Plunged into the stress-pool

Plunged into the stress-pool

What?  Wait a minute!  The RBA is doing what, now?

After six straight interest rises, a recent Aussie Home Loans survey has found that almost one in five borrowers are experiencing significant mortgage stress.  So, what is the RBA going to do about it?

They’re hiking their rates up even more!

There’s talk of RBA raising the cash rate as high as 3%, with economists predicting a peak of 3.35%.  The bank recently announced their latest point rise to 2.6%.  That’s a fair leap from the previous 1.85%.

As if full heads of hair around the country weren’t already falling out, this news has got Australian households reaching for the brown paper panic bag.

With only four in ten mortgage holders having budgeted for a 3% or under rate rise, more than half of homeowners nationwide are about to face a total financial meltdown.

Now let’s imagine any one of those borrowers losing their job!

Although some turbulence was expected after years of property supply and demand issues, RBA’s decisions will still hurt a lot of already-struggling families.  And it’s set to announce its next outcome over the coming months, where rates will likely climb once more.

So, how does one cope with all the stress?  It’s up, it’s down.  It’s under, it’s over.  No one quite knows which way is up.  Is there a next move to be made?  Or are we all facing a bit of a financial stalemate?

Homeowners are not getting a chance to catch their breath.  They’re sinking lower and lower into the cesspool of debt when what they really need is a lifeline.

If only there were other options.  A way out.

That’s where GSA comes in.  We’re the sturdy rope of hope for those who feel like they’re about to go under.  We offer game-changing investment strategies to help mortgagees come up for air.  And not only that.  We also help them get ahead of the curve, so their line of vision is always above the horizon.

Get in touch today to ask us more.

This year’s bet: crippling debt

This year’s bet: crippling debt

If you’re thinking of purchasing property in 2022, then here’s hoping you have all your financial ducks in a row.

Because the headlines are not shy in telling you that it’s a bad time to invest.  Between COVID setbacks and rising house prices, the tabloids are setting off financial alarm bells left, right, and centre.  Instead of playing happy homes, what you could end up with is a debt the size of Reservoir.

So, if you want to avoid plunging headfirst into arrears, then you should definitely steer clear of the following:

 

1. Buying property to pay less tax

 

Negative gearing sounds like something we should be doing.  I mean, who doesn’t love a good tax deduction?  Unfortunately though, this strategy only works if you can afford high-growth properties in desirable locations.  If not, you’ll simply lose money.

 

2. The fear of missing out

 

Here’s a tip: leave the emotions at home.  Don’t take shortcuts just to satisfy your short-term desires.  And don’t heedlessly jump on the first opportunity that comes along.  It’s usually not what you think.  Be smart and be patient.

 

4. Trying to get rich quickly

 

Similarly, thinking you can cut corners to make a quick buck is futile.  You can’t.  Property investment is a long game.  It can require years of research and strategy.  And it certainly calls for some solid personal due diligence.

 

4. Investing without knowing how it works

 

So you’ve owned a house, or even just lived in one.  That probably doesn’t make you an expert.  But many people fall prey to this idea, thinking they can just buy a nice place to holiday or retire.  Realistically, you need a sound investment strategy to suit your risk profile.

 

5. Poor cash flow management

 

If you’re not good with the logistics, it’s best to put your investor tools down.  You need the know-how and financial discipline to take on extra debt so that any cashflow problems don’t get worse.

 

6. Hoping to multi-purpose your investment

 

One little property can’t be the ring to rule them all.  Stick to one investment purpose.  Is it a property you’ll live in now, move to when you retire, use for holiday fun?  Or do you want to create some serious wealth?  It’s time to choose.  You can’t have both.

 

7. Launching before you’re ready

 

Don’t just invest willy-nilly.  Make sure your finances are in order; that is, you have a stable job with a steady income.  And you have enough stashed away just in case there are any unforeseeable events along the way.

 

8. Guessing the market cycle

 

The property space has seen countless investors attempt to predict the market, only to fail.  Rather than trying to guess what you think the market may or may not do, simply ensure you have enough money to afford investment-grade property.

