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.