Barefoot Investor: What are you holden out for?

IF you’ve got a burning money question, or you want to win a fight with your hubby, shoot over to barefootinvestor.com and ask a question.

Barefoot Investor suggests there are better ways to spend money than on a $100,000 car.

CAROLINE WRITES: OK, I have been driving my busted-arse Holden Astra for 15 years.

I am turning 50 soon and my boyfriend is going to buy me a new car, so l am looking at a luxury Audi TT convertible.

We both work really hard, have no kids, own our home, and have three investment properties. So l think, why can’t l have it? But the “fun police” said to me today, “How much should we spend on a car?” Being female, l don’t care — l just want a shiny new car. Scott, my boyfriend loves you, so can you get him to give me an answer?

BAREFOOT WRITES: Caroline, you are the reason that people stop me in the street and say “Those questions, they’re not real are they?” Seriously, I couldn’t make this stuff up.

OK, so your boyfriend can obviously afford it — but that doesn’t mean he wants to spend it.

From a Barefoot point of view, I’m with him. You’re asking him to spend $100,000 on a car, and your sole justification is that you just want a “shiny” car?

If I were him, the question I’d be asking is: what could I spend the money on that would make us happiest over the long term?

For that money he could buy you a nearly new second-hand car, plus a once-in-a-lifetime overseas holiday, plus fund 12 dirty long weekends away, plus radically change the entire life of someone somewhere in the world.

But hey, if you like the Audi TT convertible — I’m all for women’s lib — buy your own bloody car!

TIME TO USE YOUR MOJO

CHRIS WRITES: I have been diagnosed with a brain tumour and require surgery with no guarantee of an outcome. I am 44 years old, married with twins (boy and girl, aged seven).

Our home is worth $1.1 million with $85,000 owing, we have $110,000 in the bank. I earn $70,000 a year, and we have a combined $75,000 in super. My recovery time will be two to three years if all goes well. What should I do for my family’s security in this uncertain time? Thanks for listening.

BAREFOOT WRITES: As a dad myself — my heart breaks for you.

Thankfully, you’re in a very strong financial position. The $110,000 in cash you have is something we call Mojo.

It’s used for emergencies — and you, my friend, are having an emergency. With your small mortgage your Mojo should stretch the length of your recovery. And in a worst-case scenario you could look at downsizing down the track. Though I think that’s unlikely.

From a practical point of view, I’d do three things:

First, talk to your employer and take stock of your options — will you be able to continue working part-time? Then look at your personal leave, annual leave, and any long-service leave.

Second, call your health insurer and review the likely out-of-pocket expenses you may be hit with. That’ll help you organise a budget.

Third, call your super fund and see what insurance cover you have. You may find that you have income protection which, after a waiting period, can provide up to 85 per cent of your usual wage for up to two years and in some cases up to age 65.

Good luck, and good health.

Barefoot Investor says a Mojo account is for emergencies, such as a health crisis.

ONE BORN EVERY DAY

DOUG WRITES: I recently attended a forex seminar. There was limited learning but much selling of a two-day course costing $13,000. Though with “amazing discounts” the price was slashed to $5500. I could not believe how many people signed up straight away.

Soon I was receiving emails offering “more discounts”. Can regular people actually make money by investing in a short forex course?

BAREFOOT WRITES: I can’t work you out, dude. It’s like you don’t believe
in the Tooth Fairy — but you’re messaging me over the interwebs asking whether
I think you should punch yourself in the gob, break off a tooth, put it under your pillow, and who knows … you could strike it rich, right?

Doug, there is no Tooth Fairy. And the only forex millionaires are the ones selling the courses.

REVALUATION IS DUE

LORRAINE WRITES: My daughter has a $300,000 home loan on which my wife and I have gone guarantor. The loan is split into two parts.

Her payments have all been going to the larger proportion ($240,000), so she asked her bank about the best way to get rid of our guarantor commitment ($60,000). They have advised her to pay all her payments to the $60,000 component and change the $240,000 to interest only.

I feel this may have long-term implications for her. What do you think?

BAREFOOT WRITES: My first thought is that if you’ve had the loan for several years, you should consider getting the property revalued.

If the property value has increased, you may be able to be released as guarantor.

If it hasn’t, I have no problem with your daughter directing her efforts to knocking out your part of the loan. I hope she buys you a nice birthday present — you deserve it!

LEARNING EXPERIENCE

MARK WRITES: The banks were being questioned recently over their dodgy fees. So why aren’t member-owned companies — like ASG — in the same boat?

I mean, instead of helping hardworking parents save for their children’s education, they are taking money through high fees. For example, we invested $5000 over five years and the balance looks like it is going to be around $4750. How is that supporting children’s education?

BAREFOOT WRITES: You’ve perfectly encapsulated everything I’ve been warning about Australian Scholarships Group for the past 11 years.

They’re a terrible (non-profit?) organisation. I chose your question for no other reason than each time I mention them in the national press, someone in ASG’s marketing department dies a little inside.

Originally published as Barefoot Investor: What are you holden out for?