You mean there really is no free lunch?

 

You mean there really is no free lunch?

For those willing to risk capital buying 'write-off' loans, maybe not free but profitable.

 

For those willing to risk capital buying 'write-off' loans, maybe not free but profitable.

Good for them.

During the 2008 mortgage debacle, I continued to pay my mortgage as per the contract(s) I agreed to, because I believed my word meant something, and keeping it was important.

I'm happy I don't have to look behind me waiting for bad decisions to catch up.

 

https://www.msn.com/en-us/money/com...mpany-theyve-got-3-days-to-decide/ar-BB1oZbHD
Patagonia gave 90 staff a choice — relocate across the US or leave the company. They've got 3 days to decide.

Sustainable outdoors brand Patagonia has given 90 US employees a choice — tell the company you are willing to relocate by Friday or leave your job.


The employees all work in customer services, known at Patagonia as the customer experience (CX) team, and are able to work remotely to field calls and inquiries.

They were first alerted on Tuesday morning when they received a text and email.

"At 10 a.m. PST we will be hosting an important Town Hall Meeting," read the internal email, which was seen by Business Insider.

 

https://www.msn.com/en-us/money/com...mpany-theyve-got-3-days-to-decide/ar-BB1oZbHD
Patagonia gave 90 staff a choice — relocate across the US or leave the company. They've got 3 days to decide.

Sustainable outdoors brand Patagonia has given 90 US employees a choice — tell the company you are willing to relocate by Friday or leave your job.


The employees all work in customer services, known at Patagonia as the customer experience (CX) team, and are able to work remotely to field calls and inquiries.

They were first alerted on Tuesday morning when they received a text and email.

"At 10 a.m. PST we will be hosting an important Town Hall Meeting," read the internal email, which was seen by Business Insider.

That's a great way to learn if your employees are corporate material.

I'd fail the test.

 

Of course, they could always agree initially but then quit later on. And depending on "the where" the move would be to, there are states that I would never ever even want to visit. And there are certainly companies that regard all folks as easily replaceable. I left one and three years later saw they were still searching for my replacement. It made me laugh.

 

https://www.foxbusiness.com/economy...-layoffs-midwest-amid-production-shift-mexico
John Deere announces mass layoffs in Midwest amid production shift to Mexico
Over 600 production staff at plants in Illinois and Iowa are being let go this summer

 

Of course, they could always agree initially but then quit later on.

And give up the severance pay.

 

It's hard for me to have much sympathy for most (not all) of the people that end up in these situations. This gal was a prime example -- she clearly couldn't afford the house, so she played games. She took out an 80/20 loan so that she didn't have to put anything down (she may or may not have even rolled the closing costs into one of the loans). Then she took out an ARM, knowing that the rate would almost certainly adjust upward significantly. Everything was screaming at her that she can't afford this house and proceeding with the purchase was going to be extremely risky. She chose to take the risk without even a plan to mitigate it. Her bet didn't pay off. Instead of aggressively getting that second mortgage paid off before the first mortgage adjusted (and if she didn't have a plan for doing that, it's just one more screaming red flag that she shouldn't have proceeded), she almost certainly just made the minimum payments (probably because, as a result of buying more house than she could afford, doing more than that was not doable -- at least not without lighting a fire under herself and getting a second and third job to pay the second off). So the mortgage adjusts and now she can't make both the first and the second mortgage payments. Gee, who could have possibly foreseen that happening? There's no way of knowing what the bank told her, but even if they told her the second was forgiven (as opposed to being "written off", which is a very different thing), she was incredibly naive and stupid to not get that in writing. Any documentation on a real estate transaction should be maintained for life. Similarly, anything relating to debts that are settled for less than face amount or with someone that bought the debt as a bad debt should be done in writing and kept forever. Your heirs might need it to settle the estate, but once the estate is settled, then it can be discarded (though they should keep any records related to real estate that they inherit).

As Lehto described, most states have reasonable restrictions on what purchasers of debts can add to the debt, usually keyed to providing service to the debtor that additional costs are accruing. Many outfits that purchase bad debts are extremely disreputable and use tactics that are often blatantly illegal. Those outfits not only don't deserve payment for the debts, they should be shutdown and possibly face criminal charges. But there are a lot of debt purchasers that act completely above board and go to great lengths to follow all of the rules.

