EDITOR'S OPINION

MONEY. IT’S TIME TO TALK – BY LUCY CORNES

May 6, 2017 | Reading Time: 5 minutes

I’ve long neglected my relationship with money. I found the topic boring and I didn’t really understand it – after all numbers and I don’t get along – I’m a creative! I’ve made all the common mistakes – signing up for credit cards and spending beyond my means – actually all of my twenties were spent doing that.

By the time I’d turned thirty, I was over credit cards and interest free schemes and could see them for the trap they are but still I was not much more enlightened on the subject of cash. I’m a spiritual person with an appreciation of physical responsibilities. In short I know that believing in the ‘The Secret’ is not enough to pay the bills.

Another shift happened at 30 – I was now self-employed having founded She Shopped in 2012. Being self-employed gave me an appreciation of the correlation between working hard and being rewarded but also a sense that I was actually in control of my earning potential. I had a newfound confidence (and perhaps a sense of pressure) that I could really contribute to my family’s financial goals.

But with grit and intentions, didn’t come any clarity on how to actually ‘get there’ and where exactly is ‘there’? It’s different for everyone, but for me ‘there’ is pretty simple like paying the mortgage, educating our three boys, the freedom to take an annual family holiday and the flexibility to be generous – if there is a cause I want to be able to chip in $50 on a GoFundMe page and not think twice about it.

At 35, with a thriving business, I felt like I had the means to work towards financial freedom, but the vehicle was missing, and not because I hadn’t looked for it! I’d read countless books – the words just melted into one making no sense, UNTIL I met The Barefoot Investor. Wow! Never in my 35 years have I sat down and read a book about finances in one sitting – and better still I laughed many times over. Turns out author Scott Pape, knows about money and he’s funny!

The book is laid out as a series of ‘Date Nights’ where on each occasion you get an element of your finances under control. I think it’s supposed to take you around 6 weeks, but being an Aquarian and wanting to do everything ‘yesterday’ I read the book in 6 hours and half-way though rang my husband and demanded he do the same. He was in transit at the time and picked up a copy at the airport and by the time his flight had landed he too was on-board.

I’m not going to spoil the book by revealing everything but here are five of my takeaways.

  1. It takes a year to become financially fit, and five years to achieve financial freedom. It requires both patience and discipline – boring but ok.
  2. There are some things you just have to get in order – your will (if you haven’t done this, I beg you) and certain insurances – if I get hit by a bus my kids will be devastated but they won’t lose the roof over their head.
  3. Know what it costs you to live each month – write EVERYTHING down – think mortgage, bills, school fees, petrol, etc. I had already done this step and the figure can be frightening. If the figure exceeds more than 60% of your total household income, it’s time to cut costs.
  4. Pape, uses a bucket system, where your income is distributed between four accounts – Daily (the essentials – mortgage, bills, etc.), Splurge (think lattes and dinner out), Smile (holidays and house renovations) and Fire Extinguisher (where you demolish your debt – could be credit card, mortgage or personal loans). This system is what was missing in my financial strategy.
  5. Everyone needs a Mojo account – which you access in case of emergency – FYI Jet Star sale flights to Bali is not an emergency – boo.

Six weeks after implementing The Barefoot Investor’s strategy I can already see we are on our way to financial freedom. My mindset has totally shifted, I feel like for the first time in my life WE are in control of our finances – and I highlight WE because if you are in a relationship it is critical you are both on the same page.

Now I hear a few of you say – please it’s easy for you to say, you have a great business and your husband’s job pays well too. That is true, but it doesn’t make us immune from financial crisis, in fact some of Australia’s most ‘affluent’ people are digging themselves into the depths of debt to keep up appearances in their ‘McMansions’ (as Pape calls them) and leased European cars.

More importantly, when I get excited by something I have to tell EVERYBODY, hence this column. I also phoned two close friends, let’s call them Darling A and Darling B.

Darling A, has good household income but along with her husband has accumulated about $17,000 in credit card debt, has an investment property that costs them more than it earns and is determined to put her four gorgeous kids though private education. Darling A was drowning and stressed to the max. Post Barefoot every single credit card has been chopped and together with her husband is making leaps towards becoming financially fit.

Darling B, is an inspirational single mum of three young children, who two weeks ago had her electricity disconnected. Disillusioned but determined, she had $79 in her bank account and decided to buy a copy of The Barefoot Investor – she told me this after she bought it. In two weeks she has taken herself though all of the date nights (after working, feeding, bathing and bedding the kids!), worked out her ‘what it costs to live each month’ figure and for the first time in forever has clarity on how she is going to independently become financially fit. Darling B, take a bow!

I will say my love affair with The Barefoot Investor is not without challenges – it’s taken an adjustment. I’m having to be more disciplined and that’s kind of boring for a frivolous soul, but his method is not unrealistically restrictive and I can see in five years-time our commitment is going to put us in really good stead. In the meantime I get to pay my mortgage, educate my kids, take an annual family holiday and donate to worthy causes – winning.

My only wish is that 20 year old Lucy met The Barefoot Investor and understood what he had to say. The upside is I’ll be trying my hardest not to let history repeat by sharing the strategy with my boys when they start working at age 15 or so.

I bought my copy from Dymocks – you can too by clicking HERE or from any good bookstore.

Join in the conversation by commenting below – I’d love to hear your money tips.

 

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