Confessions of a creditholic
Ann Althouse says she wanted to smack Edmund L. Andrews, author of “My Personal Credit Crisis“, when she read his article in Sunday’s NY Times Magazine. And it wouldn’t be a love tap, either.
I’m with Althouse.
Andrews begins by saying, “If there was anybody who should have avoided the mortgage catastrophe, it was I. As an economics reporter for The New York Times, I have been the paper’s chief eyes and ears on the Federal Reserve for the past six years.”
And yet, not only did Andrews fail to avoid the catastrophe, and not only did he plunge into it with verve and vigor when he of all people should have known better, he continued to throw good money after bad, refusing to acknowledge his errors and getting ever more deeply into the hole as he covered his overextensions with ever-spiraling credit card debt.
And for what? It’s not as though Andrews and his wife-to-be (who sounds like somewhat of a financial ditz, but at least she’s got an excuse—she’s not an economics reporter for the Times) were poverty-stricken. It was just that they wanted to live in a manner to which their salaries really did not allow them to become accustomed: buying the dream house, taking the dream vacations, indulging the kids in the dream indulgences, and pretending they never had to think about whether they could afford these things.
The banking and credit industry was only too happy to oblige, by lending them more money than they could afford to pay, counting on the fact that their new home would only appreciate. Sound familiar? Andrews and his fiance, despite being highly educated and supposedly sophisticated, continue to plead ignorance and the seductiveness of easy money—pretty strange coming from a man with his job [emphases mine]:
I thought I knew a lot about go-go mortgages. I had already written several articles about the explosive growth of liar’s loans, no-money-down loans…Yet for all that, I was stunned at how much money people were willing to throw at me…
As I walked out of the settlement office with my loan papers, I couldn’t shake the sense of having just done something bad . . . but also kind of cool…It had been so easy and fast. Almost fun…
Meanwhile, neither of us was paying attention to how easy our bank had made it to build up debt…
Patty and I were now unwittingly tapping into our credit line at a terrifying pace…
Our debt spiraled up faster than I had ever dreamed possible…
Between humongous loan balances and high rates, we had hung ourselves with the rope they gave us…
Andrews remains mystified as to how this could have happened to him. I can help him out on that: greed and denial. No one forced him to do any of this, and he of all people ought to have known better. But his story is an excellent example of how far many people in this country have come from any idea of personal responsibility.
And that lack of responsibility continues. Who’s paying now? It certainly doesn’t seem to be Andrews, whose bank is so overloaded with potential foreclosures that it hasn’t gotten around to modifying his loan yet (“don’t call us, we’ll call you”). The last sentence of his piece is “Eight months after my last payment to the bank, I am still waiting for the ax to fall.”
So he and the family are living rent-free in their lovely suburban home while the rest of us idiots pay our mortgages and/or our rents and try to live more or less within our means. Sweet.
After reading the article, what impressed me was their refusal to accept limits, to keep on spending at high levels even with the big mortgage expense. OTOH, taking on such a large mortgage without funds to pay for it already indicated a refusal to accept limits.
I see no point in tax monies being used to support such tomfoolery. Let them lose their houses, let housing values fall to affordable levels. I lost a house 2 decades ago to the bank, and later bought one for cash, so I know that one can survive such circumstances.
Hey, I am one of those who got in way over his head. Between my wife and I, we had a $300k annual salary. We lived in a nice apartment on the upper west side of NYC and really enjoyed the good life. Then suddenly, all my contracting jobs dried up just as we invested money in a cafe in upstate NY. Of course, we threw bad money after good but we continued to plow our savings into the cafe to keep it going. Suddenly, we had $10k in monthly expenses that we could not pay.
Much of that article really resonated with my wife and I. We’re definitely not looking for sympathy – we made our bed and now have to live with it. However, it’s very easy to criticize from the outside as a person’s finances fall apart. It’s much more difficult to see the forest from the trees when you are in the middle of it – most of us are optimists and believe things will turn around if we just try hard enough. Isn’t that the American way?
By running the town’s cafe, I hear about the collapsing finances all around us. This morning I had a man in his late 30’s tell me how he couldn’t get out of bed last week because he was so depressed after he realized he could not pay the next month’s mortgage. He kept telling himself that things would turn around but they didn’t and now he finds himself in an extremely tough predicament.
I can tell you things are definitely not getting better – bankruptcies are only accelerating and it seems at least 1 person a week can no longer come in for their daily cup of coffee. Before you throw stones, keep in mind that it is very easy to be smug when you don’t think financial catastrophe will happen to you. My guess is a some people who are quick to criticize the author will be rereading that article a couple of years from now only to find many parallels to their own experiences.
A scathing if inadvertent indictment of the NYT: He was “the paper’s chief eyes and ears on the Federal Reserve”. Does he so remain? Dunno; I refuse to check the Times. GIGO.
Its PC delusions at that. Notice, its bank’s fault. Not their flinty employer’s. 🙂
Both are delusions but you can’t have even a delusional enemy on the left.
“So he and the family are living rent-free in their lovely suburban home while the rest of us idiots pay our mortgages and/or our rents and try to live more or less within our means. Sweet.”
I can guarantee you he’s not living the sweet life. How can you say that? My guess is that he can’t sleep at night because he knows he’s about to lose the house and when he does he has no idea where he will live because with his credit it will be next to impossible to get an apartment…wouldn’t be so bad if he was single but that is damn tough when you have kids to worry about.
I love your writing but this is the first time I read something of yours and said “is she serious?” Talk about low and cold.
Alex Says:
“we made our bed and now have to live with it. However, it’s very easy to criticize from the outside as a person’s finances fall apart.”
Your not really apples to apples… the guy didn’t get in hole from loosing his job (like you sort of did with the contracting work drying up) or having a money pit investment (re: a gamble that might have paid off). He just borrowed and spent more than he ever made… on everyday stuff…
This will be therapy for me.
I, Baklava, have a sweetie who has a credit problem. We’ve been together for 9 months and have gotten in our biggest fight ever last week.
