The thoughts of Neil Jenman
I doubt many here would put themselves in this position so it is of general interest only. Lifted it out of HC.
Worried about interest rate rises?
by Neil Jenman
Every day, after he finishes work, Conrad Joseph stops briefly at a five-star hotel. Striding up to the reception desk, he hands over his credit card and books a room for the night.
And then he gets back into his car and drives home.
The hotel room – for which Conrad gets a special rate because he's a regular – is never used. It's in darkness all night.
Why, you may ask, would someone behave in such a strange manner? How odd.
But Conrad Joseph is not alone. Hundreds of thousands of Australians are doing the same thing. Well, not exactly, but their behaviour is almost identical to that of Conrad Joseph (who, by the way, is a fictional example used to illustrate a factual phenomenon).
Each night, all over our nation, millions of home owners pay for rooms they never use, rooms that are left in darkness. They have big loans on big homes filled with empty bedrooms.
There are around six million empty bedrooms in our nation. And all of them cost money. Whether the money is a monthly mortgage payment or the initial purchase price of the home, the fact remains – empty bedrooms are costing us hundreds of millions of dollars. It makes as much sense as paying for a five-star hotel room and never using it.
And yet so many people do it. They get up early to travel to work to earn a big income and then come home late, all to pay a big mortgage for rooms they never use.
Today, mortgage payments control – even cripple – the lives of so many people. Said one home owner, "I am cutting down on the time I spend in the shower, so I can save on the water bill." And thousands of couples are turning off lights to save money on their electricity bills.
In the Sydney suburb of Kellyville – which, like many suburbs in our cities, is being taken over by those huge homes (nicknamed Mc Mansions) on tiny allotments – here's an example of just one high income couple stuck with their high repayments. Their home has five bedrooms. They both work and, although they rarely see each other, they still sleep together – in one room. The running costs of the home added to the repayments force them to watch every cent. They only use four rooms – a bedroom, a kitchen, a bathroom and, occasionally the TV room. The rest of the home is empty and dark. It's one of thousands of homes of darkness.
Sure, we have the lowest interest rates in recent history. But this hasn't made most homebuyers conservative, all it's done is make them spend more – not on basic essentials, but on luxuries, on the look, the glamour and the glitz. Why? To impress others. To fulfil the modern image of success.
But is battling to pay a mortgage, worrying about the water and power bills, scrimping to go out to dinner or the movies, rarely seeing friends and family, what we call success? Surely not.
Modern home owners are drowning in a flood of unnecessary self-inflicted debt. Low interest rates have led to high spending rates. Home affordability is worse than in the days of 17 per cent rates.
And what if these low interest rates rise? How many people understand that a half a per cent interest hike is a ten per cent hike in payments? No, it's not until they see nothing left in their purses that they start to wonder what they've done.
All those empty bedrooms, all those big payments, are creating emptiness in millions of lives.
With property prices declining, instead of using the so-called savings to increase the size of their home, homebuyers should think about increasing their happiness. As the playwright, Ibsen, wrote, "Home life ceases to be free and beautiful when it is founded on borrowing and debt."
If you are buying a home at the moment, place your happiness first. You may see plenty of beautiful homes but you don't hear the other side – the incessant struggle to pay for these homes. Yes, sure you may want it. But, do you need it? There is a difference. If you want to increase your happiness – and we all do – then here's the answer – just decrease your wants.
Don't give your life to your mortgage. Think about this – the word 'mortgage' comes from the French; it means 'agreement unto death'.
Don't let your mortgage be the death of your happiness.
Don't pay for rooms you never use. You wouldn't pay for a hotel room without using it, so don't do it with your family home.
We all need happy homes filled with light and laughter. Not homes of darkness.
