Spoiled or prudent?
Hopefully just a quick post to complain about the cruel world we live in, while feeling spoiled rotten myself.
Some friends are closing on a little 3 bedroom house for $188,000, 0% down, and expect to pay $1500/month between mortgage, mortgage insurance and property taxes.
They've been living the last nearly dozen years of being married in the house owned by a mother, and barely getting by on two incomes, but getting pressured to make their own way so the house can be sold. How will they make it if their expenses are going up by perhaps $500/month?
Zero percent down is crazy, and we can all be grateful that banks will only charge $2500/year for mortgage insurance for this cozy deal.
I can think both ways - that the world exploits them, and they fail to take full advantage of their past situation. If their expenses were $500/month LESS before, why haven't they been saving $6000/year? They could have gotten their 20% down with a bit of prudent planning, right? At least 10%, 5%?
Mostly I think they basically they are not capable of taking on this burden of a home and they'd be better of renting. I mean homes are not appreciating like they have been and might even go down! And this $188k house assesses in 2007 at $167k, so they're starting above the claimed value - meaning basically their property taxes will jump with the sale price.
A 30 year mortgage puts a minimal amount of money towards the principle for the first 5 years. AH, but they can deduct their mortgage interest, right? WHAT A SCAM I think - a conspiracy to transfer wealth from people to banks as far as I can tell.
Friends from Canada say they can't deduct their mortgage interest from income taxes.
And the REAL scam of course is not even the imprudent incentive towards home ownership - it's that once they get a better credit record they'll be offered credit cards left and right and in 5 years they could find themselves with $30k in credit card debt AND little equity on their home. STILL, they'll find some 8.4% home equity loan to pay off their new credit card debt just in time to set up a new round of borrowing on their cleared cards.
Its so easy to see from the outside - how money lenders have TOO MUCH MONEY and people without discipline can go years in the red without consequences that demand action.
And multiply my friends by 30% of the population and you have a house of cards, waiting for a little gust of wind to knock them off their feet.
SURE, there are times for taking on debt, and 30-something couples with KIDS deserve their own home SURELY, but But BUT there are risks. There are costs. There OUGHT to be choices besides living the life of slaves, one unfortunate event beyond your control that knocks down the smallest steps.
Do I show my fear? My sense of frailty of their circumstance?
Shall I simply wish my friends would think more strategically at their circumstances and live within their means?
Shall I step back and "let people fail" knowing there's NO FREE LUNCH and people need HARD COLD REALITY to learn prudence and limit their dreams to what they can afford NOW rather than PAYING FOREVER?
Will they learn? Could they learn any more efficiently than to LOSE their home in 5 years? Of course they have family and family will help them - their parents will help cover their shortfalls, and they'll muddle along perhaps for 10 years before failing.
It's strange. I don't want to be a Scrooge, really, but if I ran the world, people would not get mortgages with 0% down - they'd first prove they could save their 20% down. They'd NOT get access to easy credit cards and LOW LOW LOW monthly payments that encourage them to rack of balances for years before facing their short falls.
WELL, not like the government sets any sort of example - STEALING from Social security every year and calling their deficits smaller.
What's a prudent person supposed to do with a world of BIG greedy bastards willing take advantage of LITTLE greedy bastards to sell their futures for a few trinkets?
Who's responsible when the house falls?
Who's going to help out the needy, the homeless?
Give a man a fish, you feed him for a day. Teach him to fish you feed him for a lifetime.
Or the modern approach: Give a man some money, and you'll enslave him for a day. Teach a man to spend on credit, and you'll enslave him for a lifetime!
What a world we live in.
Yes, I do think my friends might just get by somehow. I just imagine they're doing things a very hard way, and I wish they could do better.
I can't even tell what political side I'm on. I'm a bleeding-heart liberal I suppose. I'd be an authoritarian I suppose if I could - BAN people from enslaving their futures for trinkets.
But I'm a fiscal conservative too - a good republican. BANKS ought not lend money imprudently. THEY'LL be hurt (and investors) for their failed decisions. And I despise a government that creates a safety net for banks that allow this excess risk to be carried over all of us.
Hmph! I'd rather be a teacher, rather help people say NO to apparent easy streets. SURE credit cards are evil, but the game CAN be played with care. I can't even tell if my advantage played is part of the problem?
For me "debt" is the real enemy, but that's just my spoiled perspective, being able to save before spending. My dad said I have a depression era perspective, and I believe that. I'll waste more now than I might, but still only a small fraction, and my GOAL is to reduces expenses rather than increase income. I just don't know how to teach when everyone else sees things differently...
