I stopped paying my mortgage 14 days ago for the first time in my life. I was lucky enough to get a deferral, and I now have the massive triple payment due date looming in August with no idea of how to pay it.
Best job currently seems to be delivery driver at $16/hr. There is absolutely no way I will avoid homelessness unless things change significantly, and soon.
I have an engineering degree from a good school, I played by the rules, I worked hard. Doesn't seem to matter much. The joke around here is that the $1200 check is enough money to buy a really nice shotgun to kill yourself with.
1. Were you laid off recently? If so, are you getting the supplemental $600/week in Federal UI benefits, on top of whatever your State provides? It varies by State but with the Fed supplemental you should be receiving between $835/week (in Mississippi) and $1,423/week (in Massachusetts). If you have kids, the amount may increase further.
In most States you will also qualify for free or heavily subsidized health care via the ACA.[1]
2. If your loan is owned by the Feds (as about 90% of private residential mortgages are) then I believe the deferred loan amount is added to the end of your loan via an extension of the amortization schedule. You can also defer payments for up to 12 months. You would not owe a lump sum in August.[2]
3. Even if you quit paying your mortgage and intentionally chose foreclosure as your best option (as many did in 2009-2010), it's unlikely the foreclosure would occur within the next 12 months.
A few weeks ago I looked in to the CARES act provisions for mortgages.
tl;dr it's largely dependent on how each lender wants to implement. There are lenders that will go the deferred payments then balloon or seek a loan modification. I'm not 100% sure what a loan modification.
Other lenders will simply extend the term of your mortgage by how many payments were missed.
90% of mortgages in the US are owned or insured by Fannie or Freddie. The Federal Government has provided rules that mortgage servicers are required to follow for these loans. I am guessing that the majority of the other 10%/privately owned mortgages are non-conforming jumbo loans, typically in more expensive areas.
Despite the wording, approval is not at the discretion of the financial institution. If the loan is federally backed, the financial institution must approve mortgage relief.
Moreover, currently they are not even allowed to seek proof of financial distress.
I researched this topic several weeks ago and I stand behind my original post. My researched showed that the intent of the CARES Act was for loan term extensions however that's largely been left up to the discretion of each lender.
I have a 30 year fixed rate conforming conventional mortgage. This is ver-batim from their COVID-19 assistance page.
>Important: The terms of this Forbearance Plan, and any additional Forbearance Plan(s), do not include forgiveness of any amounts. The total amount of payments suspended during a Forbearance Period will become due and payable at the end of the Forbearance Period, and you will be required to either repay the suspended payments in full or make other arrangements for how you will repay the suspended payments, such as qualifying for a loan modification or another assistance option.
If your loan is owned by Fannie Mae or Freddie Mac, or if you have an FHA, VA, or USDA loan, your loan is likely subject to the CARES Act. The CARES Act allows for a forbearance of up to 180 days upon request, with an extension of up to an additional 180 days if your hardship is ongoing. The initial Forbearance Plan suspends payments for three months. If your financial hardship remains at the end of this Forbearance Plan and you are unable to resume your normal monthly payments, contact XXX for assistance. You may request additional Forbearance Plan(s) in three-month increments, up to a total of twelve months from the starting date of this Forbearance Plan, or seek another assistance option.
Even if your loan is not covered by the CARES Act, if you have a hardship you may contact us to request assistance. Please call xxx for further assistance.
How much did you save for a rainy day, did you have 6 months of expenses put away prior to financing cars, going on vacation, buying technology, stopping at starbucks, eating out?
If you consider the purpose of emergency savings, the overwhelming majority of folks (even savers) weren't planning for an entire global economic collapse.
Economic collapse, not pandemic. The idea behind typical emergency savings is for personal emergencies where stores/etc would still be business as usual, which isn't the case now.
How does that make any difference? In both cases, you loose your job, you live of your emergency savings for 6-12 month (hoping things are resolved in 6-12 months, but I do not think things will be back to normal in 6-12 months in this specific case). Isn't this what the emergency fund is for?
It holds if, as I said, the rest of the world was business-as-usual. It's not.
One example off the top of my head, groceries are becoming more costly due to supply chain issues from the economic collapse. Savings aren't going to go as far as planned.
this holier than thou attitude really isn't helpful. And based on the fact that they estimate their runway runs out in August, they did have at or near 6 months of emergency funds saved up. Have some empathy please.
