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Jan. 22, 2023 - Stew Peters Show
57:37
The Richard Leonard Show: How Veterans Can Own a Home
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We'll be right back.
We'll be right back.
In this country, we are currently in a battle to fight veterans' homelessness.
Are veterans being represented in the affordable housing realm appropriately and accurately?
Today my friend Jason and I are going to have a conversation about this.
So stick with us.
Don't go away.
We start now.
Hey folks, and welcome here to another episode of the Richard Leonard Show.
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Okay, so today we are going to discuss whether or not veterans are appropriately represented in the realm of affordable housing.
Now, it's important that we remember that affordable housing is a great concept for everybody.
But in the midst of the battle to end veterans' homelessness, this seems like the perfect place to have the conversation about how veterans are represented and if they're represented properly.
So let me get my friend Jason.
There he is.
Jason, how are you, sir?
Hey, buddy.
Doing good?
Yourself?
Well, I'm here.
The paddleboard is upright.
I know that.
There we go.
Okay, Jason.
So, affordable housing.
I know that you're knowledgeable on this topic.
I think that maybe we should, for the sake of the people watching or listening to the show, have a quick discussion about what affordable housing is and a little bit about how it works.
So, can you kind of clue us in to the whole game there, quickly?
So, yeah, there's a dirty little secret about affordable housing.
Nobody knows what it is.
Similar to the Supreme Court saying that we can't tell you exactly what pornography is, but we know what it is when we see it.
That's kind of like affordable housing because it changes from region to region, area to area, based upon a lot of different metrics, including Where people are employed, how much money they're earning, what the cost to live in the area is in relation to the homes available.
So what is affordable in rural America obviously isn't the same as suburban or urban America.
And then vice versa, you can actually have that in the subcontext in certain areas in the metro area.
I just said area like 54 times in a row, so I digress.
But you could have specific neighborhoods and spaces inside of a town where affordable housing would have to be defined differently.
And so therein lies that unique...
That unique problem is what is affordable housing?
So is affordable housing just creating inexpensive homes that are non-conducive for people to live in?
Absolutely not.
And also is affordable housing just something that the government throws so much money at that it makes it an attainable goal for somebody that otherwise couldn't afford it?
I don't think so either.
So, you know, it is one of those questions that could keep you up at night if you thought about it every day.
So, just to make sure I'm following properly, the social economic...
Forecast, maybe, I guess I could say, for any particular area would explain what the cost of affordable housing is.
Is there like a formula or a percentage of said number, like maybe the median income of a neighborhood or something like that?
Yeah, and it kind of seems like they'll stick that to a city.
And then they come up with a percentage and then there are certain grants and dollars available based upon those percentages.
If you can keep that home inside of that, they call it like an affordability calculation.
So again, it can change, but even that piece can be thrown completely off.
And the city that comes to mind for me is Bozeman, Montana.
It's got family in Bozeman.
We both know people in Bozeman.
And, you know, just going back 15 years, the price of real estate has skyrocketed because you have a bunch of people that can work satellite jobs from California.
So they're being paid California wages in Bozeman, Montana, which was already on the heavier side of the cost for purchase.
But now it's unattainable.
So out there, what is affordable housing?
How do you do that against the median income?
So 70% of somebody's income, and let's just say you're dealing with a lot of people coming out of California who average $250,000 a year.
Well, pretty much every person that works in Bozeman that's A local to the area, even if they are college educated, maybe high-end they're pulling 150 because that's what the Bozeman area carries for pay.
They're $100,000 underneath what these guys are taking in, and that's what's diminishing the opportunity for them to ever become homeowners.
Well, I'll tell you firsthand.
Like you said, we both know people in Bozeman.
The truth is, one of my sons lives in Bozeman.
And the only reason I'm sensitive to this topic is because Every now and then, my wife and I are helping him flip the bill to live there, which is okay.
He's doing his thing.
He's responsible.
He works his butt off.
But he's unfortunately the victim of exactly what you're talking about.
When the lease on his apartment comes up and it's time to find a new place, there's nowhere to go unless you can pay another $1,500 a month.
And so...
It's a very frustrating, I wish that he would just move home, you know, because it'd be easier to help him and it's a little bit cheaper here.
But the fact of the matter remains that whatever affordable housing would be in Bozeman, I'm quite certain that our boy probably can't afford that.
And so I think that's where this relates back to us in the veteran community, is where will we be affected by things coming down the pipeline?
We tend to be the The nose of the camel underneath the tent.
The government tends to use us as the canary or whatever you want to use for that analogy.
And we've seen ripples of it.
