Our Friends Are Rich from Online Marketing

Scott,

What are your thoughts on online marketing? A friend has introduced me to what is called ‘high ticket affiliate marketing’. She and her husband have quit their 9 to 5 jobs to spend more quality time with their children while working at their own pace, and have travelled extensively. This has got me thinking — should I take a leap of faith and sign up?

Gemma

Hi Gemma,

So this sounds a little like … a pyramid scheme.

Now, affiliate marketing is selling other people’s products to your customers and getting paid a commission.

And do you know what some of the most lucrative ‘high ticket’ affiliate marketing products are?

Expensive courses on ‘how to make millions doing affiliate marketing!’

My tip: buy a $30 book, not a $3,000 course, and go from there.

My view?

Trying your hand at this is a little like buying a pair of Air Jordans then sauntering up to the Chicago Bulls and saying “I hear you guys make a lot of dough doing this dribbling thing. I think I’ll give it a go.”

If you do, prepare to be dunked!

My Husband’s Secret

Dear Scott,

I’m a 48-year-old pharmacist. I have three children and a wonderful husband. All was rosy, or so I thought. My husband, who works in the finance game, has always taken care of our money. The day before his 50th birthday last week, he dropped a bombshell. Unbeknown to me, he had several credit cards and had not paid our taxes since 2017! The tax bill is now being determined by our new accountant (I fired the old one). And, thanks to our Mojo, we’ve knocked over the credit cards. But it has left me feeling angry and betrayed. My husband is extremely remorseful — he honestly thought he could handle the situation and didn’t want to worry me. Any advice?

Claudia

Hi Claudia,

I have a couple of thoughts.

First, check to see where the money has been going — has he been gambling?

(Don’t take his word for it. Check the statements yourself. If he has been, he has an illness, and you need to talk to Gambling Help pronto on 1800 858 858.)

As far as the tax debt goes, you’ll be able to enter a payment plan without too much trouble. (You can even do it online via MyGov. Your new accountant can help with this.)

Finally, will you be able to trust him with your money again?

Well, only you can answer that.

However, bear in mind that I doubt he did this to intentionally hurt you … it just got away from him.

And he’s obviously been living with the stress of this for a long time, hoping to get back in the black.

One way to rebuild trust is to do monthly Barefoot Date Nights, and another is to share the same transaction account.

These two things help Liz and I stay on the same page financially (while drinking wine and eating garlic bread no less!). It works for us, it may work for you.

Good luck!

Scott.

Here’s what I’m listening to right now

It’s been a helluva week.

We’re in lockdown. We’re homeschooling. All six of us have really bad bronchitis, which in a pandemic makes us about as welcome as a wet dog in a clean house. Oh, and the baby is teething.

So on Tuesday my wife announced she’d booked me in for a telehealth doctor appointment.

The doctor’s first comment surprised me: “You don’t sound like your normal self.”

“But … you’ve never met me before. How would you know?” I asked.

“Oh, I’m listening to your audiobook at the moment … it’s actually very engaging.”

Right.

If I’d had a voice, I would have screamed, “Just give me some antibiotics so I can hide under my blanket for the next week!” Yet I could only manage to squeak out a feeble “thank you”.

Still, the good doctor gave me an idea: after bingeing on my usual diet of podcasts, I decided to get more beef by tucking into some audiobooks. Here are three that got me through my week from hell.

Billion Dollar Loser, by Reeves Wiedeman

This is the story of Adam Neumann, a young, egotistical entrepreneur who thought he was the Jesus of business.

It explains how he convinced some of the largest investors in the world to worship his creation. What was it? Well, he called it “a tech-enabled physical social network”. Otherwise known as WeWork, a company that takes large office buildings and rents out desks to freelancers.

In 2019 WeWork was hemorrhaging cash, with annual losses of $US1.9 billion per year. Neumann and his Wall Street bankers tried to sell it to the general public (via a stock market listing) for a ridiculous $US47 billion. Just six weeks later it would be fending off bankruptcy. Billion Dollar Loser is a beautifully bonkers business story.

Business Adventures, by John Brooks

Bill Gates says this is the best business book he’s ever read. (Okay, so Bill has been in the weeds lately, yet, as long as he’s not recommending romance books, I’m in.) This audio actually felt like a podcast, in that it tells 12 fascinating business stories. While the book was first published in 1969, the brilliance is they could have been written today. My favourite? “When Piggly Wiggly Tried to Stick it to the Short-sellers on Wall Street.”