Background:
We’ve known each other for 3 years. I didn’t think she had a problem. To be clear, I don’t love her any less and I still have her on a pedestal. She stopped paying on her home in November because she purchased a home in mid 2006 at the peak of the market values. Her home is now worth 1/2 of it’s value then. It was perfectly understandable of a situation. She didn’t get an interest only loan. She got a 30 year fixed.
She’s been an upstanding person with no traffic tickets or trouble or drugs or anything. She’s had a distinguished career.
So our plan was I would buy a home at such unprecedented low prices. I’ve done that. It recorded in March. I’ve been painting, changing things like light fixtures and door knobs and removing wallpaper, etc.
Then about 3 weeks ago her 2001 BMW 740 had a power steering pump go out. $1,000 later the mechanic said the water pump is leaking and the brake pads have about a month of pad left.
We sat down and worked out a budget because of course we tried to MAXIMIZE on the home market situation and I’m tapped out. We found out that we are minus $300 per month.
Get this… She owes $13,000 on a 2001 (8 year old) Beamer. She has a monthly payment of $400 for a car that is falling apart.
So she had a plan. Sincer her credit is shot from the foreclosure to let the car go. Let it get repossesed and with my good credit of 800 purchase a car. I said fine. I said we’ll get a reliable Honda Civic for $6,000.
That’s when I started to hear it. We argued 3 times in the last 3 weeks with last week’s argument being the worst. She needed to spend $10,000 before she felt the car was reliable enough.
I showed her consumer reports magazine had black circles for the Beamer and red circles (reliable versus unreliable) for the Honda.
I’ve talked about how a $6,000 car would make payments of $200 per month for 36 months which would make our $300 deficit a $100 defecit.
She said I need to compromise.
I said to her how does one compromise from giving 100%. I can’t give more than 100%.
I said to her that she needs to be sacrificing at this time right alongside with me and that she has been LIVING ABOVE HER MEANS.
That was what did it. She was extremely mad at me. I don’t think anybody has told her that.
She kept insisting I need to compromise and finally because we couldn’t talk about it I wrote a 2 page email that as politely as I could telling her about 10 times that “I don’t love her any less” but she needs to understand that I can’t give any more than 100% and she needs to sacrifice as she has been living above her means.
I told her I haven’t had a car payment since 2002. My 10 year old minivan has 132,000 miles and I won’t be able to replace that if it breaks in the next 3 years if I do this 3 year loan for her used Honda Civic.
At any rate. Here’s how it ends.
I’m giving 150%.
I’m going to go purchase a NEW car for about $15,000. A Mazda 3. My intent is to get the least expensive one with air conditioning. There is a 0.9% incentive for 60 months. When we do this we shall see what she can “live” with and sacrifice for me. I’m thinking the options will add up to $19,000 invoice instead of the $15,000.
I’m feeling stressed. I’m the only man who has been able to say no to her. I’ve done it a few times. But in the end. I’m saying double yes.
At all cost I will protect my credit. Since the items are legally mine I can sell them if it comes down to it.
Another thing I asked for in my 2 page note. I want recognition for giving this my all. A sense of appreciation. When she said I was doing “minimal” and not compromising – I felt extremely minimized for my efforts which should’ve exceede expectations.
Thomass, you are wrong. Looking back on things, we should not have spent the way we did. I did consulting work for many banks on wall street and brokers were talking about the coming problems in 2006. I even told my friends to short bear stearns 1 month before it collapsed. Yet, being forever the optimist I continued to spend on an apartment, food, clothes that ate up a considerable amount of my income just because I wanted to believe things would turn around. If I did not invest in the cafe, I would be up $150k, but I did and now I have the added difficulty of trying to continue to pay our staff on time when I can’t even pay my electric bills on time. So you can say the cafe was the biggest mistake of all. If I took the advice of the people here, I should have just turned tail when we were at $75k down because it would have been irresponsible to do otherwise. The bankers I work with definitely think so – they can’t understand how we are still open.
What I am trying to get across is that what happened to the writer is far easier than many people want to acknowledge. Maybe because it is too frightening. Unfortunately, I hear the stories every day and in each one there is an element of irresponsibility followed by bad circumstances that are occurring to good people. Of course, the NYT takes it overboard, but the lack of charitableness in people’s comments is surprising.
Oh yea, about the bankers – they make it very very easy for you to get into more trouble. They are not willing to provide us a line of credit (who would) but they are willing to cover bounced checks for us. On the one hand, this has allowed us to juggle our cash flow just enough to stay open. On the other hand, it costs us about $2k per month in bank fees for this privilege. Many restaurants, including some that have been long established in the area, are staying open but incurring $7-10k per month in fees – I frankly don’t understand how they afford it and many don’t as the ones I know are dipping into their life savings to stay afloat (that old optimism thing again – how horrible that they throw bad money after good). I was told by one of our bankers that most banks are really being lenient on allowing overdrafts to people in trouble because it helps them out but also because it is one of their most lucrative sources of revenue these days. Our bank will tally all the debits each day first and go from highest debit to lowest debit before they issue any credits on deposit. This insures that they maximize their overdraft amounts.
There also was the bank that gave us a credit card to purchase some initial equipment. We should have paid cash but did not because we wanted to conserve it (cash is king after all). When we were late by 15 days, they jacked our charge from 9% to 35%.
I can’t criticize the banks for what they are doing as it does keep our heads above water and the cafe would be closed without them, but the writer is correct when he talks about how easy institutions are making it to get yourself in even deeper trouble.
It’s living above your means.
It’s not mean to point that out.
It’s just hard for you or my sweetie to hear.
How is it that even though the market plummeted by 50% I am not upside down on my 1st house. I still owe less than it is worth.
How is it that I have not had a car payment since 2002.
How is it that I’ve had the resources to take ADVANTAGE of this market and buy a 4500 square foot home?
Because I did not on a daily, montly or yearly basis keep my expenses high.
If this is not the “bottom” of the market then I’m in trouble.
Hope not.
If Obama continues his assinine policies shredding this poor economy even more – (instead of learning macro-economics 101) then I’ll need to reassess my situation.
