Slowing Metabolism

Slowing Metabolism

Once upon a time, I could eat whatever I wanted and still couldn’t break 100 pounds.  Now, if I look at food the wrong way, it seems to jump into my belly and never leave.  Who here can relate and/or know someone who can relate?  You know that guy growing up who always had a six pack but ate such junk?  Funny thing is, Father Time catches up to us all, and those same people are either overweight now or had to drastically change their gummy worm breakfast routine.

Mortgage Changes

It is a fun anecdote to think about, but the reason I’m bringing this up is that I was talking to one of our mortgage guys, and good friend Matt Lieberman, the other day.  I was asking him about his business with rates much higher than we’ve seen in the past decade or two.  We then got onto the topic of refis and started discussing how, although home sales are still going strong, the refi market has come to a screeching halt. 

He then said there are still some refinance situations going on, like couples who have mounting credit card debt and need to tap into their home equity to clear it away.  This is where my analogy and our conversation became interesting (not that every conversation with my friend isn’t enthralling).  Anyway, he was telling me about these situations, and I made the comment that the ride is coming to an end. 

Hiding From Bad Financial Management

You see, when interest rates were in the 2-3% range on mortgages, conflated with the fact that home prices were shooting up year over year, it allowed people to hide, or recover, from bad financial management.  Home equity kept increasing, and a simple cash-out refi really left individuals no worse for the wear at the end of the day.

Well, as they say, trees don’t grow to the sky, and what comes up must come down.  Today, we are in a different interest rate environment, which certainly has its trials and tribulations associated with it.  One glaring issue, as home prices have tempered and home mortgage rates are still hovering in that 7% range, is that most of us lack that safety valve we have become accustomed to over the past few years.  I mean, refinancing out of a 3% mortgage to a 7% mortgage to get rid of mounting credit card debt, no longer feels like the silver bullet it once was. 

It Catches Up To You

This is where I likened it to that crazy six-pack of abs kid you knew who ate like junk growing up.  That fast metabolism catches up to us all, and now those bad habits either need to be changed, or leave those individuals, and their insane abs, grossly out of shape.  Much like personal finances, when the combo of conditions mentioned above has slowed their metabolism, it becomes very clear who needs to change their habits or deal with the consequences.

As the infamous Warren Buffett proclaimed, when the tide comes in, you can see who is swimming naked.  Point being, let this be a wake-up call, not that the good times are over, but rather that our accountability has been put under a microscope.    If you are running a tight ship over there and have got a good handle on your finances, well then, steady as she goes.  But if your finances consist of gummy bears for breakfast, well, times they are a-changin’ and let this be the wake-up call to start that financial diet you’ve been neglecting for all these years.

Thanks to my good pal Matt for his inspiration on this blog, and as always, stay wealthy, healthy, and happy!