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Why do people spend money frivolously and then cry the blues when they can't pay their mortgage
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There is an implied assumption in your question that this is a prevalent situation. Yes, there are many in the US who spend money frivolously. Yes, there are many in the US who cannot pay their mortgage, and presumably these are upset at that situation. However, are the two groups of people the same, and more importantly, are they the same people at the same time?
It is possible that John Doe buys a house with a large mortgage. John makes a nice salary, so he can easily pay his monthly mortgage, and is still able to spend on whatever his passion may be. This could be sports cars, expensive vacations, or what have you. Some would call this spending frivolous, others would simply feel that since John can afford it, there's no issue. Then disaster strikes. John gets laid off, or perhaps has medical expenses that go beyond his insurance lifetime maximum benefit of $2 million. Suddenly, John can't pay his mortgage.
You may not have a great deal of compassion for John, since he spent tens or hundreds of thousands of dollars on vacations and toys, rather than squirreling it all away for a rainy day. However, with over 2/3 of our economy built on consumer spending, if the John Does of our country didn't behave this way, some to a greater extent than others, many jobs would be lost. Also, John's behavior is not unreasonable from his perspective both when he has his high-paying job, and he's living within his means, and later when he loses it, and is about to lose his home and gets upset about it.
I'm sure there are people out there who can't make their mortgage payments yet still spend what little money they do have on things they could do without. However, I don't believe this is to the point where they could pay a substantial part of their mortgage or even all of it, and simply choose to fritter it away on frivolous spending.
It is possible that John Doe buys a house with a large mortgage. John makes a nice salary, so he can easily pay his monthly mortgage, and is still able to spend on whatever his passion may be. This could be sports cars, expensive vacations, or what have you. Some would call this spending frivolous, others would simply feel that since John can afford it, there's no issue. Then disaster strikes. John gets laid off, or perhaps has medical expenses that go beyond his insurance lifetime maximum benefit of $2 million. Suddenly, John can't pay his mortgage.
You may not have a great deal of compassion for John, since he spent tens or hundreds of thousands of dollars on vacations and toys, rather than squirreling it all away for a rainy day. However, with over 2/3 of our economy built on consumer spending, if the John Does of our country didn't behave this way, some to a greater extent than others, many jobs would be lost. Also, John's behavior is not unreasonable from his perspective both when he has his high-paying job, and he's living within his means, and later when he loses it, and is about to lose his home and gets upset about it.
I'm sure there are people out there who can't make their mortgage payments yet still spend what little money they do have on things they could do without. However, I don't believe this is to the point where they could pay a substantial part of their mortgage or even all of it, and simply choose to fritter it away on frivolous spending.
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voted helpful: lisak52
A lot of people have terrible priorities. They buy toys, subscribe to all the cable channels they can, eat like a king, and then whine when things fall apart. The problem is, it used to be typical business for mortgage companies to reward people with poor spending habits by allowing them to take out secondary loans or combined loans for up to 110% a home's value at terrible rates without deserving the credit. The mortgage companies would repackage these mortgages and sell them off to sometimes unscrupulous lenders, sometimes unknowing investors.
Now, many of these individuals have again been rewarded by the government encouraging amnesty deals, remortgaging those who can't afford it anyway, and the like.
Another problem is the fraudulent mortgage practices. When I went to get a mortgage for my home, we qualified for a fixed rate. When we went to sign the final paperwork for the house at closing, the mortgage company informed us they had accidentally put us in for an adjustable. When I said I would not sign for that, they said I would be found in contempt of court and the ppl I was buying the house from would sue and I'd lose the money I put down on the house. One week after signing all of that, I got a notice that the taxes on the house hadn't been paid for two years and I had to pay off the lien. One month after that, I was informed that the mortgage was sold and it went up a few percentage points due to the new owner's decision.
We scrambled and struggled to stay afloat. After I got everything straight, my marriage crumbled. I sold all my 1950's Barbies to pay the mortgage my ex had not paid for months. . . and he took the house in the divorce anyway.
Now, many of these individuals have again been rewarded by the government encouraging amnesty deals, remortgaging those who can't afford it anyway, and the like.
Another problem is the fraudulent mortgage practices. When I went to get a mortgage for my home, we qualified for a fixed rate. When we went to sign the final paperwork for the house at closing, the mortgage company informed us they had accidentally put us in for an adjustable. When I said I would not sign for that, they said I would be found in contempt of court and the ppl I was buying the house from would sue and I'd lose the money I put down on the house. One week after signing all of that, I got a notice that the taxes on the house hadn't been paid for two years and I had to pay off the lien. One month after that, I was informed that the mortgage was sold and it went up a few percentage points due to the new owner's decision.
We scrambled and struggled to stay afloat. After I got everything straight, my marriage crumbled. I sold all my 1950's Barbies to pay the mortgage my ex had not paid for months. . . and he took the house in the divorce anyway.
voted unhelpful: lisak52
Your situation is not what I meant. You obviously got the shaft on the deal.
The first part of your response was what I was going for though.
The first part of your response was what I was going for though.
Well thanks for the black mark, Lisa. Since the beginning was what you were looking for and the second part merely a reflection that perhaps something is being overlooked when you see a person who cannot pay their mortgage. Truly though, I was stupid for letting them bully me into that ARM. I was very young.
On a much lesser scale, but equally confusing is why so many people complain about buying an iPhone app that costs $3 while at the same time not thinking twice about spending that every morning at Starbucks...don't get it.
voted helpful: lisak52
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These people have reasonable mortgages But choose to take excessive vacations,sign all their kids up for tons of extra activities that require money.Plus then they purchase cars they can not afford also to be reposessed.These people KNOW they can not afford all these things but still do it.