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-- America's Debt = "We're Screwed!"
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quote:

Originally posted by zookeeper What do you heat your place with? ...sorry, just a bad case of sour grapes

nah, heating isn't the problem, it's cooling my apt that is the issue. i live in a 3rd floor apt which accumulates the heat from the bottom floors, so it stays nice and toasty. in the summer, however, my apt gets down right uncomfortable. two a/cs and about $50 more a month, and my apt is rather nice. i use all energy saver appliances and light bulbs.

quote:

Originally posted by jerZ07002 nah, heating isn't the problem, it's cooling my apt that is the issue. i live in a 3rd floor apt which accumulates the heat from the bottom floors, so it stays nice and toasty. in the summer, however, my apt gets down right uncomfortable. two a/cs and about $50 more a month, and my apt is rather nice. i use all energy saver appliances and light bulbs.

i can attest to that, i'm a third floor apt dweller too.

however my apt is horribly inefficient. my elec bill averages $70 p/month in the winter. we've had a very mild winter and i'm a light nazi with all flourecent bulbs!!!!! (gotta go 100% flourecent if your serious about cutting back on energy costs)

not looking forward too $120 cooling bills this summer though

quote:

Originally posted by Q5echo i can attest to that, i'm a third floor apt dweller too. however my apt is horribly inefficient. my elec bill averages $70 p/month in the winter. we've had a very mild winter and i'm a light nazi with all flourecent bulbs!!!!! (gotta go 100% flourecent if your serious about cutting back on energy costs) not looking forward too $120 cooling bills this summer though

fluorescent all the way!! the upfront cost isn't even that bad. i hear LED lights are the next big thing in energy saving.

You just knew this was coming...

quote:

Lenders Swamped By Foreclosures Let Homeowners Stay (Update1) By Bob Ivry April 4 (Bloomberg) -- Banks are so overwhelmed by the U.S. housing crisis they've started to look the other way when homeowners stop paying their mortgages. The number of borrowers at least 90 days late on their home loans rose to 3.6 percent at the end of December, the highest in at least five years, according to the Mortgage Bankers Association in Washington. That figure, for the first time, is almost double the 2 percent who have been foreclosed on. Lenders who allow owners to stay in their homes are distorting the record foreclosure rate and delaying the worst of the housing decline, said Mark Zandi, chief economist at Moody's Economy.com, a unit of New York-based Moody's Corp. These borrowers will eventually push the number of delinquencies even higher and send more homes onto an already glutted market. ``We don't have a sense of the magnitude of what's really going on because the whole process is being delayed,'' Zandi said in an interview. ``Looking at the data, we see the problems, but they are probably measurably greater than we think.'' Lenders took an average of 61 days to foreclose on a property last year, up from 37 days in the year earlier, according to RealtyTrac Inc., a foreclosure database in Irvine, California. Sales of foreclosed homes rose 4.4 percent last year at the same time the supply of such homes more than doubled, according to LoanPerformance First American CoreLogic Inc., a real estate data company based in San Francisco. Reluctant Banks ``Some people stay in their houses until someone comes to kick them out,'' said Angel Gutierrez, owner of Dallas-based Metro Lending, which buys distressed mortgage debt. ``Sometimes no one comes to kick them out.'' Banks are reluctant to foreclose on homeowners for a variety of reasons that include the cost, said Peter Zalewski, real estate broker and owner of Condo Vultures Realty LLC, a property consulting firm in Bal Harbour, Florida. Legal fees and maintaining a vacant property while paying the mortgage, insurance and taxes can add up to as much as 15 percent of the value of the home, and it may take months for the foreclosure to work through the legal system, he said. ``The end result is taking back a property that the bank will have to manage, rent out and or sell,'' Zalewski said. In many cases, lenders also have to foot the bill for fixing up vacant homes that have been vandalized. Empty Houses Real estate broker Georgia Kapsalis is offering a home for sale in Birmingham, Michigan, a Detroit suburb, where the owner last wrote a mortgage check in July. He still lives in the house, she said. ``Some of the banks just don't want the houses to be empty, especially if it's in an area where there's a lot of theft or there are five other houses empty on the street,'' said Kapsalis, who works at Added Value Realty LLC in Livonia, Michigan, another Detroit suburb. ``They'll lose toilets, plumbing, appliances, everything. Banks are getting wise and allowing people to live there longer.'' Alexis McGee, president of Internet database Foreclosures.com in Sacramento, California, said she toured a property where the departing resident tried to make off with the outdoor air conditioning unit by sawing the metal legs off its concrete apron. ``People take what they want to take,'' McGee said. ``They feel that they're owed.'' Flooded Market With home sales dropping and national inventories rising, the lenders have another reason to delay foreclosures, said Howard Fishman, a real estate investor based in Minneapolis. ``What are the banks going to do?'' Fishman said. ``They don't want the house. They have a mortgage for $1 million and the house is worth $750,000.'' In February, 5 million existing homes were sold on a seasonally adjusted, annualized rate, down 31 percent from the peak of 7.25 million in September 2005, data compiled by the Chicago-based National Association of Realtors show. More than 4 million existing homes were on the market in February, 53 percent more than the 2.6 million average of the past nine years, the Realtors reported. ``Excess inventories pose the biggest risk to the market,'' Michelle Meyer and Ethan Harris, New York-based economists at Lehman Brothers Holdings Inc., wrote in a report last month. ``As long as inventories are high, home prices will fall.'' New Foreclosures Growing inventory pulled median home prices down to $195,900 in February, a 15 percent drop from the peak of $230,200 in July 2006, the Realtors said. New foreclosures rose to 0.83 percent of all home loans in the fourth quarter from 0.54 percent a year earlier, according to the Mortgage Bankers Association. The civil court in St. Lucie County, Florida, is getting about 44 foreclosure cases to file every day. That's the same number it averaged in a typical month in 2005, said Clerk of the Circuit Court Ed Fry. ``It's pretty overwhelming,'' he said. Fry said he has 12 full-time employees and two temporary workers he just hired handling nothing but foreclosures. Still, the 50-page filings sit in cardboard boxes for three weeks before the court staff can process them, Fry said. Then it takes another two months to get a date on the court docket, he said. Mortgage servicers, who collect monthly payments and are responsible for starting the foreclosure process, also were caught short-staffed, said Grant Stern, a mortgage broker and owner of Morningside Mortgage Corp. in Miami Beach, Florida. `Moral Hazard' ``The most experienced people you can bring in are origination people,'' Stern said. ``But for a bank it's a moral hazard to have the same people who originated the loans now modifying those loans. That wouldn't be desirable. Once around is enough.'' The five largest servicers -- Countrywide Financial Corp., Wells Fargo & Co., CitiMortgage Inc., Chase Home Finance Inc. and Washington Mutual Inc. -- together manage more than half the home loans in the U.S., according to New York-based National Mortgage News, an industry publication. While more than 100 mortgage originators have suspended operations, closed or sold themselves since the beginning of 2007, mortgage servicing units are expanding. Chase Home Finance, a unit of New York-based JPMorgan Chase & Co. and the fourth-largest U.S. servicer, expects to spend $200 million more servicing loans in 2008 than it did last year, said spokesman Thomas Kelly. Delayed Foreclosure Kelly wouldn't say how many Chase borrowers have quit paying their mortgages and remain in their homes. Efforts to keep borrowers paying their bills have slowed the foreclosure process, Mark Rodgers, a spokesman at CitiMortgage, a division of New York-based Citigroup Inc., said in an e-mail message. ``In a number of cases, we have delayed foreclosure proceedings to allow our loss mitigation teams additional time to explore potential solutions to keep distressed borrowers in their homes,'' Rodgers said. Joe Ohayon, vice president of community relations for Wells Fargo Home Mortgage in Frederick, Maryland, a unit of San Francisco-based Wells Fargo, said trying to modify loan terms case by case adds time to the foreclosure process. ``Foreclosure is only a last resort after all available options for keeping the customer in the home have been exhausted,'' Ohayon said in an e-mail message. Affordable Payments Olivia Riley, a spokeswoman at Seattle-based Washington Mutual, said in an e-mail that the company's goal is to keep customers in their homes ``with payments they can afford.'' Representatives for Calabasas, California-based Countrywide, the biggest U.S. mortgage servicer last year, didn't respond to requests for comment. Few mortgage companies will admit they allow homeowners to stay in their homes without paying their bills. ``No servicer will say you can live rent-free for six months, go ahead,'' said Paul Miller, a mortgage industry analyst at Friedman Billings Ramsey & Co. in Arlington, Virginia. ``Eventually, the servicers will clear these guys out.'' Homeowners usually get 90 days to resume paying before foreclosure proceedings begin with the filing of a complaint or notice of non-payment. State laws determine the length of time between the filing and an auction of the house. In most states, it's two to six months, according to Foreclosures.com. In Maine, it can be up to a year and in New York, 19 months; in Georgia, it's as quickly as one month, and in Nevada, it can be 35 days, according to the database. Borrowers in California who fight foreclosure can stretch the process to 18 months, said Cameron Pannabecker, chapter president of the California Association of Mortgage Brokers and president of Cal-Pro Mortgage Inc. in Stockton. That doesn't take into account the woman he knows who hasn't made a mortgage payment in eight months and hasn't heard from her lender, Pannabecker said. ``Now she's afraid to mail in a payment for fear it'll come to somebody's attention,'' he said.