I think you and I have discussed it offline before, not in preparation for any of this today, but in that federal omnibus bill, There's a thing specifically about hers, and it's about making homes affordable for veterans based upon some green living metrics,
where they're trying to drive the ability for people in the VA home loan program to maybe bring up how much they're able to pay by showing some type of offsets on the underwriting.
For living in a home that's maybe more energy efficient, so on and so forth.
To me, it's flawed.
It's flawed on its face.
Something like that will never actually catch wind.
There's no way, unless you're going to start going through the entire system, to change how debt-to-income is reported.
If you really think about it, regardless of where you guys sit in the respective towns that you're listening from, I can assure you one thing.
If you're living in the older part of town versus the brand new part or even the 10 year old part, your bills per square foot are likely going to be higher if you haven't done major renovations or modifications.
Because of energy efficiency stuff?
Buy new building codes, more efficient practices, a great multitude of reasons.
When you're buying aging stock housing, maybe you kind of hit the lottery and they had to replace the furnace before they went to sell.
But it seems like nowadays people are changing houses like they used to change suits every 10 years.
Whereas I think my grandparents, I don't know about yours, but the house I knew them to have as a child, they still have.
Oh wow.
They pay for their home and they live in it because that's their home.
As years have gone by, people tend to upgrade and change their home.
And again, I guess that's neither here nor there.
What I was angling at was if you're buying an existing stock older home versus a new home, of course the new home is going to be more efficient.
But if the existing stock housing that sits in a neighborhood, maybe in the $250,000 price point, Versus a brand new home in the $450,000 price point.
I don't care how you play around with the home affordability calculator underwriting side of it to say this house is more efficient to offset a $100,000, let alone a $200,000 additional expenditure to have a newer home.
It's not going to pencil out.
There is no way if somebody is being approved in that $250,000 mark that they're going to get into those homes.
And in the data that they used to pursue this action forward, it specifically showed just in these three principal properties that they used for perspective that you were able to get $13,000 more purchase power.
Now, Richie, is $13,000 going to get you from an old neighborhood to a new neighborhood?
Probably not.
No, it's not going to happen.
No.
So even in the data and information that they created to push forward, I mean, nobody's looking at a $240,000 house and going, no, that $253,000 house is out of my price range.
But if they change that, I could be the guy moving my family there.
No, that doesn't happen.
So is it true that the rule of thumb when you're buying a home is like $28 per thousand borrowed or something like that?
And if that's the case, you're absolutely right.
$13,000 may only get you halfway up the block, if that.
Maybe it gets you a corner lot in the neighborhood, but even then, it's probably just going to have, you know, I mean, really, if you think about it, $13,000, and when you're buying a home, say you're in the $200 to $250 a square foot, I mean, you're talking about, well, real quick, I'm just going to do it.
$13,000.
There you go, folks.
Live calculations happening on the Richard Leonard Show.
I just didn't want to say it wrong.
That's why I had to do this, but 65 square feet.
Oh boy, a shower.
It's a very small bathroom in a mid-century Rambler built for post-World War II. It's a 6x9 or a 6x10.5 shower bathroom area.
That's it.
So it's not going to do anything, but then the question is, well, why are they doing it, Richard?
Well, you got me stumped.
I don't get it.
I wish I knew.
I always want to believe that people have the best of intentions when they put something together.
It smells a little bit to me like some of this Green New Deal malarkey where they're trying to attach different pieces of paper to different homes.
And I don't know what the long play game plan is or that that's actually what's occurring.
But it certainly seems like a non-starter.
I mean, as a business owner, I mean, If this was something that were amazing and epic and it was going to change how veterans were able to enter the home ownership pool, my gut would tell me you'd have some pretty high-powered lobbyists and folks on the financial sector side pushing to pursue this in the banking arena because now they could get that many more veteran borrowers on the hook to buy homes.
So there's the real question.
The real question is, are the people responsible for this, let's just use this $13,000, are these people really interested in helping veterans become homeowners to something that's affordable?
We're going to answer that question when we come back.
Don't go away.
We'll be right back.
Hey guys, thanks for joining us here.
When we ended the last segment, my question, Jason, was this.
In regards to, we're just going to use that $13,000 as a place marker.
Are the people responsible for...
An extra $13,000 of buying power.
Really concerned about people, anybody, but for the sake of this show, more importantly veterans, becoming homeowners or living in somewhere that's affordable.
Are they really concerned about it?
If you ask me, the answer would be probably not.
Because if they know anything about what they're talking about, and I just realized it when you broke it down simple stupid for me, That $13,000 is like dangling a little cocktail weenie in front of a hungry guy and saying, hey, you could spend $250,000, but now you can spend $263,000.
