More On Mortgages and Home Ownership

I hope to do a whole bunch of research on financial stuff in the coming months (along with a bunch of other stuff, too, of course). Why is this? Because I am generally clue-free when it comes to money and based on my understanding of how well my fellow Americans handle their money (not very well at all) I'm guessing most Americans don't know squat about money-stuff, either.

I can't remember where, but I remember hearing that the number of savings accounts kept in America is tiny. I used to have two until Wells Fargo started charging $8 a month to keep them--how absurd is that? The banks have such a great scam going and they have the nerve to charge for a savings account? Well, I digress, this post is supposed to be about mortgages and home ownership.

Let me tell you a story of my parents. It's a long story, so keep reading if you've got some time.

So, here it is--a story about my parents. Well, half of them anyway--I've got four thanks to divorce and remarriage. The poorer half, my mom and step-dad (who shall remain nameless on my site--hell they've got different last names from me, anyway) were classic lower-middle-class parents to me. They struggled to make ends meet and managed to do so. Every once in a while there was the visit from the repo-man or the hushed conversation about how my brother and I would go to college, but for the most part money wasn't a major issue for me growing up. My parents had embraced the American Dream, as it were.

They both had decent paying jobs, a mortgage on a small but nice home in suburban New Jersey and would come home from work and widdle away the hours watching Wheel of Fortune, Jeopardy and then whatever else was on that night. They must have lived comfortably like this for the better part of a decade or so.

As a workaholic, I look back at all the time they spent watching TV and want to vomit, but that's something else to blog about.

The point is, they were happy. They had jobs, a house and a family. They even decked over the back yard and put in an above ground pool. Everything was reasonably cool until one day in my senior year of high school. I was on the phone with my then girlfriend Alicia when I heard what I thought was arguing going on in the living room. Alicia could hear the yelling on the other end of the phone. "What is that?"

"Um, I think it's my parents fighting again," I replied. I moved toward my bedroom door to listen. It sounded more excited than the standard arguing, so I told Alicia I'd call her back. I slowly creeped up the stairs from my basement bedroom, trying to hear what they were saying. The closer I got to the living room the less it sounded like a fight and the more it sounded like...a celebration??

I peered into the living room to see my mom and step-dad literally jumping up and down, yelling and screaming--the dog was jumping up and down, too, but he did that when anyone got this excited. His behavior was normal--but my parents, they were acting like... like they'd just won the lottery.

Of course, they had.

As a kid I always thought this meant amazing things were in store--I thought we'd be going moving to Europe or building a spaceship or who knows what--but it turns out that the million dollars we won couldn't quite go that far. However, back then, being a millionaire still meant something. Now, they got the money spaced out over the span of 20 years, so there would be no trips to Monte Carlo, but as a kid who generally respected his parents, I figured the right things would be done with the money and to a certain extent, I was right.

My brother and I got to go to college.

Actually, that was about the only good thing to come of the lottery. Everything else was actually kind of bad. In the months and years following the lottery win my step-dad would tell the story of how he knew that they would win that day. He also talked about how he quit his job the next day. I eventually found out that the latter claim was a lie.

It turns out that the very day after my mom won the lottery (she had technically bought the ticket) my step-dad was laid off thanks to company cut-backs. That was OK, they thought, they had just won $1 million. They decided to get two new cars and cell phones for each car (back when this was a big deal). The catch is, thanks to the check beind divided up, they got about $30,000 a year for 20 years. They couldn't afford to buy two new cars, outright, so they leased two new cars.

They gave me and my brother a stack of cash ($100 each) to blow on comic books, but that was it. They bought a lot of stuff for the house, two time-shares and invested a huge amount of money in the stock market.

Did they pay off the mortgage? No. Did they put any of the money away for a rainy day? No. This all made a difference when their stock market investment went completely south and when my mom's employer decided to lay her off, as well. She got plenty of warning, which was nice, but finding another job had proven impossible for my step-dad, so my mom tried to find another job in her company that wasn't being phased out. They decided they couldn't stay in New Jersey because they couldn't afford to continue paying the mortgage.

So, she found a gig in South Carolina and moved there. They sold the house, paid off the mortgage in Jersey and took out a mortgage on a gorgeous home in SC on 2 acres of land. It was amazing--this was the home, they said, that they wanted their grandkids to come and visit them in. My brother and I agreed that it would be a great place to bring our kids.

Well, it would have been, had my parents done a better job of taking care of their finances. Again, rather putting that lottery money away for a rainy day (as if they hadn't had plenty of those already), they continued living like they had won the lottery instead of realizing that the economy was going south and that they had to move to the south to afford a home and playing smart with their cash. My mom decided that she needed more money than what the lottery was giving her every year--even more than the lottery on top of her dayjob. So, she sold her future lottery winnings to one of those investors.

Have you heard of them? They go around buying up people's lottery winnings. They say, I'll give you $500,00 for your $750,000 right now. So, my mom does something like this (she never told me the exact numbers) and gets a huge sum but signs over the rest of her lottery checks to this dude. She then proceeds to--well, to be perfectly honest, I'm not sure what she did. All I know is that eventually, her company laid her off again and since they still hadn't paid off the mortgage, they couldn't afford to stay in SC.

What was worse was that the housing market was terrible and they couldn't even sell the house. So, the bank foreclosed--they lost the house I was supposed to bring my kids to.

In the following years, they took some odd jobs around the country, where ever they could find work but eventually, ironically, ended up back in SC working for a company owned by a family friend there.

Now, I'm sure what happened to my parents doesn't happen to everyone. However, I'm pretty sure that similar things have happened to plenty of other people. See, my parents believe in the idea of the American Work Ethic. Get a job, work hard, raise your family, have a mortgage.

Good old-fashioned American Family Values!

Did those values serve them?

What do you think?

Sure, even at their toughest, the days my parents experienced were better than many face around the world, but the things that were supposed to deliver them a good life, instead kept falling apart under their feet. Every time they'd put their faith in the system, it would fail them as it does a great many people.

My parents had two chances to pay off their mortgage. They had plenty of opportunities to buy land as investments. They obviously could have put some money in smarter investments of other kinds or even opened a savings account or two. Why didn't they? Well, I didn't ask them before writing this post, but as far as I can tell, they trusted the system to take care of them the way it had before they each got laid off.

There's this idea that companies will take care of us--even today, in a world where layoffs and cutbacks are incredibly common, we think benefits are something companies provide because we'll always have a job, therefore we'll always have benefits, right?

Wrong. It's very likely that all of us will be out of work at one point or another. This is my main reason for avoiding home ownership--I know there will be times when I can't find work and I don't want some absurdly long commitment to spend hundreds a month hanging over my head stopping me from enjoying life.

You know, before "civilized man" came along, humanity survived for $100,000 years. We may not have had the easiest of lives, but we survived. We didn't have to make money to pay bills, we just had to grow food, hunt food and procreate. But instead of those basic needs being our focal points in life, we want to make sure the cable bill is paid every month. The bank needs their payment or else they'll come and take the house, as my parents learned.

We all seem to be so tied up in the way the world works never stopping to think how unnatural it really is. I'd say about 90% of what we all do every day is not really required to live. However, we're all programmed to believe that those things are.

Sometimes I feel like an alien from another world looking in at humanity for the first time and asking: "What the hell???"

Why would they run their world like that?