Adelaide-based anti-credit card campaigner Adam Goulding (a.k.a Mr Home Budget) will be urging Australians to get rid of their cards for good when he hosts a public funeral service on the 8th of October 2010.
Attendees at the funeral service will line up to shred their credit cards into a coffin, which will later be carried by pallbearers down the aisle so the contained plastic remains can be laid to rest in peace.
When: 8th October 2010
Time: 8:30am
Where: South Road Funeral Home
Address: 151 South Road, Ridleyton South Australia 5008
“This service is aimed at spurring ordinary Australians, many of whom are deep in debt, to get rid of their credit cards so they can finally take active steps to pay off their debts,” says Adam, who achieved national prominence last year with the launch of his book “How to cut your debt to zero in five simple steps, the keep it simple stupid home budget”.
“We are inviting people to turn over a new leaf in their life and get rid of their credit cards for good. I’m expecting a large turn-out of people who are already primed to get rid of their cards, but anyone is welcome to attend the service and cut up their cards as well.”
Adam says that credit cards are a unnecessary evil, and if more people were educated about them he believes they would become socially unacceptable over time.
For people who are unable to attent the funeral we will be publishing the video on this website shortly after the event.
Saturday, August 21, 2010
Saturday, March 20, 2010
“Australia’s on sale and we love it”
Australians I’m happy with you. Give yourselves a pat on the back.
Most of the time when I read a newspaper article about Australians it refers to how much debt we are in, or how unaffordable our houses are compared to the rest of the world, or how much our sky rocketing credit card debt is costing us. This sometimes comes across as a really negative view of this country.
However recently, there has been some good news concerning the land down under. A report last month said that Australians no longer open their wallets unless there is a sale happening. In fact some of the big retailers have seen a 30% to 50% drop off in spending until they bring the sales back.
All this has come about due to the Global Financial Crisis. We as a nation have taken a mind shift away from the let’s get it now policy. We are now thinking about whether we can get it cheaper in the future?
This is a totally refreshing change in Australians’ attitudes towards their money issues. Well done, well done, well done!
And why shouldn’t we want to save money on everyday items. We have had the fastest growing food prices in the world since Jan. 2000. We have seen petrol prices move from 89 cents a litre to $1.35 a litre between 2000 and 2010. We have seen home prices move up like a plane taking off right through to the end of 2009. We are getting the squeeze from every which way on our home budget.
Now we are starting to understand as a country that we need to push back. We need to count every cent and make every cent count. As a country we are finding that the smart thing to do is what we used to laugh at other people doing in times gone past.
And that is to put off purchasing something until it goes on sale. Become like our grandmothers and only buy when they have slashed the price.
We must have all of a sudden gained some extra collective willpower. And the retail stores are taking notice. Our buying patterns have changed, so the way they sell their stock must change as well. They have been put on notice. They can no longer mark up their prices to ridiculous levels. They can no longer expect people to price shop. And most importantly, they can no longer expect to make their record profits year after year. Those profits will be smaller as we the consumers, take a percentage off due to the lower prices.
I invite all Australians who still do not shop this way to try it. Start counting down to the sales. Price match your products with two or three stores. Do some research into your product and when it’s likely to be cut in price? But don’t stop at retail stores. We can start looking at our services such as home phone, internet, mobile phone, electricity, gas and insurance. Let’s extend our frugal ways to all of our spending. Once again well done Australia.
Thanks
Adam Goulding (Also known as Mr Home Budget)
www.mrhomebudget.com.au
Most of the time when I read a newspaper article about Australians it refers to how much debt we are in, or how unaffordable our houses are compared to the rest of the world, or how much our sky rocketing credit card debt is costing us. This sometimes comes across as a really negative view of this country.
However recently, there has been some good news concerning the land down under. A report last month said that Australians no longer open their wallets unless there is a sale happening. In fact some of the big retailers have seen a 30% to 50% drop off in spending until they bring the sales back.
All this has come about due to the Global Financial Crisis. We as a nation have taken a mind shift away from the let’s get it now policy. We are now thinking about whether we can get it cheaper in the future?
This is a totally refreshing change in Australians’ attitudes towards their money issues. Well done, well done, well done!
And why shouldn’t we want to save money on everyday items. We have had the fastest growing food prices in the world since Jan. 2000. We have seen petrol prices move from 89 cents a litre to $1.35 a litre between 2000 and 2010. We have seen home prices move up like a plane taking off right through to the end of 2009. We are getting the squeeze from every which way on our home budget.
Now we are starting to understand as a country that we need to push back. We need to count every cent and make every cent count. As a country we are finding that the smart thing to do is what we used to laugh at other people doing in times gone past.
