we are in TROUBLE

[temp guest]

I worked in car sales and now in mortgage loan origination, and what Im seeing is that america is in trouble and does not even know it.

Im only saying this because of two threads over at dpreview, for a $30k hasselblad camera and one for the new 1dsIII camera at 8k

In my line of work, I talk to hundreds of people every month who are trying to refinance their house, and a recurring theme I see is that , if you even take out the house debt, most people have no savings, and a lot of debt. We are living on borrowed, EXPENSIVE, money.

this relates to photography because I see that some people are more than willing to whip out the old credit card to buy a $8000 camera, who are not making any money from photography. Im not saying there is anything wrong with buying an 8k camera IF YOU HAVE THE MONEY, but dont put it on a credit card at 25% interest. interest on that alone is $166/month. if you wanted to pay off the debt in 5 years, you would have spent approx $17940 for that camera, which in 5 years would be worth approx $2,000.

or, we could realize that we really dont need that flashy new camera that we are pressured to buy because

1. its so much better than the old one and now we can print 40x50" prints
2. its only money and
3. you only live once
4. buy cheap buy twice etc

its this pattern of thinking that gets people in DEBT. thats why its forecasted that up to 20% of subprime mortgages will go into default in the next year. most of these people went from a prime loan to a subprime loan to do some unnecessary things- vacation, install a hottub, etc. some paid off some high interest debt, which I applaud, but many people took equity out of their homes for some stupid reasons.

please, dont be one of these people. there are signs that the economy might soon go into recession, even depression. this is not the time to be one or two paychecks from poverty. I think we should come back to reality a little bit and realize that some purchases are just ridiculous. unfortunately, the high end digital camera industry is one of those.

dont be one of the 40-50 year olds I speak to everyday who have a lot of toys but no retirement plan

instead of spending $17950 on something that would be worth $2k by the time you pay it off( if you ever pay it off) why not save $8k cash and spend it on something (used) that will hold its value better,

or better yet, why not invest it in an interest bearing vehicle? the same $300 invested monthly at 8% over 5 years will give you $22k in the bank. of course, the credit card companies dont want you to see this. their ads are all about enjoying the NOW vacation, or the NOW furniture.

hopefully, someone will read this and decide not to buy the expensive new cameras about to be introduced. they will drive down the prices of current cameras. pay cash for those, and save tons of money in the process.

ps. im sorry about the soap box rant. I live in dallas where EVERYBODY lives big, and I just had to vent somehow.

[gardener]

Fully understand your flustration at what's happening... I work on the "other side" of your business managing and selling REO's for a major lender. Just got another one in last Thursday and in reviewing the file, checked the people's credit report contained in the foreclosure/asset file. These folks had thousands of dollars in unpaid medical bills as well as close to $100,000 worth of credit card debt spread among many credit cards. It doesn't do much good to "own" a multi-hundred thousand dollar home if you can't make the payments.
I also find fault with many of the attorney ads on radio and tv noting that they can save your home from foreclosure no matter how far you're behind or how much you owe. Yep, maybe they can for a few months but invaribly, what few funds the mortgagor has available, have already been "allocated" to other bills and fees so the mortgagor can never make up the difference. Even with a b/k filed, it's only a matter of time before the court ok's a release that will let a lender f/c the home and/or property.
Unfortunately, I just don't think people take credit worthiness and paying off depts as seriously as they used to nor do they take "saving for a rainy day" as seriously either...
Keep putting out the message even if only a few pay attention and change their ways...

[cr8iveimages]

I have been in the mortgage business for the past four years and have done well. And to be honest I will do well this year. Even as the "Mortgage Market" slows into a slump, I am still writing loans with out issue...Yes there the rate of foreclosure is up and home sales are down but no need to panic (yet). On Friday the FED's lowered the bank rate by 50 Bps (.50) and it is estimated that the Mortgage rate will drop in the upwards of 50 Bps (.50). Once this happens, and it will, you will see a huge leap forward in our market. Anytime there is a long run in any business, the market will catch up...as it did with the IT area in early 2000's. The hardest hit areas are those that had double digit increase in value over night (CA, FL, NV, etc).

The refinance boom is over for now, but people still want to buy homes...but they need to be educated on what they can truly afford, etc.

With that said, many of the photographers on here, us their equipment on a daily basis, and if they half way good can pay their equipment off in no time. I would find it hard pressed for a photographer that does not do this as a full time profession will go and drop 15k to 20k on equipment. More than likely they will stay close to the 1500 to 4k range on the equipment, and upgrade as time goes on.

