So, let's talk about Megan's post and Andrew's article. I read Megan's post last week when there were only 4 comments.There are 290 comment right now. (BTW, there's a laura in the comment section at Megan's blog. Not me.)
So, Andrews writes about how he, an economics reporter for the New York Times, managed to get so far in debt that his house will be foreclosed on as soon Chase gets around to it. He says that it was too easy to get money and that he and his new wife had trouble spending within their means. For them, being middle class meant a house, J.Crew clothes and a vacation, but a reporter's salary + child support payments for a previous marriage = not much leftover.
Megan describes the article as brave. It was. But it was also a tad annoying. I shop the clearance rack. We plug in every cent we spend into Quicken. My kids wear shoes from Payless. We drive one car. I find it difficult to summon up pity for this guy. Nobody should feel entitled to J. Crew sweaters.
And yes, I guess it is difficult to be in a profession that is high status, but not well compensated. Brooks describes this as Status Income Disequilibrium. Megan says that this is a real phenomenon.
…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. Most of the people you know make more than you. And you come to feel that shopping at the farmer's market, travelling to Europe, drinking good coffee, are minimum necessities. Your house is small, your furniture is shabby, and you can't even really afford to shop at Whole Foods. Yet you're at the top of your field, working for one of the world's top media outlets. This can't be so.
Yes, it does suck to be really good at something, have a great deal of recognition, work really hard, but be less well compensated than your plumber. Academics gripe about this all the time. In fact, my family has a talent for seeking out these high status/low salary jobs — journalism, academia, publishing. Still, you have to get over it. Get some new friends who are poorer than you. Befriend grad students.
A few weeks ago, I was chatting with a dad on my kid's soccer team. He is a contractor who has barely had any work in two years. A Vietnam vet, who served his country and built homes for people is having a tough time putting food on the table for his five kids. He's ticked off, because he can't afford the taxes in town, illegal immigrants are doing his job for a tenth of the price, and nobody seems to care that boys are coming back from Iraq without their limbs.
I was reading Marx to my theory students recently. Marx describes the transition between economic systems as rough. There are also people who benefit from the old orders who lose out as the transition happens. I'm not a big Marxist and never got into his stages of historical materialism, but I do wonder if there is a transition going on.
In the mean time, people, don't run up big credit card debt.
Apt. 11d 
I found myself reacting strongly to the way Andrews depicted his ex-wife and wife. First off, I thought to myself — is this guy still married? He totally hung his second wife out to dry. It’s like he’s taken Elizabeth Edwards as his role model. Let’s publicize my spouse’s really bad financial decisions! It will be cathartic for me!
My second thought was along your lines, Laura. Why does this guy get a free pass on living within his means? He mentioned how his kids were thriving and I thought, of course the kids are thriving! Doesn’t he know that’s arguably the biggest payoff for being upper middle class — you’re able to provide more for your kids? And one of the biggest reasons the *rest* of us give up on our personal ambitions, in order to do more for our families?
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Status is part of his pay–he could have chosen a different ratio of status to income in his pay packet, but this is what he chose. The problem is his denial that the intangible status adds enough to his life that it’s worth living with fewer tangible status symbols.
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I thought the article was brave, even though I could see how it would annoy people, too. Yes, no one should feel entitled to J.Crew clothing. But, when you’ve worn that before, it’s hard to downgrade, and it’s hard to know when you have to downgrade, when you really are living behind your means (mind you not impossible to know, just hard). One variable in their story is that the wife was looking for work — and they could afford their lifestyle (I think) if she worked.
In terms of “high status”/”low pay’ professions, Megan talks about writers/journalists, and you correctly put college professors in the group. Judges & politicians (and some government/public interest lawyers) also qualify. The solution of hanging out with grad students, though, is only available to professors. And, doing it can make you a lot less aware of your status/income gap. That solution is harder for journalists (especially economist journalists), who may even have to hobnob with the “rich” as part of their job.