And that is to put off purchasing something until it goes on sale. Become like our grandmothers and only buy when they have slashed the price.
We must have all of a sudden gained some extra collective willpower. And the retail stores are taking notice. Our buying patterns have changed, so the way they sell their stock must change as well. They have been put on notice. They can no longer mark up their prices to ridiculous levels. They can no longer expect people to price shop. And most importantly, they can no longer expect to make their record profits year after year. Those profits will be smaller as we the consumers, take a percentage off due to the lower prices.
I invite all Australians who still do not shop this way to try it. Start counting down to the sales. Price match your products with two or three stores. Do some research into your product and when it’s likely to be cut in price? But don’t stop at retail stores. We can start looking at our services such as home phone, internet, mobile phone, electricity, gas and insurance. Let’s extend our frugal ways to all of our spending. Once again well done Australia.
Thanks
Adam Goulding (Also known as Mr Home Budget)
www.mrhomebudget.com.au
Tuesday, February 9, 2010
“Does your bank have crazy fees?”
What the hell is a cash handling fee? Or how about an overdrawn fee? Even a fee if someone else’s cheque bounces (inward cheque dishonour fees).
Yes, the banks have been doing it for years. Looking at ways to increase their revenue and profits and screw us the consumer. I’m sure they have meetings where they discuss ways to add fees to their products while trying not to upset consumers.
In fact in 2009, banks were paid just under $1 billion from fees. That’s around $45 per every man, woman and child. This does not include building societies or credit unions.
What really got me interested in this subject was something that happened around a month ago. I walked into my local branch and deposited $6000 cash into my business account. This total transaction with the teller took less than 2 minutes.
However then I received my statement which showed that I was charged a cash handling fee. Yes you read correctly, a cash handling fee. Calling my bank for an explanation they informed me that: If you deposit any amount over $5000 of physical money you get charged 0.25% of the total amount.
For example if you deposited:
$5000 it would be $12.50
$10,000 it would be $25.00
$15,000 it would be $37.50
$20,000 it would be $50.00
I was informed this fee is to cover the wages of the teller and the costs of running the branch. This does not sound right to me. Surely they make enough money to cover these costs on the interest they earn on my deposited money. What about the monthly $10 fee that I have to pay just to keep my bank account open? Or the interest on the home loan that they have lent to me? Why do they need extra money on top of the money they are making?
It’s like if you order a pizza to pick up. Once paying you have to pay an extra 0.25%of the total cost to help pay for the staff and rent. Pizza places don’t do this because their price for pizzas covers this cost. Just like 99% of all businesses; however not banks.
Just to recap, this fee is to deposit your own money INTO the bank! You like me probably thought that the banks wanted you to deposit as much money as possible into their bank. This fee suggests otherwise.
Inward cheque dishonour fees are another even crazier example of a ridiculous fee. This fee no longer exists, however it worked like this. You sell a boat to a friend for $5000. Your friend writes a cheque to pay for the boat. You deposit it into your account and the cheque bounces due to a lack of funds in your friend’s account. Guess what, you incur a fee and so does your friend.
I can understand your friend getting a fee, as it was his responsibility to make sure the money was there to cover the cheque. But why are you getting charged? You had no knowledge of what is going on in your friend’s bank account. You have taken the cheque in good faith.
This is just one more example of banks pushing the envelope.
What really upsets me more than anything, are the fees that are too high for things that banks pay very little to solve. For example, you can pay as much as $40 for being one day late on a credit card payment.
$40 is a huge amount to pay to miss a deadline by 24 hours. What has this cost the bank by you missing this deadline? Absolutely zero. They have not lost a cent. However you are out of pocket by $40. The funny thing is you might owe less than $40 on the entire card.
It’s in the bank’s interest that you miss this deadline. They want you to be late; it’s money in their pocket each time you are late.
Believe me banks don’t budge on any fee. If you cop a late fee, cash handling fee or any other crazy fee, try and get it reversed. This can be as hard as trying to swim the English Channel. They fight tooth and nail not to give you back your money. Sometimes you will have a victory in fighting it. However, most times you will just have to learn your lesson and move on.
My advice is to learn your bank fees inside and out. And then get organised to avoid them.
Thanks
Adam Goulding (Also known as Mr Home Budget)
www.mrhomebudget.com.au
Yes, the banks have been doing it for years. Looking at ways to increase their revenue and profits and screw us the consumer. I’m sure they have meetings where they discuss ways to add fees to their products while trying not to upset consumers.
In fact in 2009, banks were paid just under $1 billion from fees. That’s around $45 per every man, woman and child. This does not include building societies or credit unions.
