Most people have probably read Edmund Andrews' piece in The New York Times, My Personal Credit Crisis (expanded into the book Busted: Life Inside the Great Mortgage Meltdown). Many raised eyebrows when reading this:
We had very different ideas about money. Patty spent little on herself, but she refused to scrimp on top-quality produce, Starbucks coffee, bottled juices, fresh cheeses and clothing for the children and for me. She regularly bought me new shirts and ties to replace the frayed and drab ones in my closet. She thought it wasn't worth agonizing over nickels and dimes. I was almost exactly the opposite. My answer to any money squeeze was to stop spending. I would skip lunch at work to save $7. If I arrived at the Metro just before the end of rush hour, I would wait for five minutes to save 50 cents on the fare.
Fresh juices? I like Odwalla but I usuall think the better of it. In any case Megan McArdle has found that there's a lot more in this direction:
But en route to that moral, it turns out the story has been tidied up a little. Patty Barreiro, Andrews' wife, has declared bankruptcy twice. The second time was while they were married, a detail that didn't make it into either the book or the excerpt that ran in last Sunday's New York Times Magazine.Andrews' desire to shield his wife is understandable--hell, laudable. No decent person wants to parade their spouse's financial trouble in front of the world. But this is material information that changes the tenor of his story. Serial bankruptcy is not a creation of the current credit crisis, and it doesn't just happen to anyone, particularly anyone with a six figure salary.
Many people were already skeptical of Andrews' sob story because it was to a large part one of his own making. He seems to want to shuck responsibility because he had enablers. But this piece of information changes things a great deal. As Megan notes the very few individuals have serial personal (as opposed to business) bankruptcies on their record, and, those who have upper middle incomes to boot are even rarer.
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I did read that story, and it is true that serial bankruptcy is often a symptom of personal inability to manage money and credit, not external forces. But where did it say that Ms. Barreiro had a six-figure income? I recall the article saying that she had been unemployed for some years, and even when she worked was not employed steadily.
"top-quality produce, Starbucks coffee, bottled juices, fresh cheeses and clothing for the children and for me..": what an odd people you Yanks are. Who else would reckon Starbucks coffee a top-quality product? (I had one in Philly once - yuck.) I'm not even sure what "fresh cheese" is, but if he all he means is something like a decently matured Cheddar or Brie, then that should not be worthy of comment - those are the cheeses that civilised folk eat. On the other hand, I suspect that the clothing remark means that his wife lashes out on expensive new clothes for him and the nippers; when our daughter was small, we dressed her almost entirely in second hand clothes. It's what sensible people do.
So now we know who will be the first female Director of the Office of Management and Budget, in the Palin/Plumber administration!
moo, first bankruptcy. she & husband filed, and his income seemed to average out around 100 K (it was volatile).
When I first read the article I was extremely sceptical, then when I read Megan's article, I was outraged.
I have personally experienced the stupidity of overextending myself with credit (when I was young and stupid).
I worked so freakin' hard to pay off all that debt and went through such personal hardship to do it (income cut in 1/2 for one year due to an injury at work), that it makes me sick to read about these fools that work the system.
Hey, tool? She may be the love of your life and good in the sack, but she's got a seriously warped moral side and you do to for going along with the 2007 bankruptcy and cramming your comingled debts into it. I will never take you seriously as a writer again.
Starbucks schmarbucks. You want good coffee, find an Italian independent, not some chain franchise. You will get much better coffee, and probably for a lower price, if the big chains haven't driven all the independents out of business.
And 'fresh' cheese? I presume this means cut from the round, not pre-packaged. Roquefort, the king of cheeses (apart from good English stilton) has to spend more than 6 months in a cave.
I agree with Patty in one respect - food quality matters, much more than quantity. But going personally bankrupt on a shared annual income of 100K smacks of just serially living beyond their means. That's not down to any mortgage meltdown.
Long before US property prices began to tank, I knew a girl from NYC who had a credit card debt of >US$100,000. Nice girl, very attractive, not noticeably dumb - I just don't know how people do that. It seems like almost wilful self-destruction.
It's like guys who blame their virginity on their sheltered, repressive religious upbringing -- neglecting to mention that they asked out plenty of girls but always got rejected.
Oh yeah, that detail...
So, in fact, McCardle's article doesn't say whose income and debt was really at issue in the first filing? So, she's not real responsible with money, and apparently married to men who aren't either. So what? I don't really see what this changes. Andrews pretty much admits he screwed up and made some bad choices. I mean, what he wrote is still basically true. I don't have that much sympathy for him; as he himself says, he should have known better.
Blognoramous: it doesn't say Starbucks is top-quality, only that the produce is. Charbucks is actually made from creosote and dirty socks, but it's expensive, so New Yorkers are required to drink it. And "fresh cheeses" generally means mozzarella or ricotta, at least at my house.
moo, andrews said explicitly that he's cheap, and that she didn't like to scrimp. that combined with serial bankruptcy can perhaps allow one to make inferences about her tendency to expend. in any case, it does change the tenor of the narrative he's been selling and makes it more prosaic. instead of them getting caught up in a bizarre system, it also suggests that the people who got caught up matter as much as the system. they're rational faculties were obviously addled by their romance, but it seems like there weren't any "automatic stabilizers" that allowed them from going over the precipice.
I was impressed by Megan's reporting here as well. Usually she doesn't do the cyber-shoe-leather thing and here it hit the spot. It really is amazing this guy is getting a book deal.
To clear myself of agnostic's stereotype (presumably accurate in the general case), I wasn't raised in an especially religious household. I dove headfirst into unworldliness and Fred Phelps-esque ultracalvinism on my own initiative. It had enough effect on the kind of person I identify as that I can't say I regret having made an explicit and conscious decision to reject ungodly normality. Given my current disbelief in God that's presumably an irrational attitude.
