I do take it seriously as I don't think for one minute that what happens in the rest of the world isn't going to impact, eventually, on NZ and is already starting to do so. What are people doing to minimise that impact should things get really tough and business slows or employment ceases.
I've been giving it a great deal of thought. It would be helpful to be mortgage free but I doubt that few can aspire to that:(. I want to get rid of excess debt - hire purchase, bank cards etc. Pay as much off the mortgage as is possible to do so in the short term. Deal in cash. Get the farm into as good a working order as money will allow - this could well end up being the source of food and income.
AND to carry on the wombling and share my assets from that..otherwise since Ive always been allergic to money or maybe it is to me, I cant see anything changing much
I, too, believe that we've only seen the tip of the iceberg so far. The 700 Billion US bailout was less than half of what the experts on TV expect was lent to people who have no chance of paying it back. Once the US election is over it will all come out. I think big businesses kept things under wrap - and still are - because they don't want the Republicans to be blamed for the mess before the election. It might lessen the chance of McCain winning.
What to do? Well I'm going to abandon any ideas of giving up a secure job to freelance. Spend less. Pay off the credit card asap. Work out what we could sell if push came to shove.
On the plus side, the price of petrol has gone down, there are bargains galore if there's anything that you HAVE to buy, and the interest rates are going down. We will wait until the interest rates are as low as possible before renewing our fixed-rate mortage (comes up next August). The interest rate in the US is something ridiculous, like 1%, a low interest rate would make a huge difference to how fast you can pay off the mortgage.
Kids, beasts, and chillies in Swannanoa South.
Yes, but why will it make a difference to people's actual behaviour? It didn't before; rising property values and relatively low interest rates led people to raise more and more against their houses and hence the mess we're in.
Seaside;209353 wrote: ... a low interest rate would make a huge difference to how fast you can pay off the mortgage.
But by all accounts, this is the messes of all messes. There hasn't been a time in my life where savings in a bank weren't safe. In the UK they are underwritten, so in theory they are 'safe' unless the company underwriting them (a form of insurance) go belly up.
Will lower interest rates change people's behaviour? Probably not for a lot of people, if I'm being realistic. But for people like myself who have finally woken up to how it all works, and whose greatest fear is losing our home, we will (and do already) put as much as we can spare on the mortgage. Once the mortgage is paid off, the world is your oyster. I have learnt a lot from my mother who has been though decades of booms and busts, and I have to thank her for sharing her wisdom.
Kids, beasts, and chillies in Swannanoa South.
And this here is a true story: An ex-colleague of mine went to the bank, asking for a 50K mortgage for a 90 000 Dollar first home in Woolston (one of the not-so-well-off areas of Christchurch). They had a deposit of 40K and two good incomes. The bank manager tried to convince them that it was much better to get a 150K mortgage and a much better house in an area where prices were expected to rise more rapidly - with this kind of deposit and their income a 50K morgage was ridiculous. My ex-colleague started to argue that they would rather pay off their house quickly and the poorer area didn't bother them as they had no children yet etc etc. It ended with them threatening to go to a different bank for the mortgage they were asking for. That's when the bank manager gave in.
I'm sure by now they have paid it off, had a 120K deposit for their next home and are close to paying off their second home. Had they taken on the 150K mortgage they'd be maybe 15% into paying off that home, having paid 100K in interest already.
And of course, falling interest rates notwithstanding, I'm still very happy to have paid off the #$!!*#* overdraft!
I think the best advice I can give someone (having lived through the '87 crash) is to be prepared to walk away...don't hang in there and try to keep going hoping things will get better. Knock the emoitional side of your brain with a sledgehammer and rationally ask yourself if you like the look of the hole you are digging for yourself. Basically really think logically and calmly about any decisions, and don't make a decision based on what your emotions are advocating.
I'd be surprised if that's the case. The world is a different place these days. Governments and individuals have vastly better information and central banks have acted quickly and aggressively to ensure that things keep ticking over. That just wasn't possible back then.
Kilmoon;209377 wrote: I know that those 'experts' asked in the media about it don't want to make any linkage to the Great Depression, but that is exactly whats going to happen.
"Since the Nixon administration took the US off the gold standard in the early 1970s, money is no longer backed by anything of intrinsic worth; its value rests merely on the shared confidence of its users in the system that produces it."
Deep Economy, Bill McKibben
I never really understood how the finance system really works, but from what I am reading, the more it all seems to be based on smoke and mirrors. No wonder people prefer investing in bricks and mortar (as long as they are not overvalued)...
I too think we are in for a very rocky road. China is faltering now, and that was the last real hope to keep the world economy going. If the US public don't start spending (go figure the odds that they'll want to or have the money to after all that has happened) then China will also be in trouble.
These governments have put billions into rescue schemes but everything seems to indicate this is just a bandaid rather than a fix. Where does the next lot of bailout money come from?
For us, we have our mortgage down as low as we can, and will get our house to the level we can live in it basically and then take stock again; if things are even worse, we will stop at that stage and leave it a bit. We'll also be keeping an eye on the lowest rate possible to refix at.
Lots of veges and meat grown here, minimising driving around (which we are already doing, one day a week into town, hubby has a pushbike if needed for his job, we are within cycling distance of town if needed), we spend stuff all anyway so not much to cut there.
I think that the effects will start hitting here in the next few months and you'd be silly not to have a personal household plan to decrease your outgoings if you can and make sure you can weather the coming storm...
Some people I talk to seem to think I'm being overly pessimistic, but I'd rather plan for the worst and hope for the best rather than be a Pollyanna who thinks that everything is going to be hunky dory in the face of all evidence to the contrary...
Take a break...while I take care of your home, your block, your pets, your stock!  PM me...