Scott Pape: People can get into deep financial trouble but taking control gives a way out

THIS is the story of three people who found themselves in deep trouble but took control of their situation and changed it. Barefoot Investor reveals three uplifting tales for our troubled times.

Find the best path to get out of your problems.

THIS week we’re going to do something a little different.

See, right now, the newspapers are full of tragedy. It’s desperately sad and heartbreaking and futile all at the same time: but the fact is, none of us can control the acts of terrorists.

So this week I’m going to focus on things you can control.

I’m going to introduce you to three Barefooters — readers of this column. Each of them reached a turning point in their lives: a teenage rich kid who suddenly found herself homeless; a go-getting bloke whose financial adviser almost ruined him; and a woman who stared down her violent husband. Yet what they did next, that’s the real story ...

RICH GIRL LOSES IT ALL

COURTNEY grew up an only child in a middle-class family.

By her own admission she was extremely spoilt, always getting whatever she wanted, whenever she wanted.

Yet when her parents separated, when she was 13, her childhood ended and things unravelled quickly.

Courtney went to live with her father in January of that year. Tragically he suddenly and unexpectedly died in September of the same year. So she moved in with her mother.

Courtney knew that one of the reasons for her parents’ break-up was her mother’s drinking.

Yet what she didn’t know was that in the year since the separation her mother had turned into a full-blown alcoholic, drinking from the moment she woke up until she passed out.

Courtney bounced back from life on the street. Picture: Stock image

A few weeks after Courtney moved in, her mother abruptly took her keys and kicked her out.

At 14, she was homeless. For the next five years Courtney spent time on the streets, in refuges, couch-hopping, and in and out of government housing.

At 19, with $1.92 in her bank account, Courtney reached crisis point. Here’s what she did next.

“I went back to school and completed Year 12. I surprised myself when I got good enough marks to get into uni, where I’m currently studying commerce. I can only do it part time, because I work to support myself. Along my journey, I have read every single one of your newspaper columns. I have 412 of them marked ‘financial’ in case I have to re-read any of them. I feel like Barefoot is the financial parent I never had.”

Read more: Love can lead to a dumb call on shared finances

THE GO-GETTER

MICK was always a go-getter.

He didn’t want to live an average life like other people. And the key to living the life of his dreams was to build wealth, so he hooked up with an equally go-getting adviser.

Over the next few years, Mick’s adviser took him down the “borrow to invest” path, and go-gettered him from one investment turd to another.

He was losing money. The interest payments were crippling. The stress began to jeopardise his marriage. Mick had reached crisis point.

Here’s what he did next.

Mick and his partner reorganised their financial future.

“One day, while up in the mountains (must have been the fresh air), the penny finally dropped. My wife and I decided there and then to become debt free and take control of our lives.

“The first thing we did was dump the adviser. Then we offloaded the crap he’d signed us up to — the margin loan, the costly managed funds. And then we paid off our house — in three years — and began stashing cash into super, into an index fund, and buying shares in companies like AFIC (Australian Foundation Investment Company).

“Until we became debt free, I had no idea just how much of a burden it is. The best advice I could give anyone is to follow the Barefoot principles and KEEP IT SIMPLE. We all work too hard for our money to blow it by making mistakes. Funny, but through my mistakes I found financial freedom.”

HE HAS NO HOLD OVER ME ANYMORE

SANDY was happily married for 10 years, and had two lovely children.

Three years ago she was sitting in the backyard when her husband announced, “I want a divorce”.

Like every woman who faces this situation, she was terrified:

“How am I going to support my kids?”

That fear stopped her from “rattling the cage” for the next two and a half years. It kept her from having the courage to leave the house (or boot her husband out). And whenever she tried to broach the idea of finalising a property settlement he would threaten to not pay child support. Sandy knew he was controlling her. She knew she had to stand up and take care of herself. And then one night he became violent.

Sandy took control and left her violent husband. Picture: Stock image

Here’s what she did next.

“It wasn’t until I read Scott’s book that I fully believed I could do this on my own. Now I’m taking back control. True to form, once my husband wasn’t getting his own way, the child support ceased. However, I’ve now sorted my buckets and I’m days away from the property settlement being finalised, which will allow me to purchase a home on my own.

“I’m also looking at investing for the future, for me and the children. My plan is to be financially independent and not reliant upon what child support he deems fit to pay. I used to rely on it, but now — if I receive it — it will be a bonus that goes into the Grow Bucket for my children’s education.”

YOU HAVE MORE POWER THAN YOU THINK

WHAT I love about these stories is that they’re so different, but they share one similarity: each person found themselves in deep trouble and then took control of their situation — and changed it.

Over to you.

Tread Your Own Path!

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