Of course he should have to deal with it, but we can also recognize that there will be pain involved, and that we can sympathize with his pain, while, knowing, for example, that there are starving people in darfur (or unemployed Vietnam vets trying to make the best for their family).
(Sympathy doesn’t require subsidizing his J.Crew purchases, though, and the fact that he’s 8 month’s behind on his mortgage, and waiting for some kind of bailout is a worrisome).
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Oh, and the whole “downgrade” part of the equation is something that’s really difficult for a man to impose on his kids. That’s what I really worry about, that we might be creating a class of kids who have unreasonably high expectations for their income, status, and what constitutes a middle class lifestyle (J.Crew, cars at 16, granite counters, vacations in Hawaii, and Europe, a expensive college “experience”, gap years studying medicinal plants in Tibet . . . .).
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PS: the “don’t run up credit card debt is a good one.” But, I never have — never in my life have I not paid off my CC bill every month. So, I’ve never used credit cards for “credit.” I’m guessing this is not something that everyone can do? Are there valid reasons not to pay off your credit card (unlike, say buying a J. Crew shirt)?
PPS: mint.com is great, I think, as a way of tracking your spending when you’re actually doing it. Since credit card bills don’t arrive until the end of the month, it’s hard for people to know they’ve spent the money. But, if you check accounts on line (like at Mint), you see the impact of your credit card use much more quickly, allowing you to modify your spending where you can.
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I don’t have a lot of sympathy for Andrews or his situation, but I don’t have any anger about it, either. I thought his challenge wasn’t so much status disequilibrium as willful naivete about the economic consequences of divorce: he was paying more than half his salary to support his first family but hoped he could set up the second family in the same style of living to which he and his second wife had become accustomed. As a child of divorce, I can only shake my head at the foolishness of this.
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I read that article on the train on Friday and I like the way it was specific about how much he made and how, exactly, he got into this situation in the first place. No one is ever very frank about money, so we all go around without really understanding what we’re doing and sometimes make really big mistakes. Recently, a friend’s house went on the market and my husband and I asked about it, knowing that she was in a different financial situation, but still hoping it might be something we could stretch into. The house is twice as much as ours. So, um, not happening. In the subprime market, we might have been encouraged to stretch and then, like so many others, we’d be screwed.
The thing is, we didn’t want the house to meet some upper middle class criteria (though it would have), but we really could use more space and a better location (it’s on the train line, so we could get rid of a car). Of course, everything we’ve looked at in the last couple of years has been double or more the cost of our own house. We will settle for what we have and make the best of it. We spend our money on other things–electronics, travel–and that leaves us with less house space, clothes from Old Navy and Target, coupon grocery shopping, etc. And that’s even more true now that I don’t have steady income.
I hope the fallout of this whole thing is that people are more likely to live within their means and stop buying so many expensive clothes (on credit usually) and cars, etc. I think it will be healthier for all of us.
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What I found annoying about the article is the ratio of self-pity to actual damage. I mean, the guy is getting off quite easy: they had a good run of living high on the hog, rolled all that Baby Gap consumer debt into the house, and now will foreclose and walk away. They got several years in a great house that they couldn’t have afforded as renters, and essentially free outfits, vacations, etc. All he’ll get in return is a dinged credit score.
I found Megan’s post to be far more interesting and insightful than the article that motivated it.
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One thing I find striking about both your post & commenters and Megan’s post is that somehow $120,000/yr is considered low-income. I mean, fine, his wife wasn’t making much at either of the jobs he points out in the piece, and he did have a load of alimony & child support to pay. So yes, in the end, he didn’t have a lot of money in his pocket. But why do we think that a 6-figure paycheck is low for a writer? Jeez. It almost makes me feel bad for my 5-figure salary as a professor who just got tenure. (Almost, except that I don’t have enough taste to live beyond my means.)
