This has some frightening bits:
"Like most financial stories, this one is personal. It starts with me getting into the financial services industry more or less by accident. I answered an ad in 1995 that I thought was for a job related to “security” (as in security guard) but was in fact related to “securities.” That’s how little I knew about the stock market. A few months later I found myself working a phone at a Fidelity Investments call center."
...
"Housing prices were already crazy, so we rented. But our neighborhood had zero character and lots of cookie-cutter houses. Within a few weeks, we were looking for a place to buy.
...
I felt we could afford around $350,000. We called a real estate agent named Mitch, who had signs on all the bus stops: Talk to Mitch! He picked us up in a gold Jaguar, and suddenly we were looking at houses that listed at $500,000 or more."
www.nytimes.com/2011/11/09/business/how ... house.html
How a Financial Pro Lost His House
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mikenotspam
- Posts: 55
- Joined: Thu Oct 20, 2011 4:05 am
I think he just thinks that he was wrong to buy the house and work for ML
the last line asking when he would get his life back- does this mean without money, assets, we don't exist, what rubbish.
I think he was wrong to live a life of accumulation without substance or balance.
Something i could also be accused of at times.
the last line asking when he would get his life back- does this mean without money, assets, we don't exist, what rubbish.
I think he was wrong to live a life of accumulation without substance or balance.
Something i could also be accused of at times.
Funny how easy it was for him to get a job in financial services in the 1990s when he didn't even know what a "security" was. Advertise a job like that today and you'll get 100 people with MBAs and CFPs who would work for less.
I think its still a little weird that people think they have a moral obligation to pay debts they know they cannot pay -- we have not had debtors prisons for about 150 years --, yet no one thinks twice when its time for a corporation to declare bankruptcy under similar circumstances. There's a huge societal double standard there. Consider: does any financial reporter seriously think that MF Global and John Corzine have a moral obligation to pay off their creditors in full?
EDIT: See, e.g., http://www.forbes.com/sites/francinemck ... hen-where/
Note, the article pretty much assumes that there's no "lack of morality" attached to the bankruptcy filing itself. Only if there is actual fraud involved does it become a moral/legal issue.
If you understand the capitalist system and the idea of counter-party risk (loaning money is risky, and its supposed to be that way), you would probably conclude the opposite -- i.e., that you have a moral obligation to default/restructure as soon as you know you cannot pay so that the bad debt can be cleared from the system as soon as possible. Financial failure should be embraced, not avoided. Otherwise, you just end up with a bunch of zombie institutions bleeding slow deaths like we seem to have now.
I think its still a little weird that people think they have a moral obligation to pay debts they know they cannot pay -- we have not had debtors prisons for about 150 years --, yet no one thinks twice when its time for a corporation to declare bankruptcy under similar circumstances. There's a huge societal double standard there. Consider: does any financial reporter seriously think that MF Global and John Corzine have a moral obligation to pay off their creditors in full?
EDIT: See, e.g., http://www.forbes.com/sites/francinemck ... hen-where/
Note, the article pretty much assumes that there's no "lack of morality" attached to the bankruptcy filing itself. Only if there is actual fraud involved does it become a moral/legal issue.
If you understand the capitalist system and the idea of counter-party risk (loaning money is risky, and its supposed to be that way), you would probably conclude the opposite -- i.e., that you have a moral obligation to default/restructure as soon as you know you cannot pay so that the bad debt can be cleared from the system as soon as possible. Financial failure should be embraced, not avoided. Otherwise, you just end up with a bunch of zombie institutions bleeding slow deaths like we seem to have now.
Reading that article, I was struck by some of the incredibly dumb stuff he and his family did. Mainly the amount of borrowing against their home equity. I know a lot of people took out home equity loans, but it seemed like theirs was especially large and used especially stupidly. It's not like they borrowed to fix the leaking roof or something a little more "sensible" like that. Ultimately I do think their move to short sell was a smart one--they were stupid to borrow so much money, but the banks were stupid to lend it, so I also don't see that there's much of a moral obligation.
