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Head for financial freedom the barefoot way

THE BAREFOOT INVESTOR

By Scott Pape

Wiley/Paperback/ 264 pages/$31.95

Available at major bookstores

WHAT'S THE BOOK ABOUT?


The Barefoot Investor

In The Barefoot Investor, Scott Pape provides nine "barefoot" steps to help you achieve financial freedom.

Written in a reader-friendly manner and peppered with interesting anecdotes of real-life people, the money management book is about getting a plan in place so that you can devote the best years of your life to the things that give you meaning and purpose.

An international bestseller, the book was first published in 2004 and has been extensively updated. This is its latest edition, printed in November last year.

Pape himself had lost his Australian home in a bush fire in 2014. In this book, he recounted what he did next to get back on his feet.

He went as far as providing scripts on how to converse with finance providers to negotiate and get a better deal on your debts and fees.

The steps in the book serve as a guide on how to pay off your mortgage and debts, and build a financially secure life. And you do not need a huge salary to achieve it. After all, it is not how much you earn but how much you save.

SEVEN KEY TAKEAWAYS

1. Just like any life goal, being financially free requires a strong commitment. Pape wants his readers to make a commitment to becoming a little wealthier each day.

2. Start a financial plan by dividing your income into three buckets - "blow" (expenses and some splurge money), "mojo" (safety money) and "grow" (long-term wealth). Put your money on autopilot by channelling your income into these accounts automatically. Pape recommends opening the "mojo" account with $2,000.

3. Go for cheaper investment funds with low fees, and sort out your insurance by determining your need for coverage and compare costs among insurers.

4. Regain control of your life by paying off your debts. This is where you can use your spare money into eliminating debts fast. His advice is to use debit and not credit cards.

5. It is generally cheaper to rent a home instead of owning one. But remember to save and invest the difference.

6. The book offers tips on buying a home, such as the importance of saving the 20 per cent deposit and checking on availability of government grants. The book's advice is to borrow less than what the bank will lend you. The repayments should generally be less than 30 per cent of your take-home pay, it says. And if you are planning on having kids in the next five years, factor in the drop in income and the rise in costs.

7. Buying an investment property is not the only way to make money in property. You can also buy property shares.

•Write in to lornatan@sph.com.sg if you have come across a good financial read. This will be a series of regular book reviews in Invest.

A version of this article appeared in the print edition of The Sunday Times on February 05, 2017, with the headline 'Head for financial freedom the barefoot way'. Print Edition | Subscribe