Andrews’ situation isn’t about being low-income. It’s about living above his means (which he recognizes) no matter what those means are.
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What struck me about that article was how bang-on it makes The Millionaire Next Door look.
That book talks about how people who save more than you would expect tend to a) marry people who are frugal and b) live in lower-status income neighbourhoods than they ‘need’ to. My husband and I are not especially wonderful at financial management but we have taken b) to heart particularly and always sought to buy the least prestigious house in the least pretentious neighbourhood we felt we could handle (blessed by an educational system that isn’t funded so locally) and that has meant that we aren’t having to swim counter-micro-culturally all the time.
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Oh, also, as best I remember, he really emphasized the child support he had going out, but didn’t say anything either way about child support coming in. I guess it’s possible that the wife’s ex is a deadbeat, but I’m guessing that at least something was coming in to offset that $4k.
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I didn’t mean to imply that $120,000 was low-income. But it does not seem to be enough to support two families in the the DC/NYC area with stuff that traditionally goes along with a middle class life-style. For a journalist, $120,000 is actually incredibly well paid. My brother makes around $50,000.
Megan was riffing off a chapter in Brooks’ book, which talks about people in journalism and academia who hang around with people who make ridiculous amounts of money. In that context, making in the low six figures FEELS poor. Which is crazy and stupid and silly.
Virago just pointed to me an interesting discussion here.
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I’m not sure that personal profiles can make it into the NYT Magazine if they’re not annoying. It’s part of the circuses for the Bildungsbürgertum.
The layers are interesting, too. Yes, brave to get out and say in front of millions, “I screwed up about money, and you can make extra fun of me because my job is to explain things about money.” But there’s also the element of priming said audience to buy his book. That much real estate in the Sunday Times is enough to give his book’s publicist a week’s worth of screaming orgasms (this is a technical term we used when I worked in the book trade). And yet on the other other hand, chances are very good that this is what he’ll be known for: “Oh, you’re the guy who couldn’t pay his bills and wrote that book about it.” Which, all things being equal, is not what you’d ideally want to be know for. Though if the advance and royalties pan out, he might get to keep the house after all.
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We had relatives, married to each other, who got into a spending war like this. They both knew they couldn’t afford the spending, which makes it very hard for those outside the marriage to understand. Having seen it once, though, I know that educated adults can get themselves into that trap.
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I listen to a lot of hard-luck personal finance radio (the Dave Ramsey Show), and surprisingly, some of the worst financial train-wrecks involve people in roughly Andrews’ income range. What can be hard to grasp (perhaps especially for people who have never had that much money before) is that $140,000 a year gross isn’t actually wealth beyond the dreams of avarice, and you still need to prioritize. Here are a few points about the article:
1. $460k in Silver Spring would not have amounted to a fancy neighborhood or fancy house. I househunted in Montgomery County around 2006, and it was really hard to find a single family home (or even a townhouse) in the low 400s, even in iffier neighborhoods. You were paying mainly for an OK commute and Montgomery County schools, but it wasn’t Bethesda.
2. They probably could have afforded the house as renters, based on my memories of the rental market. It would have been a whole lot less than a mortgage, and somebody else could worry about the broken screens and peeling paint.
3. One odd omission is that while Andrews is paying alimony/child support, he doesn’t mention if his 2nd wife is getting any from her 1st husband.
So far, he’s been living rent and mortgage-free for 8 months. The foreclosure process is really slow, so he may wind up living mortgage-free for another year or so. He may be in for a nice payday, too. Countrywide has been giving homeowners $5k cash-for-keys to smooth the foreclosure process, at least in California (according to Jim the Realtor). Chase probably isn’t quite so generous as Countrywide, but Andrews may get something.
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“We had relatives, married to each other, who got into a spending war like this. They both knew they couldn’t afford the spending, which makes it very hard for those outside the marriage to understand. Having seen it once, though, I know that educated adults can get themselves into that trap.”
