interestingly enough there have been a few studies into the most successful ways to get out of debt.
spot on.
I AM not proud of what I did this week. I used my position in the media to blackmail a man. (And it worked.)
What follows is the true story of how I made a single mother $17,000 in 24 hours.
Let’s begin ...
Pop!
That’s the sound my brain made when I read the following email from a worried single mum:
Dear Scott,
I am an anxious 46-year-old single mum, raising two boys on $50,000 a year.
I have credit card debts of $17,000. The reason is that I invested in a wealth creation course but have not seen nothing from it yet. I am upset with my decision because I had no debts before that time!
However, I am expecting a gift of $12,000 and I should pay off the cards. But I have zero savings and want some security through having cash in the bank.
What to do?
Leah
I know what you’re thinking, dear reader — the same thing that was going through my noggin:
How the hell does a single mum wind up paying some wealth guru seventeen grand?
So I called up Leah and asked her that very question.
Single mum Leah.
MORE BAREFOOT INVESTOR
“Look, I’ve been a single mum for 10 years. I’ve been renting all that time. I guess I just wanted a better life for my boys,” she said.
Last week the corporate cops, the Australian Securities and Investments Commission, announced they will be sending undercover operatives to pursue property spruikers and identify shonky practices within self-managed super funds.
Well, boys, Leah’s gone undercover for you.
In August 2015, Leah attended a free wealth creation seminar at the urging of a friend. But the seminar was just a sales pitch.
“When I first arrived, my defences were definitely up — it felt like a cult.”
Yet over the course of the next three hours Leah was sucked in as the guru bragged about how wealthy he was, and explained that most people are J.O.B. (Just Over Broke). And that led to his pitch: sign up for a $3000 multi-day seminar and learn the secrets that the rich are keeping from you.
Spruiker: “Being successful with money requires many steps, but the most important one is giving me money”.
BAREFOOT: HOW NOT TO RAISE A SPOILT BRAT
Problem: Leah didn’t have $3000.
Solution: They offered her a deal — come up with $500 now and pay off the rest at $40 a week.
But the course was just a sales pitch.
When she attended the multi-day course, the spruiker spoke about the value of credit cards.
“He advised us to get multiple credit cards with multiple banks ... so when opportunity strikes you’re ready to invest and take action.”
Strewth!
Now here’s the interesting thing: just before signing up for the course, Leah had proudly paid off her credit card. However, in the communal confines of a multi-day seminar where everyone was getting excited, Leah applied for credit cards with National Australia Bank, ANZ and Westpac — total limit $17,000.
Next, he spoke about the benefits of opening a SMSF. And on cue, he introduced an accountant to the room who offered to set one up — at $2800 a pop.
“They explained that an SMSF is like a bank you can use to fund your property deals ... and that we could invest our SMSF money into property deals with his associate. I only had $42,000 in an industry fund, so I thought what the hell, and signed up for an SMSF.”
“It’s easy, just sign here and I’ll take your money”. Picture: Supplied
BAREFOOT: A PARENT’S PAINFUL DILEMMA
The spruiker then brought out his big guns, selling $50,000 ‘mentoring packages’. Leah didn’t take the bait. But as part of her course she’d qualified for a one-on-one ‘mentoring session’ a few months later.
But the mentoring session was just a sales pitch.
“I went in saying to myself there is absolutely no way that I will sign up to anything,” said Leah.
“He sat there in front of me with all the financial details I’d provided in the previous course. He said I was like a windscreen wiper (furiously working, but never getting anywhere) and that I needed to take action ... by doing his course.”
After an hour-and-a-half of hardcore sales pressure, Leah buckled.
But how would she pay for the course?
“He looked at me and said: you’re a single mother, you don’t have any money ... so we need to find another way.”
Remember those credit cards the spruiker advised Leah to open so she’d be “ready when opportunity strikes”?
Well, hot-diggity-dang, that opportunity had just struck!
The spruiker said he would give her a $5000 discount if she signed up for his $21,000 course “NOW!”
Spruiker: “This wealth creation system may look complex but it’s really simple — you give me thousands of dollars”.
BAREFOOT: MILLENNIALS HAVE TO DO HARD YARDS
Then he pointed to her financials and said “put it on the Westpac card”.
“It was a full-on sales pitch. I walked out of there feeling totally defeated.”
“So,” I asked, “he used high-pressure sales tactics to get you to hand over the money, huh?”
“Yeah,” said Leah glumly.
“Well, let’s give him a taste of his own medicine.”
BAREFOOT TURNS THE TABLES
I called up the organisation and (eventually) spoke to the head wealth guru (spruiker).
Spruiker: “I love the Barefoot Investor!”
Barefoot: “You follow my column?”
Spruiker: “Yes!”
Barefoot: “Awesome! Because next week’s article is about a wealth creation guru who pressured Leah, a broke single mother, into buying his $17,000 course ... on her credit card.”
Spruiker: “ ...”
Barefoot: “Look, I have a very special deal for you today ... but only if you act within the next 24 hours.”
Spruiker: “Huh?”
Barefoot: “Listen to me very, very carefully. If you give Leah a full refund — today — I won’t mention your name or your company’s name in the article I’m writing.”
Spruiker: “But ... you see ...”
Barefoot: “Look, I’m on deadline for the newspaper. If you want this, you need to commit. NOW!”
Spruiker: “I’ll transfer her the money today.”
Single mum 1, spruiker 0. Generic image
THE ULTIMATE OPPORTUNITY
“WHAT I’ve done is embarrassing,” said Leah, “but I am not a naive person. I’ve always been good with money. Being a single mum, I have to be. I have to run a tight ship.”
I don’t doubt her for a second, but everyone is vulnerable to emotional manipulation. Even spruikers, which is how we got her money back.
But I wanted her to go a few steps further.
After all, the only reason she started this nightmare in the first place was to provide a better life for her boys — and why the hell shouldn’t she?
So I gave her a copy of my book, The Barefoot Investor, and paid $1000 out of my own pocket to shut down her SMSF and help her roll her super back to a low-cost industry fund.
The other day Leah texted me to say her credit cards were now paid in full.
Of course the spruiker would say she’ll miss an opportunity. I say she’s just landed the ultimate opportunity — total control of her family’s finances.
Tread Your Own Path!
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They've already decided to offer credit cards.
Still have the highest interest savings account in the country.
