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Liberal_in_LA Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-26-09 01:52 AM
Original message
Deep in Debt, and Now Deep in Worry
Edited on Mon Jan-26-09 02:01 AM by Liberal_in_LA
http://www.nytimes.com/2009/01/25/business/25every.html?em

Deep in Debt, and Now Deep in Worry

By BEN STEIN
Published: January 24, 2009

NOT long ago, a woman in California called me for advice. She is divorced, with two children, and has a series of interlocking financial problems.

She lives in a lovely home in a stylish inland enclave. It has an interest-only mortgage of about $2.2 million that requires a payment of $12,000 a month, very roughly. It was last appraised at $2.7 million, but who knows if it’s now worth anything remotely close to that price.

The woman, whom I’ve known since she was a teenager, has no job or other remunerative employment. She has a former husband, an entrepreneur whose business has suffered recently. He pays her $20,000 a month, of which roughly half is alimony and half child support. The alimony is scheduled to stop this summer.

She wasn't paying on the principle so Basically she's been renting a home for $12000 per month. she should have moved into a modest home and banked some of that $20,000 per month

She has a wealthy beau who pays her credit card bills and other incidentals, but she is thinking of telling him she is through with him. She has no savings and has refinanced her home repeatedly, always adding to indebtedness and then putting the money into a shop she owns that has never come close to earning a dime. Now she is up all night worrying about money. “Terrified,” as she put it. She wanted me to tell her what to do.

What could I say? I did the best I could, but I had to tell her that she was on very thin ice.

Ever since, I’ve been thinking of the troubles of this sweet woman, consumed with worry about money.

These gloomy thoughts have been compounded by the holiday newsletters I have been getting from old pals and classmates. I have been getting them for about 45 years. This season, for the first time I can recall, the talk in the newsletters is not the usual tales of world-beating triumph by genius children, but of jobs lost, homes in jeopardy, children whose jobs have vanished and who are on the road looking for work.

And all of this is compounded again because my handsome son, age 21, a student, has just married a lovely young woman, 20. You may have seen on television the pudgy, aging face of their sole means of support.

what the heck? Getting married while still 100% supported by parents?!

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Mayberry Machiavelli Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-26-09 01:59 AM
Response to Original message
1. What the fuck, over. She could, right this minute, sell the home.
Unfortunately, since prices have fallen she might owe more than it's worth especially since she hasn't been getting any equity in it.

She could rent rooms out and get a job.

People aren't entitled to live an expensive lifestyle forever. Circumstances change.

However getting a multimillion dollar home where you pay a gigantic mortgage every month but don't get any equity is just plain dumb no matter what your circumstances are. Even if you could afford to make the payments, you'd be better off with a more modest house that you'd get equity in. Or just renting at a much cheaper price and putting money away.

Where did Ben Stein write this anyway, is there a link?
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Liberal_in_LA Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-26-09 02:01 AM
Response to Reply #1
2. ooops. Here is the link
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Liberal_in_LA Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-26-09 02:02 AM
Response to Reply #1
3. With a $12K monthly mortgage payment she could HAVE paid off a modest house in no time.
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JCMach1 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-26-09 02:08 AM
Response to Reply #3
6. Within a couple of years...!
She was living well beyond her means.
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Yo_Mama Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-26-09 09:13 AM
Response to Reply #1
17. How Weird
I've only read Ben Stein twice, and this is the second. Which makes it 100% idiocy. Where does this guy come from?

This is kind of obvious, isn't it? She has to rent a home for a few thousand a month while she still has free cash for a deposit and a good credit rating, then contact the bank and tell them she won't be able to pay the mortgage on this baby after the summer, and put the home on the market pronto.

She's almost certainly going to have to get the bank to agree to a short sale.

Then shut down the money-sucking business and go to school to learn something useful.

