now all are happy, maybe even Karen who criticised you so intensely. Thanks a lot, mate.

Jimmy

Hey Jimmy,

I’m glad to be of service.

And given that I’ve been labelled a misandrist (‘man hater’), and been threatened with the Racial Discrimination Act, I will certainly not even comment about how happy I am that a 71-year-old bloke can go to bed ‘stroking’ a gold bar.

You got this!

Scott

NAB CEO says ‘get out now’

“Get out now.”

That’s the advice the CEO of NAB has given to homeowners who are struggling to make their repayments.

Yes, in his quarterly trading update last week, NAB’s new-ish chief, Ross McEwan, warned:

“There will be some circumstances where people are better off selling out early and taking some equity out of their homes, or keeping some equity, before it disappears.”

While most of the media didn’t give his words much attention, there are two good reasons that you and I should:

First, because in all the years I’ve been doing this column I’ve never heard a bank boss speak so candidly. 

Bank bosses are basically politicians: they get parachuted into the top job, stay there for five years, and rocket out with $40 million. Their main job is to stick to the script: “keep lending”. (And we’ve all witnessed how bad things go when bank bosses go off script, like getting into wealth management.)

So why is NAB’s CEO sticking his neck out?

Well, that brings me to my second point: he obviously doesn’t like what he sees on the horizon.

And know this: McEwan isn’t peering into a cloudy crystal ball. Over the years NAB has invested billions into tracking its customers’ every financial move. In fact, all the banks have incredibly detailed customer analytics that tell them what people are doing — or not doing — with their money, in real time.

Now, according to the banking regulator, APRA, roughly 1 in 10 mortgages in Australia are paused.

Which gets me thinking ...On one side, how long can the banks cop 10% of their customers not paying?

On the other, when will customers who are really struggling finally bite the bullet?

It’s a grim situation.

My hunch is that the banks are betting that the overwhelming majority of their customers will get through this. Yet they also know a small number of their customers won’t, and so they (well at least Ross McEwan) are turning up the heat on them.

My advice?

Please don’t misquote me: I am not saying you should sell your home.

What I am saying is don’t be a frog … if you were in hot water before COVID hit, don’t just sit there bubbling away.

We’re still early on in this crisis, and you have more options than you think. And if you want someone independent (and free!) to walk beside you and carefully lay out your options, call the National Debt Helpline on 1800 007 007 and speak to a financial counsellor (like me) immediately.

The last word goes to McEwan:

“We’ve seen in other crises around the world, when people try to hold on they end up walking away with nothing.”

Don’t say you haven’t been warned.

Tread Your Own Path!

The Big Purchase

Hi Scott,

My little boy’s ‘Save’ jar just got emptied for this little beauty! He paid for it with six months of chores plus selling some old toys on Gumtree — a ‘Money Challenge’ that was in your book The Barefoot Investor for Families. He managed to save $143 in small change, which he counted out to a very patient store manager.

It took a whole day for him and his dad to build, and it sleeps next to his bed with its own special blanket. (We are now slightly worried that he is calculating the cost of other household items to sell for LEGO.) He has blown us away with his tenacity to work for the three jam jars.

Thanks, Scott!

Gail

Hi Gail,

Look at how proud this little guy is!

Can you imagine the swagger of having $143 in his pocket? He’ll never feel that rich again, right?Awesome!While we’re all stuck at home (particularly here in locked-down Victoria), there’s only one thing better than going ‘Marie Kondo’ and turning trash into cash … getting your kids to do it.

Thank-you for reading,

Scott

Kochie Gets Into Bitcoin?

Hi Scott

I have always liked David Kosch … and now he appears to be advertising Bitcoin trading. The ad promises, like other get-rich-quick schemes, instant wealth. My question is, though Bitcoin has recently crashed, is it OK now as the ad is saying? Could you advise me on a $500 investment with Bitcoin in this lousy viral climate?

Gill

Hey Gill,

Two things: firstly, it’s David Koch … and, secondly, the ad you’ve seen is a scam. 

It has absolutely nothing to do with Kochie, or Bitcoin for that matter. I know this because scammers have used my name and image in the past. And right now they’re using Dick Smith in their ads quite a bit too. 