What really got me interested in this subject was something that happened around a month ago. I walked into my local branch and deposited $6000 cash into my business account. This total transaction with the teller took less than 2 minutes.
However then I received my statement which showed that I was charged a cash handling fee. Yes you read correctly, a cash handling fee. Calling my bank for an explanation they informed me that: If you deposit any amount over $5000 of physical money you get charged 0.25% of the total amount.
For example if you deposited:
$5000 it would be $12.50
$10,000 it would be $25.00
$15,000 it would be $37.50
$20,000 it would be $50.00
I was informed this fee is to cover the wages of the teller and the costs of running the branch. This does not sound right to me. Surely they make enough money to cover these costs on the interest they earn on my deposited money. What about the monthly $10 fee that I have to pay just to keep my bank account open? Or the interest on the home loan that they have lent to me? Why do they need extra money on top of the money they are making?
It’s like if you order a pizza to pick up. Once paying you have to pay an extra 0.25%of the total cost to help pay for the staff and rent. Pizza places don’t do this because their price for pizzas covers this cost. Just like 99% of all businesses; however not banks.
Just to recap, this fee is to deposit your own money INTO the bank! You like me probably thought that the banks wanted you to deposit as much money as possible into their bank. This fee suggests otherwise.
Inward cheque dishonour fees are another even crazier example of a ridiculous fee. This fee no longer exists, however it worked like this. You sell a boat to a friend for $5000. Your friend writes a cheque to pay for the boat. You deposit it into your account and the cheque bounces due to a lack of funds in your friend’s account. Guess what, you incur a fee and so does your friend.
I can understand your friend getting a fee, as it was his responsibility to make sure the money was there to cover the cheque. But why are you getting charged? You had no knowledge of what is going on in your friend’s bank account. You have taken the cheque in good faith.
This is just one more example of banks pushing the envelope.
What really upsets me more than anything, are the fees that are too high for things that banks pay very little to solve. For example, you can pay as much as $40 for being one day late on a credit card payment.
$40 is a huge amount to pay to miss a deadline by 24 hours. What has this cost the bank by you missing this deadline? Absolutely zero. They have not lost a cent. However you are out of pocket by $40. The funny thing is you might owe less than $40 on the entire card.
It’s in the bank’s interest that you miss this deadline. They want you to be late; it’s money in their pocket each time you are late.
Believe me banks don’t budge on any fee. If you cop a late fee, cash handling fee or any other crazy fee, try and get it reversed. This can be as hard as trying to swim the English Channel. They fight tooth and nail not to give you back your money. Sometimes you will have a victory in fighting it. However, most times you will just have to learn your lesson and move on.
My advice is to learn your bank fees inside and out. And then get organised to avoid them.
Thanks
Adam Goulding (Also known as Mr Home Budget)
www.mrhomebudget.com.au
Monday, February 1, 2010
“When will median houses in Australia hit the one million dollar mark?”
It is an interesting question. I think that everyone would agree that median house prices will hit $1million sometime in the future. However what none of us will agree on is the year this will occur. Will it be 5 years, 10 years, 20 years or 50 years? No one can say for sure.
The Age newspaper recently had an article saying that “$1million homes will be the norm in a decade”. They predict that before 2020, a regular home in Australia will cost $1million dollars.
Peter Boehm, a real estate expert, looked at this scenario. He came up with a spreadsheet to show what has happened between 1999 and 2009 to get to our current house prices. And a second spreadsheet showing what would have to happen to get to $1million dollars by 2020.
Median House Prices October 2009
Capital City X Oct 1999 X Oct 2009 X Change X %Change X Compound Growth
Sydney X $315,000 X $615,000 X $300,000 X 95.0% X 6.9%
Melbourne X $199,000 X $519,000 X $320,000 X 160.0% X 10.0%
Brisbane X $150,000 X $459,000 X $309,000 X 207.0% X 11.9%
Median House Prices at $1 million October 2019
Capital City X Oct 2009 X Oct 2019 X Change X %Change X Compound Growth
Sydney X $615,000 X $1,000,000 X $385,000 X 62.6% X 5.0%
Melbourne X $519,000 X $1,000,000 X $481,000 X 93.1% X 6.8%
Brisbane X $459,000 X $1,000,000 X $541,000 X 117.8%X 8.1%
He then suggests that $1million dollar median house prices are fairly likely. This is due to the fact that the growth only needs to increase between 5 and 8 per cent per year. And that is well under what was achieved over the last decade.
There is one thing that I don’t think Peter Boehm takes into account. He leaves no room to suggest that property prices are already overvalued. This is the strong position that I take. Look at what property has done between 99 and 09. In Melbourne, there was a 10% compound growth. This is not a small percentage, this is a huge percentage.