 

Now, if that all sounds a bit overwhelming, don’t fret.  GSA has some good news.  We offer a plan that lets you spend less to make more – in less time!  And all the heavy lifting is done for you.  It’s the wise way to invest.

Come and have a chat with us about our upcoming projects today.

The cost of owning a home has increased by 130 per cent!

The cost of owning a home has increased by 130 per cent!

Over the last two generations, the cost of owning a home has risen significantly, with Gen X bearing the brunt of debt.  And those in this unfortunate 41 – 56 year old age bracket make up a hefty chunk of homeowners in today’s market.

With interest rates low, things aren’t quite so bad.  But if they start to rise again, Gen X will struggle big time to service their mortgage repayments.  It’s in stark contrast to the Baby Boomers, who could buy in cheap and pay off a home loan without the added financial stress.  That’s why most of them are sitting pretty, having been able to retire in style.

Of course, no family wants to be left on the street, but if rates rise and wages don’t, the situation looks grim.  “The great Australian dream” no longer offers must repose.

A recent ABC report compares the older generations: X, Boomers and Silent.

 

  • Gen X (born 1965-1980)

Are paying an average of $1,425 per month in 2021 (based on the current median VIC mortgage of $400k).

  • Baby Boomers (born 1946-1964)

The Boomers would only be paying an equivalent of $910 per month by today’s figures.

  • Silent Generation (born 1928-1945)

And these guys would be looking at an even more manageable $440 per month!

 

That’s a massive $1000 p/m income loss for poor Gen X – purely due to circumstance.  And it’s money that could be far better spent on other living expenses.

Alongside these stats, it seems that wages have been stagnant over the past decade.  In comparison, income rose notably higher than inflation for those thriving generations before.

And then if you throw Millennials and Gen Zeds into the mix, you have a younger population barely able to even cough up a deposit.

Surely there has to be an easier way to save and buy without sacrificing lifestyle.  But if the government won’t budge on tax incentives, what do you do?

Easy!  You get in touch with us to find out about our property syndication model.  It can help you:

  1. get into the market sooner
  2. pay off your mortgage faster, and
  3. comfortably retire.

It just goes to show that buying a home doesn’t have to cost you your everything.

Let those old habits die … hard

Let those old habits die … hard

It’s no secret that habits are easily formed but incredibly difficult to break.  And some of them are clearly worse than others.

While many (let’s call them) “rituals” can be helpful,  countless are just plain bad.  Unfortunately, we tend to repeat these things because they make us feel better.  The catch is, of course, that most aren’t doing us any favours.

Think of things like smoking, drinking too much, eating junk food.  All are marvellously feel-good at the time.  Until we step on the scales or find we can no longer walk up a flight of stairs without hyperventilating.  And yet, we’ll continue to inflict these things upon ourselves time and time again.  Will we ever learn?

And you know what?  Money is no different.

How often do we spend our precious dollars on overpriced items we don’t need.  Or even lots of inexpensive things we can definitely do without.  It all adds up!  But we get into a groove.  Money comes in.  Money goes out.  Quite often, we’re not even consciously aware of what we’re doing.  We just spend.  And again, there’s a good chance it’s because it makes us feel momentarily satisfied.  Until the next big bill comes in.

But what if we could be more mindful and purposeful with our choices?  How might it look if we stopped wasting precious resources on empty stuff?  Would our future look brighter?

Let’s look at investment, for example.  Imagine if you made an educated and informed decision to start accumulating money. Rather than forking out $100k for that shiny new bells-and-whistles car, what if you put those hard-earned funds to much better use?  Because like all good decisions, when you invest with purpose, your rewards are inevitable.  Plus, you finally get the chance to kick all that debt guilt to the curb once and for all.

Keen to find out how you can make it all happen?

Give our office a call and book an appointment with one of our investment specialists today.  Because old habits?  Pfft … dead.

Does this home loan look cheap on me?

Does this home loan look cheap on me?

Everyone loves a bargain.  We like that feeling of having something for nothing.  The sort of satisfaction that comes with “take now – pay later” options.

