[Today’s run: Limerock Road\u00a0 4 miles]<\/p>\n
I had one more thought about business.<\/p>\n
Not too long after our marriage\u00a0 my wife and I bought a new car. We had a functional car, but needed a bit more space and wanted something newer.\u00a0 So we shopped very briefly and purchased a new Jeep Cherokee.\u00a0 We liked it.<\/p>\n
When we bought it, I made the assumption that the bank would not approve us for a loan that was actually beyond our ability to pay.\u00a0 I was counting on them (somewhat) to say, “wait! These dummies really aren’t good for it”, as kind of a back-stop to my own calculations.<\/p>\n
Fast forward to the housing market of the 2000’s.\u00a0 Someone making $50k a year could get an “interest only” mortgage on a $250k house.\u00a0 (Or whatever the numbers were.\u00a0 You’ve seen the stupid numbers haven’t you?)<\/p>\n
So we can now see that my faith in lenders was misplaced.\u00a0 Somehow, lenders are glad to lend money that they know people will not be able to repay.\u00a0 I don’t understand the psychology of this, but I see that it is true.<\/p>\n
After we bought that car, we had it for about a year then we sold it.\u00a0 The payments were killing us.<\/p>\n
The second piece of this is the collateral.\u00a0 The lender seems to think that if you don’t pay for your car\/house\/boat, that he can come and get it and thereby recoup the money.\u00a0 But that only works if the collateral has steady or appreciating value.\u00a0 But it seems obvious that distressed property which has been foreclosed or repossessed does not bring in a full price, and every day that goes by will reduce that price for collateral items that depreciate.<\/p>\n
So, lenders are willing to loan you money beyond what you can afford to repay.\u00a0 And! lenders are willing to base the loan on collateral that has decreasing value and can go upside-down (where more is owed than the item is worth).<\/p>\n
Yesterday I admitted that I don’t understand retail.\u00a0 Today I admit that I don’t understand banking.<\/p>\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
[Today’s run: Limerock Road\u00a0 4 miles] I had one more thought about business. Not too long after our marriage\u00a0 my wife and I bought a new car. We had a functional car, but needed a bit more space and wanted something newer.\u00a0 So we shopped very briefly and purchased a new Jeep Cherokee.\u00a0 We liked […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"class_list":["post-2142","post","type-post","status-publish","format-standard","hentry","category-other-thoughts"],"_links":{"self":[{"href":"http:\/\/w0ep.us\/OM\/index.php?rest_route=\/wp\/v2\/posts\/2142","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/w0ep.us\/OM\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/w0ep.us\/OM\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/w0ep.us\/OM\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/w0ep.us\/OM\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2142"}],"version-history":[{"count":3,"href":"http:\/\/w0ep.us\/OM\/index.php?rest_route=\/wp\/v2\/posts\/2142\/revisions"}],"predecessor-version":[{"id":2144,"href":"http:\/\/w0ep.us\/OM\/index.php?rest_route=\/wp\/v2\/posts\/2142\/revisions\/2144"}],"wp:attachment":[{"href":"http:\/\/w0ep.us\/OM\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2142"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/w0ep.us\/OM\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2142"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/w0ep.us\/OM\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2142"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}