Couple Makes Cutbacks We Could Only Dream Of
Front page of CNN Money last night: Careers vanish after subprime ‘free fall’
In case you don’t feel like doing the reading, the highlights:
First Few Paragraphs: Couple gets canned after industry cutbacks but before that they were raking it in.
"The two didn’t say exactly how much money they made at their last jobs but Kent admitted they each had six-figure incomes."
The Issue: While their life has changed, they refuse to make major adjustments.
"Their home equity line, mortgage, health and life insurance premiums alone cost about $10,000 a month. Still, they are trying to hang onto what they call their dream home with a view of the Pacific Ocean where they live with Mysti’s 11-year old son."
Here are the sacrifices they have made:
"We’ve used up most of our reserves, cashed in her 401K," said Kent. "We’re going Mach 1 into a wall. When we run into it, then we’ve got to decide what to do next."
Despite their financial problems, the Copes have worked hard to protect their credit rating, staying current on bills. And they’ve made cutbacks: trading in Kent’s Corvette for a Suburban and getting rid of the gardener, for example. But the couple also has learned that it didn’t need everything it used to spend money on.
"We used to eat out a lot. Now we are the leftover king and queen," said Kent.
Apparently, sub prime morgage companies now have a stigma to them, making it hard for the couple to find jobs.
"Since he lost his job, Kent has gotten a real estate license and is trying to start a business selling the rapidly increasing inventory of foreclosed homes in Orange County, Calif. Mysti is trying to build an online business selling jewelry and beachwear, some of which she designs herself."
"…For Mysti, 37, all her efforts to find work since she lost her job last May have been futile. She said she believes the attention given to subprime borrowers who have run into trouble paying their mortgages work against her and other former colleagues. It’s almost like having "Enron" on your resume.
"The media has somewhat tarnished the subprime industry and all the employees, and portrayed them as being dishonest," she said. "We’re not dishonest. Not everybody was a bad borrower. Not every company was a bad lender."
What I’m trying to figure out is why did CNN interview this couple? Clearly it’s nearly impossible to feel sorry for them; I mean, their "step down" is a Suburban.
What I do think is CNN Money is using this extreme example to teach us all a lesson. Kent and Mysti had no savings and cashed in a 401K to live on. They aren’t taking lower paying but steady jobs and working on their side projects (education, online business) in their free time. I feel like at this point, you have to look at your life and say, "You know what? This is going to suck for awhile." Get rid of the huge house (even if it’s worth less than you paid for it), get a smaller rent, find a job that pays five figures, and get a cheap small car. Oh, and they could read this blog if they needed some help in other areas. Maintaining a lifestyle you can’t afford hurts only you, whether you want to cash in your chips before it gets bad or get carried out of your house kicking and screaming.
I think we could all learn a little from Kent and Mysti, and maybe on some mean level, feel better about our own situations.
Image from CNN Money article mentioned above