Isn’t that a pretty good description of Congress? “If we can afford your boat, we can afford my new kitchen!” When really the gospel truth is that you can’t afford either or that buying the one thing makes it less possible to buy the other thing.
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Is J. Crew really nice? I’ve never worn it.
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It was a mistake for him to keep talking about how small his house was, when there was a picture of it right there. It looked like a pretty sizable two-story place to me.
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J. Crew does have nice sweaters, but you can get them for like $20 on the clearance rack after the holidays. That’s my trick. Normally, their stuff is too rich for my blood.
This conversation is reminding me of that year that Steve and I wrote our dissertations with almost no money coming in. I owned one pair of shoes. They were the ugliest black slip-on Lands’ End shoes. $30. I wore those shoes with shorts and jeans and that was that. The three of us lived on $30,000 in Manhattan for one year. We had no credit card debt at the end of the year. More descriptions here and here and here.
So a part of me is disgusted by this guy. I lived within my means. Why can’t he?
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“It was a mistake for him to keep talking about how small his house was, when there was a picture of it right there. It looked like a pretty sizable two-story place to me.”
I do buy that it is small. There are a lot of post-war two-story brick colonials in Silver Spring and Wheaton and I’ve been in a couple of them. They’re cute but very, very small and the stairs eat up a bunch of space. If it is the vintage that I’m thinking of, the house doesn’t go back very far in the lot.
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My wife’s first reaction upon reading the article was to volunteer to go down to Maryland and evict them herself.
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Doug is right. This guy is selling a book, not being brave or something.
Also, McCardle has an update on her site. She’s read the book and apparently the wife was supposed to get $700/month, but usually didn’t.
As near as I can tell, there are only two lessons from this guy’s story. Bankers really did get criminally stupid during the boom and redheads break-up marriages. Neither of these are new information.
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“… redheads break-up marriages.” Hey!
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Oops.
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I think that while many of the stories in the NYT are skewed towards NYC readers, this story really makes more sense if you’re familiar with Maryland. MD is one of the richest states in the country, and Montgomery County is one of the top five richest counties in the country, so what MoCo denizens consider to be an acceptable standard of living is very location-distinct.
Also, in this region of MD and perhaps in NYC as well, it’s become very difficult to find the “middle class,” and thus anyone on the lower rungs of the upper-middle-class has very little to compare themselves to. In great swathes of the DC metro area, you’re either rich or poor– there’s not much in between.
More thoughts: Laura, while you were living within your means in Manhattan, was your kid old enough to know what was going on? In other words, I think part of what this story is about is how hard it is to readjust your kids’ standard of living when it drastically drops. Like Jody, as a child of divorce who went through several major class fluctuations as a child, I am not surprised by this account either, but I also do have a bit more sympathy than many seem to for the parents who tried to avoid letting their children realize their newly reduced circumstances.
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“MD is one of the richest states in the country, and Montgomery County is one of the top five richest counties in the country, so what MoCo denizens consider to be an acceptable standard of living is very location-distinct.”
Montgomery County does have a high median household income. I was looking it up on Wikipedia and it’s something like $90,000. I also looked up the median household income ($73,000) and median home value ($490k) for Silver Spring in 2007 (according to City Data). The median gross rent in 2007 was $1300, but it’s not clear how big a unit that would get you.
Anyway, this shows that Andrews bought an average Silver Spring home and that his gross income was much larger than fellow residents’. Note in addition that in 2007, the median home price there was nearly 7X the median household income. This is an absolutely apocalyptic, unsustainable ratio. The median person who bought a median Silver Spring home would be in exactly the same hot water as Andrews, if not much worse.
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Another issue is that Silver Spring wasn’t nearly so expensive in the recent past.
2000
median household income $52k
median house or condo $183k
2007
median household income $73k
median house or condo $490k
So, if City Data’s information is to be trusted, salaries went up significantly from 2000 to 2007, but not as much as home prices. In 2000, the median home was 3.5X the median household income. Seven years later, the median home was 6.7X the median household income. 2-3X household income is the traditional comfort zone for mortgages.
