Barefoot Investor: Booting kidults out gives them a kickstart
WHAT motivation do kidults have to save money while they’re living with family rent free? Absolutely none says the Barefoot Investor — it’s time to stop enabling their stupidity.
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WHAT motivation do kidults have to save money while they’re living with family rent free? Absolutely none says the Barefoot Investor — it’s time to stop enabling their stupidity.
MAX ASKS: For the past 12 months my 29-year-old sister-in-law and her boyfriend have been living with us to “save for a deposit”.
However, they have that much debt from credit cards, holidays, cars, etc, that they may be around awhile!
They both earn good money but are equally good at spending it on “lifestyle” items. How do we gently guide them on the right path without sounding like we are nagging?
We want to support them, but if we give them notice they will just go to their parents and live the same way.
BAREFOOT REPLIES: You sound like the sort of guy an Arbonne multi-level marketing sales recruiter would love!
Are you really letting your brother’s ex — and her new (unrelated) boyfriend — live in your home rent free? Dude!
Anyway, the kindest thing you could do for this couple is to kick them out on their backsides. You’re not helping them, you’re enabling their stupidity. You’re delaying the reality check they so badly need.
What motivation do they have while they’re living with you rent free? None!
Years ago I was an expert on a reality television show called The Nest, which looked at a bunch of twenty-somethings who were still living at home with their parentals.
Every kidult claimed they were doing it for financial reasons — housing is expensive, and they were saving up for a hefty deposit.
Yet on closer inspection none of them had saved a cracker. It’s almost always this way.
Bottom line? You’re treating these adults like children. It’s time you showed them some respect. Let them stand on their own two feet!
And if their parents are happy to let them fly back into their nest, that’s their problem, not yours.
BEWARE THE SHONK
ERIC ASKS: A financial planner recently paid a visit to our house, and what he told my wife and me really got us thinking.
He said we do not legally have to pay the $110,000 in tax we pay each year. (I earn $140,000 p.a. and my wife earns $160,000.)
He would not go into details but said we need to fly to Brisbane, for a one-off $195 fee, to learn how to pay off our $350,000 mortgage home in just 10 years — using our tax.
I think he was angling for an SMSF, but I could not get this out of him.
We have $40,000 in savings and $60,000 in managed funds and were planning to keep paying off debt and saving, but maybe this guy is on to something. Or is he just a shonk?
BAREFOOT REPLIES: That guy was no more a financial planner than I’m a swimsuit model. So let me bound up to you like Pamela Anderson in her red Baywatch bikini and hit you over the head with my floatie:
He’s trying to flog you a negatively geared property (that he’ll be getting a substantial kickback from), plus the debt to buy it (that he’ll be getting another substantial kickback from).
There is no mystery to any of this. If you buy an investment property from a Queensland property spruiker, I can guarantee that you will lower your taxable income. What’s more, I can also guarantee that you will substantially lower your net worth.
Look, you’re a higher income-earning couple, so you must have some brains, but I have absolutely no idea why you’d let a sleazy shonk like that into your home. Besides, on your income, you should be debt free within five years.
HIT THE TRAPEZE
PETE ASKS: I follow your publications religiously, but I am not sure I have read anything that could help with my current situation.
I am a health professional with qualifications to burn. I work as a director of clinical services for a niche health services outfit, earning well over $100,000 a year.
About a year ago I registered a mental health awareness training company, and since then have given several training sessions to hospital employees on achieving mental wellbeing. It is really well paid (around $2000 for two hours), but I have not generated much work yet as I am still working full time.
Should I pursue my training business, or stick with the reliable job? I am 43 with a family to raise and super to build, so I am not sure I should take the risk. Is it a lack of balls, or just necessary chameleonic caution?
BAREFOOT REPLIES: You’re obviously a smart guy — I had to google “chameleonic caution” and I still don’t know what it means.
Anyway, as the little girl in the taco ad says, “why not do both?” I call it the Trapeze Strategy.
You don’t let go of the swinging bar (your secure pay cheque) until you can safely grab a replacement pay cheque from your successful growing business.
Case in point, when I started the Barefoot Investor, I didn’t jump till I was ready — for years I worked 80-hour weeks combining my full-time job with my shoeless start-up.
(The thinking behind the Trapeze Strategy is that if you’re not willing to put in the hard yards for at least the first 12 months, you probably don’t have the ticker to last in your own business anyway.)
However, I started Barefoot “BC” (Before Children).
The entrepreneurial catchcry of “just hustle your face off, dude!” may work for a single 20-something eating tacos on a Tuesday, but you’re a family man who already has a demanding job.
There are only so many hours in the day. So, perhaps a more realistic option is to negotiate some flexitime with your current employer so you can develop your business.
And it doesn’t need to be a one-sided transaction: the skills and contacts you use in building your training business could be very lucrative for your employer. It’s all how you frame it!
— The Barefoot Investor holds an Australian Financial Services Licence (302081). This is general advice only. It should not replace individual, independent, personal financial advice .
If you have a burning money question, or you want to win a fight with your spouse, go to barefootinvestor.com and ask a question.
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