I have been following with great interest, the financial situations of both here in Australia and the US. I think it is going to get worse before it gets better, unfortunately. Every evening on the news and current affairs programs, particular cases of personal misfortunes, such as house repossessions, etc. grace our screens, but in reality, why are the majority of these individuals in such a dire predicament? It is all too easy to blame the banks and other lending institutions and justifiably so, but when are people going to take ownership of their own ill informed choices which are based (in some cases) on pride, greed and instant gratification?Individuals living beyond their means and getting themselves into massive personal debt through over borrowing and the reckless use of easy credit.What happened to saving until you can afford to buy something or alternatively,making do with second hand items?
My attitude may seem harsh and that it not my intention but the protestations of the modern day borrowers seem frivolous when compared to the interest rates of the ’80’s, where 17% was the norm. History should have been heeded, but it hasn’t been.
Personally, I did have a mortgage in the 80’s and when interest rates climbed it was extremely difficult, but we cut our cloth accordingly and lived a very frugal life, devoid of holidays, social extravagances and a very tight household budget. For much of that time , there was only one meagre income coming into the house, due to serious illness on my part, but we worked hard at reducing our borrowings and maintained the high repayments when interest rates fell again. We reduced the loan period by more than 50% and are now mortgage free. My house is modest but it is 50% mine, I drive a reliable vintage Volvo and I have a nest egg for times such as those we may now be facing. It can be done, but it takes plenty of self discipline and the firm belief that you do NOT have to have it all, immediately.