Repo's rising in US .Will it happen here?

[seabug]

http://www.nytimes.com/2008/05/20/business/20repo.html?pagewanted=2&_r=1&th&emc=th

All good things come to an end(Old saying)
Is this the end of the American Dream?

Regards
seabug

[jtpython]

Mate it is a worry let me tell you this may just be the start for us
I hear they are planning another rate rise in August when the hell is enuff
do we all have to eat 2 minute noodle for the long time waiting for everything to settle again
My wife just started full time work and everything goes up once you try to get ahead. Childcare / Social security drops down/ fuel goes up / achole goes up /
Rates go sky rocket to pay for amalagmation WTF
JT

[madman1]

Dont be surprised in further property value decreases. Every interest rate rise wipes out more prospective purchasers. Just look at how much the banks are offering to buy "OUR" money for. BOQ is now offering over 8% for our funds.

That suggests to me that 10% is not out of the question to borrow funds.

HOLD ON

[tin can marlin]

Not a good sign and the first thing that gets hit is luxury items which is boats. I must say i would hate to be a boat dealer if things keep getting harder. Lets hope there is not more rate hikes.

[PinHead]

I can remember when rates were at 17%..long way short of that yet.
On the flip side..there are a lot of people who are glad interest rates are rising...and they have the cash to buy boats.

[longtail]

Mate it is a worry let me tell you this may just be the start for us
I hear they are planning another rate rise in August when the hell is enuff
do we all have to eat 2 minute noodle for the long time waiting for everything to settle again
My wife just started full time work and everything goes up once you try to get ahead. Childcare / Social security drops down/ fuel goes up / achole goes up /
Rates go sky rocket to pay for amalagmation WTF
JT

I think you'll find there will be another rate rise before then..

don't want interest rate rises?? then stop using credit cards , stop borrowing money , make do with the 2nd hand car for a bit longer . the more personal debt we as a nation accumulate the more likely rates are going to go up. it's that simple . it amazes me the amount of people that can't seem to live without 4 or 5 credit cards maxed out. it's gotta stop sometime.

[gofishin]

no cash, no boat...

Find a mate & go out with him. Cheap boating ;D

[bigtez]

I am always amazed that even with the high cost of petrol and rising interest rates, we are in the busiest period in the marine industry we have seen for the last 3yrs. Wait times on new boats is longer then I have ever seen them. People just keep spending money on luxury items.

Its interesting that only a week after the labour governments first budget there is already strong predictions of a interest rate rises. Isn't that one of the major factors in the downfall in the last government?

[TimiBoy]

Oh God, is a political debate starting?

- Timiboy reaches for the popcorn again -

As he reaches for the beer he cops a smack from the wife "It's too early!"

Damn.;D;D;D

[Flex]

One big factor contributing to rises that nobody talks of, is superstores offering 5 years interest free ect. The "Take home now, pay later"

This allows people who wouldn't otherwise be allowed or afford such things to pump extra thousands into the economy.banks and credit unions have alot to answer for IMO

[nigelr]

The psychology of marketing has a lot to answer for............or does it?
Self restraint and common sense seem to have flown out the window.
"You need this big flash house/car/lifestyle in order to get respect"....................
Yeah right, come in spinner.
Once upon a time we made do with what we had, and saved and paid for goods with cash, except for the holy mortgage. Nowadays its all bought on the tick, damn the consequences. Sorry, can't find much sympathy.
Cheers.

[Hornet Rider]

no cash, no boat...

Find a mate & go out with him. Cheap boating ;D

gofishin's point is as valid as it gets - no cash - no boat, or alternatively is it a need or a want? We are a very spoiled culture in Australia, we might like to think we are hard done by, by successive Governments, the 'pen pushers' etc, but in the last 40 or so years we True Blue Aussies have been captured by the economy of play now, pay later, overly influenced by market options, and way too addicted to the misleading notion that 'it's my bloody right' to have it & to use it on my terms according to my view of what it really should cost. Recreational fishing, just like motor sport racing, amateur aviation, scuba diving, mounting climbing, sporting shooting & the list goes on, is a hobby. When ever did hobbies take priority over the responsibility of earning a living, saving for the future & providing for your family, if you are fortunate enough to have a family? For those who don't have the cash to spare for recreational fishing, then join a club, team up with similar folk, share the costs but don't use credit, it's not worth it.

[Noelm]

Oh God, is a political debate starting?

