Someone once said “there’s no such thing as a free lunch”. They lied. With $50,000 a year, you can buy yourself 5,000 free lunches thanks to the generosity of the government! What are you talking about, I can hear you thinking.
It’s pretty simple really. In addition to giving struggling homeowners a free $50,000 over a course of 5 years, and 99 weeks of unemployment benefits (which we might as well extend to 5 years in my Shock & Awe Yeah! program), the Obama administration has now announced they will require mortgage companies that collect loans backed by the Federal Housing Administration to offer 12 months of forbearance for qualified unemployed owners!
In other words, if you qualify, you don’t have to pay your mortgage for a whole year! Is that not sweet sugar or what?!
Think about this scenario. You unfortunately lose your job in 2010 due to a cut in your entire department. You own a home but don’t have much savings to hold you over even though you should have been saving and investing for the past 20 years. The 10% you put down for your home basically wiped out your cash reservers, but you didn’t care because your three kids and spouse deserve the best.
You can literally get 99 weeks of unemployment benefits, a free $50,000 from the government, $3,000 a year in child tax credit and not have to pay your mortgage for a whole year if you qualify! The maximum unemployment benefit is around $1,400/month. Let’s say your mortgage is around $1,800 a month.
That’s $38,400 in income you get to receive from the government a year. Add on the $10,000 a year free gift from the government for 5 years, plus the $3,000 a year child tax credit, and that’s equivalent to earning a fantastic $50,000+ a year!
I don’t know about you, but I sure as heck wouldn’t mind receiving $50,000 a year in free assistance from the government. With the median US household income of roughly $50,000 a year, the temptation would be incredible not to work and just spend time traveling or hanging out with family. In essence, “making the most of unemployment” might have some different meanings for different people!
To put $50,000 further into context, you can basically change the figure to equal whatever you are making since $50,000 equals the median US household income. Hence, if you live in Manhattan or San Francisco, where incomes frequently breach $200,000 a year, can you imagine getting a free $200,000+ from the government?
Oh man, no wonder why despite all the doom and gloom from the media about unemployment, the malls and restaurants are packed, traffic is horrendous, and real inflation is much higher than expected due to so much demand and spending!