The Rodeo

This article in the Sydney Morning Herald talks about a huge number of house repossessions occuring in Sydney as people default on their loans after people took out huge loans to buy big houses.

It seems our society is fixated on getting stuff now, no matter the eventual cost. Delayed gratification is never considered.

It’s something we need to think about, and try and change our ways. Instead of buying everything you want, think about what you need. After you have the necessities, you can worry about the extras. Save up and get it once you can afford it.

This applies to housing too – instead of getting a 5-bedroom house with 3 bathrooms and a harbour view, think about what you need – maybe three bedrooms. And you could share a bathroom with the kids. Maybe even consider (gasp!) renting. At the moment Jen and I are renting, we’d like to buy a house eventually, but at the moment renting suits us fine. We can move at the drop of a hat if necessary, we don’t have a huge debt hanging over our heads and we don’t have to pay rates or maintenance bills.

It’d be nice to have our own place, and maybe we will one day, but we don’t want to be struggling just to make loan repayments each month – we’d rather be able to pay off a mortgage comfortably.

A quick note about credit cards
Don’t think of a credit card as providing you with free money. It’s very much not free. Credit cards are handy – they let you wrangle all your payments into one lump sum payable at the end of the month, and if you don’t have quite enough money for something you need, you can still get it.
But, the best way to use a credit card is to spend only what you have in your account. If you couldn’t afford it with the money in your bank account, don’t buy it. If you pay back the entire amount each month then you don’t have to pay interest (then it effectively becomes free money).

Don’t spend more than you have, or you’ll get yourself into loads of trouble. Don’t take out a loan you can’t pay back. Wait, and only buy things once you can afford them. Modern society has lost this common sense with advertising telling you to spend now and worry about the cost later. It doesn’t work.

RodeoClown: not a financial advisor.

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