Be glad you live in the West! This from today's New York Times:

http://www.nytimes.com/2007/03/23/us/23vacant.html

Will this reach the West?

Bailouts in 3... 2...

I'm wondering why this is even on the table right now. Shouldn't those that did bad business just have to deal, just like the folks losing their homes?

Yes, I think some of this will hit here, but I think it will be reduced impact.

Note that the hardest hit areas with the foreclosure pandemic are places like Cleveland and Detroit, areas very hard-hit by the loss of manufacturing jobs with outsourcing and the demise of the Big Three automakers. While the high-tech sector that at least the Portland area falls under is rather volatile, there will be a demand for more high-tech stuff down the road, and I don't think Intel will make the mistake of the Big Three in marketing themselves right out of competition from overseas.

The population of Detroit has shrunk by two-thirds in the last 25-30 years. Imagine the Portland area shrinking from what it is now population-wise to something the size of, say Spokane. Talk about a complete collapse!

If you read the article, these were high risk loans to begin with, with accompinant interest rates.

I heard that the first signs on the west coast of these foreclosures will happen. Pay attention to San Diego is what I have heard and been told.

I predict a massive bubble bursting before the end of the year. Chaos meet America!

While Salem happens to provide many exceptions to the general rule in mortgages right now, the good news is that lenders ( the actual money people, not the mortgage brokers ) are getting separated. It's fascinating to get emails at 9:30 a.m. with the daily rates being offered, only to be followed by a 10:30 email saying " We're closing our doors effective immediately."

There is a lot of intertwined relationships between lenders and investors and banks and such and they are getting effected in surprising ways. Rates are still low. And with foreclosure rates getting higher and higher, stronger lenders are able ( not always willing, but able ) to step in and supply stronger loans for people that want to buy homes.

The bad news is that those that are going into forclosure ( and there are many, but I'm not getting a vibe that it's chaos ) will have to sell and rent back until they get their respective credit back in line.

All in all, much of this is good. People who didn't educate themselves on the risk are getting nailed. People who knew it was a risk, took it and are losing.

The system isn't designed to be so risky and complex. People, banks, homeowners, etc. thought that they could get something for nothing. Things aren't good when you get that. It FEELS good at the time - but it's not.

Shyguy: I'm with you. I think It's going to get a lot worse by the end of the year.

If you own a home right now and have a first or second mortgage, now is the time to pay it all off. If it gets as bad as some think and this recession takes hold, a lot of families will be out of work.

I believe we will see foreclosures go through the roof as families walk away, losing everything!

Don't let this happen to YOUR family.

Brianl, yes Detroit is a sad case. However, it should be noted that the Detroit metro area is still growing. I visited last summer, and driving in the skyline looks like something out of 1950, with the exception of the RenCenter.

But they are trying hard. New football and baseball stadiums downtown, extreme marketing efforts, etc. Not sure how successful it will be.

Wait - what? "If you own a home right now and have a first or second mortgage, now is the time to pay it all off. If it gets as bad as some think and this recession takes hold, a lot of families will be out of work."

And you think that paying off your mortgage will do what, exactly? Let's say you have the money to pay off your mortgage, you think that paying it off will save you from what?

If you own your home, at least you can live there for awhile until you can make other arrangements I would think.

Pay off your mortgage, right, with most mortgages over 200,000 dollars, everyone is suppossed to have that laying around?

And how much should people be protected from themselves? If they go to these payday lenders
who charge astronomical interests, should society protect them, if a mortgage company offers them a new loan, knowing their a credit risk, and charges high interest, knowint they will go into default, and they will get the house for a small percentage of its worth, should they be protected from themselves?

It takes about 6 months for a foreclosure to force someone out, and the federqal bankruptcy laws still protect most.

Nwokie: If $200,000 is to much money for families to pay off, maybe they bought a home they couldn't afford in the first place.

Well maybe I misunderstood something, but if I had enough money to pay off a mortgage but no job ( which I interpreted as the message behind " we're going to have a recession " ), I would rather continue to make my monthly payments and have money to live on until I get another job. I'm not saying it's the BEST choice to have to make with your money, but I see no logic in shooting all your cash into your house when it's not being asked for in one lump sum like that.

http://www.washingtonpost.com/wp-dyn/content/article/2006/03/04/AR2006030400238. html

This is the financial state of the average american family.

I would like to see them change the IRA rules, so if your out of work for a long time, you could draw against it, without a hugh penalty.

Plus, if you have the money to pay off your mortgage, then why do you have a mortgage? And if you DO pay it off while unemployed, you've got all your equity. That's great. How much do you think you can get back out if you need it for something but you are unemployed? Nobody will lend you money if you have no ability to make the payments.

Theres lots of reasons to have a mortgage, even if you can pay it off, that interest deduction for one. You can usually get a higher return from your investments, than your mortgage interest.

When I wrote my original post mentioning mortgages. I was mostly thinking about families with "second mortgages", going into debt even further than most families to buy, who knows what.

Now that is something I see all day, every day. People consolidating their Best Buy cards, Target, Victoria's Secret, etc.. Yeah - ok - Thanks for the clarification. I agree with that.

