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Rensberry.com

The Barefoot Investor

  1. Schedule a monthly date night
    Spending time with your family and friends is a direct predictor of well-being - one of the best things for your relationship </p>

    • Your most powerful financial asset is not your home or car: it is your ability to earn an income.
    • You can live like a multimillionaire today by cutting back on meaningless crap and diverting your spending to the little luxuries you use every day.
    •  Set up Bank Accounts - Share accounts with spouse - Have an agreement on amount to spend on whatever (\$400 in book).
      1. Account #1: Daily Expenses (High interest/no-fee online checking account) - everyday transaction account
        1. Account #2: Smile (High interest/no-fee online savings account) - link to Daily Expenses
          • For big goals - vacations, etc
        2. Account #3: Fire Extinguisher (High interest/no-fee online savings account) - link to Daily Expenses
          • Set up automatic transfer with each income in
      2. Account #4: Splurge (High interest/no-fee online checking account) - everyday transaction account
        • Account to spend money on things that make you feel good (shoes, booze, lattes, whatever)
        • Set up automatic transfer with each income in
      3. Account #5: Mojo (High interest/no-fee on-line savings account from a different bank) - Emergency Account
        • Insurance:
    • Only insure against things that can kill you financially
      1. Choose a higher excess (deductible)
      2. Don't automatically pay your insurance premium each year
    • How to increase income:
      • Make a commitment to earn more than last year
      • Do your homework:
        • Look at your position description from your boss's point of view
        • Write down 3 fundamental tasks
        • Set an ambitious goal for each task over the next 12 months
        • Take control of your performance review
        • Present your list of prioritized tasks and goals and ask for feedback
        • Put goals on a calendar
        • Casually follow-up with your boss over the next 12 months
      • Get a side income - Freelance
  2. Set up your buckets

    1. Blow Bucket (Daily Expenses, occasional splurge and some extra cash to fight financial fires) - Deposit Income here
      • Live off 60% of your income - goes into Daily Expenses account
        • Housing (30%)
        • Utilities (5-10%)
        • Transportation (5-10%)
        • Insurance (5%)
        • Food (5-10%)
      • 10% goes into Splurge account
      • 20% goes into Fire Extinguisher account
    2. Mojo Bucket (Safety money)\
      • Set up initially with \$2000
    3. Grow Bucket (To build long-term wealth and total security) - Investments/Retirement
      • 9.5% of wages in Australia
      • Use plain Jane index-tracking funds
      • Property investments
      • Retirement accounts
      • General Investments
  3. Domino your debts - Debt is slavery
    1. Car loan
      • Get rid of it - don't pay interest on something that's rapidly falling in value
    2. Credit card balances
      • Pay off the smallest balance first
    3. Domino 1: Calculate
      • Line up all your debts other mortgage
    4. Domino 2: Negotiate
    5. Domino 3: Eliminate
      • Cut up cards
    6. Domino 4: Detonate
      • Financial fire - Use Fire Extinguisher account (20% of take home income)
      • Pay the smallest completely off first
    7. Domino 5: Celebrate!
  4. Buy your home
    • Save for a deposit - 20% down
    • No mortgage insurance (PMI)
    • Use the Fire Extinguisher account
    • Always borrow less than the bank will lend you
  5. Increase your retirement investment to 15%
  6. Boost your Mojo account to 3 months
    • Use the Fire Extinguisher account
  7. Get the banker off your back
    • Use the Fire Extinguisher account
    • Two ways to pay off your mortgage more quickly:
      • Lower your interest rate
      • Make extra repayments
  8. Nail your retirement number
    • You do not need a million dollars to retire
    • At a minimum you needs a paid-off home and 250K for couples in Australia's Super (Probably like Roth IRA in USA)
    • Comfortable retirement which AFSA says costs \$60,262/yr for couples and \$42,764 for singles
    • How to do it:
      1. Pay off your home
      2. Get the age pension of \$33,573/yr (per couple). The \$250 in Super allows for tax-free income of \$12,500/yr
      3. Never, ever retire
        • You can change your job, but just keep working
    • As you retire (3 years before retiring) :
      • Mojo bucket goes from 3 months to 3-5 years:
      • Fire extinguisher into maxing out pre-tax super contributions (Grow bucket)
      • Invest into cash or fixed interest - not shares
  9. Leave a legacy
    • Legacy Folder:
      • Advisors: write all contact details of accountant, lawyers, stockbrokers, and other professionals
      • Bank Accounts: Include all account details and passwords and any outstanding loans
      • Investments: Print off latest share portfolio
      • Insurance policies: Include all policies
      • Funeral instructions
      • Personal documents: Include birth certificates, marriage certificates, drivers license copy,
      • passport, etc
      • Passwords: Be comprehensive
      • Up to date Will: Name executor and enduring power of attorney

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