No, You Can't Get Your Principal Lowered If The Value Of Your Home Declines

[james.hendrickson]

All,

I pulled this from Ramit Sathi's twitter feed.

Its a posting from the Costco subreddit on reddit:

And no, I don't think its a joke.

So, for all the lurkers on the forums out there, you can't get your principal lowered if the value of your home declines.

[disneysteve]

Sadly many people truly have no clue about money and finances.

[james.hendrickson]

Its just astounding how low the level of financial education is in some parts of the country.

[disneysteve]

Its just astounding how low the level of financial education is in some parts of the country.

I don't think it's a regional issue at all. I think it's true everywhere. People aren't taught this stuff in school and they don't learn it at home since odds are their parents don't know it either, or if they do, they don't do a good job of teaching it to their kids.

[ua_guy]

I acknowledge that these people are "out there" in more ways than one. It's no use to get worked up over a social media post. This is my problem with following "people" instead of ideas.

[myrdale]

I don't think it's a regional issue at all. I think it's true everywhere. People aren't taught this stuff in school and they don't learn it at home since odds are their parents don't know it either, or if they do, they don't do a good job of teaching it to their kids.

I agree 100%.

[myrdale]

All,

I pulled this from Ramit Sathi's twitter feed.

Its a posting from the Costco subreddit on reddit:

And no, I don't think its a joke.

So, for all the lurkers on the forums out there, you can't get your principal lowered if the value of your home declines.

It would be no different that if the house burned down. You still owe what you agreed to pay back, even if the house doesn't exist anymore.

[disneysteve]

It would be no different that if the house burned down. You still owe what you agreed to pay back, even if the house doesn't exist anymore.

At least then your insurance would kick in.

[ua_guy]

I don't think it's a regional issue at all. I think it's true everywhere. People aren't taught this stuff in school and they don't learn it at home since odds are their parents don't know it either, or if they do, they don't do a good job of teaching it to their kids.

I wanted to come back to this comment because I attended public school here in the US, K-12.

We were taught things like this in school. I remember clear as day working through interest equations and amortization tables and comparing loan structures as early as 9th grade. Things like personal budgets and retirement strategies weren't necessarily discussed as a standalone topic. I did hear about them in college, however. Accounting class wasn't boring because much of it was taught through the lens of relatable concepts.

My Accounting professor...I've long since forgot his name...but his lesson on personal finance was almost exactly this, and it took just as long to explain it: "Every month, tally your expenses in one column, and money coming in in the other column - your paycheck from work, any money your parents give you for school. Subtract the money going out from the money coming in, and you'd better be in the 'black' every month or you're going to have problems, and if you don't fix it, you're going to go out of business."

[disneysteve]

We were taught things like this in school.

It looks like about half the states require a financial class in high school. That means about half don’t. High school is also too late as bad habits may already be formed by then. I think basic concepts should be incorporated into the curriculum from elementary school on up. Rather than “Susie has 27 apples and gives 6 to Bobby and 9 to Margaret” use examples that actually teach real life stuff. Why does Susie have so many apples anyway?

[jenn_jenn]

I wanted to come back to this comment because I attended public school here in the US, K-12.

We were taught things like this in school. I remember clear as day working through interest equations and amortization tables and comparing loan structures as early as 9th grade. Things like personal budgets and retirement strategies weren't necessarily discussed as a standalone topic. I did hear about them in college, however. Accounting class wasn't boring because much of it was taught through the lens of relatable concepts.

My Accounting professor...I've long since forgot his name...but his lesson on personal finance was almost exactly this, and it took just as long to explain it: "Every month, tally your expenses in one column, and money coming in in the other column - your paycheck from work, any money your parents give you for school. Subtract the money going out from the money coming in, and you'd better be in the 'black' every month or you're going to have problems, and if you don't fix it, you're going to go out of business."

Not to get too off topic here but rates and amortization tables aren’t topics for all math classes and not all students take the same coursework. I tutored several students in math that were struggling to graduate high school. The bar is very low.

Back to the thread, I’m equally shocked and not shocked that someone would think their loan principle would be adjusted. My general opinion is that there are a lot of not very smart people in the world.

[disneysteve]

My general opinion is that there are a lot of not very smart people in the world.

There’s a distinct difference between not smart and not educated. Some truly don’t have the mental capacity to learn. Most have the capacity but need to be exposed to the information in meaningful ways and at appropriate times.

As a parent, there have been countless times when I or my wife used a situation as a “teaching moment” for our daughter whether she was 6, 16, or 26. We always made the lesson age appropriate so that she would understand it at her level. Now she’s a functioning adult and often appalled by what many of her peers are doing when it comes to money management. They’re smart people. They’ve just never been taught this stuff.

[bjl584]

I'm not sure how legit this post is.
Everything from Reddit is suspect, but I can see someone believing this.

A house is not a TV though.
Walmart and other retailers will give you the difference on a purchase if you buy something and then it ends up going on sale a week later.
Without knowing any better, someone could try to apply this logic to a house.

[disneysteve]

Walmart and other retailers will give you the difference on a purchase if you buy something and then it ends up going on sale a week later.
Without knowing any better, someone could try to apply this logic to a house.

That actually makes some sense. Even if you had borrowed the money for the tv by charging it to your Walmart credit card, they would reduce your balance by giving you a partial refund.

[rennigade]

I'm not sure how legit this post is.
Everything from Reddit is suspect, but I can see someone believing this.

A house is not a TV though.
Walmart and other retailers will give you the difference on a purchase if you buy something and then it ends up going on sale a week later.
Without knowing any better, someone could try to apply this logic to a house.

My bs meter is going off. Just someone trolling on Reddit. Business as usual.