Hi All,
Please go and check my previous quote and prediction on future credit card debt where I said that by the end of Feb 2007 it would hit $40bn.
Ref; Sunday telegraph 11/02/07 page 23, yes i’m wright again!
Why is this important ??
Quite simply “affordabilty” lets take the 80/20 rule which is very basic to use in this case – 80% of all Australians are struggling to survive and actually falling further behind. Developers are desperate to off load stock and in many instances offering cash incentives and gifts to entice buyers into the market.
Banks are creating new stratagies like “positive cash flow” loans to intice people to refinance and spend more money, I believe these types of loans will be seen as a bad thing in the future IMHO.
The “wealth” gap in Australia is widening 50 year olds are looking at investing in areas called “lifestyle” or coastal locations that in the next ten years they can retire to. 20/30 year olds starting out are finding it hard to get into quality areas close to work which in the long run costs them more money in travel.
As a researcher I could go on and on, OK let me give you and example – 42% of teenagers aged between 15-24 are in credit card debt, 3,140 teenagers last year declared bankruptcy, 52% of teenagers have a personal loan, 90% of teenagers own a mobile phone, 47% of women over 50 are single, 77% of all retirees live at home with no money, 11,000 people per year in NSW are losing their family home ………..
You can’t build wealth unless you develop the correct “mind set” quite simply people who don’t have money THINK differently to people who do have money. I have spent years researching about millionaires and two things I can say is that they are avid savers and they start young.
So if you are reading this and under the age of 25 – cut up your credit cards, pay off any personal loans, git rid of that car lease and open a seperate savings account and start investing money in it until you have enough to invest. If you are over 50 with no investments, a small super and still have a motgage then go see a planner asap. For those people in between I suggest that your troubles today are created from your past habbits and you need to take a good look at that situation.
Lastly, if you are getting advise from people about investing get it in writing and get them to sign it with a personal guarantee – if they are not willing to do that stay away from them !!
I would love some feed back on this topic, thanks for listening … D
Hi there,
I read that article and thought it was rather scary. What’s even more amazing is the amount of debt Australians are willing to get into to own a house.
Do people really think, particulaly in capital cities like Sydney and Melbourne, that getting into hundreds and thousands of dollars of debt is necessarily worth it?
Dan
I really think it is a two way street.
On one hand are those folk who either dont have the knowledge and/or inclination to face up to their economic reality and on the other are the financial institutions who supportthis.I recall a few years ago meeting a man nearing retirement, with quite a decent blue collar job, whose aim was to die $1million in debt!!!! This was not a home loan (lived in work supplied accomodation) this was to be all bad!! He was very proud of the fact that he had managed to aquire a lot of credit cards that he fully intended to run up before he died. When I asked what happened if he lived longer than he thought – his contingency – BANKRUPCY (the car was in his wifes name and he didnt own a house. To his mind, if “they couldnt find what I have bought then they cant take it off me and I will be better off”!!!!
This has to be a legal scam doesnt it?? With all of us who play by the rules paying for it!
Just my gripe for today.
T[angry2]Hi W.4.L.com,
Totally agree with your post. Here in the U.S I have observed Aus 10 or 15 years down the road in my opinion (maybe less).
The norm over here is for people to rent, buy the most expensive car they can afford, live on take-out and restaurant food and shop all weekend at the malls buying clothes and electronic devices. “Keeping up with Jones” is out of control here – it’s actually laughable, but sad as well. I live in an apartment building where the 2 bedders are $3,000 p/m, and there is a proliferation of 20 somethings living here and driving in and out in BMW’s and Mercs. It is astounding.
The material trappings are everywhere; everyone has a mobile phone – many kids at my son’s elementary (primary) school have mobile phones, ipods.
The only investing products advertised are the ‘packaged’ products of the stock market – mutual funds and 401k’s (super funds). The Yanks love this as there is no work required; simply sign up and hand over your cash each month. The advertising is unrelenting on this, as well as cars, prescription drugs, fast food and electronics.
