Barefoot Investor: There’s no such thing as easy cash
Great power lies in teaching independent financial education in schools, opening the eyes of kids and making sure they are wise to the loan sharks who prey on the young, writes the Barefoot Investor.
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I like to think of myself as a ‘young mover and shaker’.
Truthfully, though, the only thing about me that still moves and shakes these days is my belly (damn you ‘dad bod’!).
In the same way, Nimble likes to refer to itself as a ‘fintech disrupter’.
It gives Nimble a sort of … mover and shaker air … financial technology, man! We’re changing the world!
Actually, no.
The closest Nimble comes to being ‘fin’ tech is that it’s a loan shark that preys on young people.
Nimble slugs Millennials the maximum rate the payday laws allow: 20 per cent of the principal, plus 4 per cent per month.
Yet their marketing is truly masterful: their ironic hipster-cool advertising encourages young people who are short on cash to just ‘Nimble it’.
Make no mistake: the combination of charging insanely high interest rates and uneducated young customers means that Nimble is making a lot of money.
And now, for the next line, I’d like you to quietly hum the Jaws theme song to yourself.
(Dernum … dernum … dernum.)
Nimble has just revealed it has huge expansion plans: it’s applied for a fully fledged banking licence.
This is very bad news for young consumers … they’re effectively shark bait.
Yet wouldn’t it be good to teach teenagers just how dangerous this mob is, before they fall for their advertising?
Well, that’s exactly what my high school money class teaches.
Here’s how it goes:
First, we play a Nimble ad (which is actually pretty funny).
Many of the kids laugh as they watch it, and probably think to themselves “that’s a cool company”.
Then I get them to go to the Nimble website, which shows an attractive young couple fist-pumping the air, presumably after scoring what Nimble calls a ‘smart little loan’. And then I get the class to calculate the total cost.
“Let’s say you get hit with an unexpected $1000 car repair bill, and you decide to ‘Nimble it’. How much will it cost you after nine months?”
After a little bit of maths, the kids work out that the answer is a whopping $1560.
You should see their faces when they work out how much it costs. They literally can’t believe it.
That is the power of teaching independent financial education in schools.
From that point on, every dollar that Nimble spends on its highly targeted youth-based advertising is wasted on these kids.
The game is up. They’ve jumped the shark.
Tread Your Own Path!
Q&As
MY GIRLFRIEND WAS HIDING A SECRET FROM ME
CHRIS ASKS: Just finished your book and it has completely changed my perspective on money — I finally believe I will be able to buy my future home in Sydney. That was until my girlfriend of one year surprised me with her $30,000 debt (credit cards, personal loan and education fees).
I had a grand plan of saving together and buying a home, but now I feel like someone has stolen my mojo. How do I attack this problem?
BAREFOOT REPLIES: She deserves your respect: it would have taken a lot of courage for her to lay bare her true financial state.
Honestly, the number of people who don’t do this till after they’re engaged — or married — is astounding.
Explain to her how you feel, and that you’ll work together to help her get on top of her finances.
You won’t do this by giving her money — this isn’t your problem — rather, you’ll support her by loaning her a copy of my book, and reinforcing good money behaviours by going on lots of saucy Barefoot date nights.
By the end of the year you’ll have a good idea of how committed she is to fixing her finances. If she sorts herself out, it’ll be a source of strength in your relationship. If she can’t, well, at least you know what you’re in for.
JUST ANOTHER WAY CHILDREN ARE ‘TRACKED’
TROY WRITES: You have talked about in-school marketing programs (like ‘Dollarmites’) and how they hook kids into using the big banks.
Well, I have a concern that we are doing the same now with the ‘Qkr!’ program that is run in schools so kids can pay for stuff at the tuckshop. To sign up, parents have to provide their bank details, and their kids’ details as well.
The fact is that Qkr! is owned and run by Mastercard. Isn’t this just another way of gaining access to information about our kids’ buying habits?
BAREFOOT REPLIES: Yes, of course it is.
I had a look through Qkr’s terms and conditions:
Mastercard collects your kid’s photograph, and tracks your location, preferences, interests and behaviours, so they can “send you marketing materials and personalised content”.
On my evil-banker-meter, that’s fairly standard practice.
(It’s not like they’re Commbank, who pay schools kickbacks to sign kids up to their credit card marketing funnel.)
And it’s no worse than what’s going on in your kid’s bedrooms, where every click and swipe they make is tracked.
Big tech is collecting kids’ data at an alarming rate — as much as 72 million data points before they turn 13 — according to ad platform SuperAwesome.
And even vigilant parents can be caught out: this week Google’s YouTube got caught collecting children’s personal data without their parents’ consent, and was fined $US170 million (mere pocket change!).
Thankfully, former Google boss Eric Schmidt has kindly offered us parents a simple solution to all this digital creepiness: we should simply let young people change their names when they turn 18 so they can escape their digital past.
See, billionaire tech leaders have all the answers!
HOW DO I KNOW IF THIS IS A SCAM?
TEGAN ASKS: Your Bitcoin scam article prevented me from losing $5000. Thank you!
However, it raises another question: Where can I find out categorically if Oasis Trade is a scam company?
BAREFOOT REPLIES: Right here. Yes it is.
This was the best present of all
SARAH WRITES: Many years ago, when I was five, we lost my father to an accident, and my siblings and I always wish we had more memories of him.
Just this year we lost our mother to cancer. Before she passed away I asked her your questions (from the Father’s Day column) and videoed it.
The answers were surprising and showed a side of Mum I had not seen.
When she passed, I shared it with my family as a parting gift from her. Out of all the money lessons I have learnt from you, this is by far the greatest. Thank you for sharing, it’s such a great idea.
BAREFOOT REPLIES:
I’m sorry for your loss.
Lots of readers wrote to me this week telling me they followed my advice last week and did the Father’s Day video with their dad.
It’s funny how something that costs nothing but time, and the courage to ask the questions, can be worth so much — arguably as personally valuable as anything worldly they could have left behind.
The Barefoot Investor holds an Australian Financial Services Licence (302081). This is general advice only. It should not replace individual, independent, personal financial advice.
If you have a burning money question, go to barefootinvestor.com and #askbarefoot
The Barefoot Investor for Families: The Only Kids’ Money Guide You’ll Ever Need (HarperCollins)RRP $29.99
Originally published as Barefoot Investor: There’s no such thing as easy cash