14
Nov
15

Nation of Renters

rentingIt has been two years since the latest update on housing occupancy and the one released on Friday October 16th shows the proportion of households renting has edged up to 31 percent, an all-time high. The proportion owning outright is just in front at 31.4 percent and approximately 36 percent of homes are mortgaged. At the end of the 1990’s nearly 40 percent of households owned out-right and only 27 percent rented. Among households headed by Australians aged under 35, an extraordinary 63.4 percent now rent. For some people, especially those in Sydney, the stress of home ownership has become too much to bear.

Mark Trevorrow, probably better known as Bob Downe, was sick of being a mortgage slave. He said “I genuinely felt trapped; it was really cramping my creative style. I was making my work decisions based upon keeping thousands and thousands of bucks coming in to cover the mortgage and pay strata levies. I turned my back on the great Australian Dream of home ownership and it’s the best thing I have ever done.” Since offloading his Potts Point pad in 2010, he’s enjoyed a burst of creativity. In fact, He has been doing some of his best work he has ever done in his life. The debt-free life has also improved his physical and mental health.

renting

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27
Oct
15

Wealth Illusion

houses upClancy Yeates, in his Sydney Morning Herald Insight column entitled ‘Increased wealth an illusion’ says: ‘Lifting your spending because your house went up in value may not sound sensible, but the statistics suggest it is exactly what many households have been doing in the past couple of years.’

Recent analysis from the ANZ Bank shows that the percentage of income that is saved tends to go down when there is an increase in household wealth. In economics, this is known as the ‘wealth effect’ – the idea that people will change their behaviour because they feel richer thanks to higher asset prices.

For most people, household wealth is essentially their family home. This means that the wealth effect is an illusion for them. For example, if you sell your house, you will find that other houses in the same area have also gone up by a similar amount. Therefore, you are no better off. Downsizing, or moving to a cheaper area, will release some funds; however, in a true sense you are still no wealthier. In fact, when you start to spend those released funds, you will actually be poorer.

Even though the increase in wealth is illusory, rather than tangible, it doesn’t seem to stop people from changing their behaviour when property prices rise. My advice is simple – Make sure you don’t fall into the ‘wealth illusion’ trap.

19
Oct
15

Saving

no spendSally Patten, in her Sydney Morning Herald Her Money column entitled ‘Don’t spend it today – save it’ said: ‘Controlling our spending on unnecessary items in the short-term will help us to save for things we want further down the track, such as the kids’ education or a decent lifestyle in retirement.’ In a similar vein, Catherine Robson, from the boutique advice firm, Affinity Private, says: ‘The trick is to put in place strategies that help you to delay gratification.’

She recommends strategies; such as, reducing the limit on your credit cards to an amount that in total is no more than your monthly after tax salary. Otherwise, if you can’t trust yourself not to over spend, cut up all your credit cards, take out a personal loan to pay them off and then use a debit card for all your future purchases.

The only thing that credit cards can offer that debit cards cannot match is the ‘rewards’ program; however, for most of us, any rewards we receive are outweighed by the temptation of the credit card itself. Experts tell us: If you use a credit card, you’re more likely to buy things that you don’t need. And you’re more likely to pay more for the things that you do need. You pay more because there is no cash discount. You pay more because there is usually a credit card surcharge. On top of all that, you pay annual credit card fees just to earn those reward points.

Another strategy for controlling your money is to adopt the 3F bucket approach; that is, divide your net pay into three portions. The first portion is called Fixed – it’s to cover your day-to-day living expenses; the second portion is called Fun – it’s for non-essential consumption and the last portion is called Future – it’s for your long-term financial security.

15
Oct
15

FOMO

FOMOSam de Brito, in his regular Sun-Herald All men are liars except Sam de Brito column entitled ‘Great Expectations = 24-hour FOMO’ said that happiness is largely determined by a person’s expectations, which are invariably set by the culture in which they live.

My generation grew up surrounded by people who looked like us and wanted pretty much the same things. Obviously, we saw beautiful people in magazines and on television but there was a context to that – they were on telly; whereas, – now there is no context. In this modern switched-on world, a second after you join Instagram, for instance, it shows you dozens of people you don’t know, but who are apparently your peers and ‘just like you’ – 19 year-old supermodels on St. Barts talking selfies under waterfalls and muscled playboys posing with them.

Social media and mobile phones allow kids to compare themselves to the most gorgeous, gifted, privileged, airbrushed, staged people in the world – all the time – because of the little electronic gadget in their purse or pocket. In my era, fear of missing out (FOMO) was confined to not being invited to someone’s birthday party. Today’s generation beat themselves up because they don’t have the same body, wardrobe, friends and holidays as people they have never met, never will meet and would probably be overwhelmingly disappointed with if they did.