They can afford to plaster these ads right across the internet because (a) they’re obviously not paying talent fees and (b) they’re making out like bandits — literally! — making millions of dollars ripping people off.  

Stick to the Sunrise Cash Cow. 

Scott

Mortgage Wars

Hi Scott, 

After reading ‘Mortgage Month’ in Step 3 of your book, I apprehensively (as I avoid confrontation) called the bank and stuck to your script. Our rate was dropped from 4.03% to 2.74%, no questions asked. I shared this idea with my sister (single mum with mortgage, whose employer just announced her contract will not be renewed). Her rate dropped from 4.1% to 2.94%. A teary (because those bastards charged us so much for so long) and heartfelt thanks from both of us!

Sarah

Hey Sarah,

Sweet as! 

If there’s one thing you can do when you’re stuck at home, it’s to get a better deal on your home loan. The big four banks have all been reducing their basic variable offerings to around 2.7%. They’re really slugging it out on fixed rates -- though I’d stick with a variable rate.  I had a window-shop this week and saw three small lenders were offering deals below 2%. I have never, ever seen rates this low. Time to get the banker off your back!

Scott

I Turned $30,000 into $900,000 — Now What?

Hi Scott,

Many years ago when I was single I invested $30,000 into Apple shares, and this has grown to just over $900,000. I have a young family, and a mortgage, and due to COVID my work has dried up. My big worry is that holding so much of Apple means all my eggs are in one basket. I have a ‘glove puppet’ argument in my head, with one puppet (Warren Buffet) telling me Apple is a great business and to never sell, and the other puppet panicking about the need to diversify. It does not help that Apple shares are rocketing! Should I take my profits and diversify, or am I suffering from FOMO?

Dennis

G’day Dennis,

You think you have FOMO? I bought my first iPhone way back in 2007. If I’d spent the money on Apple shares instead, I’d have $20,000 today.

Here’s a way to think about your question: if I gave you $900,000 right now, would you invest the lot into Apple? Only you can answer that, but I’m guessing your answer might be “probably not”.

Yes, Warren Buffett is a big fan of Apple, saying “it’s probably the best business in the world”.

His company, Berkshire Hathaway, owns 245 million shares in Apple, which makes up a staggering 43% of the Berkshire portfolio. (Fun fact: his Apple shareholding has increased in value by $40 billion since March. Funner fact: Buffett traded his old-school flip phone for an iPhone … last year.) 

However, despite Buffett’s love for Apple, there’s a reason he’s decided to put his wife’s entire estate into a simple index fund — to stop what you’re going through. Life’s too short for imaginary arguments with glove puppets!

Scott

I’m in trouble with Racial Discrimination Act, apparently

Last week’s column on gold generated a lot of, well, gold in my inbox.

Like passive-aggressive Paul:

Hey mate,

You ramble on with such garbage. Who has time to read your anecdotes?

Paul

Obviously not you, Paul!

However, by far the shiniest nugget came from a woman who threatened to dob me in to the feds ...

You’re a Misandrist, Barefoot

Scott,

You really do have a way with you to regularly throw backhander insults at mainly ageing, bald white males. Last week you wrote: “Secondly, you’re 71, mate — where are you getting your income to pay for things from?”

Really! Be careful, young Scott — although not so young anymore — for one day you too will be 71 and some cocky young person will make a mockery of you and the money you have made. Please stop being ageist and misandrist in your writing or you may find yourself in court charged with an offence under 18C(1)(a). 

Your otherwise useful Barefoot Investor book, which I have bought for my teenage grandchildren, is littered with similar offensive, misandrist, ageist statements. They need to be removed. 

Karen 

Hi Karen (well, that’s the name I’m giving you),

Thank you for writing, and for teaching me a new word/insult:

‘Misandrist’.

At first I thought you were calling me a citrus fruit, but then I looked it up in the dictionary and found that it means “a person who dislikes, despises, or is strongly prejudiced against men”.

Boom!

I’ve been called many things, but never a misandrist!

It was news to my wife, who in the past has complained that I “spend far too much time in the shearing shed”.

