....

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Sent from an agnostic abacus

2014 C250 21,XXX my new DD ** 2013 GLK 350 18,000 Wife's new DD**

- With out god, life is everything.
- God is an ever receding pocket of scientific ignorance that's getting smaller and smaller as time moves on..." Neil DeGrasse Tyson
- You can pray for me, I'll think for you.
- When you understand why you dismiss all the other possible gods, you will understand why I dismiss yours.

.....

so far no.

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[SIGPIC] Diesel loving autocrossing grandpa Architect. 08 Dodge 3/4 ton with Cummins & six speed; I have had about 35 benzes. I have a 39 Studebaker Coupe Express pickup in which I have had installed a 617 turbo and a five speed manual.[SIGPIC]

..I also have a 427 Cobra replica with an aluminum chassis.

yes

I hope no one here gets that far down the hole .

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-Nate
1982 240D 408,XXX miles
Ignorance is the mother of suspicion and fear is the father

I did then what I knew how to do ~ now that I know better I do better

Not likely site members but there will be many cases. So many younger people are so far in debt with this easy credit situation for some time now. They are totally exposed in many cases to any upset.

Then again bankruptcy is not the deal today that it once was. The system wants to give them credit again. After all this is a consumer credit driven economy. The system requires them to keep consuming.

If you went bankrupt in my day it was a major stigma. Plus your credit was gone.

What I find interesting is many know the risks and do not care really. What I could be concerned about in some ways. Is the effect of too many bankruptcies could impact people that have tried to act responsibly.

The government purchased about four trillion dollars of mortgage vehicles from the banks when this virus thing first started. The ideal was to give the banks more liquidity to loan money.

Of course the taxpayers indirectly owning all this paper is not bad. Unless something occurs where a large portion of them go into default. That could be an issue if the housing market slides badly.

Canada also has done the same thing basically but at smaller dollar amounts reflecting our much lower population. Much greater risk though with the average resale in some of our populations areas.

The average house cost a million dollars in them.. Many buy them thinking a million five is just around the corner. The mortgage payments are killing them until they sell. Prices falling back was never a consideration by them. A lot of people could lose some equity in my opinion. Especially through circumstances reducing their incomes. To me buying property in Canada's superheated real estate areas is pure gambling.

If times get tough the tough get going. The majority of the young have never been tough today.

I remember living in apartments, not fun , I think maybe the trailers were better..

I also remember when looking at houses to buy, no realtor wanted to show me anything I could afford ~ I had a budget price set and knew I'd be buying a fixer, they all tried to sell me 2 X the price units telling me 'well, it'll appreciate in value then you can flip it and move on..'

Stupid ****s ~ I already had a job / career and was looking for a place to raise my family, grow old and die in....

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-Nate
1982 240D 408,XXX miles
Ignorance is the mother of suspicion and fear is the father

I did then what I knew how to do ~ now that I know better I do better

The goal of any sales process is to 1) discover the pocket and 2) build discomfort. What this means is that the salesman's art is to show you something more expensive than you think you can afford in order to find your absolute limit, and then make you itch to spend that money.

Back in the bubble and even as far back as the 1990's, there were balance-increasing mortgages. The monthly payment didn't even pay the interest. That meant that the mortgage balance increased. That was fine as long as the value of houses were going up even faster. But, when the music stopped everything went to ****.

Back in 2003, we prequalified for the maximum "conforming" mortgage, $417k. We bought a house for just over half that, and the RE agents were baffled. The value of our $220k house got a low as $150k during the meltdown. One should never mistake a RE agent or BMW salesman for a financial advisor.

Oh, yes ~ home savings tried to run that one by us, even after saying no and being sure it was mentioned NOWHERE on our closing documents the monthly payment coupon booklet showed up with three payment choices :

1. Normal full interest and principal payment .

2. Interest only

3. minimum payment that guaranteed increasing principal balance .

To my surprise my ex wife wanted to pay the lowest cost option every month and didn't grasp why I said no even though it meant I had to buy used clothes, no new cars, on and on....

She now has a house with a large mortgage, I'm on target to have mine paid off before I die to my grand daughter will get essentially free house....

Or at least one that's easy to make the payments on and has but a few years left .

I *think* this sort of thing was taught in the 'Home Economics' class in high school that I didn't take because I thought it was only for the girls....

Too soon old, never going to be wise I guess .

__________________
-Nate
1982 240D 408,XXX miles
Ignorance is the mother of suspicion and fear is the father

I did then what I knew how to do ~ now that I know better I do better

One daughter and son in law where in for mothers day. I listened to the son in law. Rather than cooling it he is going to take the Honda dealerships offer up. Replacement car no increase in payments. Plus he is doing other things.

