June 26, 2018

‘Til Debt Do Us Part

Category: Financial Freedom
I heard a frightening statistic this week: that our national debt level is 130 per cent of our GDP (gross domestic product). Quite simply, as a nation, we are racking up debt faster than we are producing.

Or, in old fashioned terms, we are spending more than we earn.
Anyone knows in managing their own budgets, that spending more than you earn ends badly. Usually with a diminished lifestyle as you need to sacrifice in order to pay back what you are have already spent. If you can…

Another equally disturbing statistic is that 30 per cent of households are responsible for 85 per cent of household debt. Wow – this is a big spending 30 per cent of our population.

No doubt it’s what’s been driving property prices up in major cities like Sydney and Melbourne. Combined with the fact that 40% of bank loans have been interest only (although the government is now decreasing that to 30 per cent,) this means that only a few factors in the combination need to change for a series of cascading events to occur.

Reading big picture statistics like this can sometimes paralyse you with fear and a feeling of “what can I do?” It’s obvious we can’t change the habits of a whole nation, but what we can do is think about our own situation and make a checklist for the what if happening.

 

What if interest rates rise? What if house prices drop? What if another GFC came into play? What if you lost your health? What if you lost your ability to work? What if your business failed?

Bear with me; I am not trying to put you on a downer, what I am trying to do is give you a sleep-at-night feeling. Because if you have answers, plans and assurances around all these questions, then you won’t be caught out if circumstances change.

Chances are you do have a plan already. But the household debt tells me that many Australians are used to a good economy and prosperous times; which at times can mean that the worse is not planned for or taken into serious consideration as it has not been needed previously.

If you don’t have a plan, perhaps it’s time to see a financial adviser. If you don’t know one, start with a search on the FPA website and ask them these questions:

  • Are you a Certified Financial Planner (CFP)?
  • How do you charge?
  • What do you specialise in?
  • How will we work together?

If you find the answers are to your liking, it just may help you answer those what ifs, and sleep better at night. For if the whole nation is not covered, at least you and your family are.

Each day I wake up excited to inspire everyday people to open up and take control of their money, regardless of their history, goals, or savings amount. About Vanessa >>

Book

Discover a new way of seeing
life & money.

Download the first 3 chapters for free

Download

Related Articles

There’s a Lot to Look Forward to

As it gets closer to the last quarter of the year, it feels like finally, there is a light at the end of the tunnel. With the vaccination plan rolling out, people are starting to make plans again, and look forward to all the wonderful things in l...

Bombed Out Breakthrough

When Hannah Pereira started making bath bombs at home from a kit she bought on eBay, she had no idea the hobby would turn into a multimillion-dollar ecommerce success. “I had no money at the time,” Hannah confesses. Starting with nothing, B...

Change your money. Change your life.

What do you want in your life and how are you going to pay for it? That’s the question finance educator Vanessa Stoykov asks from her evolution media group office, an internationally recognised boutique content house dedicated t...

The Socialite and the Sous Chef

Got an appetite for fine dining? An exquisite restaurant that tantalises the taste buds will usually ask us to put our money where our mouth is - read our scenario below as food for thought… “You’re the famous Sous Chef of Excelsior, ...