Is Allowing Your House To Be Unnecessarily Foreclosed On As Bad As Cheating On Your Partner?

A couple of weeks ago I was at a party and a friend was telling me about the goings on of a mutual acquaintance of ours. I haven’t seen this acquaintance in a pretty long time, so I didn’t know anything at all about what she’d been up to. My friend off-handedly mentioned that this acquaintance would be moving soon, into a new, bigger house in a very exclusive neighborhood. The acquaintance had been living in a really nice house, so I made a comment along the lines of, “well, she must have made BANK when she sold her house – it’s beautiful!”

Long pause.

Friend, in a low voice: “Actually, they ended up letting that house go.”

Me: “Wait, what do you mean?”

Friend: “She, you know, let it go. It got foreclosed on.”

Me: “What? Why? Did she lose her job?”

Friend: “No, they just weren’t going to be able to sell it for what they paid for it, so they let it go.”

Me: “Then how did they buy another house?”

Friend: “It was kind of weird and I didn’t totally understand, but it’s something like the first house was in her name, but the new house is in her boyfriend’s name.”

Me: “But now her credit is trashed!”

Friend: “I don’t think she cares – they’re not going to move again.”

Me: “But she just screwed over her neighbors! Now the value of their houses will go down! This is practically fraud!”

Friend: *shrugs* “Oh well, her decision.”

Me: !#&*$(%#^&*@(#@$%%@

Before I proceed, let me put this disclaimer out there: the truth is, I don’t know for sure that this is what happened. I heard this whole story second-hand from a someone who also doesn’t know the subject very well. And even if it is true, it’s plausible that there are a lot of mitigating circumstances related to the subject’s finances that I also don’t know anything about. I accept that these are possibilities. I should also mention that I know that there are a lot of people who have no choice – due to dire financial circumstances – but to be foreclosed on and that it is a heartbreaking situation, so my intention here is not to be critical of the people who have no other options.

But let’s just assume, for the sake of argument, that the scenario outlined above is 100% true: someone I know had her home foreclosed on for no other reason than that she wanted to move to a bigger house in a better neighborhood. Let’s just say that this is the situation (I highly, highly suspect that it is, but again, I don’t know).

In my opinion, this is a truly fucked up thing to do. Sure, her credit is in the toilet, so I guess that’s a “punishment.” And yeah, what she did isn’t illegal. But you and I both know that just because it’s not illegal doesn’t mean it’s not wrong. She is potentially screwing over the people around her – her former neighbors – for no reason other than that she just doesn’t feel like living in that house anymore. A foreclosure in the neighborhood affects everyone’s home values, not to mention the overall housing market. It’s selfish and unethical to do stuff like this, no matter if it’s within her rights as a homeowner or not.

So this train of thought got me thinking about people who are selfish and unethical in other ways, such as in romantic relationships, and the comparison between cheating and unnecessarily getting foreclosed on came next in the stream of consciousness. Like the foreclosure situation, cheating isn’t illegal, and its damage can cause serious ripple effects in a person’s future relationships, just like the unnecessary foreclosure causes ripple effects in a neighborhood. In both scenarios the perpetrator is looking out for their own best interest without regard for others; in both scenarios, devastation (financial or emotional) is usually the result.

I thought about this for quite a while, and eventually came to the conclusion that cheating is still worse. It’s a personal betrayal, whereas an unjustified foreclosure is an impersonal bad act. But I will say that I think a person’s ethical standards aren’t usually compartmentalized; if you’re sketchy with your money, you’re probably a sketchy person, and a sketchy person won’t be an honest partner. In other words, I probably wouldn’t date someone who “let his house go” because I’d be worried he’d treat our relationship just as carelessly.

What do you think? Does a person’s ethical conduct vary from situation to situation? Do you think shady financial behaviors portend shady romantic behaviors? I can’t wait to hear your responses!

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Wait, Money? What?

I am in a really screwy place with my money these days for reasons that I can’t reveal yet. (Are you curious?)

I just wanted to let you guys know that I’m not neglecting you and I have so many money thoughts, I just don’t have much to actually report on the financial front until a few things are finalized.

I’ll be back soon, hopefully with good news :)

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Is Being Busy Good For Your Finances Or Not?

