BORROWED
The Barefoot Investor changed my life, so this Friday is a thank you before it is a verdict. I read Scott Pape's book, a gift from my mum, in the months Stella was winding down, with debts to clear. I still run its buckets every fortnight. It also handed me my reading list. The Richest Man in Babylon came off Pape's shelf and onto mine.
Pape is a finance writer with a personality, and the book sounds like him on every page. He lays the system out as a how-to, each step easy enough to finish before the next one starts, and he fills it with case studies so a reader can watch each step at work in someone else's life. It is the money guide I wish I'd had at eighteen.
It gave me a system simple enough to run on a tired Tuesday, and a lot of Australians wanted the same. By mid-2018 The New York Times reported more than a million copies sold.
The system splits take-home pay by proportion. Sixty per cent goes to Daily Expenses and 10 per cent to Splurge, for spending now. Another 10 per cent goes to Smile, for the bigger treat with a date on it, and 20 per cent to the Fire Extinguisher, which puts out debt. Mojo sits apart as the emergency fund, and Grow holds the long money.
Then comes the step Pape calls domino your debts. He lists every debt from the smallest balance to the largest, pays the minimum on each, and throws everything spare at the smallest. When it closes, its repayment rolls onto the next. The maths favours the highest interest rate first, and Pape picks the smallest anyway, because a debt that closes in weeks gives a person a reason to keep going.
This was exactly the tool I needed to clear the fog of carrying debt. The first bill I paid off was to a photographer (thank you, friend) who had shot the cover of issue 18, the issue that never ran. I needed permission to tackle the smallest first, and one less bill was all the motivation I needed.
This was exactly the tool I needed to clear the fog of carrying debt.
Most of Pape’s system travelled to Port Moresby with me intact. Proportions work in any currency, and I ran my 20, 10 and 10 by hand until the last payment plan closed, then automated them.
Pape wrote for an Australian household, and it shows in two places. Grow leans on Australian super, where employers add 12 per cent of pay. Here employers add 8.4 per cent, and only at firms with 15 or more staff. His household is also a couple at a monthly date night, while ours carry a niece at boarding school, a haus krai contribution and a wantok's request. On Day 11 I gave those a block of their own.
My verdict. The Barefoot Investor gave me a structure that outlasted the debt it was built to clear, and I'm grateful to it. It travels as a shape, and I filled in the Pacific parts myself.
TOMORROW
A number, and what a coffee a day becomes in thirty years.
Best
Amanda
P.S. What’s your view on today’s newsletter? Did I miss something out that you’d like to share? Write to me, [email protected]. I may not get back to you, but I will try to read what you send in.
IMPORTANT NOTE
Wild Money is general information only, drawn from my own experience and research. It isn't financial advice, and nothing in it is a recommendation to buy, sell, hold or manage money in any particular way. What worked for me won't necessarily suit you. Please seek advice from a licensed financial adviser before making decisions about your own money.