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Thread: The big “middle class” rip-off: How a short sale taught me rich people’s ethics

  1. #26
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    Default Re: The big “middle class” rip-off: How a short sale taught me rich people’s ethics

    Quote Originally Posted by rickdugan View Post
    Wow. I am sorry, but I am obviously sitting in the substantial minority here. I am not wealthy by most standards (though our president would beg to differ), but I am in far different circumstances than I was growing up. This is due solely to the open nature of our system, which rewards people for their ability to provide something that others value.

    It starts with the fact that almost anyone can pay for a decent college now, as long as one gets good grades in school. I financed college completely through a combination of loans and private school grants. Now yes it is true that I was more limited in my college choices by who would give me the right financial aid package, but a top of class GPA (or very high anyway) at a decent accredited university will get you in lot of doors.

    When I started my company a decade ago, after working for others for many years, it was after I spotted an opportunity to sell services that others valued. But even if I worked in-house somewhere, I would be collecting a mighty fat paycheck, with nice bonuses, fully paid benefits and various other perks, in an officer position with "Chief" in front of it, due to nothing more than years of climbing up the ladder and acquiring valuable knowledge. Net-net I moved several rungs up the socio-economic ladder, due to nothing other than hard work and a college financial aid system that allowed me to earn a needed degree. And I have seen others come from similar circumstances and go far higher than I did, all due to the open nature of our system.

    Now I will concede that I probably could have gone much farther if I started from a better spot, but to say that the game is somehow rigged is ludicrous. Now there were many valid points made about kids who start in circumstances so bad (druggie parents, gangs, desperate poverty, etc.) that it is difficult for them to even focus on school work at younger ages, but what can we realistically do about that? Parents have the ability to hurt their kids' future chances and some parents just make bad choices, or don't value schooling for their kids, or [fill in the blank here]. Short of taking kids away en masse from bad and/or stupid parents, I'm not sure what the solution to that particular dilemma really is.

    Anyway, just my
    I agree with most of your post except the part that " almost anyone can pay for a decent college now ". Really ? Not according to everything I've been reading and many discussions here and in Dollar Den.

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    Default Re: The big “middle class” rip-off: How a short sale taught me rich people’s ethics

    College is NOT affordable. Yes many can get loans but those have to be paid back. There are scholarships but increasingly are going towards poorer students, not the brightest (who may or may not be poor). A middle class student with average or even better than average likely will have to take out loans. Even community colleges are expensive now. I remember when I went to school community colleges were cheap (something like $20 an hour), now they are around a few hundred a class.

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    Default Re: The big “middle class” rip-off: How a short sale taught me rich people’s ethics

    Quote Originally Posted by Eric Stoner View Post
    There is much that I agree with in Mr.Dugan's post except the part that " almost anyone can pay for a decent college now ". Really ? Not according to everything I've been reading and what we have extensively discussed here and in Dollar Den.
    IME the top state schools currently range anywhere from $8-14k per year (for a FT course load), depending upon the state. Classes can be had cheaper at community colleges and second tier state schools, and then transferred into a more expensive school for junior and senior year.

    Now to bring this closer to home Mr. Stoner, one can go full-time to CUNY for the relative bargain of $6,030 (plus a couple hundred in other fees and before books, living expenses, etc.).

    When I went to a private college 20 years ago, the tuition was $10k per year and there were fewer aid options than exist today, yet I did it without fronting a nickel (in part with a private university grant). I did also use the strategy of taking cheaper classes first and then transferring them in, but I still had to find a way to cover 2.5 years at the higher tuition rate without an extra dollar to my name. I was able to do so: (1) despite less aid and loan options than exist today; and (2) with only a relatively modest student load balance.

    Nowadays, the Pell grants are much more generous and most states also now offer some form of grant aid, neither of which were the case back then. Now Pell grants can go up to a little over $5k per year and some states go as high (though not all). Now yes, most students also have to take some loans out to cover the balance, but the caps on Stafford loans are also far higher than they were back then. Now a Freshman can borrow up to $9,500 and the numbers increase each year from there.

