Bad time to be solvent

November 17, 2008

Darn good question:

Should you keep paying your mortgage?

If you have significant equity in your home, absolutely.

If you don’t, it’s getting harder to answer that question, especially when our government keeps giving people who owe more than their homes are worth so many reasons not to pay.

I just made my last house payment in June. Talk about bad timing! And this just in:

A radical change in perspective could spare the nation a lot of grief down the road. Rather than subsidizing the auto makers directly (and almost certainly sucking Washington into their management), why not give Americans the financial incentive to accelerate purchases of cars and light trucks? The consumer-subsidy approach would be a less wasteful route to the desired end, as well as one that would leave a less toxic legacy of market intervention once the economy has recovered.

I just paid off my car, too, and it’s in good running condition! Man, can’t get a break at all. Maybe I should take out this huge home equity loan and use it to buy a fancy new car. What have I got to lose? Not the house or the car, certainly.

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6 Responses to “Bad time to be solvent”

  1. Larry Morris Says:

    I still think you made the right move – always best to be completely out of debt – will help us weather almost any storm, … and you beat me be about 5 months, we just paid ours off a couple of weeks ago – stay debt free, …

  2. Doug Says:

    There might be a legal issue that makes the answer different depending on where you live. It’s my understanding that in some places (California very possibly being one of them — it was a San Francisco paper you linked to, I believe); a deficiency judgment is not permitted where the homeowner is underwater on the mortgage. This is not the case in Indiana. If a mortgage holder forecloses on your house, sells it, and there is a deficiency, there will be a judgment against you for the difference.

  3. Bob G. Says:

    And (like my father always said) never live beyond your means….let’s the Joneses keep up with THEMSELVES (as they remortgage THEIR house)

    B.G.
    (debt free like there’s no tomorrow)

  4. Leo Morris Says:

    Doug — you make it sound like they aren’t making up the rules as they go along.

  5. Steve G Says:

    I need to buy a newer vehicle. Maybe I can just get the feds to buy it for me. I will be paying for it through higher taxes anyway. Might as well go for the big gas guzzler, that way I keep the ethanol plants running too. Stop the planet, my head is spinning too fast.

  6. tim zank Says:

    The actions of the last few months by our illustrious leaders have just reaffirmed an entire generations’ belief that they truly don’t have to be responsible for anything.

    Contract law is dead, why bother to write one for anything if congress can “modify” your terms?


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