# How much debt do you have?



## sam76 (13 November 2008)

add up everything.

House, Credit Cards, HECS, Margin loans, Car etc....


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## prawn_86 (13 November 2008)

Would be zero without HECS...


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## chops_a_must (13 November 2008)

prawn_86 said:


> Would be zero without HECS...




I reckon I'll be pushing half a mill by the time I'm done with Uni. Lol. :

But zero without Hecs.


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## sam76 (13 November 2008)

prawn_86 said:


> Would be zero without HECS...




you and me both.

My last tax return paid a major chunk off. Not too far to go!


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## prawn_86 (13 November 2008)

sam76 said:


> you and me both.
> 
> My last tax return paid a major chunk off. Not too far to go!




Im undecided as to wether to pay it off with spare cash or not. So far i havn't.

Its a CPI adjusted loan, so theoretically its 'free'. Now i know you get the 20% discount for paying off lump sums, but if you were to put that money in a high interest bank account then it would take about 8 yrs to make that 20% (after inflation).

Plus i have plans to move overseas...


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## Ageo (13 November 2008)

After losing money (that i borrowed) from previous cowboy trading and buying a house (when i got married) i have a total of 490k in debt loans. I was worse off 6 months ago as i had another 20k on GE credit and car loans but that is paid off. I must admit i did learn the hard way and lost alot of money doing it, but in the end its only money


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## Glen48 (13 November 2008)

I go out working and just put the money in the bank as i have nothing to pay of however there is no incentive to try and get ahead...be good if we could get this survey out in to the rest of Australia's citizens the figure would be a lot different.


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## travwj (13 November 2008)

Between my partner and I we are about 230k in debt...bought an apartment...but no car loans, and no credit card debt...would be god to be debt free again.


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## Indie (13 November 2008)

For the first time in history, zero.


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## villemus (13 November 2008)

zero without HECS.... 

just paid off all my loans.....


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## nomore4s (13 November 2008)

I have about $130,000 owing on my home loan but in about a month it will be zero due to selling up.

My other half has about $90,000 owing on an investment property in QLD.


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## Spek (13 November 2008)

Nil


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## Sir Osisofliver (13 November 2008)

You know this poll would be a lot more relevant if you asked what the net worth was as well. Who is better off someone with no debt and minimal assets, or a large amount of debt and LOTS of assets?

EG

50,000 debt    100,000 in assets vs
500,000 debt    10,000,000 in assets are very different


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## gav (13 November 2008)

Sir Osisofliver said:


> You know this poll would be a lot more relevant if you asked what the net worth was as well. Who is better off someone with no debt and minimal assets, or a large amount of debt and LOTS of assets?
> 
> EG
> 
> ...




Haha, yes I can see the property owners giving their asset/s a nice value figure... :


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## marcadrian (13 November 2008)

Cash at hand $500k
Personal loans: $0k
Investment property loan: $390k (-$5k pa cash flow)

Not a bad spot to be in.. but where does one put $500k these days?


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## sam76 (13 November 2008)

Sir Osisofliver said:


> You know this poll would be a lot more relevant if you asked what the net worth was as well. Who is better off someone with no debt and minimal assets, or a large amount of debt and LOTS of assets?
> 
> EG
> 
> ...




We should put an age bracket in there as well.

All too hard with polling system we have.


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## Julia (13 November 2008)

marcadrian said:


> C
> Not a bad spot to be in.. but where does one put $500k these days?




Exactly.   Rates forecast to fall to sub 4%.  Inflation 5%.  Then tax.


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## tech/a (13 November 2008)

gav said:


> Haha, yes I can see the property owners giving their asset/s a nice value figure... :




No doubt a comment from someone who didnt take advantage of the biggest Property Boom in history!

Whats the point of this anyway.
Geared 38% on last valuation (4 mths).
As stated wealth is relative.
I hardly think anyone in the Poo's going to admit it!


