Why aren’t we living within our means? 292



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There’s an epidemic sweeping Australia and I fear that it has been for quite some time now. People are not living within their means. It’s quite tragic really. So many of us have nice cars, so many of us have too big houses with too big mortgages, so many of us have boats and holiday homes and so many of us choose to eat out or buy nice things – but it’s all on borrowed money.

When I think of the people I know and call my friends, I can think of at least six who are in very bad debt – even in their 60s. They’ve spent their life doing lovely things, going on great holidays, living the good life but it is all from re-mortgaging their homes and getting loan after loan. One of them has even rolled multiple car loans together after having continues incidents with the vehicles – now the loan is worth triple the car!

One of these ladies I am very close with. I’ve loaned her money before and we’ve told each other our secrets – we never hold back in saying what we think to each other. Last week she came over for dinner and told me she doesn’t know how she will afford to re-insure her car or her mortgage when her annual payment is due next month. In the next breath she told me that her new local coffee shop had changed coffee beans and the new ones were so much better for her daily coffee. I pursed my lips for a moment but eventually said that the $5 she spends on coffee every day comes to $25 a week… $100 a month that could be used to pay that car insurance annual fee. Sheepishly she said she also buys a piece of banana bread. That’s another $4 that she could be saving every day.

People choose to do the finer things in life like treat themselves to store bought coffee every day but can’t pay their loan repayments or the necessities like the bills that come in each month. We’ve lost touch with the value of a dollar and the meaning of debt.

There are so many people out there who have no choice but to be in debt. So many over 60s lost wealth invested in funds and shares during the GFC. So many of us have struggled as single parents or have lost wealth going through divorces. But most of these people find a way to live within their means. They don’t treat themselves every day. They don’t buy nice things just to have them for keeping up appearances sake.

At the end of 2013, Australian households were in more debt than they have in the last 25 years. Australians owed $1.84 trillion to banks and lenders. That comes to $79,000 for every person living in Australia at that time.

There is a beautiful excitement that comes to buying a first home. Home loans are, if you ask me, a very sensible use of debt. But it’s the rest of it, the re-mortgaging, the borrowing and most of all the meaningless spending that makes me marvel at the Australian people.

We’ve let ourselves get so caught up in keeping up with the Jones’s and living lavish lives that are so far out of our means and it might be too late to reel it all back in.

Why do you think so many Australian’s aren’t living within their means? Do you see people living this way almost in denial of the impacts of their spending?

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  1. Because nobody wants to wait for anything these days, in my day we started out with a home that was modest and could be paid off on one income however these days they have to have the biggest and the best of everything when starting off, oh yes I blame the banks for that, they are greedy and over the years they have loaned to people who can least afford it and they didn’t stop there, they then encouraged you to apply for the good old credit cards until they had your neck well and truly in a noose and unfortunately people believed they could meet their payments until baby number 1 came along and then they were in real trouble.

    19 REPLY
    • Bang on! We had to jump through hoops when we applied for a home loan, when we were about 25 or 6. We didn’t get it, even though we owned a block of land. We didn’t have a credit rating, they said we might have children and be reduced to one wage. So my husband built most of the house, we saved up and when we had enough he did a bit more, it was started. Moved in before gyprocking, tiling, floors, etc done! By the time we’d finished it all (approx 1 year later) we still owned it. Set us up for when I did resign to start a family). Had to borrow a small amount when we moved 8 years later, a building society lent us the money then. I was blessed to have a husband who worked so diligently and constantly

    • Wen U come from the old school, U never got anything unless U had the money … Even now we still don’t borrow … We’ve had three homes and never had a mortgage … I guess it’s because we’ve stayed within our means … I couldn’t sleep at nite with debt hanging over our heads ….

    • That’s exactley wat we did Margaret … I didn’t want to rite all that , but U did it for me .. Lol ..

    • But I also blame the developers and their greed too. They are the ones telling people nowadays that the big house is the norm. Architects have designed super houses which cover the whole of the small block, we used to think a ‘family room’ was special, now there are multiple bathrooms, tv rooms, all sorts of nonsense. And these new places are expensive. Banks are in collusion because they are financing them. Where can you find a small simple house these days? Apart from building it yourself, and not many people can do that these days.

