Barefoot Investor: Money in marriage is a team sport

A HUSBAND is working overtime to increase a couple’s “fun money” but his wife wants to pay off their home loan. Barefoot Investor Scott Pape weighs in on the bottom line and whether they should make time to smell the Bintang in Bali.

A HUSBAND is working overtime to increase a couple’s ‘fun money’ but his wife wants to pay off their home loan. Barefoot Investor weighs in on the bottom line and whether they should make time to smell the Bintang in Bali.

COREY ASKS: My wife and I are currently following your teachings. However, we have come unstuck on overtime payments and additional income.

I am working a second job, and doing overtime in my main job, to increase the amount of “fun money” I have.

But the wife says these extra funds should just be put on the home loan and I should not have access to them.

I have searched but cannot find what you say to do with overtime and additional income. Can you please enlighten us?

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Barefoot Investor Scott Pape. Picture: Supplied

BAREFOOT REPLIES: You should check the index of my book — under “B” for “ball-breaker”. (Only joking.)

Then again, she could be right. If your mortgage is eating up more than, say, 40 per cent of your income, I’d definitely side with her — it’s time to put in the overtime and pay that sucker down.

But if it’s under control, I’m on your side. You have every right to a bit of “fun money”.

The reason I lay out the Barefoot Steps is to get people to focus on the big moves that will get them to financial security.

However, some people get a little overzealous, and get so focused on reaching the end that they forget about stopping to smell the … Bintang in Bali.

Bottom line: money in marriage is a team sport, so you should both have a say on how you spend your money.

TOO OLD TO DIE YOUNG!

JILL ASKS: Subconsciously I always thought I would die young, as my parents and older sister did.

So I have tended to “live for the moment”. Now that I am still (thankfully) here at 69, I am too old to die young! My husband and I continue to work in our own business, which we enjoy.

Our joint taxable income last financial year was $116,000, and we have $750,000 in business loans. If we sell the business and pay off the loans, we should realise about $600,000, but that’s it — no super, no house, no assets.

Should we buy something modest, or rent?

BAREFOOT REPLIES: You’d be amazed how many people I meet who tell me that retirement “just sort of crept up on them” … over 50 years.

But I’ve got a few suggestions that should help you out.

First, talk to your accountant before selling the business, as there are capital gains tax (CGT) exemptions for small business owners who are selling and retiring, especially if they’ve owned the business for 15 years and it has a turnover less than $2 million per year. Depending on your circumstances, it may be more tax efficient to roll the money into super — and then you could take out a lump sum and buy a modest home.

Second, given that you’ve enjoyed your business, why not negotiate with the new owners (once you’ve sold) to continue working in it a day or so a week? It’s good for your transition to retirement, and good for the transition of the business. Best of all, you could earn $20,800 ($13,000 p.a. of work bonus and $7800 income) before your rate of age pension is reduced.

Combined this equates to $35,058 of age pension and $20,800 of employment income, for a total of $55,858 p.a. of income. The best part is that it would be tax free — couples can have $28,974 p.a. each of income tax free, thanks to the Seniors and Pensioners Tax Offset (SAPTO).

I WANT TO BREAK FREE

JESSICA ASKS: My father monitors my money from afar and, as a 25-year-old woman, I feel I am being treated like a child.

He thinks my partner and I are financially illiterate, and disagrees with us having joint bank accounts (he and mum keep their money separate).

He does not have my account passwords, but he does ask for updates on my money, and has forceful discussions with me about my budget — talk about pressure!

Reading your book, I want to take control of my money, but I know this will be very hard for Dad. How do I tread my own path?

BAREFOOT REPLIES: Your old man just wants the best for you, but he’s got boundary issues.

You’ve probably worked this out by now, but forceful conversations about money are rarely about money — they’re usually about control — and it sounds like your father wants to control you just like he did when you were a kid.

Of course you’re now an adult, living with your partner, and your financial situation has nothing to do with your dad.

Forceful conversations about money are rarely about money.

My suggestion would be to give him a copy of my book for Christmas. This will show him you’ve got your head in the right space financially. Then explain to him that if you ever need any further advice he’ll be the first person you ask.

SHAKE HIM OFF

KIRSTEN ASKS: Well, I never thought I would be writing this but … a month ago my husband of 21 years fessed up to wanting to run off with a girl 25 years younger who he met only a week before. Ouch!

Fortunately, I have been Barefooting for the past few years and have paid off all debts (apart from the mortgage), and I have put $6000 extra into the mortgage and saved $5000 in Mojo.

It is probably not enough to get me through the financial mess of separating our finances, including the family home and a used-to-be jointly run business.

But, despite the dent to the ego, I realise that if I am clever enough to have come this far, I will be OK. My question now is, how do I pay off my house after giving him his share?

BAREFOOT REPLIES: You sound like the dream person to get divorced from — if I did that to my wife, I’d literally be in fear of my life.

Without knowing your particulars, let me tell you the number one financial mistake that I see most women make when they divorce: they keep the family home.

Do you still need a big family home? Can you afford it on one wage? And, even if you answered yes to both of these questions, do you want to live in a home with all that emotional baggage?

If you can sell it as part of the settlement and come out with cash in your pocket, that would give you less stress and more freedom — and that’s exactly what you deserve. New Year, New You. You Got This!

SOME BOOK BRAGGING

“LAST year industry outsiders Jimmy Barnes and Scott Pape taught the book industry how to sell books,” wrote the Bookseller + Publisher recently.

Yee-haw!

Two working class men who — let’s be honest — couldn’t give a Khe Sanh about a semicolon are now rubbing our dewey decimals up against famous authors like Tom Winton (or whatever his name is).

My book has officially been in the bestseller charts for 52 weeks in a row, and has sold more than 500,000 copies.

(Catch me if you can, Jimmy!)

OK, so now that I’ve bragged about the book, let me confess how dumb I really am:

This time last year I told my wife that books were “dead”.

“No one buys books any more. It’s all about ebooks and audiobooks downloaded on Amazon,” I told her.

Wrong!

Scott Pape’s Barefoot Investor book.

In the UK and the US, sales of ebooks plunged by nearly 20 per cent last year, while sales of physical books were up 7 per cent.

And Australians are some of the biggest book buyers per head in the world: according to Nielsen BookScan, collectively we spent close to $1 billion on 53.6 million books in 2016 … and this figure didn’t include ebooks or audiobooks.

My own experience backs this up: over the past year The Barefoot Investor has topped the charts for both ebooks and audiobooks … and yet roughly 90 per cent of total sales were still of the dead-tree variety.

And it gets better: the bulk of these books have been bought from … shock horror! … local bookstores.

There’s a good reason for this: I’ve purposely never sold my book on my website, even though I’d get a higher clip.

Why?

Well, when I published my first book as a young and unknown author, it was booksellers who helped sell it. They recommended it to their customers, and in so doing helped me build a following. So this time around I wanted to return the favour by getting people to go out and buy the book from bookstores.

And buy they did, with many scooping up multiple copies as presents for family and friends. And that makes sense when you think about it: when was the last time you handed someone a giftwrapped ebook for Christmas?

Tread Your Own Path!

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.