How to live in your home for free … and buy the things you’ve always wanted

Punchline:  Steve Martin has a dated comedy routine: how to get a million dollars tax-free.

First, get a million dollars.  Then, simply don’t pay any taxes.  If the Feds come knocking, say “I forgot”.

Here’s a contemporary twist: how to live in your home for free and buy the things you’ve always wanted.

First, stop making your mortgage payments.  Then, buy whatever you want until your cash runs outs.  When the repo man comes, say “I forgot”.

It used to be that American homeowners would pay their mortgage first, then the rest of their bills, and then spend whatever is left over.

My, how times have changed …

* * * * *

Excerpted from CNBC: Mortgage Defaults May Be Driving Consumer Spending, 12 Apr 2010

Recent studies show Americans are now far more likely to pay their other bills first before their mortgage (which is a big turnaround historically speaking.)

That means they pay off their credit cards, cable bills, car loans in place of their home loans.

Paul Jackson, publisher of, wrote a fascinating article last week that describes a case study of someone who applied for the government’s Home Affordable Modification Program.

The person had an $1,880.00 monthly mortgage payment on which they’d defaulted, but said person’s monthly bank statement showed payments to a tanning salon, nail spa, liquor stores, DirecTV bill with premium charges, and $1,700.00 in retail purchases from The Gap, Old Navy, Home Depot, Sears, etc. 

Writes Jackson:  Even if you assume that just half of the current 7.4 million currently delinquent mortgages fit this sort of ’spending profile’ (that is, they are spending their mortgage) and you assume a $1,000 median monthly mortgage payment for most U.S. homeowners — you get a $3.7 billion boost per month to consumer spending. It’s certainly enough spending to matter in the overall scheme of things. 

Since it currently takes well over a year, in some cases nearly two years, to go from missing a payment to being chucked out of your home … it’s just another, innovative way of using your home as your ATM.

Full article:

Thanks to SMH for feeding the lead

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