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## marcadrian (13 November 2008)

I agree with tech/a. Although i'm on a lump of cash I don't own a house.. and I want to live somewhere nice in Sydney.  So all of a sudden I am feeling very poor...

A better question could be - are you happy with your financial position at present? How do you plan on improving it over the next 5-10 years?

Personally i want to have a passive income of $100k+ by the age of 40 (ten years time) for various reasons - travel, spend time with kids, escape to the hills/seaside etc. I plan to get there by watching ASF and betting on people's recommendations...


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## Ageo (13 November 2008)

tech/a said:


> I hardly think anyone in the Poo's going to admit it!




I did  but i also stated that i learned hard and well from that and on the road to recovery.


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## chops_a_must (13 November 2008)

tech/a said:


> No doubt a comment from someone who didnt take advantage of the biggest Property Boom in history!



Or from someone too young to be involved in it.


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## Tysonboss1 (13 November 2008)

We seem to be heading into a period of high inflation and low interest,...

You should ask your self weather it makes sense not to hold debt.

taking on debt to buy an asset that produces a cashflow that is likly to increase with inflation and also the capital value of the asset has a good chance of increasing with inflation is probally a smart thing to do during low interest and high inflation periods.

taking on a debt of $100K is much better than having $100K in savings during high infation periods, if the interest rate is low and you invest the money in somthing that has a natural hedge against inflation.

my debt icluding company debt is over a $M,... but the interest and principle payments are more than covered by revenue streams that are likly to grow with inflation.


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## gav (13 November 2008)

tech/a said:


> No doubt a comment from someone who didnt take advantage of the biggest Property Boom in history!




Sorry tech/a, my post was a joke, which is why I put the ( : ) at the end.  I find reading the arguments on the property threads quite entertaining 

And I was a bit young to get into the property boom.  But if I work and save hard, hopefully I'll have my own place in a few years time


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## derty (13 November 2008)

Well my wife and I owe just over $300k on the house we live in, we own a unit in Townsville last valued at $250k, no other debts and my wife and my combined pre-tax income is around $250k. So all seems well and good, though I work in the mining industry and live in a mining town so things can get pretty wobbly pretty quickly. We are looking at getting rid of that debt as quickly as possible and in hindsight wish we had have stuck with renting here in town.


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## tech/a (13 November 2008)

Tysonboss1 said:


> We seem to be heading into a period of high inflation and low interest,...
> 
> You should ask your self weather it makes sense not to hold debt.
> 
> ...




My sentiments exactly TB.
Those with cash will be highly eroded.

Lets take an example.
Lets say in 3 yrs time inflation has increased the price of building a home 20%. (I'm half way through one now and prices have increased 25% over 12 mths to build the same house!).

So you have $500K
Your house now costs $500K
In 3 yrs for instance that $500K wont cover the build by $100K.



> I plan to get there by watching ASF and betting on people's recommendations...




Must have mis-read the topic---is it how much debt you'd like to be in?


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## drsmith (13 November 2008)

Those with debt attached to depreciating assets will most likely be more severly eroded than those with cash.

There are very few winners in the current environment. It's about minimising pain.


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## Spek (13 November 2008)

Tysonboss1 said:


> We seem to be heading into a period of high inflation and low interest,...




Most people will make decisions on this assumption, but we are more likely to see low inflation if not deflation.


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## Tysonboss1 (13 November 2008)

Spek said:


> Most people will make decisions on this assumption, but we are more likely to see low inflation if not deflation.




we will have to aggree to disagrree on that point,...

the reserve bank has dropped trying to slow inflation and is reducing interest rates so inflation is inevitable.

After tax and inflation cash delivers a negative return,


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## SM Junkie (13 November 2008)

Credit cards $0
Personal loans $0
Car $0
Property investments - couple of Mil
Stock portfolio - hurting but all my own money

I'm in a happy place, few properties bought before the boom.  No way will they return to the levels I purchased at, infact still had 1.5% increase in last 12 months, which is better than going backwards.  Currently building three more in excellent location and all are interest only, so any rate drops only frees up more funds.