Indistractible, by Nir Eyal

Nir Eyal wrote the ‘Bible’ for Silicon Valley — Hooked: How to Build Habit-Forming Products. Perhaps he was looking for a shot of redemption, but he followed it up with an equally powerful book that I’ve been listening to this week: Indistractable: How to Control Your Attention and Choose Your Life.

He argues that people have always been distracted: once it was television rotting our brains, and before that parents were worried their kids were glued to the gramophone. In other words, it’s not the device but your own internal hardwiring that needs to be mastered. The ability to stay focused is a competitive advantage, and the book lays out a framework for being — as he calls it — indistractible.

Oh, and for the kids, the audiobook of Tashi has been in high rotation. Tashi goes on epic adventures and overcomes all sorts of foes (but nothing like facing off against four bored, sick kids in lockdown.)

Tread Your Own Path!

Our $2 Million Battle

Hi Scott,

Last year I cared for a very close family member, who sadly passed away in December. I’ve been included in his will and expect to inherit approximately $2 million! Besides the grieving, we’re trying to deal with the fact that other very close family members were NOT included in the will. We are a tight-knit family and I would like to share some of this inheritance with them. Where on earth do I start, not only setting my little family up for life but also possibly helping other family members financially?

Janice

Hi Janice,

Let me start by saying that you didn’t receive this money by mistake: it was clearly what they wanted.

Case closed, right?

Well, maybe not.

In these situations the will may (read: probably will be) contested by close family members who got doughnuts.

There’s a six-month window to challenge a will — after that, they can only do so with a court’s permission.

If I were in your shoes I’d apply for probate as soon as possible (which basically means proving the will is valid and the executor can distribute the estate to the beneficiaries), and then mark the date on your calendar.

Only then would I start thinking about what to do with the money.

The first meeting should be with your accountant, to see how much capital gains tax the assets could be up for.

As for dishing out the dough: I’d follow the Barefoot Steps so that your own family is cared for and financially secure, and then think about what to do with the rest.

Good luck!

Scott.

How to earn 3% on your savings

Hi Scott

There’s a new app called Blossom that just has popped up. It’s still in the testing phase, but my fiancé has been invited to test it out. It’s targeting 3% returns on savings, and you can deposit and withdraw money at any time without any fees. It’s apparently a fixed-income investment without the restrictions of being locked in long term, like with other investments, and it’s backed by JP Morgan. It almost feels like an external high-interest-earning savings account. In the current climate of very little interest earnings on other normally high-interest-earning savings accounts, this all sounds very appealing for parking your savings in. So ... what’s the catch?

Cheers, Belle

Hi Belle,

I took a look at Blossom and it has a very Gwyneth Paltrow candle-like vibe to it:

“Plant the seeds and watch your savings Blossom each day”, whispers the pastel-coloured website.

In fact, the only thing I think you’ve planted, Belle, is this question.

Level with me: you work for Blossom right?

After all, what sort of reader says “it almost sounds like an external high-interest-earning savings account”?

Anyway, the catch with Blossom is that you are not protected by the Government deposit guarantee (of up to $250,000). In other words: if things go bad, you could lose your money.

Will they go bad? I have no idea. Generally, fixed-income investments are quite secure.

Still, the fact is that you’re taking on more risk, which is why they’re targeting a higher rate of return.

And that’s the rub: while they’re targeting a 3% return (after their fees) — that’s not guaranteed.

So the question you need to ask yourself is a simple but important one:

“Am I willing to take the extra risk to earn at best an extra 1.5% per annum?”

Personally, I’m not. It’s just not enough of a return to justify leaving the warm embrace of the Government.

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.

Timeshare Win!

Dear Scott

I am reaching out to you after reading your question from a reader last week on our timeshare club. There may be some confusion here as to how our club operates, as we never intentionally wish to cause distress to any one of our members and always try to assist where possible. I would like to contact the people who wrote to you (Julie and David) so I can personally help resolve their concerns.

Sharon, Accor Vacation Club

Hi Sharon,

Julie and David admit they got cornered by the hard-sell at your timeshare seminar in 1997.

However, they’re not shirkers: David admitted to me “it’s our bloody fault!”

