Forum Post: Personal Responsibility and Living Within Your Means.
Posted 13 years ago on Oct. 15, 2011, 11:07 a.m. EST by USAFCCT
(80)
This content is user submitted and not an official statement
So here is a little story about my house and the acquisition of it.
In 2006 my wife and I were ready to buy a home and grow our family. We looked at homes for months and came to one conclusion; They were way too expensive. We looked at the house we are in now (By chance) and it was priced at $248,000. This is a 1500 sqf 3 bedroom house. My wife and I just looked at the price, monthly payment, AND total debt we would be taking on and came to the conclusion that the homes were too damn expensive.
Could we have made the monthly payments? Yes. Did the lenders offer all kinds of no-money-down options? Yes Did we buy the home? NO!
So we waited. We waited for 4 years in total. Something told me that if the price of average homes was so high and wages were not increasing at the same rate, then the housing market would have to stabilize at some point and we would buy then. We it didn’t just stabilize; it crashed. Now you can blame the bankers as they do have some fault. But if you do blame them, you must also blame the ones who signed for a house they truly could not afford. The ones that did not really look at their means and try to live within them.
My wife and I don’t make a ton of money as I am a disabled Vet and will never be rich. But we are smarts with our money. We own old “out dated” flip phones that don’t do Internet (She is 29 and I am 31 so our peers don’t get why we don’t have i-phones). We have one TV; and we rarely eat out. But we do have a home and the one that was valued at $248K was priced at $80,500 when we bought it. Our monthly payments are such that we pay less than we did in our apartment and we make double payments monthly. We have no credit cards and her car is 90% paid off. We own my truck free and clear and set 10% of everything we make into a savings fund. We are totally happy living a modest lifestyle now so that we can live continues this modest lifestyle in our retirement years. We do not want to live fast and hard now and spend ourselves into debt, just to be trapped by social security when we are older or worse; work till we die.
On a side note: My dad was in prison while I was growing up and my mother lived off food stamps and her small paycheck. I never went to college and have never been given anything I didn’t earn. But I don’t need to be a 1%’er to be able to take personal responsibility and be accountable to my family for my actions.
American's as a whole have been living above their means for some time now and a lot of people got caught in the trap. The only way to get ahead and build a financial cushion is to live BELOW your means. Most American's buy the most expensive house and drive the most expensive car they can "afford." Truth is they can't afford either so they finance them and saddle themselves with massive debt (which is the "slavery" of our age). Many of my friends and coworkers have never leaned this - my friends are in the same position they were 10 years ago and my coworkers can't afford to retire.
Amen!
once a trooper always a trooper, i was an infantry lieutenant too, and i liked your story a lot
Thank you for your service brother!
good advice. the consumer lifestyle is also bad for the environment.
On an added note, smokeing costs as much or more then EATING, yet the majority of smokers in this country are of low income status (according to Obama that is).
You are all RICH Americans, yet you pretend that you are poor. Stop comparing yourself to your neighbor, your friends, or the big wigs on Wall Street. Start believing you are rich, and living like it. Stop sulking and throwing your money away.
Don't be jealous of others who are successful. You are promised Life, Liberty, and the pursuit of Happiness in this country. Everything else has to be earned. Stop expecting a high standard of living without taking the risks that business owners and shareholders take.
I think you misread the point of the story. I don't want to be rich. I was advocating personal responsibility. I am certainly not jealous of anyone. In fact I am very happy and content.
I'm on your side and agree with you thoughts.
You are unAmerican for living within your means and not gorging on credit. This is why our America is in its current recession.
most of you people don't understand what happened in the mortgage crisis
Thank u for your post ... People need to take responsibility for themselves
Amen brother!
You're story is very similar to mine, brother. I believe we 99% are just as much to blame as the targets of our anger. We keep ourselves drunk on entertainment and point the finger at everyone else for our own misfortunes. We need to readjust our values as a society before any real change will ever occur.
Amen brother! I could not have said it better.
Good for both of you....a great post in personal choice and responsible decision making..
Thank you.
Excellent post, however this idea of person responsibility over scapegoating and blaming others flys against most of the people here. You are an excellent example of what is right in the world. You say you will never be rich, I believe you already are. Moreso than most will ever be.