Not really concerned if any of my assets are depreciating in the current market.  Property is a long term view and my current building project although may have depreciated slightly, I have no doubt are solid long term investments. Even in the stock market, I'm saving like made at the moment and waiting to buy good quality blue chips (which is bit of a strategy change for me, but seems the logical action).

Still under 40 if age does make a difference. I think I get the same kick out of investing that other women get out of shopping.


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## jonojpsg (13 November 2008)

So should I then borrow against my house which I only owe $50k on to invest with??  Borrow $50 or $100k and put it in WOW or some other solid cash cow.

PS Not asking for advice mods, just seeing what people reckon


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## Tysonboss1 (13 November 2008)

jonojpsg said:


> So should I then borrow against my house which I only owe $50k on to invest with??  Borrow $50 or $100k and put it in WOW or some other solid cash cow.
> 
> PS Not asking for advice mods, just seeing what people reckon




That could be a good stratergy, Just make sure your comfortable with the repayments, and give your self a bufferfor interest rate moves.

Every one has I different opinion on when and how the market will recover it's up to you to form your own opinion and then make a move.

I believe consumer staples retailers can be a fantastic hedge against inflation due to the fact that they work on a profit margin on staple goods, so if they have a standard mark up of 40% if they buy something for a $1 they will sell it for $1.40 if inflation pushes up the buy price they will just pass that straight on in their sell price, so their revenue's grow with inflation.


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## tasmart (13 November 2008)

Interesting looking at the Poll results to date - which must be a reflection of the demographics of the people willing to vote - most have low or no debt.

However, as has been pointed out the question is of little value. Gearing is more relevant; is the debt business or non business - if business then marginal tax rates are relevant. Also the liquidity (actually current ratio) is important - can you cover the interest payments easily, is your income secure. What is the risk of you losing all your asset?

Considering the expected low interest rates, low stock prices and probable decrease in the property market, having managable debt is likely to be of considerable financial benefit in the coming market.

There are going to be some very good deals on property and businesses in the next year or two or three!

My 2 cents worth!


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## MRC & Co (13 November 2008)

Aren't we talking about a period of deflation now?  Cash is king etc (see USD).

The estimate of the estimate (expectation of CPI) was much lower than expected today, if I heard that squawk twat correctly.


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## JackC (13 November 2008)

Originally Posted by Spek  
Most people will make decisions on this assumption, but we are more likely to see low inflation if not deflation.

Not too sure how this is going to happen if the money being pumped into the system is coming straight off the printing press. But nothing would surprise me

Personally have a highly gearded IP with debt around 330k but currently renting in a much nicer area & have cash around 270k

Feel pretty comfortable at present, but pretty certain that there's more pain to come.


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## Tysonboss1 (13 November 2008)

MRC & Co said:


> Aren't we talking about a period of deflation now?  Cash is king etc (see USD).
> 
> The estimate of the estimate (expectation of CPI) was much lower than expected today, if I heard that squawk twat correctly.




depends if your looking with a microscope or a telescope, short term cash may be king but only while the instability continues and while the people controling the money supply don't continue speeding up the printing of it.

depending on your Tax bracket, Cash is delivering a negative inflation adjusted return, so is only good while the alternatives are deliverying a bigger negative return.


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## MRC & Co (13 November 2008)

Tysonboss1 said:


> the reserve bank has dropped trying to slow inflation and is reducing interest rates so inflation is inevitable.




The RBA haven't dropped trying to slow inflation, they have no concerns for high inflation anymore.  They think the economic climate will regulate inflation itself.

I think POG speaks volumes for the inflation threat.  It tried to decouple for a while there (at the height of this media frenzy), but didn't succeed.  

Cash doesn't have to mean you put your $$ into an Aussie bank account, there is always the USD


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## 2BAD4U (13 November 2008)

Debt - $1 mil (just signed up for more this week)
Assets - $1.5 mil (3 properties, shares, cars)

Am I happy? Yep. Am I worried? Nope. and with interest rates going down and my debt being interest only property loans, who wouldn't be happy.

