There are some genuinely tough situations here when it comes to divorces, accidents and ill fortune. But it also struck me how often situations were described in a way that made it seem like they had not control when they did.
My thoughts exactly. I mean, taking out a mortgage on your house to start a business -- when the house seems to have been a bit of a stretch anyway and you have four kids -- might've been a red flag. If your emergency fund can be wiped out by a dog's illness, you didn't have much of an emergency fund to start with. You bought a house that had fire damage -- either you didn't have an inspection done, or you should sue your inspector.
And some of these people have options they're not really considering. For example, the woman who renovated her upstairs for a daughter who then married /moved overseas could rent out that nice upstairs to someone else. The last guy sounded like he had his game together when he said he doesn't order pizza and cooks big meals on Sunday, which he can eat all week ... but then he talks about taking a month-long vacation. Yeah, that sounds great, but it's also a choice for a person whose financial life is in order, not a guy who's saying he can't afford the renovations he's making on his house.
A double pisser for me was reading in the same paper the weekly "financial makeover" Two Fed employees who wanted to retire early with fully indexed pensions (about 72k/yr), 3+MM net worth and they needed "help" figuring it out.
Well, my husband and I have substantial assets and I am almost finished earning my pension ... yet we read fairly often to be sure we are "figuring it out". Don't read that as, "I don't know how we'll make ends meet"; rather, we have spent years amassing these assets, now how should we allocate our funds so that they'll last 50 years, even with obstacles that may arise? How should we leave things to our children so that they're protected from the government? And so forth?
So what are everyone's thoughts on whether this financial illiteracy will lead to a housing crash.
More and more people are digging themselves holes that they can't get out of...surely the tipping point will arrive at some point?
I think the issue is that people are willing to borrow, borrow, borrow to have THE HOUSE and THE CAR ... oh, and nice clothes, vacations, and meals out too! And banks are willing to lend more and more and more. An average middle class person today lives in a MUCH nicer house than did his counterparts of my childhood. What's made the difference? The willingness and the ability to borrow past what's wise.