Barefoot Investor: Can Facebook’s Libra cryptocurrency beat Bitcoin at its own game?

Facebook is getting into the cryptocurrency market with its new Libra payment system. Can it beat Bitcoin at its own game? The Barefoot Investor assesses the latest crypto challenger.

The Barefoot Investor, Scott Pape. Picture- Nicole Cleary

The other day I got this email from Trevor:

“Catching the citybound Frankston train this morning, I had to chuckle at a NAB employee reading The Barefoot Investor. I wonder if it’s part of NAB’s mandatory training?”

What Trev is referring to is a script in my book that I call the “$22,064 phone call”, which gives you the exact words to say to get a cheaper rate from your bank.

Yet with 1.6 million copies sold, it’s now a well-worn script!

You can almost picture the bank’s call centre staff gnashing their teeth when they realise they’ve got a Barefooter on the line.

They instantly know exactly what the customer wants … and how the call will end if they don’t get it.

Last week I spoke about getting rogered by your bank, as they sneakily cut their savings rates in the month before the Reserve Bank dropped its rates.

Well, on the other side of the bank’s ledger, things are getting cray cray, in a good way.

Example: NAB-backed UBank is offering a one-year fixed rate at 2.99 per cent.

Smoking rate, right?

Sure, right now. But a year is a long time in Reserve Banking ‒ and this week they’ve indicated another cut (or two) is on the cards.

That’s why I recommend staying variable, and screwing down the cheapest rate you can.

So what are the best deals right now?

According to my fiercely independent research, the cheapest variable mortgage is Reduce Home Loans at 3.09 per cent (or 3.19 per cent with an offset account).

Reduce Home Loans, by the way, is actually a white-labelled (rebadged) loan from the Bendigo Bank.

(Let’s spare a thought for Bendigo’s head of marketing, who just spat out his morning coffee at having this revealed in the paper.)

Other cheapies are financial tech outfits TicToc at 3.27 per cent, Loans.com.au at 3.28 per cent and Athena at 3.34 per cent.

These rates are generally only for eligible borrowers.

(Think of it like striking up a conversation with a hottie at a bar. Unless you’re a good catch ‒ more than a 20 per cent deposit or equity, a stable job and all your teeth ‒ they won’t even look at you.)

Still, home loan rates are at the lowest levels in history, and competition for borrowers is cutthroat.

Bottom line?

This is a once-in-a-lifetime opportunity to get the banker off your back.

So please do me a favour. Take out your phone. As in right now. Go on. Ask Siri to remind you to call your bank this week. Borrow my book from the library, and use my original well-worn script. Then, after you’re done, email me ([e-mail]) and tell me how much you saved.

Tread Your Own Path!

Facebook Launches Crypto

CHRIS WRITES: I am a regular Barefoot reader so I was not surprised when I heard that Facebook is now launching its own cryptocurrency. You picked it ages ago! But do you think it will be any better than Bitcoin, which you have always been strongly against?

BAREFOOT REPLIES: For those of you who aren’t on Facebook, this week the company announced that it’s creating a new cryptocurrency called Libra (which is Zuckerbergian for ‘worldwide domination’).

Basically, it’s a payments system powered by blockchain, and Facebook has created a digital wallet called Calibra to go with it, which they plan to open up to its 2.7 billion users.

The goal?

To make sending money as easy as sending a text message (says the company).

Oh, and worldwide domination (says me).

Anyway, the move was pretty obvious … Facebook had a massively successful model to copy: WeChat.

WeChat is the Chinese version of Facebook (and Google, Twitter and YouTube all rolled into one) … and it digitally dominates everyday life in China.

A lot of that has to do with the seamless payment system that’s baked into the app.

Personally, I think Facebook are corporate creeps and I trust Zuckerberg as far as I could throw him.

Yet a lack of trust hasn’t exactly hurt the company thus far, right?

Someone is going to dominate mobile payments, but I’m not sure it’s going to be Facebook … or for that matter, one of our big four banks.

As for Bitcoin?

Well, you’re right, it’s back, baby!

Okay, so if you took your hairdresser’s tip and bought in December 2017 you’re still well and truly clippered.

Yet the price is climbing, and some are suggesting that this is because of the legitimacy that Libra brings to crypto.

Yet comparing Libra ‒ which will be backed by a basket of international currencies to ensure its value is stable ‒ to Bitcoin is like comparing The Wiggles to Marilyn Manson.

Yes, they’re both musicians, but they have very, very different audiences.

Help, My Husband’s a Hoarder!

LEE ASKS: I just finished my first Barefoot Date Night with my hubby. My problem is that he is a hoarder, and the look on his face when he heard your advice about selling our stuff on Gumtree was nothing less than horror. And without selling a heap of stuff there is no way we will have a Mojo account. He earns way more than I do (as I have gone back to university) and I have already sold most of my stuff to pay for textbooks and such. What should I do?

BAREFOOT REPLIES: So what you’re saying is “with my drop in income I feel vulnerable, and I want some financial security”. And what your husband is saying is “I don’t really care”. Is that too harsh? Probably (especially if he’s actually got a thing for hoarding).

I’m sure he does care … he just doesn’t need to think too deeply about it, because you keep things separate. He may not even realise you’ve had to sell some of your stuff to buy your university books.

Yet this approach isn’t working for you now, and it won’t help you achieve your joint life goals.

So if I were in your shoes I’d have another Date Night and put the issue fair and square on the menu:

As a couple, what do we value more: our stuff or our financial security?

Changing Our Kids’ Lives

LAYLA ASKS: My parents were terrible with their finances (and still are, sadly), so I learnt from them that ‘credit is OK’ and got myself into all kinds of trouble. Then, two years ago, I read The Barefoot Investor, and my partner and I are now very close to paying off all our debts. A few weeks ago I read The Barefoot Investor for Families. We have two children, aged 3 and 5, so we started the jam jars with them. Today we all went to Target, and when we were in the toy section, instead of saying “Mummy, can I have …” they were saying “I’m going to save up for this”. How powerful is that? We are determined for our kids to be financially savvy, and now we feel we can do it.

BAREFOOT REPLIES: Thanks for writing and telling me of your win. You see, I got a letter from another parent this week who told me that I was corrupting the youth of Australia. Her basic argument was that making kids work for money is too full on: “Why not just let them be kids ‒ they’ve got the rest of their lives to worry about money?”

That’s certainly one approach, yet for me it’s code for “Don’t worry, schnookums, here’s twenty bucks”.

MORE BAREFOOT INVESTOR: HOW TO BUY A CAR

WHY I’M NOT CHEERING RBA RATE CUTS

What you’re doing, on the other hand, is teaching your kids self-reliance. More importantly, you’re giving your kids self-confidence, and there’s no age restriction on that.

I’ve always said that an amazing thing happens when kids save up and buy something on their own steam. It’s not only a proud parenting moment for you, but it’s a life-changing experience for them. You got this!

The Barefoot Investor for Families: The Only Kids’ Money Guide You’ll Ever Need

HarperCollins)

RRP $29.99

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 hubby, go to barefootinvestor.com and ask a question.