CWA ladies enjoy a real slice of financial advice

I'VE spoken to billion-dollar-fund managers. I've spoken to Federal Members of Parliament on a range of economic issues.

cake baking competition

I'VE spoken to billion-dollar-fund managers. I've spoken to Federal Members of Parliament on a range of economic issues. Yet this weekend I'll face my most daunting crowd - a bunch of women in my country town.

My wife roped me into being a guest speaker for a fundraiser organised by our local community version of the CWA, which I'm pretty sure stands for the Chin Wobblers Association.

"You've got ten minutes - because finance is boring," said Mrs Barefoot.

"For God's sake don't be boring," she warned. "Anyway, we've put you in as the last speaker, and even though it's billed as a high tea, there'll be plenty of chardy."

So this just kept getting better: I've got ten minutes to do an entertaining finance speech to a bunch of mums who'll be three sheets to the wind.

Here's the three tips I'll be giving them:

Men are from Mars, women are from Venus, but the way most couples manage their finances is from a place called Uranus.

In most relationships there's someone who manages the day-today finances and someone whose idea of an audit is checking the balance at the ATM. The biggest pain point in most marriages is money. But the problem isn't necessarily caused by a lack of money - but by a lack of communication.

The best way I know to counter this automatically is to share one joint savings account, and agree that you'll discuss any purchases over a certain amount (ours is $400). Anything under that amount, you have the freedom to buy - no questions asked.

There's nothing sexier than a woman who can save her family from paying too much tax.

If your husband comes home with a harebrained investment scheme to save tax he better be talking about superannuation. That's really the only way you can save tax without having to lose money first.

If you earn less than about $33,000, the Government will kick-in 50 cents for every dollar you add to your super, up to $500. If you earn more than this, up to about $48,000 you'll get a free contribution, but not the full amount. For those that earn more, shovel some of your pre-tax wages into super and you could slash your tax by more than half.

Bargain Shopping on Steroids

I'm the sort of dude who waits out the front of shops while my wife 'browses' - but I still love shopping. Although, only if I can save upwards of $30,000. Seriously. Here are two examples:

Over your working life, the average super fund costs you $300,000 in fees.

So shop around and find a low-cost fund and add up to $150,000 to your nest egg.

Sticking with the standard variable that most banks trot out can cost you about $40,000 extra in interest and add years in repayments. So switch to an ultra low-cost variable loan.

Pass the Chardonnay, and wish me luck. I'm going to need it.

Tread Your Own Path!

QUESTION OF THE WEEK

HELP! I earn $155,000 a year, but I'm $110,000 in Debt!

I am 34, and over the past decade I have steadily accumulated roughly $110k of unsecured debt, due to family circumstances. I earn $155k a year, but have no savings - yet I also don't have any default or other bad entries on my credit report. However I've found that I can't get approved for either a low rate credit card balance transfer, or for one consolidation loan for the whole amount.

My problem isn't that I can't afford the debt repayments; it's that I'm stuck with these high interest debts and no bank wants to help me out. Is there anything else that I can do?

Thanks,

Rick

Hey Rick,

Your situation kind of looks a lot like the US Government's - you're in a hell of a mess. And like Barry's boys, you're not getting out of this without taking some bloody tough decisions.

Let's get one thing clear: the solution to your problem isn't getting a lower interest rate, nor is it finding a bank to lend you more money. The only way you'll avoid going bankrupt in the future is by radically changing the way you see your financial situation.

That begins by making a vow to stop spending money you don't have. Which sounds simple, but it's hard to do when you've been doing it for so long (just ask Congress).

The easiest way to attack your debts is to line them up from smallest to largest, and then focus on knocking over your smallest debts like a domino (while paying all your minimums).

About a third of your income goes in tax, which leaves you with $100,000. So if you commit to living very lean, you should be able to direct $50,000 a year towards debt repayments. That means you should be able to clear your debts in three to four years.

STOCK OF THE WEEK

Freelancer.com

Six years ago I hired my first Indian virtual assistant, Aishwarya. Each day she answered my (re-routed) calls, replied to my emails, and managed my diary.

There was only three things that separated her from Aussie admin assistants: (1) she couldn't pick up my dry cleaning, (2) she didn't spend the morning bitching about last night's episode of X-Factor, and (3) she cost about $5 an hour.

Back then finding offshore outsourcers was difficult. Yet it didn't take long for an online freelancer marketplace to spring up. The biggest today is an Australian owned website called Freelancer.com.

The site has over nine million registered freelancers like Aishwarya, who have collectively completed five million jobs - and divvied up $1.2 billion in fees. Whether you like it or not really doesn't matter - this is the future.

Try this for size: roughly 4 billion people have never been on the internet. These people live in poverty. When they finally get online they probably won't be watching videos of dancing cats. They'll be looking for work - and it's likely they'll do it at Freelancer.com.

So when Freelancer.com announced its IPO (raising $15 million from investors, next month), I was as excited as Aishwarya was at being 'Mister Pape's assistant'. Or at least I was until I read Freelancer.com's financials.

Revenue this year is forecast to be $18.3 million - yet their profit after tax is expected to be a puny $471,000. The float values the company at $218 million, and it's being sold on a nosebleed earnings multiple of 463 times.