Neighbors getting bailed out by the banks

[samclem]

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Originally Posted by bright eyed i also have friends who milk every benefit they can, and it is very discouraging. they even applied for free/reduced lunch when they make a decent income because the application uses last year's income and by the present her husband had started working and increased their income...luckily they were rejected. they've also gone to the chiropractor just because it was included as a benefit, not because they needed it, and on and on...

I've changed my position on these types of things. For example: the reduced price lunch for your friend's kids. Should they apply for it? In the past, I would have said 'no", since they have enough money to pay for the lunches, and it's probably true that they aren't the intended recipient of this government aid. I would have said that they were doing a good thing by not taking the money.

Now, I'm inclined to say 'take it. Take every penny that you qualify for." Why shouldn't they? They aren't taking the money/benefit fraudulently, since they are meeting al the requirements of the (dumb) rules. I take every tax deduction for which I qualify, right? The government doesn't ask me if I've got enough money to pay my taxes, or if the taxes will be an undue burden--they expect payment. By the same token, if there's a program designed to distribute funds under some stupid set of rules, every qualified individual should take full advantage of the situation. It's probably the best way to get this tax money back into the productive economy. And, these people should write to the newspaper and tell all their friends how they getting things for free. This is the best way to generate a little outrage and get things reigned in.

Now, if this were charity, that would be entirely different. Taking that without being in need is wrong and contemptible.

[armor99]

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Originally Posted by Hamlet Just wanted to make a clarification that 40% of Americans pay no "income tax" at all. Those 40% pay plenty of other taxes, between FICA, sales tax, property tax (even renters), gas tax, liquor tax, etc. We can argue about what their fair share is, but they aren't paying nothing.

Hmmm.. OK... let me think carefully about what you have said. You are agreeing that 40% pay no income tax. Then you go on to say that they pay sales type taxes on other things. I agree with you on those points. But.... these are the taxes that the other 60% of people are paying in addition to income tax. The point that I was trying to make, is that if people do not have a horse in the race (financially speaking), then most will not care about the situation one way or the other. Now if on the other hand we one day go to a flat tax system, then suddenly EVERYONE is concerned about taxes going up and down.... not just 60%. Are you implying that somehow I should be happy that at least they are paying these sales type taxes? I am not...

[bright eyed]

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Originally Posted by samclem I've changed my position on these types of things. For example: the reduced price lunch for your friend's kids. Should they apply for it? In the past, I would have said 'no", since they have enough money to pay for the lunches, and it's probably true that they aren't the intended recipient of this government aid. I would have said that they were doing a good thing by not taking the money. Now, I'm inclined to say 'take it. Take every penny that you qualify for." Why shouldn't they? They aren't taking the money/benefit fraudulently, since they are meeting al the requirements of the (dumb) rules. I take every tax deduction for which I qualify, right? The government doesn't ask me if I've got enough money to pay my taxes, or if the taxes will be an undue burden--they expect payment. By the same token, if there's a program designed to distribute funds under some stupid set of rules, every qualified individual should take full advantage of the situation. It's probably the best way to get this tax money back into the productive economy. And, these people should write to the newspaper and tell all their friends how they getting things for free. This is the best way to generate a little outrage and get things reigned in. Now, if this were charity, that would be entirely different. Taking that without being in need is wrong and contemptible.

I see your point - if we were talking tax deductions, we'd probably see much less of a problem of people milking whatever they could to squeeze it -

But once you compare to a charity I differ - as I've said before - many great charities get lots of state and federal dollars and I also wouldn't want to contribute to perception of waste for programs that do help people, even if some abuse the rules...

[cute fuzzy bunny]

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Steve Hawks, owner of RE/MAX Platinum real estate agency in Henderson, Nev., says he has been flooded with calls from people interested in "buying and bailing" -- that is, buying an additional house while their credit is still good, then walking away from the old one unless they can cut a favorable deal with the lender. So far the number of people who have done so appears to be small. But Hawks says banks are receptive to lending for such purchases because they figure the buyer will be able to afford the new, cheaper place. Also, says Hawks, they know that, since the buyer's credit will become damaged, he or she won't pull the same trick on them, at least for a few years.

Amazing how these financially naive people who got themselves into more house/loan than they can afford without realizing it can suddenly become so sophisticated.

Once again, making prudent and conservative financial decisions is trumped by doing whatever you feel like, let someone else eat the problems, nothing really bad happens and there are only nominal consequences, and you get to double up and do something else squirrely to get yourself out of it.

[CitricAcid]

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Originally Posted by cute fuzzy bunny Amazing how these financially naive people who got themselves into more house/loan than they can afford without realizing it can suddenly become so sophisticated. Once again, making prudent and conservative financial decisions is trumped by doing whatever you feel like, let someone else eat the problems, nothing really bad happens and there are only nominal consequences, and you get to double up and do something else squirrely to get yourself out of it.

You'd be surprised at the reaction of people to simple incentives and prices, as many are seeing now in the oil/gasoline market in America, as all the major American automobile manufacturers start cutting back their larger pickup truck and SUV production numbers. More to this point though is that the same people who got themselves into too much house/loan in the first place may not have been that irrational in the first place. They, like many on here in a different way, were a lot more risk-tolerant and with the almost historic lows in mortgage rates, with the boom occurring in the real estate market, it is almost hard to argue with these people into NOT leveraging themselves as much as possible. If most of these people got into their house in 2002, instead of 2005, they may find that they are still up substantially, but then again the ARM might adjust. It seems that people who are in the situation know best how and when to react to their particular financial problems. If it is between living in a nice house or getting yours foreclosed, I'd be surprised if most of us hadn't come up with that idea in the first place.

[cute fuzzy bunny]

Thing is, you can be as risk tolerant as you like providing you never have to suffer the consequences.

Its not risk if theres only reward.

[Nords]

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Originally Posted by cute fuzzy bunny Its not risk if theres only reward.

The best kind of risk!