Tucson What is in Your Finance Jar
September 27, 2007
Post Tags: adjustable_rate_mortgage , arizona_daily_star , car_payments , expensive_cars
If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!
There are a lot of variations on the story of the jar and what you can or can not fit in the jar.
Usual Version:
- Glass Jar
- Golf Balls
- Pebbles
- Sand
- Coffee
Financial Version:
- House Payment
- Insurance Payments
- Car Payments
- Credit Card Payments
- RV, ATV (toys) Payments
Recently there have been a lot of articles appearing in the paper about people losing their homes or having a difficult time making their house payments once their mortgages reset.
In each case when digging into the details it appears they filled their finance jar with lots of small stuff and now can’t cram the House Payment in the jar and it is always someone Else’s fault they can’t make their payments.
I am left wondering in almost every case; Why would you not sell some of the stuff, get rid of those high car and recreational vehicle payments and keep your house. In other words, make some room in your financial jar for what is important.
If a person’s RVs and Expensive Cars are really important, more important than keeping their home, then why are they complaining about losing their home.
I sometimes hear complaints about low Tucson wages. I agree they could be higher, but higher wages are not the issue here despite what some people might think. Just this week we had an article in the Arizona Daily Star about a maintenance worker having a hard time making his house payments after his ARM reset after 5 years.
“Robert Murray of Middletown, N.J., said he didn’t pay enough attention when he took out a five-year, adjustable-rate mortgage in 2002. This month, his payments ballooned to $1,800 from $1,300. Because he makes about $90,000 a year at his Newark Liberty International Airport maintenance job and hasn’t missed a payment, he said he hoped he might be a good candidate to refinance.
If Murray were to apply for an FHA-insured refinancing, he’d be out of luck. The value of his home has declined from the $265,000 he owes on two mortgages, and his equity has vanished, so he would have to write a check of at least $45,000 to refinance, and he doesn’t have the cash.
“I’m way upside down,” Murray said. “The payments will kill me now. I don’t know what I’m going to do.” (bolding mine for emphasis)
It is unfortunate he is facing such high monthly payments. An $1,800 monthly house payment is high, but with an income of about $90,000, this should not be unaffordable unless there are a lot of other things in the financial jar.
One interesting note: When the house gets outside of the jar the payment grows bigger and bigger; at least it seems that way. That is why our house is much bigger than the jar in the picture. Hey, it was the only house I had available and I had to bribe the granddaughter to use it. But it illustrates the point perfectly. Fit the house payment in the finance jar or it will overwhelm the jar.
No matter how high wages go, no matter how much bigger the financial jar may get, if we don’t learn how to organize the stuff going into the jar by putting the big ticket items in first and then the rest, we will still be seeing people losing their homes no matter how big their paycheck.
September 27th, 2007 at 8:16 pm
Is the house in the pciture for sale?