>>Source<<

Holy crap! this may be a "rebirth" of squatters!

Should we start singing songs from "RENT"?

If everyone is broke, and no one can buy your property, you'd be stupid to leave if the bank won't take eviction action. You still don't own your house, with a mortgage, so this may be interesting...don't pay and still have a roof over your head.

it's amazing how people can be so irresponsible. to me, there's almost nothing worse than not paying debts you owe. now we are seeing how individual irresponsibility can truly effect the entire economy.

Don't worry fellas, regulations are on the way...

great

quote:

Originally posted by Krypton Don't worry fellas, regulations are on the way...

regulations normally shift the consequences elsewhere. ask anyone about the success of SOX. while it has been a boom for accounting firms and law firms, SOX may have shifted the title of financial capital of the world from NYC to london

quote:

Originally posted by jerZ07002 fluorescent all the way!! the upfront cost isn't even that bad. i hear LED lights are the next big thing in energy saving.

They do have promise, though they currently cost an assload on the front-end and the payoff is 5+ years. The good thing about LEDs is that unlike CFL bulbs, the quality of the light from LEDs is much better, and the intensity of light that they emit is constantly rising. I have CFLs installed at home and those things really fuck with my color vision.

I called a company last summer to price LED-type bulbs for curiousity's sake. They told me that a single can-light fixture was running around $100 or so. So to replace 1 can light fixture in my house that uses a 60-75 watt bulb that costs a couple of bucks a pop and lasts for 1-2 years (and puts out as much heat as it does light), I could spend $100 on a 60-75watt equivalent LED fixture (power consumption around 12 watts) with an expected lifespan of 50,000 hours or so. Give it time and hopefully prices will come down as the technology advances and yields improve, etc.

I think Ann Arbor, MI recently announced a bold LED initiative for the city.

CREE is a major company in the LED/LED lighting space, but it's been a dicey stock. At any given time you can get some of the most divergent opinions on it that you could imagine.

quote:

Originally posted by jerZ07002 regulations normally shift the consequences elsewhere. ask anyone about the success of SOX. while it has been a boom for accounting firms and law firms, SOX may have shifted the title of financial capital of the world from NYC to london

Sarbox has done more harm than good (as is usually the case with regulation that is passed once the horse is already out of the barn).

quote:

Originally posted by Shakka Sarbox has done more harm than good (as is usually the case with regulation that is passed once the horse is already out of the barn).

