Australia’s debt culture | SBS Insight
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- Опубліковано 4 лип 2022
- Australia has the second-highest household debt in the world, with the average person now owing twice as much as they earn. Insight takes a look at what's behind our debt culture and what rising interest rates mean for the future.
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The first lady still bought a house that she could not afford and still cannot afford. She calls that house her dream home but truly that is her nightmare something she can't afford
I’m from Ghana and people here have no debt. Everything is prepaid, from electricity to phones to rent. Almost everyone who owns a house is paid for. It’s hard to live without credit but one is forced to live within their means.
I have been debt free for over 20 years...the feeling was like you shook off some hard drug. A ton of weight was lifted off my shoulders. Young people must be educated at school level as to the effects of this debt debacle.
I agree. After 6 years and after paying off close to $100k in student loans and my car debt free, I won't go back into debt again. My mom passed away earlier this year and her death discharged the last chunck of what I owed. I may buy investment properties in the near future but only if they make sense. Otherwise I'd just sit tight.
There used to be a good old saying: "You will only get a loan when you prove you don't actually need it." That has changed. The good old honest banking has died. We now have sharks that are looking at making profit at all cost, even at the cost of people's misery and lives. And this isn't only a problem in Australia.
I agree, that's why the credit system in America is so hard. If you're credit isn't good you're not getting anything good.
The lack of financial literacy is just shocking
It is difficult to understand how the first woman thought that she could afford a house that was so expensive
and eight times her income.
I wanted to add another comment.
My parents were very immature people. Starting with my birth where my parents were teens who were too young to marry and eventually having 8 children they couldn't afford. They were always in debt. They borrowed from finance companies where the interest rates were usurious and were constantly borrowing from their parents. My father had mental issues and had to be institutionalized at times and this didn't help. We'd be on welfare which wasn't very generous in those days. My mother's narcissism was another factor. None of this was her fault.
I started working at real jobs when I was 13. I've lied about my age for so long I'm not sure what my age really is, lol. I've worked slinging burgers and eggs working shifts that by law I shouldn't have been working. I also worked in a tool and die shop and a sheet metal shop. My mother took my earnings and I had to ight to keep anything so I could buy clothing. I'd entered puberty wearing the same old hand me downs and thrift shop clothing. I'd grown 6 inches in one year and I was ashamed at how bad I looked.
My school work suffered of course. I had been in advanced programs that promised a college scholarship if I could complete the entire program. That was lost. Eventually I just stopped going to school. At 18 I got a good break. I had gotten an excellent job with Ma Bell. I convinced the interviewer that despite not having a high school diploma I could pass any examinations they had. I did and was hired.
My parents had moved us all to Dade County Florida. It was a spur of the moment decision. They didn't even bother to pick up our school records. I was placed in a grade that was far below what I'd been doing in New York City. I zipped through it all. I also made friends with people who weren't good company and I eventually found myself in a juvenile facility as an incorrigible.
My parents skipped out on all their debts. Our utilities were false names. The lenders tracked us down and we started getting phone calls looking for my mother. Our unusual surname made it easy. I knew to tell the caller they had a wrong number.
My mother was a dishonest person and congenital liar. She lied to everyone about everything. We used to have a peddler who'd come to the apartment. One time after he'd left I found two crisp folded $20 bills under the kitchen table. I gave them to my mother thinking she'd dropped them. The next time the peddler came I heard him ask if she'd found $40. She denied it. I knew to keep silent. I asked her about it and she said. " He's a Jew, he won't miss it.".
I got drafted in 1970. I joined the Navy for four years where the jobs were mostly technical versus the Army for two years and come out a grunt. I got a decent rating and went to a public works department where I learned utilities management, manpower and job scheduling as well as leadership. I went as far as I could go and let as an E-5.
During that time I was introduced to a friend of my supervisor's wife. She'd come to visit Barbara and I was her date for two days. After she left I wrote her and thanked her for the time. She wrote back and we continued writing. In April I went to visit family in New York and was invited to come to New Jersey to stay at her house for the weekend. I had proposed in New York and was accepted. Her parents must have been confused as I was the only guy she'd invited like that. I slept with her bothers. She didn't tell them about the proposal until I'd left. My mother in law was very upset. I wasn't a local boy.