Yes, I said to David, you got pressured into making a bad financial decision that cost you $22,000 upfront.

Yet to be locked into paying a grand each year for something you won’t use, you can’t afford and you can’t get out of seems kind of … well … outrageous to me.

So much so that I decided to take this case on myself.

It seemed like an easy case for the Australian Financial Complaints Authority (AFCA): Julie and David were pressured into an unfair contract. They’re now pensioners, selling off assets to make these payments they can’t afford.

However, I’m appreciative that Accor Vacation Club has decided to let Julie and David exit the club and not be liable for any further payments.

Having an extra $1,000 a year will have a huge and meaningful impact on their lives.

Thank you.

Scott.

My Saturday night date with Lindsay Lohan

On Saturday night I was watching Herbie: Fully Loaded with the kids.

That’s the one starring Lindsay Lohan, when she was still sweet and innocent and doing Disney.

It’s a terrible movie.

So, while the kids munched on popcorn, I fired up my laptop and began looking through reader questions.

A new email pinged ... with the subject line ‘SOS - help me Scott’

Scott,

I should have listened, I read your articles about crypto and I sold mine before the rise. Then I got FOMO and invested $18,000. Now it has dropped ... MASSIVELY. I’m down $10,000. What do I do? I want to sell but I don’t want to lose my money. Seriously. I’m 22 and just quit my job!

Ben

Hang on a minute.

Of all the things a 22-year-old bloke could (or perhaps should) be doing on a Saturday night ... he’s sending a daggy dad a question on crypto?

Herbie goes bananas!

Still, Saturday night was a knife fight for crypto: some coins were slashed by half.

(However — and this is important — it was simply a marker in time. Since Ben sent the email, Bitcoin has rallied 25%, and Etherium 50%, so maybe he made his money back?)

In any event, I do have some advice for you, Ben:

STOP WASTING YOUR TIME.

The money you’ll make in crypto is chickenfeed compared to the life-changing gains you can make if you get serious.

You might think I’m talking about investing — and I am.

But it’s more than that.

See, Ben, you’ve got two things most people don’t have enough of:

Time … and energy.

Now you can waste that time betting on things you have no control over (like crypto) … or you can invest it in skills and habits that will compound for the rest of your life.

That could be finding a mentor, starting a side business, getting fit, or even just reading some good books (my pick: Extraordinary Popular Delusions and the Madness of Crowds — no talk of crypto, though, it was published in 1841).

In other words, anything that you master now will compound over your life and make things exponentially better.

When you’re 22, you think you’ll always be young and that you’ve got plenty of time to get around to all that stuff.

However, I reckon you have just 10, maybe 15, years to really focus on the hustle.

After that, your time and a lot of your energy will likely be diverted by a partner, kids, a mortgage.

I don’t want to scare you, Ben, but one day you’re going to wake up. You’ll have three kids on your lap, popcorn in your pants ... and you'll be watching Lindsay Lohan pretending to talk to a car.

Beep, beep!

Tread Your Own Path!

The Big Short

Investment legend Michael Burry met his wife on a dating website.

His profile read as follows:

“I’m a medical student with only one eye, an awkward social manner, and 145 thousand dollars in student loans.”

She wrote back: “You’re just what I’ve been looking for!”

(In other words, she was looking for honesty.)

Burry was profiled in the book, and later movie, The Big Short, where he predicted the US housing meltdown before anyone else, and made himself a hundred million bucks in the process.

My favourite scene:

Goldman Sachs: “You want to bet against the housing market?”

Burry: “Yes.”

Goldman Sachs: “Why? Those bonds only fail if millions of Americans don’t pay their mortgages. That’s never happened in history. If you’ll forgive me, Dr Burry, it seems like a foolish investment.”

Burry: “Well, based on prevailing sentiment, the market, the banks and popular culture, yes, it’s a foolish investment. But everyone’s wrong.”

Fast-forward to today, and Burry is back making three more ‘foolish’ bets:

First, he’s wagered a massive $680 million bet against Tesla.

Tesla’s share price rocketed 743% in 2020, making founder Elon Musk one of the richest people on earth.

Yet just as the share price was roaring towards its peak last year, Burry said it was ‘ridiculous’ and started shorting the stock (which means that if Tesla’s share price falls then Burry can sell his Tesla shares for a profit). It seems his bet is already paying off: Tesla shares have fallen 40% from their all-time high.