This week there was an announcement that the U.S has a negative savings rate for the first time in it’s history. The average American has $8,000 in credit card debt, and is spending around 110% of their income.
Foreclosures are in a boom at the moment, with personal bankruptcies topping 50,000 per month across the country. Interestingly, the main cause of these bankruptcies is health care bills from hospitals and loss of jobs, which forces people out of their homes. This is partly due to exorbitant health care costs and operation costs, and the people aren’t/can’t saving any money towards these eventualities. Most people are one or two paychecks away from homeless if the truth be told.
House prices across the country are still in decline, and the interest rates are rising. This is not directly related to the mindset of the ‘doodad brigade’, and is probably part of the normal post-boom cycle, but it has an effect in that they fall further behind on the road to home ownership.
The younger generation has largely given up on home ownership, and elect to simply rent and party and look cool. They are referred to here as ‘the forever young’. The problem is they are not saving any of the excess income towards retirement or financial improvement.
The middle class is disappearing, with the gap between the rich and poor widening even further. The USA is one of the worst countries in the world for this scenario now.
Not bragging here, but my wife is 36 years old, and in a hospital of the reputation and wealth of Cedars-Sinai in Beverly Hills where she works, she is the only woman her age who actually owns ANY property. My wife earns $85k per year – this is normal at this hospital! There are many nurses over 65 who are still working because they have to – some own no property or have savings, some are still paying off home mortgages.
The relevance to Aus with all this is that after living here for 18 months, I have observed that our society closely follows and mimics the USA. We are heading down the same path in my opinion. It is a worrying trend, and here, as with Aus, no-one is trying to teach the kids some financial literacy in high school when it is most important.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
Thank you so much L.A what an interesting responce …
As to following the USA i think we are already there … What about Kiyosakais teachings or isn’t he that big over there as we imagine he is ?
Lets put a prediction on when Australia will hit $50bn credit debt.
There are some great bargins here, even in Sydney we just bought 3 houses in Cambeltown in great locations and all are positive cash flowed because we offered stupid cash 30 day settlement prices. People and banks are crazy, you can’t buy land and build a cheapie on them for what we paid and we didn’t have to resort to investing in mining towns which now the ROI is drastically changing.
D
i blame most of the credit card debt on plasma and lcd tvs…but personal responsibility’s got to be a factor too, i mean people complain how credit card companies keep giving credit to young people, it’s upto the young ones to say ‘no’….i met a guy few months ago who took out a 50k car loan! And he only worked at woolies in the bakery..crazy…
Hi Picklesam,
Our CEO is about to launch his 4th book, I can’t tell you the name of it but I will give you a snippet of how he draws a concept which I just love.
Emagine two trees, 1 a beautiful oak tree with large roots a thick trunk and huge lush upper system. 2 a poorley nourished lemon tree with dry roots a knoty trunk and only a few leaves with lots of exposed branches.
Lets call tree 1 – Rich people and tree 2 poor people – now the root system is all about your education, understanding, upbringing, DNA structuring and how you follow and interperate instructions. The trunk is all about education, learning, understanding,and the upper section leaves etc is the RESULTS we are getting in our life.
This book is so totally different to any thing out there in the market so here is the twist to getting rich results and turning your life around – MOST people are working on the leaf section where they should be working on the root section.
Question if the late Mr Kerry Packer was likened to a tree would he look like an oak tree or a lemon tree – get the image?
So are you an oak tree or a lemon tree.???
If you have seen thesecret you will get the message – most people work on what they don’t want – and thats what they get “what they don’t want”
D
LA I think we are only a few years behind.
The wealth/gen gap is really hitting here.
As much as I know of the pain in Syds west, I spent a lunch with some fin planners who said that the ave amount people were retiring on was 600K (plus house) drawn from a mix of inferitance and super/savings/property.
Wealth your stats have these people …..they are the x% of the people who are fine.
These guys know that there are problems but the population they see is the haves.
