Monday, May 25, 2009

The (Non) Price Of Financial Irresponsibility

Posted by Anonymous.

Early 2001- a thirty-three year old man, his wife, and their two kids move to a bedroom community outside of Palm Beach FL. He's a paramedic, and she finds a job sterilizing and packing surgical equipment at a local hospital. They buy a house for around $185,000.00 and get one of those peachy loans that keep the payments where they can make them, as long as they don't think about having the thing readjust in three years, or that they are paying pennies a month on the principal. As long as he keeps working a few hours of overtime a week, they are fine, just fine....

2004 – the value of their little slice of heaven has soared! When they go back to the bank to re-jiggle the mortgage before the ARM adjusts, they find out they have over $55,000.00 of equity, even though they have hardly touched the original mortgage amount. With the help of a friendly banker, they decide to take a new mortgage, for a lower 5 year rate – and a second mortgage taking $25,000.00 of their new-found equity to put in a back yard pool, fencing, and a pool house. After all, with the pool, their home is worth even more! Wow, what a great country. They can afford these new payments because he is averaging 15 hours of over-time a week, and she has gotten a couple of nice raises, and their kids deserve a nice pool - and a nice vacation to ski in Colorado.

2007 – The company he works for cuts over time hours to nothing, but he finds a second job as a gate guard in one of those exclusive communities – they pay premium for guards with medical skills, but the commute is hard on his 4 year old car. His wife develops medical problems of her own, and has to cut her hours to 20 per week. With no savings, they are being buried by not only the house, but the rest of the consumer package they have bought into: a car loan, credit card debt, and two teens in private school. Wife goes back to work 40 hours a week, against her Dr.'s advice to keep the family from drowning. They make a big decision: They will sell the house. They call a Realtor, and are shocked that the home that they are carrying about $210,000.00 of debt on is only worth about – wait for it - $190,000.00 , and they may have to discount it to about $180,000.00 to get anything like a fast sale. They buy a new SUV to make themselves feel better.

2009 – They didn't sell the house, and are nearing foreclosure. He inherited $15,000.00 last summer and it helped them dig out of some of their debt, and staved off the hounds for a few months, but they also took a really nice vacation – all this stress in their lives, they deserved it, didn't they? This time it is diving in the Bahamas. They return with some really awesome pictures. Now, they hope and pray they will be first in line for some of this mortgage reduction, foreclosure stopping, stimulating, government bail-out money. Their house is worth less now than when they bought it in 2001. Life isn't fair! No it isn't. Certainly, when their mortgage does it's 5 year thing in a couple of months, the bank will give them a break, with government cash. Yes. We. Can.

I am his sister. My Husband and I worked hard, bought a house we could afford, stayed out of debt, saved for retirement, put our son through college, drove old cars, lived modestly, and enjoyed life. In the past 8 years, from the outside you would have guessed my brother's family's income to be much higher than ours. In truth? We make at the very least $25,000.00 a year more.

Our responsible financial behaviour? Taxed To Death, Investments in the toilet – but we'll be OK. We've made plans, and will be able to take care of ourselves.

His irresponsible behaviour? Rewarded as the sanctioned Way of American Life. He'll get to 'write it off' and have another chance - and another, and another. He's pretty smug about that. But he called me today and asked for a loan - seems his daughter might have to miss her Senior trip - He doesn't have a credit card left with $800.00 left in the credit line. Would I be a dear and send it to her? As a graduation gift?

Sorry, I love my niece, but I'm more sorry you are using her for a pawn. She'll probably call me from college next fall desperate for books. I'll send money then. If I had my choice, the f'ing whiney braggart would be living in a 800sf apartment and forced to use cash for the rest of his life for being stupid – and made to pay back every last dime.

28 comments:

Anonymous said...

Geez...bitter much?

We got in a similiar situation except without the benefit of a pool, fancy trips, or a new SUV. We are up to eyeballs in debt because we owe 2x as much on a house that what it's worth, we had a business fail, and have had major medical bills.

The problem with this snarky vent is that people assume that if you're in major debt it must be your fault for being a greedy consumer. Sometimes circumstances just stack the deck against you. We have been forced into bankruptcy and are losing our home that we have put blood, sweat, and tears into. Well, first we have to find $2300 to pay the lawyer in order to go bankrupt. It's not as easy and carefree as you suggest.

