9KDropTopDream

I know there is some agreement on the living inside your means, and not letting your house go, and cutting down to live responsibly, etc. My Point is, I like 9krlind did the responsible thing, and purchased a house that was affordable. And Like others, I sacrificed living out further so I could get something more affordable to meet that requirement, as that was the only option at the time.

So I can easily afford my payment, I'm within an affordable house. But, if you lose your job tomorrow, and the average time to find a job that pays the same amount is 8 months, and you're the sole provider to the mortgage, unemployment and a minimum wage job isnt going to pay the mortgage. So being responsible and living within your means doesnt do much to help you out.

Historically, you could sell your home and at least break even. Now you cant move unless your rent your house out, have chance of it being wrecked by renters, and have that hassle.

So if your undesirable location yields lack of renters, and you exhausted your savings, what choice are you left with? Looking at the most logical financial decision you can make, is exhausting your savings, renting your house out living in with parents, friend, or crap apartment worth the sacrifice to save a negative equity home that will not show a return for decade or more? Or does letting it go, settling out, and purchasing a more desirable home in a better location for cheaper that will yield over double the return in a decade be the better choice? Im all about staying in the house and doing what it takes. But unless you're mortgage is so low that you can afford it on minimum wage, the choices arent really there.

Am I way off? And David, now that everyone has chimed in, are you going to deliver your thoughts? ;-)

CBR2200

David???

AZDavid

There have been great "on point" comments in this thread.

In my opinion, one word describes the current state of the economy, abysmal. If you believed the media's propaganda spin over the past two years we should have been out of the recession and growing at the pace we were during the housing bubble. Instead the talk has changed to, "Are we headed for a double dip recession?" Did we really ever get out of the first recession?

Reality has set in for many that the economy is not as good as President Obama, the media, and other political pundits make it out to be. The government continues to find innovative ways to artificially prop up struggling parts of the economy and manipulate economic news releases in an attempt to keep public confidence. The housing tax credit and cash for clunkers programs were successful in pushing forward sales. When the credits ended, both housing and automobile sales declined precipitously. Looking at the headline BLS Nonfarm Payrolls and the unemployment rate numbers you would believe that the employment situation is improving. What you likely do not know is that teen unemployment is at a 62 year high, BLS continues to make several hundred thousand person monthly adjustments for people leaving the workforce, U-6 (most comprehensive) unemployment is 16.5%, underemployment is over 20%, just to keep up with people entering the workforce the country has to create 125,000 jobs per month.

I personally know numerous people who have been unemployed for months and still are not able to find work in their professional area. It has been tough watching them struggle to pay their bills. These are educated people who have worked hard their entire lives. After graduating with a Master of Accountancy in May I joined the unemployment rolls. Over the past two months it has been extremely difficult to get face time in front of HR representatives to explain my qualifications. Even with contacts within companies I am being told that people with 10+ years of experience are applying for entry level positions and my application is one of hundreds. How do you compete with such people? It is a catch 22, you have the skills and not the years of experience but you are not able to find a job that gives you the required experience. You used to be able to walk in or call a company and talk with someone in HR. Nowadays, HR will not give you their time and direct you to their website to apply for positions. There is no longer personability in the hiring process. You are a number amongst many. It is not only me who is having problems finding work. In previous years the program I graduated from had 100% job placement at the end of December for students graduating in May. This year there was ~50% placement of students at May graduation.

I agree with the US Federal Reserve minutes report released yesterday, the US economy is likely to not recover for five or six years. Home prices will continue to fall as option ARM and Alt-A mortgages reset over the next two years, unemployment will continue to increase as companies cut expenses to meet or beat Wall Street expectations, US debt will continue to grow as more stimulus funds are announced, personal income tax rates will increase, quantitative easing round 2 will be announced, and Ben Bernanke will keep the Fed Funds Rate at 0%.

Below is a sobering link outlining the 50 ugliest facts about the current state of the US economy. The list includes data that you will not hear from the mainstream media. All of the facts have been tied back to well known news websites.

http://www.zerohedge.com/article/presentin...bout-us-economy

Keep the discussion going...

adrs2k

Did anyone see the special House of Cards? I thought it was very educational and really drove home some points.

In brief, I believe in most cases that the consumers are at fault, but the banks and lenders made it so darn easy!

CBR2200

I actually heard an ad on the radio yesterday for an ARM mortgage! Are you freakin' kidding me? "It's the best choice if you're absolutely sure you'll be out of your house in 5 years." How many people were absolutely sure they were going to be out of their homes two years ago? It's complete insanity.

9KRDLIN

+1, because we bailed them out, banks never learned any lessons, and are still selling shit and calling it steak

CypherAZ

I can't believe that the democrats in congress are planning to extend unemployment benefits again. All this will do is lengthen the time it takes to recover from our current economic state.

http://www.huffingtonpost.com/grant-cardon...e_b_650096.html

Great article.

MLC S2K

Honestly, there is nothing wrong with an ARM provided you have an exit strategy at the end of the initial term, and that does not necessarily mean selling the house. I have owned 3 houses in my lifetime and not one of them did I end up owning more than 5 years.

Also, I would like to add +1 to living below your means. If you are married and both work, you should adjust your lifestyle to one income and have the second income just go to savings. If one of you looses your job, no big deal. If you both loose your job, you have the war chest to go to.

I have been wanting to buy a house since 2004, but have not bought yet because of the market, which at first was insane to the upside, and now to the downside. I'll be trying to hold out till the market bottoms, and given that mortgage rates keep dropping, I should be able to fix myself up with a pretty low housing payment.

As for the economic situation, it's bad, especially on the employment front. I found myself unemployed back when things were really getting bad (they have improved, I can testify to that) but fortunately I found a job working for some people I really respect and enjoy. I am making less money that I used to, but generally speaking I'm less stressed and happier than when I was making more money. Since I am used to living below my means anyway, the cut in pay only affected the amount I am building in savings. I figured back in the day that it was going to take a full 2 years to recover and in that time all I wanted to do was maintain my level of wealth as opposed to increasing it.

Hopefully this will be a valuable learning lesson for people but I think when (if) things ever do get moving again, people will fall right back into the debt trap like they did before.

ZeroF

Buy Gold.

watchdogd

Not gold but gold stocks.