Can You Afford to be Greedy?
October 29th, 2008It seems the world is either headed for a global economic recession or we are already there. Either way, most countries are suffering financially on at least some level, some countries much worse than others. The so called credit crisis in
Recently I read somewhere online that Warren Buffet said investors need to be fearful when others are greedy and greedy when others are fearful. He was referring to buying shares when the market prices were significantly down (this is often when fearful investors sell, not buy) and sell your shares when the market prices are booming. It sounds like an obvious recipe for fiscal success but history tells us most people are financially fearful or dare I say, financially stupid. Remember however that this piece of economic advice is coming from the worlds richest man and perhaps the worlds greatest ever investor. I would say his reputation proves he is not in the category of the financially stupid. Can Warren Buffet afford to be greedy? I would say Mr. Buffet could afford to do just about anything he wants.
The point I am trying to make here is that all people need to be responsible for their financial decisions. Warren Buffet did not become the worlds wealthiest investor by making stupid decisions but the current state of the world wide economy is based on a combination of stupid decisions by millions and millions of greedy idealists who deserve what they have gotten themselves into.
When I was growing up in
This global credit crisis I hear so often is said to be the fault of over zealous money lenders in the form of brokers, banks and a myriad of small and large scale credit agencies. Are these credit agencies without blame? No they are not. Many of these multi million dollar or billion dollar credit companies and banks are run by the scourge of society. The management of these companies prays on the weak, the stupid and the idealistic dreamers of this world. However, the representatives of these money lending institutions cannot make you borrow more money than you can afford to pay back. It is entirely up to the individual as a borrower to apply for and accept an amount of credit that is not over and above what he or she can realistically pay back with interest, that may rise or fall, over the long term.
Taking out a loan for a huge sum of money like the amount needed for a mortgage on a house is a big decision. This decision needs careful planning in relation to all the pitfalls that an individual can encounter in life. If you cannot pay your mortgage comfortably with a more than reasonable amount of excess money left over in your weekly or monthly income for all the essentials in life and a significant safety net of funds for those pitfalls or extras in life that crop up like losing your job, getting injured, having a baby, going back to one income, buying a new car and the list goes on, you are either not ready to take out a mortgage or you are simply borrowing above your financial capacity. For those who decide to borrow for a mortgage without a solid saving history, you really deserve what you get.
We all want to live in a nice house and have all the modern appliances to make life easier and more comfortable but you need to crawl before you can walk. Your bank manager or money lender will happily lend you more money than you can probably afford because they are on commission and earn more for themselves if you borrow more. It is entirely up to the individual to accept the terms and amount of the loan in relation to their capacity to pay that money back over the long term which in many cases might be decades. When choosing to borrow large sums of money one also needs to be able to afford the necessary insurances that go along with mortgages and a hefty debt.
I refuse to accept this diatribe from borrowers who have lost their house to the same bank who they claim was responsible for loaning them an amount of money they say they could never afford to pay back. Newsflash, the bank is ultimately not responsible for the loan no matter how moderate or excessive the amount may have been. The borrower is entirely responsible for the total amount borrowed. This is the law now and this has always been the law, the borrower is always responsible.
The banks are in the business to make a profit for the shareholders. In terms of their money lending practices they have most definitely overstepped the line and this is why the government, especially the American government has had to bail out these banks due to their questionable lending criteria. For the individual however, they are accountable for every cent they choose to borrow.
Whatever you want in life and there are few if any exceptions to this rule, you have to work hard for. You want a rewarding and fulfilling career, well you have to work hard for it. You want the house of your dreams, you will just have to work hard to achieve your goal by saving and sacrificing. There is simply no other way to get what you want it life. If circumstances change, you default on your mortgage and the bank repossesses your house, it will no doubt be a tough lesson to learn but you put yourself there, nobody made you do it. Can you afford to be greedy?
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