happystampThanks to the federal government for bailing out huge corporations – hopefully they will bail out my stock portfolio too!

So whats the difference between being underwater on a mortgage and underwater on a stock ? Is it that “experts” will tell you to hold the stock in hopes of it going up in value and then explain that those with homes worth less than their mortgages shouldnt feel bad about breaking their mortgages and defaulting ?

I think “Buy and Hold” for stocks is one of the all time great marketing scams. Ignore it. Always.

“Buy and Hold” for your house is a mantra you should always live by. The difference ?

You can live in your house. You get utility from your house. You may get a deduction for interest paid on your tax bill. You can develop a positive emotional attachment to a house.

A share of stock….well you can…you can look up the price anytime you want if you think thats fun. There is no utility of a share of stock beyond its financial value. The value of a house is that its your home.

The fact that you may be underwater in your mortgage is of no relevance if you can make the payments.

If you can make the payments on your mortgage, it shouldnt matter if your house is worth 10pct of your mortgage. If you can make the payments, make them.

I remember being freaked out watching as my rate on my Adjustable Rate Mortgage went up and up as I watched the value of my house go down. For 2 years my rate went up, my house value went down. Fortunately, I liked living here.  So I keep paying the note every month. In spite of the financial pain.

Then a funny thing happened. Interest rates started to go down. I didnt even know it until I got my notice saying that my mortgage payment would go down. The value of my house wasnt going up, but at least for now, my payments are low. It has taken years, but I actually built equity in the house.