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Will Truman

Will Truman is the Editor-in-Chief of Ordinary Times. He is also on Twitter.

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144 Responses

  1. Avatar Mad Rocket Scientist says:

    I have a house up in Everett that I can’t unload. We bought it in 2007, and we are still about $50K shy of the purchase price, so we can’t afford to sell. We tried to, but we found out that the bank sold the note to Fanny/Freddy, which had an unforeseen consequence that our government never bothered to fix.

    Seems that if the bank owns your note & you want to try a short sale, you just call the bank up & talk to them, see if they are open to the idea.

    If Fanny/Freddy own the note, you can’t even have the conversation about trying a short sale until after you’ve missed a mortgage payment. They won’t talk to you about it. Do you have any idea the damage a missed mortgage payment has on your credit score. You can just cut 200 points off of it straight away. If I’m going to take that kind of hit to my credit score, & I’m in a state where the bank can’t come after me for the balance after auction, what incentive do I have to not send out a bit of jingle mail? The foreclosure won’t hurt me any more than the missed payment already did.

    My wife & I seriously considered just foreclosing on the place, but for various reasons we decided to rent it out. But because of that very stupid rule, foreclosure was very much on the table for us.Report

    • Avatar Will Truman says:

      Well, Washington is a semi-recourse state (closer to recourse than non-recourse, if you have assets), so make sure you do some consultations before you go that route, if you do decide to go that route. I agree that the situation is indeed pretty messed up. Definitely not what I want to hear right now, as we move towards the closing date! 🙂Report

      • Avatar Mad Rocket Scientist says:

        That was one of the considerations. The other was that we had a second mortgage for a downpayment, and while we might have slipped out of paying the balance on the primary mortgage, the second would be due immediately.

        On a related note, never buy a house while still recovering from the unexpected death of a parent, you make bad decisions that way.Report

    • Avatar Kim says:

      I like jinglemail. It says to the bank “bet went bad, cancelling long term leverage. Keep the collateral.”Report

      • Avatar morat20 says:

        I like jinglemail simply because there was such a fuss about it being unethical, despite it basically being common business practice done on the personal scale, and in fact part and parcel of the contract.

        I could be biased — I live in a non-recourse state whose laws on housing were strangely tight (for once, Texas was not leading the US in deregulation craziness) so the housing bubble largely passed us by. Not that the great Texas miracle of making second mortgages and other forms of tapping equity practically impossible by law was heralded widely. Too big government, I suppose. 🙂

        But really, good for the goose and all that. The housing bubble, to me, was a nice and lengthy example of a nasty double standard in American life — to see what was ethical as a business being a moral failing in an individual.Report

      • Avatar Kim says:

        morat,
        +1
        Pittsburgh had too much of a glut of unoccupied housing to bubble… at all. Reaping the dividends now!Report

      • Avatar Will Truman says:

        Whether I (morally) approve or not depends largely on the circumstances.

        That said, I think jinglemail is a great way to convince banks to convince legislators to make non-recourse states into recourse states and to prevent recourse states from becoming non.

        I say this as someone who is a diehard non-recourse partisan.Report

      • Avatar Mad Rocket Scientist says:

        The thing is, the hit to the credit score is already a pretty solid incentive to not let your house go into foreclosure if you can avoid it.

        My problem is with the rule that I basically have to prove I’m willing to do a foreclosure by suffering the damage of one before I can get (what is essentially) a government body to let me do something less damaging & more responsible.Report

      • Avatar ScarletNumbers says:

        @morat20

        I have never heard of the term jingle mail until today, but I like it.

        Anyway, I don’t see what the big deal is. The mortgage clearly states that the penalty for not making payments is losing your home. Therefore, the borrower is clearly fulfulling the terms of the contract.Report

      • Avatar morat20 says:

        Scarlet,

        During the bust, there were LOTS of people ridiculously underwater on their homes. Like they had houses where the remaining loan was hundreds of thousands more than the value of the house, and given the trends it’d be a decade or two before the house approached the value of the note.

        If you’re a business, the cold-blooded thing to do is simply shed the unit. Declare bankruptcy. In this case, tell the bank “yeah, I’m never gonna get my money out of this. Take the house, per our agreement, because I’m not paying the loan anymore.”

        What happened was the pundits, business leaders, and politicians who were most vehement in championing the free market and winners and losers and go business go, were aghast. Shocked. They were, in fact, furious at the notion. They’d scream about morality, and abiding by your word, and paying your debts (even though, as noted, repossession is part and parcel of a mortgage contract and if the bank loses money on repo then obviously they’re not pricing their loans correctly), and in fact used all the sorts of squishy words they’d turn around and claim businesses shouldn’t listen to.

        It was very much a double standard — individuals should adhere to one moral code when conducting business, whereas the businesses they were interfacing in should have another. Morality for thee, but not for me sort of thing.

        It sorta culminated in the big screaming about the “horrible borrowers” who took out loans they couldn’t afford (and thus were totally to blame) with nary a word for the folks who made loans they KNEW couldn’t be repaid.

        It boiled down to where you place the blame in a loan gone bad — with the people who took out the loan, or the people who offered it? I tend to go with the latter, myself. That’s what interest rates, due diligence, reams of actuarial tables, and all those lawyers are for. Assessing, mitigating, and handling risk.

        It all goes out the window when the people making the loans just sell them, because the risk moves onto someone else’s books. (And when selling something, people do tend to get a bit rosy about it).Report

      • Avatar Mad Rocket Scientist says:

        It boiled down to where you place the blame in a loan gone bad — with the people who took out the loan, or the people who offered it? I tend to go with the latter, myself.

        Exactly! While mortgage companies are making loans with imperfect knowledge, they are significantly advantaged over the home buyer with regard to information available for assessing risk.

        I feel no sympathy for them when they get some keys in the mail.Report

      • Avatar Will Truman says:

        I don’t care about the loss of the bank, except insofar as making things difficult for lenders makes things difficult for future borrowers.

        I am in favor on non-recourse loans because I don’t think that someone who can’t pay their loan back should spend the rest of their lives paying for it. When people walk away despite the ability to pay, and most importantly without a good faith effort, that makes things more difficult all around.

        I don’t think less of people who walk away from loans they can’t pay, and indeed I am glad that there are laws that allow them to do that. What annoyed me, mostly, was the cheering section for those who defaulted because they could. And the actual encouragement of it that I saw. (Made even more problematic is that a lot of the boosters didn’t understand the law and a lot of people probably walked away from their mortgages not understanding that they live in a recourse state.)

        (In the case of MRS, I am convinced that he is making a good faith effort. He’s being stymied by stupid policy.)Report

      • Avatar morat20 says:

        I don’t think less of people who walk away from loans they can’t pay, and indeed I am glad that there are laws that allow them to do that. What annoyed me, mostly, was the cheering section for those who defaulted because they could. And the actual encouragement of it that I saw. (Made even more problematic is that a lot of the boosters didn’t understand the law and a lot of people probably walked away from their mortgages not understanding that they live in a recourse state.)

        Will, a lot of the cheering was….not so much partisan as, perhaps, “hoist by your own petard” reaction. It was very…interesting…to see the same people who would cheer on offshoring or closing down a profitable (but not sufficiently so) business unit or union-busting or whatnot as “Good for business, winners and losers, that’s capitalism baby!” suddenly finding a moral problem with an individual making the same cold, rational economic calculation.

        I’d happily advocate for jingle-mail to anyone whose situation it made economic sense to do (which included the laws of their state and factoring in the credit hit). And if I felt a little amused by it, because for once the economic shoe was (potentially) on the other foot? Gotta take your amusement where you can get it.

