I get calls from potential buyers every day that would like to explore the opportunity of purchasing a home.
But the vast majority of these would-be home buyers are not qualified to obtain a loan. Many have either low credit scores, little or no down-payment money, or a combination of both.
Somewhere along the paradigm shift to a high technology society the basic principles of finance have been relegated to a low priority.
The average consumer is more concerned about having the latest and greatest gizmo or whirligig than securing a roof over their head. I have encountered families with monthly wireless expenses which exceed $600.
If you throw cable or satellite into the mix, many are paying more for technology services than they are any other single household expense.
Discretionary spending is directed towards upgrades and faster speeds. Apparently as a culture, we need to be entertained at higher and higher rates of data transfer each and every day.
As a result of this cultural swing saving money for the purchase of a home or controlling one’s income to debt ratio is not nearly as important as being able to watch a video or making birds angry.
With record low interest rates and great prices, nearly anyone can afford a house in today’s market.
It just takes a little financial discipline and a determination to “set aside” a little every month!
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Good morning, Richard..... this post certainly says it as it is..... young people today, especially, have less financial discipline than ever before.... it's more of who has the latest and greatest.
Richard,
And the sad thing about it is that unlike many bills, there is a huge discretionary component to the technology bills each month.
Rich
It is true..everyone complains about how hard it is to save up 10% down but if you look at their life styles they spend everything on cable, new gadgets, nights out and take out food. It is actually relatively easy for a couple to save $50,000 in two years if they just laid low for a couple years.
Consumers want to spend. If they cant do it on a house, they buy things that are more achievable to them. Hence, crap. Adults learn to delay pleassure but children want it NOW.
There is still the fantasy of owning a home and I hope that comes back fast and furious this year!!
Richard you're on the right roll with this post today! Nailed and now suggested. Make it a great Monday in all you do!
The sad part Richard...Is that many of these families are not willing to give up anything in order to buy a home. Moat that do will go back to the old ways of spending an lose the home also.
As a person who loves technology and all it can bring, I think this is an absolutely brilliant point. How much is enough? When we add up the cost of cable, internet, phone, mobile, mobile wi-fi, and all the other bits plus the cost of any secondary services such as iTunes, it's amazing how much we spend. Cutting back on these toys could have a significant impact on affordability.
FEATURED IN BANANATUDE!!
The I wants, I have to have, keep up with the Jones with gadgets, etc. My proudest moment is when my daughter and son-in-law decided that one perk they did not need was cable. Cut, cut and save, save was their philosophy as they began their marriage, something they both believed and agreed before they said I do. Keep it lean with wise spending choice so student loans could be paid and savings. A rare philosophy for this tech age younger adults.
Financial discipline is not only challening but often for many, unreachable. We are taught how to read, do math, and use a computer. But our financial IQs are generally in the ditch as people haven't had a good role model, been taught, or are not patient.
Richard,
This is a very interesting point. My kids know we are not going to get them a data plan, or iPhone, etc. They have a basic phone with texting. Then, we meet folks who have given a 7 year old an iPhone 4s? Seriously, this is insane.
Now that I think more about your point, folks just want instant gratification, more than any other plan.
Save, save, save. Technology won't keep you warm at night.
All the best, Michelle
Sorry I am so late getting back to the post. Thanks you all so much for the comments.
It's not just the spending, but spending on the things in life that ultimately are not very meaningful. And saving just doesn't happen anymore either.
Richard~~ In see the low end of the spectrum at times in the low cost housing that is rented out. Dirty and discusting at times... BUT these people find the money for multiple cell phones and that FLAT SCREEN TV... where does that come from. I think our society is getting to be a very ME~MORE~~NOW mentality.. no more saving and discipline
Richard,
What a great blog post. I would say only 1 our of every five buyers I talk with can actually get pre-qualified right now. Cathy is exactly right about lack of fiscal education in our country. It's not taught at home or school anymore, so people go through most of their lives with very little understanding of money.
The silver lining is the rental opportunities for savvy investors.