In most things financial – ignorance is usually not bliss. The case for educating oneself on financial matters is made consistently and regularly. But I guess we tend to ignore this sage advice and end up paying a high price for this lapse in judgment.
"The surprisingly high number of subprime loans among more credit-worthy borrowers shows how far such mortgages have spread into the economy -- including middle-class and wealthy communities where they once were scarce. They also affirm that thousands of borrowers took out loans -- perhaps foolishly -- with little or no documentation, or no down payment, or without the income to qualify for a conventional loan of the size they wanted."
WSJ - Subprime Debacle Traps Even Very Cedit-Worthy
Evaluate your options – We spend considerable time and effort exploring and evaluating the type of house or car we will buy. Even if a small percentage of that time and effort was spent in evaluating the financial options available for these purchases we would be so much better off. The price for picking the wrong product or not understanding the details of the transaction could be extremely expensive as the excerpt above highlights.
Read the fine print – It’s legal mumbo-jumbo and boring as hell. Agreed but in the fine print lie the details about the fees, penalties, rates and default clauses. If you don’t get it – hire some help to decipher the contract for you. A few hundred dollars spent on a competent attorney could save your thousands in the long term.
Education – We can’t be experts on everything but that does not mean you have to be absolutely ignorant either. A person who is not looking up a car’s blue book value online before walking into a showroom is choosing to be taken for a ride. There are enough financial tools and education available to the retail investor today to give you an edge. If you choose to be ignorant – you pay the price!
But everyone else is doing it - That is called herd mentality and we all like to follow the herd. Before you join the herd, think about what carrot the herd is running after and who is dangling that carrot. My mantra is – “if it looks too good to be true – it probably isn’t”.
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Mark U Runta 
2 comments:
And now the government wants to bail out the ignorant. My 2 cents -you reap what you sow.
Those who got taken for a ride were naive and ignorant but you have to put substantial blame on the lenders also. The lending institutions enticed people and mislead them into getting loans they could not afford. If the consumer was naive - the lenders were definitely dishonest and unethical.
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