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Author Topic: How to go bankrupt while earning $120,000 per year  (Read 2175 times)

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Offline darrellmaurina

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How to go bankrupt while earning $120,000 per year
« on: May 19, 2009, 11:57:07 AM »

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Every so often I read something in the elite liberal media that show just how fouled up their basic worldview has become. Last week, a business reporter for the New York Times wrote a first-person article about how he got sucked into the housing crisis.
 
The article is here:
http://www.nytimes.com/2009/05/17/magazine/17foreclosure-t.html?em=&pagewanted=all
 
Some key points: In 2004, the author, who was in the process of a divorce but hadn't yet finalized the end of his 21-year marriage, wanted to move in with his fiance. After deductions for child support, he was taking home less than a third of his $120,000 annual salary, but the banks were willing to give him loans for $460,000 to buy a home in the Washington D.C. suburb of Silver Spring. By his own admission, he had "take-home pay of $2,777, barely enough to make ends meet in a one-bedroom rental apartment" and said "at any other time in history, the idea of someone like me borrowing more than $400,000 would have seemed insane."
 
But in 2004, through several perfectly legal but clearly stupid decisions, the author was able to get the home loan he needed. Quite predictably, he ran into financial trouble, compounded by his fiance's irresponsible financial management.
 
He's nice about his fiance, but he writes this: "We had very different ideas about money. Patty spent little on herself, but she refused to scrimp on top-quality produce, Starbucks coffee, bottled juices, fresh cheeses and clothing for the children and for me. She regularly bought me new shirts and ties to replace the frayed and drab ones in my closet. She thought it wasnít worth agonizing over nickels and dimes. I was almost exactly the opposite. My answer to any money squeeze was to stop spending. I would skip lunch at work to save $7. If I arrived at the Metro just before the end of rush hour, I would wait for five minutes to save 50 cents on the fare. We were both building up grudges. 'You canít keep second-guessing me,' she told me angrily. 'Itís small-minded and petty, and itís not very attractive.' I was beginning to wonder whether she had any clue about how money worked. We were lurching from paycheck to paycheck, one big home repair away from disaster."
 
The author's fiance eventually got, and then lost, a $60,000-per-year job. With an attitude toward money like that, I can guess why.
 
The author is honest and up-front about his financial mess. He's probably going to lose his home, but his first and second bank are now bankrupt and his third lending institution is backed up so badly that they don't have time to deal with him, so he's still living in his home though he's many months behind on his mortgage with no way to pay it.
 
Now remember ... THIS GUY IS A BUSINESS REPORTER FOR THE MOST PRESTIGIOUS NEWSPAPER IN THE UNITED STATES!!!!! If he manages money like this, it may be a window into the world that lets the elite liberal leadership of the United States think we can spend ourselves into prosperity by the economic stimulus package. It's too much to say that liberals think money grows on trees, but as someone whose parents lived through the Great Depression and World War II and raised me with the common attitude of that era toward money, I cannot imagine how two highly educated professionals can act like this.
 
What's scary is that thirty or forty years ago, stupid financial management like this was viewed either as something that elite rich kids do to waste the money they inherited or as something poor people do with their welfare checks, finding out there's more month left at the end of the money and then hitting up food pantries to stuff their stomachs off the generosity of people who think they're helping the poor when they're really just enablers to bad financial management.
 
But today, stuff like this is being done, with devastating consequences, not only by elite rich kids and by "po-folk" on welfare, but by the American middle class. It's what is destroying the American economy, and is at the root of the current housing and credit crisis.
 
Here's some excerpts from the article. It'd be hard to believe it if it weren't in black and white.
 
Regards,
Darrell Todd Maurina
 
_____
 
 
 
My Personal Credit Crisis
By EDMUND L. ANDREWS
Published: May 14, 2009
The New York Times   

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 paperís chief eyes and ears on the Federal Reserve for the past six years. I watched Alan Greenspan and his successor, Ben S. Bernanke, at close range. I wrote several early-warning articles in 2004 about the spike in go-go mortgages. Before that, I had a hand in covering the Asian financial crisis of 1997, the Russia meltdown in 1998 and the dot-com collapse in 2000. I know a lot about the curveballs that the economy can throw at us.     
 
 

 
 

 
But in 2004, I joined millions of otherwise-sane Americans in what we now know was a catastrophic binge on overpriced real estate and reckless mortgages. Nobody duped or hypnotized me. Like so many others ó borrowers, lenders and the Wall Street dealmakers behind them ó I just thought I could beat the odds. We all had our reasons. The brokers and dealmakers were scoring huge commissions. Ordinary homebuyers were stretching to get into first houses, or bigger houses, or better neighborhoods. Some were greedy, some were desperate and some were deceived. 

As for me, I had two utterly compelling reasons for taking the plunge: the money was there, and I was in love.
Darrell Todd Maurina
Check out the Pulaski County Daily News online newspaper at
http://www.pulaskicountyweb.com
Cell: (573) 433.6733 * FAX: (573) 774-2349
Follow me on Twitter: http://twitter.com/darrellmaurina/
Follow me on Facebook: http://www.facebook.com/darrellmaurina/

Offline What_The?

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Re: How to go bankrupt while earning $120,000 per year
« Reply #1 on: May 19, 2009, 03:03:10 PM »
I would think that someone who is a reporter would be able to distinguish between one person's mistakes and all the other millions of people in America.

