Recently i saw some adds on TV with Rams Home Loans, know the one i mean??
I want 2 go on record as saying that IMHO this is leading Australians of the future into financial turmoil.
We r not teaching financial fundermentals of how 2 save and start small to build wealth, we r teaching laziness.
Use other peoples equity (parents)
Interest free accounts
Leasing
Credit cards
Don’t save borrow …Australian credit card debt is at 30 billion dollars. Australians r amonst the highest in the world of debt to population proportions. Adv debt on home loan % has doubled in the last 5 years.
Why r young Australians encouraged to get into a nice new home with all the bells and whistles, what ever happened to starting with a 1 – 2 bed unit second hand and building up??
When u use other peoples money there is no urgency to pay it back, the mind set is “oh its free money”. I have a Dip in finance and mortgage lending and have known for some time that this was coming.
My over all point is that we r not teaching people how to save, or is that a dirty word?
What do u think about equity lending …
resiwealth[blink]
Marketing is marketing. It will always be there.
Regarding borrowing, there is ‘smart’ debt and there is ‘bad’ debt. There is nothing wrong with borrowing to the maximum for ‘smart’ debt in my opinion.
Using equity is just one tool that enables those seeking further investment to achieve their goal sooner.
Robert Bou-Hamdan
Mortgage Adviserresi,
Three of the possibilities that I think will get investors into trouble:
* 105%/100%/95% or any high borrowing ratios
* IO loans in a declining market
* People giving up their jobs or never having one and then thinking they can live on residual income of $50 per week X however many mortgages- well, that’s 20 houses to get a bare wage of 52k per year- pretty low expectations for 20 houses effort! If people stay out of the workforce for too long, it could be VERY hard to get back into it if you want to in a rainy day.As for saving… well, i guess if one can create “instant equity” or some such thing, by utilising real estate as a vehicle to wealth “creation”, then one doesn’t have to scrimp and save for ongoing deposits. I am not gonna live the Anita Bell way and make my own white bread sandwiches.
Credit cards are crap, I agree, but they’re handy.
kay henry
Yes Yes but …
Good debt v’s bad debt i totally agree, however not when u buy your first home.
How do you create instant equity when u r using some one elses and then borrow 100% to get a dream house.
My eldest nephew (33) has 9 investment properties and no home mortgage. He uses a system i have been teaching him for several years now. He has no car leases, no credit card debt three kids and a rock solid marridge because they have no pressure. His mates r all in debt with their marridges in tatters because of financial pressures.
I believe the majority of aussies (80%) have ‘stinking thinking’ re finances. Craig (nephew) is a totally adverage bloke from an adverage family, he started with a s..ty one bed unit in Parramatta 7 years ago.
lets see what happens in the future, but i am not confident with this one, sorry guys and gals. next thing we will be like japan with third generation loans.
Philip[blush2]
There is always a place for those using other people’s money or 100% finance. I would personally be totally satisfied helping my kids get a start in life by helping them with a deposit and costs of purchasing their own home and seeing them make the repayments themselves. After all, why watch them pay rent instead?
I hear where you are coming from although, due to my high risk profile, I do not see much use for savings. I consider it ‘lazy’ money.
Robert Bou-Hamdan
Mortgage AdviserIt would be cynical to suggest that getting people entangled in debt nice and early makes the little vegemites motivated members of the workforce… and the more workers the more taxpayers… So some might say it is a beneficial for our overall society.
Others might disagree…
Cheers,
GregOriginally posted by resiwealth:My eldest nephew (33) has 9 investment properties and no home mortgage. He uses a system i have been teaching him for several years now. He has no car leases, no credit card debt three kids and a rock solid marridge because they have no pressure.
Craig (nephew) is a totally adverage bloke from an adverage family, he started with a s..ty one bed unit in Parramatta 7 years ago.
Hi Resi.
I (and I’m sure others) would love hear about this system of yours. Or do I have to wait fir the book.
Cheers
as per the saying: bite off more than you can chew and chew like hell….
