"My Personal Credit Crisis" by a NYT economics rep

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
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preserve
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Post by preserve »

VictoriaF wrote: "Oh, and by the way, we will be living in an apartment, share an old car, never dine out, and save in every possible way."?
I'd love to receive a how-to book for that..

I am seeing an uptick in women my age trying to show that they can be a frugal stay at home mom, yet they are failing miserably. They aren't factoring in the cost of children and/or college expenses.
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VictoriaF
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Post by VictoriaF »

preserve wrote:
VictoriaF wrote: "Oh, and by the way, we will be living in an apartment, share an old car, never dine out, and save in every possible way."?
I'd love to receive a how-to book for that..

I am seeing an uptick in women my age trying to show that they can be a frugal stay at home mom, yet they are failing miserably. They aren't factoring in the cost of children and/or college expenses.
Do these women judge each other by the size of their wedding diamonds? In today's American society conformity and frugality do not go together.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
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Index Fan
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Post by Index Fan »

In today's American society conformity and frugality do not go together.
I see both types in the public service occupation that I am in- the keeping-up-with-the-Joneses set, and the frugal set. Perhaps the frugal set will become more fashionable as necessity forces more people into that situation.
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preserve
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Post by preserve »

VictoriaF wrote: Do these women judge each other by the size of their wedding diamonds? In today's American society conformity and frugality do not go together.

Victoria
No, diamonds and conformity don't seem to be an issue among educated women. I will go out on a limb and say this.

1)They are very good at finding ways to make me happy. They are very unselfish. Unfortunately, this involves activities and goods that cost money. I think they've modeled this behavior after their mothers.

2)My mother continues to hassle my frugal father, to be even more frugal. Without a frugality coach, I worry that one day I will lose my mind set and have nothing left.
gchan
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Post by gchan »

Eight months after my last payment to the bank, I am still waiting for the ax to fall.
This suggests to me something seriously wrong with the banking system and housing markets.

Eventually, the banks will have to act on their defaulted loans and if they are sloppy and just foreclose on everybody, expect to see even more foreclosures that will drive housing prices down.
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VictoriaF
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Post by VictoriaF »

Index Fan wrote:
In today's American society conformity and frugality do not go together.
I see both types in the public service occupation that I am in- the keeping-up-with-the-Joneses set, and the frugal set. Perhaps the frugal set will become more fashionable as necessity forces more people into that situation.
Yes, the return to frugality has recently made news, but it is hard to judge to what extent it is happening, and for how long it will last. More-current reports describe renewed consumer spending and an uptick in the housing sales.

When I wrote "conformity," I meant that people follow some societal expectations without critical analysis. Few are willing to give up the following items, habits and expenses -- none of which are vitally necessary:
- owned home (house, condominium, etc.)
- car for every family member of driving age
- wedding banquette (own)
- flying to and making gifts for others' weddings
- Christmas gifts
- cable and cellular telephone subscriptions.

For many people, being frugal means foregoing the Starbucks coffee, getting cheaper haircuts, and buying groceries and clothes in discount stores. But these savings cannot compensate for thousands of dollars spent on the items I listed above.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
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VictoriaF
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Post by VictoriaF »

preserve wrote:
VictoriaF wrote: Do these women judge each other by the size of their wedding diamonds? In today's American society conformity and frugality do not go together.

Victoria
No, diamonds and conformity don't seem to be an issue among educated women. I will go out on a limb and say this.

1)They are very good at finding ways to make me happy. They are very unselfish. Unfortunately, this involves activities and goods that cost money. I think they've modeled this behavior after their mothers.
Are you sure they cannot make you happy without spending money?
preserve wrote:2)My mother continues to hassle my frugal father, to be even more frugal. Without a frugality coach, I worry that one day I will lose my mind set and have nothing left.
The good things about educated women are that:
1. They earn their living, which means that in case of a divorce your downside is limited.
2. While they are busy working they have less time for spending money.
3. They satisfy their ego with their professional achievements, not with their belongings.