Lumping one person's shortcomings onto all "liberal elitists" makes about as much sense as me saying because George Bush was a coke snorting idiot, you are too.
"There are plenty of good reasons for fighting, but no good reason ever to hate without reservation, to imagine that God almighty Himself hates with you, too. Where's evil? It's that large part of every man that wants to hate without limit, that wants to hate with God on its side." - Kurt Vonnegut

Offline Coyote

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Re: How to go bankrupt while earning $120,000 per year
« Reply #2 on: May 19, 2009, 03:32:30 PM »
Well...that guy was certainly an idiot; probably always has been.  At least he gets to live rent free for a period.  Then his girlfriend will move on to some other sucker and he'll beg his old wife to take him back...yada yada yada.
....and that night as the moon crossed the mountain, one more Coyote was heard...

Offline darrellmaurina

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Re: How to go bankrupt while earning $120,000 per year
« Reply #3 on: May 19, 2009, 03:55:52 PM »
I would think that someone who is a reporter would be able to distinguish between one person's mistakes and all the other millions of people in America. Lumping one person's shortcomings onto all "liberal elitists" makes about as much sense as me saying because George Bush was a coke snorting idiot, you are too.

Oh, I so much wish this idiot reporter for the New York Times were alone in his foolishness!

The New York Times didn't do a profile piece on this man because he was somebody odd or unusual. They selected him because this man, multiplied hundreds of thousands of times, is a good illustration of the financial practices on the part of both homeowners and banks that have led to our current financial crisis. They were trying to put a human face on a major crisis, and succeeded in illustrating more than they probably intended.

In another thread, I recently said that many Americans don't have the faintest idea how to cope with hard times, and pointed out that basic rudimentary financial principles that most people in a previous generation knew very well have been forgotten by large percentages -- quite possibly a majority -- of Americans today.

There's a place for taking risks in business. People taking out debt and banks charging interest both have a place in a capitalist society -- banks loan out money and charge interest because they are taking a calculated risk that the people will be able to pay back the money they owe, and that enables people to start businesses that often though certainly not always succeed in paying back the money they owe, either by becoming a successful business or by the owner closing up shop and selling assets to pay back the loan, either voluntarily or through foreclosure.

But when a business reporter for America's most prestigious newspaper moves in with a fiance who absolutely refuses to stop buying high-dollar luxury items like fresh cheeses, produce, Starbucks coffee, and nice shirts and ties, gets a house with payments far in excess of what they can afford, and then doesn't understand how they're spending thousands of dollars more per month than they're earning, there's something major wrong.

And I'm not just blaming the fiance. I don't want to let the guy off the hook by any means -- notice what he's saying about thinking he's saving money by sometimes skipping on spending $7 per day for lunch. HELLO?  ??? Did the guy ever hear of buying a loaf of high-priced bread, buying some high-priced meat and cheese, and putting them in a refrigerator on his desk so he can have his luxury lunch food for a fraction of the $7 per day he was spending?

Also, I'm not just blaming liberals here, What-The. I've seen too many conservatives -- and yes, even conservative Christians in the so-called "health and wealth gospel" movement within Pentecostal and Charismatic churches -- who act in the same foolish ways. We have a major problem in American society of spending beyond our means, and what was once limited to rich kids wasting their parents' inheritance and poor people wasting their welfare checks has moved into the middle class.

I do blame liberals for creating this problem, but that's not a recent development. The concept that spending beyond our means is good, as foolish as it seems, started seven decades ago during the Great Depression when FDR decided to try to spend us out of a major crisis. (Yes, I am prepared to believe that FDR may have made the best choice from many bad options -- he truly was facing a crisis, and America did succeed in retaining a democratic system of government when nations all over the world were moving toward fascist or communist models to get them out of their own economic crises.)

But the fact is that liberals aren't the only ones to blame. Far too many conservatives have adopted practices in our own personal lives that we don't tolerate when our goverment does them with our tax dollars. That's not exactly hypocritical -- there's a legitimate point to be made that if a person chooses to be irresponsible with their own money, that's their right, but the government has a far greater obligation to the people who pay taxes because it's their money, not the government's money.
 
However, it's not good policy whether it's done with our own pocketbooks or the tax receipts.
Darrell Todd Maurina
Check out the Pulaski County Daily News online newspaper at
http://www.pulaskicountyweb.com
Cell: (573) 433.6733 * FAX: (573) 774-2349
Follow me on Twitter: http://twitter.com/darrellmaurina/
Follow me on Facebook: http://www.facebook.com/darrellmaurina/

Offline julymorning

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Re: How to go bankrupt while earning $120,000 per year
« Reply #4 on: May 19, 2009, 05:51:08 PM »
I agree with you DM.  It appalls me how many people are clueless when it comes to managing their finances.  There is an odd sense of entitlement out there with them that they feel they deserve to have whatever their heart desires, and indulge themselves with it.
I have a really hard time feeling sorry for them when they can't pay their bills, are near filing bankruptcy but it doesn't occur to them to let the 40 grand vehicle go, or find more modest digs.
Then there are those that want to finance things with no concept on  maintenance costs, let alone basic budget rules.
The Government is criticsized for foolish spending, but hey, it's the American Way apparently, if you examine our own habits.

Hey, it's just me, Suzi