        Not that it mattered. American’s are, by and large, quite well trained. Puritans at heart, I suppose. Bankruptcy and offshoring and such is acceptable for businesses, but not people.

        It’s a pretty good racket.Report

      • Avatar Will Truman says:

        As someone who is in the process of trying to convince a bank to loan me money, I’m quite glad that people by and large did not follow this advice. But if one isn’t concerned about tomorrow, I can understand today’s chuckle…Report

      • Avatar Mike Schilling says:

        That said, I think jinglemail is a great way to convince banks to convince legislators to make non-recourse states into recourse states and to prevent recourse states from becoming non.

        That is, if the law is ever on your side, they’ll find a way to change the law. And if you ever manage to score a victory over them, they’ll make sure you (or someone) pays for it tenfold.Report

      • Avatar Troublesome Frog says:

        My theory is that if Wells Fargo and I entered into an investment together and that investment went sideways, Wells Fargo would stick me with the whole thing in a hot second if there was any legal way for them to do so. Given that, I don’t understand why there’s so much hand wringing about borrowers acting the same way.

        The situation MRS is describing does seem pretty perverse. There are ways to cut losses on both sides short of a full default, so any set of rules that take those options off the table and encourage the worst possible outcome are… problematic.Report

      • Avatar Troublesome Frog says:

        @will-truman

        But if one isn’t concerned about tomorrow, I can understand today’s chuckle…

        I don’t necessarily think that the new equilibrium with lenders having more skin in the game is a terrible thing in the long run. Somewhere between “cash upfront for houses” and “unlimited 0 down, interest-free borrowing for houses irrespective of income” there’s a reasonable policy, but I’m not convinced that moving to a place a little closer to the “cash upfront” endpoint is necessarily a bad thing. The reduction in credit should tend to weed out bad buyers more than good buyers and it should also slow the relentless bidding up of house prices.

        When my wife and I started looking at houses toward the end of the bubble, we had no debt and a substantially higher income than most of the people who might compete with us for a house, but it was clear that there were people out there who were willing to do insane things to outbid us. Just looking at average income to average home price in our area, it was obvious that the winning bidders were willing to cut their own hands off to win the auction.

        At some point, super easy credit just results in a “steroids in professional sports” situation where everybody loses because the only way to get ahead is to do something that’s really bad for you, and if you don’t do it, somebody else will. The limiting factor for that situation is either the wisdom and cool-headedness of the bidder with the most outrageously high bid or the wisdom and cool-headedness of the bank lending to that bidder. Keeping credit from going into really stupid projects is a big part of what professional lenders are supposed to do.Report

      • Avatar Will Truman says:

        @troublesome-frog I don’t disagree that lenders should have a stake. That’s one of the reasons I support non-recourse laws. Most states are recourse, though, and I’d like to see that changed. One of the biggest arguments against going non-recourse is that it will be abused by people who can afford to pay off the loan, but don’t. And others think that because it’s the bank taking the hit, it’s okay. But it’s something that we all end up paying for.

        More largely, the system requires good faith efforts to extend and pay off credit. It’s bad for the entire system when lenders act in bad faith. The problem doesn’t go away when borrowers do it. The more we have to worry about these things, the more rules and laws we have to pass. I supported cracking down on the banks and credit card companies with regard to overdraft fees precisely because they were operating in bad faith (which I mention to clarify that this, for me, really isn’t about “yay banks!”), even if they were operating within what was then the letter of the law.

        Most people who disagree with me on this would say that walking away from a mortgage isn’t “abuse” or “bad faith”… and that’s a fair point I suppose even when I disagree with it. But honestly, they are not who I want the laws for. I want the laws for the people that really can’t make their payments, or would otherwise be stuck. Expanding that to everyone who sees an advantage in walking away dilutes the benefit, and makes what is already a tough sell with the public a tougher sell.Report

      • Avatar ScarletNumbers says:

        @morat20

        I love how people cry about the borrowers taking out loans they couldn’t afford. It’s like they forget that one cannot unilaterally take out a loan. For every risky loan that was taken out, there was a loan officer who approved it.Report

      • Avatar Jesse Ewiak says:

        @will-truman As long as companies can lay off people without being in “real” financial problem, I have no problem with people, even those who can afford it, getting rid of property they no longer want.

        If corporations have no social responsibility to the larger populace, why should the consumer? But then again, lots of people have huge problems with a Mom getting $25 extra in food stamp benefits while cheering their buddy who uses tax loopholes to lower his tax bill by thousands.Report

      • Avatar Will Truman says:

        I don’t consider laying people – absent financial necessity – off any more unethical than leaving a job for which you are well paid for another job that pays more.

        I already pointed to a case of corporations (banks, specifically) acting unethically, so it should be apparent that I do not have the double standard here that everyone keeps going back to.Report

      • Avatar Troublesome Frog says:

        My issue is that regardless of whether the borrower is able to pay the loan back or not, a secured loan that ever exceeds the value of the collateral is the lender’s fault more than the borrower’s. The default thinking seems to be that the buyer should continue to massively overpay for the asset if they can afford to do so because they owe it to the rest of us to absorb 100% of the pain for the mistake. Given that the mistake was made in concert with a parter that was likely much better informed than they were and is certainly more able to absorb the loss than they are, I think that’s taking “being a sport about it” too far. In some of those cases, the amount of money we’re asking people to throw away is pretty staggering.

        I’d much rather see lenders become much more sensitive to both the quality of the borrower *and* the LTV. If that happens, people with the ability to pay will almost certainly keep paying because they’re unlikely to end up underwater in the first place. If 25% down payments were the norm, I think we’d all be in better shape.Report

      • Avatar Will Truman says:

        If 25% down payments were the norm, I think we’d all be in better shape.

        On this I agree. On the other, you’re absolutely asking me at the wrong time because right now that sounds like a real PITA from a borrowers’ perspective.Report

      • Avatar Troublesome Frog says:

        I know what you mean. But bear in mind that if 25% was the norm, prices would be lower across the board, making it a lot easier for people to put 25% down in the first place.

        While we’re at it, let’s dump that stupid mortgage interest deduction too.

        And I want a pony.Report

      • Avatar Vikram Bath says:

        For what it’s worth, the commission that studied the crisis and came up with recommendations on how to avoid it again suggested that the absolute minimum down payment even for dodgy loans be raised from 0% to 20%.

        And not one politician dared say a word.

        Edit: Here is the story. I think everyone was hoping more for a solution that would still let everyone do everything they were doing before but without the bad parts.Report

      • Avatar Vikram Bath says:

        You can have non-recourse loans where it is perfectly acceptable legally and morally to give the bank your house if you no longer want it, or you can have 4% fixed interest rates. You can’t have both at the same time though. Even companies that have access to non-recourse debt will often choose to issue recourse debt so as to get a lower interest rate.

        Maybe one solution would be to also give homeowners the option. Let them choose beforehand whether they want to preserve the opportunity to turn in their keys with no questions asked in return for a slightly higher interest rate.Report

      • Avatar Troublesome Frog says:

        You can have non-recourse loans where it is perfectly acceptable legally and morally to give the bank your house if you no longer want it, or you can have 4% fixed interest rates. You can’t have both at the same time though.

        The spread between the two should be a function of the probability that the value of the collateral will drop below the value of the loan, though. With a sufficient down payment, that probability should be driven fairly low.

        Maybe one solution would be to also give homeowners the option.

