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Profile in Irresponsibility

I saw this story on cnn.com's front page a few days ago but had been too busy to comment on it until now. It's an anecdote of a family under sudden financial stress:

When she was laid off in February, Patricia Guerrero was making $70,000 a year. Weeks later, with bills piling up and in need of food for her family, this middle-class mother did something she never thought she would do: She went to a food bank.

I question the journalistic value of publishing stories like this for a national audience. I see no purpose for it, except perhaps to tug at heartstrings and build support for bailouts. It's ironic, then, that this story is actually a marvelous example of someone who does not deserve a bailout. (And I'm pleased that many of the commenters there share my sentiment.)

I have very little sympathy for Patricia Guerrero. She was financially irresponsible, and I'm incensed that politicians will be falling over each other pledging to solve her problems with my tax dollars. Let's review the relevant facts.

She couldn't afford her home to begin with. Her mortgage costs $2,500/month, or $30,000 annually, yet her income was only $70,000! Even worse, she had an interest-only mortgage… she was paying over 40% of her income on interest and building no equity at all! The jaw-dropper here is that she was a loan processor before being laid off — she, of all people, was in a position to know the risks of a mortgage like hers. (The story didn't say whether she processed mortgage loans, but I expect anyone working in the field to have this kind of knowledge.)

She had little or no savings, probably as a consequence of this unaffordable house. She was laid off only two months ago and she's already at the end of her resources. Despite drawing unemployment checks and having her mother move in with her to split costs, she used up her tax refund to pay bills and is now going to the food bank because she can't afford to buy food for her two young children.

The story does say that she is estranged from her husband, but there is understandably no additional detail. I wonder cynically whether he didn't want to be with her because she was financially irresponsible. (Of course it could have been for many reasons).

It is irresponsible to be at her station in life — good-paying job, husband, kids, house — without having a solid financial footing. She should have had an emergency fund in case she lost her job. (Especially if she processed mortgage loans, she should have seen the writing on the wall months ago.) She should not have bought a house she could not afford. Yes, she lived in California, but she could have rented… or moved somewhere affordable even if that meant leaving the state. Most importantly she should not have brought two children into the world when her financial situation was so precarious. Those children deserve better. (But not on my dime, take careful note.)

She should sell her house. She can't afford it. Get out, get out, get out!


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