Barefoot Investor Scott Pape says pawnbrokers are ruining lives and should be subject to credit laws

In the current cost-of-living crisis, these guys are stealing food off the table, with some charging the equivalent of a staggering 480 per cent interest. Read Scott Pape’s warning on trap lurking in every town

Barefoot Investor Scott Pape had a scuffle with a pawnbroker. Inset image: Canva AI

Let me tell you the last time I made a giant arse of myself in public.

It started, as these things usually do, innocently enough.

I hadn’t had my morning coffee and was searching for a cafe when I wandered past a pawn shop, and thought, Why not?

“BEE BAW,” blared the door chime – unnecessarily loud.

Behind the counter sat a bloke in his mid-40s: bleached blonde hair, an NBA 2017 All-Stars tee that looked vacuum-sealed to his body, and a (possibly pawned) Shane Warne-style diamanté earring.

He didn’t look up. Just kept scrolling on his phone.

So I coughed.

Then I coughed a little harder.

Eventually, he raised his head, locked eyes with me, and let the silence stretch just long enough to make it awkward. Then he said:

“You look like you need some money.”

Without missing a beat, I shot back: “What interest rates do you charge?”

He slowly put down his phone, eyeballing me.

(Blokes with no money don’t ask about the interest rate first up)

“Get out of my shop!” he snarled.

And that’s when the trouble started.

As I walked out, I noticed a poster of his interest rates and charges in the window. And for reasons I still don’t quite understand, I whipped out my phone, and did the most Karen thing I’ve ever done in my life:

I stood on the sidewalk and took a photo of the poster.

And then I heard …

“BEE BAW”

Shane Warne was bowling out the doors with steam coming out of his blingy ears.

“Put your phone away, this is private property!” he yelled.

And then he made a jelly-rolled lunge for my phone.

Two middle aged men grunting and swearing and making a ruckus in the street. Not my finest moment.

Yet later on I looked into it, and what I found made me even angrier.

Pawnshops have been around for hundreds of years – but they weren’t always like this.

It turns out, pawnshops have been around since the 15th century. Back then, they were known as banks of pity, lending small sums to people doing it tough, in exchange for something small they owned.

They haven’t changed much since.

Here’s how it works:

You give them your Nana’s necklace, they give you cash.

Pay them back (plus enough interest to buy your nana’s first home in 1974), and you get it back.

And if you don’t?

They flog it in the front window next to a busted NutriBullet, a lawnmower that hasn’t started since the Rudd Government, and a copy of Shrek 2 on DVD. Don’t think of pawnshops as sleazy Salvos … they’re really loan shark shops.

And make no mistake: in the current cost-of-living crisis, these guys are not offering a lifeline, they’re stealing food off the table from kids. You see, these loans are structured to roll over again and again, which means some end up charging the equivalent of a staggering 480 per cent interest. And it’s all perfectly legal, because pawnshops are largely exempt from the National Credit Act.

My view?

The government needs to close the loophole and hold these outfits to account. Because the only thing sadder than a dirty old NutriBullet in the window … is knowing someone skipped dinner to keep it there.

Tread Your Own Path!

Divorce is seldom kind to your finances.

My Husband told me he’s Having an Affair … and I’m eight months pregnant!

Hi Scott,

I’m not sure if this is the right way to reach you – but my husband of 12 years just told me he’s having an affair. I’m eight months pregnant. We also have a two-year-old and a five-year-old. I’m still in shock. But here’s the strange thing: I’m not panicking about money. We’ve followed your steps religiously. We have solid Mojo, index funds, a modest home that we’ve paid 25 per cent off in 18 months.

So while I’m heartbroken and terrified about what’s ahead, I’m also deeply grateful. Because of you, “how will I survive financially?” isn’t the first question I’m asking. But now I need to start asking the right ones. How do I protect our financial position through separation? Should I slow down mortgage payments to preserve cash flow? What’s the smartest way to divide the assets we’ve worked so hard to build?

