The Barefoot Investor

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
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
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!
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
Increase your retirement investment to 15%
Boost your Mojo account to 3 months
- Use the Fire Extinguisher account
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
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
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

My distractions

The Barefoot Investor

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