    So yes, I believe that college is affordable and becomes even more so if schools want you enough because of your grades. Now of course most students have to assume some debt to get it done, but it can be accomplished for far less than the 100k number floating around here and should pay for itself in the future. Even most private schools should be manageable without assuming a total debt load nearly as high as $100k, especially if a student keeps his/her grades up.

    But this all assumes a F/T course load. Schools tend to be much more punitive on people who pay per credit on a part time basis, so anyone who is serious about obtaining a degree should find a way to take on a class load sufficient to qualify for F/T, which in turn opens up all of the aid options.

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    Default Re: The big “middle class” rip-off: How a short sale taught me rich people’s ethics

    http://www.nakedcapitalism.com/2010/...bt-crisis.html


    http://www.cbcny.org/cbc-blogs/blogs...funding-reform

    whatever numbers you use, tuition vs inflation vs income is out of control

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  6. #30
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    Default Re: The big “middle class” rip-off: How a short sale taught me rich people’s ethics

    Quote Originally Posted by oldster View Post
    http://www.nakedcapitalism.com/2010/...bt-crisis.html


    http://www.cbcny.org/cbc-blogs/blogs...funding-reform

    whatever numbers you use, tuition vs inflation vs income is out of control
    I agree that tuition increases have vastly outpaced inflation and overall economic growth, but even by the numbers provided by those articles, with the average student walking out $23k in debt with an additional tax adjusted lifetime earnings of $280k (which I think is a damned low estimate btw), a college degree makes sense for most people. This also does not factor the quality of working conditions, among many other things, of those who have degrees vs. those without.

    And of course smart decisions regarding where to take early credits and what to major in all factor into these metrics. By way of example, I will easily earn a number 7 figures higher over my life than I would have without my degree, all while coming out of college with a very manageable debt load.

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    Default Re: The big “middle class” rip-off: How a short sale taught me rich people’s ethics

    Hell, you could get your college education for free through online sources. Many Ivy League schools post all of their courses online. There are also sites like Coursera where you can score a free education. However, it isn't the education that is important to employers, it's the pedigree that goes along with the education.

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    Default Re: The big “middle class” rip-off: How a short sale taught me rich people’s ethics

    Rick makes excellent points, but misses one really important factor - foresight/luck. Many, many people in this country had great educations and/or work and trade experience in industries that simply disappeared, or aren't worth anything close to what they once were from an employee standpoint. This effect crosses many verticals and categories, not just blue-collar workers. So you have to get that degree in something that is going to be there long enough for you to climb the ladder, at a time when the ladders themselves are being rearranged with frightening regularity.

    As for the previous posts about short selling the house, and Eric's comment re the author "feeling bad" about it - what is there to feel bad about? It's a joke. The bank didn't lose any money, they lost profit. The fractional lending system means they only risked a very small percentage of their "real" money in making that loan, and likely still made "real" money on the deal. They probably backed ht $400k mortgage with less than $80k in actual deposits. Sure, they wrote a check for $400k to a seller - but most of that money came from nowhere. The house short-sold for $150k "real" dollars that went into their coffers. They got to post a real profit while also claiming a loss!! THIS is why the rest of us get fucked.

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    Default Re: The big “middle class” rip-off: How a short sale taught me rich people’s ethics

    Quote Originally Posted by Half Empty View Post
    Rick makes excellent points, but misses one really important factor - foresight/luck. Many, many people in this country had great educations and/or work and trade experience in industries that simply disappeared, or aren't worth anything close to what they once were from an employee standpoint. This effect crosses many verticals and categories, not just blue-collar workers. So you have to get that degree in something that is going to be there long enough for you to climb the ladder, at a time when the ladders themselves are being rearranged with frightening regularity.

    As for the previous posts about short selling the house, and Eric's comment re the author "feeling bad" about it - what is there to feel bad about? It's a joke. The bank didn't lose any money, they lost profit. The fractional lending system means they only risked a very small percentage of their "real" money in making that loan, and likely still made "real" money on the deal. They probably backed ht $400k mortgage with less than $80k in actual deposits. Sure, they wrote a check for $400k to a seller - but most of that money came from nowhere. The house short-sold for $150k "real" dollars that went into their coffers. They got to post a real profit while also claiming a loss!! THIS is why the rest of us get fucked.
    If you're right then the original author's feelings are even harder to understand.

