do we have compassion for lifestyle choices?

[ProdigalJunkMail]

Yesterday (or the day before) there was a thread about the story on CNN about the lady who at one time made over $70K/annum and yet was now going to the local food bank. There were many cries of compassion right alongside cries of foul! I admit, I cried FOUL!

Do you have the same compassion for the person, who no fault of their own (medical emergency or whathaveyou), ends up in a situation where they are forced out of a job and/or their home (that was modest or not overly mortgaged) only to end up on some sort of assistance as the person who refinances their home (sometimes more than once) to 'cash out' and support a lifestyle they would otherwise not be able to afford and THEN hit a financial bump and end up hurting?

sP

[selador]

1. with all due respect

imo, it was not the 70k. that's a modest income, at least by my frame of reference. it was the fact that with 70k income, she was paying a $2500/month NO interest mortgage

when i was making about 70k, i bought a house for 190, and put 50 down, and got a 15 yr. so, my mortgage would only be about 1k per month, and i was paying down principle

having a 2500 mortgage on 70k salary is INSANEly irresponsible.

i have less compassion for anybody who creates, or substantially facilitates a personal disaster vs. somebody who is an innocent victim. i HAVE compassion for both, but people who are victimized through no or little fault of their own DO deserve more compassion than those who create their own woes.

[ProdigalJunkMail]

2. but were they 'innocent' i guess is the question

i mean, she said she felt bad about wearing her Tiffany bracelet and carrying her Coach bag to the co-op or food bank or whatever it was. They had mortgaged themselves to the hilt for lifestyle...and THAT is what came back to bite them, IMHO.

sP

[selador]

5. no

they were not innocent. ANYbody can lose their job. the first thing you should do once employed is start building a cash reserve and then start investing.

basically, her lifestyle was maintained on assumptions that the status quo would continue (if you want to make god laugh, tell him your plans), and even worse that real estate prices would continue going up (no other reason to get an all interest loan like that)

i don't begrudge her use of the food bank with her tiffany bracelet, although in the interest of not pissing others off, she might want to leave it at home.

[Warpy]

3. I came to the conclusion a long time ago

that people were by and large doing the best they could given their life circumstances, education, and temperament.

I suppose it would be all too easy to sneer at the example you cited, but consider that they lacked the education to know that booms are generally followed by a bust, that debt is poison, and that net worth matters a great deal when economic conditions turn sour. Part of the human condition is thinking that things have always been such and so and will remain so in the future. It takes time and effort to find out the contrary, plus the willingness to deal with unpleasant facts.

I have a great deal of compassion for anyone caught in the bust. Some people simply have to learn the hard way and many of them will be teachers for the generations to come.

[ProdigalJunkMail]

4. my biggest problem is that SHE obviously knew SOMETHING

she was a Loan Processor, after all.

I admit, people make mistakes, but at what point does a mistake become willful negligence and should we react the same in both conditions. I would be of the opinion that you don't let them starve, but don't let them off the hook either. At some point you have to be responsible for your own financial wellbeing when given the opportunity of a job that pays $70,000 a year!

sP

[Warpy]

15. What she knew was that she had a husband with a good job

and she had a good job and that housing prices were heading up and up and she didn't have the education to realize that her circumstances could change so quickly and dramatically.

Shit happens, in other words.

I'm sure she's kicking herself harder than we could ever kick her. Some people really do need to learn the hard way that nothing is ever permanent, especially in economics.

[ProdigalJunkMail]

17. but do they need to learn this at the expense of the items

specifically the luxury items they bought with the $450K (if the other thread is to be believed and i see no reason for the poster to lie)? Everyone fucks up...hell, i have made a few doosies, but none of them would have jeopardized my family in this way. and just a note, in the interview i heard, she sure didn't seem to be kicking herself...she seemed SHOCKED that this could happen to her and her family.

do you forgive and forget? how will they learn?

sP

[Warpy]

21. I have compassion. I didn't say I'd forget

and my compassion will begin to evaporate if her circumstances change for the better and she doesn't learn from this experience.