The poster said they didn't pay the mortgage 14 days ago... check your math, if you didn't pay for the roof over your head, your runway has run out. It may not have been a positive comment but my question was valid, think of me as the father in law you don't have, always critical but the advice is most likely good to follow. How do you improve in the future without being critical of your past mistakes... I was laid off in january 2018, I had 3 years of savings, economic collapse is the exact thing we should be planning for, I know it's not possible for everyone, I would not have made the same comment if OP was a waiter working their way through college, but, OP is an engineer who did everything right and went to a good school and probably considers themselves one of the smart ones, engineers with degrees from good school get far less sympathy than waiters, I hold those who brag about their education to a higher standard.
No where in their comment do I see where they state they had a 6 month run way. They stated that they have no idea how to pay for the balloon payment in August, that is the only mention of dates. No mention what so ever was given as to their savings.
I also feel that this is exactly the time that people should be discussing savings and emergency plans.
Is your response really, well that sucks, your fault enjoy your family being homeless as you did not adequately prepare for a global pandemic? The lack of actually understanding that these are real people that are suffering is amazing to me.
You have no knowledge of OP's life, maybe he did everything right and he still got hammered. Maybe he did everything wrong. Either way he is a real person not a data point for you to feel smug.
I really dislike all the down votes you received, this is a fair question. People need to realize what they could have done better and the first step of being honest to yourself is be honest to others.
It is real easy to get lost in your finances when during good times your income exceeds your expenses to the point you don't even know what all your expenses are.
Where many get trapped is in what many economist term as monthlies. These are all those ten, twenty, and thirty, dollar reoccurring payments that when added all up can be a significant drain on your finances. They are also the sort of expense that needs to be jettisoned fast when down turns occur. Some cannot, that much is obvious, but others can be ended completely or reduced. I have seen more than my fair share of people blowing a thousand on food in a month.
So sit down, figure out your expenses. Come back in a few hours, a day later, and more, and see what else you need to write down. Go read your bank and CC statements and see what is truly going out and where.
Put your thousand or so aside but your first goal before the new shiny computer, phone, or worse, car, should be six months and from there build up to a year while factoring all your monthly expenses both new and recently acquired.
We should not have to be told this but I bet any number of you can point to people you work at who have no financial sense. Don't be like them.
What should the OP to whom the person I replied to reply to? Jettison every expense they can. Shelter which includes utilities and food come first. After than find ways to reduce or eliminate the rest. It certainly is not fun but it is something you can and should plan for.
Here is the bonus part, once you get your six months savings you may find yourself not willing to make so many impulse buys because by then you realize what it cost
> People need to realize what they could have done better and the first step of being honest to yourself is be honest to others.
After maybe, but you don't go "well, that's what you get for playing with matches" while someone is actively on fire. You're not helping the problem right now.
There's a tendency in a lot of US culture to push away the problems of society and of individuals outside your tribe with a dismissal along the lines of "they deserve it", and it's monstrous. We should teach people to fish, and give fish to starving people. It's not a dichotomy.
Why bother? Businesses don't bother saving for a rainy day, they just hold out their hands to the government every time something bad happens to them, why should an individual be expected to be better than a business?
I'm somewhat kidding, but it's clear that this pandemic caught just about everyone with their pants down, from governments, businesses, and individuals alike.
Hopefully after this is over there will be a recalibration and people and organizations won't be so frivolous with their hard-earned money... but that was supposed to happen after the recession in 2008, and it looks like most people went back to bad habits after recovering from that.
There was a post on a photography forum I frequent, a month ago (so factor that into the timeline):
"I know of a couple operating a local photo business that are gonna go that way. One of the owners had a $100k Mercedes SUV and his wife has the white one. They have a huge mortgage on a huge home up in the foothills, their kids in private schools and are in deep debt. Everything they have, including the photo gear, is owned by their bank. Their hired domestic help and Nanny long gone. I was talking to her last month. They're giving up the house. Kids are going to do the public school system. They left the silver one (his) SUV at their bank's parking lot yesterday. Her white one is tomorrow. They have no savings, owe local, state and federal taxes on top of everything."
If we want to talk about living beyond your means, there's your example. Perhaps if they'd held off on private school for a semester, or could have survived without maids and nannies, they might not be in the dire straits they are now.
