So, bye-bye, Miss American Pie
Drove my Chevy to the levee
But the levee was dry
And them good old boys were drinkin’ whiskey and rye
Singin’ this’ll be the day that I die
This’ll be the day that I die
One of the hallmarks of a great song is its ability to be interpreted in different ways. American Pie is an allegory of our times, an ode to the death of our housing market. With leverage drying up, the party is over. The last drink is for the death of the market itself, and with it’s death, the death of the American Dream of home ownership for thousands of overextended homedebtors.
When a bubble in a financial market pops, it doesn’t explode in spectacular fashion like a soap bubble, it is more comparable to a breached levee which releases water slowly at first. Once the financial levee is ruptured, the equity reservoir loses money at increasing rates. It washes away the imagined wealth of homedebtors everywhere until the reservoir is nearly empty and the torrent turns to a trickle. Ultimately, the causes of failure are examined, the financial levee is repaired, and the reservoir again holds value, but not until the dreams and equity of homedebtors are washed away.
New Century Financial
Do you recall what was revealed
The day the music died?
The poster child for the great residential financial bubble of the 00’s will be New Century Financial. The date of their financial implosion will be regarded as the Day the Market Died. 
The death of New Century Financial will come to represent to death of loose lending standards and the beginning of the cycle of credit tightening as I described in my last post, The Anatomy of a Credit Bubble. Many people currently see the elimination of sub-prime lending as being the problem. It is much larger than that. It is the changes in behavior caused by loose lending standards epitomized by New Century Financial that will be the undoing of the housing market.
100% Financing
The most damaging change in buyer behavior was caused by 100% financing: potential buyers quit saving. Once 100% financing became widely available, it was enthusiastically embraced by all parties: the lenders suddenly had a huge source of new customers to generate high fees, the realtors and builders now had plenty of new customers to buy more homes, and many potential buyers who didn’t have savings were now able to enter the market. It seemed like a panacea; for two or three years, it was.
Now for ten years we’ve been on our own
And moss grows fat on a rollin’ stone
But that’s not how it used to be
There is a problem with 100% financing (which was masked by the rampant appreciation brought about by its introduction): high default rates. If you want a glimpse into the irresponsible mind of a typical 100% financing borrower, go read the post and comments in Update: an FB situation 14 months later. The FB stated in the comments,
“However, I take exception to the idea that I’m taking food out of someone’s mouth by sticking the bank with the loss. An appraiser made the valuation, and I got a loan. No one forced New Century to give me the loan to buy the house, but they did. They confirmed the value, and thus, assumed all risk, especially since I went no money down with an, at the time, 720 mid-FICO, and the wife as well.”
This borrower signed papers promising to repay money to New Century. He gave his word. How does it follow that New Century took all the risk? How does the presence or absence of a downpayment impact whether or not a borrower will live up to their commitments and responsibilities? We all know the answer: When people don’t put their own money into the transaction, they don’t feel responsible for what happens. At one point, the FB was celebrating, “I was planning on claiming insolvency to the IRS through my job loss, anyway, but they didn’t even give us a 1099!” Does it make you want to turn him in?
The courtroom was adjourned
No verdict was returned
The more money people have to put in to the transaction, the less likely they are to default. It is that simple. Taken to its extreme, 100% financing becomes the ideal tool for fraud. The FB from above probably intended to repay the loan when he got it, he just didn’t feel much of a sense of responsibility to the loan when the going got tough. People who commit fraud have no intention of repaying the loan from the start. Fraud is much easier to commit with 100% financing because the bank will loan you the full amount of an inflated appraisal. It is much harder to commit fraud when the bank will only loan you 80% of a property’s value.
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The point here is not about being irresponsible or committing fraud, it is about defaults. High loan-to-value loans have high default rates; this will cause 100% financing to disappear, and it will make other high LTV loans much more expensive, so much so as to render them useless. OC Fliptrack documented the elimination of the 100% LTV loans at HSBC. It is all part of the ongoing credit tightening cycle.
