Pajamas Media

111 Comments

1. jvon:

Carol,

I feel for you. Between the real estate dive, a divorce last year, and then the stock market debacle, somewhere around 80% of my savings have been wiped out. I certainly would have been better off stuffing it in a mattress. Ironically when I talked about buying a large amount of gold after 9/11, my father sarcastically remarked that I could start buying gold ingots and bury them in the yard like some kind of lunatic; a rational analysis of what actually transpired shows that that would indeed have been an excellent strategy.

Apr 26, 2009 - 12:25 am 2. D.F.:

I’m 56, and another refugee from the TV biz, but in Hollywood, not the U.K. I have some pension money coming from various Guilds, but as one example–one of the funds that, per my most recent statement, was worth $81k at age 60 to me on Jan 1. 2008 was worth $61k on Dec. 31 2008. You can only take so many 25% hits before there are no percents left. But the biggest thing I’ve done to stay solvent is this: Pay cash. No mortgage. Pay off debt. Unlike most of my peers whose futures are in hock at huge interest to Mastercard, Visa, and Co., my wife and I owe an ever-descending $5,000 to the world and own our home free and clear. I won’t buy another until/unless I can buy it for cash outright, and I’m planning to do that in another state where insane taxes and huge cost of living aren’t the status quo like they are here in California–my native and once-beloved state now become unliveable thanks to big government spending sprees and the taxes and fees which inevitably follow. The problem, therefore, isn’t being a “right winger” or a “capitalist”–it is in buying the financial industry’s pitch and the “just trust us, we’re experts” kind of elitism that, in goverment nowadays, is the left-lib-Obama-Pelosi-Clinton gang’ stock in trade. To paraphrase an otherwise-abominable racist, “When I hear people tell me how much smarter they are than I am and how much they’ll help me and take care of me….I reach for my pistol.” Or in my case my automatic. Which, right-wing capitalist that I am, I paid cash for, too.
P.S. I’d like to buy those books Carol wrote, but the Amazon links are to their U.K. version only and won’t sell/ship here in the USA.

Apr 26, 2009 - 3:34 am 3. RightwingHippyChick:

“I knew that behind my back they were making cracks about “Jews are always the best with money” but it did not faze me.”

Why bring this into the discussion when you don’t know if they really did(as it was supposedly behind your back)? It really is tiresome that you have complain of imagined racism everywhere almost every time you write anything here, save it for the all-too-often times when you have real grounds of complaints.

Next, a little casual research would have long ago told you that your investment strategy is not going to work, because it can’t, by definition. You don’t need read Warren Buffets books to figure out that investing with mass-investment schemes via a middleman with a snazzy office and a fancy car is always a bum deal — common sense could have told you that with a small back-of-the-envelope calculation, moreover, there is plenty of financial entry level literature out there that explains all this. There is no magical make-money-fast enterprise anywhere!

Maybe not believing the stereotypes as much as you do would have been helpful here

Apr 26, 2009 - 3:53 am 4. John:

She took out an interest-only mortgage, and was shocked when she ended up with no equity?

Apr 26, 2009 - 3:56 am 5. Dougf:

I commiserate with you and your situation. I’m sure you know that sooner rather than later someone commenting here will blame you for your current mess. Can’t be the fault of a broken, dysfunctional, and tilted ’system’.

One does not have to be a ’socialist’, or ‘worse’, to see that greed ,cupidity, avarice, and venality, and ‘insider influence’, are the hallmarks of the current incarnation of ‘capitalism’. The creatures running the asylum now are giving the whole concept a very bad name. While the ‘managers’ loot the assets, pad their expense accounts, bet the farm on whatever might make them look good in the next quarter, and behave as if they are the ‘Masters Of The Universe’, the rest of us are in precisely your position, whether we know it or not. But in our cases the other shoe has not dropped.

Yet.

I DID put my money under the mattress after the 1986 Stock Market collapse. I just could not understand how a system could lose so much value so fast. And I still can’t. But after I began to think of the ‘process’ as a GIANT Ponzi Scheme indulged in by largely ‘irrational’ people, it made a lot more sense. As long as new suckers are willing to continuously throw their money into the morass, everything goes ‘well’. It’s merely supply and demand in action. Intrinsic ‘values’ be damned. But when the music stops —— you really, really, Really, need to have a firm grip on ANY available chair because someone is going to be in the hurt locker.

