It can be tough to have sympathy for stories about people who have lost the American dream. It’s one of those situations where we all were looking to get one over on one another and the problem when regular people do that is they will lose every time.

There was an excerpt of Tom Brokaw’s special on America losing the dream. They showed a family struggling in Nevada. They bought a home during the boom times and all seemed well but now they are close to losing their home. There are the prerequisite tears flowing from the woman and the blame going to the banks and credit card companies. The music makes you want to feel the pain that this family is facing.

The part of the story glossed over is that when they bought the house, modestly priced under $200000, they got the house with no money down and they had to pay $1600 or so a month. The husband brought home $1400 every two weeks. Technically, you’re in the hole at that point because it’s more than half your income that is needed for the basic payment of the house, when the recommended number is a fourth or third of your income should be for the house. Add to this the couple buying two cars and a sundry of other things and they were a disaster waiting to happen.

Queue the disaster with the husband losing a job, then getting and losing another job. She doesn’t work and if she did her income wouldn’t off set his so you have a situation where they can’t pay for the large house they bought. The wife, who was in the preview a lot probably because she was close to tears most of the time, wondered why all these institutions were against her. She doesn’t question, nor did the commentators of the piece, why they bought a house with no money down and knowing they didn’t have the money to meet minimum requirements.

Look, the housing situation where I live is crazy and I was looking into the possibility of getting my own place. When I researched it I saw it might be possible to get a house, but I had to set down some conditions as to how to get the house. When it got to the point when I didn’t think I could afford it comfortably, I walked away. It hurt but it would hurt more if I got a house and ended up like the family on TV, looking at an eviction.

There is a hard pull of sympathizing with people who are losing their home. Many people imagine themselves in the same situation and don’t want others to suffer the same fate. The sad other side of the coin is some people bring their fate onto themselves.

The family, according to the report, knew they were treading water going into the house. Just a little research would tell them they needed to have some money put down or a lot of income coming in. Even if they missed that sign, when they got the house they didn’t need to get two cars. Now I’m guilty of doing something stupid like that myself. When I got my car, I was so excited that I qualified for a loan I didn’t question the payments nor did I think about what I was paying long term versus what I should get. All I cared about was I was tired of taking the bus and relying on friends to take me home from work.

A week ago I was thinking about what I have paid and what is still owned on the car. While I drive by and noticed people selling seemingly good cars for $1500 to $3000 I realized by February, not even a full year, I would have spent $4000 in payments and still have about three years to go. There were even some dealerships I went by that had cars for up to $6000. So if I had planned better I could have gotten a card for less and possibly paid it outright or by now would have paid it off.

The fact that I signed the contract isn’t the dealers fault. I put my name on the dotted line. I don’t hate the car, but in looking at the housing issue if I didn’t have the car to pay off I could get a mid-level home in this market as opposed to looking at lower end homes. I could be assured I could get the home with my own resources and I would know even if something were to happen I could handle it in reserves. The family on TV relied on faith to get them out but faith doesn’t plant a money tree in the backyard.

 

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The American Dream Skewered - January 25, 2010
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