PS: I'm 39yo.


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## freddy2 (13 November 2008)

Tysonboss1 said:


> depending on your Tax bracket, Cash is delivering a negative inflation adjusted return, so is only good while the alternatives are deliverying a bigger negative return.




Bringing forward future consumption, if possible, is the best alternative. Now is the time to be spending not saving.


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## Sir Osisofliver (14 November 2008)

I think it's also important to make the distinction between debt and liability.

Debt
You go and buy a $1,000.00 pair of sunglasses and whack it on your credit card.

Liability
You borrow $1,000.00 and invest in an appreciating asset that can be sold at any time (to clear your liability)

See the difference?

Sir O


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## theasxgorilla (14 November 2008)

tech/a said:


> My sentiments exactly TB.
> Those with cash will be highly eroded.




Curiously it's also sentiment contrary to what most people believe to be prudent right now.  Since the majority usually get it wrong when it comes to investing does that make this the safer bet? 

I'm in debt, but have a good LVR with plenty of buffer, and fully intend to buy another property at a high LVR by March next year.


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## Ageo (14 November 2008)

MRC & Co said:


> The RBA haven't dropped trying to slow inflation, they have no concerns for high inflation anymore.  They think the economic climate will regulate inflation itself.




Well im not sure what you mean but i thought when the money supply increases so does inflation? (i.e the purchasing power of your dollar becomes less). So if thats the case then how do you explain this?
http://www.rba.gov.au/Statistics/financial_aggregates.html



> over the month of September, M3 grew by 1.4 per cent and broad money by 1.3 per cent. Over the year to September, broad money grew by 14.7 per cent.




You can also download the tables to clearly show the supply of money is continuing upwards? perhaps the RBA isnt concerned with inflation by i can tell you now im freaked out by it.


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## chops_a_must (14 November 2008)

Deflation is the global concern.

Which is why money supply is increasing, to try and counteract that.


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## chops_a_must (14 November 2008)

theasxgorilla said:


> Curiously it's also sentiment contrary to what most people believe to be prudent right now.  Since the majority usually get it wrong when it comes to investing does that make this the safer bet?



What about widespread deflation though?

By your logic, and the logic of the property bulls here, I might as well borrow as much as I possibly can, and buy as much gold as I can get my hands on, because inflation is the worry.

But I doubt the property bulls would consider that. Why not?


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## Ageo (14 November 2008)

chops_a_must said:


> Deflation is the global concern.
> 
> Which is why money supply is increasing, to try and counteract that.




Well whatever the reason i fear the day they contract that money supply because if they dont we will eventually risk hyperinflation (soon we might see stagflation).


A good article by Frank Shostak (and Aussie)
Speaks about consistent money levels

http://mises.org/story/3197


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## nunthewiser (14 November 2008)

chops_a_must said:


> What about widespread deflation though?
> 
> By your logic, and the logic of the property bulls here, I might as well borrow as much as I possibly can, and buy as much gold as I can get my hands on, because inflation is the worry.
> 
> But I doubt the property bulls would consider that. Why not?




nah you got it all wrong chops , the way of this recession due is ......

borrow as much as you can 

buy as much gold as you can

dig the deepest hole that you can and bury said gold

go on dole , grow a mullet , become a bogan

claim bankruptcy

be viewed as a buisness mogul fallen on hard times



i hope this helps


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## chops_a_must (14 November 2008)

Hahahahahaa...


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## Indie (14 November 2008)

chops_a_must said:


> What about widespread deflation though?




I'm with you on this CAM.

So far there has been massive asset deflation in the stock market and it's now moving to the property market. It will move into the labour market soon too as unemployment rises. I've bet heavily on this by investing everything in YEN (mostly) and USD.

