Vow not to tie the knot with debt

IF you’ve got a burning money question, or you want to win a fight with your hubby, shoot over to barefootinvestor.com and ask a question.

Barefoot Investor says you do not need a credit card to pay for a wedding.

If you’ve got a burning money question, or you want to win a fight with your hubby, shoot over to barefootinvestor.com and ask a question.

Renee asks: I’ve never owned a credit card in my life. With my wedding coming up in four weeks, I’m looking into one for a few expenses I can’t pay upfront. I’m looking at a NAB low-rate credit card, how does this one fare?

I’d need it to purchase some flights, some everyday things and potentially to use in Bali for some accommodation.

Barefoot replies: Congratulations on getting hitched — I’ve been getting a lot of questions about weddings lately.

Straight up, you do not need a credit card. If you don’t have the dough for something you must have, up and do what everyone else does in your situation: whack it on your bridal registry.

Meanwhile, just for giggles, I had a look at NAB’s low-rate card.

They’re charging 13.99 per cent per annum, plus a $59 annual fee, and 21.74 per cent for cash advances.

Seriously, where the hell do they come up with these figures? Point seven four — really? You’re just messing with us, aren’t you guys?

Given you can get a home loan with the NAB for 4.5 per cent, and no fee, that’s quite a stretch.

However, respect to the NAB marketing team, who are at the top of their game (of banking bulldust).

On their application form, they even put a cute picture of a guy putting money into a pink piggy bank.

Or is he?

Maybe he’s stealing money from his daughter’s piggy bank because he can’t afford the extra point seven four on his low-rate card.

The Barefoot Investor recommends getting a job instead of investing in property.

TIME TO GET A JOB

Rick asks: Thanks for the great advice, we read your column out loud each week.

Our current situation is this: we live in Geelong, have a home loan of $7k on a property valued at $500k and have no other debts. I am 38 years old, unemployed and looking for work. I formerly worked in the contaminated land treatment business.

My wife is on maternity leave with our first child. We are looking to sell, rent for a year and see how things go, then buy if the market falls. Risky, stupid — or both?

Barefoot replies: At $7000, you don’t really have a home loan, mate.

What it sounds like is that you’re justifiably stressed about having no money coming in when you have a little baby at home. If that’s your real question, I totally understand and hear you.

Yet the answer isn’t playing real estate roulette to try and free up some money.

For one, you’ll eat up thousands of dollars in selling fees. For two, you need to look after your wife.

She’s just had her first little baby and doesn’t need the stress of buying and selling and moving.

The easiest answer is for you to pull up your daddy pants and get a job — it doesn’t matter what it is.

Then pay off the last bit of your mortgage and save up three months of living expenses.

It will be a lot less than most people’s because you won’t have a mortgage.

The best way to look after yourself and your kids after a divorce is to get real about finances.

HOME LOAN DILEMMA

Rachel asks: I’m scared.

I’m 35 and have recently separated from my husband. I will keep the house (valued at $1.4 million, with $640k debt) plus $60k in savings and I have $40k in super.

My monthly income is $4200, including child support for my 10-year-old son. I work three days a week, at present, but I may need to stretch it to four days to deal with the bills now I am a single mum.

I would like your advice on how to pay off my home loan and have a reasonable quality of life.

Barefoot replies: It’s totally natural to want to stay in the family home for your son’s sake — he must have been through a lot.

However, on your income you can’t afford it, even if you did work an extra day per week.

You must have been through a lot as well.

You need to look after yourself and your son, and the best way you can do that is to sell your home, rent somewhere for 12 months, then buy something you can afford — no more than $900k.

PRIZE HASN’T PAID

Dennis asks: About 10 years ago I won $2000 in a competition. Part of the prize was a financial planning session with AMP.

So I took up the offer and, on the advice of the financial planner, invested the $2000 in two managed funds through AMP. I then added another $2000 of my own money soon after. Since then, the funds have barely broken even — in fact I currently have less than the $4000 originally invested.

I have considered taking the money out and investing it elsewhere but am worried about realising the loss. Any suggestions?

Barefoot replies: Sounds like you won the booby prize, mate.

It reminds me of the meat tray my father always seemed to win every Friday night at the pub. How many tickets did he have to buy?

How many beers did he and his mates have to drink? Why were the sausages a slimy green? But I digress.

The last decade hasn’t been great for the Aussie share market.

In fact, if you look at a 10-year price chart it shows the ASX 200, which represents the 200 biggest companies on the share market, has done basically nothing.

If you’d invested in my mainstay, the Australian Foundation Investment Company, you’d have earned 6 per cent a year, factoring in share price gains and the all-important reinvested dividends.

In other words, your $4000 would be worth about $7200 today. Dennis, you may have won the prize, but judging your returns I’d say your adviser has too.

Originally published as Vow not to tie the knot with debt