Losing My Humanity In the Economic Crisis

"You don’t deserve a loan modification," I thought to myself as my friend confided to me that she is currently seeking loan modifications for two of her Vegas properties that are underwater.

As I’m thinking this, I’m disgusted with myself. How can I wish ill upon someone and still call her a friend?

~~~

Back in 2004, many of my friends and colleagues were gloating and bragging about the skyrocketing value of their properties. (The median home price at the time was $580,674. And this wasn't even the peak!)

I listened enviously how their real estate investments were effortlessly doubling and tripling in value. Everyone seemed to own a goose that laid golden eggs. Everyone, but me.

One co-worker advised me, "Shtinky, you need to buy yourself a property – ANY property. It may not be your ideal property but when the value goes up, just keep trading up."

Shtinky: “I can’t afford it with my student loan payments.” (Note how I've conveniently omitted the fact that I was totally drowning in $38k+ credit card debt.)

Co-Worker #1: “Yes you can! Just talk to my broker. He’s got so many amazing mortgages he can offer you. You can get a mortgage where your monthly payments will be around where your rent payments are! And besides, you’ll get tax deductions and you can pay off your student loans with your mortgage!!”

Shtinky: “Thanks, but no thanks. I'm barely making ends meet.” (Actually, at the time, my expenditures exceeded my income.)

Co-Worker #1: “Suit yourself. But just remember, the longer you wait, the more likely you’re gonna get priced out of the market forever.”

Shtinky: “Story of my life.”

The peer pressure was relentless.

My friend, referenced earlier, bought couple of investment properties in Las Vegas during this period – a single family home and a 1 BR condo. My friend said, “Shtinky. The real estate boat is passing you by! You need to buy something ASAP!”

Shtinky: “I know, I know. I just can’t afford it. Besides, I don’t have money for a down payment.”

Friend: “You don’t need any! And if you do, just take money out of your 401k and use it as a down payment. That’s what I did and look at me! I’m buying my THIRD property and I have renters lined up. My investment is paying for itself! How cool is that?”

Shtinky: “My 401k is my ONLY asset. I’m not going to tap it. I’m gonna guard it with my life.”

Friend: “You’re never going to get anywhere renting. You have to take risks to make money, Shtinky.”

~~~

And there's the rub. My friend was preaching to me about how I needed to take risks in real estate. But it's now abundantly clear that my friend had no clue as to what those risks were. As a matter of fact, it appears that the only "risks" my friend is willing to accept are the upside potentials. And that's not risk-taking.

On the one hand, I find it galling that my friend would even think about asking for loan modifications on her investment properties. On the other hand, I hope everything works out for my friend. But I know I'll be livid if she gets her loans modified. Why should her investments be re-priced when my 401k assets remain decimated?

I hate these conflicting thoughts that continuously churn in my gut during this financial crisis. It’s self-defeating and it’s ugly. I hate the fact that I'm stewing in sour grapes and my thoughts are turning against my own friends.

I accept that fact that there are going to be winners and losers in this whole bail-out discussion. Fairness is going to take a backseat to stemming foreclosures and stabilizing the market.

In the end, the game will be rigged and I'm losing faith in our market system. But worst of all, I fear I'm losing the most basic component of humanity -- compassion. And that's my biggest loss in this economic crisis.