Inflation only works effectively when you couple printing with circulation. Although the printing presses are working overtime everywhere in the world, the mechanism used to distribute the money is broken, i.e banks. So the money isn't getting to the consumer. Also, credit is money is our financial system and the presses are not printing nearly enough to make up for the massive credit destruction taking place in the financial system. Central banks are cutting like crazy trying to re-inflate the economy but if the banks tighten lending and consumers are reluctant to loan then it makes no difference at all how much is printed. We are also in the process if re-regulating the world financial system as taxpayer money is used to re-capitalize banks. I can't see the same loose lending practices continuing under those conditions so that equals tighter money supply too. This is precisely why the government is not worried about inflation anymore. Any inflation that comes now will be as a direct result of the increased cost of foreign goods and capital due to the rapid depreciation of the AUD. Even this is likely to be minimal as slackening demand and rising inventories will drive down the price of commodities and goods until the bottom is reached and production is reset.

Those taking on debt to hedge against inflation in this environment are going to have their heads handed to them - IMO.


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## arco (14 November 2008)

Indie

How are you investing in Yen? (cash or?)

rgds - arco


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## Indie (14 November 2008)

arco said:


> Indie
> 
> How are you investing in Yen? (cash or?)
> 
> rgds - arco





I've never played the forex market so I simply have accounts with a bank (CBA) that are in YEN and USD and use cash. I have invested six figure sums so I get the wholesale rate when I convert. YEN attracts no interest, but the appreciation has been very good so far. USD attracts a small amount of interest. I just take a bit of profit now and then which is my philosophy when I invest in anything. Gotta keep increasing the living standard and enjoying life.

I'm opening a Interactive Brokers account to invest some more in YEN with leverage and I'm hoping to see a spike up in the AUD before I find a suitable entry point. However, I will probably only leverage 5/1 or so I can have some breathing space if the market turns against me temporarily and I need to wait for the tide to turn. Gotta watch the margin calls.


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## Prospector (14 November 2008)

The amount of debt you have is irrelevant; good debt and bad debt.  All of our debt is good debt and can be written off.  HECS debt is also good debt, because it educated you, although cant be written off and is very frustrating.  Someone with no debt but rents is most likely worse off then someone who has a PPOR debt.


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## prawn_86 (14 November 2008)

Prospector said:


> Someone with no debt but rents is most likely worse off then someone who has a PPOR debt.




lol, check the property threads for that hornets nest...


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## Prospector (14 November 2008)

prawn_86 said:


> lol, check the property threads for that hornets nest...




We did the number crunching on that maybe five years ago.  And buying a house was just ahead. Renting in today's market is a nightmare; and it takes a very disciplined person to put the 'savings' from renting into a savings account and not spend it.  It is indeed a hornet's nest!


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## theasxgorilla (14 November 2008)

chops_a_must said:


> What about widespread deflation though?
> 
> By your logic, and the logic of the property bulls here, I might as well borrow as much as I possibly can, and buy as much gold as I can get my hands on, because inflation is the worry.
> 
> But I doubt the property bulls would consider that. Why not?




I thought liquidity was the issue?  And access to credit?

Central banks and govs have lowered interest rates and printed money because they're trying to address the above issues and would rather deal with inflation than deflation.

What makes you think they won't succeed?


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## MRC & Co (14 November 2008)

Ageo said:


> Well im not sure what you mean but i thought when the money supply increases so does inflation? (i.e the purchasing power of your dollar becomes less). So if thats the case then how do you explain this?
> http://www.rba.gov.au/Statistics/financial_aggregates.html




Inflation is an increase in prices.  

Do you need to increase the money supply for prices to increase?  If crude becomes a scarce resource globally, will this increase the money supply in Australia?

I struggle to see how higher unemployment and a decrease in economic growth (disposible income included) are going to drive us to 'stagflation'..........unless of course the Chindia phenomenon can decouple from the Western world.  Something highly unlikely from what is currently being seen IMHO.

