Barefoot Investor: Why a safe will prevent you from being sorry

Keeping your family’s finances safe could be as easy as a trip to Bunnings, saving time and heartache when life goes astray, writes the Barefoot Investor.

Barefoot Investor Scott Pape. Picture: Foxtel

Today I’m going to tell you about a $69 purchase from Bunnings that will keep your family’s finances safe.

Given we’re at the start of fire season, it’s important to have all your essential documents in one place.

Like what?

Well, I have a system I write about in The Barefoot Investor for Families called the Fearless Folder.

The book lays it all out, but at a base level you want to get copies of your will, powers of attorney, bank accounts, investments, insurance policies and login details.

And then you stick them all in a First Alert Fire Safe and Waterproof Protection Chest, which costs $69 at Bunnings.

What I like about these chests (other than the fact that they’re fireproof and waterproof) is that they’re small enough for you to pick up by the handle if you have to evacuate your house.

Here’s the thing: we lost everything when our house burned to the ground … except our important documents. Having all those docs made the process of rebuilding our financial lives that much easier.

Yet this year I decided to go bigger.

I was scrolling through Gumtree and I saw an old heavy-duty safe with a spinning combination lock and brass keys.

A few days later it arrived at the farm, and it was so big we had to use the tractor to move it.

I parked it at the shearing shed until I’d decided what to do with it.

Yet the next day my five-year-old son (who’s going through a “super spy” phase) started … playing with it.

Later, he provided this statement of events to Senior Sergeant Dad:

“Look, I was just playing and spinning around the lock, and then I closed the door … and then it wouldn’t open up.”

It turns out he’d actually managed to reset the code. And then locked the door.

With the only set of keys inside.

And so, with my tail between my legs, I begged my local locksmith to fix it.

He took one look and announced: “It’s locked for good.”

“Oh, there must be something you can do”, I protested.

He shook his head.

“Mate, it’s a 95-year-old safe. Once it’s shut, it’s shut. The only thing we could do is oxy a hole in the back, but that would destroy it.

“It’s now a nice piece of furniture. Haw! haw! haw!”

The locksmith got in his car, still chuckling at his gag, and started his engine.

Yet just as he was about to leave he wound down his window.

“You know, there is this one bloke I’ve heard about who gets round the traps. He’s a … safecracker.”

Bewdy!

The next day the safecracker arrived.

“Will you be able to crack it?” I asked.

“Yes,” he said with an unsettling amount of conviction.

It’s a rather unusual trade, so I didn’t ask many questions, and just pointed him to the shearing shed.

And after a couple of hours – and $300 – he’d cracked the safe.

A $69 purchase from Bunnings will keep your family’s finances safe.

READERS WRITE

MEGACITY INVESTMENT

BILLY WRITES: I am 19 and considering investing in NEOM, Saudi Arabia’s new $700 billion “megacity of the future”.

Considering it is being built in an area that may be subject to wars, is this a stupid investment?

BAREFOOT REPLIES: If I asked my five-year-old son to design a megacity, this is what he’d probably come up with:

“There’s going to be a dinosaur park! And flying cars! And robot maids! And glow-in-the-dark sand! And, and, and a giant artificial moon!”

Sounds good, huh?

Well, these are just some of the wild ideas Saudi Crown Prince Mohammed bin Salman (age 38) has dreamt up. No, seriously.

However, reports in the Wall Street Journal have raised doubts that this mega-expensive project will ever see the light of day.

Billy, before you invest in this, I’ll give you the same advice I give my five year old: “Go into the contemplation corner and think about things for a moment.”

COACHED TO BE SCROOGE McDUCK

PETE WRITES: Sir Scott, I see your dread and fear of low interest rates, and will slay this with my positive outcome.

My investment property in Queensland, which I bought cheaply, is positively geared and is reaping the rewards.

I bought it in 2018 and interest rates have continued to decline each year.

I feel this is a much better approach than just letting money sit in the bank earning next to nothing.

I am quite shocked as to why you never encourage investment property purchasing when there is affordable housing across Australia.

I feel you coach people to be Scrooge McDucks.

BAREFOOT REPLIES: As they say in the classics, where do I start?

Whenever I talk about cash, I’m talking about short-term savings: money you’ll need in a pinch.

You suggesting that an investment property is an “alternative” to saving money in the bank is weird.

They are not the same.

There are three things that your 18-month journey into property investing hasn’t taught you yet:

First, interest rates may be the lowest in history now, but remember you are taking on a 25-year mortgage.

Second, properties are expensive to maintain. Something costly almost always goes wrong when you least expect it, and that will eat into your return.

Third, when speculators without Mojo go bust, it’s not pretty. And it happens quite a bit, especially in the go-go Queensland apartment market.

Wait a few more years and you’ll probably see it.

Look, it’s not about being Scrooge McDuck, having money for money’s sake.

That’s the opposite of my message. Rather, it’s about having a financial cushion so you can say, “I’ve got this” no matter what happens to you.

And that gives you the ultimate return: sleeping well at night.

Properties are expensive to maintain. Something costly almost always goes wrong when you least expect it.

CONFESSIONS FROM THE DARK SIDE

BRYAN WRITES: I have a confession to make. For years I have been drawn to the “dark side” – working as a finance broker putting people into ridiculous high-interest-rate loans (up to 29.9 per cent).

When I started I was shocked that people would buy these loans, but it soon became the “norm” and I even trained other people on how to sell them.

This is something I am not proud of as I have been following the Barefoot way myself the last three years, which has really helped my wife and me.

Now I want to right the wrongs I have done and help people, especially young people who do not have a clue.

With my knowledge of the dark side, I want to become a “finance Jedi”. Where can I best help?

BAREFOOT REPLIES: You should consider becoming a not-for-profit financial counsellor.

No other job in finance comes close to matching the impact you have on people and their families. You’ll deal with the same clients, though instead of preying on them you’ll go home at night and pray for them.

It’s mentally draining. People turn up and dump decades of stress in your lap. They tell you heartbreaking stories. In the spirit of being candid, let me give you a confession of my own:

Financial counselling is the toughest job I’ve ever had.

So why do it?

Well, when I first got into finance my old man gave me one bit of advice that stuck with me: “Just don’t be a wanker, look after the battlers.”

Turns out to be the best advice I ever got.

Good luck.

MORE BAREFOOT INVESTOR

Information and opinions provided in this column are general in nature and have been prepared for educational purposes only. Always seek personal financial advice tailored to your specific needs before making financial and investment decisions.

If you have a money question, go to barefootinvestor.com and #askbarefoot.

The Barefoot Investor 2020 update is available from December 1. Pre-order now to make sure you get it before Christmas.

And, while you’re there, buy a copy of The Barefoot Investor for Families for someone who wants to give their kid the best start in life

The Barefoot Investor for Families: The Only Kids’ Money Guide You’ll Ever Need (HarperCollins)RRP $29.99