Alex: Before you throw stones, keep in mind that it is very easy to be smug when you don’t think financial catastrophe will happen to you. My guess is a some people who are quick to criticize the author will be rereading that article a couple of years from now only to find many parallels to their own experiences.
Lemme tell you what I specifically didn’t do to avoid your situation (I am a defense contractor and could end up w/o work, same as you):
o I didn’t take out a line of credit against the house I own.
o I didn’t replace my 1996 Dodge truck.
o I didn’t buy my wife a new car
o I didn’t build onto my house so my kid could have his own bedroom.
o I didn’t take the kids to Disneyworld this year.
o I didn’t hire anyone to do any maintenance on my house; I did it all.
o I didn’t remodel the bathroom.
o I didn’t “invest” in a cafe.
o I didn’t buy a flat-screen TV.
o I didn’t buy my daughter a laptop
I didn’t do a lot of things, many things that I wanted, or “needed”. Consequently, I’m not in your shoes.
I’m sorry you have nicer stuff than I do, and you can’t pay for it…. Tough luck.
Of course, the NYT takes it overboard, but the lack of charitableness in people’s comments is surprising.
I am being “charitable”:
By denying myself and my kids, I’m paying his, and your, mortgage as part of the bailout so you can have a hobby cafe and he can have a prestige job with the NYT whining about what an impecunious dope he is.
You guys could at least thank me.
I’m feeling stressed. I’m the only man who has been able to say no to her. I’ve done it a few times. But in the end. I’m saying double yes.
Run!
F’in run! Run fast and run far! I don’t care how good in the sack she is–run for your life!
People seem to have lost their fear of economic failure because our society has enjoyed a multi-generational period of prosperity. Conditions generally improved and even our “poor” were blessed compared to the masses in other countries. A false sense of security developed, and many people felt safe living close to the edge, or beyond, because there were few serious consequences. Today we are still looking painless remedies to support our unsustainable habits. Just look at our government’s alarming spending and bailout actions!
Realistically we are coming to the end of our ability to pretend that everything is OK, and avoid a genuine economic collapse. Soon credit-holics will not be able to get a “fix” with other peoples money because there will be much less of it available. Earning before carefully spending, and saving to avoid economic calamity, will be in vogue after our currency is devalued. We all will have to learn to live within our more modest means.
Gray 🙂
I’m good.
I don’t have the flat screen tv’s either. And besides the real estate and new car – both property that I could sell – and both property that she’s paying me rent for as she’s been a state employee at CA for 25 years –
’tis not a good situation but it’s not all on me and I will take the steps necessary to protect myself and my credit.
Gray, you are missing my point completely. I certainly don’t want your sympathy as I am where I am and we’ll figure a way out of it. There is a certain sense of moral virtuousness in the attacks on the writer (and your comment) that I am more accustomed to seeing in the leftosphere and am disappointed to see on the right. It’s not a stretch to see that even people who did not go overboard and overspend may wind up being in the same place as the writer. I know two contractors who both were very frugal. Neither has been able to get steady work for 2 years now (yes, unlike what the media tells people, things have been going downhill a lot longer than anyone wants to admit). One just lost his only pickup which was a 1990 model. Tough to be a contractor without a pickup. The other just lost his house and his wife left him. Neither had a flat screen or went to disneyworld or took out a line of credit on their house or remodeled the bathroom or invested in a cafe or bought a laptop. They are still in trouble. Yes, it’s tough luck and they will both work things out. I hope.
But again, I’ll say that given the way things are deteriorating, people should not be so quick to put themselves up on a pedestal.
Gray, Amen.
But you have to remember that somehow there are people who make messes and others who clean them up. You and I are among the latter. It’s been that way since childhood.
Gray, guess what – I don’t have a mortgage – I rent. And I never knew that something I had to spend 100 hours a week on was a hobby. But hey, I guess I am just an entrepreneurial parasite on the back of the american public. Thanks for making my point…
There is a certain sense of moral virtuousness in the attacks on the writer (and your comment) that I am more accustomed to seeing in the leftosphere and am disappointed to see on the right.
Unlike “diversity” or “tolerance”, “Thrift” is an actual moral virtue.
So, no, it’s not like what you are accustomed to seeing on lefty sites.
Assistant Village Idiot – let’s see, by my estimate, I will probably wind up paying approximately $40K in business taxes this year for a cafe that is employing 10 people. Thanks for cleaning things up for me.
Gray, again thanks for making my point so clearly.
Alex,
That’s not enough. 🙂
I rent. And I never knew that something I had to spend 100 hours a week on was a hobby.
If you are sinking money into it, it is not a vocation. It is an avocation http://www.merriam-webster.com/dictionary/avocation. A hobby.
But hey, I guess I am just an entrepreneurial parasite on the back of the american public. Thanks for making my point…
No, you’re just another dreamer with a bad business plan. An entrepreneur reads things, does research, talks to people, get’s an intuitive feel for the business cycle and people’s behavior and then they do not open a cafe!
Gray, again thanks for making my point so clearly.
I guess if your point was that you were impecunious and I am not giving you a shoulder to cry on; you made your point.
S’aright–I’ll still be subsidizing your losses by bailing out your bank with my taxes and fees.
Gray, thanks for the business lesson. This is my 4th business and by far the smallest. Each one has been successful, well, except for the consulting business which was great until the business died. I’ve employed over 200 people and created quite a lot of wealth for other people. But jeez, you’ve so opened my eyes. A business plan, if only I had known that ;).
Oh, and guess what, just because things are tough does not mean the business is a failure. I can actually pay my rent now and might be able to pay my electricity and oil in the same month by September. The small food business is tough but it is one of the most rewarding I’ve been in to date. But if I had only listened to you I never have bothered. Wow, thanks.
A few years ago there was a book which touched on some of the issues raised here. It was “The Two-Income Trap” by Warren and Tyagi. The authors hypothesize that the great increase in family income made possible by two careers resulted in a bidding war for housing in safe neighborhoods with good schools. Thus people were maxed out on spending. Also, when the old single earner man lost his job, Mom could seek temporary work to help out. Now when one person loses a job it’s an instant crisis.
