Barefoot Investor: Perils of the simple life
FALLING in love with the idea of moving to the country? The grass might starts to look a bit patchy if you have to commute back into the city each day. Barefoot Investor Scott Pape has some advice for those tempted by the simple life.
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TEMPTED by a tree change and falling in love with the idea of moving to the country?
The grass might starts to look a bit patchy if you have to commute back into the city each day.
Barefoot Investor Scott Pape has some advice for those tempted by the simple life.
ROXY ASKS: I keep falling in love with the idea of moving to the country. Whether it’s you or a happy-go-lucky couple I recently met, it seems many people are singing the praises of “the simple life”, ditching expensive inner city rents for a modest country abode with a manageable mortgage.
But is the country life only suited to freelancers who have flexibility and work from home, or is it still worth it for those of us in our early 30s who will face a long and possibly dreary commute?
BAREFOOT REPLIES: You’re falling in love with the “idea” of moving to the country.
Understand that the grass never looks greener than when you’re stuck in the concrete jungle, tailgating a Kia Rio.
Now, if you can run your own show (like I do), living in the country is bloody brilliant.
The Australian Wellbeing Index has repeatedly shown that people living in regional Australia are among the happiest in the country. Part of that is because you can avoid becoming what I call a “postcode povvo”.
Deakin University Emeritus Professor Robert Cummins and his team have found that financial insecurity (read: mortgage stress) produces similar feelings to that of physical torture. Struth!
However, the grass starts to look a bit patchy if you have to commute back into the city each day.
A study from a university in Sweden found that relationships where one partner commutes longer than 45 minutes are 40 per cent more likely to end in divorce.
My view? I’d look at it as a three-year plan. First, swing on the employment trapeze by building up some freelance work.
Second, after that, look at renting in the country for a year to try it out. (That’s what we did. While I’m from the country, I shacked up with a woman who was born and bred in the hipster suburb of North Fitzroy, where even the ducks have their own bike lanes. So we both had to be certain that country life would work for us.)
Finally, if after all that you’re still in love with the idea, make the move!
HE’S ON THE BALL
TIM ASKS: I am a professional footballer. I received a copy of your book through the Players’ Association, and it is honestly the first book I have read from start to finish ‒ overnight!
I have learnt a lot from your book after being almost $1 million in debt. My situation is as follows: I earn $220,000 a year, I own my own home (no mortgage), have $40,000 in a term deposit, $300,000 in an investment trust, and $200,000 in super.
My question is, now that I am approaching 35 (I won’t be a footballer forever), how can I maximise my percentage growth?
BAREFOOT REPLIES: I wish all the professional sportspeople I have dealt with were in as good a financial shape as you!
Look, so long as you don’t do anything stupid with your investments (read: Bitcoin, investing in a start-up, punting on property), and so long as you resist the need to upgrade to newer. flashier digs you’ll be able to live out the rest of your days very, very comfortably.
You’ll never have to worry about money again: you have your home paid off.
You have $40,000 in a term deposit, which I’m going to call your Mojo. You have a decent amount in super.
You have $300,000 in a family trust (that’s hopefully invested in a low-cost share fund).
If you tick the dividend reinvestment plan (DRP) box and let compound interest do its thing over the next 30 years, it’ll likely grow to $1.5 million in today’s dollars.
The main thing you need to maximise is your income after you hang up your boots.
That’s where I’d be investing, in education, training and career counselling, because you’ve got everything else sorted. Well done!
SCHOOL LESSONS
ZOE ASKS: A couple of months ago I phoned my bank, and they thanked me for being a customer for 29 years.
OMG! Twenty-nine years of banking and nothing to show for it except $12,000 in credit card debt, a big mortgage and living pay cheque to pay cheque. Then I read your book.
I have now set up my “bucket” accounts with ME Bank, cut up three credit cards (and paid $2000 off them so far), renegotiated the mortgage interest rate, and increased my super contributions. I have learned that, at 37, it is not too late to gain control. I am so grateful to you!
BAREFOOT REPLIES: If I do the maths, it appears that you became a customer of your old bank when you were just eight years old. Hmmm, I wonder … Which Bank?
That’s the power of the Dollarmites program for CommBank: a survey last year by Choice magazine found that 46 per cent of Australians who opened their first account with Australia’s biggest bank had not switched to another bank.
In your case, CommBank gave you some crappy colouring-in books and threw in a kickback to your school ‒ then got to slug you with credit card interest for 20 years.
That explains why one analyst valued Dollarmites as being worth a staggering $10 billion to CommBank. Kerching!
Well done for seeing the light.
The Barefoot Investor holds an Australian Financial Services Licence (302081). This is general advice only. It should not replace individual, independent, personal financial advice.
Originally published as Barefoot Investor: Perils of the simple life
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