This is the second installation of what NOT to do. For some background, read yesterday’s post.
Notes
I also read the comments, and Meg you are so sweet to give everyone the benefit of the doubt but in this case, no. I’m afraid not.
She was perfectly healthy, no problems, and they CLAIM that it was some magical Chinese doctor that gave them “herbs” (whale sperm, tiger penis, that sort of thing) was what got them pregnant. I vote for in vitro. Anyway.
Where they ended up
He finally decided to move to Montreal without any job prospects, but get this….
He was sick of paying for rent. So he wanted to buy a home.
Yep. A home.
A home, when he just finally finished paying off all the appliances which by the way, he was NOT going to be bringing to the new place (they just left all their shiny appliances there because it was a rented apartment…), and were still broke.
Broke as hell. No job. No money. No savings.
Twin babies, and the wife who now finally had a purpose – to be the stay at home mom.
They still weren’t cooking by the way, and going out to eat every day as well as buying formula for the babies because she didn’t want to breastfeed.
He got to Montreal, found a job at $30,000 a year (this guy has an MBA by the way and could have found a better job but was really too lazy to do it by using his contacts or asking for help), and he felt lucky.
Understandable…ish.
Back to the house. The kicker is that he bought the house without looking at it.
Oh yea.
You love that don’t you?
He bought the house from a real estate agent, after giving her the estimate that he was looking to spend around $300,000.
But he wanted to live in a very expensive part of Montreal, and $300,000 when the market was hot, was just not enough money to get anything decent.
He bought the home on paper, after reading it had 2 bedrooms, a kitchen, a living room and a dining room.. plus, it came FURNISHED! He had (uhh sort of) learned his lesson from before.
He paid $320,000.
He didn’t even have the money for the down payment. They were asking for $15,000 as the MINIMUM, and he couldn’t even afford that since he was broke the whole time he was married to this woman who ran up the credit cards.
Anyway, he asked the money from his parents.
And he put the down payment on the house worth $320,000 with the actual estimate from the city of being worth $150,000.
The wife NEVER saw the house, and when they finally moved from Quebec City to Montreal, she stepped into the house and immediately said: We need a bigger house.
Please. Who was she to complain?!
If I were in her position with what has been going on, I would’ve just been happy to have had a 1500 square foot home to live in, food to eat and a loving family.
Instead, she complained the whole time and had these fantastic dreams about buying a second home in Montreal just so they would be able to say that they owned two homes. A summer and a regular home.
She also demanded a Mercedes because she felt she deserved one. (I was incredulous at this part). She had absolutely no concept of the value of a dollar and how hard it was to earn one, because she never worked a day in her life.
To her, she wanted to buy everything an image-conscious family should own to show off because she was still insecure about herself and her racial background, and the Mercedes was her thing.
A Mercedes. Sports car. In Montreal.
The city of wind and snow in the dreadful winter. With twin babies to tote around.
Brilliant, wasn’t she? So practical and smart. *heavy sarcasm*
By the way, the wife, even after living in Quebec City for the two years it took, still didn’t know enough French even after taking lessons, because she never practiced it or needed to because she doesn’t work, and they just speak Spanish at home.
He got a job at $30,000. Today, he wouldn’t have been able to get that house for $320,000 but these were the Wild West times before.
She still had the kids to take care of, and they had NO SAVINGS because they lived for a year without making any money in Quebec City, just so they could learn French.
They lived like that for about 6 months, until BF helped him find a job at $80,000 a year, $20,000 LESS than what he could’ve gotten because he was so scared he wouldn’t get the job.
BF kept repeating he could’ve asked for $100,000 and the negotiated, but he went for $5000 UNDER what he was making before, because he wanted to land the job.
I get that. It was hard times for the past 2 years.
He got the job, and immediately leased a car to drive to work. A Jeep. Not a Mercedes.
So imagine the situation now.
A home worth $320,000, has now dropped to $265,000 (we checked).
