Author Topic: This is WHY we do what we do, Mustachians!!!  (Read 2701 times)

JGS1980

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This is WHY we do what we do, Mustachians!!!
« on: September 05, 2018, 11:43:23 AM »
Just a reminder to all here why we focus on this stuff...

https://www.thepennyhoarder.com/subprime-mortgage-crisis/

JGS

YoungGranny

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Re: This is WHY we do what we do, Mustachians!!!
« Reply #1 on: September 06, 2018, 08:50:59 AM »
Good reminder - I was in high school when this storm hit and I am forever grateful my Dad was transparent about the tough times because it made me the frugal BA I am today. The lending company told my husband and I we were approved for a $1m loan - we took out $150k ain't nobody got time for history to repeat itself.

JGS1980

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Re: This is WHY we do what we do, Mustachians!!!
« Reply #2 on: September 06, 2018, 10:19:16 AM »
Student Loans were the fire from which my wife and I were forged. Without 250K in initial student debt, we would certainly not be Mustachians today.

I feel for these folks who were slammed repeatedly in small periods of time. Especially the single parents who didn't have another partner to help in case of prolonged economic droughts.

I'm laughing at the loan company approval limits. Same thing happened to us. Meanwhile Credit Cards approve 30K spending limits after a 2 minute internet application...Crazy.

fuzzy math

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Re: This is WHY we do what we do, Mustachians!!!
« Reply #3 on: September 08, 2018, 02:15:56 PM »
That's a really well written article. The website penny hoarder has changed a lot from the fluff garbage they used to spam on FB. frankly I am surprised.

It's interesting that out of all those people, only one couple had the $$ to buy a home again. The traveling musical family also made me cringe. My impression is that people buy their music out of pity rather than pure enjoyment, making it seem more like they're beggars.

OzzieandHarriet

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Re: This is WHY we do what we do, Mustachians!!!
« Reply #4 on: September 13, 2018, 09:20:50 PM »
None of these people seem to have common sense. I feel sorry for them, but damn.

I do understand that they were being sold hard on these loans, and some were outright swindled. But how could you buy a house knowing that you didn't have the money to pay for it?

And then, I bet a lot of them continue to vote for the people who let it all happen and don't care if it happens again.

ericrugiero

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Re: This is WHY we do what we do, Mustachians!!!
« Reply #5 on: September 21, 2018, 07:16:38 AM »
Good article that really makes you think.  There is some responsibility on lots of different sides.  Banks and loan officers shouldn't be pushing loans that people can't afford.  People should take individual responsibility to choose a house and a payment they can afford.  Due diligence should be done before kicking someone out of their home. 

One thing that would really help is if the school system would do some training on managing finances. (How to balance a checkbook, spend less than you make, how much car can you afford, how much house can you afford, how do you prioritize what you want vs what you need, etc.)  If people had more knowledge of how all those things work together they could all make better decisions.  Many people are raised in situations where it's difficult to get ahead.  The American dream is still alive and well but it takes knowledge, planning and hard work to make it happen.

ixtap

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Re: This is WHY we do what we do, Mustachians!!!
« Reply #6 on: September 21, 2018, 09:00:19 AM »
None of these people seem to have common sense. I feel sorry for them, but damn.

I do understand that they were being sold hard on these loans, and some were outright swindled. But how could you buy a house knowing that you didn't have the money to pay for it?

And then, I bet a lot of them continue to vote for the people who let it all happen and don't care if it happens again.

The story was that appreciation would always be so high that you could just get a bigger loan. I never understood how that was supposed to help, but it was popular.

OtherJen

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Re: This is WHY we do what we do, Mustachians!!!
« Reply #7 on: September 21, 2018, 10:56:39 AM »
The story was that appreciation would always be so high that you could just get a bigger loan. I never understood how that was supposed to help, but it was popular.

This. Also, there was a willingness by most people who really should have known better to conveniently forget previous housing boom/bust cycles even within their adulthood. In 2003, then-newlywed Husband and I were pushed by both sets of parents and many friends to buy more house than we could afford because "Property values will only ever go up! It's always a fantastic investment, no downsides! You're throwing money away if you don't buy now! Your incomes will only ever go up!"

Fortunately, we had enough common sense to ignore the advice to take on a higher monthly payment than we could manage at the time (not even counting upkeep costs) and insisted on a 30-year fixed-rate loan on our small house, as I was in grad school when the bottom dropped out of the market in 2008 and our house lost 80% of it's 2003 value almost overnight. Husband was laid off 18 months later. We were still able to make mortgage payments in full on my student stipend and his unemployment checks.

People hear what they want to hear. I have friends who borrowed huge sums of money from both sets of parents for a downpayment and then maxed out what the bank would loan them for a clown house. They both have to work to pay for clown house and car loans, which means that their little kids are both in full-time daycare, and they wonder why there's no money left over but happily discuss how much their home value has increased in the last year. Yeah, mine has also gone up 20% in the last year. That's not a good sign.

JGS1980

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Re: This is WHY we do what we do, Mustachians!!!
« Reply #8 on: September 21, 2018, 01:14:07 PM »
Wants and Needs, Wants and Needs

Dicey

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Re: This is WHY we do what we do, Mustachians!!!
« Reply #9 on: October 19, 2018, 12:18:11 PM »
I am so glad to see this article.  So many people here were too young to realize what was happening, and now don't believe the cautions of those of us who did. I think most people here understand the perils of buying too much house, but there are more risks too many seem blithely unaware of.

No EF? There's springy debt - no problem! Who needs an EF? "I'll just use my HELOC."

Um, nope, the banks shut them down, even for people with perfect payment histories who still had steady employment. Ditto for credit limits on CC's - yup, when I started shopping at cheaper places, B of A cut my limit in half, those bastards. Happily, I had no debt and just switched to another bank. Not so easy if you have a balance and/or no job.

Finally, this was what firmly convinced me to become a die-hard, card-carrying member of the "Don't Pay Off Your Mortgage" Club. I'd much rather have 3, 6, 9, 12 or more months' mortgage payments in my control than give money to the banks one second before it's required. As I was working my way to FIRE, I always calculated how long I could make payments without an income. It was pretty gratifying to watch the numbers rise as I saved steadily. I knew I would never lose my house, no matter what happened.

Thanks for posting this link. I'm going to have to read it a little at a time, because it makes me see the faces of real people I know. Most have recovered somewhat, but many have been left far behind on life's road, especially on the road to FIRE.