In fact, if prices keep moving this way in Melbourne for the next ten years, by October 2019 house prices would not be $1million dollars, they would be $1,346,152.
Let’s look at a story about shares which could help explain my overvalued scenario (I will use the Melbourne price rise as the figures here). Pretend you bought $5000 dollars worth of ACME company shares on Oct 1999. Each share is worth $5.00, so you get 1000 shares. Over the next ten years to Oct 2009, your shares go up 10% a year. Now you still have 1000 shares, however they are worth $12.96 a share or $12,968 in total. You think if they only go up 6.8% over the next ten years, I will have $25,000. You think wow, 6.8% is such a small amount compared to 10%. This must be very likely.
However you never take in the fact that the rise between Oct 1999 and Oct 2009 might be over done. People might have been dazzled by the company’s prospects and paid too much for their shares. Making them worth more than the intrinsic value of the company. This happens all the time in the share market. So what happens is either the shares go backwards or they don’t move anywhere for a number of years.
Peter Boehm in his article doesn’t consider this fact. He has looked at the last ten years and made an assumption that house prices are not overvalued.
He has not taken into account that Australians are in debt up to their eyeballs. $56,000 per every man, woman and child. And this amount is up 71% from 5 years ago. In my opinion house prices have gone up because there has been a bigger fool principle going on. There has always been a bigger fool who borrows more to buy a house.
People seem to have this belief with housing (unlike shares and stocks) that house prices can never fall. That they will continue to move ever higher for years to come. In this case, Peter Boehm has taken that view. As he uses the words in describing house prices moving to 1million dollars before 2020 as fairly likely.
Sure prices could be at $1million dollars in 10 years time. Maybe if we had high inflation or hyper inflation. But in that case you would be paying $5 for a can of coke. So $1million dollars wouldn’t have anywhere near the same purchasing power as it does today.
Please, in reading any article about housing prices, do understand that they can go up and down. Just because they have had a miracle run in 10 years does not mean we will get even half of that in the next ten.
Thanks for reading
Adam Goulding (Also known as Mr Home Budget)
For more information go to www.mrhomebudget.com.au
The Age newspaper recently had an article saying that “$1million homes will be the norm in a decade”. They predict that before 2020, a regular home in Australia will cost $1million dollars.
Peter Boehm, a real estate expert, looked at this scenario. He came up with a spreadsheet to show what has happened between 1999 and 2009 to get to our current house prices. And a second spreadsheet showing what would have to happen to get to $1million dollars by 2020.
Median House Prices October 2009
Capital City X Oct 1999 X Oct 2009 X Change X %Change X Compound Growth
Sydney X $315,000 X $615,000 X $300,000 X 95.0% X 6.9%
Melbourne X $199,000 X $519,000 X $320,000 X 160.0% X 10.0%
Brisbane X $150,000 X $459,000 X $309,000 X 207.0% X 11.9%
Median House Prices at $1 million October 2019
Capital City X Oct 2009 X Oct 2019 X Change X %Change X Compound Growth
Sydney X $615,000 X $1,000,000 X $385,000 X 62.6% X 5.0%
Melbourne X $519,000 X $1,000,000 X $481,000 X 93.1% X 6.8%
Brisbane X $459,000 X $1,000,000 X $541,000 X 117.8%X 8.1%
He then suggests that $1million dollar median house prices are fairly likely. This is due to the fact that the growth only needs to increase between 5 and 8 per cent per year. And that is well under what was achieved over the last decade.
There is one thing that I don’t think Peter Boehm takes into account. He leaves no room to suggest that property prices are already overvalued. This is the strong position that I take. Look at what property has done between 99 and 09. In Melbourne, there was a 10% compound growth. This is not a small percentage, this is a huge percentage.
In fact, if prices keep moving this way in Melbourne for the next ten years, by October 2019 house prices would not be $1million dollars, they would be $1,346,152.
Let’s look at a story about shares which could help explain my overvalued scenario (I will use the Melbourne price rise as the figures here). Pretend you bought $5000 dollars worth of ACME company shares on Oct 1999. Each share is worth $5.00, so you get 1000 shares. Over the next ten years to Oct 2009, your shares go up 10% a year. Now you still have 1000 shares, however they are worth $12.96 a share or $12,968 in total. You think if they only go up 6.8% over the next ten years, I will have $25,000. You think wow, 6.8% is such a small amount compared to 10%. This must be very likely.
However you never take in the fact that the rise between Oct 1999 and Oct 2009 might be over done. People might have been dazzled by the company’s prospects and paid too much for their shares. Making them worth more than the intrinsic value of the company. This happens all the time in the share market. So what happens is either the shares go backwards or they don’t move anywhere for a number of years.
