Financial Responsibility: Understanding The Pressures of Debt

Financial responsibility, now there’s a term to send people running. I’m sure there are better ways to say it but hopefully if you stick with me you’ll see my point. You may not agree with me, and that is perfectly fine. This is just my thoughts and opinions.

The following examples are very general and I know many people who do not fit into these boxes, but I feel it needs saying anyway.

I seem to see a lot of people, younger than myself, with vast amounts of personal debt before even considering buying a house, then complaining that houses are unaffordable. It has to be said, the statistics prove it, the ratio between mortgage repayments and people’s incomes has stayed almost the same for the last 50-100 years. It may not seem so to you, the reader, but I hope to explain why.

If you go back even just one generation, normally the only debt everyone had was their home loan/mortgage. Everything else got saved for and paid for.

The bit that skews things these days is all the extra debt, mobile phone plans, internet costs, pay television, car loans, boat loans, bike loans, credit cards, never mind the good old ‘interest free’ offers.

Now I’m as guilty as everyone else here, I have some of this type of debt also but… I understand the pressures it places on incomes and people, where as many people do not.

I’m certainly not saying that you don’t have these debts, just understand how these affect your disposable income. A $650 per month car loan could reduce a Mortgage/Home Loan you can have by $100,000… Now factor in some of the other facilities and you can start to see what a big impact they can make. Think about also how they impact your ability to save a deposit. Add them all up together and the costs can be scary.

As with every blog I write, I just want you to make an informed decision and understand why it’s harder to buy a house now.Property is still affordable to many but it may mean a change in some of your priorities to achieve it.

You don’t have to agree with me, it doesn’t seem fair; it’s just what it is.