I had to hit the ground running because Aussies’ appetite for financial information – and help with strategy navigation – was insatiable. The mining boom was bonkers,and everyone was wondering if it could last forever. Spoiler alert:that theory was crazy,and I was frantically warning thus.
Nicole Pedersen-McKinnon has been writing about money for 20 years. Here’s what she’s learned.Supplied
But our land – and sharemarket with a 16 per cent one-year return – was flowing with milk andmoney. Inflation,at just 2 per cent,wasn’t even reducing it yet.
Property prices though – goodness! If you had some,you were sitting pretty;if you didn’t,it was a pity. The market was over-heated and over-hyped. The only thing was that interest rate hikes were starting to bite … those last bits sounding familiar?
Except that forget today’s 4.35 per cent official interest rate. In May 2004,we were already at 5.25 per cent and on the way to 7.25 per cent.
By then,though,it was 2008. I recall standing with colleagues around a (possibly cubed) TV atThe Australian Financial Review,expert jaws all on the floor,as the Aussie sharemarket plunged 8.3 per cent in a day (and 16 per cent that week) in the worst falls since the 1987 crash. The global financial crisis had hit and was threatening to crack our credit system.
You will still succeed – ultimately – if you grow your income and squeeze your expenses,and smartly squirrel away any excess.
Besides those from traumatised retail investors,some of the most heart-rending reader phone calls I’ve taken were from people who had panicked and fixed their mortgage interest rate just before rates were slashed to (then) emergency settings of 3 per cent.
But nowadays,we might consider all that light training for the year 2020 and the COVID economy. Because lest I am coming across like an annoying,“in-my-day-we-had-it-harder”-type,that’s far from true.
If it feels so,itis tougher now than in the past 20 years to get ahead.
It was a full year ago when I crunched the numbers that showed it had become than in the painful,pinnacle-interest ’80s and early 90s. To quote myself:“[The] interest rate today devours a gut-punching 58 per cent of our income.”
No,it’s not a function of that rate itself,some 8 per cent as opposed to 17 per cent back then,but the sheer loan size – the amount youhave to borrow now to call a home your own.
However,it’s also far harder to getapproved for loans – and (meanwhile,advance-income facilities,buy-now-pay-later – so far – and payday loans and their predatory like remain dreadfully,dangerously accessible). The spellbinding Royal Commission into Banking and its 2019 revelations of fast-and-loose consumer protections saw to that.
Speaking of safety, is a massive modern challenge. That essential insurance is now being dropped by Aussies stretched to breaking point terrifies me. What if your house is destroyed,and you can’t rebuild? Or your income ceases? Or your health has a blip?
But there – thankfully – is also more help at hand. Such as:
Oh,how different smart money management is from my start 20 years ago. Well,same same … but different. Youwill still succeed – ultimately – if you grow your income and squeeze your expenses,and smartly squirrel away any excess.
And getting out of housing debt fast – – works wealth wonders. But,yep,those things – though done differently – remain freaking difficult.
Nicole Pedersen-McKinnon is the author ofHow to Get Mortgage-Free Like Me,available at.Follow Nicole on, or.
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