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Finance & Economy

Cracking The Code Of Personal Finance


I hope you had a good start to the New Year and, whatever kind of year you had in 2009, I hope 2010 will be a better one.

I try to do a commentary every Monday. I do them on Mondays for a simple reason: it gives me the weekend to think about what I want to say.

But sometimes the drive to work changes things. This weekend, this story was on my mind. It's about the criticism that the loan modification program set in place by the Obama administration may be making things worse.

I was thinking, "this is interesting."

I have a particular interest in housing because it was my first national beat, when I worked at the Wall Street Journal. And it also coincided with my purchase of my first home. I remember very well the sick feeling in the pit of my stomach when I signed that paper with all those zeroes after it.


But by the time I bought my place — a condo — I had been covering housing. I had read every book I could get my hands on, and I was being tutored in essence by my editor, a very lovely and patient guy named Ron Shafer. No question was too stupid ("what are points?"). And I also had the benefit of talking to the economists at the Mortgage Bankers Association and the Realtors about trends in mortgage rates and products because, well, that. That was my job.

My parents did not own any real estate. So this was all new to me and, before I started out, I had no idea what I did not know. And so I think about that when I hear about people who buy houses they should never have been shown based on their ability to pay.

And, yes, I believe in personal accountability, but until very recently there was very little written for people at a basic level about how to buy and how to invest. It was all very much geared to people who already knew what they did not know.

I am reminded of a friend of mine who had hoped for a career in the military, until a jeep accident ended his ability to deploy in combat, so he retired and did something else. But when I asked him what he liked about it he said, "the army does not make success a mystery. They break it down step by step."

But it wasn't like that with personal finance. A whole genre has exploded in making things simple and, apparently, not simple enough.

Here's one more story for you, I referred to it in my commentary today.