Call me nuts if you like, but I really like being super busy. I love having a long to-do list and little down time. In fact, now that the school year is winding down and I’m finding myself with fewer and fewer tasks to fill my time at school, I feel sort of lost. Yesterday, I was downright crabby from not having enough to do. Don’t get me wrong, I still put in a full day of work. It just wasn’t as action-packed as usual, and that drives me a little batty.

At any rate, I’ve been thinking recently about how being busy impacts my finances. I used to think that being busy all the time was a boon to my finances. After all, when I’m really busy:

  • I don’t give in to the temptation to go shopping because I’m bored, because I’m not bored. This saves me from countless impulse purchases. 
  • I don’t have the energy to go out to dinner or bars with acquaintances just to fill the time. Sleep is free, and it feels so good when you’re exhausted from having a jam-packed schedule. 
  • I don’t mindlessly shop online to entertain myself; again, this saves me from too many unnecessary purchases to calculate. 

Basically, when I’m really busy, I don’t have the time or energy to frivolously spend. But lately, as I’ve been working harder on some freelance projects and making headway on a super-secret personal goal (which may or may not be revealed here), I’ve been starting to see some financial downsides to being too busy, such as:

  • I don’t have time to prepare meals, which leads to picking up take out food. This is both expensive and unhealthy.
  • I’m exhausted, so I don’t put the same effort into shopping for deals and scrutinizing my spending. This has probably led to overpaying for things on more than one occasion. 
  • I feel unmotivated to cut corners. I normally put a lot of effort into figuring out creative ways to avoid spending money, but when I’m constantly rushed, convenience and ease are the name of the game. This becomes a serious problem with lesson-planning. Normally, I get an idea for a lesson that requires me to shell out money on materials, but then I figure out a way around the spending. Lately, I’ve just been rolling up to Target and plunking down the money needed for the original idea, no questions asked. 

So, it seems like sort of a draw. In some ways, being busy saves me money, but in some ways it’s definitely expensive to be over-scheduled.

What do you think? Is being busy good or bad for your bottom line?

 

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Do 401(k)s Suck?

Last week while I was researching another article, I came across this piece on Slate. The title of the article, “It’s a 401(k) World, And It Sucks,” immediately caught my eye. I’ve long been skeptical of the 401(k), so I was intruiged to see what the author’s arguments against it were. (Note: if you’re unfamiliar with the 401(k), it’s basically a tax-deferred retirement savings account offered by many American employers to their workers. Sometimes employers match employees’ contributions, sometimes they don’t. You can also check out this article to compare the various types of retirement savings accounts that are out there.)

This quote from the beginning of the original of the article pretty much summarizes the author’s qualms with the 401(k) as America’s primary vehicle for saving for retirement:

— Poor people get absolutely nothing.

— Wealthy people who would have had large savings anyway get a nice tax cut that offers no meaningful incentive effect.

— For people in the middle, the quantity of subsidy you receive is linked to the marginal tax rate you pay—in other words, it’s inverse to need.

— A small minority of middle-class people manage to file the paperwork to save an adequate amount and then select a prudent low-fee, broadly diversified fund as their savings vehicle.

— Most middle-class savers end up either undersaving, overtrading, investing in excessively high-fee vehicles or some combination of the three.

— A small number of highly compensated folks now have lucrative careers offering bad investment products to a middle-class mass market based on their ability to swindle people.

I found this pretty interesting because the author took a socio-political stance against 401(k)s that I hadn’t considered, or at least, I hadn’t considered in these terms. He’s basically arguing that 401(k)s put too much control in the hands of the individual, as well as failing to provide for the retirement needs of poor Americans. I completely agree with all of the author’s points, but my argument against 401(k)s is more simplistic and micro-level. I dislike 401(k)s because:
  • You have to elect to join your company’s 401(k) – this, of course, means that a lot of people don’t
  • 401(k)s, unlike Roth IRAs, have no option to retrieve funds before retirement age without incurring lots of taxes and penalties
  • Most investment options provided by employers are very limited
  • 401(k)s don’t travel easily between jobs 

Whether you look at a 401(k) from the perspective of the individual investor or the perspective of American society on the whole, it’s pretty clear that I think that 401(k)s suck. What about you?

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