Posts Tagged foreclosure
The Broken Windows Theory
Phot by Skelekitten
I recently read an entry by Chris Guillebeau on the Art of Nonconformity blog entitled Business, Blogging, and Broken Windows. I’m subscribed to Chris’ blog, and I enjoy his views about unconventional living. In the post, he talks about the potential “broken windows” for an online business. For those unfamiliar with the Broken Windows Theory, it was first mentioned in an article in the Atlantic Monthly. Here’s an excerpt:
Consider a building with a few broken windows. If the windows are not repaired, the tendency is for vandals to break a few more windows. Eventually, they may even break into the building, and if it’s unoccupied, perhaps become squatters or light fires inside.
Or consider a sidewalk. Some litter accumulates. Soon, more litter accumulates. Eventually, people even start leaving bags of trash from take-out restaurants there or breaking into cars.
Broken Windows in our financial lives
Broken windows can either be repaired quickly, or they can turn into lost causes. If neglected, more broken windows appear, leading to complete ruin. After reading the post, I though about the potential “broken windows” in our financial lives. These would be the bad habits that we get into. I started to compile a list in my head, based on what happened to a close friend of mine:
Broken Window #1 - You neglect to save any money for your emergency fund.
Broken Window #2 - Your car breaks down, and you charge the repair to your credit card, because you have no emergency fund.
Broken Window #3 - You pay only the minimum payment to your credit card, resulting in a finance charge being assessed for the outstanding balance.
Broken Window #4 - You lose your job. You have no cushion in the bank, and can’t pay the minimum on your credit card. Your credit card company assesses a late fee in addition to the finance charge.
Broken Window #5 - You finally get another job. You save enough money for a down payment on a house, but your spotty credit history due to missed payments counts against you. Don’t worry, you can still qualify for a subprime mortgage.
Broken Window #6 - The economy is in a shambles, and you lose your job. Because of the housing bubble, your house value plummets, and you’re underwater on your mortgage.
Broken Window #7 - Your home is foreclosed, and you move in with your daughter. Your financial life is in a shambles, just like the run-down building in the theory. Only this is really happening. If only you would have fixed that first broken window…
Don’t let small problems grow into big ones. Fix what needs to be fixed. A little inconvenience now will save you a lot of heartache later on.
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Top 10 Home Deals Across America
Posted by enrique s in Links, Real Estate on July 22nd, 2009
CNNMoney recently listed ten great home buys from across America. Some of these look like they could be good deals, but be forewarned: many of these “deals” look like the typical McMansion that got us into this subprime mess in the first place.
I’ve created a table of the homes for sale, which you can enlarge by clicking on the thumbnail below:
I know my wife would kill for an extra bathroom, but do you really need 5 and a half? I guess if you have the money to burn, then $2.2 million is a bargain at a 12% savings. Call me a cheapskate, but I think you could probably do better sifting throught the foreclosure market for some real bargains.
Home prices in my area have dropped over 8% since this time last year, and 18% over the last three years. How have the prices in your area changed?
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25 Affordable U.S. Towns
Posted by enrique s in Links, Real Estate on July 21st, 2009
CNNMoney recently published a gallery of 25 affordable U.S. towns. You can read the original article here. The thing that they have in common: they are located in the middle of the country, and not even remotely near either coast. No surprise there. The gallery was nice to look at, but since I’m a numbers guy, I’ve put together a table, with the median home price and median family income for each. I’ve also included a column that shows the median home price as a percentage of median family income:
As you can see by the list, these affordable towns aren’t evenly distributed throughout the country; they’re concentrated in the Midwest. The final tally shows:
- Two states had 5 cities listed (Michigan and Indiana);
- Texas had 4 cities, many in proximity to Houston;
- Ohio had 3 cities;
- Three states had 2 cities on the list (Nebraska, Tennessee, and Wisconsin;
- Iowa and Kansas had one each.
So, the top 25 affordable towns are located in only 9 states. Here’s a crude map showing the cluster:
That doesn’t say much for the other 41 states that didn’t make the list. While I wasn’t expecting any coastal towns to make the list, I was surprised at the absence of towns from the South. I was also surprised that many of the Michigan towns were near Detroit, given the state of the auto industry.
These towns really are affordable. I can see where the home prices would allow young people to settle in the area where they grew up, unlike most places along the coasts. I can tell you, no decent house in my area goes for even twice my annual income. That’s even factoring in foreclosures.
What about you? Do you live in an affordable area? Or are you like me, surrounded by neighbors in underwater mortgages?
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Top 10 Home Deals Across America woodleywonderworks CNNMoney recently listed ten great home buys from across America. Some of these look like they could be good deals, but be forewarned: many of these "deals" look like the typical McMansion that got us into this subprime mess in the first place. I've created a table of...... -
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