Thursday 13 September 2018

The Barefoot Investor

A separation and divorce makes you reconsider pretty much everything in your life and I've been doing quite a bit of reconsidering lately. Of course there are so very many changes over this time, some positive, some not so much, but there are also many new horizons, new opportunities, many new and different ways of looking at and doing things. One of the big ones is the way that you do things with money. It can take a while to realise that this doesn't need to be the same as when you were married. Especially if that way wasn't working particularly well for you anyway. It's important to do things your own way now.

I'd never paid all that much attention to our finances during the marriage. I earn a good wage and I thought that that would be enough and things would just happen. Well, they don't just happen, you still need to do things to make them happen. But I'm doing those things now.

I've come a long way in the past three years, and more particularly in the past year. I'm debt free (apart from the mortgage) but things can always be better. I've come to realise that just because things had been done a certain way for the past 20 years they may no longer feel right, that way may not fit me any more. I've already changed a lot of things that I do in my life. So, it was time to really look at matters financial.

I reserved The Barefoot Investor at my library and got cracking. The Barefoot Investor has been huge over the past few years, with over 850,000 copies sold! Clearly lots of people have found Scott Pape's methods helpful. It's a quick enjoyable read for a finance book, although I found his jocular, blokey banter a bit much at times.

A lot of the Barefoot message is about empowerment and control, control over your money and your life.
The goal of the Barefoot Investor can be summarised in one word: control

Scott has nine steps to financial freedom. 
Most are very sensible things. Consolidate and pay off your debts. Have a buffer for emergencies. Buy your house. Get your super in order. He has a specific way of doing this with multiple buckets (separate online accounts where you parcel off your money).

The bucket system doesn't appeal to me really. I don't want to do that, so I'm not going to. And I don't think I need to. I'm starting this process at Step 7.

I do like that he doesn't like budgets though. I really don't like budgets and don't work well within one.

For most people, budgets don't work. They're like surviving on a grapefruit diet. 
Budgets set you up to fail. You feel like a loser with no willpower. 

But Scott Pape is big on conscious spending. Which dovetails very nicely with the decluttering and minimalistic (lite, super extra lite minimalist) approach that I've been trying to adopt of late.

Environment Victoria says the vast majority of what we buy ends up in landfill within six weeks of purchase. 
Six weeks! Can that really be true? I don't see how. Food and consumables sure. But the rest of it? It's hard to imagine. 

Scott's sensible advice has helped me work out my priorities, and some strategies.

Become an investor, not a trader.
Make saving automatic. Increase your pre-tax super to 15% (or up to $25, 000 - the current annual maximum). 
Super should be the centrepiece of your long-term investment program.
The best place to invest your money for the long term, regardless of your age, is super.
Your greatest investment weapon is time. 
Great. Time isn't exactly on my side, but I can certainly make use of the time I have left as a worker. Speaking of which, Scott is a big advocate to "Never, Ever Retire"! What? I've just really started thinking about how to make retirement happen, and now he's telling me I shouldn't ever retire... Well we'll see about that I guess.

I wish I had made many of these decisions and changes years ago. But I didn't, and there's nothing I can do about that. But I'm making the right moves now. Scott likes to say "I've got this". I haven't got it yet, but every fortnight it's coming closer. And I might just get myself a new pillow. 

You can listen to Scott Pape on a podcast with Mia Freedman. 


Marg said...

I guess it's never too late to start doing the right things. Every little bit helps

Louise said...

It does indeed Marg. I've made little changes that have made a huge difference. I just wish I'd done it sooner and not been so complacent.

Deb Nance at Readerbuzz said...

It’s nice to hear how you have taken this difficult time and used it as a time of reflection and conscious change.

I do like budgets, though. I like realistic budgets, with plenty of room for things like, well, the occasional book purchase. We’ve always had a budget since the days we were living on one small income to our extravagant-no-children-at-home days to now, our retirement days. It comforts me to know how much we are taking in and how much we can spend, to know we are saving some every month for those times when we will have to spend a lot of money suddenly. It’s not a grapefruit diet at all; I could never do that for more than a month or two. Instead, it is a well-thought-out delicious and nutritious menu that I can easily live on for the rest of my life.

Oh dear. I’ve gotten quite preachy, I think. I’m afraid my accountant father has had more influence over me than I realized.