Matilda
The current state of credit in the US is the worst possible situation imaginable. Look at all the foreclosures. Look at all the ads to stop foreclosure next to the ads that tell you how easy it is to buy whatever you want on credit. How many people do you actually know that put money into savings on pay day? Do any of these folks still exist? Look at how our government is handling debt, not the debt to pay the lights at the White House, but the debt of the entire country. “Go out and spend” isn’t patriotic. It’s just plain stupid. And each sub middle class household across the country hasn’t two nickels to rub together much less pay their bills with the money they have. Why? They spent it and then some. But it’s not just them. It’s everybody else too.
Don’t get me wrong. I am not innocent either. You are looking at a guy that just sold next to the last of his music gear so his car insurance wouldn’t lapse and his utilities would remain on. And if the future yields promise, my application at the nursery across the way will be accepted and I’ll be pushing plants part time so I can keep my mortgage business operating on the fly. But worse, I am the (mindful of the penis) infatuation struck hero wannabe that forked over the remainder of his nest egg to bail out a girl I met on MySpace that would have lost her car and home hadn’t I arrived to save the day and keep her solvent to the tune of 10 months (about 15K) or so worth of bills (not my own). I am also the romantic goon that plunked down 2500.00 in small ones for a ring I never laid eyes on much less received for a girl I never married who has since then married someone else of course. I do have store credit. But I can’t get this jeweler in Georgia to sell me anything to close the account. I live in Houston. His store is in Georgia. He has no website. He’s about to have a different set of complaints (or at least a new one) come the following week. I’ll get into that another time.
For the last five years or so, it has been advertised for the masses that anyone with a pulse can obtain financing to buy a home of their choice with zippidy doo da down! My heart goes out to all of those folks that scrimped and saved for a down payment for the home they now live in. If their jobs are intact, they’ll be living there from now on and most likely until retirement. Simple planning promotes the least likelihood of failure. My parents were a class example and the model of doing it right to avoid catastrophe. My folk’s first home was less than 19,000.00 in Scottsdale, Arizona back in 1968. Their combined salary at that time wasn’t anywhere near 1000 bucks. Can you imagine that? In fact George, fresh out of college, got an offer from Shell Oil for a starting salary of 400.00 a month. When we moved to Arizona, Sylvia worked at Motorola for a trade wage of 2.50 per hour. How much did they save and for how long? I remember powdered milk. Had there been Romon noodles, back then they might have cost something like 60 for a dollar.
This was a few years ago. Sitting across from me at my office was a newly married young couple in their late 20’s. Our meeting was to determine what program they could qualify for so they could buy a new home. Their preconceived notions were neatly in a bag they brought with them. There weren’t any bank statements or tax returns. But some colorful brochures of homes on a man made water front somewhere in Sugarland. Leo and Carol were going to apply for a mortgage for a large home. Each of them has new jobs they had started in the last year or so. They have a couple of thousand bucks between them and as they have told me, their parents can help if need be. Groovy! I just love being an order taker instead of a consultant or counselor. Further, I pull their holy credit report. We have a few garden variety charge cards, a MasterCard, a his and hers visa, two car loans and some serious bad stuff (I am not allowed to say shit in place of stuff).
The bad stuff is as follows. We have a series of collections including medical entries like hospital visits for the emergency room or whatever. There seems to be an apartment complex that didn’t get paid at some point. That happens. There are a couple of cell phone companies unpaid for whatever reason. That’s acceptable. Back then, these cellular plans weren’t as liberal and cheap as they are today. So, I don’t blame our thespians here at all. But here’s the problem I have with these two. There seems to be a credit card with an outstanding balance of 12,000.00 (dollars, in case you are from a country that has pesos). Here’s why I have a problem.
For starters, after so many years of trying to maintain credit to the extent that I am able to have any credit at all, I have never even had an available credit line on any thrift account of more than 2000.00. I asked my applicants what’s the story with this credit card. Is it theirs? Is it a mistake? Here’s the answer they gave me. “We used that card for our wedding and honeymoon and we went on a couple of trips. Besides, we are disputing that card anyways….”. This is the part where my inner rage wants to increase the level from simmer. Yet I quietly remind myself my job is to provide a loan solution for these little monsters. After all, that’s what pays the bills and keeps my love life active.
Was it my place to be good cop bad cop and interrogate these little larcenists or should I lay low and make the deal happen? I selected the latter. After all, the credit report did state the entry was in dispute. I can’t imagine a mafia loan shark seeing it quite that way, but oh well. Besides, they got their deal and their parents loaned them 10,000.00 for the venture. What do I care?
Back to my parents and their first home. My mom found a used refrigerator in the newspaper to help furnish our new kitchen. The fridge was clean and well taken care off. She paid 20.00. In contrast, Leo and his delicious little minx opened an account at Conn’s and bought all the appliances straight out of the pictures in “Home Decorating Monthly” to suite their needs. Best Buy provided the entertainment along with a few extras. How do I know all this?
