There is life after jail when you take responsibility for mistakes

A MAN made a huge mistake years ago and ended up in jail. He turned it around, got a job, but has been made redundant. He asks Barefoot Investor Scott Pape for advice.

IF you have a burning money question or you want to win a fight with your spouse, ask the Barefoot Investor.

STEVE ASKS: I made a huge mistake years ago and ended up in jail. I got out, put it all behind me, and found a job. Now I’ve been made redundant, and can’t find another job due to my criminal record. I owe $360k on my mortgage (I live alone). I have redundancy money of $14k, and I’m really scared I won’t find another job. I have applied for 50 jobs and got three interviews — and as soon as they hear about my jail time I get stonewalled. I want to work. I don’t want to lose everything. How can I survive?

BAREFOOT REPLIES: First, well done for turning your life around. Second, ring your bank immediately, speak to their hardship department, and tell them you’ve lost your job. Third, understand there are organisations that can help. WISE Employment helps former inmates get jobs, the TOLL Group has a well regarded Second Step program, and there are heaps of government and community agencies (like the Salvation Army) that specialise in helping people like you get into a job. Get in touch with them immediately. Finally, create a 60-second pitch about your past: take full responsibility for your mistakes, discuss your specific learning lessons, and explain why you’re a better person because of what happened — and a harder worker than the next bloke. You’ve got a lot to prove to yourself and others. Practise it in the mirror ’til it’s perfect. Say it in interviews, say it on dates, say it to your kids. Say it ’til you believe it.

SUPER TANTRUM

NICOLE ASKS: I am negotiating with my ex-husband on our separation. It has been a long and arduous process, mainly because he is a lying scumbag and has no regard for anyone but himself. I want his super, which he says is “bugger all”. When pressed he said it is less than $4000 (because he has always been self-employed and never bothered with it). No matter. I want it. He says I can’t get it because it’s too small. What do you say?

 

BAREFOOT REPLIES: Your lying scumbag of an ex-husband is actually telling the truth. Well, what I mean is, if his balance is under $5000 then it’s deemed “unsplittable” in a separation. Having said that, your husband isn’t the sort of person I’d play golf with, or allow to “self-report” on how much money he has. So I’d get your solicitor to run a check on that. One more thing (and I hate to say this): if your super balance is over $5000, it can be split!

 

SPOT SCAMMERS

CINDY ASKS: My partner and I earn great money, close to $400k a year. After years of splurging on kids, cars, houses and holidays, we are finally sorting out our “stuff”. We have savings of about $70k plus about $150k in shares. Here is my question: I took a call from a financial company talking about a “post reduction tax” strategy. Sounded good. Is it a real thing?

 

BAREFOOT REPLIES: Is “post reduction tax” a real strategy? Well, I think I remember reading about that in the Australian Journal of New Idea. Professor Kim Kardashian was detailing a “post reduction strategy” to get her bikini bod back after having her latest baby. Cindy, what I’ve just said is no more stupid than taking a cold call from a stranger who pitches you an investment opportunity to save you tax. Statistically, on your household income, you’re 97 per cent wealthier than the rest of the population — it’s time you started acting like it.

Three points:

First, while a high income allows you to look rich, it doesn’t automatically make you wealthy. For that you need to save, which you seem to be doing, so well done.

Second, you should minimise your taxable income the smart way. Salary-sacrifice the maximum amounts you can both put into super ($30,000 if you’re under 50, $35,000 if you’re 50+). With any money left over, focus on paying down your mortgage, as well as looking to invest either in a family trust or investment bonds.

Finally, don’t get too stressed about paying tax. It’s a good thing! This is something I know about — I’m a high income earner but I don’t have a dollar of debt. Some people would call that silly; I call it peace of mind — and when you’ve got that, you’ve really got it made.

DUD DILEMMA

JEN ASKS: We are huge fans — we religiously read your columns every week. We are in our 40s and earn around $140k between us. We have been badly burnt with a Melbourne CBD apartment. We owe $550k on it and rent it out for $360 a week. Today, units in the block are selling for just $400k. Do we sell for a massive loss and tack it on to our home loan, or hope in time it will bounce back?

 

BAREFOOT REPLIES: Only you can make that decision. However, I have one observation to make after watching a lot of people lose a lot of money on dud property deals over the years: time doesn’t turn a bad property into a good one. The truth is you actually lost your money when you bought. That money is gone. It’s not coming back. Now, you can anchor your expectations on getting back to $550k, but what you paid for the apartment is irrelevant to your renter, or the next buyer. All you can deal with is the here and now. You own a $400,000 apartment which is costing you by my (rough) calculations around $10,000 a year in after-tax losses to hold on to. There’s a huge oversupply of Melbourne apartments, so I doubt your rent (or value) will increase any time soon. The question you need to ask is, knowing what you know now, would you buy that apartment today?

 

The Barefoot Investor holds an Australian Financial Services Licence (302081). This is general advice only. It should not replace individual, independent, personal financial advice

Originally published as There is life after jail when you take responsibility for mistakes