The harsh reality and aftermath of foreclosure: personal stories of financial loss from Foreclosure Alley.“You know you’re in trouble when the lawn is brown and the pool is green.”
Something making the rounds of the web is a haunting, somewhat gloomy video on foreclosures — the scenes of which show some surprising, unexpected details. We hear about the foreclosure statistics and the stories in the news, mostly on a detached level. But as I find out more about the personal stories of people whose lives have been greatly upturned by the real estate bust and what seems very much like an economic recession borne of the financial crisis we’ve been hit with, I can’t help but feel sadness and dismay for the things that have transpired.
Despite all the talk that we should just let the market do what it will do, it doesn’t change the fact that financial loss has wrecked people’s lives significantly. The news is littered with many such stories, including this one about a family with a toddler who is forced to live in a tent, and a desperate 90 year old woman who shot herself while in the process of being evicted from her foreclosed home.
For many, a home to live in has become harder to find, as people with damaged credit are finding it harder to find a place to rent. Landlords are becoming much stricter about whom they sign up as tenants, no doubt, due to difficulties with previous renters.
Remember the infamous poster boy for foreclosure and real estate decline: Casey Serin? From his example, we see that when things go wrong financially, it can escalate quickly and significantly. Once you make a few financial mistakes, it can be one short step from missed payments to homelessness: your credit gets damaged, your debt load spirals and before long, you’re evicted.
The Story Of Foreclosure Alley: Main Points
What struck me most about this video about foreclosed homes in Southern California (in a suburban development of large, spacious homes now dubbed as “Foreclosure Alley”) were these facts:
1. One in two homes sold last month was a home that was previously repossessed. 700 families lose their homes to foreclosure everyday.
2. The typical foreclosed home is a newer house in a newer neighborhood that was purchased over the last 5 years.
3. Many families that abandon their homes no longer care about what they leave behind. You’ll find so much stuff in these homes when the cleaning crew comes by. All the items they come across — even brand new large, flat-screen television sets, appliances, computers, printers and other electronic gadgets will be thrown out to a landfill! Ironically, the cleaners claim that it takes too much time and money to donate these items to charity. Some surprising materials that people leave behind: photo albums, pink slips for vehicles, birth certificates and other important documents, and in one case, even an urn carrying remains of a loved one. These latter items are eventually returned to their owners.
4. People leave behind many valuable material possessions during a foreclosure because they may no longer be able to pay for them (as they try to walk away from debt and financial obligations) or because they are at a low emotional point and just want to “get things over with”. It’s a point of despair and abandonment when they leave their foreclosed home still stuffed to the brim with their former lives.
5. The business of “trashing” is done by a cleaning company that specializes in cleaning out foreclosed homes. Such companies are doing very well at this time, with business currently booming.
6. Part of fixing up a foreclosed home (other than cleaning it out) is to spray paint a dead lawn to get it ready for resale. It’s done for instant curb appeal.
7. How far have prices gone down? Original prices for these foreclosed homes just a few short years ago: $399,000. Today, they’re worth $180,000.
My Guidelines For Avoiding Financial Potholes
This video made me conjure a few thoughts on how to avoid making financial missteps of this caliber. I try to live conservatively, and embrace a few rules of my own. I use these tenets as a guide for myself and continually work to try to stay true to them:
1. Don’t take anything for granted. Just because things are going well doesn’t mean they’ll go on indefinitely. I try to keep the mindset that all things should be cared for and handled with appreciation, for who knows how long these items will remain available to us? Part of thinking this way allows me to think defensively about our financial future.
2. Make hay while the sun shines. As the well-worn saying goes: be prepared for that rainy day. Preparation is key. When things are going well, you have the resources to prepare for tougher economic times, so take advantage of the “good times” to build a financial cushion as best as you can.
3. Avoid taking too much risk. As we build our net worth, I often feel that it’s a process of taking one step forward and two steps back. In my opinion (and I’m sure many of you will agree), it’s much easier to lose money than it is to gain it. So be wary and careful about the steps you take when it comes to managing your money. Know how to manage risk and avoid making overly aggressive financial moves. And if you’re going to borrow money, work on protecting your credit and stay conservative with your debt load. In my case, I try to limit our borrowing by only taking on good debt as much as possible.
4. Live within your means. This principle has been echoed far and wide in the financial blogosphere and in many financial articles I’ve read. But it never gets old. Make it a goal to keep your expenses lower than your income.
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