This woman doesn't have a problem by the definition of most Americans. She's got a boatload of opportunities that most Americans don't. What she has is a problem with reality, and I guess Ben Stein does also.
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Skittles Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-26-09 02:07 AM
Response to Original message
4. this gal sounds like a gold-digging 'ho
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Mayberry Machiavelli Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-26-09 02:08 AM
Response to Reply #4
5. Seriously. She has kids.. not very considerate of THEIR future to piss 12K a month interest only,
leaving them with no savings for college or any emergency.
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JDPriestly Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-26-09 03:10 AM
Response to Reply #5
11. I will bet you that she lives where she lives to get her children
into certain schools and because she has drunk the koolaid about not being "safe" in a community with moderate priced housing. And then, of course, all of her girlfriends live in the "better" area as does her ex. It's very hard to accept a change for the worse in your living standard. Just wait. It is going to happen to everyone or, at least, many, many people.
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Liberal_in_LA Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-26-09 02:17 AM
Response to Reply #4
9. She's 'consumed with worry' cuz her divorce payments drop to $10K per month. We should all have
that worry. She was seriously living beyond her means.
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shintao Donating Member (288 posts) Send PM | Profile | Ignore Mon Jan-26-09 02:12 AM
Response to Original message
7. This for real?
Sell the house, file bankruptcy, move in a double wide down at the beach.

Still supporting the kids? Kick there arse out. They call it tough love, like get jobs, get a dinky place & have your own privacy. My brother was 65 and still living with mom and dad. I was out on my own by 16 and never needed to look back. Times are harder, sure. Help them with first months rent.

And sorry your friends made bad choices. Was this a private school they all graduated from?
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Liberal_in_LA Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-26-09 02:15 AM
Response to Reply #7
8. Who is your question directed to? The tales of woe r from friends of Ben Stein
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BlooInBloo Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-26-09 03:07 AM
Response to Original message
10. Sigh. "principal".
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Liberal_in_LA Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-26-09 03:13 AM
Response to Reply #10
12. lol. Thanks. I'll fix it.
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ihatehannity Donating Member (41 posts) Send PM | Profile | Ignore Mon Jan-26-09 03:51 AM
Response to Original message
13. oh poor her... only getting $20,000/month
oh poor her... only getting $20,000/month
should've sold it when they got divorced... if she knew she would not get the support forever... why keep a house she cannot afford...
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marions ghost Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-26-09 03:52 AM
Response to Original message
14. $12K a month mortgage and $20,000 a month income....(!?!)
Edited on Mon Jan-26-09 04:01 AM by marions ghost
I doubt too many of us can relate to these woes. If she doesn't figure it out soon, she'll be relieved of her burdens anyway. Move in with "the wealthy beau" might be a good option for her...beats the homeless shelter.

OK OK

This seems like one of those stories that's supposed to make you feel better about your own nosedive...watch out for these morality tales in which the purpose is to compare --"us vs them"... Of course most people have no sympathy for this woman and so get a righteous self-satisfied charge out of this. When you see this type of story, you realize they are just a depressing sign of the times. We are to think, well I'm not OK but I'm not THAT bad off. But the danger is that you forget WHY so many people are suffering --NOT through fault of their own but through the fault of their political, corporate & financial "leadership."

And then to further induce guilt and self-examination-- the writer swings from this to the situation of the young student couple with no income of their own. OK I see the connection (always expecting to be supported...) but most young people don't go the route of the California matron on the skids. They usually get a dose of reality and figure out how the world works before too long. It's not fair to compare a 20-year-old with a 50-year-old.
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B o d i Donating Member (543 posts) Send PM | Profile | Ignore Mon Jan-26-09 04:03 AM
Response to Original message
15. Win! Ben! Stein's! Money!
Should I feel sympathy for people like his lady friend? I'm having trouble.
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TWiley Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-26-09 05:45 AM
Response to Original message
16. Poor dear. Divorced and a $2.2M home with 20k monthly alimony
I am sure she is trolling as we speak. She will be OK.
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