Back in the days of the dinosaurs.. when I started selling real estate .. people looked at buying a house a bit differently. First there were not 57 different varieties of loans.  You went for a fixed or an adjustable.  The adjustable was pretty simple.. it moved up or down, was tied to a fairly stable index and no negative amortization. Oh.. and you had to qualify for the loan.  Most people chose the fixed rate loan because they wanted to know what their payment would be over the long term. 

If you hadn't saved much money or been a bit too free with those pesky credit cards then you took some personal responsibility.  I can't tell you how many people came in who wanted to buy but had to wait 6-24 months while they saved a little more toward a down payment or paid down the credit card balances.  No one got upset because they knew they hadn't been as responsible as they should have been.  They knew that if they really wanted to buy a home they needed to get serious about savings and debt. They were willing to start with a home they could afford and work their way up to the home of their dreams.

Many of today's  buyers expect to buy the home their parents finally ended up owning. They expect to get that home even if they have not saved any money or spent above their income and have heavy credit card debt. Often they are making a lot of money but are spending more then they make on expensive toys, fabulous trips and a rather extravagant lifestyle.  Others just don't earn enough to be able to purchase the home they want and often don't want the home they can afford.

With the advent of multiple choice loan programs suddenly everyone could buy a house.  Savings or credit  scores didn't matter. You want it.. you got it.. became the order of the day.  People who couldn't and shouldn't have been able to qualify for a loan found themselves proud homeowners for about six months until someone lost a job or a child got ill or  there was a divorce. Life got in the way of plans and we now have lots of foreclosures in many parts of the country.  It's easy to blame the lenders or the agents or the economy.  But the fact is that people have changed the way they view homeownership.  It's not something you earn.. it's a right.

We don't value saving or deferred consumption anymore.   We don't hold people responsible for their actions.  If you buy a home you can't afford and don't cut back on non-essential spending so you can make your payments... its the lenders fault or the fault of the agent but it's never my fault.  No one ever sits down and says... Maybe I shouldn't have gotten that loan.  The payments were always more then I could make.  I need to be more responsible... my house really isn't an ATM machine with free flowing cash..   I don't need a new car.. mine is good for a few more years. Would love to see Italy someday, but maybe we'll just stay home this year and save the money. New clothes.. I already have  a closet that is  full.. maybe I'll put off buying more until I pay off the credit cards.

Last September Brian Brady wrote about the  Habits of Millionaires.  It's a great post and includes some very wise ideas and perhaps some habits to emulate. No.. not everyone will or can become a millionaire but if you pick just one of the habits.. deferring immediate consumption.. you stand a better chance of reaching your financial goals and not winding up in foreclosure.  

 Monopoly is a game not a lifestyle... maybe it's time to recognize the difference. 

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All content copyright © 2007   Kaye Thomas