How about that?
Right.
And I don't believe that a lot of folks that are going to be in the situation that need affordable housing are going to really understand what that means until they've either committed to something or they got their hopes up or whatever, and then realizing, well, I can still get a piece of shit.
It just has 65 square foot more of house.
Right.
So, I don't think that it is a priority.
I think it's just a way to kind of make it look a little more sexy for people.
Right.
Everything's got to be green.
Everything's got to be this.
Everything's got to be that.
However, the only green that really matters should be people's personal financial security.
Yes.
And understanding how to be financially savvy in this world.
Right.
And I think, I mean, that's something that I think our veteran populations, sometimes we struggle with.
You know, there's a reason they put that Harley dealership in Kuwait when we were leaving.
And the Chevy dealership.
You know, that's a far stone's throw from a Cinnabon, which I've been known to eat a dozen of in a crack.
So good.
I can say I walked into that Harley dealer and kind of looked her on and went, yeah, you're right.
$214 a month does sound like a bargain to get my beard in the wind.
Which we all know now, if you guys have watched the show, I'm scared testless of being on a bike.
So even though I have one, I still won't go riding and Richie will ride me on that.
We're going to get him on a bike, folks.
That's it.
I showed you the new Coleman.
I'll go anytime.
Well, here's the truth.
As we know, those of us who served, the truth is that if you go to any active duty base, What are you going to see around it?
You're going to see a lot of Ford Raptors.
You're going to see a lot of 50, 60, $70,000 vehicles.
You're going to see a lot of Jordans and nice shoes and nice clothes and a lot of video games and big screen TVs because the one thing that the military is not good at doing is Is providing any kind of financial literacy to these young soldiers.
Now, that may have changed a little bit since you left, Jason, and since I've left.
But the last time I was at an active duty base was Fort Lewis-McChord out in the Seattle area.
And I'll tell you what, those young soldiers have some nice stuff.
But I'm guessing if they got hurt or something happened to where they couldn't be in the service anymore, that nice Ford Raptor is probably going to go away because they do not have a really good idea about how to manage their money.
And so I guess maybe that leads us into a conversation about financial literacy as it pertains to the military and the veterans as a whole.
I don't know.
Maybe there are programs and there were programs to teach us how to manage our money better.
But if there are, they're not readily available because there's a lot of people doing a lot of stupid things with their money on base.
Right.
Well, and what's the first thing you see other than a liquor store and a nudie bar outside of base?
Car dealership.
Car dealerships and payday loans.
I think the veteran population, there probably are some things in there.
I think now with the push out with UVLC, with you and I and the fellows, we're going to have some more access to data that we can create some information to see where some of these financial trends go.
And I can only speak from what I believe I've seen and speculate on.
But I certainly know that a vast majority of our brothers and sisters pay attention to payment versus cost.
Yes.
And that, too, can be a generational thing.
Certainly, if you're thinking about the greatest generation, the World War Deuce, those folks were extremely conservative with their money.
Granted, it was a different time.
The opportunities were different.
You really could.
You could raise a family up until the 70s with a single income.
And have a couple of kids in a car and take a vacation.
Well, that's not the case.
So I still think that probably happened a little bit back then, but I think it happens more so now.
And I don't think the Department of Army, the Veterans Affairs, DOD, they're not responsible for any of this.
This comes down to who we are as people.
But if we have the opportunity to access that information, I was fortunate enough to have a grandparent, my grandfather, around for a very long time after my adult brain had started forming.
Because it still hasn't totally formed, that's why I have a toy collection.
However...
A lot of people don't have, they never had those figures in their lives.
And our parents are also very astute people that point us and create us in a particular direction.
But you always see that when there's that generational skip and that connect, They are the ones that pass down a lot of that information anecdotally, where it's not, you know, this is what you need to do, and you save 10%, and you do all these things, all the things that we hear about, but they actually had the opportunity to live it the right way, and they're the ones that say, I don't care what the total, you know, what the costs are individually, you need to look at total nut cost.
So my grandfather would always say, 30%, no more than that on your home.
Well, that didn't mean 30% on your mortgage payment and everything else.
It was 30% of cost of ownership to live in that home.
So to get you to 30% of your gross income meant that you had to kind of, you know, in your loose calculations in your head, maybe it's, you know, 7% of that overall 30% is going to be chewed up in insurance and taxes and gas and energy and garbage and water because anybody that's owned a home realizes that those, they don't really talk to you about those costs when you first buy a house.
Absolutely.
It's a lesson you learn.
And then it's a lesson you forget every time you buy your next house because you've theoretically bought a bigger house and now you looked at that thing on Zillow and you're like, wow, $2,800 for taxes.