        That’s an interesting idea. I wonder what the borrower’s decision says about the borrower. Most people want the lower rate, and most people don’t go into a mortgage thinking they’re likely to default (very likely, they underestimate the probability). It seems like the remainder would have a very high concentration of ruthless investors willing to default at the drop of a hat.Report

      • Avatar Kim says:

        Vik,
        it’s a good idea. Besides, we already have FHA for low collateral loans, where they go to EXTREME lengths to make it “move in ready” for years past move-in.Report

      • Avatar Will Truman says:

        I like the idea of requiring down payments, though many would rightly object on the basis of people being shut out of the home owning market. Selfishly, I have a concern about what it would do about the house we just bought.

        Speaking of which, I should add that we are putting down 20% and we’re still having to provide documentation on top of documentation. Right now things are held up because they haven’t gotten “Verification of Employment” forms from Clancy’s employers. The VOE is not, in and of itself, an unreasonable request, of course. Except that they already have tax returns and pay stubs which indicate employment and pay. Which is what I mean by “documentation on top of documentation.”

        When I referred to the PITA, it was actually that I was referring to, rather than having an amount saved up for a sizable down payment which I think should be, if not mandatory, the norm.Report

      • Avatar Mo says:

        @will-truman The PITA thing is largely a post-crash correction. My dad said that the house he bought in 2010 was the biggest pain in the butt out of any of his home buying experiences. This is despite the fact that he has more down than any prior time and unlike his first home he’s not FOB in a double digit interest rate environment.Report

      • Avatar Mad Rocket Scientist says:

        Most people want the lower rate, and most people don’t go into a mortgage thinking they’re likely to default (very likely, they underestimate the probability). It seems like the remainder would have a very high concentration of ruthless investors willing to default at the drop of a hat.

        Although given the mobility of the current & coming generations, many might take the option as a hedge against job loss & the urgent need to relocate for work. Which, if such an option did become a common thing, would function as a signal that it is important to keep housing markets stable, since a bubble bursting, even a localized bubble, could be ruinous if accompanied by job loss causing significant migration.Report

      • Avatar Dave says:

        I have several comments about this sub-thread:

        @will-truman

        That said, I think jinglemail is a great way to convince banks to convince legislators to make non-recourse states into recourse states and to prevent recourse states from becoming non.

        Or it’s a great way for those lenders that keep loans on their balance sheet to employ effective underwriting standards, something that happened before, during and after the crisis. If the loans are properly underwritten and the banks have adequately protected themselves from the risk (usually through a sizable down payment), recourse won’t be necessary.

        @morat20

        What happened was the pundits, business leaders, and politicians who were most vehement in championing the free market and winners and losers and go business go, were aghast. Shocked. They were, in fact, furious at the notion.

        You have more patience than I do if you pay attention to any of these morons.

        It boiled down to where you place the blame in a loan gone bad — with the people who took out the loan, or the people who offered it? I tend to go with the latter, myself. That’s what interest rates, due diligence, reams of actuarial tables, and all those lawyers are for. Assessing, mitigating, and handling risk.

        Everything you mentioned is employed by balance sheet lenders since they are the ones that have to bear the risk. However, most of the toxic loans weren’t made by balance sheet lenders and none of those things applied.

        I don’t have a beef with people that blame predatory lending. Lord knows there was enough of it going on long before the housing bubble really heated up. However, blame is not an all-or-nothing proposition to one side or the other. Just because I won’t complain about homeowners taking out loans they couldn’t afford doesn’t mean that I’m not baffled by the amount of risk people exposed themselves to, many willingly.

        It all goes out the window when the people making the loans just sell them, because the risk moves onto someone else’s books.

        That the risk moves onto someone else’s books is no trouble at all if the nature of the risk remains transparent, which has historically been the case with asset-backed securities. Mortgage securitization existed before the crisis and it chugs along today just fine, as it should.

        That didn’t happen during the bubble. The securities were mispriced because the underlying risk was completely ignored by everyone from the mortgage brokers all the way to the Wall Street banks to the ratings agencies, etc. Investors weren’t savvy enough to pick up on that.

        Will, a lot of the cheering was….not so much partisan as, perhaps, “hoist by your own petard” reaction.

        Except the petards that got hoisted were those of the bondholders (i.e. pension funds for teachers, police, fire, public employees, etc.) not the banks.

        @troublesome-frog

        My theory is that if Wells Fargo and I entered into an investment together and that investment went sideways, Wells Fargo would stick me with the whole thing in a hot second if there was any legal way for them to do so.

        Taking theory into practice, there were be no legal way for WF to do it if you structured the partnership agreement the right way.

        Given that, I don’t understand why there’s so much hand wringing about borrowers acting the same way.

        I don’t see how the former has anything to do with the latter. However, I agree with you for another reason – the default provisions are clearly stated in loan documents. Please keep in mind that I don’t pay attention to political pundits when it comes to finance-related matters. It’s like nails on a chalkboard.

        The situation MRS is describing does seem pretty perverse. There are ways to cut losses on both sides short of a full default, so any set of rules that take those options off the table and encourage the worst possible outcome are… problematic.

        It is a perverse situation and I feel for him, but from what I’ve seen on the commercial real estate side, it’s a resource issue.

        Not only were loan servicing departments ill equipped to handle the flood of defaults that came a few years ago, but the volume was so high that they could only focus their attention on loans that are in special servicing (i.e. have missed payments, defaulted, etc.).

        What’s equally perverse here is that while it’s obvious that the loan servicing departments were woefully understaffed, because it doesn’t make anyone money to add staff to renegotiate loans, no one wants to add staff (at least from what I can remember). It’s almost cheaper to allow for a default, sell the house and recover as much as possible (sad to say).

        Keeping credit from going into really stupid projects is a big part of what professional lenders are supposed to do.

        “Professional lenders” is not a term I would use to describe mortgage brokers or the typical fly by night non-bank lender, but I’m kind of cynical that way.

        @scarletnumbers

        For every risky loan that was taken out, there was a loan officer who approved it.

        The comment above applies here as well.

        @will-truman

        I already pointed to a case of corporations (banks, specifically) acting unethically, so it should be apparent that I do not have the double standard here that everyone keeps going back to.

        That should keep the knife wielders at bay…or not. 😉

        More later…Lots of good stuff in here.Report

      • Avatar Mad Rocket Scientist says:

        @dave

        Perhaps I got bad information, but what I was told was that had BoA actually owned my mortgage, rather than just servicing it, I could have called them up & asked for a short sale, and while it may have taken time to get the ball rolling, they would at least agree to have a conversation with me.

        Fanny/Freddy would not even pick up the phone. Since F/F are supposed to be the last resort, & pseudo government, I would think they would be more willing to have the conversation than BoA would.

        It all just seems bass-ackwards.Report

      • Avatar Jim Heffman says:

        “Just because I won’t complain about homeowners taking out loans they couldn’t afford doesn’t mean that I’m not baffled by the amount of risk people exposed themselves to, many willingly.”

        It’s not a risk if you can sell the note to some damn fool investor before the owner defaults.

        And, somewhat cynically, it’s also not a risk if the entire market goes under at once. If that happens you can just shrug and say “welp, one of those Black Swan things, not really anyone’s fault, I was just following the market”.Report

      • Avatar Mike Schilling says:

        If the loans are properly underwritten and the banks have adequately protected themselves from the risk (usually through a sizable down payment), recourse won’t be necessary.

        Yeah, recourse mostly protects lenders that are lazy and stupid. And how many of those could there be?Report

  2. Avatar Kim says:

    95 pages? were they all pictures? Seriously, we inspected houses that were “Do Not Buy”, and they didn’t have 95 pages. (not sure if they got red-tagged at some point, but our inspector did get called BACK to the house to inspect it again for someone else).

    Getting a loan in 2011 was a BITCH and then some. I don’t think we fit neatly into ANY formulas — so it was “talk to the credit union” over and over and over again. (also, the loans were flat-out unprofitable for the banks, so they didn’t want to underwrite them).