I kind of agreed with his statements on the last page that you can't really judge someone if you don't fully understand their situation. But then his example (of a guy going on fancy ski vacations) was so ludicrous that he even lost me on that.
I kind of agreed with his statements on the last page that you can't really judge someone if you don't fully understand their situation. But then his example (of a guy going on fancy ski vacations) was so ludicrous that he even lost me on that.
I always had considered it part of the equation that you were responsible for your debt and your decisions. If you borrowed the money from your brother, would you default as easily? I no longer take this view... not out of morality, but because I was obviously the foolish one who was not really comprehending the real rules in our time. Be it big banks, financial institutions or individuals... in net, they all hold some tiny fraction of my money.
So anyway... I don't see it as moral any longer. 100 years ago (50? 25? When did we go off the gold standard?).. face to face, man to man, yes. Now it's a giant faceless numbers game, and I've been a fool for too many decades. Part of my new ERE strategy is to seek out and abuse ever single opportunity I can to legally milk the system for every last drop I can.
I believe I will start by focusing on bottom of the barrel health care. I need to figure out what coverage free clinics offer, and how to go about hiding my net worth (if necessary) to gain access.
I think (don't quote me) that 401k and IRA money is protected in a bankruptcy. I will need to look into the strategy of taking my exposed net worth (1/3) and leveraging up 30:1 to try to time a recovery. If it hits... boom, I'm retired! If it fails, I can default on the debt, and still have my protected assets... maybe stuck working another year or two. I'm sure I can't get 30:1... but that's reserved for institutions like Lehman Brothers who are more responsible with such power.
So anyway... I don't see it as moral any longer. 100 years ago (50? 25? When did we go off the gold standard?).. face to face, man to man, yes. Now it's a giant faceless numbers game, and I've been a fool for too many decades. Part of my new ERE strategy is to seek out and abuse ever single opportunity I can to legally milk the system for every last drop I can.
I believe I will start by focusing on bottom of the barrel health care. I need to figure out what coverage free clinics offer, and how to go about hiding my net worth (if necessary) to gain access.
I think (don't quote me) that 401k and IRA money is protected in a bankruptcy. I will need to look into the strategy of taking my exposed net worth (1/3) and leveraging up 30:1 to try to time a recovery. If it hits... boom, I'm retired! If it fails, I can default on the debt, and still have my protected assets... maybe stuck working another year or two. I'm sure I can't get 30:1... but that's reserved for institutions like Lehman Brothers who are more responsible with such power.
If you can all excuse my double-rant, is there a more nauseating statement than "I should have known better. No matter how well things are going, borrowing 100 percent of the purchase price of a home is not a good idea." So why didn't you know better? Because you are a complete a$$?
In that recent (meaningful) vote in congress, we should have changed "in god we trust" to "in someone else we blame". Big banks my left testicle. In the words of the immortal Yakov Smirnov - "What a country!".
I'm just way too cranky! Articles like that really push my buttons though.
[edit: there are little old ladies and such who were taken advantage of by banks. This person is a "Financial Pro"]
In that recent (meaningful) vote in congress, we should have changed "in god we trust" to "in someone else we blame". Big banks my left testicle. In the words of the immortal Yakov Smirnov - "What a country!".
I'm just way too cranky! Articles like that really push my buttons though.
[edit: there are little old ladies and such who were taken advantage of by banks. This person is a "Financial Pro"]
The review list for his book is interesting: http://www.amazon.com/Behavior-Gap-Simp ... 1591844649
Favorable excerpts from no less than Barry Ritholtz and Seth Godin, among others. And then there is this gem:
"If a picture is worth a thousand words, Carl's sketches could change a life! He captures the essence of life and money."
-Marty Kurtz, president of the Financial Planning Association
We live in a time of shameless chutzpah. I await Bernie Madoff's guide on how to avoid being ripped off.