Second, he’s said that he thinks Bitcoin is in a speculative bubble.

(Duck for cover!)

Third, and most alarmingly, he believes that the massive money printing experiment the US is currently doing will lead to hyperinflation and economic catastrophe.

Here’s the point: while the stock market hits daily record highs, Burry is betting on doom ahead.

So, is he right?

Well if you’ve been following me for any time you’ll know how I feel about short-term predictions. Studies have repeatedly shown that they mostly come down to luck. No-one has a crystal ball.

Yet what’s interesting to me is Burry’s psychology: he’s proven that he’s willing to look past the ‘herd mentality’ that grips markets to make his own judgments, even if it makes him look stupid at the time.

In other words, he’s a wolf, not a sheep.

Speaking of which, I met a few young rams the other day … apprentice tradies who were flipping crypto on their smoko. These blokes, and just about everyone I talk to lately, are convinced that making money is quick and easy.

Now, I honestly don’t know if Burry will come out on top, or come a cropper.

But there’s one I do know: making money (and keeping it) is never easy. And making it quickly is even harder.

Tread Your Own Path!

Timeshare Tragedy

Dear Scott,

My husband and I are in our sixties and on the pension. In 2007 we went to an Accor timeshare seminar and signed up to their deal. We paid $22,000 upfront, plus an annual maintenance fee. We’ve only used the hotel three times (it’s always booked out). Yet we’ve been paying these annual fees ever since. Our bill this year was $990, and it goes up every year. We’ve been told we can’t get out of these annual payments unless we declare bankruptcy, or die. We’ve had to sell a lot of our assets to live. Help!

Julie and David

Hi guys

This is outrageous.

You were robbed — with a pen — by a $12 billion-dollar publicly listed company!

At least with an old-fashioned hold-up it’s done and dusted in a few minutes. These robbers are holding a gun to your head till the day you die!

(Consumer group CHOICE found that timeshares can “lock you into contracts that run from 60 to 99 years, and can cost you as much as $450,000 over the long run”).

If I were in your shoes — pensioners on a low income — I wouldn’t pay them another cent.

After all, they’ve already made their money twenty-fold from you.

Fair cop!

However, if you do this they may play hardball and sic their debt collectors onto you, and even try and bankrupt you.

So it seems to me you have two choices:

You can keep paying them till the day you die.

Or you can call the (financial) cops on these robbers. Give me a call during the week (when I have my financial counsellor hat on) and I’ll help you lodge a complaint with AFCA, the Australian Financial Complaints Authority.

Scott.

What the Flip?

Hey Scott

I just read your recent column and I have one question: how the flip do you not carry a phone? I’m quite interested in the logistics of such a daring lifestyle choice in this day and age.

Ben

Hi Ben,

I’m the first to admit my life choices aren’t for everyone, or even most.

I went cold turkey last year and ditched my number, which had served me for 20 years.

Today I have an Apple Watch that serves as a tracking device for my wife, family and close friends.

In addition, it has an eSIM which allows me to make and receive calls (with AirPods), send voice-to-text messages, listen to podcasts, get directions via maps, order an Uber, and pay for things.

I also carry around a notebook and pen, and can often be seen writing things down, or staring blankly into space.

It started out as an experiment ... but I don’t think I’ll go back.

(Besides, I can always use my wife’s phone. Right, Liz?)

Scott.

Fingers in the Jam Jar

Hi Scott,

When kid #1 was born, I put $10,000 into an index fund for him. Kid #2 is now due and I’ve done the same. I have not set up the money in a trust, though. I DO NOT want to hand over the Jam Jar when they turn 18, unless the funds would help them with a home, business, etc. So do I have to sign them over at 18 to avoid capital gains tax? Or can I sign them over at 25, 30 or whatever?

Simon

Hi Simon,

Yes, if you bought them via a share broker, they’ll automatically transfer to your kids when they turn 18, and they’ll be free to cash them in and head off on a bender to Bali.

(An alternative to this is to purchase your index funds either in a family trust or via an investment bond, which allows you to nominate the age your kids can inherit the money.)

So you’ve just created a trust fund kid, right?

Wrong!

Here’s how I’m doing it with my kids.

Don’t hide the fact that you’ve invested money for them: it’s an awesome opportunity to show them how compound interest works.

