Wednesday, August 07, 2013

Growing up poor was the best thing that ever happened to me.

When I look out at the landscape this world has become - all I can see is a generation robbed of their wealth. It really is a deeply painful thing for me to watch. Each and every day fills me with a level of sadness I can't even describe. I've seen so many people lose their houses. But that isn't the part that makes me so unhappy. Some times things happen in life. These are the choices people made. The part that gets me, is that so many people were so easily conned out of them. Like lemmings jumping off a mountain.

Almost everyone I know either lost their house or gave their house back to the bank because every idiot on the face of the planet convinced them that houses would never be worth anything. I would actually have conversations with myself trying to figure out if my whole entire life was an anomaly, or this period of time was the anomaly.

Week after week I saw pundits and commentators force doubt into the minds of normally reasonable people. Some of these talking heads obviously had never owned anything in their entire lives. Yet they were screaming at the top of their lungs that real estate was a suckers game. I believe this is why more people defaulted than normally would have been expected for the depth of the financial crisis. Even I woke up every day to wonder if I was insane for not joining them. Many times I thought I would. Every single day it felt like I was running into a burning building when everyone else was running out. It really fucks with your head honestly. But I fought to save my houses because I grew up poor.

Growing up - all I wanted was a house. I was also very aware how easily it was to lose them. To me - houses meant freedom. Growing up poor you move a lot. And I didn't understand it at them time, but I've grown to understand the rent trap. Landlords raise your rent all the time making it almost impossible to save for a house. Owning a house to me basically meant I didn't have to move every year. It meant I could own a dog if I wanted. Or a fucking fleet of dogs. I could knock down a wall, or a fleet of walls@!

For as long as I can remember I needed to find out how people could afford a house, so I could afford one. Growing up poor, you don't have family who can give you a great start in life. You are constantly searching for the key to unlock that door of home ownership so you can rest.

Some people might think the obvious answer was to marry into wealth. And I probably could have. But Mr S. and I were about as poor as you could get when we married and I liked it that way. To this day we still play who was poorer when we grew up.

Last week I was talking to my oldest friend in the world from childhood. She was the only person in my circle pre-recession to still have a house. And she was getting ready to give it back. It really put me in a funk that I'm still in today. I'd ask Mr S. - how could she so easily give her house back like that!? The whole entire time I've been alive - the only way most normal people got ahead in life was by owning property! Sure, you could work three jobs - but how people really got ahead in life was from owning something you could sell to someone else. Usually that was property. And this whole generation was just willing to give it all up at the drop of a hat. It's breathtaking. Some of these people will never own a house again. Not because they don't want to. I believe there is an evolutionary drive to own a house. In nature - it doesn't matter how many times your nest is destroyed. You build another one. There is an endless need to own your own home. Despite all of the phony rationalisation bullshit people say.

The only thing that kept me sane was knowing how much my grandfather paid for a house in his day. It's all I do now when I run into someone who has owned their house for 20 years. I ask them how much they paid. Oh yes I do. It's the only thing that brings me comfort because I believe President Money Bags plan is to turn this country into a dependant country. And there is no easier way to do that then tell them they are wasting their money providing a safe stable environment. He's a proud renter you know! Which only reinforced my belief that I am right and he is wrong.


  1. My husband would be a renter if he had a choice. He doesn't. I will continue to be a homeowner. I do not understand the mindset that paying for something and never owning it is okay.

  2. Good girl. It's funny actually (said in the most sarcastic way) they think buying a house is a fools errand, but they don't consider paying rent to someone else throwing money away. I don't get it. At least I have a chance at recovering my money.

  3. In all fairness to the idiots, some of us were warning about housing being a suckers bet in 2006 and 2007 and I don't know that anyone was conned by holding off on purchases that they wanted to make otherwise. I don't know that I'd say that prices won't ever get back, but it does look like a lost decade for those who dove in at the highs while having to wait for things to return. Not to say that you don't have a legitimate point, housing creates stability, a way to pay declining real dollar payments over time, while renters pay increases because of inflation. It also makes you care more about the community that you live in which I view as a positive for yourself an the neighbors . . . but I do think that the argument that all anyone needs is a house and they can achieve financial stability is a dangerous myth. What's allowed you to succeed isn't home ownership, it's the title of your post, you grew up poor. Every dollar means something to you because when you've had to spend dollars on survival. You really can't discount this experience, money means more to you because it hasn't always been plentiful. It's this attitude that allows you to put off your wants and focus on your needs and ultimately this has allowed you to create capital because you have the savings to take advantage of. Some who grew up poor don't ever learn this lesson or they just can't make it past the next paycheck. Those who grow up wealthy often times have a tendency to forget how important surviving and the importance of taking care of one's family. Just look at Trump, how many times has he gone belly up because his obsession with luxury has blinded his ability to focus on the right priorities. In someways being wealthy makes it harder to scrimp and save, the fancy iPhone, the leased Lexus or the 5 bedroom house that is costing them 3 times as much as you can afford are all good reasons for people to walk away from mistakes they've made, even if it's a great personal cost to them and the rest of us. Maybe some made a mistake walking away from underwater mortgages over the last few years, but some also made a mistake buying in the first place, so I don't know that I'd label all detractors as con men without looking at the specifics.