Favorable excerpts from no less than Barry Ritholtz and Seth Godin, among others. And then there is this gem:
"If a picture is worth a thousand words, Carl's sketches could change a life! He captures the essence of life and money."
-Marty Kurtz, president of the Financial Planning Association
We live in a time of shameless chutzpah. I await Bernie Madoff's guide on how to avoid being ripped off.
@chilly "Part of my new ERE strategy is to seek out and abuse ever single opportunity I can to legally milk the system for every last drop I can."
I come from a pretty marginalized upbringing, so I've been seeing the entitlement and hypocrisy like this "Financial Pro" since I was in my early teens and have sought out to methodically game the system wherever possible.
My ERE strategy also involves a system-milking game plan and then some, which is why I consider myself a financial anarchist.
I come from a pretty marginalized upbringing, so I've been seeing the entitlement and hypocrisy like this "Financial Pro" since I was in my early teens and have sought out to methodically game the system wherever possible.
My ERE strategy also involves a system-milking game plan and then some, which is why I consider myself a financial anarchist.
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Bingeworker
- Posts: 48
- Joined: Fri Nov 04, 2011 7:41 pm
I can't believe that idiot has a book out. He doesn't sound like he's learned much. I don't buy the argument that his moral obligation is to only his family and his obligation to the bank is merely contractual... that's the money of savers that the bank is throwing away on imbeciles like Carl Richards. You don't think the banks are putting their own money at risk, do you? They're using mine and yours. They'd be using Carl Richards if he was bright enough to have any. If you borrow, you have to pay it back. Yes, the banks were evil to convince to many to borrow too much, but people have to take responsibility.
When I bought a house back in 1999, the bank (Canadian and way more conservative than what's gone on lately in the US) tried to lend me too much money back then too. I did the math though and I bought what I could afford and pay off quickly. I knew a loan benefited them and not me. I don't see how everyone is so oblivious to that, but if they are, I wish the banks would raise the interest rates so that the borrowers suffer the consequences of their foolishness instead of me.
When I bought a house back in 1999, the bank (Canadian and way more conservative than what's gone on lately in the US) tried to lend me too much money back then too. I did the math though and I bought what I could afford and pay off quickly. I knew a loan benefited them and not me. I don't see how everyone is so oblivious to that, but if they are, I wish the banks would raise the interest rates so that the borrowers suffer the consequences of their foolishness instead of me.
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Bingeworker
- Posts: 48
- Joined: Fri Nov 04, 2011 7:41 pm
... oh, and also, this book is a perfect example of why nobody should ever trust a financial planner. I've met with many over the years (they ask me for meetings, and I'm always curious for their take on things so I usually agree), never really found one who knew more about money than I did. I'm pretty sure I had a better handle on the basics of money than most of them, and I'm not that knowledgeable about investment, not at all.
$350,000 and $500,000 houses. Number one, you are an idiot if you pay that much for a roof over your head. Period.
Number two, nobody can afford a mortgage of these amounts. I didn't say you couldn't borrow the money, I said you can't afford it. Most of us ARE the 99%, and I am not talking about the other 1%.
Someone says "Oh yeah, I can afford it, lots of my friends can as well". (well, at least until my job loss, major illness, other overspending, or a divorce, or housing prices make me so underwater I decide to walk). Other wise all is roses in Happytown. "After all with my USA citizenship, my heritage, and family name, I am entitled to live in a palace, right"?
Let's make this post short and just insert the "G" word:
GREED, emotional and unmitigated.
Number two, nobody can afford a mortgage of these amounts. I didn't say you couldn't borrow the money, I said you can't afford it. Most of us ARE the 99%, and I am not talking about the other 1%.
Someone says "Oh yeah, I can afford it, lots of my friends can as well". (well, at least until my job loss, major illness, other overspending, or a divorce, or housing prices make me so underwater I decide to walk). Other wise all is roses in Happytown. "After all with my USA citizenship, my heritage, and family name, I am entitled to live in a palace, right"?
Let's make this post short and just insert the "G" word:
GREED, emotional and unmitigated.