I bought my first home, single and in my own name, December 29th, 2004. I was 26 years old and thought this was the pinnacle of adulthood and the "american dream". I finally had something that was "mine". This was a delusional thought of course, as I had a mortgage.
When I have a mortgage, it's not really my house. I'm renting it from the bank, it's really theirs. I'm just keeping it safe for them - maintaining it, paying the taxes for them, keeping it insured for them and if I don't pay them, they can legally take it back. It's the same as paying rent, just different words used to confuse me into thinking one thing when it's not reality.
If I had bought my house with cash, then I would have owned it, but I did not have $190,000 in cash at that time... or well, any time since. I should have just kept renting and saving money (not investing it) until I could buy a cheap house in a safe enough neighborhood with cash. Maybe I never would have bought anything, but I'd still have cash, which is better than a good credit score.
Mortgage has an Old French root from 1189 ~ "Dead Pledge". Basically life expectancy was so low that people borrowed this money and were expected to die before paying it back and the creditor needed a way of getting their money back, thus foreclosure. 826 years later this is still relatively true, most people never pay off their dead pledge. And with amortization, the bank gets more interest today than tomorrow, so they love sales and refinances... it creates new dead pledges where they get more interest today.
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On January 5th, 2010 the bank foreclosed on my home and took it back. I gave them the keys, turned off the utilites and drove away. The day I gave the keys back to the bank was really a huge relief. I no longer had a dead pledge to carry around on my back every day.
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I thought I was doing the right thing, building savings, building equity, being responsible, being an adult and on the path of the "american dream". When things went sideways in the real estate crash I thought I was doing the right thing by spending all my money paying my debts and honoring my contracts. My beliefs were wrong on both sides. It was all a large waste of time, capital and emotion. All it did was bring suffering during the experience.
The bank did not care if I paid the debt, the bank is not a person. Even the people I interacted with really did not care, and if they expressed care it was an attempt to manipulate me to pay. Maybe they cared about losing their job, because if too many people did not pay they would get laid off. Either way, it was pointless for me to care about honoring a contract when the other party didn't care. Plus, I didn't have the money to pay anyway.
I had been brainwashed by our culture to care about credit and paying debts to corporations, (I pay back friends and family). That somehow my playing this game correctly made me a "good" person and me not paying made me a "bad" person. This is very powerful for the banks and creditors to lever in getting their money. There is a lot of guilt and shame in failure and not paying debt, people kill themselves over it.
There were people all over the news saying it is "wrong" and unethical to not pay debts. That we all, as americans', owed some sense of responsibility to the banks, society and the economy to pay our debts. This is total b.s. Corporations default on debt all the time and are never called unethical. There is a contract for debt and when one party does not follow it, there are ways to settle it legally. That's all it is, there is no stigma. It just did not work the way it was set out, things change.
When I was losing this house I had already lost over $500,000 of my own, friends and family's capital investments into other real estate companies. I had over $10,000,000 in other real estate related debts. I was once a millionaire (on paper) with "equity" and within a 3 month span had a net worth of -$3,000,000... negative 3 Million.
I thought I was a totally worthless person as a result. I became 60 pounds overweight, depressed, angry and a drug addict. Only drugs could overpower the internal pain and suffering I was imposing on myself. And that's what it was - self imposition. I beat the shit out of myself based on my beliefs of what was good and bad, beliefs I adopted without my inspection.
No banker ever told me I was worthless, only 1 guy ever got mad and he just walked out of a meeting. Family and friends were mostly supportive, minus the ones I thought would try to kill me but I guess those aren't friends. My daughter still loved me.
I did not love myself, maybe I never did, but this time I had a reason to not love myself. I defined myself as a "failure" and I was "losing everything".
I almost died on an emergency room bed from drug addiction. I was doing drugs because I hated myself and wanted an escape. I hated myself b/c I believed I was failure based on losing money, cars, homes and having "bad credit". My self-worth was enmenshed with my financial success and material possessions, I was never taught another way.
A few months' out of drug treatment I went to a Buddhist monastary and learned meditation. I was really confused to see all of these really happy people - monks and nuns - who had no materials possessions. How could they be happy without money and stuff? It was such a mystery I had to figure it out.
