I don’t want to make the issue of an interest rate rise this week a political one - nor do I want to make any kind of political statement.   Instead I would like to challenge you to look at the situation in a rational way and stop trying to blame any ‘one off’ movement in rates on any particular policy or political party activity. Instead …… take a close, hard look in the mirror and ask yourself some questions…. Have you been as prudent with your spending in the last few years as you should have been or are you caught up in the belief that this is the lucky country?   Have you been willing to accept responsibility for your actions in terms of household budgeting? Have you shown restraint in your purchasers and fully considered the difference between need and want?   Have you developed a household budget and made savings a priority? The economy is all about us.  Sure governments and the Reserve Bank can influence the market but if we, as consumers, do not accept some responsibility for our own activities and ignore the factors such as household spending and personal saving, both of which have a strong impact on the economy, then we are asking for trouble. 

We need to accept responsibility for our own actions. Credit card spending in the last 3 years rose by 50% ($20b in 2004 to $30b in 2007).  That wasn’t the government – that was us. The size of an average home has risen by 15% in the last 2 years and more than doubled in the last 30 years while the size of the family it houses has halved 27% of homes now have a large screen TV.  Large screen ownership grew by over 50% in 2006 and up to 20% of people say they will buy one in the next year.   82% of family homes in Brisbane have 2 or more cars with 82 cars for every 100 people. There are many more examples of how we are ‘trying to keep up with the Jones’s’ – not living within our means and wanting it all now. This is a good opportunity to stop blaming and start taking responsibility. The Reserve Bank increases its rates for one reason – to slow the economy.  It is a balancing act.  Look upon the increase this week as a health warning.  Just as someone who has a mild heart attack, if they are smart, will look on it as a warning about the need to change lifestyle - we have just been given ANOTHER health warning!  It is time to slow down!  

There is no doubt that we are in for a rough ride no matter who wins the election later in the year.  Maybe we will get another rate rise before Christmas – who knows.   Some people will be able to weather the storm better than others but I guarantee you this…… Those who take stock now and do something about their own situation, will be the smart ones and will be doing everyone a favour.Kevin Turner - kevin@realestatetalk.com.au

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This entry was posted on Monday, September 10th, 2007 at 11:43 am and is filed under Housing Affordability. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.