Now, what has me up in arms now? Its this fuckin' retarded ass story from CNNMoney.com. As soon as I got to the fourth paragraph, I wanted to shoot both of these morons.
Let's start at the top. How in the hell do you have $10,000/month in expenses??? Are you fuckin' stupid? (Yes, you'd have to be, but the rest of the article will show that.) First and foremost, the home equity line. If that isn't a code word for "I am so stupid I don't deserve to live", I don't know what is. (I bet we'll find good alternatives later in the article.) So you buy an expensive ass house in San Clemente and cash out the equity? And before having at least $60,000 in liquid savings for an emergency too?
Moving on, we have gems like this one -- "...they've made cutbacks: trading in Kent's Corvette for a Suburban...". I know I'm not the smartest person on the planet, but just reading that snippet gave me a headache. Someone, for the love of God, please explain to me how exchanging a Corvette for a Suburban is trading down. PLEASE, ANYONE, EXPLAIN THIS!!! I don't think its possible to explain that away, unless you inhabit some fantasy land. So you traded down from one gas guzzler to another? What is this supposed to solve? You already live in one of the regions with the highest per-gallon fuel costs in the nation. Trading down means that you go from a Corvette to a Toyota Corolla, or Honda Civic, or a Prius, but not to a damn Suburban. THAT defies all logic and again, I don't see how anyone can make any justifications for that. Its just stupid.
Now, the article doesn't mention which model year of either vehicle that Kent owned/owns. However, I'm sure that a quick check over on www.fueleconomy.gov will show that they made a huge error on this trade. In fact, from the 2007 numbers, the Corvette is MORE fuel efficient on both city and highway. On the highway, its dramatically more fuel efficient! So clearly this couple lacks basic reading and comprehension skills. WTF? The one advantage I could see the Suburban having, if any, is lower insurance costs. There is a possibility the Suburban has better maintenance costs as well, IF the Corvette is an older model. However, on the face of it, this looks to be one of many absurd decisions these former 6 figure financial geniuses made.
So it seems that in order to keep this dream house, which, given how things are going, they will probably lose anyway, they have blown through all of their savings and Mysti's 401(k). Without harping on the tax implications of that move, what is the point of this delusional attempt to maintain a lifestyle? The whole effort was doomed to failure from the start, but clearly these former executives couldn't see that. They should have immediately tried to short sale the house and found a place to rent, if they didn't have the savings in place to last at least 6 months. (A year would be better, and you have to save even more to account for the fact that they live in Orange County, CA which is ungodly expensive. I know because I lived in OC for 2 years.) This next sentence really encapsulates the naivete of these people's thinking:
"We're going Mach 1 into a wall. When we run into it, then we've got to decide what to do next."
You don't say! Maybe you should plan BEFORE you hit the wall? Of course, why should we even expect people who couldn't plan in advance of their problems to plan out their strategy for addressing those same problems? They don't even seem to care. If you're that non-chalant about the whole situation, with no sense of urgency, the all I can think to myself is that you're a completely hopeless.
I think what pisses me off the most about this is the fact that Kent is 59 years old. He's 2 years younger than my father. That means he was old enough to experience the horrific, well documented stagflation of the 70s. The key part of the word stagflation, as it relates to this post, is "stag". You're describing an economy in which there was stagnant growth (and actually, 2 recessions occurred during that decade). Now, if after living through that, you don't have a modicum of foresight or the slightest inclination to say "I'm not going to allow myself to be that exposed to a recessionary economy", then all I can say is that you really get what you deserve. Kent has lived through the 70s, the early 80s recession induced to kill the 70s inflation, the recession of the early 90s, and the recession in the wake of the dot com boom. You're telling me after all of this life experience, he had not yet learned to put away substantial sums in case of emergency?
Even his wife, being only 5 years older than me, should have learned that lesson. Where was she during the early 90s recession or the 2000 - 2002 recession? Obviously she learned nothing from those experiences. I cannot fathom how people just blithely and unconsciously wander through life like this. I mean, this is your life - your "dream home", your child's future, your lifestyle which presumably you've worked up to over the course of years if not decades.
Oh, here's another good one -- they both worked in the same industry! Now, I don't know how many financial advisers and writers have spoken on the topic of income diversity, but this one takes the least amount of intelligence to "get". Clearly, getting over that bar was not within this couple's abilities either. If they sat idly by and watched the industry implode around them, without making any changes or preparations for what the impact of said implosion would be on them, all you can conclude is that they both knew this was coming and they were comfortable with that fact.
The Mortgage Lender Implode-O-Meter dates New Century's bankruptcy filing as 2 April 2007, as does the accompanying CNNMoney.com article about "Subprime's Ghost Town". That means Kent had a good 4 month window between New Century's failure and his own layoff. In that time, it never occurred to him that since he was in the same industry, his job might be at risk? He's just watched his wife's employer, the professed second largest subprime lender in the nation, collapse and he couldn't see the writing on the wall for his own firm? At that point, I figure scratching my head in wonderment and disbelief is a waste of energy. This couple literally stood by and watched their life crumble without lifting a finger to prepare for what was an inevitable future.
Finally, for all of you socialists out there, we have this bit of entitlement drivel:
"We were New Century. We were a large corporation. We were the No. 2 subprime lender in the industry," she recalled. "You figured someone would come in and want to invest and take it over."
Sheesh! If you hadn't noticed, I haven't a bit of respect or sympathy for this formerly dual six figure income couple. I fail to see how they deserve it; they deserve to be punished for their lack of intelligence. They literally have made innumerable financial blunders, and from what little I can tell, they expect someone else to save them from themselves. Please, someone put these boneheads out of their misery. People like this couple are exactly why I am against bailing anyone out. If you make bad choices, then you need to learn not to make bad choices, and the best way to learn that lesson is to have to deal with the repercussions of your bad decisions.
Now, I know some of you are probably going to come down on me for coming down on the Copes. That's fine. I admit that there may be some missing information, and I've written this response based solely on the material found in the CNNMoney.com article. There could be other factors that were outside of their control which have contributed, if not had a material impact, on their situation. I agreed to all of that. However, everything this article mentions was either directly or indirectly a factor within their control, and they screwed the pooch in their handling of these events.
Starting with not being prepared when 3 decades worth of experience and southern California's high cost of living should have told Kent the importance of being prepared, to waiting until the layoffs occurred before doing ANYTHING, to trading a sports car (sort of) for a hulking SUV as a way to trim gasoline expenses (WTF?), their response to the situation they found themselves in has been downright inane and stupid. I'd really like to hear how anyone could think otherwise.
Until next time...
P.S.: Maybe its me, but I swear that there is just something wrong with the name Mysti. I think some of you probably know what I mean. This is completely irrelevant to the conversation above but I just needed to get that off my chest.