Another issue that people rarely think about is that two wage earners have doubled the family’s exposure to unemployment. Two people are exposed to the vagaries of the economy. Two people are exposed to possible health problems which can lead to job loss. The liklihood of unemployment has been doubled.
Decades ago peole got married young when they had no money and few worldly goods, but at least they had little debt. Now the average college student graduates with $20,000 in student loan debt. Even though they marry later if at all, they are likely to carry that debt. They also have car notes and credit card debt along with a taste for the high life. It’s a recipe for financial disaster.
When it comes to money there tend to be savers and spenders. Spenders think that the purpose of money and access to money (credit) is to buy things and experiences. Savers think that the purpose of money to provide security in case a crisis arises. In a marriage, spenders think that savers are trying to curb their fun. Savers think that the spender is undermining their security. Studies show that the number one source of conflict in marriage is money.
I should have just turned tail when we were at $75k down because it would have been irresponsible to do otherwise. The bankers I work with definitely think so – they can’t understand how we are still open.
Each one has been successful, well, except for the consulting business which was great until the business died. I’ve employed over 200 people and created quite a lot of wealth for other people. But jeez, you’ve so opened my eyes.
OK, I guess you are just fine. What were you complaining about then? What were you blaming the banks for? They paved your path to success with gold and you’re ungrateful?
Oh, and guess what, just because things are tough does not mean the business is a failure. I can actually pay my rent now and might be able to pay my electricity and oil in the same month by September.
No, it’s a rollicking success:
They are not willing to provide us a line of credit (who would) but they are willing to cover bounced checks for us. On the one hand, this has allowed us to juggle our cash flow just enough to stay open. On the other hand, it costs us about $2k per month in bank fees for this privilege.
Good stuff Mr. Frank…
I’m totally exposed. It’s a risk she understands.
http://www.slate.com/id/2132576/
This is one of my favorite stories.
I’m totally exposed. It’s a risk she understands.
Of course she does.
Run like hell!
🙂
Sipping my coffee….
Alex, your point is a fair one, but perhaps you, in turn, could try to understand why those who are not in the same fix you are in can get so cranky. Many of these folks (and I leave myself out, because I’m not a particularly prudent money manager) have been scrimping and saving for quite a long time while watching others like you “enjoy the good life,” as you put it. They’ve been the ants, while you and others like you have been the grasshoppers. Now the ants are doing without even more than they used to, because they have to cover not only their own bills, as they have been all this time, but they also have to cover the grasshoppers’ unpaid bills while trying to stay afloat in the economy that the grasshoppers heedlessly helped to ruin.
You freely admit that you were at fault for getting into trouble, and I give you credit for that. But I don’t think you fully realize that if the ants do go under in the end — and yes, you’re right, they might — it won’t be solely their own fault, no matter what financial mistakes they may have made. As they know full well, it’ll also be the fault of the mess made by the grasshoppers, who are taking the whole economy down with them, ants and all.
The hard-working, penny-pinching, cranky ants out there don’t, as you seem to think, assume that financial catastrophe can’t happen to them. They KNOW it can — that’s why they act like ants! Of course they want to smack the grasshoppers, who did make that foolish assumption and now not only want help from the aunts but also want to whine in the New York Times about their circumstances.
When you say you’re surprised at the ants’ “uncharitableness,” I think you don’t realize just how charitable they have been forced to be already.
Mrs. Whatsit,
Wow. Are you single? 😉
Why, thank you. 🙂 But happily for me, especially given my grasshopper-ish tendencies, I am married to a very lovable ant.
oops. “ants,” not “aunts.” I do wish comments could be edited . . .
🙂 And I love my grasshopper also.
Gray, that’s really rich – a defense contractor who is so unaware of where he gets his livlihood that he can lecture others about frugalness. I worked for Raytheon for 35 years. Defense contracting is all about sucking at the federal teat and figuring how best to take advantage of the federal taxpayer. And you are lecturing a cafe owner, which is a relatively honest profession about your thrifty purity? Heh. Thanks for the laugh!
“Throwing money at us..” “The bank made it so easy…” “The rope THEY gave us…” “…unwittingly..” and on and on. “THEY” caused all this! Why didn’t THEY stop us? We are not irresponsible yuppie spenders – we are VICTIMS! Too bad these two didn’t save more of the money that was practically forced on them – they could have used it to buy a pair of clues. A sense of entitlement coupled with greed. No “victimhood” here, just irresponsibility. Poor babies.
George, Puhlease !
National security is important.
People can be frugal and COOK FOR THEMSELVES.
🙂
Like I do everyday.
I know what you are trying to say but you are GENERALIZING. Big time.
I worked for Raytheon for 35 years. Defense contracting is all about sucking at the federal teat and figuring how best to take advantage of the federal taxpayer.
Just like banks, car companies, medicare/medicaid, cafe owners, Octomom, illegal aliens and universities….
The difference is that we actually produce something the rest of the world wants!
My sister and her husband have been married a very long time. No kids (they can’t have them). They have lived on his income and have been banking and investing hers from day 1. They will retire as millionaires with no bills except incidentals. Then they intend to have a blast.
Baklava, you strike me as a highly intelligent, logical individual. I love to read your posts, among those of others who come here.
But at this moment, I have to ask, what the hell are you thinking? Don’t do it. Now is not the time. And you KNOW it’s not. Buy the $6,000.00 used Civic (arguably the finest automobile made in the world) and allow your sweetie to get back to financial health and buy an Acura TL or something – when she can afford it. The only lesson she is learning is (that I can see) is that she can manipulate you. Your compromise isn’t even rational. IMO, of course. I won’t go into her walking away from her house, other than to say SOMEBODY is going to pay for it, even if it isn’t her. Yeah, I’m cold, too.
I drive an 11 year old Nissan Maxima, because it runs just fine, still looks like new (I take care of it) and have no desire to have an unnecessary car payment.
When you say you’re surprised at the ants’ “uncharitableness,” I think you don’t realize just how charitable they have been forced to be already.