It may be hard for some people to imagine, but people once flourished without every modern convenience we now consider ‘essential’ – from hygiene to refrigeration to almond milk – yet there’s no persuasive evidence they were unhappier than those of us today, who lose our minds if there’s no aircon or Wi-Fi.

In truth, your level of happiness is largely determined by how you feel within yourself that makes the difference. One of the leading philosophers of the 20th Century, the Indian Master of Happiness – Paramhansa Yogananda – once said: Many people are unhappy because they are looking for happiness in material things. In fact, they are looking for happiness everywhere, except, within themselves. To chase happiness outside of yourself. Is like searching for the pot of gold. At the end of the rainbow. It is simply not there.

My mission is to help people to live better lives. One way I do this is by delivering talks in which I cover what I feel are the most important ingredients for a more fulfilled life.

Here is my next appearance this month.

Thursday Night October 22 at 6pm Author Talk in the Conference Room at The Stanton Library, 234 Miller Street North Sydney. The event is free; however, bookings are essential. Please phone Amanda Hudson on 9936 8400.  As this is part of the Library’s Mental Health month program my talk will cover Depression and the Road to Recovery. You could say that you’d be crazy to miss it.  Please click on this link for further details: http://www.northsydney.nsw.gov.au/Library_Databases/LibraryPrograms/Mental_Health_Month/Author_TalkEric_Stanley

06
Oct
15

18 Years Card-Labour

Excessive debt sentence

CC stressNicole Pederson-McKinnon, in her Sun-Herald column entitled ‘Big bank sentence? 18 years card-labour’, says that ‘the excess debt sentences for the average Aussie is 18 years. You could get less hard time for robbery.’

If you rack up the average credit card debt of $3,199 at age 20 with a big bank, and only repay the minimum, you won’t be debt-free until you are 50 years of age. In the meantime, you would have forked out $11,920 in interest – almost four times what you initially spent.

What goes up, goes up some more

John Collett, in his Sun-Herald article entitled ‘Rates elastic for your plastic’, says: ‘those expecting interest rates on credit cards to fall after the latest cut to the cash rate [by the Reserve Bank] will be waiting a long time.’

In fact, data from Mozo.com.au shows that as the cash rate has fallen, the average credit card interest rate has risen. Over the last two years, average credit card rates have risen from 17.14 percent in February 2013 to 17.56 percent in February 2015. This means that – while the cash rate has been cut four times to a never-before-seen two percent – the interest charged on credit cards is now nearly eight times higher than the official cash rate over that same period.

Rewards are less rewarding

The only thing that credit cards can offer that debit cards cannot match is the ‘rewards’ program. Some people are induced to have credit cards in order to accumulate frequent flyer points. However, progressively these points have been devalued. In 2013, a report from the Reserve Bank of Australia confirmed that in recent times, the generosity of these reward schemes has substantially deteriorated. For example, in 2004 you could, on average, qualify for a $100 voucher by spending $12,400 on your credit card. That amount has now risen to $18,000, a devaluation of almost one-third.

For most of us, any rewards we receive are outweighed by the temptation of the credit card itself. Experts tell us: If you use a credit card, you’re more likely to buy things that you don’t need. And you’re more likely to pay more for the things that you do need. You pay more because there is no cash discount. You pay more because there is usually a credit card surcharge. On top of all that, you pay annual credit card fees just to earn those reward points.

Cut the problem in half

Credit cards can be one of the major road blocks on your path to prosperity. My advice is simple. If you can, cut up your credit cards and take out a personal loan to pay them off; then use a debit card for all your future purchases. With a debit card you are using your own money instead of the bank’s money. You are not using borrowed money that at some stage has to be repaid, surely with the addition of hefty interest charges. A debit card forces you to do what our grandparents did – live within your means. A debit card can do everything a credit card can do, without getting you into trouble.




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About Eric Stanley

Eric's interest in the principles of success, self-help and motivation began in the late 1960s, when he was in the top four percent of successful life security consultants. This led him to being involved in seminars devoted to the essential principles of success. Eric holds a Graduate Certificate in Adult Education, equiping him to develop his book with a simple but powerful message: how people can use the concept of happiness in a co-ordinated and logical strategy to obtain the riches that they deserve.

Contact Info

Phone: +61 2 9990 9441
Fax: +61 2 9814 8277
Email: info@behappyberich.com.au

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What does it take to be happy?

With his gorgeous wife and kids, lovely home, plenty of money and good looks, Michael seemed so happy. When he jumped to his death in November 2004, he left behind many devastated loved ones, including his close friend and colleague, Eric Stanley. It was this tragic event that prompted Eric to explore the links between happiness and success, and motivated him to write his book.

Michael had everything that people strive for in life, yet he was deeply unhappy. Some people my think that success is the key to happiness; but ironically, the reverse is actually true.

Happiness is the key to success.

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