Facebook IPO Reminds Us Not Enough Has Changed
by PJ Wade
Tuesday, May 29, 2012
Facebook ranks high among the social media that have changed the way we think about staying in touch, but in spite of improvements to the ease and speed of communication, consumers were still led astray astray by the financial guys. Fallout from the Facebook IPO is the current prime example. As in the past, after the fact, the debate is raging on social media.
This should leave you wondering what else has not really changed in the world of finance?
Credit card rates, especially store credit cards, are killers. They are levied at rates that should stop people spending, but don’t. Even the "best” credit cards listed on lowcards.com lowcards.com still have double - digit interest rates, which are significantly higher than prime rates. No wonder credit card companies keep pushing higher borrowing limits on consumers while the media continues to cry: "Consumers must reduce debt!”
The cost of arranging a mortgage is not the cost of buying a home. It is really the cost of borrowing the money to buy. As long as this misconception continues, buyers put their time and energy into searching for a "dream” house or condo, not searching for the best available financing option before they find the perfect purchase. Concentrate on learning how mortgages work and where costs lie, and you’ll save money from the beginning. The hundreds or even thousands not spent in the first years may mean tens of thousands over the life of a mortgage. Or, perhaps you’d prefer to pay double (or more) what you originally borrowed? (For more on mortgages: "Mortgages: 7 Things You Don't Want to Learn the Hard Way Mortgages: 7 Things You Don't Want to Learn the Hard Way" )
Home insurance costs rise while coverage doesn’t. Did you have a detailed conversation with your insurance agent when your policy last automatically renewed? Most insurance companies won’t cover homes with knob and tube or aluminum wiring, old insul - brick exterior siding, and a growing list of items. Don’t find out the hard way what your insurance company has disallowed. Rising real estate values mean rising costs of replacement if your home is destroyed by fire. Are you sure the designated replacement value of your house is accurate? Insurance companies are not there to ensure your home is protected, that’s still up to you.
Condominium buying still focuses on how "cool” the lifestyle is. This hooks buyers on amenities and decor. Amenities cost money, and more money, to maintain. Therefore, the more exercise and play options purchased, the more monthly fees will rise whether owners use these goodies, or not. The condo mystique encourages buyers to spend more time thinking about decor than on understanding their financial responsibilities. Living by committee has long been my definition of how condo living differs from home (fee simple or free hold) ownership. This lifestyle shift means you may be buying space that you won’t be able to use the way you want to. Bylaws explain the details, but are not an easy read, so many rules are a surprise. Let’s hope the continued boom in condominium building does not follow past patterns and leave condo owners to live with expensive problems caused by construction defects like the leaky condos disaster. That’s a set of past financial woes we hope will not be visited on property owners again.
We keep reinventing the real estate "wheel." That’s probably the greatest financial stagnation of all.
First - time buyers know little or nothing about real estate and finance after years of high school and secondary education. They still learn the hard way like their parents and grandparents did. After a series of real estate purchases - each time at the mercy of financially - adept, incentive - motivated salespeople - consumers will have learned something, but not everything consumers need to make confident, informed real estate decisions.
Real estate buying has moved online and now aps make home buying seem more accessible. Although a lot has happened, has much really changed?
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