The foreclosures are happening in areas that high housing costs and low wages.

Many of the people now in the subprimes have negative equity in their homes so they are choosing to abandon their homes and leaving them to the mortgage holder.

So if you want to flock to the areas of the country with low wages and high housing costs expect a collapse later this year in the mortgage market.

One of the areas where a large level of interest only loans is Atlanta.

You can come back to the Northwest Georgia Pacific, but you have to get permission and you can't leave for twenty years.

Well here I go tooting our own horn again.

We paid off our mortgage a year ago. We have no credit card debt, no car payment, no business debt. We have paid off two new car loans over the years and a few smaller loans. All this while working for ourselves. No full time job in the traditional sense.

We have savings, investments and best of all the right attitude when it comes to debt. Also all our large loans have been through our credit union.

It's not just thinking outside the box you really have wonder about the box in the first place. During slow times in our work we take advantage by looking for creative ways to save money or make money.

How you spend the money you make is by far the biggest problem with today's typical American family and it's debt. This consume, consume, consume drive without any real understanding of debt is creating many of these problems.

Part of what my wife and I are doing at home is sharing with our kids the value of money verses debt. We try to explain it in language that they understand. They hear us talking about all the time and how we work through the more challenging aspects of managing our money.

Even without a mortgage we have plenty of write-offs, but the best part of having no mortgage is...HAVING NO MORTGAGE!!
Why people choose to keep mortgages for tax purposes seems crazy to me. What you pay in interest and what you pay per month simply makes more sense to pay it off.

Off my soapbox...for now.

WOW, That's Great Chris! My Hat's off to You and your Wife for doing this. I'm sure your Family will be just fine on the other side of this.

Anyone that reads the Bible and believes in Revelation should be where Chris' Family is right now.

I have No debts either.

Chris Taylor, the only way to accomplish the above is to inherit enough to make it possible, or better yet, never get into debt to begin with. Sounds like you were one of the lucky ones who fit into one of these categories.

But you are not the majority. Most are deeply in debt and have no solution to get out. Bankruptcy? Yes, it works for some, but not most. Home equity loan? OK, just another loan. Debt consolidation and negotiating with creditors? Might help, but will be a credit blip almost as bad as Chapter 7, and at the end of the day you will still have to pay.

You are to be credited for your situation, but please recognize most are not in your boat.

Redford-
In 1991 my wife lost her full-time radio job, at the same time KGW radio was making a format change in which 40 some people lost their jobs so the market was over saturated. No full time job opened up for her.

After a year of being on unemployment and losing her benefits my wife asked that she take 2 months off from looking for work to find ways to save money by looking into our spending habits. What she learned was an eye-opener for both of us and we made some changes.

Fast forward to Nov of 1992. I was let go of my full time production director job and at the same time lost another 1/3 income from a freelancing gig. My wife was pregnant with our first kid. We had a mortgage, a new car loan and all the other expenses with no full time job.

So I went on unemployment for a year with no success at finding full time work and lost benefits. During this time we continued to make changes to how we spend money. We had started our own business in 1990 but because we worked full time hadn't committed much to it.

We finally decided that sense no one else would hire us full time we'd hire ourselves and do whatever it takes to earn a living. That was early 1993.

Just before my wife got pregnant she got a part time Sunday morning gig at Z100 for their Christian music show "Rock of Ages." After I was fired at KPDQ I came on board to help her with the show. It was pretty meager earnings of hourly pay but it was something. I also had a chance to learn about digital audio workstations.

Then Standard TV and Appliance hired us to be their audio production agency. So we used Z100 production studios after hours and on weekends to produce our commercials for them.

I started to do mobile DJ work and my wife got on at a talent agency. Still we're not making a whole lot of money but we are surviving. We watched our budget and made cuts when we needed too. There were a few times I actually took our mortgage check to the bank at 5pm the day it was due. There were some real tight months.

Little by little and by nickel and dimming it we slowly crawled our way through all the while not allowing ourselves to get into major debt. It was a benchmark for us that to this day we look back on and shake our heads and truly wonder how we did it.

Because my wife and I are also people of faith we feel that divine intervention and trusting our God was vital to our survival.

We made more good decisions than bad ones. And then learned from the bad ones.

Redford we worked our butts off to get to where we are and have earned every penny. We didn't fall into the debt trap so many do. We made some sacrifices and nobody gave us handouts. We were not lucky, we worked at it, as we do today.

What Chris? Your Family didn't buy a new motor home? A new boat? A new SUV during this time? You saved your money to get out of debt?...WHAT?

That Sounds Un-American!

Good For You!

Thanks Craig. I know that each situation is different for families, but ultimately the decision comes down to how you spend your money. It seems simple but for many it's hard.

My wife and I had a financial checkup with our financial planner earlier this year and he said he has clients who make twice and three times what my wife and I make and they have nothing to show for it in real debt consolidation or savings.

Our tax consultant told us that we are the one percent of American's who are doing it right.

Why people don't get it figured out is beyond me.

I think a lot of what's going on in America today is because most of us don't use cash in transactions anymore.

