Forum Replies Created
-
AuthorPosts
-
earlyretirement
Participant[quote=flyer]
Concerning all of the diverse viewpoints here concerning risk and reward. The final answers most likely lie with each individual to determine how they want to “play” with their lives.Others can offer opinions, as many here have, but, in the end, each of us is completely responsible for our own decisions–and we will be forced to live with the outcome of those decisions–good or bad–like it or not.[/quote]
Oh absolutely flyer. We all have different opinions on risk/reward. I’m not even saying anyone is right or wrong. Everyone is just expressing their personal feelings and opinions on it which is what these message boards are all about.
I’ve found these message boards can be really educational just reading other people’s experiences and thought processes.
It seems like there are some strong personalities on this board and that’s ok as well. Just from reading this board, there are some really intellectual posts (and not… LOL j/k)… Seems to be a great site with many people that have been posting for years which is always a good sign.
Participant[quote=AN]ER, what you fail to see is the fact that you’re born here in the US already mean you already won a pretty large vagina lottery. So, your argument only apply if you got that good luck. Some people were not born with that silver spoon fed in their mouth. I know many who risk it ALL. When I say ALL, I mean their lives, not just money. Money can be made back. I know many who died trying. Literally dying, and not just lost their money. I also know many who are now millionaires because they took those risk. So, yeah, sometimes, you have to risk it all. I also know those who didn’t take the risk and now are stuck in an environment where there’s very little upside financially.[/quote]
AN,
I don’t fail to see that at all. I’ve always argued how WONDERFUL the USA is. It’s truly the best country in the world and I always feel fortunate I was born here. I do agree with you that anyone born in the USA is truly fortunate.
I don’t agree with you however that just merely that being born in the USA means you were “born with a silver spoon in your mouth”. I understand what it is like to have family that emigrated to the USA. So you can’t assume that people are just born with silver spoons in their mouths or had it super easy.
Still, I don’t think you can go through life with the attitude that people you know “risked it all” to come to the USA so it’s ok to justify taking all kinds of high risks and it’s all relative. (I’m not speaking about you..I’m speaking in general).
I’ve lived abroad for many years as well as traveling around the world quite a bit and I’ll always argue with anyone how wonderful the USA is and how fortunate we are here. However, in what we’re discussing above…. I’ll still argue for people not to take on irresponsible leverage and risks.
Yes, you can say people risk their lives coming to the USA for a better life and the risks some people take are nothing in comparison to that… however I’d say that is going way off topic and comparing apples to oranges..
My parents didn’t risk their lives coming to the USA on a boat. However, if they did, I think I’d have worked even harder and been even more aware of taking undo financial risks in life. That’s just me. I know others would do it differently and that’s ok as well.
Participant[quote=flu]
Well let’s see CAR…Let’s see how a kid’s attitude if they took your advice literally….
1. Don’t ever buy a house as an investment.
2. Don’t invest in the stock market/bond market, because it’s all gambling.
3. Don’t go to college, or if you do go, don’t major in anything technical, because we’ll all be replaced by robots or outsourced.
4. Don’t speculate and take risks on opportunity[/quote]
I can’t speak for CAR but on your points, I’d counter with these thoughts speaking for myself.
1. It’s one thing to buy a home. And also another thing to buy investments properties if you can comfortably afford them. Nothing wrong with either as long as you can COMFORTABLY manage the payments under a worst case scenario situation.
Worst case scenarios including possibly losing your stable job, someone in your immediate family having a medical problem, being in a prolonged bad economy where rentals can be affected on investment properties, etc.
Personally I’ve always believed in real estate as a LONG TERM investment and excellent for cash flow. In fact, it’s how I built up much of my net worth via cash flow from paid off real estate.
I think the thing you just have to be careful is “biting off more than you can chew”. I’ve met several people here in San Diego that bit off more than they could “chew” and either lost home(s) because they just leveraged too much.
One of my wife’s friend always says things like, “oh I remember when I was rich and had a big house, and had a maid, and had a Mercedes SUV, etc. etc.”. Her and her husband were obviously leveraged to the hilt. They not only lost their home here in San Diego but they also lost a home they bought/leveraged in Las Vegas. I always feel like telling her that she was never “rich”. It was all false….
