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Old 11-17-2011, 08:12 AM   #61
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That IS a scary story. How to break into the financial business-just show up.
It wasn't even Ameriprise..it was Fidelity. I bet it is harder to get a pizza delivery job-you have to have a clean driving record and be able to make change.
You would be amazed at the things that happen..........
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Old 11-17-2011, 08:33 AM   #62
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That IS a scary story. How to break into the financial business-just show up.
It wasn't even Ameriprise..it was Fidelity. I bet it is harder to get a pizza delivery job-you have to have a clean driving record and be able to make change.
After a layoff in the late 90s, I thought about switching careers to the financial services industry. Went to Ameriprise, and a couple of insurance companies. They would "train" you to get certain licenses and such, but it mostly seemed like they want whole-life and annuity salespeople; not much mention of other instruments...

"Here, fill out this form of 100 people you know that we can badger relentlessly to buy insurance."
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Old 11-17-2011, 08:32 PM   #63
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This is getting humorous, folks on here get mad if they hear Fidelity hires inexperienced folks? What do you think a Fido call center guy makes, $50K a year??
Financedude, I've been "out of pocket" for a few days and just reading your post. I didn't want to come across as "mad" for sure. The modicon I used expressed sarcasm but not anger. I have no idea what folks make at Fidelity but I have faith in human beings who are tasked with hiring personnel to represent their companies and I still think that there are certain minimum requirements set up prior to hiring someone for a job.
Now I still think that this guy is nothing more than a "con" and he's a pretty good one apparently.
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Old 11-19-2011, 09:53 PM   #64
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I rarely buy books - I use the library. But I wouldn't waste my time checking it out at the library to read it. Unfortunately the people that can least afford to spend the money will buy his book because it will reasonate with them. I still believe your house is your home, not a financial investment (unless you want to risk living on the street (the part about looking in through the window at his family....oh please). The article really hit a nerve with me. I see him as an opportunist - I believe he is spinning his story to sell books)! Just my opinion.
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Old 06-06-2012, 01:59 PM   #65
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I'm bumping this thread for an awesome reason---a book report!

I know, I know, I said earlier that I'd never read anything this dumb guy wrote, after seeing how he handled his own finances, blah blah blah.

But, I stumbled onto it by accident, not realizing it was the same guy. And I LOVED it!

Mostly I liked the way he used the simple Sharpie drawings to explain, in very basic terms, why our behavior is such a huge part of our success or failure in investing. And why it is so hard not to be ruled by either fear or greed in making decisions.

I should also say that it isn't going to be an "AHA" moment kind of book for our very savvy forum members who have already figured a lot of this stuff out, but it is, I think, an outstanding but quick-reading book to recommend or hand out to folks who ask questions about how to deal with uncertainty in the market and the financial planning process.

Also, because he's a fee-only planner, he makes a good case for why some folks can be helped by a planner who keeps them on track with their goals, rather than reacting to the nightly news. That may be a turnoff for you, but you may not have seen first-hand what it is like to overcome that fear, or try to talk someone off the ledge who is experiencing it.

And I also like that the guy readily admits that he fell victim to the same kind of thinking when he bought too much house and let it go, that he now has a much better understanding of that fear and greed dilemma than someone who hadn't been in the frying pan himself.

Here's an example of his sharpie drawings I got from his website, Behavior Gap, talking about that book "the Secret". He also has a lot to say about what he terms the Economist smirk, which I may or may not be guilty of!
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File Type: jpg The-Secret1-591x455.jpg (36.1 KB, 31 views)
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Old 06-06-2012, 03:30 PM   #66
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Sorry Sarah but color me underwhelmed. There is a big difference between mildly amusing and useful.
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Old 06-06-2012, 03:49 PM   #67
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Sorry Sarah but color me underwhelmed. There is a big difference between mildly amusing and useful.
I used to be like that, too, Clif.
Now I'm happy just to enjoy a good read.
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Old 06-06-2012, 04:38 PM   #68
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I am a firm believer in a Universal Intelligence. I am still working on a close parking spot at the gym. I do think that if you don't ask/look for intentional goodness to come your way, you are messing out on stuff that just shows up. The Secret, not so much, A New Earth, by Tolle, watch out.
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Old 06-06-2012, 06:24 PM   #69
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A gallery of sketches is available here: The Sketchpad: Personal Finance on a Napkin - Interactive Feature - NYTimes.com
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Old 06-06-2012, 07:02 PM   #70
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I used to be like that, too, Clif.
Now I'm happy just to enjoy a good read.