Kat said...

Wonderful post.

I wouldn't send the money either.

Kat

Anonymous said...

Brava to you!

I often feel like i live below what i could but know that digging a hole will only land me in the bottom of it. Sometimes we want things we cant have and sometimes most people realize they cant have them while others just take advantage.

Anonymous said...

Um, wow. Would you rather see them all homeless, or getting the help that they clearly need?

First of all, all of these "easy outs" for people who are in dire financial straits at the moment? Not so easy. I've worked in the non-profit housing counseling industry, trying to save people from predatory loans and foreclosures. It is INCREDIBLY difficult to get the kind of help that they need. Lenders aren't exactly jumping out of their chairs to help them out, whatever your brother thinks. It takes hours and hours and hours of legwork and paperwork and wrangling with automated phone menus and collecting documents and verifying incomes. In other words it's a hell of a lot harder than getting the loan was to begin with, and it's a million times harder than just letting the home go to foreclosure or short sale.

There's been big money in the past in talking people into cashing out their home equity and refinancing into "nontraditional" lending products. Your family is not solely to blame for falling victim to a slick sales pitch in a strong economy, nor are they to blame for what's happened to the economy since then.

Definitely not to blame: your niece. Kids are the victims in all of these economic woes--they don't get any say in what their parents do or how they spend, and yet they're the ones who are suddenly finding themselves without college savings, a prom dress, the car their parents promised them if they kept their grades up, or a roof over their heads. If you don't think that their kids have any inkling of how stressful their situation is, you're crazy--kids know. Even the pets know. Don't take out your frustration and anger at your brother at his family.

Your brother's not blameless, but neither is he unique. Don't give him the money but encourage him to make better choices, preferably with the help of a HUD-endorsed non-profit housing counseling agency in his area who can help the family to keep the house out of foreclosure by negotiating better rates with their lender. You can find one at www.hud.gov.

Anna said...

I don't think you're bitter or "would rather see them homeless" at all. It's hard to be the one who lives sensibly, even if it means living below your means, and then have to listen to the whining of people who made stupid decisions because they felt they deserved what they wanted when they wanted it. Even worse when those same people are asking you for money. And worst of all, were it not for the stupid, selfish decisions of all these people who are now claiming to be "victims," then the economy would not be in the kind of shape it currently is in, and those of us who behaved sensibly and saved and invested our money would not have sustained the kind of losses we have over the last couple of years.

It's a shame that your niece might have to miss her senior trip, but she'll survive that. It's certainly not your fault, and you shouldn't let your brother or anyone on the internet who obviously shares your brother's mindset try to make you feel guilty about it.

Anonymous said...

I'm with you. Wouldn't send the money either. $185K is not a lot for a house. Good job? Great. Save some money and have a decent down payment. Surely by 33 years old you can save some decent money. If you cannot, then you need to reexamine the need to buy a house!

As someone who has worked very hard, saved money, put good downpayments and lived well within my means, I feel what you feel. Certainly he could sell his fancy SUV and buy something smaller and more economical to help send his daughter on her senior trip?

And bail outs? Should be available to people who really need them, not those that need them for being irresponsible. Enable much?

Bad Mummy said...

I agree with the poster. We are all allowed to be bitter.

Life isn't fair. Shit happens to the worst of us and the best of us. But some people make a bad situation worse and the poster's brother and his wife are a great example of this.

What is shameful is that we send ppl out into the world with absolutely NO CLUE on how to manage money and be fiscally responsible.

Anonymous said...

I am watching my sibling and spouse receiving the same "wiped clean" right now, after living a shockingly similar lifestyle as your brother and family. We warned them, we advised them in the least preachy ways to be responsible, and they made fun of us living within our means.

Now they are begging us for money, selling all of the kid's stuff to make payment (but oh my lord, keep the jet ski and other toys because we'll be back on our feet in no time - child doesn't need his toys or belongings), and crying about having no credit cards save for one with a low limit that is monitored by a lawyer. Oh my word! They can't take a vacation this year -- we haven't had one in three years so suck it up sister.