Well, yeah, that was based upon somebody buying it 25 years ago.
You just paid four times what they paid for it and then you get snapped in the face with an $8,000 tax bill.
Boom.
You just blew your entire wad house and you have $500 more per month going out just to pay the taxes for that ownership.
And so, again, if you're having that conversation and somebody understands that, and if you've got a good banker that you're dealing with, a lot of times they will go through that with you.
Chances are good we don't listen to it.
But I think it would go a long way in teaching people about what an asset versus a liability is.
And so a house is an asset, but it certainly is a huge liability.
So yeah, most Americans now, when I see this data that comes out from banks, how much people have saved, how big 401ks are based against folks of our age, and then how much of their overall worth is carried in the home, the percentages are greatly askew from where they were before.
It's interesting that you said the thing about the thing.
When you were saying that a lot of veterans think about payment, not cost, the perfect example of that is me.
I am financially illiterate in that sense.
For example, when my wife Karen and I have conversations about buying a new vehicle, let's say, or moving to a new house, and the price of the vehicle is $50,000, right?
So $50,000, your payment's about $800 or $900 a month.
Well, when I say something to her like, Oh, well, that's only a couple hundred dollars more than we pay now.
No big deal.
It's 200 bucks.
A couple less caribou coffees a week or whatever the case may be.
She gets super frustrated with me because it is true, Jason, that when I think about big purchases like a vehicle or a home or my motorcycle, I think about what my monthly income is and what it's going to cost me monthly to own it.
And that's how I operate.
And I'm slowly, as I get older, I'm not quite as old as you yet, so I have a lot to learn.
But as I get older, I'm starting to see this cost of ownership that you're talking about.
It is, in fact, true that if I buy a vehicle that's $150 more than I currently pay, it's not gonna make or break our family financial situation.
But at the end of the day, I think you end up paying a whole lot more money.
And if you wait it out and maybe get something that's a couple years older and even lessen your payment a little, you're going to be a whole lot better off in the long run.
And so when you start to get older and thinking about retirement and what you want to do with the rest of your life, those things become more important.
And so what you're talking about is exactly what I believe should be being taught to younger soldiers and people in the military.
Because it seems like these young folks, and even the older guys that are still in, that are single, for example, it's hard, I think, when you're a young person in the service to see the end.
Right?
Because it's such a long road.
20 years is a long time.
And if you're joining the military and making a career and making a life out of it, it seems like a really long road.
I look back now after I'd be coming up on my like 22 or 23 year anniversary.
It seems like yesterday that I was walking through the halls of that armory in civilian clothes getting yelled at for having an effing hat on.
I had no idea.
So, those things are super important and I guess my question to you, we got about a minute left in the segment, what is, how do we go about teaching that to these veterans who now need affordable housing?
Well, yeah, I think we're going to have to pick it up next segment because that's a heck of a lot longer answer than a minute.
But I think that'll give us a great opportunity to talk about some of the initiatives, the pieces, and the things that we want to be doing with UVLC. Okay.
All right.
So, folks, when we come back, we are going to talk heavily about how to transition, let's say, my train of thought as it relates to spending my money on a vehicle or a home or a motorcycle Or whatever, and be able to come out ahead in the long run.
And maybe there's a way, Jason, that we do that, make that transition, and not even really notice the difference.
You know, of course it all comes with a little bit of sacrifice, but we should be used to that as service members.
So stick with us, don't go away, we'll be right back.
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Hey folks, welcome back here for the next segment.
Jason, when we left the last segment, I kind of had a very long-winded question, but I think it comes down to this, sir.
Let's use me as an example, and let's just imagine for a minute that I am a veteran in need of affordable housing.
But I have this mindset that I'm worried only about what it's going to cost me monthly versus what I make monthly.
And how do we shift possibly that mindset to cost of ownership so that we have something tangible over time that we can possibly get some of our money back or use that to get something of better value later?
How does that work?
So, there is a theory out there, and it loosely can be interpreted as the cycle of poverty.
The system is set up in a very specific way, like how you get loans and how you do all these other things, right?
And the lower your credit score, it shows you're a higher risk to actually be loaned out dollars, so you never really get a lot of money.
You always hear people, I don't have that opportunity, based upon reasons.
So, And then there's other people that just don't kind of understand, like the ones we're talking about, where it's people making payments.
That's what they're looking at versus the cost of ownership.
And so the thing that I use to talk to people about is a used car.
You need transportation every day.
So it's something that's a little bit smaller.
It's easier to pallet when we talk about it like this, but it certainly could be translated to a home, right?
