Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 02-24-2008, 04:43 PM   #21
Moderator
Walt34's Avatar
 
Join Date: Dec 2007
Location: Eastern WV Panhandle
Posts: 16,501
Quote:
Originally Posted by chinaco View Post
How is it that some manage to live within their means and others do not? Some people have to learn the lesson the hard way. Welcome to reality lady!
I wish I knew. A few years after we were married DW was laid off from her job, found another, laid off from that a year later, then it took 3-4 months to find another. It was financially inconvenient but since we lived below our means there was no struggle. Other than the house mortgage at the time there were no other loans. To us this is just common sense.

We are in awe of another couple we know - I've mentioned them here before - he's a carpenter, she just retired as a math teacher (of all occupations!) - and they are over $500K in debt! These are people who I will have zero sympathy for when they're out on the street.
__________________

__________________
I heard the call to do nothing. So I answered it.
Walt34 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 02-24-2008, 05:05 PM   #22
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,450
Quote:
Originally Posted by laurencewill View Post

I think people need to take responsibility for their own actions, but at the same time, there is something criminal about how HELOC's are sold to people. "Unlock that equity in your home!" "You deserve it!" as if it's a special bank account with free money rather than a secured loan.
I agree that HELOC are promoted as free money. On the other hand virtually every product in the USA from Apple Computers to cubic Zirconia is marketed aggressively. By the time somebody is old enough to have children they better have figured out that they don't need everything they see advertised.

Sadly the alternatively to not cutting off home equity lines is make all American pay for bad loans, via either direct taxpayer bailout or indirectly via higher banking fees.
__________________

__________________
clifp is offline   Reply With Quote
Old 02-24-2008, 10:28 PM   #23
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Laurel, MD
Posts: 2,946
You guys are going waay overboard criticizing these folks and thier lifestyle and making all sorts of assumptions. If only we knew the details of thier situation, perhaps they have made lousy choices which we could legitimately criticize...if we knew. A half-million dollar home is not a big deal in howard county which is right up the road from me. Childcare costs can easily run 50/day/child...they have FOUR kids ranging from 4 to 8 yrs. The only point that can be taken from this story goes to the risk of using HELOC as an emergency fund which is a seperate thread. I am very curious about the lender making a loan and 4 months later deciding the property value has dropped 16% when the actual sales figures for this area indicate no more than 5-8% decline which is YOY, not from when they applied.Yeah, I know they can do whatever they want, but I don't like the process.

Newguy...outstanding! Congratulations!........... Rutgers?
__________________
jazz4cash is offline   Reply With Quote
Old 02-25-2008, 01:06 AM   #24
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,450
Quote:
Originally Posted by jazz4cash View Post
You guys are going waay overboard criticizing these folks and thier lifestyle and making all sorts of assumptions. If only we knew the details of thier situation, perhaps they have made lousy choices which we could legitimately criticize...if we knew.
Clearly we don't know all of the details, but judging from what we do know they are living above their means.

1. They are not kids; Judging by the picture Nancy Corazzi is in her 30s if not early 40s.
2. Even with two jobs they were still running into debt hence the original HELCO to consolidate debt.
3. Faced with a likely loss of income their first instinct to get a bigger line of credit.
4. Nancy no longer has salaried job but still thinks it is a necessary to send the twins to pre school. Sorry mom, if you aren't working and hubby can't make enough to support the family, you cut expense by keeping the little ones at home.
__________________
clifp is offline   Reply With Quote
Old 02-25-2008, 03:43 AM   #25
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2007
Posts: 5,072
Quote:
Originally Posted by jazz4cash View Post
You guys are going waay overboard criticizing these folks and thier lifestyle and making all sorts of assumptions. If only we knew the details of thier situation, perhaps they have made lousy choices which we could legitimately criticize...if we knew. A half-million dollar home is not a big deal in howard county which is right up the road from me. Childcare costs can easily run 50/day/child...they have FOUR kids ranging from 4 to 8 yrs. ...

You could be right on the criticism. But something seems a bit off. If they have to rely on a HELOC to finance their ongoing needs, then maybe a mortgage on a $500k house is too much for them. The lender (i.e., investors) is unwilling to loan on the house and put the loan upside down (that's is the way it appears). If the woman is upset, one would conclude that they have no other liquid resources or they would go for plan B. Something seems off. Do you think they have a 6 month emergency fund they can tap into?