You don't sound bitter to me. I think your call on his manipulation and financial-stupidity is well deserved.

Jessi said...

Couldn't agree more. I know you don't want to see them homeless... you want to see them learn. There is a BIG difference. Good job standing your ground with the senior trip... hopefully she will learn better money management than her parents.

Stacy said...

Great post. My husband and I are some of those that made the "right" decisions. We only bought what we could afford and we don't have any credit card debt. I think it's disgusting that those who made really bad decisions and spent more than they could afford are getting a bail out. I say people should be held responsible for the decisions they make.

Anonymous said...

Hi Everyone,
I'm the original poster here, to add a bit of an update, then a few comments at the bottom:

Somehow, my Niece did get to go on her Senior trip, and this last weekend had a bang-up, catered graduation party for about 60 people. In about two weeks, she will be moving across two states to live with us for the summer - before attending a large state university about 90 minutes from our home in the fall. Since I wrote this note, I have shared the wisdom of a really good financial teacher with my brother. He seemed to listen for a few weeks, and then told me that he's decided just to run "everything up to the limit, then do the bankruptcy thing. That'll be easier." They lost the SUV in April. Their jet ski was taken back by the dealer at about the same time. (funny someone should mention one of those..) They still have the house - My SIL told me they were able to get some money from her family to pay enough to get an extension of some sort until October. The house is back on the market, and the market in their area is bouncing back - they are hopeful for a June or July sale. After that, they will still have a car to pay off and $68,000.00 worth of consumer debt. (no medical bills, or emergency bills - they aren't struggling with those - just consumer debt.)

In a phone call this last weekend My SIL told me my Niece would be arriving here on the train with almost no money - any cash she got for graduation went for the party - and she thanked me for finding her daughter a summer job. (fill in for maternity leave at the dental office where I work.) My Freaking Idiot of a Brother told me he bought her a Mac Book for graduation.

I'm not as mad about this whole thing as I was when I wrote the original submission, a couple of months back - and I will admit it is a total rant! I realize that there are a lot of folks that are in a world of financial trouble that didn't come from their own actions. Expensive, bad, things happen - and we don't always have time or the foresight to be prepared.

This is not the case with this family: they just bought in to the stupid cr#p the media, banks, and all the asinine hubris that testosterone overload can supply a guy that wants everyone to know how successful he can appear to be. Now it's crashed down around them, and they want sympathy - oh, and a bail out. Call it 'bitter' if you want but that torques my tail.

Cheers to all the Basement folks, and may all your mail contain checks. :)

Anonymous said...

Why shouldn't the poster be bitter? If people have to suffer the consequences of their irresponsibility, we all feel for them. If they don't learn anything from the experience, it's hard to work up pity. On top of everything else, the money from the bailouts is coming from the people who are solvent and paying their taxes, not so much from the financially irresponsible people.

A senior trip is a luxury. If these people haven't learned that luxuries should be sacrificed by now, then they have a problem. Sending money would just be enabling them and teaching their daughter that irresponsibility is forgiven/rewarded by everyone.

Mary said...

Oh my God, I think we're related! My brother in law and sister in law are JUST LIKE THIS.. He lost his job two years ago, they stayed in their five bedroom house with a built in pool (they have ONE CHILD), they didn't cut back anywhere.. and heck, with the bailout money from my clueless mother in law they BOUGHT A BOAT. She continues to send money every time there's a new sob story.. and they continue to live the way they want to.. Maybe I am a little bitter, although I shouldn't be. We did things the right way, we saved, pay off our bills every month, and just do the best we can. Because we have money in the bank, we are looked at as heartless when we don't give them our hard earned money.

No thanks.

flutter said...

It is so tiresome to hear people judge those who have been responsible. This is the problem we face as people. We feel bad for those who have fucked up either by mistake or by irresponsibility, but feel no twinge of anything for the responsible people left holding the bag.

I am with you, poster. I don't think you're bitter and I don't think you'd be helping by becoming the bank of sister.

good on you.

ewe are here said...

I'm with the poster; her brother doesn't deserve any sympathy. Especially since he seems proud of the fact that he's going to get away with piss poor economic decisions, and hopes to deliberately stick a lot of creditors with the bills (running up credit cards deliberately, knowing you're going to file for bankruptcy, btw, is considered fraud; he can be charged).

