60 Minutes - People losing their homes..

[GinB]

I cant understand how people get themselves in such dire straights? How their pesonal debts almost exceeds the value of their home. What the hell are they spending all their money on? Yes you can invest your money in business or investments & lose but what they put everything they have into that venture? Dont they start small by using a small outlay or making sure they have enough in reserve in case things dont work out? I didnt watch the 60 minutes program but i can only imagine the stories told, but i have heard so many of these kinds of stories & it just amazes me how people can be so irresponsible like this. I know of couple who invested all their money on an investment venture, i mean mortgaged their entire house plus another $300k they had totalling $700k, to a so called very good friend of theirs who mind you wasnt even a licensed financial person who promised them 5% returns per month on their money. Well things were great to begin with, they were getting back 5% per month on their investment but what do you think they did when all this money was coming to them every month? Firstly they both quit their full time jobs, went overseas, bought so much of designer lable things, went to QLD on numerous occassions & stayed at the Versacci Hotel, renovated their house to the tune of $100K, leased a $200k Merc, etc, etc...And then of course the unthinkable happened, their so called good friend went bust & lost all their monies. Now they have a mortgage of $400k, no savings whatsoever & they both had to go back to work full time just to save the house, mind you they have 2 young kids as well. They had it good for 3 years but they dont realise & still dont realise all they were spending was all the monies that they gave this guy to begin with, none of it was profit ontop of their initial capital. If they put aside their capital first, then eventually they would have been spending profits. They fully blame this guy for losing their entire monies & really they are not taking any kind of repsonsibility for their irresponsible spending.

I read in one of Robert Kiyosakis books is that too much money is just as dangerous as not having enough.

Anyway thought i would share that as it just goes to show how so many people out there wont settle for less, they must have all the latest things like yesterday no matter at what cost.

Cheers,
Gina.

 

[willair]

Except, of course, a highly leveraged loss-making investment property

People need to be reminded of it constantly,
just because a few can't live up to other people dreams,
they only have themselves to blame,buts that's always the problem they listen to
other people's opinions,and then look for someone to blame..
willair..

 

[BV]

This is probably just the beginning
There are many people in this situation.
i.e. borrowing against their equity to invest in their business
or to buy the latest car or the biggest plasma, go on holidays, buy shares etc.
If their business goes under, their circumstances change or the stock market crashes they are gone...
Cheers

 

[natmarie73]

Except, of course, a highly leveraged loss-making investment property

Good point HG. However, if using equity wisely to buy an investment property you will still have your job income to help out with repayments as well as rental income. When buying a business, that is your income full stop and in many cases it is less than what you would expect to make working for someone else at least for the first few years while you try to get the business off the ground. Also, 95% of small businesses fail in the first year - not so for investment properties particularly cash-flow positive ones.

There's nothing wrong with giving a shot at your own business, but you do have to do a lot of research and due diligence and the risk is much higher.

Of course the key word here is "wisely". It would be just as misguided to go and use mum's paid off house to buy 5 or 6 negatively geared IP's and not be able to meet the repayments and lose the lot.

I really do think that high schools should teach finance subjects because so many people have no idea how to handle money and of course it is not something you can learn off your parents if they are not financially intelligent either. Most of these people's problems stem from simply not knowing how to harness the power of money for good instead of greed.

 

[BoatBoy]

I really do think that high schools should teach finance subjects because so many people have no idea how to handle money and of course it is not something you can learn off your parents if they are not financially intelligent either. Most of these people's problems stem from simply not knowing how to harness the power of money for good instead of greed.

Well said Nat, not sure if I would have picked it over the "Wine Appreciation" class in year 11, but would definetly have picked it over history.

It could easily be part of the economics class.

Dave

 

[lizzie]

high school is starting to get to late - unless you catch the kids in yr 7-8. i would like to see something in the primary schools, even if it was serveral games of cashflow for kids played once every 2 months by the entire class.

imo, that would be more important than making coconut ice.

 

[topcropper]

I remember getting a brief learning about investing in economics. We learnt a bit about shares and property, interest rates, compound growth etc.