Thank you my friend.
Great post.
Edit: What I should have said is that I will never be fiscally rich. I am very rich when it comes to the love of my family and a wonderful wife.
Great story. I think there are two sides to the story; many average citizens did not act wisely before the economic bust and are now left with debt payments they can't afford. Now, they are attempting to transfer the blame to Wall Street.
On the other hand, Wall Street IS to blame for much of the recession/economic bust. They didn't force those underwater homeowners to sign their loans, but they 1) funded the mortgage lenders to provide these bad loans, 2) purchased mass quantities of these bad loans, 3) bundled these bad loans into securities and used complex math equations and large paychecks to convince the credit rating agencies to give them AAA ratings, 4) sliced up these securities made up of bad loans and created new securities, 5) sold all of these knowingly toxic securities to international investors, 6) made multi-billion dollar Credit Default Swap bets that these securities would fail, and then 7) begged the U.S. government for a multi-trillion dollar bailout when they lost all their money on these horrible securities, and credit default swaps, and derivatives. This last step, in particular, led to a credit crunch which nearly brought the global economy to a halt.
Yes, I agree, many average Americans acted foolish. Tsk tsk. But the most important point is that our domestic housing bubble would not have turned into an enormous global crisis had it not been for all the "creative financial activities" that Wall Street engaged in AFTER the bad loans were made.
How about, we would not have had a housing bubble if Barney Frank, Chris Dodd, and the Clinton administration didn't insist on making homes affordable to EVERYONE, which created the new sub-prime class. That led to influx of new buyers who previously did not qualify for a loan (for good reasons), and they drove up the the housing price. Wall Street is in the business of making money, so of course they had to get involved. So really, I think the anger should be directed at Congress.
The "ownership society" was not merely a Clinton/Frank/Dodd phenomenon. It was a George W. Bush/Alan Greenspan phenomenon, as well. In fact, much of the political establishment (both Democrats and Republicans) did what they could to pump up the housing market since it was a cash cow for all parties involved.
But I disagree with you that Congress is primarily at fault. The Wall Street chicanery was purely Wall Street-based. There was no federal mandate to securitize bad loans, then chop them up and securitize them again, then to take out trillions of dollars worth of derivatives on these securities, and then to sell these junk securities as AAA investments. That was Wall Street's doing.
The housing bubble would have caused a modest U.S. recession, but the fact that Wall Street pumped it up and leveraged it sky high led to a crippling global recession.
Many are at fault, but to merely point your finger at Frank, Dodd, and Clinton is willfully ignorant. It might feel good to blame it on "the other guys," but blame deserves to be spread far wider than those few individuals.
Look, this is the chicken or the egg debate. Securitization has existed since the 1980s, if not earlier. The credit default swap game is relatively new, and yes, that poured gasoline on the fire. But the flame is still caused by irresponsible lending/borrowing, which was made possible due to a federal mandate to loosen lending standards. There's blame to go around for everyone, it's just that Congress will never own up to it, and it's very self serving for them to blame it all on Wall Street.
Banks were more than willing to lend to anyone with a pulse during the 2000's. That's the way the game worked; lenders (like Countrywide) were paid for loans based on quantity, not quality. The big banks (like Citi and BoA) bought these loans off the lenders, bundled them, and pawned them off to international investors (after securing borderline fraudulent AAA ratings).
The more loans, the more money earned by mortgage lenders (for lending) and big banks (for securitization).
CRA didn't bankrupt this country, just plain, old-fashioned greed.
Yes greed, but EVERYONE was greedy, that's the distinction I'm trying to make.
I agree. Which is why it's frustrating when so many folks try to pin the blame almost solely on Dodd, Frank, and Clinton. I'm no fan of those individuals, but it's simply inaccurate to pretend that the Community Reinvestment Act and Dodd/Frank/Clinton were the epicenter of the crisis. That's both counterfactual and absurd.
Could you two please get over yourselves. It has happened. So, lets fix the problem instead of going back and forth on who's fault it was!
I totally agree that blame is shared by all. Even the government that sued the banks to force them into risky lending shoulders much of the blame.
Great post my friend.
