dmarc117 Posted September 29, 2008 Share Posted September 29, 2008 A few months ago, a friend of mine from Hawaii asked me if I wanted to buy his new powerboat with twin motors. Apparently, in late 2007, he purchased it brand new for approximately $85,000. His plan was to refinance his house when it appreciated in value and use the difference to pay for the boat. Failing to obtain new financing, he called to ask me if I would buy the boat from him -- just take over the payments and it was mine. I passed, and the bank eventually repossessed his boat. Later, his wife called to tell me he's now having problems making his mortgage payments. Apparently, my friend planned to pay for his house the same way he planned on paying for the boat, by refinancing his debt. I mention this story because it illustrates the problem Obama or McCain face: Limited financial education and diminished financial common sense. Quote Link to comment Share on other sites More sharing options...
evil_gop_liars Posted September 29, 2008 Share Posted September 29, 2008 You need better friends. Quote Link to comment Share on other sites More sharing options...
dmarc117 Posted September 29, 2008 Author Share Posted September 29, 2008 You need better friends. i just need friends Quote Link to comment Share on other sites More sharing options...
evil_gop_liars Posted September 29, 2008 Share Posted September 29, 2008 i just need friends You buy that boat, I'll be your friend... Quote Link to comment Share on other sites More sharing options...
dmarc117 Posted September 29, 2008 Author Share Posted September 29, 2008 You buy that boat, I'll be your friend... is your friendship worth 85k? Quote Link to comment Share on other sites More sharing options...
tonorator Posted September 29, 2008 Share Posted September 29, 2008 i heard on the radio this morning that the gov has a bunch of leeway when deciding what bad loans they will purchase, potentially including things like car or boat loans. Quote Link to comment Share on other sites More sharing options...
AtomicCEO Posted September 29, 2008 Share Posted September 29, 2008 Does this guy in Hawaii with an 85K boat and a house he can't afford sound like one of your irresponsible poor people you like to blame this on? Was this guy benefited by the initiative to encourage lending to lower-income people and minorities? Or is that argument irrelevant here? Quote Link to comment Share on other sites More sharing options...
Caveman_Nick Posted September 29, 2008 Share Posted September 29, 2008 There was a discussion here maybe six months ago about trying to pay down/off a mortgage versus "working the debt" to your advantage. I would say that we are seeing some fairly obvious downside to that debt working strategy. Morans buying powerboats with their mortgage money is only a small portion of the problem. People either reaching for things that plain common sense should tell them the can't afford and people trying to leverage their home instead of treating it like a necessary part of living are the ones in trouble now. And people that were smart with their money are the ones that will pay for it. Amerika. Vedy Gut. Quote Link to comment Share on other sites More sharing options...
dmarc117 Posted September 29, 2008 Author Share Posted September 29, 2008 (edited) Does this guy in Hawaii with an 85K boat and a house he can't afford sound like one of your irresponsible poor people you like to blame this on? Was this guy benefited by the initiative to encourage lending to lower-income people and minorities? Or is that argument irrelevant here? when have i ever said anything about poor people???? please show me. i talk about irresponsible people from all walks of life. i dont care if your worth 25k or 250k. dont buy what you cant afford. its simple. Edited September 29, 2008 by dmarc117 Quote Link to comment Share on other sites More sharing options...
Perchoutofwater Posted September 29, 2008 Share Posted September 29, 2008 There was a discussion here maybe six months ago about trying to pay down/off a mortgage versus "working the debt" to your advantage. I would say that we are seeing some fairly obvious downside to that debt working strategy. Morans buying powerboats with their mortgage money is only a small portion of the problem. People either reaching for things that plain common sense should tell them the can't afford and people trying to leverage their home instead of treating it like a necessary part of living are the ones in trouble now. And people that were smart with their money are the ones that will pay for it. Amerika. Vedy Gut. I agree with you about the morans buying powerboats they couldn't afford or for anything else that they can't afford. I disagree with you regarding investing vs. mortgage payoff. If you paid extra principal on your mortgage, you still have the same mortgage payment every month, and now that times are tough, it just means you have more money tied up in the house you can no longer afford and may default on. If you invested the excess funds, then even if that investment has depreciated, you still have additional funds that more than likely are fairly liquid that you can sell, and use to make it through the hard times. Quote Link to comment Share on other sites More sharing options...
Perchoutofwater Posted September 29, 2008 Share Posted September 29, 2008 Does this guy in Hawaii with an 85K boat and a house he can't afford sound like one of your irresponsible poor people you like to blame this on? Was this guy benefited by the initiative to encourage lending to lower-income people and minorities? Or is that argument irrelevant here? This guy is just irresponsible. Unfortunately we have irresponsible people at all income levels, and as far as I know, nobody has said that the poor people are the only irresponsible buyers out there. What some people are saying is the government strongly encouraged banks to provide sub-prime mortgages to poor people, and that is one of the many things that have gotten us into this mess. Quote Link to comment Share on other sites More sharing options...
Caveman_Nick Posted September 29, 2008 Share Posted September 29, 2008 I agree with you about the morans buying powerboats they couldn't afford or for anything else that they can't afford. I disagree with you regarding investing vs. mortgage payoff. If you paid extra principal on your mortgage, you still have the same mortgage payment every month, and now that times are tough, it just means you have more money tied up in the house you can no longer afford and may default on. If you invested the excess funds, then even if that investment has depreciated, you still have additional funds that more than likely are fairly liquid that you can sell, and use to make it through the hard times. You are ignoring the other half of my point, and these concepts need to work together. Many people bought houses with mortgages that anyone with 2 bits worth of common sense could see was an enormous stretch financially. The housing market went up so rapidly because buyers bought at the inflated prices en mass. Too many people that weren't using their brains. Buy a house you can afford and work from there. It's not hard to understand. I knew it when I bought my first place at 21 years old. Quote Link to comment Share on other sites More sharing options...
