Why are some people poor?

trainspotter said:

... Broccoli, cooked, boiled, drained, without salt = 100 calories = $3.00 ...

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20 Heads of Broccoli, cooked, boiled, drained, without salt = 2000 calories = $60.00

Mmmm. I'm starting to like MuckDonalds!

I'm off to get Pizza and Milkshake. lol

Why are they poor because the purchased a house thinking they would double every 7 years and took the first home owners Bribe.
From SMH:

More mortgage defaults than at GFC peak
Queensland suffered biggest acceleration
Points to new wave of repayment stress
MORTGAGE customers are defaulting on their loans at a faster pace than at the height of the global financial crisis as soaring living costs stretch household budgets to breaking point.
Westpac, the nation's second-biggest home lender, revealed yesterday that mortgage delinquency rates had climbed above the peaks they reached late in 2008 as the crisis swept around the globe.

And chief Gail Kelly, unveiling the bank's record first-half profit yesterday, said they were likely to climb further - albeit off a low base - as households struggled with rising utility bills and other costs.

Customers accounting for about 1.5 per cent of Westpac's $275 billion home loan book were more than 30 days behind on their repayment schedule at the end of March, according to the data released yesterday.

And the proportion of home loan clients more than 90 days late has jumped to 0.6 per cent - almost double the rate of a year ago and significantly above the high watermark hit during the financial crisis.

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Although Queensland has suffered the biggest acceleration in delinquencies - compounded by the natural disasters that beset the state over summer - defaults are gaining pace in every state.

Analysts said the surge in defaults, which comes despite the robust state of the nation's employment market, pointed to a new wave of repayment stress in Australia's mortgage belt.

UBS analyst Jonathan Mott questioned whether the rise was driven by first home buyers who used grants to enter the market.

The abrupt surge in the proportion of customers who were at least 30 days behind on payments was likely to "flow through over time" to the proportion at least three months late, Mr Mott said.

Mrs Kelly said the lift in delinquencies was "entirely within our expectations".

"It is picking up and we think it will pick up actually a little more, because we're in that stage of the cycle," she said.

While more customers were likely to require support to manage their loan repayments, "we don't actually see it translating into loss".

The revelation came as Westpac posted a cash profit for the six months to March of $3.17 billion, up 7 per cent on the same period a year ago in a result aided by a sharp fall in the charge for bad and doubtful debts.

Net profit soared to $3.96 billion - a 38 per cent increase largely fuelled by a favorable taxation ruling, previously announced by the group, relating to its 2008 acquisition of St George.

Nomura analyst Victor German said there were "no obvious problems" with Westpac's result, despite the 2.5 per cent fall yesterday in the value of the group's share price on a downbeat day across the market.

Some investors were concerned that the increase in profit, which beat analysts' forecasts, was largely fuelled by the sharp drop in the charge for bad and doubtful debts, Mr German said.

Glen48 said:

Why are they poor because the purchased a house thinking they would double every 7 years and took the first home owners Bribe.

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Consider the average price of a house in good condition is 400k.
Consider you save $50,000 as deposit and negotiate a home loan of $350,000 over 25 years at an average of 8.8%.

(The average bank variable interest home loan interest rate rate over the past 59 years in Australia is 8.87 percent. (source Reserve Bank of Australia standard variable interest rate home loans, Jan 1959 to Feb 2008)

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Weekly repayments would be $666.27. You would have to be earning well in excess of $1000 per week to live a simple life after mortgage payments. Guess what? Unless you are skilled and your skills are in demand, you won't be pulling in well over $1000 per week and mortgage repayments will squeeze your lifestyle down to poverty level.

I think you will find the great Australian dream is errr out of reach for the unskilled low income and tough for mid income earners. But wait!!!! The government can bail them out .... right???

No the Government will bail out the banks, the taxpayer will bail out the Feds while the feds keep spending then we all fall down

I agree with the housing issue.

I am gen x and bought my house for $330K, it is now worth $950K (ridicilous)and I have almost paid it off. I would like to go the next step but the prices are stupid, I would need to borrow 400K so we are staying put.

