Aus­tralia, we have a prob­lem

Keep­ing up with the Jone­ses is cost­ing us more than ever be­fore

The Gympie Times - - NEWS OPINION - Join­ing Paul on the pro­gram this Mon­day are Gra­ham Richard­son, Ross Cameron and Ja­nine Per­rett.

WE ALL know our coun­try is in deep debt.

In just 10 years we have gone from a Fed­eral Gov­ern­ment in sur­plus, to a coun­try with a debt limit that’s been in­creased to six hun­dred bil­lion dol­lars.

How­ever, there’s an even big­ger prob­lem that al­most ev­ery house­hold faces, but for some rea­son we don’t want to talk about it: the debt we per­son­ally owe.

This week we learnt the av­er­age Aus­tralian house­hold owes $169,000. To give you an idea of how much that has blown out, back in 2004 it was $94,000.

Ob­vi­ously we have to bor­row more and more to buy a prop­erty th­ese days, but it’s our in­abil­ity to pay it back that’s the worry.

Ear­lier this year the Re­serve Bank pub­lished some scary num­bers.

Back in 1989, when in­ter­est rates were through the roof, we still took out lots of debt, but it was only 60% of the money com­ing in to the house, so slowly we could pay it off.

In 2017 we owe 190% of the money that comes into a house­hold. To put that in con­text, in the US back in 2007 just be­fore the GFC, debt to in­come was 140%.

Put sim­ply, we can't af­ford and will never pay our house­hold debt off with the money we earn.

The only way we can is if our houses dou­ble their value by the time we want to sell them. That's fine if you are go­ing to stay in the same place for decades, but what hap­pens when in­ter­est rates go up?

We are so far in the hole that thou­sands will be forced to sell, way be­fore their prop­erty price gam­ble can pay off. In fact, the Aus­tralian Bureau of Statis­tics showed us this week 30% of house­holds owe more than three times the money they make in a year.

It’s hu­man na­ture to al­ways want to take a step up in life. Most of us want a bet­ter car, big­ger house and new stuff to put in it and there are plenty of peo­ple will­ing to lend you the money to get it now.

But their whole busi­ness model is mak­ing you pay way more for all those things over the long run and some­times they bet on you not be­ing able to pay it back.

The ques­tion is, has it be­come too easy to get money? To be hon­est, I don’t know, that’s for smarter peo­ple than me. But Aus­tralia, we have a prob­lem. Th­ese debt num­bers show us, we want a cham­pagne life­style on a beer bud­get.

Just be­cause some­one will find a way to give you money, think long and hard about how the hell you are go­ing to pay it back.

I write this not be­cause I know any bet­ter. I’m right in the hole with you.

We have to wake up. The hole is get­ting big­ger and they are charg­ing us a for­tune for the spade to get the heck out of it.

NO CAUSE TO CEL­E­BRATE: Aus­tralians want a cham­pagne life­style on a beer bud­get, as debt num­bers re­leased this week show. PHOTO: THINKSTOCK

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