The new smart financial move is walking away

[outtamojo]

Great post Davelj! As some walkers in Ca. recently found out, it is too early to proclaim that simply walking away is smart or as easy as some make it out to be.I cringe when I hear such advice given out- it’s not the adviser who’s gonna suffer any consequences, they’ll be long gone just like those loan officers who promised folks they could just refi their teaser loan later into another one.

[poorgradstudent]

[quote=briansd1]Housing is now living on welfare and you all know that happens when people who depend in welfare. They can’t get off the subsidies. Eventually, the government won’t be able to handle it anymore and the whole thing will come crashing down, if that continues.[/quote]
Slightly off topic, but the opposite is actually true of most recipients of welfare. The majority who use the safety net are actually short timers who utilize the resources available during tough times (job loss, health problems) and return to work in less than 2 years and get off the system. (Note: I’m not looking at things like tax breaks, since if you consider that “welfare” most of the American middle class with kids is sucking at the government teat and living off the childless). Only about 20% actually stay on welfare for more than 5 years. Not a trivial amount, although overall it’s a drop in the bucket of total federal government spending.

The policies of the Clinton and GW Bush administrations helped create and prop up the housing bubble, along with a lot of stupid banks and foolish borrowers. Still, it is the role of the federal government to increase spending and cut taxes during economic downturns (i.e. run a deficit) and (here’s the tough political sell) CUT spending and RAISE taxes during economic boom times. Again, both Clinton and GW Bush screwed up by cutting taxes during their respective good economic years rather than paying down the deficit.

[poorgradstudent]

[quote=briansd1]Housing is now living on welfare and you all know that happens when people who depend in welfare. They can’t get off the subsidies. Eventually, the government won’t be able to handle it anymore and the whole thing will come crashing down, if that continues.[/quote]
Slightly off topic, but the opposite is actually true of most recipients of welfare. The majority who use the safety net are actually short timers who utilize the resources available during tough times (job loss, health problems) and return to work in less than 2 years and get off the system. (Note: I’m not looking at things like tax breaks, since if you consider that “welfare” most of the American middle class with kids is sucking at the government teat and living off the childless). Only about 20% actually stay on welfare for more than 5 years. Not a trivial amount, although overall it’s a drop in the bucket of total federal government spending.

The policies of the Clinton and GW Bush administrations helped create and prop up the housing bubble, along with a lot of stupid banks and foolish borrowers. Still, it is the role of the federal government to increase spending and cut taxes during economic downturns (i.e. run a deficit) and (here’s the tough political sell) CUT spending and RAISE taxes during economic boom times. Again, both Clinton and GW Bush screwed up by cutting taxes during their respective good economic years rather than paying down the deficit.

[poorgradstudent]

[quote=briansd1]Housing is now living on welfare and you all know that happens when people who depend in welfare. They can’t get off the subsidies. Eventually, the government won’t be able to handle it anymore and the whole thing will come crashing down, if that continues.[/quote]
Slightly off topic, but the opposite is actually true of most recipients of welfare. The majority who use the safety net are actually short timers who utilize the resources available during tough times (job loss, health problems) and return to work in less than 2 years and get off the system. (Note: I’m not looking at things like tax breaks, since if you consider that “welfare” most of the American middle class with kids is sucking at the government teat and living off the childless). Only about 20% actually stay on welfare for more than 5 years. Not a trivial amount, although overall it’s a drop in the bucket of total federal government spending.

The policies of the Clinton and GW Bush administrations helped create and prop up the housing bubble, along with a lot of stupid banks and foolish borrowers. Still, it is the role of the federal government to increase spending and cut taxes during economic downturns (i.e. run a deficit) and (here’s the tough political sell) CUT spending and RAISE taxes during economic boom times. Again, both Clinton and GW Bush screwed up by cutting taxes during their respective good economic years rather than paying down the deficit.

[poorgradstudent]

[quote=briansd1]Housing is now living on welfare and you all know that happens when people who depend in welfare. They can’t get off the subsidies. Eventually, the government won’t be able to handle it anymore and the whole thing will come crashing down, if that continues.[/quote]
Slightly off topic, but the opposite is actually true of most recipients of welfare. The majority who use the safety net are actually short timers who utilize the resources available during tough times (job loss, health problems) and return to work in less than 2 years and get off the system. (Note: I’m not looking at things like tax breaks, since if you consider that “welfare” most of the American middle class with kids is sucking at the government teat and living off the childless). Only about 20% actually stay on welfare for more than 5 years. Not a trivial amount, although overall it’s a drop in the bucket of total federal government spending.