I have no sympathy for such narcissistic, impulsive, and foolish people, and I have no doubt that they will continue to game the system and be rewarded for their selfish and stupid behavior. Throughout the piece, Andrews uses words such as "surprised", and "shocked" ... did his prefrontal cortex fail to mature, or what? Maybe Andrews and Barreiro should have had part-time jobs in high school, to learn a little money management, rather than discussing politics or whatever in a coffee shop. Typical privileged lifestyle.
Several things stood out for me in the article:
- Andrews relies on the ATM to "reveal" his balance of $196, and is "shocked"
- OMG teh evul bank taps teh MasterCard when we're overdrawn!!ELEVENTY!!1!
- $50,000 in credit card debt. WTF?!?
- $700 at J. Crew and $179 at Gap Kids. When you are in such deep financial doodoo, you should be shopping for secondhand clothes at Salvation Army or Goodwill. Or learn to sew and make your own clothes, for crap's sake.
- $1600 to rent a beach house as an "embarrassing mistake". As if they needed to bury their heads in the sand even further.
- Their house started to look bad, with "peeling paint and broken screens". This just enrages me, because when people do this it negatively affects their neighbors, who might be perfectly responsible homeowners. Unlike these arseholes.
You know, I can understand people who make sacrifices in other areas of spending, such that they can eat local, seasonal, and organic food. I can also understand wanting to avoid MallWart and other chains that might buy from labor-exploiting sources. Many people I know have such attitudes, but they find clever and resourceful ways to maintain socially and environmentally responsible standards, or they sacrifice in other areas. That is not the case with Andrews and Barreiro.
"in any case, it does change the tenor of the narrative he's been selling and makes it more prosaic."
Really? Because it struck me as awfully prosaic when I read the article, nothing really bizarre about it at all. It's exactly the sort of thing that's happened to a lot of people. The only odd thing is that because of his job, he should have known better. He was actually more informed about mortgages, but he did the dumb thing anyway. I still don't see how the wife's bankruptcy changes that. I think you are making a mountain out of a molehill, here. Was the first husband blameless in the bankruptcy? Probably far from it; it was probably mostly his own income.
Yeah, the banks made it too easy: in the pre-bubble days, there's no way Andrews and his wife would have gotten that mortgage. It's just dumb and dumber.
"It really is amazing this guy is getting a book deal."
Oh, now that's the least amazing thing in the whole story. From a publishing perspective, this was an easy deal.
moopheus, well, doesn't really matter what your opinion is. most people probably disagree with you.
The only odd thing is that because of his job, he should have known better. He was actually more informed about mortgages, but he did the dumb thing anyway. I still don't see how the wife's bankruptcy changes that.
It doesn't change that specific detail of the narrative. What it does change is the big picture of the narrative: instead of somebody who made one dumb financial decision he should have known not to make, Andrews turns out to be somebody who has made a string of bad financial decisions. He chose to marry somebody who was not merely a spendthrift but had a personal bankruptcy in her past. Granted that there could have been extenuating circumstances (we don't know, because Andrews gave no details), but that should have been at least a yellow flag. Also, he should have been aware that arguments over money are a leading cause of divorce--we don't know if that was the case for the couple's first marriages, but we do know that both were divorced, and that he was paying significant alimony and child support to his ex.
Then we come to the detail that his wife filed for a second personal bankruptcy, and did so within a few months of being legally able to do so. It's the second bankruptcy that puts the story into WTF territory, because we have the appearance of bankruptcy abuse, and the details McArdle found certainly support the appearance. The wife isn't just a spendthrift, she's a deadbeat. Andrews could explain away his wife's first bankruptcy, if he were so inclined. There is no way to explain the second bankruptcy without making both of them look bad.
Short version: It's an optics problem.
*** "I'm not even sure what "fresh cheese" is, but if he all he means is something like a decently matured Cheddar or Brie, then that should not be worthy of comment - those are the cheeses that civilised folk eat." ***
Yeah, that's sort of the problem, isn't it? The idea that if you're going to buy cheese it has to be the $6 brie rather than the $2 block of Kraft Medium Cheddar. It's quite easy to imagine that a lot of Patty Barreiro's lousy financial choices were based on just that idea: good, "proper" people eat this, wear that, live in this neighborhood, etc. Wearing t-shirts from WalMart is for white trash.
On the list of rules of what civilized people do and don't do, the type of cheese you select for your dinner table is well below "don't file for bankruptcy" and "pay your taxes."
And the truth is that if American's are going to balance their budgets they're going to need to drop the lifestyle that Patty aspires to.
"There is no way to explain the second bankruptcy without making both of them look bad."
Too late for that. It's not as if the story as it is doesn't make him look like a schmuck. I guess I still can't get worked up about the wife because the guy is basically doomed as soon as he signs he mortgage papers. What comes after that hardly matters; the end game is inevitable. The broker who got them the mortgage? That guy saw a couple like Andrews and his wife every day, and thousands of brokers around the country were doing the same. They're the people the subprime industry was built. They're not that unusual.
bioIgnoramus,
The words "top quality produce" and "Starbucks coffee" are separated by a COMMA. They are not equated, they are two different items.
I hate it when rag on "Yanks" for stupid shit, and it turns out that we aren't even guilty of what you accuse us of.
Oh by the way, the big spender here was some South American broad. True, American bankers enabled her.
I second the notion that Megan's reporting here was first-rate. Of course, the Atlantic's big guns blogger is Andrew Sullivan, who has never done a lick of real work since he came to the US and befuddled us "Yanks" with his fraudulence.