A few months ago they returned. The game had changed and some new hurdles were added. Deep in debt, a consolidation loan of sorts was on their minds. Looking at their credit made me fearful. It didn’t make me fearful for me. I couldn’t obtain their credit to buy a boat. They were not only maxed out, they had no equity. No equity because they didn’t put any money down and not enough time and payments had passed for them to be able to borrow anything using their home as collateral. I couldn’t even refinance them because rates were higher and the rate they were given was reasonably low compared to the present. I don’t even want to write about what I told them about credit counseling and how they could get some credit counseling company to negotiate their debt and get a lower payment.
What comes to mind is my mom. What would my mom have done in the above scenario? NOT A THING! She was never that stupid. She, like my father grew up poor in a coal mining town where the only available credit was at the Union Pacific store. IF and I mean IF Sylvia landed there in a debt crisis, she would probably knock on Motorola’s door with hat in hand. My dad would work at night drawing for other engineers and architects OR he’d sack groceries.
Leo and what’s her name might be in foreclosure. If they are, they join millions of Americans that don’t have a clue. As consumers we are seeing the results of this type of debt strategies. Let me regress. There is no strategy here. This is clearly theft. Credit is a privilege. If you can’t afford it, don’t buy it (sign it or whatever). Fucking up your credit and going into default makes interest rates go up and charge card companies rotate higher fees along with higher interest.
Sometimes I become so mad I could scream. But who would listen.
Back to my damsel in distress. The one I bludgeoned my nest egg for to ingratiate her life style momentarily. For the sake of anonymity, we’ll call her Matilda.
Matilda experienced a divorce from a man that didn’t like to pay bills and yet spent the family’s money on extra marital affairs. Matilda was his second wife and he had two likeable kids from the first. Our lover eventually lost his house to foreclosure. It’s beyond me how he got it in the first place. Oh yeah. Now I remember. Ralph (that’s what we’ll call him) is somewhat like Leo. Let’s move on. Matilda receives a settlement from the divorce of about 10,000.00. Seems like a lot of loot. Sylvia would have saved it. I would have used it to pay some chick’s debt.
Matilda meets Lydia. Lydia works at a mortgage office as a loan officer. Lydia tells Matilda we can get you in a new home with no money down from a program titled “the Acorn Program”. “Woo hoo” Matilda exclaims. Now we’re off to the races. Lydia explains that the first couple of years are interest only so you can get on your feet. But afterwards, the payments will go up and the interest rate is adjustable. Matilda doesn’t flinch as she signs all the documents. Matilda sees the larger picture: “I can take care of Ralph’s kids and they can each have their own room”. That’s a nice Christian approach notwithstanding that meanwhile, our lover boy is still out spending money he doesn’t have on women that are someone else’s instead of paying for his own kid’s school supplies and clothing. I could write a book about this guy but I’d only sell one copy.
Matilda has decided the old clunker she is driving has seen better days and a better newer vehicle would be more prudent. She has a very valid point. If you have ever lived in Georgia, you have done your share of commuting from point “A” to points “B” and “C” and destinations in between. Gas isn’t cheap, so at a minimum you’d better have reliable wheels.
But wait! We just signed on the dotted line and committed the rest of our life’s income to a house payment that will eventually go up. Maybe we should have rented and then bought the car. Remember the ten grand? I’ll let your imagination linger with all the factors attributed to a new home in the hills, new car insurance, cable and whatever I have told you about Ralph’s personal life. Forget the ten grand. Some would characterize that amount of money as chump change. Sylvia wouldn’t have. Neither would I if I didn’t own and operate a penis.
If you are going to buy into the housing market, you should make some sacrifices and add up all your bills. But more importantly, you should save and plan for the event. I welcome with open arms the new bankruptcy regulations where you can’t just file to skip out on debt. I say this not for the reasons you might imagine. In fact how will my mortgage business survive if I can’t get Leo and his pals a loan? Even so, now Leo and his lady along with Ralph and Matilda are shit out of luck unless they pre plan and save from now on.
Our government in all their infinite wisdom is lowering bank rates as we speak to loosen credit. The credit that gets unrestrained, you’d think would go to businesses and enterprise to build a better and more stable economy while creating jobs and wealth. It’s not. It’s going to people like Leo that will never pay it back.
I remember hanging out in a library that was in Ralph’s neighborhood. I was there waiting with Matilda for Ralph to pick up his kids that happened to be with us. (They were nice kids. He is and always will be a total jerk). I wasn’t to be seen. I was holding up a book identical to a book Matilda had bought a week before from a book store we were at. It was a joke. She didn’t get it. Neither did I. The joke was on me.
