Strategic Default

i never said i was a genious
but you seem like a smart guy, so...
please go on, so i can keep laughing

and yeah i do, i was going to argue, but decided not too!

 

For nothing?? You're paying on a debt you agreed in writing to repay. Why do you feel the bank is obligated to absorb the loss on a deal you're no longer happy with?

You made the deal. Good or bad, it's your responsibility to honor it.

 

if thats how you feel. you live by it, but i sure as hell wont, as well as most other people.

 

Good plan. Keep passing the responsibility to the rest of us.

 

The maker of the deal is immaterial, the principle remains the same.

Additionally, let's drop the long held notion that buying a home is an investment. It's a purchase of a depreciating asset.

 

Guys, you know while I agree with the argument that "you should pay what you agreed on," you have to look out for yourself. The housing bubble was caused by the banks to start with by taking so many risky people and giving them loans to start with, and thus artificially inflated the market. So good honest people that had every intention and ability to pay these loans are now getting the big shaft up the rear with hyper underfinflated values, paying 2-3x or more less than their new neighbors... and for what? Ultimately you have to look out for #1, you and yours (family). The banks are already hit hard, your piddly investment won't make a huge difference to the bank, but it will drastically affect you and yours life.

So, yes I'm getting rid of my house because I can live closer to work and the actual city and cut my monthly down in almost half while having a similar house. It makes financial sense to me, and I can have more free cash for dates, toys, hobbies, whatever I want. It's just business.... it's how it goes.

 

i agree 100% with you. great post

 

Home ownership should never be considered a depreciating asset. It's not a car or other consumable. Yes, a house ages and needs upkeep/repairs/remodels but in the end you should still stay ahead if you take care of your home and the market is relatively stable. If I remodel my kitchen for $20k, I should be able to see it improve the value of the home by at least that much if not more. Repaint your car/truck for $5k and see if you are lucky to get an extra $1000 for it when you sell it. Equity is an investment, period. Some investments are good, some are bad. But, in a stable market you should be able to be profitable on your investment in 5-10 years and be able to roll that equity over into a better home or pocket the savings.

We chose not to pay substantially more than her home would be worth in the next decade, but to ditch one bad investment for a better one in the future. Millions of folks buy bad stocks and lose money on them. They sell them and move on to a better investment. I don't see those people getting ragged on, as they are essentially doing the same thing just on a smaller scale (sometimes much bigger).

Had millions of others not dumped their houses for less of a loss than us and helped put the market where it is, we wouldn't be in this position and we would have been able to sell our home on our own terms and at least break even.

 

While I do agree with Swanson to a point I also agree that you need to make the best decisions for you and yours. I dont soley blame the banks, they get to carry a majority of the burden for the bad loans and loans to people who ultimatly shouldnt have had them but the people who took those loans are also partially to be blamed, weather they lied or were lied to or were jsut ignorant they are still partially to blame. I am an honest and very proud guy myself so it would be hard for me to jsut turn and walk away myself but given the right circumstances I probably could. In this case, I cant say if I would or wouldnt because I am not in the situation.

As for your girlfriend, she screwed up with her house. If the company building her townhouse went out of business and did not complete her specific unit she was free and clear from her contract and could have gotten her ernest money back. They probably lied to her and pressure sold her a more expensive unit in a spot they knew was dying in adying market. So in that case, she is mostly to blame. My parents own a construction company and I worked with them for many years and if they did not follow through on her original contract she was free and clear. She might have had to fight and go to court to get her money back but she could have gotten it.

Now, the OP was asking peoples opinions. If you do or dont agree with it, feel free to state your opinions for or against it in an intelligent manor and leave the name calling and morality bashing to the religious threads. There is no need for it here and it does nothing to help or get your point across. Just makes you look like an ass. This is not directed at any one person so dont get your panties all in a wad.

 

x2. I remember PMing you about this a long time ago saying to do it.

 

This is a wrong statement. There is no garentee either way of a profit or a depreciation. It is an asset and like other investments (and lets not kid ourselves, it is an investment of time and money) it can fluctuate with the market and world influences.
If your trying to turn a quick profit as many were then if you got bitten than that is the risk and I have no sympathy for you. If you took a loan over your means or live on credit, I have no sympathy for you. If you bought a house as a long term HOME and fell on hard times, I do have sympathy for you and wish you the best.