So we'll just go through this, and you have to tell me if this is crazy or not.
So, it's Richard looking for a vehicle to get to work, to live his life, to have something.
There's two different things you can do.
There's a vast array, but just kind of the median low and the low input way of doing it is to come up with a way to spend $10,000 on a used car, right?
And I guess now, it's been a few years since I've said this, so I'm still going to use the 10,000.
I know that doesn't get you a ton of car, but it gets you a heck of a lot more than the other side, which is the $500 piece of ass.
Yep.
That, you know, it gets you there, but sometimes, you know, when it's really cold, the exhaust manifold is leaking, you're a little bit buzzed when you're on your way to work because you're getting a little free high off carbon monoxide.
But anyway...
It's a $10,000 investment.
You know, again, you've got to get a partner with a bank to get you that loan or a credit union or what have you, or mom and dad, doesn't matter.
Or $500 to purchase that POS to get down the road.
Now, the cost of owning that loaned $10,000 vehicle, and I just kind of roughly ran it out here, maybe it's $330 a month.
That's your payment every month.
That's what you're paying to beat down that principle.
And because maybe it's a little bit newer or a nicer vehicle, that insurance will actually be a little bit less for that particular vehicle.
And likely, because you were able to go a little bit higher up in the marketplace, your fuel efficiency is going to be a little better.
So it's going to cost you less in fuel and insurance, which are kind of some static costs associated with vehicle ownership.
Over the three-year period of time owning that $10,000 car, you're maybe left with a $7,000 car that you could sell.
But now we'll go to the $500 car.
And maybe you're a shade tree mechanic, so you're hanging a lot of your own parts.
But it always seems like every POS that I ever owned, I was putting in a couple hundred bucks a month.
Yes.
Easily.
You know, it was the alternator or it was something bigger.
And so again, this $200 number is just kind of the static piece.
You know, maybe it's burning two quarts of oil every thousand miles.
We've all had that car.
Now, granted, you could keep less coverage on it, but your insurance statistically goes up, you know, because you're probably driving some kind of bucket without any type of safety fixtures whatsoever.
And certainly your fuel efficiency is worse.
So you're going to spend more per mile just getting that thing down the road.
Now, over the course of that same three-year period, you spent $500 on the vehicle and on the average $200 for upkeep, you have spent $7,700 on that vehicle.
And what do you have at the end of that rainbow?
Nothing.
Nothing.
You have nothing you can sell.
I'm just gonna call it a wash in the 500 bucks.
You've also spent on the purchase price.
Maybe you can sell it for that.
You can get 200 bucks basically for anything at the scrap yard as long as you can get it there.
But you spent more on the insurance and you've spent a hell of a lot more on the fuel.
Now, what do you have at the end of the day versus the $10,000 investment is you actually have something that's saleable, that's leverageable to your next move.
And so that can be thought of in a house too.
But we don't think about it that way.
Now you have the guys that maybe are spending $50,000 on that vehicle that are living on post where they just left the military, and they know they can make the payment, and they do the exact same thing.
Now, they do have an asset.
Let's just say nobody's going to pay that thing off in three years.
They're just not going to escalate that number.
They're going to get it drawn out as long as they can, as long as the interest stays reasonable.
So if it is a brand new...
Right?
You're just going to have a longer duration of time that you're going to be paying on that note.
And yeah, you're going to have some value on the back end.
But again, it was like what you were talking about.
It was that entry point that could be negotiated that would shorten the duration of payments.
It shortens the amount of money that you're paying out.
And it does give you all of the positive pieces of the vehicle ownership.
And yeah, you can kind of maintain that way.
You're not going to do it driving new cars off the lot unless you've got a business you can write them off against or you just have so much money that you need to have that vehicle.
That's a very simple way of looking at it that are small dollars that are impactual in your day-to-day life because those are dollars you have to spend.
You have to be able to get to work to make money to afford all the other stuff.
Just like it doesn't matter if you're paying rent or paying a note or paying whatever.
I don't know how many other things there are that you can pay, but certainly between the mortgage and rent, that's probably it.
But you need to have that job to get those pieces done.
Right.
If you take that to a house and you're thinking about your house, it's a liability because, you know, furnaces are going to go out.
You're going to have some of those upkeep things that you have on the less expensive vehicle.
But the longer you own that home, the more asset value you create, the more you're paying down principal.
You're getting more time and space in between when you purchase and when you're selling.
And so if you have the opportunity, then you can watch the cycles.
And if you need to make that next move to the next house, you can leverage that for advantage.
But you can't have it if you're always in a cycle of poverty, if you're always looking at payments versus cost of ownership.