  4. I'm not sure I said all you needed to do was own a house. But I can see how it sounded that way. And it's a fair comment. Though I do wonder why people never say renting is a suckers bet. Then, or now. Assuming the same rules apply. If you had a floating interest rate, you likely would have experienced a payment increase of nearly the same magnitude that you would get with a rental increase. I'm rough estimating it based on refi'ing my primary which is much more expensive than what the average rental is in my town. Owning or renting you likely would have been kicked out. Except for that part where people got to stay in their houses rent free for up to 5 years because the banks were in
    complete stasis. Yes, I have a girlfriend that swears her neighbor did this.

    If you couldn't afford a 1 or two point rise, you can't afford a rental either. That just doesn't cave a bank? Perhaps. I don't know.

    For instance the average rental in my town has gone up 20-30% in four years. Sure a lot of people lost their houses over a point or two rise in interest rates. But they would have had to pay similar increases if they rented.

    A lot of people could afford the houses, they walked away in strategic defaults. And it was made worse because so many people told them prices would never return in their lifetime. And perhaps that is true. Although history doesn't seem to agree. I don't know one way or the other. I just know that we didn't overbuild like many part of Europe. We just basically lost the stuff we already had. Population growth over time should sop that up.

    See, I don't think I value the dollar any differently than anyone else. I think I just have better impulse control. I am no different than anyone. I'd like to think I am, but I have all the same reactions, I just take longer to sort through them.

    There is a lot to be mad at with the Bush administration, but it made the most level financial playing field I may know in my lifetime. Good credit, bad credit. Not a citizen? Anyone with a pulse could own a house. It wasn't right obviously.

    But many of these people will never get to pretend to be middle class again. I still contend if they would have suffered it out - in the end they actually would have been better offf. And I think those people are suckers.

  5. I see your renting is a suckers bet and raise you a Section 8 FTW - No seriously though, I'm not necessarily disagreeing with the importance of home ownership, but rather that the assertion that it's always good to own. It's not always as simple as that, what options you can afford is way more important to look at. Some use this rationale to justify buying better neighborhoods or bigger houses than they should and the blind belief that real estate always goes up encourages people to take risks that do cost them the house later on. I guess that I don't disagree that people are better off owning, just that they should be buying the worst house on the block with the shortest possible mortgage instead of going interest only so that they can live in a zip code they're proud of.

    I can't speak for you, but I grew up in a middle class background where I never had to worry about necessities. It wasn't until I took my income below the poverty line that I understood the hard lessons that others are forced to learn. There was a time where I went a month and a half without a shower because every time I could save up the money for a hot water heater, another cheap game for the business would pop up on CL and compete for those dollars. Going to the supermarket and buying flour instead of bread or giant bags of potatoes to freeze when you have the money because you worry you won't the next month psychologically changes someone.

  6. What happened with real estate in the 2000's was completely out of the historical norms. This isn't to say that prices still can't and won't go down. And obviously I completely think it's wrong for the banks to let people buy houses without a substantial down payment. When people don't have anything to lose, why wouldn't they walk away? The past 5 years have been terrifying. Absolutely buying the worst house in the best neighborhood is the smartest idea. For many reasons. But to tell people that houses do not keep going up over time is completely wrong. I'm sorry.

    The first house I bought was in 1996 or 1997. Even during the darkest black hole of the recession that house was still 50% higher than what we paid. Right now, it's 150% higher. This is over several nasty recessions. I can give dozens of examples. That same friend who was going to give her house back was telling me about another mutual friend who bought a house in Santa Clara for 250 grand. When I asked her what decade that was she said 1995. I can assure you - you can not find a house in Santa Clara for anything less than a mill now. Houses in East Palo Alto go for 650grand! My neighbors to the back bought their house for 40 grand. They are grandparents, so obviously they are old. But they are still alive. Either you believe in inflation - or you don't. And there has only been on constant my entire life. Ask any old person who is an original owner how much they paid for their house. If it doesn't make you want to hold onto your property for dear life - I don't know what would.

    There is not one single thing you can do to help yourself for when you get old is to have a house that is paid off, or nearly so. It's not about flipping money.

    Even if you walked out of your house flat - it's still like living rent free for however long you own it. It's frustrating how many people were scared out of their houses. The only reason I wasn't was because I've been asking how much people paid for their houses since I was young. I'm not trying to get people to buy houses, but to say that renters have an advantage over owners has only been true for a very slim margin of history.

    I'm going to give you the same advice I had to give a close friend recently. Don't stay too long. I think you know what I mean. The longer you stay the more lost you get, and you can't find your way out.