    I can sympathize with getting an FHA loan — but it is SUCH a horrid idea! (reminder: our housing stock around here is OLD. Nothing hits FHA code, and sometimes the issues Can Not Be Fixed).Report

    • Avatar Will Truman says:

      @kim Yeah, it’s a lot of pictures. In fairness, I should say that we’re not talking about full-page spreads here. Lots and lots of pictures, per page, for much of 95 pages. (A lot of pages don’t contain pictures.)Report

  3. Avatar Vikram Bath says:

    I’ve heard a million stories like this. I wonder why some get written up and others do not.

    It seems that even in this individual’s case, the student loan was not the only problem. Duke is just what he wants to blame it on because that is the one that ties least to him. Why isn’t he putting down 20%? Or getting a cheaper house for which he could put down 20%? The whole article reeks of entitlement.Report

    • Avatar Dave says:

      I was thinking the same thing, especially considering that it was becoming obvious to me that they weren’t interested in shopping around to different lenders, something they should have done the second they ran into difficulty.

      Given their situation, calling a mortgage broker wouldn’t have hurt. I’m surprised that their realtor didn’t have someone on speed dial.Report

  4. Avatar caethan says:

    I try to come into these financial sob stories with a willingness to be sympathetic, but invariably there’s some detail in the narrative that just makes me stop and gape for a bit. Sometimes it just makes me feel terribly sorry for the person, that I wish they had had a competent advisor – like with the story I read recently about a Texas nurse who was being driven into bankruptcy by the expense of caring for her aged mother — after she had tapped $250K in 401K retirement savings. And sometimes it makes me want to smack the writer for being an entitled twit. In this case, the stop-and-gape bit was at the end, where Mr. Banks details his plan of saving $50 a month for his future house. Bully for him for starting to save money, but this is laughably, hilariously, small for what he plans to do with it.

    I suppose I take this one in particular a bit personally, because my wife and I are in a somewhat similar situation – we earn about the same amount of money as Jeff and Kelly, and we graduated with pretty substantial graduate school loans. But we saved half our income for four years to pay them off as soon as we could. And hey, I don’t expect everyone else to make the same choice – we were lucky enough to have a good income, we had a good place to live, and no kids to worry about yet. Now we’re in a good position to save some more money for a down payment, have some kids, and settle down – about where Jeff thinks he ought to be. When you’re lucky enough like me and like Jeff to have a very good income – 1st to 2nd quartile for Jeff in Sacramento – then you get to make the choice between consumption now and consumption later. It’s not necessarily a moral choice, just what you prefer. But I find it galling to have somebody choose to spend their money now and then complain in the future about how unfair it is that people who saved can afford things.Report

  5. Avatar Saul Degraw says:

    Our media seems to like to focus on extraordinary stories of success or bad luck. We hear about the people with zero student loans or unbearable student loans. We hear about people who hit the brass ring very early or people who spend years or decades in adjunct hell or a seemingly endless temp/freelance hell of always living mouth to mouth.

    We never hear about people who climb the career ladder slowly and surely as the overwhelming majority of people will do. This involves some steps forward and some steps backwards and maybe some years of being stagnant.Report

    • Avatar j r says:

      That is likely because of the framing. There is nothing in that article that leads me to believe that Banks has had extraordinarily bad luck. He has just chosen to spin his tale into a sob story. He sounds like an upper-middle class guy with a bit too much student loan debt and aspirations to buy a house that he cannot afford. Having to rent or having to buy a house in a neighborhood that is not your first choice hardly strikes me as unbearable.

      And this might be the dumbest sentence that I read all week:

      My generation, especially, has been given mixed signals by society. We’re told to attend the best schools we possibly can — but then we’re punished when we can’t afford it.

      How the heck can society send anything but mixed signals? Society is an aggregate, not a single unitary thing that can speak with one voice. Part of being a sentient being is actively interpreting the signals that various elements of society send you and 30

      Yes, society tends to reward people for having prestigious degrees from well-known schools. So what? As an individual, he could have done his research and found out what “society” says about manageable levels of student loan debt. For instance, it takes about 30 seconds of Googling to find the rule of thumb that says it is unwise to take on more in student loan debt than you are likely to make in your first year of work after school.

      So, taking out $120k to get an MBA gives you an awfully large debt burden. If you can reasonably expect to come out and make $150k + a year, however, it can be a manageable debt burden. This guy, between him and his wife, has ~$180k in debt and combined household income of ~$90k. That is nobody’s fault but his own.Report

  6. Avatar Tod Kelly says:

    I have to say, Bank’s is exactly the kind of self-involved internet handwringing that drives me nuts.

    So he has debt, hasn’t taken the time to save up for a down payment, and the house he wanted is out of his price range — so it’s clear that the system is broken and the fact that he went to Duke is to blame for all of it. Like not being able to get creditors to loan you money to buy a house you probably can’t afford with not much down is some kind of new trend.

    Seriously, people on the Internet who are younger than 35, exactly how do you all think it used to work “back in the day?”Report

    • Avatar Kim says:

      Free Houses, Lying about Loans, etc?
      People have the attention span of goldfish these days.Report

    • Avatar Will Truman says:

      back in the day, there were NINJA loans that made his issue irrelevant.Report

      • Avatar Tod Kelly says:

        Yeah, for a couple of years — and how did that work out for everybody?

        I say again: Your not being able to get someone else to pay upfront with their money for something you really want but can’t really afford is neither a “trend” nor a “problem.”Report

      • Avatar Will Truman says:

        As per my comment below, it’s not clear to me that he couldn’t actually afford this house. If his telling is accurate, the cause of the denial hinged (at least in part) on their not counting his income.

        In the abstract, I don’t (necessarily) (entirely) disagree. It’s not a crime against humanity that he couldn’t get the house he wanted. Especially because Duke. It just seems to me that he did get caught in some ambiguities of the system. Not sure there is a fix, though, or that there should be.Report

      • Avatar Kim says:

        Will,
        of course there’s a fix. Save the cash to buy it outright. Live in a one bedroom until you can. (it appears that they’re living quite above their means, if they’re only saving $50 a month — and I know rents are sky-high, so some of that might not be their fault)Report

      • Avatar Will Truman says:

        How realistic paying outright is depends on location, I think. If he is moving to a place like where you or I live, it’s not out of the question (eventually…). Though if he’s buying near DC or something, it’s far less realistic.Report

    • Avatar James Hanley says:

      I’m going to sign onto what Tod’s saying.

      I left grad school with debt that has actually grown, because it took several years to get a permanent job, the starting salary at my college is, or at least was then, pretty low, my wife and I had 3 kids, she took several years before finding a job here to finish school, and the one well-paying job she had here got downsized, and she doesn’t make what anyone would call good money. And now we have two kids who need braces and one about to start college next year and god only knows how much all that will cost.

      But we also spend more than is necessary on travel. Yes, we could complain that her family lives on the West Coast, and it would be unfair if she and the kids couldn’t visit them, but it’s not about unfairness, it’s about a choice.

      And part of that choice was to buy a house well within the affordable range, actually well below median price in our town, not in the best neighborhood, and in need of renovation. I get frustrated with my house sometimes, and I watch the home shows on TV and sometimes get so jealous I have to stop watching them. But these are the choices we’ve made, and I never expected that I’d be able to have it all.

      The culture of expectations really does bug me. But then both my parents grew up very poor in the Great Depression–both in fact lost their fathers during the Depression–and I knew their stories. And my father had various long spells of unemployment, once because of the economy, and another time because of a major injury, that made our family poorer than it might otherwise have been. As for my wife, her dad grew up during the German occupation of the Netherlands, and her mom during the Japanese occupation of Indonesia. Her mom was separated from her parents shortly after the Japanese invaded and not rejoined to them until, I think, over a year after the way.