And I think that's one of the things, Richard, that you and I have hit on at UVLC, is we want to, you know, find other partners, like true professionals, people far smarter than you and I, that can sit down and do something, you know, either it's a digital forum or if it's something that we can do face-to-face with folks, and just kind of show them how money works.
How that extra mortgage payment every year can knock a couple years off the maturity date of your loan.
I really don't think people ever really see that.
I mean, maybe they mentioned it one time when you're at your mortgage broker or your house of finance, if it's a bank or credit union, what have you.
But if people actually saw it and you could pay attention to it's hard to live 15, 20 years in the future or 30 for that matter.
Yes.
But if you could see it and then you could see even in that 10-year cycle that you may own that home, what kind of an advantage that gives you to the next property.
It's a small thing to pay incrementally, but it's a huge thing to overcome with time.
Well, yes.
And I think that folks probably don't realize that until they've seen firsthand the advantages of the cost of ownership method.
And, you know, I agree with you.
It's hard for people to, and I don't know that it's just veterans.
I think that everybody in some way, shape, or form falls into this.
But I think that why it is important to the veteran population Well, just because coming up and being raised, I'll call it, being raised in the military, we are programmed to focus on mission first, right?
When you get 5, 10, 12 years into the service and you've lived that mission-first lifestyle, now when you go out into the real world, you're still focused on mission-first.
The monthly payment becomes your go-to because, all right, I got to get to work.
I got to buy groceries.
I got to buy fuel.
And so whatever this is going to cost me the least a month to have what I want or something close to what I want, Is how I'm gonna do it.
And you know what?
I'll worry about the extra money or whatever.
I'll worry about that bridge when I get to it.
But I gotta get to work and I gotta feed my kids and I gotta bring them to hockey and I gotta do this and I gotta do that.
And that cost of ownership method gets lost on this population, I believe, because of the way the military trains you to always focus on the mission for mission completion.
Nothing else matters.
And so shifting that mindset now for veterans who find themselves in a spot where life is just difficult because I don't ever have any money, everything's getting more expensive, and now the payment-only vehicle that I bought is on the fritz, and it costs too much to fix it.
Anything that's comparable is out of my price range.
And now I don't really have an asset, as you call it, to make that next move.
So now we get into this situation where, oh crap, I'm in danger of not completing the mission, whatever that mission may be.
And so now we make drastic moves.
Yep.
Moves under duress.
Yep.
To try to facilitate the completion of that mission.
And so now that we talk it out, I even see it a little more clear.
But here's the thing, Jason.
Here's my devil's advocate moment.
At a certain point, you still want what you want.
And so now it becomes the question of how much are you willing to sacrifice To be able to get to where you want.
Because I think another issue that veterans run into is, well, I want what I want.
And so I'm going to go get it.
Not thinking about how that's going to affect me later.
Because now I have what I want.
And then you know what?
If I got to not eat for a few days, a month, okay, I'll do that.
But I want this vehicle.
Right.
Which is probably that circle of poverty you're talking about.
Yeah, it's definitely, that is, it's right in there, right?
So it's at all means for any value.
You just don't care, right?
So, but if you're sitting down with somebody and you're looking at, you know, X amount of dollars that come in net into your pocket every month, you've got your raw costs for housing and everything else, and then you've got expendable income.
And so now here's where veterans fall into the cycle even harder.
So now we look at expendable income as income that we can use to support those other payments.
So now that extra $150 in that truck payment, like, you know, you probably said it before, and I think I've heard you say it even today, I just won't go to, I won't get my coffee a couple times a week.
Yeah.
And that'll make up for it.
So what you've done is you've just shifted the money that you had here in your disposable income pocket, and you took a little chunk and you went boop.
Now you've got it locked here.
Now this payment needs to continually be made.
You very soon start to realize after a very short period of time, it's probably in the first 90 days, because that's how long it takes for us to pattern anything.
I don't care what your background is or what anything is.
You look at the rule of 90, that's how people expose themselves.
That's why a lot of companies are going to start shifting to this 90-day temporary status when you're hired on, because you can hide who you are and your tendencies for up to 90 days, but eventually you will come through and people will see you.
Yep.
Same thing with your financial habits.
So you might fight those coffees for the first month or two, and everything's working out fine.
Eventually, Richard's buying the coffees again.
Let's be honest, it ain't even gonna be two months, bro.
I know, it's probably gonna be about a week and a half, and you're gonna be back into it.
But if you're in a situation where you don't have other levers, where there is no extra money, where does that money come from to make up the difference?
Well, yeah, if you're in a situation where you're already sacrificing, you're eating ramen instead of Campbell's soup or something like that, and you're already deep in this circle of poverty, if that's what we're going to call it, there is no skipping a coffee.