The article is just showing how the spenders out there have been spending the equity growth of their homes and that has ended for now.

This sounds like another "house poor" middle class family living paycheck to paycheck. If their cash flow is interrupted, they are probably in trouble. And it looks like a source of their cashflow just got interrupted.
__________________
chinaco is offline   Reply With Quote
Old 02-25-2008, 10:49 AM   #26
Full time employment: Posting here.
Sandy's Avatar
 
Join Date: Dec 2006
Location: Florida
Posts: 855
Had twins in daycare and preschool - it was about $1000/month as i recall about 10 years ago (pick age 2). Went through a couple of tough spots. First, when DH was unemployed, while we had a mortgage, alimony, and preschool - together equal to about 3 mortages. We didn't take the kids out of daycare when DH was unemployed because you loose your place - and wouldn't be able to get back in. There are few quality places (or even good enough that you would want to leave your dog), so if you expect to return to the workforce, daycare is just an ongoing fix expense.

When we first moved to Tallahassee, while both working we had old mortgage, alimony, daycare, and rent (now we were up to the equivalent of 4 mortages on 2 state salaries)

Nevetheless, we trudged on, met our obligations and didn't go into additional debt - used that ole emergency fund as a bridge - that is what it's for.
__________________
I would not have anyone adopt my mode of living...but I would have each one be very careful to find out and pursue his own way, and not his father's or his mother's or his neighbor's instead. Thoreau, Walden
Sandy is offline   Reply With Quote
Old 02-25-2008, 10:53 AM   #27
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Laurel, MD
Posts: 2,946
I won't defend the couple's actions as we don't know any details, but obviously they're not optimal. I will say the feedback in the Wash Post was much much more harsh than what was posted here!

I just believe that if lender accepts an appraisal in Oct of '07 of $560k on thier home and four months later they decide NO!.....it's only $469k, it's not right. Maybe lender uses Zillow for appraisal info. It's not like the loan was extended at the height of the bubble. What if it was a loan for the max LTV instead of a HELOC.....would they call the loan?
__________________
jazz4cash is offline   Reply With Quote
Old 02-25-2008, 11:19 AM   #28
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by Sandy View Post
Had twins in daycare and preschool - it was about $1000/month as i recall about 10 years ago (pick age 2). Went through a couple of tough spots. First, when DH was unemployed, while we had a mortgage, alimony, and preschool - together equal to about 3 mortages. We didn't take the kids out of daycare when DH was unemployed because you loose your place - and wouldn't be able to get back in. There are few quality places (or even good enough that you would want to leave your dog), so if you expect to return to the workforce, daycare is just an ongoing fix expense.
I agree 100%, we had a similar issue when DW got let go due to an overzealous boss, was burned out anyway, and took 12 months to find the right job. Luckily, we had savings and LBYM to get us through.

Many, many other folks in our circumstance would take out a HELOC or something..........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 02-25-2008, 12:36 PM   #29
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
For me, the real bottom line is that lending institutions should be using much more conservative criteria in determining the size and terms of loans folks "qualify" for. So conservative that even 10% - 20% swings in appraised value of a home don't cause the lender to change the terms of the loan.

My hope in the current lending crisis was that the government would allow lending institututions to suffer enough before any bailouts that the lending institution management would regret the day they were born. Apparently not going to happen, at least not to the extent I would have liked. Somehow the big bux guys at the top of the food chain always seem to dodge the bullet.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 02-25-2008, 01:31 PM   #30
Thinks s/he gets paid by the post
Jay_Gatsby's Avatar
 
Join Date: Oct 2004
Posts: 1,719
I don't see any problem with lenders yanking HELOCs before they can be exploited if there is a legitimate basis for believing that house values in a particular area are on the decline. It's only good lending discipline. Would anyone here prefer the opposite, namely, loose lending that puts the bank at risk? Why should the bank be the one to tolerate the risk, especially if doing so funds a lifestyle choice that might preclude the borrower from ever paying it back?