- Timiboy reaches for the popcorn again -

As he reaches for the beer he cops a smack from the wife "It's too early!"

Damn.;D;D;D

hehehe, now Timi is a comedien as well, must be contagious, but I guess the only answer to the original question is a resounding YES!!

[PADDLES]

yes ................. food for thought here guys, but what about all those people who bought a house during the big boom for top dollar and then fixed their interest rates at say 6% or so for a few years. they're all due to come off their fixed period sometime soon and then get slapped with a 3% or more rate rise in one hit .............. yow, i hope they've done their budget!

[PinHead]

One big factor contributing to rises that nobody talks of, is superstores offering 5 years interest free ect. The "Take home now, pay later"

This allows people who wouldn't otherwise be allowed or afford such things to pump extra thousands into the economy.banks and credit unions have alot to answer for IMO

No one is forrced to take these forms of finance..if people choose to go that way it their problem..it is all about choices.

[TimiBoy]

Spot on FNQ. It could be argued that Finance Houses and Banks are responsible because they'll loan just about anything to anyone these days (it used to be difficult to borrow money unless you could prove you didn't need it)

BUT, if you cock up your finances, it is (usually) your own fault. Personal responsibility seems to have gone out the window these days. Funny though, the only ones who get out of trouble are the ones who realise that it really IS a jungle out there, and you can only fix something yourself. No one, but NO ONE is going to do it for you. :P

[Splash]

I am always amazed that even with the high cost of petrol and rising interest rates, we are in the busiest period in the marine industry we have seen for the last 3yrs. Wait times on new boats is longer then I have ever seen them. People just keep spending money on luxury items.

Its interesting that only a week after the labour governments first budget there is already strong predictions of a interest rate rises. Isn't that one of the major factors in the downfall in the last government?

All smoke and mirrors...

I wonder if Australia's electorate are dum enough again to get sucked into another election campaign (in 3 years time) where the current Govt is blamed (wrongly so) for increasing/rising interest rates....?

Rudd played the game better than Howard in convincing the electorate that it was Howard's fault for rising rates.

We'll see who is to blame for 14% interest rates come 2010 8-)

Splash

[bigtez]

Well said Splash. That was the point I was trying to make, not start a political argument (guess thats why I am tradey and not a literary scholar). It seems no matter who is running the country they will always blame the previous government.

[Dirtysanchez]

Interest rates are very much influenced by international factors, and to a lesser extent domestic purchase trends and easy money finance.
It is true that if we improve our spending and reduce our reliance on credit, we can slow down inflationary pressure.
I watched a documentary on the ABC recently, and it was about the rise and rise of all these easy finance options, which suck a lot of people in. The banks used the likes of Harvey norman and co to get a foot hold where they offered 3 years interest free etc, and by all accounts it made overnight millionaires of a lot of the retailers and financiers. Their strategy was to pull you in for a few thousand on an interest free period, but they set the min repayments per month so low, you fell well short by the time the interest free period was over, and you defaulted to 18% + rates!!

We bought some loungeroom furniture, on one of these schemes, and straight away we worked out the amount necessary to repay each month, to leave a nil balance when the 2 years was up, and we paid it. The finance company got very shitty with us.. We used their money, to our advantage!

I have a friend who has to have the latest car, TV, mobile, Playstation etc etc etc.
Recently he seemed subdued and reluctant to open his wallet, which was odd. No worries, I paid for the carton and pizza. He then went on to tell me he had to take out a hundred thousand dollar personal loan to repay his 8 credit cards

A fool and his money are soon parted as they say ;)

[Splash]

well done Dirt (on the repayment scheme)!

[PADDLES]

if you're talking about the 4 corners show (called "debt nation" i think) on consumer credit sanchez, then it was a real eye opener. the bit that had me gobsmacked was that there's actually a support group for employees of lending institutions that have gone suicidal over the pressure being brought to bear on them by their employers to sell loans to absolutely anyone no matter how unscrupulous it is. like has been said though, it's borrower beware, if you can't afford it then dont have it.

