Sunday, March 1, 2009

Let me guess, He told you a house was an “Investment” and you “responsibly” believed him.

We have a saying that I am sure most of you know that starts out, “if you believe that, I have a bridge to sell you.” It is a cliché used to point out the most preposterous assumptions by the most naïve people. It usually gets rolled out when only the slightest amount of thought renders an ideal illogical.

So when the pimply faced ex-pizza delivery guy (because I am sure you checked out the credentials of this perfect stranger that all of the sudden had your best interest in his heart.) who turned into a loan agent told you this did you have him explain how? Did he explain that over the next 30 years, at your 7% rate, on a $100,000 loan you would pay $250,000 plus property tax, insurance, and maintenance costs? This was supposed to be an “investment”? How many times your net (bring home) yearly salary is that? When you finally paid it off, it might be worth $200,000, although historically it would be more like $150,000 and that wouldn’t even take into the rise in cost of living over the past 30 years. So how was this a “responsible decision”? Boy, wait till you get a grasp of how a credit card works.

An investment people should A) never cost more then the purchase price you paid for it. B) Should never be worth less then the price you paid for it. C) Should have the ability to cash out (with maybe some minor penalties) and get your “initial investment” back plus whatever you have earned off of it. And D) If you loose your job, it should be a source of last resort to provide food shelter or clothing for you and your family. You should not be in jeopardy of loosing it because you lost your income. The only thing way a house might be considered an “investment” is if you are planning on leaving the paid off asset to one or all of your kids.

I suppose that you believed him when he said, “borrow to the max now, everybody’s income eventually grows” as well? So you bought shares of a bridge, and now I have to pay for it. Exactly how is the free, fair and just? The biggest problem facing this country is not its economic woes. It is that a large enough portion of our community are not able to make rational responsible decision and are not able to accept blame. I hate GWB and believe he may have doomed this country to a bitter end. But I could never bring myself to believe he was responsible for a hurricane. Now, Cheney? He may have had that kind of influence, being the Anti-Christ and all.

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