If you start feeling that you are losing your frugal mind-set, start a new Bogleheads' thread and you will get plenty of support ;)

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
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legio XX
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Post by legio XX »

DRiP Guy wrote:
downshiftme wrote:
See the guy in the hat, working for Angel Lynn, Realtor®, TODAY ?

Image

http://angellynn.com/?target_url=http:/ ... eangel.com
What is this? An ad for push-up bras, plastic surgery or Weight Watchers?

Vic
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LadyGeek
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Post by LadyGeek »

I'd like to read the same article, but written by his wife.
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sotaboy
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Post by sotaboy »

I agree, Ladygeek, that would be interesting. Perhaps, since he was not forthcoming with his lenders, he might have been the same way with her.
Unfortunately, given the dynamics of the relationship, she will probably write her article in the middle of a bitter divorce battle.
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MnD
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Post by MnD »

I hope after foreclosure that Chase sues them successfully for every penny he makes on his lousy book. Say the lender loses 50% or more on the foreclosure after all expenses, then sues him for $250K that he has to cough up. No house and out $250K - about what these two nitwits deserve.
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VictoriaF
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Post by VictoriaF »

MnD wrote:I hope after foreclosure that Chase sues them successfully for every penny he makes on his lousy book. Say the lender loses 50% or more on the foreclosure after all expenses, then sues him for $250K that he has to cough up. No house and out $250K - about what these two nitwits deserve.
Do you have any particular reason for the Schadenfreude?
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VictoriaF
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Post by VictoriaF »

LadyGeek wrote:I'd like to read the same article, but written by his wife.
Or both wives ;)
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Post by MnD »

VictoriaF wrote:
MnD wrote:I hope after foreclosure that Chase sues them successfully for every penny he makes on his lousy book. Say the lender loses 50% or more on the foreclosure after all expenses, then sues him for $250K that he has to cough up. No house and out $250K - about what these two nitwits deserve.
Do you have any particular reason for the Schadenfreude?
He's a self-declared deadbeat, hasn't made a house payment in eight months despite a $120K (base) income and the taxpayers will be picking up the tab courtesy TARP on the bank side and likely other bailouts like "making home affordable" that benefit deadbeat borrowers directly.

If he's not making house payments he's not not paying property tax either that supports police, fire, schools, roads ect. I'm sure thje CEO of Chase has had the article sent to him, hopefully this "reporter" will become the poster child for what a lender can do to people with solid incomes who just decide to stop paying on their loans. Probably not though, he'll win some award for reporting on the mortgage crisis "from the trenches" and get a big principal reduction on his loan to get to a payment he can "afford".
djw
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Post by djw »

The author was interviewed for an hour by NPR's "On Point". If you go to their website, you can listen to the replay. The questions and comments from callers are good, but the posted comments re: the author which appear on the web site are, IMHO, of boglehead quality.

http://www.onpointradio.org/

As one poster asks, (I paraphrase): When did owning a McMansion you can't afford become the definition of the American Dream?

I would add:

When did buying your bride-to-be a large diamond ring become a necessity?
When did buying flowers on Mother's Day become de rigeur?
When did buying chocolates on Valentine's Day and Easter become essential?
When did celebrating Secretary's Day (Assistant's Day?) become mandatory?
etc., etc., etc.

We've all been sold a bill of goods. Who still believes that advertising and PR aren't effective?
bmb
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Post by bmb »

I have very little sympathy for the guy.
By his own admission, he lied, lived beyond his means to impress, and should have known better.
If he lucked out, he would have felt superior to all the frugal suckers.
It didn't.
rockbottom
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Post by rockbottom »

twacapt wrote:Makes me suspicious of the NYTimes other "expert" reporters. Do you think that perhaps some of the political reporters and editorial writers might lack some common sense and discipline?
It might just be possible.

Many US government officials dealing with China cannot read Chinese well enough to skim news reports on-line. They need to rely on translations. The whole country seems to have incompetents in highly paid positions of authority.
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Post by 3CT_Paddler »

gchan wrote:
Eight months after my last payment to the bank, I am still waiting for the ax to fall.
This suggests to me something seriously wrong with the banking system and housing markets.