From this response it seems like one big problem for most people is a lack of clarity around and education for what options are really available to us. I consider myself pretty educated and even I can't figure out that the mortgage loan may be deferrable or extended to end. It was refinanced before, but is it federally owned? Can it be extended after the 3-months or is it all due at once? IDK. Where do I go to find out? Is it an online forum like this one, and if so, why is it that hard? Most people wont have that luxury.
Talk to your mortgage servicer. They have a vested interest in keeping you in your home. Foreclosure is an expensive and time consuming option for the lender.
The difficulties I have with this are everyone says to do that, but the provider does not accept calls. Every single time i've tried to call, they leave us waiting with the typical "we're busy with calls" but sends us to thew website (which doesn't let us have that conversation). After about an hour or two the call hangs up saying we will be called back. Never do get that call back. I've repeated these results many times.
I figure that reality versus the "theory" is that everyone is calling for this option right now, and if the mortgage companies could work on delaying payments for everyone they would be out of business eventually. Some people probably can't be helped, some can. I feel like it's more akin to a lottery.
Simple Google searches turn up a massive amount of useful information. It’s complex topic and no single answer is going to be right for everyone. Start research now, don’t wait, if you think you might have issues, contact your lender as soon as possible.
Related terms:
- Mortgage forbearance
- Credit report
- mortgage relief options
- proof of hardship
- borrower assistance
I’ve been thinking about building a “what are my mortgage options” type of tool for this reason. I’m a banking attorney who can code enough to be dangerous but I worry there are too many variables for my self-taught coding skills to handle. If anyone with a complementary skill set would be interested in building it with me (free, open source, no data harvesting, etc.) I think it could be useful to a lot of people.
Edit: I’m decently knowledgeable with MEAN/MERN, Django, and Swift. I’m less practiced but still (mostly) capable with Rails and Go. SQL and I are frenemies but I’m working on it.
My parents went through a bankruptcy when I was a boy, they lost everything. All the assets of the business they owned were auctioned by the bank right from the property we lived on. We were thrown out of our house in the middle of a cold March. I remember a lot of what happened and what that felt like. Even as a child it was no fun. Mom says just focus on making it through one day at a time, it's gunna be a bumpy ride, just hang on. Things will happen that make you uncomfortable. Then you'll get to a "new normal", and you can start to rebuild from there.
For practical money advice during a crisis seek out Dave Ramsey. He's gotten a lot of people through this type of thing and went through it himself. Good luck. Don't buy a shotgun.
I went through a personal bankruptcy when I was younger (Ch. 7 due to 2008 collapse), it was no big deal. Paid the attorney, had all of my debt wiped out and re-assumed the mortgage and car payment. I did not have a business so different experience than your parent. If you have few assets and very limited income a BK can be a good option.
Don't get me wrong, it was not something I felt good about but sometimes you absolutely need a reset and it does not make sense to suffer financially for decades when a viable solution presents itself. From a purely logical perspective it can often make sense.
For those who need and heed this advice, there is a YC backed 501c3 nonprofit called Upsolve who will help you through your bankruptcy filing. Please do not fear bankruptcy if you need this type of economic relief.
> it was no big deal. Paid the attorney, had all of my debt wiped out
Right here is the problem with the US. Why should all your creditors need to pound sand for your financial mismanagement? I'm okay with deferred payments, restructuring, and other types of payment plans but why do we allow people to wipe their slates clean?
Sure, that is definitely one way to look at it. What is wrong with America is that we are too easy on those in poor financial shape and we should crack down on them.
Another way to look at it is sometimes either through bad choice or unfortunate circumstance people get into financial trouble. Not everyone has wealthy parents or a network they can fall back on. By not allowing people to reset you are creating an indentured class. What of those unable to pay? Should we send them to prison? Perhaps garnish their wages in perpetuity? What if they become pregnant or sick after falling into debt? By not allowing a way out you are creating a slippery slope towards forced labor.
Not allowing bankruptcy also closes the door on entrepreneurship for anyone in a low income bracket or without rich parents. They cannot take a business loan as the risk of failure means they are forever indebted.
All roads lead to the rich getting richer and the poor getting poorer.
Note: If its legal it cannot be theft by definition.
Here's my problem with the US, why do people feel the need to defend companies that have all the tools in evaluating risk in lending and dealing with payment delinquencies?