The Trickle Down of SOX
Since the Sarbanes Oxley Act (“SOX”) was passed, much has been written on the cost of compliance levied upon Wall Street brokerage firms (I include the Spitzer Settlement in this calculation) and corporations (specifically Section 404 which mandates an audit of internal accounting controls). However, little has been said about the cost to investors.

The cost of compliance is now trickling down to the end user, the investor, and can be classified as direct and indirect. This tax on the market and its participants could have an adverse impact on the US economy.

Direct Costs
Direct costs consist of the reduction in earnings, earnings growth, and dividends that result from the high cost of complying with SOX. The increased accounting and auditing fees that are required in order to comply with SOX are new and sizeable expenses that increase with the size of the company. In an efficient market, the reduction in earnings and growth potential will be reflected in the stock price.

According to a study done by the Financial Executives Institute, companies expect to spend an average of $3 million to comply with Section 404 of SOX. Companies with revenues in excess of $5 billion expect to spend an average of $8 million (0.2% of sales) and companies with sales less than $100 million think the average cost will be $550,000 (0.6% of sales). You can add to this price tag the cost of higher Director & Officer Insurance and the need to make more regularity filings with increased speed and frequency. This “investment” will not increase a company’s competitiveness or its profitability.

This data indicates that the cost of SOX compliance will impact profit margins and weighs heavier on smaller companies. The cost is expected to be highest in the near term as companies determine how to comply with Section 404, which systems need improvement and auditors charge to test the new systems.

The short term accounting costs are higher than they might have been for three main reasons. First, competition among the major accounting firms was reduced when Arthur Andersen was taken out (due to its involvement with Enron). Arthur’s former clients had to scramble to find a replacement, allowing the remaining firms to raise prices.

The looming deadline for compliance with Section 404 is the second main factor resulting in higher accounting fees. Some accountants are claiming that the higher fees are due to the need to implement recently issued guidance from PCAOB (Standard No.2) and the 2005 deadline. Although Section 404 was public knowledge for over a year, accountants waited for guidance before creating the systems needed to perform the required audits.

But perhaps the main reason for the high near term cost is that nobody knows what they are doing. The accounting practices in Section 404 have been around for a long time, but the current environment of malpractice risk makes the players cautious. And fees rise with uncertainty. Fees are thus set to not only cover the base costs, but also include risk premiums for the hard costs of malpractice insurance and soft costs that allow partners to sleep at night.

While you might expect fees to decline once everyone gets more comfortable with the new reality of Section 404, don’t count on it. Costs could increase as miscreants test the limits of the law (as they always do), resulting in new regulations and the need to invest in new systems and audits in order to comply with the new regs.

The bottom line is that the spending on compliance will divert funds that could be invested for a profitable return that would boost earnings and dividends. As a result, valuations will experience a quantum shift downward from what they could have been.

There are also “soft dollar” direct costs, the biggest of which is reduced productivity. While some of the hard dollar costs noted above may include an estimate of the hourly cost of management’s time, I think the real soft costs are understated. How can you quantify the opportunity cost of the time management spends on determining how to comply, implementing new systems, and constantly monitoring these systems instead fo growing the business? The thousands of hours spent on compliance divert managements from focusing on becoming more competitive and profitable.

In the financial industry, the compliance costs are already evident. We already have seen the cost structures of brokerage firms change as they have had to erect higher Chinese Walls and fund the Spitzer Settlement. Wall Street firms have had to increase legal and compliance expenses because they need to have a babysitter every time an analyst talks with someone in investment banking.

Indirect Costs
Indirect costs are those that result from the unintended consequences of SOX. These costs consist of the reduction in research coverage, the growing number of companies that chose to de-list, a decline in productivity, and the inability of companies to access the capital markets. It is these costs that could have the greatest detrimental impact on the US economy.