The problem for the future housing market created by 100% financing is that people quit saving money for downpayments. People respond to incentives. This is basic economic theory. The availability of 100% financing removed the incentive to save for a downpayment. People responded; our national savings rate went negative as people stopped saving and borrowed instead. This is going to create a huge problem going forward: nobody has the newly required downpayments.
Elimination of Entry Level Buyers
Oh, and there we were, all in one place
A generation lost in space
With no time left to start again
People who currently own entry level housing (2 bedrooms or less and small 3/2s) are bagholders. With the elimination of 100% financing, they have missed their chance to sell to a greater fool. Even if these fools were still out there (they have been decreasing in number), they no longer have the ability to borrow all the money required to buy, and they have no way to make up the difference. The entry level market was destroyed the moment 100% financing was eliminated because nobody has a downpayment.
Collapsing from the Bottom Up
The players tried for a forward pass
With the Jester on the sidelines in a cast
Now the half-time air was sweet perfume
While the Sergeants played a marching tune
We all got up to dance
Oh but we never got the chance
Housing markets collapse from the bottom up. 
The first sign of a troubled real estate market is a dramatic reduction in volume. This is particularly pronounced at the lower end of the market for reasons outlined above. Since the lower end of the market has a more dramatic drop in volume than the top of the market, the median stays at artificially high levels which is not reflective of pricing of individual properties in the market. In other words, things look better than they are.
The graphic on the right (borrowed from Calculated Risk) shows the problem when the entry level is eliminated. For a more detailed analysis, please read Why the Sub-Prime Meltdown is a Problem. As the problem at the entry level becomes more serious, more and more transactions higher up the house chain fall out of escrow. Volume plummets, and the whole market seizes up. That is where we are today. There will be no summer bounce this year.
Helter Skelter in a summer swelter
The birds flew off with a fallout shelter
Eight miles high and falling fast
Eight Miles High and Falling Fast
The market will not stay seized-up forever. Many bitter renters have complained about greedy sellers, but it isn’t the sellers who determine market prices, it is the buyers. Think about this: what if every seller in the market decided they would not sell for less than $10,000,000? Would houses suddenly become worth $10,000,000? Of course not because no buyers could afford to pay that much. Buyers determine the market price by putting in competing bids. Sellers can decided to accept or reject the highest bid. If all bids are rejected, there is no market because there is no transaction.
Buyers are never forced to buy, it is always a choice; however, sellers may face circumstances when they are forced to sell. Over the past several years, greedy buyers motivated by rising prices and fueled by loose lending standards were able to bid prices up to ridiculous levels. None of them were forced to buy. The exotic financing was not a result of high prices, it was the cause of high prices. Those of us who are financially conservative and do not wish to take on debt under terms which will put us into bankruptcy have been competing with those afflicted with Southern California’s Cultural Pathology. It is a competition we were all better off losing.
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Now the tables are turned. The once greedy buyers are becoming desperate sellers, their dreams of riches from perpetual appreciation in tatters. Many will be forced to sell due to their inability to make their mortgage payments. Those that hang on will be homedebtors with 50% or more of their income going toward paying off an asset which will be declining in value. It is not a set of circumstances I envy.
Prices will fall. We will see weakness at the bottom first, but it will work its way through all market strata. It is only a matter of time. Will you remember The Day the Market Died?
A long, long time ago…
I can still remember
How that music used to make me smile…I can’t remember if I cried
When I read about his widowed bride,
But something touched me deep inside
The day the music died…I met a girl who sang the blues
And I asked her for some happy news
But she just smiled and turned away
I went down to the sacred store
Where I’d heard the music years before
But the man there said the music wouldn’t playAnd in the streets the children screamed
The lovers cried, and the poets dreamed
But not a word was spoken
The church bells all were broken
And the three men I admire most
The Father, Son and the Holy Ghost
They caught the last train for the coast
The day the music died
When I was an insurance agent a few years ago, my largest client has about 250 rental homes in the Aurora,IL area. He told me that the most active and stable area of the market was $100K to $250K because that is where a vast majority of incomes fall.
