Tuesday, January 17, 2012

An Update on my Home Loan:

I have bad news again. I just arrived home after having my application for a home loan denied by yet another bank. Financial lenders must really have something against me; I really cannot see why anyone would refuse to lend money to me.

Seriously, where is the problem? I told the financial lender that I earn an annual income of $21, 700. But that was not enough for him. He then bombarded me with questions about my financial situation.

He questioned me specifically about my debt and expenditure. I told him that I have $142, 000 in household debt, and my household expenditure is $38, 200 per year. But he did not seem to care that I had cut my household spending by $385. I repeat: three hundred and eighty five dollars. He said that means that I am adding $16, 500 to my total household debt every year, not including interest. But did he not listen to me? I cut my household spending by $385 this year. What is his problem?

The lender then turned his attention to my future expectations. For some reason the lender expected that I projected that my income was about to increase and that I would currently be planning further deep cuts to my household expenditure. When I told him that I planned to do neither of those things, and let him know that in the future, I would have the same income and more dependants, he seemed bewildered. He told me that my current and future financial situations were both unsustainable.

Because he seemed to think that I needed to lower my debt, part way through the consultation, I reached under his desk, and grabbed a few hundred dollars out of his wallet. He gave me a strange stare, got all defensive, and gave me a long speech about how he had worked hard to earn his money. He also said that for me to take his money, and therein reduce his after tax income is a disincentive for him to work.  By his reaction, you would think that I was a thief or something.

Again, I really do not understand. Why won’t any bank lend me money?  I have $142, 000 in household debt.  I am on an annual income of $21, 700, and I only spend $32, 800 of that $21, 700 every year. I even cut my household spending by $385. My current ratio of income to people dependant on my income is much better than it will be in the future. Where is the downside to lending to me?

Anyway, if anyone who reads this knows any financial lender that would be willing to lend me money to buy a house, could you please get them to give me a call, or find me on X-Box live or something.


For those who failed to see through my analogy, the situation above is not my personal financial situation. I have no debt. In the scenario above, I put the U.S. debt situation in household terms, keeping the figures in ratio, and swapping an increase in federal debt with applying for a home loan.

“The U.S has a federal debt of $142 trillion, and spends $3.82 trillion of their $2.2 trillion income, increasing the federal debt my $1.65 trillion dollars annually. Because of social security, the situation will only get worse, as the ratio of workers to people on social security will only continue to worsen. Government spending needs to be cut significantly.” In household terms that equates to saying “I have a household debt of $142, 000, and spend $38, 200 of my $21, 700 income, increasing my household debt by $16, 500 annually. Because of my age, my situation will only get worse, as the ratio of my household income to people dependent on me will only continue to worsen. My household spending needs to be cut significantly.”

As a disclaimer, I understated the situation, by using September 2011 figures. The economic situation in the United States is currently worse than that - the US national debt is nearing $15.3 trillion. To lend to the United States is just as ridiculous as lending to that person. Government expenditure must be slashed first. It is called the right wing for a reason.

©Jonathan Williams, January 2012.