Foreclosures Really Happens All Over

by David Ning · 4 comments

We hear about all those people who are underwater on their mortgages, and we hear about the incredibly high amounts of distressed properties on the market today. Yet, many of us never really come across the foreclosure process. Is it really that bad? Is it really happening everywhere?

As I write this, I’m on my way to Cape Charles, VA where we have a yearly golf trip (I didn’t go last year because Emma and I went on our honeymoon instead). Usually, we stay in a nice little place we like to call Yellow House but not this year. Yesterday, I found out that the Yellow House doesn’t have water anymore because the owners stopped paying the bills. Uh oh.

Turning a Prudent Investment into an Unrecoverable Mistake

My friend also owns a property on the same street, so we are well aware of the financials. The owners bought the Yellow House around 2002 when the golf community was just getting started. At the time, the town was extremely small and the gorgeous houses were being sold for roughly $200k. At the height of the bubble, these houses were being offered for more than $500k because the golf community have brought in businesses, restaurants, tourists and oh, the housing bubble helped a little I’m sure.

You’d think that over $300k in appreciation would surely help the owners quite a bit, especially considering that the vacation home could be rented out to others during the couple of years that it was built. Instead, the owners ended up with a few luxury cars, many receipts from shopping sprees, a ruined credit and a irreversible sense of regret.

It’s Always Easy to See it From the Outside

We can sit here and laugh all day at how stupid these owners were. That if we were in that position, we would never do something so irresponsible because we know how hazardous out of control spending can become. But then, we also know we should:

  • Live Below Our Means
  • Keep Credit Cards to a Minimum
  • Keep Fit by Eating Healthy

We know all this (and much more), but how many of us really practice what we know? I’m sure the owners of the Yellow House knew all that too, but where did “knowing” get them? I’m tired of hearing reasons why you couldn’t do this or do that. I just don’t want to hear it, and you shouldn’t tolerate it either. Stop thinking about why you couldn’t, and start thinking about how you can.

Once you have the knowledge, then it’s time to put it in action. Otherwise, it’s just a big waste of time.

Live rich. It’s hard work but all it takes is patience and practice.

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{ read the comments below or add one }

  • As the saying goes, “there but for the grace of God go I”. Having compassion for people in trouble REGARDLESS of how they got there, is a wonderful thing and so important. Most of us have no actual idea how someone else got in the bad situation they are in. We’re only guessing. We all need to be thankful for what we have and stop being smug that we still have it. Great article.

  • Good post. It’s easy to blame people, but we’ve been raised by a culture of consumption. When you see wealth all around you, you think it’s going to continue forever. I’d say that as long as you are saving each month versus living check to check, you’ll be safe no matter what happens.

  • Jerry says:

    You are so right on this. While I will try not to throw stones I can’t help but see the mistakes of others. And, aknowledging their mistakes leads me to make less of my own. I also fully agree that living below your means and eating healthy is your only insurance for good health physically and financially. If you can’t take care of yourself when you have less what makes you think you’d be able to manage a lot of money?
    Jerry

  • “It’s always easy to see from the outside…We know all this (and much more), but how many of us really practice what we know?”

    Well said, my friend. It should be possible for us to learn from others’ mistakes while still maintaining compassion for the people involved.

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