I was lucky. I've been poor and I've been homeless for a brief period. I know how quickly things can change. She didn't have that sort of advantage. She got educated, got a good job and a husband with a good job, and settled down to a humdrum but productive middle class life that she had every reason to expect would continue just the way it had been going.

[ProdigalJunkMail]

22. so, do we let her become homeless as you did

and I was very close to at one point to reinforce how she should be living when times are 'fat?' how do we PREVENT this sort of thing? my thought would be teaching classes on basic home banking and keeping a budget might go a LONG way in the schools...

sP

[Warpy]

25. Not with two kids in tow!

Seriously, she should have moved in with Mom instead of renting Mom's house out to partially cover those ridiculous mortgage payments.

I'm sure that will occur to her eventually.

[Iris]

6. Good question. What I'd like to know is do people think her children should go hungry?

It's one thing to be scornful of this woman's choices. It's another to suggest that her children should go hungry because of their mother's ill-informed choices.

[ProdigalJunkMail]

7. please dont' misunderstand

i think NO ONE should starve...but, should they have to sell their junk? That Tiffany bracelet and Coach bag she whines about having to take off before going to the food bank would sure pay for a pretty good bit of food if used appropriately.

THAT is what I mean when I said I cried FOUL! They still have the accouterments of the lifestyle the lived while feeding high on the hog...I think that stuff should GO before they get to be on CNN complaining about having to visit a foodbank...not matter HOW thankful they are that it is there!

sP

[Iris]

10. I know, I know.

It all seems so crazy out of proportion. I saw one of those shows where people are trying to sell their homes and they featured a woman who was going to lose her house but before her credit got bad, she financed a new car before her credit is ruined because she still has to drive to work. While I thought that was understandable, I couldn't help but get puffed up and judgmental over her choice of car - a SUV, a small one, but, still, surely there was a more economic choice.

On the one hand, I sometimes feel this stuff should just play itself out - correct the inflation of housing prices that occurred because of this. On the other hand, I feel like deregulation and corporate greed sucked these people in as victims. I mean, those interest only loans were designed for businesses - construction loans where the house would in theory be sold before the interest rates went up.

[ProdigalJunkMail]

13. i feel torn because it IS so complicated

i do judge these people...i know i shouldn't...i have no REAL idea of what brought them to where they are today...but it pisses me off to see people who lived SOOOO much 'nicer' lives than me and my family simply because i would not go out and refinance the house and take out the 'maximum equity' so i could take the kids to Disney (which i would love to do).

Fuck it...maybe we should just let everyone live as crazy as they want and catch them when they fall. That would be a great world...i just don't think it should be that way. I guess the big problem here would be MY definition of 'crazy living.'

sP

[mondo joe]

8. One can have compassion for anyone. It's really more a question of policy for me -

In this case, for example, if the worst possibilities are true this family could be using a scarce enough foodbank resource making it less available for people who have fewer options.

[ProdigalJunkMail]

9. I would like to see them selling off assets

instead of taking from people that have a 'real' need. Real being NO means of getting the money necessary to properly feed themselves or their families...no job...no savings...no assets...

if this story had been two years from now...and they had sold all the crap they had acquired during the mortgage run-up they had, then ok. but these people have some assets they should be dumping instead of wearing them to the food bank only to have to leave them in the car so they don't feel too out of place in the food bank...

sP

[mondo joe]

12. I mostly agree. I also wonder about child support or its absence, though

these are queastions rather than conclusions.

The one devil's advocate point I'd take up though is this: I'd rather families not put thenmselves in greater futuer peril just to use a foodbank. If a family is having a rough time, a foodbank can be a great resource to help maintain stability while getting back on their feet. I wouldn't want them to sell an asset that would make them LESS stable in order to do that.

But I do think they could shed some luxury items to make sure they're not taking food from others who don't have that choice.

[Warpy]

23. She was a sucker for name brand crap

that won't bring in much as used name brand crap My DKNY bag cost me five bucks at a thrift shop. That's about the return she can expect from that Coach bag at a yard sale. She can't sell her house for enough to pay off that interest only mortgage. I think that since her mom is at the rescue, she should declare bankruptcy ASAP, kick the renters out of Mom's house and move in until she gets back on her feet. She'll get used to sleeping on the sofa.

