Stop keeping up with the Joneses

After reading today’s opinion piece from The (Waynesboro) News Virginian, (Borrowers beware of government’s hand), I just had to chime in.

Anyone with a basic understanding of economics could see things weren’t quite right in the real estate market over the last couple of years. The rise of the “McMansions,” no down payments and interest-only loans were key indicators. Who in their right mind would borrow hundreds of thousands of dollars with an interest-only loan to buy their home? Apparently, millions.

Now the government wants to bail them out for their excesses. Although the mortgage lenders are equally culpable, many of those who purchased these homes should have known better and could have saved themselves from this crisis if they had made more modest investments. Instead, they took enormous risks, betting on the market to continue its upward spiral so they could cash out later with a profit.

For a local example of this insanity, take a look at the dozens of homes currently for sale in the River Falls community. This is an upscale golf course community, yet many of these homes are in foreclosure or pre-foreclosure. At the peak of the market boom, these homes were selling for between $800,000 and $1,000,000. How does anyone in that income bracket foreclose on their home? We could explain two or three examples of folks who lost their jobs or suffered some other life crisis. However, there are just too many failures that can be explained away for these reasons.

Now the government wants to bailout the borrowers. What will be next? Will the government consider bailouts for people who bought automobiles they can no longer afford? How about those who cannot pay off their credit card balances because they cannot afford to pay more than they owe in interest? What happened to saving up for that next big purchase?

We have become a society that bites off more than we can chew. Americans are spending more money than they earn. We “need” the biggest house we can purchase, the fanciest car, and whatever else we see and decide to purchase on the spot with our credit cards. Keeping up with the Joneses has become a way of life for too many of us. It’s a darn shame.

STEVE SCHMITH

Lake Ridge