I see some significant social problems here if not addressed
We need some cultural changes soon
hi wealth4life, yeah i know what you’re trying to say…but it’s kinda hard to work on my roots now because i’m not academically or business smart, i struggled through highschool but still made it to uni…struggled through that too and now i have a pretty decent paying job, i’m pretty happy with how i turned out but don’t know how i can get a better income job, I’m on a $95k package… going back to uni is not an option, i’d have to sell my ip at a loss…and i figured if i go back and studied to be a doctor or dentist i’d be in the highest tax bracket anyway, who needs all that stress?
and LA, is your wife earning $85k USD? If so you reckon she can get me a job as a radiographer? Can i live in your place rent free? I’ll pay all the bills…haha..had to try…
Well done on your prediction, perhaps you can get your crystal ball out and tell us all if interest rates will rise this year also & by how much…now there’s a challenge.
I do agree though with a lot of the posts here that getting into debt is just to easy, and I think Steve refers to it in his book as the “debt buffet”. I’m totally against borrowing money for new furniture, cars, holidays etc and prefer to drive my safe but humble family station wagon. Hey its got 7 seats & air cond, no electric windows or CD players but I get from “A to B” in comfort, although not the latest fashion. And yes the hand me down furniture will do just fine and it just goes to prove my signature saying (see below) “It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Originally posted by wealth4life.com:Thank you so much L.A what an interesting responce …
As to following the USA i think we are already there … What about Kiyosakais teachings or isn’t he that big over there as we imagine he is ?
Lets put a prediction on when Australia will hit $50bn credit debt.
There are some great bargins here, even in Sydney we just bought 3 houses in Cambeltown in great locations and all are positive cash flowed because we offered stupid cash 30 day settlement prices. People and banks are crazy, you can’t buy land and build a cheapie on them for what we paid and we didn’t have to resort to investing in mining towns which now the ROI is drastically changing.
D
From what I’ve seen, R.K is not as big here as he is in Aus. He probably has a profile, but I think that the size of the population and the country here, and the fact that the Yanks seem to be wrapped up in their own little worlds is holding back the impact he is having on the education process. He is on tv very occasionally, but that’s it. It’s a bit like ads for eating salad, or eating maccas. He is the salad ad; you know it’s good for you, but it’s just too hard and uninteresting.The average punter is going to take notice of the maccas ads every time unfortunately.
The advertising on t.v is relentless and disgusting, and I’m afraid that the uneducated, or lazy, or don’t care, or ‘it’s too hard’ brigade just cave in and follow the message.
The other problem is the poor seem to think that their way of life is cool and hip. It’s more important to have your jeans hangin’ down around yo knees, your shirt 14 sizes too big, your car stereo on 200 decibels, and yo hat on sardwayz y’all; yanowerdarmsayin?
There is no desire to be smart or to lose weight (unless there is a pill that will do it) or to learn some financial intelligence. This is the majority of people who are poor. The middle class are all spending like there is no tomorrow, which leaves the rich, or financially intelligent, left to scoop up all the treasure.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
Hi, wealh4life
I saw your estimate a while back. Am not surprised that you got it right.
In my home country of Singapore, the young are also spending quite freely. Many people I know do not have the financial literacy to really become rich or accumulate some serious wealth. Most of my friends in their late 20s do not even begin to scratch the surface of financial literacy.
Personally, my partner and I are new residents in this country and having only finished Uni last yr and lacking sufficient work experience, are still renting and working low-end jobs.
At the mean time, we are saving as much as we can to our ING online accounts, waiting for the day when we can make our move and get our own 2 bedroom PPOR.
Keep your foresights coming, Wealth and every other seasoned investor. I have learnt a lot from this forum.
All the best.
Cheers
Daniel Lee [specs][chill] Much ado about nothing. The living cost is ever increasing is mainly the drive in the amount owed in credit card debt. I think most people including young people of australia are more financially savvy these days. Look how many people choose to salary sacrifice and use their credit card to maximise the benefit of having one. Otherwise, how do you think the RBA put hold on interest rate increase this time? Many people are not spending as much money because they want to but because they have to. The oil prices and festive season are to blame.
