Comments on: Money and Illusions http://www.michaelherman.com/wordpress/archives/2006/03/31/money-and-illusions/ an international practice of "Inviting Leadership" grounded in a house and 'hood at the edge of the Chicago River Tue, 14 Oct 2008 10:53:58 +0000 http://wordpress.org/?v=2.3.3 By: Michael http://www.michaelherman.com/wordpress/archives/2006/03/31/money-and-illusions/#comment-1857 Michael Tue, 04 Apr 2006 05:11:49 +0000 http://www.michaelherman.com/wordpress/archives/2006/03/31/money-and-illusions/#comment-1857 well, if he sells his house and pockets the gain, he still needs to find someplace to live. if he moves someplace smaller and cheaper, then he could live on the gain. but most people aren't doing that. adding more debt, by drawing out the equity isn't going to help. he can barely make the payments already. so more debt only delays and deepens the problem. what's more, if he loses his job (in the recession that's coming, we just don't know if it's this year or next) then he has no choice but to dump the house and live off the equity. lending rules will have tightened and the home equity line won't be available. if he loses his job the month after his neighbor has to dump his house in a soft market at a lower price for the same job-loss, no-savings reasons, then the price of our guy's house might actually be less than he thinks. so less gain. and less time to find a job and a way to survive. it just gets ugly. saving is the only way to go. well, if he sells his house and pockets the gain, he still needs to find someplace to live. if he moves someplace smaller and cheaper, then he could live on the gain. but most people aren’t doing that.

adding more debt, by drawing out the equity isn’t going to help. he can barely make the payments already. so more debt only delays and deepens the problem.

what’s more, if he loses his job (in the recession that’s coming, we just don’t know if it’s this year or next) then he has no choice but to dump the house and live off the equity. lending rules will have tightened and the home equity line won’t be available.

if he loses his job the month after his neighbor has to dump his house in a soft market at a lower price for the same job-loss, no-savings reasons, then the price of our guy’s house might actually be less than he thinks. so less gain. and less time to find a job and a way to survive.

it just gets ugly. saving is the only way to go.

]]> By: ted http://www.michaelherman.com/wordpress/archives/2006/03/31/money-and-illusions/#comment-1856 ted Tue, 04 Apr 2006 05:02:42 +0000 http://www.michaelherman.com/wordpress/archives/2006/03/31/money-and-illusions/#comment-1856 What happens if he sells the house? Can he use the profit to suppliment his income for a period of time? And what about drawing $100/month from a home equity line of credit? Of course he'll have to make the minimum payments on that credit, but does that action help at all? What happens if he sells the house? Can he use the profit to suppliment his income for a period of time? And what about drawing $100/month from a home equity line of credit? Of course he’ll have to make the minimum payments on that credit, but does that action help at all?

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