HELOC Heaven
Jan 21st, 2008 at 1:39 pm by Susie
Yeah, I don’t understand it, either. Why would any sentient being take out all their home equity to sustain a lifestyle they can’t afford?
In the past five years, I’ve seen people take out HELOCs for House & Garden-type remodeling projects, extended dream vacations, swimming pools, a family cruise … the list goes on. The most common reason? To pay off the credit card bills they ran up buying just about any shiny thing that caught their eyes. And God forbid we ever say no to our kids about whatever expensive toy they “need” to have!
I wonder: Is it from watching all those cable shows? I suspect most people are a lot more susceptible to marketing than I am. (Not bragging, just an inborn resistance I have.) Do people really believe they “deserve” to live in luxury? My friends kid me about how cheap I am, but my thriftiness hardly translates to living in a cardboard box. I have nice things - I bought most of them used, or got it free from Craigslist, but so what?
I recently heard a woman complaining about how much clothing and toys cost for her two-year-old. When I suggested going to consignment shops for clothes and buying toys at yard sales, she looked at me as though I was doggie doo she’d tracked in on her shoe. Now, if I didn’t tell people I bought used stuff (or even better, trash-picked it), no one would ever know. I buy mostly used clothing, too.
I wonder how these people are going to deal with it when it all comes crashing down.
Without used baby toys I’d never be able to afford my beer tab.
Chris, you could also buy used beer as well.
But what are HELOCs?
I get the first three letters, but not the last two.
Do people really believe they “deserve” to live in luxury?
yes.
which isn’t a positive sign for the future.
HELOC = Home Equity Line Of Credit
Nearly everything in this economy is geared toward consumer spending. It’s something like 70% of GDP (I think). Corporations make their money from manufacturing, distributing, and selling their goods to Americans, and the only way they can do that is to manufacture a need for Americans to buy. It’s a constant drumbeat, aided and abetted by our criminal president and his administration.
Yeah, I think it’s stupid too.
Will people learn a lesson from this? It depends on how hard the crash is. If it’s as hard as I fear it’s going to be, an awful lot of people are going to be learning how to cook beans and ride busses, who until recently ate filet and rode bmws. The depression of the 1930s certainly taught our grandparents (and some of our parents) a serious lesson. But hey, it’s America! No one could have predicted! What could possibly go wrong?
When Sam was born and I had to retire some debt and buy a vehicle, I took out a HEL. Not a LOC, although my parents AND the bank encouraged that for the “flexibility” and the ability to just have it open for when I needed it. When the loan officer said that the rate was changeable subject to the market, that killed it. I took out a FIXED rate LOAN for what I needed and not a cent more.
I’m still in debt to the credit cards (though it’s a lot better and has taken a LOT of work), but I cannot understand how anyone with any sense would take out a LOC in the wake of the Bankruptcy Reform Bill. It’s such an obvious and blatant con
What’s making me mad now is the bailout of the investors who lost their shirts, especially this idea to freeze their interest rates. FUCK that: they shouldn’t be rewarded for trying to game the system when people like me played by the rules.
I game the system too of course, but in reverse: instead of buying things I can’t afford with money I don’t have, I get it used or free from craigslist, or shop right after the holiday is over. Let me tell you, there were some bargains this year as the consumer confidence and spending went down the shitter.
HELOC is the logical equivalent of having your salary check on direct deposit, especially because people have been treating the rise in housing prices as INCOME. That’s like two guys in a pit getting rich by selling each other their hats over and over.
I’m not sure how you decide what level of lifestyle your income can sustain. Given that, the prudent thing to do is err on the low side, but that’s hard.
I’ve been down the debt trail too. Something about four kids and college tuition . . . .
I love resale shops.
My house is full of used furniture which is better, more sturdy, more attractive, and way more full of character than anything that Raymour and Flannigan has.
Most of my computers are used too. But, once I replace Windows with Linux, they just scream.
And kids these days have too damned many toys. I say give ‘em a cardboard box and toss ‘em into the back yard.
Merciless has a point about the economy.
Since this country doesn’t actually manufacture much of anything any more, consumer spending is the engine of the economy. If it drops and stay dropped, the economy is basically toast. And with health care soaking up more and more of everyone’s disposable income, it’s going to stay toast for a long, long time.
Uh-oh, merciless, I already eat beans and ride buses. What now?
Maybe I should get the old bicycle out, but I’m not as quick as I used to be, and the traffic is fierce here in NYC…
It’s really interesting how much the HELOC situation has changed since January. Over 120,000 of those people you’re writing about have had their lines canceled or frozen without any notice. Many people owe more on their home loans and HELOCs than they can get from selling their houses.