The significant decline in research coverage created an Information Gap which resulted in inefficient pricing by the market. Prior to the implementation of the Spitzer settlement and the creation of SOX, the number of companies that lacked research coverage was large and growing. I did a study in 2002 that indicated that almost 70% of the publicly traded companies lacked adequate research coverage (defined as 2 or more analysts). Since that time, I think the situation has gotten worse. The number of analysts declined as brokerage firms reduced their market making activity. The wave of mergers in the late 1990s significantly reduced the number of regional brokerage firms that use to focus on small cap stocks in their “back yards.” The surviving brokerage firms reduced their coverage lists to the biggest and most liquid issues. As a consequence of the combination of a lack of research and SOX costs, a growing number of firms are delisting themselves from the major exchanges.

The trend toward de-listing (also known as “going dark”) is another indirect cost to investors. Delisting is a relatively simple step whereby companies can move from the larger exchanges (NYSE, AMEX, and NASDAQ) and have their shares trade on the OTC Bulletin Board (aka “Pink Sheets”). While trading on the Pink Sheets does not have the stigma that it use to have, an “aura” remains and it does increase the cost to trade. Whether real or perceived, there are inefficiencies that increase the cost to invest in Bulletin Board stocks that have not been offset by electronic trading mechanisms. But the most significant indirect cost is the cumulative impact of all of the above to the economy as a whole. As the result of SOX, the cost to access capital has increased, the ability to access capital markets has decreased (lack of research coverage and market making), and the efficiency of the market pricing mechanism has decreased.

To illustrate, consider the small entrepreneurial firm. It has always been the source of innovation and economic growth in the US economy. Pre-SOX, the small firm could focus on its core competency and develop a market for its product. While it had to deal with regulatory costs, access to capital was less costly because research coverage was more available because there was a network of regional brokerage firm that could provide investment banking and market making services to these small firms. Today, the few remaining regional firms are hard pressed to provide the needed services due to the increased cost of compliance and reduced margins. Due to these increased costs, brokerage firms are focusing their efforts on the biggest and most liquid stocks in order to maintain operating margins.

The Bottom Line
Change was needed to correct the excesses that were manifest during the dotcom bubble and many of the post-bubble regulations are beneficial because they provide investors with more information. However SOX, despite having some very good points, may turn out to be the modern day equivalent of the Smoot-Hawley Tariff Act, doing more harm than good.

Both SOX and Smoot-Hawley were enacted in an attempt to correct systemic wrongs but both had unintended consequences. Smoot-Hawley was enacted in the wake of the Great Stock Market Crash of 1929 as a way to protect the US economy. However, it had the exact opposite effect and caused the Great Depression. SOX and other post-bubble regulations have changed how the markets function in a way that may actually reduce the future growth potential of the US economy because they have reduced the ability of small entrepreneurial firms to tap the capital markets. This may prove to be the biggest cost to investors.
Source

Good article on SOX

Back to the fray...

It just gets better and better down there doesn't it?

quote:

Foreclosures jump 57 percent in last 12 months Tue Apr 15, 2008 2:00pm EDT By Lynn Adler NEW YORK (Reuters) - Home foreclosure filings surged 57 percent in the 12 month-period ended in March and bank repossessions soared 129 percent from a year ago, as homeowners struggled to make mortgage payments, real estate data firm RealtyTrac said on Tuesday. For the month of March, foreclosure filings, default notices, auction sale notices and bank repossessions rose 5 percent, led by Nevada, California and Florida, RealtyTrac said. The rise in March to filings on a total of 234,685 properties followed a 4 percent decline in February, RealtyTrac reported. RealtyTrac said the peak has yet to be reached. "What we're really looking at is ongoing fallout from people overextending themselves to buy homes they couldn't afford and using highly toxic loan products to get into the houses in the first place," Rick Sharga, vice president of marketing at RealtyTrac, based in Irvine, California, said in an interview. "We're going to see quite possibly a record amount of foreclosure activity in the third or fourth quarter," reflecting sharp payment increases on adjustable-rate subprime mortgages in May and June, Sharga said. One in every 538 U.S. households living in single-family dwellings received a foreclosure filing in March. The single-family dwellings can include condominiums. There are three phases of the foreclosure process in most states -- an initial default notice, notice of a scheduled auction, and an "REO" filing if the property is not sold at auction but instead repossessed by the bank, Sharga said. REO refers to real estate-owned property. All of the households in the report received at least one of these filings last month. AUCTION NOTICES UP 32 PERCENT While default notices and repossessions soared in March, auction notices rose a relatively small 32 percent, James J. Saccacio, chief executive officer of RealtyTrac, said in a statement. That suggests "more defaulting homeowners are simply walking away and deeding their properties back to the foreclosing lender," he said. "This deed-in-lieu-of-foreclosure process allows the lender to take possession of a property without putting it up for public foreclosure auction." The states with the highest foreclosure filing rates -- Nevada, California and Florida -- also are among those that had the biggest price appreciation in the five-year boom before the housing meltdown that began in 2006. These states tend to also be plagued by defaults on unoccupied homes bought by speculative investors. In many cases, home prices have now fallen below the size of the mortgages and some owners are walking away. In Nevada, one in every 139 households received a foreclosure filing in March, keeping the state at the top of the ranks for the 15th straight month. The 7,659 Nevada properties receiving foreclosure filings last month represented a 24 percent jump from February and a nearly 62 percent spike from March 2007. California had the second highest rate of foreclosure filings, one for every 204 households, followed by Florida with one of every 282 households. Arizona's filings fell about 5 percent, but it retained its standing as with the fourth highest pace of foreclosure activity for the third month straight. Foreclosure activity in Colorado dropped 8 percent in March from February and 1 percent from a year ago, but it ranked No. 5, with one filing for each 339 households. Georgia, Ohio, Michigan, Massachusetts and Maryland were the other states with the highest foreclosure rates in March. The states with highest total number of foreclosure filings were California, Florida and Ohio. Foreclosure filings were reported on 64,711 California properties in March, the most of any state for the 15th consecutive month, up nearly 21 percent from February and up almost 106 percent from March 2007. Florida posted the second highest total, with foreclosure filings reported on 30,254 properties in March. While down about 7 percent from February, filings were about 112 percent higher than last March. Georgia, Texas, Michigan, Arizona, Illinois, Nevada and Colorado were the other states with the highest foreclosure totals in March.

>>Source<<

quote:

Originally posted by Fir3start3r Back to the fray... It just gets better and better down there doesn't it? >>Source<<

if you're trying to buy into the market it couldn't be better. i actually don't know anyone who has lost their house, but then again, i don't think that's something people advertise. i only wish my student loan payments didn't amount to $1400 a month. i could definitely get a nice condo on the hudson if that wasn't the case. although the condo market in north jersey / nyc has yet to collapse like the housing market in other parts of the country.

quote:

Originally posted by Fir3start3r Back to the fray... It just gets better and better down there doesn't it? >>Source<<

Great pair of articles

quote:

Originally posted by jerZ07002 i only wish my student loan payments didn't amount to $1400 a month.

I hope your job is worth the education, that amount IS a house payment WITH taxes. Pretty stiff payment I wonder how many other graduates are crippled by a student loan payment (...and defaulting on a student loan is WORSE, to your credit, than a foreclosure)

quote:

Originally posted by zookeeper I hope your job is worth the education, that amount IS a house payment WITH taxes. Pretty stiff payment I wonder how many other graduates are crippled by a student loan payment (...and defaulting on a student loan is WORSE, to your credit, than a foreclosure)

It's amazing what student debt is accumulated these days.

Happily I was able to pay my way through with part-time jobs and co-op placements (and that's living by myself btw) so I never had any debt.