      Not being able to afford that house that’s a little beyond your comfortable price range is not really a big deal. Whining about it strikes me as the response of entitlement to not getting its way for the first time.Report

      • Avatar Kazzy says:

        @tod-kelly and @james-hanley nail my thoughts. The piece is annoying — borderline insultingly — titled and this guy has such a sense of entitlement about him.

        Zazzy and I have been very fortunate to be in the situation we are in when viewed in a vacuum. However, we remain frustrated with certain aspects of it. And we blame no one but ourselves. We sure as hell don’t blame our alma mater.Report

      • Avatar Kazzy says:

        To put this as simply as possible… would Banks be more likely to have gotten the house if he had A) 1 degree from Duke or B) 0 degrees from Duke?Report

      • Avatar Will Truman says:

        I would say B in the short term (for this house), A in the longer term.Report

      • Avatar Kazzy says:

        How so, @will-truman ?Report

      • Avatar Will Truman says:

        In the short term, they have a whole lot of debt and not much income to show for it. But the dividends of going to college haven’t really kicked in yet. At least, that’s my impression. Once they start getting some serious wage premiums, that changes. As their financial picture improves, so too will the way that lenders look at them.Report

      • Avatar Kazzy says:

        I didn’t read the entire article, so apologies if this info is in there… but does Bank disclose what his income is? And what field he works in? Because I’m pretty sure both of those are dependent on him having a degree from Duke.

        Now, if you want to argue that he could have gotten a similar degree from UNC for cheaper and which would have afforded him similar job prospects, I can see how your logic would hold up. But, nonetheless, that isn’t Duke’s fault, but his own.

        That’d be like me complaining that it was Johnston & Murphy’s fault that I chose to spend a bunch of money at their store on shoes and thus couldn’t buy the pants I really wanted. The choice — and thus, responsibility — remains mine even if I could have gone to a cheaper shoe store.Report

      • Avatar Will Truman says:

        He’s a contractor, so his income didn’t count towards their collective income. I’m not sure what her income was. I am pretty sure that they would have to have a pretty awesome income to overcome that much debt. Even compared to someone who didn’t go to college, who might have spent that time building a work history and earning money.

        Duke will get him ahead, but I suspect that he is at that time in his life before that has happened. I could draw a similar diagram with our finances, where around 2004-09 or so her medical school debt was a bigger drag than the income provided by the degree. Less true now, of course, though depending on what we’re comparing it against.

        (In the Banks case, I’m comparing Duke to no college but assuming that he is intelligent and a hard worker. Completely agree on Duke vs UNC. That’s on him.)Report

      • Avatar Kazzy says:

        @will-truman

        I understand that the contractor thing worked against him — maybe rightfully, maybe not; I can’t speak to how the bank ought to consider that when evaluating him for a loan. But I have to assume that part of his disappointment is predicated upon the expectation that his contractor salary would count.

        I guess this article feels like an overly verbose version of a t-shirt that reads, “I went to Duke and all I got was this shirt.” Duke presumably afforded him some really remarkable opportunities. Those came with costs but he chose to take the deal.

        Really, the issue here isn’t Duke. Not at all. Or college in general. The issue is him opting for contractor status. Every decision has pros and cons. I assume there are benefits associated with the contractor status or else he would not have chosen it. It seems that he was unaware that one potential drawback was how the bank would factor that into his loan application. It seems reasonable he would have assumed it was of little consequence. So, in a way, it sucks that he got blindsided by this. But that happens. I’ve got a bit of sympathy because the home buying and selling process is a complicated one — and often seems needlessly complicated by various “professionals” who do little in the way of actually helping those who are paying them for their assistance. Ideally, whenever Banks initially met with a bank rep, they would have looked at his contractor status and informed him of its potential consequences. That would have allowed him to either A) adjust his expectations or B) adjust his work status.

        But, again, that ain’t about Duke. Is it possible that Banks would be in a better position had he eschewed college altogether? Sure. Anything is possible. But we also just went through a shitty recession. What were the job prospects for high school grads?Report

      • Avatar Will Truman says:

        I get the feeling the contractor thing isn’t entirely voluntary. He says at the end that he is looking for a salary gig. So while he could be working at Target, it may not have been a choice he had with a lot of good alternatives.

        I suspect (with no evidence) that before the house feel through, he was probably upset that his degree didn’t come with a lush job included after graduation.Report

    • Avatar Maribou says:

      I’m 37, but what I’m assuming is that back in the day people’s incomes (in equivalent rather than absolute dollars) were rather higher, and many of their major expenses (eg medical costs, and yes, education) were proportionally rather lower. It’s been a long time since I read the things that lead me to assume that, so if you have contrary evidence I’d be open to hearing it.Report

      • Avatar Maribou says:

        PS When I think about education costs, part of what I am thinking about is the increasing professionalization (eg degree requirements, literal or de facto) of many, many jobs.Report

  7. Avatar Kim says:

    Rookie home buyers don’t make mistakes like “signing away earnest money.”
    At least not around here, where the realtors have standard forms.
    That’s on the realtor.

    A rookie home buyer mistake is “Yes, I’ll pay for the oil on premises” (not realizing there isn’t an oil-furnace…), or other tricksy things.

    Or, you know, getting an FHA loan when they don’t need to.
    The whiny article sounds like “waaa! we can’t figure out why we’re risky! waaa! nobody will sell to us!” (Seriously, they’re actively underbidding investors??? Damn, you’re setting your hopes high.)

    And saving $50 a month is REALLY pathetic. Most people start by saving a quarter of what they earn, and go up from there. (or at least, they ought to).Report

    • Avatar Will Truman says:

      I honestly misread the $50 as 500. I must have assumed that $50 wouldn’t be worth mentioning.Report

      • Avatar Kim says:

        Lol! In Pittsburgh, $500 would /be/ a mortgage payment!
        http://www.zillow.com/homedetails/1023-Ross-Ave-Pittsburgh-PA-15221/11379777_zpid/
        And for that $18k, he could nearly Buy A House (okay, that’s just barely outside the city).Report

      • Avatar j r says:

        Seriously, $50!?

        I admit that I am unduly harsh on Millennials, but sometimes I think that their parents raised the dumbest generation of smart people ever.Report

      • Avatar Kim says:

        jr,
        the dumbest generation of Americans was the Boomers (we fixed the lead issue! also… other things that were causing Southerners to be stupid (not genes, environmental issues)).
        entitlement does not equal stupidity (sadly! there would be fewer serial rapists that way).Report

      • Avatar Maribou says:

        It is an eyerolling amount. But as someone who was once a broke college drop out struggling to save 50 or a hundred bucks a month, I’m still glad they’re doing it. The thing about saving 50 bucks a month is that at some point you have like 600 bucks. And then some disaster happens and instead of putting it on a credit card or borrowing from your mom, you CAN AFFORD IT. And after that happens a few times, mirabile, you eventually find that you somehow magically have more disposable income, and can save a lot more than a hundred bucks a month. People don’t have to start out saving Mortgage-Building Amounts to get there eventually. It can snowball.Report

    • Avatar ScarletNumbers says:

      LOL come on now, I think they are saving $50 per month EACH.

      That’s MUCH better…Report

  8. Avatar Michael Cain says:

    Sigh… there are days when I’m glad I’m an old fart, now mostly retired, with a house that was paid off 15 or so years ago.Report

  9. Avatar Will Truman says:

    I was expecting a different sort of pushback than what I am seeing. Namely, that I spent too much time harping on Duke.

