Ashley Ormond - 101 Ways to Get Out of Debt and on the Road to Wealth

Contents

First published 2009 by Wrightbooks

an imprint of John Wiley & Sons Australia, Ltd

42 McDougall Street, Milton Qld 4064

Office also in Melbourne

Reprinted 2009

Typeset in Berkeley LT 11/14pt

Ashley Ormond 2009

The moral rights of the author have been asserted

National Library of Australia Cataloguing-in-Publication entry:

Author: Ormond, Ashley.

Title: 101 ways to get out of debt and on the road to wealth/Ashley Ormond.

ISBN: 9781742169361 (pbk.)

Subjects: Finance, PersonalAustralia.

DebtAustralia.

Saving and investmentAustralia.

Dewey number: 332.02401

All rights reserved. Except as permitted under the Australian Copyright Act 1968 (for example, a fair dealing for the purposes of study, research, criticism or review), no part of this book may be reproduced, stored in a retrieval system, communicated or transmitted in any form or by any means without prior written permission. All enquiries should be made to the publisher at the address above.

Microsoft Excel screenshots reprinted with permission from Microsoft Corporation

Cover design by Brad Maxwell

Cover image Alhovik, 2009, used under license from Shutterstock.com

Disclaimer

The material in this publication is of the nature of general comment only, and does not represent professional advice. It is not intended to provide specific guidance for particular circumstances and it should not be relied on as the basis for any decision to take action or not take action on any matter which it covers. Readers should obtain professional advice where appropriate, before making any such decision. To the maximum extent permitted by law, the author and publisher disclaim all responsibility and liability to any person, arising directly or indirectly from any person taking or not taking action based upon the information in this publication.

Personal debt is the devil for people trying to build wealth. In this very practical book Ashley Ormond shows us many ways to beat the devil and get on the road to riches.

Pam Walkley, Editor-in-chief, Money magazine

Debt can be a great servant, but a bad master. In this book Ashley will show you simple ways to take control of your debts, and make debt a tool you can use and not something to fear.

Noel Whittaker, Best-selling author and finance columnist, The Sydney Morning Herald and The Age

Australians have been living beyond their means on a diet of cheap debt for too long. This is a must-read book for all those who want to get out of debt and back in control of their finances.

Chris Cuffe, Former CEO, Colonial First State

Many Australians live beyond their means and take on too much debt. Ashley Ormonds book is by far the best account yet available on understanding the details of debt, the problems that arise when debt becomes excessive and how we can manage and reduce debt to achieve better financial security and happiness for ourselves and our families

Dr Don Stammer, Economist and journalist, The Australian and BRW magazine

About the author

Ashley Ormond was one of Australias first PC-equipped mobile lenders, starting out in the early 1980s with a financial calculator, a dual-floppy drive Compaq portable PC and a portable Epson thermal printer in his car. This was before the age of mobile phones, the internet, Windows, Excel, or even hard drives. It was back in the days when:

• lenders actually analysed each borrowers ability to repay
• borrowers actually had to have a job or other source of income
• borrowers actually had to have proof of a savings record, proof of income, proof of assets
• lenders had to actually think about how each debt would be repaid, instead of just shovelling money out the door
• lenders actually retained the credit risk and retained the ownership of loans, instead of just selling them to unsuspecting bond-holders on the other side of the world.

His banking and finance career included several senior executive roles at major Australian and international banking and finance groups, including running branch networks, lending operations, product development, pricing and financial control. His formal qualifications include a Bachelor and Masters in Law, a Bachelor of Arts in Economic History and a Graduate Diploma in Applied Finance and Investment. He has also lectured for the Securities Institute of Australia. Since retiring at 40, he has been a director of several companies, including listed, private and not-for-profit companies and a charitable foundation.

Ashley is the principal of Investing 101 Pty Ltd, a specialist investment research firm that holds an Australian Financial Services Licence. He is a sought-after speaker and commentator on financial markets and has written two best-selling books on finance: How to Give Your Kids $1 Million Each! and $1 Million for Life.

Ashley lives in Sydney with his wife and two children. He may be contacted at . Visit his website for access to newsletters, updates and other useful articles: < www.investing101.com.au >.

Disclaimer

This book is intended to provide general information only, to assist readers to make their own decisions and choices. This book is intended for educational and instructional purposes only, and is not intended to constitute personal financial advice or taxation advice. It does not take into account each readers individual objectives, financial situation or needs. Readers should obtain their own financial, tax and legal advice to determine whether the information contained in this book is appropriate to their particular objectives, financial situation and needs.

The author is the principal, owner and authorised representative of Investing 101 Pty Ltd, which holds Australian Financial Services Licence 301808 issued by the Australian Securities and Investments Commission under section 913B of the Corporations Act 2001 . Neither the author or any related company or entity receives any fees, commissions nor any other benefits from any product provider. Nor are they involved in selling or promoting any seminars, courses, trading systems or marketing schemes. A current financial services guide is available from < www.investing101.com.au >.

Part I

The household debt explosion

Between 1992 and 2008, Australians experienced a 17-year-long economic boom that handed us a golden opportunity to get into financial shape but we blew it. With an unprecedented run of uninterrupted economic growth following the 199091 recession until the 2008 credit crisis, we had the best-performing economy in the Western world. During this time we enjoyed rising incomes, stable government, no major wars and low unemployment, interest rates, inflation and oil prices. Despite this lengthy period of superb economic conditions, we didnt get our houses in order. Instead, we went on a debt-fuelled spending binge:

• housing debts grew by 800 per cent, or 14 per cent compound per year
• non-housing personal debts grew by 260 per cent, or 8 per cent compound per year
• credit card debts grew by nearly 1000 per cent, or 15 per cent compound per year.

  (Source: Reserve Bank of Australia, Lending and Credit Aggregates tableD02, RBA, Canberra)

We borrowed more and more, saved less and less, and continued down the same path of increased spending and borrowing that we have been following since the 1970s (see ).

: Australian household debts and savings ratios