The New American Dream: Not Paying For Your Residence
I’ve talked before about the growing trends of strategic defaults in America. By strategic default, I mean the person who stops paying his or her mortgage simply because they don’t want to or they see it as a bad financial strategy.
How could it be a bad financial strategy you ask? Well, when you can live in a house for a couple years without paying your mortgage without the bank evicting you, maybe it’s a good strategy? Sure your credit will get hit (who cares), and they might come after you later, but hey, it’s a trade off.
For the record, I don’t advise this strategy, otherwise I’d be doing it myself, but I do see why people are doing it. The moral hazard created by bailing out some and rewarding bad decisions has led to the rise of the strategic defaults.
I know people personally doing this and I don’t blame them one bit.
Why don’t I do it? Well, for one, I can still pay my mortgage just fine. Two, I don’t think it will be as clean as some make it out to be – either the banks or the IRS or someone will eventually come after you for money that is “forgiven”. Three, it’s not worth the stress and the hassle for me at this point in my life.
The following infographic is very interesting and informative: