why are people in nice houses in so much debt?

Question

why are first time buyers buying houses with an expensive mortgage living far beyond their means and ending in so much debt? what is wrong with buying a less expensive house that needs a bit of tlc, living comfortably and building ourselves up from there? or have we become a nation of want it right now?

Answer 1

We seem to have raised a generation of idiots. Debt is a choice that they have embraced.

My ONLY debt is my mortgages and it will stay that way. Hopefully I raised my children with enough common sense to live within their means.

Answer 2

The house is an asset. Over time it's going up in value, and their mortgage payments will remain the same (if it's fixed). They are buying as much as they can afford and expecting their income to catch up.

That's exactly what I did. Where I live, a basic 2 bedroom condo runs about $440k. Nothing fancy. When I bought it 4 years ago, I paid $362K, and it was a stretch. But I knew if I waited any longer, housing prices would out pace my ability to buy. So I bought, and lived very frugally for 3 years, until my income caught up.

Of course, I didn't make the adjustable rate mistake. I made damn sure I locked in a good 30 year fixed rate. Even though it took over half my take home pay to pay the mortage and property taxes, I knew I could do it, barely. Now the same mortgage and taxes take less then 33% of my take home pay.

Answer 3

People have a tendency to buy into the "Keeping up with the Joneses". Now the Jones may have a better income base, more cash reserves, fewer obligations (other than the house) and may be better money managers (jugglers). Debt is forced onto us with...Low, low interest reates, do not pay schemes until 2020 and the "You deserve to have it commercials". The attitude used to be...save and then buy cash...now it is buy and end up broke and out of control. I used to be a Bailiff (repo man) in Canada....the majority of "assets"-houses, cars, boats etc are always owned by the bank until at least 2/3rd's paid-at that point we could not just take them. That beautiful beamer or hummer you admire that person having!!! Well close behind is the bank's repo man just waiting for missed payments and yes it happens all the time. Ask your grandfather what to do and he will give you the magic formula...think with your brain and not your "Ego"!!!

Answer 4

People in any houses are having problems even more so in popular areas

I have a friend who is an estate agent who has a couple on their books that cant afford to eat as the mortgage takes every penny

They are hardly living beyond their means!

Answer 5

Because mortgage brokers told them they could afford it now and by the time the first adjustment arrived they would have received a raise to cover it. The problem was if you weren't in a war supply business-no raise at all. Absolutely nothing wrong with your suggestion in fact I think you are smart for thinking of it! Our kids are a nation of want it now. Our grandparents suffered through the depression and not enough food so they planted gardens and taught their children the word NO. Those children didn't like the word NO so never used it on the young people today. Those are the young people who think they should get it all for nothing and no pain. I'm the parent of those kids today and didn't know how I was hurting them at the time! They are now learning to cinch in their belts now that they have their own children. Tough lessons in Every generation. You wonder what the next one will be.

Answer 6

One of my friends is paying her mortgage by credit card each month. I personally couldn't sleep at night. She buys new clothes all the time and has a holiday abroad at least twice a year.

I would rather be in my humble abode, in much need of decorating and modernising.

If there is cash in my purse we might have chops for tea if not there's always beans on toast.

If I don't have money to pay for something I want I either save up or go without. Its hard with the kids getting older and wanting the latest stuff but I don't want them thinking everything can be paid for with a bit of plastic.

Answer 7

Its not as simple as that. For first time buyers getting on to the property ladder could mean taking out mortgages over longer periods of time in hope that they're financial circumstances change. We were lucky in getting on to ladder when we did and can now live happily in 4 bed detached, two new cars and 2 holidays and also have children on average ish salaries because we made a cracking profit on our flat!!!

Answer 8

Have you seen the prices of houses throughout the country lately? (Although the market is stagnant right now) Most people have to depend on someone else to build for them. And then yes, they have to keep up with their neighbors. People live so far beyond their means, it amazes me. They worry far too much about what others think of them. Then they see all these things on TV and expect life to be like TV. I'm glad I'm not part of that "most".

Answer 9

Part of the problem is that houses prices are the highest they've ever been in terms of how many years salary they represent. But you're right about people not wanting to help themselves. As "the House Doctor" has shown, people lack the imagination even to see a house with different coloured carpet and will pay a huge premium so they can "move in straight away".

Answer 10

around our area.... we call them "Spam Valley" because they have two big 'Chelsea Tractors' at the door and f**k all on the table....they copy each other like a middle class ghetto and 'keeping up with the Jones's'. They get themselves into the sh*t to impress each other.... no f**kin' way man!!. I rent from my local council and I'm as happy as a pig in amongst sh*t... the 'property ladder', started by Thatcher and her cohorts, is all in the mind and can eventually cause psychological damage. The prices are away over the top and they will surely collapse into 'negative equity'... better off out of it.