Anyone Can Lose a Home

Sent in by a reader …. From the New York Times; that they got a crazy loan(s) isn’t the most powerful part of this story. The rapid spiral of debt, and hopelessness is; this story is a “must read.”

Between humongous loan balances and high rates, we had hung ourselves with the rope they gave us. In the previous December alone, we charged $2,845 on the Chase card for Christmas gifts, food, gasoline, clothing and other expenses. The charges included almost $350 for groceries, $700 in clothes from J. Crew, $179 at GapKids and $700 for airplane tickets for two of Patty’s children to visit their father in Los Angeles. Our balance climbed from $14,118 to $17,135, and in January 2006 we maxed out at our $19,000 credit limit. And there were other expenses on other cards: $1,200 in dental work for Patty’s son Ben; $1,600 to rent a beach house the previous year for us and all the children. Granted, the beach house was an embarrassing mistake. But given that Patty had landed a solid job, it seemed like an indulgence we could work off later.

I felt foolish, ashamed and angry as I confessed to Bob. Why had I been trying to live a lifestyle that I couldn’t afford? Why had I tried to keep up the image of a conventional suburban family man, when nothing about my situation was conventional? 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? 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?

The panic attack hit me around 2 a.m. on Patty’s birthday. It was Oct. 17, 2007, and I was lying in bed obsessing over bills that couldn’t be postponed and the money we didn’t have to pay them. Like many of my predawn fear cascades, this one had its start with a specific unpaid bill: $240 in traffic tickets — $140 for speeding, $50 each for expired tags and inspection. The fines would double if we didn’t pay them in less than a week. The tickets had uncorked the bottle on all the other “must pays”: the $400 electric bill with the cutoff date printed in red; the $220 cable/telephone/Internet bill for the past two months; the MasterCard and American Express bills — at least one of which had to be brought current or I wouldn’t even be able to travel for work. And of course, there was the $3,271 mortgage payment.

My panic circuitry was in fine form, connecting small debts to big ones, short-term problems to the bottomless abyss, private calamity to public shame. Once Patty was asleep and I was alone in the dark, the bottled-up fear reached the surface. I tossed from side to side, trying to figure out at least a triage plan for our bills. I was too fidgety to lie still in bed, but I was in no mood to actually sit down with the bills themselves. I climbed out of bed for a moment, then jumped back in. I couldn’t decide if I would rather feel confined or all alone.

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  1. Sorta Sympathetic May 19, 2009 at 18:19

    These stories remind me of those after-school specials about the poor kid who tried pot and ended up a heroin addict. I do feel sorry for him, and I know that addicts are never really in control of their choices. The only difference is that the heroin addict is on the margins, while the big house/fast car/J. Crew/Beach Vacation addicts are right in the center of the mainstream.

  2. Mark May 19, 2009 at 18:43

    Call me heartless but I don’t feel a bit sorry for this guy. J. Crew? Beach house?
    “…we had hung ourselves with the rope they gave us.” Telling quote. Now he’s presumably renting and life goes on.

    Depending on your worldview, the bigger problem here is either the rope-giver or the self-hanger (either the sugar in the soda that we’re gonna tax, or the obese type II diabetic who drinks two Big Gulps a day).

    Do credit card companies/loan officers bankrupt people, or do people bankrupt people?

  3. downtownenvy May 19, 2009 at 21:16

    I’m not sure which is more horrifying- the fact that this guy is a supposedly an intelligent, and knowledgeable source about finances, or the fact that some of the current short sellers in our market are just like him and his family. Egads- the New York Times guy did this?

    Not feeling so ignorant now. Thanks once again Jim.

  4. Bob Hughes May 20, 2009 at 05:45

    I shall shed no tears for someone who lived beyond his means and knew it.


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