Bryant Tutas stepped on our collective toes with his post Morally Wrong....OR...Financially Sound? The post generated 175 comments within just couple of days. Terrific post, terrific comments. Definitely worth reading, so click and you will not regret. He twisted the legal subject and asked whether it was moral.
The reason it is such a passionate discussion, is that we are to make the adjustments, that we did not think we would have to make. We lived in the world, where the promise to pay equalled the obligation to pay, and the moral thing to do and the only right way to do it. Foreclosures were the exceptions, they were not us. Someone else, less fortunate, less diligent, less lucky.
When the fallout started, we kept adhering to the moral stand. We are paying our debts. But the market kept falling, and holding to the principles was wearing us out and getting increasingly frustrated.
At that time if we could pay, we paid. Changing reality was testing us. The notion that acting responsibly and morally was the right thing to do and doing the right thing was supposed to be good and rewarding... but it wasn't.
Our world in the last few years has changed dramatically. We are painfully adjusting to the new reality. We stand to make our choices how we are going to deal with this changed reality. What is moral and what is not. What we would accept as a norm, and what we not.
We are facing changes that we have never faced before. Moral issues will be numerous, and sticking to the morals of 4 years ago may not help us. It is a nostalgic notion to keep the morals of the past working for the present. The world changes, we change, the morals change. I understand that morals are not the condom used once only (we are still rich enough to afford a one-time condom, aren't we?). But by the same token they are not the dogma, that never changes. They should not be the form without substance, without real life, that left.
3-4 years ago the idea of stopping the payments, do a short sale of your property was appalling. It was definitely a "no". It has changed. It is not only people who made poor decisions, and people who were not responsible. People who thought they were acting responsibly are in the same line.
We have already changed. Unless you think that the only place for them is jail, you have changed your stance on that. This is no longer immoral.
Strategic default that is happening now, not 3 years ago, is often nothing else, but the understanding that the real default is around the corner, and turning off the moral life support today will simply help avoid or delay the moment when it turns into inability to feed the family and provide shelter after spending the last borrowed penny.
Because when we say, that if people can pay, they have to pay, we might be pushing them dangerously close to the point that they deplete their credit cards paying for what they would not be able to keep anyway.
Let them walk. This is not fun for them. They are not criminals. They are you and me, greedy or not greedy, it does not really matter. They are you and me, caught in the big mess, that we did not see coming. We should've but we are neither Bush, nor Obama. Big mess that everyone else failed to warn us about.
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Jon- Good points. I don't mix finances with morals. My morals don't change with the times. My morals are contained in my values which are congruent to who I am and that is bound to my principles.
Credit and finances never really fit into my moral standards because I don't equate the two.
Credit is a debt maker. Credit is over-rated and I don't trade cash for credit. Does that make me a bad person in some people's eyes, I am sure it does, but at the end of the day it is my family that I must think about and take care of. No one else is going to do that for me. Credit can be used for good but more times it enslaves us. I see homeowners going into credit cards to pay their bills without realizing that soon that well will also be dry, then what?
But I also see many people, the majority of those we work with, bought houses that they knew they could not afford or keep. They were not planning on keeping them, they were flippers and got caught. I also meet a lot of people who drive Escalades and make $800 payments on their SUVs instead of their house payments. I know 3 couples who quit their jobs, then kept refinancing and living on the refi money. When it ran out they refid again, now they are living free in their houses for about 2 years until they get foreclosed on. I don't feel sorry for people like that. They should have remained renters if their home is not important enough to them to not use as an ATM machine. They are a part of the problem not the solution. Katerina