[r3volt]

I think the only way i will buy a house is if i pack up and move somewhere no one wants to move too. Maybe ill buy one of those houses at collingwood park :)

[tunaticer]

One big factor contributing to rises that nobody talks of, is superstores offering 5 years interest free ect. The "Take home now, pay later"

This allows people who wouldn't otherwise be allowed or afford such things to pump extra thousands into the economy.banks and credit unions have alot to answer for IMO


In my opinion this form of sales pitch and credit facility should be outlawed completely. There is no need for people to be saturated with the buy now pay nothing for xx months interest free crap. I saw recently a major jeweller offering the deal, yet to see a boat yard offer it tho........wait for it........wait for it. It wont be long.

Jack.

[seabug]

All smoke and mirrors...

I wonder if Australia's electorate are dum enough again to get sucked into another election campaign (in 3 years time) where the current Govt is blamed (wrongly so) for increasing/rising interest rates....?

Rudd played the game better than Howard in convincing the electorate that it was Howard's fault for rising rates.

We'll see who is to blame for 14% interest rates come 2010 8-)

Splash

I never meant this post to be favouring any political party.

One is as bad as the other as far as being addicted to easy money.

EG,
The government gives first home buyers $7000
And houses jump 30-40%
Govt. reaps lots of stamp duty.
So they increase to $14000
And houses jump another 30-40%

Huge increase in Stamp duty on EVERY house bought.

So govt,turns a blind eye to shoddy lending practices that they must have known could only end in disaster.

Houses double in price

Govt. is now rolling in $ from stamp duty

But anyone buying a house recently or possibly in the future is paying a price for their home which would not have been reached for another 20 years if the above "Freebies "had not been available.

What really has happened is that there has been a massive transfer of wealth from todays homebuyers to the previous generation.

And not a word from any side of Govt. as it was happening.

At least that is how I see it.

Regards
seabug

[Flex]

Such is life I suppose. I know its harsh to say, but if you have to eat 2 minute noodles for dinner because of a couple of % interest rate rise. Then you shouldn't probably have bought that house to start with IMO.

Often you see people whining on current affair shows that they cant afford food or basics for their kids, yet in the background is a plasma TV and leather, they are living in a mansion with 5 bedrooms etc.

Its all a matter of priorities, I think the last 10 years people's definition of being "poor" is alot different than say 20-30years ago.

Im coal miner, So im one of those bastards contributing to interest rate rises due to the comodoty boom:).Im also very lucky that I pay no rent. BUT, I have to live in a shithole and an 50y old piece of crap house. This allows me to afford things I couldn't have otherwise. its all a matter of compromise.

Its bad interest rates are going up and I do feel for those people who are generally doing it tough(which there are lots who really are doing it tough).
but I feel some people need to change their priorities and maybe look at a downgrade, or spend less on that new TV,car, coffee every day and mcdonalds every second night.

[Splash]

I agree Seabug.

GREEEEEEEEED and Corruption at the highest level!

We should also note that Mining has changed the landscape (pardon the pun) of the whole country forever...

Splash

[tunaticer]

I have a different angle on the housing price hikes Seabug.

I blame channels 7, 9 and 10 for all thier "Hot Property" like shows that flooded Aussie TV for about 3 years. Effectively these shows educated the general public that it is good to get much inflated prices for your house when selling and to expect to pay much inflated prices for any house you buy.

Prior to these shows going to air the market steadily and slowly grew much in line with inflation rates. Once the shows started to educate people right around the country housing inflation skyrocketted and we have the current climate to live with.

In my opinion the 3 tv channels should be held responsible for a large part of the housing prices we currently endure. I would like to see them pay out all the billions they made from those shows into the first home owners grant scheme.

They are a very large part of the blame.

Jack.

[Splash]

...more greeed..

[billfisher]

The property market is just correcting back to a more sensible price. Stock markets correct all the time. But property is based so much on debt which can be a dangerous thing. The real risk is that this correction feeds into the overall economy through weaker consumer spending. Firms will start laying off and even more people will default on their mortages and there will be even more downward pressure on property prices. The US seems more at risk in this regard. The US Fed is pulling out all stops to prevent a recession. I think that the US will slow down but skirt by a recession thanks to the Fed's efforts and the fact that the World economy is strong. The much maligned globalisation of our economies mean that the US will draw strength from other countries. Their exporters will continue to do well aided by a falling US dollar and employment will remain solid. The balance sheets of US companies are centainlly more solid than that of their citizens!