There isn't, but what is the one lever that people use to bridge the gap?
Work extra shift.
Incorrect.
Credit.
Well, but that's, well, yes, okay.
You're right.
And I feel like that's a whole nother conversation, but yes.
But it's not, but that's what comes back to a lot of these pieces.
I'll just finance it.
You're just gonna finance it.
I'll get the money another way.
I'm gonna, again, now I'm gonna re-leverage across the entire board.
I'm gonna do something else.
I'm gonna take on a little more Unsecured credit card debt to make up for the SOTOs or I'm going to do that.
Whatever it is.
And I think some of the data did come out when you look at 2007-2008 when people were losing their homes in the foreclosure process at a much higher rate than we had ever seen.
And hopefully we never see again.
The consumer debt was a far greater driver or a red flag In the financial industry than payments.
People had overrun the ability to pay their minimum bills based upon their unsecured and secured debt load outside of the house.
So they had the big fancy cars.
They've got all the fancy phones.
Everything is driven off a payment cycle.
And again, that cycle of poverty, it doesn't matter if you're making money.
$20,000 a year, $150,000 a year, or a half million dollars a year.
The cycle of poverty can follow you all the way through the income growth.
Yeah.
Because you're overspending what you're taking in.
And there's always some card out there that can clean this up.
And it's always a temporary patch.
And then as soon as people started to trigger into the foreclosure pipeline, they were...
And again, I'm not...
I can't speak from specific experience that I've had, but I've certainly talked to enough people that went through it.
Do you think any of them missed their car payment or their phone payments?
Yes.
Absolutely.
I used to.
They make their phone payments.
They would make their...
They had the internet.
They had all these other things.
Those are things that really have become very, very...
They're staples in our lives, the way that we live them now.
And so the consumer debt had to be constantly fed because they needed to have that lifeline, that ability to extend that credit maybe another $2,000 or $500, whatever they could get.
So if they weren't making those payments on this unsecured consumer debt, they were never going to get another lifeline.
Making your mortgage payment wasn't going to give you a chance at a couple of extra bucks to extend the game up.
Consumer debt in that cycle of poverty did a lot more to drive people into foreclosure than the cost of their home because they likely weren't making any less than they were when they got the property.
But the amount of money that they had to pay, the house became the last thing to get paid.
And so once some of those properties started cycling through, I think people got very accustomed to hearing there was always kind of a stigma if you ever had a house foreclosed up.
Nobody would ever want to talk about it.
Kind of be one of those quiet things.
And they probably moved out to an adjacent town and lived life under the radar for quite some time until they came back up.
It almost became commonplace.
I mean, everybody knew somebody that went through foreclosure.
And, oh, I was underwater, or I was this, or my house wasn't worth that.
Well, it's just like the stock market.
If you've got money into it, just because it goes low, you don't just sell it off.
It's a cycle.
Housing is a cycle.
It's never going to go completely down or completely up.
It's going to have its ebbs and flow and you're just going to ride through that thing.
And so instead of paying for the important pieces, they were paying for the unimportant pieces and the unimportant pieces were what took them out.
And they were willing to do it because they were, quote unquote, underwater.
There's always a reason or a rationale.
And those are instances where you didn't have an emotional event that triggered something in foreclosure or a change in lifestyle.
Those happened to all of us.
But it became very commonplace where people were still employed.
They were still doing the same income.
They were still doing all these other pieces.
But consumer debt is what took a lot of people out.
Nobody really wants to talk.
Well, that's a very interesting point.
I never thought of it that way, but I can see where you're coming from.
That house payment's the last because if I don't make my payment on my two or three credit cards, I got nothing else to spend.
That's a whole lot more clear.
All right, folks, stick with us.
We'll be right back.
Hey folks, welcome back here for the last segment of the show.
We went a little bit over on the last one, so we gotta be quick.
We only got about eight and a half minutes here.
Jason, do you believe that veterans are an advantage or disadvantage when it pertains to affordable housing options?
Well, just because you're a veteran doesn't mean that you're going to find more options for affordable housing, but I do believe that the VA home loan program, depending upon your resources and where you fall in on the income bracket, allows you the flexibility lower in the bracket to procure the financing to own a home, period.
Okay.
In my opinion, that would mean that we're possibly at an advantage.
And so what I'm going to go on a limb and say is that, and I have used the VA home loan program a couple times, and it certainly worked out well for us and our family.
But I think that ultimately, at the end of the day, we are at a little bit of a disadvantage because, not because the programs are there, but because veterans aren't necessary.