I calmly suggested he should wait until he sees what the financial winds are blowing like. New car prices might dive for corporations to get cash flow. If he really thinks his two year old car needs replacing. That offer is available anytime.

He is continuously spending heavily on other things in this period. All with of course constantly increased debt loading. I know he is not alone in his mindset and know better than to really say much.

It may be good for the economy but I question for the individuals. He quoted he would not do it again after the last time. We assisted them in avoiding bankrupcy. Today I see it as a possible repeat. Although it may put the general economy back quicker if there are enough people that think like he does now.

It is becoming a little concerning that total debt loading does not matter to them. Only the ability to make payments. Almost everything we buy today depreciates rapidly. So they reach retirement age and are probably in a real financial mess.

I specifically said we will never help bail them out again. To an old goat like me there is not much hope. You live by the financial sword you can be butchered by it.

How many in our society have their mindset on constantly increasing their obligations?

Even in times of uncertainty. His job will come back but it will do so slowly.

Calculated and considered risk are one thing. Acting the same basically as our modern governments do. Is a total other scenario. I am not suggesting I am right and they are wrong.

Yet the real issue is they are living well beyond their sensible means. There is a sane middle ground. I am old so perhaps it does not matter any more. I just find some more modern trends disturbing.

I well understand for periods of our lives we may be tight for funds. Yet going for a constant diet of ever increasing debt loading is another thing.

To suggest you do not own your own home for example until it is paid for. I believe would go right over their heads. At least that can be an appreciating asset.

Most troubling is I do not think our daughter can stop him. I did manage to encourage him to get into a better paying job field. This has backfired as it also just enables him to further increase their obligations.

Forty six percent of our Canadian society have absolutely no savings, Plus never will. Not that one should hoard money. Reduction of debt loading over time is or was a common concept. I cannot find the benefit of spiraling upward as a constant diet. Yet it seems to be convention for many today.

There is a big difference between personal debt and business debt.

A bit of a rant as I realized we should not have helped bail them out. About five years ago today. We should have let them go into bankruptcy. It might have slowed down their ability to get credit.

Just before the daughter married him she mentioned he always seemed to be spending money at a good clip. Plus he seemed unhappy when he was not. It never occurred to me then it was perhaps almost always borrowed money.

Ppl that save a lot of money are not very good at spending it.

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Jim

Perhaps not in the majority. In any event enough money should be set aside to cover the unexpected at least. A reasonable cushion. All kinds of things can happen with time. This current situation will be very damaging to many.

Without the government aid many could see the issue of servicing debt or even paying for rent and food a problem.. I could see credit card limits heavily enforced.

The amount of unsecured or at best marginally secured debt out there is giving the financial institutions nightmares. With what is.

I wouldn't feel sorry for your S.I.L., he made that bed, enjoy sleeping in it .

The point about overly easy to get credit is valid .

I've never yet welshed on a debt yet I had the devil of a time getting a loan to buy my first house long, long ago .

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-Nate
1982 240D 408,XXX miles
Ignorance is the mother of suspicion and fear is the father

I did then what I knew how to do ~ now that I know better I do better

This type of loan is called an "option ARM," for obvious reasons. I had thought we had seen the last of them after 2008, I guess not. There are a lot of trap doors with these loans, in addition to the main trap of owing more principal over time. Most of them were balloon loans, with temptingly low initial rates. The problem with this is that the borrower would often qualify for a loan that would have been unaffordable without the teaser rate. The reasoning was that housing prices were skyrocketing, so the borrower could flip the house and pocket money for doing nothing or the bank could foreclose and get more than what was owed. In the worst case, the loan could be refinanced at a new teaser rate. In the event, neither end game worked out. The fallacy was that housing values were rising because unqualified flippers were able to get financing. As long as there was a flow of stupid money into the real estate market, it works, but eventually it had to stop. Of course, this was fraud by the bank and the borrower, BOTH of whom knew the loan was a pure gamble on rising real estate prices. And yet, nobody went to jail.

As with legitimate ARM's, the interest rate adjusted based on an index. The index used most of the time was Libor. And of course, prior to the financial crisis, Libor was famously manipulated by a consortium of major banks. For that, there were fines and apologies, but no jail time.

If you're shopping for a mortgage in the US, you should begin by pricing out a fixed 30 year with zero points and 20% down. That's the honest loan, and it's going to best define what you can really afford. Now, you may pick a different loan for cashflow or down payment reasons. But the house for which you qualify at fixed thirty is the most house you can safely buy. You may want more, and an ARM may promise more, but the road to financial hell is paved on wishful thinking. And since you know the baseline cost, your task is to figure out where the extra expense has been hidden in your particular loan.