That's only because you don't have a TV.
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Old 06-07-2012, 09:46 AM   #71
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I felt we could afford around $350,000. We called a real estate agent named Mitch, who had signs on all the bus stops: Talk to Mitch! He picked us up in a gold Jaguar, and suddenly we were looking at houses that listed at $500,000 or more.
It felt a little crazy to be shopping for houses that cost half a million dollars, but my income was growing rapidly. Everywhere I looked, people were being rewarded for buying as much house as they could possibly afford, and then some. There was this excitement in the air, almost like static. I started to think that if I didn’t buy a house right then, I would never be able to afford one.
I can certainly relate... luckily for me, the stability of my job market as well as our 'quick' learning lead us towards a much more manageable situation. We never lost our home and we're doing extremely well today...

DW and I were 21 and 22 at the time we signed the papers for our $518,000 house (well actually a townhouse) to be built between January-May 2005. We were both in school full time and going to graduate in May. House was going to close May 28th, and our wedding was set for June 3rd. I had a dozen job offers I was deciding between to start in mid June (all ranging between $57,000-$85,000). I had never made more than $9,000 a year myself up to that point.

We put down 5% (or $25,900) more then half of which was an early graduation gift from my grandparents. The rest came from savings I'd accumulated working internships over the previous 3 summers.

So there we were... two 'kids' (or adults I suppose technically) about to leave the college atmosphere and enter the real world. A family friend was representing us as our realtor and had convinced us that if we didn't purchase a house now we'd have to wait until our 30's to get in at a much higher price. I didn't know until years later that she received a 3% commission from the builder... I always thought she was working with us for free. I'd estimate she spent about a total of 10 hours of work (showing and paperwork) on us as clients... not a bad paycheck, about $1,800 an hour.

I asked all the right questions:
"How can we afford this when I don't even work yet?" ["stated income... duh"]
"What happens if I lost my job in a few months/years?" ["sell the house for a huge profit"]
"I noticed the housing market has skyrocketed recently, how can this possibly continue?" ["everyone needs a house and the housing market is always going up"]

We were introduced to the builders lender. If we used him, we got a free $15,000 on upgrades, nicer kitchen, hardwood floors, etc...).

"This is how it is done..."

"Just use the highest job offer you have... and make an assumption on how much your wife will be making"

"Everyone does it this way... if you don't you can't get a house"

"Call me in 6 months and we'll refinance you into a 30 year fixed... if you're really worried about the rate changing."

"You are approved for a 5:1 ARM up to $550,000... congrats!"

"Can I get a 30 year fixed instead?" ["not without paperwork showing your income and putting more down... which would be silly to do"]

Yep... we were told by the 'professional' that it was silly to put down more than 5% on a house.

It is easy to look back now and think how foolish I (a millions of others) were with housing at the time.

Luckily today we're still in the same house and still love the place as much as the day we purchased it. We've paid our mortgage down to $365,900 and the house is currently worth about $430,000 according to Zillow. We're in a 30 year fixed

Certainly would have been much easier and less stressful ways to get from then to now (we've paid $201,400 in interest alone over the last 7 years... most of the $126,000 in principle that was paid down was additional payments and brought to the table at refinancing). We sometimes wonder what situation we'd be in if we had rented the last 7 years and saved on the side... how much we'd afford today. Oh well...

luckily we came out on the right side of this one, and learned an incredible amount about our financial health while side stepping many landmines.

live and learn...
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Old 06-07-2012, 11:00 AM   #72
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...
I think the fundamental problem is the both laws and the attitudes of the banks and government officials have changed to encourage strategic default. In general I believe that when people stop paying their mortgage, they should either be forced into bankruptcy, or have so little assets and so little future income that are basically bankrupt. Instead Congress passed and then extended the law that changes the long standing rule that treats forgiven debt as income. Simply getting rid of that rule would discourage people from strategic default since they'd probably owe Uncle Sam 1/3 of the money.

