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The Barefoot Investor Summary

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Quick Summary: “The Barefoot Investor” by Scott Pape is a three-part nine-step manual to financial freedom and everything that comes with it: security, independence, happiness. Dubbed “the only money guide you’ll ever need,” the book uses simple language and even simpler “do this-do that” rules and techniques to achieve its goal; and it has – for millions.

The Barefoot Investor Summary

Who Should Read “The Barefoot Investor”? And Why?

“Money may not make you happy, but the research shows that not being in control of your finances will make you very unhappy.”

Thus says Scott Pape, but we don’t need him or scientific studies to be reminded of this dreadfully accurate axiom.

However, we do need at least one of them to get the upper hand and start being in control of our finances.

The Barefoot Investor is a great way to do this. Recommended for anyone struggling to live a financially comfortable life.

The Barefoot Investor Summary

“Without my knowledge or approval,” writes Scott Pape in the “Prelude” to The Barefoot Investor, “the Department of Environment and Primary Industries had rolled up at first light and begun destroying my surviving sheep. Apparently, they can do that when your farm is declared part of a disaster zone.”

“Two chimneys and a pile of rubble were the sum total of a lifetime of possessions,” he adds, after witnessing with his wife Liz the destruction. “Her wedding dress. Tea cups. The few last remaining photos of her late father, who had died 10 years earlier. Butter knives. All of my baby son’s clothes. All of his toys. Everything was gone.”

And when everything was falling apart, three words came to the mind of Pape: “I’ve got this.” That’s when the idea for this book was born.

It’s also the moment when another idea came to Pape’s mind: to plant an apple tree.

Because that’s where everything starts.

And it’s a process afterward.

“After all,” Scott writes, “you don’t plant an apple tree on a Saturday and then come back on Sunday and stand with your hands on your hips and scowl: ‘Where are my freaking apples?’”

What you do instead is quite simple: you just plant the tree and wait. 30 years later, your sapling will transform into a” big, beautiful tree with thick, strong branches that you attach a rope to as a swing for your grandkids to play on. And the apples feed your entire family.”


Because that’s how nature works: plant → grow → harvest.

Well, that’s how money works as well. And The Barefoot Investor is here to take you through the whole process.

Bonus: the author himself has summarized it on his website.

But – to our job.

Part 1: Plant

“It’s time to get your hands dirty” – that’s how Pape introduces his journey to wealth. And then he demonstrates, in three steps, how you can plant the seeds of your future wealth.

Step 1: Schedule a Monthly Date Nights

Most people overestimate what they can achieve in one year money-wise, but underestimate what they can achieve in half a dozen years.

So that you do not become one of them, a good place to start is, well, with a date.

May it be your partner, your friend, your special friend, or even yourself – but the monthly Barefoot date night is a prerogative.

For three reasons:

#1. It will make you happier.
True, it may seem like such a silly idea, but Scott Pape promises you that, in time, you’ll grow to like them so much that you’ll look forward to them.

#2. Because it’s the two of you against the world.
If you want to make a good family financial plan, then you need your partner on board. You’ve got to work together and the Barefoot date nights make that possible. If you’re single – don’t worry: then you don’t have to play the partner mind games: you only need to look after yourself.

#3. Because there’s no such thing as ‘get rich quick.’
True, there are many people and books which say the opposite, but, even truer, only a naïve person would ever believe this. It is a process, and you need to manage it.

Use these barefoot date nights to look at things such as bank fees and superfunds: if you are not paying zero fees and you don’t have a superfund, then you’re doing something wrong.

But let’s not get ahead of ourselves.

Step 2: Set Up Your Buckets

We already told you, in our summary of The Automatic Millionaire, that self-discipline and willpower don’t work; what works is automation.

Well, this step introduces you to Pape’s “Serviette Strategy,” his “simple, three-‘bucket’ solution where you put your money on autopilot, so you’ll never have to worry about it again.”

How does it work?

Just allocate your income each month in three buckets:

Blow Bucket, “for daily expenses, the occasional splurge and some extra cash to fight financial fires;”
Mojo Bucket, “to provide some ‘safety money” (online savings account with another institution; reserve $2,000 in here on your first Barefoot date night); and
Grow Bucket, “to build long-term wealth and total security” (9.5% of your wage reserved in an ultra-low-fee superfund).

Allocate further by using this simple strategy to distribute the money in your Blow Bucket:

Splurge Bucket (10%)
Smile Bucket (10%)
Fire Extinguisher Bucket (20%)

As for the rest 60%?

Well, they are (understandably) reserved for daily expenses and define the Barefoot benchmark, the money necessary for you to run “You, Inc.”:

• housing (rent or home loan*): 30 percent
• utilities (power, gas, water, broadband, phones): 5–10 percent
• transport: 5–10 percent
• insurance: 5 percent
• food: 5–10 percent.

