From DSNews we get this encouraging tidbit:
DSNews: Job Loss Would Make 1 in 3 Homeless
And by “encouraging,” I mean that the last thirty years of insane financialization and ridiculous consumption is making itself evident everywhere you turn. While the use of “homeless” in the article is a touch misleading, it still paints a pretty yucky picture:
One in three Americans would be unable to make their mortgage or rent payment beyond one month if they lost their job, according to the results of a national survey taken in mid-September.
Despite being more affluent, the poll found that even those with higher annual household incomes indicate they are not guaranteed to make their next housing payment if they lost their source of income. Ten percent of survey respondents earning $100K or more a year say they would immediately miss a payment.
And this:
Sixty-one percent of those surveyed said if they were handed a pink slip, they would not be able to continue to make their mortgage or rent payment longer than five months.
Chalk this up to too many folks borrowing for (or against) homes they couldn’t really afford, and it logically follows that these same households couldn’t build up savings even if they wanted to do so. Throw a dead-weight economy on top of it, and you have the makings of a mighty tenuous situation for a lot of Americans.
her every cent counts wrote:
That’s really scary. There is so much focus on people making less than $100k a year, but an even bigger problem is that so many people who are in the middle class and upper middle class spend more than they should on their lifestyle. That’s why I’m waiting until I can buy a house outright. It may never happen, but I’d be terrified to have a mortgage where, if I lost my job, I’d be SOL. The way the country is right now, it seems like we’re headed for a much worse recession.
Mike wrote:
I think there’s an additional question / dimension here. Does that mean these folks don’t have enough in savings to come up with one payment? Or would they prioritize their money to other needs? With all the evidence on display that banks are not even trying to get the foreclosure process moving for months and years, maybe some folks just consider their mortgage a good place to stop-up their outflow. Its not irrational.
With the cash I have in savings I think I could make about 4 or 5 years of my mortgage payments – but if I add in all my expenses (cobra payments, groceries, etc.) and what I planned on some of that money being used for (car replacement), etc. I could imagine responding to some survey that I might miss a payment 6 months after loss of income. However, my family would definitely find some way to get more income ASAP, and we would probably be able to make our mortgage by just delivering pizzas at nights or some such. We made sure we would never take on a mortgage that was hard to afford. Actually our tenants pay our mortgage we just have to cover our taxes and insurance at about $250/month. But if we assume no government goodies, living only on our savings and still paying for health insurance, I think after five months or so when our savings got well past the halfway point, I would consider missing a mortgage payment and keeping that money in our account instead.
It’s kind of a silly what if game for those of us who do save up and plan ahead. We’re probably the same ones who wouldn’t let our incomes stay at 0 for more than a week anyways.
Michael wrote:
Yeah, there’s a lot about the survey that isn’t clear. But that’s pretty standard, I think, in that results from surveys are usually geared to get attention.
With all the evidence on display that banks are not even trying to get the foreclosure process moving for months and years, maybe some folks just consider their mortgage a good place to stop-up their outflow. Its not irrational.
Bingo. Though, if you have equity in your place, the bank will be at your door within moments of missing a payment.