- submitted by Linda Keenan on 01/24/2008
Home Values Plummeting. Economy In Meltdown. Blame?--Look In The Mirror!
Contributing Writer: Linda Keenan*
When I moved into my first-ever home 6 months ago, I was told in no uncertain terms by several people that I would have to, simply have to, redo the kitchen, or at the very least, get new appliances. I would say to myself, "why? Why do I need to remodel my reasonably attractive and perfectly functional kitchen?" It was presented to me as a fait accompli; naturally I would become yet another mommy warrior in the great suburban kitchen arms race. Whose subzero fridge is colder? Whose dishwasher is quieter? Not once did someone ask this: "do you have the money to remodel the kitchen? Maybe you'll save up to remodel the kitchen?"
Sometimes I feel like the 3 very different suburbs I've lived in over the past 4 years are Potemkin villages, American-style. Big, shiny facades, propped up by a pile of questionable IOU's. I knew roughly what the people around me earned. I knew what many of them owed. I knew how they lived. I used to just sort of chuckle about the seemingly endless number of people I knew who were overextended. Now I'm angry at them, because they are not the poor and vulnerable you hear about on the news, and their problems have now become my problems.
I should say right off that I am almost certifiably cheap, truly, madly, deeply. And though I am politically liberal, I often feel a bit like the nasty banker, Old Man Potter, from It's a Wonderful Life, surrounded by a bunch of Uncle Billys, who need strings on their fingers to keep all their financial business in order. (To quote George Bailey: "what'd you say a minute ago (Mr. Potter)? They had to wait and save their money before they even thought to think of a decent home. Wait? Wait for what?" To which this old man Potter yells at the TV screen: "wait until you have the MONEY, George!")
I am hardly recommending my lifestyle to anyone, because if we had a nation full of insane tight-wads like me right now, we'd be headed for Japan-style, never-ending recession. I have spent a lot of money on our house, a very small one by today's McMansion standards, to live in a town with superior schools. But my husband and I had been saving for a very long time to do it. Everyone has their own priorities, and mine was schools. If your priority is a state-of-the-art kitchen, that is perfectly fine, of course, but I have one question: did you overextend yourself for that kitchen with a bigger mortgage, a second mortgage, a credit card or two that you're a bit behind on paying? I ask, because predatory borrowing (thank you, Tyler Cowen of the New York Times for recently mainstreaming the phrase), not just predatory lending, has led to the housing and stock market mess we now find ourselves in. My 401k is right now in my (dated, but functional) toilet. I'm sure yours is too.
Yesterday the local paper had a story about wealthier suburbs being affected by the housing bust, and I kept thinking, "oh, YOU THINK?" There is one foreclosure on my street, another about a mile away. Several real estate listings in my area lately have mentioned, darkly, "offer subject to bank approval", and it doesn't take a Federal Reserve chief to figure out what that means. And yet again, this also affects my family's livelihood: houses sold at pre-foreclosure, fire-sale prices are going to damage my home's value.
Shockingly, easy money is still out there. I'm currently refinancing my mortgage to a lower 30 year rate (though it's on hold right now to see how rates shake out after the Fed cut this week). My mortgage broker assured me that there are no closing costs, but that I would have to bring money to the closing to put in escrow, which would then be refunded by my previous lender a month or so after closing. He said to me "most people just add the escrow cost to their mortgage balance (i.e. borrow more). But I don't get the sense you like to work that way." Got that right, brothuh! I then went online to check other rates, and the site asked me how much money I wanted back at closing. Money back? After buying a house? Apparently, it's expected that you can still get some cash wad, even if it means just piling more debt onto your balance.
Now it seems Potemkin Village U.S.A. is being unmasked for what it is: a hollow construct, dangerously close to collapse. And if you're looking for the culprit, well, take a good long look at your reflection in those stainless steel appliances, and ask yourself if you're really one of the innocents.
*Linda Keenan worked 7 years as a head writer/senior producer for various programs on CNN. Before that, she worked as a writer/producer for Bloomberg TV. She now writes satire, primarily about parenting culture, at www.thoroughlymodernmommy.blogspot.com, ...
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