Friday, September 09, 2005

Recommended Reading…

Today’s Arizona Republic contains an article that features cash-strapped homeowners bemoaning the high price of gasoline. Owners say their once affordable homes in the far nether-regions of the Valley are now virtual prisons, as high gas prices have crimped their ability to commute at will.

Barbara Parsons says, "I don't go out on weekends, and people won't come see me…so my social life suffers."

Sam Sayles moans, "We're basically barricading ourselves in our house. We want to get out and mingle and see what the town has to offer, but we can't. I just turned 21 in July, and I'm staying home on Saturday nights playing Monopoly.”

Mike Paesano bitches, "We're pretty much stuck in the pool and hanging out at home."

If anyone sympathizes with their plight, raise your hands. Good. Now, make a tight, clenched fight with your raised hand and punch yourself in the face!

Put aside your knee-jerk “woe is me, gas is so expensive” gut reaction and read the article a little more closely, people. Barbara Parsons owns a “big house in San Tan Heights”. Sam Sayles “just turned 21”, yet he owns an 1800 square foot house in Gilbert. Mike Paesano’s home is in Paradise Valley, where the average house sells for over $1million.

The suddenly high price of gasoline isn’t the problem here. What plagues these homeowners is poor planning. I understand the desire to own a piece of the American Dream, but there are limits. If you have to do “precise budgeting” and squeeze every penny just to get a dream house on the outskirts of town with a monster commute (Barbara drives 124 miles roundtrip each work day!), then you have to plan for gasoline price shocks. It’s called common sense.

Unfortunately, things like common sense and prudent financial planning often get pushed to the side when greed rears its ugly head. Yes, you heard me correctly: I’m saying greed played a role here. I’m willing to bet the people in this article were at least partly driven to buy homes beyond their means by the prospect of striking it rich in the frothy Phoenix real estate market. I'm also willing to bet that these people are sitting on short term, adjustable rate, interest only mortgages, as well. Are we going to see a similar article in the Arizona Republic a few years from now, complete with cash strapped homeowners crying about suddenly being faced with big jumps in their mortgage payments? Don’t get me wrong, I’m all for getting rich in real estate as much as the next guy (peruse my house sale posts below), but you’ll never see me stretch my budget to the limit just to play that game, then complain about my pitiful, boring life later.

When you live beyond your means, as Barbara, Sam and Mike clearly do, all it takes it one price shock to bring the house of cards tumbling down. Today it’s gas prices, but tomorrow it might be a spike in utilities costs, or taxes, or insurance, or interest rates. Maybe your home will sustain damage in a natural disaster, or you might become seriously ill or injured, or you might find yourself unemployed. There are too many variables in life to employ “precise budgeting” and “penny squeezing” and get away with it in the long term. If you let greed get the better of your common sense you will ultimately regret it. Just ask Barbara, Sam and Mike.

On a similar note, here’s something scary.

3 Comments:

At 9/09/2005 10:04 AM, Blogger Kel Kel said...

Well written! I feel the same way about this stuff.

 
At 9/12/2005 11:30 AM, Blogger Eddie said...

Well written, as always Ace! I could get into the details of poor urban planning, the creation of urban sprawl, and how it's one's own decision as to where to live and even where to work. Yes, my heart is bleeding for the ladies hurt social life, NOT!

Actually, the article proves that the laws of supply and demand are working as intended. As the supply of oil has gone down, the choices of consumers are being limited to use it only as needed. All the reasons these people listed were not "needs" and were merely "wants." Bravo again Ace.

 
At 7/31/2012 11:47 AM, Anonymous Mamapaesan said...

Actually I am mikes wife and we were lucky not to get into a mess with the real estate market we actually sold at a profit a year later and have owned and sold 2 since but in all fairness he was misunderstood in the article he was just stating a fact that to save money we were staying at home rather then taking road trips like we once did to see th beautiful state

 

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