A lot of the teachers I remember had very socialist views. This could be a problem when learning about capitalism and investing. The views of the teacher would influence things. Although, when I was at school, communism was still an experiment, rather than as now, a failed experiment.

See ya's.

 

[tubs]

Problem is that most teachers dont understand enough about money to be able to teach it. And then, anything the kids would be taught about money would probably be viewed as 'greed' and 'anti-social' so there's no hope there.

I went to a high school as part of a careers presentation recently, and they did appear to be teaching the year 9/10 students about loans, finance etc, but I dont know how much.

I'd love to go to my kids school when they're in secondary school, and just teach them about money for an hour. I'd get through as much as I could before they dragged me out of there, but it would be nice to get kids to think about how to make money work for them, and how it can help them in their lives. Beats working 9-5 in a crappy job until you're retired and too old to enjoy it (no offense to those who are retired AND enjoying life!) But school is all about churning out wage earners.

Money is a very misunderstood thing. It runs through our entire society, and yet people bury their heads in the sand about it. They think its unimportant, but if you look at the things that ARE important to people, nearly all of them can be acheived, or at least helped along in some way with more money. eg. The desire to spend more time with your family can be helped if you had more money, since you wouldnt have to work as much, if at all.

And yet everyone bitches and moans about their job, but still say that money isnt important to them.

Well, that's about it for me on the topic for now.

 

[wish-ga]

For Joanne Sanders and her family, it is the end of the Australian dream.....have lived in this house for 22 years but now they are being thrown out. ....... Recently they have fallen more than $20,000 behind on the mortgage and their lender is repossessing the house.

If the house was bought in the 80s wouldn't the 20 grand be about 1/4 the loaned amount?

Refinancing might have brought the repayments in line with current market prices. Maybe they refinanced to draw the equity to assist their disabled child the best they could but did not understand the big picture. Banks sold them a product that sounded good.

So the problem isn't market price is it? It is refinancing and spending habits.

Because if the house has a high market value and their repayments are the same as 20yrs ago then if they got in trouble wouldn't they be able to sell it for the market value. BUT if they refinanced then the repayments are for today's market prices.... ouch.

Tabloid journalism.... pressing all the right buttons to get mr and mrs avge aussie outraged

 

[alexlee]

You don't go from zero to $20k in arrears overnight. They must have known they were in arrears, and received plenty of notices from the bank.
Alex

 

[steveadl]

Problem is that most teachers dont understand enough about money to be able to teach it. And then, anything the kids would be taught about money would probably be viewed as 'greed' and 'anti-social' so there's no hope there.

I went to a high school as part of a careers presentation recently, and they did appear to be teaching the year 9/10 students about loans, finance etc, but I dont know how much.

I'd love to go to my kids school when they're in secondary school, and just teach them about money for an hour. I'd get through as much as I could before they dragged me out of there, but it would be nice to get kids to think about how to make money work for them, and how it can help them in their lives. Beats working 9-5 in a crappy job until you're retired and too old to enjoy it (no offense to those who are retired AND enjoying life!) But school is all about churning out wage earners.

Money is a very misunderstood thing. It runs through our entire society, and yet people bury their heads in the sand about it. They think its unimportant, but if you look at the things that ARE important to people, nearly all of them can be acheived, or at least helped along in some way with more money. eg. The desire to spend more time with your family can be helped if you had more money, since you wouldnt have to work as much, if at all.

And yet everyone bitches and moans about their job, but still say that money isnt important to them.

Well, that's about it for me on the topic for now.

Exactly! Well said Tubs.

I mentioned my thinking on the subject a couple weeks ago, but pretty much echos what you''ve said. Start teaching the kids about real life finance topics - even just an hour a week. One week about mortgages, next week about interest rates, next week superannuation and why it may not be enough for you to retire on etc etc etc

This would'nt have to take a huge amount of time away from the rest of the curriculum, and would'nt even necessarily need to be done in Y12. Maybe just yrs 7-11 - that gives you 5yrs of 1hr per school week. That's a lot of time, and it may encourage the kids to go off an read more about these topics themselves.

