Well here it is, Friday

I suppose first I need to say this:  I slept last night.  I got almost 8 hours and I feel much better today.  I’m hoping that because of this, my thought processes will be much better.  The baby and I were up at 5:15 this morning.  We enjoyed some cuddles and his early morning bottle, then I started trying to get going for the day.  It was hard and by the time Todd and the boys dropped me off for work, I needed a cup of coffee.  I opted for decaf, mostly because I want to get by on my own energies for today.

I received an email in my inbox today that came from my subscription to MSN’s Jim Jubak.  He’s a financial writer and I find him extremely interesting to read.  His article for today is about the similarities between what is happening in the US financial markets and the crash that happened in Japan in the 90’s.  If you have an interest in these kinds of topics, check him out at:  http://articles.moneycentral.msn.com/Investing/JubaksJournal/IsUSEnteringJapansNightmare.aspx

I don’t always agree with his take on things, but interestingly enough, I had started to mull this over too.  This is interesting because, frankly, I have no expertise in the financial world.  I read a great book about preparing for retirement – one that explained about diversification of assets, compounding interest, the stock markets and investing – but beyond that, most of my knowledge is gleaned through articles and watching what happens in the world at large.

So even if you aren’t big on financial-type reading, check it out and give it a chance.  His comparisons are interesting and educated. 

Along the lines of the financial markets and this whole real estate meltdown, I was thinking today about the necessity for person responsibility on a micro-level, i.e., the consumer/borrower.  We can look at the mistakes made by the big corporations, the mortgage brokers and mortgage companies, as well as the craziness of those involved in the stock market, but we also need to look at ourselves.  I know there are many out there who are intelligent and manage their finances in a mostly “bullet-proof” way, but I also know there are a ton of us out here who don’t.

I say this, as my husband and I have just gone through a foreclosure on our house.  Admittedly, we tried and tried to work with our lender, long before anything went bad for us.  We had never been late on our mortgage and essentially the lender refused to work with us.  Even with that situation, we still kept working on trying to take care of things.  We sold the house ourselves to a buyer with an agent, did all the buyer-required repairs and requests (with all the associated costs) and then two days before closing the sale fell through because the buyer of our buyer’s home (in an agented deal) had not disclosed they had a house to sell – and it hadn’t sold.  The whole thing fell through, with no recourse on our part as we were a third party.

These are just a portion of the details, but in essence, we were left with a rough situation – committed to a 12-month lease with a friend and her daughter, payments on a house that we could no longer afford due to the move and the lease, and a brand new baby.

We had turned down another offer while the house was in “contracted” status and we were no longer in a position to continue to market the house ourselves.  It was a sad day. 

From that point onward, we joined the ranks of those homeowners caught in a downward spiral.  We couldn’t refinance because we weren’t living in the home.  We couldn’t rent it because rents were too low to cover what we would need. 

So back to my comment about personal responsibility.  We were responsible for our situation because we signed the mortgage contract with a hard prepayment penalty in the first place.  A hard prepayment penalty, for those who’ve never encountered it, means that even if the house is to be sold there is a penalty before the end of the period noted on the contract.  Here’s the thing about it:  We could have gone with another lender who was offering a soft prepay (no penalty if the home was sold).  We didn’t, in order to save a few dollars each month. 

I can rant and rave all I want about the lender we had and how they blocked us at every turn, but it all began back when we were shopping for our mortgage.  That is why I talk about accepting responsibility for our actions.  We could never have forseen some of the things that came for us just two short years after we got that loan (our penalty period was three years), but that’s where the notion of “bullet-proof” finances comes into it.

We have been living the fat life in this country for quite a while.  I know not everyone had done it and I know a lot of people who were left out of it altogether.  We still have too much poverty in this country.  But I stand by this:  credit was easy to get and look at what happened to our national savings rate.  With interest rates so low, earnings on savings were almost non-existent so it made more sense to keep getting and paying down credit.

It looked like the boom was going to keep on booming and even with the gradual increases in the rates, things were still good.

All things have a life span.  The boom ended and people and companies got caught with their shorts down.  I watched that big decrease in rates that the Fed did in an emergency move last week and I felt a sort of pessimistic glumness.  I know that we need to try to prevent a major crisis in the financial markets.  If we don’t many of the people on the bottom end of the financial spectrum could be hurt, as well as those folks facing impending retirement even out as far as the next five years.  I just wonder, again in my humble, not-so-educated opinion, how much we need to stop our own personal behaviors and get back on track as a society as a whole.  We’re in a business cycle – a process – and it will do this kind of up and down.  Some of this mess is going to have to work through on it’s own.  Government can do what it wants, but that seems to be apparent to me – the “little guy.”

What I think needs to happen now is that all of us little guys need to fortify ourselves.  We need to circle the wagons (I know, this is loaded with bad metaphors)…  Do what you can, even if it isn’t much each month, to decrease your expenses and find a way to set aside something into savings.  I know it’s hard.  Actually, I know it’s really hard and up to this point I’ve never forced myself to do it.  I think the time has come to get aggressive and move away from the edge, where it has become so easy to live.

I’m pooping out and I think it’s time to get down off that soap box.  My break is over and I need to get back to earning my $11.96 per hour.  I’m glad I have a job and insurance and medical benefits.  My family members are in good health and we have a solid roof over our heads.  Even with all the bad news out there, we are doing well.  The storms will eventually pass.  I just hope that not too many of the little guys get hurt in the process.

Stay warm and safe,
moonfire.

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