MY MONEY

What happened to the dream of having a million dollars?

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I don't want to sound as comically ignorant as Dr Evil requesting a far-too-low payment in return for not destroying the world, but seriously, whatever happened to One Million Dollars?

A million dollars used to be the dream, the Lotto win, the favourite fantasy shopping exercise. Yet today the question, 'What would you do if you won a million dollars?' seems most likely to be met with a lame or alarming answer, like 'pay off most of my mortgage', or, worse still, 'use it as a deposit on a new house'.

This deeply depressing financial madness struck me recently when discussing the future with my debt-loving wife, who informed me that I was being some strange species of flower called a Worry Wort and that I needed to get over myself because "everyone has a million-dollar mortgage these days".

dr evil one million dollars

Now I'm sorry, and I know that interest rates are so low that such a thing would only cost you, roughly, $20,000 a year in interest alone, but there's just something about all those zeroes with a minus sign in front of them that would (and no doubt soon will) cause me to suffer chest pains every time I opened the banking app on my phone.

Call me crazy or, worse still, old, but I've long associated the idea of genuine freedom with the seemingly outdated idea of being mortgage-free (apparently this is something only Boomers got to experience, and I should just appreciate being young and never debt-free).

As long as one owns some of a house in Sydney, or what my wife and others prefer to call "an asset", then one should be satisfied with their financial lot in life, and happy, nay delighted, to continue paying interest on that associated debt for the rest of your days. Even if it is ONE MILLION DOLLARS (I find writing it in capitals provides at least some of the appropriate heft, although I can confirm that shouting those words has no effect on people who aren't bothered by the idea).

Some time after this robust discussion, as I lay in a darkened room with iced towels on my head, I was approached by my teenage son, who wanted to know why I'd been crying, again.

We had a long and, I hope, informative discussion about inflation, stagnant wage growth, the false economy of borrowing money over 20 years on the basis that interest rates look likely to stay low for the next three, and ham and cheese croissants.

Having wasted most of my life by being a journalist rather than an economist, I found the idea of inflation particularly challenging to explain to him as he struggled to understand why the price of things, and houses in particular, constantly rises.

The only technical term I could find to appease him was "greed". Human beings, it seems, constantly want more, and given the chance, many of us will fleece our fellow man out of every possible dollar to get that more.

I was sorry to explain to him that, many moons ago, Australia was actually an affordable, nay wondrously cheap, place to live, but by my observation, the introduction of the GST in 1999 had changed all that. I moved to London in 1997 and was financially crushed by how expensive it seemed. Visiting home over the next few years, I was moved to tears by how cheap a case of beer, or a ham and cheese croissant, was in Australia.

And then the GST hit, and it was as if every shop owner and retail company couldn't believe their luck. Prices jumped 10% overnight and people happily kept paying, so why, they seemed to think, would they not pay 20, or 30% more?

It seemed, at least from my very personal point of view, that things really lost control from there. Back in 1997, I'd sold a motorcycle to raise the funds for a deposit on a sizeable house, which cost a then-intimidating $125,000. Today, $125,000 would be barely a deposit on that same home. And I dread to think what it will cost by the time my son is ready to dream about buying one.

For the past decade or so I have undertaken an unscientific yet undeniably illuminating pricing survey, where I seek out the price of a ham and cheese croissant in every country I visit (they are a remarkably global foodstuff), and while I've seen some expensive ones in Europe, the Australian habit of charging $9, $12 or even $14 for what is essentially a flaky sandwich remains unmatched.

Are we more greedy, and perhaps more gullibly willing to pay more for things, than other countries? I'm sure there's data that would dispute my lived experience, but that's certainly the way it feels.

And at this rate it's surely only a matter of time until a ham and cheese croissant will cost One Million Dollars.

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Stephen Corby used to sit next to the staff of Money magazine, back when he was the editor of Top Gear Australia magazine, and he really wishes he'd listened to all of their helpful financial advice, instead of revving his engine and pretending he couldn't hear them. Stephen likes to buy and sell shares, has bought and sold several properties and believes that negative gearing is a very good thing, but that stamp duty is evil, particularly if you live in Sydney, as he is blessed to do.
Comments
John Ellis
May 15, 2021 3.53pm

I loved your article about the million dollar mortgage. I've had one for years and found the best way to survive it is to open another account in a different bank for day to day banking. An accountant once told me that my house would pay it off in the end, and that day is getting closer, but I'm 80 and he has since had a nervous breakdown.

Lara MAZZANTI
May 16, 2021 2.16am

Hi Mr Corby

How refreshing, to read your article 'What Happened to ....a Million Dollars' (May 14th 2021). Thank you. It occurred to me in recent days, how much pressure many families/couples endure day-to-day. 'Making ends meet'..'keeping up with the Jones' '.

'Greed', or fear...? when referring to owning and striving for at least one mortgage in your lifetime. Fear of an inadequate financial retirement. Fear of prospective Govt. policies, and more financial regulative measures/limitations in respect to investment properties in the future - 'changing the rules/the goal-posts' again..

'Humans want more..' or are fearful of missing out if they don't act quickly?

The 'crossiant' you refer to...

Often, a cappuccino and a crossiant once a week/fortnight is a special treat for me, and many others. Costing $6 coffee and $9 - $12 crossiant. A loaf of bread is $2 - $4, and milk $2 approx. Putting it in perspective, one often holds a tinge of guilt, while devouring an expensive pastry..with the boutique coffee. 'Can I not have a little something occasionally?' I often tell myself, after all the sacrifices.

Whilst keen to support local businesses (cafes, eateries etc), I'm more enthusiastic for free/inexpensive activities (bush-walking - picnic, kayaking - fishing, cycling, BBQs) It's a matter of financial preservation/survival.

Subconsciously, we're asking ourselves 'have I provided enough for my family, retirement - the long-term.

I realised recently that, along with several properties between their parents, life insurances, heirlooms, inheritance, my children (aged 19 & 20) will be far better off financially than I have ever been. No wonder Baby-Boomers are tempted to spend their children's inheritance.

Generation Exxer
May 16, 2021 10.38am

Why should parents be concerned about leaving an inheritance, spend the coin and have fun!!!!

John Tzavalas
May 16, 2021 6.03pm

Due to your lack of brain cells shop owners were not happy to pass on the 10 percent GST. It cost them alot more with the extra expenses related to the tax,pea brain

John Battista
May 17, 2021 8.25am

I am a self funded retiree and having gone through a divorce I am still in a great financial position because I have always thought about my retirement and being financially secure.So I beleive its a mindset that you need throughout your working life to get educated on your finances.

Paul Dawson
May 17, 2021 6.30pm

I think to many real estate buyers are getting hoodwinked by greed vreal estate agents and underquoting ,but now they are updating the quotes to fill the sellers greed as people sell to fund the next project.or retire.

Anthony Ramkulov
May 25, 2021 12.33pm

"borrowing money over 20 years on the basis that interest rates look likely to stay low for the next three"

Probably most people don't even think that far as 3 year time.

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