Peter Boehm in his article doesn’t consider this fact. He has looked at the last ten years and made an assumption that house prices are not overvalued.
He has not taken into account that Australians are in debt up to their eyeballs. $56,000 per every man, woman and child. And this amount is up 71% from 5 years ago. In my opinion house prices have gone up because there has been a bigger fool principle going on. There has always been a bigger fool who borrows more to buy a house.
People seem to have this belief with housing (unlike shares and stocks) that house prices can never fall. That they will continue to move ever higher for years to come. In this case, Peter Boehm has taken that view. As he uses the words in describing house prices moving to 1million dollars before 2020 as fairly likely.
Sure prices could be at $1million dollars in 10 years time. Maybe if we had high inflation or hyper inflation. But in that case you would be paying $5 for a can of coke. So $1million dollars wouldn’t have anywhere near the same purchasing power as it does today.
Please, in reading any article about housing prices, do understand that they can go up and down. Just because they have had a miracle run in 10 years does not mean we will get even half of that in the next ten.
Thanks for reading
Adam Goulding (Also known as Mr Home Budget)
For more information go to www.mrhomebudget.com.au
Monday, January 18, 2010
“Westpac are greedy and guess what, you do care”
“Westpac are greedy and guess what, you do care”
Earlier this month, Australia’s largest mortgage broker reported that a “large proportion” of its home loan business in December, came from Westpac customers switching to other lenders in protest at the banks oversized rate boost.
In case you missed it, Westpac put up their home loan rates by .45% where the Reserve Bank of Australia only put it up by 0.25%. You might remember the banana smoothie advert/ email that they sent to their customers.
We in Australia have been taking so much flack from our banks over the years. High bank fees, ludicrous bank fees (e.g. a cash handling fee), home loan rates that go up two days after a lift in interest rates but then taking 11 days to come down after a fall in interest rates. ATM fees of $2.00 a transaction, monthly bank account keeping fees, credit card interest above 20% and credit card fees that you need to be a rocket scientist to work out. Normally they have done this with impunity. People being lazy or not caring have not put these banks in their place. And because of our silence as a nation, we have let them steamroll us into untold revenue for their shareholders.
So when I first heard about Westpac doing this, it is just something else we will have to deal with and pay. I was convinced that people would huff and puff but not much would happen or change.
I’m so happy that it seems that people are standing up to Westpac. Changing their home loan over to a different bank is sending them a message. Believe me this does not just send Westpac a message; it sends all banks a message. There are customers willing to do the hard yards to change to a different bank if their bank pushes them too far. And in this case it does seem that Westpac has pushed them too far.
What this action does is keep the banks honest. It keeps them in line and shows them that you can only treat people like numbers instead of customers for so long.
What I like most about this situation is that people are switching their home loans. Home loans are probably the most difficult product to switch. Credit cards, savings accounts and personal loans are difficult; however home loans take the most time, paperwork and possible fees to switch. These customers have all endured some time and pain to send a clear cut message.
The biggest secret that all four banks don’t want you to know is that while there are four of them, they operate in a relative duopoly. This means if you leave one you simply join with one of the other three. So the banks, as long as they do everything as a foursome (e.g. putting up rates together at once) you could leave your current bank but more than likely you would be going to a bank that is doing the same thing.
In this case, Westpac went out and did it alone. None of the other banks followed and that’s why people have chosen to move. Congratulations again to the people that changed from their Westpac home loan.
Thanks
Adam Goulding (Also known as Mr Home Budget)
www.mrhomebudget.com.au
Earlier this month, Australia’s largest mortgage broker reported that a “large proportion” of its home loan business in December, came from Westpac customers switching to other lenders in protest at the banks oversized rate boost.
In case you missed it, Westpac put up their home loan rates by .45% where the Reserve Bank of Australia only put it up by 0.25%. You might remember the banana smoothie advert/ email that they sent to their customers.
We in Australia have been taking so much flack from our banks over the years. High bank fees, ludicrous bank fees (e.g. a cash handling fee), home loan rates that go up two days after a lift in interest rates but then taking 11 days to come down after a fall in interest rates. ATM fees of $2.00 a transaction, monthly bank account keeping fees, credit card interest above 20% and credit card fees that you need to be a rocket scientist to work out. Normally they have done this with impunity. People being lazy or not caring have not put these banks in their place. And because of our silence as a nation, we have let them steamroll us into untold revenue for their shareholders.
So when I first heard about Westpac doing this, it is just something else we will have to deal with and pay. I was convinced that people would huff and puff but not much would happen or change.
