There is a fierce debate over what constitutes risk, particularly financial risk, and whether it should be the responsibility of its citizens and government to step in when things unravel. The question I want answered is how lenders could allow greed to supersede their fiduciary responsibility for ensuring we are committing ourselves to a supportable loan.
We all know the needs-vs-wants war. A little child wants a giant double fudge sundae. It's evident the child can't eat it and it's expensive, but the child reeeeaaaalllllly wants it. Do her folks buy it anyway or steer her toward a humble single scoop dressed up with chocolate sauce and sprinkles, realizing the child will be satisfied with that?
America is all about options that are exceeded only by opportunities. The sky is the limit for those who know how to play the money game, and for those who don't there's credit. We play so fast and loose with credit, we've come to believe needs and wants are the same thing. We are conspicuous consumers.
Needs are things basic to survival, like food, shelter, clothing, health and welfare, education, freedom of religion, etc. Wants are everything else. Though we want our own home, we need shelter; though we want a car for school, we can get there by walking or using public transit.
Needs are things basic to survival, like food, shelter, clothing, health and welfare, education, freedom of religion, etc. Wants are everything else. Though we want our own home, we need shelter; though we want a car for school, we can get there by walking or using public transit.
Those who take sensible steps toward increasing financial responsibility are rarely told no. There's no mystique to it, really: they listen to the experts, scale their wants and needs, and establish more achievable goals. They respect the relationship between hard work and responsible spending which garners respect in the financial world.
Borrowers who are in the gotta-get world of materialism snub those cautioning them about risk. They feel a sense of entitlement for a house and you bet they are entitled to everything the rest of us are. They're entitled to take responsibility for the consequences of a loan or understand the terms - variables, negative am, interest only. They're entitled to believe once they're in, they can relieve the financial choke of being overextended by refinancing. But they're also 'entitled' to decide what they're going to do when things don't turn out as planned.
The couples in a $600K house, with a new Suburban and full size truck painted to match the boat in the drive are tenuously balanced on an income that can't sustain their lifestyle. It must be terrifying to lay down at night, knowing an emergency or job loss would plunge them into financial ruin.
My first house was a dump of a place that cost $484 a month, PITI. Sounds like a car payment now, but then it represented sixty percent of my income. It was an enormous struggle to make the payment. Six years of sweat equity later it was a pretty home, but learning to be disciplined on a budget eventually led to afford landscaping, and paint, and other improvements. That experience, and others since, shaped my philosophy of consumerism.
I get the difference between needs and wants. There's times I want want want and there's times I indulge myself, too. But I stop short of hurling myself into a financial chasm I cannot possibly scale. I don't expect people to bail me out if the investment doesn't yield what it expect. So I say, let the chips fall where they may as long as their misery doesn't take down the entire financial structure of our country with 'em.
Life is too short to dance on the point of a pin.
Borrowers who are in the gotta-get world of materialism snub those cautioning them about risk. They feel a sense of entitlement for a house and you bet they are entitled to everything the rest of us are. They're entitled to take responsibility for the consequences of a loan or understand the terms - variables, negative am, interest only. They're entitled to believe once they're in, they can relieve the financial choke of being overextended by refinancing. But they're also 'entitled' to decide what they're going to do when things don't turn out as planned.
The couples in a $600K house, with a new Suburban and full size truck painted to match the boat in the drive are tenuously balanced on an income that can't sustain their lifestyle. It must be terrifying to lay down at night, knowing an emergency or job loss would plunge them into financial ruin.
My first house was a dump of a place that cost $484 a month, PITI. Sounds like a car payment now, but then it represented sixty percent of my income. It was an enormous struggle to make the payment. Six years of sweat equity later it was a pretty home, but learning to be disciplined on a budget eventually led to afford landscaping, and paint, and other improvements. That experience, and others since, shaped my philosophy of consumerism.
I get the difference between needs and wants. There's times I want want want and there's times I indulge myself, too. But I stop short of hurling myself into a financial chasm I cannot possibly scale. I don't expect people to bail me out if the investment doesn't yield what it expect. So I say, let the chips fall where they may as long as their misery doesn't take down the entire financial structure of our country with 'em.
Life is too short to dance on the point of a pin.
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