Math-challenged Americans more likely to end up in foreclosure

[HeXen]

I'd like to know more about this so called "study". There are many studies out there done that are pathetically inaccurate. People can't pay mortgages cause they either refuse to properly manage out their income and expenses to give into selfish desires and lifestyles, they lose their job or sudden major expenses like health issues..etc.

I'm not ashamed to admit I suck at math. I literally graduated with my last math class being in the 8th grade and still had 2 more credits than required to graduate. Yet my mortgage has been paid in full each and every single month and at 36 i'm proud to honestly say I still have over 800 point credit score.

 

[Eug]

But the point is that people who have no number sense are the ones defaulting on mortgages. There isn't a simple pick up a calculator and perform a single arithmetic operation to determine if you can afford your mortgage long term.

This helps a lot though.

http://www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx

Ironically, the numbers provided on the Canadian site are wrong.

http://www.bankrate.com/can/mortgage-calculator.asp

Not off by much, but still wrong, for most Canadian banks.

I'd like to know more about this so called "study". There are many studies out there done that are pathetically inaccurate. People can't pay mortgages cause they either refuse to properly manage out their income and expenses to give into selfish desires and lifestyles, they lose their job or sudden major expenses like health issues..etc.

I'm not ashamed to admit I suck at math. I literally graduated with my last math class being in the 8th grade and still had 2 more credits than required to graduate. Yet my mortgage has been paid in full each and every single month and at 36 i'm proud to honestly say I still have over 800 point credit score.

Your criticism of the study makes little sense... in terms of the math. Say that those bad at math default at a rate of 10%. That still means 90% don't default. However that's still much, much worse than a default rate of say 2%.

 

[Ice_Dragon]

I thought this had to do with algebra, geometry, etc. which I was horrible in. If I didn't hate the high school environment, I could have tried harder.

As for basic math, that is something I feel should be essential to know even with technology.

 

[MaxPayne63]

www.bankrate.com

Ironically, the numbers provided on the Canadian site - http://www.bankrate.com/can/mortgage-calculator.asp - are wrong. Not off by much, but still wrong, for most Canadian banks.

That tells you what it will cost, not if you can afford it.

Important difference.

 

[Eug]

That tells you what it will cost, not if you can afford it.

Important difference.

I also blame the US banking system. Other countries have/had much stricter rules guiding mortgage lending.

If anything, the US banking industry deserves a fail for its approach to math.

 

[Red Squirrel]

I suck at math, but I still can do basic finances, such as not spending money I don't have, or buying something I can't afford. I can't do math in my head if my life depended on it.

As for tips I find it hilarious that people will go as precise to the penny. I just make it a nice round number, much easier for me and easier for them. Usually I just give an amount with an increment of 5 and maybe throw in a few bucks and tell them to keep the change. Ex: pizza comes up to 23.43 I'll give 28 bucks and tell them to keep the change. A 20, a 5 and a 2, much easier than calculating to the exact penny and giving a bunch of change lol.

 

[tfinch2]

I suck that math

Lulz how does that work exactly?

 

[JulesMaximus]

There are two reasons why it is still a useful skill.

The first is that just because you can whip out your smartphone every time you need to calculate a 20% tip or figure out whether it's better to buy 3 for a dollar or 2 for $0.40 each doesn't mean that you will. The time that it takes to get out the phone, unlock it, go to the calculator, formulate the problem, and get the answer is more than many innumerate people are willing to spend, which means that they are perpetually going to be ripped off by deceptive labeling and vulnerable to simple cognitive biases.

The second is that knowing how to do mental math gives you a sense of heuristics, even if you don't calculate the exact answer every time. If I'm filling up my car and I put 15 gallons in at $3.88/gallon, I know that my bill will be around $60, and if it's over that something is wrong. Innumerate people could get a $80 bill and have no clue other than "it's more than I usually pay, I guess the price of gasoline did go up a few cents since last time."

I work with high schoolers on a summer science program, and it's not uncommon for them to make order-of-magnitude errors in their calculations without even realizing it. And yes, sometimes they even do this when they're using a calculator...turns out that it takes a little mental math sense just to enter the problem correctly.

I'm not suggesting that everyone should memorize pi to 100 decimal places or know how to take cube roots in their head, but a little basic understanding and enough practice to get some idea of how the different equations work (especially compound interest) will get you a long way.

Use the machine for complex or precise solutions, use your brain for easy problems and decent estimates.

:thumbsup: I couldn't possibly agree more.

 

[JulesMaximus]

I also blame the US banking system. Other countries have/had much stricter rules guiding mortgage lending.

If anything, the US banking industry deserves a fail for its approach to math.

About 10 years ago my wife was interested in a nice house about a mile from where we live now, it had a huge yard, 3 car garage, slightly smaller floorplan but the taxes would have have been double what we currently pay so even though we had a lot of equity in our home at the time and we could have probably stretched our finances and bought that home it just didn't make sense to me financially so I talked her out of it.

Sadly I see more manipulation of the housing market going on now and prices are once again rising. :whiste:

 

[TecHNooB]

I gave her a $20 bill. She said if I gave her a penny, she could give me back the change in bills, and not worry about coins. I said she owed me the penny. She argued. I argued back. This went on for several volleys and she just "gave in" with a sigh. What a frickin' moron. Luckily we no longer have pennies, but I'm sure she'd do the same thing with nickels. I wonder if she ever got a mortgage.

this is a terrible example. her practice is so standard that I would consider it smart on her part. you could have said you didn't have any pennies and she would have just given you the change. but nope, in your mind, she's an idiot. good work.

 

[Train]

this is a terrible example. her practice is so standard that I would consider it smart on her part. you could have said you didn't have any pennies and she would have just given you the change. but nope, in your mind, she's an idiot. good work.

^^ Not sure if serious.

Maybe you should go back and read Eug's WHOLE post, including the part before what you quoted.

 

[TecHNooB]

^^ Not sure if serious.

Maybe you should go back and read Eug's WHOLE post, including the part before what you quoted.

well shit. i am an idiot. im going back to bed.

my apologies to hello kitty

 

[Red Squirrel]

Lulz how does that work exactly?

lol no idea how the th got there. And nobody caught my humor a bit further down. :biggrin:

 

[Mixolydian]

I suck at math, but I still can do basic finances, such as not spending money I don't have, or buying something I can't afford. I can't do math in my head if my life depended on it.

Same.