Barefoot Investor: Pay back any bank debt before repaying any HECS debt #nigeria | #nigeriascams | #lovescams

In almost 20 years of writing this column, I’ve never seen anything like it. Just this year I’ve had emails from: A veteran policeman scammed out of his savings. An experienced tech journalist swindled for ten grand. And hundreds of readers who’ve lost amounts ranging from $1000 to $1 million.

What the hell is going on?Scams are red hot right now. They’ve increased a staggering 80 per cent in the past year alone.

Most of it, to be honest, is the run-of-the-mill scammy stuff that you and I try our best to avoid, like taking dodgy calls from dodgy people in dodgy overseas call centres, or romance scams, or clicking on fake links and text messages.

Yet don’t get too comfy — an army of robots is coming for your money.

A new artificial intelligence app called VoiceLab can recreate your voice with just a three-second clip lifted from a spam call (you answer: “Hello, who is this?”) or, more likely, from one of your TikTok posts.

Scammers have even been using voice-cloning tech to trick parents into believing their kids are calling them in a panic and needing money fast! (Which is horrifying, but also makes me want to try it out on my mum, who complains I never call her any more.)

Yet what the scammers are really after is voice authentication. The Australian Taxation Office, Centrelink and many banks give customers the option of using their voice as a way to confirm their ID when they call or want to make a transaction. Bingo!

And if that doesn’t freak you out, how about the fact that criminals are using machine learning AI to hack your passwords (yes, the same password you’ve used for every single login since 2015).

So, what’s the answer?I don’t think government can do much: the tech and the scammers are moving too damned fast.

And Aussie banks are lobbying furiously behind the scenes to avoid being on the hook for their customers’ losses (as UK banks will soon be forced to do).

In truth, the banks are as good as useless. Last year the Big Four managed to stop just 13 per cent of scam payments. Worse, the banks only compensated their customers for about 2-5 per cent of what they lost, according to ASIC.

So, given the leaves are falling and the nights are getting cooler, one way to warm your cockles is to grab a bottle of wine, take a moment and make sure you have two-factor authentication set up on all your accounts.

And if you’re really concerned, lock down your credit file (though, according to the first question, left, telling you this could get me killed).

Tread Your Own Path!

Watch your step!

Tony writes: I like you and I like your advice. Which makes me want to give you some of my advice.

Watch your step. You’re a finance guy, right? Let me run some numbers by you: you have said the three credit bureaus in Australia made $521 million collectively. You are challenging their entire business model. Do you see where I am going with this? You are a pretty bright fellow, and I respect your advice (and big balls!). Just remember, an American president got murdered in broad daylight.

Barefoot responds: Thanks for your concern, but I don’t think the credit bureaus take me very seriously. After all, they have highly paid lobbyists who have better access to politicians than I’ll ever have.

Still, I think locking your credit file is one of the best ways to safeguard your identity and stop scammers who’ve accessed your personal details via a hack from applying for credit in your name. The most logical solution would be to put a “lock and alert” system on all credit reports. That is, give people the ability to lock their credit file so no one can see it (without the customer’s consent) and send an immediate two-factor-authenticated alert to the customer if someone tries to access it.

The US Government forces credit bureaus to offer exactly this service. I’ve asked our Finance Minister Stephen Jones why he doesn’t follow their lead. He told me he’d look into it, but I haven’t heard anything for months. Bang!

A hex on debt advice

Tania asks: My hubby has $85,000 in HECS debt and I’m wondering what your thoughts are on the HECS-HELP debt saga.

The Greens are trying to freeze the indexing to inflation. You have always suggested that we don’t rush to pay off our HECS-HELP debt because it’s an interest-free loan, but I am wondering if you still think the same way now.

Barefoot responds: Look, I hate inflation like the Greens hate fossil fuels (and Barnaby Joyce).

Both Labor and the Coalition “Barnabyed” the Greens’ proposal to freeze indexing student debt to inflation. Now the whole concept of inflation can be a really hard one to get your head around … but HECS debt lays it bare in all its brutality.

For many years the indexing has been bugger all (in 2021 it was 0.6 per cent). Yet this year it’s a whopping 7.1 per cent. So your husband’s debt will be indexed up by $6035.

So, have I changed my mind: should you make extra repayments?

Well, that’s obviously totally up to you. However, I’d flip the Greens’ advice and pay back any bank debt (that attracts an interest rate) first before you repay any HECS debt.

What I think the Greens are picking up on is how the current economic climate is screwing people on low incomes, which includes students.

Rents have increased at the fastest pace since 2010, and the cost of most things is skyrocketing.

But despite all that, given that HECS is an income-contingent loan (you only start repaying it once you earn $48,361), I’d be more inclined to put your money in Mojo as a buffer than make a voluntary extra repayment to the government.

Earning self-respect

Linda says: We confiscated our 14-year-old son’s phone over a year ago because he was misusing it.

It’s been a long year of self-harm and reminding him he is supported and loved. It’s now time for him to get one again, primarily to check in with us when he’s away.

So here’s the argument I’m having with my hubby. I want him to earn the phone. We have 2ha of bush and I have the idea that he only needs to sell one bag of firewood a month to pay for a phone. My hubby says it isn’t worth the cost of the petrol, a chainsaw and delivering the wood to customers. He just flat out says: “No, it’s spending money to make money.” He won’t be reasoned with at all. Help!

Barefoot responds: Your husband may not show it, but I’m sure he’s been worried sick about your son self-harming.

Any parent would.

So here’s how I’d approach it with your husband. Ask him to think about how he’d feel as he watched your son start his own little firewood business.

Paint him a picture.

He’d be off the screens and out into the fresh air, doing some physically demanding work. He’d be smiling and interacting politely with his customers and, most importantly, his confidence would soar as he earnt his own dough.

Personally, I think this could work out to be the best money you and your husband ever spent.

However, if it makes him feel better, you could write an agreement with your son that he has to pay you a certain percentage of each sale to cover the costs.

I think if your husband could see your son making a go of it he’d beam with pride.

Any parent would.

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