If Everyone Took "Don't Spend What You Don't Have" Seriously, No One Would Own A House

[stopbush]

Right?

[hifiguy]

1. No new cars, either.

And the furniture and appliance stores would be pretty empty, too.

[madaboutharry]

2. A lot of people wouldn't own a car or

be able to help their kids go to college. There is a difference between spending money on stupid crap and taking loans to buy a house, a car, or a college education.

This is the "Great Depression" mentality. There is a generation of people who lived their lives afraid to owe any money. The were emotionally damaged by the poverty of the 1930's.

[piratefish08]

3. and EVERY SINGLE issuer of a credit card in the entire country. yeah. they Right supports

crushing that industry......



the fucking morons don't even hear the blather out of their own mouths anymore.

[Lone_Star_Dem]

4. Fact is we're a consumer based economy. We'd dry up and wither away if Americans did that.

We have to spend to keep things rolling. Which is why this insane assault on the middle class has been destroying our economy. The middle class spending is the grease that keeps the wheels turning.

[upaloopa]

5. No it means don't borrow with terms you can't

afford also.

[a geek named Bob]

11. Indeed!

My wife and I saved up our pennies, and bought our house. No mortgage needed.

[RebelOne]

6. I am a believer in that philosophy.

I had to declare a Chapter 7 bankruptcy several years ago because of credit card debt. So now that I am free and clear of all debt, I do not buy anything unless I can pay cash.

[LiberalFighter]

7. Someone should ask Romney why he took out loans to buy companies.

[kctim]

8. Wrong

We wouldn't have McMansions, multiple huge cars in the driveway and so much trash. Our utility and fuel bills would be significantly lower, as would our enviromental impact.

If everyone took it seriously, we wouldn't be in the position we are.

[kelly1mm]

9. I bought my first and every subsequesnt house with cash. The vast majority of people

do not, but it is possible.

Note, first house was a fixer upper I bought for 20k, lived in it while I fixed it up, sold it to buy a nicer fixer upper, then kept doing that (4 times total) till I bought my farm for cash.

[exboyfil]

10. While I have a mortgage

I have not borrowed money for any other thing since I was 25 or so and paid off my student loan and first car. I owe about 80% of my annual salary for my house, and the mortgage is a very low interest rate.

In general borrowing for nonproductive assets is a bad idea. While purchasing a home may be slightly more expensive than renting, it conveys numerous other benefits that outweigh the extra cost (most importantly being the selection of the public school). Borrowing for a reliable car to get you to work is also an investment in a productive asset. Note both of these purchases should be made at the lowest possible cost/highest return of investment.

Some people have to borrow just to survive, but in general do not borrow for perishables (food, clothing, entertainment, etc).

[Egalitarian Thug]

12. A case can be made that the reason houses cost as much as they do is because of the

nationwide acceptance of the mortgage industry. There are lots of variables, but if you track the price of a new home against average annual household income, houses cost about 2 - 2 1/2 years wages until mortgages became common for the working classes.

One of the fundamental principles of economics is that everything is worth exactly what you can sell it for at the time you sell it. When people have to save their wages until they could afford to buy a house, that caps what a house can be sold for. As many people have learned in the last four years, you may believe your house is worth a million dollars, but if all you can sell it for is $300,000, then it's worth exactly $300,000 at that time.

[FarCenter]

13. Houses wouldn't cost nearly what they do now. So lots of people would own them.

About 40 percent of "homeowners" actually own their homes free and clear.

[reformist2]

14. +1000 - When we all want something so bad, we drive up prices to their upper limit.

And sadly, banks are all too willing to help us in this game where everyone loses (except the bankers).