From Riches to Rags

I can't say I know too much about mortgages or buying a home, but I still wonder how people get themselves into foreclosure. I understand it when the breadwinner gets sick or dies or loses their job. But what about all these people who make a decent living and just signed up for a stupid mortgage.

A month or so ago I was getting my haircut and the hairdresser said that he signed for a ARM (Adjustable Rate Mortgage) after his daughter (the mortgage broker) told him it was a great deal and interests rates would certainly not raise for a long time.

Sure the man should've known better than to assume interests rate would stay at an all time low for 20-30 years, but his trusted kin told him otherwise, so he is now on the verge of screwed.

Surely not everyone is being told by family members to get these crazy mortgages? I wouldn't trust a mortgage broker or almost any financial adviser with my life savings, they all have a motive, if you don't think that you're foolish.

When I see excel spreadsheets full of hundreds and hundreds of foreclosures (and that's just for one area of the country) I do feel bad for some of them; some were so close to paying off their mortgage and then they miss a few payments and BOOM it's all gone. But another part of me is wondering how people can be so shortsighted.

So from my limited knowledge I leave you with some basic tips when buying a home.
-Put down the largest down payment as possible (don't end up getting mortgage insurance)
-Get a FIXED RATE loan
-Buy a home that is 20% (at least) less than what your mortgage broker tells you you can afford

I DECLARE BANKRUPTCY

Have you ever noticed that when you hear about one random topic all of a sudden the next 10 things you hear about relate to it?

As some of you might know, I'm an avid Oprah viewer and yesterdays episode was about American families who have gotten themselves in massive debt. The guest star was my favorite person, Suze Orman who is a financial guru and has had her own financial T.V. show for years.

I also (along with most people I know) am a huge fan of the show The Office, and last night a good portion of the episode was about getting into debt... weird huh?

So my focus on this post is on avoiding financial ruin.

I went to High School in New York State in a small village (not city) and the only aspect of finance we were taught about was one day when a teacher told us that if we invest our money in a mutual fund we could one day be millionaires. -- Not exactly the most useful information, but it caught my interest nonetheless.

Considering many people who I went to school with weren't going to be supported by their parents much longer after graduating and also weren't going to be going to college it would've been very helpful to have more information on personal finance.

Despite new bankruptcy reform laws the number of households filing is growing. How many of these people are bankrupt due to life's circumstances (sickness, death, job loss) and how many are due to mismanagement of money?

If my passion for personal finance lasts over the years, my goal is to go to high schools and maybe middle schools and teach responsible personal finance practices.

How many of you feel that you would've been better financially if it had been taught to you in High School? Or maybe earlier?