Consequences of "free money"
- Thread starter Shonnie
- Start date
Hi Simon:
which lenders don't take CC limit into consideration? I personally find CC very useful in reducing my interest payment
Simon,
I know where you are coming from especially since you are in the industry, but I only make the following comments:
I am not advising ppl to do anything.
I was only expressing my "attitude".
Just having access to a large limit CC does not mean, as a sensible investor that you are going to use it....and I personally find it galling that just because lender A thinks I am a good customer and gives me a large limit CC which I have a history of treating responsibly, that lender B, for the purpose of assessing how much they will give me as a mortgage, needs to take into consideration that I will be irresponsible with lender A's CC and max it out.
Individual's circumstances can change - and change suddenly - after a mortgage has been approved.
Lo docs weren't called lie docs for nothing.
I found the following article most interesting http://www.news.com.au/story/0,23599,22769114-2,00.html
wherein it states:
MILLIONS of Australians lie about their financial details when applying for credit, with men almost twice as likely as women to make false declarations, a study has found.
The study, conducted for credit reporting agency Veda Advantage, found as many as 2.7 million people had deliberately underestimated expenses and credit commitments, exaggerated their work history and overestimated the value of their assets to secure funds.
I am not advocating this as a course of action - just an observation - and one as a MB you must see quite a lot of.
Cheers,
Aimy
SheWarrior, sure there's more to life than investing.....like not being dependent on your boomer parents, getting married and perpetuating the species,,,
My example referred to buying a PPR, not an IP. Seems a lot of people won't breed until they have their own home.
There's a growing number of smart young people who prefer not to settle down early, but rather choose to do half a degree, then start another one, then travel OS, then party....and get into their mid 30s with no money....not good for the country, and not good for the birth rate. Probably ok when 10% of the population is doing it, but not 30%. The welfare burden it will create down stream is unsupportable.
Hiya,
I don't believe there's anything wrong with such a lifestyle, either. We - everyone - is blessed with having choice, and making those decisions in life does not make someone any better or worse than someone who chooses to save their money and invest for the future. As WW said, it is not all about investing.
It is simply about knowing the options, and the subsequent ramifications, and choosing to take the ones that appeal most at the time. For some, this means investing and taking it a little harder now to enjoy more later. For others, this may mean a similar series of events to those WW described above.
The choices I've made have meant I can afford to have some nice toys, some expensive experiences, a fastpaced lifestyle, and still be planning ahead for an early retirement.
One of my sisters has taken a vastly different path in life. She's now 21, and often barely has two coins to rub together let alone anything in the way of investments. But, she does have a loving fiance and baby daughter.
In some ways, she is far richer than I.
Cheers
James.
The problem is James;
you are assuming that many of these people will suddenly wake up and start to plan for retirement when they reach their 30's.
Many of those people that Winston described don't wake up when they reach their 30's and do anything about it like you say.
Suddenly, they are 40 and still have no assets; they may still be renting and have a couple of young kids who are about to become expensive to raise.
They may not be able to get a high-paying job, despite their swag of degrees, due to their age; they may in fact be un-employable with no practical experience and age against them.
These people will now run out of choices; they won't have the choice of retiring at 65 in comfort, or even retiring at all.
The reality is that over 60% of the population retire broke, so the current pattern of society thinking will simply perpetuate this.
I think it's better for all concerned if the 20 somethings get their act together, form some good money habits and learn the basics of investing, so that they will get to 40 and have choices, and be able to retire when they choose to and not be a burden on society, but more importantly, have a nice life for the whole of their life; not just the fun-filled, care-free Uni days.
you are assuming that many of these people will suddenly wake up and start to plan for retirement when they reach their 30's.
Many of those people that Winston described don't wake up when they reach their 30's and do anything about it like you say.
Suddenly, they are 40 and still have no assets; they may still be renting and have a couple of young kids who are about to become expensive to raise.
They may not be able to get a high-paying job, despite their swag of degrees, due to their age; they may in fact be un-employable with no practical experience and age against them.
These people will now run out of choices; they won't have the choice of retiring at 65 in comfort, or even retiring at all.
The reality is that over 60% of the population retire broke, so the current pattern of society thinking will simply perpetuate this.
I think it's better for all concerned if the 20 somethings get their act together, form some good money habits and learn the basics of investing, so that they will get to 40 and have choices, and be able to retire when they choose to and not be a burden on society, but more importantly, have a nice life for the whole of their life; not just the fun-filled, care-free Uni days.
When I was in my 20s, my friends couldn't understand why I would want to take on so much mortgage debt. And that's from the people who did invest. The ones who didn't invest couldn't understand why I would deliberately live below my means.
Now that I'm 30, my friends are complaining to me about the cost of having and raising kids. The reality of schooling, etc is making them depressed.
Most people don't make the conscious decision of 'I know how to handle money but I'll deliberately spend for a few years and then manage my finances correctly'.
Reality gets heavier as time goes on. For those who aren't prepared for it, anyway.
Alex
Now that I'm 30, my friends are complaining to me about the cost of having and raising kids. The reality of schooling, etc is making them depressed.
Most people don't make the conscious decision of 'I know how to handle money but I'll deliberately spend for a few years and then manage my finances correctly'.
Reality gets heavier as time goes on. For those who aren't prepared for it, anyway.
Alex
Yes, and as crass as that sounds, responsibilities are SO much easier to handle when you have assets behind you.