"Oh legalized theft". So, cash advance abusive loans aren't? Overdraft fees (and the ways bank forces an overdraft)? Wage theft? Patent trolling? ATM fees?
Even more naive than that is thinking the bank is losing money at the end. Sure, they might lose money on one lending operation. But they know how many people are going to pay back or not. If they don't they have multiple ways of losing much less than the nominal value.
All businesses have a risk and I guarantee the bank knows that better than people who defend them.
It’s also their mismanagement. If I loan you money, and you can’t pay me back, I should have done my homework. If you don’t like those rules, I shouldn’t loan money.
It comes down to how much you are hurt. You can cripple me financially for life with a $150k loan I can’t pay back because I can’t get the kind of job that pays enough.
Option a: I pay most of my income for life and end up only paying interest, never make headway. My life is ruined, the bank doesn’t care.
Option b: the bank has to eat its small investment. Nobody is fucked, maybe one guy is fired if he does this repeatedly.
I'm sorry to hear about this man. Please check into your forbearance payment options as there might be more to it then you expect and you might have other options on the table, see [1].
You can borrow from your 401k for 3 years without penalty right now FYI, hoping for the best for you. Stay Strong, do what you can, it's not your fault.
You can have them tack all payments at the end of your loan. Find out if your mortgage is backed by Fannie Mae & Freddie Mac, if so, you should easily get this. You can even possibly get deferral for up to a year.
It depends on which state you are in, but if you have a non-recourse loan and bought the house with a small deposit which you can lose, it might be a good strategy just to stop paying the mortgage until you get repossessed. In many states it takes a long time even when things are normal. In 2008 many people got to live in their house for years without paying. You'll screw up your credit and probably lose your equity but might be worth it. Do some research.
Just stay in your house without paying the mortgage. The court system is going to be completely overloaded once it opens back up again, so it's unlikely that they'll be able push a foreclosure through anytime soon, let alone an eviction. It'll probably be at least a year before they can push the paperwork through to actually take possession of the property, and by that time there's a good chance the issuing bank will be bankrupt.
We're rapidly entering an era where possession is 9/10ths of the law. Hold onto physical possession, because you can't count on the law still being there.
(On second thought, as someone looking to buy a house in the near future - please do vacate the property, and leave it in good condition, so it can be sold for cheap in a foreclosure auction and I can buy it. </haha-only-serious>)
The good news is that banks really do not want to foreclose on delinquent loans. It's a long legal process, and it's a money loser for them. I can't guarantee jack squat, but most likely the bank would be willing to work with you to keep the home. If you can make even small partial payments, that will work well in your favor.
> Best job currently seems to be delivery driver at $16/hr. There is absolutely no way I will avoid homelessness unless things change significantly, and soon.
Take the delivery job and rent an apartment when the bank forecloses. You won't be homeless. $16/hr is good money.
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Judging by the tenor of the responses you've received already this comment will not get a lot of positive attention. But here goes...
You should have six months expenses saved. Period. You own a home and "have an engineering degree from a good school".
Saving is both an intentional act and a privilege. It sounds to me you had the privilege (you have a house and a good degree) but lacked the intention.
I say this as a person who has not always had the privilege of saving money. And who knows how fragile life feels when you are on the edge.
Hey everyone, this guy worked hard too, thinking that meant something while headlines like “inequality is up, so are profits!” were the norm for the last 30 years!
I cannot feel very bad for Americans who at scale preferred a society that ignored the distress of their neighbors and communities all these years
“Please may I have another opportunity today, father?”
It’s not that hard: Take control of the political narrative from elites.
Varoufakis revealed there’s nothing but made up political equivocation behind their decisions
Physics has yet to define the causative mechanism aside from violence that has economically lifted aristocrats, despite all the hullabaloo about them being intertwined
Switch off the computers and say no more until they they capitulate
We don’t have to honor arrangements negotiated in bad faith
Greenspan testified to Congress in 1997 part of their philosophy was fostering economic anxiety in workers to keep them in the same job
Steve Jobs worked with other companies to depress wages
It’s all over government record, obfuscated by jargon and noise
But grandma or something might be disappointed I guess. No more Apple phones, Johnny!
I hope this pandemic forces more folks to realize that it's possible to do everything right and still need help or a safety net. Who am I kidding though. . . Folks will continue to think that anyone down on their luck deserves it.
I'm a damn hard worker, and I've saved a shit ton of money, but don't think I fool myself into knowing that's enough. If I got cancer tomorrow, it'd all be a big fucking waste.
I would be utterly drained financially. Most bankruptcy in the USA is due to healthcare.
So after diligently saving / working hard / "doing things right" I'd end up in the same situation as someone who lives paycheck to paycheck. My family and I would very likely lose all our assets / financial security in the long run. That to me would be one hell of a waste.
It's why I'm a huge believer in social safety nets / programs. They help everyone. You may be lucky today, but believe me, most people hit snake eyes eventually. If not you, a loved one will.
The best safety net is the one you weave yourself in the form of 3-6 months of savings. I know this is difficult to do but it is not impossible - it does require sacrificing some things. I drive an 11 year old car for example. I am hopeful that between unemployment I can stretch my 4 months savings to 6 or 8 before having to tap my 401k.
I don't think you read my comment closely. I have almost 4 years of savings right now that I could depend if I wanted to (hell, I could pay off my house if I wanted to, but I know it's better to keep this money in case I need it for an "emergency"). My point was that it doesn't end up making as big a difference as the "personal responsibility" folks like to claim. Don't fall into the trap of thinking you're an island, or that you're to blame if things go utterly sideways. It's possible to do everything "right" and still need help from society at some point.
If I got cancer tomorrow (and the odds of cancer eventually are damn high), I could almost guarantee you that I'd be declaring bankruptcy in the long term. I would lose everything.
To be honest, it upsets me that you're falling into the trap of thinking fiscal responsibility is the end all be all, even after witnessing this pandemic destroy hard working folks like yourself. Yes, people need to save for things. But folks shouldn't be bankrupted or ruined by uncontrollable forces, that's what societal safety nets are for.
It's not one or the other (fiscal responsibility or societal safety nets), we can do both!
Sympathies, can relate. If you're not married, you might do what I did, which was to convince a poor single mom to take me in. Worked out surprisingly well for us.
Beyond that, if that shotgun ever starts looking too good, drinking worked for me. Yeah, not great long-term, but definitely helped me "flatten the curve".
Might mean nothing, about 90% of mortgages are backed by Fannie Mae & Freddie Mac (govt). The govt is now buying bond EFT so definitely will be buying Mortgage Backed Securities and Fannie & Freddie are fine with tacking all deferred payments to the end of the loans instead of requiring a lump sump payment. It will take people losing their jobs and not being able to pay for this to matter. If there's a fast V shaped recovery like some expect, then we can expect a blip at best in the RE market.
I'm trying to follow why this is fine. I don't know much about this stuff.
If you lose your job for 5 months, but get your loan deferred, won't you just need to 6x the the normal payment once you get your job back? Granted most loan terms won't end right when you get your job back, but I feel like many individuals will not be able to keep up with their debt if they lose several months of income. Is this fixing a problem or just delaying the realization of losses so people don't go bankrupt right now?
That's the issue, while a lot of people are saying "Oh, you can get your mortgage modified", a lot of lenders are saying "We're giving you three months deferment. At the end of that three months, the next mortgage payment is due, plus the three deferred payments".
You have to make sure to ask for it to be added at the end of the loan and not a lump sump payment due after the deferral. The interesting thing is that these mortgages are parceled up and sold as bonds. So the investors require payments. If I bought a 4% bond, I expect my 4% no excuses. I believe this is why the govt is going to start buying bonds. There really is no such thing as a free lunch.
I'd expect if you defer 6 months of payments then your original pay off date would be moved back 6 months. Basically add 6 months to your term and additional monthly payments to match.
For decades, lenders have been preaching "don't pay off your mortgage, borrow against your house, its the best terms you can get". Now we see how that backfires. If the mortgage is never paid off, the house is always at risk.
I know, most young people have decades to go on their house. But even some equity can help if times are tough.
Even with a paid off mortgage you are still going to owe property tax. Not paying that ends in the same way as not paying the mortgage. So I wouldn’t say home owners with a paid off mortgage are in a zero risk situation.
I've been terrified to even buy a house with prices the way they have been. It's been so obviously a house of cards for years.
Out of curiosity, I got a pre qualification for a mortgage. They wanted to give me about 4x what I was comfortable spending. I'd rather put 40% down and have a low payment than over leverage--even though my wife and I have had high incomes for the last five years. I always thought of it as years runway if things went really bad (FAANG and other tech salaries dry up, housing equity collapses). It's better to be sitting on cash than worrying about paper gains and if you're going to have a home year end.
