I’m getting crisis fatigue. I’m tired of hearing about it and I’m tired of watching the market react negatively. It’s funny to me that all the people who were FOR the bailout basically promised us that the market was going to fall IF we didn’t approve the bailout. Well, guess what: we did get the bailout and look at what the market is doing. You guys are smart!
So, what can we learn from this credit crisis? I have a few lessons I can think of off the top of my head. There may be more. If I missed something, please leave a comment and let me know.
I present to you JLP’s Lessons From Hell:
1. You can only live outside of your means for so long. Eventually, you have to reign in your expenses and bring them in-line with your income.
2. A bunch of crap bundled up together and sold off in chunks is still CRAP! Seriously, who’s bright idea was it to bundle up subprime mortgagesthe riskiest of all mortgagesand sell them off as “safe” investments?
3. Housing prices don’t always go up!
4. There’s a difference between what you can actually afford and what you are approved for.
5. READ the fine printthat’s where all the nasty stuff is going to be found.
6. Don’t trust ANYONE who profits off your business! Sure, there are ethical sales people out there but you can’t trust that they have YOUR best interests at heart. Remember too that mortgage brokers make a percentage of the amount they write. The more they write, the more they make.
7. Greed is a deadly motivator.
8. People need a basic education in money management.
9. Don’t use home equity to buy stuff or take a vacation.
10. Your home is not a bank.
11. Banks and brokerage houses are managed by people just like you and me. Although they may act superior to us, they really aren’tas evidenced by how stupid their actions were in helping create this crisis.
I’m sure there are more lessons but this was all I could come up with. What do you think of this list? What did I miss? Leave a comment and let me know.