A Time and Place for Adjustable Rate Mortgage

Adjustable rate mortgage (ARM) is a taboo term by now, while the mess in the subprime loan market continues to unfold.

ARM is another financial tool with a purpose for its existence. However, buyers abused it to buy a house they cannot afford, and banks abused it to get unsubstantiated numbers on their balance sheet. We can generalize that bad outcomes in human society is always the result of an abuse of certain power.

ARM is a good option for someone who wants to buy a house in short-term. It allows the buyer to keep more money in the pocket for the period of time with the initial interest rate, while he invests those money in other places for a higher return. There are also various types of ARM to “tweak” the amount of payment. The usual scenario is for the buyer to live in the house for however long before the interest rate reset and then sell it.

Essentially, the buyer must understand that by taking an ARM, he is speculating on an appreciating housing market. If he plans to live beyond the expiration of the initial interest rate, he’s betting on a reset to lower percentage for the interest rate. The ideal scenario is either selling the house before the reset at an appreciated price, or staying in the house with a reset to a lower percentage. It’s neither the case for the people with ARM, which brings us to the current situation.

I wonder if the ARM buyers in default or facing foreclosure thought and understood about ARM when they took the loan. I doubt it though. They were too busy marveling at the house that’s too big for them to afford. I also wonder if the banks made sure that buyers understand ARM. I doubt that too. They were too busy adding all the numbers on their quarterly reports.

But then, perhaps ARM will be a good option for me in the next few years?

Originally posted 2007-12-12 23:12:06. Republished by Blog Post Promoter

Irrational Beings with Rationale

I like to theorize, although I may only have the vision of a donkey filled up on a dozen beer. My theory today is that human beings are merely irrational beings with rationale. Below are a few examples to support this theory.

Banks, real estates brokers, and home buyers who fearlessly bet on the real estate market to go up forever. Haven’t they heard what goes up must comes down? And how can anything grow forever?

A president and politicians who think a $600~ per person tax rebate will save people from losing their home and cover the losses in their retirement/pension plan.

People who are easily swayed and hastily change the opinion on a person due completely to rumors and stories about someone else who is remotely associated with him.

Someone in a dire or unfavorable somehow think, hope, or pray that the situation will somehow change without themselves changing.

Those are my few examples… What do you think about my theory? Do you have any examples from your experience? Why don’t you leave a comment and let me know?

Of course, my theory can be disproved as easily by counter examples. Hence, it is just a theory.

There is a reason for me to say this. I believe people make decisions irrationally more often than not, where they are mostly influenced by ego and emotions. I am not judging or saying it is bad per se, but if we can base our decisions and expectations on this understanding as we observe such is the case, we will come across less disappointment and misunderstanding in everyday life.

On the other hand, it is also useful to be self-conscious when you are trying to rationalize an irrational decision. This should help mitigate some of the bad situations we tend to get ourselves into. Some food for thought.

Originally posted 2008-05-14 23:12:41. Republished by Blog Post Promoter

The Weight Loss Bullshit New Year Resolution – Stop Talking and Just Act

It’s the time of the year when all we hear people talk about is new year resolution (I’ll type NYR from now on).

I hate it. There, I said id. I hate it.

I don’t tell someone to shut up if they do talk about it… I simply smile and nod.

The most talked about topic for NYR is losing weight. Probably the first on most people’s list.

But here’s what I wonder, if every year we are saying we are going to lose weight… that means people didn’t do it. And if people just don’t do it every year, why do they keep talking about it?

It’s like lying to yourself.

A lot of people just talk and won’t achieve it. Here’s what I propose:

Stop talking and just act. Achieve it, then talk.

You may argue “well, people lose the weight and then gain it back over the year…” And this takes me to my 2nd point…

Losing weight is probably not such a great goal after all!

Fine, you can set “losing weight” as an initial goal. But at some point on your way to it, you should switch that goal to something less ephemeral… A better goal would be…

“Staying healthy.”

There is no excuse around this one. It means for us to stay consistently healthy and it also includes working on the mind, the body, and the spirit.

Staying healthy is all around wellness. You monitor yourself. Everyday you’ll watch want to feel your body. Everyday you’ll monitor yourself the mental and emotional state. You learn to see and feel your body and mind so you act to stay healthy.

You’ll know when you feel toxic emotions. And then you act.
You’ll feel when your body’s worn and stressed. And then you act.
You’ll see where you stand in life. And you act to improve it.

You’ll learn that you need to act in all facets including balanced diet, exercise, and lifestyle to maintain this health that involves more than your physical components.

Staying healthy is a continuous process. If you make that your focus, you’ll always end up studying a lot and will learn a balanced diet means, a healthy fitness style that suits you, and your own approach to react to whatever your body tells you. You’ll learn to maintain this health that involves more than your physical components.

This is so much more than weight loss because weight loss is a shallow goal.

Forget weight loss and figure out what it means to stay healthy.

Stop talking and just act.

And one last tip, be consistent.

Originally posted 2013-01-07 00:44:31. Republished by Blog Post Promoter

The Ordinary Hero

I came across a piece of writing by an unknown author. The original is here:
http://leecha.blogspot.com/2008/09/shocked-for-your.html

I loved it and gave it my own little tweaks to convey what I frequently try to convey here.

A hero is only an ordinary human who does the right thing consistently.

Non-truth is what changes through time.
Truth is the permanent basics of reality, realized by wisdom through generations.
(if you care enough to look)
(if you care enough to be wise)

All our “tricks” have been changing for thousands of years.
The old teachings stay as the cat is let out.
What we need to pay attention to,
is here, is now
our being and us applying them.

Heroes may not always win,
but they never lose.

Originally posted 2010-01-05 23:42:15. Republished by Blog Post Promoter

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