General Advice Warning. The information on Dad Mode is intended to be general in nature and is not personal financial or product advice.
My journey towards financial stability started a few years ago when I met my wife.
Before this point, my main financial principle was a self-righteous aversion to saving money, solely based on the belief that I didn’t need to.
For some reason, I thought I was smart enough to just ‘make more’ in the future. Why would I sacrifice spending money on what I wanted when I was on my way to making millions next week? Seemed logical at the time.
I met my wife just before financial disaster struck, and she set me on the straight and narrow.
Thankfully, my taste in women was better than my mindset around money…
I finally had something to save for.
Now I had the motivation to sort my finances out, but I didn’t have the skills.
After listening to a few podcasts, I never really found anything that clicked. My motivation was starved of strategy. I was going nowhere.
Until one day I saw a poster that changed everything….
Here’s how it went down. I was stuck in traffic on a busy road in Melbourne, staring aimlessly out the window. My eyes skimmed over the plastic bags and cigarette butts littering the ground. My gaze eventually locked on to some band posters on a nearby fence. After sifting through who had upcoming shows (no one interesting), I noticed an unfamiliar face staring back at me. Glued onto the fence was a poster of a bloke with a friendly smile on his face and no shoes on his feet.
“The Barefoot Investor, what a stupid name for a band” I thought to myself.
Was this some new alternative folk-rock group fronted by a middle-aged dad?
With a closer look, I saw it was, in fact, a middle-aged dad. He was claiming that he could help me with money. Admittedly, I was a little disappointed that it wasn’t a band. Dad-folk-rock is my favourite genre, after-all. His face and name — Scott Pape — stuck in my head nonetheless.
Fast-forward a week and I have his book “The Barefoot Investor” in my hands, and I am devouring it.
After finishing the book, my mind was blown. Never had I seen personal finance strategies that were so easy to put into action. It always felt as if you needed a degree in economics to get your money right.
I immediately began to implement the barefoot strategies and actually started to feel an increase in financial control as soon as I got my next pay.
Once you decide to get things in order, you can start to feel better immediately.
My savings began going up as my stress was going down.
Fast-forward six years, six moves, and quite a few jobs later, and we are well on our way to financial security. We even funded our wedding (in our garage) and had two kids!
The kids I can’t credit to Scott (obviously) but what I can say is that he has given us the financial security we needed to take the leap into parenthood.
Scott is most well known for his ‘domino your debt’ and ‘cut up your credit card’ personal finance strategies, along with his friendly and approachable writing style. But there is so much more to him than that.
The Main sections of his book, The Barefoot Investor, are:
Monthly Date Nights - How to make personal finance planning enjoyable with yourself or your partner. Dinner and wine included!
The Barefoot Investor bank accounts (buckets) - Where to send/store your money in the simplest and most effective way possible. (Bonus bucket at the bottom of this article)
Domino Your Debts - Psychological strategies for paying off debt to make it easy and fun.
Buy Your Home - The when, how and why of buying your home in Australia.
Supercharge Your Wealth - The name says it all, this section covers strategies to increase your wealth over the long term. No get-rich-quick schemes here folks…
Boost Your Mojo to Three Months - How much money should you have in your emergency fund? What do you need to get your mojo back? What is mojo anyway?
Get The Banker Off Your Back - Paying down your mortgage can feel like you’re standing at the bottom of a rocky mountain, and you aren’t wearing any shoes… Scott covers some strategies that help you get to the top.
Nail Your Retirement Number - How much do you actually need in your superannuation to retire? Should you retire at all?
Leave a Legacy - If you were in a secure financial position, what impact could you make to those around you? Build your wealth first, then help others.
Although the book is simple and easy to follow, you still have to be motivated to make a change, things won’t get better without you actually doing the work.
With the right strategies and CONSISTENT action, you can do big things, and the process laid out in the Barefoot Investor is a great way to start.
What would I add to The Barefoot Investor?
Now I want to avoid cutting Scott’s grass (Aussie slang, look it up) but my wife and I have added an extra ‘bucket’ to his budgeting method that, we feel, has transformed our spending and saving. We never worry about missing bill payments anymore, and I always know how much money I have leftover for fun stuff (like investing).
Here’s our strategy. I like to call it…
Making Direct Debits your bitch!
But you can call it whatever you want.
Here’s how it works.
1. Automate your expenses
Try to automate as many of your fixed expenses as possible. An example of this is getting your household products on subscription, like toilet paper and washing detergent. This does two things. First, it makes sure you’re never caught out on the loo… And second, it makes your regular expenses easier to predict. It’s the same bill, every month. Obviously, there will be things that will vary, like groceries and fuel bills, but try to automate as much as you can.
2. Calculate the total
Next, list out all of your regular bills on a spreadsheet (sorry Scott, I know you don’t like spreadsheets). This should include rent/mortgage, loan repayments, toilet paper, phone bills, and anything else that doesn’t change. The pay frequency of each of these may be different, so you may need to do some maths here.
Work out the cost of each expense based on the frequency of your pay cycle. So, if you are paid weekly but some of your bills are due fortnightly, halve them, and you will get the weekly cost. Once you have each individual bill done, add them all together. You will need this number for step 4.
3. Open a new account
This part is crucial! Open a separate account just for bills. Ours is called ‘Bills’ as I’m a creative genius. Set up all of your direct payments to come out of this account.
4. Feed ‘Bills’
Now to fund the bills account. Each time you get paid, you need to deposit the amount you calculated in step 2 into your bills account. We have an automated transfer set up on payday, so we don’t have to think about it. It’s also good to have $10 buffer added on just in case something changes slightly (and also in case your maths is wrong, mine usually is).
Once this system is set up, all of your regular bills are taken out as soon as you get paid. You will know exactly how much money you have to spend/save, and you’ll never have to pay late fees again.
A bonus tip is to have a regular investment come out of your bills account. If you treat it like an expense, then you’ll eventually forget about it and your portfolio will grow all on its own!
I know that this looks complicated and annoying to set up. But trust me, it’s easy, and you’re going to love how much more relaxed you are about your bills.
So what are you waiting for? Go out there and read The Barefoot Investor. It’s time to feel the grass between your toes.
You can pick up a copy HERE. It will change your life, even if it is missing the ‘Make Direct Debits Your Bitch!’ chapter.
All hail King Scott.
Tread your own path!
See you in the next one xx