It's so easy to just swipe your credit card and it's done. You're not counting the money out of your wallet, so you're not seeing the amounts leaving. There's never a time when you have to stop because you've run out of money in your wallet.

That's why we love the debit card so much. Plus if we don't have in the bank we don't buy it.

Craig- I'm a radio DJ, a mobile DJ and a musician yet i don't own an iPod or home entertainment system or fancy car stereo. All my "toys" are work related. If it can't make me money I don't buy it.

For good information on how to get out of debt and stay out visit www.daveramsey.com

No hocus pocus, smoke and mirror magic get rich quick schemes, just common sense information presented in a way that is easily understood.

If you can find one of Dave's "Financial Peace" seminars, I would highly recommend attending it.

Chris...awesome job on getting out of debt. I hope to be there some day too!

"If it can't make me money I don't buy it."

Chris: So I'm guessing you don't own a Ski-Doo or ATV. How many do and are in debt? I'll bet a bunch!

Skybill: Dave Ramsey is great! I listen to him all the time. He's also Christian based as you probably know and is program is set around those values. Families are so wrapped up in the trappings today, some really need spiritual help to lend them a hand with this.

Craig, I like Dave a lot too. He's funny and puts things in perspective so that you don't have to be an accountant to understand them.

I stole one of his lines. I'm sure you've heard him use it on his show.

When someone calls in and asks him "How are you?", his response is "Better than I deserve!"

I get some really wierd looks when I use his response!

They'll have to pry my ATV from my cold dead hands!

(Paid for in cash!)

Skep: That's ok for anyone that has their finances in order.

Chris, my use of the word "lucky" was not the best choice of words, I wasn't referring to you specifically. Sounds like what you have is more than luck...discipline! Great job.

Credit is way to easy these days and people are being setup for a fall. Most average middle income families are probably at most 60 days from bankruptcy. With no source of income or the loss of one in a dual income home it would not take long for those that use credit unwisely to get in real trouble real fast. I guess that is why these money now and title loan places are thriving. People get themselves in trouble then think that these places are there to help them out....WRONG! There is a formula for debt to income and I forget the percent that is recommended but people should really monitor that and keep it under control. I crack up everytime I see some person.....say a woman rifleing through a hundred credit cards to find just the right one at the cashier. I think it is a contest with some people to see just how many credit cards they can get. I have one Credit Card and I do not carry it or the number with me. Only use it for emergencies and carry it only while traveling or on vacation.

I admire Chris and the struggles that he has gone through financially to get that mortgage paid off. My wife and I also have been "debt-o-phobes" since we have been married, especially since we have for years been a one income household. We now have a 15 year mortgage, about 10 years to go. It's the only debt that we have; we have one credit card that we use sparingly, and we always pay off the balance at the end of the month.

Right now we are considering a much-needed remodel of our kitchen. So now that the kids are older (early teen) my wife has started working part-time and may take on a 20-hour a week position when it becomes available. All of her income for the last year has been going into a "kitchen remodel" account at the credit union to serve as the downpayment for the remodel.. But since it could easily cost $50K, we'll also probably need to get a home improvement loan on top of that.

So, we've been adding $250 a month to our mortgage payment for awhile. This does two things: it obviously helps to get our mortgage paid down, but it also lets us see if our budget can handle the outflow of a second loan payment. By next year when we start the project, her work savings plus having "practiced" paying the home improvement loan should make the remodel just a minor blip on the budget.

I'm in a bit different situation than most of you, but I'm also doing what I feel is a good job of avoiding "stupid" debt. Since I just bought my house 3 years ago I'm paying 98% interest, which is nice for the tax writeoff but I'm not building much equity through payments... on the other hand I've made almost 50% in equity from appreciation.

I'm also not shy about having credit cards, but I never carry a balance unless it's a promotional zero percent interest, no-fee deal. Lately I've been taking the 0% balance transfers and dropping them into my Etrade savings account which pays 5% APR. I don't see any risk in that, if my financial situation goes south I can always just pay off the credit card from the savings (or use it otherwise, at my discretion).

tadc sez: "on the other hand I've made almost 50% in equity from appreciation."

this of course throws a wrench into the thinking of the no-debt believers.

since it takes money to make money, if you don't have it and you've a functioning brain and know how to use it, you might as well borrow it.

I'm firmly in the no debt camp.

Was there once. Had the house paid off, monthly expenses were very low.

Family issues forced some changes, so that's off the table today.

Know what? If I had not borrowed at that time, I would have later had some options that would have kept me outta the mess I am currently in. In the near future, I'm gonna sell most of my crap, shed as much of the debt as is possible, then build my home on a time and materials basis, until I can live in it debt free once again.

Having to come up with a substantial monthly nut all the time, is nuts! I'm going to get out of it, and stay out of it.

Will I have as much as the next guy? No. But nobody is going to be forcing life decisions, or infringing on my time so much either.

One of the best moves my wife and made was over the last 12 yrs of our mortgage we made double payments. One near the beginning of the month and one at the end. That way we didn't have a huge payment once a month.

We've gone to equal payment plans with our utilities in most cases so I know exactly what I have to pay per month. It really has simplified bookkeeping.