The mortgage is probably $1500/month, Car Lease at $400, Utilities are another $100, Food at $600 with the children included, plus Telephone, Internet etc.. we’re looking at around $3000 in expenses each month.
He pulled in $4000 a month from his $80,000 year job.
But she continued to keep shopping and running up the credit card bills, buying unnecessary items for the babies, like more toys that they didn’t need or understand that they needed (they were 1 year old), and buying DVDs because she loved to watch DVDs… she kept spending, and is still spending to this day.
BF asked him the other day how it was going. The guy said that he wanted to sell his home in 2 years for $450,000 (I choked at this point), and move to a larger home.
So let’s break this down financially
He bought the house at $320,000.
Today, it’s worth $265,000. (The real estimated value is $150,000 but it’s a nice location).
$320,000 – $265,000 = $55,000 drop in value in the past year aloneHe only put 5% down, and then his mortgage is $1500/month, and they’ve been there for 1.5 years.
5% down = $16,000$1500 x 18 months = $27,000
His equity in the home: $27,000 + $16,000 = $43,000It doesn’t even COVER the drop in the home’s value. He’s still $12,000 short. And the prices are dropping even lower every day.
And this guy expects to SELL the home for $450,000.
An increase of $130,000 over what he paid for it.$130,000 / $320,000 = 40% return in 2 years, is what he is expecting.But the housing prices have DROPPED to $265,000. No one will pay $320,000 for the house now (and he didn’t even negotiate the standard 10% that they were expecting).
For $320,000 today you will get an apartment with 2 extra bedrooms and about 800 more square feet than what they have now.
Incredible.
Oh, and he now has credit card debt which he has jokingly admitted to, but BF and I suspect it’s true that he’s maxed out all 3 cards. And he now has a mortgage, a lease.. and practically no assets to his name whatsoever.
He only has the equity in the home which is $43,000 but his debt and liabilities are around $300,000. He doesn’t even own the car. It’s a lease.
On top of that, no retirement savings (minimal at best), no regular savings except for a couple of thousand, and definitely NO emergency fund.
As for the job status, he’s increasingly unhappy with what he is doing because he’s travelling so much.
He already quit a $130,000 a year job a couple of months ago on IMPULSE because he was sick of travelling so much. His wife, upon hearing the news, was SO EXCITED. “Let’s take a big trip to Mexico now that you’re free!“, she said.
With no solid emergency savings and 2 babies. They relied on credit cards at this point.
He luckily had more brains than that, and told her that he didn’t have a job which meant they were going to tighten their belt until he got one, because this was NOT the time to go on a big expensive trip with two babies.
This is the only smart thing I’ve ever heard him say, financially speaking.
But my whole philosophy on it is that he is the sole breadwinner in the family – that means he is the one responsible for making sure he makes money so they can eat.
He doesn’t seem to think that, because he has been quitting his job, his high paying over $100,000 salaried job that people would kill for (even without these hard economic times).
He was lucky to get the second job at the same salary, but imagine if he didn’t?
The conclusion?
They’re nice people. But they’re idiots, and what makes it worse is the following:
1. He’s in finance. I know I shouldn’t assume things, but I’d assume you can at least BUST OUT A BUDGET!
2. They’re unrealistic about everything.
A $130,000 increase in your home price in 3 years, when you bought it for $320,000? Take a look at the market prices TODAY and it will give you a reasonable idea of what you could sell your house for in 2 years. He would’ve seen that the prices were crap.3. The wife is truly a lazy, stupid woman.
She doesn’t know how to cook, so they don’t get to eat at home and save money because they go out to eat all the time. This would be fine, if she were a trophy wife, and he was making the big bucks and able to afford to pay for her and the kids.
BUT THEY SIMPLY CAN’T.
She also buys unnecessary items on huge shopping sprees. The first month, after living in Houston, TX should’ve been the tip off that she has a problem spending and to start the process of learning how to stop. I know. Because I had a problem spending too much in the past, and it took me a year or two to detox that kind of attitude about shopping.
