Seems staggering, doesn’t it? But that’s not all.
“More than 10% of people with mortgages owe 25% more than their home is worth” reports MarketWatch, The Wall Street Digest enews.
With this volume of negative equity floating in the market there is not much to celebrate. In fact, if this is the best the recovery is able to produce, I get a real choking feeling about the future of home values.
If you have been trying to sell your home or hope to sell it this year the danger signs are all around of further declines.
Another 2.5 million homeowners have less than 5% equity in their home. This is the state of affairs as 4th quarter US home prices dropped 1.1% versus the 3rd quarter.
Keeping your head above water is the challenge of the day. Spending less appears to be the only solution in an economy where employment is also at risk. No lifejacket here.
This bundle of bad news is a nasty disturbance ‘blowin’ in the wind’ as the song goes. It’s interesting that the original tune was a spiritual sung by emancipated Canadian Negroes that celebrated the end of slavery in the British Empire.
While it was called “No More Auction Block” back then, the same can’t be said for the housing market as it remains chained to a principle (sub prime mortgage) that should have never been allowed in the first place.
Copyright 2010 William M. MacKay
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( 3 / 99 )Wanting more than you can get…
is the Super Bowl of the middle class.
It’s a recipe for financial misery in the first instance
because it’s a poverty of the material kind.
When the “material girl” and boy want all that life has to offer
we are back to where Adam and Eve started it all.
If perfection arrives only when there is nothing left to add
you will never find the happiness expected for one simple reason;
there is always more to acquire. That’s the goal of a consumption-based system.
You can never have it all because it isn’t available yet.
But you can be sure of three things:
1. It will be for sale soon
2. You will be told you must have it, and
3. Some of your friends will get it.
Given the declining financial punch of the middle class, your natural inclination to peer pressure, and an attitude of entitlement chasing it all requires increasing use of credit and debt. That’s the price to pay.
Antoine de Saint-Exupery, remarking about engineering elegance, regarded perfection just the opposite from the above. He saw it when there was nothing left to take away.
The plight of Haitians is an extreme case of nothing left to lose. Deprivation-driven frugality was never meant to be so cruel and brutal. But is there a middle ground?
Examining your spending and eliminating what you want least frees up money for what you really want most. Is there some sacrifice and discipline demanded? You bet.
But the outcome is the future possibility of getting something you would rate close to perfection.
A relentless pursuit of what truly matters most will work if you adopt the rule that you can have ‘any thing’ you want but not ‘every thing’. This action starves the stuff that matters least when you stop using credit to buy them.
When there is nothing left of the stuff you want least you are truly being frugal.
Call it by any name, an attitude of thrift is a proven way to get what you want most with what you have.
When wanting more costs more than you have, happiness is not middle class.
Copyright 2010 William M. MacKay
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( 2.9 / 99 )As another conspiracy theory, the plot to render you poor is timely.
First, the question offers an opportunity to strike out at the perpetrators of the financial mess many people are struggling to resolve.
Secondly, it attempts to shift responsibility from the individual in crisis to a third party, one you can blame for your misfortune.
If only it was that easy to walk away from all the financial decisions you have made that have been debt-trimental to your investments, lifestyle, and dreams.
But while you can’t change the past you can do something so your current financial troubles never happens again.
Today, articles abound with prescriptions for being frugal, pinching pennies, all the usual approaches to doing what you should have done five years ago.
They go by various names; Right-Sizing, Living Well, Thankful Simplicity.
Pick one. The choice won’t matter much as long as you begin. “Live well with what you have” was a recent headline in Parade Magazine. More advice. There’s lots of it everywhere.
You and you alone still have to control your spending and the impulses that drive it.
Without a crystal clear awareness of the difference between what truly matters most to you and what matters least you don’t have a chance.
There are a multitude of products and services promoted as your salvation for all that makes you miserable, lonely, unhappy, and unfulfilled. Believe this at your peril because purchasing all of them will render you poor.
There is no plot to ruin you. You do that yourself.
Copyright 2010 William M. MacKay
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( 3 / 92 )Is poverty a human rights violation when a bank CEO still gets a $9 million dollar bonus?