It's a humorous indictment of humanity: when the Magical Money Machine is turned on and everyone (Wall Street, average citizens, politicians) think they can get money for nothing, then everyone crowds around the Magical Money Machine until it malfunctions and explodes in everyone's face.
Then they all blame each other and try to build a new Magical Money Machine.
I enjoyed your story my friend. I too have elevated myself from the pit and earn what most would have to attend 8 years of college to earn. But don't be fooled. The system we live in only works when highly repeat highly regulated. If you have ever played the game of monopoly you know what happens at the end of the game. The wealth always ends up in the hands of one. That is a simple way of making a point. Check it out: http://youtu.be/jpxcnQA_3qM
look for this in a new post, i would like to share with everyone.
" essentially because workers \let bygones-be-bygones".
I can tell that you are proud of your accomplishments. Rightly so!
However, many people are innocent victims of Wall Street atrocities.
Many people were fraudulantly coerced into bad loans by unscrupulous criminal mortgage originators. And Wall Streets greed drove these criminal endeavors of creating bad loans. Then they proceeded to make untold billions of dollars by committing more fraud as they re-sold the bad loans as AAA investments. Now we all suffer the consequences of their criminal greed.
We have to ask ourselves, how could this happen? And where is the justice? In what world is this ok?
Without freedom you cannot live within your means. 99% of GOOD people will live in complete harmony with others in an environment of true freedom. SO long at the world is violently dominated this can never happen.
Your like a guy wandering around a theater looking to buy produce. In short USAFCCT you're lost. I am sorry I don't mean that as a slam everyone who relys on televisin, radio, and newspaper is being fed the same lyes as you and most peopl like yourself believe they know what is going on based on the corporate media garbage. Not your fault you should be able to trust the media to deliver the truth but now that you no you can't turn it off and do some research. This movement is about the corruption in Wallstreet, Washington, corporate media, and the banking industry. I would love to set here and type for hours supplying you with an all the info you need . Unfortunatly I can tell by your post you don't know what the housing/lending crash was about it was about Default swaps, selling receivables, The bankers use a lot of synanyms to confuse you but if you learn about Futures, bundeling and selling recievables You can start to put together what happened. Also go to Youtube and watch Money Masters 3 hours long but well worth your time. If it is not still there just google the name it is a great documentury.Look into how corporate CEOs, move in and out of leading positions in the government agencies charged with regulating the very companies those CEOs lead. You can get netflix they have a section of "Watch Now" in it look up documenteries and you will find many documenteries on the subject. Congress passed a law leaving themselves exempt from any laws governing insider trading. So insider secrets are also passed to them as a form of payoff. Then they use that info to make millions in the stock market. You will want to thank me when you finish your research. But for now you are horribly misinformed.
USAFCCT is lost ??
Well tell us JeffCallahan, how is life going for you?
Actually I am very informed. I just simplified the problem. I also put the fault on those that signed on the dotted line. It is after all their fault. Many here don't like personal responsibility. It is tragic that we have the hippie mentality back of "It’s all someone else’s fault just give me mine". I have not heard one person here take responsibility for their actions. They act as though they were forced to buying a home, running up huge dept, and then not paying it off.
As for what this site or OWS is about...There is no real clear list of demands, wishes, or wants’. Trust me I was trying to get behind this movement but all I found was hate speech and no real direction or leadership. Not to mention all the misinformation that is being spread around.
After all this was just my story I wrote here. I cast no judgment in telling what I did.
What about the fact that wages have actually decreased over the past decade. So, people who bought homes they thought they would "grow" into ended up in over their heads especially when the values of these same homes crashed. Our consumerist society is a huge problem but corporate greed that keeps profits for executives and stockholders while barely paying a living wage to the majority of employees (hence the 47% who don't pay income tax) is a problem.
Can you tell me why someone who buys a home they can't afford today, with the hopes that they will get a raise soon and then be able to afford it; is not the biggest part of that problem? After all they never could have afforded it to begin with. Yes the banks should not have lent them the money and it is true the Gov (Obama) should not have sued the bank to force them to lend to these people. But it all really comes down to people signing on the dotted line.