2. I’m not sure I read anywhere where someone was saying it’s foolish to invest in the stock market. But it’s one thing to “invest” and another thing to “trade”. It’s two totally different things that are best not confused. Timed/planned/steady investments over a long period of time in a diversified portfolio is one thing but day trading is another.
And I’m not even saying that there is anything wrong with “trading”. My only point is that trading on margin can be treacherous with too much leverage. Also, it’s one thing to be investing in a diversified portfolio that isn’t too risky but there are lots of guys out there that are chasing a small basket of volatile stocks. That isn’t “investing” either.
Also, investing and even some leverage might make sense but I see lots of day traders with their 4 X buying power and their margin accounts that really get killed with sudden swings in the market and margin calls. What they are doing is NOT “investing”.
Also, it DOES make sense to protect your positions through responsible use of call and put options. However, lots of people just basically gamble with options. Again, I’d say you have to separate the two.
Also, it’s one thing to invest with YOUR money but quite another when you’re “investing” with leveraged money. For example, I recently met a guy that was telling me that he was taking these 0% credit card balance transfer check offers and depositing it into his investment/margin account! He said that he had very high credit limits and was paying 3% to deposit it into his account and then he was using this money and trading/investing.
Because money market and CD’s are paying almost nothing, he had invested all his cash in the stock market but that wasn’t even enough so he said he took $100,000+ in these credit card balance transfer offers. Sure, things might be rolling ok for him now in an up market. But in a down market you can get crushed easily.
Man, I told him how that is dangerous and I’d advise against it. But guys like this just think that this is “found money” and idiot proof. I just shook my head listening to that guy. He thought he was the smartest guy doing this… I don’t consider this “investing”. The truly scary thing to me is after that story I wondered how many people out there are doing things like this? I’d have to imagine if there are guys like this out there, then there are guys taking HELOC’s doing the same type of thing!
3. I’m in the camp that still says you most likely will need to have a college degree in a good major from a respectable University to get a good high paying job these days. Sure there are exceptions to the rule but I don’t see this changing in the near future.
Back when I graduated, it was still possible to have an almost “worthless” degree like Religion, History, Communications, Art and still get a decent job. But more and more that is not the case.
I still say that a college degree if you’re going into a field that isn’t totally worthless in today’s job market is still almost a necessity. And I do find the cost of a college degree is insane these days. But I still say it’s almost a necessity. I’m one of those students who graduated with six figure student loan debts (I totally put myself through college).
The truth is I could have NEVER gotten where I did in life if I didn’t spend all that money on a college degree. I wouldn’t have gotten the job I got or made the income that I made.
4. Personally I think it DOES make sense to speculate and especially take a risk on opportunity IF it’s within reason and IF you have a very good plan. It’s one thing to just gamble but it’s another to carefully put together a solid business plan or life plan based on that speculation opportunity.
As we discussed above, calculated risk/speculation is different than blind risk/speculation.
From my experience,some of the most successful and wealthy people I’ve met are people that DID take advantage of calculated risk/opportunities. But most of them put together very solid business plans. Everything was very well thought out. And even with those opportunities they either self-financed the opportunity or they got loans from family/friends. Not like using their credit cards like I hear some people do.
I think in life you do need to take advantage of various opportunities when they become available.
I truly believe that in most cases to be able to retire earlier in life you needed to have most of these things:
– Worked VERY hard in life.
– Been intelligent and made good investment decisions
– Either made a limited amount of financial mistakes or they quickly learned from those mistakes and didn’t repeat it
– Had some luck on their side
– Had good timing on their side be it in a particular investment, working for an employer that still offered great pension plans, or other element of “good timing”.
– Capitalized on a good opportunity where they took calculated risks
– Was careful with leverage ratios and never put themselves in a situation where they could “lose it all” with any particular investment
– Fairly well diversifiedThere are many others but I think most people have at least had these elements as a recipe for a possible earlier retirement in life. Obviously I didn’t list those that inherited money, had trust funds or won the lottery. That’s just good luck!
Participant[quote=flu].. I prefer to live in the present.
What’s the point of making gazzillions of dollars 10,20,30+ years from now if by the time you do it you’re 50+ and are shitting into your depends diaper?