    In Banks’s defense, though, if the story is accurate as he tells it, it does seem to me like maybe he should have gotten the loan but for the issue that he was a contractor. It seems dubious to me that people should get loans by paying such marginal amounts down and with such income-to-loan ratios, but it’s not clear to me that he’s asking for something out of line with expectations here.

    It just doesn’t seem to me that Duke is actually the cause of it, but rather the specifics of what income and obligations the banks do and do not count.

    I’m a big biased here because I’m partially expecting/fearing that the bank will deny our loan on the basis of her current contract lapsing and the new contract not counting in their formula. The actuaries have their reasons, of course, but it does seem to leave potential for crack-slippage to occur, and Banks might have been the victim of that.Report

    • Avatar Kim says:

      Being able to demonstrate that yes, you will be able to afford to keep paying in a wide variety of circumstances seems to help. [we had to convince the bank that we really could put X% of our income towards housing, and not be in severe financial trouble. Going carless was pretty foreign to our credit union.]

      I can kinda agree with not counting contract-work towards a house (please note: I had roughly as much trouble with “just started working a new job”)Report

      • Avatar Will Truman says:

        That does touch on something I’m curious about. One reason we may get a pass on her contract issue is that we have a very good earnings history that they did comb over. So they know that she is capable of making $x/yr.

        What’s Banks’s earnings history? If he has none, and just started as a contractor, and his industry is not particularly secure, that does make me much more sympathetic towards the bank’s point of view. Even though it sucks for him, if he is being denied a loan that he could actually make payments on.Report

    • Avatar Kim says:

      It’s warranted. When you have excellent publicish schools, it’s something a bit dumb to go to private ones. (counting myself in that dumb, fwiw).Report

    • Avatar Jim Heffman says:

      The problem is you’re talking about someone who describes themselves as having graduated from Duke without an insane amount of student debt (and that being handled with a shockingly good payment plan.) Which means, to most readers, “rich person”. And that gives the article the time of someone with a silver spoon in their mouth whining that they can’t get a turn at their preferred soup bowl.Report

    • Avatar Vikram Bath says:

      In Banks’s defense, though, if the story is accurate as he tells it, it does seem to me like maybe he should have gotten the loan but for the issue that he was a contractor.

      You know part of the reason companies hire contractors? It’s so they can let them go when they don’t feel like paying them anymore and no one complains. It’s great if you’re a business, and great if that’s the sort of work you enjoy more, but it’s not so great if you’re a bank looking to make a loan against what a contractor says he expects to earn in the future.Report

      • Avatar Will Truman says:

        And yet my wife’s earning potential, in the form of a contract, was of absolutely no interest to our bank. Meanwhile, the temp job she currently has, which expires in a couple of weeks, was.

        I’m not saying that the banks don’t know what they’re doing. I am saying that from the outside in, what counts and what doesn’t can look awfully screwy and may not actually be representative of someone’s actual risk portfolio, even if it is in the aggregate.Report

      • Avatar Kim says:

        Will,
        you’re signing a 15 year (or longer) mortgage. They want you to be able to pay it for more than the contract lasts.
        (also, they don’t necessarily mind saying “come back after your six month review, when we know you have the job”)Report

      • Avatar Will Truman says:

        Fifteen year. So why are they so concerned about how much she’s making right this minute?Report

      • Avatar Vikram Bath says:

        Don’t get duped by the words. Having a contract doesn’t make you a contractor. Contractors are typically distinguished from employees in that they provide their own tools and decide how the work will be performed. They might be paid a flat fee for a job or hourly based on work performed. They issue invoices that get paid. They do not receive a recurring salary. They don’t get benefits or sick leave or anything resembling it as employees would.

        Your wife was working under a contract, but I always assumed she was salaried.Report

      • Avatar Vikram Bath says:

        Fifteen year. So why are they so concerned about how much she’s making right this minute?

        Almost all defaults if they happen at all, occur in the first year. They are way more concerned with the immediate future because the longer term tends to take care of itself (in their experience).

        It’s also worth noting that people who are having or are expecting to have financial difficulties often seek credit right before it shows any outward signs. So, they will be on the lookout for any pinkish flags and not just red ones.Report

      • Avatar Will Truman says:

        That wasn’t really my point. My point was that her contract was finite (with no possibility of renewal!). With the end of it coming up very, very soon. I mean, don’t get me wrong, I’m glad that they didn’t care about it. What surprises me is that the question “What about when this contract is over?” never came up. Except when I brought it up, when they told me it didn’t matter.

        Running things strictly by the numbers does make sense in the aggregate. So I get why they do it and take it out of the frailty of human judgment. Even so, it does likely lead to problem cases. In our case, we could be trying to sneak this in right before expected unemployment*, which would be bad for them, or they could disregard someone ultimately creditworthy but whose circumstances don’t quite fit into their formula, which would be bad for the borrower.

        It’s also worth noting that people who are having or are expecting to have financial difficulties often seek credit right before it shows any outward signs. So, they will be on the lookout for any pinkish flags and not just red ones.

        Unless that flag is being two weeks away from a contract that’s ending. I was really expecting to have to justify why they should give us money under those circumstances. I didn’t. I guess because of earning history (though earning history has been erratic).Report

      • Avatar Michael Cain says:

        Granted it’s been a long time, but when my wife and I got our first mortgage, what the S&L seemed concerned about was less what our current income was — so long as it was sufficient — than how long we had been at our jobs. As I recall, they wanted at least a year, and were much happier with two or three.Report

      • Avatar Will Truman says:

        I mean, I’m pretty sure their distinterest in the ambiguities here favor us. Otherwise, they’d be tearing their hair out about “What happens if the new contract doesn’t work out?”… because we have, a couple of times. There’s still a sticking point that, if it isn’t addressed, will cause us to walk.

        Obviously, we believe that it’s not going to come to that. Otherwise, we wouldn’t be buying this house. We believe strongly that it will all work out. I remain certain it will. But one would think that, from the bank’s POV, there is a real liability here. One worth investigating, for sure, even if not one worth denying the loan over.

        @michael-cain Fortunately for us, since she’s been at her job for slightly less than a year, they don’t seem to care too much about that. Really, about 90% of what they seem to be asking for pertains to demonstrating that she is making the money she says she is making.Report

      • Avatar Vikram Bath says:

        Ah, I missed that.

        I would guess that the reason they didn’t raise an issue is that contracted salaried positions are a somewhat common occurrence. They may have seen enough cases like that to reason that it doesn’t add much additional risk. That might not hold true for temp work more generally.Report

  10. Avatar Kolohe says:

    Make student loans dischargeable in bankruptcy and the mortgage lenders won’t hold it against people as much.Report

    • Avatar ScarletNumbers says:

      Yes, but this provides a set of incentives that I would rather not provide.Report

    • Avatar Vikram Bath says:

      Make student loans dischargeable in bankruptcy and student loan rates will go up (or the market might disappear for lending to students who are considered good candidates for strategic default). The thing’s like a balloon. Squeeze in one place, and it will pop out in another.Report

      • Avatar Morat20 says:

        Student loans shouldn’t be privatized anyways. Last I checked, the government does all the work — and backstops them. I’m not sure when it changed, but the interest rates I paid in the nineties were like 2% — but my wife (doing her Master’s) is not only paying 6%, but she’s not allowed to consolidate them at a lower rate! (I consolidated mine down to like 1.5% in 99 maybe?).

        Honestly, I’m not sure what the point of privatizing SL’s was for, other than to let banks in on basically risk free money.Report

      • Avatar Vikram Bath says:

        You could do that, but the default risk doesn’t go away just because the government is issuing the debt. The government is certainly in a better position to weather student defaults, but I’m not sure the population would want to tolerate that for long.Report

      • Avatar morat20 says:

        Vikram,

        When i said the government backstops the debt, I meant it. Unless it’s changed in the last ten years (and I’m pretty certain it didn’t), the government does most of the work of collecting — and in cases of default, the government covers the loss.