[PinHead]

the financial industry is no different fro many other in a capitalist society. They have a product to sell and they need different sales pitches to get customers. Similar to anything else. How many times have you seen ads for cars where extras are supposedly included for no extra cost. Same with the finance industry.
There is no finance company to blame. No TV stations to blame. People purchase these products then some have trouble paying for them..same as some have done with cars or any other possessions. If you cannot afford the product then do not buy it. I have no problems whatsoever with what any finance company wants to offer. You have seen the offers of their product...it is your decision.

[TimiBoy]

How long will it be before we start talking in $Euro rather than $US? The US has an unfunded Super liability of something like $A Few Trillion coming up in a few years, and they run their economy on a credit card. Can't last forever can it?

[Splash]

Please elaborate on "The US has an unfunded Super liability..."

Splash

[wags on the water]

We all work hard for what we have, then there are those who put that little bit extra in when you want something so bad like a holiday, newer car, boat or big TV..... The way I see it is we, the taxpayers, are spending more frequently therefore we have too much money. So the government want to take our hard earned cash in the form of rate rises (on everything) because, heaven forbid, we enjoy that little bit of happiness. Soon there'll be no time for sport/ recreation/ holidays as we will be hard at work 7 days a week just to get by.

[FNQCairns]

All behavior is driven by regulation, if regulation says it's ok, if regulation dead ends opportunity or choice, if regulation enacted a result it is an expected outcome, we as the people must abide by it.

The previous federal government changed law to allow a domestic housing speculator bubble, there is one reason for the housing shortage and the resultant house prices - speculators locking up an essential need - the traditional family house.

It's as cold blooded as the Howard government and as cold blooded as the original design to change the negative gearing and capital gains tax rules on housing.

This allowed all those who had no interest in living in a 'investor quality widget' yet had the portfolio power to own and lock away 5,10, 20, or 30 of these common widgets, whereby sheer number of 'locked away widgets', the common bloke naturally in need of a traditional widget faced a lack of supply on the free market, this feed the housing price boom/bubble.

When graphed the price spikes are purely speculator and government driven -no doubt about it.

Point is the position we are in now was by design not in any way a natural progression, the housing shortage is only a shortage because of the sheer number of houses locked away by speculator's to drive up market value.

It's ok to believe different although anyone who followed the last 10years with interest, it was an amazing journey of almost treasonous intent or a philosophy of the like not often displayed by any 1st world government globally.

Sadly the inclusion of an increase in the first home buyers grant also spiked the value of speculators portfolios overnight with not one red cent of it helping those it was marketed toward.

Our personal dept problem we seem to have follows well when graphed against the government/speculator driven domestic housing bubble.

With thanks to the previous government, my niece and nephews have a life ahead not seen for many a decade in this country.

Will the current government have the balls to reverse the tax rules to right our ship slowly over time or will they consider it not popular? after all interest rate rises only badly hurt the bottom 15%, those above either see it as a great free money period or simply ride it out, history says the lowest 20% of the population is of little political consequence irrespective of what their country looks like through disenfranchised eyes.

I was one of those speculators, low level though it was, today in all reality I would have been better served as a responsible individual if government didn't ever initiate the ability for me to speculate, no way can I afford to correct for my wider family all of these wrongs I was associated with, they are starting out are stuffed.

Buy the credit financed boat, widescreen because the coldest of money has housing still in its grip and every person that stays classed out of the market is helping to stabilize it but still all is fubar compared to the quality of life we would as a nation have if we never knew the previous governments design was for housing.

cheers fnq

[Jackinthebox]

Please elaborate on "The US has an unfunded Super liability..."

Splash

Splash, I think Timiboy is referring to how the US Govt has been raiding the Medicare and Social Security funds to feed the George Dubya War machine for many years . In fact, they have been doing this for a long time now.


Last time I checked (a few years ago), US Medicare & social security were about 15 - 16 trillion in the red because the money has been raided for so long.

Many big company pension plans such as General Motors, Boeing, etc are in the negative like this as well which is why they started up Defined Contribution plans/401(k)'s which are similar to our Super. For the sake of the people that really need it, at least our national social security system is not as screwed as theirs

Like it or not, the current crop of pensioners who are complaining about not being able to live on $270p/week plus rent assistance, allowances etc, are better off than the people my age who now have massive mortgages to pay for decades and will probably not have a pension at all to fall back on!!!


Governments are resisting the push to increase the pension because they know that in the future, the economy will not be able to support the huge numbers of baby boomers drawing a pension in relation to the smaller taxpaying workforce who will still be struggling to pay off huge mortgages,etc. Couple this with a mega stock market crash when self funded baby boomers start pulling their money out of their Super funds to live on and I think we've got some interesting times ahead next decade.

