A Movie called "Three Dollars"

[Investor]

Over the weekend, I watched a new Aussie movie called "Three Dollars".

It starred David Wenham and was filmed in Melbourne. It depicted a story of a young couple, who faced the 'ups and downs' of life, as most people do.

However, an unexpected job loss brings considerable financial difficulties for the family (in the movie).

This is probably a movie for the moment because job losses are now happening more frequently. Workers lose jobs when companies collapse and there have been a few collapses.

NAB has been reducing job numbers and continues to do so. Telstra looks like it will continue to reduce staff levels as part of T3. Rebel Sports has announced it will close 3 stores.

Increasingly, households will reduce debt levels by repaying debt, if they are able to do so. The credit card debt level at over $30 billion is a big problem (for the portion that is not fully paid each month) because of the high level of interest rates. People who pay those high interest rates would find it hard to find investment returns that can generate a similar rate of return during their lifetime.

 

[RichKid]

Over the weekend, I watched a new Aussie movie called "Three Dollars".

It starred David Wenham and was filmed in Melbourne. It depicted a story of a young couple, who faced the 'ups and downs' of life, as most people do.

However, an unexpected job loss brings considerable financial difficulties for the family (in the movie).

This is probably a movie for the moment because job losses are now happening more frequently. Workers lose jobs when companies collapse and there have been a few collapses.

NAB has been reducing job numbers and continues to do so. Telstra looks like it will continue to reduce staff levels as part of T3. Rebel Sports has announced it will close 3 stores.

Increasingly, households will reduce debt levels by repaying debt, if they are able to do so. The credit card debt level at over $30 billion is a big problem (for the portion that is not fully paid each month) because of the high level of interest rates. People who pay those high interest rates would find it hard to find investment returns that can generate a similar rate of return during their lifetime.

Investor,
Yes, a salutory tale from what you say and Yes again, sure is slowing down, I feel for families as they will find it tougher to get ahead. The new budget forcing single mums to work when their kids are just toddlers is a real shame for our national character as well. Let's see if the Family First party is worth its name.

As you'd know creditcard co's love to have those balances so they keep earning fees while the poor consumer thinks s/he's getting more time to pay (to pay more). Talk about getting caught in a cycle of debt, you're perfectly right about it being hard to earn enough just to break even again let alone to save some money. Those department store cards aren't much better. Low end Virgin type credit cards are the best if managed wisely- which few can do.

 

[It's Snake Pliskin]

Increasingly, households will reduce debt levels by repaying debt, if they are able to do so. The credit card debt level at over $30 billion is a big problem (for the portion that is not fully paid each month) because of the high level of interest rates. People who pay those high interest rates would find it hard to find investment returns that can generate a similar rate of return during their lifetime.

Thanks for the movie plug! Aussie movies are great and there should be more of them.

With respect to credit cards, do people really need them? In essence if you can't afford something then you shouldn't have a credit card. If you can't afford the latest big screen TV in real terms (you haven't the capital to pay for it) then using a credit card is just living outside of your means. I couldn't think of anything worse than sitting on my backside watching TV, that cost me thousands, and at the same time be worrying about how I can pay the interest it is making me pay - essentially living outside of one's means.

Retrenchments are reality, and complacency, unfortunately is also. I feel for the workers who will lose their jobs!

 

[RichKid]

Thanks for the movie plug! Aussie movies are great and there should be more of them.

With respect to credit cards, do people really need them? In essence if you can't afford something then you shouldn't have a credit card. If you can't afford the latest big screen TV in real terms (you haven't the capital to pay for it) then using a credit card is just living outside of your means. I couldn't think of anything worse than sitting on my backside watching TV, that cost me thousands, and at the same time be worrying about how I can pay the interest it is making me pay - essentially living outside of one's means.

Retrenchments are reality, and complacency, unfortunately is also. I feel for the workers who will lose their jobs!

Credit can be very useful if used wisely but most people don't know anything about sticking to budgets or monitoring spending, it can really help solve shortterm cashflow problems, other benefits too but it depends on the individual profile.

 

[Smurf1976]

As a whole I make reasonable use of my credit card. I use it to avoid keeping cash in a savings account earning 0%. Mostly I just use the card as a free 55 day loan - present one being for the car rego and insurance.

