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It's a wise choice to pay off your house early. The purpose of the article is to get an inside view of what it's like to lose something you worked for. These people didn't buy at the height of the "bubble" they bought in 1998, 12 years ago.
The point is, this kind of thing can happen to anyone.
A+B=C You can't eliminate A from the equation and say that B=C. They had too much debt, bought too much house, saved too little income....they were living on the edge already. The income loss was simply the last straw that broke the camel's back.....but the straw was already piled high!!
And are you sure they didn't participate in the bubble even though they bought their house earlier? The author mentions a re-fi and all the expensive home repairs, sounds like they participated by draining their house of equity that was created during the bubble. I know, I know...everyone was doing it.
Sure, it CAN happen to anyone (even lighting can strike the same place twice) but for the most part it's happening to financially irresponsible people as described in the story.
I'm still waiting for the link to the story about the family who bought below their budget with a 20% downpayment, doesn't have any car debt, home repair debt, CC debt, lives below their means, has a generous emergency fund, didn't suck the equity out of the house during the bubble but instead saved and invested knowing the good times have to come to an end and then still lost it all when the economy soured.
Find me THAT story and then I'll agree that it shows another side of the foreclosure crisis. What you have presented is very typical of what is happening...those living on the edge are more likely to fall off the cliff. Nothing new here.
NCYank - I don't think you're going to find it. Sadly, so many of us were caught up in the 'gotta have it' mode and the credit cards were eating us up. I was tryiing to remember a time before credit cards - and I did. Life was so much more simple back then.
BUT - all of a sudden, you couldn't pay cash for a motel room, you couln't rent a car or book an airflight without a credit card. These things should have alerted us, but for the average american, it didn't. So sad.
Saying that it is hard to do is a weak argument. We've been there before....lost income and it DIDN'T do us in because we didn't live our lives on the edge of a financial cliff as these people did.
It's not an easy choice to go against the flow but it is still a choice. "Everyone else is doing it." is something I expect to hear from irrational children, not grown adults with responsibilities. Seriously, it's lame. Like lemmings they ran toward the financial cliff but didn't expect to fall?? Come on....
The number of people that saw this one coming in time to do something about it is really small. That is what I am saying Now it is easy to say we should have done something differently. Then it was hard. Lame is after the fact. To not get cought up in something is really hard.
NCYank - I don't think you're going to find it. Sadly, so many of us were caught up in the 'gotta have it' mode and the credit cards were eating us up. I was tryiing to remember a time before credit cards - and I did. Life was so much more simple back then.
BUT - all of a sudden, you couldn't pay cash for a motel room, you couln't rent a car or book an airflight without a credit card. These things should have alerted us, but for the average american, it didn't. So sad.
I know people who live without credit cards, at all. They use debit cards for all the same things. I get that most people don't live that way but some still do. I think even more will be but not by choice. Ruined credit, distrust and disgust at banks, credit card companies, etc. will force some back to doing things 'old school' and others just won't participate any more on principle. People who used to mock my cash spending envelopes are now asking if I will help them make some of their own. Most are brought to that point because they have realized how close to the edge they are...having witnessed those around them falling over the edge.
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Originally Posted by newonecoming2
The number of people that saw this one coming in time to do something about it is really small. That is what I am saying Now it is easy to say we should have done something differently. Then it was hard. Lame is after the fact. To not get cought up in something is really hard.
LOL....well something is ALWAYS coming and while you might not know when or what it is is not a reason to live for the moment and be unprepared.
I guess it's never bothered me to go against the flow even it was hard. I didn't fall for peer pressure as a teen, we didn't fall for it with the economy either. It was hard sometimes, we endured 'lectures' from people who said we should buy as big a house as we could possibly afford. We were ridiculed by friends and family for saving up to do home repairs in cash instead of tapping into equity in the house. We got 'helpful' e-mails from my IL's featuring articles about how wise people never pay off their mortgage. Heck, people laugh at my coupons or scowl at me when it takes too long to check out and I just don't care. We live so far away from the edge of the cliff...why should I care what the other lemmings think? It's astonishing to me to hear '"It's hard not to get caught up in it." or "Everyone else was doing it." or "No one knew this would happen." are serious responses being used by intelligent adults.
Noooo, because you didn't read the rest of the article.
You got as far as the first few paragraphs then gave up. The author is a large animal vet. When the recession hit, she lost a huge chunk of her income, which resulted in them not being able to meet their mortgage obligation. Try reading it all the way through.
Try living on a fraction of your income and see how you fare. No failure here.
so the fact that they took advantage of easy credit, and ran up huge debts that they could only afford if their income remained high was not irresponsible? the fact that they choose a long commute everyday, 30 miles, and even if their car got 30mpg, at $3.00 per gallon that is $6 per day just in gasoline. so they overspent on buying the house, refinanced the house to renovate it, and likely pull some money out of the house to maybe pay off other bills, and then likely ran the credit card bills up again, means nothing? the people who survive this crisis intact are the ones that worked to pay down or pay off their debts as much as possible, and then tightened up their belts so they could continue on a reduced income if needed. these are also the people who saw this crisis coming. i knew it was coming way back in early 2002 when i saw ads for home loans where you could just lay interest only for ten years. that right there meant that credit was far too easy to get, and trouble was coming. i knew it was getting worse when car dealers were saying that you could trade in your car even though you still owed money on it, and roll the old car loan principle into the new loan. just because you would be upside down in your new car before you drove the damn thing off the lot didnt matter to those people.
When you buy a house with a mortgage you are gambling period. All sob stories aside. Its the same as buying stock on margin. If you lose your house because of a job loss the harsh fact is that you could not afford it to begin with. That's why we have mortgages. The buyers and the lenders are both gambling on a financial product.
Huh? By this logic nobody should ever buy a house unless they are independently extremely wealthy and would be able to cover all costs for every life event and expense with no chance of running out of money- ever.
In such a scenario, what would be the effect on the economy as whole over time? There would be very few landlords and many millions of renters. Not sure how this would play out. Besides, money is created out of debt- out of lending to people.
Huh? By this logic nobody should ever buy a house unless they are independently extremely wealthy and would be able to cover all costs for every life event and expense with no chance of running out of money- ever.
In such a scenario, what would be the effect on the economy as whole over time? There would be very few landlords and many millions of renters. Not sure how this would play out. Besides, money is created out of debt- out of lending to people.
Too bad that's not the whole logic that I presented just a snippet to prove the weak position that you present. Just because you can afford to make payments doesn't mean you can afford the house. You are gambling. Don't get me wrong I do it also. I hedge my bets and I am very disciplined. I have never lost on any of my gambles and only made money. That includes closing my company last year because it started to turn unprofitable.
The scenario you present is nonsensical. You obviously did not read all my posts.
Too bad that's not the whole logic that I presented just a snippet to prove the weak position that you present. Just because you can afford to make payments doesn't mean you can afford the house. You are gambling. Don't get me wrong I do it also. I hedge my bets and I am very disciplined. I have never lost on any of my gambles and only made money. That includes closing my company last year because it started to turn unprofitable.
The scenario you present is nonsensical. You obviously did not read all my posts.
I was responding to one specific remark you made in one specific post- not your entire body of work. This is a large forum and I don't read ALL of anybody's posts. Do you? So there was no personal disrespect intended.
You said:
Quote:
If you lose your house because of a job loss the harsh fact is that you could not afford it to begin with.
I still say I cannot make any real sense out of this, but I will not push you to explain it any further since it really isn't all that important.
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