If you think you can make money now, albeit at some risk…. Go for it…Fail now…You will fail at something anyway…Fail now, fail fast, fail young….Learn something from it…better than failing later when your 50+…..And apparently failing now is much easier to be forgiven than possibly in the future…
Clearly sitting on one’s ass isn’t gonna work in the future… Ok, it might work in California (for now)…. but probably not sustainable
Oh and find friends smarter than you….I like to think I’m a moron and much dumber than my friends…I’d rather that be the case than to be the “smart” person surrounded by a bunch of dumb people. Smart friends can help/educate dumb people like me….It doesn’t work the other way around and a lot harder if you have to do all the discovery/lessons learned yourself.[/quote]
I missed this post first time around. I just read CAR’s post and I agree. I don’t think anyone is advocating to sit on their ass and do nothing. Quite the opposite in fact. Short of winning the lottery, inheriting a windfall, etc. building up net worth usually takes a lot of time and VERY hard work. So I’d say it’s the exact opposite of sitting on your ass and doing nothing.
Also, I know you were being sarcastic above with the “Depends Diaper at 50 years old” comment. But see, that’s where I have a different outlook. You might look at 50 years old as older and I don’t look at it that way. The average lifespan now with modern science is approaching 80’s and I’d imagine a few decades from now it will increase even further.
At the turn of the Century when the average life expectancy age in the USA was only around 46-48 years old, you could say 50’s was “Depends Diaper” age. But now it’s a totally different story. Yes, it’s great in a way that modern science allows us to live so long but in a way it’s scary as well!
Time flies by too damn fast. I don’t think anyone on this board is a gazzilionare. And in life most aren’t. They are just people that worked hard most of their lives and are fighting the “fight” to not outlive their savings.
And sure having smart friends helps. I have lots of intelligent friends. Most of them are highly educated, hard workers, not only book smart but also street smart and even they have made hiccups in life. Some of them major hiccups. Most of us have all made financial hiccups in life.
[quote=flyer]
Even though many of us took some risk to build our wealth, I think, most likely, it was very calculated. Today, it seems, some people seem to be willing to throw all caution to the wind, leverage to the point that they could lose everything, and “hope” for the best.The stats on the net worth in this country tell the whole story. They aren’t pretty. .[/quote]
EXACTLY flyer. It’s all about calculated risk. Heck, I’m not even saying some of the players on this board aren’t calculating their risk. As I mentioned, I don’t know the personalities too well yet on this board or their personal situations.
I do agree that the net worth statistics and also the numbers of people that don’t have a sizable nest egg for retirement tell the true story.
Participant[quote=flu]
But I think a lot of people are full of shit… A lot of people were/are the ubber bears that will convince themselves not to do anything.
Some people will always miss the boat through there own inaction.[/quote]Yep. I’ll agree with you on this point. I also think the same thing. Especially on internet message boards. And yes, some people are permabears and some are permabulls. The key is not to be in either category and swing with the punches.
I always got a kick out of sites like http://www.patrick.net where permabears thought real estate would fall to $0. LOL.
Participant[quote=flu]Good luck people. Since I guess most of you here have already “made it”, you obviously know what the ticket is to financial independence…[/quote]
Flu,
I don’t think there is anything wrong with wanting financial independence. In fact, I think that is a great thing to strive for in life.
I think the point many people are making is it’s good to try to achieve that with reasonable/responsible risk. I”m not even speaking about you or anyone else’s situation on this board as I don’t know most on this board (Yes, I’ve met a few on this board and they were all very intelligent and great guys).
When I’m typing on here I’m speaking in generalities. I type about 175 words a minute so I’m just typing fast and giving my opinion but speaking in general.
It just seems like some people on this board and in life are trying to hit many “home runs” in a very short amount of time and get rich in a relatively short amount of time with limited risk.
Possible? Yes, absolutely. Probable? I’m not sure in all these scenarios.
Participant[quote=spdrun]Not hoping for a systemic crash, but Dow dropping to 9 or 10k inside of a few months would be awesome. Besides, a lot of the “imminent systemic crash” hype was just that — [/quote]
Well, that’s good that you’re not hoping for a systemic crash. But again, I reiterate that what you saw back in 2007 – 2009 wasn’t a normal bear market or simply the stock market crashing.