If I am not mistaken wasn’t it just 2008 when a fraternity of financial institutions run by the equivalent of a small family were being bailed out by the very taxpayers who had suffered a greater decline in their invested assets than in the Great Depression?
THE FORGOTTEN PLEDGE
The long standing cry to give the world’s poor a voice has fallen on deaf ears. The injustice to be corrected in this instance was intended for those living in wretched third world conditions. Few countries have lived up to their pledge.
Now it seems, we should extend the call for justice to the middle class of all communities here at home brutally struck down financially by the gamesmanship of those at the helm of the banks and investment institutions who precipitated the collapse.
THE CIRCLE OF DOOM
Most individuals victimized by these events will never recover in their lifetime, leaving their families trapped in a circle of doom; deprivation, insecurity, and exclusion. It is the children of the middle class and the really poor that will be denied a lifestyle better than their parents. Without major changes economic mobility will continue to be a fantasy that is at last recognized as such.
I’m sure too that it was just the other day (pre the Toyota feeding frenzy) that a neighboring country collapsed and its starving millions were roaming its streets looking for their first meal in days.
While Haitians have clearly been struggling from more than a lack of income by decades of corruption and the incompetence of their ruling families they have finally been given a voice by humanitarians around the world. But what about the poor in our midst?
VOICELESS BY DISTRACTION
Where is the voice of the middle class, the working class, and the blue collar builders of our towns and cities who have been pushed into poverty? Their problem is not just a lack of income.
They have been rendered ‘voiceless’ by the bread and circuses managed by our ruling families aided and abetted by a media that is failing its mission and continues to be marginalized by corporate monopolies and cost cutting.
The Super Bowl, Federal Election Campaigns, Upstart Political Parties, Late Night Wars of Words, Golf Pro Infidelities, Academy Awards, Gas Pedal Recalls, etc. are given top-of-mind priority.
CAN YOU FOOL ALL OF THE PEOPLE ALL THE TIME?
These cultural apexes and icons of our daily life, however, will not be enough to keep us distracted forever from the massive overhaul of our lifestyle now past due. I am heartened by the shift many individuals are making. It’s time our leaders gave notice of their game plan.
Copyright 2010 William M. MacKay
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( 3 / 102 )Make the easy-living lifestyle a dream come true by starting a plan today.
Reverse the under saving, over spending course you adopted during exuberant times when ‘more’ meant more stuff, more space, more power, more debt, and more stress.
Because wanting more seems like a natural inclination of a consumer culture let’s stay with the ‘more’ theme. But this time gear up to more that would support and sustain the chance of actually creating a lifestyle that is not only possible but also highly probable if you manage three simple things.
1. MORE AWARENESS OF YOUR SPENDING
For starters, be blind to fashion and fads. Resist the ‘external’ influences that propel your spending on these products where satisfaction is short term. It is a fact that we are as strongly motivated by our interdependence (what others are wearing, doing, buying) as we are by our independence (values, dreams, interests). So be watchful. Smart people can do dumb things especially with their money.
Think. Don’t flip into autopilot when shopping. Don’t bring home bargains you don’t need. These are never a good deal. Wanting and getting don’t make them so.
2. MORE AVOIDANCE OF DEBT
Debt financing went ballistic pre 2008. Everyone was doing it. This was the “social proof” that it was an okay thing to do. Your intuition likely offered an opposing view but you ignored it as did so many others. Now, you dare not avoid the warnings if you want any chance of having an enjoyable lifestyle. Debt kills if it’s the wrong kind…the result of financing short term comforts, disposable stuff, and depreciating assets. A budget will help you identify where your money goes on these things. See below.
3. MORE FINANCIAL EDUCATION
Get smart. Start with an understanding of budgeting by doing one. It doesn’t matter whose system you choose. Just begin. It will help you manage your spending more strategically. The game plan is simple; spending on what really matters most will ensure you get to have a lifestyle worthy of your level of income.
Learn more about car financing, mortgages, and pensions. The pay off from financial literacy may be the best dividend you’ll ever get.
Copyright 2010 William M. MacKay
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