Those "people"...

I often hear the sentiment "Those [country]'s people all want war or are this or that. People talk about all the people in a country as if the people of the country were doing what it is their government or fundamentalists in their country is actually doing.

But, when we hear the same about us, we say "I am an individual and I don't always agree with my government and it's actions. So, don't label me as one of those people!"

We hear it from our friends to the north - "Those Americans are all blah blah." - when what a lot of them mean to say is "The U.S. government is..." The point is that while we elect our leaders, our leaders do not do as all of us would necessarily do.

So before we label peoples of a country, think about how we don't like it when it is done to us. We are not held in high regard around the world - not due to what we as Americans do in our daily lives, but by what our bloated imperialistic leadership has done for the past four years. And remember - all the free talk you hear on the radio and TV here is not what those people hear. They hear it from their perspective. Keep that in mind when we talk about other countries. Just like there are two sides to any story in a schoolyard brawl or argument, they have their side too.

Remember this when you speak of "those Lebanese people" or "those Iranians" or "those Isrealis". Often it is the government or terrorist group and not the people who are in favor of declaring this or that decree or offensive.

All this to say - our reality is largely shaped by a media that is "on our side" and you rarely really get an objective viewpoint. Keep this in mind when you decide to label a country this or that.

debt vs no debt

An article in today's paper reports that older people, in particular, retired people are no longer paying off their mortgages, and actually living on the equity in their home - to die without a paid off home. It is an upward trend in the last 25 years or so.

The conventianal wisdom and practice was for homeowners to pay off their mortgage and be as debt free in retirement as possible. Now, that conventional wisdom is being challenged. Some economists say that this may be fine in a boom market, but if housing takes a downturn, then these older people saddled with home equity lines of credit that are tied to current short-term interest rates will not be able to easily downsize should the need arise.

My personal view on this is mixed, but I think overall, the attitude of most Americans toward debt is skewed. I don't know if I have ever had a conversation with anyone where one of their top priorities was to be debt-free. That is, other than my closest friend, who carries virtually no debt. I work amongst people my age, younger and older - and while I do not poll people about their take on debt, the ones I have spoken to do not think it is an issue - or if they do - they say they can't help it. Meanwhile, they drive newer cars, have nicer homes and live beyond their means.

Debt-free vs. being smart: The best decision I ever made was to buy a home. Of course, I am not debt-free, but the equity I have built up, especially in the recent housing boom, is a great asset. What I do with that is the key though. A lot of people think - "Great - I can now "afford" to go out and get more house or more stuff. I can now "afford" to get that $30,000 car instead of the $15,000 more practical car - I can just stuff it onto my HELOC (home equity line of credit) and have ten years to pay it off. (I think 10 years is a common factor in HELOC's - at least it is with mine.) And many of those HELOC's are interest only loans, at least for a period of time.

So - they end up either with more house (do they really need it?) or more stuff and MORE DEBT. The thinking that I have is: "Do I need that $30K car?" or "Do I really NEED that nicer house?" The answer is almost always NO. But, I am in the minority.

But, here's the rub - what does it matter? I think I am better off having a mortgage, and undoubtedly, my monthly expenses for mortgage, taxes, insurance, hoa fees, etc. are more than my friend who still rents. But, my costs are reduced further by tax breaks I get each year - so my taxable income is reduced - and in the end, while my costs out of pocket are higher than my renting friend, the difference is not that great. My advantage is that when I sell, I am also going to get a lot of equity out of the sale, provided I do not go out and mortgage the full amount constantly.

That is exactly the problem with today's thinking. If, due to the rising housing market, you have 50% equity in your home now - that means you could tap into the 30% or more of equity to finance up to 80% of your home value. And the lenders make it so easy. But, in a downturn, then you are financed to such a value that any job change or if you are "forced" to sell, either to take a job in a new town or you choose to sell to get out from under your debt - you might just end up close to upside down or you won't be able to sell and ultimately the price of your home might sink to where you are upside down.

So, why not preach to keep your 50% equity? Why not take the safer route and be in the best position should you need to get out. Then if the real estate market tanks - and you have to take 20% less for your house - you still have a chunk of equity and cash to play with for whatever your need is. Why? Because, all of this refinancing and cashing in on your equity is what keeps an otherwise lacklust economy humming. We seem to have more money to spend, but actually we just end up with more debt. More debt makes us more vulnerable. The prez might say we americans need to save more, but he would not discourage us from taking out the equity in our homes because he knows that is vital to keep the economy moving.

I call it playing it safe - but nowadays, they say - "Why not invest that money?" - and certainly there are strategies to do this - where you use that equity to buy rental properties or invest that money in stocks, bonds, gold, whatever - and if you get the money cheap enough, you make more on that money than having it just sit there untapped. This is riskier and takes more investment acumen than most of us lay people have. Not to say you can't learn it, but I tell you, if you want to get into real estate, fine - but if it is just part-time and you already work 40 plus hours per week, how much can you put in to learning and dealing with your new investment strategy? How many amatuers get in just to lose their shirts?

I am not saying that you should not buy a couple homes to rent out. In some markets, you can charge enough rent to have positive cash flow - but in some, you will need to lose money for a few years for rents to catch up. And as fast as the real estate market zoomed upward in many markets, it may be years before the rents can catch up - they don't go up 30-40% per year because wages cannot go up that fast.

Bottom line - I think it is a dangerous trend that people don't have a goal to live debt-free or with very low debt - and that the thinking is that debt does not matter. We are in a fairly prosperous time right now (even though we are paying a LOT more for goods and gasoline.) - but if there is a downturn, watch out. I am not predicting a big downturn, but even a subtle one could spiral out of control. Markets cycle up and down. But, once it starts and if it gets bad enough, the emotional consumers (including me) will start bailing out - and then the whole cycle down begins.

Rambling On

Rambling on.... I do this. My mind is a sea of thoughts, but unfortunately, they do not always come to the surface in an organized and cohesive way - therefore I leave my audience confused and bewildered.

Concentration: I picked up a course on CD from The Teaching Company about Argumentation at the public library. It is an interesting course so far. But, I am aware of something as I listened to the professor: I have a really hard time concentrating. When I go to a church service, I find my mind wonders while the sermon is being delivered. I have to consciously listen to what is being said - or I will just drift off into the la-la land of thought. But, if I concentrate too much, then I focus on the fact that I am concentrating on listening and end up not actually listening and absorbing what is being said.

This evidence of concentration lapses, although present for quite some time, did not occur to me that I probably suffer from some degree of ADD. Not to diagnose myself. I am certain that many others suffer from this - and only a small percentage are actually diagnosed professionally as being ADD or would be if tested. There is some normal level of this present for most of us too. The key is knowing what is normal and what is not.

So - what do I do with this piece of knowledge, this concern? I don't know.

When I am actively creating something, like my present endeavor of writing this entry, I don't notice it. But, I do notice that I have a hard time keeping in mind all the points I want to make while writing. When writing, I am afraid I will forget some point, but I don't want to stop writing and write it down, as I will then lose my train of thought of the time. I guess this warrants thinking about what to write before I sit down to write - making a list of points or topics I want to cover and in which order. This would help me lay it out more methodically and cover all the points I want to. This is as opposed to just having a general idea of what one wants to write about and then just spilling it from the brain like mental diarrhea. You just don't know when it will be an even stream or a blirted mess.

Okay - so I have successfully rambled on about my lack of concentration abilities and stream of conciousness writing about subjects and found some way to link the two. So, my question is: "Does any of this make any sense to you?"