I’m so happy that it seems that people are standing up to Westpac. Changing their home loan over to a different bank is sending them a message. Believe me this does not just send Westpac a message; it sends all banks a message. There are customers willing to do the hard yards to change to a different bank if their bank pushes them too far. And in this case it does seem that Westpac has pushed them too far.
What this action does is keep the banks honest. It keeps them in line and shows them that you can only treat people like numbers instead of customers for so long.
What I like most about this situation is that people are switching their home loans. Home loans are probably the most difficult product to switch. Credit cards, savings accounts and personal loans are difficult; however home loans take the most time, paperwork and possible fees to switch. These customers have all endured some time and pain to send a clear cut message.
The biggest secret that all four banks don’t want you to know is that while there are four of them, they operate in a relative duopoly. This means if you leave one you simply join with one of the other three. So the banks, as long as they do everything as a foursome (e.g. putting up rates together at once) you could leave your current bank but more than likely you would be going to a bank that is doing the same thing.
In this case, Westpac went out and did it alone. None of the other banks followed and that’s why people have chosen to move. Congratulations again to the people that changed from their Westpac home loan.
Thanks
Adam Goulding (Also known as Mr Home Budget)
www.mrhomebudget.com.au
Wednesday, January 13, 2010
“What planet are you on? Property prices to surge; I don’t think so.”
“Buy a house before property prices are beyond your reach,” was the message from a recent Yahoo article on money. The article says in no uncertain terms that property prices are heading upwards again. In fact to quote directly from the article, “Property buyers are being urged to take the plunge early in 2010 to avoid missing out on purchasing their dream property at a price they can afford”.
Someone called Meighan Hetherington, managing director of Property Pursuit in Brisbane said, “Buyers need to realise that the peaks and troughs of the property market are shortening; so we are now seeing the start of a property market surge, reminiscent of 2007."
Then the article says in bold writing “Don’t wait until it’s too late”
I’m not sure what planet these people are on. With Australia having 100.4 debts to GDP, why in God’s name would there be a rise in property prices? People are struggling to pay for their houses right now.
House prices in Australia are hugely inflated and expensive compared to the rest of the world. Yet for some reason these people who can’t see that we are already in a property bubble are acting like cheerleaders trying to work the property market up higher. And worst of all, reporters with national audiences like the Yahoo article believe them. That we need to pump more air into this already overinflated bubble.
USA, England and New Zealand have had big falls in their home prices. Not to mention most of Europe. But for some strange reason Australia has avoided this bubble popping. Yet people believe that there is still room for the market to move upwards.
Well I guess as long as there is a bigger fool to lend more money from the bank, the property market will continue to keep going up. Remember that in Victoria the medium house price has just passed the half a million dollar mark to $520,000. No this is not for a mansion. This is the price for a medium house. If Meighan Hetherington is correct and she talks of a surge, what could that mean for a medium house price in Victoria?
Well let’s say it goes up by 5% per year over the next three years, this house would now be worth $601,966.
Up by 7% per year over the next three years, this house would now be worth $637,022.
Up by 10% per year over the next three years, this house would now be worth $692,120.
Up by 12% per year over the next three years, this house would now be worth $730,562.
However, let’s look at the words Meighan Hetherington uses, “surge, reminiscent of 2007”. When I think of the word surge, that makes me think of 15% to 20% a year; not 1% to 14%. In fact the dictionary describes the word surge as the following, a strong, wavelike, forward movement, rush, or sweep. That definition of the word definitely describes prices moving above 15%.
Well 15% per year over the next three years, this house would now be worth $790,855.
And 20% per year over the next three years, this house would now be worth $898,560.
And this is for the medium priced house. Can you see what I mean by this?
What scares me is someone reading the Yahoo article might just decide to buy a house that they can’t afford based on the predictions from someone else. The article and language including the title made it seem as if you are not in the housing market right now, forget about getting into it in the future. Some people might purchase a house thinking, “Sure I can’t afford it now, however with property going to SURGE, it’s like money in the bank”.
Any research of the property market will soon show you this is probably not the case. However in being fair and balanced, I would like to say that this is only my opinion. I have been known to be wrong in the past and I’m sure that I will be wrong in the future. You need to make up your own mind.
Thanks Adam Goulding (Also know as Mr Home Budget)
www.mrhomebudget.com.au
Someone called Meighan Hetherington, managing director of Property Pursuit in Brisbane said, “Buyers need to realise that the peaks and troughs of the property market are shortening; so we are now seeing the start of a property market surge, reminiscent of 2007."
Then the article says in bold writing “Don’t wait until it’s too late”
I’m not sure what planet these people are on. With Australia having 100.4 debts to GDP, why in God’s name would there be a rise in property prices? People are struggling to pay for their houses right now.