And no, it wasn’t just “hype”. I’m not sure how involved you are with the financial markets but I can tell you that it wasn’t just “hype”. Look at all the CDOs, SCDO’s, SIV’s, SPE’s, HCDO’s, CDPC’s, and other very toxic derivatives from 2000 to 2006 and it was some scary stuff! The exposure out there was very frightening. I mean look at Lehman Bros. A company that was around for 160+ years. You’re talking about the 4th largest investment bank in the USA. What successfully lasted for 160+ years was undone in a very short period of a few years with leverage. Just one example of many.
And yes, most people that use leverage will tell you that they use it responsibly. After all, how many people have you met that told you that they were irresponsibly using leverage???? LOL. You will probably NEVER hear those words out of someone that is using leverage. They ALWAYS tell you how they are using it responsibly or why it makes sense in THEIR situation.
Heck, even these investment banks that were using insane leverage were fighting off regulators that tried to reign in on their insane leverage multiples. NO ONE will admit they are irresponsibly using leverage. That’s human nature.
And of course you will have many examples of people out there that have almost no retirement savings, credit card debt, kids coming up in college and don’t have savings for them….. Yet they will tell you why they HAVE to take that HELOC so they can renovate their house. They will tell you how it’s wise…yadda yadda.
Some of my friends and clients were at the highest levels of some of these banks and also I have friends at the Federal Reserve Bank. Yes, it could have been close to a systemic crash. That isn’t some hype.
I’m glad that you made money during those tough times and all the power to you if you like volatility but you can’t try to downplay what went on. It was some scary stuff that I hope we never have to think about again.
Participant[quote=CA renter]ER,
Exactly! Over the years, I’ve come to the conclusion that most traders are no different than the professional poker players in Vegas. They just wear suits, instead.
One more thing that really surprised me was the inability/unwillingness of these Wall Street types to see the financial world and economy in a holistic way. I had always thought that traders on Wall Street would be totally knowledgeable about all things financial: accounting, economics, history/socio-political aspects of the economy, etc. During my discussions with some of these higher-level traders, I discovered that they didn’t know any more about these things than some hairdressers do. They only knew about the one asset class (or classes) that they traded, and that was it; they were not “intellectuals” who grasped how their actions could affect other economies or the potential socio-political ramifications of their actions.
While I do believe that some at the very top have a better understanding of the interconnectedness of markets and societies, our global economies are, for the most part, being run by rather ignorant cowboy traders who haven’t the slightest regard for how their actions might affect the rest of the world. It’s pretty frightening when you think about it.[/quote]
CAR,
Yep. Absolutely true about traders on Wall Street. Not everyone on Wall Street is like that. There are some old school type guys that are intelligent, mitigate risk, experts with asset classes, and understand true risk/reward scenarios.
But traders for the most part aren’t really too much different from professional poker players in Vegas. In fact, in many cases, I’ll argue that the professional poker players in Vegas might even be more intelligent because they understand the real world and at least are “street smart”.
I mostly work with high net worth and ultra high net worth folks. Earlier in my career I worked with some ‘supposedly high net worth’ traders. I saw “supposedly” because these guys might be worth 7 figures one day but the next day they would be worth nothing. As you mentioned, they were just gamblers.
Very quickly I stopped working with these trader types because they were a nightmare dealing with. For one, even though today they had lots of $$$$ the next day they would get panicked because they needed funds back as they got themselves in a hole. Just a vicious cycle. And most of them were very very very clueless. They would just yo-yo from being up one day and down the next.
Like you mentioned, you would think they would be intelligent. Understand about different asset classes, understand financials, profit and loss statements, risk/reward ratios. You would think if they are managing tens/hundreds of millions of dollars they knew more than you. Right? Nope. That many times isn’t the case.
I mean these were guys that were making 7 figures yet they were RENTING and not owning a place. They would always tell me how it was silly to buy as they could use that money and turn it into even more money. Yet at the end of the day somehow they never seemed to own anything and many don’t have anything to show for it.
These guys were dining out at expensive restaurants, showering girlfriends with expensive jewelry, taking fancy trips or traveling in first class. Supposedly wealthy guys. Yet, they never owned anything and always tried to argue that they were successfully using leverage.
