Some good news on the bailout front (I hope)-

[reinbeau]

We have credit cards (he has one, I have one) that are paid off in full every month if we use them at all. I own my own home, he owns his, my truck is paid for, his car we did buy on credit, but we were stuck because his truck frame went, we were involved in the Toyota frame buyback, so they gave us $12,000 - we went for a Camry for the gas mileage, and owe $6,000. Hubby drove a hard bargain and got a good deal on a good car. Not going to break us paying that back. We are in no way the credit consumers they want us to be. And I know we are not alone. It may seem as though everyone lives on credit, but that's what they want us to think. Sorry, I've never let the media and the 'Joneses' tell me how to think and operate.

 

[enjoy the ride]

Unfortunately what other people think does effect us all. Let's say everyone around you is willing to pay $300,000 for an acre of land- they only way they can afford to do this is to buy it on credit as saving the money at the same time as paying rent is very difficult- not impossible but for most people, they would be pretty old before they could do it or pretty disciplined to be frugal enough to save anyway.
So you (who theoretically have no land yet of your own) are in competition for this acre. You have to pony up the money or you won't get it. So you compete with the person who is willing to take this risk even if you were wise enough not to want to do that.

Great for sellers- bad for buyers.

Houses were able to get so expensive because it got easier and easier to borrow money. So that everyone could continue create then market these mortgages. People didn't have to save even a small amount- they could do 100% financing. Many people were able to do it but only at great risk if anything went wrong- like gas increasing so that more came out of your wallet each month and your house became less valuable when people started looking for houses closer to work. So you find that you did not have enough money to pay for gas, food increases, poorer medical insurance and a mortgage.

I think it would take a lucky, exceptionally foresighted person to take a chance of waiting it out- it was years of experience that houses just kept getting more and more expensive until it appears you would never be able to have your own house.

I was lucky (not all knowing) to be able to get my little two and a half acres just before the market went wild. If I had not started building at just the time I did, I would not have been able to afford my house or get a reasonable mortgage I could afford and would have had to make the decision about taking the risk to get in at the edge of my ability to pay or foregoing my dream of a little land out in the country. Being a chicken I think I would have chosen to remain in town but maybe not..........

There were plenty of wasteful people who used there houses as a bank account but there are also plenty of people who did the best they could see to do for their families and just got caught.

 

[Woodland Woman]

We are part of the 2% also. House is paid for. Travel Trailer is paid for. We paid cash for our van, truck, and now economy car. We use credit cards and get 5% back on gas purchases and 1% on everything else and pay it off every month. Now we are looking for a house with more land and it is extremely difficult. Everyone wants what their property was appraised for in 2006. The problem is prices have gone down up to 30% where we live. If I sold my house I would have to accept that fact, too.