I’m poor
Ever wonder how housing finance crises get started?
… [the] five-bedroom house in the good school district, the high-quality medical care, the college education, the designer clothes, etc. — credit becomes a lever that pushes up the prices of these goods exponentially. Whoever is willing to take on the most credit wins the most goods. Take the Home Depot cashier as an example: If she opts for an interest-only, negative amortization, adjustable-rate mortgate, she can easily outbid a family with twice the income, as long as that family has chosen a traditional, thirty-year fixed-rate mortgate. If, as Dave Ramsey strongly recommends, the family opts for a fifteen-year mortgage, they could have three times th emoney to spend on their home and still lose. It’s easy to see how those who are unwilling to leverage their credit to its fullest, i.e., who refuse to be irresponsible, quickly fall out of the middle class and begin to look and act suspiciously like the poor.
from: MAXED OUT, the book
