Barefoot Investor Scott Pape says one woman’s husband is bashing her financially

BAREFOOT Investor Scott Pape answers your questions on joint accounts, going back to university and whether ‘swing trading’ is a good idea in his weekly column.

06/02/2009 BUSINESS: Scott Pape. The Barefoot Investor. HWT staff.

BAREFOOT Investor Scott Pape answers your financial questions in his weekly column.

This week, Pape tackles questions on joint accounts, going back to university and whether ‘swing trading’ is a good idea.

The Financial Abuser

Hi Scott,

I’m married with four kids (2, 4, 6 and 12), and things aren’t going well. Years of financial pressure, no sleep, and marriage problems have divided us. I don’t work, only he does. For the past two years he has refused to have a joint account with me and keeps his passwords and bank statements private. Therefore I can’t get a credit card or overdraft — while he has two credit cards valued at $10,000, which he won’t let me use. All I really want is a bit of extra money so I can take my first holiday in thirteen years. What can I do to earn some extra cash?

Alice

Hi Alice,

Your husband is bashing you up. He’s using his finances rather than his fists, but the end result is the same: he has power over you. As the mother of his children, you have a legitimate say over how the family’s household income is spent — and if you doubt that, ask any family court.

So, you don’t need to earn extra money. What you need to do is see a marriage counsellor, and potentially a family lawyer. As far as the finances go, you need a clear and accurate understanding of your family’s situation: all your debts (including credit cards), assets and income.

You also need to get paid (by your husband) so that you have your own money to spend, within the limits of your financial situation. Otherwise you’re no better than a teenager, begging for money. It’s totally unacceptable. You deserve better.

Following My Dream

Hi Scott,

I am 46 years old, single, and about to make a huge, life-changing decision: I am going to quit my $80,000-a-year full-time job to go back to study and become a midwife — something that makes me very happy. Now I just need to know how to pay for it.

I have $65,000 in savings, I have a share portfolio of $7,000, and I’m paying extra on my super through work. I also have two tenanted investment properties: one valued at $400,000 with an $82,000 mortgage, and another valued at $330,000 with a $300,000 mortgage. My question is: should I sell my main investment property and live off the proceeds, or sell both of them?

Christine

Hi Christine,

Well done for following your passion — and for getting yourself into a strong enough position to do it.

My instinct would be not to sell either of the investment properties. You’ll be able to defer your fees via the FEE-HELP system, and you may be eligible for scholarships or other incentives from your university (don’t ask, don’t get).

Then there’s Austudy, which is worth $426.80 a fortnight at the full rate. To qualify you have to pass an asset test, which is $348,500 for a non-homeowner, which you (as a renter with investment properties) would be over, based on the figures provided. However, if you moved into your investment property with the most equity, you’d qualify for the homeowner asset test of $202,000.

Either way you have a healthy Mojo buffer of $65,000 in cash, and you have the ability to work part time while you study — perhaps this is something you could talk about with your current employer? Remember, you can earn up to $427 per fortnight, before tax, before your Austudy is affected. Good luck!

The Rogue Trader

Hi Scott,

I have $15k to invest in stocks, but I’m so lost. I’m trying to be a swing trader. I make $300 at the beginning of the week, and lose $300 at the end of the week. I do seem to spot the stocks that have breakouts, but the market moves too quickly for me to buy them. I have no solid search plan, and I’m unsure when to buy and sell. Will your investment newsletter help me and how? (Please don’t use my real name if published).

Jarrod (not his real name)

Hi Jarrod,

Do you know how ridiculous you sound? Swing trading sounds impressive, but it’s merely a more socially acceptable form of punting than the dishlickers. The only ‘breakout’ you’re likely to have is in the form of a stress-related rash when you lose your dough. You cannot consistently make money trading, otherwise I’d be doing it. The truth is that you get rich by working hard, earning a high income, saving that income, and investing it into good-quality shares and property that will yield a solid return.

Property Spruiker

Hey Scott,

This is a follow-up to a question you generously answered for me a few months ago. To remind you: I bought a property from a spruiker outfit in 2010. The costs were as follows: land $173k, build $212k, mortgage insurance $11k, and other costs around $10k. You advised me to get an RP Data report on my property, which I have now done. It has valued it at $381k! The place costs me out-of-pocket expenses of $13k a year, but my accountant told me I save $4,000 off my tax. Should I sell?

Barry

Hey Barry,

Unless the local area has had a huge run over the past few years, I’d say you paid $30,000 to $40,000 in commissions to the spruikers. Your total expenses, excluding mortgage insurance, were $395,000, and the (rough and ready) valuation has come back at $381,000. Now, if the house is tenanted, I find it very hard to believe that you’d be losing $13,000 a year on a cashflow basis. More likely that’s your loss after taking into account depreciation charges. However, you should make your decision on whether to sell based on the golden question: if you were offered the same deal today, would you take it? If not, get rid of it.

Originally published as Barefoot Investor Scott Pape says one woman’s husband is bashing her financially