I remember these guys would kind of rag on me because I preferred to wait and save up to buy a property. I didn’t really want to use leverage and they laughed saying how stupid it was. How they were making tons and tons of money and how they could turn all that money into more money. I was fine just saving and buying a place with cash after I saved up. Yes, very conservative but it was more my style.
So over the course of 20 years I’d work hard, save, buy a place. Rinse repeat. Obviously it gets easier as time goes on as you have more places, have more income and can save up more each year. The thing is the trader types will always say what I’m doing is stupid and how they can make more blah blah blah.
One thing I think is just much different today is we totally live in an “I want it now” society. Everyone wants to get rich overnight when that is just about impossible without taking on massive amounts of risk.
These guys will never understand or appreciate the power of compound interest or charting out a spreadsheet over many years/decades and watching it every year.
Yes, technology vastly improved the trading market. It’s a wonderful thing. But many traders of today don’t know how it was way back before the $7.99 trades. I remember when I first started investing. You had to actually call up a broker and it was wicked expensive. I remember paying upwards of $70 for a stock trade.
Back then you actually had to really think about if you wanted to invest in a company because the commissions were so high. LOL. Now it’s $7 trades and people trying to move with momentum.
It’s ok to trade and I know many successfully do it over a shorter period of time. But very few people that I’ve met that are active day traders are truly successful over a long period of time.
Participant[quote=spdrun]Personally, I’m hoping for another crash (at least in the stock market — since the property market in my region is still down where prices belong). I only trade short-term at this point, so it won’t hurt me much, but it would be a hell of an opportunity. I feel like I took advantage of 2008, but not ENOUGH advantage.
(They tend to happen once every 10-20 years, not necessarily once in a lifetime, so here’s hoping! And no, I don’t give a rat’s ass about people who are stupid enough to overleverage.)[/quote]
I hope you realize just how silly it comes across hoping for another “crash”. As to how much it will “hurt” you… you have no way of knowing how badly it would affect you.
I don’t think you quite understand the events that took place during this last financial crises. NO, that wasn’t a once every 10-20 year type thing. Yes, the stock market can take big dives but that wasn’t all that happened during this “Great Recession”. I suggest you take a closer and more in-depth look at the events that took place this last crash.
And hoping or wishing for something like that to happen again is just silly. Odds are if it did happen, it would affect many people in your life, your family’s life, your friends and neighbors. Job market, economy, financial system, your tenants, etc.
Even if your stock portfolio comes out ahead, no telling how much carnage it can cause in your personal or professional life. For example, I did well in the stock market during the meltdown (mainly because I was short selling the bond insurers and banks). However, I lost FAR more in my businesses with lost income due to the horrible economy, people losing jobs, etc.
It’s clear after that comment you don’t quite understand just how close we came to a meltdown. And financial meltdowns typically never work out that well for anyone.
[quote=AN]
this is coming from a guy who leveraged to get his 4 houses. Lets see… Economic crash causes stock to crash, your tenant looses their jobs, like in 2008, and they stop paying their rents. You still have to pay the mortgage while trying to get them evicted. When you got them evicted, you see that they just trashed your place and will cost you tens of thousands to repair. Yeah, that scenario sounds so desirable, just so you get pick up a few cheap stocks.[/quote]I still don’t know the personalities on this board that well. Or their personal situations but yes, this example above is just one example of what could happen. Many people get cocky or too confident when things are rolling their way.
Wishing and hoping for a major systemic crash and meltdown so you can score some good stock entry points comes across as kind of silly to me. JMHO.
Participant[quote=CA renter]
Absolutely true.I had a friend who was a fairly big-time commodities trader on Wall Street. He made many millions over the years, and I figured he still had most of it, especially because of the way he talked and how he and his wife spent money. We often talked trading and he would make fun of my positions (not terribly small, considering they were never leveraged) while showing me his very large positions and puffing his chest out. Always thought that was all his money. I always deferred to everything he said because he was an old-timer on Wall Street and had held powerful positions there.
Long story short, we ended up in a situation where they owed us money (just a few thousand, but still…), and we are now entering our second year in our collection efforts. They are flat broke, and I mean really, really broke. Apparently, all of those large positions were leveraged to the hilt. Because of his Wall Street connections, he was able to leverage far more than most people ever could, and his positions turned against him. Because of his age, he will never, ever be able to recover from this.[/quote]
CA Renter,
This ties in with that other thread we were all discussing how you never really know one’s true net worth. Your example you gave is a good one and there are LOTS of stories like that out there.