It is terrible for the next generation. I know plenty of very wealthy Baby boomers with tens of houses who are rolling in it. The tax system needs to be changed so that they can only gain negative gearing on the house - not their wage. The government would be able to lower our taxes with the money saved and the young would be able to buy houses and I could upgrade. ...but house prices are sacrocent - we are a weird mob in Australia.

Your house might be worth $950K but you can't sell it and get that amount in your hand
it you could get out NOW before its to late.
Buy it back again in 10 yrs time for 95,000

Well Knobby 22 if you feel the baby boomers had it easy "picked up tens of houses" get on with it.
It was just the same when they had to take risk on an unknown future. Don't worry about it's easy you just jump in take on debt and make a lot of money. Then gen y can tell you how easy it was for you.
Mate I'm 55 started work on $17.32 a week a $1000 loan frightened the S###t out of me. LOL
You bought your first house for 330k now your scared of borrowing 400k when you have made 620k on the first one. Doesn't sound like you have much confidence in what Wayne Swan is crapping on about.
The thing in everyones favour is the capitalist sytem relies on prices and wages going up. So no matter what happens if you can carry the load and have big enough you know whats and you wait long enough you will make money.
It just depends if you want the stress and cost to your lifestyle.

sptrawler said:

The thing in everyones favour is the capitalist sytem relies on prices and wages going up. So no matter what happens if you can carry the load and have big enough you know whats and you wait long enough you will make money.

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Not really, in pure capitalism money is gold or some other high-value-density physical item. During the days of the gold-standard, mild deflation was the norm. The steady uptrend in overall prices (including wages) is caused by expansion of the monetary base by the central bank (inflation).
Of course, this doesn't actually 'make anyone money', because since all prices go up (the money just looses value). Indeed, because you only get you wage up-adjusted about once per year, but prices of the things you buy steadily creep up over the whole year - you loose out.

Actually toothmax6, I was taking the pizzzz if just borrowing and buying was the answer, we would all be zillionaires.

I find this thread a bit distasteful.

Poverty has little to do with talent or effort.

It is often a consequence of birth, latitude, or circumstances.

gg

Garpal Gumnut said:

I find this thread a bit distasteful.gg

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I recommend not licking the screen.

Wysiwyg said:

I recommend not licking the screen.

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Fair comment.

gg

Garpal Gumnut said:

I find this thread a bit distasteful.

Poverty has little to do with talent or effort.

It is often a consequence of birth, latitude, or circumstances.

gg

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Highly agree

Should be end of thread THANKFULLY

I've been cold but I've never been hungry!

One more thought before you go out and try and get rich. I was actually richer when I was "poor" than I am now and can say that I am worth millions. Think about it. Life is so short.

Or is it more a matter of attitude and ambition?

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my simple anecdotal experience is that the above is true. My parents are the perfect example. The separated when I was a kid, at that stage they had an equal share of nothing and one parent took on a massive debt/business so was on the back foot from that day.

Fast forward 35 years and the parent that took on the debt/business has a nett wealth in the $10,000's mil my other parent is about to die a pauper.

The wealthy one has the best attitude of anyone I know as well as being a very hard working person. They have a great attitude to life, love, work and has a good grasp on the reality of it all.
The poor one has always had a bitter and bad attitude to life. Life owes them, everyone else is to blame, "I am owed". There has always been a head in the sand attitude and not a good grasp on the reality of life.

At times I think I need counselling to reconcile the massive difference in my parents circumstance, it has had a big impact on my life. I do not tell people that I have a multi millionaire parent and a poor pensioner parent.

NewOrder said:

Fast forward 35 years and the parent that took on the debt/business has a nett wealth in the $10,000's mil my other parent is about to die a pauper.

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Not sure if this is a typo, but very few people in the world worth $10 billion. Andrew Forrest if your father?

prawn_86 said:

Not sure if this is a typo, but very few people in the world worth $10 billion. Andrew Forrest if your father?

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Sorry I cannot edit my posts. His nett wealth is well over $20mil (no debt). Those extra zero's make all the difference.

sptrawler said:

Should be end of thread THANKFULLY

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sp, I don't think there's anything wrong with the idea of the thread. There have been some thoughtful and intelligent responses.
What have you found so distasteful?