Who's in debt and by how much?

[Ghostwriter]

Me, all clear, but i'm more than curious to see what the level of debt is, I could be stating the obvious here but I think the banks are carrying loads of debt.

 

[Frodo]

Me, all clear, but i'm more than curious to see what the level of debt is, I could be stating the obvious here but I think the banks are carrying loads of debt.

I think you mean bad debt , now called impaired debt.

It's a problem, no transparency.

Take the four big power stations in Victoria. Loyang A & B, Hazelwood and....grrr, I can't recall the other one.
When privatised, for about 8 billion. 20% was cash and 80% debt. All four lines of credit are renewable in the next year or so.

Because of the 'carbon fad', the value of coal fired power stations has been crippled. The debt will not be renewed. So the banks will be sitting on a $6.2b default. Which banks? We don't know!!!

But don't worry Victorians, the lights wont go out. Who can tell me how it will be averted?

 

[dmc333]

I have $56 on my mastercard.

 

[dmc333]

I have $56 on my mastercard.

Paid it off now. I'm in the clear.

Seriously though, I don't think you're going to get anyone revealing if they're in it up to their necks.

 

[Scallop Industry Thug]

Why anyone would a get a credit card is beyond my understanding

 

[Brad Goodman]

Why anyone would a get a credit card is beyond my understanding

Frequent Flyer points!

If you never spend more than you have and pay it before interest kicks in you might as well.

 

[Eagle87]

Why anyone would a get a credit card is beyond my understanding

You dont travel much do you?

Try doing 50 or 60 international flights and staying in hotels for 120+ nights a year without a credit card.....

You would have to be 15 years old or 60 years old and one of those "I know better" types to not see some benefit from having a credit card...

 

[Frodo]

You dont travel much do you?

Try doing 50 or 60 international flights and staying in hotels for 120+ nights a year without a credit card.....

You would have to be 15 years old or 60 years old and one of those "I know better" types to not see some benefit from having a credit card...

Agreed.

We have company credit cards and personal ones. Invaluable.

 

[RobbieGray17]

I was once told that by using a credit card you could be better off. Always being good with money I got one and always paid it off every 2 months. The savings were very little, and if anything it tempted me to purchase items I didn't want. I now have no credit card and work completely from savings.

I have a mortgage, I orginally borrowed $184K, the repayments were $315 /wk and my income was $750 / wk after tax. Thats 42% of my income to the loan. The bank was prepared to loan me 220k. That was suicide in my opinion. This is why we are in so much debt now, people are borrowing too much rather than to take a conservative approach and build for tomorrow. Instead people wnat everything today.

 

[dmc333]

Why anyone would a get a credit card is beyond my understanding

How do you pay your ISP?

How anyone racks up thousands of $$ on them is beyond my understanding.

For me it's just a matter of convenience, it's linked to my other accounts and it's only sheer laziness if I haven't cleared the debt within a week.

 

[Ghostwriter]

I realise its a pretty direct and personal thread title, but if people don't want to be too specific I can understand, but i'd be very surprised if it was at least 1 in 10 people have debts of varying sizes, what caused this indulgence in debt, the banks must have known what was going on, just look at your balance sheets for gods sake, the slowdown in our economy will be huge, Rudd can throw as much money as he likes, the fact is there's not enough loose cash in the system, its all committed to loan repayments.

 

[Frodo]

How do you pay your ISP?

How anyone racks up thousands of $$ on them is beyond my understanding.

For me it's just a matter of convenience, it's linked to my other accounts and it's only sheer laziness if I haven't cleared the debt within a week.

That's spot on.

Anyone who pays interest at credit card rates is a fool.

 

[RobbieGray17]

That's spot on.

Anyone who pays interest at credit card rates is a fool.

Its called Greed, and lies with peoples inability to wait for things they like, rather they end up impulsively buying s**t they didn't even want in the first place because money is available.

 

[Scotland]

Why do people pay $2.50 for a can of coke when you can get a carton of 24 on special at Coles for 11 or 12 bucks? Convenience.

Credit cards and other easy forms of credit are simply convenient. Credit cards can be very beneficial, the only real negative is interest, and you are just stupid if you get yourself to the point where you need to pay any.

 

[Scotland]

I have a mortgage, I orginally borrowed $184K, the repayments were $315 /wk and my income was $750 / wk after tax. Thats 42% of my income to the loan. The bank was prepared to loan me 220k. That was suicide in my opinion. This is why we are in so much debt now, people are borrowing too much rather than to take a conservative approach and build for tomorrow. Instead people wnat everything today.