Alex
1) Its quite possible to do this stuff and still get to your mid 30's with money / assets. They are not mutually exclusive. I see myself as a case in point.
2) There are numerous threads on this forum about people who don't know how to manage money, live beyond their means, live off credit cards, etc. Many of these people went to school/uni, got a job, got a house, and still got into trouble. People get to their 30's without money because they make poor finiancial decisions, not because they choose to persue their dreams and interests.
3) I will certainly aim to educate my children financially. I will also encourage them to live a life and make choices that ultimately make them happy. Having "assets behind you" is one aspect of being able to make the choices. Broardening your horizons (reading, traveling, interacting, experiencing new things) and having the courage to change paths are also part of moving towards a life you really want to live.
4) Money can open doors. Pursuing money can often close doors. Some opportunities are not measured in $ and don't show up in your balance sheet. There is a balance.
I work in the medical field. Many of my friends have pursued specialist careers and now can earn double or tripple what I do. Some of them will have the potential to earn 5 times as much as me, pethaps more. The price they paid was long hours at work, very little leave, high stress levels, little time for friends and family, etc. Most of them will continue to endure this through out their working careers.
The choices I have made have allowed me to work the hours I choose, take leave if and when I want, spend time with my family etc. I have been to every continent on Earth (including Antarctica). Most years I take 6+ weeks off (the last 2 years I have taken 10+ weeks off, and few years ago I took 6 months off). I am expecting my first child and I will reduce my hours to take an active role in child rearing.
The choices I have made are not open to many my friends because they take the path of career focus / wealth. Essentially they are pursing money at the moment. Sure, once they have money, some of them will devote themselves to other things. But, for now, some doors remain closed to them. Some of these doors, if they wait too long, will never open.
Dis,
this sounds as though you are referring more to lost opportunities rather than closed doors, and I quite agree with you.
I have met many people who are the same; I was one of them, but decided to change the path. For most this is hard to do as it is very scary to give up all the hard work, or the "security" and seek a different life; especially if it means a drop in "lifestyle".
For example, when we decided to move to the USA for a few years, all our friends and family said either;
"You're mad!" or
"I wish I could do that!"
It has turned out to be one of the best things I/we have done in my life.
One of my best friends still does what I used to do, and still does the big hours, and hates it. But he is now trapped; he is a voracious keeper-upper-with-the-Jones, loves all the gadgets and brand-name everything, expensive cars and of course; has to have the massively too expensive house. He has virtually no investment other than some super.
His nett worth is about the same as mine in terms of his house (I don't include doodads as assets), whereas mine is IP's, and he will be working for a very, very long time to pay it all off in a job he hates. I'm not. He made a choice and so did I.
Good luck with the child rearing role; it's what I've been doing for the last 6 years mostly, and it's harder than it looks, but still great.
this sounds as though you are referring more to lost opportunities rather than closed doors, and I quite agree with you.
I have met many people who are the same; I was one of them, but decided to change the path. For most this is hard to do as it is very scary to give up all the hard work, or the "security" and seek a different life; especially if it means a drop in "lifestyle".
For example, when we decided to move to the USA for a few years, all our friends and family said either;
"You're mad!" or
"I wish I could do that!"
It has turned out to be one of the best things I/we have done in my life.
One of my best friends still does what I used to do, and still does the big hours, and hates it. But he is now trapped; he is a voracious keeper-upper-with-the-Jones, loves all the gadgets and brand-name everything, expensive cars and of course; has to have the massively too expensive house. He has virtually no investment other than some super.
His nett worth is about the same as mine in terms of his house (I don't include doodads as assets), whereas mine is IP's, and he will be working for a very, very long time to pay it all off in a job he hates. I'm not. He made a choice and so did I.
Good luck with the child rearing role; it's what I've been doing for the last 6 years mostly, and it's harder than it looks, but still great.
True that they are not mutually exclusive..... Human nature being what it is however, will see the greater majority of 30 somethings with nothing, continue to have nothing. My point is that our media and culture are influencing an ever increasing number that these choices are ok, cool even......It would seem financial illiterarcy and poor impulse control are the rule rather than the exception today.
And the few in well remunerated occupations (even those with specious entry barriers), should not mistake that catching up financially is as easy for the majority in less fortuitous circumstances. After all, half of us have to make do with less than the median household income.
There most certainly is a balance between the two, which is my point. And currently, I think contemporary popular culture and progressive parenting has swung way out of balance.....the consequences will be painful, almost tragic, and not realized until several generations are too old to be able to do diddly squat about it.
Hopefully, in 2020, Kevin07 or Julia will be there manning the soup kitchen.
What's "progressive parenting" WW?
Maybe I should have called it parenting by progressives.
Passively or actively granting kids adult rights and freedoms, without adult responsibilities, within the family unit and greater society.
Denying that emotional development and self discipline is an ongoing process through adolescence, not innate....and requires nurturing and guidance from mature adults.
Believing minors should be left to develop by reference to their own instincts, with no or minimal guidance from adults.
Ideological opposition towards established traditions and morals, especially those associated with organized religion.
Yowzer.....major shock to find your partner had racked that up. How could you not know? A spendthrift married to an ostrich.I inevitably get an invitation to increase my credit limit when I haven't paid off the full amount, then as soon as it is paid off, the letter comes asking me if I want to increase my credit limit. It is always to increase to $15 000. I have never taken up the offer.
Pen