No it didn't come down to the people signing on the dotted line. I wish I could find a tactful way to write this, and if we were talking I could through voice inflection convey to you that I am not trying to offend you and I assure you II am not. However, you are woefully under informed on the subject and should not be posting or debating until you do some research. But for the time being your making your self look stupid. Again, I am not trying to offend you you just lack the knowledge necessary to discuss this topic.
Okay fair enough. Let me ask you this: If consumers did their due diligence and came the conclusion they could not afford a 300k home so they didn’t purchase one. Would the housing bubble have popped? Or would the prices slowly fell until the homes became more affordable?
your wasting my time and doing yourself a huge disservice your are trying teach me something about a subject that I have an incredibly comprehensive understanding of. I can see you want to ask me closed ended shallow question to satisfy yourself that's sad.
Well then I'll take that as you see my point and begrudgingly agree.
Have a good day.
No, what I mean to say is that you are trying to satisfy yourself by asking shallow closed ended questions. You want to get in a "shot" in order to satisfy your personal need to feel like you know what you are talking about but you do not. You're wrong, and you're uninformed You do not have a valid point and if you take the time to get an education on the subject you will realize that. I don't mean to be harsh but you seem to be pretty hard headed. Running into someone like me who can point you in the right direction can be met with acceptance or with resistance. One way you grow and become smarter and the other way you plod along displaying your ignorance anytime you discuss the subject. Please for everyone's sake take the smarter route our country already has more than it's share of the later thanks to television news.
I am all for educating myself further. But remember I am not attacking you and I did not post to you first so I would argue that you are trying to make yourself feel better. What you are doing is basically putting your fingers in your ears and shouting "I am smarter than you about this" and not listening to any of the points I raise or the questions I ask.
I don't think too many people are buying homes today that they can't afford. Most of the people who are in trouble bought their homes years ago when wages were rising and home prices were increasing. They did not foresee the wage stagnation and actual decrease in wages that has crept up in the last decade. To be honest, I don't think the bankers or Wall Street folks did either. Nobody saw this all coming, except for maybe Ron Paul! The one big problem though, is greed. I stayed home to raise my kids and returned to work for over a year as a "temp" for a Fortune 100 company. I did a better job than the employees I sat next to. I was more qualified than the employees I sat next to. But, I had no sick pay, no vacation pay, no 401(k), no pension, no health benefits, no life insurance, no dental insurance, no disability, and I made a lower hourly wage. When one day I discovered that there were actually "temps" at this place for 10 years! I quit. It was so unfair. But, I'm sure the executives at the top enjoy the profits they get to keep by cheating these people. Sorry, but it always goes back to the fairness thing.
Well to be fair I didn’t mean today as in 10/15/2011. I meant today as in the day they bought it and could not afford it.
Yes, houses were over-priced in 2006. When you have low interests rates and such a huge market demand to create the wave, prices rise. It's basic supply and demand. If you look back in the 80's when interests rates were 11 to 14%, houses were way cheaper.
As for a house that went from $248,000 to $80, 500? My guess is that you capitalized on a foreclosed house. It's a dog eat dog world out there and you benefited from another's losses.
As for your outdated phones, one television, paid off truck, etc. is a personal agenda to reaching ownership of a house four years later? It just goes to prove how wages/salaries do not accommodate to today's cost of living.
Your story is a good story but you should not so easily think the rest of the world was greedy, selfish individuals controlled by the so called "keeping up with the Jone's" mentality.
Congrats on your home and enjoy the pride you so freely have demonstrated to us.
I place no blame on others nor do I judge them. I just see my peers who have new expensive cars, phones, and homes that they can't really afford. I am not sure why they do it, but they do. Simple fact is they spend more than they earn. This will lead to collapse at some point.
Yes my home was a foreclosure. I was lucky though, because the bank and previous owner took care of the house. It was in great shape when we purchased it.
The American dream is different to everyone. There is no cookie cutter dream that fits everyone. I never grew up in a house so it was vitally important to me to provide a stable home for my children. Part of that was buying a house. I value that above other things. Some value always having a new car, or maybe being the first to own the latest i-phone. Either way, you can have the American dream; I just advocate personal responsibility above all else.
