- L.A Aussie wrote:It's not often you see a person earning $250k per year living in a $350k house out in somewhere like Roweville in Melb, driving a 4 year old Honda Accord. No; they're hocked up to the eyebrows with a $950k house in Kew, and there are two brand new BMW 4WD's in the garage. Actually; they're not in the garage; the boat is in there; there's no room for the cars.
I'm not saying they shouldn't buy these items if they truly can afford them, but from my experience, people spend all their income and more to keep up with the Jones, don't do any investing in much other than "stupor-annuation" and don't allow for "rainy days" and "life".
Something happens like a car accident, loss of work – or both, or a downturn in real estate and a jump in interest rates while carrying very high LVR's, and so on.
Or, you'll get the average soccer Mum and Dad on a combined income of say $60k.
But there out there buying brand-new Pumpkin Patch clothes for the kids, they both smoke, they both have a new car on HP, they have cable tv, a video library membership, Mum spends $100 on her hair every month, they buy lattes every other day when they're out and about, they have 3 credit cards; all being hammered on a regular basis and only paying the minimum repayments per month, and they have a 35 square house with a double garage, and so on.
Exactly, and this is also why I truley fear we are headed for one of the biggest corrections we have ever seen-there is just soooooo much debt out there it is frightening and all of these people are still yet to see a real downturn in the economy. When, not 'if' itcomes there is going to be a disaster….
Agree with your points LA and blogs. The keeping up with the jones and buying plasmas thing gets mentioned everyday. I was just saying that there are many people who will genuinely be hurt out of this through no fault of there own.Just bad timing. And i believe geting all excited about the impending blood bath can be in bad tast by some on these forums.
There is a fine line between been excited about someone else trouble and actually seen an opportunity, didn't some one say : Buy when there is blood in the streets. Some got heart by rising prices and been unable to purchase PROP, other will get heart on the downturn. There is always some one in trouble. You just have to try to stay on the side which is making money at the time, not loosing.
Hi
I have to agree with LA Aussie. We need a serious dose of financial literacy for as many people as posslbe. Not to such a level that there would be more RE investors around to compete against us, but the basic money management such as spend less, save more mentality. Often, it is the poor that really need such financial understanding, as they are dealing with such small amounts of money that basic needs take up a greater proportion of their income.
As for the higher income earners, they need it too so that they do not get into a bigger mess.
I remember back in late 2006 a senior manager back in my last work place earning over $100K annually and hearing about him having financial trouble. I was simply amazed at such a high income earner could have such problems… considering at that time my partner and I were working casual jobs and saving about $2K a month for a deposit for our first property which we finally bought a few months back.
Like Paul Clitheroe, Chairperson of the Federal Government's Financial Literacy Foundation, said: "It is how much of your income that you save that matters, not how much you earn."
I seriously hope we do not get the RE crash that might be coming.
All the best
Daniel LeeThe greatest change over the ages is credit debt … there is no use attending seminars on wealth creation with out the basic understanding of how to spend money and how NOT to spend money …
Credit cards … teenager debt … single women over 50 yrs old … interest free store accounts … divorce … depression and sadness … all have been surveyed at increasing by 100% over the last 20 years … go figure.
The largest growing disease in the word today is SADNESS … lets run a seminar on "how to get rich in real estae and build yr self esteem at yr same time"
10% rates this year and rising … Sydney worst state and QLD the best for the 10 yrs
wealth4life.com wrote:The largest growing disease in the word today is SADNESS … lets run a seminar on "how to get rich in real estae and build yr self esteem at yr same time"Human suffering has always been with us Wealth4life. Not only that – it appears as commonly in wealthy countries as it does in poor countries. I think that running a seminar on how to get rich will do nothing to correct this problem.
Maybe character building to assist people to be content with life despite all the external ups and downs would be more appropriate.
Regards, Ian
The massive correction now 40% in the banking sector bodes very badly for the unaffordable Aussie home sector…..unfortunately, housing is going to get very ugly in certain locales of Australia……ouch
http://therainmaker.net.au
Small Stock InvestingHi
Have you thought of buying "GOLD".. I think its a good investment in the long run.. .. We bought unallocated gold 9.8 oz.. via Perth Mint. There always pros and cons on every investment… At the end of the day tis up to you how much you want to spend/risk.
perthmint.com.au
cheers.. good luckWhy are people so freaking dumb? The country is certianly headed for recession-you can bet your last dollar on that, and now all of a sudden we have the start of panick selling and hysteria with the media beat ups-anyone see sunrise this morn? Auction clearance rates below 60% in parts of melbourne and a massive 1400 properties to auction on the weekend clearance rate 65%. What I want to know is how all these idiots who belittled me when I said property prices couldnt continue to rise at 30% per anum now think we should feel sorry for them becasue they were greedy and got in over their head?