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
why watch them pay rent insteadIs that because rent is dead money?
rent isn’t dead money – its the economic cost of NOT living under a bridge. everything has its place and time.
cheers
brahms
Purveyor of Fine Finances
aka Mortgage Broker BrisbaneI think rent is dead money if those paying it do not have other investments.
Robert Bou-Hamdan
Mortgage AdviserNicely said, brahms.
I pay rent. My investments give me greater return than if I lived in one of my rental properties.
kay henry
Originally posted by kay henry:Nicely said, brahms.
Would you kindly explain it to me as the ‘bridge’ comment has gone over my head???
Robert Bou-Hamdan
Mortgage Adviserrob, no, i’m not going to.
cheers
brahms
Purveyor of Fine Finances
aka Mortgage Broker BrisbaneThank you for your kind assistance brahms.
Robert Bou-Hamdan
Mortgage AdviserI want 2 go on record as saying that IMHO this is leading Australians of the future into financial turmoil.We r not teaching financial fundermentals of how 2 save and start small to build wealth, we r teaching laziness.
I couldn’t agree more.
(and before Robert jumps on me, I don’t think all debt is bad)Here is a chart of household saving 1996-2005:
http://203.26.51.178/cracker/54029_2.jpgHousehold saving is now negative. We spend more than we earn.
Here is a chart of credit aggregates 1996-2005:
http://203.26.51.178/cracker/54029_3.jpgNote how housing credit has zoomed past business credit over the past decade. Australia borrows to build houses, not productive enterprises.
dmichie, are you going to start following me around in an attempt to pick some sort of fight?
I am not going to jump on you. Your views are limited and mean nothing to me. Obviously I mean a lot to you as it seems important for you to have my attention.
This thread is all yours. I am not interested in your biased economic propoganda.
Robert Bou-Hamdan
Mortgage AdviserOriginally posted by dmichie:I want 2 go on record as saying that IMHO this is leading Australians of the future into financial turmoil.We r not teaching financial fundermentals of how 2 save and start small to build wealth, we r teaching laziness.
I couldn’t agree more.
(and before Robert jumps on me, I don’t think all debt is bad)Here is a chart of household saving 1996-2005:
http://203.26.51.178/cracker/54029_2.jpgHousehold saving is now negative. We spend more than we earn.
Here is a chart of credit aggregates 1996-2005:
http://203.26.51.178/cracker/54029_3.jpgNote how housing credit has zoomed past business credit over the past decade. Australia borrows to build houses, not productive enterprises.
out of interest, what is your definition of a productive enterprise? is a car or a camera more important than a nice house? When you look at developed economies (and no I am not including Australia in that category) they typically outsource manufacturing offshore and expand the service sector. Am not sure how you can determine whether someone that washes your car is more valuable than having someone build you a nice house.
I looked at those charts – looked convincing but lacked a lot of detail. The first question would be what is the definition of savings in the first diagram? Who compiled it? what currency is it denominated in? Has it been adjusted? etc. But anyway the gist of it is probably correct… the papers tell me this so it must be true [blush2]
Given that you wish to develop Australian enterprise I can see your motivation for attacking the property industry, however I think you are going about it in the wrong way. To bring it down is to cut your nose of to spite your face, rather it would be better to embrace it as one element of the economy whilst building others. After all, the flow on demand from new homes is incredible. Makers of items like dishwashers must be loving it… a value added industry which is largely Australian made. This sort of support can give them the boost that they need to go on to export without being lazy and producing shoddy goods that only sell because the currency makes them cheap.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
I started out using other peoples money in 1979. I never considered that you could buy a house any other way until I started dating a very average lady who bought her first house for cash. She was employed as a registered nurse and saved this money over the years from her wages. Over the years I was continually impressed how this lady could go through life without spending money. The point to this is that we both purchased our first homes in the same town. I purchased mine in 1979 she in 1989. The difference being that at the time she paid cash for her house I still owed money on my house. People look at the large sum required to buy a house and say I can’t, this lady would look at the large sum required to buy a house and would say how can I get enough money to buy it. This lady, employed as a nurse, would also buy her cars for cash. She is lived proof that you can save for what you want
Goes to show that registered nurses are not just average people as you point out…don’t know what you do for a living but she out smarted you.
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