But...I do agree that if you are having to put it on a credit card, do you have the money to pay it off in six months or less? Does your current portfolio of clients warrant such a purchase? Do you have money in a savings account for a rainy day? If no, than wait...wait until you can truly justify the purchase of the such equipment.

Just my thoughts.

[ndsimm]

I make money with my equipment (not as much as I would like to...yet) and I have purchased almost all of my equipment used and I for sure have paid cash for all of it. I learned my lesson the hardway when I financed a computer at 30% interest that was worth 1/3 of the cost when I finally paid it off.

some people are solely cash based and others rely too much on the plastic.....responsibility is the key.

[AndrewCCM]

I pay for my equipment with my photography work. I even earn a profit.. Crazy isn't it?

My corporate job takes care of family, retirement, etc.. My father-in-law is a financial adviser and the company I work for is 50% Accountants (at my office), so I am semi-forced to be fiscally responsible... LOL

I do completely understand what you mean and think more people need to hear it and take it to heart. Unfortunately, a large percentage are not as blessed to be in good financial shape, and/or choose to live beyond their means.

Dallas definitely is the land of the $50k millionaires. I am often reminded and somewhat put off by a large segment of the younger population these days when I see how they portray themselves. The fact that I deal with them on the modeling side of my biz has educated me on what seems to be important to many. Check out Myspace and the like... A large majority are "It's all about me...Look at me... Don't hate me because etc... F' everyone else, on and on..." So sad.

This generation (much of it) hasn't had to do without...They are crushed if they lose their cell phone and miss out on being at the local hot spot for one night. Priorities man...

[cr8iveimages]

I have traveled all over the world and have encountered my fair share of elitists ..When I first got out of the service, living in CA was fun, and did some photography work while out there....and never did I meet a "snob" crowd as you can encounter in Dallas.....

With that said, it is good to see the other side of the story from the photographers....yes we need to stop putting so much on cards, I know my family does (had a baby, bought a new home, and got married)...but the credit we have created will be paid for by years end.

As a lender I consult with the client and find our what there true needs are. If they have no money set aside for retirement, kids college fund, etc, I show them ways to make their mortgage work for them, and set them up with one of our FA's (Financial Associates), and map out a plan for them...

That is the responsible way to lend..and many of the top lenders lost site of that...that is why the top one had to borrow 11.5 Billion from 40 Banks as an emergency, and many of their bank customers withdrew 100's of 1000's of dollars in deposits...

We are stewards in all that we do!

[SaundraU]

I guess I am on the other side of things......I am one of those who does use my plastic alot as well as credit. When I was much younger I really really got myself in trouble (creditors calling, trashed my credit, etc). I got into credit counseling with a reputable company and paid most of it all. Now I am still in debt (student loans and a 3 yr old truck and 1 credit card) but am much smarter about what I buy, why I buy, and what goes on credit.

Unfortunately not all of us can have cash on hand for all we need, want, desire. I make a modest living as a soldier and so yes I depend on my plastic for somethings. And yes there are things I choose not to buy used (my vechiles for one ~ yes I know they loose value when I drive off but for me the warranty and extended warranty is worth it to me).

For me my horse and photography are expensive hobbies (hopefully the photography will begin to pay for itself) but I do w/o in other areas.

When I use my cards I choose the one w/lowest interest rate, I pay WAY more then the minimums each month and pay things off as fast as possible.

Case in point, I bought lenses which I thought were good (and they are but they aren't fast enough) and now I need to replace them ~ faster and more in line w/ my focuses and will have to do so on credit if I truly want to have the photography to start paying for it. Sometimes you have to put something in to get something out.

BTW I have dropped my debt significantly and repaired the credit I ruined.

[Shane]

I am in the real estate industry and you would be shocked (or maybe not) at how many people come in to one of my communities where the homes sell for $450k+ and buy a home with a combined household income of less than $75k . . . they apply for a 100% mortgage and get it from some fly-by-night mortgage group willing to sell them some exotic mortgage and our hands are tied as we can not do anything but sell them the home, even though we know it will probably be resold or foreclosed within a few years.

We can pre-qualify all we want and tell them to stay at 2 - 2.5 times their income, but if they go with an outside lender (who tells them they can afford 4-5 times their gross income), we can't do anything about it . . . sad, but true.

[tjavery]

Banks, financial institutions, etc. just need make it MORE difficult for individuals to get credit.

Back in college, I remember walking through campus and seeing credit card companies with little booths all over the place. I went for it I got two credit cards and in no time had several thousand dollars of credit, oh sorry, spending power! I had no job, no money... nothin'! Does that make sense to anyone?

When my wife and I first bought a house, we were approved for a maximum loan WAY above our comfort limit. If we had gone for it (and this was a plain, standard loan - fixed rate, 30 yr., etc.), we would have been eating Ramen noodles for dinner for years.