House prices in Australia are hugely inflated and expensive compared to the rest of the world. Yet for some reason these people who can’t see that we are already in a property bubble are acting like cheerleaders trying to work the property market up higher. And worst of all, reporters with national audiences like the Yahoo article believe them. That we need to pump more air into this already overinflated bubble.
USA, England and New Zealand have had big falls in their home prices. Not to mention most of Europe. But for some strange reason Australia has avoided this bubble popping. Yet people believe that there is still room for the market to move upwards.
Well I guess as long as there is a bigger fool to lend more money from the bank, the property market will continue to keep going up. Remember that in Victoria the medium house price has just passed the half a million dollar mark to $520,000. No this is not for a mansion. This is the price for a medium house. If Meighan Hetherington is correct and she talks of a surge, what could that mean for a medium house price in Victoria?
Well let’s say it goes up by 5% per year over the next three years, this house would now be worth $601,966.
Up by 7% per year over the next three years, this house would now be worth $637,022.
Up by 10% per year over the next three years, this house would now be worth $692,120.
Up by 12% per year over the next three years, this house would now be worth $730,562.
However, let’s look at the words Meighan Hetherington uses, “surge, reminiscent of 2007”. When I think of the word surge, that makes me think of 15% to 20% a year; not 1% to 14%. In fact the dictionary describes the word surge as the following, a strong, wavelike, forward movement, rush, or sweep. That definition of the word definitely describes prices moving above 15%.
Well 15% per year over the next three years, this house would now be worth $790,855.
And 20% per year over the next three years, this house would now be worth $898,560.
And this is for the medium priced house. Can you see what I mean by this?
What scares me is someone reading the Yahoo article might just decide to buy a house that they can’t afford based on the predictions from someone else. The article and language including the title made it seem as if you are not in the housing market right now, forget about getting into it in the future. Some people might purchase a house thinking, “Sure I can’t afford it now, however with property going to SURGE, it’s like money in the bank”.
Any research of the property market will soon show you this is probably not the case. However in being fair and balanced, I would like to say that this is only my opinion. I have been known to be wrong in the past and I’m sure that I will be wrong in the future. You need to make up your own mind.
Thanks Adam Goulding (Also know as Mr Home Budget)
www.mrhomebudget.com.au
Monday, January 4, 2010
“Australians’ debt is about to bubble over”.
“Australians’ debt is about to bubble over”.
Just imagine a nearly boiling pot of water seconds away from hitting boiling point. The water is still quite calm and not moving much. However within about 30 seconds all hell breaks loose. The water starts moving, bubbling and frothing in an uncontrollable, unpredictable manner.
There is a sense in my bones that this analogy is similar to Australians’ debt issue. Right now all is still calm, however any month now an uncontrollable and unpredictable economy might take shape. With Australians finally hitting breaking point with all the debt we are in. Is there going to be a straw that will break the camel’s back?
And we are in debt, tons of it; right up to our eyeballs. In fact on Dec the 27th Australians now owe 1.2 trillion dollars. Yes that’s right I said trillion with a “t”. This is our debt on credit cards, personal loans and mortgages.
In fact this is on average, $56,000 for every man, woman and child in the country; up 71 percent from just 5 years ago.
Let’s do the sums. So if it is up 71 per cent from 5 years ago what does this mean? Well by my calculations, in Dec 04 as a nation, we owed $33,000 per every man, woman and child. This has climbed by an average of 11.2% each year, every year since then.
On average our debt has gone up by 11.2%. This is not a small percentage; this is a huge percentage. Especially, when you consider most people are only getting a 3 to 4% pay rise each year.
Did you know at 11.2% our debt doubles every 6 years and 3 months. If it keeps going this way we will be at $105,880 by Dec 31st 2015... Only six years away.
In fact Australians’ debt now totals 100.4 percent of our total yearly GDP. In case you don’t know what GDP is: It is all the money spent in the country for the whole year. (Please note this is a basic one sentence explanation of GDP). Plus this 100.4 is one of the highest ratios in the developed world.
Will Australia hit a debt wall? Will people all of a sudden not be able to pay back loans? This figure shows that there is trouble ahead. People are talking as if the GFC is already over. However, these figures in my opinion at least, show that Australia is maybe just getting started.
I’m not 100% sure of all the reasons of how we got to this situation. But we must start changing and quickly.
There seems to be this undercurrent of worry out there. Most people seem to be putting on a brave face, however there are people really struggling.