        Back in the 90s, the only thing the ‘private’ part of the loan did was administer the thing. They collected and issued checks. The MONEY for the loan came from the government, the money paid in went back to the government, and if the loan went bad the government was stuck with the bill.

        Given how rigorously controlled the interest rate is on student loans even now (even if their base point is much higher, as it used to be pegged to the T-bill rate), I’m pretty darn certain that hasn’t changed.

        It might have changed back — I know the Democrats were pushing to change the system back to the previous setup, but I really don’t know if they succeeded. Everyone I knew was done with school by then, and our kids hadn’t started. (Mine just did by the way. And yes, the local community college costs have slightly more than doubled since 95. Hooray).Report

      • Avatar Will Truman says:

        @morat20 I think @vikram-bath was saying that whether the loans are administered privately or by the government, allowing people to default would likely be untenable without significantly higher rates or people being denied loans. Having the government administer won’t change that. I think he’s correct.

        Even so, I do actually think a time-buffered option to default might be worthwhile, considering that defaults still occur. Something on the order of “ten years after graduation or interruption, debts may be discharged”… That might result in a slight uptick on defaults, but not the sort of strategic defaulting that a system that allowed immediate default would be. (I don’t think people would spend seven or ten years in financial limbo waiting to default on their student loans.)Report

    • Avatar Burt Likko says:

      How’s about making accrued interest on the loan dischargeable, one time, but not the principal or future interest?Report

  11. Avatar ScarletNumbers says:

    I found it particularly annoying that the author used the last name Banks in a story that involved a bank.Report

  12. Avatar greginak says:

    I can’t say i’m sympathetic to this couple. Mostly for the same reasons others have said above. I really diske the “this is what we were told to do” argument in this piece. If it is just the general society said to do this, then they aren’t taking responsibility for their own choices. Society is to big and vague a concept. If one person told them to do it and the advice sucked then blame that person and themselves.

    Their education is also going to give them, hopefully, careers that are fulfilling and will give them long term employment.I would hope they value those things. And it is his choice to be contractor i assume. That choice also comes with costs.Report

  13. Avatar Michael Drew says:

    The key to dealing with this problem is to not dream to own a house. Make the housing decisions that make sense for you at any given moment n your life. Don’t weigh that decision down with a ton of cultural-emotional freight (whether personal sentimental commitments or out responsiveness to the dominance of that expectation as the prevailing sign of arrival as a legitimate person in one’s own right in our society) that isn’t connected to the actual utility of the housing choice for you or to wise personal/family finance management.Report

    • Avatar Burt Likko says:

      Well, I don’t know if that’s the answer, either. Maybe the answer is “buy less house in a less desirable neighborhood and rent it out as income property when you’re doing better” or “shop around to a different lender who will actually look at your income instead of believing the massive marketing lie that is ‘pre-qualification.'”Report

      • Avatar Michael Drew says:

        No, it’s the answer. It’s not that you never develop a well-considered desire to buy a house. It’s that you don’t buy into these big emotional-conceptual complexes about it that have such currency in our culture. That allows the weight of the opportunity cost of making other choices that delay/disallow home purchases to reflect something more like the value of what owning a home would be to a person insomuch as owning a home id not categorically different from owning any other thing. I realize you’re never going to completely get rid of the specialness of ownership over that possession, but letting go of the huge cultural freight of that possession/status allows you to consider its real value to you. Otherwise, you’re stuck considering the value of the signal that ownership (but especially non-ownership) sends about you to society. And again there’s always going to be some of that – all possessions have some signaling value. But you can manage the extent of it if you let go of the singularly strong emotional power that the social-conceptual complex that is home ownership has over so many people and consider it instead on your own terms. If you’re still bummed that you made other choices, fine, but at least you know you’ve assessed what the value of owning a home really is to you. I have my doubts that people who have basically dreamed since forever of owning a home ever did that. (Otherwise they would have had a sense of what it would take and what they would’ve had to give up or earn in order to realize it.)Report

      • Avatar Burt Likko says:

        Errr….

        Where I live, after the mortgage interest deduction is considered, it’s cheaper to buy than rent. I was under the impression that’s true in a lot of places.

        That’s an entirely rational, non-emotional, non-Veblenesque decision. I couldn’t blame Mr. Banks for wanting to get on that train and being frustrated at getting over the top to get there because of an underwriter’s failure to comprehend his situation. If that were really the case.

        Dude lives in North Carolina. There’s in The Triangle and there’s Not In The Triangle. Not In The Triangle is not hugely expensive. Maybe he ought to commute for a while.Report

      • Avatar Michael Drew says:

        So if that’s true, then the problem is that what looks to be a well-considered desire to buy because it makes good sense is being frustrated. Frustrating, but it shouldn’t be devastating. The issue I thought we were treating was the dashing of lifelong dreams to own houses (or, perhaps in this case, houses of a particular quality of appointment and location). Lifelong dreams, not well-considered desires based in present circumstnce and realistically anticipated actual prosperity and desire to sacrifice for an asset. It’ she dream part I’m speaking to. The way to avoid having lifelong dreams to own houses dashed is to soberly deconstruct them (the dreams) and replace them with considered desires that meet present needs and current and future means.Report

      • Avatar Kim says:

        Burt,
        yeah, you’re in LA or close enough. Chi-town, Boswash, and San Fran (maybe seattle/portland as well). Certainly the mortgage tax deduction isn’t doing me one bit of good, and it’s not like I’ve got a cheap house for the area.Report

      • Avatar Kim says:

        Michael,
        given that he appears to have spent a substantial portion of $18k on a wedding, I want to tell him: “just get a cheaper wedding, or get more jingle from your relatives”Report

      • Avatar Will Truman says:

        Wait, when you say CMU you mean Carnegie Mellon?Report

      • Avatar Kim says:

        will,
        yes. not that I graduated with loans, or anything (parents had /some/ money laid away, and I got one hell of a scholarship).Report

      • Avatar Will Truman says:

        Huh. All this time I thought you went to Central Michigan.Report

      • Avatar Kim says:

        Will,
        Lol. No one around here calls it anything other than CMU. (one of my community college profs referred to it as Carnegie Tech, which was cute).

        I have to keep repeating to myself that “I am bright, or at least smart enough to look bright on college applications” is a privilege. That not everyone managed to swing a good scholarship to whatever school they went to.
        Because, um, I did go to private school, but probably at about the cost of a decent community college.Report

      • Avatar Vikram Bath says:

        @kim ,
        Oh, I somehow missed what happened with the $18k the first time I read the thing. His in-laws give him $18k to help with the downpayment and he now has $2k of it left? I think all future articles complaining about Millennials shouldn’t bother saying anything and instead just link to this piece.Report

      • Avatar Will Truman says:

        Closing costs and incidentals can eat through a lot of $18k, combined with the lost earnest deposit.Report

      • Avatar ScarletNumbers says:

        @burt-likko

        There are also parts of the country where housing prices have gotten so far out-of-whack that renting makes economic sense.

        Also, the interest deduction is offset by the lack of the standard deduction.

        Dude lives in North Carolina

        Actually he lives near Sacramento.Report

      • Avatar ScarletNumbers says:

        @kim

        (cough)humble-brag(cough)

        one of my community college profs referred to it as Carnegie Tech, which was cute

        Not sure if serious, but your school WAS called Carnegie Tech until 1967.

