An Absurd Way to Live
CNN has been posting more and more stories focusing on people caught in the economic downturn. Some are more ridiculous than others but this one takes the cake.
Patricia was a member of the working middle class as recently as February. She was laid off, which is unfortunate. But to turn around within weeks crying poverty is a clear indication that this individual lived her entire life well beyond her means. It has been less than two months since she lost her job and within that time she has been drawing unemployment, received her tax refund, and had her mother move in to help with the bills. Despite all that was working in her favor, she exhausted all of her savings within weeks.
Guerrero is estranged from her husband and raising her two young children. She’s already burned through her savings to help make ends meet, and is drawing unemployment checks. She has had to take extreme measures to pay for her interest-only mortgage of $2,500 a month. In fact, her mother moved in with her to help pay the bills.
$70K a year ends up being about $3,500 or so a month in take home pay. That would put the cost of her mortgage alone at over 70% of her take home pay. I played around with some mortgage calculators and without knowing her interest rate exactly, my best guess points to a house value around half-a-million.
People lose their jobs all of the time. It’s a fact of life. But it happens even when the media is not focused on it. These kinds of stories probably occur with great regularity over the course of every year. In bad economies they are more frequent true, but that is exactly when the media puts it in front of our faces because they are fashionable.
It does nothing more than sensationalize and feed the specter of recession.
It takes common sense to make yourself recession proof.
- Spend less than you make
- Make more than you spend
- Have an adequate emergency fund
- Don’t buy too much house
- Invest for the long term
If you lost your job tomorrow would you find yourself on the front page of CNN with your story? Perhaps you would simply shrug it off and move on with your life because you were fully prepared for it.
Do yourself a favor and be a part of the second group.