Anyone that can't control their personal debt & levels of spending is gonna be up the creek in the future.

At least we can catch fish to eat when times are tough ... well some of us anyway:)

Mick

[Splash]

THanks Mick - I never knew about this (US Govt has been raiding the Medicare and Social Security funds).

And... " self funded baby boomers start pulling their money out of their Super funds to live on..."

BLOODY SCARY!

Another great thread - we fishos are pretty good financial analysts I reckon!

Splash

[PADDLES]

fnq, i agree wholeheartedly with what you are saying re speculators driving the price up, but they aren't the whole issue they are only part of it.

i mean that's how it all happened in the US when their rates were super low and the prices were going up, speculators bought up houses and drove the selling price up. they got a big shock when the bubble burst though, it can only sustain itself for so long. the only people that got hurt were people that had to get rid of a house that they had bought in the boom, ie. the speculators. if you didn't need to sell then you were ok, sure you paid too much but at least you're not selling for a loss. the prices are returning to what they should be worth over there right now.

a similar thing is happening here as well, the bubble has burst somewhat and the prices are going back to more reasonable levels and the market is stabilising. the buying frenzy is finished. the swings aren't as bad here (QLD) as it is in the US because we have something to sell the world ........... coal, and so there's development happening here which keeps us going forwards.

again the only people that are getting hurt are speculators that have to sell up their investments. there's factors other than speculators driving up the price just as much, ie. transport/materials/labour. i don't know how you can blame the government for the frenzy that just occured, what would be another solution to come from them? it's a free market economy here and prices would still be going up here in QLD whether speculators bought houses or not, simply because of the development and the number of people moving here.

by the way, i'm not a speculator, my accountant (wife) reckons rental investments are a mugs game and we're better off having some fun with our lives/money instead of working our @rses off to pay for an investment property.she let me buy a boat so who am i to argue? ;D

[Splash]

Lucky man Paddles - enjoy!

[PinHead]

fnq, i agree wholeheartedly with what you are saying re speculators driving the price up, but they aren't the whole issue they are only part of it.

i mean that's how it all happened in the US when their rates were super low and the prices were going up, speculators bought up houses and drove the selling price up. they got a big shock when the bubble burst though, it can only sustain itself for so long. the only people that got hurt were people that had to get rid of a house that they had bought in the boom, ie. the speculators. if you didn't need to sell then you were ok, sure you paid too much but at least you're not selling for a loss. the prices are returning to what they should be worth over there right now.

a similar thing is happening here as well, the bubble has burst somewhat and the prices are going back to more reasonable levels and the market is stabilising. the buying frenzy is finished. the swings aren't as bad here (QLD) as it is in the US because we have something to sell the world ........... coal, and so there's development happening here which keeps us going forwards.

again the only people that are getting hurt are speculators that have to sell up their investments. there's factors other than speculators driving up the price just as much, ie. transport/materials/labour. i don't know how you can blame the government for the frenzy that just occured, what would be another solution to come from them? it's a free market economy here and prices would still be going up here in QLD whether speculators bought houses or not, simply because of the development and the number of people moving here.

by the way, i'm not a speculator, my accountant (wife) reckons rental investments are a mugs game and we're better off having some fun with our lives/money instead of working our @rses off to pay for an investment property.she let me buy a boat so who am i to argue? ;D

truer words have never been spoken.

[PinHead]

Splash, I think Timiboy is referring to how the US Govt has been raiding the Medicare and Social Security funds to feed the George Dubya War machine for many years . In fact, they have been doing this for a long time now.


Last time I checked (a few years ago), US Medicare & social security were about 15 - 16 trillion in the red because the money has been raided for so long.

Many big company pension plans such as General Motors, Boeing, etc are in the negative like this as well which is why they started up Defined Contribution plans/401(k)'s which are similar to our Super. For the sake of the people that really need it, at least our national social security system is not as screwed as theirs

Like it or not, the current crop of pensioners who are complaining about not being able to live on $270p/week plus rent assistance, allowances etc, are better off than the people my age who now have massive mortgages to pay for decades and will probably not have a pension at all to fall back on!!!


