Monday, July 23, 2012

Having an economic pity party

Ok, once in a while I catch myself having a little pity party. I don't do it often because I catch myself and remind myself to be grateful for all I have. I am very grateful for what I have - most importantly I have a husband and five sons who are healthy. I also have both parents who are still living and are close by. They aren't in perfect health, but for being in their mid-70's things could be much worse. That's the most important thing I have going in my life - the people I love.

Then there's the other stuff. I have a modest home. I have a vehicle to get me places. We have food on the table. Those are the cheery optimistic answers. The realistic answers are a little more complex. We have food on the table, but it's always either generic or purchased on sale and sometimes with coupons. It's a treat to be able to stop at the drive through for burgers or order a pizza. I have a vehicle, but it is 8 years old and was used when we purchased it. It's nearing 100,000 miles and won't be paid off for a few more months. And it costs about $90 to fill the gas tank, so it doesn't go too many places that it doesn't have to. My husband's vehicle is 13 years old and we keep nursing it along because two vehicle payments would kill us. There's no extra money for luxuries. Clothing is usually hand-me-downs or the occasional new stuff at the start of the school year or at Christmas that gets shuffled around on credit cards when there's a 30 percent off sale at Kohl's. My husband has a good job. I work two jobs - one doing freelance writing and another part time at a local hospital. However, at my husband's work there was a pay freeze going on for a few years and increased insurance costs at the same time that gas prices pretty much doubled and the prices of everything at the grocery store and department stores went up as well as a result. And the property taxes have also skyrocket in recent years. It sent us from floating along pretty well to barely scraping by. Sucks to be there, but we are.

We have a home, but a very modest home - one that is really a 2-bedroom, but we managed to squeeze two bedrooms into the basement to accommodate the whole gang. We're in the process of splitting our living room in half to add a bedroom there. At this time last year we had a roof over our head, but one that was leaking. We held out until the income tax refund arrived and spent it on a new roof and new chimney. We have only one bathroom. It's drafty in the winter and stuffy in the summer. We've done some improvements over the years, like adding a driveway and a larger garage, adding a wooden porch on the front and painting the exterior. But there's tons of work to be done. There always is when you own a home. It was meant to be our starter home, yet we're still here and there's no light at the end of the tunnel indicating we'll be able to move into a different house or a different place.

We purchased our home 20 years ago. Five years ago we went to look at a larger house - a big Victorian three-story in town that would have suited our family well. There would have been lots of room. But, it needed a lot of work and taking that into account, we made a low offer. They weren't interested in even negotiating. At that time, an appraisal of our home came in at almost twice what we'd paid for it. Fast forward a few years to the rotten housing market we have now. Now, the several foreclosures in our neighborhood have gone for less than half of what we paid for for our house. Basically, that lowers the value of our place - if we were lucky enough to find a buyer.

What we could get for the house is probably significantly less than what we owe on it. I try not to think about it. It just makes me want to cry. Why? Because we did everything we were supposed to do. We married and immediately purchased a home. The line of thinking at that time was that there was no way you could lose money on real estate....and in the 80's and 90's and early in the 2000's, you almost couldn't. Renting didn't make sense. You got nothing for it when you moved. Buying a home was an investment in your future - the best investment you could make, we were always told. We both worked hard and bought our home when I was 18 and my husband was 21. This is going back a few years when it was not easy to get a mortgage and interest rates hovered around 10 % -- before the recent years of mortgages being handed out like candy to anyone who could sign their name with no money down.

And I try not to judge or to blame, but in seeing the circumstances of others, I get a little miffed sometimes. I feel bad even saying that, but it's true. I know several people who have had homes go into foreclosure in recent years. We all hear the sad stories highlighted on the news about desperate circumstances of elderly people living alone who are about to lose their home because of a balloon mortgage or a father of three who gets laid off and finds himself and his kids living in his van. But, it's not always happening that way.

Of the many I know who have been in the situation of facing foreclosure, none of them ended up homeless and in some cases, they ended up better off. One family stayed until the last moment when eviction was imminent after not making a house payment for over two years and they then went to live in a home that had been sitting empty that had been inherited from a relative - add had some added square feet to boot. In another case, a single guy simply decided to stop making payments because he was planning to move in with a lady friend anyway and continuing to pay on a home that was worth a third of the price he paid for it didn't make sense. With the extra pocket money he had, he purchased recreational items and other luxurious items that he couldn't have afforded before. In another case, a family living in a very nice home (over half a million dollar home, I believe) in an affluent area stopped making payments when the head of the household got laid off. Other jobs came and went, but it was too hard to catch up, so essentially it was more than two years of living in a huge house for free. I don't wish those difficulties on anyone. But, hey, I wouldn't mind living in a McMansion for free for more than two years. Or for one year. Or heck, for even a month. Or a week.

In some cases, I think maybe they took the easy way out. And on the other hand, I wonder if maybe they simply did the smart thing - the smartest financial thing they could have done. If you do the math, someone with a $2,000 mortgage saves nearly $50,000 if they stop paying their mortgage for two years. If they struggle to keep up and then sell their home for much less than what it was worth five years ago, they are probably losing at least that much. Sometimes I think we are the dummies for doing what is supposed to be the right thing. No matter how you look at it, it's a lose-lose. We continue paying on this house, which won't be paid off for a dozen more years and pour more and more money into a home that will not be valued at what we paid for it 20 years ago. Or we put our house up for sale, eat tens of thousands and then try to also save up enough for a down payment on a different place while keeping up on the bills and living paycheck to paycheck. Just think, had we ignored all the sound advice about investing in owning home and we had rented all these years, we would be money ahead. We wouldn't have blown the income tax check on a new roof, the landlord would have. We wouldn't have ended up taking a home equity line to replace a garage that was nearly falling over. If we had rented, we would be financially better off. We haven't been irresponsible. We have paid our bills on time. We don't take luxurious vacations. We don't drive fancy new cars. We wear clothes that have lots of wear in them. We have always done the right thing...or what we thought was the right thing. I hate to be a complainer, but it just seems we sure lost out because of trying to do what we are supposed to do. How about a bailout for those who have done the right thing all these years?


Mishal said...


Mishal said...


Jessica said...

Yup, I agree. Myself and my husband had to downsize HUGE when he fell subject to the failing financial sector of this country. We went from our nice house into an apartment, I was forced to work, instead of stay home with our daughter and we are living off of ONE vehicle that is barely running. This country needs to help the ones who are doing it right and doing the best they can, not bailing out the ones who DON'T need it. Great post!!!!

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