Curb My Enthusiasm

As the old saying goes – “home is where the heart is.”

With millions of Americans thinking about walking away from their houses simply because they are worth less now than when they were purchased, there is apparently a lot of heartless people out there.

While it is disheartening to know the monthly mortgage payments are higher than what they would be for the same house in the current market, when did it become more of an investment and less of a home?

“We just got some really bad news,” a family member told me the other day in a very solemn voice. “We had our home appraised and it is much less than what we thought it would be. We’re not sure what we’re going to do now.”

That is not news anybody wants to hear, obviously, but considering how much her family loves the home and the neighborhood – not to mention the school district for her children – I wasn’t sure how to respond. I mean she plans to be there for many years to come, so is the fact that her home is “underwater”  really “bad” news?

Maybe I was just naive, but growing up I don’t remember my parents ever talking about our house in monetary terms. I’m sure they may have always kept an eye on the market, but the goal was to simply find a nice community and place to raise five rambunctious kids.

Basically, over the next 25 years, the house was praised – not appraised.

Today, however, there seems to be a different mentality. For some reason, people are less concerned about living the “American Dream” and more concerned about their potential “Underwater Nightmare.”

Of course in many cases this is warranted. There are those who have lost their jobs or for whatever reason can no longer pay their mortgage. For them, foreclosure and walking away may be the only unfortunate solution.

For people, such as one particular member of my family, who are thinking of leaving their submerged homes in the hands of the banker despite the fact they can still afford them, it may be time for a change of heart.

In the end, it’s important to remember that while an investor may claim it is of less value than you want it to be, when it comes to raising a family, a home is priceless.

As the saying goes “home, the spot of earth extremely blest. A dearer, sweeter spot than all the rest.”

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To ensure Americans follow a brighter, sunnier economic path in the future, perhaps we need a little Frost.

In his famous poem “The Road Not Taken,” Robert Frost writes about an autumn traveler who comes to a fork in a path and has to decide which one to take. While a meaningful and metaphoric poem regarding life and the path we all choose to follow in it, it could easily apply to our modern-day housing situation as well.

“I blame Bill Clinton and Janet Reno for this whole mess,” a friend of mine blurted out the other night as we talked about all the foreclosed homes in his neighborhood.

When asked why, the reply was: “They set the ill-guided policies that led people to get in over their heads.”

In times of incredible wealth and profit, it is the duty of our leaders to make sure all Americans have the opportunity to share in the economic gain. It is what separates the great United States of America from your common oligarchy.

The bottom line is we the people care less about polices that will help us 10 or 20 years from now and more about what will help us in the here and now. After all, it’s all we know – it’s what’s real and tangible.

Policies that seem ideal for today may actually prove otherwise come tomorrow. It’s just the nature of the financial game all our experts play, conservative or liberal, which we all hope balances out to economic growth in the end.

In terms of the current housing crisis, for argument’s sake, let’s say everything my friend said is true. In their grand desire to help every citizen share in the American dream, Jimmy Carter, Bill Clinton, and Janet Reno were the ring leaders who paved the way for the creation of private financial institutions that ultimately allowed unqualified individuals to buy homes they can’t afford.

Are they still to blame? Are polices that make it much easier to qualify for a home loan really the core issue of the current housing crisis?

The answer is no.

As Gordon Gecko states in “Wall Street 2: Money Never Sleeps: “It’s greed that makes my bartender buy three houses he can’t afford with no money down. And it’s greed that makes your parents refinance their two hundred thousand dollar house for two fifty. Then they take that extra fifty and go down to the mall.”

While technically it does boil down to greed, it’s also a power issue – a “Keeping up with the Joneses” mentality that is intrinsically woven into our fibers. Thus, before my friend and others start pointing their angry fingers at our past leaders, they need to point them at the nearest mirror.

And I at my own mirror.

About 12 years ago, I received daily calls from another friend of mine. The call always came in soon after the stock market closed. The conversation was usually quick, he would update me on how much he made as a day-trader, then hang up. I remember one day in particular because it was the day I opened up my own E-trade account. The excitement he displayed after announcing he had “earned” $8,000 was the final straw that broke my back.

Over the course of the next several years, as I followed his tips on “dot coms” I never heard of and nobody else ever will as they all folded, I lost close to $40,000. I was, to put it mildly,  ”upside down” on my investments. Yet, these were investments I could not simply walk away from. The money was gone and not coming back.

In my effort to keep up with the Joneses, or the Dougs to be more specific, I lost almost my entire life savings.

When it comes to the current housing situation, perhaps it’s true our past leaders set “ill-guided” policies. Yet, simply because the credit authorities allow us to buy a second home, a boat, several plasma TVs, etc., doesn’t mean we should.

In the end, our own common sense needs to prevail and we need to realize our income coming in has to equal – or be greater than – our expenses going out. That $400,000 house that was supposed to be flipped for $600,000 but is now worth just $250,000, is not the fault of Carter, Clinton, Bush, Reagan, or our good friend – it’s the man or woman in the mirror.

As I told my friend the other night, just because a path is smooth and worn down by much use, it sometimes pays to take “the one less traveled by.”

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