It's been awhile since I last posted here and reading all the recent posts regarding the potential mortgage crisis, etc made me think about what it's like here in Britain at the moment. Everyday I see people driving round in expensive and luxurious cars worth over £20,000 ($40,000), 2-3 bedroom houses in excess of £200,000 ($400,000) with many other expensive items you see shown off every day. The average income in the UK is apparantely £25,000 ($50,000) per year, so how are people affording these items? Is it simply that everyone is financed to the eyeballs (including the young adults and teens)? Another common theme I have noticed is that the majority of the people I see with expensive cars (2007 Mercedez/BMWs) and extensive list of owned property is the Asians (Pakistani's, Bengali's, etc for our American brothers). What am I missing here? Anyone else noticing this increasing trend? What's in the future for these people, surely they can't be rewarded for living such risky lifestyles? It'll be nice to see your thoughts.
Consumption is the new 'religion,' no matter how fraught with risks it is. In my line of work, as in many others, people will literally make assumptions about the core competence of people based on the kind of car parked in the lot outside the office. 'The Mind Of A Millionaire' was an excellent read, because it talked about how UAWs (under accumulators of wealth) fell so far behind PAWs (prolific accumulators of wealth), irrespective of their income differences. In other words, a PAW could build much more wealth over time, even if they had a much lower income stream, than a much higher income UAW. In fact, many UAWs with much higher income streams declared bankruptcy at an incredibly higher rate than PAWs with much lower income streams did. The authors of the book surveyed some of the wealthiest people in the Manhattan area to compile data for their book. How did they get the PAWs to attend? Free danish, coffee, and trinkets.
"affluenza" http://www.telegraph.co.uk/health/main.jhtml?xml=/health/2007/01/09/haffluenza109.xml Those that profit and prosper from getting the masses in debt know what they are doing.They also own the mainstream media. Watch some television one day. The messages coming from it aren't hard to see.
Its like that here tooo in the United States, as long as you have okay credit, you can take out loans and borrow anything you want.
I have a friend that makes 400k a year and lives in a 2.3 million dollar home, with two 90k+ cars and a 140k boat . His property taxes alone on the house are 4,100/month. He is a very serious under accumulator of wealth... ...especially in retrospect, now that his house is declining in value, his two German cars and his boat are depreciating assets, and his income stream is taking a beating (he is a mortgage broker).
It seems the UK and US are too similar in too many ways. Back on topic, does it not annoy you that you're working hard (at work and trading), investing wisely, building up assets and living a responsible life, yet there are the ignorant masses being rewarded for living such risky lives. Whats worse, is that when this time bomb goes off, it isn't the ignorant masses that pay for it, it is the hard working people who live the responsible lifes who pay through taxes. Me, I'm happy with a practical modern car with good mileage, a suitably sized house and free time to enjoy the money I have "earned". What do you think the future holds for our societies?
I bought my first house in 1963 and owned it by 1969. I bought my vacation home in 1976 and owned it by 1984. Rented it out some and then used the proceeds to send two kids to college. When I moved three years ago, a middle aged real estate agent told me that she never had another client who actually owned a home outright. Because I lived within my means, I was able to retire at 50.
It doesn't bother me, because it is through these peoples' implosions that many future opportunities are created. You just have to be patient. Here's a great example, though on a larger scale - Daimler bought Chrysler for essentially 44 billion dollars 9 years ago. Kerkorian just opened his bid for Chrysler at 4 billion, now that Daimler is shopping it. I'm not saying the bid won't be raised, but it's probably fair to say that it will bring a fraction of what it cost Daimler, 8 years ago. So they will get a fraction, and it turned out to be a depreciating asset. Going back to my friend, at some point he really will thank me for giving him just a tad more than the stealership offers for his S500 in case he is forced to let it go. I'm not saying I will buy it, but hey...you never know. If the stealership offers him $50k on his $94k car, that only has about 22,000 miles on it, I may jump in. Especially if he is okay with it.
I have an automotive business in Florida here and the expensive cars are all driven by mortage brokers. I dont notice it with real estate brokers. But these mortage brokers seem to be making a killing .