Some friends are closing on a little 3 bedroom house for $188,000, 0% down, and expect to pay $1500/month between mortgage, mortgage insurance and property taxes.
They've been living the last nearly dozen years of being married in the house owned by a mother, and barely getting by on two incomes, but getting pressured to make their own way so the house can be sold. How will they make it if their expenses are going up by perhaps $500/month?
Zero percent down is crazy, and we can all be grateful that banks will only charge $2500/year for mortgage insurance for this cozy deal.
I can think both ways - that the world exploits them, and they fail to take full advantage of their past situation. If their expenses were $500/month LESS before, why haven't they been saving $6000/year? They could have gotten their 20% down with a bit of prudent planning, right? At least 10%, 5%?
Mostly I think they basically they are not capable of taking on this burden of a home and they'd be better of renting. I mean homes are not appreciating like they have been and might even go down! And this $188k house assesses in 2007 at $167k, so they're starting above the claimed value - meaning basically their property taxes will jump with the sale price.
A 30 year mortgage puts a minimal amount of money towards the principle for the first 5 years. AH, but they can deduct their mortgage interest, right? WHAT A SCAM I think - a conspiracy to transfer wealth from people to banks as far as I can tell.
Friends from Canada say they can't deduct their mortgage interest from income taxes.
And the REAL scam of course is not even the imprudent incentive towards home ownership - it's that once they get a better credit record they'll be offered credit cards left and right and in 5 years they could find themselves with $30k in credit card debt AND little equity on their home. STILL, they'll find some 8.4% home equity loan to pay off their new credit card debt just in time to set up a new round of borrowing on their cleared cards.
Its so easy to see from the outside - how money lenders have TOO MUCH MONEY and people without discipline can go years in the red without consequences that demand action.
And multiply my friends by 30% of the population and you have a house of cards, waiting for a little gust of wind to knock them off their feet.
SURE, there are times for taking on debt, and 30-something couples with KIDS deserve their own home SURELY, but But BUT there are risks. There are costs. There OUGHT to be choices besides living the life of slaves, one unfortunate event beyond your control that knocks down the smallest steps.
Do I show my fear? My sense of frailty of their circumstance?
Shall I simply wish my friends would think more strategically at their circumstances and live within their means?
Shall I step back and "let people fail" knowing there's NO FREE LUNCH and people need HARD COLD REALITY to learn prudence and limit their dreams to what they can afford NOW rather than PAYING FOREVER?
Will they learn? Could they learn any more efficiently than to LOSE their home in 5 years? Of course they have family and family will help them - their parents will help cover their shortfalls, and they'll muddle along perhaps for 10 years before failing.
It's strange. I don't want to be a Scrooge, really, but if I ran the world, people would not get mortgages with 0% down - they'd first prove they could save their 20% down. They'd NOT get access to easy credit cards and LOW LOW LOW monthly payments that encourage them to rack of balances for years before facing their short falls.
WELL, not like the government sets any sort of example - STEALING from Social security every year and calling their deficits smaller.
What's a prudent person supposed to do with a world of BIG greedy bastards willing take advantage of LITTLE greedy bastards to sell their futures for a few trinkets?
Who's responsible when the house falls?
Who's going to help out the needy, the homeless?
Give a man a fish, you feed him for a day. Teach him to fish you feed him for a lifetime.
Or the modern approach: Give a man some money, and you'll enslave him for a day. Teach a man to spend on credit, and you'll enslave him for a lifetime!
What a world we live in.
Yes, I do think my friends might just get by somehow. I just imagine they're doing things a very hard way, and I wish they could do better.
I can't even tell what political side I'm on. I'm a bleeding-heart liberal I suppose. I'd be an authoritarian I suppose if I could - BAN people from enslaving their futures for trinkets.
But I'm a fiscal conservative too - a good republican. BANKS ought not lend money imprudently. THEY'LL be hurt (and investors) for their failed decisions. And I despise a government that creates a safety net for banks that allow this excess risk to be carried over all of us.
Hmph! I'd rather be a teacher, rather help people say NO to apparent easy streets. SURE credit cards are evil, but the game CAN be played with care. I can't even tell if my advantage played is part of the problem?
For me "debt" is the real enemy, but that's just my spoiled perspective, being able to save before spending. My dad said I have a depression era perspective, and I believe that. I'll waste more now than I might, but still only a small fraction, and my GOAL is to reduces expenses rather than increase income. I just don't know how to teach when everyone else sees things differently...
posted by Ares Olympus at 10:04 AM
1 Comments:
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