Your chance to grill PM

IT doesn’t matter how old you are, when something major happens in your life, you want to ring your parents and tell them your big news.

It happened to me this week:

Barefoot: “Hey, Dad! Malcolm Turnbull’s office just emailed and asked if I’d like to do a Facebook Live with him!”

Dad: “Ripper! So … that means that you’ll both be on the Facebook … er … live?”

That was a decent stab in the dark for a man who owns a flip phone with five contacts programmed into it.

Truth be told, I’m flattered by the invitation. Who would have thought that old-school values — like spending less than you earn, avoiding debt, investing for the long term, taking responsibility for your money, and looking after your family — would be so sexy?

It’s a movement of everyday working people who are taking control of their finances. It’s fitting, then, that you now get the chance to ask the top boss how he’s managing the country’s cash.

So if you’ve got a question for the PM, head over to my Barefoot Investor Facebook page and let me know.

Hit Malcolm with your money shot. I’ll pick out the best ones and ask the PM on the Facebook … er … live.

Tread Your Own Path!

BITCOIN LURE

TED ASKS: I have a friend who states that he invested $50,000 in Bitcoin many months ago and now owns an investment of $1.5 million.

So I have done a lot of reading about Bitcoin, as well as listening to its promoters online. The problem is that there is a lot of pressure to invest, by subscribing to their newsletters and, ultimately, paying a high price for their “professional” guidance. Does it live up to the hype? BAREFOOT REPLIES: It’s very hard to resist the lure of getting rich quick, right? But you need to listen to your gut, not your mate. I wouldn’t subscribe to an investment newsletter that claims to provide “professional” guidance on Bitcoin. Reason being, there is no way to value Bitcoin (or any other “cryptocurrency”). The price is surging right now because, well, everyone wants to be your mate.

And the newsletter writers are picking up on it, to sell subscriptions. (And let me guess: even though they’re dripping with Bitcoin-fever, when you get to their payment page you’ll find they only accept old-school analogue dollars.)

So don’t buy some cheesy newsletter.

Instead, I’d encourage you to get a copy of Extraordinary Popular Delusions and the Madness of Crowds, by Charles Mackay. It was first published way back in 1841, so admittedly it’s a little light on the analysis of cryptocurrencies. But the stories McKay tells of investors losing their minds and losing their money are as relevant today as ever. Good luck.

A WORKING SOLUTION

NATALIE ASKS: I’m a 41- year-old single mum stuck on Centrelink benefits. I cannot work for health reasons, but I love houses!

I am cashflow poor but have a good amount of equity in my home and want to work towards having two or three properties to support myself and provide for my future.

I have found a few cheap, positively geared properties I could buy with the equity, but once their value reaches $250,000 my benefits would be cut. Any advice on how to get out of this cycle? BAREFOOT REPLIES: I love that you want to get off the welfare cycle … but you’ll be replacing it with a debt cycle.

Now, even though you have equity in your home, and you’re planning on buying cash flow-positive investments, the banks are bound by responsible lending laws to take your income into account.

And if you’re on Centrelink, you don’t have enough income.

My view? If you’re smart enough to hunt down positively geared investments, you should be able to turn your talents to doing paid work in some capacity — the only sure-fire way to escape the welfare cycle. You’ve got this!

SHARP POINTERS

JESSICA ASKS: I am a 40year-old, single, professional woman with no dependants. I have recently increased my income to $210,000 and so have moved into the top tax bracket — a double-edged sword.

I am following your steps, claiming deductions where I can, and saving for a home. The trouble is, most of my income disappears through tax! I have seen you recommend family trusts, splitting income, etc, as ways to reduce tax.

What options are available for employees like me who do not have a traditional family? BAREFOOT REPLIES: I don’t think earning $210,000 is a double-edged sword … it’s more of a diamond-encrusted poker. So let me poke you a bit.

It’s not true that most of your income disappears through tax. You are only paying the top rate of tax of 45 cents in the dollar, excluding Medicare, on each dollar you earn over $180k. The total tax payable on your $210,000 is $71,932 per year, roughly onethird of your income.

My advice? Put away your violin, and start swinging from the chandeliers!

You still have $11,503 aftertax income hitting your bank account each month. And you have no debt and no dependants to share it with. Life is good! Because you have a very demanding job, my advice would be to keep your financial affairs simple and build up your financial security.

Here’s what I’d do over the next decade:

First, save up a 20 per cent deposit and buy yourself a nice home.

Second, add to your employer’s pre-tax super contributions, so that you round it up to $25,000 per year.

Third, build up a Mojo account of three months of living expenses.

Fourth, focus on paying down your mortgage as quickly as you can.

Fifth, then start building up your investments.

None of this is as sexy as taking out a whopping big loan, investing in something exotic, and then running a spreadsheet of how much tax you’ll save each year.

But my plan is simple and safe, and it works. And if you continue earning big bucks, you’ll retire a very wealthy woman, no doubt about it. TOMORROW: Having a baby is a huge financial commitment. In a special report for the Sunday

Tasmanian, Scott Pape offers sound advice to parents-to-be for the journey ahead.