Hopefully, you'll be able to influence your niece while she lives with you during the summer to be more financially responsible... be prepared for an uphill battle, though. She's spent 18 years with a family that has taught her feel "entitled" to the good life, whether she can afford it or not.

Anonymous said...

To the author of the post: bitterness or a better-than-thou slam is NOT the message I am getting.
It is hard to feel badly for family/friends who love to live life to the fullest and in the moment than to plan carefully for the "What-Ifs" that always happen.
I married for the first time in 1988, lost him in 2003 when our daughters were 3 and 5.
My late-husband's brother married a year after we married. He dropped out of college, as did his wife. She was my room-mate before I married.
While husband and I lived in a small apartment, she & brother-in-law bought a nice home in a nice neighborhood. Neither had a job. They were living on a modest inheritance left by late-hubby's mom. When his brother bought that house, I jokingly said "If we ever have to make one of their house payments, I'm moving in."
The joke was on me. After 6 months, they were coming to us for loans. They didnt want to ask the older brother. He and his wife out-earned us 4 x, but lil bro didn't want big bro to look down on him.
yeah, lil bro & wife lost the house, divorced (after 2 kids) and I put my foot down on the loans.
I could have used that money when my husband died. Life is better now. I've re-married, stashed cash like crazy.
I suppose my point is: More of us need to learn the phrase I'm sorry but we are not in a position to help you financially. Period. Those relatives in danger of being homeless can pitch a tent in my back yard, but I bet a dime to a dollar that if it came down to that, they could somehow come up with other arrangements.
If I had had children when this lil bro-in-law had stuck his unemployed hand out to me with his unemployed wife beside him (they could have been employed, couldnt be bothered to find one of those boring job-things) I would have slammed the door in their faces.
Not anon, I am Ame Inman in Jackson TN but have forgotten my other i.d.'s & passwords, ha!!!

Anonymous said...

I thought you couldn't use bankruptcy to get out of paying. You will ruin your credit and STILL have to pay them back in installments. It's not an easy way out anymore.

He's an idiot.

Smithers said...

Great Post! My personal policy is to NEVER loan family money. You can GIVE them money...but loaning them money...all it does is ruin relationships. So, unless I am willing to give money to my family...I try to stay out of it. A little harsh...but I also value my relationships.

My husband and I are a lot like you. We drive crappy cars and live pretty frugally...but people constantly give us shit about it. I just laugh because I know that when I am 50 I will have a lot more options than they will. Does this seem callus or pretentious? Sure. But so does the fact that they are mocking my car. :)

This economy sucks...and I do think that its hitting some people that didn't live extremes like your brother. I feel for those people, I really do. However, that doesn't mean that its not frustrating when someone lives outside of their means and then complains later. Sigh.

Anonymous said...

Your brother is a financial moron. So is about half the country. We never learned about finances in school, we got credit cards as 18 year olds and ran them up on minimum payments. It's not just him, it's how most of America lived. The economy sucks, bankruptcy isn't all it's cracked up to be, and he may lose his house afterall.

But you're blaming his kid for his idiotic actions and that is just wrong as far as I'm concerned. She's been taught to be financially wreckless and now she'll have a chance to learn from you how to curb this addiction to spending. She needs to LEARN because the example that's been set for her is terrible.

FWIW, it's important to realize that plenty of people do not now, nor have ever lived like this. One member of my family has, but asking for help in my family is just NOT done. Ever. Even if they were homeless, nobody in my family would help. Which is JUST as sucky as your situation, believe me.

It isn't your responsibility to be your brother's keeper or teacher. He'll learn the hard way when he goes to a bankruptcy attorney and gets every card cut up and has to live on cash. He'll learn when he can't get a car loan, or a mortgage, or even a store credit card. He'll get it the hard way.

Your deal is to help the daughter as non-judgementally as you can and to be kind to your brother even though in your eyes he's a jerk about money. He's still your brother. Try and find your love for him.

Karen said...