Governments are resisting the push to increase the pension because they know that in the future, the economy will not be able to support the huge numbers of baby boomers drawing a pension in relation to the smaller taxpaying workforce who will still be struggling to pay off huge mortgages,etc. Couple this with a mega stock market crash when self funded baby boomers start pulling their money out of their Super funds to live on and I think we've got some interesting times ahead next decade.

Anyone that can't control their personal debt & levels of spending is gonna be up the creek in the future.

At least we can catch fish to eat when times are tough ... well some of us anyway:)

Mick

the baby boomers did not have compulsory super for everyone either..it was unheard of in the private sector when I started work in 1970.

That is what super is for..fund your retirement...instead of a pension.

[troy]

I started work in the sixties and never heard of Super.
My wife and i bothed worked and bought a beach house which a few years ago probably more was not worth a lot of money.
Because of the boom the price has been blown out of all perportion so much that a lot of people like me will not be able to get the pension.
So if you do not have a big super or investments to retire on it is either sell the family home or sell the beach house that you poored your life savings into.
Not having a whinge just telling it how it is.
I know a lot will say owning a beach house is a luxury so one should not expect the pension.
All i know is it has been a hard slog to own and maintain it and may be was not a wise decision.
Troy

[Splash]

Troy.

Based on what you know now, what would be your preferred way to go to fund/live in your retirement - if you could wind back 10 years...?

I am curious...

I thought having a family home in retirement is considered vital...and nto sell it..

Splash

[r3volt]

Capitalism as its best :D .. Houses and food cost more and more each day and the government and big corporations just laugh at all of us... its great

And as for house prices stablizing.. We may be slowing a little but we are still heading to another boom... Far too many people here now and so few houses

[kingtin]

Troy.

Based on what you know now, what would be your preferred way to go to fund/live in your retirement - if you could wind back 10 years...?

I am curious...

I thought having a family home in retirement is considered vital...and nto sell it..

Splash

I can understand where Troy is coming from. Someone pisses it up against the wall, retires with nothing and gets a pension. Someone spends wisely, and saves wisely, and doesn't get the pension because they are classed as having too many assets. The stupidity of it all is the guy on the pension may actually have been earning more than the guy with the assets.

I've been a one income family all my life. The first wife never worked due to bi-polar disorder and shot through and left me with 3 kids. Up until then, I'd been the sole provider. Luckily I met the deckie pretty soon after that and for the first time in my life, I was part of a two income family.........for only 12 months ::) The deckie decided that she wanted kids of her own and we both decided that they were not to be latch-key kids. I gave up work and we've been one-income for nigh on 15 yrs now.

We have never had credit cards and everything we have, other than the home, was paid for in cash

We came to OZ with nothing other than $18000...........no furniture........no bedding...........just my pro camera gear that I had sold within 6 months. I had a couple of insurance policies that I cashed in towards the 18k and that was our lot.

Oz was good and kind to us. We got in at the right time and made money on our first property and through frugal saving, we managed our first boat about 5 yrs ago.

The deckie got left some money by her parents and after the British Tax man took his 40% we paid off the mortgage and bought the Whittley.

Without the mortgage, the deckie could back off the overtime, although her conscience and the nursing shortage hasn't helped in reducing her work load, but we are "comfortable." We would have managed without her inheritance, we just wouldn't have had a boat as big as we wanted. The money we saved on the mortgage is now funding our kids through private school so it really is the kids who have benefited, particularly our autistic boy.

In real terms, we still only have the same buying power and lifestyle we had before she inherited a few bob, we just have the peace of mind of knowing that everything we have is ours and bought and paid for and no mortgage over our heads.

It's been a hard road and the deckie's parents made it easier for us, as did the wonderful opportunities that Oz presented to us. I don't think we would have survived in the UK on one income.

Although the pressure for us is off, I never lose sight of just how tough some folk are doing it, and as I have said in the past, if family and society had educated some of those doing it tough as to how they should manage their affairs, and how they should lower their expectations, then a lot of grief could be avoided.

As it is, that's the way society has gone and become............we want it yesterday........Things hopefully will change but I think that will only happen if we are all given a wake up call Unfortunately, if Thatcher's Britain and the resultant repossession of houses that ensued from her "economic strategy' is anything to go by, then that wake up call is coming along with all the grief and despair that it entails. I hope I am wrong.

kev

[Splash]

Thanks Kingtin and well done.

[seabug]

Capitalism as its best :D .. Houses and food cost more and more each day and the government and big corporations just laugh at all of us... its great

And as for house prices stablizing.. We may be slowing a little but we are still heading to another boom... Far too many people here now and so few houses

You may be right,
But that is not how it has worked out in USA.

