The Death of Responsibility

The main reason for the title of this post sprouts from reading one article and another article regarding attempt to pass legislation that set aside 20 billion will help people from foreclosures in the subprime mortgage sector. And I won’t get started on how the goverment is over-spending (our poor tax money…) It’s a whole other rant.

Anyways, you ask, how does the legislation relate to responsibility, or the death of it?

Here is some background info, in a nutshell:
Yes, the subprime mortgage exists to help people with lesser credit to obtain money to be able to purchase a home. But couple years ago, a lot of people, who I would assume did not think and plan logically based on their cash flow and how the possibility of rate adjustment would affect their payment in future, take on these loans to purchase a home. And I am certain among those people, there are plenty who took it to the extreme to buy something they can only marginally afford. On top of that, they probably take the risk of buying such homes with the assumption that the market price will continue to rise. Needless to say, now that the market price is stagnant and probably will drop some more, and time has reached to point of rate reset, they can no longer afford their payments and face foreclosure.

Here is the answer why having the legislation is an irresponsible deed:
The word of significance from my explanation above is, RISK. Any market/business out there involves risk. Like buying stocks, people understand (I hope they do…) that they are at risk of buying something that which the value may drop and therefore, they can lose money. The logic isn’t too far off here. These people, who are now facing foreclosures, borrwed money and borrowed more than they can afford. There’s also probability that they did not try to fully comprehend the terms – what could happen with the rate and how a slight change in rate can strangle them by taking loans to the extreme. They took the bet, and they lost. Like gambling in casino, you don’t get your money back when you lost. Period

This takes me to the conclusion that the folks proposing the legislation are simply silly. If they go ahead with that, why don’t they have legislation to help cover the people who lost in the stock market. Next, help the people who started business and completely failed. While we are at it, let’s have legislation that bails out the folks who lost their shirts at casino. This really makes me want to laugh.

On top of this and outside of the financial arena, responsibility is also non-existent. A few points of support are:

  • Most recently, from the Virginia Tech shooting, I talked about how people fail to look into themselves for the source of problem
  • Another recent case, check out some news on Alberto Gonzales. The dude used 50+ times of “I don’t recall” as his answers in his own defense. Isn’t he the head of the Federal Bureau of Investigation? If so, I would say, whether he is willing or not, whether he likes it or not, it’s his job, and he should be aware of the firing process of eight attorneys. Since he doesn’t recall of of that, he deserves to be fired, as a normal employee would on a job.
  • A case of parents suing frat/school for the demise of their under-age-son because of alchohol. My argument – did the fraternity or the school make the decision for the boy to sneak in and over-drink? Even if it’s due to hazing, the kid chose to join the frat himself. I am sorry, but he has made a stupid choice.
  • Few years back, a case where people attempt to sue the big four fast food restaurants “lying” to customers and need to offer healthier options to. What the heck, c’mon, we all know fast food are not healthy. Go eat something else if you want to be healthy or add exercise to the agenda.
  • Domestic (unmarried) partner claiming the other person has held them back in life. This is an example I observed from personal life and my argument – pure excuses.

The list could go on if I really want to keep digging, but I think I have stated my point. It would really help if people do THINK before they make a decision, and also understand that whatever outcomes are the direct result of our own decisions and actions, and we need to stop blaming and take responsibility.

Originally posted 2007-04-23 00:52:02. Republished by Blog Post Promoter

Personal Finance Blogging is a niche?

As you may have noticed on my links, I read a lot of personal finance blogs (and those are just the most frequently read fraction of what I have bookmarked). I just like to make an observation. One thing I’ve noticed and am not sure if it’s the case is that a majority of these financial bloggers are either pretty much settled with a domestic partner or married and/or with kids. So I wonder if this “financial blogging circle” mostly only involves the ones who are already moving into the later stage in lives and only a very small fraction is people like me (recently grad, young, no family and such). If that is the case, then does it also mean that the younger generation isn’t paying enough attention to these things? This pertains to comments I have made before on how I cannot or have a difficult time to communicate with a lot of “my peers” on these financial topics.

