5 reasons why you're broke

Lauren Leisk, Yahoo7 Moneyhound Updated May 26, 2012, 8:10 am

Aussies are going broke in record numbers

Expanding waistlines aren't the only thing Australians need to worry about. Mounting debts mean that thousands of Aussie businesses and individuals are going broke.

In the 2010/11 financial year, over 27,500 Australians filed for bankruptcy. Of those, 16.7% were business-related claims, while the remainder were individual bankruptcies.

So why are we a nation that's going bust? Is it bad business decisions? Is it the state of our national economy? Or is it simply our own bad habits?

Here are five reasons you may be seeing a downturn in your finances – and what you can do to turn them around.

Related reading: How to beat debt stress

Big spenders

Retail sales may be declining, but that hasn't stopped Aussies from spending. The Reserve Bank of Australia published statistics from 2010 that revealed national credit card debt had climbed 42% over the previous five years, up to a staggering $49.3 billion.

Whether you're using your credit card to pay off your mortgage, or just using the plastic for everyday expenses, the nation is currently accruing $36 billion in interest. You can transfer your credit card debts to a new card for 0% interest for a limited time in order to get your debt back on track, compare balance transfer offers at Moneyhound.

We are not known as a "saving" nation. Until the GFC in 2007/8 we were spending recklessly. That's scary. What happens on a rainy day? Is it really healthy to be living from hand to mouth all the time? Instead of lying awake having sleepless nights, put a stop to it by checking out some savings accounts that pay you to save.

Housing affordability

According to the Australian Bureau of Statistics, our country has one of the highest household debt-to-disposable income ratios in the world. The Housing Costs Through The Roof: Australia's Housing Stress report acknowledged that over 850,000 Australian households are at risk of financial hardship and poverty after paying for housing costs. Furthermore, the two groups with the highest rate of housing stress are renters (25%), and first home buyers (15%).

Consider renting to free up some equity, otherwise it pays to compare your current mortgage with other home loans in the market to see if you can get a better deal. This is called 'refinancing' and it could save you tens of thousands of dollars. Read more: Refinancing could save you thousands.

Petrol prices

Tighter oil supply in the Middle East is causing Aussies to feel even more concerned about the rising cost of petrol. Whether you drive a vehicle, or commute using public transport, you're going to feel the financial repercussions from such oil restrictions.

Recently consumer group Choice predicted motorists would be most affected by soaring petrol prices, expecting the current spike to last until the school holidays. They urged motorists to fill up their vehicles while prices were below $1.40/litre. Related: How to beat rising petrol prices


Australia is experiencing its weakest employment growth in two decades. ABS figures released in January highlighted that more than 29,000 Australians lost their jobs in December 2011 alone. A lack of new jobs created throughout the whole year added to the unemployment debacle, causing job growth in 2011 to reach its lowest point since 1992.

To find employment, you might have to consider relocating or learn a new skill. Any investment in education is tax deductible. Related: Tax deduction tips and tricks

Utility bills

The Nielsen Group’s July 2010 report on shoppers of today and the future found that rising utility costs are keeping Australians up at night. More than two-thirds of those polled were battling the soaring prices by cutting back on household energy. By 2014, residential electricity prices are expected to jump by an average of 37% in nominal terms.

The only solutions for this are to use less energy and or pay less for it. Moneyhound can help you find a cheaper energy provider in your area and help you switch just by filling in an online form, try it now. Related: Ways you can beat the Carbon Tax

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Debt Consolidation: How to be debt free, faster.
Carbon Tax 2012 - How it affects you, and ways you can beat it
Banks vs Mutuals: What's the difference and who should you bank with?
What is Negative Gearing?
Spend now for tax deductions - helpful tips and tricks

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