At the current historically low rates, banks are willing to lend me enough money such that the minimum repayments would be 60% of my net income based on the maximum term loan.

Funnily enough I don't see taking that on as a wise financial decision.

 

[RobbieGray17]

At the current historically low rates, banks are willing to lend me enough money such that the minimum repayments would be 60% of my net income based on the maximum term loan.

Funnily enough I don't see taking that on as a wise financial decision.

**** no, I can't remember the figures, But I worked out an absolute **** me over budget a while ago, I could afford a 270K Loan, but I would sit at home vegetate, Eat staple food, never go out, use candles, people have to be reasonable. I reckon 40% of net income is about right, at the moment, I'm able to put away $50 a week, with rates coming down, but I'm still paying the rates at 9% so I can pay of quickly

 

[RobbieGray17]

Why do people pay $2.50 for a can of coke when you can get a carton of 24 on special at Coles for 11 or 12 bucks? Convenience.

Credit cards and other easy forms of credit are simply convenient. Credit cards can be very beneficial, the only real negative is interest, and you are just stupid if you get yourself to the point where you need to pay any.

Haha I was talking about this the other day.....People at work pay $1.60 for a can of coke, and I buy them from the supermarket in packs of 20 on special for $11.99, people are so ****ing Dumb

 

[Steve_Addlem]

Haha I was talking about this the other day.....People at work pay $1.60 for a can of coke, and I buy them from the supermarket in packs of 20 on special for $11.99, people are so ****ing Dumb

I wouldn't call that being dumb. Its just a bit lazy.

 

[Scotland]

Lazy, dumb, stupid - same thing. A lot of people don't have the ability to plan ahead or budget, and plenty have zero willpower. If you have 24 cans of coke for example, it's OK to not drink them all before your next weekly shop...

Home loans as a percentage of income is an inexact science. There's no point paying $600 a week to buy a place over the course of 30 years when you can rent it for $300 and pocket the rest. $15k in additional savings is worth more than one year's equity in a house on a long-term loan, and house prices aren't looking like booming any time soon. The more you can afford to put into a home loan the better, as getting the principal down is the aim of the game. There's also no point prolonging a compounding debt to stick to a defined figure of 40% or less of your income is sufficient to pay a lot more.

 

[Power King]

Just curious how old people here were when they got their first credit card?

 

[RobbieGray17]

21 got it so I could do Ebay and buy pr0n, and what a ****ing waste of money that was.

 

[Ghostwriter]

Home loans as a percentage of income is an inexact science. There's no point paying $600 a week to buy a place over the course of 30 years when you can rent it for $300 and pocket the rest. $15k in additional savings is worth more than one year's equity in a house on a long-term loan, and house prices aren't looking like booming any time soon. The more you can afford to put into a home loan the better, as getting the principal down is the aim of the game. There's also no point prolonging a compounding debt to stick to a defined figure of 40% or less of your income is sufficient to pay a lot more.

Good post, the bit I bolded is whats gone wrong, paying down principal used to be the aim of the game, now its spending the equity in your home on holidays new cars etc, that game is finished too, back to paying down principal again, good luck spending the next 30 years paying back half a million dollar home loan.

 

[raskolnikov]

I only have my mortgage and HECS. I have a credit card but rarely use it and pay it off straight away.

 

[Scotland]

Good post, the bit I bolded is whats gone wrong, paying down principal used to be the aim of the game, now its spending the equity in your home on holidays new cars etc, that game is finished too, back to paying down principal again, good luck spending the next 30 years paying back half a million dollar home loan.

Nothing wrong with drawing a small amount of equity, provided you actually have some and understand that doing so is just increasing a large debt...

The fact that you can pay back a loan over 30 years is also a good thing, provided you know what it means. You can get your repayments down to a level comparable to rent, which is good if you are starting out in a career where your salary will increase with time, or need to pay as little as possible (birth of a child, job loss etc.) for a period. Despite the fact that you are buying your own home, you are putting a lot more money into the bank's coffers than you are into your equity the longer you drag out the loan term.

 

[Eagle87]

Most of the suggestions on here are common sense but the thing generally overlooked is income....

If you focus on improving your skillset and your income producing skills then many of these issues go away... I mean who cares about buying coke at $2 a can if you are making $400k per annum, who cares about a $500k home loan if you are making $400k per annum...

You can focus on below the line costs or you can focus on above the line income - neither are wrong but it does seem that this thread is mainly being posted into by "bottom line accountants"...