Regarding ARMs, the common wisdom is to simply never take out an adjustable mortgage. I don't quite fall into that camp, but agree that it's solid advice for the vast majority of people because it's too easy to fall into the trap of just making the minimum payment and then letting the ARM bite you when it adjusts. But if you are very deliberate and strategic, you can make them really work for you (provided the market is "normal" where the ARM intro rate is significantly lower than the prevailing fixed rates).

When I bought my prior house, I could get a 5/1 ARM at 2.75% compared to a fixed rate of 5.25%. The terms of the loan allowed the rate to adjust a maximum of 2%-pts after five years and no more than 1%-pt each year after that (with a total max increase of 5%-pts). So, before I made the decision to go with the ARM, I sat down and calculated how much I needed to pay extra against the mortgage each month for the first five years in order to get it paid down enough so that even if the rate went up the full 2%-pts after five years that my adjusted payment would be the same. This turned out to be an extra $370/mo (the ARM payment was $334/mo less than the fixed rate, so in reality I was talking about committing to paying just $36/mo more than I would have been paying if I had opted for the fixed). So I decided that I would only take out the ARM if I could commit to somehow, someway, paying an extra $400 a month, even if it ended up meaning taking an additional job delivering pizzas (which I didn't expect to happen, but that would have been a very viable option). As it turned out, I paid it off sufficiently aggressively that, when it adjusted, my payment was reduced significantly. After two more adjustments, I had the principal amount down to the point where my P&I was just $50/mo and my goal was for the next adjustment to result in the monthly interest charges being just under $0.005 so that it would round to zero. The effect would be that the mortgage company would be dealing with me taxes and insurance payments while receiving no interest revenue from the loan. I actually achieved this, but then they pulled a fast one on me and used my escrow balance to payoff the mortgage. I argued with them about this and got them to even admit that the loan terms prohibited them from doing this (the escrow amounts can only be used to pay for escrowed items), but I would have had to sue to force them to abide by the terms -- and I seriously considered doing so, but eventually came to my senses.

I'm almost in a similar situation now. We bought this house at the low in the interest rate market so we have a 2.5% 30-year note on it. Normally, I would be paying off this house as aggressively as I could to get completely debt-free again, but instead I am making just the minimum payments and parked enough from the sale of the old house in a money market so that it is making considerably more interest each month than is being charged by the mortgage company. I also have the mortgage payments drawn from that account, so its balance is going down some each month (since the mortgage payment also has the principal and the escrows included). My original plan had been to pay enough into that account each month so that it would be exhausted just as the mortage was paid off. I've been lazy and haven't been doing that (I'm by no means immune to the trap of not keeping my eye on the financial ball).

I haven't firmly decided how to proceed. As long as I can earn more in an FDIC-insured account than I'm paying in interest, I don't plan to pay the loan down early, unless and until we decide that we are in a position to simply pay it off in full in order to gain the piece of mind of being completely debt-free (which is considerable and I definitely miss it). But part of me would like to see my daughter eventually inherit the mortgage, at which point she would be in a position of having a super cheap payment (given another twenty years or so of inflation) on a house with a very low remaining principal balance. She can then decide to either continue paying it or just settling it and having a house free and clear to live-in, rent out, or sell.

 

https://www.msn.com/en-us/money/com...mpany-theyve-got-3-days-to-decide/ar-BB1oZbHD
Patagonia gave 90 staff a choice — relocate across the US or leave the company. They've got 3 days to decide.

Sustainable outdoors brand Patagonia has given 90 US employees a choice — tell the company you are willing to relocate by Friday or leave your job.


The employees all work in customer services, known at Patagonia as the customer experience (CX) team, and are able to work remotely to field calls and inquiries.

They were first alerted on Tuesday morning when they received a text and email.

"At 10 a.m. PST we will be hosting an important Town Hall Meeting," read the internal email, which was seen by Business Insider.

