AN OPEN LETTER TO PRESIDENT OBAMA

[TexasT]

Why I keep my BBC

Got a little off topic so I started a new thread.

http://gbodyforum.com/viewtopic.php?p=84034#84034

 

[TexasT]

The issues is education, most that have home mortgages don’t know that in’s and outs of the different types of rates unless they are of higer wage 50k+. They look to the professional with trust to provide the full picture; the banks did not do this but provided a “sunny outlook” and forgot the rest so they can turn a profit. In personal experience, when I bought my house when I was 21 I had multiple banks try to sugarcoat the adjustable rate mortgage, pushing it because it was lower payments but never given the dark side if the market. Luckily for me I liked economics at the time knew a little about the “biz” and went with the at the time higher fixed rate (6.25). They likely did this because I was young and not a high wage owner. By loaning to those who don’t have the funds to repay (which are normally those that lack an education) and then convincing them with all the good aspects the banks have created this mess. But on the same side I do agree that it is the consumers responsibly to do research before they make finance or legal decisions even if you have a banker or lawyer representing you

So why doesn't public education address the need for financial education? It is essential to survival as the three r's. Seems like this should be addressed. No one seems to have been taught, when it is too good to be true it probably is.

Defined benefit retirement is dead. The defined contribution took its place. You must be paying attention or as evidenced by the 2008 crash you lose a substantial amount before you know it. There is no guarantee you will even have any left when you retire unless you have yours invested in low yield insured instruments. Some(most) of which don't even keep up with inflation.

One best get educated on investing or it is just gambling.

 

[CaStylin]

So why doesn't public education address the need for financial education? It is essential to survival as the three r's. Seems like this should be addressed. No one seems to have been taught, when it is too good to be true it probably is.

Because public education among those many/most of those who fell into the variable interest rate scheme is poor and offers little more then basic mathematics. Even public schools in the middle classes of America teach a 1980 version of current economics and barley address real issues of credit, how it’s built, and how to manage it.

I don’t feel bad for those that loss there house because of variable rates, education is key and if you don’t take your time to control your funds/credit then you don’t deserve your funds/credit. I do feel sorry for those who lost there house because of losing there jobs, it not something that is ever planed and very few of us can stash 8+ months of mortgage payments in the interim of finding a job that was of previous salary if you don’t know what "true" is then you don’t know what "to go to be true". I.e. at right they told me 9% APR was good for me, and offered me 8%. If i didn’t know that wasn’t the truth in either case i would have taken it"

Defined benefit retirement is dead. The defined contribution took its place. You must be paying attention or as evidenced by the 2008 crash you lose a substantial amount before you know it. There is no guarantee you will even have any left when you retire unless you have yours invested in low yield insured instruments. Some (most) of which don't even keep up with inflation.

One best get educated on investing or it is just gambling.

Again i agree, proper investment takes time and planning but as you can see, most of America did not do either...

 

[rick48195]

Defined benefit retirement is dead. The defined contribution took its place. You must be paying attention or as evidenced by the 2008 crash you lose a substantial amount before you know it. There is no guarantee you will even have any left when you retire unless you have yours invested in low yield insured instruments. Some (most) of which don't even keep up with inflation.

One best get educated on investing or it is just gambling.

Again i agree, proper investment takes time and planning but as you can see, most of America did not do either...

Is there someone who didn't lose money last year? You think education would have helped someone to not get nailed by the market crash? Only an insider or criminal would know these things

 

[rick48195]

I don’t feel bad for those that loss there house because of variable rates, education is key and if you don’t take your time to control your funds/credit then you don’t deserve your funds/credit. I do feel sorry for those who lost there house because of losing there jobs, it not something that is ever planed and very few of us can stash 8+ months of mortgage payments in the interim of finding a job that was of previous salary if you don’t know what "true" is then you don’t know what "to go to be true". I.e. at right they told me 9% APR was good for me, and offered me 8%. If i didn’t know that wasn’t the truth in either case i would have taken it"

I don't understand the difference someone losing their home is someone losing their home, All homes that were lost were all due to the downturn in the economy whether it was variable rate mortgage or not. So you only feel sorry for the ones who lost their jobs but not the ones who bought a 250k house in 2001 that is now only worth 150k? Losing ones home is losing ones home I feel sorry for them all, they are all victims, they were not all necessarily trying to live above their means

 

[CaStylin]

I don't understand the difference someone losing their home is someone losing their home, All homes that were lost were all due to the downturn in the economy whether it was variable rate mortgage or not. So you only feel sorry for the ones who lost their jobs but not the ones who bought a 250k house in 2001 that is now only worth 150k? Losing ones home is losing ones home I feel sorry for them all, they are all victims, they were not all necessarily trying to live above their means