    • Always keep in mind that banks are doing business, the key business is to lend the money and make money out of money. They are not warfare service centre.

    • Yes it’s what I did and still do today. Trisha I agree. Nothing but the best. Seen it heaps.they have all different house designs just takes a little longer looking around. I’m sure if you didn’t want 3 bathrooms, cinema, playroom, etc you don’t have to. It’s your choice. Nothing different to buying a dress. Do they talk you into buying one you don’t like?????

    • Unfortunately Anne, in the area I love in there is a starting size for homes which can’t be under 35 sq’s which means the young people of today may not have a choice in starting with something smaller that they can afford, it is a disgrace.

    • Husband in building trade built our house,moved in with front door & back door & 5 kids,it was just a little past lock up stage,I only insisted on kitchen & bathrooms being complete,I tiled bathroom floors & kitchen flash back,have all be modernised in granite now,everything had to be finished,painting,wardrobe doors,door handles, ect,ect,floors were sanded before we moved in,out side everything had to be done,driveway,gardens set out & planted decks to be built, a few years later a pool put in could go on & on,borrowed the maximin $8000 now worth $700,000,but was very hard on about $36 a week,house built in 1967….interest rates higher than today’s, they’ve never had it so easy if they would come down a peg or two..

      1 REPLY
      • We started just like you Judy, in New Zealand first house under 4000 pounds did our own driveway, painted the roof, had no carpets, not much else.. The house is still looking good, wish it was still ours…55 years later. Having it all was not what brought us down, other problems came to our door after having a successful business for 20 years in Bath UK. In our fifties we hit the black spot, but we are pretty good at surviving, more often by the skin of our teeth!

    • Trish Daley, my daughter and son-in-law, when going for a bank housing loan ten years ago, were offered an enormous loan, based on their then-combined incomes. I was dreadfully alarmed and GENTLY mentioned to my
      daughter that, if she became pregnant and, for some reason, couldn’t work, they’d probably lose the lot!

      They bought a small, 3 bedroom, 1 bathroom, 2 toilet, no family room house on 1/3rd acre of lovely garden. Two fruit trees. Added chook shed. Starting veggie plot. Lots of external room for 3 boys.

      Ten and a half years later, we occasionally reflect on what they, THEMSELVES, had also been concerned about, too – over committing and losing the lot. A very wise decision on their part, too, BECAUSE….

      Although my daughter worked through most of their first pregnancy, during the first few/several months of their next two pregnancies, she was EXTREMELY ill with SEVERE vomiting (hospitalised several times)
      and, as her great husband had to keep working, I was glad to step in for months, both times, until my daughter was much better and could do most things, then just helped out. She’s said, several times, that they don’t know how they would have coped without me to help out, as the existing child/children would have had to have been put into care – at least during the days!

      Now, with all the boys at school, she’s back studying, but even that had had to be put on hold – for years!

      Trish, like you, I just wish that the young ones could understand that, even with the best of plans, their situation can quickly alter.

    • Your right Kate, the Banks wouldn’t be willing to mortgage a small home, not enough interest in it for them, they have a lot to answer for.

    • Judy Chappell, I take my hat off to you and hubby! Brilliant effort by both!

      By the way, my sister-in-law and I were widowed (many years apart), she with 6 children, I with 3.

      On low incomes, we each managed our finances extremely well, kept our modest houses, which gave our children stability, paid off our mortgages, both houses were extended by one room, those paid off, then we were mortgage-free for our ‘older’ age.

      I recently received a $20,000 inheritance and spent it painting trims, ceilings, re-plastered my bedroom and wood-lined my bedroom ceiling plus new carpets throughout – plus buying an excellent second-hand car (Honda, LOW kilometres – know someone in the trade, who hand-picked it for me).

      Had to pay off nearly 3/4 of the carpet on a ‘no-interest for 40 months’ deal, but did so in 20 months. This was because carpet prices are high for a very good one, plus the fact that PAINT (HAYMES, Australian made and lovely to use and great quality) was more expensive than I realised and had eaten into my carpet allowance. Hated the temporary debt.