Down she goes fellas-get prepared to buy some bargains!!
Agree with blogs, same here.
I was siting tight and watching market starting to slide hunting for my dream home. Have had couple coming up on the market, just the way i like them, but price is still not right (read as high). You can snap few good houses now in the range of 500K but closer to 1M properties still seem to hold the value, it will just take a bit longer till those get hit as well….
It is just a waiting game now to snap the bargain!I gotta say that i'm looking forward to some real bargains in the not too distant future.
Am I allowed to advertise my property for sale here?
emu1208 wrote:Am I allowed to advertise my property for sale here?Yes if it is a good deal
devo76 wrote:Agree with your points LA and blogs. The keeping up with the jones and buying plasmas thing gets mentioned everyday. I was just saying that there are many people who will genuinely be hurt out of this through no fault of there own.Just bad timing. And i believe geting all excited about the impending blood bath can be in bad tast by some on these forums.I don't agree that it's not their fault. No one forces anybody to create a dangerous financial position for themselves.
I think the timing is irrelevant if you have used sense and some caution with your purchase of a house.
Buying within your means, keeping the LVR lower, reducing debt are all good hedges against unforseen life events.
wealth4life.com wrote:The greatest change over the ages is credit debt … there is no use attending seminars on wealth creation with out the basic understanding of how to spend money and how NOT to spend money …Agree.
There are not nearly enough seminars available for people about simple money management skills, and the difference between an asset and a liability.
We need these more than the wealth creation seminars, but for people it's a boring topic, so there is not much of a market for them. It's like teaching budgets and accounting.
"eeeuuwww" I can hear the sheep saying when you advertise a seminar on "Create a Budget to Wealth". It's got that nasty "B" word in it.
emu1208 wrote:Am I allowed to advertise my property for sale here?Put forward a very detailed presentation of the numbers etc that will show the forumites what sort of deal it is, and what makes it so good.
And, if it's so good; why are you selling?
No-one is interested in a plain old property ad here; we can see them everyday on r/e.com,domain.com or in the papers.
Real Estate agents try to flog properties as investments everyday, and they are mostly crap investments.
Not here yet but getting closer.
Yesterday afternoon over three hours I personally saw
– girl in lift (whiile leaving for a meeting) just made redundant, employee of largish loan provider 250sq metrs, 5 car spaces, – they can’t sourse funds
– at meeting client mentioned a large consolidator (a centra wanna be) in unrealted industry had made unsolicited contact to my client, who is a product provider, to open a relationship. Client rang round and got the word, that if the caller was not yet technically financially dead, they soon will be.
– but the best was last, a solicitor mentioned a big end of town boy was having trouble getting his 2 mill loan rolled over, property was 12M, 1st mortg 6M 2nd was 2m.
Eventually got it covered by a non bank lender at…drum roll please….4%….what a deal …but the catch is ….per mth, but the good part is if not met, after 7 days the default rate kicks in at 8% per mth. They are counting on his inabilty to turn the business around (they always dream they can) and are probably picking out the furnishing for their new house right now….Not here yet but soon…say another 6 mths to a year..
80% will never know anything has happened
10% will have some level of hurt
5% will have a life changing experience
5% for them it will be excruciating.1. The man I know just sold his boat for under 1Mil and purchaser asked him to indicate higher value so he can get 100% finance on pleasure cruiser…….
2. Few of my friends have refinanced there's PPOR do draw the equity to……..purchase car…….go on holiday
3. We just purchase industrial land, part of larger block of land with factory on it. Owner only got about 20% of money as the rest went to bank. Company been in Business for 15 years.
4. The best one – is year old Aston Martin valued about $500K been auctioned by finance company. Get an idea of a caliber of people going down ?simple wrote:1. The man I know just sold his boat for under 1Mil and purchaser asked him to indicate higher value so he can get 100% finance on pleasure cruiser…….
2. Few of my friends have refinanced there's PPOR do draw the equity to……..purchase car…….go on holiday
3. We just purchase industrial land, part of larger block of land with factory on it. Owner only got about 20% of money as the rest went to bank. Company been in Business for 15 years.
4. The best one – is year old Aston Martin valued about $500K been auctioned by finance company. Get an idea of a caliber of people going down ?errr….no actually…what has the auction of a one year old car got to do with the calibre of the person?…..we know jack shit about the situation …. which enables us to draw any inference we like I guess
as posted on somersoft.
some simple common sense research as to why prices will keep on going up, done by economists.
http://www.anz.com/documents/economics/Housing%20Snapshot%20April%202008.pdf
You must be logged in to reply to this topic. If you don't have an account, you can register here.