When that part of the market freezes, there is major trouble. Like the post above, that is exactly what is happening because Joe and Mary Sixpack who have a $60K household income and nothing in the bank are priced out because now those $100-250K homes are now $180-300K range and they cannot afford them.
It will be a bumpy ride everywhere this summer. I am waiting until the end of summer to buy here in Chicago.
SoCal will be an even more interesting ride!
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I have been in the mortgage industry for several years and have worked with many New Century reps. One thing I can tell you for sure is that not only did they commit fraud on a regular basis, they encouraged it. I even know of a few that photo shopped appraisals, made bank statements etc… I can also tell you that this was not unique to New Century, it hapened at all lenders. Now we are seeing the end result of all of this.
Excellent article and post! And how can you not love the parallel’s to Don McClean’s song. Brilliant stuff! And thank you for reminding readers not to be distraught over the currently high (and still climbing) median home prices in OC. All that is required now, assuming one is in a position to afford it, is patience. Prices will eventually come down. Every month more houses are placed on the market in OC (more condos and more single families). The truth about Orange County family income levels, while difficult for many in the industry to accept, WILL come out. Families earning $70K a year will be told the truth: they have no business going into debt at 10 times that gross income to buy a home. It’s just too risky anymore.
Irvine Renter:
I agree that in an ideal world, people would see themselves as duty bound to comply with the terms of a contract. Period. If for nothing else than a sense of honor.
However, I also feel very little sympathy for the lenders and brokers, since they used their “institutional credibility” to knowingly screw the borrowers. I guess it boils down to the question “If you found a $1,000 chip on the floor of a Las Vegas casino, would you return it to the Casino?” My mother would, but she wouldn’t go to Las Vegas in the first place.
I think the problem with Subprime lending started earlier than 1999. It started with Credit Cards. A very enterprising executive working for Citibank figured out (I think it was in 1986) that by lowering the minimum monthly payment required on credit cards, they could increase the amount of debt that their customers could carry…. and did the PROFITS FLOW IN! Within 2 years every credit card company had copied the paradigm.
The Banking Lobby ensured that this was all perfectly legal. Which led to credit cards being mailed to every house in the country (the equivalent of a drug dealer mailing one “sample” pill of ecstasy to every address in the country, with information on how to get more).
I lived in the third world for quite a while, so I can tell you from experience that unless a profitable activity is not snipped in the bud, the pattern is for a RAPID expansion of that activity… until the crash hits.
To me, the whole housing lending problem is simply the natural expansion of the credit card game. First, overextension of personal credit led naturally to debt consildation refis… but more importantly is the pattern. Lower the required monthly payment to allow for an increase in debt… sound familiar? Of course once Wall Street got involved… the lid was off.
One could argue that the banks were not involved in the mortgage brokerage level… until the bankruptcy hearings began… which by law have to be public. Suddenly some VERY familiar names started popping up… Bank of America, Morgan Stanly, Credit Suisse… etc.
It worked for credit cards…. so why not use the same tactics in home financing…. Well.. to use an old saying “Borrow a dollar and the bank owns you… borrow a million dollars and you own the bank” To be honest, when I was a kid I didn’t understand this saying, since I looked at banks as permanent fixtures in the financial matrix of our country… but now it is pretty obvious.
The banks have now lent literally TRILLIONS of dollars out. This time, when the borrowers are getting into trouble, it is spelling trouble for the banks as well. The banks now simply have too much skin in the game for their liking.
Anyway, food for thought.
Could someone loan me $3.00, I need a pack of cigs.
There is so much food for thought in your comment, I don’t know where to start.
I certainly don’t feel sorry for banks getting screwed on 100% financing. I just found the thoughts of this FB to be very revealing. He obviously has no problem letting the bank eat his debt, and I imagine his attitude is prevalent among this borrower class. That is why I am pretty confident 100% financing is gone and will never return.
