Stinkin' Thinkin'

[SoCal78_IHB]

I have an online friend I've known for a while now. Last night we were on the phone and she was opening up about their financial situation, which she has never done before.



I was surprised to just now learn they bought a home during the peak of the market (they are on the eastern seaboard) and took out an ARM loan. They are of course concerned about the upcoming reset and it will be completely unaffordable, naturally. For some reason they feel compelled to pour as much money into the home as they can, doing upgrades to the bathrooms and other areas for a quicker sale, despite their neighbors sitting on the market and other homes selling for far less. I think they actually believe they can get what they paid back then or at the worst, might lose a little out of pocket. (When I mentioned a short-sale she was completely unaware of what that meant.) Well amidst all this she's telling me about the upcoming cruise, vacation to Florida, and plastic surgery she's got scheduled. I told her it must be nice to be able to afford that. She said they don't really have any savings and just live for the moment. She went on to say years ago her and her husband had their own business and it was flourishing. I asked what happened. She said they mismanaged it and ran it into the ground. But, she said, that won't deter their plans for her surgery and trips because, "This may be the only opportunity we have to do these things." (Maybe there is a reason for that.)



So, now they are facing losing their home, damaged credit, and not doing anything to prepare themselves for having to start from square one. No game plan at all. Plus they have two little kids. It doesn't matter, though. It has not phased their mentality one bit.



Up until now I hadn't actually known a person in this situation we hear about so often. I do wonder what exactly has to happen for someone to change their views on spending and taking on debt. If this isn't enough of a wake-up call, then what is?? Well, just had to share because I found it rather disturbing.

 

[Daedalus_IHB]

Just like her before she told you, you probably know others who are in the same situation, but just aren't aware of it. I can only imagine how disheartening it must be to have your financial plans ruined by a turn in the market. Actually, no, I don't have to imagine. I recall taking a good whallop in the tech crash of 2000. Still waiting for my bailout by the way. I didn't give up, though it sounds like your friend may have. This being the "only opportunity" sounds like they're expecting a dearth in finances and credit in the future, with no acceptable way to get out of that hole. This has a lot to do with the sense of entitlement that IR and others have posted about. They deserve the things they consume and it's not their fault the rest of the world is having some financial problems.

 

[IrvineRenter_IHB]

[quote author="SoCal78" date=1225072464] I do wonder what exactly has to happen for someone to change their views on spending and taking on debt. If this isn't enough of a wake-up call, then what is?? Well, just had to share because I found it rather disturbing.</blockquote>


Most people will hang on to their lifestyle until they are cut off by their creditors. Denial is a funny thing.



I had a friend from high school that got in an accident the summer after our senior year. He received a $60,000 insurance settlement. This is an 18 year old male with $60,000 in his pocket. Of course, he blew it all. In fact, at the end, I remember him writing about $2,000 worth of bad checks before he left town in the middle of the night. Faced with the obvious loss of his lifestyle, he refused to stop the spending even once he was broke.