VRM (variable rate mortgages) are very large gambles on investments, if you choose to gamble then be prepared to lose. yes they are all victims but not all victims of the economy, some where victioms of there own greed, others victims of lack of reseach. You can’t ride the high tides and smile and then complain when the tides falls when you had other options that where much, much more stable. I feel some sorrow because they are with out home but this much there own doing and you have to take responsibly for decisions/gambles that you made in the past. The down turn of the economy is not something an individual can avoid; we are all subject to the needs of our company regardless of our personal worth ethic. IMO losing your house this way is not because you did not do your best to keep it. Losing value in your house really not an issue if plan on living there, most items lose value after purchase, houses normally to not but are subjectable. If you felt the house was worth 250K when you bought it and agreed to pay it, then why get mad when its value falls? To look at this from another angle… last year I bought a portable hard drive with a TIG of memory and it cost me over $500, this year that same TIG hard drive cost under $100… should I be made that I paid more then its current value? IMO a house is just like any other investment, but we choose to live in it, if the road was getting rough then they could have sold the house like it was a piece of stock and the losses would have been cut by a good percentage

 

[TexasT]

I don’t feel bad for those that loss there house because of variable rates, education is key and if you don’t take your time to control your funds/credit then you don’t deserve your funds/credit. I do feel sorry for those who lost there house because of losing there jobs, it not something that is ever planed and very few of us can stash 8+ months of mortgage payments in the interim of finding a job that was of previous salary if you don’t know what "true" is then you don’t know what "to go to be true". I.e. at right they told me 9% APR was good for me, and offered me 8%. If i didn’t know that wasn’t the truth in either case i would have taken it"

I don't understand the difference someone losing their home is someone losing their home, All homes that were lost were all due to the downturn in the economy whether it was variable rate mortgage or not. So you only feel sorry for the ones who lost their jobs but not the ones who bought a 250k house in 2001 that is now only worth 150k? Losing ones home is losing ones home I feel sorry for them all, they are all victims, they were not all necessarily trying to live above their means

What don't you understand? Someone who took on a mortgage that had the potential to raise the rate, thereby raising the payment, possibly to a level that was unaffordable. VS Some one who due to economic conditions was laid off, terminated or wages were reduced to a level that their house note payment became unaffordable. You don't see a difference?

CaStylin doesn't see that having a reserve or cushion of cash is attainable. Depends on your priorities I guess.

The housing crash, while not predictable, had the symptoms of a crash. what goes up also comes down. You may not remember the S&L crash in the eighties. Lots of similarities. Just that this time it seems to be nation wide. Really a good time to invest in Real Estate. Think of it as a sale. Limited time only. Next thing ya know it will be going back up.

Remember, you make you money when you buy, not when you sell. If you buy it "wrong" you'll get the 'short end of the stick'. You also need an exit strategy. If you don't know where you are going with an investment, how do you know when you get there.

 

[CaStylin]

CaStylin doesn't see that having a reserve or cushion of cash is attainable. Depends on your priorities I guess.

Anything is attainable but obtaining a reserve or cushion for a mortgage as well as other owed bills for 6 months is very hard to do even with those who live with in there means. Getting laid off and being out of the job market for more then a couple months will likely lead to foreclosure or the accumulation of large debt. For example, the average Americans mortgage takes up to 60% of their take home pay, giving that people have bills that are usually close to the monthly equal of there mortgage it leave little room to save. Cushions are obtainable but with the average house cost at 200K that means if you are out of work for 6 months you would need to stash 12k just for mortgage cost. Then add in every thing else needed for the necessities, the average American (before the economic recession) has less then 6k in withdrawable cash savings, its much lower now with the recession

 

[TexasT]

CaStylin doesn't see that having a reserve or cushion of cash is attainable. Depends on your priorities I guess.

Anything is attainable but obtaining a reserve or cushion for a mortgage as well as other owed bills for 6 months is very hard to do even with those who live with in there means. Getting laid off and being out of the job market for more then a couple months will likely lead to foreclosure or the accumulation of large debt. For example, the average Americans mortgage takes up to 60% of their take home pay, giving that people have bills that are usually close to the monthly equal of there mortgage it leave little room to save. Cushions are obtainable but with the average house cost at 200K that means if you are out of work for 6 months you would need to stash 12k just for mortgage cost. Then add in every thing else needed for the necessities, the average American (before the economic recession) has less then 6k in withdrawable cash savings, its much lower now with the recession

60% of the take home pay for their housing is someone living beyond their means. If you don't think so I see why we disagree an many issues.

 

[CaStylin]

60% of the take home pay for their housing is someone living beyond their means. If you don't think so I see why we disagree an many issues.

Yes, most of Americans are living beyond its means if they own a house, gambling that there means will improve to give breathing room on there investment (the house/mortgage) but honestly the yearly cost of rent in America is 80% to the amount of yearly mortgage when matching locations but losses the tax benefits, space benefits and investment benefits of a house

I don’t know how much of your budget goes to mortgage/rent but i take it is close to or above 40%... IDK, just guessing, $20 an hour on a 150k house gives $1,500 a month in mortgage payments with a avg monthly take home pay of around 2,940 (using a 15% tax- no deductions) leaving the housing spend rate at 50% of the take home… (Please don’t take it personal if my guess is wrong). A person making $10 an hour in a full time job makes $400 a week, maybe $340 take home pay. If rent is $500 a month he is not living in the best of areas and likely only has one bedroom and he is still spending almost 30% of his take home on rent not including water, gas, & electric bills. This person also gets nothing back like the mortgage holder does but is living with in his mean. I'm not saying it is the best financial thing to do We stress our budgets so we can live somewhere nice/safe. I could easily afford an apartment in the hood and have my rent be +/-30% of my take home pay, but by living there i jeopardize not only my other personal property.