The housing bubble was sustained by what I refer to as the death of the american dream. The oppertunity to work hard and better the lifes of those around you is no longer the american dream. It used to be the OPPERTUNITY to EARN things, to work hard for the things you wanted and needed. Now it has turned into the american entitlement, everyone must keep up with the jonses for the toys, the house, the car. You dont need to earn it, you can jsut pay with credit even if it stretches you thin and in the end when your debts are called in you cant afford to pay them. Then you complain because people take the things that you didnt EARN to begin with.

I got kicked out of High School, served 11 years in the military, went to war 3 times. Fought tooth and nail every inch of every day to get to where I am now. I am 32, no college degree, no high school degree, travel the world to over 75 countries and still counting, self taught, and am one of the top engineers now at the company I work and am routinley requested by both US and Foriegn governments by name to come and assist them. I have worked for everything I have gotten and owe almost nothing to anyone except my parents and all I owe them is the many thanks for instilling pride, honor, and a sense of hard work into me.

Thats what the american dream is about. I lived overseas for 12 of the last 14 years and I do totally understand why so many countries hate us. but at the same time many of the reasons they hate us is what makes us so great.

I am not a liberal or a conservative so dont label me as one, neither am I a tea partier or anything else. I consider myself a free thinking independant and do not conform to party lines at all or groups.

All I know is some people got a bad wrap, some were stupid or ignorant, and others did not care and prayed on the weak. The truth of the matter is that whatever the reasons, we have a HUGE problem in the US and it is the people. If the people wise up, the governments and the businesses and the bankers will fall in line. Plain and simple.


Ok, off my soap box!!!

 

dude that should be a dam speech. i also like that post. but i do think property is a long term investment

 

Thanks. I think I would make both the best and worst politician ever. I would tell people all of the crazy stupid shit I have done in my life, then tell them why that makes me the best candidate and what I can do to try to fix things. No promises other the promise to try and do my best. Then my first act would be to fire all of congress and the senate and have new elections. And your budget can not be any larger than the average household salary for a family in your state and you cant use ANY state funds. That means door to door and public speaking!!!

Like I tell people at work and when I get sent some place on an emergancy to fix things.
"I dont care if you like me, I dont care if you down right hate me because I am not here to make friends but you will respect me because I am the guy that they called make shit happen when the rest of you cant!"

That or this one...
"I am only good at 2 things, pissing people off and blowing shit up and I havent seen anything go boom around here today so keep running your mouth and see which one happens first!"

My boss tells me I shoudl be kept in a glass case with a sign that says "Break only in case of emergancy" because I tell people the truth be it good or bad, I dont play games, but I get results when no one else can. I personally think they shoudl add a sign that says please dont feed the wild animals" as well.

OK, sorry for the thread jack, back on subject.

 

You're either buying a home or an investment property. The two are absolutely mutually exclusive; if you view your primary residence as an 'investment', you need to reevaluate your understanding of investment strategy.

 

Great post. If you're ever in Denver, the beer is on me.

 

Thanks, I dont normally get on my soap box like that and I wasnt trying to thread jack but the "gimmie" attitude just really pisses me off, especially knowing how hard my parents worked for what they got and how hard I have worked to get all I have. Not saying anyone here is guilty of that its just I felt the need to vent on the subject.

 

No you're absolutely correct man. I'll be the first to admit I've had a pretty easy ride but I've done it all on my own too, I just had some great luck in getting the job I've had now with the way things worked out. There were people literally ready to close on a $180k house then the day before bought a $55k Escalade (first of all... should your vehicle really be 1/3 your house lol) then they were dumbfounded why they could no longer close on the house. Morons think that just because they have a pulse they deserve to be 50 Cent

 

lol. this is gettn good. sub'd for shear entertainment value alone! Sorry Mendy!!

 

I appreciate all these civil convos. This is what I was *hoping* for.

Me, I was moved out to AZ from Cali for my job. At the time (2005) the housing market was intense, and I bought something I could afford, even though I was approved for much more. I am beyond proud to be able to say as a single girl, I have a home. So many of my friends felt they couldn't buy a home till they were married. So I don't take this situation lightly in the least.