Taming the Debt Monster - Attitudes to debt for young players

Discussion in 'Property Finance' started by Simon, 21st Mar, 2006.

  1. tobe

    tobe Mortgage Broker

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    personally I have found it unworkable to just do one thing, like focussing on repaying bad debt to the exclusion of everything else. Its a bit like dieting, I can do it short term, but quickly lose focus and revert to old ways.

    Id suggest doing a spending plan and include either a dollar figure or percentages for some of the following catagories.

    rent/mortgage payment/accomodation tithe (for when the mortgage is paid off)
    saving for investment/retirement
    saving for holidays
    bad debt repayment

    Id then decide if it was better psychologically and economically to save my holiday money 'in' the personal loan for the time being (it has the best effective interest rate, and works on my desire to be out of debt etc)

    It may be that your happy to allocate $x to each catagory, and the $x is just right for repayments on 3 new personal loans, one for holidays, one for investment one for the furniture etc and you do it all now. You might be happy with this. The loan assessor might not be so happy, and ecomoically speaking it might not be the best use of funds.

    Id say as long as you have allocated enough funds to each catagory, and you have enough catagories (perhaps a prudent reserve is another catagory thats important) and you dont spend more than you earn, its up to you what your priorities are.
     
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  2. cimbom

    cimbom Member

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    Thanks tobe. Just to clarify, are you suggesting that I "recycle" the loan by putting money in there and then withdrawing it again for the expenses I mentioned? Also, I'm not sure what you mean with the three new personal loans you mention - are these in addition to the existing loans?

    In terms of investing, we will probably take a break from this for this next 1-2 years. We are pretty close to our serviceability at present anyway and would like some time to adjust from having one property to two.
     
  3. tobe

    tobe Mortgage Broker

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    I wasnt suggesting anything. I was exploring possibilities. Mainly though I was suggesting you find out how you tick with money and debt. For some people debt is a curse, for others its fantastic. For others its just a tool.

    What is it to you? You outlined a wishlist, new furniture, holiday, pay off personal loan, start a new business. Is it just a wishlist? What is the priority? Why? could you put off the furniture? the holiday? can you increase your income? etc, etc. the answer is yours, when you find out what makes you tick around money.
     
  4. china

    china Member

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    I don't understand.

    In Australia, we have the privilege of essentially free medical care. Surgery whether as a private/insured patient or public/non-insured patient should cost you close to nothing. Unless you are having cosmetic surgery / IVF treatments / laser eye treatments - which would definitely cost you a bomb - but would be considered discretionary spending / bad debt / self indulgence etc.

    There is obviously an opportunity cost from time lost from income generating work when actually having surgery and recovering from surgery but overall, surgery in Australia should not be expensive for the individual. In Australia, the taxpayer generally shoulders the burden.

    If you have been slugged with gap fees for surgeons and anesthetists as a private patient, then there has been a problem with either your choice of specialists or your communication with these specialists.
     
  5. BMan

    BMan learner property investor

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    even dental surgery?
     
  6. china

    china Member

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    Except dental surgery.
     
  7. cimbom

    cimbom Member

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    I wish the above was true. I don't wish to disclose my medical history/conditions on an internet forum but it was surgery that was required as a result of a hereditary medical condition. There is a Medicare rebate available of a few hundred dollars which is a drop in the ocean compared to the final cost. I had the surgery done in Canada as I could use a better surgeon and I saved $4k. I'm not sure why you think I'd be making this up?
     
  8. china

    china Member

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    No on the contrary.

    I hear a lot of people telling me how much surgery costs in Australia. My reply to them is the same. This country is unique because surgical costs are mostly borne by the tax payer. Whereas, overseas the individual often has to foot the bill. I personally know of many people who hang on to Australian citizenship despite residing overseas so as to have access our health care system. We have world class surgeons / facilities in this country and due to our heavy taxes, our government subsidises most treatments in for both public and private patients. This would cover over 99% of essential surgeries required for humans. Due to the unique characteristics of our subsidised, yet free market nature of the Australian health care system, it will almost always be possible to find a surgeon offering the same service for a next to no cost rate for the individual. The key is in finding the right specialist and communicating with them.
     