The ironic thing is many times it’s these so called financial gurus on Wall Street that end up flat broke. I also know some Wall Street types that totally got crushed during the Great Recession. It’s hard for me to fathom a guy making a few million dollars a year or tens of millions in his lifetime and having NO net worth or worse yet NEGATIVE net worth but there are lots of those guys out there.
When times are great they spend it all thinking it will always be there. Or they leverage it and lose it or they leverage it, make more money, leverage THAT and keep going but the thing with those types is they always think they can leverage and keep winning and sometimes it doesn’t turn out that way.
Wall Street is akin to a Casino in many respects. Look at Pattern Day traders and how they get 4 X buying power of whatever funds they have in their account.
I’m not saying leverage can’t be used wisely. Because it certainly can. But if we are going to discuss the merits of leverage and HELOCS you have to also discuss the potential pitfalls as well.
[quote=spdrun]
Why? So your 401k starts looking like a 201k…
Because I had no 401k or 201k or whatever, just a decent freelance gig and a non-trivial bank account. (And no interest in investing prior to the 2008 crash, but that changed in the ensuing months and years.)[/quote]
Congrats for entering the market at a good time. Hopefully a financial crash like the one we experienced is a once in a lifetime type event. You entered at a great time but it just comes down to good timing (i.e. luck) that you didn’t yet have a 401k. It’s very difficult to time the market. Just when you slap yourself on the back telling yourself how smart you are…… the market can whack the heck out of you fairly quickly.
[quote=spdrun]Yeah, but you’d have had to have been Stevie Wonder not to see the 2008 crash and foreclosuremageddon as some sort of business opportunity.[/quote]
Well, yes there were lots of opportunities but almost always in these kinds of events there are a lot of Monday Morning Quarterbacks. Don’t underestimate the power of fear. There were a lot of people that were scared and already tried catching a falling knife.
It’s great that you took advantage of things and it worked out for you. I also came out of the crises even better, but I’m not devoid to the fact that it was a very scary time for many.
I remember during that difficult time. I had a very close friend who works on Wall Street. He is a Partner at one of the big financial firms in NYC. He was old school and very wise. I remember him telling me about walking away from a $300,000 deposit that he put down on an apartment he was buying (investment property). He was just totally frightened because the whole financial world felt like it was going to collapse. spdrun, most people don’t realize how close we came to a systemic meltdown.
It’s easy to say now that you would have had to have been blind not to do/see X. But the reality is things could have really gone the other way…..
Also, with leverage you can have a guy that is on the right side of trades for 20+ years…. but then leverages it all on one “sure thing” and loses it all. I’ve also seen that. It doesn’t really matter your track record over the span of a long time….ultimately it just comes to the end of the day you still having everything you made and some people leverage one time too many…
ParticipantI said it before and I’ll say it again. The VAST majority of the people out there vastly overestimate their investment skills/abilities/timing.
I’m not saying everyone. But I’m comfortable with saying the vast majority of people out there. Everyone thinks they will do wonderful and their leverage/arbitrage play will work out for them. Especially in a stock market like this where it keeps going up. Everyone thinks they are some genius or guru. (Kind of like in the dot com days…. and the real estate bubble years).
Yet they won’t admit they probably $hit their pants during the financial crash and the Great Recession. Where no matter how many times they tried to catch a falling knife their hands got awfully bloody. Nope. They won’t admit that.
I’ve seen it time and time again over the last twenty years.
The people that leverage will always argue how they will always do smart and wise and fantastic things with the money that make it a smart or wise investment. Yes, sometimes it is. But lots of time it doesn’t turn out well for them.
And in many of those cases, you’ll never hear from them. They will tell you about their best investments but never about their worst investments or leverage plays that didn’t turn out well.
Human nature….
ParticipantPersonally I think it would be nice if they got hit hard but in all reality, many people were “in on the game”. It didn’t take a rocket scientist to see that much of that JUNK wasn’t AAA rated like they said it was. No one wanted to see the truth at all.