But do let them know there will be NO handouts (and no Dad-sponsored Bali benders).

Instead, set up what I call the ‘Barefoot Ladder’:

Use the money to match them, dollar for dollar, for something they’re saving for: a car, a small business, a house deposit, plastic surgery (well, maybe not). Either way, you choose what it is — and they work for it. And the harder they save, the more they get.

Scott.

Night-Night, Barefoot

Hi Scott,

I have been a proud Barefooter for years. Last night my three-year-old son requested ‘The Doggie Book’ for his bedtime story. Thank you for being such a positive influence in our household.

Megan

Hey Megan,

That’s awesome! Take that, Bluey!

Scott.

The Greatest Investor You’ve Never Heard of

Let me tell you about one of the greatest investors you’ve never heard of.

His name is David Swensen.

Swensen was responsible for investing Yale University’s endowment (the money it uses to fund its education).

Over his career, he grew that pot from $US1 billion … to a staggering $US31 billion.

His returns were so impressive that Bloomberg said, “there’s David Swensen, Warren Buffett … and everyone else”.

With his track record, Swensen could have become one of the richest men on Wall Street.

And, early in his career, Swensen had countless opportunities to quit managing money for Yale and start his own hedge fund. If he had, he would likely have become a billionaire many times over. Rich enough to own an island, a fleet of jets, and mansions all over the world.

Yet here’s the really strange thing about David Swensen:

He didn’t.

Instead, he continued working for relatively low pay (by Wall Street standards) managing money for Yale.

Unlike most Wall Street fund managers, who get their significance from the investment fees they skim off the top, Swensen was driven by the fact that his investment gains helped the institution change young people’s lives.

Even better: while other ‘masters of the universe’ fund managers had plush offices and chauffeurs … Swensen helped out the university by turning up in front of a chalkboard to teach an investing course to students.

Tragically, Swensen died last week, way too early at the age of 67.

There was a lot written about his investing genius. (Interestingly, Swensen, like Buffett, was a vocal critic of expensive actively managed fund managers and argued that most people, including large pension and super funds, should invest in index funds.)

Yet there has been much more written about what author David Brooks calls his ‘eulogy virtues’:

The time and effort he put into mentoring the young investors he worked with. The encouraging letters he sent to his students. And the fact that he was still teaching that investing class just a few days before his death.

Now, you don’t have to be an investment genius to gain the secret to Swensen’s true wealth. Simply put down your phone and spend a few minutes thinking about your own funeral.

Many people (men in particular) spend much of their lives pursuing things that look impressive on their résumé:

Fancy titles. Money. Power. Respect. Status trophies.

Yet the person delivering your eulogy won’t talk about the car you drive, the title you attained, the balance of your bank account … or any of the other things that society has you chasing.

Instead, they’ll talk about the kind things you did. The courage you showed. The difference you made.

David Swensen understood this. And his legacy lives on in the hundreds of students whose lives he changed.

Rest in peace, David Swensen.

Tread Your Own Path!

This is How to Get a Job

Hi Scott,

Something to brighten your day. My almost 15-year-old recently applied for (and got) her first job at a local ice-cream store. She based her application on your example in The Barefoot Investor for Families. Now my 11-year-old believes she should also be allowed to get a job at the ice-cream store. She even wrote an application letter following your book’s example. Let me quote you a few lines: “I want to work at Gelatissimo because I love ice-cream, and I want to bring the joy of sweetness to others. I am able to work at any time, any day, any hour. My biggest strength in the ice-cream business is eating ice cream.” This gave us a good laugh and we love her enthusiasm, though we won’t be letting her loose on the workforce just yet.

God bless, Janice

Hi Janice

Congratulations on your teen getting her first job!

As for your 11-year-old …

She had me right up until the part where she hinted that she’d be getting high on the boss’s supply.

Other than that … I’d hire her!

No brain-freeze for that girl … she’s not going to have a problem getting a job when she gets a bit older.

Now, for those of you following along at home, let me explain what Janice is talking about.

Most employers — regardless of whether its Macca’s, KFC or an ice-cream store — essentially ask these five questions:

Why do you want to work for us?

When can you work?

Why should I employ you?

Are you going to work hard?

Who can vouch for you?