If I don’t cough up taxes to cover the bank bailouts, car bailouts, Obama care and newpaper bailouts, guys with guns will show up at my house for the money.
Now that’s uncharitable.
They have lived on his income and have been banking and investing hers from day 1. They will retire as millionaires with no bills except incidentals. Then they intend to have a blast.
No kids is the key point: I have two kids and my wife stays at home (by mutual agreement and happily).
My retirement plan is to die at my desk….
Gray, we were obviously separated at birth. You took the words right out of my mouth, I have followed exactly the same course you described in your 4:31 pm post (and of course, I recall your seconding my “brutal workouts and Scotch” recipe for sound sleep).
Seriously, Baklava, pull your coat over your head and run for the door! Do not purchase her a new car (now or ever). Here’s why.
Your plan was eminently sensible. Hers is moronic, and is of a piece with how she got into trouble in the first place. She’s about to get in trouble again, but take you with her this time. Sight unseen, I’d say she seems immature, self-centered, and more than a bit manipulative. She’s guilting you to do something that makes your stomach churn so that she gets what she wants (never mind whether you can afford it or not). If you cave, the stress you feel now will fester into resentment as your finances go down the drain. And make no mistake: this is the first of an infinite series of such disputes re spending (where you will always be expected to “compromise,” read “cave”). Draw the line, now.
This is none of my business, and you’re more than welcome to tell me to get stuffed, and you’d be absolutely right to do so. But I feel I’ve come to know you a bit through this forum, and I’d hate to see you abandon your sound judgment on this when the outcome is so foreseeable.
Neither of our boys are quite old enough yet to date, but I’ve already had “the talk” with the older one. No, not that talk: the more important one, not to let the little head do the thinking for the big head. I told him make damn sure the gal he picks is on the same page with him in values and perspectives, including (as a very high priority) handling money. (He’s very prudent and sensible with money; long may it continue!) I followed my own advice assiduously, and been so glad I did.
So you and she need to have a meeting of the minds, and it comes down to this: you handle the money. If she can’t deal with that, walk. No. Run!
Thank you BR549. I hear ya.
It is my wish to do the $6,000 Civic. It would’ve been a 2003 or 2004 with about 70,000 miles.
Going the route I’m going now (new) at least I get a 5 year warranty which SOLVES her reliability issue.
It’s all about addressing the issues. 🙂
If she tries to tack on the leather, sunroof, navi, etc. I’m out…. She can keep her $13,000 8 year old falling apart beamer.
She makes a decent income. Moving from a $400 payment to a $250 payment and removing the unreliability from the mix is a good thing.
Do you see the logic now? he he
BTW, It is very different for women. Women do NOT want to be stranded on the side of the road.
On the other hand. Guys can live with a 2003 or 2004 Honda Civic with no fear. None. I’ve purchased inexpensive used cars 2/3rds of the time and ran them till they died. Gave me lots of years of service.
Seriously Occam,
I hear ya. I knew I’d hear these words. 🙂
It IS different for women though.
The Mazda 3 is the least expensive Mazda you can get. And one with air conditioning and an automatic?
The funny thing guys is – I’m improving the financial picture for the both of us at the same time I’m increasing risk.
Her expenses have been lowered for housing and now car. Her credit has been shot by her decisions. My credit has not.
Question to you guys.
If she goes from the flat out powerful and large, BMW 740 il to a small econobox, do you give any credit to her? I do.
She has a good heart. Has no credit card debt, has a good family, no tickets or criminal issues, has a good career and never done drugs.
She’s been devastated by what’s happened to real estate in this area and we are making an investment in our future with each of our changes…
Ah, let’s look more closely at that statement. People who did not go overboard and overspend, but were struck down by circumstances beyond their control (I don’t mean an unexpected sale on BMWs, I mean catastrophic illness, unavoidable business failures, that sort of thing) are certainly entitled to sympathy (and in some cases, even help). People who just made piss poor decisions and got clobbered by the totally foreseeable outcomes — such as the author of the NYT piece — do not deserve sympathy beyond a “chin up, Timmy” and certainly do not deserve help.
There’s a world of difference between someone getting hit by lightning as he steps out of his front door and someone who gets hit by a train while he’s picnicking on the railroad tracks.
Again, as I’ve said to my boys, “when things are bad, just remember, ‘this too shall pass.’ But when they’re good, remember the same thing.”
If she goes from the flat out powerful and large, BMW 740 il to a small econobox, do you give any credit to her? I do.
Only if she’s a demon in the sack.
I believe that one factor in our spending problems is that people under forty are two generations removed from the lessons of the Great Depression. The people who lived through the Depression and WW II rationing had a firm understanding of the difference between a need and a want. They passed much of that hard earned wisdom on to their children, but their children failed to pass it on in many instances. Throw in close to thirty years of relative prosperity and easy credit, and you have a recipe for disaster.
Yeah, it is. But that’s why we’ve got cell phones. Also, that’s an excellent argument to return to your Consumer Reports pont on the reliability of the Hondas vis a vis the BMWs!
I’d give her only a little credit (nah, I’d insist on cash — kidding!), and that only if she does this in good grace, without bitching about it, and agrees that it’s the sensible thing to do. The reason she’d only get a little credit (from me, at least) is that this is what she should have been doing all along.
LOL! The problem is that creditors pounding on the front door kinda ruin the moment.
She does agree it’s the sensible thing to do. She is very grateful. Having her Beamer break down like that really impacted her.
She wants it gone.
She did say she doesn’t care what she drives as long as it’s reliable and not torn up. She has qualms about 70,000 miles being on the car. To her that’s the same as torn up because 70,000 miles for some lead footers could be bad.
For me 70,000 miles wasn’t bad. To her it was.
And Gray , She’s paying the monthly payment not me! She’s doing our financial future the favor by going for my compromise plan ! 😉
70,000 miles? Why, that’s barely run in. /g
She did say she doesn’t care what she drives as long as it’s reliable and not torn up. She has qualms about 70,000 miles being on the car. To her that’s the same as torn up because 70,000 miles for some lead footers could be bad.
70,000 miles on a car with a woman driving it is a helluva a lot different than a guy:
thee female toggle switch brake/accelerator driving; changing the oil every 10k whether it needs it or not; running over stuff….
(yes, there are some women who are auto-savvy, I’m talking about the other 99%)
I have to really keep up on the maintenance on the wife’s car, ‘cuz I’ve ridden with her and I know it is getting flogged….
So, how are you gonna know she’s keeping up on the payments? That’ll be a subject for endless fights and bitter recrimination.
Gray asked, “So, how are you gonna know she’s keeping up on the payments? That’ll be a subject for endless fights and bitter recrimination.”
She’s paying me. I’m paying Mazda.
If she decides one day something else. It’s all mine ! 😉
minus the demon in the sack!
She’s paying me. I’m paying Mazda.
So you’re going to play repo-man on her when she stops paying you? Or pester her like a bill collector?
I’m not seeing this. She’s gonna resent paying you instantly; anyone would. There is no love for the taxman, figuratively.
There would be lots more love and less hurt feelings if you either just bought the car and suprised her with it as a gift, or ran away and never looked back.
Your solution will only lead to hard feelings all around.
I suggest running away and never looking back ‘cuz you are going to feel really bad whether you have to repo the car from her ‘cuz she never pays (why would she pay you?) or whether she is tooling around with some new boyfriend in the car you gave her.
If you really wuv her, just give her the damned car–or run. Those are your real choices.
“a fool does eventually what a wise man does immediately.”
Mrs Whatsit: Excellent post. I am proud to be one of your “ants” and you have stated our case very well.
Baklava: I hope it all works out well for you. I admire your loyalty and optimism. As Dave Ramsey (the radio money/finance guy) likes to say, I hope she learns to “act her wage”.
Gray and Occam’s Beard: Great posts! Keep up the good work and fight the good fight.
Alex: First of all, I never said the author was “living the sweet life.” I wrote [emphasis mine]:
So he and the family are living rent-free in their lovely suburban home while the rest of us idiots pay our mortgages and/or our rents and try to live more or less within our means. Sweet.
The word “sweet” there means something like “ain’t it sweet how life sometimes is so ironic?” The irony comes from the fact that the author is not taking responsibility for the fact that he has been living far beyond his means for years, before the bubble ever burst. He was dramatically overextended from the start, in a way that shows poor judgment, even if the recession had never happened, or had been much milder.
This is in complete contrast to someone who fell on hard times post-recession, such as yourself. The author and his wife were, quite simply, financially reckless, and for him to plead innocence is an absurdity, considering what he does for a living.
It would also have been quite different if he’d gotten into debt from providing necessities for his family. Clearly, this was not the case; he lived quite luxuriously.
Perhaps I’m showing my age here, but I was raised in a time when people did not easily go into debt unless necessity forced them. They paid for things when they had the money and not before that, and didn’t live luxuriously unless their salaries were high. It’s not that I don’t believe people should buy things on credit—but the amount of credit they carry should be reasonable in light of their earnings. This man’s was not.
In your case, with your salary and your wife’s combining to reach 300K per year, it sounds as though you were living basically within your means and then made an investment you thought would pay off, and in the changed economy it did not. This is a very very different situation than the author’s, and a much more sympathetic one.
I can’t help but wonder whether the free-spending author and wife looked down on those who didn’t meet the criteria of the Style Section. It reminds of the trend a while ago of women renting designer handbags they couldn’t afford to buy.
Neo, you need to have a reunion. I want to hoist a few with Occam’s Beard, Gray, Mrs Whatsit, and FredHjr among many others. Great people. Baklava, LMAO.
How about holding it Rochester, NH, the Lilac City?
Any out of work EEs who would like to team up on a big thing in genetics? 🙂
Alex I can feel your pain, but if i may add another difference to neos point. which is that even in bad times your the kind that will do ok. your getting into debt is not really the same as the other people that many of us are bitching about. these people never ever could pay what they were living in.
your skills translate, you work hard, your not happy about your debt. wel they dont care about their debt. other than losing what they cant afford they just go back to their old lifestyle of subsidy and working the system.
its those people that piss me off. and are pissing other “ants” off.
heck… a friend recently tried to argue to me about greed… and i said how much was greedy? how much was enough? he said it depends. i said on what? he couldnt answer. but i did.
i said it depends on what you know you will need. and what you know you will need depends on planning and planning depends on you knowing the future. since you dont know what you will need in the future in reality, you cant be greedy. however if you believe in the planned utopia, then anything that is beyond what is good for that fantasy land would be greed. the left believes they know the future, so they know how much will be needed and so a large amount is no needed…
but they are wrong… and since they are wrong, and we dont know the future, then grabbing as much of the pie against uncertainty as one can, is the ONLY rational answer.
a dollar short of what you need to save the life of your family and friends in any of the huge things that has happened to people in the past 100 years, was a dollar short of the right amount.
Some years ago, for a professional certification, I had to take an econ course. “How conservative this is,” I thought, until it occurred to me that it was simply explaining how people actually operate and what the consequences are of certain decisions.
If you spend enough time talking with liberals, you will encounter the phenomenon of being accused of liking, supporting, wishing for, a predicted consequence of an action.
As if the consequence wouldn’t happen if there weren’t mean-spirited people talking about it all the time and making these nice people unhappy.
Another thing Dave Ramsey says is that you should never buy a new car, unless you can pay cash for it. And that doesn’t mean scraping together every dollar you have and going down to zero. I agree with that totally. Every car I’ve owned I’ve bought for cash and none of them were new (and none were even close to $10,000). The drive-it-off-the-lot depreciation on a new car is so extreme I can’t understand why anyone in a money crunch would even consider it. Even a car that is a year or two old is a much wiser choice. I know you’re trying to do the right thing, Baklava, but it still sounds like piling a new mistake onto the previous one. I’d think long and hard about your plan even though I’m sure you’ve already thought long and hard about it.