One long-lived example of the don’t-pay-anything-yet initiative is the interest-free payment plan.  Frequently offered by the big home goods retailers like Harvey Norman, these purchases require zero deposit.  They also give you the flexibility to pay off your invoice over time – without incurring any extra fees.  1000 days interest free sounds like a dream come true!

But there’s a catch.  The fine print states that, should you miss a payment, inflated interest rates immediately kick in on your entire outstanding balance.  And that currently stands at around a whopping 26%!  You may also be up for late payment fees.

Credit card providers hit you with much the same thing.  And it’s great for a while.  The benefits of up to 26 months of zero interest are clear.  Pay off your debt at your leisure, without having to pay the bank anything extra. But beware the hidden costs and escalating interest rates slapped on after your interest-free period.

These days, of course, we have the likes of Afterpay.  Their payment plans allow you to access your goods without paying a cent for two weeks.  After that, you pay off your purchase in fortnightly instalments.

The one thing the above all have in common is the need for cash flow.  You still need to budget and ensure you have the funds to pay for your purchases.  It’s easy to get carried away with the rose-tinted notion of owning a fancy new, high-tech 292-inch Samsung TV.  But remember – you will eventually have to pay that $16,000.

This brings us to the government’s latest incentive to open up another 10,000 spots for cheap first-time home loans.  Rather than having to fork out the usual 20% deposit for a home, first-timers have the opportunity to secure a property with just 5%.  While this gives families a shot at the great Aussie dream, what it means is – they essentially need to borrow 95% from the bank.

The thought of owning their own home is extremely appealing for most.  And if they can get their hands on one sooner rather than later (without having to cough up the extra 15% deposit), they’ll take it!  But again, that’s a huge outstanding loan accruing for the best part of their younger lives. Can they really afford it?

So, whether you’re a first-timer, or you’re still paying off your regular mortgage – it’s worth doing it as quickly as possible.  And that’s where GSA can help.

Give us a call, and we’ll walk you through our powerful and rewarding investment strategy.  The consultation is not just cheap – it’s free!

Older Aussies add mental stress to list of ailments

Older Aussies add mental stress to list of ailments

It’s official: the unrelenting burden of mortgage debt is leading to significant mental stress for older Australians.  And the strain is not likely to ease any time soon.

According to findings from Curtin University, almost half of 55 to 64 year-olds are still paying off their home loan.  And it’s predicted that in the next decade or so, more and more of these Aussies will be requiring rent assistance as they are forced out of their homes.

Over the past 25 years, the average mortgage debt has risen by a whopping 600%!  One of the main drivers is, of course, the significant rise in housing prices.  Property values have been increasing at a much faster pace than incomes, leaving homebuyers having to take out higher mortgage debt.  Curtin University’s Professor Rachel Ong ViforJ estimates the current mortgage debt to income ratio to be around 200%.  In other words, the average debt is DOUBLE the income of mortgagees.  Compare that to the rate 20-25 years ago at only 70%, and you can see why the Great Australian Dream is rapidly slipping away.

So, you’d have to take your hat off to people for trying to find a way out of this dilemma, though the strategies they’re employing are not exactly doing them any favours.

Many older Aussies are expecting to either work longer or draw down on their super.  But neither plan of attack is a sustainable solution.  The assumption that they can work for as long as they like does not take unexpected illness or lay-offs into consideration.  And those hoping to draw down their super upon retirement are merely eating into their future savings – money which is meant to see them through well into their golden years.

It’s hardly surprising then, that older mortgagees are suffering increased levels of mental health issues compared to those who already own their home outright.  And it appears to be more severe amongst women than it is amongst men.

The sad news is a number of older Australians are likely to need the government’s help with housing and rent assistance after mortgage stress tips them out of homeownership.  Studies anticipate that about 650,000 older Australians will need this financial assistance by 2021, with a likely risk of insufficient or secure housing in the private rental sector, and an increase in homelessness a very probable outcome.

The idea of vagrancy or even carrying unsustainable mortgage repayments into retirement is enough to bring you to your knees.  Luckily, GSA has a two-pronged solution: pay off your debt sooner AND grow your retirement nest egg faster.  Think of us as your financial shrink. Call us to find out how we can help end your financial anguish.