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I’ve lived in Australia for 10 years and still cannot believe how flippant people here seem to about getting into debt. Tens of thousands of dollars of credit c

I’ve lived in Australia for 10 years and still cannot believe how flippant people here seem to about getting into debt. Tens of thousands of dollars of credit card debt, a mortgage covering 60% of a salary, and a leased car seem to be fairly standard for a lot of my peers. It feels like they’re all 3 missed months of salary away from having absolutely nothing. Obviously all anecdotal but still astounding and probably not too uncommon here in Sydney.

catmanjan 5y ago
Other than mortgage (and HECS) nobody I know uses debt - Australians love second hand cars
- Tehdasi 5y ago
  So basically it's 90+% of debt for housing (scroll down to the pie chart): https://www.finder.com.au/australias-personal-debt-reported-as-highest-in-the-world https://www.finder.com.au/australias-personal-debt-reported-... I'm including 'Investment debt' cause who are we kidding? It's all investment properties.
  - siquick 5y ago
    Feels like that chart is slightly misleading - it’s easy for credit card debt to appear to be low when there are so many high value mortgages. $20k CC debt is only 2% of the value of a $1m mortgage.
  - dannyw 5y ago
    huh? plenty of brokers offer margin trading at decent interest rates.
megablast 5y ago
Compared to what?? Canada?? The us?? Uk???
pcurve 5y ago
Sounds 100% like America. :-/
- shell0x 5y ago
  I'm not American, so I have less insight than you perhaps, but I'd say America is much more affordable than Australia. In Australia most jobs are in Sydney and Melbourne. Perth is mostly for mining and Brisbane doesn't have many tech jobs. Real estate prices in Sydney and Melbourne are in the million(s), but incomes are ~100+k AUD. Some people earn 200k+ as a principal engineer, but that's pretty much it. In America you have much more cities where you can find a decent job and different lifestyle. If New York is too expensive, you can move to Raleigh, NC. I don't think that exists in Australia. There is also a very low degree of innovation in Australia, it's all related to real estate and mining. Personally I just feel like it's not worth building a life here unless you get a large inheritance, but for an immigrant, America is a much better place to build a future.
  - djrobstep 5y ago
    I think you're underselling Sydney a bit there - there is a google campus, Atlassian, and a lot of finance companies offering high salaries. Not SV level, but pretty close. Melbourne is pretty decent for high end tech jobs, but not as good as Sydney. Certainly real estate is extremely expensive and broken, but it's not like New Zealand where the real estate is almost as expensive but the pay is much lower. I had to leave for this reason - New Zealand's housing crisis is much worse in real terms.
    - nsonha 5y ago
      > a lot of finance companies offering high salaries. Not SV level, but pretty close. How close? let's say AUD 300k (I'm honestly curious, does Optiver/Atlassian/Google even pay that much here?) which is a mind-blowing salary in Australia, tops all kinds of taxes, it converts to USD 220K give or take, adjusted for higher taxes and cost of living, down to about 200k. So a top earner 0.1% in Sydney makes as much as a strong 3 yoe engineer in America.
jeeeb 5y ago
The flip side of this is that: 1. As long as your LVR isn’t too high your interest payments on a home loan will probably come in well below what renting an equivalent house would cost. Further rent will generally rise over time with inflation, whereas your interest will decrease to zero over time as you pay down the loan. 2. If you’ve got a home loan with a 100% offset account (very, very common in Australia) then a credit card makes financial sense. I purchase everything on credit and pay the full balance each month. I pay no interest, earn points and this maximises the amount of money in my offset account at any one time. 3. Depending on your usage and tax situation a noveated lease (car lease) can make good financial sense.
- nl 5y ago
  These are all entirely correct. The thing worth pointing out that explains how both this, and the person you are replying to are correct is that in Australia we haven't had an unemployment crises since the 1990s. If you have never seen unemployment, and can't imagine not having a job then arranging your affairs for tax efficiency makes perfect sense, even if it means you are carrying more debt.

catmanjan 5y ago

Other than mortgage (and HECS) nobody I know uses debt - Australians love second hand cars

Tehdasi 5y ago
So basically it's 90+% of debt for housing (scroll down to the pie chart): https://www.finder.com.au/australias-personal-debt-reported-as-highest-in-the-world https://www.finder.com.au/australias-personal-debt-reported-... I'm including 'Investment debt' cause who are we kidding? It's all investment properties.
- siquick 5y ago
  Feels like that chart is slightly misleading - it’s easy for credit card debt to appear to be low when there are so many high value mortgages. $20k CC debt is only 2% of the value of a $1m mortgage.
- dannyw 5y ago
  huh? plenty of brokers offer margin trading at decent interest rates.

megablast 5y ago

Compared to what?? Canada?? The us?? Uk???

pcurve 5y ago

Sounds 100% like America. :-/

shell0x 5y ago
I'm not American, so I have less insight than you perhaps, but I'd say America is much more affordable than Australia. In Australia most jobs are in Sydney and Melbourne. Perth is mostly for mining and Brisbane doesn't have many tech jobs. Real estate prices in Sydney and Melbourne are in the million(s), but incomes are ~100+k AUD. Some people earn 200k+ as a principal engineer, but that's pretty much it. In America you have much more cities where you can find a decent job and different lifestyle. If New York is too expensive, you can move to Raleigh, NC. I don't think that exists in Australia. There is also a very low degree of innovation in Australia, it's all related to real estate and mining. Personally I just feel like it's not worth building a life here unless you get a large inheritance, but for an immigrant, America is a much better place to build a future.
- djrobstep 5y ago
  I think you're underselling Sydney a bit there - there is a google campus, Atlassian, and a lot of finance companies offering high salaries. Not SV level, but pretty close. Melbourne is pretty decent for high end tech jobs, but not as good as Sydney. Certainly real estate is extremely expensive and broken, but it's not like New Zealand where the real estate is almost as expensive but the pay is much lower. I had to leave for this reason - New Zealand's housing crisis is much worse in real terms.
  - nsonha 5y ago
    > a lot of finance companies offering high salaries. Not SV level, but pretty close. How close? let's say AUD 300k (I'm honestly curious, does Optiver/Atlassian/Google even pay that much here?) which is a mind-blowing salary in Australia, tops all kinds of taxes, it converts to USD 220K give or take, adjusted for higher taxes and cost of living, down to about 200k. So a top earner 0.1% in Sydney makes as much as a strong 3 yoe engineer in America.

jeeeb 5y ago

The flip side of this is that: 1. As long as your LVR isn’t too high your interest payments on a home loan will probably come in well below what renting an equivalent house would cost. Further rent will generally rise over time with inflation, whereas your interest will decrease to zero over time as you pay down the loan. 2. If you’ve got a home loan with a 100% offset account (very, very common in Australia) then a credit card makes financial sense. I purchase everything on credit and pay the full balance each month. I pay no interest, earn points and this maximises the amount of money in my offset account at any one time. 3. Depending on your usage and tax situation a noveated lease (car lease) can make good financial sense.

nl 5y ago
These are all entirely correct. The thing worth pointing out that explains how both this, and the person you are replying to are correct is that in Australia we haven't had an unemployment crises since the 1990s. If you have never seen unemployment, and can't imagine not having a job then arranging your affairs for tax efficiency makes perfect sense, even if it means you are carrying more debt.