The policies of the Clinton and GW Bush administrations helped create and prop up the housing bubble, along with a lot of stupid banks and foolish borrowers. Still, it is the role of the federal government to increase spending and cut taxes during economic downturns (i.e. run a deficit) and (here’s the tough political sell) CUT spending and RAISE taxes during economic boom times. Again, both Clinton and GW Bush screwed up by cutting taxes during their respective good economic years rather than paying down the deficit.

[poorgradstudent]

[quote=briansd1]Housing is now living on welfare and you all know that happens when people who depend in welfare. They can’t get off the subsidies. Eventually, the government won’t be able to handle it anymore and the whole thing will come crashing down, if that continues.[/quote]
Slightly off topic, but the opposite is actually true of most recipients of welfare. The majority who use the safety net are actually short timers who utilize the resources available during tough times (job loss, health problems) and return to work in less than 2 years and get off the system. (Note: I’m not looking at things like tax breaks, since if you consider that “welfare” most of the American middle class with kids is sucking at the government teat and living off the childless). Only about 20% actually stay on welfare for more than 5 years. Not a trivial amount, although overall it’s a drop in the bucket of total federal government spending.

The policies of the Clinton and GW Bush administrations helped create and prop up the housing bubble, along with a lot of stupid banks and foolish borrowers. Still, it is the role of the federal government to increase spending and cut taxes during economic downturns (i.e. run a deficit) and (here’s the tough political sell) CUT spending and RAISE taxes during economic boom times. Again, both Clinton and GW Bush screwed up by cutting taxes during their respective good economic years rather than paying down the deficit.

[briansd1]

[quote=sdrealtor]I just dont think people are as quick to walk away. From what I have seen I just think Dave’s post was far closer to reality in the way people look at and react in these situations.[/quote]

I think that it depends on the situation.

If the purchase was a flip (rental or residence), then buyers are more likely to walk.

If it was a house for a family, there are social pressure to keep on paying.

For example, the wife might just love the house and the couple might think they’ll get the money back. But if the house payments are a hardship on the family, and if prices don’t recover to the peak, people will get worn out.

It takes time. The longer prices continue to drop or stagnate, the more people will walk away.

It’s not an easy process for most owners (even the flippers).

Psychologically, walking away is admitting defeat and calling it quits. But holding on gives one that ray of hope, however faint as it might be, that the money will be recovered.

I believe that walking away is based on the relative net worth of the individuals. If people just get by on their paychecks, they’ll get tired feeding the house while they sacrifice.

Since the peak, the cars people drive are still pretty new… When people realize that they can’t replace those cars because the house is sucking all the money, then we’ll have some reassessment.

The cyclical housing recession related to unemployment (not the financial crash) is only beginning to be felt.

So far, the foreclosures were due to the housing speculation. We have yet to see the cyclical foreclosures due to unemployment.

[briansd1]

[quote=sdrealtor]I just dont think people are as quick to walk away. From what I have seen I just think Dave’s post was far closer to reality in the way people look at and react in these situations.[/quote]

I think that it depends on the situation.

If the purchase was a flip (rental or residence), then buyers are more likely to walk.

If it was a house for a family, there are social pressure to keep on paying.

For example, the wife might just love the house and the couple might think they’ll get the money back. But if the house payments are a hardship on the family, and if prices don’t recover to the peak, people will get worn out.

It takes time. The longer prices continue to drop or stagnate, the more people will walk away.

It’s not an easy process for most owners (even the flippers).

Psychologically, walking away is admitting defeat and calling it quits. But holding on gives one that ray of hope, however faint as it might be, that the money will be recovered.

I believe that walking away is based on the relative net worth of the individuals. If people just get by on their paychecks, they’ll get tired feeding the house while they sacrifice.

Since the peak, the cars people drive are still pretty new… When people realize that they can’t replace those cars because the house is sucking all the money, then we’ll have some reassessment.

The cyclical housing recession related to unemployment (not the financial crash) is only beginning to be felt.