I wholeheartedly agree with your point about credit card companies and drug dealers. The analogy is better than most people would like to admit. Both produce a product which in the end has no value other than to give a temporary sense of pleasure. There is NOTHING which can be obtained on a credit card that cannot be obtained through saving: nothing. A credit card gives you the indulgence of obtaining something before you have saved up money to buy it, nothing more.
The connection you made between lowering credit card payments and lowering mortgage payments to increase the debt is right on. We are slowly becoming a society of debt servicers. Right now, I have no debt upon which I am paying interest (I do have a zero interest car loan about to be paid off). I don’t know anyone else who can make that claim, even if you exclude their mortgage. Somehow carrying a credit balance is a sign of sophisticated financial management to most people. I see it as flushing my money down the toilet. I am lecturing and ranting: sorry.
I had never heard your saying about you owning the bank. There is a lot of truth there. I have been party to some debt renegotiations with major banks on some real estate deals. It is certainly less cut-and-dry when you are a major debtor.
I think the banks must be really worried. There have to be a few smart people who see they are bagholders. I heard Merrill Lynch has been pulling out of the game as quickly as they can, but when you are that big of a player, you can’t bail overnight. It will be interesting to see how Pimco’s funds perform. They have been publically bearish.
Thank you, MarkusArelius. I am thinking about writing my next analysis post on the strange notion of paying off a mortgage. If someone on a $70K income contemplated paying off a $700,000 mortgage with income, I suspect they wouldn’t be so eager to take on the debt. I don’t think it is even possible.
I would pwn you.
“Right now, I have no debt upon which I am paying interest . . . . I don’t know anyone else who can make that claim, even if you exclude their mortgage.”
You could add me to list of people who can make such a claim (zero debt), and in all humility let me say that it is a fantastic position to be in. I recognize there are smart debts (generally for assets that appreciate like an education, a home (in a normal environment not the one we will see in SoCal for the next couple of years), or a business) but debt ought to be painful to experience. I did my undergraduate and graduate work on scholarship so that I would never need a student loan. I bought all my cars in cash. I bought a home with a mortgage and had debt for the first time in my life, but I used a fixed 15 year loan at a rate that was incredibly low. And I paid it off in 3 years anyway, retiring the mortgage because I couldn’t stand the feeling of having debt.
There have been a few comments in the thread about the bank “owning” you as you borrow, and hopefully that sinks in for readers. If you have a debt where you aren’t even making significant payments toward the principle, you have signed yourself up for slavery. You have volunteered to be an indentured servant to someone else. Maybe if it were not unconstitutional, requiring people to wear a badge proclaiming their total bondage to a credit card or bank would motivate a few people to do things differently.
A few friends and I have joked that license plates in California ought to be different colors depending on whether you lease, own but make payments, or own outright. Little things like that would make it harder to put on the appearance of wealth you don’t really have, and it might encourage a few folks to make smarter financial decisions.
No debt here. No auto loan, mortgage, credit card, college. Nada, zilch, nix, none, zero, 00.
Great points. I too, have never heard the “borrow a million” line. It makes perfect sense, though. The fate of the banks are in the borrowers hands.
This whole entire mess can be easily summed up:
Banks screwed up by lending too much of the right money to too many of the wrong people.
The pigs are getting slaughtered.
No debt here either, but it’s because of the housing bubble. In 1998 I bought my first house, had a car loan (granted, the car was a Toyota Tercel!), student loans, and cc debt. January 2005 we sold and paid off everything, split the remainder, and went our separate ways. Now I am debt-free with a good amount of money for a down payment once this insanity comes crashing back to earth. I use one cc for all my daily purchases (Trader Joe’s, Target, Albertson’s) in order to get the cash-back rewards, and I pay it off each month. No bitter renter here!
IrvineRenter,
I have really good source material for another “poster child” entry for your blog: Quick Loan Funding!!
I work in the same office building complex where their offices are located, since more than 1 year ago, I noticed very high end cars parked in one spot of the parking structure: Ferraris, Mercedes, etc., different each time that walked by.
