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<p>Seriously? I’m not sure anyone, except those with a trust fund, should ever buy a home that expensive. But that’s just me…I like to sleep well at night.</p>
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<p>Some of actually did what he should have done. On a fraction of his income.</p>
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<p>If you’ve been a managing director of a company for the last ten years, then you’ve
almost certainly laid people off. Looking at GE’s chart, from the $60/share to the
high-single-digits, I’d say that GE had to deal with a lot of layoffs and firings in the last
ten years. How do you lay someone off without understanding that the same thing could
happen to you?</p>
<p>There are lots of people that I’ve worked with that had to worry about layoffs on and off for the last 25 years. Times can be good or they can be bad and sometimes layoffs are arbitrary in large companies.</p>
<p>Someone in the upper echelons of the business world should have better information than peons like myself and should be able to manage their wealth more effectively.</p>
<p>My mother bought GE ten years ago in the high-40s. I traded GE stock too taking small profits. It went to $60 and then headed down. I suggested that she get out of it when it broke support in the $50s. I still think that she has those shares today. I started out with technical analysis back then and even back then could understand that a break of support could be a very bad thing. Even without knowing what the company really did.</p>
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C’mon BC, didn’t you see they called Mr. GE upper middle class?</p>
<p>Of course, this points out one of CC’s greatest fallacy - we’re all middle class around here, aren’t we? Just some of us are more middle than others?</p>
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<p>You didn’t think they could keep up their past growth rate after Neutron Jack left? ;)</p>
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<p>Acquisition binges can only hide your core performance for so long. I sold GE when it became elite credentials obsessed in its workforce forced rankings. That could be an interesting case study for the elite freaks here at CC. ;)</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>This. At first I thought they meant that Mr. $550k had saved $250k in one year. I was thinking, “Wow, that’s terrific, he socked almost everything away.” I actually imagined that he took home around $350k and managed to get through a year supporting five people on a net income of only $100k…like those of us in the upper middle class.</p>
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<p>Anyone bringing in a fair amount in income should learn how to manage that income. I think that everyone should learn how to manage wealth well but those with a financial background or in upper management ranks really have no excuse.</p>
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<p>Well I do know the statistics on income. It’s odd when they don’t correlate with wealth.</p>
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<p>Doesn’t really matter if you’re a technician.</p>
<p>The article said he saved $250,000 for college, it doesn’t say anything about his savings for retirement. It makes more sense to save less for college at that income, thinking you can write checks out of yearly earnings. That $550,000 was with bonus, his base pay was likely a lot less. He may have assumed he could pay a chunk of tuition with his bonuses. Or even on the monthly pay plan. He will get penalized for dipping into retirement savings, so needing the college funds to live on is likely. Yes he made a very good salary and he chose to live well on that salary. Whether you made $50,000 a year, $250,000 or $550,000 these last 10 years you probably didn’t anticipate layoffs and the economy tanking so spectacularly. I live in an area where a lot of people work in the financial industry, most of them didn’t see it coming either.</p>
<p>These people lived beyond their means, simple as that. My husband’s income is slightly more than half of Mr. Johnsons and we’ve saved almost 600K for our 2 children plus more for our retirement that we could dip into for the kids.</p>
<p>We also live in the same area as the Johnsons, are the same age and our home is worth about the same, only difference is our mortgage is about 100K. We could have bought a bigger home, gotten a bigger mortgage and upgraded years ago, but always had saving for college in the back of our minds.</p>
<p>No mention of Mrs. Johnson was made, I wonder if she considered finding a job to help out with college costs? I’ve always worked part-time just for that reason, even though many women in my situation don’t or won’t because they don’t “have to”.</p>
<p>I’d be willing to bet that Mr. Johnson nor his children mow their lawn and that Mrs. Johnson doesn’t clean her house. We do.</p>
<p>If I were them I’d be embarrassed to be getting aid. Shame on Johns Hopkins for giving it to them.</p>
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<p>BC, I was being a bit sarchastic.</p>