...

Right now the financially sound thing to do for most people is to default and I don't thing morale lectures are working well. I don't see away out of this mess until we make our laws and actions align with encouraging people to pay their mortgage.
I agree. Many people put 100% of the fault on the borrower (using nasty words to describe them) while ignoring that the banks/lenders, as well as the rules in place that allow short sales and strategic defaults, deserve at least some of the blame (1%, 25%, 50%... you choose)

This reminds me of a lesson described in a great book called "Predictably Irrational"...

A daycare owner found that a handful of parents were continuously late in picking up their children by the 5:00 deadline (traffic, meeting, forgot, etc... always a different excuse). This was causing a headache for him and trouble in keeping staff. He had to pay them more and they were unhappy about waiting around for parents "breaking the rules"

The owner decided to implement a penalty fee for parents who came late to pick up their kids. He charged $20 per hour to help offset the additional pay his staff of two would receive that were waiting on them. What he found was that the number of parents arriving late increased...

The parents who were never late on principle, morals, what have you, now had a fall back to justify their tardiness. The cost of being late was now quantified into a $20 fee you could choose to make...

IMO, this is the problem with the short sales and strategic defaults... more so than the people making them. When you put a price on something, or a penalty, you are giving a person a reason to justify and calculate in their head why it makes sense to do... to wash their hands of the moral issues of it because they are "paying the price" after all.

Forcing people to declare bankruptcy to get out of their legal contract with the banks would be a quick way to bring morals to the surface of the decision making process... since that black mark on ones record is much more difficult to shake.

Short Sales make sense financially to the banks... but they give some people a reason to walk away who could have struggled through it had the option not existed at all.
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Old 06-07-2012, 11:37 AM   #73
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Much of this makes no sense to me. We're still in a nice house we bought in 96 for 230k; paid cash. Income then $95k annual. Watched people who worked for me buying huge houses with big mortgages. House today worth probably $375 to $400k. Meanwhile, all the mortgage payments I didn't make went into 401 and 457 and other investments.

The mortgage scams made no sense at all to me...I remember last mortgage I got (1987?) I had to supply more evidence of income and assets, credit history, etc than you'd believe. And then, it was a 6 week wait while the "loan committee" deliberated as to whether I was worthy. With 20% down. In retrospect, that's the way it should have been and should be. The whole premise that every American should be able to own their own home? Um....I don't think so. Not from the financial behaviors I've observed.
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Old 06-07-2012, 12:11 PM   #74
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I agree. Many people put 100% of the fault on the borrower (using nasty words to describe them) while ignoring that the banks/lenders, as well as the rules in place that allow short sales and strategic defaults, deserve at least some of the blame (1%, 25%, 50%... you choose)

Looking at your last two posts is informative... and I do not think that most people is placing 100% blame on the borrower...

But let me throw out another thought on this... who made the final decision and signed the forms

IOW, if someone convinced you to jump off a high building, on the way down you can think to yourslef that you are not 100% to blame for jumping off.... but once you hit the pavement you are 100% dead...

Sometimes you have to think of the consequences of your actions because you will be 100% responsible no matter who or what got you there. That is one of the lessons that I keep trying to teach my kids...
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Old 06-07-2012, 01:05 PM   #75
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Looking at your last two posts is informative... and I do not think that most people is placing 100% blame on the borrower...

But let me throw out another thought on this... who made the final decision and signed the forms

Point made, but what we're talking about are two different things:
1) Why did a borrower get into the mess (who is to blame for the mortgage and borrowing);
2) Why did the borrower default, or choose to walk away (who is to blame for the bailouts and defaults);

Then vs. Now

The two are certainly linked but entirely different when it comes to analyzing the mess we're in as a country.