So in my book I boiled down the answers to these five questions into a double-page, plug-and-play resume template teens can complete in one evening. However, it’s more than just a resume, because in the process of putting it together teens get two benefits:

First, they get a pre-written ‘cheat sheet’ they can take along and use for their interview.

Second — and more importantly — they learn empowering stories that will change the way they see themselves.

It’s an absolute killer … just not for 11-year-olds!

Scott.

Following My Dream

Hi Scott,

I am trying to follow my dream of buying my own home before I turn 30, even though I am on an average wage. But my accountant recently put me in touch with his property advisory team and they are adamant I should buy an investment property (with their help) as a way to pay less tax. It has got to a point where I have started ignoring their calls as they just will not listen to me. Am I being too stubborn or am I doing the right thing?

Tash

Hi Tash,

Interesting predicament.

Here’s what I’d email your accountant (feel free to use it):

Dear Mr Accountant,

I’m breaking up with you and your firm, effectively immediately.

It’s not me, it’s you … and your salesmen mates who keep hassling me.

Seriously, they remind me of a desperado date I’ve been on before (I know they only want one thing, and they won’t take ‘no’ for an answer).

It’s all a little creepy and, dude, I just don’t need that from my bean-counter.

Regards, Tash

If you have an uncomplicated set-up (pay-as-you-go job, no investment properties), you should be able to complete your tax return with myTax through myGov. And if you need to maximise your deductions, check out the ATO’s myDeductions app.

Put the money you save towards your house deposit, not these clowns.

Scott.

Fixed or Variable?

Hi Scott,

I am wondering, given current home loan interest rates, whether you still recommend a variable home loan with no frills and extras. Fixed-term home loan now rates are as low as 1.9%, so they are very tempting!

Erin

Hi Erin,

Yes, they’re low right now.

However, the banks have begun hiking their fixed term rates, especially their four- and five-year fixed-term loans.

Why?

Well, I guess they’re picking up what the Reserve Bank is putting down: money may be dirt cheap now, but with the economy on steroids it’s unlikely to be in four or five years’ time.

So should you snap up a fixed-term rate?

Well, it’s a personal choice but, if you do, read the fine print: they’re generally not as flexible as variable loans and it may restrict how much you can repay. For most homeowners, getting the lowest variable home loan rate you can find, and paying it off as quickly as you can, still makes sense.

Scott.

Thanks, Mum

Hi Scott

I will be forever grateful to you for removing the noose around the neck of both me and my mum. A couple of years ago I read your book and was hooked — I set up my buckets and paid down my credit cards. Then I realised I could also help my mum. She had just hit 70, was desperate to stop working, had little super, had credit card debt, still had a mortgage, and was being crippled by strata and council rates. On New Year’s Day of 2018 I sat her down and suggested she read your book, which she did in a couple of hours. Before we knew it, her credit cards were gone and her dreaded bills were covered. Most amazingly, she sold her place, paid off the mortgage, and retired to the country. Honestly, the best gift you could give your mum is to rid her of money stress. (P.S. I’ve just purchased my own first home — something I thought would never happen.)

Thanks, Jess

Hi Jess,

What a fantastic story!

Let’s repeat that last line so everybody gets it: “The best gift you could give your mum is to rid her of money stress.”

Not flowers. Not chocolates. Not Apple gear.

You know who would love this idea?

Anna Jarvis.

Anna is none other than the Mother of Mother’s Day.

She created the first Mother’s Day in 1908, to honour her late mother … and all mothers.

Yet, just like Coca-Cola hijacked Christmas (ever wondered why Santa’s dressed in Coke’s corporate colours?), it didn’t take long for corporations to cash in and commercialise Mother’s Day.

But she wasn’t one to stand down; instead she fought them every step of the way.
Newsweek reported that she once had as many as 33 simultaneous Mother’s Day lawsuits on the go!

She devoted the rest of her life — and every cent of her savings — to fighting to keep Mother’s Day pure.

In a day and age where you can buy anything for your mum and have it gift-wrapped and delivered, spending time with them, and maybe even helping them out, is what Anna Jarvis envisaged all those years ago.

You Got This!

Scott.