 

[alexlee]

All well and good, but let's be honest. Personal finance books have been around for 50 years. If people can't be a*sed to go to a library or a bookstore to pick one up, I don't think teaching it at school will help much. You'd think with all the new finance books that have come out in the last 20 years people would be more knowledgable about it.

Me, I'm going to teach my kids about money in the future. Can't depend on schools for it.
Alex

 

[BoatBoy]

Point being Alex, is that a lot of us wouldnt have known these books existed until we realised that we HAD to change things.

For me, that was 35

If I knew about these books and had been given a few examples earlier on, I may well have looked for them at 20.

Dave

 

[steveadl]

A valid point Alex, but I still can't help but think any financial education would have to be better than none at all - which is pretty much what kids get now.

I appreciate that a lot of people such as you and myself can teach our kids this in the future because we "have seen the light", but this won't help the kids whose parents have no idea about it either. The cycle has to be broken at some point, or it will never change.

My parents were fantastic growing up, and I learnt a lot about running a business and dealing with staff etc. - but they had no idea about Realestate and sharemarket what so ever, so I didn't get started until I discovered and investigated it for myself later on. Had I have been made aware of it in year 7 - I may have started a lot sooner and had my first IP @ 16/17...

 

[Beef_Hooked]

Problem is that most teachers dont understand enough about money to be able to teach it. And then, anything the kids would be taught about money would probably be viewed as 'greed' and 'anti-social' so there's no hope there.

I think that's very unfair on the teachers.

Chemistry teachers don't need to be as skilled as a professional industrial chemist.

Manual Arts teachers don't necessarily have the skills to build a house and maths teachers don't have to be at the level of Stephen Hawkins.

They are educators and it is the quality of the curriculum they are given to deliver that counts.

Just like you wouldn't hand your life over to a financial planner without taking an active role, you shouldn't hand your children over to the Ed. Dept. and expect a system to teach them anything. A continuation of the declining levels of literacy and numeracy is the result.

But school is all about churning out wage earners.

The Universities have that roll these days

 

[steveadl]

The Universities have that roll these days

Ah, but these days the schools are only there to get you into University.

 

[VYBerlinaV8]

The cold hard reality is that schools are never going to seriously teach financial education. The masses are not going to change, at least not for a few generations.

I am going to teach my kids about money myself, and especially show them the linkage between sensible living and building real wealth. Part of this is going to involve crappy part time work while they are at school (my first job was cleaning the butchery at the local Woolworths), to try to develop some hunger for success.

That said, I firmly believe that it's not healthy to think about money constantly, and to have balance in your life. Being financially well organised mean NOT obsessing, I think, and I hope I can pass this message to my son and any future kids.

 

[Boshy888]

These types of stories are highly irritating although perhaps they save those who have been trying to avoid facing their financial problems by waking them up to the fact that they too could soon end up in the same boat. I'd rather sell and downsize or sell and lock up what's left over until my circumstances improved.

As sad as these stories are they aren't much different from the "I got ripped off by the car dealer who sold me a $4,500 car for $19,000 and now its repossessed because the interest rate was 24%" story. I mean, how dumb can you get?

 

[kissfan]

Re high school students getting financial tuition, in my opinion, any sort of lessons on finance is better than nothing at all. Ok, so the teacher mightn't have all the answers but even if a few of the students take notice and decide to do further research, it's a start.

Like other subjects, some students won't give a damn, others may do enough just to pass, but hopefully some will become interested enough for it to kickstart their budgeting/wealth creation etc minds into some action.

The students I would love to see it effect the most are the ones that parents are not too switched on when it comes to financial issues. For the other students whose parents are switched on, well hopefully some of the influence will be passed on.

Regards
Marty

 

[Boshy888]

I agree Kissfan. Some schools are starting to have classes on managing your money and the possible pitfalls of credit cards. They also enter the ASX trading game to learn a bit about the stock market.

Re my previous comment, I do feel sorry for the poor old Mum who probably used her house equity for her son's business. That would hurt. I feel that anyone of her age should never be asked for a loan if there's even a remote possibility that they could lose their home.