Monday, February 22, 2010
Sometimes I wish people thought like me.
But some people.
Peep this conversation that I had at work with a co-worker.
Her : Kyle, look at this guy's information (as she points to her computer screen). This guy makes $12,500 per month but he's buying this house that only costs $180,000.
Me : Only?
Her : Yeah. That's 150k a year. Look at his credit. He doesn't have much credit. He could afford a more expensive house.
Me : Yeah, he could. Maybe he doesn't want to overextend himself financially? He's keeping his debt to a minimum. I understand it.
Her : Not me. That's just stupid. I would get a bigger, more expensive house. He can afford it.
Me : You know what...that might have been the dumbest thing I've heard all day. Just because he can afford it doesn't mean that he should buy it. People have to get past that mentality. Look at his profile. He's an executive at GM. You never know what may happen with that company or any company. I'm sure his severance would be nice but he's being smart. He's making a good business decision. You never know what his situation is. Why jump into a ton of debt if you don't have to? We're in a recession. You have to be smart about what you spend your money on. And if he found a cheaper house, why not get it?
We're both mortgage underwriters. We have more than 10 yrs of experience. Right now, we're looking at corporate purchase relocations. These are loans where people who work for corporations and are being relocated by their companies. For example, Jon works for Glaxosmith Kline in Durham, NC. He gets a promotion and they want him to move to Reno, NV. It will be up to him to find a home in Reno and he'd have to qualify. The loan file would come to me and I'd approve it.
My point to my co-worker is this...we all have to be smart about how we spend our money. The dude who's credit profile that we were talking about only had one small credit card. No car payment. No loans. So, he is able to invest/save almost all of his money. As we emerge from this recession, I think it's important to be mindful about what we spend our money on. I'm not saying that we shouldn't want the finer things in life. Who doesn't? Foreclosures and unemployment is at an all time high. Companies are going under. Financially, the country is at rock bottom. It'll be some time before we dig ourselves out of this hole. That being said, be smart about the debt that you assume. Be mindful about what you spend your money on.
Don't go all out...just because you can afford to.