Maxed Out

I haven’t read the book, or seen the movie, but “Maxed Out” by James Scurlock (no relation to Morgan Spurlock, of “Super Size Me” fame) is turning out to be one of the more prescient documentaries in recent memory. Today’s Washington Post has a brief interview with him, and what he expects is coming from the subprime mortgage/credit crunch fallout. Pay attention out there.
It’s articles like that one, and this one from the Wall Street Journal which make me glad we refinanced when we did. We certainly didn’t need to refinance: our ARM wouldn’t change until 2010, I believe. But we were lucky that we timed it just right. We probably got one of the last fixed-rate 6.0% 30-year mortgages the market will see for a few years. As for the Montes family profiled in the WSJ article, they need to start living within their means. (I do give them kudos for doing things like taking a second job, trying their damnedest to refi, etc. But they should also look at the fact that they’re paying $700/month in car payments, and look at trading them in for used cars with no car payments.) Their mortgage (without taxes and insurance) was taking up 42% of their (I assume) gross pay, and that’s before it resets in December, driving it over 55%! Our mortgage takes up only 18% (more with insurance and taxes, but still not over 30%). Even if some crazy bank was willing to give me a mortgage like theirs, I’d have to look at how much we’d be paying each month and simply say, “We can’t afford to own that house.” There’s nothing wrong with renting, folks. It’s time to take a look at where you are, and start getting your priorities straight. Owning your own home simply isn’t that important in the grand scheme of things, and if I was facing their situation right now, I’d be packing up my stuff and getting ready to move out.