A Gambling Problem

CNN promised a heart wrenching story on a couple about to lose their home and the inheritance the couple used to make the down payment. It is at this point I usually turn the channel as my own personal mindset doesn’t usually allow me to watch distressing news. However, the economic troubles cast upon us by our government leaders, who have flatly denied it existed for a long time, peaks my interest in hearing what happens to the common family. The story only had one major twist: this was not a common family in dire needs.

It seems this California couple with a comfortable income had taken the wife’s inheritance to make a down payment on a home. Sounds good, doesn’t it? Well, after making the down payment on the 1.5 million dollar home the couple would still need 78 percent of their monthly income just to make the payments. What were they thinking?

Well, it seems that the wife in this fine pairing is a real estate agent and she decided to gamble her inheritance on what would seem a sure bet. They could easily make the down payment, buy the home, and by the time the money got short they would sell the house at a profit. This sounds like the typical story one might hear at the race track just before the big race. It seems their timing was not right. As might be expected to eventually happen, the bottom fell out of the housing market.

The couple is now complaining that their monthly house payment is around $8,000 per month. Approximately $2,000 of that payment is the principal and $6,000 is the interest. This attractive payment deal is after they negotiated a very fair modification to their mortgage. The bank gave them a new loan at 5.5% interest (or near that) with a 30 year fixed term. In all truth, that is a bargain. Yet the couple is not happy.

The wife is upset that she is about to lose the house, along with the inheritance she placed for the down payment. They believe the government should bail them out. What? I bought a simple, rather humble home with the hopes of fully paying off the loan. My payments are less than 15% of my monthly income. If the government bails these bad investors out, then who will pay the bill? Hint: we all pay taxes. Yes, we pay the bill.

So, if I am living my life in a humble home and forgoing extravagance then why should I help someone fix a bad gamble? Folks, I recently visited a casino because I had to stay in the hotel. No, I didn’t bet any money. But if the government had promised to cover any losses I think I would have had a very interesting evening.

Many common folks are suffering and losing their homes. Not because of bad bets. They are losing their homes because our government has promoted the export of their jobs to another country. In those cases we should hold our government responsible, first removing the officials who initiated the problem. But, bad investors simply need to learn a lesson. Live within your means and you should be able to keep a roof on your head. If you are reasonable you can put a little money away for the rainy day that is sure to come.

I have no sympathy for the couple in California and the story did not tug at my heart strings. The story simply set my resolve further that the government has created a mess and the current administration has simply let greed rule the day. Maybe it is time some of these unfortunate million dollar home owners admit the truth, they have a gambling problem. We have support organizations to help them if they simply admit the truth. Oh, and shame on the bank that let them finance at 78% of their monthly income. The bank loses too, with no sympathy from me.

© 2008, Mark A. Daily