An increase in the money supply obviously means there is more in circulation, which can be spent/invested etc to drive up prices.  Doesn't necessarily mean they are going up if other forces are pushing them down.  Inflation is no longer a worry I believe.  The 'invisible hand' will regulate it on it's own.


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## nunthewiser (14 November 2008)

arco said:


> Indie
> 
> How are you investing in Yen? (cash or?)
> 
> rgds - arco




http://www.hsbc.com.au/1/2/personal/savings/multi-currency

worth a look

even earn intrest on the balance regardless of currency

tellem gero sent ya so i can collect my steak knives


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## chops_a_must (14 November 2008)

theasxgorilla said:


> I thought liquidity was the issue?  And access to credit?
> 
> Central banks and govs have lowered interest rates and printed money because they're trying to address the above issues and would rather deal with inflation than deflation.
> 
> What makes you think they won't succeed?




I don't think liquidity or access to credit is the issue. Solvency is.

They haven't succeeded thus far, and the markets certainly aren't worrying about inflation. Probably because no matter how much they print, it can't keep up with the de-leveraging.


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## lioness (14 November 2008)

I have 700K debts on 2 properties worth 1.8 million where the one negatively geared has 440K debt.

My partner and my income combined are 400K.

We have no credit card or personal loan debts.

I have 100K in shares also but don't wish to sell for capital loss situation.

Should I be worried?


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## numbercruncher (14 November 2008)

lioness said:


> I have 700K debts on 2 properties worth 1.8 million where the one negatively geared has 440K debt.
> 
> My partner and my income combined are 400K.
> 
> ...





My tarot cards say you should be afraid, very , very afraid .....

They also say you should go to your GP for an immediate checkup ...

Goodluck !


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## gav (14 November 2008)

Prospector said:


> The amount of debt you have is irrelevant; good debt and bad debt.  All of our debt is good debt and can be written off.  HECS debt is also good debt, because it educated you, although cant be written off and is very frustrating.  Someone with no debt but rents is most likely worse off then someone who has a PPOR debt.




Unfortunately, this is not always the case.  My g/f spent 5yrs at Uni.  After one year of finishing Uni cannot find a full time job that pays above minimum wage, and now has a HECS debt.  At the moment she works 3 part time jobs on those low wages, but on weekends and evenings when the pay rate is a bit better.  Now she has applied to go back to uni to study something that will give her more of a chance to get a job when she finishes.  I never went to Uni, and on Monday I start a new job earning roughly double what she would if she accepted any of those full-time jobs (although I've been on minimum wage for nearly 2yrs now).

As for ppl renting saving less, I find it the complete opposite.  Many people I know around my age on good incomes who have gone out and bought a house are not only struggling to meet the repayments, but they somehow manage to afford to buy expensive cr@p that will look pretty in their new house... (alot of the time its interest free from Harvey Norman)  Even on minimum wage, I have still been able to put a little bit away each week.  I am renting and find that I have more incentive to save, where as they think "well I have a house, I just need to meet the minimum payments and dont need to save"

I am not saying this is the case all the time, just the majority for ppl around my age that I know.


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## gav (14 November 2008)

lioness said:


> My partner and my income combined are 400K.




Holy crap!  May I ask what u do for a living?


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## Prospector (14 November 2008)

gav said:


> As for ppl renting saving less, I find it the complete opposite.  Many people I know around my age on good incomes who have gone out and bought a house are not only struggling to meet the repayments, but they somehow manage to afford to buy expensive cr@p that will look pretty in their new house... (alot of the time its interest free from Harvey Norman)  .




Yeah, well, there will always be some people who cannot manage their money.  Whether they rent or buy the property.  Not sure if these examples actually prove anything.


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## lioness (14 November 2008)

gav said:


> Holy crap!  May I ask what u do for a living?




I am a senior manager in WBC bank and my partner is a senior manager in a blue chip top 30 ASX listed company. She is also due for promotion very soon to a higher level. What I am saying is the rental property pulls 20K per year also so I don't see a problem with our level of debt.

