Thread: Credit crisis

Income - Expenses = What I Can Afford

Not rocket science

Even if my income and expenses vary from month to month, who is more qualified to make the determination of what I can afford: myself or someone who is going to say "yes, of course you can afford it. Later on you'll be making more money and spending less, we promise. Now sign and get out of here"?

Originally Posted by thebigspendur

So you walk into a real estates agents office to buy a house and your not the college graduate type and you know nothing about real estate and the expert sits down with you and shows you with pen and paper how you can afford to buy this house. Maybe he tells you the mortgage is interest only or not even that or maybe he doesn't. All you know is this expert is showing you the path to home ownership. Maybe he tells you in 5 years you will have to refinance or move but look at the market going up and up and all the money ordinary folks are making. If the big shots on wall street can do it why shouldn't Joe Public be able to do the same. Or maybe your the real fiscal conservative living in California paying 2 grand a month for a 1 bedroom apartment realizing you could never afford to buy a home the old fashioned way and all your friends who make the same as you are not only living in their own homes but have investment properties and drive around in BMWs and are always traveling and having a grand time so you think who's the real chump here?

Why are people now trying to pin most of this on the average American? They are just trying to get ahead like everyone else. If the fiscal system worked as it should have these scenarios would never have happened.

whether you get taken by a sideshow carny, a pyramid scammer or a realtor lying to you about how much you can afford...

it's still a reflection on you and not the con man. it does not take a doctorate in math to realize you can't afford something.

Originally Posted by jockeys

whether you get taken by a sideshow carny, a pyramid scammer or a realtor lying to you about how much you can afford...

Hey pyramids work! I've seen lynn honing and talking about pyramids and man can he get those razors sharp!

The same can be said for the people who lost their money in the dotcom bubble burst.

'The stock price just keeps rising. no need to spread your investments. Just put all your savings in this hot new tech stock and you're set for life.
don't let the fact that you know SQUAT about what's going on and what happens to your money scare you. It'll be allright. I promise.

Sign here please. And don't mind all the fine print. That's just stuff our lawyers come up with. You're going to be rich!!!'

What do you mean 'what if the stock price drops'?? Look at this 2 week trend: It's going to rise exponentially for months to come, regardless of what the company is actually doing.

Well yes, you will invest all your money now, but think about when you sell them for 1000% profit. You'll be rich!!


When people who knew squat about the stock market started telling each other 'you should invest your money in the stock market' I knew it could only end badly.
And then there were the jokes 'What do you mean we have to make money. But we're a dotcom!?'
At that time I was wondering how people could NOT see what's coming...

Granted, the bust was worse than I had anticipated, but at least I was smart enough not to be the one left standing when the music stopped in the financial game of musical chairs.
What I had left was well spread. Yes I got hit, but not badly, and only a small % of my savings was in the game anyway. The rest was in a plain old boring savings account.

Originally Posted by jockeys

whether you get taken by a sideshow carny, a pyramid scammer or a realtor lying to you about how much you can afford...

it's still a reflection on you and not the con man. it does not take a doctorate in math to realize you can't afford something.

I disagree. The bank is the party loaning the money and taking the risk that it won't be paid back. The cause of this credit crisis is that banks gave loans to people they knew couldn't pay them back AND THEN TURNED AROUND, PACKAGED THE LOANS AND SOLD THEM TO INVESTORS DISGUISED AS GOOD LOANS. The banks basically said, "we don't care if the people can pay or not, because we won't suffer the loss when they don't pay." This is the crime at the heart of this crisis.

Originally Posted by Chimensch

I disagree. The bank is the party loaning the money and taking the risk that it won't be paid back. The cause of this credit crisis is that banks gave loans to people they knew couldn't pay them back AND THEN TURNED AROUND, PACKAGED THE LOANS AND SOLD THEM TO INVESTORS DISGUISED AS GOOD LOANS. The banks basically said, "we don't care if the people can pay or not, because we won't suffer the loss when they don't pay." This is the crime at the heart of this crisis.

I'm not saying the banks are blameless... they are, in fact, guilty as hell.

But the individuals taking out loans they couldn't afford to pay back are equally culpable.

Originally Posted by Chimensch

I disagree. The bank is the party loaning the money and taking the risk that it won't be paid back. The cause of this credit crisis is that banks gave loans to people they knew couldn't pay them back AND THEN TURNED AROUND, PACKAGED THE LOANS AND SOLD THEM TO INVESTORS DISGUISED AS GOOD LOANS. The banks basically said, "we don't care if the people can pay or not, because we won't suffer the loss when they don't pay." This is the crime at the heart of this crisis.

I don't know about you, but I never assume people have MY best interest at heart.
In important cases (like a mortgage) I am putting a lot on the line, so I think twice about the possible outcomes of what I am doing.

I sure as hell don't trust a banker / insurance agent / ... to tell me what is good for me. Why would they care? It's not their lives. Their primary motivation is to make money.

Originally Posted by Chimensch

I disagree. The bank is the party loaning the money and taking the risk that it won't be paid back. The cause of this credit crisis is that banks gave loans to people they knew couldn't pay them back AND THEN TURNED AROUND, PACKAGED THE LOANS AND SOLD THEM TO INVESTORS DISGUISED AS GOOD LOANS. The banks basically said, "we don't care if the people can pay or not, because we won't suffer the loss when they don't pay." This is the crime at the heart of this crisis.

While there is some blame to be laid on the doorsteps of the banks, the vast majority of the blame is to the be laid on the buyers of these homes, and their overinflated sense of entitlement.

How about the fact that the savings rate for the USA is in the negative. We spend more than we make. However, its not the fault of those that are spending, it is the fault of the credit cards companies. Don't blame the people not saving, blame the institution that makes spending easier. Much better to blame a company, than those that vote, because if you lay the blame on those that are responsible, you may not get voted back into office.

How about the fact that we are losing the manufacturing jobs in America?? Lets blame the republicans, or the companies that move jobs into third world countries. Sounds great, its not my fault. HOWEVER, it is the fault of the American people. We demand cheaper and cheaper products, and we don't care where it is made. So companies, in order to compete, move to cheaper labor markets to meet the demands of us the people. Then people lose their jobs here in the USA due to the move of manufacturing to to other, cheaper, countries. The loss of the manufacturing jobs here in the USA is due to the people, and not companies. If the company tries to maintain their local manufacturing positions, they cannot compete, and they fail. then according to some of the posts earlier in this thread, the executives of the companies should be criminally prosecuted, because their company failed, and people lost their money in the stock market. However, if the keep their company profitable, they get persecuted for moving jobs to other countries.

You tell me, where does the blame lay. I say with the American people, and those stupid enough to take out loans on huge assets, which they cannot afford, and could not afford when they took out the loan in the first instance.

Matt

Where did the notion come from that you have to own your own home anyway? In the UK and US there seems to be this drive for people to own their homes but it needn't be that way. In continental Europe alot of the time people rent for their whole lives. And the notion of a house as retirement collatoral? Give me a break.... the house isnt yours until you pay every last penny on it. Some people never get to that stage! And you just end up paying over the odds because of the interest. You wanna invest for your retirement then do so, but dont do it in property.

Originally Posted by sidneykidney

Where did the notion come from that you have to own your own home anyway?

It comes from the socialist way of thinking that keeps growing in the federal government: if the hard working majority get to have to home, so should everyone else.