If you haven’t heard about The Barefoot Investor and you are reading my blog, please stop right now and follow this link.
If you have, that is awesome. Let’s talk about the brilliance that is Scott Pape, AKA Mr Barefoot.
I have just finished reading his book, The Barefoot Investor: The only money guide you’ll ever need. I think he may have a point. It’s a pretty damn good book.
How’s that for a review?
To break it down a bit more, Scott unravels the whole financial world in about 250 pages. He gives a step by step process for getting yourself out of a financial fire and into a place of prosperity.
It’s not about getting rich quick. It’s just simple practical steps to set you on a path to financial freedom.
Scott starts by giving a clear cut way to set up your accounts or “buckets” (go for fee-free BTW), and a process to crush any credit card debt or personal loans. Then he explains, simply and clearly, how to grow wealth.
He’s a fan of people buying their own home, mainly because it’s an enforced savings plan. Scott recommends saving up the whole 20 per cent deposit because you won’t have to pay thousands of dollars for lenders’ mortgage insurance.
He also cautions against believing your bank in this little nugget:
A pre-approval for a loan doesn’t mean they’ll give it to you. It’s a lot like getting a number from an attractive woman at a nightclub. You’re a long way from being invited back for coffee – and it may turn out she gave you the wrong number just to blow you off…
But most importantly – don’t jump the gun on buying a house because of FOMO (fear of missing out) and don’t buy one you can’t afford and risk becoming a “postcode povvo” (read the book to find out what this is).
He’s not a fan of buying investment properties. Instead, he says the share market is a long-term winner when taking an “unemotional view of historic returns” into account. The damage is done when people, fearful of losing their hard-earned money, freak-out and sell at the first sign of a downturn.
The secret, he says, is to buy shares within a direct investment option of a low-cost super fund (read: tax benefits), while also boosting your existing super investment option (i.e. balanced) to 15 per cent of your gross wage.
Scott’s book also gives advice on how to invest for your kids, and how to save three months of living expenses in a “mojo” account so you never have to worry about money again.
In the last part of the book, he explains why it’s so important to “get the banker off your back” and own your own home (i.e. pay off your entire mortgage). Then he lays out a retirement strategy where you don’t need to have over a million dollars in your super fund.
BUT here’s the kicker: the critical part of the book (IMHO) is the first chapter where he encourages everyone to schedule a monthly (or weekly) “Barefoot Date Night”.
I think it’s so important for couples to be on the same page about their financial future – you’re in this together! My husband and I have locked in our first official “Barefoot Date Night” for tonight after a few months of ‘financial check-ins’. This feels different though because we are actually making a commitment to follow a proper plan to change.
We might not see results overnight or even in a year, but in five or six years time – who knows where we will be?
Seriously, there are so many nuggets of gold in this book, get yourself a copy if you can. No commissions here – I just think it’s a great book and it could change your life.
Have you read the book? What did you think?