And this is just a question out of curiosity. I admit I don’t know much about car payments since I’ve never made one. But how come she still owes $13,000 on a car that’s 8 years old? I thought most car loans were for 5 years. Shouldn’t the car be paid off by now? What’s an 8 year old BMW of that model worth, if in good condition?
The Andrews piece was shocking and horrifying. An unbroken string of truly terrible decisions, compounded by magical thinking and irresponsibility, and at bottom by a fatal immaturity. The divorce is the real killer in this story. A man with lots of information and contacts, but no understanding. I wonder for whom he voted.
Baklava Says:
“Question to you guys.
If she goes from the flat out powerful and large, BMW 740 il to a small econobox, do you give any credit to her? I do. ”
No… sorry. New low end Hyundai > $10k… Even then, ‘only some’. The rest of us have bought used cars when that’s all we could afford… I make $100k and I still wouldn’t buy a BMW… I’d splurge and buy myself a $20k Hyundai instead of the under $10k models…
Compromise… watch out man. That’s some serious nonsense and it won’t be getting better down the road.
Baklava, when I am counseling a young person on these sorts of things, I generally wave my arms and say “Danger Will Robinson Danger”, they don’t get it, only the old guys do:
http://www.youtube.com/watch?v=JYfM-frIWlQ&feature=related
Instead of the run man run comments, my recommendation is, eject, eject, eject:
http://www.youtube.com/watch?v=MgcPhl1UIhA
He he
dudes. I hear ya. AS A GUY, I can’t plunk down the pretty penny on a new car. I buy used.
She bought a used BMW a few years ago and that is why she owed $13,000 for a car that is worth $10,000.
I don’t even know why it is worth $10,000 ! Who in their right mind would pay $10,000 for an 8 year old car???
Oh well.
But I tell ya. You have to put yourself in your mate’s shoes. No matter how high they are..
I’ve heard this from many women friends. They simply aren’t interested in entertaining the idea of getting a car that is older to begin with. She thought she was buying a rock solid machine. She had no idea what Consumer Reports said.
Think about it guys. When you go through life as an attractive woman (put yourself in their shoes) what do you think they have to go through if they were stuck on the side of the road. It’s a situation that isn’t pretty.
And do you know what? My sweetie didn’t have to even talk about that thought much.
So yes. Going from an 8 year old car that you owe $13,000 to a new car that you owe $15,000 on is only beneficial in that it buys you the warranty, some piece of mind, etc.
Me? I’m stuck with my 10 year old minivan for the foreseeable future ! Good thing it’s my favorite car I’ve ever had.
I’m of the mind that you pay for cars with cash also. The only thing that should be financed is a house.
The good news is that my sweetie does that with everything else. If she doesn’t have the money she doesn’t buy it.
By the way. I’m 39 years old. That is young to a few of you. But I think like a Great Depression era person.
And check out how many black circles are next to the Hyundai’s and the Kia’s in Consumer Reports. Won’t do that to save a few bucks either.
The quality of German made automobiles has become all in the “perception” column. A long time subscription to Consumer Reports, Motor trend, Car and Driver, etc. would bear that out. The quality of these vehicles has been dropping off, even though they continue to do well on the race track and in the showroom.
Baklava, I sweated saying what I said up the thread a piece. It was not my wish to offend you. I’ve kinda – sorts been there already (red face here) and we know how crystal clear hindsight is.
Gray, I’ve raised three kids (as a single dad) with one still in school running down a Ph.D. I know how you feel about dying behind your desk. At 56, my original plan was to retire at 55. I was set up to do so by keeping x percentage of my money in investments and out of the reach of my ex’s emotions. Of mice and men. I had to cut my losses, although it was too late to save any retirement, much less early retirement. And here I was, doing my best on a day to day basis, trying to expect the unexpected. Fact is, one never knows. On top of that I’ve had major illness strike twice (cancer) and although modern medicine has saved my life (prolonged) it has left me breaking even every payday for as far as I can see into the future.
Don’t do it, Baklava.
I think capitalism only works when it’s chained to a sense of shame. The shame of deceitful dealings, of not keeping your word, of not being able to meet your obligations. Aren’t Dickens novels filled with various bankrupts who, whether through their fault or not, have secluded themselves away from decent society? Society may have been hard-hearted back then but its rigorous virtue kept most of the weak and foolish on the straight and narrow. And we are all finding out what happens when the threat of stigma is lifted.
Mazda is kind of the poor man’s BMW, and car nuts tell me the 3 a hoot to drive. It’s quite popular among the rice rocket crowd. So B’s friend won’t be totally slumming. I fell in love with my wife on our 1st date when she told me she called her savings account her FU money.
Bizarro world happened yesterday.
i was walking home, and a poor person, stopped me. this happnes more often than one would think since i have a reputation in my neighborhood of defending people after an incident a 3am.
anyway, she wanted to know what something she found in the garbage was for. she was spanish, and a nice woman. i explained things, and she was so upset that such good things were going in the trash.
but then she went on a tangent about an old man down the block. he is slovak like me, and he does nothing but bitch as to how communism was better. she said he should go back.
this woman, who can barely speak english well. picking through the garbage was more conservative and smart about the world and politics and purposes than most in my neighborhood. she asked if i liked a certain radio person. i looked around for rod serling.
she said it was so sad to hear him talk. but he will nto change his mind. she said, does he do this with you. he does it with everyone. talking about the end, and all that. i said, no.. he doesnt do that to me since i answered him obtusely one day.
i told her how to stop the problem. she says going back he argues against, and so on. i said, no. just hit him broadside with the truth. the next time he rants as to the socialims being better, and all that. when he is done, let him know that you really really enjoyed listening to him, you dont agree, but at least everytime you hear him, you know we are still free… then ask him what it was like to criticise comrade stalin, you would like to know?
i did that to him and his crap, and he never argues with me again… says hi!!!
[he never wanted to win the arguments, he WANTS to lose… but he doesnt want to give in. he wants someone to tell him that the doom will not come and give him a meaningful answer! sometimes people argue so hard to win, beause they need to lose in a way that they are reassured that they are wrong]
anyway… so odd…
the poor who are being ‘helped’ hate the ones trying to help them because they are the same as the politicans that they fled to america to get away from.
