Wednesday, September 17, 2008

I'm Repeating Myself Again

They say that happens when you get to a certain age. Well, here I am. I've hit a 'certain age' and I'm about to repeat myself. At least I'm going to repeat myself about the current Banking Problems.

The Democrats are blaming the Republicans (and capitalism in general) and the Republicans are blaming the Democrats.'d think it was an election year or something.

But the fact is, the root of the current Banking crisis is Greed, and our love of credit. The banks never should have gotten involved in subprime lending and investment banks never should have started buying the notes. The present situation shouldn't be a surprise to anyone. I've predicted it for years. And I'm an idiot! If a simpleton like me could see the danger, why couldn't others? My guess is, they could see it just fine, but greed kept them counting their monopoly money.

We reap what we sow. These institutions have sown seeds of bad loans and they've reaped a harvest of debt so plentiful they've buried themselves in the fruit of their labors.

And I say the Government should not bail them out, we should let the markets correct themselves. Government bailouts will only delay and sustain the problem.

For what it's worth, the current banking problems have resulted in only a fraction of the bank closures as the 88-92 banking crisis. But this is the age of the internet, the blogger and the day trader. Bad news is magnified and hyped like never before. Add in a dose of election year fever and a storm is brewing.

There are other contributing factors, like the oil price bonanza, but they were only the triggers or catalysts to bring down the house of cards on it's foundation of sand.

For those who have lost homes and dreams, I genuinely feel pain. I know what it's like to lose everything. I remember being 37 years old hand having all my worldly possessions in a suitcase and a carry on bag. I had no home, no job, no car, no money. But there is hope for you.

1. Trust God and do good and He will give you the desires of your heart (Psalm 37)
2. Stop borrowing
3. Stop relying on the Government. Take charge of your own future.
4. Work hard.
5. Live on less than you earn
6. Start an emergency fund
7. Get out of Debt
8. Save for a downpayment of at least 20% before you buy
9. ONLY accept a fixed rate mortgage. Don't listen to any other sales pitch...ever.
10. Don't borrow more than you can afford. $25% of your take home pay MAXIMUM. Don't listen to any crap about 44% debt to income ratio.
11. Seriously consider saving up until you can pay CASH for your house.
12. Pay your mortgage off early.

Ok, that's enough advice for one post. But I assure you, I'm right. I know from my failures and I know from my successes.

Now back to the banks. I'm sorry for the people who will lose their jobs, but for the institutions and their poor decision making, my sympathy pool has run dry.