She's educated and articulate. She's not going to be down for long, but she needs to take her lumps now instead of prolonging the agony until the balloon payments start.

It's what I would do, but my temperament allows me to look at rotten situations head on and not cling to past illusions.

It's got to be killing her to look at her kids and realize how badly she fucked up and what it will take to get out of that mess. That's why she deserves my compassion. People who don't know better do stupid things. They and their kids will suffer for it. Since things are now looking up for me, I'll keep donating to the food banks. I don't want them to go hungry, been there done that and it's no fun.

[Iris]

11. I never really thought of that before.

You're right, though. And as the OP keeps saying, they have possessions they could sell. It does seem to boil down to priorities.

[ProdigalJunkMail]

14. they should sell the LUXURY items...

that is the point. don't dump your only means of transport when that is your livelihood! but the Tiffany bracelet and Coach bag...i bet she could get along fine without those...

sP

[Iris]

16. but, really

when push comes to shove, lots of people sell EVERYTHING to make it. Sometimes you really do have to start over.

[ProdigalJunkMail]

18. my folks did during the 70's

mom was teaching full time, dad was in the army...we rented a house and drove a VW Beetle from the 60's and mom still had to sell her engagement ring to make some ends meet. i was young, but i remember her crying about how embarrassed she was to use food stamps. my guess is however, these people will NOT start over...they will file for bankruptcy protections and keep some of their ill gotten possessions.

sP

[CBGLuthier]

19. ill gotten possessions?

Care to explain how that phrase applies to these people.

[ProdigalJunkMail]

20. i was thinking someone might jump on that...so, to answer

my choice of phrase might have been over the top...yes, most certainly it was. it is not like they stole anything. but they did make use of a system that allowed them to mortgage their home to a point far beyond its initial worth (once again, according to info in the other thread that i cannot validate) in order to support a lifestyle they otherwise would not have been able to afford and NOW they are in a food bank, with her Tiffany bracelet and Coach bag, taking advantage of other peoples' generosity at the potential expense of people who really need those food items.

ill-gotten...only in the sense that they mortgaged their own future without concern for that future should something arise when they had the means to prevent this had they only lived a simpler life. should they die for it? no! should they dump those items before raiding a food bank? yes!

sP

[Coyote_Bandit]

24. Meanwhile

somebody with the same job lived a frugal lifestyle, saved their pennies and purchased outright a much more modest home completely unencumbered by debt. When they fell on hard times they discovered they did not qualify for any assistance simply due to the value of their home. Some reward for financial discipline isn't it? Actually it is more like an institutionalized punishment for a failure to consume.

Predators should face severe public punishment. That said, I've got no problem with people bearing the consequences of their choices. Especially when those choices produce excess and unnecessary consumption.

Simple fact is that anytime someone takes on debt to finance a purchase they run the risk of default should they encounter some adverse financial circumstances. The only time this isn't true is if the debtor has assets equal to the debt and those assets outperform the cost associated with the debt.

Somehow I doubt we would be having this discussion if we were talking about someone who ran up credit card balances financing a designer warbrobe. Same difference.

[Midlodemocrat]

26. Yes. We never know all of the circumstances.

Although I personally would never dream of taking out an interest only loan, perhaps that was their only option. I have a friend in MD whose husband is in the Secret Service and they had to resort to that. They're hoping that with the next transfer, they will be able to get out from under that trap and buy something that will give them some sort of a future.

That being said, in CA, it actually made SENSE for some to get an interest only mortgage. My own brother had a home that he purchased for $350,000 and sold four years later for double that. An interest only loan would have been a very reasonable choice for him; the payments would have been more affordable and he still would have walked away with a lot of equity.

As far as selling her possessions goes, she probably realizes that nothing she has purchased has anywhere near the value of its original price. Her coach bag would probably fetch $20. If that.

She's probably hoping that things will recover when she gets another job and her life can continue as it was.

And, honestly $70K in CA isn't what it is in other parts of the country.