Major Bank Insider says 50% of personal loans “debt consolidation”

15 Jul

I recently interviewed several employees of the major 4 banks. The emloyees worked in the personal lending call centers. All stated that 50-60% of the lending they did was for the purpose of debt consolidation.  The employees stated that in all cases the debt was credit card debt.

I’m finding it very difficult to get data on the debt consolidation lending. A debt may be “consolidated” several times making it difficult to establish the real levels of “consolidated debt”. A personal loan may be taken out to consolidate several credit cards which is in turn consolidated into a mortgage. It’s very much a circular argument. How much of the oceans originated as snow melt?

There is $143 Billion in “other personal credit” outstanding which does include car loans.  It would be fair to say that a significant portion of this is debt consolidation related.

Most Australians “comfortable with their debt”

7 Jul

Australia’s debt to equity ration is the highest in the developed world at around 158%. But 49% of people feel “comfortable with their debts” indicating that most feel pretty comfortable owing considerably more than they earn.  It may be normal like obesity but it’s not a good thing.

There may be an argument that consumer debt is helpful to the economy, and while this is true in the short term in the short term it reduces the capacity of Australians to consume in the longer term.

By increasing the share of GDP occupied by finance it does so at the expense of other sectors rather than increasing the pie.

The Symptom

5 Jul

Have you seen the GE money advertisement with the guy juggling balls walking down the street? The balls disappear and the tag line is “GE making life easier”? I mean wow. I wish I had so much debt that I could get a GE money debt consolidation loan. Even if I didn’t have debt I’m sure my life would be better if I got a debt consolidation loan! I tried to find it on youtube to put up here but I guess GE doesn’t want you to watch it more than once. It’s that portrayal of debt consolidation that irritates me the most. It’s so fun and happy. He’s a professional guy handling his affairs responsibly. It was so jolly and care free I almost thought it was a tampon ad. Just as you can’t sell tampons by showing a woman in trackpants you can’t sell finance products by showing someone not being able to fund their retirement. I guess that would be how I would want to view myself if I had lots of debts. However it ain’t the case and portraying images like this in the public arena makes have debt seem like no big deal and having your period as fun. Both of which are lies. Debt consolidation should be seen like ZOVIRAX shure it’ll make the herpes go away but it doesn’t cure it.