When they were CHILDLESS for 15 – 16 years now, and they lived in Mexico and then Houston, TX, she never ONCE worked.
She was a stay at home wife (not mother) for 15 years.
She was at least able to work in Mexico and in Houston (we asked, she had the Visa), and she could’ve gotten a simple job as an office assistant, bringing in SOME money instead of spending the time spending it all in the malls.
And she could work by the way. She had the visa to do so in the States and even if she didn’t, you can ALWAYS find ways to make money if you are really desperate (*cough*) and at least learn how to live a frugal lifestyle and not spend all day shopping like money grew on trees.
And the worst is that one year where he lost his job and lived off the savings for the year (savings? more like credit card debt), because they were BOTH idiots and refused to get low paying jobs just to try and stem the bleeding of their cash reserves.
4. He doesn’t think anything through.
I think the best examples are him buying the house without even seeing it in person, and quitting his $130,000 a year job on impulse without any real substantial savings to do so.
I think that pretty much sums it all.
Just a girl trying to find a balance between being a Shopaholic and a Saver.
I cleared $60,000 in 18 months earning $65,000 gross/year.
Now I am self-employed, and you can read more about 
These stupid people are lucky.
They are probably worse off than you describe… A $320,000 house with a 5% dp would entail a mortgage of around $2300/month on a 30yr fixed loan. Once you factor property tax, interest, and PMI (given only a 5% dp) only a small fraction would go towards equity.
The mortgage is around $1500/month. I think they got some sort of fixed introductory percentage at 4% for 7 years and then variable afterwards.
(They got the house 2 years ago or so)
He wants to re-negotiate his mortgage interest, but since he did all the calculations being in finance, he now wants 1% as his interest
Can you believe that? 1%!!!! … He’s just living in a dream world.
O.M.G! You know, I’ve dealt with some doozies in my days in banking, but this tops ANYTHING I’ve dealt with. I’ve never, NEVER heard of anything so beyond rational thought and that’s saying something.
First, this guy needs to dig deep and find a pair because his wife is running his life into the ground. Not only does he need to put a stop to the excessive spending, he needs to get a grip on the job situation. It’s one thing to be unhappy with a job, but the number of jobs he’s WILLINGLY gone through looks absolutely horrible on his resume. As a hiring manager, I’d look for someone more stable in their work history.
Second, he really needs to sit down and take a look at his situation objectively. Put himself in one of his clients’ shoes. What would he tell them to do. If he’s got an MBA he’s not stupid. He’s simply unrealistic with his expectations and he’s got a wife that is impossible to please. He probably has a lot of pressure on him from her, but he needs to take a stand there.
Third, the woman needs to get off her lazy a$$ and get a job! I cannot believe the antics this woman is up to. She’s setting a terrible example for the kids, and frankly, her laziness genuinely worries me in dealing with two twin toddlers anyway. It seems to me she is more inclined to let them do whatever they want, regardless of consequences or personal injury.
I don’t know the whole story so I can’t speak to what goes on behind their closed doors. But, I can only imagine that this situation has put a huge strain on their marriage in general. He may need to take some time for himself to get on his feet. And I don’t ever suggest that people separate because I believe married people should give their relationship every opportunity. But, in this case, I think he needs to take some time to get his head right. Send Ms. Wifey back to mom and dad while he figures out what he needs to do. He’s clearly not able to do that with her around.
Gawd! What a terrible position to be in. Ok, off to read the newest update!
Kristy
http://www.masteryourcard.com/blog
Vom. People like this and people who call Suze Orman and who get on Oprah cry about having no money when it’s ALL THEIR FAULT. Dumb.
haha @ 1. i worked in finance for two years and even taught budget management, and yet never managed to budget myself. racked up quite the debt too. it’s amazing how well we can compartmentalize.
Interesting story…they seem incredibly spoiled. Maybe they are expecting an inheritance to bail them out.