Step 3: Domino Your Debts

Now, you don’t need Pape to tell you that we’re living in an empire of debt: half of the things we own we don’t actually own and could lose every single moment.

You don’t need that stress in your life, so it’s time to do away with it.

Time to domino your debts!

And to do that, there are only five dominos you need to set up right:

Domino 1: Calculate

This, of course, is the first thing to do when dealing with your debts: calculate it in its entirety.

Whether we’re talking about parking fines or credit cards, car loans or money owed to friends – write all of it down.

You need nothing more but a four-column table: name of debt, total amount, interest rate, monthly minimum.

“There’s something very powerful about getting stuff out of your head and down on paper,” notes Pape. And he’s not the first one to say that.

Domino 2: Negotiate

A bank costs more money to get a new customer than it does to keep an existing one. In other words, banks will do everything they can to not let you go.

Use this to renegotiate your credit card rates, threatening to leave the bank in case your demands are not met; of course, it’s crucial that you don’t sound like a terrorist. Nobody likes that kind of customer.

Domino 3: Eliminate

“It’s time for some plastic surgery,” writes Pape. “Cut up all your credit cards. Take a photo, and post it on the Barefoot Investor Facebook page. Get ready for an avalanche of ‘likes.’” It helps to know that someone has your back.

Domino 4: Detonate

Now it’s time to detonate your debts. To do so, rearrange the list you made in Step 1 – from smallest to largest.

And use your Fire Extinguisher – remember: 20% of your take-home pay and you Blow Bucket – to ‘hose down’ your smallest debt.

Then turn the hose to the next debt, and the next, until they’re all put out.

Domino 5: Celebrate!

Once again, it may sound silly, but it is not – after each paid debt, organize a small (or large, depending on the debt) bill-burning ceremony.

“Celebrating is really, really important,” writes Pape. “You need to give yourself a pat on the back for having a small win. That’s how you build momentum. You’re training your brain to win.”

Part 2: Grow

Now that you’ve planted your wealth tree and domino-ed your debts, it’s time to grow your fortune. Learn how to earn more and save more in three simple steps:

Step 4: Buy Your Home

First of all, you need to realize that rent money is not dead money – well, “at least not in the short term while you get your life and finances in order.”

In other words, in case you want to become a wealthy person, it is very important to buy a home and don’t rent; however, it is even more important to not rush into anything.

Most people, warns Pape, make these five mistakes when buying a home:

#1. They’re waiting for a crash
#2. hey buy a home they can’t afford
#3. They buy an investment property first
#4. They rent but forget to save
#5. They don’t consider other options

If you haven’t made any of these five mistakes so far, then you’re on a good path: you just need to learn how to save for home deposit properly.

According to Pape, you need 20% of your paycheck to do that.

That’s right – you’ve guessed it: the Fire Extinguisher Bucket.

It served you well so far to domino your debts, but now that you don’t have any, it will serve you even better to buy you a home.

You can even go overboard: learn how to live off of one salary (it is possible, and it’s short-term), and save your partner’s entire salary for your home for two years.

It’s just enough to end up with a home.

Step 5: Increase Your Super to 15 Percent

In Step 2 we told you that 9.5% of your paycheck goes into a grow fund; usually – and in many countries – this is paid by your employer; that’s how one gets his pension in most of the world.

Now, there’s a trick to get an even better deal: after you’re done buying a home, boost this to 15% (i.e., add 5.5% yourself)!

If you’ve already read our summary of The Automatic Millionaire, you already know this part – that’s where Pape borrows it from.

But here’s it again:

If you’re 30 and you’re earning about $72,000 a year, 5.5% of your yearly salary amounts to a little more than 330$ a month or just $10 a day.

What does saving $10 a day would mean to you 37 years later when you’ll retire at the age of 67?

Well, assuming conservatively just 8% growth, and 2% inflation, you’ll be richer for more than half a million dollars!

Add to that the amount saved by your employer and, yup, you’ll retire a double millionaire ($2,063,179 to be more exact)!

Step 6: Boost Your Mojo to Three Months

If you follow Scott Pape’s first five steps pretty carefully, by Step 6, you’ll be able to basically forget everything around you and start living your life to the fullest!

But there’s one more thing you should do before starting to feel the happiest you can ever be: triple the amount in your Mojo Bucket.

What does this mean?

It doesn’t mean just putting $6,000 on the side; it means having – at all times – three Blow Buckets in your Mojo Bucket; so, if you’re earning $5,000 a month, put $15,000 in your Mojo Bucket after domino-ing your debts, buying a house and increasing your super to 15%.


Because that’s what security is; that’s what freedom is; and, according to many studies: that’s what happiness is.

Part 3: Harvest

“Ask any farmer what their favorite time of the year is, and they’ll tell you ‘harvest!’” We don’t need to tell you why; but Pape wants to show you how to harvest even more.

