A parent’s painful dilemma over search for missing daughter

SEARCHING for a lost child should not involve selling your home to fund the mission, writes Barefoot Investor.

A mother mustn’t sell her home to fund a search for one of her children.

SEARCHING for a lost child should not involve selling your home to fund the mission.

BEVERLEY WRITES: I have worked as a nurse my whole life, supporting two daughters and a mentally unwell husband who has since died. I am 64 and retired, and completely overwhelmed. My 31-year-old is in LA; I pretty much support her, though I do not mind helping her out. My 27-year-old became a missing person back in 2015 and I have spent a lot of money looking for her on the US west coast. I intend to find her, and to do this I want to sell my fully paid-off home (in Mullumbimby, NSW), for which I would probably clear $480,000. But what then?

BAREFOOT REPLIES: As a parent my heart breaks for you. But you’ve asked me for financial advice, so here goes. You know when you’re on a plane and the flight attendant does the safety demonstration. Have you noticed they always say, “put on your own oxygen mask before you help others”. There’s a reason for this — you’re no good to anyone else if you can’t breathe yourself. The same goes for your financial situation. You’re retired now, so you’re not earning an income. There’s safety and security in owning your own home, so please don’t sell it. Rent it out, and head over to America by all means, but don’t sell it.

NO, I’M RIGHT

DOUG WRITES: I’m sorry to say this but your book is WRONG. In the chapter on retirement — “The Donald Bradman Retirement Strategy: Why You Don’t Need $1 Million to Retire” — you state: “You can’t retire until you have $250,000 in super for couples or $170,000 for singles. What’s so special about these numbers? This is the maximum dollar amount of assets (excluding your family home) that you can have and still get close to the maximum age pension.” WRONG! According to the Centrelink website, you can have $375,000 for a homeowner couple and $250,000 for a single homeowner, and still qualify for the FULL age pension. You will need to PULP your best-selling book!

BAREFOOT REPLIES: Thanks for the all-caps SHOUTY SHOUTY. Nice touch. I’m not wrong. Centrelink applies two tests for the age pension: an asset test and an income test. Then they base your pension payment on whichever test gives the lower figure. If you were a couple and had $375,000 in assets, you wouldn’t actually get the full age pension — because you’d fail the income test. Stay with me here, shouty, and I’ll explain why. Centrelink “deems” a rate of return that retirees get from their assets. If you’re a couple, the first $81,600 of your combined assets (other than the family home) are deemed to earn an income of 1.75 per cent per annum, and any amount over that is deemed to earn an income of 3.25 per cent per annum. If you do the sums you’ll find that a couple with $375,000 worth of assets would be deemed to have earned an income of $10,963.50 per year from their assets. Now let’s look at the income test. Retired couples can earn a maximum of $292 a fortnight ($7592 per annum) in income before their age pension is affected. For every dollar they earn over that, their age pension is reduced by 50 cents in the dollar. Do the sums again and you’ll see that if a couple have $375,000 in assets, then their age pension will be reduced by $1685.75. Only on (roughly) $250,000 would the pension not be affected, like I say in my book. To be clear, the figures in my book take into account both the asset and the income test — but I didn’t want to bore anyone to death (though for you I’ve made an exception). The truth is that financial planners, banks and other financial floggers scare the hell out of people when they say you need $1 million to retire comfortably. It’s complete self-serving rubbish (the more assets you have, the more fees they can grab). Only about 1 per cent of people have super balances over $1 million. I’m writing for the 99 per cent, showing them that they can retire with dignity if they have a paid-off home, have $250,000 in combined super, and work a day or so a week. THANK YOU, DOUG!

SHIP OF FOOLS

MARTIN WRITES: I am looking at making some investment decisions for the next 3-5 years to save a deposit for a first home. An option I am looking at is to buy shipping containers. Of the companies I have researched, the terms are: $5000 per container, 5-year minimum hold, sell-back at full purchase price (capital preserved), 9.75-12 per cent fixed lease options, paid monthly if four or more owned. You always say “when something sounds too good to be true, it is”. Thoughts?

BAREFOOT REPLIES: You’re talking about an unregulated investment — meaning you have no protection if it all goes pear-shaped. I’d be as tempted to invest in this as I would to live in a shipping container. Yes, it’s too good to be true.

 

A BAD CASE OF STD

MELINDA WRITES: I am 38 and I earn $90,000, and I have a money problem I need your help with. I was stupid to co-sign a vehicle loan with my ex-boyfriend. The vehicle was never in my possession and then (in 2010) it was repossessed. A credit company is now chasing me for 100 per cent of the amount owing, which is $11,000. I tried to negotiate it down to 50 per cent, but no joy.

BAREFOOT REPLIES: Well that sucks. The jerk gave you a nasty case of Sexually Transmitted Debt (STD). But I have good news. It sounds like this debt could be “statute barred”. Basically, if the debt is older than six years, under most circumstances the debt collectors can’t chase you for it. Even better, the default should have fallen off your credit card file as well. The most important thing is not to make any payment or admission of owing the debt. The other thing is to sit down with a community-based financial counsellor and check whether the debt has in fact lapsed. Call them on 1800 007 007 and book an appointment. Finally, think of it this way: imagine what it would have cost if you’d married this loser!

 

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