This article explains why:
http://www.ocregister.com/ocregister/money/article_1701128.php
From car salesman to sub-prime lender millionaire in 2-3 years!
I easily see that his background as a car salesman helped him to grow his subprime business!
You all rule!
I love hearing stories about being free of debt.
OK, I really don’t need the $3.00 for cigs.
Truth is I’ve lived a dept free life for about 10 years………….when you don’t have dept you have the freedom to make choices.
I actually followed up on the guy after reading the article about him in the register. I think his name is Sadek. Things are coming down pretty hard for him now. The movie that he made to showcase his car collection (and former fiance) netted a total of $6 Million for a budget of over $26 Million. Apparently, he also owes a lot of markers still in Vegas. What I find amazing about the guy is that his company is actually fairly clean when you compare it to Ameriquest… which goes to show you how bad the subprime market really got.
On the subject of debt… I do have debt (plent of it) but it is all for business reasons (I own a chemical distribution company). Everything I purchase for myself I do on a cash basis, or with cards that I pay off at the end of each month.
I actually started using cards because my credit was lower due to the fact that I had none. What I actually did was order three cards over the course of a year. The first I use on a regular basis. The other two cards went directly to my safe and stayed there (no annual fee). My credit report now shows 3 separate credit accounts that are current, which bumped my score up by 30 points (since they also have balances that are less than 30% of the limit). Neat trick that worked out great.
Business debt is what one could call “good debt” since the money is used to generate income. Also, companies need to establish a credit history for later expansion. However, I agree… personal debt is not a good idea. When the crisis ends, I will be paying cash for my house.
SmartMoney, you should have a blog about managing in Orange County without spending like crazy and going broke at a young age. I read many negative blogs, but there are not too many positive. I am almost debt free, except for student loans, with a small interest payment — but the truth is, not really out of choice. I would like to know more about how you do it.
My wife and I also have not debt to speak of as well. We use CC but pay off the balance each period. It makes a big difference one’s outlook.
Trust me, SoCal is the epicenter of this. I owned a T-House in Darien, IL before I moved to San Diego in late 04. I couldn’t believe what I was seeing here in sunny SD. The incomes were lower than Chicago and the homes were three times as costly here. I couldn’t believe how people who made less than my wife and I were running on and buying 700K homes that were not particularly nice. Unbelieveable. My only consolation is that there is a Portillos in Buena Park…at least I can get some decent food here once and awhile.
Thanks for the compliment and idea, Lost Cause, but I don’t know that I would have enough content to justify an entire blog. I’m actually pretty fortunate as a young attorney to make an awful lot of money (actually a kind of embarrasing amount of money) for someone my age, so I just treat it like a blessing and try to continue to live frugally and stick to a budget.
My amazing wife is another big secret to my success: she is highly educated but stays home to care for our two small kids and takes care of a lot of things that people here pay huge regular fees to have handled (she loves a clean home, is an incredible cook, enjoys gardening, etc.)
Like IrvineRenter said, anything you could get with credit you can also get with cash, and in the end it often costs half as much to buy it if you don’t pay for both the item/meal/trip/service and several years worth of interest on top. As you live conservatively to build up a comfortable reserve and by continuing a simple lifestyle a couple of years longer than others did, you set yourself up for many times the amount of luxury and real wealth down the road. And you can take advantage of a superior bargaining position in every single negotiation going forward: people are forced to pay more when they have less options, even if they have less options because of their own lack of planning and preparation.
I try to live on exactly 50% of what I make, which sounds crazy I know, but I think everyone would be served well by seeing if they could meet all of their basic needs (food, shelter, clothing, transportation, utilities, insurance) with half of what they make. That leaves me 10% for charitable donations (total selflessness), 10% for fun splurges for me and my family (total selfishness), 10% for retirment savings (stocks, 401(k)), 10% for long term savings (homes, kid’s college, big trips, etc.), and 10% for short term savings (cars, unexpected bigger expenses, small trips, that sort of thing).