Help! My Mother-in-law Breeds Siamese Fighting Fish

Hi Scott,

I get along well with my mother-in-law — it’s her business ideas that drive me nuts. One day she discovered the marvellous world of pet breeding, specifically high-end ragdoll cats. Quite good money for cute little kittens. She took a loan — from my wife — and off she went. But the kittens turned into old cats, with no buyers. That was 10 years ago, and it almost bankrupted my wife. Lesson learnt? No! She switched to great blue mastiffs (very Instagram worthy), but still no buyers. Lesson learnt? No! Next came Siamese fighting fish!

And that brings us to today. She holds to the idea of entrepreneurship like a lottery ticket, thinking her luck will change overnight. We have shown her that if she had taken the dole and saved it, instead of buying animals, she would be in a better position. Even those poor creatures would be better off anywhere but where she has them. But she doesn’t want help. How do you make someone so delusional see the red numbers?

Craig

Hi Craig,

She sure sounds like she’s having lots of fun!

You? Not so much.

To you, the answer to her problems is so simple it’s like shooting Siamese fighting fish in a barrel: “Stop doing this, you’re going broke!”

Yet she seems purr-fectly happy with her monetary menagerie, mate!

So let me give you the same advice I give any family member who writes to me:

Never, ever ‘lend’ money to your family or friends.

Give it to them instead.

Mentally, get to a point where you’re giving away the money: surrender any thought of it ever being repaid. Which is a decent strategy if you know she’s using it to breed pets she’ll struggle to later give up.

So on this Mother’s Day I want you to stop off at the butcher and get as many bones and offcuts as you can carry.

Then tell her the debt is forgiven!

(And never lend her money for ragdoll cats again.)

Scott.

A Very Barefoot Will

Hi Scott,

My beautiful mum passed away recently. She was a big fan of yours. Each Sunday we’d catch up and she’d ask me what ‘Barefoot Scott’ had written this week, often chuckling at your straight-talking responses. After she died, we found that she had left instructions (in her fire-proof Bunnings safe) about a hidden ‘Mojo’ envelope — to help us out until her will was resolved. We also found an ING account named ‘Holiday’, ready for her next big trip. As sad as I felt, I had to smile with pride. It wasn’t about the money, I was just in awe that Mum had done all this in her late seventies, and with very little too. Kudos, Mum!

Jenny

Hi Jenny

Love it!

A lot of people think that Barefoot is about money-grubbing finance.

Yet, at its core, what we talk about here each week is how to look after the people we love.

And, in that sense, your mum was a true Barefooter.

Thank you for sharing your story.

Scott.

The best Mother's Day present

Many years ago, I was invited to a very exclusive finance dinner.

As luck would have it, I found myself sitting next to a VIP ... the chief of a large international bank.

He leant in, shook my hand, and began telling me all about his sprawling bank, which employed tens of thousands of staff and had millions of customers.

And then he said something that totally shocked me:

“We lend money only to women.”

“What?”, I blurted out.

“My bank lends money to small businesses. And we’ve found that when we loan money to women they use it to improve their living situations and educate their children … whereas men often squander it.”

Bingo, bango!

The famous bank chief I was sitting next to was none other than Muhammad Yunus.

Back in the seventies, Yunus did something that no one in his native Bangladesh had ever done before: he provided small business start-up loans to women — poor, uneducated women who lived in the backblocks.

People thought he was crazy.

See, at the time, 99% of loans were to men. If a woman applied, she was often laughed at and dismissed: “Go get your husband to apply.”

Yet Yunus understood the power of the mothering instinct ... these women wanted a better life for their children.

Yunus bet this would drive these mothers to work hard, to look after their kids ... and to repay their loans in full.

And that’s exactly what they did.

The result was that millions of people were pulled out of grinding poverty, and Yunus was awarded a Nobel prize.

Of course it doesn’t matter if you’re in Bangladesh or Bendigo — women tend to be more focused on financial security.

And you don’t need a Nobel prize to work out why: they have to be.

That’s because women are, on average, poorer than men.

They are more likely to do more unpaid work. They are also more likely to take time off their career to raise children. And they still get paid less than men, according to the Human Rights Council of Australia.

The result?

They have less money compounding over their working lives, so they retire with around half of what men have in super.

And so, on this Mother’s Day I’ve got a special request for you:

If you know a mum who’s struggling (whether yours or not) give her the gift of financial knowledge.

Offer to take her out on some Barefoot Date Nights. Help her work through the steps.

Odds are she’ll remember that more than the supermarket flowers she gets every year!

Tread Your Own Path!