Edmund L. Andrews’ recent piece for The New York Times, “My Personal Credit Crisis”, is a fascinating but also frustrating excerpt from his upcoming book, Busted: Life Inside the Great Mortgage Meltdown. In “My Personal Credit Crisis,” Andrews recounts the story of how he went from being a financially stable journalist with a great credit score to becoming a husband and father so deep in debt that he would lie awake each night awash in dread and anxiety.
I’ve read Andrews’ piece twice now, and must admit that I’m still unclear as to what point he is trying to make. Was the purpose simply to print this excerpt in order to generate demand for Andrews’ book and thereby increase the likelihood that he will make lots of money off the deal and hopefully pay down the debts he rather recklessly acquired? Is the point to make those in foreclosure feel less guilty about their predicament? After all, Andrews himself makes it clear that, because of his role as an economics reporter for the Times, “If there was anybody who should have avoided the mortgage catastrophe, it was I.” Perhaps his goal was a combination of both, in which he would help alleviate consumer guilt while at the same time recouping some of the financial losses he’s suffered over the last five years.
Much of my frustration with Andrews’ article comes from the way he moves from self-directed anger to an apparent urge to blame other people for the situation he’s found himself in. The effect is that he seems to be telling the reader, “I’m so mad at myself for letting these other people–my wife, my mortgage broker–influence the decisions I made.” In the beginning of the article, he is up front about the fact that he probably couldn’t afford the home he wanted to buy. He notes that in his first conversation with his mortgage broker, “I told him about my child support and alimony payments and said I was banking on Patty to earn enough money to keep us afloat.” Patty is Andrews’ wife, who–it’s worth noting–did not have a job at the time when they bought the house. So Andrews went into this situation knowing that he couldn’t carry the mortgage on his own salary, and thereby put his wife in the position of needing to find a job with the right salary requirements that would allow them to afford this house they were so anxious to move into.
Andrews explains that he was able to secure the kind of loan that would allow him to avoid stating his income (I will leave you to ponder why such a loan is even an option for people in the first place), and because of that option, he wouldn’t have to worry about his “debt-to-income ratio.” As he puts it, “I could have had four other mortgages, and it wouldn’t have mattered. American Home was practically begging me to take the money.” His language here offers an interesting semantic shift of blame: As an economics reporter, Andrews presumably understands money better than some of the less money-savvy folk who took on mortgages they couldn’t afford because doing so seemed to mark their entrance into the “ownership society” that our previous president spoke of so often as a key component of the American Dream. But despite his superior knowledge of finances, Andrews accepted the loan because “American home was practically begging” him to do so. In other words, who wouldn’t turn this offer down?
Once Bob (the mortgage broker) is out of the picture, Andrews moves to blaming his wife for the couple’s money troubles. After five months of living in their new house, Andrews discovers they are officially broke. He panics, while Patty seems to try to remain calm. Andrews says, “We had very different ideas about money. Patty spent little on herself, but she refused to scrimp on top-quality produce, Starbucks coffee, bottled juices, fresh cheeses and clothing for the children and for me.” In other words, Andrews is a frugal sort, while Patty buys top-of-the-line and won’t sacrifice quality, no matter how little money she has. While virtually anyone would agree that when one is low on cash, the first things to fall by the wayside will be fancy cheeses and regular trips to Starbucks (assuming, of course, that these indulgences are already part of one’s daily life), we must not forget that Andrews not five months prior signed a loan for a house that he knew he couldn’t afford. Though he tries to paint himself as “almost exactly the opposite” of Patty because his “answer to any money squeeze was to stop spending,” noting that he “would skip lunch at work to save $7,” it’s hard to imagine who would believe such a thing about him since his “answer” to his previous “money squeeze” was to skip out on renting a house or an apartment when he and Patty moved in together and instead purchase a home whose mortgage payment would swallow his entire paycheck every single month. But I guess Andrews feels that because he never kept his fridge stocked with brie, the reader is supposed to think of him as a real penny-pincher. To do so, however, one would have to disregard Andrews’ admission that–for all his talk of being conservative in a “money squeeze”– the couple still spent over a thousand dollars on Christmas gifts at the height of their ‘personal credit crisis.’
As the months passed, the couple amassed some $50,000 in credit card debt, much of it due to the overdraft protection that they had for their checking account, “protection” that paid overdrafts by drawing $100 from the couple’s MasterCard every time they were overdrawn (which was often). Again, this is apparently not the couple’s fault, because of “how easy [their] bank had made it to build up debt.” First mortgage broker Bob “practically begs” them to take a half million dollars, and now their bank tempts them into mounting consumer debt–Gosh, when will these money lenders stop conspiring against these two?
This article of course is troubling for telling the tale of someone who should have known better falling prey to promises of easy money that would guarantee him a slice of the American Dream. It seems to beg the question: If this man whose job is to understand loans and economic patterns could find himself caught up in the spiral of taking on debts he may never be able to pay off, what hope do those of us who are less well-versed in the intricacies of mortgage lending and economic fluctuations have in trying to understand the terms of those big purchases we might make, and whether or not we can really afford them?
But that doesn’t seem to be the real lesson of this piece. Instead, to this reader, at least, Andrews’ article stands as evidence of the need for all of us as Americans to question the cultural values that tell us that the size of our home or the neighborhood we can afford to live in or the kinds of gifts we give our children are the things that measure our worth as human beings. We talk a good game about knowing that we aren’t our stuff, but that seems little more than a bumper-sticker sentiment in a society whose very economy is built on the idea that people need to keep buying things–not just necessities like food and clothing, but the things that in other cultures would be huge extravagances: granite counter tops and multiple cars, DVRs and frequent dinners out.
Even now, as we read reports and hear of people dialing back their spending in these uncertain times, it appears we haven’t all gotten the message–that living our lives according to what we can afford is not just a short-term response to the current financial catastrophe, but a long-term formula for greater personal peace and stability. Case in point: just today the Times reported on the fact that falling rents in New York City are making it possible for teachers and others with lower incomes to afford nice apartments. Toward the end of the article, one lower-income renter admitted that he is willing to “pay beyond [his] means for the location” he wants to live in. So even with evidence all around him that paying beyond one’s means is the worst financial mistake one can make, this young man still thinks it will somehow be worth it for him to do so, just so he can live in the “right” neighborhood. It might be easy to write this man off as an anomaly, someone who just doesn’t get it. But we must remember that he, like Mr. Andrews, is a product of the culture that collectively asks, “When are you going to ‘settle down’?”, a question that usually means, “When will you stop renting?” or “When will you buy a house, or get married and have kids whether or not you can afford them? Why do you live in that neighborhood, or wear clothing you got at thrift stores?” In asking these questions, we continue the myth that “status” comes not from what we have contributed to our families, our communities, or our society, but instead issues from the material markers of financial “success.” As long as we seek to uphold this myth, we can expect to continue to see ourselves and those around us getting in over our heads just to be able to say, “Look–I’ve made it.”