In Febuary 223650 homeowners filed for foreclosure

California is hard hit.

Houses have dropped 29% according to the California Realtors Association. And a thousand foreclosed houses are auctioned every day,.

Meanwhile, other towns – such as Modesto, Stockton and Merced – are said to have 60% of their homeowners “upside down,” with more mortgage than house. Their unemployment rates are above 10%. And Vallejo, a city in Northern California, is taking the coward’s way out. It is slashing its wrists – it says it will declare bankruptcy
Source"The Daily Reckoning"

And some sources say that Australia has higher personal debt than USA

If that is true then the pain may be just starting.

Regards
seabug

[troy]

Troy.

Based on what you know now, what would be your preferred way to go to fund/live in your retirement - if you could wind back 10 years...?

I am curious...

I thought having a family home in retirement is considered vital...and nto sell it..

Splash
Splash
Mate it goes back a lot more than 10 years more closely would be 25 years.
I agree the family home is most important .
But no excuses we own our family home and the beach house which does not return any income as it is only accessable by sea and no water supply besides rain water tanks.
The problem is because of the mining boom the beach house is worth triple of what our house is worth but we cannot get a return from our beach house due to the isolation from the mainland and no facilities eg. we pay rates but we get no council ammenities not even a wheely bin.
As i said above i have most likely made the wrong decision but have had many years of enjoyment.
Troy

[kingtin]

Thanks Kingtin and well done.

All that waffling and I didn't get to the point ::) ;D

The conclusion is/was that it really is in the lap of the Gods (Gov't). The deckie's dad saved hard and paid his taxes to provide an inheritance for his daughters and the bloody british tax man took 40% from money that had already been taxed, even though we are Australian citizens.

Someone saves hard and is penalised by having the pension cut because they have "assets".............assets that are left over after the tax man has had his share, and yet they want more by reducing your pension! No wonder the grey nomads are cashed up............they're spending early rather than have their pension cut, if they hadn't spent it!

At one time, we leaned towards an investment property, not because we wanted an investment but to minimise the 23 grand that the deckie gives to the tax man each year. Then we decided that having no debts (investment property) was preferable to having a debt, even though that debt could negate the tax she was paying. We simply opted for peace of mind over tax minimisation.

What we are all talking about now is what was the deciding factor............uncertainty..............there is just too much uuncertainty nowadays. What if we couldn't find a tenant?...........what if the interest rate rose to unbearable heights? I suppose it boils down to whether you want to gamble or not, and we prefer stability, and inevatability, over what is not necessarily guaranteed. An investment can very easily turn into a millstone at the whim or stupidity of any government.

kev

[r3volt]

Maybe we all move to California while the houses are cheap

[Busted Melon]

All very valid points, something that seems to have been left out.

Stop buying (chinese) crap you dont need, with money you dont have, To impress people you dont like.

[Splash]

All that waffling and I didn't get to the point ::) ;D

The conclusion is/was that it really is in the lap of the Gods (Gov't). The deckie's dad saved hard and paid his taxes to provide an inheritance for his daughters and the bloody british tax man took 40% from money that had already been taxed, even though we are Australian citizens.

Someone saves hard and is penalised by having the pension cut because they have "assets".............assets that are left over after the tax man has had his share, and yet they want more by reducing your pension! No wonder the grey nomads are cashed up............they're spending early rather than have their pension cut, if they hadn't spent it!

At one time, we leaned towards an investment property, not because we wanted an investment but to minimise the 23 grand that the deckie gives to the tax man each year. Then we decided that having no debts (investment property) was preferable to having a debt, even though that debt could negate the tax she was paying. We simply opted for peace of mind over tax minimisation.

What we are all talking about now is what was the deciding factor............uncertainty..............there is just too much uuncertainty nowadays. What if we couldn't find a tenant?...........what if the interest rate rose to unbearable heights? I suppose it boils down to whether you want to gamble or not, and we prefer stability, and inevatability, over what is not necessarily guaranteed. An investment can very easily turn into a millstone at the whim or stupidity of any government.

kev

You should not have to worry about not renting out your investment properties now. Oz has turned dramatically and renting is now like USA - very high demand and not enough supply.