However student costs are staggering now even from a decade ago...

quote:

Originally posted by Fir3start3r It's amazing what student debt is accumulated these days.

In 1991, when I graduated from Syracuse University, tuition was $14,500 per semester (..a new car, every 12-15 weeks) I'm seeing "kids" fresh out of college, with $250,000 debt loads! Common sense would tell you that's not a great position to be in at 22-23 years old.

This is an interesting offshoot, I started this thread with mortgages and credit cards in mind, I hadn't thought about how much debt load "Big Education" is putting on Americans.

Perhaps this is an interesting direction to go in?

Guess where the government chose to spend $500 billion? That's right, not here...

quote:

Originally posted by zookeeper In 1991, when I graduated from Syracuse University, tuition was $14,500 per semester (..a new car, every 12-15 weeks) I'm seeing "kids" fresh out of college, with $250,000 debt loads! Common sense would tell you that's not a great position to be in at 22-23 years old.

What's the interest rate on that?
I'm assuming its an unsecured and variable rate loan so it would be roughly 14-17% P/A?

edit- just checked its around anywhere between 5-8% for Americans
Still, if someone offered you a mortgage rate loan for $250k you should probably invest it in a house!
Because unless your coming out of school with a chance of a higher paying job (Solicitor, Accountant etc) then accumulating that much as a lower paid, qualified job (Nurse, Teacher etc) will just leave you in debt for 30 years and with interest paying off an ungodly sum.

quote:

Originally posted by zookeeper In 1991, when I graduated from Syracuse University, tuition was $14,500 per semester (..a new car, every 12-15 weeks) I'm seeing "kids" fresh out of college, with $250,000 debt loads! Common sense would tell you that's not a great position to be in at 22-23 years old. This is an interesting offshoot, I started this thread with mortgages and credit cards in mind, I hadn't thought about how much debt load "Big Education" is putting on Americans. Perhaps this is an interesting direction to go in?

I don't see why not?

It definitely should be a huge concern for those planning on getting a post secondary education and what they're potentially going to face in the way of debt.
This was my #1 reason I choose (happily looking back) very wisely before moving on from high school.

I never understood why someone would want to WASTE a year or two in a university with 'General Arts and Sciences' and other fluffy courses trying to figure out what to do with themselves, all the while racking up a huge debt.
Are these people on crack???
Big deal if all your friends are going - are they going to pay your bills too??
These people need to take a step back before being corralled into a bubbled system that demands big bucks.
I say 'bubbled system' because even after graduating with that post secondary education, it still doesn't even come close to preparing you for Real Life™.
When they leave their safe, bubbled environment, that's when the sticker shock really sets in and they bury it with the worse thing they can do, credit cards.
And why?
Because their personal fiscal education is nil, they need to feel good about themselves and they believe it's the only way they're going to be able to afford that [insert keeping-up-with-the-Jones' gadget here].
That and their sense of entitlement (especially these days it seems) only drags them down further into the very tar pit they're trying to escape from...

quote:

Originally posted by zookeeper I hope your job is worth the education, that amount IS a house payment WITH taxes. Pretty stiff payment I wonder how many other graduates are crippled by a student loan payment (...and defaulting on a student loan is WORSE, to your credit, than a foreclosure)

i make quite a bit more than the average person. i'm not totally dissatisfied. to clarify though, that debt is from an undergraduate degree, a law degree, and half of an LLM (Legum Magister), so it's not all that bad because i have 8 years of post-high school education debt.

quote:

Originally posted by Lilith Still, if someone offered you a mortgage rate loan for $250k you should probably invest it in a house!

A house is really a poor investment these days, especially when such a large chunk of money goes just to the interest alone.

