The Barefoot Investor – by Scott Pape

The Barefoot Investor – by Scott Pape

‘The only money guide you’ll ever need’

A bushfire raged through Scott Pape’s town and took everything form his family – their home, their farm, their sheep, and everything they owned. Their life’s possessions now amounted to a charred pile of rubble. And just as everything seemed to be falling apart, Scott looked in the mirror and said ‘I’ve got this’.

This book is all about helping you with your personal finances so that you too can look in the mirror and say ‘I’ve got this’. The book takes us through different stages of life: Plant, Grow and Harvest. There are specific actions littered throughout the book and tasks you should complete if you want to truly control your own finances. It’s well worth reading and putting into practice. The ‘bucket’ strategy of managing your money without budgeting is amazing!

Grab a copy of the book here: https://www.bookdepository.com/The-Barefoot-Investor-Scott-Pape/9780730324218/?a_aid=adamsbooks

 

Here is a dot point summary of the book!

 

Synopsis

Once you have the systems in place, you are free. Free from excuses, second guessing, free from constantly worrying about your financial future

Goal of the book: control

 

If you have left it too late. BF Stop and tell me what age you’ll be when you die

 

See the situation for what it really is and have the courage to change it

 

Most people budgets don’t work. They set you up to fail.

 

Step 1: Set a monthly barefoot night

Make it a ritual to focus on money every now and then

  • Do not just go with the big banks. They have the bigger overheads. Find a good savings account
  • Get some MOJO.
  • Get a low fee interest fund that takes the index. One of the best decisions you will ever make
  • Super can gobble up a third of your savings in fees
  • Get a fee for service financial advisor
  • With insurance choose a higher excess
  • Debts are a symptom of the real problem: out of control spending. Self storage business is booming. Learn to live with less stuff probably the best decision you will ever make.
  • What do you have from 5 years ago that gives you happiness today? What time did you trade for it.
  • In Australia/USA/UK  if you earn average salary you are top 0.28% of world. Everything is marketed for you so you think we don’t have enough.
  • Buy things that will impact your life. Like a good pillow and undies

 

Step 2 Set Up Your Buckets

Budgets are really hard to stick to. Make everything automated. Simplify your choices. Willpower is a limited resource.

 

Benchmark: Live off 60% of your income

  • Allocate 60% for netflix, food, housing, gym etc

 

Mojo Bucket:

Have an account with 2K in it

 

Grow Bucket

  • 10% into super
  • Property investments
  • Rolled over super funds

 

Splurge Bucket

  • 10% on anything that makes you feel good. Shoes, booze, lattes
  • Have different cards for each

 

Smile Account

  • 10% for saving something special. Example laptop etc

 

Fire Extinguisher

  • 20% to domino debts or save for your house

 

Step 3 Domino Your Debts

Who taught you about money?

  • Page 81. Cred. The cool dude, hey kids wanna be cool like cred?
  • Financial control isn’t about net worth. It is about self worth
  • I love my platinum card! The guy at the 711 doesn’t care, he thinks you’re a wanker

 

Part 2 Grow

How to double your income?

Just make the conscious decision to turn your income tap and let the money gush into the right buckets.

Start off working for free. Then do freelance work. Then take on more than you can handle. Make the transition to full time freelancing.

 

Earn 5K in one hour?

Spend 1 hour thinking about goals before performance review. Put goals into your calendar.

 

Swing on the trapeze. Don’t move until your safely holding the next.

 

Step 4 Buy Your Home

  • Aus has highest property, highest debt in world
  • Interest rates are low so paying debt is kind of manageable at the moment
  • Economist mag has labelled Aussie housing market biggest financial bubble in history.
  • However, Barefoot thinks owning your own home is like a forced 30 year savings plan
  • Don’t wait for a crash
  • Don’t buy a home you can’t afford
  • Don’t buy an investment property first
  • Don’t rent and forget to save
  • Consider other options

 

Step 5 Supercharge your wealth

Should I buy an investment property?

People think property doubles every 7-10 years. Starts now at 741K. Impossible (pg 138)

Property returned 2.1% per year after inflation

No one looks at the real costs. They just look at sale price – buy price

The reason house prices are at record highs is that we have taken on record debt at a time when interest rates at record lows.

When it comes to investment, it’s all about cash in your pocket. Everything else is speculation

Average investor underperforms the market by approximately 7.4% every year.

Become a business owner. Buy shares. Boxing day sales in crashes.

 

Step 6

Boost your mojo to three months

 

Step 7 Get banker off your bank

  • Pay down debts
  • Be satisfied. Don’t go on a chase on the never ending story

 

Step 8 Nail Retirement Number

 

Step 9 Leave a legacy

 

 

 

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