How Do You Define “Well Off?”May 6th, 2010 by Chris Henry
More Money, Money Magazine’s personal finance blog, wants to hear from anyone who falls into the category “well off” and who is facing foreclosure.
The blog mentions a study by the Florida Association of Realtors that cross-referenced three years of foreclosure filings with demographic data. The study found that 20 percent of the filings went to households with more than $100,000 in annual income. Fifteen percent of homeowners had college degrees; another 8 percent went to graduate school.
But what is “well off” anyway? Fifty years ago, $1 had the same buying power as $7.35. Someone with a $100,000 annual income in those days was unquestionably rich. Today, that amount is still considered well-to-do, and yet, the analysis shows, it is not enough to shield families from foreclosure.
The study screened out those who were buying on speculation. These were responsible ordinary folks, well … well-to-do ordinary folks. Thirty-five percent of homeowners who received a foreclosure filing “had lived in their homes for more than 10 years. These were not people who’d bought too much house, but more likely people who lost their jobs and suddenly couldn’t afford the payments.”
These people’s finances, it seemed, died a death of thousand cuts. According to the blog, “it was very rare for just one financial setback to lead to the foreclosure. The group’s vice president of public policy, John Sebree, called this the ‘plus one’ effect: It wasn’t just a high-interest-rate, high-payment subprime loan that might have caused a foreclosure; it was a bad loan and then a job loss. Alternatively, it wasn’t a job loss that caused an affordable loan to go bad; it was a job loss and a health issue.”
And so it goes. Financial stability, it seems, is a three-legged chair, propped up by health, employment and sound financial decisions. How much control do any of us have over any of these factors?
Do you consider yourself wealthy (regardless of where your income falls on the “well-to-do” scale). What is (are) your greatest treasure(s)? How do you protect it (them)?
Chris Henry, South Kitsap/government reporter