I see published figures on average income and can't see how people manage to live (in Sydney at least).

I earn what I think is a reasonable income, but then I see all the multiple new cars, holidays, expensive housing, private schooling, etc., all around me, and figure that most people must earn a lot more than I do, and then I pick up the paper and see the average income figures again, and none of it seems to add up.

What's really going on?

Asset rich....house of cards.....?

I work in the Construction Industry in Sydney and most of my co workers live for the overtime.
If they do not get an 8hr Saturday they are upset.
I really can't see the point in working 48hrs plus and then spending the money on rubbish to keep up appearances.

I think a lot of people in the corporate world Sydney ppl, live out of their means. Most of it is actually leased cars,houses etc. I see a lot of this especially around eastern suburbs.

Cash.

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Harrow said..
I see published figures on average income and can't see how people manage to live (in Sydney at least).

I earn what I think is a reasonable income, but then I see all the multiple new cars, holidays, expensive housing, private schooling, etc., all around me, and figure that most people must earn a lot more than I do, and then I pick up the paper and see the average income figures again, and none of it seems to add up.

What's really going on?

Credit
Debt
People Living Beyond their (entitled) means

PS: Maybe low interest rates as the devil in the mist
PPS: Lying on your loan applications

I think there are definitely plenty of people living beyond their means, or just spending all the money they earn. I know I sure could have a new car every year fancy holidays etc if I didn't bother to try and save. That said people who are able to live in Sydney, generally aren't average or below. You got to consider that the average salary includes everyone in Australia, plenty of people living in regional Australia where 6 figure wages and salaries are completely unheard of.

Id be interested in what the general attitude with many is; whether they know to save, but choose not to, after all superannuation is meant to look after your retirement, so do you need to save money now? Also see plenty off people in 20's-30's spend every dollar they make, but they have the potential to be making double what they are now in the future, so even if they don't save now, they could easily make up the difference later on, if they can somehow change their attitude.

The only obvious conclusion to draw is that the wealth divide is growing larger and larger by the day. It's definitely easy for the wealthy to get wealthier, i.e. all the small time property developers out there, you could easily double your money every few years, you just need a mil or two in capital to start with.

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albers said..

Harrow said..
I see published figures on average income and can't see how people manage to live (in Sydney at least).

I earn what I think is a reasonable income, but then I see all the multiple new cars, holidays, expensive housing, private schooling, etc., all around me, and figure that most people must earn a lot more than I do, and then I pick up the paper and see the average income figures again, and none of it seems to add up.

What's really going on?

Credit
Debt
People Living Beyond their (entitled) means

yep definitely

PS: Maybe low interest rates as the devil in the mist

yep low rates are definitely helping/not helping the situation. (Depending on your point of view)


PPS: Lying on your loan applications

for people with "investment portfolios", sure. First home buyers, nup.

i reckon the age of staying within ones own means are fast falling away (for worse I believe). I look at how some people I associate with live, and wonder how they can sleep at night.

You need to distinguish the difference between average wage and median wage.

Average wage is inflated by the very high wages of the very high paid.... with wages that are in the many millions.
Median wage is the wage that most people earn, it is lower than the average wage.

Also they generally use "taxable" income...I have a sister who is a manager for aged care social work, as a govt employee they are able to salary sacrifice a huge range of things not just cars, phone super etc but restaurants etc. While far from highly paid in the first place, she barely makes a taxable income. Of course they have to pay FBT on a lot of those salary sacrifices - but to a govt it does not matter, as they are taxing themselves.

Well for a start people in the east dont have to pay over $200 a week in tolls to go to work that must help..
But in the paper it was saying that out west drugs are stopping it's probably because they cant afford them all money has to go on tolls so its now eastern suburbs all in & coast so maybe there selling drugs .
I know getting paid for work is like getting blood out of a stone from the more affleunt suburbs .
People live beyond there means for sure when they fail the interest free loan &still order the job then say i got no money cant pay you for the next 6 months on completion and there's 2 brand new cars a Mercedes &Porsche in driveway its frustrating.
They got another credit card it took a couple of days but paid
That happened .
I thought I'm glad I finished 1st because they having everything done at once they had more people working on that house than a high rise .

Its the same with the private schools sign kid up pay 1st term &keep sending them for the rest of the year .
Clock up debts but dont lose house rebuild with accommodation for the inlaws you can get them to sell there house to fund it .
&then ship them off to nursing home .
Then its teenager's retreat
Im seeing this building &my wife sees it to working in the nursing home
Harrow how many of them have parent's living in house even if its only one .
Or did have for a brief period .
Its like winning lotto ..
And some spend it before they even win it .