Perchoutofwater Posted September 29, 2008 Share Posted September 29, 2008 You are ignoring the other half of my point, and these concepts need to work together. Many people bought houses with mortgages that anyone with 2 bits worth of common sense could see was an enormous stretch financially. The housing market went up so rapidly because buyers bought at the inflated prices en mass. Too many people that weren't using their brains. Buy a house you can afford and work from there. It's not hard to understand. I knew it when I bought my first place at 21 years old. I wasn't ignoring it, I agree with it, and since I didn't have any issue with it I didn't comment on it. Quote Link to comment Share on other sites More sharing options...
moneymakers Posted September 29, 2008 Share Posted September 29, 2008 Investor uses credit cards - cash advance- to purchase house- investor guts house and uses credit cards to remodel house. credit card debt is over 200,000. investor files bankruptcy. House is protected. Car/truck is protected. Result. Investor does not have to pay credit cards and phone calls stop. New bankruptcy laws become effective. credit card company now sends/approves investor new credit cards. investor says Thank you I do need a new set of tires on my car. Legal theft done by millions of American citizens. Quote Link to comment Share on other sites More sharing options...
TimC Posted September 29, 2008 Share Posted September 29, 2008 Also, the new way to handle this (from what I'm seeing): 1) Insure boat 2) Burn boat Ain't insurance fraud grand? Quote Link to comment Share on other sites More sharing options...
WaterMan Posted September 29, 2008 Share Posted September 29, 2008 Boy this trickle down economics is great. Quote Link to comment Share on other sites More sharing options...
cliaz Posted September 29, 2008 Share Posted September 29, 2008 Also you have to look at this on the Micro level. In my area there are dozens and dozens of new businesses spring up. It is this quick cash centers. "bring us the free and cleared title to your car and we will give you cash" Now people struggling because they bought a 600K house with two ARMS and barely making payments are not giving their cars away for a few hundred, maybe couple thousand clams at 28% interest. Quote Link to comment Share on other sites More sharing options...
H8tank Posted September 29, 2008 Share Posted September 29, 2008 No power boat with twins costs $85K brand new in 2007. Likely a used one, but not new. Quote Link to comment Share on other sites More sharing options...
Ursa Majoris Posted September 29, 2008 Share Posted September 29, 2008 And people that were smart with their money are the ones that will pay for it. And that right there is the main reason I feel so angry right now. Should have spent all my money on hookers, beer and blow and had the government bail me out. Quote Link to comment Share on other sites More sharing options...
Caveman_Nick Posted September 29, 2008 Share Posted September 29, 2008 And that right there is the main reason I feel so angry right now. Should have spent all my money on hookers, beer and blow and had the government bail me out. You and me both, Bro. Quote Link to comment Share on other sites More sharing options...
AtomicCEO Posted September 29, 2008 Share Posted September 29, 2008 The housing market went up so rapidly because buyers bought at the inflated prices en mass. Too many people that weren't using their brains. Buy a house you can afford and work from there. It's not hard to understand. I knew it when I bought my first place at 21 years old. It made sense to me. I bought a house for 187K that is now worth 205K even after the market crashed. Houses on my block were up to around 235K for similar models. It also made sense to me that getting a fixed rate mortgage at the lowest rates of my lifetime made sense, rather than getting an ARM which would be 1% lower for a year and then increase every year for the rest of my life. But that didn't keep the mortgage broker from telling me that I was pre-approved for 250K without any documentation. And it didn't keep him from trying to push us into an ARM mortgage. I kept asking "Why would I want to do this? It makes no sense...", and he told me "Well, most people don't stay in a house for more than 3 years." and "You can just refinance later." I'm not as gullible as most people, but if I had a more convincing salesman, or I was more of a pushover, I could have easily ended up in a 250K ARM which I couldn't afford. Who's money was this guy giving away, and why didn't they care that he was selling bad loans? Quote Link to comment Share on other sites More sharing options...
Ursa Majoris Posted September 29, 2008 Share Posted September 29, 2008 and he told me "Well, most people don't stay in a house for more than 3 years." Where do they get this info? My street has never had any house resold within three years, not in the last decade anyway. Quote Link to comment Share on other sites More sharing options...
Perchoutofwater Posted September 29, 2008 Share Posted September 29, 2008 I just refinanced today, in order to take some equity out and pay for a little bit of stupidity on my wife's part, but mainly to do some home imporovements. I had an appraisal done on my house last Wednesday. When I bought my house I bought it below market value from a couple that were having serious financial issues and going through a divorce. I bought the house for $267,000 in 2003. According to the appraiser it is now worth $337,000. Quote Link to comment Share on other sites More sharing options...
Perchoutofwater Posted September 29, 2008 Share Posted September 29, 2008 Where do they get this info? My street has never had any house resold within three years, not in the last decade anyway. We've been in the same place for 5 years, and there are about 20 houses in our neighborhood. In that 5 year period we've been there only 2 have sold. There is one that is now up for sale, but they want way too much for it, so I doubt it will sale. They want $600,000 for it, but might be worth $450,000. Quote Link to comment Share on other sites More sharing options...
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