Holy majoly. I waited to read the 2nd part before commenting. I didn’t want to burst any more eye veins (capilaries?) than necessary. Wow. I wouldn’t blame a woman for not working if she had children, and even if she/they didn’t, it is truly her/their choice. AS LONG AS THEY CAN SURVIVE OR THRIVE ON ONE INCOME. But that thriving became surviving, based on what I read here, and that surviving has dwindled. That is a very sad case. There are even online jobs if you look for them, so she could have gotten something at some point but wow… just… wow. I think I better end my comment here so I’m still family friendly 😉
Well in that case… yeah, they are definitely idiots. (Not that having medical problems would have excused them from 99.9% of that, of course, since then they should be even more frugal.)
Now for my rant…
Reminds me of a question a guy asked Suze Orman. He wanted to know what “living within your means” meant since he said it meant spending less than you earn while his wife said it just meant that you could make the payments on everything.
Sounds like this couple subscribes to that wife’s philosophy. Or course, then the slightest thing happens, they can’t make payments, then they are forced into bankruptcy. But chances are it won’t be “their fault” because the straw that broke the piggy bank’s back would be not their fault — like a lost job or cut in salary or medical expenses or the price of gas going up. Meanwhile, the rest of us have to pay the consequences for them when their debtors don’t get paid (e.g. through higher interest rates or even more taxes to fund huge bailouts to banks).
/rant
Where do you even begin?
First off let me say I am genuinely impressed by how in charge you are of finances. I mean I do my best to save as much as anyone else but you’re doing an amazing job being aware of so many facets of credit, cost, and such.
I feel bad for these people only in the sense they are so clueless and stupid. Honestly when you’re young and dumb it’s one thing, but this is going to haunt them and their children for the rest of their lives.
To the poster who said they probably have money more than millions because of the social class in Mexico…do you really think if they had millions they’d be in debt now?
So stupid of them.
Poor kids.
Wow, its rare when I actually feel smart and feel like I have a good holding on my finances. I don’t even want to finance a car right now let alone buy a $320,000 house.
Thank you! 🙂
Wow. Just wow. I just finished reading parts 1 and 2. They say “whenever you wake up, that’s your morning.” I guess this couple are yet to wake up.
I feel like someone should smack both of those morons. I pity their children. Just look at what kind of atrocious financial habits their mother is going to be teaching them.
WOW! I am really shocked by the story. The sad thing is that they are probably going to raise their kids to do the exact same thing they did….sigh.
Un-freakin’-believable. I would not be able to accept that such stupidity exists except for the fact that I know a couple who are extremely similar. It makes me want to put my head through a wall.
What a funny story. Thank you for sharing. But in fact it is not that unrealistic given the thinks I have seen lately. Here in Toronto the Buyers are scared and it shows in the numbers of homes available vs the number sold.
Please continue with the writing!
David Pylyp
Eh, if they’re actually from money in Mexico, all of this is no big deal. Mexico has even worse class division than the US. So, the rich in Mexico are really, really rich. And I don’t mean a couple million dollars.
Reading this just makes me ill. There’s nothing even to really say. Poor little babies. 🙁
With their situation, I doubt anyone would give them another credit card so what happens when there is no available credit since everything is maxed out?
Your math is a bit off. Mortgage payments do not go to equity – not most of it. Probably only a couple of hundred dollars at most go to equity for the first 7 years or so. The rest goes straight to interest. It might be they have an interest only loan, which means they still could have only 5% equity in the home. So even worse than you describe.
Some people can’t be helped to see reason.
omg i am can’t believe people like this actually exist!!!! what a lazy stupid cow! they are screwed!!! when you ask them whether they are worried for the future or not, and not having retirement savings… what do they say???
I wonder if this guy realised he and his wife’s life story would be published on the internet…
Man those people are just clueless…i could never buy a house without seeing it either. thats just ridiculous.
This story makes me feel very sorted! Why are some people so unrealistic???
I am speechless! I don’t know what to say or should even think about saying anything? God help them!
no comment.
and in this moment I feel so glad my mom set such an example, managing her money better than anyone else I know. they did some things I’d never even THINK of possibly doing!!!