I agree with not paying it and waiting to help her out until she is in college and needs money for books. How do you know he will pay for her trip and not using the money for him. I stuggle my butt off so my 7yr old can be in cheerleading and sacrificing stuff for me.
My little brother has everything handed to him. He lives rent free, no job, just started school thats $400 a month and he is 28. My mom bought his truck and clothes, and sends money for CC payments because he taps them to buy alcohol.
When I divorced my ex I didn't even get an offer for help. I struggled and most nights was left hungry so the girls could eat. Had to deal with a broken lease because ex quit his job when i had daughter a month early after 4 months of bed rest. Now I am getting stable and working crappy hours but I am getting on my feet.
No advice but I am supporting you.. if only in thought.

lidiya said...

Hi,

We have just added your latest post "Her Bad Mother's Basement: The (Non) Price Of Financial Irresponsibility" to our Directory of Foreclosure . You can check the inclusion of the post here . We are delighted to invite you to submit all your future posts to the directory and get a huge base of visitors to your website.


Warm Regards

Foreclosu-re.info Team

http://www.foreclosu-re.info

dkaz said...

Why hasn't the daughter saved up to go on her trip? My kids both work and they are in HS - when there are trips to be taken, they have fundraisers at school too to help defray the cost of the trip. Your brother's family seems to have been in financial trouble for a while, so why didn't they take advantage of these options when they had the chance?
Having your niece miss her Senior trip might seem cruel now, but it may be ther absolutely best lesson she will ever learn if she is to escape the trap of living beyond her means for the rest of her life.

Anonymous said...

I see both sides of the coin on this one. My parents just lost their home. Cancer and losing the family business were to blame. As it were, my parents lived within their means their entires lives and never once made an etravagant purchase. There was to be no bailout for them. They are now couch surfing at ages 53 and 54, respectively. Pretty heartbreaking.

On the flip side, I am pissed to the high hilt that so many people who DID live beyond their means think they're entitled to anything more than a swift kick in the ass.

You reap what you sow.

Anonymous said...

Brava! Brava!

Anonymous said...

My husband and I lived in a crappy trailer with no heat for 3 years, then on base housing for five in order to dig us out of our debt (college for me and divorce for him...not really anything we did wrong.) Then we bought our house with a traditional VA mortgage, only spending what we could afford each month. We qualified for the mansions, but we chose to get what we needed instead. We're still not rich, and we don't have a true nest egg yet, but we've worked hard and pay our bills. I, too, am bitter about the people who are able to keep buying and spending, knowing that someone, somewhere will bail them out. Meanwhile, my state is so busy supporting people on welfare, I may have to take a significant pay cut to allow them to balance the budget (I work for the state.) I wouldn't be quite as bitter, but even at worse (when we didn't know where the food would come from) we didn't qualify for food stamps, and I watched people driving brand new vehicles and wearing designer duds using those food stamps. Bail outs just encourage that sort of thought process.

Anonymous said...

I've seen a couple of people say that you don't sound bitter as if bitter is a bad thing. I think that we need to be bitter, frustrated and angry about things like this to bring about a change that makes sure that people pay back their own debts instead of others, who are financially responsible, paying it back. Since when is it your responsibility to pay for someone else's child's trip - even if they are your family. I completely agree with you that they should be forced to pay back every dime. Bailouts? What a joke - more like stealing money from responsible people and deciding that someone else deserves it more than the person who went to work to earn it themselves.

I think that a huge problem right now is this sense of entitlement that so many have. Maybe if we start by teaching people that they don't DESERVE the fancy car, home, clothes, trips and toys but that they have to EARN them then we will solve some of the problems plaguing our country.

Kudos for speaking your opinion - especially one that seems to be less and less popular in the circles that I have seen recently.

Anonymous said...

I gobbled up this post - fabulous job of writing this. You're doing everything right, poster. I agree that bad things can happen, but making the "mistake" of buying an SUV, trip to the beach, catered parties, expensive computers, etc. is just stupid.

Looks like the first couple of irate posters have their tails between their legs now...

Gerry said...

I agree. There is always a proper procedure for every matter under the sun. Like foreclosure, this will happen when availing loan is not paid on time and even become past due. Yet, an attorney's help can be sought to solve the matter.



stopping foreclosure florida