Everybody knows that there's a VA home loan program.
Where we fall short is the education piece.
How do we use it?
Where do we find it?
How do we find a bank that'll even give us a VA loan?
How do you apply?
How do you navigate it?
And to be quite honest, the process is a little more frustrating.
And as you said offline, any federal program requires more paperwork, which equals more frustration.
So to enable to avoid wanting to Jump off a bridge going through this process.
It comes down to education.
And so I think that where we fall short as a community or a population of veterans is that we haven't been properly educated.
And maybe that's due to our own...
Maybe it's our fault because we haven't sought out all the information because I'm quite certain that it's out there.
But it's just probably a little bit tougher to find or to read through than anyone really wants to...
So do you think, Jason, that there is a situation where you and I together can Search out some of this data to find out what the numbers about VA home loans are.
Like, for example, who uses them?
How many times are they being used?
Are there new buyers?
Are they repeat offenders?
Whatever it is.
Can we find that data and maybe report this back to the audience?
Yeah, that data is out there.
There's no question.
I guess I will say we have drifted so far from the original idea today.
I don't have anything that I could point to real quickly to say that, but I certainly know...
The VA does publish a lot of that information on, you know, who's using the programs, what they're kind of who they are as a buyer, those kind of get pulled together and what the default rates are.
And most banks have those.
So it would be something that we could look at.
And then we could take some time to actually dig into, you know, maybe the things that we're talking about are the reason that maybe there's a higher default rate, which, Which eventually leads to either foreclosure or short sale or selling off asset and then not being a homeowner again.
And they will have a lot of that data there and we could kind of either validate, substantiate or completely blow out of the water what we've been talking about.
I find that highly unlikely.
I certainly think that where we're walking is real because we both wear the boots.
We're not smart men.
We've fallen into these traps.
So I don't think we're an anomaly.
I think we're probably center mass when it comes to this.
So I think that would be something that we should pick up, grab, and then we can revisit it because then we could look at empirical information and say, Okay, here's what it is.
Here's how it's worked in the past.
And maybe there are some things that either through education for veterans who are using the programs or And here's the hypothetical, to pursue or push something that, depending upon where that veteran enters the cycle, if they can do something on their end to better ensure that not only they're meeting the underwriting criteria,
but if you're already going to have to do 450 pieces of paper and documentation more than a regular loan, what's another one to show people some of the things associated with owning a home?
Yeah.
Agreed.
And it can be as easy as a two-page document.
Like this is the real no BS information about what you're going to pay when you own a home.
And so...
You know, for anybody who doesn't know, which would probably be most of you, you've heard Jason and I reference UVLC today.
The UVLC is the United Veterans Legislative Council, which is an organization that Jason and I, amongst a few other guys, have joined in trying to make it better.
And so the whole focus is to work with a side Legislators and other government agencies, both city, county, state, and federal, to try to improve the lives of veterans.
And so this, Jason, may be something that we also can incorporate into UVLC's mission, you know, and start it here in Minnesota with hopes that it grows.
You know, I mean, the goal of this show is to...
Engage veterans everywhere.
Even the ones that decided not to come and live back in the US. And sometimes I don't blame them.
But there are things that need to be done and that need attention.
And so that's our goal.
Our mission is to improve the lives of our brothers and sisters.
And I'm going to go out on a limb and speak for you here, Jason, and say that one of the only reasons that we have any wisdom in our lives and any kinds of common sense is because we were stupid enough to fall into some of these traps and learn the hard way.
And so like I tell my kids all the time, I already did all that dumb stuff.
So if you would just listen, just listen a little bit, you might save yourself some heartache.
So our goal here is to engage everybody who needs it.
And if you're not one of those people that need anything in particular that we're talking about, You're certainly more than welcome to help us teach it.
And so that's the plan.
Jason, we got about 45 seconds left.
I'm going to give you the last word.
What do you got, sir?
Boy, thanks.
I thought you were going to round it out, Richard.
Come on.
You know, I think getting back to some of the things that we hit on today that were completely off topic, a better understanding of who we are as a community and a better understanding of who we are as people and understanding how to navigate the financial world will yield better results in the over...
Ah, shoot.
I lost train of thought.
I'm out.
Done.
I think what he's trying to say is that being able to pass on this information and understanding who we are and where we came from, being raised in a military culture, will just help the overall betterment of the community.
Thank you.
The nods mean yes, I was correct.
And that's true.
There's nobody more qualified to help our brothers and sisters than us.
And so my pledge to you from this show is that we are going to do everything we can to help further the lives of veterans.
And so with that, I want to thank you for joining us.
Please have a great evening, and we will see you next week.
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