your home just to spend some time together. In addition to the fun of the here and now of the experience, you are also building memories, and maybe passing along some legacies as well. That, after all, is the most precious gift you can ever give.
LESSON RECAP
Stand in the truth together, as a family. The more you talk and share, the greater your ability to reach your new dreams.
Raise your children to be financially honest. Teach the value of saving, but give them the space to spend as well.
Choose a college that is a great financial fit. Cost matters.
Know how best to help a family member in need. Are you solving a problem or providing a temporary patch that just delays the inevitable?
Pay it forward. Grandparents can seed the dreams of grandchildren.
CLASS
HOME
THE TRUTH OF THE MATTER
There is no aspect more fundamental to the classic notion of the American Dream than homeownership. Ask anyone their definition of the American Dream and I have no doubt that the first thing out of their mouth will be “Home.” The postwar boom years of the last century and the rise of suburban life ingrained this notion in us that homeownership is not only something to strive for as an American but very nearly our right. There is no single image that speaks to our security so much as a family home. And there is no greater manifestation of how each successive generation has fared better than the previous one—that very American promise—than the way we’ve traditionally “traded up” in the area of real estate. And why shouldn’t we have come to believe in this? After all, as a general rule, home values have historically risen over time. Your parents or grandparents most likely bought their first house for less than what you might spend today on a new car, and that house probably increased in value dramatically over the years. No surprise, then, that we grew to expect that you would buy a house that in time would be worth significantly more than what you paid for it, and that house would provide for you and your children. The equity you had in the house would be a safety net, a way to help fund college costs, to bridge a shortfall, to ease some of the anxiety of an underfunded retirement account. And then over-night, everything seemed to change.
The implosion of the housing market has already resulted in more than five million foreclosure notices in 2008 and 2009 and another 2.8 million in 2010, according to RealtyTrac. To be sure, the epic proportions of this disaster were the result of lax lending standards that allowed unqualified borrowers to become homeowners. But also to blame was a kind of entitlement gone wild—the American Dream careening out of control, fueled by greed and recklessness and untethered to a genuine sense of fiscal responsibility. I’m not going to lecture and point fingers—I did that in my 2009 book, Action Plan; we all know what went into making that perfect storm and we know all too well that the damage and repercussions are far from over. But I will point out that the housing crisis has ruptured and twisted our view of the American Dream like nothing else in my lifetime.
And the truth is, greed is not the entire story. Many families that didn’t overreach during the bubble years are nonetheless suffering as well. As I write, more than six million Americans have been unemployed for more than six months. Nearly one in five of us is either unemployed or working part-time, because we can’t find a full-time position. Continuing to make a monthly mortgage payment under those circumstances is proving painfully difficult given those harsh realities and the jobless recovery that we are told is under way. The federal government’s mortgage modification program has been a massive disappointment; from its start in the spring of 2009 through late 2010 barely more than one-third of homeowners who were enrolled in the Home Affordable Modification Program (HAMP) were granted permanent modifications. And
LESSON RECAP
Stand in the truth together, as a family. The more you talk and share, the greater your ability to reach your new dreams.
Raise your children to be financially honest. Teach the value of saving, but give them the space to spend as well.
Choose a college that is a great financial fit. Cost matters.
Know how best to help a family member in need. Are you solving a problem or providing a temporary patch that just delays the inevitable?
Pay it forward. Grandparents can seed the dreams of grandchildren.
CLASS
HOME
THE TRUTH OF THE MATTER
There is no aspect more fundamental to the classic notion of the American Dream than homeownership. Ask anyone their definition of the American Dream and I have no doubt that the first thing out of their mouth will be “Home.” The postwar boom years of the last century and the rise of suburban life ingrained this notion in us that homeownership is not only something to strive for as an American but very nearly our right. There is no single image that speaks to our security so much as a family home. And there is no greater manifestation of how each successive generation has fared better than the previous one—that very American promise—than the way we’ve traditionally “traded up” in the area of real estate. And why shouldn’t we have come to believe in this? After all, as a general rule, home values have historically risen over time. Your parents or grandparents most likely bought their first house for less than what you might spend today on a new car, and that house probably increased in value dramatically over the years. No surprise, then, that we grew to expect that you would buy a house that in time would be worth significantly more than what you paid for it, and that house would provide for you and your children. The equity you had in the house would be a safety net, a way to help fund college costs, to bridge a shortfall, to ease some of the anxiety of an underfunded retirement account. And then over-night, everything seemed to change.
The implosion of the housing market has already resulted in more than five million foreclosure notices in 2008 and 2009 and another 2.8 million in 2010, according to RealtyTrac. To be sure, the epic proportions of this disaster were the result of lax lending standards that allowed unqualified borrowers to become homeowners. But also to blame was a kind of entitlement gone wild—the American Dream careening out of control, fueled by greed and recklessness and untethered to a genuine sense of fiscal responsibility. I’m not going to lecture and point fingers—I did that in my 2009 book, Action Plan; we all know what went into making that perfect storm and we know all too well that the damage and repercussions are far from over. But I will point out that the housing crisis has ruptured and twisted our view of the American Dream like nothing else in my lifetime.
And the truth is, greed is not the entire story. Many families that didn’t overreach during the bubble years are nonetheless suffering as well. As I write, more than six million Americans have been unemployed for more than six months. Nearly one in five of us is either unemployed or working part-time, because we can’t find a full-time position. Continuing to make a monthly mortgage payment under those circumstances is proving painfully difficult given those harsh realities and the jobless recovery that we are told is under way. The federal government’s mortgage modification program has been a massive disappointment; from its start in the spring of 2009 through late 2010 barely more than one-third of homeowners who were enrolled in the Home Affordable Modification Program (HAMP) were granted permanent modifications. And
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