A day of celebration in Australia today as Shane “Warnie” Warne took his 700th test wicket, the ashes are ours after a long 12 months, and Australia is now at 150%….
Yes that’s right we have finally, after years of trying, hit ONE HUNDRED AND FIFTY percent. Retailers are celebrating nation wide like a drunken bowler with a cricket stump, as our debt to income ratio sits happily at 150%. Making us the highest debt to income ratio in the world…
Before you go “oh no finance and numbers post”, I am going to keep it simple.. Put bluntly for every 10 dollars that you earn, you are borrowing 15 dollars.. The “Aussie” dream of owning your own home, as shown in the Castle. Is quickly becoming the Aussie nightmare as personal debt spirals out of control.. On average Australians have 4 (up to 12 maxed is not that uncommon) credit cards and will regularly payout one card with another transferring the debt across…. To see the state of Australian Debt do a search on seek for debt collection positions, 333 current vacancies. Adds constantly for consolidation we are in trouble to say the least.. Working with debt has opened my eyes, seeing up to 20000 dollars revolved at 25 % interest but they still try to borrow more..
What is creating this cycle of debt? Why are we driven to consume? What do we get from it? Is it our culture?
“There are so many things we need so desperately and the TV preaches that we cant live with out them” –TV - Chris Hall – Stabbing Westward. Very true though, every day we are shown images of people happier than us, they look like us, but they have product X , the logical inference is that Product X is causing the opiate release. Maybe it is status, like the magpie, hording many coloured objects to show our wealth and attract a mate… Many objects = great success = better to sleep with.
Finance is available for those incapable of saving, interest free terms buy now pay nothing for 12 months, only 20% of consumers pay this off the rest revolve at 27- 30%… with no real idea of what they are getting into. Gimmicks and marketing hide the truth that it is DEBT! Which in my opinion is not a good idea. Should they read the fine print, yes, should it be intentionally misleading, No.
Government? The Australian Government has actively encouraged debt to fight rising inflation, similar to that of America in the 60s and 70s (a major contribution to third world debt). Australian Government in the face of insane inflation began the home buyers grants 10,000 dollars to buy the first home, marketed as the Aussie dream huge debt was generated and the inflation dropped. In response to falling inflation interest rate goes up. The dream falls apart.
Irresponsible lending? Credit cards, personal loans, store cards all available at the click of a button confirming the most basic of financial details. Income and out going, age and outstanding debt (only on cards). No details to see if someone could really afford it. How about IQ and personality test? Are they smart enough to use a credit card? Will you understand a credit contract? Are you a shop-a-holic? Are you genetically predisposed to spending? Statements are misleading asking for minimum monthly payments, the way to avoid interest and get out of debt is hidden. The money is shown to be your own, “your available credit is” its your card, personalised cards. The terms and conditions are long and drawn out, we think of it as our card. Somehow they convinced us that debt was cool. My suggestion is that terms and conditions need to be as bright and colour full as the adds for the card.. Make people interested in what it means to have a card, how it all works, how interest is applied.
Where do you draw the line between corporate, government and personal responsibility? Are smokers responsible for their cancer, when the dangers of smoking were hidden for so long? Are consumers responsible if they are forced into a toxic environment?