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Zoinks, Scoob. I’ve made many a financial misstep in my life and I do spend money on little luxuries (mostly from LUSH). So I don’t feel qualified to be a full-on Judgy Judgerton here. But I expected better from someone who *made his living* writing about *economics.* And Patty may be “fiery and sexy” but I wonder at the “brainy.” (I’m sorry, but expecting to be supported by a man Just. Chaps. My. Hide. Says the daughter of a working mom and granddaughter of one, too; I fully expect to work all my damn life even if I decide to marry some rich guy who will put up with me.)
It sounds like a failure to communicate (about money) on both their parts. And two ill-advised divorces, with what looks like an “unhappily ever after” ending. *Knowing* that Andrews has to pay out the wazzoo on child support AND that fiery sexy Patty’s ex is paying very little maybe, just maybe, they could have done some planning?
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Steve Sailer (I know, I know) thinks Andrews has it figured out:
“So, this guy has been living in Silver Spring rent-free for the last eight months and he’s turned his rent-free life into a book (which I have a suspicion he wrote on a paid book leave sabbatical from the Times), which he’s gotten the New York Times Magazine to promote? No wonder the Times had him covering the Fed. He’s financial freaking genius.”
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My kid was a baby, so I didn’t have to protect him from class drop. I don’t like being Judgy Judgerton, but this guy puts his mess out there. He’s inviting judgment.
But I think that Megan and others are right. This isn’t a tale about a writer and a mortgage. This is a tale about what divorce does to the finances. The commenters at Megan’s have figured it out. Cue the misogyny.
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I see the misogyny already blossoming in the comments over on Megan’s blog. I don’t think the issue here is “women make out like bandits in divorce” – clearly Patty didn’t. I think the issue is that BOTH parties – Mr. and Mrs. Andrews – did not communicate well nor did they plan. I guess they were floating on a romantic pink cotton-candy cloud. However, a lot of times what breaks a marriage is the NON-romantic stuff like money, kids, lifestyle, etc. Edmund and Patty seem to have thought with their little heads, yaknowhatImean. And assumed that the money issues would just sort themselves out. Not thinking about what it meant to support stepkids as well as one’s own kids, etc.
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I’d say more generally that it’s about a change in status (in this case, the divorce), but it could also be a job loss, loosing a spouse, or ill health, and a lag in understanding that your expenses would have to change substantially to account for it.
I just can’t judge him — I can see how people get themselves into this kind of mess, and I think that he does deserve credit for putting the details of his story out there (even if it’s to publicize his book, and hopefully the resulting publicity will mean he can pay his mortgage up and not become a taxpayer burden). We don’t talk nearly enough about money in this country, about earning, and spending, and the tradeoffs.
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Ailurophile, I think the lower-paid party tends to be given a big chunk of the income of the higher-paid party, at least here in Virginia. And infidelity tends to be punished – a friend of mine divorced his unfaithful wife and she was stuck with HUGE child support payments to him, then found that the guy she left him for went into the ether after a year. Same story, genders reversed from the one we’ve been reading here.
Is that a bad thing? The kids in the case got a dependable home, supported up to and through college. The person who blew the marriage up had a far less pleasant life, and the person who did not walk out on his obligations/promises had an only somewhat less pleasant one.
Andrews – I have read the NY Times article, not the book, probably won’t read the book – and his new wife seem to have blown up their marriages for each other. I’m not very concerned for them, and his kids and ex-wife seem to have been decently taken care of by the courts. His new wife’s child, not so good. The heart wants what it wants, Woody Allen said, but unless you have his kind of income, it can be expensive and hurtful for a lot of people.
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Actually, one of the lines in Megan’s post that struck me the hardest was “Everyone you write about makes more than you.” I haven’t read through all the comments, but it looks like only a couple of folks in the comment thread remarked on it at all.