There is no consistency in how loan forbearance will be addressed with customers.
Allowing someone to not pay their mortgage for three months and then requiring a balloon payment isn't really a solution for the crisis, and will just kick the can down the road.
I wouldn't be surprised if citizens sue governments for loss of housing. I am not saying it was unwanted but if people are forced to shut down their businesses, it is obvious that many of them will eventually default.
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[ 3.0 ms ] story [ 126 ms ] threadBest job currently seems to be delivery driver at $16/hr. There is absolutely no way I will avoid homelessness unless things change significantly, and soon.
I have an engineering degree from a good school, I played by the rules, I worked hard. Doesn't seem to matter much. The joke around here is that the $1200 check is enough money to buy a really nice shotgun to kill yourself with.
2. If your loan is owned by the Feds (as about 90% of private residential mortgages are) then I believe the deferred loan amount is added to the end of your loan via an extension of the amortization schedule. You can also defer payments for up to 12 months. You would not owe a lump sum in August.[2]
3. Even if you quit paying your mortgage and intentionally chose foreclosure as your best option (as many did in 2009-2010), it's unlikely the foreclosure would occur within the next 12 months.
[1] https://fileunemployment.org/unemployment-benefits/unemploym...
[2] https://www.consumerfinance.gov/about-us/blog/guide-coronavi...
tl;dr it's largely dependent on how each lender wants to implement. There are lenders that will go the deferred payments then balloon or seek a loan modification. I'm not 100% sure what a loan modification.
Other lenders will simply extend the term of your mortgage by how many payments were missed.
Despite the wording, approval is not at the discretion of the financial institution. If the loan is federally backed, the financial institution must approve mortgage relief.
Moreover, currently they are not even allowed to seek proof of financial distress.
I have a 30 year fixed rate conforming conventional mortgage. This is ver-batim from their COVID-19 assistance page.
>Important: The terms of this Forbearance Plan, and any additional Forbearance Plan(s), do not include forgiveness of any amounts. The total amount of payments suspended during a Forbearance Period will become due and payable at the end of the Forbearance Period, and you will be required to either repay the suspended payments in full or make other arrangements for how you will repay the suspended payments, such as qualifying for a loan modification or another assistance option.
If your loan is owned by Fannie Mae or Freddie Mac, or if you have an FHA, VA, or USDA loan, your loan is likely subject to the CARES Act. The CARES Act allows for a forbearance of up to 180 days upon request, with an extension of up to an additional 180 days if your hardship is ongoing. The initial Forbearance Plan suspends payments for three months. If your financial hardship remains at the end of this Forbearance Plan and you are unable to resume your normal monthly payments, contact XXX for assistance. You may request additional Forbearance Plan(s) in three-month increments, up to a total of twelve months from the starting date of this Forbearance Plan, or seek another assistance option.
Even if your loan is not covered by the CARES Act, if you have a hardship you may contact us to request assistance. Please call xxx for further assistance.
One example off the top of my head, groceries are becoming more costly due to supply chain issues from the economic collapse. Savings aren't going to go as far as planned.
I also feel that this is exactly the time that people should be discussing savings and emergency plans.
You have no knowledge of OP's life, maybe he did everything right and he still got hammered. Maybe he did everything wrong. Either way he is a real person not a data point for you to feel smug.
It is real easy to get lost in your finances when during good times your income exceeds your expenses to the point you don't even know what all your expenses are.
Where many get trapped is in what many economist term as monthlies. These are all those ten, twenty, and thirty, dollar reoccurring payments that when added all up can be a significant drain on your finances. They are also the sort of expense that needs to be jettisoned fast when down turns occur. Some cannot, that much is obvious, but others can be ended completely or reduced. I have seen more than my fair share of people blowing a thousand on food in a month.
So sit down, figure out your expenses. Come back in a few hours, a day later, and more, and see what else you need to write down. Go read your bank and CC statements and see what is truly going out and where.
Put your thousand or so aside but your first goal before the new shiny computer, phone, or worse, car, should be six months and from there build up to a year while factoring all your monthly expenses both new and recently acquired.
We should not have to be told this but I bet any number of you can point to people you work at who have no financial sense. Don't be like them.