We have 2 young kids which take out 20K per annum for a nanny though which is equivalent to 40K before tax. I still don't see a problem as we spend very little and manage to save one income net per year.


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## 2020hindsight (14 November 2008)

chops_a_must said:


> I reckon I'll be pushing half a mill by the time I'm done with Uni. Lol.



lol, Know how you feel chops ..I have been in similar circumstances (worse actually considering I was much older) - house (part owned) second mortgaged to the bank - built a factory just before the commercial property crash - went into Asia just before the Asian crash.  

Got to where I'd look at the occasion bottle of beer and say "gee, if there's a genie in there - can I win the lottery please ! - BUT no point unless there's at least a milion payout" lol. 

PS My daughter's gonna be at uni for 5 years - to become a social worker of all things !  - Hecs is one thing - but when there's no chance of paying the thing off in one lifetime lol.


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## nunthewiser (14 November 2008)

2020hindsight said:


> lol, Know how you feel chops ..I have been in similar circumstances (worse actually considering I was much older) - house (part owned) second mortgaged to the bank - built a factory just before the commercial property crash - went into Asia just before the Asian crash.
> 
> Got to where I'd look at the occasion bottle of beer and say "gee, if there's a genie in there - can I win the lottery please ! - BUT no point unless there's at least a milion payout" lol.
> 
> PS My daughter gonna be at uni for 5 years - to become a social worker of all things !  - Hecs is one thing - but when there's no chance of paying the thing off in onelifetime lol.




 please tell me what you will be investing in next m8 










this post is posted with humour attached


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## 2020hindsight (14 November 2008)

nunthewiser said:


> please tell me what you will be investing in next m8



lol
well for one thing - I'm getting smarter!!
I PRETEND to invest in something - 
then at the last minute I change my mind and go for the exact opposite!!

and guess what - they BOTH lose lol.

So which do you want to know ? - the original bet, 
or the exact opposite? 

PS At least I employed 30 blokes for 10 years -  And exported hundreds of tonnes of manufactured product


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## nunthewiser (14 November 2008)

2020hindsight said:


> lol
> well for one thing - I'm getting smarter!!
> I PRETEND to invest in something -
> then at the last minute I change my mind and go for the exact opposite!!
> ...




 she,ll be right and sincerely hope you hit the motherload of right place to be at the right time 

cheers


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## 2020hindsight (14 November 2008)

I used to say "money is of no consequence - unless you have none"
Now I say "money is of no consequence - unless you've run out of plastics " 

PS to be honest , this thread is pretty demoralising lol - closest I've been to depressed for a long time   to find myself in the 85 percentile of debt. 

PS to be honest, I'm astonished to find 50% with debts of $20K or less. = obviously ASF'ers are atypical!


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## gav (14 November 2008)

lioness said:


> I am a senior manager in WBC bank and my partner is a senior manager in a blue chip top 30 ASX listed company. She is also due for promotion very soon to a higher level. What I am saying is the rental property pulls 20K per year also so I don't see a problem with our level of debt.
> 
> We have 2 young kids which take out 20K per annum for a nanny though which is equivalent to 40K before tax. I still don't see a problem as we spend very little and manage to save one income net per year.




I apologise, my 'holy crap' comment was on your combined income.  Congrats, I'm sure you and your partner have worked very hard to get where you are


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## theasxgorilla (14 November 2008)

MRC & Co said:


> Inflation is an increase in prices.




I have to point out that an increase in prices alone does not inflation become.  In fact an increase in prices is the expected symptom of inflation, but itself is not inflation.

Classically, inflation is an increase in the money supply as a proportion of the supply of goods and services.


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## MRC & Co (14 November 2008)

theasxgorilla said:


> I have to point out that an increase in prices alone does not inflation become.  In fact an increase in prices is the expected symptom of inflation, but itself is not inflation.
> 
> Classically, inflation is an increase in the money supply as a proportion of the supply of goods and services.