(Click go the shears! The truth is that white, wealthy, middle-aged men — of which I’m one — screw most things up when it comes to finance. Really, how often do you hear about conwomen?)

Anyway, thankfully my counselling studies (and now practice) have helped me understand, appreciate and connect with people from different backgrounds at a much deeper level.

Even you, Karen.

You’re totally entitled to feel offended, to insult me, to even threaten me with the Racial Discrimination Act.

Heck, I’m publishing your complaint about me to millions of my readers!

However, I stand by the quote you pulled out:

The fact is that a 71-year-old (Jimmy, who described himself as an ‘old, and not a very bright bugger’) was considering investing in gold, which pays no income.

So I asked a very simple question: “Where are you getting your income to pay for things from?”

Questions like this are universal, and it’s my job to ask them.

Tread Your Own Path!

The 12-Year-Old Miner

Scott,

My 12-year-old son wants to become a Bitcoin miner. He wants to purchase a special device for $120 and believes he will earn around $30 a day. We have researched online and based on the power consumption of the unit, he will be lucky to make even $1 a day, as the difficulty level is extremely high. What is your opinion of Bitcoin mining ? Is it worth the effort or expense? I am more worried about the risk of the house burning down or having our computers hacked. 

Bec

Hi Bec,

A dollar a day is maybe on the high side … however if my kid was more interested in Bitcoin than, say, Fortnite, I’d be mining that hobby for everything it’s worth. So double down on antivirus software, keep a fire extinguisher at the ready, and HODL away!

Scott

Crash Landing

Hi Barefoot,

My wife and I live in regional Australia, earning good dough. Our problem is our rental in Brisbane. Our tenants (no problem up to this point) have been stood down due to COVID. He is a pilot and the main income-earner for his family of six. For the past three months we have discounted their rent by 50%. They have just come back requesting a further discount period because he is still on stand-down. Shouldn’t they have their finances sorted so that my wife and I are not subsidising their lifestyle? Or do I show a level of compassion and continue with discounted rent on the basis that some rent is better than zero?

Gary

Hi Gary,

You seem like a good bloke. Many landlords haven’t been as generous as you, judging by a report out this week from Better Renting which found that fewer than 10% of tenants who asked for rental relief received a satisfactory discount. Yet, if I were you, I wouldn’t simply approve their request for a further discount period.

Instead I’d write to them explaining that the fairest thing you can do is give their family time to make some tough financial decisions. Nominate a certain date you’re willing to give them to make that decision, and, importantly, spell out the amount that this will cost your family. At that date they need to come to you with an acceptable offer, or move out.

Scott

I Used My Mojo to Buy a $10,800 Handbag

Hi Scott,

I am a long-time Barefooter and, overall, have made money decisions I think you would be happy with: I have a good job ($110,000 a year), have paid off my bad debts, have started maxing out my super, own my car, pay extra on my mortgage, and have started a share portfolio. Most importantly, I have three months of Mojo — until yesterday, that is, when I walked into a Chanel store and bought a flap bag for $10,800 (my 38th birthday present to myself). I’m giddy with happiness and anxiety all at once. This is a classic bag I will have for life. Chanel raises their prices each year (it cost $6,000 five years ago), so I will never lose money on resale. Yet I also feel sick as it is an enormous amount of money — am I insane?

Elisha

Hi Elisha

So I learned something this week: handbags are an investment.
In fact, research from Knight Frank found that, over the last decade, handbags have more than doubled in value.

Well, not every handbag. (Liz’s is like a lucky dip to another world: you can pull out half-eaten crumbly cruskits, a hairy hairclip, a Wiggles concert ticket from 2018, but never the ringing mobile phone that she’s desperately searching for.)

Elisha, you seem to have worked hard to get your financial life in good shape. And if the bag makes you “giddy with happiness”, well, that sounds like a good purchase to me. You may as well enjoy it!

The only thing I’d say is that you raided the wrong bucket: it should have come from your ‘Smile’ bucket (the savings account for longer term purchases that will put a smile on your dial). 

Having a well-stocked Mojo bucket is not nearly as flashy as a Chanel bag, but it will give you the inner confidence to face any financial fires coming your way.

Scott