I suppose my parents get the credit or blame for my feeling about loans. The only actual tidbit of wisdom I recall receiving was “If you pay extra every month on your mortgage, in the long run, you pay less interest and you save money.” Owing money to someone makes me feel bad. I’ve only ever bought one car myself and I paid off the tiny loan within two months. The car we have now was paid for in cash. I just can’t stand being in debt. My life has been fortunate enough that I have not been forced to spend much time in debt. But I could have, if I wanted to take more financial risks. Luckily I married a woman who feels the same, if not more strongly than I do. I cannot imaging how a marriage could function if the two parties were not in agreement on what acceptable debt levels are.
Over the past 6 years, particularly during the time we spent in England during the housing bubble expansion, I could have made a ton more money by taking out huge mortgages and buying property. We had a friend who, on an engineer’s salary, owned a half dozen houses he was renting to pay his half dozen mortgages. In two years, the value of his properties went up hundreds of thousands of pounds. But to do that, you have to be fine with debt. I was annoyed at owing the bank for my own mortgage. How could I ask for another one? My mind is just not wired to be able to ignore my debts in the interest of greed.
This is why the current economic meltdown pisses me off so god damn much. The media says, “Well, we are really all to blame.” Bullshit. I would never ever ever have taken any of the thousands of actions that led to this debacle. My mortgages are never the maximum amount the bank is willing to loan me. I don’t ask for loans to make dodgy investments. I would never lie to someone to make more money off them (this is why I could never be a salesman). Absolutely nothing that went into this mess is something I would have done. And I’m not just speaking with 20-20 hindsight.
I’m a little heated right now after reading this amazingly clear and concise article about why, exactly, this meltdown happened. I cannot recommend it highly enough: Economic Disasters and Stupid Evil People
The reason the financial industry needs government regulation is exactly the reason we need laws in the first place: so that bad people don’t steal from good people.