This is a reporter who makes $120K a year, a higher single income than most of America. Yes, depending on your beat, you’re going to be writing a fair bit about prominent folks in society who are rich and powerful, and make a lot of the decisions affecting economic conditions in the US. But if that’s *all* you’re writing about, then you’re missing a huge amount of what goes on in America: how folks below the upper income class live, what they do, how they make do, and how the decisions of the rich and powerful affect them.
If you’re covering economics, or just about any other topic, you need to talk to the less well-off, and get to know them in depth, and not just to to get a quick “man on the street” or “woman in the projects” quote to round out the story you’re filing right now and will forget about tomorrow.
You might, for instance, be able to give a more complete and compelling picture of folks facing their foreclosure crises than just people making good money and bad decisions. Yes, that’s part of the big story, as Andrews’ own account makes clear (and to his credit as a storyteller, in a hard-to-turn-away-from style). But I didn’t get any sense of the wider perspective in his article. How typical is his story compared to others nationwide who are losing, or have already lost, their homes? What are they doing to cope, get out of, or avoid the problems that he’s facing? Can we learn useful things from comparing his experience to theirs? Or is it all about him, and people like him?
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Two more comments:
(1) As much as I do think this was about divorce, it’s worth noting (as Amy P and John Mark Ockerbloom have) that Andrews could call on an entire apparatus designed to get people into homes they could not afford. This wasn’t just Andrews’ experience: in many places, housing prices had risen so high that people who wanted to buy ended up making crazy choices.
Corollary to that point: The housing bubble was unsustainable, and plenty of smart people not only knew it abstractly but were living the reality.
(2) The misogyny over in Megan’s comment thread was occasionally breathtaking, and a potent reminder why 99% of all comment threads are worse than useless. Andrews opened his piece with this descriptor: “bruising two-decade-long marriages” and admits that, after “a one-year bicoastal courtship,” he had “separated” from his wife and was paying her alimony. These are not the words of a Victimized Man (TM) but there were a few vocal participants in Megan’s thread who had a filter and wanted to read the story accordingly.
If I’m honest with myself, I wasn’t nearly as dismayed by Andrews’ financial mistakes as his decision publicly to denigrate a two-decade long marriage that resulted in children. That sort of revisionism irritates the heck out of me: yes, after the fact, all those moments when you decided to stick around and keep working on the marriage might look “bruising.” But at the time, I would hope that they were an honest attempt to preserve something you believed had value, and you owe it to your kids to man up and acknowledge that.
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One of my ex-relatives found himself in a very similar position to Andrews, but with twice the income. Nonetheless, with himself, an ex-wife, a current girlfriend, and seven kids between the three of them, he found himself in uncomfortable financial circumstances. (Truth be told, things had been tight earlier when his previous family was intact–they had several rental properties that he and his wife were HELOCing to death.) As I said about him at the time, you can’t just expect to live like an Old Testament patriarch and do well financially.
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I saw Andrews on the Today show this morning with his current wife. I have no sympathy for him at all. He makes more money than I ever have or will. He takes vacations at the beach and regularly buys new clothes. He wanted to live a lifestyle he couldn’t afford and feels no shame about ‘stealing from the bank’ by living in a house he doesn’t pay for. And what about the wife and children he abandoned? What is admirable about him or his choices? And now he has written a book describing all his bad choices and will ‘make a mint’. It just goes to show that life is not fair and no good deed goes unpunished.
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” The misogyny over in Megan’s comment thread was occasionally breathtaking, and a potent reminder why 99% of all comment threads are worse than useless.”
It’s really sickening. When I read that stuff, it always makes me wonder how widespread that crap is. Is the blogosphere comprised of a bigger section of assholes than the general public or does the general public really believe that stuff, but just holds it in most of the time?