I don't have a huge problem with this. If I insist on having the right to leave my employer with little or no notice, then it's only fair that they have the option to let me go with little or no notice. It's up to me to make them want to keep me and it's up to them to make me want to be kept. If my employer told me that I would have to relocate to keep my job, it would merely start a period of evaluation and negotiation. Where do they want me to move to? How quickly? Are they going to cover the expense of the move? Is my compensation package in the new location going to be comparable in total purchasing power to my current situation? Then, of course, there's all of the intangibles that go into whether we would like living in the new location as much as we do where we currently are as well as such things as quality of schools and so forth. All of those are negotiable and if we come to an agreement that is acceptable to both the employer and my family, we move. If not, we part ways with no ill-feelings either way.

For the next two years, it would be unlikely that I would agree to a move because my daughter is in a very good environment academically and musically and that would be about top on the priority list -- the new place would have to offer improvements in both of those in order to be viable. But in another couple years once she is off to college (or whatever), then it comes down to quality of life and both my wife and I are pretty flexible. For me, it's the physical climate that is probably most important at this stage of my life.

 

We bought this house at the low in the interest rate market so we have a 2.5% 30-year note on it.

As long as interest rates stay high, pay the minimum and invest the difference.

 

As long as interest rates stay high, pay the minimum and invest the difference.

Divorce rates are falling, couples are staying together not for the kids’ sake these days, but rather for their low mortgage rate.

 

Divorce rates are falling, couples are staying together not for the kids’ sake these days, but rather for their low mortgage rate.

Incentives count.

 

Workers Rights Won by Unions, From the 8-Hour Workday to Overtime Pay

Ten things we all take for granted that we only have because of the effort and struggles of organized labor movements:

1. An eight-hour workday, two-day weekend, and overtime pay
2. A minimum wage
3. Child labor laws
4. Paid vacation and holidays
5. Sick leave
6. Worker health care
7. Antidiscrimination protections
8. Right to strike
9. Safety regulations or “worker’s comp”
10. Protecting public education

All of these things and more arose only because of the huge efforts and struggle of organized labor movements, none of these things we see today emanated from within corporations or capitalism.

 

Workers Rights Won by Unions, From the 8-Hour Workday to Overtime Pay

Ten things we all take for granted that we only have because of the effort and struggles of organized labor movements:

1. An eight-hour workday, two-day weekend, and overtime pay
2. A minimum wage
3. Child labor laws
4. Paid vacation and holidays
5. Sick leave
6. Worker health care
7. Antidiscrimination protections
8. Right to strike
9. Safety regulations or “worker’s comp”
10. Protecting public education

All of these things and more arose only because of the huge efforts and struggle of organized labor movements, none of these things we see today emanated from within corporations or capitalism.

True enough but without Capitalism and the Free Market the efficiencies for those things would never have arisen.

 

True enough but without Capitalism and the Free Market the efficiencies for those things would never have arisen.

Maybe we should all leave behind the "us vs them" narrative of economics and social relationships and simply be thankful for every gift that each one of us represents to one another.

 

Maybe we should all leave behind the "us vs them" narrative of economics and social relationships and simply be thankful for every gift that each one of us represents to one another.

I tend to agree with that sentiment but there are too many people who don't understand what capitalism is and how it actually functions within the US economy and therefore gets the blame for things it is not responsible for and no credit for the things it is responsible for.

 

Maybe we should all leave behind the "us vs them" narrative of economics and social relationships and simply be thankful for every gift that each one of us represents to one another.

Because some such relationships promote prosperity and happiness while others produce death and destruction. It's helpful -- both at the personal level as well as the at the civilizational level -- to know which is which.

 

Because some such relationships promote prosperity and happiness while others produce death and destruction. It's helpful -- both at the personal level as well as the at the civilizational level -- to know which is which.

I agree, and if there's a system that has historically proved to be a master at exploitig the "us vs them" ideology is socialism. It is the philosophy of envy and resentment. Always resulting in stagnation and mediocrity. It never ends well.

And don't get me wrong, I also believe that capitalism has very severe flaws and short comings. But we owe it credit for the modern world's economic progress. Mainly because it respects the liberty and motivation of every individual.

I so wish someone could come up with a better third option, though. But until then, capitalism is the best we've got.

 

I so wish someone could come up with a better third option, though.

The better third option is actual capitalism, as opposed to a mixed economy.