We hear a lot of news about Climate Change, rising temperatures and the huge damage it’s doing globally but few realise how it has already affected their mortgage.
Here in Australia, specific agencies such as the Bureau of Meteorology and CSIRO are tracking a big jump in the number of natural disasters throughout the land. This in turn raises a number of interesting flow on effects that have – and will continue to – affect all mortgage holders.
More Disasters. More Money
I should hope by now we all know that a rising global temperature increases the amount of energy inside the Earths ecosystem. From there this increased energy adds more power to storms, bush fires, cyclones and floods as everything gets hotter, faster and more frequent.
As such natural disasters aren’t just more powerful, but happen more often too. This in turn can directly affect the ability to pay down your mortgage, even if you’re not hit by the storm.
For example, obviously if your house is burnt down due to the more frequent and further reaching bush fires Australia is famous for, your repayment rates are probably going to take a dive.
You’ll be busy rebuilding, paying for any out of pocket costs your insurance might not cover or maybe even the entire house if you didn’t have insurance.
However even if you’re the absolute luckiest duck and your house survives the fire fully in tact… the surrounding houses, roads, schools, shops and so on all probably weren’t as lucky. As such, your home valuation will go down significantly as you’re now living in a much worse area than before the fire. People usually don’t want to live in areas prone to natural disasters either and if it’s happened once…
On top of all that, your house insurance will now sky rocket making your mortgage repayments that much lower. You might also have to drive further to get to shops that weren’t burnt down or to a different school. Council rates will also jump sharply as they need more funds to rebuild all the damaged areas.
More Flow On Effects
The above repercussions are only for very local residents, what about the wider community? Well if the fire, flood or cyclone gets big enough – and they most certainly already have – it can then expand the damage sphere considerably.
For example, back in 2011 Queensland was hit by huge floods causing $5.6 billion dollars in damages. As a result, the Australian Federal Government enacted a temporary “Flood Levy” for all Australians.
Those earning between $50,000 and $100,000 a year would pay an additional 0.5 per cent flood levy tax, while those earning over $100,000 would pay an additional 1 per cent tax.
This meant that a couple living in WA had to pay more taxes (and less to their mortgage) due to disasters that happened on the other side of the country!
Beyond this one time levy, governments have always used tax payer money through various “Disaster Relief Funds” to help those struggling with disasters. This is fantastic… however with the sharp increase in natural disasters these funds are of course also needing to be funded with more and more tax payer money.
I’m not suggesting we stop or reduce these critical funds, but the money for them comes from the taxes we all pay. The larger these funds need to be, the more tax money it takes from everyone and the less we can put towards our mortgages.
A Sorry State Of Affairs
By now you’re probably pretty depressed regarding all this. Whether you’re hit by a giant cyclone, have your entire house flooded or even left completely alone by natural disasters your mortgage repayment capabilities have already, and will continue to be affected.
It also doesn’t help that the government still doesn’t seem to believe or at the very least take seriously Climate Change. We had literally multiple hundreds of thousands of Australians march yet again and how does the ruling body of our land react?
Australian Prime Minister Scott Morrison has opted to spend his time with US President Donald Trump to take a tour of a box factory owned by a Liberal Party donor, instead of attending the UN climate leaders summit in New YorkRenew Economy
It’s a pretty tough spot to be in as there’s really not much individual people can do to reign in these increasing costs. Reducing disaster funds and turning our backs on fellow Australians that have been devastated by disaster certainly isn’t the answer and neither is doing nothing.
But while I can’t give any answers on how to immediately stop the increasing costs Climate Change is putting on all our lives, I can say a few words on how we can all help slow it down.
- Talk about Climate Change more with your friends and family. Ask them what they’re doing to help. Many are confused about the science or how to best reduce their carbon footprint. Help them understand. It also shouldn’t be a taboo or “weird” subject, it’s a very real and serious problem we will be dealing with for many decades to come.
- If there’s room on your roof, buy as big a solar system as you can. A 5 kW one will all but wipe out your homes electrical carbon footprint and likely save you thousands of dollars a year on your bill, win/win. If you can’t add solar, at the very least buy Green Power or other all renewable electricity.
- Stop, or greatly reduce your meat intake. You don’t have to be 100% vegan, even halving the meat you eat helps a lot. It’ll reduce your food bills (meats expensive after all!) and as an added bonus studies have shown numerous times that less meat equals a healthier body. If you can’t live without it try the new plant based meats that look and taste just like the real deal.
- Convert any gas based cooktops, heaters/coolers or water heaters to all electric the next time they die. It’s expensive to replace working appliances, but if they’re broken and need replacing anyway it’s a no brainer to buy good quality electric versions.
- Reduce the amount you drive by combining trips, buying closer to work the next time you move house, taking public transport each day to work or any of the other tricks such as cutting down to just 1 car.
- Stop buying useless crap that you don’t need like houses with too many rooms that are always left empty, cars that aren’t used and left in the driveway or boxes and boxes of random junk that piles up in the garage. Buy a select few, good quality, high value things and plan to use them for a significant time (5 to 10+ years).
- Participate in climate rallies, be vocal to local politicians that you demand significant action on Climate Change and also only vote for parties that have demonstrated in the past that they’ve done something to help stop Climate Change.
- Put pressure on the company you work for to reduce its carbon footprint. The same renewable energy savings you get with solar can be even better for businesses. Being green often saves companies a heap of money so start engaging with them on how best to start the transition.
So what have you done so far to help with the problem? Do you have solar? Are you driving an EV? Were you in the rally this year? Let us know in the comments below and feel free to add any other tips on how to best reduce your carbon footprint!
The benefits include: 1) How to pay off your mortgage faster than 99% of people with one hour a month of work 2) How to get rid of your debt and have the freedom to spend money on the things you love, guilt free 3) Clear outline of how to setup your expenses, mortgage and general finance 4) How offset accounts work and how to get the same result without being gouged by the big banks 5) How to cut through the crap and focus on the things that truly matter when taking down a mortgage 6) How to adjust the strategy so it works for you, even if you have kids, even if you only have one income 7) How to do all of these things and maintain a normal social life (and never be cheap).