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Did this woman really do anything wrong? Her situation would be far different were it not for the divorce. What married couple ever plans for divorce when they look at their finances? Not to mention, a 2.5 million dollar home in NYC is not the same as it would be elsewhere in the country...for their market and their jobs, they were not wealthy people.
I lived in that area (westchester county) for over 20 years. It's expensive but not THAT expensive. I even worked at Mastercard in Purchase. She can find a nice home for 350K 30 minutes from there. And if she needs to stay in that specific area, she can certainly find a home for 500-700K.
Just because a person earns a certain amount does not mean they should spend the most they could 'qualify for.' When you have incomes that high, less of the money should go towards a house.
They could have bought a beautiful 700K home in the best school districts in Westchester and had it paid off by now. They were dumb.
I lived in that area (westchester county) for over 20 years. It's expensive but not THAT expensive. I even worked at Mastercard in Purchase. She can find a nice home for 350K 30 minutes from there. And if she needs to stay in that specific area, she can certainly find a home for 500-700K.
Just because a person earns a certain amount does not mean they should spend the most they could 'qualify for.' When you have incomes that high, less of the money should go towards a house.
They could have bought a beautiful 700K home in the best school districts in Westchester and had it paid off by now. They were dumb.
She could also rent out the property and move in to a smaller rental. I think a family of her size can get by just fine with say, 2000 sq.ft. and a .5acre.
Well, to be more detailed, she really only earns $150K a year with a bonus plus $75K a year child support from her ex husband.
But this woman is trying to maintain a 2.5 million dollar home PLUS a live in nanny for $40K a year PLUS having to pay $35K a year in Real Estate Taxes in New York.
This woman should be the poster child for what's wrong with America, what's one of the main contributing factors in the housing collapse.
She is a ticketing time bomb. At least she still earns a very good income, instead of relying on alimony support from her ex. I'll give her credit for that. But can't she see danger ahead? What if she loses her job as a Mastercard executive? I'm sure she has savings, but this house will drag her down quickly unless she does something right now. She and her ex husband purchased this home when they had two working incomes, now she's a divorce mom on one income. Her and her ex probably made around 700-800K a year to afford this home. But more than half that salary is gone with the divorce.
Sad word we live in. I earn more than this woman and I live in a home worth about 5 times less than hers, but I'm perfectly happy in my house. I'm very liquid, can take vacations anytime I want. My housing costs (includes mortgage/principal/taxes/insurance electricity, cable, phone, hoas etc) are less than 10% of my monthly income.
You gotta not try to keep up with the Joneses. It'll get you in trouble very quickly. Get rid of the nanny first. It's not like the kids are less than 5 years old. They can take care of themselves for the most part. Or hire an afternoon sitter from 3-7 pm for less than half the cost when the kids get home from school.
I know let's bail her out because it will be a "stimulus" to create jobs... that's what I keep hearing when they want to justify wasteful spending...
I lived in that area (westchester county) for over 20 years. It's expensive but not THAT expensive. I even worked at Mastercard in Purchase. She can find a nice home for 350K 30 minutes from there. And if she needs to stay in that specific area, she can certainly find a home for 500-700K.
Just because a person earns a certain amount does not mean they should spend the most they could 'qualify for.' When you have incomes that high, less of the money should go towards a house.
They could have bought a beautiful 700K home in the best school districts in Westchester and had it paid off by now. They were dumb.
While I am not feeling mean enough (this instant...) to call the profiled people dumb, I do agree that this is a very good example of lack of logic.
In any logical analysis it makes no sense to live in a place that demands so much in taxes asa percentage of income. Neither is it logical for some one who, as she formerly worked not at other finance related firms, but instead for fashion / retail firms, to live so far above their salary -- at least if the woman profiled had some shot at getting a bonus of finance type proportions it make some sense to have two vehicles and nanny that is paid nearly a quarter of own income.
Alas emotionally it is challenge enough to know that the father of your children is getting a new wife, in such a situation it would be hard enough to uproot yourself and your kids. There is also something to be said for Silverfall's line of reasoning -- why take what would almost certainly be a HUGE hit by selling in a depressed market? Maybe it make some sense to hold onto the house in the hope she can use it to retire or host a wedding for her daughter someday...
Somehow I do hope that the woman profiled does open her eyes though. While emotionally she may think that little Solstice makes it more likely she can find a new husband, logic says that it a remote chance at best. Selling that car to rely only on the Volvo SUV and using the proceeds to fix a plumbing leak is going to crush her ego, but save her equity...
There is always an element of "delusion" when one buys a "dream home" -- the upkeep is inevitably far more costly than estimates, the time spent lounging in the pool is NEVER cost effective in comparison to even an expensive club (and miles behind the pool at the Y...), the value of gardener pales weighed against installing VALUES in your kids by having them learn about pulling weeds and mulching the lawn...
I agree that the prudent thing would have been to sell the house at the time of the divorce, but she didn't.
No one is bailing this woman out. She is making her payments and has savings.
There are a number of government interventions that are designed to prop up house prices.
It's true that if she pays off her mortgage in full and never has to sell, then no-one is bailing her out. I don't believe that she can keep making the payments.
If she does sell and she's not underwater, then she benefits from the market interventions that prop up the value of her house (these include interventions in the credit and bond markets and foreclosure prevention measures. The 8k credit is also a measure to prop up demand, though that isn't going to affect a $2.5M house)
If the bank takes the place back from her because she can't afford it, then we paid for that too. In a number of ways, the public has been forced to eat the losses of the banks.
What married couple ever plans for divorce when they look at their finances?
I do... well, not exactly. I take into account what will happen if we have to only rely on one income, though - disability, death, the loss of one of our jobs, etc.
While not everyone makes enough money to have that luxury, planning the necessities around ONE income provides a heckuva lot of security, freeing a lot of cash for retirement savings, emergencies like medical costs, and simply enjoying yourself rather than being obligated to pay for rooms you never use or whatever.
Folks who make $30,000 a year don't have any other option than living month-to-month, but people in this circumstance don't have any excuse. It just isn't smart.
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Logic vs Emotion/ Ego
