A Bad Debt Follows A Bad Choice

Lots of praise around the Internets for this story by NT Times Business Correspondent Edmond Andrews, and his financial struggles with high credit card debt and the increasing demands of a sub-prime mortgage. It's written in a "I coudn't believe this happened to me, thus it could happen to you" style. People have been praising Andrews' bravery for admitting something most people in his position would be loath to admit to: that, despite his prestigious job and high income, he actually can't afford the trappings of a middle class life.

This post from Megan McCardle, who sympathizes as a fellow writer living on the budgetary edge is typical: Debt: A Writers Life

This is the bravest thing I've read for a long, long time. For a reporter--an economic reporter--to admit that he's been in the hell of excess debt and unpaid bills that he reports on is a major statement in middle class America. There was a time when America tolerated a certain amount of this in its writers--one reads nearly approvingly of the repeatedflirtations with bankruptcy undertaken by the likes of Dorothy Parker or F. Scott Fitzgerald. But these days, their profligacy, like their alcoholism, is no longer admired, or even tolerated, in the editorial world.

Now, it is true that there are plenty of profligate people out there who got in over their heads buying Hummers and jet skis on a beer budget. But, most of the debtors I see in my practice are in a hole because of a disruptive and/or unexpected event - a major illness, a job loss, the death of a spouse, a pregnancy, moving to San Francisco - that caused their carefully wrought balance between income and debt servicing to go awry, finally leading to the death spiral of increased debt as their interest payments skyrocketed with every missed payment. People don't become overwhelmed with debt because they are "writers" or some such. And in Andrews case, the reason was not his job; it was a woman.

I had two utterly compelling reasons for taking the plunge: the money was there, and I was in love. It was August 2004, just as the mortgage party was getting really good. I was 48 years old and eager to start a new chapter in my life with Patricia Barreiro, who was then my fiancée.

Patty was brainy, regal, sexy, fiery and eclectic. She was one of my closest friends when we were both students at an American high school in Argentina. Back then, we would talk together about politics and books at a coffee shop every day after school. We were not romantic in those days and went our separate ways after high school. But each of us would go through bruising two-decade-long marriages, and we felt that sweet spark of remembrance and renewal upon meeting again in middle age.

(snip)

The only problem was money. Having separated from my wife of 21 years, who had physical custody of our sons, I was handing over $4,000 a month in alimony and child-support payments. That left me with take-home pay of $2,777, barely enough to make ends meet in a one-bedroom rental apartment.

In other words, Andrews was supporting himself, two adult women, and three teenagers on his $120,000/yr salary from the NY Times. He's a little vague about when his alimony payments began, but - reading between the lines - it appears as if his divorce and "reconnection" with the sexyfierceclectic Patty came close upon each other's heels and were perhaps related. Regardless, Andrews was struggling because of his alimony payments, not because of his job or his mortgage.
It's a reminder that, for all the flaggellant talk of "profligate Americans," debts are often not the result of unbridled greed and piggish consumption, but arise from personal circumstances, whether self-caused or arising from life's little Black Swans.