Anna

Anna,

I’m so sorry you’re in this situation.

You’re not the first woman this has happened to, but because of your hard work and financial smarts, you have put yourself in a powerful position. And that means you don’t have to stay in a relationship with someone who betrayed your trust.

Now isn’t the time for big financial changes – not until you’ve spoken to a lawyer and have a clear path forward. So, for the next few months, just keep things steady.

Here’s what I do want you to do this week:

First, gather every bit of financial info you can – bank accounts, investments, super, mortgage, house title. Take photos of everything.

Second, call your bestie — you need someone in your corner.

Third, book in with a family lawyer. They’ll explain your rights and help you map out what comes next.

And then?

Do what you’ve already been doing brilliantly: be a calm, powerful force for your kids

Because one day — when they’re old enough to understand — they’ll know how strong their mum was.

That she stood tall when life fell apart. That she protected them with everything she had.

And that’s a legacy worth living.

You’ve got this Anna.

Don’t use ChatGPT for health insurance.

I Saved $1200 With ChatGPT

Hey Scott,

I just wanted to say thank you: I finally called my health insurer and used that ChatGPT script to ask for a discount. They ended up cutting $1200 off my premiums over the next two years!

Mandy

Mandy,

How do I say this gently?

Well … I don’t. I NEVER said you should use AI for private health insurance!

That’s like letting a robot do your prostate exam because it watched a YouTube video on squirrel grips.

Sure ChatGPT can help you sound confident on the phone. But can it tell you if that “cheaper” policy covers your dodgy hip? Or whether you’ll be whacked with an out of pocket $10k fee after a late-night kebab goes full jihad on your intestines?

Here’s the truth: insurers can legally give up to 12 per cent off your premium – but they often do it by quietly downgrading you to a junk policy with more holes than a hammock.

So by all means use AI to write your script. But when it comes to actually comparing your cover, go to privatehealth.gov.au. Yes, it looks like it was built by a retired TAFE teacher in 2004 — but it’s kickback-free and it works.

Look, I’m not anti-tech. I’m just sick of Silicon Valley tech bros flogging AI like it’s Jesus in a hoodie.

Use it wisely. Your backside will thank you.

Young reader Olli has an idea and a market.

What You Can Learn From a 10 Year Old

Hi Scott,

My name is Olli, I’m 10 years old and I have ADHD so I have lots and lots of energy. That’s why I love footy, I get to burn it all off! My mum and I have been reading Barefoot Kids and it got me thinking … maybe I could teach little Auskickers how to play footy and be their coach? I’m thinking one session would go for about an hour. I’d teach them the skills they want to learn — and maybe a few extras to impress the parents so they’ll want to come back. I was thinking $10 a session. But I don’t know if I need insurance, and it sounds expensive. What do you reckon? Do you think it’s a good idea? Is there anything I haven’t thought of yet? Thanks Scott, I hope you can get back to us (me and my mum).

From Olli (& Carla)

Hi Olli (and Carla),

I don’t like your idea … I absolutely LOVE it.

And no, I’m not just being nice because you’re a kid.

Here’s a little secret: heaps of successful entrepreneurs have ADHD – and just like you, they turn all that energy into action.

You’ve nailed the essentials: you’ve got a real service (coaching), a clear audience (Auskickers), a smart price ($10 sounds spot on), and you’re already thinking about how to keep customers coming back.

Honestly? You’ve thought this through better than most adults who write to me.

Now, insurance. If your mum’s there supervising – and you’re doing the dishes without being asked (top-tier business move) – I reckon you’re good to go. Start with a couple of kids you know. If it takes off (which I think it will), you can deal with the boring paperwork later.

Carla, this is parenting gold. Your son has cracked the code: he’s turning what he loves into something that helps others and puts money in his pocket

Olli, you’re my rookie entrepreneur of the year.

Originally published as Barefoot Investor Scott Pape says pawnbrokers are ruining lives and should be subject to credit laws