Baklava, I’m no relationship expert, although I do listen to Dr. Laura on occasion:-) Your “sweetie” sounds like a spoiled brat. How’s that for subtle? Whiny, selfish, ungrateful….I could go on, but I won’t. Was she indulged as a child? Seriously, I think your male friends on this blog have a good point. No matter how much you love her and excuse her actions and reactions, at some point it’s not going to be cute. And the fallout will not be pretty. She needs to grow up and be grateful for you, no matter her expectations about what she deserves.
Good luck. You’ll need it.
This is for the rest of you men out there. I’m the one who takes care of the car stuff in my family. And I learned to drive on a stick shift. I consider air conditioning to be a gift from God, but I wouldn’t die without it. So quit generalizing!
“She did say she doesn’t care what she drives as long as it’s reliable and not torn up. She has qualms about 70,000 miles being on the car. To her that’s the same as torn up because 70,000 miles for some lead footers could be bad.”
Yeah, my Mom sold me her 8 year old Prelude in 1994 cuz it wasn’t reliable enough with those 94,000 miles on it. The damn thing stranded me a couple years ago, in my own driveway, when it wouldn’t start – with 314,000 miles on it.
MM: I hear ya. She is grateful though.
All: It’s been fun. 🙂
Gotcha beat, Mel. I purchased a 1985 Prelude new and gave up on it after it started giving me too many problems. In 2006, over 567,000 miles later. Best car ever, an absolute blast to drive.
(Now watch me get hammered by the others on here for admitting I bought it new.)
Automobile air conditioning in the deep south or southwest is as necessary as a heater in Minnesota. You won’t die without it, but you’ll be really miserable.
Alex, I am sorry if you thought my statements were critical of your personal decisions. I know nothing about them, and it is certainly true that people can make decisions that look reasonable at the time but then have the ground shift under them through no fault of their own. If you are such a one and trying to cobble together solutions as best you can, then good on you. Life is unpredictable.
The original article, however, was about a person who made decisions that could easily have tanked even under excellent circumstances. He made bad decisions and resented his fate when the world did not oblige him by being perfect, or bestowing unnatural good luck on him to bail him out. That is quite different.
If there was smugness here, I think it derives more from the author’s position as a financial writer for the world’s most prestigious newspaper, dispensing advice to we poor unwashed. It is as if the writer of the marriage advice column had a messy divorce, and it came out that the marriage advisor behaved in ways that a common citizen recognised as obviously divorceogenic.
Baklava Says:
“And check out how many black circles are next to the Hyundai’s”
I’m on #3 and the only one I had problems with was due to a bum alternator. It burned out a few other electrical devices before they found it was causing the other problems… and because of the long warranty, I didn’t pay for any of it….
The current one is an 06, no problems.
Now kia…. junk… Brother had one….
Getting back to the original post:
The guy got in trouble without losing his job, without having his business go belly up.
He did it to himself.
That’s one point.
He doesn’t get it.
That’s another point.
He’s a financial writer who did it to himself and still doesn’t get it.
That’s a third point.
Thomass–
My sister loves her 99-ish kia 4-door car– she’s had it since high school and drives it all over creation. (parents helped her buy it so they could rest easy while she worked her way through college)
My 99 neon is an awesome car– fuel pump recently went out and I sold it to a guy who could fix it himself, I expect his daughter will have at least the 7 years I got out of it to look forward to.
“Work utility vehicles”– minivans– are another surprisingly good deal; the ’01 dodge caravan I’ve got ATM gets car-level mileage and “sets” like a pickup, as well as being big enough to fit stuff and family.
If I was going to buy a fairly new car, I’d drop in to Les Schwab and ask them what cars they don’t see very often, as a supplement for the consumer reports.
Gotta agree with the “buy recent used vehicles” advice– best vehicle my folks ever got was a huge extended bed, 4-door red ford that had been returned after the guy found out it wouldn’t fit under his tree. (tiny scratch on the top of the cab– some seven foot in the air, so meh.)
Baklava, I’m sorry, but I have to agree with those up thread that this behavior from your sweetie is a warning sign. It is very possible to get a perfectly decent, reliable car for $6000–I know because that’s how much we spent a few months ago to buy me a less-used car after my ’91 Sunbird finally died. (In fact, I didn’t even want to spend that much, but my husband insisted.) We shopped around a bit, and got a 2004 Chevy Classic in great condition (checked out by our mechanic and verified) for $5900-something in cash. I love it and feel totally safe in it.
I do understand the “not wanting to be stranded on the side of the road” thing. My Sunbird actually *did* that to me when it finally died on me (failed at an intersection, no less). It was not a fun experience, I’ll admit. Still, just randomly shelling out money won’t necessarily buy you reliability. The fact that she refuses to even consider buying for less than $10,000, even after you did your homework and showed her the Consumer Reports on the Civic, to me seems like a red flag.
THIS woman had a 1999 Saturn that she bought at the end of 1999 (it was a “program car”) And still had when she married her husband in 2004. She owed $4500 on it (don’t know how much it was worth)
Due to her husband’s good sense, we paid it off at that point, but continued to drive it up until September 2008 when we moved and decided to give it away. Then promptly wished we had not when we realized we needed two cars in hte new area. So we spent $5000 on a 2001 Pontiac grand Am after we got here. (And I loved my Saturn MUCH better. Grumble)
But this woman, if she was concerned at being on the side of the road (I had no boyfriend for much of that time either), would have put $100 into a yearly AAA membership instead of $10000 into a new car. In the 9 years I owned my Saturn, I NEVER felt unsafe in it. Even driving to Idaho, Montana, etc.
This story resonated with me too, though because I work for the economics research wing of a major credit ratings agency (in Australia though). My company was talking about a housing bubble in the US as early as 2003 (or maybe earlier, I only began mid 08 and have just read random reports). Ironically, I went to the U.S. office late 2008 and quite a few of the senior people there sounded like they are in a similar situation to Mr Andrews…… I hope I’m never this silly, unlucky and deluded.