patrick.net

- years of brain-washing!
- lot of people make money off YOU (bankers, brokers, re-agents). And the system has worked for *them* (not you) for decades
- when you wrap any thing in cutesy, cuddly, emotional gift-wrap, it will sells better

It's the American Dream , baby!;O)

'cause it's your piece of the pie! A place to hang your hat, your own corner of the world. Can't explain it when it's home.

1. "Why do so many of us continue buying even when we know the market is dwindling and will leave us with a 100K depreciation charge?"
Answer: No one knows exactly how much of a loss or a gain one will make when buying a home, we can only speculate. With the exception of people who purchased near the top of the market, most people have not lost much money. In fact a lot of people who purchased there first home 10+ years have probably had a reasonable return. Buying a house today does not imply you will lose or make money off of your choice.

2. "If you would not buy milk at $10 a gallon why are you so willing to buy at house at 400K in a lower income neighborhood?"
a. Not all homes in low income areas are low end. A 2mil home in a low income area could be a bargain depending upon the home itself.
b. Unlike a gallon of milk, home values are not mostly dependent upon quantity so I am a little confused on how one can compare the 2.
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Using your argument "technique" one could probably argue against buying anything. If one would not spend $1000 to visit LA than why would one be willing to spend $4000 to visit Russia.

Again, just ask yourself if you can stay in a home, financially and emotionally, for years regardless of its mark-to-market value.

With the exception of people who purchased near the top of the market, most people have not lost much money.

Or, it could be argued they did lose the difference between "owning" (ie, servicing a loan) and what a comparable home would cost to lease. This site has made those calculations. So, even if one did not buy at peak, the PITI difference can be substantial--plus a lost opportunity by parking one's cash that might be better invested elsewhere. Of course, until somebody sells…they don't know if that home even hedged their money over term.

The societal pressure of "ownership" was so pervasive that people took on crushing debt just to say they were "home owners" in "special" zip codes. Naturally, realtors hammered away on their emotional buttons to make a sale—irregardless of the financial implications. People eagerly bought the hype on "your home, your investment", when a few minutes of risk analysis might have convinced them otherwise.

Most people do not know the first thing about money management and are all too weak when it comes to resisting emotional appeals from real estate hucksters and credit card companies. Most Americans want it all NOW at any price. That philosophy comes at a heavy price (pun intended) and in the long run is dangerous to one's health (physical and emotional) and unsustainable, as some of us see. (I pay cash for everything and do not live in debt.)

Debt is a tool. And there is nothing wrong with wanting things now. Life is short.

Do not forget that all fiat currencies are debt based. You cannot avoid "debt" simply by using "cash."

The problem was the misuse of leverage, not leverage itself.

When the whole country (or world) is in debt. How do you stay out of debt? You will still have to pay in the form of higher taxes and/or inflation and/or war.

Sorry, I'd much rather stay out of debt. It is bad for the body and the soul. You have no idea how free it makes one feel not to ever owe anyone a cent, ever.

Whatever works for you... Emotion works differently in each person, that makes us unique.

Question: why is being in debt so stressful? Is that because of "moral" reasons?

BTW, you still owe about $35000 of national debt.

Question: why is being in debt so stressful?

If debt is managed well, I don't see a problem there.
Then again, how many people do that well? 1:100, 1:200?
But, it would be a real trick if "your life" is one humungous pile of debt already.
Tuition debts, auto loans, wedding debts, mortgage debts, cc debts on 5 cards, etc.

You have no idea how free it makes one feel not to ever owe anyone a cent, ever.

Agreed--particularly if you can opt-out of the "happy pill" approach to buying crap you don't need. There's some psychology behind a lot of consumer debt--people would be emotionally ruined if they couldn't drop by their favorite store for another useless toy. Yet, it would do some people a world of good to stop buying crap for even 6 months. Wait...I think that's happening now.

Debt management is really about matching cashflows.

Emotionally, some people like to pay everything upfront. However, even if he buys a car with cash, he will still have:

1. Insurance
2. Maintenance
3. Repairs
4. Gas
5. Parking fees
6. Tolls
7. License fees

Unless one plans to keep the car in the garage as NO-OP, there will be recurring costs.

Throwing in financing and depreciation does not materially alter the debt-like structure of ownership.

My point is, one must learn to manage cashflow anyway, and debt is just a line-item, so successfully managing debt is important for every one.

Peter, yeah...most of us know how to responsibly manage our automobiles...one would hope as much. ;-)
Then again, perhaps such responsibility does not pertain to the guy who HELOC'd his home for:
1. BMW M5,
2. Range Rover
3. Jaguar XJ
--that's what a co-worker did back in 2006--within a few weeks
Gotta wonder how he managed all those costs, those line items? Maybe he didn't
Who cares about line items when you must own something? That's the kicker with consumerist psychology.

Well, Kurt, those people had just one flaw in their assumptions. ;-)

IF housing prices really never go down, it would make sense to extract every penny of home equity. But who in the universe could have predicted the housing bubble? LOL!

(Does that guy love high maintenance cars or what?)

I can explain it in dollars or sense, but when it comes down to it we buy house because she wants one.

I can explain it in dollars or sense...

Only that dollars do not make sense. Money is the power to purchase. If it can buy you a happy marriage, buy now or be priced out forever. :-)

You totally missed his joke Peter...

"I can explain it in dollars or sense, but when it comes down to it we buy house because she wants one."

LOL>ROTFLMAO>LMAO...Knewbetter is saying we buy a house to keep our wives happy! Nooky makes the world go round.