I suppose if people have debts, they should consider paying those off a form of saving, and adjust a simple budget like that to see what they can do and what works for them. It surprises me to hear what some people consider necessities of life, though. Cable TV? Satellite Radio? Daily Starbucks? Multiple cellphones? They may be common place, but I call those luxuries, not necessities, and think some people ought to get rid of them.
Cry no tears for the lenders. They have incredible resources to evaluate the risk/reward balance in lending $700,000 to somebody with zero down on a “liars” loan. They set the interest rate at what they felt compensated them for the risk. If they made a strategic business error, then they end up eating the loan.
Let’s face it — the lenders knew when the housing Ponzi scheme ended they would end up with the short stick. They gambled that they could pass the risk on to the investors who bought the loans. The investors who bought the loans gambled that the return on their investment was more than satisfactory to compensate them for the risk. Every investment is somewhat of a gamble. They gambled, they lost and now have to eat the loans. If I place a $1,000 roulette wager on “Black 8” and I lose it, nobody’s going to cry for me. If the lender (or investor) didn’t do their homework before plunking down their cash, too bad for them.
Does anyone know how the Savings Rate is calculated? I am amazed when I see a negative savings rate, because that means people are really really spending.
Most workers pay into Social Security, which, for most workers, is about 7.50% of your salary. Is that included in part of the Savings Rate? If everyone saves 7.50% of their salary (whether you want to or not…it is a TAX) and the savings rate is negative that means some people are out there spending like there is no tomorrow.
I don’t believe it counts social security or tax-deferred retirement savings. I have heard it argued that there is no savings problem because people are saving plenty toward retirement. Let’s hope so, otherwise we will be supporting the baby boomers throughout their retirement.
Your perception is essentially correct, though. People are generally borrowing and spending like crazy, particularly the under 30 crowd. Apparently, having a negative net worth isn’t a problem as long as you have plenty of consumer goods.
The investors, (insurance companies, pension plans, some large banks), think they mitigated some of the risk by buying credit default swaps from hedge funds and other financial institutions. And so, the investors carry the mbs’s and the cds’s on their books as assets with a particular valuation. These derivatives are traded over the counter so there is no open market for them, begging the question, “How do the involved organizations value an asset for which there is no particular market?” Each derivative is customized to the needs of the buyer and seller. And the huge questions, “What if the seller cannot make good on the obligation to pay off on the credit default swap?”, “How are the buyers and sellers leveraged to these derivatives and what effect will that leverage have in the event of defaults?” It may seem like a distant and non-consequential situation, but if these derivatives blow up, 90% of the mortgage market will dissappear. Just as folks were saying a couple of years ago, there is no way to predict the outcome of the loose subprime lending standards, the same folks are now saying there is no way to know the outcome of a derivatives meltdown. There may be no crystal ball, but financial history is full of examples of folks thinking that they had eliminated risk, but in reality they had just postponed that risk and actually increased it.
No debt, zip, zero, zilch. Just savings.
I work in Darien, which is a nice area. I heard about to Portillo’s because my cousin who lives in LA was ecstatic when he found out they built it! Does the food taste the same?
I am in the process of gathering a down payment (remember those?) and choosing an area to live. If incomes are lower than here, it boggles my mind how people do it there in OC. Figure a nice lil’ McMansion in Naperville, IL (named one of the best cities to live in the USA many years over) is the same price as a damn condo in SoCal.
I don’t get it. Sun and nice weather isn’t worth THAT much…
No debt here, either, but it hasn’t always been that way. I graduated college with about $3K in CC debt plus $20K in student loans, plus a car loan at MSRP. Spent above my means for the next 1 1/2 years, and ended up with an $11K debt consolidation loan through my Dad’s credit union. Met my wife-to-be, who has been a wonderful influence (though she had her own student loans).