What should the OP to whom the person I replied to reply to? Jettison every expense they can. Shelter which includes utilities and food come first. After than find ways to reduce or eliminate the rest. It certainly is not fun but it is something you can and should plan for.
Here is the bonus part, once you get your six months savings you may find yourself not willing to make so many impulse buys because by then you realize what it cost
After maybe, but you don't go "well, that's what you get for playing with matches" while someone is actively on fire. You're not helping the problem right now.
I'm somewhat kidding, but it's clear that this pandemic caught just about everyone with their pants down, from governments, businesses, and individuals alike.
Hopefully after this is over there will be a recalibration and people and organizations won't be so frivolous with their hard-earned money... but that was supposed to happen after the recession in 2008, and it looks like most people went back to bad habits after recovering from that.
Of course, corporate and sovereign debt have increased dramatically during that time because of near zero percent Fed rates.
"I know of a couple operating a local photo business that are gonna go that way. One of the owners had a $100k Mercedes SUV and his wife has the white one. They have a huge mortgage on a huge home up in the foothills, their kids in private schools and are in deep debt. Everything they have, including the photo gear, is owned by their bank. Their hired domestic help and Nanny long gone. I was talking to her last month. They're giving up the house. Kids are going to do the public school system. They left the silver one (his) SUV at their bank's parking lot yesterday. Her white one is tomorrow. They have no savings, owe local, state and federal taxes on top of everything."
If we want to talk about living beyond your means, there's your example. Perhaps if they'd held off on private school for a semester, or could have survived without maids and nannies, they might not be in the dire straits they are now.
I figure that reality versus the "theory" is that everyone is calling for this option right now, and if the mortgage companies could work on delaying payments for everyone they would be out of business eventually. Some people probably can't be helped, some can. I feel like it's more akin to a lottery.
Related terms: - Mortgage forbearance - Credit report - mortgage relief options - proof of hardship - borrower assistance
Edit: I’m decently knowledgeable with MEAN/MERN, Django, and Swift. I’m less practiced but still (mostly) capable with Rails and Go. SQL and I are frenemies but I’m working on it.
For practical money advice during a crisis seek out Dave Ramsey. He's gotten a lot of people through this type of thing and went through it himself. Good luck. Don't buy a shotgun.
Don't get me wrong, it was not something I felt good about but sometimes you absolutely need a reset and it does not make sense to suffer financially for decades when a viable solution presents itself. From a purely logical perspective it can often make sense.
https://upsolve.org/
https://news.ycombinator.com/item?id=18980861
Right here is the problem with the US. Why should all your creditors need to pound sand for your financial mismanagement? I'm okay with deferred payments, restructuring, and other types of payment plans but why do we allow people to wipe their slates clean?
It's legalized theft.
Another way to look at it is sometimes either through bad choice or unfortunate circumstance people get into financial trouble. Not everyone has wealthy parents or a network they can fall back on. By not allowing people to reset you are creating an indentured class. What of those unable to pay? Should we send them to prison? Perhaps garnish their wages in perpetuity? What if they become pregnant or sick after falling into debt? By not allowing a way out you are creating a slippery slope towards forced labor.
Not allowing bankruptcy also closes the door on entrepreneurship for anyone in a low income bracket or without rich parents. They cannot take a business loan as the risk of failure means they are forever indebted.
All roads lead to the rich getting richer and the poor getting poorer.
Note: If its legal it cannot be theft by definition.
"Oh legalized theft". So, cash advance abusive loans aren't? Overdraft fees (and the ways bank forces an overdraft)? Wage theft? Patent trolling? ATM fees?
Even more naive than that is thinking the bank is losing money at the end. Sure, they might lose money on one lending operation. But they know how many people are going to pay back or not. If they don't they have multiple ways of losing much less than the nominal value.
All businesses have a risk and I guarantee the bank knows that better than people who defend them.
It comes down to how much you are hurt. You can cripple me financially for life with a $150k loan I can’t pay back because I can’t get the kind of job that pays enough.
Option a: I pay most of my income for life and end up only paying interest, never make headway. My life is ruined, the bank doesn’t care.
Option b: the bank has to eat its small investment. Nobody is fucked, maybe one guy is fired if he does this repeatedly.
Massive difference in outcomes for society.
[1] - https://www.consumerfinance.gov/about-us/blog/guide-coronavi...
Edit - thanks for the comments, updated the about field in my profile with my email.