Great post. We don't all have to agree, but as long as we are civil to each other in our disagreements; we will actually get something done. I commend you on your civility.
http://www.youtube.com/watch?v=reazEr_AIBk
Did you know:
After adjusting for inflation, average hourly earnings haven't increased in 50 years?
Wages as a percent of the economy have dropped to an all-time low?
Three years after the financial crisis, the unemployment rate is STILL at the highest level it's been since the Great Depression? The 9% equates to 14 million people who want to work but cannot find jobs. Include people working part-time who want to work full-time, plus some people who haven't looked for a job in a while, and unemployment's at 17%. This is the lowest percentage of Americans WITH jobs since the early 1980s.
Labor participation levels have plummeted because jobs are scarce and people have stopped looking?
A RECORD number of people have been unemployed for more than six months?
The median duration of all unemployment (not just construction workers) is near an all-time high?
Having said that, do you further know:
Corporate profits just hit another all-time high? Corporate profits as a percent of the economy are near a record all-time high. With the exception of a brief period in 2007 (just before the crash), profits are higher than they've been since the 1950s. And they are VASTLY higher than they've been for most of the intervening half-century.
CEO pay is now 350X the average worker's, up from 50X from 1960-1985?
CEO pay has skyrocketed 300% since 1990? Corporate profits have doubled? Average "production worker" pay has increased 4%? The minimum wage has dropped?
Few people would have a problem with inequality if the American Dream were still fully intact—if it were possible to work your way into that top 1%? ;that social mobility in this country is also near an all-time low?
The aggregate tax rate for the top 1% is lower than for the next 9%—and not much higher than it is for pretty much everyone else?
Even though we were all told that we had to bail out the banks so that the banks could keep lending to American businesses and that without that lending society would collapse, bank lending dropped sharply, and it has yet to recover?
That instead of lending to help the economy, banks have been lending money to America's government by buying risk-free Treasury bonds and other government-guaranteed securities? And they're collecting interest on money they are NOT lending—the "excess reserves" they have at the Fed. Back in the financial crisis, the Fed decided to help bail out the banks by paying them interest on this money that they're not lending. And they're happily still collecting it.
The banks are able to borrow money FOR FREE because the Fed has slashed rates to basically zero? And the banks have slashed the rates they pay on deposits to basically zero? So they can have all the money they want—for nearly free?
When you can borrow money for nothing, and lend it back to the government risk-free for a few percentage points, you can COIN MONEY? And the banks are doing that. According to IRA, the "net interest margin" made by US banks in the first six months of this year is $211 Billion. And it has helped generate near-record financial sector profits—while the rest of the country struggles with its 9% unemployment rate.
I would say most people aren't against some people doing better than others. I think most people simply want to stop losing ground; to stop seeing their wages stagnant or drop; to stop seeing opportunity that once existed suddenly disappear. Pretty simple.
This is not surprising nor does it mean anything. Productivity/automation has increased, thus a higher proportion of the economy comes from higher value enterprises, reducing the relative value wages.
Thats because we went into a recession.
Thats what happens when you have 99 weeks of unemployment. If that wasn't an option I'm sure more people would be willing to seek out any job (rather than being picky). As more people take jobs, it decreases the labor pool driving up wages and increasing spending.
99 weeks of unemployment might contribute to this..
See previous two answers.
Citation? The only way I can see this as true is if you look ONLY at hourly wage workers and do not include salaried people (ie: people who get paid the same amount per year regardless if they worked 30 hours or 90). Alternatively, this may be true if you looked at MEDIAN salary...
Bureau of Labor Statistics - "Current Employment Statistics"
Care to be alittle more specific?
Thats like me saying "The world is flat" - the internet
Corporate profits at an all time high and banks coining money??
If so how do you explain the bank stock prices being in the toilet?
Great cut and paste. With that said; if we all lived within our means the market would be forced to stabilize and become more equal. That is simple economics. If we continue to spend, spend, spend, then we will drive the prices so high that it will price commodities out of our reach and end in a collapse. The economic "balloon" is inflated by those that spend more than they make on a regular basis.
Exactly why we need to torpedo the banks and lenders. Stop paying your bills. We have the power! Let's take these bastards down!
"Great cut and paste."
And your point is?