      Now saving up for a new back ramp, then curtains for two rooms, which I’ll sew. Inside house is now lovely. Just a few LITTLE jobs to complete.

      The light fittings waited until I had saved again and look lovely, too. Nineteen years ago, I recovered my lounge suit cushions and armrests myself in a very expensive tapestry (half-price from an upholster’s
      ‘end lot’), and it’s still in fantastic condition.

      Luckily, my late mother taught me to sew. I’ve made my curtains, most doona covers, any fancy pillowcases, tablecloths, many of my children’s clothes, including primary school winter tracksuits and windcheaters (many years ago, now), my dressing gowns, many pieces of clothing, etc.
      Even sewed for a few weddings for friends’ daughters – hard task with three young kiddies! Sewed much of it after they were in bed or at school! Did volunteer work for 10 years, as well as helping out a bit at their schools.

      Oh, well. It’s been a struggle many times, but I have self-respect, love my children and all my grandchildren, am grateful for my children’s help with this and that (carpentry, etc. here and there) – and still have an excellent credit rating! LOL!

    • I’m sorry, Trish Daley, I don’t agree that’s it’s the banks fault. What happened to personal responsibly??? I get letters all the time from banks to get a new credit card and they go straight into recycling. I have a debit card which means I have to have the money before I spend it. People want everything yesterday and have been given too much by Governments instead of working for it!!!

    • It’s all well and good to say buy a small home that you can afford on one income. Has anyone looked at the prices of those “small homes” these days? Afford them on one income? Perhaps if that income is substantial. We paid $11,033 for our first home (land included) and we could manage on one income. We had friends who built their homes themselves while they lived in the shell. I very much doubt that the regulations and council rules would allow that these days. I can agree that many waste money wanting everything NOW but it’s not that simple for a lot of people these days, no matter what age they are.

    • You can’t put an old head on new shoulders so there for it is the fault of the Bloody Banks so get your facts straight, and feel free to stay out of this conversation.

    • Harsh Trish Daley, but I happen to agree with Emily Mary Wallis. If you put yourself on a public forum, you must expect that others are entitled to their opinions…..we were all young at some stage and learnt by experience but at the end of the day it is the responsibility of the person/couple to not go for large mortgages or credit limits, if you do not have the payback capacity, common sense. The banks are a business and they are there to make a profit……all that glistens is not necessarily gold…..

  2. Because everyone wants everything NOW. Gone are the days when you saved for things then updated cars,home etc when you had the money

  3. Are we talking about individuals or the crazy out of control LABOUR party that owes all this .

    8 REPLY
    • Lesley, just stupid Labor propaganda. I can find many of these stupid little boxes saying the opposite. Don’t fall for all that social media political shite.

    • Dianne Starr Wisher we are talking about personal debt here not budget deficits and if you want to be fair about this your crazy out of control liberal party has tripled the deficit in 17 months on quite needles things but has no money to pay pensions or medicare or health or education or infrastructure or any of the small things that governments fund.

    • Of course the debt has madly risen since the libs came into gov’t How could it not when we have to borrow big time to pay just the Interest on labors debt =plus liberals debt because they are operating on borrowed money too ;Labor having left us totally without money to opperate on !Do yourMaths and put the blame where it belongs–on labor!!

  4. Household debt is out of control. Read the article Dianne Star-wisher.

    4 REPLY
    • Oh I read it alright… I know exactly what it said…..how do you expect people to live within their means when their leaders don’t. People are like sheep just follow along after the one in front. They just borrow and borrow go along their merry way then leave the debt for those who come after…. .no I can’t be right can I?

      1 REPLY
    • This is the reason I won’t sell my house. To move elsewhere or downsize, I’d lose, stamp duty etc and my kids had thought I could go into a retirement village to find out I would never own it and that I’d be paying expensive exit fees plus a general service fee each week. I can mow the lawns myself and pay my rates for less than $120 per week. No way! What I have, I’ll keep but it is kept nicely and I have a dog and he is expensive, clipping, vet, insurance but he’s cheaper than a shrink. I’m happy but I live well I eat reasonably well and very healthy. I will happily pay to put a coat of paint on something or have repairs done to make it look presentable.