This woman was working her way through college. Cleaning rooms at the Jersey Shore, cleaning up after lab animals at school and busing tables. Her parents weren't well off but not poor. I admired this work ethic. In September she graduated and we were married. We went back overseas for three years. She managed to find work despite not speaking the language. Despite our pitiful earnings we paid off about $7000. of her school loans. When we left the Navy we were debt free. That was easy because in 1972 credit was hard to get especially for a military person. I went back to the telephone company and found work in her field and we started saving for a home. After a year we got a VA loan and bought an old house. And we had a baby boy.
We stayed in New Jersey for four years. I hated it. It's a crummy place to live and the commuting was killing me and our marriage. There was an opening in North Carolina and we took it. After AT&T was split up I was laid off. I started a business and we did fairly well though I worked long hours.
This September (2022) we will be married 50 years. In that time we had sent our son to college. We paid for all of it so he could graduate debt free. We paid off our home in 15 years. We'd bought investment properties and sold them off when we'd tired of them. We kept one, an ocean front that was a good rental property from April to October. It is our retirement income, about $55,000 year. We have no debt. We used credit wisely. The beach house paid for and completely renovated using the rental income. We never took a dime from ourselves except for the down payment. We used the equity in our home for the down payment and paid that with the rental income as well.
We are now retired. Our son has done well graduating with two Civil Engineering degrees. He wasn't as smart with his money. He rented or 10 years. I'd advised him to get one of the condos. In most cases they are a poor investment but in the Washington, DC they are a very good investment. His wife had bought the same model that he was renting for $130.000 and 10 years later sold it for $390,000. He told me he regretted not following my advice. He'd spent nearly $180,000 in rent before he got married.
There are some rules to being successful financially in life.
Don't have children before marriage.
Limit spending on wants.
Borrow profitably.
Get an education for a profession or a well paid trade. Trades like plumbing, sheet metal/welding and tool and die pay very well. Yes, you get dirty but it washes off. It's easier to start a business in the trades because there are fewer people to compete against. You are the main asset and product. Charge well for your services. Insure yourself so the asset (you) can take care of your family if you are injured and die.
Work hard but more importantly work smart.
You'll find that you will have less family problems when you don't have financial problems. Finances are are major reason behind divorce.
We paid 25% down on our house and chose a shorter mortgage. The realtors and the banker told us we could afford “more house.” But we didn’t need “more house”, so we bought the older, less expensive house.
Folks have been misused by the lenders. I don’t criticize other people at all; we were older and more educated than the average home buyer, and we had seen my parents screwed over by the bank that held their mortgage, and so were forewarned.
Young vet..I feel sorry for her..the profession is at the edge, vets are leaving, there is a huge shortage of vets for the stress, the hours and the poor salary and still with a massive debt from uni to pay..very sad
What a brave group of people. Thank you all for helping others understand the severity of making financial mistakes -- it's a rabbit hole that quickly craters. Good luck to everyone! ✌
N. Eldon Tanner, a Canadian businessman and later a Mormon leader during the Great Depression, summed it up well when he described just how hard interest works against you. “Interest never sleeps nor sickens nor dies; It never goes to the hospital; It works on Sundays and holidays; It never takes a vacation; It never visits nor travels; It takes no pleasure; It is never laid off work It never works on reduced hours;
It never pays taxes; It buys no food; It wears no clothes; It is unhoused and without home And so has no repairs, No replacements, No shingling, plumbing, painting,
Or whitewashing;
It has neither wife, children, father, mother,
Nor kinfolk to watch over and care for;
It has no expense of living;
It has neither weddings nor births nor deaths;
It has no love, no sympathy;
It is as hard and soulless as a granite cliff
It crushes you
Live Below Your Means
Well I got debt free in 2019 when I payed off my 20 year mortgage and I did without a lot just to pay for my mortgage loan off and I am still driving a 18 year old car and no credit card debt and no car payment no mortgage payment no loans of any kind and no problems I had a plan to get out of debt before I got to full retirement age and 2021 the plan was complete
Credit is a necessary evil. I'm 71 and I've never known a person who could buy a home or car for cash. Automobile is the worst to me because you are borrowing to buy something that is worth less than the loan. When I was young the typical term was three years to pay it off. An oddity of the 1950s was the practice of paying the loan on car and once it was paid off trade the car in on a new one and get another 3 year loan. It never dawned on people to keep the car for a longer period and save some of the payment amounts toward an eventual new car and purchase something else you need or want. Cars came out every September and ads were splashed all over media starting in August.