I currently work with a lot of Europeans. They are totally amazed at our credit system. "Back home..", as they say, they hardly ever buy using credit. A lot of them don't even get a mortgage.

I have a Russian co-worker that tells me there is absolutly nothing bought on credit back home. They just manage to live without it. No car loans, no mortgages, nada!

It makes me ill thinking that we mgiht suffer an economic down-turn or recession or whatever because lenders are too lenient and consumers too frequently abuse their credit.

[markfh]

Want to learn a bit about your personal finances then read Dave Ramsey http://www.daveramsey.com/. You can hear him on AM1070 durring the weekday here in Houston.

The picture that's been painted here is a bleak one. One that I've heard repeated for the last 30 years or so. Personally although there are many people that are living paycheck to paycheck or have no savings a good percentage of them do have retirement plans at their place of business.

I've found most people don't get interested in how much they do or don't have for their retirement until their late 30's or sometime in their 40's. With proper planning and not living high off the hog they can still have a decent retirement.

One thing to know about the foreclosure rate. Yes, it has gone up somewhere around 55% over last year but the overall foreclosure rate is still right at or below 1% of all mortgages.

Certainly for the people that get foreclosed on it's not a pleasant experience but also like said here there are people that don't know how to manage their money and allow someone else convince them to buy way over their income level. They need financial education more than a new iphone.

Some of those foreclosures are like the house across the street from us. Bought as an investment by someone that had no clue what it took to invest in real estate the right way. He deserved to loose the house.

As for camera equipment I'm saving for a better camera but I'm also augmenting my savings by selling some of my other stuff that I no longer want or need.

Anybody looking for a 1968 Dodge Dart GTS 340 original survivor muscle car?

[iCe]

That's a sweet car Mark. I had one back in the late 70's / early 80's... Mine was a '69 though...

[temp guest]

wow, so many people in the mortgage industry.

ever since I came out of college Ive been in sales and one thing that Ive seen for real is that the

"Penalty for being Poor" is alive and well

in the car business, the dealership probably made $500 per car on customers with good credit and good income, whereas, we took people with marginal credit to the CLEANER. it was not unusual to make $8-10k on a car sale to someone with marginal credit. we sold the car for $5k over our cost, and then financed them at a ridiculously high interest rate that would cost them about 2x the selling price of the car to pay off. I wanted to tell some of these people - take your $5k down payment and go get yourself a used honda accord that will last you forever until you get your credit right, but unfortunately it was the people who had bad credit that wanted the big cars.

people with an 850 fico were buying altimas and sentras for their kids. people with the 608 fico wanted a murano or a Z.

AMERICA FEEDS ON THE POOR AND WE WILL NOT GO UNPUNISHED.

shane, what you said is all too true. the issue of a house is very close to my heart. I see all this people who have these mega expensive houses in interest only, adjustable, option arms and Im like " what the heck were you thinking" why did you not just a smaller house at a fixed rate. I mean, do some people not realize that they have to make that huge payment EVERY MONTH, come hell or high water, for the next 30 YEARS?

when I tell people to buy a house 2x their base income and buy a car 0.3x their income they look at me like Ive gone mad. now these same people are in foreclosure.

tjavery, I saw this documentary recently that had Europeans in it. he interviewed people making $4-8k euros per month who were living in 1000 sq ft homes. a person making that kind of income in dallas wants to live in a 3000 sq ft home.

cre8ive, yes, I was watching countrwide last week. their stock fell over $10 during the week and did not bounce back till friday when the feds lowered the discount rate, which is BS because it bails out the big companies, but how does that bail out the common man?

mark, Im so jealous. I JUST started thinking about building me a muscle car. how many horses to the rear wheel?

[iCe]

when I tell people to buy a house 2x their base income and buy a car 0.3x their income they look at me like Ive gone mad. now these same people are in foreclosure.

Cool... I'm at about 0.5x on my house and as soon as it gets here at about 0.2x on my vehicle so I did good :o)

For cheap horsepower get a bike... out of the box 10s 1/4 mile times or less for crotch rockets and out of the box low 14's for "muscle cruisers" like the VTX1800...

[Murph]

My wife and I have decided (after paying off ALL the credit cards) that if we can't pay cash for it, we don't need it. Makes me happier.

[ndsimm]

Originally Posted by markfh

Want to learn a bit about your personal finances then read Dave Ramsey http://www.daveramsey.com/. You can hear him on AM1070 durring the weekday here in Houston.

he's on 1070 now??? I thought he was on 950? he kept changing, I either listen online or listen on XM

he's helped a lot to improve my finances