It was kind of like everyone knew the Emperor had no clothes on but everyone wanted to play along like he did. (As long as “he had clothes on” they could get fat off the King)…
I saw a lot of crazy things during the bubble. Lots of people wanted to try to blame someone else.
Quite comical actually. You had people that had $hitty jobs not making much money and they were some how “fooled” into lying about their income and buying a house they couldn’t afford. They blame it on someone else all the while knowing they couldn’t afford a house that was $500,000+. Yeah..it was someone else’s fault….uh huh.
There is a lot of blame to go around including these fraudulent sham ratings agencies.
I suspect they will get a slap on the risk and move on….same as a lot of the other players.
Those of you who haven’t seen the movie “Inside Job” should definitely watch it. It’s an EXCELLENT documentary that touches upon some of this rating agency junk. I believe it’s also on Netflix DVD delivery. (It won an Academy Award for Best Documentary Feature).
The typical John and Jane Doe will probably get sick watching it however…
February 4, 2013 at 11:07 AM in reply to: Over 21% of homeowners in SD County have paid off houses #758823Participant[quote=UCGal][quote=earlyretirement]
I always wondered about how things will end for some. And funny about you mentioning the topic of net worth. I just finished reading, “The Number” by Lee Eisenberg. It was a great and interesting read. (They have it at the San Diego County Library so you don’t even need to pay to read it).
http://www.thenumberbook.com
[/quote]Thanks for recommending this book. I’ve got it out from the city library now… It’s an easy read – I read about 1/2 of it this weekend, in between dealing with kids basketball, yard work, and chores.
Makes me look around at myself and others, slightly differently as I try to figure out what categories they fall into. And the prologue was very interesting – how lots of rich wall street types have moving numbers – based on status, ego, etc.[/quote]
You’re welcome UCGal! I agree it’s a super easy read. I read it in a long weekend. Yes, so funny you mention that about looking around trying to figure out where friends/family/neighbors, etc. fall into. After reading that I noticed I find myself wondering more about that.
I just started “Exposure” by Michael Woodford. It’s very interesting. CEO to Whistleblower. A guy losing his job for integrity. Not very many times you will see that these days. Also, recommended.
Participant[quote=bearishgurl][quote=patb]we may still be better off letting them discharge this debt.
we let corporations discharge debt in Chapter 11 and businesses are utterly ruthless, why do we put the dog on people who marry, have kids, etc..
If there is fraud, go after them, but, the system is awash in debt, that has to end.[/quote]
I am completely against this. I know several people (early gen-x-ers and boomers) who have deliberately taken out $65K to $120K in student loans AFTER the age of 45. I have NO IDEA who any of them think would hire them in this day and age after they obtained their lofty credentials. In all cases, this was an utterly foolish idea, IMHO.
At any age, it is grossly unfair to those who kept their noses clean and only paid for the education their could afford in life. IOW, their “contemporaries” (who elected NOT to borrow for college) shouldn’t be “outgunned” in the job market by those who successfully “stole” a bachelor’s degree or even graduate degree!
A college “degree” is not something which can be repossessed. There is no collateral here. The benefits of a degree follow the former student until their deaths. Just like a personal injury award (a condition that follows the individual who sustained the injury until their death), the injury award/college debt legally belongs SOLELY to the affected person.[/quote]
I totally agree with you BG. I don’t believe it should be easy to discharge student loan debt so easily. While I do think there are legitimate cases where someone might have a need to write off the debt, I don’t believe that it should be easy for anyone in bankruptcy.
I speak from experience having graduated with over $100k in student loans and paid them all back. As much as some people want to say a college degree is worthless these days. The truth is they are not. As mentioned, they are almost a necessity in getting a solid job after college.
Us taxpayers would be on the hook most likely if people were able to discharge them so easily.
As mentioned, I think banks need to change the way they dole out these loans and look at each individual situation of the student, their grades, their majors, etc. Obviously higher risk degrees (i.e. almost worthless degrees) would need to have parent co-signers that agree to pay it back if the student doesn’t. That would make parents think twice about Johnny or Janie getting that Art History or Religion major.
But I wouldn’t like to see everyone just able to discharge their student loan debt so easily as we’d get hit somehow. Banks would pass this on to us.
-
AuthorPosts