    • Dianne it is not the gov’t that is following the extravagent people that is the problem!!It is the people that want to follow that spendthrift Gov;t that we just got rid of that is the real problem !!

  5. If you are referring to my comment Gail Weston, then I suggest you read it again because I don’t blame young people I actually blame the greedy banks for encouraging young people to buy what they may not be able to afford, my son and his wife were talked into building a much bigger home than needed because the banks wanted to make sure they got the maximum mortgage out of them, don’t worry about the fact that it took nearly everything they had at the time and they were convinced if the bank said they could afford it then they could.

    5 REPLY
    • Can’t always blame others, people have to be responsible for their own actions – if you can’t afford don’t buy – simple as that.

    • I’m glad you see it so black and white Carole Harris, when my husband and I got our fist Mortgage the banks went over our finances again and again and some of our friends were told to keep trying because they just didn’t earn enough money on the mans wages to qualify, now they include both wages + any overtime if it is regular. YES I BLAME THE GREEDY BANKS.

    • With interest rates so low, more loans for investments on a second property are being allocated. Good for renters but boy if it crashes, look out! Banks are pushing these loans in a big way.

  6. Budget is what one should live by. Stay within your own means. I love having a budget and don’t have a credit card, if I can’t pay for it, I don’t have it. Simplicity and cheap pleasures seem to be a thing of the past. Nothing is more fun then getting a really good bargain, for instance a label brand top at the op shop for three dollars, sweet!

    2 REPLY
    • I have often looked at tee shirts at op shops and they are tired and worn, never good value. The only way to go with some tops is to buy in the sales. I know there is frugal, and my cousin only buys from op shops, good for her, but no matter what, I would rather buy just one tee shirt in a sale than look like I am wearing tired and over the hill clothes. And yes, I have often bought at op shops but I am very careful indeed. They can be bad value for money and I have to give back to another op shop.

      2 REPLY
      • Have to disagree, Kate. The op shops I go to have a policy of not stocking any garments in poor condition. There are many fantastic bargains to be had if you keep looking. At the Salvos near me, most items are $4 or $5. I don’t buy anything that doesn’t look near new.

      • Kate – I suggest you change your op-shop.
        Although the op-shop which I staff doesn’t stock clothing, there is another run by the same charity just up the road, which does.
        I asked the girls up there to keep an eye out for a good hi-viz top. It wasn’t long before one in new condition came in, which I THEN BOUGHT AT THEIR NORMAL PRICE – just a few dollars, anyway.
        I have bought a few other excellent items there, too.
        Anything which looks, as you put it, tired, doesn’t go in stock, by the Chief’s instructions.

    • I agree, I only go when I am away, strolling whilst away. Towns like Queenscliffe in vic are great, places where the wealthy throw out. Salvos are too dear, same goes for st. Vinnies. You can buy new at K Mart for cheaper. Just try not to wash them too much. Ha. My theory has always been, how many clothes can you wear at once? Cheers Kate.

  7. It is essential we educate our children and grandchildren how to save. The coffee a day example in the article highlights how easy it is to save. Add things like make your own lunch to take to work instead of a take away each day and you have thousands a year to pay off debt and invest. Governments also have a responsibility to live within their means.

    2 REPLY
  8. The banks have done a great job on marketing credit cards etc and normalizing debt

    4 REPLY
    • Why do u have a credit card? For convenience? So you don’t have to save and wait to buy! The banks marketing people have sold this idea to people – which normalizes debt -ie everyone has at least one credit card or home loan or car loan or personal loan – marketing debt has been hugely successful for all the financial institutions!

    • I have a credit card in case I run into a situation I didn’t see coming and for emergency use, car break etc down needing a taxi etc. Everything else is debit or savings and card is paid off at end of month.

  9. I sigh when I see the type of comment ‘in my day we went without’.. In those days most of us could afford to buy a house, these days many young ones are not able to buy and stuck with sky high rents. In those days you could have fun cheaply, we used to go camping with friends. Now, once the petrol games have finished, it will go back to not being able to afford the petrol. You used to be able to buy good food cheaply, not so cheap any more. It is much harder these days, I would hate to be trying to save money for major items.

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