Foreclosure of non-recourse loans does not trigger cancellation of indebtedness income. Instead, it could trigger capital gains.
We're rapidly entering an era where possession is 9/10ths of the law. Hold onto physical possession, because you can't count on the law still being there.
(On second thought, as someone looking to buy a house in the near future - please do vacate the property, and leave it in good condition, so it can be sold for cheap in a foreclosure auction and I can buy it. </haha-only-serious>)
Take the delivery job and rent an apartment when the bank forecloses. You won't be homeless. $16/hr is good money.
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Judging by the tenor of the responses you've received already this comment will not get a lot of positive attention. But here goes...
You should have six months expenses saved. Period. You own a home and "have an engineering degree from a good school".
Saving is both an intentional act and a privilege. It sounds to me you had the privilege (you have a house and a good degree) but lacked the intention.
I say this as a person who has not always had the privilege of saving money. And who knows how fragile life feels when you are on the edge.
I cannot feel very bad for Americans who at scale preferred a society that ignored the distress of their neighbors and communities all these years
“Please may I have another opportunity today, father?”
It’s not that hard: Take control of the political narrative from elites.
Varoufakis revealed there’s nothing but made up political equivocation behind their decisions
Physics has yet to define the causative mechanism aside from violence that has economically lifted aristocrats, despite all the hullabaloo about them being intertwined
Switch off the computers and say no more until they they capitulate
We don’t have to honor arrangements negotiated in bad faith
Greenspan testified to Congress in 1997 part of their philosophy was fostering economic anxiety in workers to keep them in the same job
Steve Jobs worked with other companies to depress wages
It’s all over government record, obfuscated by jargon and noise
But grandma or something might be disappointed I guess. No more Apple phones, Johnny!
Enjoy homelessness then
I'm a damn hard worker, and I've saved a shit ton of money, but don't think I fool myself into knowing that's enough. If I got cancer tomorrow, it'd all be a big fucking waste.
So after diligently saving / working hard / "doing things right" I'd end up in the same situation as someone who lives paycheck to paycheck. My family and I would very likely lose all our assets / financial security in the long run. That to me would be one hell of a waste.
It's why I'm a huge believer in social safety nets / programs. They help everyone. You may be lucky today, but believe me, most people hit snake eyes eventually. If not you, a loved one will.
If I got cancer tomorrow (and the odds of cancer eventually are damn high), I could almost guarantee you that I'd be declaring bankruptcy in the long term. I would lose everything.
To be honest, it upsets me that you're falling into the trap of thinking fiscal responsibility is the end all be all, even after witnessing this pandemic destroy hard working folks like yourself. Yes, people need to save for things. But folks shouldn't be bankrupted or ruined by uncontrollable forces, that's what societal safety nets are for.
It's not one or the other (fiscal responsibility or societal safety nets), we can do both!
Beyond that, if that shotgun ever starts looking too good, drinking worked for me. Yeah, not great long-term, but definitely helped me "flatten the curve".
Godspeed.
If you lose your job for 5 months, but get your loan deferred, won't you just need to 6x the the normal payment once you get your job back? Granted most loan terms won't end right when you get your job back, but I feel like many individuals will not be able to keep up with their debt if they lose several months of income. Is this fixing a problem or just delaying the realization of losses so people don't go bankrupt right now?
“Fannie & Freddie are fine with tacking all deferred payments to the end of the loans instead of requiring a lump sump payment.”
Meaning the payments missed would not be due when payments restart, but added to the end of the current monthly payments.
> Fannie & Freddie are fine with tacking all deferred payments to the end of the loans
F&F require no balloon payment. Deferred payments must be tacked on to the end, not as a balloon payment, extending the term.
I know, most young people have decades to go on their house. But even some equity can help if times are tough.
It could have a big impact on how things develop from this point on.
Out of curiosity, I got a pre qualification for a mortgage. They wanted to give me about 4x what I was comfortable spending. I'd rather put 40% down and have a low payment than over leverage--even though my wife and I have had high incomes for the last five years. I always thought of it as years runway if things went really bad (FAANG and other tech salaries dry up, housing equity collapses). It's better to be sitting on cash than worrying about paper gains and if you're going to have a home year end.
There is no consistency in how loan forbearance will be addressed with customers.
Allowing someone to not pay their mortgage for three months and then requiring a balloon payment isn't really a solution for the crisis, and will just kick the can down the road.