Ann Crittenden has a big section in her excellent book about men who feel entitled to set up second families and resent the first family who drain their finances. I would have liked it if at one point in that essay, Andrews had acknowledged that child support payments are fair and that he had a responsibility to care for the first family he established. He also mentioned that the child support payments were coming directly out of his pay check. Doesn’t that only happen, if you fail to pay for a while and judge has to set up automatic withdrawals from your paycheck?
But the comment section here is the giant exception to blogosphere. Yes, we absolutely need to talk more about money in society and couples have to deal with these issues frankly. And, yes, it is scary that an economic reporter is only talking to one economic segment of the population.
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My main reaction to the article was a strong desire to find who approved those loans and make them pay for TARP out of their own pocket. I have that reaction a lot lately. It’s probably going to get worse when it comes time to pay-off the deficit or I have to deal with double-digit inflation and university raises. I’m trying to find my calm spot.
As for the misogyny in Megan’s thread, that’s been there for as long as she’s been at the Atlantic. I’ve always wondered why she attracted so much of it. My guess is that, if you want to insult a woman from the safety of your computer, she’s got the biggest audience of anybody who will let a comment like that in. Also, something about libertarians and people who are irked at libertarians seems to bring out the worst in a discussion.
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This, from Amy P, bears repeating: “The median person who bought a median Silver Spring home would be in exactly the same hot water as Andrews, if not much worse.”
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I’m not one to post replies that say “Yeah! Word!” But finals end tomorrow, and that’s all I am capable of saying right now.
“I would have liked it if at one point in that essay, Andrews had acknowledged that child support payments are fair and that he had a responsibility to care for the first family he established.”
Yeah! Word!
Of to the grading coal mines.
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From the article, “How could a person who wrote about economics for a living fall into the kind of credit-card trap that consumer groups had warned about for years?”
In no small part because entire industries existed to help people do exactly that. Lots and lots of enablers in this story.
Also: “But Patty and I paid off our credit cards, and my credit scores jumped. In October 2006, Bob refinanced us once again, and our payments dropped just as he had predicted.”
And just as easy credit made it simple to get into trouble, it could help people get out of it as well. If Patty had kept her job, the story might very well have a different trajectory (and we wouldn’t be reading about it in the magazine, of course): “We had some close scrapes and made some iffy decisions, but thanks to the refinancing we made it through the rough patch ok.”
How many of us could withstand the loss of one income from two-income families? For how long? We might avoid the stupid things that Andrews did (speeding with expired tags and registration, beach house, cross-country flights, etc) but it’s equally possible that our livelihoods could be threatened even though (or worse still because) we did everything “right” and played by the rules.
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I didn’t read Megan’s comment thread, ’cause I could see that it was going to get misogynistic. But, $4800/month in child support, 48% of his monthly income seemed high. MD’s guidelines seem to suggest that support payments would be on the order of 16% for that level of income. I would be interested in knowing how that amount was set (and how we think it should be set).
And, yes, I see Doug’s point, that with a few other tweaks, the easy money could have set them on the right footing (a big key being the loss of the 2nd job, and the general collapse of the economy). It’s the compound effect that’s been a problem in so many instances (personally bankruptcy, and in firms, and the economy, the “perfect storm”)
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Doug, I’m still ready to go riot at the bankers (Pittsburgh has about 600 police, so I’m waiting for a riot big enough that there are sure to be 600 people slower than me). But it is hard to feel that much sympathy for the Andrews. Even aside from their mortgage, they spent a lot.
Quote: “How could I have glossed over the fact that we had been spending about $3,000 more than we were earning, month after month after month?”
As near as I can tell, that quote is from when both were working and I find it hard to fathom since their take-home would have been something over $5,000 a month at the time.
When buying a house, we deliberately kept our range at the point that we would be able to afford to live on the lower of our two incomes. Admittedly, we live in a city with cheap housing so our range was still very good relative to the median house price of the city, but it did involve keeping a much smaller house than most of our peers.
