Like cars, kids, pets, gas, and leisure. Yes, everyone wants to buy that first home and have something to call their own but is it really in the cards right now? For most it should not be, yet the mortgage companies are more worried about gaining a buck than if that person in ready to buy a home. One way the lending company’s can help is to make sure that their credit cards are paid off, or with low balance. Doing this can insure that people are not living off credit cards, paying the balance just to run it back up.
They are faced with nerve-racking and disconcerting circumstances for everyone in the family, including and especially the children. Some may even face homelessness because of it. It also hurts the bank, which looses money and has to extend the time and expense to try sell the house. In this economy selling is difficult and homes sit on the market for long periods of time. Empty houses hurt the community, making it less desirable to live in.
Many people use credit cards because they don’t have the money to make their purchase when they want to.Credit cards also collect interest and the television that cost two hundred dollars at Best Buy has now cost you almost four hundred dollars. Eventually people can not pay back their loans or credit card debt which leads to more problems in our struggling economy. Some people have even refinanced their homes so that their mortage would be less. In the long run it has cost them even more money. When you can no longer pay for your home, the government can forclose your home.
It is usually by a technicality, a loss of annual income such as loosing a job, or an accident. If a family of three has one source of income, usually the father, and the father is hurt in some way, car accident, cancer, or any other event, that family no longer has that normal income coming in. Now they have bills unpaid and the person who usually brought in the homes money still can not work. These are unfortunate cases but they do happen. That is why it is important that something is done to help those who find they are victims to the foreclosure problem.
College debts also have frightened the future students into not applying for college. Almost half of all adults 18-34 cannot afford the price of college anymore ("Here 's Your Crisis: Student Loan Debt Isn 't a Myth"). Those who do go to college most likely cannot start a business or continue their career path because of the extraneous debt they
What people like this do not understand is that even if they buy the brand new car or house, they cannot afford the upkeep for that car or house, and will fail into debt. “Debt robs a man of his self- respect, and makes him almost despise himself” People also get into debt by trying to provide the best for child or by over compensating for their child. The parent may not have had very much growing up, so they showered their children in over abundance to make up for their childhood. The parents will end up in debt and will also end up with children who will probably have no sense of the value of a dollar. The child will have false illusions of the real world and will believe that money is a luxury that they can always afford and that is not the case.
Consumers gave into the game, and the financial institutions gave into the greed by not ensuring that their customers were 100% qualified. Some consumers do not have the income they originally had to keep their homes, and too often had to choose between everyday necessities. All home buyers first time or the twentieth time need to be counseled regarding what they want versus what they can afford when researching loans or mortgages. Most buyers are uneducated regarding their debt to income ratio and no one ever thinks twice about losing their income due to unemployment. Due to the lenders greed, that itch to make a buck, it appeared that anyone and everyone were being approved for a mortgage regardless of their income.
With spending power of $172 billion a year, youth attract the interest of retailers and credit card companies, but have little knowledge about how to make a wise consumption decisions. Many accumulate significant debt that may lead to poor credit scores and possible bankruptcy." Most people nowadays tend to depend on credit cards because they can easily purchase their product or other things that they want without knowing that in the end, you'll have to pay in high rates or you'll be highly indebted by the bank because of irresposible financial behavior of a certain person. (Johnson and Sherraden, 2007) Parents could influence financial behaviour in their children for them to grow financially literate and will not worry in their future expenditures especially in their retirement. A lot from a previous studies discussed the financial education role related to financial behaviour and financial education is important in increasing the literacy of financial.
“Once students graduate from college, they need to be prepared to start paying back any loans they took out for school” (Mooney 49). Sad truth about going to college is being in debt and trying to get hired. Even “About 70 percent of 2015 graduates had student loan debt” (Mooney 49). Naturally the only ones who aren’t in debt are the people who can afford college, but for most it is just too expensive. Even though college is important, it is not worth the price, because it puts people in debt, which ruins students credit, is extremely overpriced and students can live without it.
When these basic items are in jeopardy mortgage payments often suffer first. The reality is that no one is going to pay their mortgage if their children are cold and hungry. The decline in the value of the American dollar has also been mentioned as a reason for the mortgage crisis. Parallels have been cited between what is happening now and what happened prior to the Great Depression. Inflation has robbed too many homeowners (and non-homeowners) of their savings, making the money they do have of little value.