A few days ago, I went to dinner with a friend and we got talking about my beliefs and observances. I talked about the book Get Out Of Your Own Way by Dr. Cooper and then asked the questions that got me thinking in the long term.
What would you do with your life if you had half a billion dollars at your disposal? How would you change the world for the better?
My friend has a wandering heart and said he would travel full time like I want to do. When I pressed him for an answer to the second question he said he would end homelessness.
That is a pretty lofty dream and since I’ve had that fear of being homeless for years, I’ve been thinking about it every since.
A few years ago I looked into buying a foreclosed house. It was small, only six hundred square feet on a half acre and the only thing I could find wrong with it was a broken drawer front in the kitchen. It was move in ready and I was ready to move in.
The monthly payments on it would have been less than three hundred dollars. I was and still am paying four hundred in rent on a studio apartment. I figured if I could afford four hundred in rent, I could afford three hundred in house payments and I’d have something to show for it.
I contacted my bank and the loan officer there pulled up my credit history then said, “You don’t have a lot of credit history.”
“I live on what I make and save for what I want,” I responded.
“Well, in order to get a better credit rating, you need to get more credit cards to establish it.”
I stared at the phone, then thanked him and hung up.
Take a minute to think about that. I did.
A person who lives within their means is rejected for a home loan because they think and plan ahead and don’t mooch off of others.
Yes, mooching. That is exactly what loans and credit cards are designed for. After all, what would you think if your friend came to you repeatedly through a month and said, “Hey, I can’t afford to buy these things, will you loan me the money?” That is exactly what people juggling credit cards are doing, mooching. They just aren’t mooching off friends.
That home buying experience got me looking at the banking industry and home loans in particular. Why would they reject people who live within their means?
Bank officers don’t sit down with you to look over your budget to see if you are a good option for a loan. They go straight to the numbers and generally don’t talk to you much. They analyze how much credit you have extended to you and whether you have been paying those bills. But in their quick numbers crunch, they don’t look at the most important factors.
They don’t ask how much money you make. They also don’t check to see if you are making your rent or house payments on time. Because let’s face it. When I’m broke, I and most Americans, prioritize keeping a roof over their head over paying a student loan or credit card payment.
The credit card companies know this, too. That is why they have such high fees for late or non-payment and are quick to report you to the credit bureau. They want you to put paying them at the top of your list of priorities because they don’t give a crap if you have a house. They care that they got their profits.
The mortgage issue ate at me for quite a while, then one day it clicked.
Banking is a for profit industry, too.
They are punishing people for living responsibly because those responsible people don’t ask for loans and therefore don’t pay interest and don’t make the banks any money.
That revelation ticked me off. Responsible, intelligent people are being punished while irresponsible people are rewarded for bad behavior. What the freaking hell is wrong with our country that this would not only be standard practice, but not questioned and challenged?
Then I realized, I’m ahead of my time. I’m still thinking outside that box everyone else finds so comfortable. Americans, as a people, don’t stop to think about stuff like this because they are tied up with the competition of getting to the next level in the game of life.
That game has rules that are being rewritten by industries like the banks. Those rules are not in the best interest of the greatest good. They are in the best interest of the greatest profit.
We can solve this problem by rejecting those rules and writing our own. We can do that by helping each other instead of relying on the profit mongers to do what we as a society should be doing.
That is the first step in solving homelessness.
If you own investment property, take a look at your renters. Many of them have lived in your houses for years and pay their rent on time every month but, for whatever reason, they can’t get a house loan. Why not talk to them about rent to own? After all, you can afford to by another house. They can’t.
The next step is buy up cheap rental houses in the worst part of town. Let the people pay rent for a year and establish their credit with you, then offer them the rent to own option. If you are really generous, make the year’s rent their down payment.
That one step could change the worst parts of town into nice neighborhoods and would leave the banks and profit mongers out of the equation.
Invest in the people instead of the property and you and I can change the world.