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We came close to buying a bigger house in 2007, but backed away because we got afraid do to the rumblings of the credit crisis and the prudence befitting a couple where both parties have ‘at will’ employment.
If we had bought, I’d be very nervous right now. On the other hand, we’d have enough space that our living room wouldn’t look like the Island of Sodor meets Elmo.
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I’m with you on the rioting, MH. “Dans ce pay-ci, il est bon de tuer de temps en temps un financier pour encourager les autres,” moderator’s family excepted.
Nearly half of monthly income in child support does seem high, but spending $3,000 more than was coming in each month does also seem stoopid.
A living room done up in Early Sodor is completely charming. Ours runs to Brio and Lego.
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Yes, moderator’s family excepted. I’m not going to NYC to riot anyway. I hate flying, it would take all day to drive and the train is about four hours slower than driving. However, I am driving to Cleveland this Friday to see Thomas and friends.
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Yes, please spare my financier, but I do have names of others.
My living room is presently decorated in Late Happy Meal Chachke. We’re classy like that. So, jealous of your Day Out With Thomas. We’re stuck on the soccer field all weekend. Grrr.
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I’ve never been to one of these Thomas things, but it looks interesting. However, I’m already getting the news that he expects to see not just Thomas, but also Percy.
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If there were recycling Over Here, the Happy Meal stuff would be rapidly recycled. As it is, it mysteriously disappears. Go figure.
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“I’m not a big Marxist and never got into his stages of historical materialism, but I do wonder if there is a transition going on. ”
We’ve been living in one for ~35 years – it’s called the destruction of the working and middle class of the USA.
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Posted by: John Mark Ockerbloom,
about Megan’s comment about always writing about people making more than her:
“You might, for instance, be able to give a more complete and compelling picture of folks facing their foreclosure crises than just people making good money and bad decisions. Yes, that’s part of the big story, as Andrews’ own account makes clear (and to his credit as a storyteller, in a hard-to-turn-away-from style). But I didn’t get any sense of the wider perspective in his article. How typical is his story compared to others nationwide who are losing, or have already lost, their homes? What are they doing to cope, get out of, or avoid the problems that he’s facing? Can we learn useful things from comparing his experience to theirs? Or is it all about him, and people like him?”
There was an article in the NYT Sunday magazine a few weeks ago, about some couple and their financial hardships. The husband owned an interior design business; as soon as he realized what was coming down the road last fall, he laid off three employees. This was presented in a single sentence, praising the man for his frugality. The three people laid off were never mentioned again.
It reminds me a line from some Mark Twain novel, where Huck tells a lady that a ship suffered a boiler explosion; the lady asked if anybody was hurt. Huck said “no ma’am, a ‘n*gger was killed’.
To the NYT, and Megan, we’re that n*gger.
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Barry,
If the business isn’t making money, you have to lay off employees or risk the business itself. In a major downturn, if you lay employees off now, you can save the business and hire people back later. If you wait and delude yourself that things are coming back, you keep paying your employees, you borrow to meet payroll, you borrow to pay for your own living expenses, and things go to hell very rapidly. Some of my relatives started a retail business during the dotcom years (when people were buying stuff they didn’t need with money they didn’t have), and sales just kept going up and up every year and they had hot-and-cold running employees. At some point the music stopped, but they kept waiting for things to turn around and kept the high level of staffing. The debt level got dangerously high. They eventually started cutting staffing and through some miracle, the business survived. Yes, there were hard feelings, but there wasn’t a bankruptcy, there wasn’t a foreclosure, there wasn’t a divorce, and the business has gone on to employee people and has spread out into some unexpected areas. The owners now have a much lower staffing level, are leery about credit (rather than treating it like free money), and one of the owners is now a huge Dave Ramsey fan. For a small business owner, employees are a luxury. If you cut back on staffing, you have to work more yourself, but if you aren’t making enough money to cover payroll, there is no other way out.
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