That trend has been over for a long time. Cars became so expensive that the 7 year loan has become standard or the car is leased. You put a little down, keep the car for the term, paying on the lease monthly. At the end of the lease you can turn it in for another one or buy it for some nominal amount. If you turn it in you have to pay for wear and tear over the maximum and you are responsible for the maintenance of the car.
It's probably the worst investment we make and you also have to pay for license plates and inspections.
At some point it’s on the individual. You can try to blame everything else but in the end, you signed on the dotted line and it’s on you.
I had a SIX figure salary and would never ever think about buying a 500 k house NEVER it’s macroeconomics 101 . And had to be debt free at time of buying the house
Compound interest should be taught every year in high school to enable people to understand how debt and savings multipliers work over time
I remember a time decades ago when we desperately needed $500, and we got a “car title” loan and it took us 6 months to pay it off. Bad times.
American here, with, luckily, only a $100,000 mortgage debt. I have been where many of these people are since my husband is a spender. It took his job loss 11 years ago to completely alter my mindset. In the US it is illegal to discriminate due to age so an 80 year old can get a loan. We refinanced in 2020 making our first loan payment January 1, 2021. I have paid off over $24,800 of the mortgage during this time because I want to retire in 9 years with no mortgage. Even without a mortgage, I anticipate housing expenses of at least $500 per month in just taxes and insurance. Our first house payment in 1990 was not even that much!
If I could tell young people one thing to do it would be to pretend your income is cut in half or one of a couple (the highest income) loses their job because it can happen in a blink of an eye. It is a struggle, but you will realize how much money slips through your fingers and it will change your thought process. Promise to commit to it for 6 months, it will change your financial life.
Please, please, please turn ON the subtitles/closed captions facility.
*Ordinary* simple Citizen Vloggers are capable of doing this easy option when they upload their offerings, so why can't a _Jolly Big Organisation like SBS_ simply turn on CC mmmm?
Debt makes you a slave.
It's painful to watch things like this, and I'm almost afraid to watch because the attitudes might rub off on me!
Watching from Houston, Texas, USA. Interesting to see what is happening in another major country on the consumer indebtedness. Most of these stories are common to American households, but I was very surprised to see how low the student loan debt is in Australia. Would have liked to hear more about the $1million debt from businessman that passed debts along to his family members, it sounded like the siblings had to take on their mother's debt, something that is highly unlikely to happen in America. Does Australia have personal bankruptcy laws?
Student loan debt is lower there because tuition is much cheaper. Think of tuition in the USA during the 90s. I remember it was something like 5-10 k a year for the UC system in California and much lower for the state system.
I was surprised by the mortgages. I think the most I hear people in the states qualify for is 5x their annual income if they have good credit, and the mortgages they mentioned were much higher.
Great watch.
This is the same in UK too. The education system should teach kids about debt and money management as this is a really important skill required in adult life.
Some people learn about this early, some later on in life and some people don't.
Guess the 'Keeping up with the Joneses' culture and people showing off their possessions has got even worse with social media, whilst in reality they are up to their eyeballs with debt.
Budgeting Daddy UK
Thank you, this is a great program. Love it. Love the questions you posed
For Kate Chen having 1.9M in real estate debt on various properties is all good providing the renters continue to pay the rent! Being an accountant she may be on top of things but I wonder - it is not as easy as she makes out and wouldn't be easy if people stopped or were inconsistent with their rents. She is comfortable with the risk - her partner doesn't appear as comfortable.
She’s got a better business head on her shoulders than he is. I suspect she’s smarter than him and is the actual brains behind this operation. As an accountant she’s clinical and unemotional about business decisions. She’ll be fine.
Yep,people should feel ashamed of been in deb,most of this people buy stuff they don't even need,not me...!
It's happening in Canada too.
I hope they had more time. Love the conversation.
It's unnecessary spending that gets a lot of people into debt. I don't believe in buy now pay later
Australia’s economy hasn’t experienced a recession in decades yet things are this bad. Just imagine how bad it’s going to be when the country finally go through a recession. A lot of people’s lives are going to be in turmoil. This culture of debt is not sustainable and needs to change.
The situation these people are is is terrible no doubt. However, none of them seem to take personal responsibility, they were not forced into those situations, they made a series of decisions that got them there..
That's an ongoing problem worldwide,
Fantastic show 👏
You should get auto translate CC for English so the hearing impaired and foreign audience can watch your amazing videos.
