Australians should be concerned about their level of household debt according to data released by the Organisation for Economic Cooperation and Development. The average Australian household owes 212% of net income, the fourth highest in the world. It’s pretty clear: we’ve come to rely too heavily on loans and credit cards. The Sydney region is leading the charge with debt levels but it also represents the city with the most financially beneficial opportunities.
However, debts can be divided into ‘good’ and ‘bad’. Good debt is when we take on debt we can repay and build wealth in the long term, like investment properties or mortgages. Bad debt diminishes wealth. It occurs when we take on debt for things that are either consumed or lose value over time. For instance, holidays, cars, clothing and food.
The good news is that the majority of Australia’s debt is the good kind, with 56.3% going to home loans and 36.5% to investments. Fortunately for us, housing values continue to rise, which means that we still have good asset values in relation to debt.
However, there’s always risk involved in debt. What if Australia suffers a housing market collapse like the United States did in 2008? What if interest rates go up or we lose a job?
Managing Household Debt
We could all benefit from managing our household debt better. There are certain tried and tested ways to do this:
1. Put off buying items until you’ve saved the amount you need. Even if you don’t have a goal in mind, regularly putting away savings will make your finances healthier.
2. Know what’s going in and out of your accounts. This is empowering and helps you to chip away at debts and build savings.
3. Consolidate your loans. If you have several credit cards and types of loans, consolidating means you only have to deal with one interest rate and simplifies repayments.
Courses to help you build wealth
No matter what stage or phase of life we’re in, we all confront questions and forks in the road that we consider carefully. Macquarie offers a range of educational courses, run by experienced and qualified trainers:
1. Pre- and post-retirement investment strategies: You will learn about the benefits and traps of different wealth strategies, including investing in property, shares and managed funds.
2. Setting up your own business: You will learn everything you need to know about how to kickstart your own export or import business.
3. Self-managed super funds: Get a crash course on how to set up your own self-managed super fund and pension strategies.
4. Successful Stockmarket investing: Learn the ins and outs of how the Australian stock market works.
5. Financial planning for women: This course takes an in depth look at the financial issues facing women today.
6. Starting your own small business: Find out what’s involved in starting your own small business or renting out your own home.
7. Property development: Learn how to conduct a financial feasibility analysis, and discover the elements of good development design, finance, marketing and construction.
Call Macquarie Community College on 1300 845 888or come back online during business hours to talk to a consultant on live chat. Let us help you find the Sydney based Finance Course that answers your financial questions.
*Please note, the information in these courses are educational and not designed to be taken as professional financial advice