Yes, I cannot remember all that ISLM junk, seems too long ago.  But CPI is based on a basket of goods right?  So an increase in prices is inflation, how is that an expected symptom of inflation?  I don't get it 

But higher global crude prices are probably the biggest influence on inflation right as they feed right though the system?  Which has no relation to the Australian MS............


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## Smurf1976 (14 November 2008)

Sir Osisofliver said:


> You know this poll would be a lot more relevant if you asked what the net worth was as well. Who is better off someone with no debt and minimal assets, or a large amount of debt and LOTS of assets?



I'd argue it's the net position that counts. Assets - debts = net wealth.

Governments on the other hand have spent the past 15 years trying to convince us all that no debt and no assets is wealthy. If that's the kind of financial incompetence we've got running the place then there's not much hope for the rest of us.


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## theasxgorilla (15 November 2008)

MRC & Co said:


> Yes, I cannot remember all that ISLM junk, seems too long ago.  But CPI is based on a basket of goods right?  So an increase in prices is inflation, how is that an expected symptom of inflation?  I don't get it
> 
> But higher global crude prices are probably the biggest influence on inflation right as they feed right though the system?  Which has no relation to the Australian MS............




I'm no expert, so please don't take this as a lesson.  Besides economics is extremely complex.

CPI is attempting to measure the end result of an increase in the money supply.  Loosely the theory goes that if there is more money in circulation relative to goods and services the price of goods and services will increase to absorb the excess money.  This is why printing money is not creating wealth.

I would say that an increase in oil prices might look like inflation, because fuel costs are measured in the CPI "basket", but that can be misleading.  As you said, it can have very little to do with Aust money supply and more to do with market supply and demand.  There could still be as much oil supplied to the market, relative to Australian money supply, but the Chinese and Indians bring their demand to the market and it drives prices up.


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## mayk (15 November 2008)

MRC & Co said:


> Yes, I cannot remember all that ISLM junk, seems too long ago.  But CPI is based on a basket of goods right?  So an increase in prices is inflation, how is that an expected symptom of inflation?  I don't get it
> 
> But higher global crude prices are probably the biggest influence on inflation right as they feed right though the system?  Which has no relation to the Australian MS............




And I thought Inflation is the decrease in the value of dollar (mostly because of excessive supply).

Supply and demand of a commodity essentially complicates things, and thus the reason for considering the whole basket. Those geniuses forgot to think that all the items in the basket are correlated (via energy or OIL), thus it complicates the whole inflation function.  


I also think deflation is more of a worry than inflation for short to medium term (6-15months), but after 2-3 years inflation will hit the market with a bang. There is no good ending to this story.


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## 2020hindsight (15 November 2008)

mayk said:


> And I thought Inflation is the decrease in the value of dollar (mostly because of excessive supply)...



like .... This computer will cost you 300 Big Macs, whether you buy today or next year. 
:topic Then again, if you buy the computer instead of the Big Macs, you'll grow the mind, instead of poisoning the body ... And there's certainly an excessive supply of Big Macs.   XXX :1cent

Someone said that Big Macs are a great example of Quality Assurance - every time I buy one, it is always exactly the same quality!   - I  keep hoping ... but it's always the same. 

PS Spare a thought for Zimbabweans trying to keep up with doubling of prices every day or hour or whatever it is these days.


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## aleckara (15 November 2008)

Smurf1976 said:


> I'd argue it's the net position that counts. Assets - debts = net wealth.
> 
> Governments on the other hand have spent the past 15 years trying to convince us all that no debt and no assets is wealthy. If that's the kind of financial incompetence we've got running the place then there's not much hope for the rest of us.




Governments have been trying to tell you that the appreciation in your house is wealth. It isn't since really you own the same amount of stuff. It's just that your money is worth less. On another point I never understood why houses weren't included in the inflation figure - most people 'need' a house and consume it by living in it. I think that would get a better indication of how much wealth has been eroded. Assets while they have gone up can come down - debt stays constant. Need a buffer.


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