        Also, I wonder if their generosity toward you was influence by their lopsides male/female ratio (57% male). Do you know what it was when you went?Report

      • Avatar Kim says:

        Scarlet,
        yeah, hence the cuteness.
        I’d say it was more that I was a woman going for a physics major, than the actual ratio. We had plenty of drama classes where I’m pretty sure the ratio was around 50/50. (The CS classes were pretty bad, but had actually gotten better by the time I was there. About 5 years earlier, we had more Daves than girls in intro cs).Report

  14. Avatar Kazzy says:

    @will-truman (DOWN HERE!!!)

    Given how he ends the piece…

    “I don’t want to make it sound like I regret attending the schools I did. School was where I met my wife, how I prepped to be competitive in my field, and where I met some of my closest friends. So I wouldn’t change a thing about my education — I just wish it hadn’t cost so much.

    My generation, especially, has been given mixed signals by society. We’re told to attend the best schools we possibly can — but then we’re punished when we can’t afford it.”

    This guy does seem to have pretty unrealistic expectations. “I wouldn’t have changed anything about the experience except the drawbacks that made it possible!” “But how was the play, Mrs. Lincoln?”

    I don’t know if “society” tells us to attend the best schools we possibly can. I believe it tells us to attend the “right” school. And who, exactly, punished Mr. Banks? And how?Report

    • Avatar dhex says:

      who doesn’t like to get good things without bad things, and for free?

      i mean, that’s the summary of every political speech ever.

      “you deserve these good things. my opponents are bad people who don’t want you to have them. but you can have these good things. vote for me – and this is the best part – and you won’t see any downsides. ever. it’s all free, you deserve it, and you’re all very handsome and pretty.”Report

  15. Avatar Damon says:

    Gee, what I find interesting is that “signals” “society” was sending to this guy, or so he claims.

    I never cared about “society”. The only signals I paid attention to were from my parents. Especially when they said that they would help pay for undergraduate school, and they did. Grad school was “on me”. Sure, they would help with free room and board, help me find a decent part time job, but I was the one who took on the student loan debt and paid it off over the next decade.

    When I got married, I was told they would give me a cash gift, either to use on the wedding or for help with a down payment on a house. I choose the house.

    So this guy choose to incur lots of student debt and now finds he can’t afford the house he wants. Welcome to reality. Man up and deal, and save more than 50 bucks a month, and stop bitching.Report

  16. Avatar Ethan Gach says:

    My biggest advice to anyone applying to colleges this fall is (where applicable): go local and cheap for the first two years, than transfer to a main or state campus for the final two.

    It’s really astounding how much of the ‘millenials in economic crisis’ narrative is dominated mostly by people who went to very expensive schools and didn’t come out making the uber bucks they thought, leading them to have to postpone certain plans or make life trade-offs (pursue X career perhaps never own a house).

    I’ll be the first to rant about economic inequality and the hollowing out of the economy, but specifically regarding the economic struggles of college educated young people, the media and those in it too often ignore the people who went to low-prestige/low-cost state or community schools, landed steady but not exactly sexy or exotic jobs, and are now moving on with building a family and getting that house just like they’d always wanted.Report

    • Avatar Ethan Gach says:

      FWIW, my advice is born of regret–I went four years to U. Pitt when I would have been much better served going two years at a penn state satellite campus and then transferring up later to complete my major.Report

      • Avatar Kim says:

        When were you at Pitt? (Also, what’s your degree in?)
        I went to CMU, only to discover that Pitt had the better physics department, and I could have had a free ride to Pitt.Report

    • Avatar Glyph says:

      people who went to low-prestige/low-cost state or community schools, landed steady but not exactly sexy or exotic jobs,

      I was just ahead of the game!

      Seriously, consider Ethan’s advice.

      If the problem is, “X now costs too much, and purchasing it will leave me mired in debt forever”, then consider purchasing less “X” and replacing some of it with cheaper “Y”.Report

  17. Avatar j r says:

    Further up I took a couple of cheap shots at this Banks guy, insinuating that he is an idiot. In all likelihood, however, he is the furthest thing from an idiot. The guy is probably a standard deviation or two above the mean IQ. And that raises an interesting question: why has he got not even the most basic understanding of personal finance?

    Putting aside for a moment the questions of whether this is an instance of individual failing, sociological failing, or some combination of the two, is anyone else bothered by how poorly thought-out that article is? What is it about our present education system that helps to develop full-grown adults who don’t seem to have any idea of how to make cost-benefit calculations? I bet this guys has a somewhat impressive resume. He is probably fairly well traveled. He’s got an advanced degree from Duke and probably a couple-few high-profile internships. And after all that, he doesn’t seem to have much in the way of common sense when it comes to personal finance. How does that happen?Report

    • Avatar Burt Likko says:

      Smart people do unwise things all the time. With money, career choices, criminal activity, substances, driving… Being smart just means the ability to more eloquently recriminate oneself for mistakes; being smart does not alleviate the condition of being human.Report

      • Avatar Damon says:

        And being smart doesn’t necessarily mean you’re smart with money. Is budgeting, basic personal finance, time value of money, and such things taught in schools? It wasn’t when I was in school, nor in college.Report

      • Avatar j r says:

        Sure, but that’s not quite what I’m getting at here. People, smart people, over-extend themselves all the time. It’s easy to live high on the hog when you have it, with little forethought to what happens when your circumstances change. Generally, though, when that happens the person intuitively understands the mistake that they made. They may say that they don’t regret making that mistake because the experiences that they had were worth it, but they don’t turn it around and pretend that they were doing the right thing.

        It is a problem when not only can’t the most highly educated people see the forest for the trees, but that inability to see is built into their education.Report

      • Avatar Vikram Bath says:

        they don’t turn it around and pretend that they were doing the right thing.

        They would if they have a fully ingrained habit of blaming others or outside factors whenever things don’t go the way they want them to go.Report

      • Avatar Damon says:

        @jr

        Yah, I understand that, but FINANCIAL PRUDENCE suggests you don’t spend 100% of your income, especially in the good years, but put some of it away. So you don’t rent that 1500 USD place when you can made do that 1k place and save 500 bucks a month. Or you take your annual increase, if you got one, and put it all into savings, since you already can live on what you’re currently making.Report

    • Avatar Vikram Bath says:

      j r, it’s plausible to me that he could be smart, understand personal finance, and still write this piece. I think he just dislikes the fact that there are trade-offs and that he can’t simply choose to get all the things he wants and has to settle for just getting most of them.Report

      • Avatar Kim says:

        … he’s saving $50 a month towards a house. That’ll be less than $10,000 in Ten Years. He ought to splurge, have a vacation, and then cut his expenses. Say by not living in the neighborhood he wants to live in later. or ditching the car, like I did.Report

      • Avatar j r says:

        It is plausible, but it’s still a problem. The fact that someone can write a piece in which he claims that he did everything that he was supposed to do, except abdicate almost all personal financial responsibility to societal pressures to get the most prestigious degree, that says something alarming about the nature of this country’s elite educational institutions.Report

      • Avatar Patrick says:

        except abdicate almost all personal financial responsibility to societal pressures to get the most prestigious degree, that says something alarming about the nature of this country’s elite educational institutions.

        I’d say that this says something alarming about the citizenry’s relationship with the country’s elite educational institutions, but I don’t know that I’d shuffle all the blame onto the institutions.

        I mean, “I expect that attending elite institutions of learning will translate into economic success” seems to be an expectation loaded with lots of … ah… dubious assumptions.Report

      • Avatar Kazzy says:

        “I think he just dislikes the fact that there are trade-offs and that he can’t simply choose to get all the things he wants and has to settle for just getting most of them.”
        @vikram-bath
        I see this all the time. From four-year-olds. It boggles my mind that adults have not progressed beyond this stage of thinking.Report