Tuesday, April 1, 2008

More (un)worthy subprime fallout victims

My wife pointed out another article on CNN about a couple that's been affected by the subprime fallout, Careers vanish after subprime 'free fall'.

"We're still both in shock that it could go from something so good to so bad so quick," said Kent, 59. "New Century in 60 days went from top of the heap to out of business."

The two didn't say exactly how much money they made at their last jobs but Kent admitted they each had six-figure incomes.

Today, they're trying to get by on his unemployment benefits of about $450 a week, which covers only about an eighth of the basic payments they owe every month."

"Their home equity line, mortgage, health and life insurance premiums alone cost about $10,000 a month. Still, they are trying to hang onto what they call their dream home with a view of the Pacific Ocean where they live with Mysti's 11-year old son.

Kent estimates the mountainside home in San Clemente, Calif., which they bought in 2005, is worth 20% less than it was a year ago. And in the current market, he said he's not sure he could sell it for even that amount.

"We've used up most of our reserves, cashed in her 401K," said Kent. "We're going Mach 1 into a wall. When we run into it, then we've got to decide what to do next."

Despite their financial problems, the Copes have worked hard to protect their credit rating, staying current on bills. And they've made cutbacks: trading in Kent's Corvette for a Suburban and getting rid of the gardener, for example. But the couple also has learned that it didn't need everything it used to spend money on."

I lived in San Francisco and was laid off when the the dot-com bubble burst and felt the pain of going from a comfortable salary, to unemployment that doesn't even cover your rent so I know that frustration. I had to wait for my lease to expire to find a cheaper place to rent, but I was able to sell my car, found a free place to stay in exchange for work, and sponged off my girlfriend (now wife) for a few months while I enjoyed a relaxing summer looking for a new job.

But their cutbacks? "And they've made cutbacks: trading in Kent's Corvette for a Suburban and getting rid of the gardener, for example." They ditched the gardener? And sold the 'vette for a Suburban? That's economizing? How about selling the Vette and sharing a car? Or at least buy a corolla, or anything that gets more than 10 MPG.

I'm also amazed at the number of people who are cashing in their 401k's to prop up their extravagant lifestyles. I've already given up any expectations of seeing my social security in 30 years, but after bailing out the banks and the homeowners who overextended themselves, in another 20 years I'll be bailing out the homeowners who sucked their retirement dry in exchange for an ocean view and granite counter tops.

I need to stop reading the news, this is getting depressing.

16 comments:

Anonymous said...

I heard about this. It's almost tongue-in-cheek, but CNN can't make it clear.

You should consider having an open thread, by the way. I'd have posted it :)

Kirk Coburn said...

You should consider having an open thread. I read this article too early this week and was hoping it would make its way onto your blog.

These jokers are a typical example of the people who became accustom to the Disney Dollars. Now what? I would be curious to see the results of a poll to see whether the general public feels bad for these people. My money says the vast majority do not!

Anonymous said...

Losing faith in the SS system is just what republicans want you to do. They've created crises for SS for decades, since it was started. They HATE SS and if they can get enough of you younger people to believe it's a pyramid scheme, they can get you to approve of killing it.

Here, read this:

http://krugman.blogs.nytimes.com/2008/03/28/about-the-social-security-trust-fund/

The shallow, hyper-competitive, dog-eat-dog culture created by conservatism is what led us to this housing bubble and all the idiots living beyond their means. Don't fall for it.

PDXOutsider said...

i'll try an open thread and see how it goes, with a few ground rules of course. the gang here seems pretty well behaved and i'd like to keep it that way.

i have a few other upgrade ideas as well, just need to find the time to implement them!

PDXOutsider said...

"Losing faith in the SS system is just what republicans want you to do. They've created crises for SS for decades, since it was started. They HATE SS and if they can get enough of you younger people to believe it's a pyramid scheme, they can get you to approve of killing it."

i don't want to kill it, it's pretty much all that's supporting my grandmother since republic steel went bankrupt. it's there for a reason and i want it to stay. i just want to see some changes so that it's around and i can get my fair share.

bearlee said...

This reminds me of the Enron wives...boohoo...gotta cut back on my manicures, pedicaures, pilates, hair appointments, 24hr gym...boohoo.

Makes me want to write a long letter to folks like this and let them know what struggling looks like.

Anonymous said...

Bearlee,

Along those lines is this great article from Salon.com:

http://www.salon.com/opinion/feature/2008/04/02/depression/

It contains a section on what this country's unending fascination with the wealthy and making sure they stay happy is doing to us.

Anonymous said...

That again.

Anonymous said...

Oops, didn't close the tag!

bearlee said...

Gee, thanks for the pick-me-ups;O) You want more depression and frustration...look on realtor blogs, not housing blogs, around Portland...
My current 'favorite':
http://propertyblotter.com/

Makes you want to scream!

PDXOutsider said...

bearlee, I thought we should be looking at realtor blogs for pick-me-ups? Most of them seem to show nothing but optomism, kind of like Kevin Bacon at the end of Animal House http://www.tigersweat.com/images/anim15.jpg

WRT propertlyblotter, there's not a single comment to be found, I wonder if anyone is reading it?

Anonymous said...

That or the comments get deleted.....

Anonymous said...

From www.propertyblotter.com:

"I have got to take a moment to respond the the front-page headline of the Oregonian on Wednesday, March 26, 2008: “Portland home values take first dip”. First of all, that headline was put there to sell newspapers. Doom and gloom has always been a spectator sport. Not to down play the severity of our Nation’s current economic situation, but that headline was extremely sensational."

AND SHE'S SERIOUS. GAWD! This is really hilarious.

Has anyone tried commenting???

Anonymous said...

Commenting would be like shooting fish in a barrel. The realtor sites simply scream out for abuse but really, they're just advertisements. When I think about leaving a chiding comment I realize they're just people trying to make a living. Irritating as f*ck people, but still, they're just trying to get along in life.

bearlee said...

I used to comment on Ron Ares' www.rePDX.com blog until he started deleting my posts. Another poster called it to my attention. Haven't really posted since though I check regularly to make sure he is not making outlandish statements regarding the market.

Now he just gets the usual, "Great blog, Ron." from fellow realtors.

What makes a great blog?

PS Looks like he works with the propertyblotter.

Nick said...

My dad told me 2007 was his first "seven figure" year. It sure is nice that all of us younger people are paying for his health care along with a nice little monthly SS (welfare) check.

The nut job liberals want us to all count on Uncle for this money. The old folks spent it all. Lets shut it down for all but those who need it and call it what it is, welfare.