Are you as sick as I am of hearing ads about the 'Secret' to wealth? Not only am I sick of those, but I think my neighbors my have heard my complete disgust last week as the news reported that Fannie Mae and Freddie Mac are in trouble and may need a hand from the government.
For those who don't know, Fannie Mae and Freddie Mac are huge organizations that control most of the mortgages in the United States. I could be wrong, but I think they were kind of started by the government to help stabilize and control the mortgage market.
I'm sure there are a number of factors that have related to their current problems, but I think at the root is the same problem that most other financial institutions are facing.
Basically there was a housing boom. House prices started shooting up, and everyone wanted to upgrade to something bigger and better. Banks decided to loan money to people who had crappy credit histories and couldn't afford the house they wanted to buy, never-the-less the banks were blinded by dollar signs and greed.
The borrowers themselves aren't without blame either... They borrowed more than they should have, and didn't plan for the future either.
Shockingly enough, all of these people are now in financial hardship and the banks are not seeing the dollars signs anymore either. Stupid people lent money to stupid people and now they want help.
I upgraded my home a year ago. It was a significant jump in mortgage payment, but we had done our home work and it was something we could afford. My mortgage broker was very responsible and helped me get the best rate he could, without using any funky programs to help me get more house for the money.
So now, King George and the house of Lords - I mean, the federal government, rushes in to save the stupid people, with tax money from those of us that weren't dopes. And in case you were wondering, this isn't capitalism... Capitalism would mean the banks who were blinded by greed and tried to take advantage of stupid people would now be going bankrupt, leaving the responsible ones behind - That's how it should work.
Anyway, so I've saved the best for last... The Secret to Wealth - and it's free too!!
Are you ready?
If you can't afford something don't buy it.
I'm sure there are other aspects to it as well, but that's about the most important part. Wealth is a state of mind, and has nothing to do with the amount of money you have. I earn far less than most of my neighbors, but we live far better - Why? because we've saved up for things we've wanted. We don't buy stuff we don't need and can't afford, and we live within our means. It's a foreign concept to most, but it really works.