Eventually, the banks will have to act on their defaulted loans and if they are sloppy and just foreclose on everybody, expect to see even more foreclosures that will drive housing prices down.
I thought the same thing. I wonder how many properties there are out there where people are just living in these foreclosed homes. If this is common at all it will only make things much worse for housing.
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preserve
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Post by preserve »

3CT_Paddler wrote:
gchan wrote:
Eight months after my last payment to the bank, I am still waiting for the ax to fall.
This suggests to me something seriously wrong with the banking system and housing markets.

Eventually, the banks will have to act on their defaulted loans and if they are sloppy and just foreclose on everybody, expect to see even more foreclosures that will drive housing prices down.
I thought the same thing. I wonder how many properties there are out there where people are just living in these foreclosed homes. If this is common at all it will only make things much worse for housing.
It makes no sense to foreclose on a home unless you can sell it. Property damage, tax, and other liabilities.

It does bring up a good point that there are probably a lot of high end homes just hovering.
james22
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james22
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Puakinekine
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Post by Puakinekine »

Great post!
Yet writers are, as a class, extraordinarily at risk. They spend their twenties, and often their thirties, living paycheck to paycheck. They are extremely well educated, and all that education is not only expensive, but builds expensive habits. You end up with a lot of friends who make much more money than you--who don't even realize that a dinner with $10 entrees and a bottle of wine is an expensive treat, not a cheap outing to catch up on old times. Our business is in crisis, and we lose jobs often. When we do, it's catastrophic.

This is what David Brooks calls "status-income disequilibrium", and unless you are among that happy breed of writers who is married to someone with a high-paying job, or who has a trust fund, you feel it keenly. Everyone you write about makes more than you.


I think the whole society has been under the influence of "status-income disequilibrium". Watching the evolution of the consumer society in North American from the perspective of my life in a small, rural, and often economically marginal Hawaiian town, has been a series of shocking jolts with every visit to the mainland. I could just not understand where all the money was coming from and why people seemed to do nothing but commute for hours and shop. This lifestyle versus income disconnect and the disconnect between what the earnings statements of major corporations said versus my personal bewilderment, when I had anything to do with their goods and services, as to why they were making any money at all, was what led me to hold very little in equities and corporate bonds over the past ten years.

I have always been thankful for an early life lesson. In the early 80's, we had undergone a major financial setback ,which we knew we would recover from but had to be careful for a while. Meanwhile, most everyone around us was going on far away vacations, investing in this and that, buying larger houses, all the stuff. It was the first time I had seen this sort of thing. I kept asking "Where is all the money coming from? What are we doing wrong?". I think the hardest thing was not to be able to buy for the kids what many of their friends had. Then that bubble burst and the neighbor with the huge house and two vacation cottages, and children each with their own car, and twelve pairs of Keds in every color, was bankrupt inside of two months. The investors discovered that their financial adviser had taken off, and I discovered that they had all bought on margin.

And the past ten years have given me the same exact feeling that I had in the early 1980's. But this time, I knew better then to be envious or to even attempt to keep up with it. But I can easily see how a whole society got into this easy credit-fueled pathological spiral.
delisim
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Post by delisim »

As someone who chose an Alt-A loan, I have no sympathy for the writer. I had brokers pushing me telling me that I "qualified" for more, but I knew I could never afford the payments they were talking about. He should have too.

While he (I assume) accurately tells his story, I don't see him accepting responsibility for his actions. Indeed, I think he makes it much too easy to blame the broker or the banks. It is his fault, pure and simple.

I should not have to pay for it. But I am and probably will for the next 40 years. That's what irks me.
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sergeant
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Post by sergeant »

The new wife doesn't get any support or alimony payments from her ex? Me thinks the writer was thinking with the wrong body part when he hooked up with this one.
AA- 20+ Years of Expenses Fixed Income/The remainder in Equities.
grayfox
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Post by grayfox »

preserve wrote:It makes no sense to foreclose on a home unless you can sell it. Property damage, tax, and other liabilities.

