BARE­FOOT IN­VESTOR

SCOTT PAPE

Sunday Herald Sun - - Finance -

CANDICE ASKS: I have bought your book — thank you — and I now want to set up my buck­ets. We used to have joint bank ac­counts, but my hus­band has gam­bling/ spend­ing prob­lems so I con­trol the ac­counts (though he does have an AMEX, hard to make him get rid of it). My ques­tion is, when open­ing my new ING NG ac­counts should I make them joint or in my name me only? We have had to sell our ur home, our money is drain­ing, ning, he is not work­ing, and our rent is high, so I am des­per­ate er­ate to start. But I am so con­fused and feel like a fail­ure. ure. BARE­FOOT REPLIES: PLIES: You are not a fail­ure.

You’ve been to hell and back, and not only are you still stand­ing, you’re doggedly mov­ing for­ward.

Now there’s an ele­phant in your liv­ing ving room: your hus­band nd is an ad­dicted gam­bler, er, and he has a credit t card.

That’s like an al­co­holic keep­ing a six­pack in the fridge! My advice to him?

Ad­mit his prob­lem, cut up and can­cel the credit card (if it’s in joint names, you’ll both have to sign to can­cel it), and call the Gam­bling Helpline on 1800 858 858. My advice to you? Pro­tect your­self. From this point on, keep your fi­nances com­pletely sep­a­rate.

Keep the ING ac­counts in your name only, and pay the house­hold bills from that ac­count.

Do not give him any money, and tell your fam­ily and friends not to give or lend him any ei­ther.

One more thing: even strong peo­ple like you need sup­port.

Give the Gam­bling Helpline a call your­self and seek out a sup­port group of peo­ple deal­ing with the same chal­lenges.

Sadly, there are a lot of peo­ple in your sit­u­a­tion: Aussies lose more money per head on gam­bling than any other peo­ple on the planet. LISA ASKS: Help me, Scott!

I am in my mid-30s, have read your book, and am in the process of turn­ing my fi­nan­cial sit­u­a­tion around some­thing very im­por­tant to me as I have no in­her­i­tance or safety net. I started dat­ing a great guy who is 40 years old and self-em­ployed.

I re­cently dis­cov­ered he has ZERO su­per, as he has never paid into it. He also has ZERO savings and lives pay THE odds of win­ning Power­ball are 76,676,600 to one.

To­day we’re go­ing to meet that one.

A mar­ried cou­ple hit the jack­pot, col­lected $3 mil­lion tax free … and they con­tacted me.

For pri­vacy’s sake, let’s call them Do Don­ald and Me­la­nia.

Yet while they were giddy with ex­citem ex­cite­ment, I de­cided to be a to­tal we wet blan­ket.

I told them the odds were high that the they’d be less happy in thr three years than they are righ right now. Blink. Bli Blink. How coul could that be?

Well, Ph Philip Brick­man and Dan C Coates, of Northwe North­west­ern Univer­sity, did a fam fa­mous study where t they tracked the hap hap­pi­ness of two ve very dif­fer­ent group groups: peo­ple who’ who’d just won the lot lottery, and peo­ple who’d be­come paral­ysed af­ter an ac­ci­dent ac­ci­dent. Th Three years af­ter, they checked back in to see how the study par­tic­i­pants were far­ing.

The re­sults were star­tling: par­tic­i­pants in both groups had more or less re­verted back to their pre-ex­ist­ing men­tal state.

Shrinks call this phe­nom­e­non “he­do­nic adap­ta­tion”, which is a fancy way of say­ing that cheque to pay cheque on a very tight bud­get (busi­ness not go­ing so well). His sit­u­a­tion ter­ri­fies me. Has he left it too late? BARE­FOOT REPLIES: So you want to know whether you’re dat­ing a fi­nan­cial dud?

That’s a per­fectly rea­son­able ques­tion to ask of some­one you’re con­sid­er­ing mak­ing your life part­ner, espe­cially when you’re get­ting down to the busi­ness end of the sea­son. The good our brains are hard­wired to adapt to cir­cum­stances (good or bad), and that ul­ti­mately we’ll be no hap­pier than we were be­fore.

The rea­son lotto win­ners can be even worse off is be­cause of all the stress the money brings: wor­ry­ing what to do with it, wor­ry­ing that you’ll waste it (a-la MC Ham­mer’s gold-plated gates), and fend­ing off peo­ple who ex­pect a piece of the pie.

So, here’s what I ad­vised Don­ald and Me­la­nia to do. First, don’t tell any­one. Se­cond, se­ri­ously, don’t tell any­one.

Noth­ing good will come of it. You didn’t earn it, and some peo­ple will think you don’t de­serve it.

It’ll cause re­sent­ment, envy, and con­flict with the peo­ple you love.

Third, if Liz (my wife) and I were in your sit­u­a­tion, we’d put in place a sim­ple fi­nan­cial plan: clear all your debts, con­sider putting $100,000 in a Mojo ac­count, make af­ter-tax con­tri­bu­tions to your low-cost su­per fund, and then set up a fam­ily trust and in­vest the pro­ceeds into low-cost share funds — and live off the div­i­dends.

Fi­nally, if you want to feel great and not have all the hang-ups, do­nate some money anony­mously.

You’ve beaten the odds once on the lotto, but to be a happy win­ner you’re go­ing to need to beat them again.

Tread Your Own Path! news is that he hasn’t left it too late to turn him­self around. He can do it, espe­cially with what Huey Lewis calls The Power of Love. (I’m lis­ten­ing to this song on Spo­tify now — ’80s rock at its finest.) The bad news is that, if you try to tell him this, he might just nod his head, tell you what you want to hear … and do noth­ing. (Guys are good at that.)

So let’s you and I cook up a script that be­longs in an ’80s rom-com. Take him out to din­ner. Ex­plain to him that it’s re­ally im­por­tant to you to be with some­one who has their stuff sorted. Give him a copy of my book. Ask him to read it. Check back with him in two months. If he hasn’t read it, you have your an­swer.

Part­ner’s fi­nance fail Strip­ping out tax

NICK ASKS: I have a ques­tion re­gard­ing my part­ner’s se­cond job — she is an erotic dancer. What do we need to do with her earn­ings? She keeps all the re­ceipts she gets from danc­ing, but tips are paid in cash. She also keeps re­ceipts of things she buys for the job. How do we in­cor­po­rate this other in­come, and what steps should we take to make this hap­pen? BARE­FOOT REPLIES: Be­ing a strip­per is the ul­ti­mate cash busi­ness — I mean, her clients lit­er­ally throw money at her.

The Bare­foot In­vestor holds an Aus­tralian Fi­nan­cial Ser­vices Li­cence (302081). This is gen­eral advice only. It should not re­place in­di­vid­ual, in­de­pen­dent, per­sonal fi­nan­cial advice.

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