To all the 20ish people: In the sitcom “Friends” only Chandler had a nest egg put away for his future. I know this because Monica wanted to spend it on the wedding.Everyone else on that show spent their money on expensive coffee and clothes.
When people out of college say to me, I can’t find affordable housing, instead of just nodding, I feel like saying to them: “Have you ever watched “Friends”? People out of college with entry level jobs should start out sharing rents with roommates. During this time they are suppose to be saving money for a down payment on a home. If they are spending all their money there is something wrong with their budgets. Either their housing is too expensive (they need to add another roommate or they should move back with the parents) or they are spending too much money on crap. Tough love, tighten your belt.
When I started out in Manhattan I had two roommates. I saved money. That is how it is done. And, if you have a crappy credit score, fix it before you look for a loan. You might have to build it up for a couple of years. Life isn’t instant gratification.
A house doesn’t magically appear. You have to save for one. If you don’t have a down payment you have no business buying a house. You will just go into foreclosure.
This should have been the message in the newspaper to consumers years ago. I never saw it, did you?
Well, lenders are tightening the criteria for mortgage loans, finally, so you had better get the message: Save money like Chandler!
Read: Restrictions have new mortgage applicants feeling the squeeze by Kenneth Harney in the Home and Design Section of the Miami Herald:
"For example, a traditional cut-off point between prime and subprime loans -- 620 FICO scores -- has migrated upward in recent weeks. Some mortgage companies are posting 680 FICOs as the new demarcation line; others have set the break point slightly below. Webster Bank, a wholesale lender based in Connecticut, told its broker network on Aug. 7 that its ''minimum credit score has been increased to 680,'' and that's with full documentation of applicants' income and assets."
7 comments:
An excellent lesson for the average person. But why in your blog? There are no average people reading you. Both the bloggers and their readers are far above average in intelligence. You only have to read the blogs and the comments too see that. Get the information published in the newspaper and there would at least be a chance that someone who needs it will read it. Whether they will do anything with it is another story.
Mensa good point about our savvy readers -- however we are picked up by a National Blog and these articles do get all over the internet. Maybe one person will be influenced that needs it...
I am sure you are a person who values savings...
It's excellent advice. It's too bad we live in an age of instant gratification. The Madison Avenue types reinforce that. Perhaps most of the financially uneducated should read "The Millionaire Next Door".
The whole economy is build upon creating debt dependent people from our system of college loans to mortgage debt. This is what corporations and government want. Workers in debt will not rebel, they cannot strike, and they grow despondent about their conditions and don't or can't complain to their employers or the government. They see things in personel terms and feel that they are a failure and yet buy more to try to cheer themselves up thanks to Madison Avenue. If you analyze the US economy (and to an increasing extent the UK economy now that college is no longer free) this is what you will find. Look at France, Germany and other countries where labor militancy and higher levels of social welfare conditions exist and you will find much higher levels of savings and far lower levels of personal debt despire higher levels of taxation.
Good idea in practice...but what is all this Madison Avenue crap talk, check out craig's list real estate in new york and see how much it costs these days to live in a neighborhood within a 45 minute commute to manhattan, I'm talking about apartments with 2, 3, even 4 roommates. Then figure in student loans and the current cost of living. Not much money left over from my entry-level job my employer considers me lucky to have. The times are changing.
Well, my first apartment was in Queens and I commuted to Manhattan bus and subway, 1 1/2 hours each way...so it hasn't changed that much. You work your way up.
Times have changed much in NYC, if you read the NYTs as I am sure you do you will realize that even the wealthy are falling below the super wealthy. This is more true in Manhattan then ever before. The whole island, even the Bronx is full of rich people and some are so rich that even the (use to be) rich (like doctors, lawyers etc.) are priced out.
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