Barefoot Investor Scott Pape. Picture: Graeme Taylor
Barefoot Investor Scott Pape. Picture: Graeme Taylor

How demolishing debt can set you free

The first time, my wife flung her arms around me and, through tears of sheer joy, whispered, "We're pregnant".

The second time, she raced up behind me and squealed with delight.

The third time, she pushed open the dunny door, locked eyes on me, and threw the pregnancy stick at my head.

And the fourth time - which happened a few weeks ago - she was purely practical: "We're going to have to buy a Kia Carnival."

"A people mover?" I protested.

It's been voted the most unsexy car for the past 13 years straight.

For the record, we're both over the moon to be soon bringing a brand-new member to our happy family … it's just that when you get to the fourth things become a little bit more, shall we say, structured.

Interesting factoid: when we sat down with a priest for pre-marriage counselling, she asked us separately to write down how many kids we planned on having: Liz wrote down three, I wrote down six. So I'm winning.

But am I really?

Kids are expensive, but they're awesome. Unlike buying a slab of beer, it doesn't get cheaper the more kids you have. According to a study by Suncorp, the average Australian parent spends $297,600 raising a child to age 17.

And that doesn't include the Kia Carnival. Honk! Honk!

Tread Your Own Path!

P.S. I'm off for a couple of weeks for school holidays - it sure will be a change to have the kids at home! My wife has got a hankering for hamburgers, so I'll be flippin' burgers to satisfy the cravings of a pregnant woman.

See you in a couple of weeks.




GREG WRITES: I am halfway through your book (my wife made me read it … thank God). We have $46,252 of high-interest credit card debt and no assets. For the first time I see a glimmer of hope of getting out from this noose of debt.

We are following your book and I am going to trust it works, because I cannot see any other way out. The thing is, we go to church and are encouraged to give away 10 per cent of our income.

Should we use that 10 per cent to get out of debt instead?

BAREFOOT REPLIES: I guess this is the Barefoot confessional!

If you are really committed to tithing and believe in what you're doing, why are you writing to me about it?

I'm not going to get in between you and your God, or between your bedsheets and your balance sheets.

Some people have criticised me for not being prescriptive enough … but I'm not the sort of person who likes someone telling me what to do.

So you do what's right for you, your marriage and your God.

I'll just say this: Let's say you're both earning $60,000 a year. Combined that works out to be $8000 a month in the hand, and $800 in the Sunday tip jar.

If you paused your tithing and put the money against your debt, it would save you $120,585 in interest, according to the ASIC MoneySmart credit card calculator, and get you out of debt in a few years.

And then you'd be in an even stronger position to do God's work.



Unlike buying a slab of beer, kids don’t get cheaper, the more you have.
Unlike buying a slab of beer, kids don’t get cheaper, the more you have.




EMMY WRITES: Hoping you can help a stripper out!

I am a 25-year-old stripper from NSW, and I have just read your highly entertaining book. I would love your advice on budgeting.

In my line of work, I can never estimate how much money I am going to make each week - some weekends it's $3,000+, some weekends it's less than $500. How do I manage this? 

BAREFOOT REPLIES: I know what you're doing … trying to get my attention with that opening line.

And you know what?

It worked.

My first thought is that being a stripper would be the ultimate cash business.

I mean, your clients literally throw money at you!

Then again, you'll still face the same financial issues as any self-employed person.

My book sets out how I personally manage my own money … I'm self-employed, and it works for me!

That said, you need to do three things:

First, set up a separate bank account and deposit all the cash you receive.

The ATO data-matches billions of transactions, and they target people working in professions where cash is received.

Report your tips in your tax return (usually at Item 2: "Allowances, earnings, tips and director's fees") and claim any legitimate work-related deductions (lingerie and the like), as with any job.

Second, transfer 35 per cent of whatever you earn into a separate tax account so you'll never be caught out at tax time.

Finally, work out the absolute minimum you need in your "Daily Expenses" bucket and set up your other buckets by following the plan in my book. Any extra you earn after that should be applied to working through the Barefoot Steps, which will keep you growing a little wealthier each day.

People keep telling me that my "three jam jars" system for kids doesn't work because nobody uses cash anymore … maybe they need to come and see you at work!



BEC WRITES: I am in my early thirties and feel hopeless.

Recently I lost my brother to a very long and hard battle with cancer, and in his will he left me $10,000. I was thinking about spending it on a holiday or a nice piece of jewellery to remember him by, but I also have a $20,000 credit card debt that I have struggled to pay off for the past 10 years. Would you put it towards the debt or go on a nice holiday to get away from all the painful memories?

BAREFOOT REPLIES: I'm sorry for your loss.

Here's what I think: I think that losing your brother is a tragic, heartbreaking reminder that life is precious.

Bec, life is far too short to spend it being a slave to a bank.

And make no mistake: while you're paying them $3600 a year in interest, you're effectively a financial slave. If you keep on paying the minimum, it'll take you 54 years to be free (and that's if you stop spending on it today).

I think you should honour your brother, cut up your credit card right now, and live the rich life that he can't.

Make him proud.



WENDY WRITES: Thanks to your advice my friends have paid off their mortgage. They are a young family with four children. He is a school chaplain who earns very little but is dedicated to his job and his community.

I would be so grateful if you could flick them a quick email of congratulations - it would mean so much to them. His name is David and his wife is Emily.

BAREFOOT REPLIES: I can do better than that - I can celebrate it with a few million of my fellow Barefooters, right here.

You bloody ripper!

Well done, David and Emily. You've achieved a goal that will change your family's life in more ways than you know.

You're now on to Barefoot Step 8: "Nail your Retirement Number", which is so much easier when you have the banker off your back. It means you're able to focus on my favourite step of all, Step 9: "Leave a Legacy".

That's when you know you're really wealthy.



If you have a money question, go to and #askbarefoot


The Barefoot Investor holds an Australian Financial Services Licence (302081). This is general advice only. It should not replace individual, independent, personal financial advice.


The Barefoot Investor for Families: The Only Kids' Money Guide You'll Ever Need (HarperCollins)RRP $29.99

Originally published as How demolishing debt can set you free