Hmmm, just a thought. What do you think? (and now I wonder, how old are you, my readers, anyways? and how much interests you have on these personal finance topics? :P)

Originally posted 2007-03-31 23:41:24. Republished by Blog Post Promoter

The Poverty Business

“The Poverty Business” is the title of an article from the May 21, 2007 issue of BusinessWeek. An excerpt from the article:

In 1989, households earning $30,000 or less a year paid an average annual interest rate on auto loans that was 16.8% higher than what households earning more than $90,000 a year paid. By 2004, the discrepancy had soared to 56.1%. Roughly the same happened with mortgage loans: a leap from 6.4% gap to one of 25.5%.

Does this help explain why the gap between the wealth and poor is expanding rapidly in the past years? Not only are these people making less, they also have to pay more. It’s a double whammy!

Another thing is, the poverty business, which includes service like pay-day loan, subprime mortgage, etc., use procedures and strategy that entice the poor or make use of their ignorance to use their service and then hit them with outrageous interest+fee (BlueHippo?). It is always my insistence that we are the results of our own action. Based on that principle, these people should educate themselves financially and know they are getting themselves into, otherwise, it’s their own fault. However at the same time, it’s also problematic that these business are exploiting these folks who are already making less. That’s just adding trouble to misery, kicking them when they’re down, and get them stuck in a vicious poverty cycle.

Who is responsible for this “poverty problem”? The business? Or the people themselves? What do you think?

Either way, this raises another point – there is a need in our society to better educate people on personal finance and raise their financial awareness.

Originally posted 2007-05-20 23:24:21. Republished by Blog Post Promoter

Avoid Giving Up and Burning Out by Incremental Change

I had a conversation at dinner tonight where a friend of a friend mentioned her effort on a physical training program. Unfortunately, the attempt seemed to have come to an end after 12 days. Doesn’t this sound familiar? Haven’t we all heard this somewhere before? Maybe because it’s happening all around us. Perhaps you are one of them.

This is the exact same thing when we hear about someone’s new year resolution or someone’s birthday resolution or someone’s after-doctor-visit resolution. Somehow these certain events would provide people this sudden burst of energy and motivation. Then overnight, they transform into fanatics in exercising and gym. Amazing. But these effort usually ends in desertion and is completely forgotten after a few days, a few weeks, or at most a few months. All that effort wasted, sadly.

What went wrong? People burn out quickly whenever they abruptly change their entire routine and lifestyle in order to contribute to such total dedicaion. Let’s say your work suddenly requires you to work 100 hours per week when you usually work 40. I’m sure you will burn out quite quickly. Suddenly making yourself exercise couple hours everyday of the week when you don’t normally exercise is no difference. Despite feeling good for yourself at the beginning, such abrupt change puts so much stress, both physical and mental, on you that will easily lead to giving up.

How to avoid? First, you must understand that your goal is to achieve long-term, sustaining change. You may as well not waste your time if you don’t see it this way. You will need to implement incremental change over time, by doing it one step after another. You cannot learn to sprint without learning the proper way to breath and run first. You cannot lift 100 lbs before you can lift 25, 50, 75… lbs first. So, if you never run on daily basis, maybe start running 15 minutes at a comfortable pace. Then 30 minutes, 45 minutes, with gradual increase in speed. Find a suitable pace for yourself.

However, in order to improve, it is essential that you must push yourself a little over the limit each time. Run just a little longer and faster, lift just a little heavier, despite the diffuculty, despite the pain. Move outside your comfort zone. Get uncomfortable. In the end, it’s all worth it because you want to change, to improve, which is why you are doing it in the first place.

So far I have mostly focus on the health aspect of incremental change. However, the same princple can be applied in personal development and personal finance. If you spend $2000 in order to eat delicious food each month and then you force yourself to start eating fast food or only salads for $200 a month, the likelihood of you keeping up is extremely low. Worse yet, you may rebound and start spending more than $2000 later to make up for it. Instead, you can slowly lessen the frequency of eating out, at expensive restaurants, to give yourself time to get used to the change. Eventually, you will end up spending $200 a month. Or you can start saving $50 each month, then $100 after awhile, then $200…

It is important to understand that the incremental change principle suggested here is a healthy way to create sustaining change, applicable in all areas of life. It is not the only way, but it is a healthy way. It is about making a conscious choice for every action and doing it one step at a time.

Based on the incremental change principle, I suggested to the friend, “How about slow it down and start training 2 to 3 times a week?” for which I received a blank stare on her face. I sure hope this post is a bit more well received.

Originally posted 2007-11-16 23:27:26. Republished by Blog Post Promoter

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