Barefoot Investor’s advice on when to ask your bank for hardship help
A young couple is ready to pull the ripcord just three months after getting their mortgage because they can’t get their expenses under control. Here’s what Barefoot Investor suggests they do.
Barefoot Investor
Don't miss out on the headlines from Barefoot Investor. Followed categories will be added to My News.
When I was a kid we’d drive to the ‘big smoke’ (Mildura) once a year to do our Christmas shopping.
For my mum shopping was a social event.
She’d meet up with her friends. She’d try things on. And, if the sales assistant did a good job on her, she might even pop it on laybuy (stuff was expensive back then).
And while my mum was having the time of her life, my old man was … standing out the front of the shop. The thought of going into an airconditioned shop for a bit of a ‘looky look’ never crossed his mind. So he either stood in the 40 degree heat reading the newspaper, or made small talk with the other dads that were doing the same thing.
Isn’t that outdated with a side serving of sexism?
Sure, but that was my childhood.
Twenty years later, the internet changed shopping forever.
It went from being a real-world social event to a solitary pastime. There is no friction, no waiting, no talking, and an unlimited range of everything. You buy (often with Afterpay), enticed by free shipping, knowing that you can simply send it back if it doesn’t fit.
The internet essentially became a giant shopping mall, and there was a sale happening all the time. (Next week: Black Friday … followed by Cyber Monday. Ho, Ho Ho!)
Yet in the last few years shopping has gone Tik Tok on us.
The fastest growing retailers on the planet right now are Temu and Shein.
Here’s the model: they sell outrageously cheap junk direct from factories in China (essentially they make it on demand) and deliver it to your door in a throwaway plastic bag.
And this week Amazon joined the fray by launching their very own copycat service called Haul.
“Say hello to crazy low prices: unbelievable finds $20 and under”, the banner says on the Haul app (though Amazon has said that most of their junk – my term – will be priced under $10, and some under $1).
And in doing so they have announced a new chapter in retailing:
Shopping is now a form of gambling.
Yes, gambling.
On Temu you can buy three outfits for $20. An entire dinner set for $8. An iPhone charger for $1.25.
And when you hit ‘buy’, you’re taking a gamble:
You know it’ll likely break, it’ll be dodgy, or the sizing will be way off.
Yet if you wear even a couple of items from your haul, that’s a win, right?
And because it’s all so incredibly cheap you’re not going to bother sending it back.
Anyway, I spent some time on the site, and here’s my shopping review:
It’s the shopping equivalent of MAFS.
You don’t need anything on this site. You’ll be dumber for buying it. Like MAFS it’s just plastic junk designed to drill your dopamine and leave you unsatisfied.
And it’s also terrible for the environment.
Here’s the lifecycle:
It goes from some factory in China, to your joint, to your cupboard, to your big red bin, and then to the bottom of Sydney Harbour (or wherever those garbo trucks go).
Tread Your Own Path!
I Don’t Want to Adult Anymore
Hi Scott,
My husband and I are in our twenties. We have just gotten our first mortgage and have had a real shock at how much it costs to be adults, and frankly we don’t like it.
After living with my parents for three years, and two kids later, we are finding it tough.
Our mortgage is just under 60% of our income, so I don’t know how I can get our expenses to under 60%. We both work full time and our kids are in daycare. My husband is an apprentice plumber and I’m in the public service. He tries to get cash work but it’s hard competition out there. I’m just not sure how we can survive considering we got our mortgage only three months ago so refinancing is not really an option. Any tips?
Bindi
Hey Bindi,
Yes, being an adult totally sucks.
And, just when you think it couldn’t get any suckier, you’ll get hit with your council rates, then house and contents insurance, and the hot water service will go to god … all on the same day.
Now I’m assuming you went through the ‘Bank of Mum and Dad’ to help secure the loan, because you wouldn’t have gotten it on your own.
In that case, you serve as the ‘after’ mugshot of what happens when you give kid-ults a hand-out disguised as a help-out.
You’re reaching for the ripcord three months after you got the loan?!
Surely you looked at what your repayments would be before you signed on the dotted line?!
Bindi, I’m reaching for a paper bag because I’m hyperventilating at the moment.
BREATHE, BAREFOOT!
Okay, so my breathing is back under control. Let me put away my paper bag and my passively aggressive double dose of exclamation and question marks and give you some advice.
You’re parents now, so it’s time to behave like responsible adults.
So I want you to call your bank and tell them you’re in hardship. Show them your budget. They’ll likely allow you to switch to interest only on your home loan – which will reduce your repayments – perhaps until your husband finishes his apprenticeship, and he starts earning some decent coin.
Until then, enjoy the baked beans, do your Santa shopping on Gumtree, and sell whatever you can to get at least $2000 Mojo in the kitty.
You will get through this, and it will make you stronger and wiser.
Promise.
Should I Go to Cash?
Hi Scott,
Love your articles!
I’m sure you’ll get a million questions to this effect, but what should we do with our super based on Warren Buffett’s indicator (mentioned in last week’s column)? Do we move our super investments to more conservative options (cash, etc)?
Hayley
Hi Hayley
I can’t tell you what you should do, but I can tell you what I’m doing:
Nothing.
Here’s the problem with converting to cash ahead of a crash:
You have to be right twice.
As in, you not only have to pick the right time to sell your shares and move to cash … but you have to pick the right time to buy in again, just before the market recovers.
And, as my wife will tell you, I’m rarely right once … let alone twice!
When you look at the long-term track record of the markets, things have turned out exceedingly well if you follow another piece of advice from Buffett: “The trick is, when there is nothing to do, do nothing.”
And that’s good enough for me!
Young and Stupid
Hi Scott,
Our Year 12 economics teacher just read out one of your Q&A newsletters in class. An 18-year-old guy had written to you confessing he’d spent $8000 on a credit card. He said he felt a burden to share it because many Aussie teens fall into the same trap. It dawned on me that I’m now eligible for a credit card too. The $$$ symbols flash before my eyes, just for a moment. It clearly illustrates just how easy it is to fall into stupid mistakes being young, and I really don’t want to be stupid. So I’m simply writing to say thanks. I’ll definitely be getting your book!
Annie
Hi Annie
You’re right, you can get ahead of most people in life simply by avoiding doing the ‘stupid’ stuff. That’s how people stay in loving relationships, out of jail, away from debt collectors, and with their adult teeth intact.
Yet if you really want to thrive, and live an amazing life, you need to go one step further. You need to actively build up the belief that you, Annie, are a really savvy woman with money.
How do you do that?
You prove it to yourself with the little actions you do, starting today.
Yes, you avoid credit cards, but you also open an investing app and start buying index funds. Yes, you avoid Afterpay, but you also set up your buckets and start saving for a house deposit, even if it’s years into the future.
I’m a self-serving grubby author, but I’ve always thought my book makes a good graduation present.
Good luck!
DISCLAIMER: Information and opinions provided in this column are general in nature and have been prepared for educational purposes only. Always seek personal financial advice tailored to your specific needs before making financial and investment decisions.
More Coverage
Originally published as Barefoot Investor’s advice on when to ask your bank for hardship help
Barefoot Investor: ‘How I took on the fake Scott Pape scammers’
Barefoot Investor tried to uncover Facebook’s fake Scott Pape scammers but it all descended into chaos with his wife away, the kids sick and German backpackers running his farm.
Unit owner’s shocking $210k loss over 10 years
Not everyone is making a killing on property says Scott Pape, noting some inner city suburbs are struggling with one seller having to cut $210k off the price they paid 10 years ago.