Bad Ideas All Around

In case you need to know this or anything, it was one hundred and four degrees here in Our Fair City today. At nine pm local time it is still ninety-five. This is the time of the year when I ask myself how stupid must I be to spend the summer here? As if that wasn't hot enough, I have to drive to Phoenix tomorrow. It was one hundred ten degrees in Phoenix today. Luckily the forecast for tomorrow is only one hundred seven. Since the humidity is under ten percent in Arizona this time of the year, it feels a few degrees cooler than it really is. When it is one oh four, it doesn't feel much over one oh two. Why you may be asking would anyone drive to Phoenix, Arizona, the armpit of the nation? The hot and sweaty armpit to boot. As it happens, I have to go to the bowling tournament that I missed the first day of last Saturday. The team event is tomorrow, so I have to go or the other four guys will be pissed. Tomorrow will be the last time I ever drive to Phoenix...ever, do you here me? Ever! In other, non-weather related news, I often listen to a podcast of a program called The Story, hosted by a fellow named Dick Gordon. Mr. Gordon has a daily program produced by North Carolina Public Radio. The format is that Dick interviews someone each day who has a story to tell. It is often very interesting, although some of the stories seem a bit on the whiny side to me. For instance, he had a story this week about a Kentucky National Guardsman who lost his family home to foreclosure. The story has a heavy undercurrent of things not being fair, America not treating its returning vets appropriately and capitalism run amuck. After all, why should a soldier returning from Iraq have to face foreclosure? Shouldn't the government or the banks step in to help a brave warrior at least keep the roof over his head? Most people would think so. This fellow is married with three kids. His wife was employed at a mortgage company, where her boss convinced them that they could afford to buy this house with no money down. He signed them up for a 4.25% adjustable rate mortgage (ARM). Our soldier freely admits that he didn't really read the papers he signed and for sure didn't understand that his mortgage interest rate would continue to rise as the prime rate did. Mistake one was buying a house they couldn't afford. Mistake two was getting an ARM and mistake three was not understanding what they signed. The cardinal mistake, one so great it cannot be numbered, was taking advice from a mortgage guy. This guy was called up to duty and sent to Iraq sometime after they moved in. With his combat pay, his income increased over $800 per month after he was deployed. All the better, money-wise anyway. Unfortunately, while he was gone his wife quit her job (mistake four) and tried to start a business, which sounded suspiciously like it was selling Mary Kay cosmetics. She was an utter failure and ran up significant debt trying to keep the business going (mistake five). She also quit making the house payment to fund the business (mistake six). When our soldier returned from Iraq he began to try to dig out of the mess by getting a second job. His wife refused to ditch the business and get her own job, thinking that the business was ready to take off (mistake seven). Our guy tried to get the bank to restructure the loan but by then the ARM had adjusted way up and he was hopelessly behind, with no hope to catch it up. The bank foreclosed and that was that. Sad state of affairs. Dick asked this fellow if he thought that buying the house was a mistake in the first place and he said no. He thought that someone should have stepped in and help him and others like him keep their homes. I have to disagree. As I have posted many times, the only way to borrow for a home is with a fixed-rated, fully amortizing 15 or 30 year loan, using a reputable lender. If you have to resort to tricks to make it happen, it just isn't worth it. Things in this blog represented to be fact, may or may not actually be true. The writer is frequently wrong, sometimes just full of it, but always judgmental and cranky Tag: Daily Life Personal Finance Humor