People are still spending

[moXJO]

I know what the official figures say. But I see a lot of people making major purchases of late. A lot of my friends have brought a house. A lot of them are also upgrading their cars. One sold his car to a lady in QLD, and she flew to Sydney and gave him a wad of cash. Personally I don't see how they manage the massive debts in this environment. But they all seem to be doing fine.

I don’t see the economy getting better mind you. And some of these massive mortgages are a worry. Is the bailout mentality rife atm?

 

[Beej]

I know what the official figures say. But I see a lot of people making major purchases of late. A lot of my friends have brought a house. A lot of them are also upgrading their cars. One sold his car to a lady in QLD, and she flew to Sydney and gave him a wad of cash. Personally I don't see how they manage the massive debts in this environment. But they all seem to be doing fine.

I don’t see the economy getting better mind you. And some of these massive mortgages are a worry. Is the bailout mentality rife atm?

What do you call a "massive" mortgage? What sort of income and job security do your friends have? Right now if you have good income and good job security, the cost of servicing a mortgage has never been cheaper! How do you see managing debt right now as being any different, if not far easier, as compared to say 2 years ago?

Sometimes you have to get away from the herd mentality thinking. It's like my father said once during the 80s recession: Once my mum was suggesting that because the country was in recession, that maybe we should put off some plans for a family holiday - he said "why should we do that? We (as in our family) are not in recession!!!".

Cheers,

Beej

 

[billv]

Once my mum was suggesting that because the country was in recession, that maybe we should put off some plans for a family holiday - he said "why should we do that? We (as in our family) are not in recession!!!".
Cheers,
Beej

Beej

Good point, we are not cutting down on our expenditure at all.

Last year when interest rates hit the roof, it was painful and we sure felt it but life goes on and now it's all good. In december we spent about $5K on electricals alone and about $7K on home improvements and presents.

As long as we have a job and can afford it I don't see why it's a problem.
Now mrs and the kids booked themselves in for an overseas holiday in Scandivania and leaving in 2 weeks and I am next for a trip to Southern Europe in June

Edit: Both trips are to an extend subsidised by our parents though.
They realise how important it is to take some time off.

 

[Trevor_S]

Right now if you have good income and good job security, the cost of servicing a mortgage has never been cheaper!

I don't have a mortgage, (1 x PPOR 1 x IP) I used to have lots of income from cash though

Lots of self funded retirees are starting to struggle with severely reduced incomes, so not every sector has it rosy

Good point, we are not cutting down on our expenditure at all.

I have eg I was looking to upgrade the PPOR into a nice Unit, seven figures, pay cash but have put that on hold... hell I don't even have a TV after my ancient CRT set crapped itself, don't have a sofa (I do have a recliner !) get all my books, magazines and newspapers from the library, mow my own lawn, replace my computer about every 7 years or so, clean my own house etc etc I bring this up because one of my staff, that works part time for me, has a cleaner

but I have always been frugal anyway. eg I camp out, hike, don't own an ipod etc etc, have a mobile phone for business calls only (other wise I would ditch it), ride a push bike etc for my activities, don't own a Car or have any personal or business debt (lazy balance sheet indeed !) and a very small debt over a share portfolio at about a 20% LVR and cash flow positive.

That aside, people are spending, look at the last set of retail figures and as Beej says, for the average Australian, who is employed, times ave never been as good. Money thrown at them by Government, petrol prices relatively low, interest rates low.... it's just they (and I !) will pay for it in the years to come with a heavy tax burden and a further cut back on services.

I am liking the new NZ Governments policies over our own, they seem much more inline with my thinking. !

 

[moXJO]

What do you call a "massive" mortgage? What sort of income and job security do your friends have? Right now if you have good income and good job security, the cost of servicing a mortgage has never been cheaper! How do you see managing debt right now as being any different, if not far easier, as compared to say 2 years ago?

Sometimes you have to get away from the herd mentality thinking. It's like my father said once during the 80s recession: Once my mum was suggesting that because the country was in recession, that maybe we should put off some plans for a family holiday - he said "why should we do that? We (as in our family) are not in recession!!!".

Cheers,

Beej

$350k plus mortgage, cant really call one half of it a secure job. But agree with your post. Just had a few beers on Ruddy with a mate and he agrees things are good.

 

[nomore4s]

Most people will spend if they have the money to spend, most will not save anything or very little if they do. There is always the latest gadget or whatever to buy and most will not stop spending till they have no choice.

This is now a trait of our society.

 

[moXJO]

Most people will spend if they have the money to spend, most will not save anything or very little if they do. There is always the latest gadget or whatever to buy and most will not stop spending till they have no choice.

This is now a trait of our society.

Being a saver myself, I feel slightly gipped. Everyone I know is spending like mad, with plenty to show for it. While I have a modest lifestyle but no debts and good savings+investnments

I am starting to think I should be blowing cash on a ritsy lifestyle.

 

[nomore4s]

Don't worry moXJO I'm in the same boat as you, our day will come.

Hell I don't even own a Plasma/LCD TV lol.

 

[sinner]

Nothing wrong with spending imo if you can afford it. As in, have a budget and can afford it in the budget!

Holidays are important (even though can sometimes be stressful), and though they do not return 4.57% fully franked and may have incumbent costs they have an important psychological and physical return for your body! Same as having a beer with mates or upgrading your microwave or even television sometimes!

Remember the stories of the ants and the grass-hopper children. You can have fun in the sun so long as you remember to prepare for Winter. For the prepared Winter is cold but bearable. The unprepared have to take their chances out in the snow.

