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Fiscal Irresponsibilty
Published on December 28, 2008 By MusicMayne In Current Events

Let me tell you why we are in a financial crisis. There is a general lack of training with our present and following generations on how to handle money. Money is viewed as a means of purchase instead of a means of sustenance. We are a BUY BUY BUY country. I have a friend, married with two kids and a modest salary. Not as modest as mine but modest. He bought a $250,000 house....ahem mansion. That guy has about as much business owning a home with 4000 square feet than I do owning a professional hockey team. His house payment is equal to 2/3 of his salary and that does not include the new mini-van he financed at the rate the car company offered because "he doesn't like confrontation."  It is the fiscal responsiblity to the board of directors of a bank as well as to the potential customer that banks consider house loans on the TRUE salary that a person makes...that is their "take-home." Instead they base it on the Gross. That makes 0 sense. Banks were loaning to just about anyone and there were countless advertisements saying, "We will get you approved!" Now they want a bail out? Gee, I wonder if it was dumb to sell a 250,000 home to a guy that makes 60,000 a year and owes tens of thousands in credit card and student loan bills? The failure of our banking industries are directly linked to irresponsibility in lending practices. You cannot loan to any Tom, Dick, or Harry. We, the American public are so into the have it now mentality that we have allowed ourself to be drug along with all these failures and we have watched retirements sunk because of the fickle stock market.....all related to the fiscal irresponsiblity of our banking industry.

We are in this crisis because we pay $72, 000.000 to professional athletes that aren't worth the writing on their contract. You may does this have to do with the crisis. It shows fiscal irresponsibility to pay a middle age guy to chunk a ball downfield all that money. The mentality of many of them are a great the professional athlete that made at least $12,000,000 a year in salary and endorsements complaining during a strike that they were "just trying to put bread on their table." GAAAK! I could barely write that. Money is mistreated and it is a fickle mistress that will bury you if you fail to treat her right.  We sink billions into movie stars, athletes, .....etc. Even the car companies that begged for money in Washington were "considering cutting some of their celebrity endorsements." Like the millions Tiger Wood collected for knocking chocolate out of a little white ball and the more millions he collected by saying that he likes GMC even though he probably drives a foreign sports car. (LOL). I find that one funny.

We have learned to use money to get what we want and not what we need. The greater concern coming should not be are we in a recession but in how are we going to sustain the retiring baby boomers in a depressed economy. The single largest retirement surge in the history of the world is in progress. How will we meet their retirement needs and pay billions to the beggers hounding Washington. Most people do not realize that the $700,000,000 is printed money from the Feds. More money in circulation means lower dollar value....lower buying power.....and a depressed economy.  Thank you to the fat cats begging for a golden parachute when they deserve to be air dropped parachute-less in the middle of the Sahara! 

We will see a massive drop in our economy over the next year or two. We will not recover unless we re-prioritize our spending and learn to buy what we need...not want. We must learn to use money effectively so we can support ourselves and not have to spend our career investing in retirement accounts that probably won't be there when we retire anyway. Everyone needs to get Dave Ramsey's Book, "The Total Money Makeover" and get busy getting busy.

on Dec 28, 2008

I think the next few years are going to be pretty rough for us.

We are tapped out on credit at this point and with the baby boomers starting to retire, there will be a loss of investment resources too.

on Dec 28, 2008

I you see what I mean Draginol. And most people are hiding their heads in the sand.

on Dec 29, 2008

US$250,000 (EUR 200,000) wouldn't buy you a mansion in Ireland, not even a two bed room flat.

I made some calculations. If I bought a flat or house I could afford, monthly payments would be about 1/3 of my income (assuming I remain at my income level, which is not so likely).

However, because of how the tax system works, I would save enough in taxes to be better off at the end of the year than if I paid the same amount of money in rent.

Unfortunately I have a somewhat good job with a good income and prospects of being in similar jobs in future. Before the banks essentially stopped giving mortgages they were more likely to give a mortgage to an unemployed dude in the US than to me. I think that might be part of why there is a banking crisis now.


on Dec 29, 2008

US$250,000 (EUR 200,000) wouldn't buy you a mansion in Ireland, not even a two bed room flat.

IN many places here, it would not either.  But in some (specifically the fly over country) it does.  And 4000 sq feet is a mansion.  My first home was about 1100.

Very good article.  You are not going to get an argument from me.  Most of what you say I pretty much knew.  But you put it very well.

on Dec 29, 2008

Hahaha Doc I think my first home (an apt) was less than 1100.  It was sure very small.  It was basically an upstairs of a townhouse converted into a small apt. 

I've raised a family  (4 kids and various animals) and have had live in relatives and dorm students live with us for extended periods of time over the years and have never had a home bigger than maybe 2500 sq feet. 

We could have had much nicer more expensive homes but we always lived within our means if not "under" our means.  Because of that we recently had two homes (over 200K and 300K) each completely paid off and no outstanding bills or car loans.  We never had a big income.  For most of the kids growing up years I was a stay at home mom babysitting in the home.  We  went over 100K only a few times (just the last few years) and not much over.   My brother who makes at least one and half times as much as we do (he's a pilot) recently asked me "how did you do this and put the kids thru college too?" 

Easy, we barely ever had a mortgage .  We just kept moving up and only paying what we could as much in cash as we could pay for it and then moving on after it was paid up.  The rule of thumb, according to my CPA husband has been to never go over 1/3 of your income for mortgage, insurance and property taxes.  So calculate all your housing costs and don't go over that 1/3 amount.   Banks will go 40% but we don't reccomend that if you really want to do well. 





on Dec 31, 2008

Hahaha Doc I think my first home (an apt) was less than 1100.

I meant a house.  My first was about a 750 sq ft apt as well.  Those were the days!