I have been utterly fascinated by the credit crunch. Eagerly awaiting what institution I will partially own thanks to government bailouts. In my pursuit to fully grasp the insane amount of money lost out there, and how this all started, I came across an interesting blog entry. Captain Capitalism
Who's fault is all this? Obama says Bush. McCain says Wall Street. Most Americans say Alan Greenspan. Then Captain Capitalism blows my mind and says it is my fault!
Whoa! Now wait a minute here. We did own a home and at the height of the housing bubble took out a second mortgage. Why? To play the debt game. Take out a lower interest loan to pay off higher interest loans. The value of our house went from $125,000 to $180,000 in less than 5 years. We were "in the money!"
When "we" turned into "I," the house was put on the market. It sold for far less then what we owed. Luckily, our local bank was able to convert the remaining debt into separate loans. That took several agonizing months, and we didn't always pay then.
It was a classic case of living beyond your means.
How many Americans do so today? Top Economist Says A Lot Do And of those, how many defaulted on their credit cards? Their home loans? Their car loans?
There is plenty of blame to go around. Lenders looking for a commission, predatory loan officers working in an unregulated environment (or working around regulations). But if I was honest with myself, and if other Americans were too, we have to see the greed.
It is so much easier, and feels nicer to blame someone else for our own issues. But can we continue to afford it?
This experience of mine is the reason why I changed my lifestyle. It all came down to two questions: What is real? What do I own? The answers back then were raw and brought me to the basics.
It's time we all do the same.
Here are some links I have found helpful to put money, debt and true wealth into perspective. If you have suggestions, please advise so I can share with other listeners and readers.
Marketplace Money
Financial Peace University
Suze Orman
Oprah: Get Out of Debt
UPDATE: I heard Fresh Air today and found the discussion with Michael Greenberger about the credit crisis very helpful and insightful.
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1 comment:
The "stupid banks who make stupid loans to stupid people" comment has been coming up a LOT with people on the street within my earshot, so I hardly think this is a revolutionary idea.
(Says someone who bought a cheap house with a 30 yr/fixed mortgage half or less of what we could have qualified for back in 2002, and is desperately hoping we can pay it off in another 10).
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