It does bring up a good point that there are probably a lot of high end homes just hovering.
A lot of people are playing the banks right now. They just stop paying their mortgage and wait, knowing that the banks are so swamped with foreclosures that they won't get to them for a very long time. I don't even think the banks care because like in the story JP Morgan is only servicing the mortgage, they don't loose anything.

Or maybe there will be government-mandated moratoriums on foreclosures. Free rent for how long? Maybe a year or two or three? Then hope for some kind of government bailout and a reduction in principle.

Everyone should just stop paying their mortgage. People writing checks every month now are suckers.
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Post by Fear and Loathing »

bigH wrote:
HardKnocker wrote:What? This guy and his wife are idiots.

>

"Between humongous loan balances and high rates, we had hung ourselves with the rope they gave us. In the previous December alone, we charged $2,845 on the Chase card for Christmas gifts, food, gasoline, clothing and other expenses. The charges included almost $350 for groceries, $700 in clothes from J. Crew, $179 at GapKids and $700 for airplane tickets for two of Patty’s children to visit their father in Los Angeles. Our balance climbed from $14,118 to $17,135, and in January 2006 we maxed out at our $19,000 credit limit. And there were other expenses on other cards: $1,200 in dental work for Patty’s son Ben; $1,600 to rent a beach house the previous year for us and all the children. Granted, the beach house was an embarrassing mistake. But given that Patty had landed a solid job, it seemed like an indulgence we could work off later."
I noticed this too. Come on? None of these expenses are necessary. I understand the preassures of society to keep up with the jones', but he jones' are BROKE.
Bring back debtors prison and public flogging.
Fear and Loathing
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Post by Fear and Loathing »

sergeant wrote:The new wife doesn't get any support or alimony payments from her ex? Me thinks the writer was thinking with the wrong body part when he hooked up with this one.
In that case he should probably put her to work at a pole or corner. Good money to be made - especially in volume.
at ease
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Post by at ease »

..he gave his reasons as; the money was there and i was in love.....

..later he said he thought they would rent a place but Eve, i mean Patty, found a small but stately brick apple in a leafy....(just kidding ladies)

...i too appreciate the post and story...it is life...and just about all of us stumble and exit off the wise path a time or two in our travels....they both have, and are suffering....and it takes courage for them to share their human weakness' like that....the money is no longer there, but i hope the love is.....
BobL
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Journos and Discipline

Post by BobL »

twacapt wrote:Makes me suspicious of the NYTimes other "expert" reporters. Do you think that perhaps some of the political reporters and editorial writers might lack some common sense and discipline?
Yes! Spot on. Absolutely.
Gekko
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Post by Gekko »

my favorite comments on the article -

"One of his problems was re-marrying. He should have learned his lesson the first time. His ex-wife continued to receive his alimony payments because she did not marry a new sucker. If Andrews did not marry his new wife, the new wife's ex-husband would need to keep paying alimony to her. The extra income that she would receive in alimony payments could have helped to fund their lifestyle. I am sure a lot of people will criticize them for buying a $460,000 house. That is pretty cheap for the DC suburbs. Silver Spring, Maryland is a little bit seedy as far as the nearby suburbs go, so that is why his home is cheap for this area. It is not unusual to see small 1950's-built ramblers with hardly any land selling for $600k in some neighborhoods. The housing bubble still has some more deflating to do." - Yahoo! Finance User

"the only lesson that I take from this is that philandering, the divorce and a quick re-marriage are deadly to a man's self-worth." - felonious_hex

http://finance.yahoo.com/expert/article ... tk-cmtscnt
bradshaw1965
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Post by bradshaw1965 »

kb0fhp wrote:
sergeant wrote:The new wife doesn't get any support or alimony payments from her ex? Me thinks the writer was thinking with the wrong body part when he hooked up with this one.
In that case he should probably put her to work at a pole or corner. Good money to be made - especially in volume.
Aren't you just a little burst of sunshine?
badger
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Post by badger »

I listened to his NPR interview. He kept saying that "he was not apologizing for his behavior" and described all the individuals who participated in getting him this loan, house, whatever as "enablers". There is a problem there.
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