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<p>To be fair, my parents took out a large-ish ( but less than $200k, don’t want to get more specific than that) mortgage four years ago (at age 50) because they were moving from an area with low housing prices to an area with higher housing prices. They’re generally quite debt adverse, and they’ve worked hard to pay it down quickly, though.</p>
<p>" Saving 250K for college is amazing, putting a down payment of 650K is amazing. I think we saved about 1/50th of that for college."</p>
<p>And you’re a republican? ;)</p>
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<p>Having a $1.8 million home in Fairfield isn’t uncommon for some one making that much money.</p>
<p>busdriver11 -</p>
<p>I think you can make an argument that an 800K mortgage is not huge for someone with a 550K income. It is still a bad idea to take out that kind of loan in your 50’s. </p>
<p>But I have to disagree with you about saving $250K for college. That is not a lot of money for someone in his income bracket. Proportionally, my husband and I have saved a much bigger percentage of our income for college (and we have only 2 kids), and our income is much, much lower. Once you get into his stratosphere, the necessities of life take such a small portion of your income (you can only spend so much on food, clothing, cars) that you have the ability to save and invest is at a much higher rate than those with lower incomes.</p>
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<p>Surprised there hasn’t been more sympathy for this family… they’re in a really tight place, and it gets at why I get so annoyed when people just assume teenage/college-age children should have a part-time job by default–when you have a disability, it just isn’t that easy!</p>
<p>I feel very bad for this family.</p>
<p>Looking at the GE guy’s financials before the bottom dropped out, he was actually living well within the norms of “conventional” ratios. His house was about 3x his annual income with debt of about 1.5x his income - very normal for his age. He had saved about 50% of the typical private college tuitions for 3 college educations - not bad to expect to be able to finance the rest out of cash flow at his income. </p>
<p>The problem here is that the $550K a year jobs that don’t have a contract and buyout agreement are hard to replace on short notice (thus the need for the buyout/severance clauses). </p>
<p>The biggest problem here is that leverage always has risk when the cashflow is not guaranteed. Recessions often expose this flaw in the linnear planning that most people live by. In recessins, the fickle finger of fate pokes a hole in the underlying assumptions of the linear plan of steady income and steadily rising asset values.</p>
<p>We sit here looking at these folks who extended themselves and found the legs kicked out from under them, meanwhile on other threads people are trying to figure out how to leverage themselves to afford the “dream” school instead of taking the financial safety. Does the term cognitive dissonance mean anything?</p>
<p>psych_:</p>
<p>I have a lot more sympathy for the family with disabled children than I do for the Johns Hopkins family.</p>
<p>I think families with disabled children should get more support from government at all levels. Except for the truly wealthy, almost no family has the financial resources to cope with one, let alone three, children with disabilities.</p>
<p>Goaliedad…interesting points…especially the last paragraph.</p>
<p>It is very unlikely that the subject of this article (the one who lost his 550k income) did not seek out the publicity. Someone he knows likely knows someone who knows the reporter. Clearly he did not subject himself to public scrutiny in order to get sympathy.</p>
<p>goaliedad:</p>
<p>When my husband and I bought our current home, its cost was about 3x our income. And the mortgage was about 2.5x. But, we were in our very early 40’s, not 50’s, when we bought ours. If I’m wrong about the $550K guy’s age, and he is a lot younger then I agree with you on the housing issue. But I think it is a bad idea to take on that much debt for a home in your 50’s.</p>
<p>And while it does seem that he saved half of a typical college education, it looks like he intended his kids to go to the atypical JHU all along.</p>
<p>Not that it has anything to do with this thread but yes, I am 36 and my oldest will be heading to college this fall.</p>
<p>I think the point of this article is not to show the “outrageous” expectations of people living “way beyond” their means (although I understand the thought of a $800K mortgage sounds excessive in an absolute dollar term). It is meant to show that people who look very responsible (saving a large amount for college - although not all of the necessary funds) can fall “victim” to this recession.</p>
<p>Please note that I put the word “victim” in quotation marks. The “cry me a river” quote at the end tries to soften things a bit, but ultimately the hubris that led Mr GE to project the good times out is found in all of us to some extent. I think the author uses him to pull a little schadenfreude out of the lower income reader audience as well as appealing to those in a similar situation. Very craftily done.</p>
<p>The 550k guy could have been anyone, just with a different number. Most people can’t afford to be out of work for 6months or a year without letting it effect their life style. There were a lot of people like that in my town. Some of their kids have decided to take a gap year or take merit aid instead of full pay top tier school. Luckily some of them have started back to work.</p>
<p>"It is very unlikely that the subject of this article (the one who lost his 550k income) did not seek out the publicity. Someone he knows likely knows someone who knows the reporter. Clearly he did not subject himself to public scrutiny in order to get sympathy. "</p>
<p>Exactly. The article was written to illustrate different people’s financial situations. Of course nobody can read something like this without commenting what people should have done. A guy like that is in the group that has been paying most of the taxes and full pay tuition for their children—so others don’t have to. He probably thought he’d have that great job for 10-15 years, and had his world turned around like many others. Very sad about the family with the disabled children. But what is the point of comparison? Probably not too smart to take on alot of debt in your 50’s, but if you’re not planning on retiring for a long time–I’m sure we all could look back at things we could have done smarter. </p>
<p>“The 550k guy could have been anyone, just with a different number.” I agree with that!</p>
<p>goaliedad:</p>
<p>Well said. I confess to enjoying a little schadenfreude myself regarding Mr. GE.</p>
<p>And I agree the tendency to project the good times going forward is something we all have. It is the ability to control that tendency that makes us a good steward of our resources.</p>
<p>$550K a year only makes you upper middle class?</p>
<p>Wow! I’m now hoping I make it to upper poor class now. (perception is everything you know)</p>
<p>"$550K a year only makes you upper middle class?</p>
<p>Wow! I’m now hoping I make it to upper poor class now"</p>
<p>The richest I ever felt was when I was making 20K/yr as a 2nd Lt in the military. No house, no children, no college or debts to pay for. Practically 0 in taxes, no obligations. I was rich before the government, mortgage lender and children commanded all of my income!</p>
<p>I guess I’m less sympathetic to Mr. GE than the others here. I don’t see him as someone with “just a different number.” He had financial resources that most of us only dream of, and he didn’t use them well.</p>
<p>LOL, busdriver11. I tell my sons that their dad and I would be living the good life if it wasn’t for them! But, of course, I would do things the same way if I had to do it over again.</p>