The extent of personal debts in this country does concern me though. At some point we are going to see consumption fall in a hole when consumers wake up. Whilst there is a lack of firm proof, I am suspicious that this might actually be happening right now. Time will tell.

 

[krisbarry]

With respect to credit cards, do people really need them?

I couldn't live without one. I have payed mine off in the past and cut it up, returned it to the back to the bank, to find that I am completely screwed without it.

Look at all the things that you cannot do, or are almost impossible to do without one. Rent a car, Pay Internet access (with those newer ISP they only accept credit cards), Monthly deductions like motor insurance etc, Home shopping ( not that I have done any of this LOL) I am sure that other users can add to this list.

I am a casual worker so my pay vaires so dramatically from fortnight to fortnight. I live of it in the tough weeks eg groceries, petrol, bills and pay it back in the better weeks. Rather than selling my shares each time I need cash I just raid the card instead.

I guess I am luckier than some, I can afford to have/own 2 cards as I have savings to cover both of them.

 

[markrmau]

You paid back a 20k loan which was charged at what 5% ??? interest and occasionally use credit card charging say 10-20%, and invest in day trader stocks ???

 

[krisbarry]

You paid back a 20k loan which was charged at what 5% ??? interest and occasionally use credit card charging say 10-20%, and invest in day trader stocks ???

Yes the interest/cpi on the 20K student loan is the same as the amount charged to run my credit cards annually.

20K student loan = $600 p/a
4K Credit cards = $598 p/a

Ahhh but the one good thing now is that most of the credit card debt was used to buy shares and now is classed as good debt. The interest charged comes straight off my taxable income. HECS interest does not.

Personally, going to uni is bad debt if you cannot get a job out of it. Thought I would pay off this debt and put that whole bad experience behind me and move on with life. Not only has it freed me up financially but emotionally as well. Kinda like cleansing! Some would argue my stance on it but it has been the best thing I have done in the past 10 years. Only those who have gone to uni, got a degree, and still are unable to find work in their chosen field would understand this.

Yes I do day-trade on some stocks but also have held some stocks for more than 8 months too.

 

[markrmau]

Negative gearing using your credit card...

So, you do realise that assuming you are in the 22k-52k tax bracket (paying 30% marginal tax rate), and assuming a 15% credit card interest rate, you need a gain of roughly 10% p.a. SIMPLY TO BREAK EVEN?

Of course this is fine if you have found your trading method to give you a gain greater than 10% return.

 

[wayneL]

I couldn't live without one. I have payed mine off in the past and cut it up, returned it to the back to the bank, to find that I am completely screwed without it.

Look at all the things that you cannot do, or are almost impossible to do without one. Rent a car, Pay Internet access (with those newer ISP they only accept credit cards), Monthly deductions like motor insurance etc, Home shopping ( not that I have done any of this LOL) I am sure that other users can add to this list.

Yeah went through something similar. When I was 21 maxed out my $1000 credit limit (through lack of disipine) and decided the only way to avoid the temptation to spend money foolishly was to chop up the card.

Went ok for a while... til I landed in Sydney one year and tried to rent a car with cash. HAHAHAAHAH

I was immediately viewed as a criminal or drug dealer or something...and they told me so. Well I managed to rent the car through some sweet talking, but decided that this was getting uncomfortable.

Solution - Visa debit card. Doesn't stop me lashing out on stupid frivolities, but at least its with my money and not credit LOL.

Cheers

 

[Investor]

As a whole I make reasonable use of my credit card. I use it to avoid keeping cash in a savings account earning 0%. Mostly I just use the card as a free 55 day loan ...

Same for me. It is a convenient payments system that facilitates many types of usage (car rental, accommodation bookings, internet payments, etc.). In addition, I get reward points.

I always pay the total in full every month, thus avoiding interest charges.

Agree with the household debt becoming an issue in the near future. Interest servicing costs already exceed the previous 1989 peak (rates were near 20% back then) and interest rates could rise further before the year is over. The households with very high debt levels could be stretched. What more if job losses become widespread???

 

[Smurf1976]

Agree with the household debt becoming an issue in the near future. Interest servicing costs already exceed the previous 1989 peak (rates were near 20% back then) and interest rates could rise further before the year is over. The households with very high debt levels could be stretched. What more if job losses become widespread???

Any figures as to actual interest costs for typical households?