In previous times, HELOCs could be used for home improvements or other expenses where there were assets that could be levied upon for repayment. In other words, there were more restrictions on their use. True, banks shouldn't be in the business of approving how people spend money -- but only if it is THEIR money. Until the bank actually loans the money, it is the bank's money, and the bank has a right to make sure it can be repaid.
__________________
He had one of those rare smiles with a quality of eternal reassurance in it . . . It faced, or seemed to face, the whole external world for an instant and then concentrated on you with an irresistible prejudice in your favor. -- The Great Gatsby, F. Scott Fitzgerald
Jay_Gatsby is offline   Reply With Quote
Old 02-25-2008, 02:53 PM   #31
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by Jay_Gatsby View Post
I don't see any problem with lenders yanking HELOCs before they can be exploited if there is a legitimate basis for believing that house values in a particular area are on the decline. It's only good lending discipline. Would anyone here prefer the opposite, namely, loose lending that puts the bank at risk? Why should the bank be the one to tolerate the risk, especially if doing so funds a lifestyle choice that might preclude the borrower from ever paying it back?

In previous times, HELOCs could be used for home improvements or other expenses where there were assets that could be levied upon for repayment. In other words, there were more restrictions on their use. True, banks shouldn't be in the business of approving how people spend money -- but only if it is THEIR money. Until the bank actually loans the money, it is the bank's money, and the bank has a right to make sure it can be repaid.
I disagree, I think once the customer has been APPROVED for the loan, why yank it because market conditions have changed? Regardless of the "abuse" we are debating, how has the lender been "wronged"? they still got extra interest, and if things go really haywire, they still have a secured loan

I think unsecured debt is more risky than secured debt, but that's just me........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 02-25-2008, 03:00 PM   #32
Thinks s/he gets paid by the post
 
Join Date: Jan 2008
Posts: 2,020
Quote:
Originally Posted by FinanceDude View Post
I disagree, I think once the customer has been APPROVED for the loan, why yank it because market conditions have changed? Regardless of the "abuse" we are debating, how has the lender been "wronged"? they still got extra interest, and if things go really haywire, they still have a secured loan

I think unsecured debt is more risky than secured debt, but that's just me........
do they still have a secured loan? If you're the second lender, doesn't the primary lender have first rights? If someone has an 80/20 on a $200k house and the house value drops to $160k, then wouldn't the second lien holder, for all practical purposes, be stuck with an "unsecured" loan?

I'm not arguing that the lender has been wronged... obviously, they're accounting for the additional risk with higher rates pegged to higher LTVs (at least, with the HELOCs I've seen). But, given the borrower behaviors we've seen posted in stories here, it might seem the lender is a bit worried about walk-aways and higher-than-anticipated defaults.
__________________
Marquette is offline   Reply With Quote
Old 02-25-2008, 03:32 PM   #33
Full time employment: Posting here.
 
Join Date: Feb 2007
Posts: 595
Quote:
Originally Posted by chinaco View Post
How is it that some manage to live within their means and others do not? Some people have to learn the lesson the hard way. Welcome to reality lady!
Well said chinaco!!! Some of us choose to live under the laws of reality, while others try to cheat. Sooner or later when you live a dilusional lifestyle, reality WILL come back to bite you.
I guess this is the banks answer to the so called "jingle mail". Where people were simply mailing in thier house keys to the bank and walking away. So now the banks are retracting their offer of credit instead. I wonder how long it will be until someone trys to sue a bank for not offering them anymore credit, while at the same time mailing back their keys to the same bank because they cannot pay.
__________________

__________________
armor99 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
"Two lines in the signature" doesn't equal two lines. Nords Forum Admin 4 02-09-2008 06:20 PM
Health Insurance / Picket Lines CuppaJoe Health and Early Retirement 2 09-26-2007 03:40 PM
Taking your will across state lines Olav23 FIRE and Money 4 04-18-2007 10:08 AM
banks and credit lines, so0000 sneaky mathjak107 FIRE and Money 4 10-13-2006 06:21 AM
Soup Lines Ahead? Bill Gross Speaks haha FIRE and Money 45 09-05-2006 07:19 PM

 

 
All times are GMT -6. The time now is 05:20 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.