Moved companies to get better pay, lived below my means, got married, paid off all of our debts, bought a TH in ’98 (cheaper than renting at the time), built savings, had two kids, sold the TH for >140% what we paid for it and moved to the OC. We’re leaving the OC next month to go back to the East Coast, where salaries are higher, cost of living is lower, and people are more conservative with their money. We’ll be renting there, too, since prices are heading down. We can make a lot more in 5%+ CDs and MMAs, and we wouldn’t consider anything but a 15-30 yr fixed for 3x-4x (tops) income when we do buy.
Oh, yeah, and we save at least 18% off the top for retirement and college for the kids. Oh, and the 5%+ interest on CDs and MMAs doesn’t get touched, either. Oh, and any excess each month goes into an MMA rather than a BMW. Delayed gratification, anyone?
Great suggestions, SmartMoney. Had I lived by your tips when I left college (or even before), I would be in even better shape financially. As it is, I paid down the debt over a few years (and moved to a cheaper apartment, moved again to get a better-paying job, etc.). Now I’m married with two kids, no debt, a good start on college and retirement savings, etc.
The biggest key is living within your means. The SNL skit was spot-on…
Naperville is a very nice suburb. I have family in Downers Grove, so I know the area somewhat.
If renting wasn’t a good option here, I would be gone too. The weather is great, and there is a lot to do here, but if you don’t have any money to enjoy life due to the cost of living, what is the point?
Based on a conversation I had a few weeks ago with someone who works for AARP, the negative savings rate is a problem for the over-50 crowd, too. When historically most 50+ people were nearing paying off their mortgages in anticipation of retirement, she said that now the 50+ crowd is instead taking out HELOCs.
Considering that she was speaking about the nationwide stats, that is troubling. If she was only talking about SoCal, perhaps I wouldn’t be surprised and just chalk it up to the Cultural Pathology here (great piece, BTW). Of course, the baby boomers may be lucky enough that Social Security will remain solvent through their lifetimes, but at 34, I have no such illusions (well, short of the Dems trying to turn the US into a socialist nation like much of the EU — say “Hello” to 75%+ tax rates!).
Yep, the food is the same. Italian Beef and all. Best burgers and fries too. Not to mention real Vienna hot dogs. The wife and I always make it a point to stop there when drive back from No.Hollywood where my in-laws live.
For a very long time I wanted to live in Naperville. I could afford it now easily, but alas, I’m here in Lala Land. Where people borrow their way to “wealth”. sigh….
Acutally, I was really keen on living in either Batavia or St. Charles near the Fox River. Those were both nice places to live and raise kids.
Glad to hear the food is the same. I will make sure I check it out when I come and vist soon. My cousin lives in Burbank, so I will be out there soon.
I grew up in Bartlett, which is a town that is changing by the minute. You should see this place now….
Plenty of 5,000 sq ft McMansions and brick front frame boxes.
St.Charles is really nice and Batavia/Geneva have surprisingly resisted the whole teardown trend.
Another zero debt person here, more or less. Husband bought the house for cash at the end of the last RE crash, before we met. Luckily I am not fussy about houses; it’s an old, quirky farmhouse that is huge but doesn’t conform to any RE “marketing” standards.
Not having a house payment and not being the sorts to throw our money around to impress people allows us to have a really great lifestyle compared to many of our friends who earn more than we do. Well, that and not having any kids!
I had about $20K of student loan debt and finished paying it off a few years ago. I occasionally carry a small (less than $1000) balance on a credit card for a month or two (I have heard that carrying a balance occasionally helps one’s credit score; I don’t know if it’s true or not but my score is sky-high!) The last big debt I had was a 0% interest, 3-year car loan which was paid off in 2002.
I was raised on a dirt farm in West Tennessee, and I put myself through college without any financial assistance whatsoever…so, I know how to get by on very little and live within my means. But, I also know that the happiest I’ve ever been was in the late 70s when I was up to my ass in debt…huge house, two fast cars, a boat, child support payments, and so on. Now, I’m loaded with cash…with no debt…and I’m F’ing miserable. Go figure.