    You have circled back to a point that Melonie and I have been making for quite some time. Banks borrow money from the Fed at virtually nothing i.e. ridiculously low interest rates. Then they lend it out at 4 % on a mortgage. Perhaps higher depending on the borrower. That money is NOT being lent to small businesses to enable them to start up or expand. Any wonder why median family income and middle class wages are stagnant. Depending on who you talk to , they've been shrinking.

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    Default Re: The big “middle class” rip-off: How a short sale taught me rich people’s ethics

    Quote Originally Posted by Half Empty View Post
    Rick makes excellent points, but misses one really important factor - foresight/luck. Many, many people in this country had great educations and/or work and trade experience in industries that simply disappeared, or aren't worth anything close to what they once were from an employee standpoint. This effect crosses many verticals and categories, not just blue-collar workers. So you have to get that degree in something that is going to be there long enough for you to climb the ladder, at a time when the ladders themselves are being rearranged with frightening regularity.

    As for the previous posts about short selling the house, and Eric's comment re the author "feeling bad" about it - what is there to feel bad about? It's a joke. The bank didn't lose any money, they lost profit. The fractional lending system means they only risked a very small percentage of their "real" money in making that loan, and likely still made "real" money on the deal. They probably backed ht $400k mortgage with less than $80k in actual deposits. Sure, they wrote a check for $400k to a seller - but most of that money came from nowhere. The house short-sold for $150k "real" dollars that went into their coffers. They got to post a real profit while also claiming a loss!! THIS is why the rest of us get fucked.
    This has been caused by outsourcing, technology and visa workers. I was in college probably around the same time as Rick and during that time entire industries have disappeared or changed. Back then one of the big trends was computer based technology because the internet was starting to be so important so many got technology degrees. However many of those jobs have either merged with others due to advancing technological techniques, have become so technological that they were sent overseas, or they bring workers over cheap. I got my degree in broadcasting and in 1996 Clinton signed the 1996 Telecommunications Act which basically destroyed radio broadcasting. Clinton also signed NAFTA which sent many jobs to other countries including Mexico.

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    Default Re: The big “middle class” rip-off: How a short sale taught me rich people’s ethics

    Clinton also repealed Glass-Steagall, making him the REAL father of the Great Recession. Remember that the next time someone tells you that voting Republican is voting for the 1%. Neither party exists to help The People.

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    Default Re: The big “middle class” rip-off: How a short sale taught me rich people’s ethics

    I would agree. I think Reagan on, not one president has been for the middle class, of either party. We all know Republicans never claimed to be but Democrats did yet both are selling us out. It's about to happen again when congress decides to allow illegals to become citizens. It happened when outsourcing and visa workers became a major issue. In fact both parties are fighting to increase visa workers. While in some cases this isn't bad (for example a person in a skill that is hard to find or someone wanting to start a business)the other times it's bad (like diversity visas given to low skilled people who likely receive welfare).

  15. #37
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    Default Re: The big “middle class” rip-off: How a short sale taught me rich people’s ethics

    I am going to back away from this discussion for obvious reasons.

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    Default Re: The big “middle class” rip-off: How a short sale taught me rich people’s ethics

    sidestepping the political commentary ...

    You have circled back to a point that Melonie and I have been making for quite some time. Banks borrow money from the Fed at virtually nothing i.e. ridiculously low interest rates. Then they lend it out at 4 % on a mortgage. Perhaps higher depending on the borrower. That money is NOT being lent to small businesses to enable them to start up or expand. Any wonder why median family income and middle class wages are stagnant. Depending on who you talk to , they've been shrinking.
    There's essentially zero difference when FAFSA borrows money from the FED at 1% interest rates, and then uses that money to fund student loans carrying a ( subsidized ) 4.66% or ( unsubsidized ) 6.21% interest rate. Of course, what FAFSA isn't coming 'clean' about is their imputed cost of defaulted student loans and/or student loan 'forgiveness' programs ... which the 4.66% and 6.21% interest rates don't even come close to covering !!! However, in keeping with this thread's central topic, FAFSA is arguably contributing to the 'fleecing' of the middle class by charging these high interest rate spreads ... whereas the children of the 'rich' escape the cost of those high interest rate spreads by paying 'cash'.

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