We can’t as Aussies keep going along as if everything is fine; purchasing overpriced houses, using our credit cards and taking holidays on personal loans. We seem to keep doing these things as a whole because everyone else is doing it. We seem to feel safer in numbers doing stupid things than going it alone. I heard this story many years ago. I’m not sure where it came from, however I will tell it with my best recollection as I believe it describes this debt problem perfectly.
A man walks by a frozen river. He sees a bridge 500 metres into the distance that he must walk over to cross the river. He has no intention of crossing on the ice as he does not know how thin it is. However just in the corner of his eye he notices people; 2 or 3 people walking across the river. Then some children come and start iceskating. He watches further as people start going on the frozen water and having snow ball fights. Soon half the town is on the ice having a good time. As each person steps onto the ice it gives other people the confidence to step on the ice. Each person on the ice reassures the other people that the ice is 100% safe. The man seeing that the ice now looks very safe decides to cross the river. However he gets half way across and he hears a crack. The ice is breaking and everybody is screaming. They all fall into the freezing cold water.
The ice could only take so much weight before it gave way. I wonder what the weight of debt Australians can take before our ice gives way? Are we there now or do we have a few years to go? Who can say? What I do know is that with debt moving up 11.2% a year it can’t be too long before we hit the wall.
Thanks from Adam Goulding (Also known as Mr Home Budget)
For more information go to
www.mrhomebudget.com.au
Just imagine a nearly boiling pot of water seconds away from hitting boiling point. The water is still quite calm and not moving much. However within about 30 seconds all hell breaks loose. The water starts moving, bubbling and frothing in an uncontrollable, unpredictable manner.
There is a sense in my bones that this analogy is similar to Australians’ debt issue. Right now all is still calm, however any month now an uncontrollable and unpredictable economy might take shape. With Australians finally hitting breaking point with all the debt we are in. Is there going to be a straw that will break the camel’s back?
And we are in debt, tons of it; right up to our eyeballs. In fact on Dec the 27th Australians now owe 1.2 trillion dollars. Yes that’s right I said trillion with a “t”. This is our debt on credit cards, personal loans and mortgages.
In fact this is on average, $56,000 for every man, woman and child in the country; up 71 percent from just 5 years ago.
Let’s do the sums. So if it is up 71 per cent from 5 years ago what does this mean? Well by my calculations, in Dec 04 as a nation, we owed $33,000 per every man, woman and child. This has climbed by an average of 11.2% each year, every year since then.
On average our debt has gone up by 11.2%. This is not a small percentage; this is a huge percentage. Especially, when you consider most people are only getting a 3 to 4% pay rise each year.
Did you know at 11.2% our debt doubles every 6 years and 3 months. If it keeps going this way we will be at $105,880 by Dec 31st 2015... Only six years away.
In fact Australians’ debt now totals 100.4 percent of our total yearly GDP. In case you don’t know what GDP is: It is all the money spent in the country for the whole year. (Please note this is a basic one sentence explanation of GDP). Plus this 100.4 is one of the highest ratios in the developed world.
Will Australia hit a debt wall? Will people all of a sudden not be able to pay back loans? This figure shows that there is trouble ahead. People are talking as if the GFC is already over. However, these figures in my opinion at least, show that Australia is maybe just getting started.
I’m not 100% sure of all the reasons of how we got to this situation. But we must start changing and quickly.
There seems to be this undercurrent of worry out there. Most people seem to be putting on a brave face, however there are people really struggling.
We can’t as Aussies keep going along as if everything is fine; purchasing overpriced houses, using our credit cards and taking holidays on personal loans. We seem to keep doing these things as a whole because everyone else is doing it. We seem to feel safer in numbers doing stupid things than going it alone. I heard this story many years ago. I’m not sure where it came from, however I will tell it with my best recollection as I believe it describes this debt problem perfectly.
A man walks by a frozen river. He sees a bridge 500 metres into the distance that he must walk over to cross the river. He has no intention of crossing on the ice as he does not know how thin it is. However just in the corner of his eye he notices people; 2 or 3 people walking across the river. Then some children come and start iceskating. He watches further as people start going on the frozen water and having snow ball fights. Soon half the town is on the ice having a good time. As each person steps onto the ice it gives other people the confidence to step on the ice. Each person on the ice reassures the other people that the ice is 100% safe. The man seeing that the ice now looks very safe decides to cross the river. However he gets half way across and he hears a crack. The ice is breaking and everybody is screaming. They all fall into the freezing cold water.
The ice could only take so much weight before it gave way. I wonder what the weight of debt Australians can take before our ice gives way? Are we there now or do we have a few years to go? Who can say? What I do know is that with debt moving up 11.2% a year it can’t be too long before we hit the wall.
Thanks from Adam Goulding (Also known as Mr Home Budget)
For more information go to
www.mrhomebudget.com.au
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