Back in March, I posted an entry called The Financial Wisdom of Seattle Billy. He is a likable guy, but when it comes to financial decisions, he is the perfect gauge of what not to do. From that post:
Billy is a college graduate working a white-collar job. Billy is also a financial idiot and to me that is what makes him interesting.
Billy bought a condo at the absolute peak of the Seattle real estate market in 2007. Actually it was a condo conversion. He got the privilege of swapping his low rent payment for a bloated mortgage without having to hire a mover.
Now Billy is without a job. He was laid off 3 months ago. He can’t find a job. He can’t even find an interview. When I first met him, he explained to me how Seattle would not be affected by a downturn in the economy. He thought it was a California thing. I just let him keep talking.
I learned that Seattle Billy is directing all of his unemployment benefits into paying his bloated exotic mortgage and dipping into savings to survive. Instead of recognizing that he was duped into paying too much for his condo, he is now obsessed with refinancing. The idea of walking away or negotiating a principle reduction hasn’t even occurred to him. The bank that sold him the mortgage has been seized by the FDIC. The bank that now holds his mortgage is getting bailed out by the billions.
Some people can not learn through observation and research. They must get burned by the hot stove. I expect Seattle Billy will sell every asset he has to keep making payments on his condo. He will probably do something really dumb like borrow against his 401k, which is protected should be have to file bankruptcy at some point. Then one day he will realize he was duped by fraudsters into being a debt slave. But that might be another year or so. By then, I expect him to be angry, bitter and penniless.
Joe Crawford
Jan 31, 2009 — 2:16 pm
Big pile of ouch for him.
I wonder if listening to Dave Ramsey would cure him. Dave’s advice in this case would be yours exactly, and to get his butt in gear and take a job, any job, ditch the financial rathole, and move on.
MAS
Jan 31, 2009 — 5:13 pm
Most people would have been better off had they listened to a few hours of Dave Ramsey.
Ed
Feb 1, 2009 — 11:00 am
It sounds like he’s not smart enough to know that he’s not that smart. So much for a lack of wisdom. The old saying “ignorance is bliss” will prove fatal in his case.
Tell him to cut his losses and walk out of the condo, live in a van and take showers at the YMCA until he finds a job. Keep a cell phone and stay under the radar from creditors.
MAS
Feb 1, 2009 — 11:42 am
If I thought Billy would listen, I would say pretty much just what you said. But he didn’t become “Seattle Billy” by listening to the wisdom of others.