So far, the foreclosures were due to the housing speculation. We have yet to see the cyclical foreclosures due to unemployment.

[briansd1]

[quote=sdrealtor]I just dont think people are as quick to walk away. From what I have seen I just think Dave’s post was far closer to reality in the way people look at and react in these situations.[/quote]

I think that it depends on the situation.

If the purchase was a flip (rental or residence), then buyers are more likely to walk.

If it was a house for a family, there are social pressure to keep on paying.

For example, the wife might just love the house and the couple might think they’ll get the money back. But if the house payments are a hardship on the family, and if prices don’t recover to the peak, people will get worn out.

It takes time. The longer prices continue to drop or stagnate, the more people will walk away.

It’s not an easy process for most owners (even the flippers).

Psychologically, walking away is admitting defeat and calling it quits. But holding on gives one that ray of hope, however faint as it might be, that the money will be recovered.

I believe that walking away is based on the relative net worth of the individuals. If people just get by on their paychecks, they’ll get tired feeding the house while they sacrifice.

Since the peak, the cars people drive are still pretty new… When people realize that they can’t replace those cars because the house is sucking all the money, then we’ll have some reassessment.

The cyclical housing recession related to unemployment (not the financial crash) is only beginning to be felt.

So far, the foreclosures were due to the housing speculation. We have yet to see the cyclical foreclosures due to unemployment.

[briansd1]

[quote=sdrealtor]I just dont think people are as quick to walk away. From what I have seen I just think Dave’s post was far closer to reality in the way people look at and react in these situations.[/quote]

I think that it depends on the situation.

If the purchase was a flip (rental or residence), then buyers are more likely to walk.

If it was a house for a family, there are social pressure to keep on paying.

For example, the wife might just love the house and the couple might think they’ll get the money back. But if the house payments are a hardship on the family, and if prices don’t recover to the peak, people will get worn out.

It takes time. The longer prices continue to drop or stagnate, the more people will walk away.

It’s not an easy process for most owners (even the flippers).

Psychologically, walking away is admitting defeat and calling it quits. But holding on gives one that ray of hope, however faint as it might be, that the money will be recovered.

I believe that walking away is based on the relative net worth of the individuals. If people just get by on their paychecks, they’ll get tired feeding the house while they sacrifice.

Since the peak, the cars people drive are still pretty new… When people realize that they can’t replace those cars because the house is sucking all the money, then we’ll have some reassessment.

The cyclical housing recession related to unemployment (not the financial crash) is only beginning to be felt.

So far, the foreclosures were due to the housing speculation. We have yet to see the cyclical foreclosures due to unemployment.

[briansd1]

[quote=sdrealtor]I just dont think people are as quick to walk away. From what I have seen I just think Dave’s post was far closer to reality in the way people look at and react in these situations.[/quote]

I think that it depends on the situation.

If the purchase was a flip (rental or residence), then buyers are more likely to walk.

If it was a house for a family, there are social pressure to keep on paying.

For example, the wife might just love the house and the couple might think they’ll get the money back. But if the house payments are a hardship on the family, and if prices don’t recover to the peak, people will get worn out.

It takes time. The longer prices continue to drop or stagnate, the more people will walk away.

It’s not an easy process for most owners (even the flippers).

Psychologically, walking away is admitting defeat and calling it quits. But holding on gives one that ray of hope, however faint as it might be, that the money will be recovered.

I believe that walking away is based on the relative net worth of the individuals. If people just get by on their paychecks, they’ll get tired feeding the house while they sacrifice.

Since the peak, the cars people drive are still pretty new… When people realize that they can’t replace those cars because the house is sucking all the money, then we’ll have some reassessment.

The cyclical housing recession related to unemployment (not the financial crash) is only beginning to be felt.

So far, the foreclosures were due to the housing speculation. We have yet to see the cyclical foreclosures due to unemployment.

[briansd1]

poorgradstudent, I actually agree with everything you said in your post.

I was using a cliche about welfare. My bad.

[briansd1]

poorgradstudent, I actually agree with everything you said in your post.

I was using a cliche about welfare. My bad.

[briansd1]

poorgradstudent, I actually agree with everything you said in your post.

I was using a cliche about welfare. My bad.

[briansd1]

poorgradstudent, I actually agree with everything you said in your post.

I was using a cliche about welfare. My bad.

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