<p>As to his education making him more culpable for his situation, the educations wasn’t the thing blinding him, it was his psychology of matching his life to what it is expected to be. Lots of people know the danger of alcohol, even those working in substance abuse, but some fall victim to it anyway. We deny the problem regardless of the known risk.</p>
<p>As to the technician comment, even the best technicians didn’t see the implosion we had sub-prime mortgage coming. The couple of folks (I remember hearing the story of some guy who made billions on the implosion, just taking a cautious hedge - he worried about the moral implications of what was he was doing making the size of bet he did) who did see the writing on the wall could have made Bill Gates and Carlos Slim look like paupers with a relatively small leveraged bet.</p>
<p>Not that I actively play the market, but I can remember having a long chat with a friend who is a GE employee about his company stock investment about the time Neutron Jack announced his retirement and told him to get the heck out of Dodge (stock wise), as I personally believe that with his steady line profit growth, something was going to give eventually, and his exit was the perfect excuse to “straighten out the books”. Doesn’t always happen in the first year, but after almost all highly successful CEOs leave, there is a significant letdown - not right away, but within a couple of years.</p>
<p>“Whether you made $50,000 a year, $250,000 or $550,000 these last 10 years you probably didn’t anticipate layoffs and the economy tanking so spectacularly.”</p>
<p>You don’t need to anticipate this cataclysm to make careful decisions. I had no idea this was coming; I only knew some kind of rainy day could come. During the years I worked at law firms, I saved 60% of my take-home every year. It’s made me one grouchy ant now that a lot of grasshoppers are asking for my stash.</p>
<p>For all of you speaking about the use of “upper-middle class” with the implication that the GE director’s income is beyond that, I think you need to read a bit about sociology instead of using linear comparisons. Median household income (in 2007) may be about $50,000, but does that make the household middle class? I think not. </p>
<p>Often, upper-middle class is defined as highly educated, white collar professionals in law, medicine, academia, or upper-management. High income is generally associated with such careers, but it isn’t used to delineate between upper-middle and upper class. To compare, upper class is often described as not working in a professional capacity, instead, only managing assets (likely inherited). To make the analysis simple, consider pre-modern Europe. The nobility and upper clergy constituted a very small slice of the overall population, and they were the only “upper class.” The merchants, knights, and lower clergy were another, somewhat larger, portion of the population who were the “middle class.” Finally, the majority of the population consisted of peasants who often did not differ substantially from slaves in their living conditions and legal rights. If you take this social dynamic, make it less rigid, and increase income at all levels, then you would not be far from the class structure in modern England (middle class, to them, is equivalent to our “upper-middle class,” while a great portion of the population is “working class”). Being in the top 20% (to randomly select a grouping) of income earners doesn’t mean anything in terms of class, as a member of it could own a plumbing business without holding a college degree or live on inherited wealth and sit on multiple Fortune 500 boards of directors.</p>
<p>As compared to other articles about the expenses of college that detail how “bad” certain wealthy families have it, I actually didn’t find anything abhorrent about this man’s choices or attitude. In his position, how easily replaceable would anyone have felt? I doubt many could easily move into such a role in terms of ability. Apart from a terrible financial crisis which happened to target one’s industry more than most, I don’t see many situations in which a member of upper management at a very large company would fathom under-going a significant down-grade in income. Even now, his situation is not the norm in terms of statistics, as unemployment has hit those without years of experience and education much harder.</p>
<p>I would encourage others to refrain from comparison to one’s own life when analyzing others – I agree with those who said his situation is special as a matter of degree, not of kind.</p>
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<p>I think that it does. But one could just use the middle-third or even,
with a little generousity, the 25% to 75% range.</p>
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<p>You can define it any way you want to but to obscure but the
mathematically simple approaches of middle-third or 25% to 75% is
pretty simple and easy to understand.</p>
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<p>This guy was in the top 2%. Many here could associate with top 20%. But
far fewer with top 2%.</p>
<p>As far as class goes, I guess that you would count Warren Buffet and Bill
Gates in the upper-middle class.</p>
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<p>Only the paranoid survive – Andy Grove</p>
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<p>That’s a non-issue. How many more did more with a lot less?</p>