Very interesting and similar in the UK. There are a lot of different kinds of debts on the programme. Many thanks to everyone who gave us their stories. I remember the 1980s in the UK and the day interest rates rose in one day 2% and then another 3% (5% in a day - Black Wednesday) and then down a bit and the year we locked in at 13% over 10 years on our home lone as that was cheaper than the much higher rates we had had - given my luck rates then started dropping but we were in at 13%,
It seems everywhere has debt culture.
Debt makes debtors to the slaves of lenders. Have no financial and emotional debt to anyone. Self sufficiency with the truth that you live within your means.
Never pay more than 25% of your take home pay for housing. That includes HOA, taxes, and insurance or what's commonly called escrow. This would mean you need to secure a fixed rate loan. If you do this simple thing you'll be able to stay permanently housed.
American's problem of the mortgage market of the 1990s is now Australia's problem.
Many people will lose their homes. They bought home they can't afford.
Buy a house below your means. Learn to live below your income level.
$55k income for 200k debt! That's a bad investment to hustle backwards. That's 1 to 4 basically.
Please get rid of that outfit...........................it distracts from any comments you make.
Wow! And I thought debt problems and financial insecurities like this only existed in America, for some reason I thought people in other countries were in a better financial position because of the way their banks and financial institutions are regulated by their government.😒
Lol. Ahhh, no.
WOW...
In the United States most people can only get approved for a mortgage 2.5 X their annual income.
With the usually required down payment the monthly payment should only be 30% of monthly income.
At least in Australia the standard of life is a lot higher than in Southamerica. I wouldn't be surprised if Chile had the same rates but a quality of life worse and almost as expensive as Australia.
This is an example of the kind of program that should give us the publishing date.
How come Tori earns such a crap income after spending so much to become qualified?
BTW, she's beautiful!
My people perish for lack of knowledge!
All just because the banks approve you for a massive amount of borrowing, you'd be a FOOL to max it out. Mad, mad, mad! Buy within your means, preferably under your credit worthiness, and pay it off ASAP. Once you've repaid, you can trade up if you need to (not just because you want to). Banks want you to default. It's no risk to them, they will just take what you have secured the borrowing against....your home.
Every single Australasian person needs to watch this. More restraint is needed. Financialized society, indebts, that is encouraged. Buy now, pay later. No, no, no, if too much .
You can have a great life living a " minimalistic" lifestyle. Debt and a maximalistic ( more is more) spending habit, can never lead to peace of mind. The strange thing is that debt is a problem for the high earners and the poor earners. Real " wealth" is if you have investments that you can live of the interest of the invested capital without spending the principal investment. That is if you can live of the dividendes without spending of the wealth, then you are pr definition a capitalist and wealthy. If you are spending your income and have debt that`s higher than your investments your need to spend lesser than you earn and save.
Consuming to feel better, is a form of addiction in the same way as any other obsessiv/toxic habit.
I never wanted to go into full retirement carrying debt mortgage and car payments and credit cards debt and loans
A house that's 8x your income! In what world is that a good idea? The rule has always been the home you can afford is 2 1/2 times your yearly income. Anything other than that (unless you have a huge down-payment) is a recipe for home foreclosure. It sounds like Australia is doing exactly what the US did in 2008.
What on Earth is this presenter wearing ???!!!
School systems have failed the community with personal financial education
20.37 ...lol
Hahaha housing will go down big time. Kate and hubby are going to be sinking!!
I hate to kick people while they are down but the answer to each one of these case studies are simple fixes but I surmise some aren't at the absolute end of the line and they're hoping for a miracle. I hope they get them. I'm retired and have been since 12/99 but I became a community volunteer home retention counselor in 2010. I'm in US and we had a government program called HAMP ( Home Affordable Modification Program) and other local, state, and federal programs to keep homeowners in their homes. It was really dependent on your lender and servicer what kind of help you got but out of 46 clients 39 are still in their home's. 4 were sold with no out of pocket expense and unfortunately 3 families were foreclosed on and lost their homes. Some of the 39 are remarkable journeys but my favorite was 2 school teachers who had purchased for 225K and mortgaged 198K and after 6 years owed 205K with home appraisal at 189K. Their mortgage payment at the time was $1710.00 (2014). Today they owe 149K and the house is worth 340K and their payment is $1180. So in 6 years they went from -16K in equity to +191K in equity with a fixed payment they can afford. Not a holiday or birthday do I not get a card, call, or visit from these incredible people. Hoping the best all these people. Homelessness is horrible and life changing so I urge all to try and avoid at all costs.