Have you ever been to a “mortgage burning” party? I doubt it. It’s something that has become completely obsolete as Americans have accepted the lifestyle of living in debt their entire lives. Mortgage burning parties were commonplace in Ohio when I was growing up. It seemed like someone in the neighborhood was paying their mortgage off on a regular basis and they were proud of that accomplishment. They would invite family, friends and neighbors for a cookout, and sometime during the evening they would literally burn their mortgage. Now, years later, living in California, I was talking to a friend about how stupid their neighbor was for paying off their mortgage. After all, they could take that money and invest it in the latest fad and make “a fortune.”
All I could think was WOW! Someone is calling a person who has worked all of their life to be able to own their home stupid. Look at us now. Foreclosures are at an all-time high. People think that since their home is worth less than when they bought it, they should be able to just walk away with no consequences. Banks don’t think twice about ruining someone’s life by taking everything they have worked for because they were convinced by the media that borrowing more than you can afford is the American way.
I wondered if this is the difference between living in California or living in the Midwest, but I have discovered it’s the difference between living in 2011 and living in 1960. There has been a change in the country in which we no longer believe in the American dream of home ownership.
The American dream has always been defined as owning your own home, and somewhere it became owning a share of a home with a mortgage on it, and now it is defined as using your home as a way to create wealth. Many of you can remember when you went to your grandmother’s home and there were notches in the doorway with your age and height marked along with your parents and most of your aunts, uncles and cousins. Those were the days when someone stayed in a home their entire life and maybe even the home you grew up in and then passed it on to your kids. That dream has become a nightmare for many Americans as your home has become a burden instead of a goal to define your lifetime of hard work.
Is it possible for us to get back to where we were in the middle of the 20th century? Probably not, but we definitely need to take a step back to being proud of someone who has worked their entire life to be debt free at some point. They should be the envy of the community. Today only about 30 percent of all retirees own their home free and clear. A larger percentage of retirees now use their home as a means of income through reverse mortgages or borrowing against their homes to supplement their incomes. The goal of owning your home is not even a consideration for the majority of home owners today.
The government tried to make homes affordable for all Americans by giving incentives to lenders to make it easy for anyone to get a mortgage. Well, this may not be a popular comment, but not all people are made to be home owners. That’s why it was always referred to as an “American dream.” Our current financial crisis has made it obvious that many people cannot accept the responsibility of home ownership. Not to say that all of those who bought homes and ended up in financial trouble aren’t responsible Americans. It means we as a society can’t accept the responsibility of having everyone be a home owner.
If we lower the bar of home ownership, everyone jumps on board, prices go up, some neighborhoods become blighted as those who can’t handle the responsibility lose their homes. Banks start foreclosing, values drop, communities lose funds because of the lack of taxpayers, jobs are lost. Then, those who are responsible enough to have a mortgage and try to pay it off are burdened by those who could not. I have a very good friend who is in his mid 50s and has never owned a home in his life. When I was younger, I used to ask why he chose to be a renter his whole life and he admitted he didn’t want the responsibility. I now understand his wisdom in the fact that as many of my childhood friends have lost their homes after years of struggling and trying to move up and they just got further into debt.
Now, what can we do to get back to the American dream being a lifetime goal of the average American? The first thing we need to do is to be proud of our neighbors who have reached that milestone. That is huge. If you asked parents what their goals are for their kids, I doubt you would get many responses that I wish my kids could be responsible enough to live debt free. Next, set a goal for a lifetime, not next year or next month. We need to a learn to live within our means. And finally, recognize the first sign of trouble. The first time you find yourself having to pay anything late or you find you can’t put money away in a savings account, that is the time to react. Stop buying lattes, stop using credit cards, get a second job. My grandpa used to always tell me when I got in trouble that the first thing you do to get out of the hole is to stop digging. It’s time for America to stop digging.