  9. cimbom

    cimbom Member

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    I'm sorry but that's incorrect. i did a lot of research before proceeding and that's around the market rate for the procedure. I'm very happy with the surgeon I went with as he is well renowned and accomplished in his field. Far more than the pretty average surgeon I would have gone with in Australia who would have also charged significantly more. Together with travel costs, I ended up paying about the same but I'd rather pay for quality than location.

    The people you know are probably from less developed or third world countries. Most European countries have far more comprehensive coverage than we do. Our system used be among the best in the world but the rest of the world has moved ahead and we are yet to catch up.
     
  10. china

    china Member

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    This must have been quite a uinique situation. And I respect your need for privacy and won't ask for further details.

    However, as a general priniciple, for Australian citizens to travel to another first world country where they are not citizens for any medical treatment and vice versa will almost always cost more than if they had their surgery in their own country where they hold citizenship.
     
  11. Aaron_C

    Aaron_C Finance Broker

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    Anaesthetists always charge more than schedule.
     
  12. china

    china Member

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    Some are downright rapacious.

    However, you can always discuss this with them prior to your planned elective procedure. Most people will not care who gives them anesthetic. In fact, the quality of anesthesia / anesthetist is unknown to most people, unlike big name / high profile surgeons. Hence, in a free market economy, they are open to negotiations or else you will find another service provider who will offer better quality services at schedule fee.
     
  13. redwing

    redwing Progress Not Perfection

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    China

    You could probably start a thread on this and educate many of us

    I'd be keen to see how
     
  14. china

    china Member

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    Would be very glad to. It is best to deal with specific examples if anyone has any, in order to demonstrate various points about negotiating the australian health system.
     
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  15. cimbom

    cimbom Member

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    Just posting these posts from the debt consolidation thread in the coffee lounge as I'm not sure if they'll get many views.



    My post:

    I tried to apply for a GE debt consolidation loan today (to pay off all debts and small bit extra for some expenses) and got knocked back despite meeting the serviceability criteria as we recently got approved for our PPOR mortgage (and had a pre-approval from before then).

    Is it wise for me to try and increase my credit card limit to temporarily cover these expenses or will I completely trash my credit file if I do this?

    -------------------------------------------------------------------------

    MRO reply:

    Failed application from GE is already marked on your credit file.

    From my distant memory of credit files, every time you apply for credit the lender name and amount is marked. I know that applications to high interest low value loan companies were reason for automatic further review of a file.

    To answer your question, another application wont completely trash your file but it will be another record on the file. Try and get a good indication from the lender prior to submitting a formal application.

    --------------------------------------------------------------------------

    My reply:

    Thanks. In a weird position at present as we got pre-approval prior to bidding at auction which then fell through. In order to not lose our deposit, we had to drop the LVR of the loan which has taken all our spare funds.

    I have ordered stuff for our new house as we are currently renting a furnished property but now it seems like we'll have to live in an empty house for a while as I won't be able to make the payments which is going to be quite strange :confused:




    Any ideas or advice?
     
  16. redwing

    redwing Progress Not Perfection

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    We're with a private Health Insurer and we've been slugged with Gap fee's, anesthetists stand out in my memory, I'm sure there's others

    What gives China?
     
  17. tobe

    tobe Mortgage Broker

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    cancel the new stuff, and head on over the op shop for some furniture. You wont be the last first home buyers to have second hand furniture. It works almost the same as new stuff.
     
  18. cimbom

    cimbom Member

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    I've put down over $1000 in deposits so it seems like false economy to cancel it. I'll just have to delay delivery by several weeks. So much second-hand stuff is overpriced these days anyway.
     
  19. D.T.

    D.T. Property Lookerafterer

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    Went looking for this old post (by its old author :p) as a friend of the family recently bragged that their 18 year old daughter bought a financed $42k 4wd for her first car. It'd be partly justified if it was work related but alas I seek solace in these forums for I am not the only one who could have put my money to better use.

    The message in the original post is just as valid today as it was 7 years ago when it was written. I can't see it being any less valid in another 7, too.
     
  20. Longrass

    Longrass Member

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    Great article!