What price are we willing to pay now (taking the proverbial short cuts in life) that will require a balloon payment down the road?
When we bought our empty lot behind Magic Kingdom in 1990, most vacant-land mortgages came with a mandatory balloon payment; a pay-in-full requirement in three short years. This was designed to promote vacant land development.
The banking model assumed customers would be forced to convert their vacant-land mortgage into a home construction mortgage (a 15 to 30 year payback schedule) because they wouldn’t have cash to pay their loan in full in three short years. This would triple, or more, the banks mortgage volume. It triples under the assumption that a home at least twice as expensive as the land it’s build on is a safe bet.
The balloon payment was an enticing way for people to purchase the property of their dreams and then design a floor plan and pick a builder.
In life, however, taking the easy way out means skipping exercise, missing volunteer opportunities, neglecting a healthy sleep pattern, making pleasurable food choices instead of intelligent ones.
The balloon payment for those decisions doesn’t come due in three years.
That’s the bad news.
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On April Fool’s Day 2009, jeff noel began writing five daily, differently-themed blogs (on five different sites). It was to be a 100-day self-imposed “writer’s bootcamp”, in preparation for writing his first book. He hasn’t missed a single day since.