4 ms·

Wow, check out Household debt. I'm not surprised to see Brittain, the United States and Canada top the list, but can anyone tell me what is going on with Switze

by lowkey 16y ago

Wow, check out Household debt. I'm not surprised to see Brittain, the United States and Canada top the list, but can anyone tell me what is going on with Switzerland? I always thought the Swiss to be a wealthy, financially conservative lot.

baddox 16y ago
Lots of wealth, or the appearance thereof, is directly due to debt.
jsnell 16y ago
My guess: expensive real estate, distorted tax rules that make it advantageous to hold a mortgage [1], and availability of very long term mortgages (up to 100 years). So people take a mortgage and never pay it off, even if they could afford to. Net household savings / debt statistics might tell a different story. [1] Though IIUC the mortgage deduction and its counterpart of taxing the "income" of living in your own house rather than renting are going to be phased out. So this reason would not apply for much longer.
- eru 16y ago
  Actually taxing the income of living in your own house as similar to rent sounds reasonable to me. Making debt payments tax deductible is a bigger problem.
mgw 16y ago
The Swiss tax system benefits people taking a mortgage on their house. When you own a house you have to pay taxes around what you would pay to rent the house. So when you don't have a mortgage on the house you pay twice. Once the "rent" plus the normal property tax. The smart thing to do is to get a mortgage, so you don't have to pay the property tax. The interest to pay will be far less than the property tax.
nandemo 16y ago
I don't think you can draw any significant conclusions about each country's financial conservativeness based on this data alone. For instance, note that the BRIC's household debt is very low compared to the developed countries. It might just be the case that the real interest rates in wealthy countries are lower, so it's not necessarily a bad idea to have debt there.

by lowkey 16y ago

baddox 16y ago

Lots of wealth, or the appearance thereof, is directly due to debt.

jsnell 16y ago

My guess: expensive real estate, distorted tax rules that make it advantageous to hold a mortgage [1], and availability of very long term mortgages (up to 100 years). So people take a mortgage and never pay it off, even if they could afford to. Net household savings / debt statistics might tell a different story. [1] Though IIUC the mortgage deduction and its counterpart of taxing the "income" of living in your own house rather than renting are going to be phased out. So this reason would not apply for much longer.

eru 16y ago
Actually taxing the income of living in your own house as similar to rent sounds reasonable to me. Making debt payments tax deductible is a bigger problem.

mgw 16y ago

The Swiss tax system benefits people taking a mortgage on their house. When you own a house you have to pay taxes around what you would pay to rent the house. So when you don't have a mortgage on the house you pay twice. Once the "rent" plus the normal property tax. The smart thing to do is to get a mortgage, so you don't have to pay the property tax. The interest to pay will be far less than the property tax.

nandemo 16y ago

I don't think you can draw any significant conclusions about each country's financial conservativeness based on this data alone. For instance, note that the BRIC's household debt is very low compared to the developed countries. It might just be the case that the real interest rates in wealthy countries are lower, so it's not necessarily a bad idea to have debt there.