With the cost of inflation, it's really just an illusion of appreciation, anyway. You'd be much better off putting your money somewhere else besides in a house.

quote:

Originally posted by Trancer-X A house is really a poor investment these days, especially when such a large chunk of money goes just to the interest alone. With the cost of inflation, it's really just an illusion of appreciation, anyway. You'd be much better off putting your money somewhere else besides in a house.

first, a home shouldn't be purchased with the intent of making a profit from a future sale. Second, one of the main goals of investing is to protect against inflation (along with earning a return). Third, real estate has historically been the safest investment with some of the largest returns.

quote:

Originally posted by Fir3start3r I don't see why not? It definitely should be a huge concern for those planning on getting a post secondary education and what they're potentially going to face in the way of debt.

A fairly good (brief) read...

quote:

Average college cost breaks $30,000 Average for 4-year private school passes key mark; total costs for both public and private schools up well above inflation. By Rob Kelley, CNNMoney.com staff writer October 27 2006: 4:14 PM EDT NEW YORK (CNNMoney.com) -- The average cost of a four-year private college jumped to $30,367 this school year, the first time the average has broken the $30,000 mark. As they have for the past 11 years, average college costs rose faster than inflation, according the latest report from the College Board, a non-profit association of 4,500 schools, colleges and universities. College Costs Tuition Total Cost Four-year public $5,836 $12,796 Four-year private $22,218 $30,367 Source:CollegeBoard The good news is that the rate of increase at four-year public colleges slowed slightly for the third year in a row - to 6.3 percent from a 7.1 percent jump last year. The average tuition at four-year public colleges and universities is $5,836 for the 2006-07 school year. 10 most expensive colleges The rate of growth in tuition at four-year private colleges was the same as last year - 5.9 percent - and the average tuition reached $22,218. Of course, college costs don't just end at tuition. Room and board costs grew at around 5 percent for both public and private schools this year, with public schools at $6,960 and private schools $8,149 a year. With room and board, four-year public colleges average $12,796 for in-state residents. In need of aid? Almost two-thirds of full-time students receive grant aid that lowers their tuition costs. And millions also benefit from federal tax credits and deductions for college tuition. Total student aid increased 3.7 percent to $134.8 billion in 2005-06, but federal grant aid didn't keep pace with inflation. Without taking inflation into account, the average Pell Grant per recipient fell by $120. After grant aid and tax benefits, full-time students at public four-year colleges are paying an average $2,700 a year in net tuition and fees. But this number has increased at an even faster rate than published prices because grant aid hasn't kept pace with tuitions. Just over a quarter of all students - 28 percent - are in such a situation. Full-time students at private schools pay an average of $13,200 in tuition and fees after grants and tax benefits. In total, 13 percent of the students in the survey were enrolled full-time in private schools. Over the past decade, total student aid, including grants, loans, work-study and tax benefits, increased by 95 percent, adjusted for inflation. But loans have grown to become a bigger part of aid packages, while grant aid has shrunken. Loans constitute 51 percent of total aid to graduate and undergraduate students, while grants made up 44 percent. "The College Board continues to advocate for need-based aid, so that more students can have the opportunity to benefit from a college education," said Gaston Caperton, president of the College Board, in a statement. "Though student aid makes it possible for many students from low- and middle-income families to afford college, we still face inequality in access to higher education across ethnic, racial and economic lines," he said. Why costs keep climbing In the past few years, tight government budgets have kept been cutting off non-tuition revenue from colleges, forcing schools to ask for more from students' checkbooks. Nor have the costs of health benefits and utilities gone down. And schools are also grappling with higher faculty salaries, especially at private institutions where faculty receive higher pay. The benefits of a bachelor's In an accompanying survey, "Education Pays 2006," the College Board analyzes the benefits in lifetime earnings trends of those who've earned a college degree. The data showed a big earnings gap between high school and college graduates. In 2005, women aged 25-34 with bachelor's degrees earned 70 percent more than those with high school diplomas, up from 47 percent in 1985. For men, that gap was 63 percent, up from 37 percent in 1985. Full-time workers aged 25-34 with college degrees make an average of $14,000 a year more than those with high school diplomas.

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