People who default, strategically or not, tend to blame everyone but themselves - or they take responsibility, but then go on to justify why/how they got to where they are: "It wasn't entirely my fault, and this is why." I'm sure some of that resides in my post above, despite the fact that we never defaulted or received bailouts for our situation. We stuck it out. From the outside looking in, it is easy to point to them and say "you signed the papers, you deal with this mess!" (#1 above)

What I'm trying to address is #2... As an investor and citizen, we should all be mad that these loans were created... mad that people signed for them... but IMO, more mad that the banks took unnecessary risk in lending the money (or that they were allowed to). After all... the people wouldn't be able to sign on the line if the banks weren't offering the ability to get the money. As evident from our society... when money is available people take it. Banks and regulation need to be held to a higher standard than people... after all, its the banks (and their investors) who lose when money is lent to an individual who is a high risk of default... and does.

No one here would loan their own money to someone at a high risk of default that didn't put anything down... and if they did, would you blame the 'thief' or blame the poster who took on the risk of lending the money? Humans will take advantage of situations that present themselves to improve their lives in the short term... investors prove this often with their foolish investing habits. So why are we going so easy on the banks/lenders... while attacking the individual borrowers so vigorously?

Because they are people... we can put ourselves in their shoes (or try to) and say "wow that was a bonehead decision, [I think] I never would have ever done that!"

What really gets to me are the bailouts that now exist to reward that bad behavior (banks and individuals both benefit from their poor decisions). My wife and I chose to pay a lot for the house we live in... and we made it work. Others weren't fortunate enough to be given the opportunity to make it work. I fully understand that one small change in our situation could have lead us to be in the pool of defaulters... and that is why I don't carry apathy their way pointing a finger in judgement.

Today we're being punished (relative to those receiving aid) because we refinanced on our own instead of modifying our mortgage... because we decided to stay in the house regardless of the fact that it was underwater (who cares, make the payment)... because we weren't backed by Freddie or Fannie and HARP wasn't available (tough luck)... because we stayed in our house while others walked away... because we were responsible and paid back our debt.

The policy is the problem... it is teaching (I mean allowing/encouraging) people to walk away when life gets tough. If you're a bank and you give out some bad loans... we'll take care of you. If you bought a house you couldn't afford and missed your payments... help is on the way.


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IOW, if someone convinced you to jump off a high building, on the way down you can think to yourslef that you are not 100% to blame for jumping off.... but once you hit the pavement you are 100% dead...
One might ask... why didn't the building have a wall to prevent the option to jump in the first place? Policies to prevent people from making suicidal financial decisions would protect both the borrowers and the banks/investors...

Seems what we have right now... are nets at the bottom of the building catching people who were advised to jump and made the decided to. "I noticed you made a horrible decision to jump... let me bail you out of that mess"

who are you really more mad at... the ones jumping (gonna die regardless), or the ones who caught them giving a second chance to make the same mistakes again?

Personally, I'm more mad at the system that allows this abuse... then I am at the people abusing it.

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Sometimes you have to think of the consequences of your actions because you will be 100% responsible no matter who or what got you there. That is one of the lessons that I keep trying to teach my kids...
That is a great lesson... and a very difficult one to teach. Too many parents today ignore it.
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Old 06-07-2012, 01:13 PM   #76
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Dang, and I stirred y'all all up again over this, when I just wanted a handy place to put my book review. That'll teach me!
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Old 06-07-2012, 01:18 PM   #77
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Dang, and I stirred y'all all up again over this, when I just wanted a handy place to put my book review. That'll teach me!
fwiw... I'll probably read the book based on your recommendation. Before I would have ignored it
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Old 06-07-2012, 01:41 PM   #78
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fwiw... I'll probably read the book based on your recommendation. Before I would have ignored it
Evr, thanks for the validation! I feel like I needed it today. You rock!
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Old 06-07-2012, 02:19 PM   #79
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Dang, and I stirred y'all all up again over this, when I just wanted a handy place to put my book review. That'll teach me!
You know how to have fun, Sarah. No guilt. We need little excuse to do some moralizing.

Ha
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Old 06-07-2012, 02:22 PM   #80
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Dang, and I stirred y'all all up again over this, when I just wanted a handy place to put my book review. That'll teach me!

Not stirred up at all.... just a small debate (at least for me)....
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