Step 7: Get the Banker Off Your Back

“If your home loan is with a big bank,” notes Pape, “there’s a good chance you’re getting screwed. Generally speaking, the banks don’t do the best deals on home loans because… they don’t need to.”

But believe it or not, you can wipe off almost 7 years of your mortgage and save over $77,641 by adhering to these three simple rules:

#1. Don’t get the bells and whistles
Let Scott Pape remind you of something: “A home loan is a pretty simple proposition: you borrow money from the bank to buy a home and then pay it back with interest over 25 to 30 years.” Everything else – repayment holidays, fixing a portion of your loan, etc. – is where the bank makes its margin.

#2. Don’t fix your rate
You know why banks are offering fixed-rate deals? Because exit fees are banned and want to stop you from switching to a better deal. Fixed-rate loans give them that power.

#3. Get the cheapest rate possible
As we said above, it’s more expensive for banks to find a new customer; six times more expensive to be exact; use this knowledge to get a cheaper rate.

How does this work?

Simple: threaten your bank that you’ll refinance if your bank doesn’t drop its rate; stay firm in your demands, and you’ll probably save $22k on your loan based on a mortgage of $400k over 18 years at 4%.

What if your bank doesn’t agree to your demands?

Well, ring them again.

And if they don’t agree then as well – switch.

And start the procedure once again.

Step 8: Nail Your Retirement Number

Some will say that you need $1 million saved in order to retire and live happily as long as you do with your partners; others add “$1 million each,” i.e., $2 million in full.

What does Scott Pape say?

Though the more money, the better: $170k in super for singles or $250k for couples is just enough by the time you retire.

If you’ve paid off your debts and your home and you’re getting a pension, then you’ll end up with more than $60,000 yearly from the age of 67 onward.

You don’t need more.

Step 9: Leave a Legacy

How do you like to be remembered?

As the guy who drove a C-Class Mercedes or the one who gave away some of his/her money to charity or scientific organizations and helped the lives of those around you get better?

It’s not even a question, is it?

After all, nobody ever gets remembered for driving a Mercedes.

If you manage to build wealth, share some of it– with those you love and those who need it more than you.

That way, you’ll be remembered.

The right way.

Key Lessons from “The Barefoot Investor”

1.      Schedule a Monthly Barefoot Date Night with Your Partner
2.      Allocate Your Monthly Payments in Three Buckets
3.      Live Off 60 Percent of Your Income (Aka: The Barefoot Benchmark)

Schedule a Monthly Barefoot Date Night with Your Partner

The first step of retiring wealthy and living a comfortable life (at least money-wise) is only remotely related to money; and it’s the most pleasurable one.

Namely, setting up a monthly financial date night with your partner; treat yourself, say, the last Friday of every month and use that day to talk finance.

Use the first few dates to set up a long-term strategy and rules: it’s the two of you against the world, and, more than anything, you want your partner on board when it comes to financial fears and solutions.

Allocate Your Monthly Payments in Three Buckets

The foundation of Scott Pape’s plan: allocating your monthly income in three buckets:

Blow Bucket, “for daily expenses, the occasional splurge and some extra cash to fight financial fires;”
Mojo Bucket, “to provide some ‘safety money” (online savings account with another institution; reserve $2,000 in here on your first Barefoot date night); and
Grow Bucket, “to build long-term wealth and total security” (9.5% of your wage reserved in an ultra-low-fee superfund).

Live Off 60 Percent of Your Income (Aka: The Barefoot Benchmark)

Now, the Blow Bucket is mostly for daily expenses, but the daily expenses should never amount to more than 60% of your income.

In Scott Pape’s experience, this should prove to be more than enough for you to deal with housing, utilities, transport, insurance and food.

The rest 40% should be divided into three smaller buckets: the Splurge Bucket (10% for short-term pleasures), the Smile Bucket (10% for long-term pleasures), and the Fire Extinguisher (20% for debts and when they are done, home deposits).

Like this summary? We’d like to invite you to download our free 12 min app for more amazing summaries and audiobooks.

The Barefoot Investor Quotes

Sixty-two per cent of Australians believe they cannot afford to buy everything they really need. Click To Tweet At any stage of the game — regardless of your educational level, upbringing or age — you can decide to leapfrog the pettiness of people to achieve your goals. Click To Tweet The word ‘mortgage’ comes from Old French and roughly translates as ‘an agreement till death’ — and that’s exactly what many young families enter into when they mortgage themselves to the hilt. Click To Tweet Make no mistake, the entire universe is conspiring against you ever being mortgage-free. Click To Tweet

Final Notes

Scott Pape is an Australian, and as far as Australians are concerned, he is “the most knowledgeable regarding financial matters, topping the ratings in the areas of superannuation, investment, taxation, insurance and economics.”

And that should tell you a lot about the very easy-to-read and even easier-to-follow money manual that is The Barefoot Investor.If you are an Australian (because a lot of its advices are geo-based), it is certainly one of the best finance and investing books.

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