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<p>It does happen all the time. Perhaps you haven’t looked very hard.</p>
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<p>It has but they haven’t built up a consuming lifestyle that requires
a continuing high level of income.</p>
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<p>You should have seen the John Edwards and Tiger Woods threads. People
will compare.</p>
<p>The way I read this article is that they had saved almost a million dollars, for college and down payment towards their house. They probably have retirement funds too. No point in speculating about the wifes job or how much else they have saved, since it isn’t mentioned. I would say these people have been far more responsible than most. Not getting a government handout, still working, still paying their mortgage and probably plenty of taxes. So some of you have been more frugal and looked towards the future more carefully. Good for you. I’m sure many more people are now doing the same.</p>
<p>If they qualify for some financial aid from a high priced school, so what? They meet the same standards as whomever else applies. There are plenty of lower income kids who are getting free rides at these elite schools. What, you’re going to have the financial office evaluate all parents opportunities and bad financial decisions throughout their lifetime order to qualify the kids for aid?</p>
<p>Where’s the critique of the other families? The 26 year old woman who “has to put her photography and sculpture career on hold” because her parents are no longer footing the bill. The family with the three handicapped kids whose husband is still working only as a writer (income?) while the wife does part time work. Who buys a 3600 sf house with a 650K mortgage in ORLANDO, for God’s sake? Easy to criticize decisions of others with the knowledge we have now, isn’t it?</p>
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<p>Some of us criticized those decisions in 2004, 2005 and 2006 too.</p>
<p>The lesson I always take away from these kinds of threads is to never, ever, ever be the subject of a newspaper article about paying for college.</p>
<p>“What, you’re going to have the financial office evaluate all parents opportunities and bad financial decisions throughout their lifetime order to qualify the kids for aid?”</p>
<p>Well, that wouldn’t be much of a change from what they do now; it would just be retrospective. They already decide what is a legitimate expense and what’s a wasteful luxury. Having another kid in college is taken into consideration and reduces the EFC. Having an equally onerous yacht payment does not.</p>
<p>“I don’t see many situations in which a member of upper management at a very large company would fathom under-going a significant down-grade in income.”</p>
<p>You don’t? It doesn’t have to be a downturn that knocks down his income; it could be a lawsuit or an accident. I don’t know anyone with disability insurance that would restore his income to the $550k level following a stroke or car accident.</p>
<p>I am a regular donor to my alma mater’s need-based fin aid fund. I don’t give that money to pay for millionaires’ kids to attend, and I am confident that’s true of JHU’s donors as well. They may be getting some pretty irritated calls in the development office this week from grouchy ants like me.</p>
<p>I’m going to give the family with 3 handicapped children a pass.</p>
<p>Maurice Johnson did try to save. He said they saved like crazy from the minute his kids were born. </p>
<p>I just find it interesting that GE capital got in trouble…and this guy who worked for GE Capital took on such a large mortgage in 2007. Yes…it was affordable for a guy who made $550,000 a year…but…</p>
<p>A few things:</p>
<p>To reiterate what I said earlier, and in complete agreement with Hanna, that it is absurd that JHU would give this family financial aid.</p>
<p>Don’t you think that a financial executive would be familiar with the basic concept that the higher the reward, the higher the risk? (Given the way some on Wall Street did their jobs, maybe not.) Anyone in such a high paying job should expect that he would lose said job and be unemployed at some point in his career.</p>
<p>I’m more and more convinced that there are two kinds of people in this world. Those who have a rainy day plan (and fund) in the event that life doesn’t work out the way they hoped, and those who don’t.</p>
<p>2007 was the height of bonus for most people. 2008 a lot of people got cut 30-50% in bonus. 2009 most people are back up to 2007 level again.</p>
<p>In 2007, we were feeling good, we were one signature away from buying a house twice as big as what we have today and 3 times of our old mortgage. The day we were to wire the money around, our buyer backed out of our contract, and our seller wanted a lot of contingency added to our contract. My husband and I looked at each and said, “It is a sign. What are we thinking of?!” We cancelled both contract, and the market fell apart.</p>
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<p>I know what it’s like having a child ill for a prolonged period of time. Having three where it is permanent is probably very taxing and I can see making bad financial decisions under that level of stress.</p>