PS - take note of the last few years' surplus figures - $21bn - Amazing!
This is where all those taxes end up!>:(

SPlash

[billfisher]

I'm glad I got into the mining stocks five years ago. At that time here in Sydney we were at the height of property mania and everyone was a property expert. The sharemarket is gambling - by a hundred houses - no deposit - you have got no worries - was all I heard. At least I don't get nagged by the property bores anymore.

[kingtin]

You should not have to worry about not renting out your investment properties now. Oz has turned dramatically and renting is now like USA - very high demand and not enough supply.

PS - take note of the last few years' surplus figures - $21bn - Amazing!
This is where all those taxes end up!>:(

SPlash

So the gurus who quote the figures that they would like you to think are a true representation.

The truth of the matter is that many cannot afford the rents now. One estate that was built near me purely to satisfy interstate investors now has vacancies and those that aren't vacant have 5 or 6 cars parked on the drives and lawn.

The truth is that yes, you are renting out, but where you once knew who you were renting to to, there are now 2 islander families living in the garage, or 5 Centere Link claimants sharing the rent. The investors still get their rent, but the market is being shrunk and the "symptoms" of that market are frightening..........overcrowding is becoming the norm in rentals.

Beware if you have young adult kids.........they either won't leave home or will share a rental with those who likewise, can't afford a lifestyle of their own

kev

[Splash]

Thansk Kev. Scary thoughts.

Tell me - how should one plan for retirement - with or without pension?

Splash

[TimiBoy]

Thanks Jackinthebox, I wasn't about yesterday to explain the super bit (I wasn't, sadly, fishing). You've done a great job!

We had a similar issue here with our Public Service Super, though I believe that was largely dealt with by our previous Government. Let's hope the money stays where it should.

[PADDLES]

good call busted, that's actually a definition of "consumerism"

spend money you don't have, to buy something you dont need, to impress someone you don't like

[kingtin]

Thansk Kev. Scary thoughts.

Tell me - how should one plan for retirement - with or without pension?

Splash


Mate, you gotta go for the superann, particularly now as it's untaxed coming back. The deckie puts every spare penny into Q Super and salary sacrificing makes it even more attractive. Nobody can live solely on the basic pension.

There are older nurses, working part-time who's whole salary is sacrificed into Q Super and they live off the returns from the super.



kev

[Splash]

Thansk Kev,

That's what I have always thought - ever since Costello changed it 2/3 years ago...I swore to myself - never again buy more rental property...

Does having a big fat Super at Retirement affect one's ability to claim full pension?

Splash

[kingtin]

Thansk Kev,

That's what I have always thought - ever since Costello changed it 2/3 years ago...I swore to myself - never again buy more rental property...

Does having a big fat Super at Retirement affect one's ability to claim full pension?

Splash

Only if you have above a certain level of assets. I think it's around 236000 for a couple, not counting the family home. For every 1000 dollars you have over that, your pension would be reduced by $1.50 a fortnight

So if you owned your own home which isn't counted as an asset and had superann totaling say, 33600, you would have 100000 over the asset level so that's 100 x $1.50 = your pension would be reduced by $150 a fortnight.

As you can see, even a moderate superann will wipe out the Gov't pension which is why they've had to make the tax concession on superann so attractive. At least you have a good idea of your return via superann, whereas the go'vt pension is at the whim of politicians.

Many are simply spending big just before retirement to reduce their assets so that they get the pension. Others are "gifting" ie putting it in trust for the kids so it is classed as the kid's assets, not theirs. The truth of the matter though, is that you can't live on the pension alone so you have to rely on income from some assets...........it's just a matter of balancing the books to get the best from both your assets and the pension

Don't take this as gospel as it's a while since I looked at the future..............there was a time a short while ago that I thought that I didn't have one ;D

kev

[Splash]

Thanks Kev - again!

I have learnt alot over last few days reading these threads and it has been a very good reflective exercise.

As petrol has suddenly become a luxury, our lives are changed forever.

Splash

[Reel Nauti]

How well I remember the days in the very late '80s when interest rates went to 17%. As a young real estate salesman, married with one child and another on the way, it eventually forced me out. Along with hundreds of others. The recession we had to have....

People are hurting now of that there is no doubt, but I think it's got a long way to go. I hope and pray that we don't see the 17% again, but even that pales somewhat against the 21% when Howard was Treasurer for Fraser.

Every day now needs to be "kiss a Jap or hug a Chinaman" Day.

Dave