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Adriano said..
Asset rich....house of cards.....?

Could be snowballed accumulative wealth handed down from generations. I think its important to drum into the next generation the values of working hard. There empathizes due to "consumer based advertising " and a keeping up with the Jones attitude amoung youth today is all spending. We were always raised to live within our own means and pay off any debit ass soon as possible pay of your first house so there is no way anyone can ever take it away). Its important that you try and keep your marriage for life and not take the hit on a divorce. I don't believe that you have to earn the highest wage to have a good life! it has to be a happy median. You keep the assets and hand them down. Its a rich family organization not a rich person!

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albers said..
Credit
Debt
People Living Beyond their (entitled) means

PS: Maybe low interest rates as the devil in the mist
PPS: Lying on your loan applications

That's it right there, hopefully it's not getting out of hand in Au., like it did here in the U.S. check out the movie "The Big Short".

Was saying to someone the other day that I can not believe the number of 200 series Landcruisers I see on the streets. Pricing those things new is anywhere between $110-$130K and second hand they don't seem to be a hell of a lot cheaper.

Coming up with the readies or even the repayments on a vehicle like that is a huge chunk out of someones savings/weekly income.

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shi thouse said..
Was saying to someone the other day that I can not believe the number of 200 series Landcruisers I see on the streets. Pricing those things new is anywhere between $110-$130K and second hand they don't seem to be a hell of a lot cheaper.

Coming up with the readies or even the repayments on a vehicle like that is a huge chunk out of someones savings/weekly income.

Novated lease comes out pre tax so most are company owned or leased.

Novated leasing is still dead money for the majority of people. All well and good to save a few $$ in tax but at the end of 3/4/5 years you're left with a balloon repayment thats probably more than the car is worth and nothing to show for the last few years of weekly payments. Much like renting unfortunately.

I think most are bought with refinanced mortgages or inheritances

I can't get over the apprentices with V8 turbo LandCruiser utes. They are 70k!

Don't share the secrets about saving tax $$

Green voters will think it is some sort government hand out and try to shut it down

Olly, is it you?!

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myusernam said..
I can't get over the apprentices with V8 turbo LandCruiser utes. They are 70k!

Just because the badges say "V8 TURBO" doesn't necessarily mean it has a force fed V8 under the bonnet......

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Harrow said..
What's really going on?

Chinese hot money.

I've got a 32yo friend who drives around in an M3, has a nice apartment; he has been studying for 12 and his dad pays for everything.

Money is there to be made. Go out & Earn it. A friend of mine started a Demo biz with nothing. now he has 50 staff doing his sh@t for him. He basically has so much time on his hands & just surf's & enjoys all the good things of what life has to offer.

Ive wondered the same thing for awhile now Harrow.

I quit my job few years ago sold up in sydney and own my own home in WA and have enough income from investments and trading to beat the average income but even without a mortgage I have to watch what i spend.

I just cant see how someone on the average wage (let alone median) can afford the average mortgage, a new car every few years the os holidays etc etc without going backwards.

2 things are happening i reckon -

1. Couples are both working their rings off (and family life suffers)
2. Nothing is being saved other than minimum super (which we all know wont be enough right). Its hand to mouth and usually with a decent rolling credit card balance to boot.

One trip and the house of cards comes tumbling down...

Oh and the demand on the aged pension will be enough to sink the titanic in around 10 years time...

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sn said..

myusernam said..
I can't get over the apprentices with V8 turbo LandCruiser utes. They are 70k!

Just because the badges say "V8 TURBO" doesn't necessarily mean it has a force fed V8 under the bonnet......

nah all cruisers with a bonnet scoop are the v8 ones. and every chippy, plumber or sparkie apprentice round here has one.
apprentice wages are and have always been atrocious. I don't know how they do it. living at home probably.

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gavnwend said..
Money is there to be made. Go out & Earn it. A friend of mine started a Demo biz with nothing. now he has 50 staff doing his sh@t for him. He basically has so much time on his hands & just surf's & enjoys all the good things of what life has to offer.

Sure about that?

50 staff? Gotta raise 80K a week to just pay 'em.

Not saying its not true your mate has a demo biz, but I'm tipping' with 50 staff he's got his share of worries going on.

Of course his got a lot of responsibility anyone who has a empire that big would. His business is growing bigger every year.Its not all roses but good management keeps him afloat.theres a old saying in business the bigger they are the bigger they fall.personally l wouldn't want a Biz that big.oh yes it is true & anyone can be that successful.