This includes a good stock-pile of memories of good times past when things are rough!

 

[moXJO]

It’s a tough line to pick. I might go along the path of have 'fun in the sun while young' as per sinners advice. I'm sick of lending cash to friends anyway

I know in the end it may pay off. But I don't know if I will really give a $hit when I am 60+. I already have good savings habits. But lifestyle has suffered a bit compared to others. My investments and timing are doing well. I suppose it’s a wait and benefit approach. I'm just getting antzy about keeping up with the Joneses I suppose

 

[sinner]

I'm sick of lending cash to friends anyway

Are you kidding? One of my mates honestly calls me "Your Bankness" :/

 

[nomore4s]

It’s a tough line to pick. I might go along the path of have 'fun in the sun while young' as per sinners advice. I'm sick of lending cash to friends anyway

Just to clarify, I still spend money on holidays and trips away when I get the time and any of my hobbies when required but I don't waste it on crap like most of my mates.

I don't need to lend money to my mates cause they all think I'm broke because I don't own "flash" things and they think whatever money I did have has been lost on the stockmarket

 

[Rough_Trade]

Beej



As long as we have a job and can afford it I don't see why it's a problem.

I think you’ve said it in one,
This is the major factor that is going to determine weather people are heavily effected by this recession or not. Seeing that the unemployment rate is on the rise it doesn’t bode well for some.

 

[Smurf1976]

$350k plus mortgage, cant really call one half of it a secure job. But agree with your post. Just had a few beers on Ruddy with a mate and he agrees things are good.

A perfectly reasonable mortgage as long as:

It is supported by an income over $100K

That income is insured

There are no plans, for example having children, to reduce that income at any point

But for a single income household on 60K that would be an insane level of debt, somthing they'll understand all to well whenever the present extraordinarily low interest rates head back somewhere close to normal, taxes rise or some other disaster such as unemployment strikes.

 

[Julia]

MOXJO and Nomore4s: don't be intimidated into changing what feels right for you by friends with a shorter term approach. How would they fare if they lose their jobs? What sort of retirement will they have?

It doesn't sound to me as though either of you are doing without anything you really want.

I've never seen the point of following the crowd. I don't have a plasma TV either!

 

[nomore4s]

lol Julia, there is no danger of that. I'm now in a position to buy pretty much anything I want without breaking the bank or getting into debt (within reason of course) but just don't feel the need to. My money is put to better use preparing for my early retirement.

When my current TV gives up the ghost I might look at buying a plasma

 

[billv]

When my current TV gives up the ghost I might look at buying a plasma

I was doing this as well but got tired of waiting,
so when Kevin07 splashed out the first time I went out and bought 1....

 

[Bill M]

lol Julia, there is no danger of that. I'm now in a position to buy pretty much anything I want without breaking the bank or getting into debt (within reason of course) but just don't feel the need to. My money is put to better use preparing for my early retirement.

When my current TV gives up the ghost I might look at buying a plasma

Believe me mate early retirement is great and it was all achieved through hard work, saving and investing. This year I am not spending much at all and I have cancelled my yearly overseas holiday, why? Because I have never seen a sharemarket with such value and I have put all my holiday money into my index funds. I am willing to forgo 1 holiday in order to build our asset base. I could easily buy a new car and take an O/S trip if I wanted but investing those $$$ right now in what might be a once in a lifetime opportunity is more important to me. Good luck to all you savers.

Oh and yes, it's business and spending as usual here in the shops, cafes, restaurants and pubs here in Sydney, no noticeable difference that I can see.

 

[Happy]

At the moment there is hardly any strategy that is guaranteed to work for sure.

We have only possibilities and I don’t think we are able to calculate probabilities.

What are the possibilities?

Value of property falls as those who have to sell cannot get fair value because there are no buyers, but want or must to sell hence have to substantially drop asking price.

Printed money all over the globe will cause prices to rise.
Looks like immediate contradiction with the first statement, but not necessarily as some prices can rise dramatically and some can fall dramatically.
I suspect that there will be shift of perceived value.

Gold might go up or down and there is compelling reason why it can go either way.
Gold can go up if enough people will think that gold will become universal currency
Gold might go down if enough people will dismiss universal currency status as you cannot eat gold.

What is going to be universal currency?
Hard to say, but could be food, fuel, all depends how far depression will bite.
People will hoard food and fuel and if panic kicks in, bartering will be only currency.

Quite grim and probably will not eventuate, but who knows might get close.
:dimbulb:

 

[gav]

I know what the official figures say. But I see a lot of people making major purchases of late. A lot of my friends have brought a house. A lot of them are also upgrading their cars. One sold his car to a lady in QLD, and she flew to Sydney and gave him a wad of cash. Personally I don't see how they manage the massive debts in this environment. But they all seem to be doing fine.

I don’t see the economy getting better mind you. And some of these massive mortgages are a worry. Is the bailout mentality rife atm?

3 weeks ago my mate flew to Sydney, just to buy a car. The particular make and model of the car costs anywhere from $41-45K in Melbourne. He found a dealer in Sydney that was selling it cheaper (with 3yrs warranty), so he flew up to have a look. The dealer picked him up from the airport (30min drive from dealer) and opened the dealership on a Sunday (when they are normally closed). The dealer was advertising for $34K, and my mate ended up buying it for $32K and driving it back to Melbourne. Then the very next day he gets it insured by RACV for the value of $42K. He could ride it off today and make a $10K profit (minus airfares to Sydney and fuel on drive home ) not that he'd do that, he loves the car.

I guess times are tougher in Sydney than they are down here.