Hi Amanda … Interest rates prediction …
I believe that they will leave the interest rates for the first 3 and then UP ??? some people are saying that they may go down however based on the US going up now, I feel we will follow. Secondly the government is in an election year and they have lots of pressure to keep it stable otherwise all hell will break loose.
New buyer confidence is very low at the moment, building approvals are down and 80% of the population are finding it very hard to make ends meet, wages are the same but petrol, school fees, groceries, etc are up.
Hi Picklesam …
Don’t worry where you are worry about where you are going, change your roots = change your future go and get http://www.thesecret.tv DVD then go and get http://www.thesecretvisionbook.com “things will change” and I think you are doing just fine …
Hi GMH and happy new year …
Yes GMH these people know there is a problem but they still make the same mistakes … it’s like the river that used to flow past the pyramids “denial” of courseolder people have more thats the whole point, these younger generations need to realise that they can’t compete and should move into a world of creative … maybe if they stopped watching TV we would not get inticed with all the FREE offers …
D
A few people mentioning Financial Literacy here; okay, so how do we get it? Is it something we just pick up as we go – the school of hard knocks? Or is it something that can be learned from a book?
What do you think the required knowledge – the roots of our mighty oak trees – we should be passing to the next generation is?
I’ll start:
1. The value of saving money
2. The pitfalls of living on a credit card
3. How and why we buy propertyAny other ideas?
Hi Dvane
I do some contract work for some one who I believe is very up there, although he does not want to go down the seminar/guru path as others do – if you want access to the best collection of full colour cheap webucation and ebooks in the world as well as a real developer go check out http://www.apin.com.au
There are 28 accounting Ebooks FREE as well as lots of other really cool and very valuable information for under $10.00 which is a fraction of the cost.
The owner of this site is about launch a 25 module full colour on line webucation course covering how to get started up to how become a DIY developer – and you won’t believe the price, so no seminars or week end boot camps. Oh also free mentoring with every coach a fully licienced broker, agent, developer, fin planner etc etc
check it out – site is about to go through a massive upgrade so be patient, i shouldn’t even be telling you.
D
Totally agree dvane,
also, teaching the difference between an asset and a liability to the kids I think is very important. You still need to have some of both unfortunately, but at least they should know the difference and make informed decisions.
Many kids; I’m talking from high school to early 20’s (and a lot of sensible adults) don’t know the difference, and what’s worse is their bank tells them the wrong info as well. Your banks asks you to list your assets when you want a loan, and they give you the list to fill out; it includes house contents, cars, clothes, electronics etc, etc.
An asset is something that appreciates in value and provides you with an income.
A liability is everything else – even savings in the bank. By the time you factor in inflation, bank fees and tax on the interest, your $1,000 deposit is worth around $950 or even less after 1 year in the account.
The problem is that people are taught that a their home, car, plasma, new lounge suite, jet-ski, clothes, even jewelery are assets. Except for their home which usually appreciates in value (but doesn’t provide an income) everything else depreciates. Many people think that jewelery appreciates, but the reality is that you are never going to sell that diamond engagement ring left to you by your great grandmother, and the one you paid $5k for last year is worth maybe half that (if you sold it and you wouldn’t). It is a huge waste of money (sorry girls).
Giving the younger kids in school the right mindset will stop them from leaving school with the consumer mentality I believe.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
G’day WFL,
That mentor you mentioned, maybe you should have consulted him before buying at Campbelltown.
Not the best of places to invest in at this time. Most of the western suburbs are suffering from interest rate increases. Meaning that
PPOR people are struggling to make home payments. Defaulters
coming out of the woodwork. Campbelltown is one of those suburbs.Your last line in your last post sounds like sucker bait ( come in sucker). “I SHOULDN’T BE TELLING YOU”.
Sounds like a come on line to me.bruham.
These people who are pathetic with their money are our tenants!!!!
KEEP INCREASING YOUR RENTS
Wholesale Property Brokers
http://www.wpb.com.au
Australia*Hong Kong*Singapore*India*MalaysiaMmm, not sure about that link you provided W4L, as I’m always a bit sceptical of those that promote “education” at the same time as selling real estate.
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
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