The key to that whole article:
Some people lose their house or their boat to abrupt setbacks: illness, job loss, divorce. Dahmen, who works as a technology manager for a car manufacturer, belongs to a second, probably larger group: he simply spent beyond his means. He is one of the millions of reasons the consumer-powered U.S. economy did so well for most of this decade, and one of the reasons its prospects look so bleak now.
"There's a certain sense of failure about all this, to tell you the truth," Dahmen said. "There really is."
He originally bought a smaller, more affordable boat, but a salesman talked him into an upgrade. "Oh yeah, I said, that would be cool." And it was: There were many pleasant cruises during the brief Michigan summers.
The merriment came at a price, though. Toy Box cost $175,000. With the trade-in and a down payment, Dahmen ended up with a $125,000 loan. "You pay the interest up front," he observed, "and the principal never goes down." After seven years he still owed $111,000, about twice what the boat is worth. Meanwhile, he lost his condominium when his mortgage readjusted and those payments went up. His 401(k) is down to $9,000.
"I oversaturated myself with long-term debt," he said. "It was a risk, a calculated risk. I obviously lost." He is declaring bankruptcy.
what's wrong with this picture? You live in a condo, that you can't really afford once the ARM adjusts, and you buy a $175,000 boat? Was he driving a Bentley too?
. |
