r0dman.com

I read an article yesterday that was just ridiculous. A 19 year old casual employee is already $42,000 in debt – the result of a car, plasma TV and an overseas holiday. While the article claims to be about how Generation Y are getting their act together financially, I’m just reading another piece of tripe by News Corp.

I’ve always had an issue with image. Not personally – as mentioned I’m a fairly resilient person, so I don’t hugely care what other people think of my lifestyle or how I look, but coming from a private school I was inevitably part of a competition to look as rich as possible, regardless of where I actually stood in the pecking order. It’s amazing how some parents push their kids out of the car in Ralph Lauren and Nautica, despite their car running on three cylinders.

Only now have I realised that a large part of a lot of males’ image is tied up with cars. I personally have had a few nice cars, and while I have never consciously bought them for the image factor, now that I think about it image is the only reason for your car to look good. While nowadays it’s easy for me to let go of that dream, I find that most Australians consider others to be “successful” dependant on how new their car is. Going on that judgement, I must be fairly unsuccessful, right?

Whether it be for a car, house, TV, boat, bike, clothes, laptop or so on – are people actually getting into debt purely just to boost their self-image? In this crazy world that we are living in, I’m a firm believer that nine times out of ten they are.

I don’t profess to be exempt from this, although I consider myself to have things under control – a good friend of mine asked the other day if I was sick of not having a car, and that “surely you could afford it”. Quite honestly, we could afford another car, but we just don’t need one at the moment – it doesn’t make any sense.

Nowadays you just don’t seem to get any kudos for paying down your loans and owning things freehold. To date I have never had a loan for a car, and only ever taken out a loan to buy our property. I wouldn’t have it any other way.

I wrote an article about the Minimalist Lifestyle not too long ago, and I feel that this ties in perfectly – to me, debt means stress. It is something that will always be in the back of your mind until it’s gone. Get rid of it and it will be one less thing to think about. Be content with less, and enjoy life rather than worry about it constantly.

Every Australian knows what a first-home buyer is entitled to by now. A heap of free money! But is there really such a thing as free money?

According to a recent report by market research firm Brandmanagement, young home buyers’ loans have jumped an unsustainable $52,000 (23%!) in the past two years.

From February 2008 to February 2009, first-home buyers have flooded the market, up 9.6% now comprising 26.9% of the market. It’s almost as though there’s something they don’t know!

Here we essentially have a boom within a boom. The increased madness of first-home buyers rushing to get into the property market before they lose their “free money” or “before the next boom” has pushed prices up, despite times of economic doom and gloom. This “mini-boom” in itself gives first-home buyers more reason to commit earlier than they should. In the belief that property will only increase in value, they want to enter the market as early as they can at any cost.

Andrew Inwood, from Brandmanagement is quoted saying:

“What the government incentives appear to have done is transfer the money from the people who are borrowing money to buy their first homes into the pockets of those who are selling at a more attractive price.”

The issue for me is the short sightedness of this whole situation. Anyone who has taken the time to do the research knows that Australia is not in a sustainable economic situation right now, and propping up the bubble with grants like these is just prolonging the inevitable. Why give people a false sense of security and then screw them over?

It’s hard to make a comparison, and this example is probably a little extreme, but during a war what would you prefer? To have your country bombed and suffer considerable damage in an instant, and then have the attacking country leave? Or to have troops attacking nearby, tormenting the families and fighting for five or ten years? The way I see it, instant annihilation, while hard for everyone, allows the country to be rebuilt immediately. People will realise what is actually important in life, and pull together to reconstruct their homes, hospitals, and so on.

It’s amazing how this whole situation is only centered around money, not life or death, and yet people still want to believe that everything is peachy, while all they are really believing in is a slow and painful death of the market.