Of course, this is only anecdotal, but my wife and I have always lived below our means - never been in debt (except our mortgage) and have our home almost paid off. However, because we are forced to compete with third-world labor that can live nicely on a small fraction of what we can, we have both seen our incomes drop like a stone (despite having graduate degrees in a field where jobs used to be referred to as the "jobs of tomorrow"). Corporations are exploiting globalization, and Americans are the losers. And when we are forced to live within our means, those means become smaller and smaller until we, too, are third-world status.
The problem is NOT because people "spend, spend, spend". The problem exists DESPITE the people who "spend, spend, spend".
Yes, commodity prices had a run-up (but have since come down), but contrary to what you would have people believe, the run-up was due to investor speculation on emerging markets, not because people in the US "spend, spend, spend'.
Like you said, simple economics.
The point was this was not your thought. Just a cut and paste or read and regurgitate if you prefer. How is investor speculation done? By looking at past and current spending trends and predicting a rise or fall of the mean line for the previous quarter. If we all spent less than the mark up would have been less. It could never rise too far above the mean line. But if the mean line raises every quarter and the investor speculation is adjusting higher every quarter; then of course cost will steadily rise. But the fact is that consumers set the mean line that investors use to speculate.
Everything is consumer driven. Always has been. If consumers stop spending above the mean line then the speculators will be forced to adjust.
"The point was this was not your thought. Just a cut and paste or read and regurgitate if you prefer."
Not my thought? They were thoughts I read and agreed with. So what exactly is wrong with me sharing it? I think you're grasping. But it seems to give you some bazaar satisfaction in knowing I copied and pasted some things that I understand to be facts and that I agree with. Whatever floats your boat.
"If we all spent less than the mark up would have been less".
If we all spent less than the unemployment rate would be quite a bit higher than it currently is. If we all spent less, corps wouldn't make as much profit as they're currently making and would use that to argue that they need to cut costs further by laying off more Americans and sending more of the work offshore, never to return.
Simple economics.
You claim that people lived beyond their means. But what you don't admit to is:
People started in the 80's seeing their incomes not being able to keep up their standard of living that they had up until that point. To make up for it, women flooded into the workforce, making their households a double-income household. Prior to the 80s, one earner was sufficient to maintain a certain standard of living. That's no longer the case and hasn't been for at least 30 years. My father was an immigrant who was able to support our family of four in the 60s and 70s on just his income that he made as a hair stylist with a sixth-grade education. If he were to try that now, we'd be homeless.
People started in the 90's/early 2000s seeing their double-income household was starting to not be able to keep their standard of living. To make up for it, they took on debt.
Now that people took on too much debt, people are taking to the street, demanding that their incomes STOP FALLING so that they could at LEAST keep their standard of living and maybe say that they're doing better than their parents did.
We had a healthy consumer base post WW II up until the 80s. People spent. But during that period, peoples' incomes and standard of living went up (one-income families). Since the 80s, peoples' incomes stopped going up and started declining. That may be OK with you, but it isn't OK with a lot of others, whether I copy and paste it here or not.
The problem with cut and paste is that you rarely fact check. Most just assume that someone else has done the leg work. You just form an irrational bond to the ideas posted by another and take them as your own. If you were agree with an opinion and then state it as someone else’s, then you should give them credit for it. Otherwise it is a form of plagiarism.
If you are stating facts of others then you should really make sure what they say are truths, and not facts as they see them. Otherwise you are just a sheep and part of the problem.
"If you were agree with an opinion and then state it as someone else’s, then you should give them credit for it."
The bullet points that I have shared here are facts of no one. They are facts. If you don't agree that they're facts, you're free to poke holes through them.
Now - do you have ANY point to make on the other things I've said? Care to prove them wrong? Or do you insist on just harping on this copy-paste thing?
The points of others that you have pasted here are not indicative of the real problem here. But I will take a crack at a few points I think might be your own words: -"If we all spent less than the unemployment rate would be quite a bit higher than it currently is. If we all spent less, corps wouldn't make as much profit as they're currently making and would use that to argue that they need to cut costs further by laying off more Americans and sending more of the work offshore, never to return"
This is flawed, as if you spend more then you have and so does everyone else for long enough then eventually you run out of credit and people will start defaulting and poof! It all collapses. It already happened.