Most people know I’m a barefoot investor fan, and they know I wish Scott Pape’s editor chopped 97% of the windbag words from his book.
Here you go. A solution:
Here is MY version
For too many years I avoided this money-finance thing.
Its really scary.
- Mistakes are expensive.
- Ignorance is expensive.
- Expensive mistakes are stupid.
- You are a bad person who will never be not-stupid, dying alone with cats eating your face.
It sounds trite, but most money mistakes only cost a bit of time, while not making the mistakes costs a lot of time.
Most money mistakes are of the ‘you get 2% interest instead of 6% interest’ kind.
So don’t be scared.
How to fix this crap
This looks hard, but it ain’t complicated
- List all your bank accounts, list all your debts
- Automate next months bill payments so they go out just after payday
- 10-15-20% of your income goes to the automated payments of the “Fire-hose”
Direct the Fire-hose payments at one thing at a time.
- Setup a MOJO account of $2000 for disasters and emergencies.
- Pay Debts with the Snowball method
- Increase your MOJO fund to 2-3 months cash so you can leave your job if long term unhappy (or other disaster)
- Get into house with 20% of the mortgage as a deposit (this is obviously deferred for Tanz and me)
- Invest/Pay mortgage faster
So you have paid your bills, and are fixing your future. You can spend the rest on beer and Russian dolls. Whatever, I don’t care. Neither should anyone else.
Kill your credit card. Kill the stinking thing.
- Banks feed on your debt like leeches feed on a hemorrhoid.
- Some people can get them to work. But they aren’t reading this, are they?
- With your MOJO fund, you don’t need a credit card for emergencies.
- Travel with a travel card, you don’t need a credit card
- You can use your normal debit visa/MC card to pay on-line. You don’t need a credit card.
- etc. You don’t need a credit card.
You know what I’m saying here. Kill your stinking credit card.
Scott also says superannuation is great for tax purposes, but management fees will rip you off.
In AU there is HostPlus, while in NZ there is SuperLife.co.nz to sidestep management fees.
ETFs, ETFs, ETFs.
I can’t currently invest long term in property, and in AU property is a terrible short term investment. So I’ve invested in ETFs.
I’m possibly too aggressive in my share portfolio but I looked at the Vanguard 100 portfolio and modeled it on that.
In retrospect I could have just invested in the Vanguard 100 portfolio. Or the SmartShares version in NZ.