I’ve been following the Edmund Andrews story as it’s been unfolding via various blogs, mostly via Megan McArdle. In case you weren’t following, Andrews excerpted part of his book on his succumbing to the subprime mortgage market in the New York Times. Since the story came out, lots of blame has been going around, a lot of it focused on his wife, who had been a stay at home mom, struggled to get jobs and, it turns out, had two prior bankruptcies.
Reading the numbers makes me sick. As far as I can tell, these people make about as much as we did when we were both working. And yet, thanks to putting themselves into huge debt, they have a lot more than we do: a larger house, kids in private school, expensive clothes. Granted, they are on the verge of losing much of that, but it’s still depressing. I’m glad I didn’t run up $50k in credit card debt in order to have fancy clothes, fancy cars, and private school. Are there things I wish I had? Sure. But instead of getting in over my head, I’ve lived (mostly) frugally. Like the anger over the AIG bonuses, I think much of the anger directed at Andrews is about the relative wealth they displayed compared to most people. While many people went into debt to live a modest lifestyle–finally getting into a home in a decent neighborhood, for example–a lot of people lived within their means, forgoing an expensive lifestyle. Many people being foreclosed on now did not have 3000 square foot or larger houses. They are now living with family, don’t have jobs, etc. And yet, Andrews still has a job, still has a house even, and a book out that will certainly bring in some income.
My father in law used to say, “Poor people have poor ways.” And it’s sometimes true that poor people make some bad financial decisions, but it’s also true that they sometimes get hoodwinked into doing so or simply have no other alternative than a payday loan in order to put food on the table. Increasingly, though, I think the phrase should be “Rich people have poor ways.” As more stories come out about wealthy Wall Street bankers and mortage brokers as well as people like Edwards, it occurs to me that many of them weren’t so financially savvy. Unlike the poor, however, who tend to only suffer personally for their decisions, the poor ways of the rich are dragging us all down.