After the boom, the bankrupts

[Fester]

This article in the Sydney Morning Herald:
http://www.smh.com.au/articles/2004/05/21/1085120120184.html

Am I heartless! I read this, but I don't have a great deal of sympathy
for this couple. I personally would not have gone into a similar deal.
They have made some good CG from the sales, where is that money?
Maybe my wife is right, she says I am too cynical!

 

[Lplate]

This article in the Sydney Morning Herald:
http://www.smh.com.au/articles/2004/05/21/1085120120184.html

Am I heartless! I read this, but I don't have a great deal of sympathy
for this couple. I personally would not have gone into a similar deal.
They have made some good CG from the sales, where is that money?
Maybe my wife is right, she says I am too cynical!

Fester
To quote from the article At one stage Moran was earning $250,000 a year and Leighton was on a $125,000 package. .

I guess we lesser mortals have learned to make every dollar count and unlike some high-flyers, we cannot afford to fly by the seat of our pants.

Naive or a bit superficial, self-centered and greedy? Obvious targets for some!
Lplate

 

[D.T.]

Hi

Wonder what happened to good old fashioned back-of-envelope calcs before deciding to buy a property?

-Regards

Dave

 

[NEWGEN]

I don't feel any pity for them at all. They knew what they were getting into.. hell if they didn't then they're the only ones to blame. The problem facing them doesn't seem that great does it? I'm sure they can afford to pay what they owe. They seem to be making a big deal out of it because they realised how stupid they were and how they got played. I guess they just want everyone else to see it as well...

 

[silas]

Hi All. Although I agree that the purchasers should have been more aware of what they were doing and the risks invovled many people are and will get burned because they have only ever understood the upside of property investment. Often those selling particularly apartments communicate that nothing can go wrong as capital gains will continue to grow at 10% per annum. If that is all you have known it is easy to believe that in a few years your $660,000 property will be worth 1m. It is also easy to make decisions for negativly geared property when you are on a high sellary that in the short term do not make sense. I am presently trying to help a friend in a similar position who has just walked away from settlement rather than pay a similar interest rate. They still need to find out how they will be treated by Meriton. It is sad to hear in the above story that looking for financial success has cost the more important things in life such as health and family.

 

[Tibor]

Hi there,

I am just reading (and enjoying every minute of it) the latest RK book, Who took my money?

Is very interesting and builds on the fundations laid in his previous books. It is definitely for the 10% (or closer to 5%) who understands the importance of cash-flow vs cap gain. I know, we had the discussion on this subject in the past on several occassions, but it is put together very well and in layman terms as usual.

The couple has fallen exactly for this reason. It is easy to be a high flyer on 200K per annum. Only problem when the well paid job has gone, what's happening with the cap gain investor? This couple example is only one scenario, a luckier one might have sold it for 850K. At the end of the day it still would not have solved their original problem, how to get out of the rat race? That one needs cash-flow, not cap gain.

This article just shows to me again the importance of financial education, or the lack of it.

Simply, as soon as your cash-flow exceeds your expenses, you are out.

Just the 2c.

 

[Aceyducey]

The moral to this story is:

When you're doing well it's due to your own financial skills.....

But when things go badly it's someone else's fault!

Who decided to take a very risky path without adequately assessing the risks?
Who signed the documents?

Cheers,

Aceyducey

 

[Territorian]

I thoroughly agree with AceyDucey last post.
I also add some "conservative" thoughts from my parents teaching.
Its all about Risk Managment & the importance to consider your stages of life. Particularly when you are raising a family..........
"never commit more than one wage"
"create a portfolio of varying skills & experience" so that in different times you can be "employable".
"read the fine print"
"know exactly what your getting into"
"discuss important financial decisions with those in the know"
and the no1 thing that will always stick in my mind:
"We will help you put food on the table but we will never bail you out if you get yourself into debt by your own stupidity - its your own fault"

MMMMMMMMmmmmmmm

 

[Donna L]

I too was similarly very confused by this article. Why wouldn't you walk from the settlement? Yes you will pay a penalty, maybe 60-70K but it is hardly bankruptcy! Why would you agree to a loan at 102% p.a. when you have lost your job???

By the way, has anyone here defaulted on a settlement? What was the economic cost to you?

 

[thefirstbruce]

"We were two hard-working, successful people. We are educated, smart, we pay our taxes, and for the past seven years we have invested in property to provide a future for us and our children."

really?.....

not that I have anything against Kiwis associated with Bondi, nor people who think marriage and giving their kids the convenience of having two parents with the same surname is for superstitious squares, but........


1. Moran never met King
2. Moran never checked on King's credentials....King wasn't even a member of the industry association.
3. Obviously small print wasn't read. Would have been an idea to have a solicitor read the agreement.
4. Moran signed up for a business loan.
5. Moran chose to default on the original loan.


I say if Moran and mother of his kids are educated and smart, then they are reckless fools....

 

[thefirstbruce]

http://www.theage.com.au/articles/2004/05/29/1085641766317.html

 

[itinerantotter]

The moral to this story is:

When you're doing well it's due to your own financial skills.....

But when things go badly it's someone else's fault!

I agree wholeheartedly with this!

Cheers

 

[Peter_Tersteeg]

102% pa intrest. And there are some people who thing wrappers are sharks!