This led to a deep dive into uninstalling all the non-sense programs that had been installed in my brain for 20+ years. After getting a somewhat clean slate, then I could upload a new program, one based on love. Love for self, love for others. All that matters is Love. I Love you. You are more than your money, your career, your home and your credit score.
When I decided I could and was going to love myself and others all the negativity went away. I no longer defined myself by my material possessions or money. I tried living the way of the "american dream" and being ambitious in business and it did not work. So, instead of killing myself I just needed to live another way. Through Buddhist and stoic philosophy I found that way.
I met with all the banks and told them I could not pay. I told the truth. I helped where I could. It all worked out. Then I got married and bought another big house with a mortgage, stupid. I guess I need to learn things the hard way. It is said entreprenuers must go broke twice before getting "it" the third time, so I guess I fit that rule.
The American Dream is a lie, or at best it does not exist. There are 300,000,000 million people in America, how can "we" have a dream together? We cannot. The root of the lie of the American Dream is based in debt, education and home "ownership". Work hard, go to college, borrow a ton of money for education, get a degree, buy a car with a loan, get a promotion, buy a house, get a mortgage, work harder to afford it all, paint your house and update your kitchen, work hard to pay for it, then die.
The banks make trillions of dollars in home loans, car loans, credit cards, etc... They don't care if you kill yourself over suffering to pay them back. No bank ever came to the hospital to see how I was doing. To be fair, some of the people who worked at banks were good people and I am still friends with them. They were suffering too, everyone was suffering at that time. We were all delusional.
Borrowing money is a trap, there is no such thing as a "good debt". I got a finance degree and learned all about "good debt" and lost my ass and filed bankruptcy. I can do the math on levered ROIs and still failed b/c I don't control macro economics, or anything but my actions. I simply bought the wrong plan.
There is no "good debt" for individuals, especially when borrowing from corporations. Student loans are not good, car loans are not good (well maybe 0% financing), mortgages are not good debt (unless you are the 1% who can pay it off at anytime and can get the tax benefit), credit cards - not good... Basically, don't borrow money, you don't need whatever it is the money is going to buy anyway.
- You can take all of the classess MIT offers online for free or little money. You can get the education without getting the degree. You'd be smarter than most people and have no debt. I would hire you over some other person with a degree, all that tells me is that person played the game good enough to get a piece of paper, not that they can think. Getting a self-education shows you can think and will keep thinking and growing.
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- Buy a cheap car with no loan. Dave Ramsey says this to about everyone who calls into his show. I wanted nice cars to signal to you I am "good" or "successful". There really are few crappy cars anymore, it's just a way to get somewhere. Better, buy a bike or move somewhere you can walk. With Uber, ride sharing and self-driving cars, car ownership will eventually go away any way. Kids are smart these days, they don't want cars. It's an expense & depreciating liability you cannot get a tax deduction for.
- Rent before getting a mortgage... It's not throwing money down the toilet. You still need somewhere to live regardless. It's not like you have to live on a park bench if you don't buy a house. Homes are not good investments... I wrote this blog a while back - http://doughilbert.blogspot.com/2015/01/is-buying-home-good-investment.html
- Pay cash for everything else. I hate spending cash, so I really think about everything I buy. Do I really "need" this thing? When I have credit or debit cards I just swipe away. It's the same reason casinos use chips and not cash, there is a disconnect between us and our money.
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So, I "lost" all of that stuff and gained a new perspective on life. I gained more time to do things I like, such as spending time with my children and loved ones, coaching, helping others, writing, meditating. I gained more time to love myself and love you.
It was a valuable lesson I had to learn to be where I am now. I don't have much money now, I rent an apartment, companies grow and companies fail, sometimes I have more money, sometimes less... The difference now is I do not suffer over things. I love myself and I love you and when I act in that way everything always works out.
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If you like this, check out my book "Letters to My Son: Choosing Yourself First" on Kindle or paperback through Amazon.
If you want to chat, feel free to email me at douglashilbert@yahoo.com
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