The television commercial stopped me in my tracks. I was walking by the living room TV as I heard the words:
“Your bathroom can be your next Caribbean vacation. That extra bedroom can be your son’s college tuition for next year. Your kitchen can be a brand new model car.”
The advertisement was for equity mortgages. I laughed. Who on earth would believe such things? Obviously millions of people did.
The real estate agent’s mantra for years has been: buy more house than you can afford. Values always go up, you will make money. Never pay off a house and instead invest elsewhere, you will make more money. Culminating with, let your house work for you, borrow off of it.
After the Great Depression, it took decades before people became comfortable with borrowing money. Young couples often lived with family or they rented and saved money so that they could afford a home without a mortgage. No one wanted to be caught with a large debt.
Then somehow living within your means became an old-fashioned idea.
The housing industry has been badly shaken, and bankruptcy is so prevalent that any stigma attached to it is nearly non-existent. So many seem to have been duped and are having financial problems. The government has come to the rescue, since personal responsibility is no longer in the equation.
Some of the people working in the mortgage industry are scum that will take advantage of the most vulnerable. Many on Wall Street will never have the best interests at heart for the average guy. Skepticism and frugality should have been our guides.
A Caribbean vacation may bring you great memories; but it may have been wiser to let toilets be toilets.