The only thing you can rely on is that the ones doing the hurting are very likely NOT the ones who drove the vehicle over the cliff. Those people are blissfully looking around for the next group of SUCKERS( ooops I mean ‘Investors’.) And sooner or later they will find them. The supply seems endless.

Apr 26, 2009 - 4:33 am 6. JFP:

OK, you had a house here in the U.S., and a flat in St. John’s Wood. I’m not quite clear as to why you needed two residences. You could have sold the house here in the U.S. so that you could have bought the flat outright. Then you wouldn’t have needed the endowment and the interest-only loan. Or if the money from the house wasn’t enough to pay for the flat, at least it would have put you in a stronger position than what you were in with this interest-only loan plus endowment.

Also, was it necessary to live in such an expensive part of London?

Finally, it was very idealistic of you to give up a good-paying job as a protest against your employer’s racism, but what I found after years of being on the left is that you can support their causes all you want, but when you get in trouble, they won’t lift a finger for you. I just won’t support them anymore. And Marxists talk a good game, but look at the results. It’s still the poor at the bottom, plus the middle class gets dragged down there as well. And think of the shortages.

As for what to tell you goddaughter, tell her to concentrate on the basics first. Pay off your house as fast as possible, and put money in the bank where it is guaranteed before you put it into an investment that is not guaranteed.

Apr 26, 2009 - 4:49 am 7. HalifaxCB:

I do feel sorry for your position, but I have to add that your story pretty much exemplifies what’s wrog with Western economies in general. Most people think in terms of accumulating capital (or capital goods) as the road to wealth – and certainly for some it is. But in general it’s always been a very dicey road. I tell my kids that if they want to be independent, what they really need to do when young (actually throughout their lives) is accumulate useful & marketable skills that can be extended outside their natural domain, and sharpen those as much as possible. I don’t care if it’s extreme sports, auto mechanics or astrophysics (I mention those because they are what my offspring do); the point is that they should be adaptable to other fields. And above all learn to be self-reliant.

That last I cannot emphasize too much. We start off life as totally dependent, and individual growth involves moving away from that. We are geneticaly designed so that childhold should end by the late teens, yet we have created a society that prolongs it well passed middle age. That’s perhaps ok when nothing goes wrong – but the natural chaos of life pretty much guarentees that what can go wrong, will. One has a choice of either learning to adapt to that chaos , or looking to “leaders”, the state, or society to protect us from it. The first gives you independence with all its attendent discomforts; the latter, servitude. Pick yer poison (I prefer the first)

Apr 26, 2009 - 5:01 am 8. Right Brain:

Notably Japanese view residential property, at least in their own country, as always going down, similar to the way we view an automobile purchase. No one buys an ordinary car and expects to sell it for more in the future, but with property many Westerners did; many believed improbably that their house was earning more than they were. Whereas the Japanese have actual savings greater than any other industrialized due to the simple procedure of putting money in a bank at CD rates and leaving it there.

Had Ms. Gould done that, over time, with the same earnings, she would be wealthy.

Apr 26, 2009 - 5:23 am 9. Douglas:

I jokingly told my wife I was buying an airplane with the proceeds of my retirement package. Instead, I invested in relatively conservative mutual funds. I wish I had bought the airplane, unless I crashed it, it would be worth more than the mutual funds.

Apr 26, 2009 - 5:39 am 10. vsatt:

I’m sorry for your situation, but anytime you’re taking out an interest-only mortgage you’re taking a big big risk. The only way you can have equity is by the property value going up since you’re never paying down the principle. Plus, you indicated you had to struggle to get that mortgage which tells me you were probably buying more than you could really afford.

As for buying into the endowment plans, you were basically looking for your investments to pay off your mortgage rather than paying it yourself over the years. Another big risk. And to buy the 2nd endowment you took out a second mortgage on your home — going further into debt to make an investment to pay off said debt — that’s crazy!

Bottom line here is you built up a huge house of cards that may pay off for some people but as you can see, when it doesn’t pay off the results are catastrophic. Don’t blame the system, YOU took those chances. With investments there are no guarantees and anyone who’s honest with themselves should know that and should not invest more than they can afford to lose.

Apr 26, 2009 - 5:56 am 11. longun45:

Unfortunately, Capitalism had little to do with the bad decisions she has made to get to this point. This article reads more like a why I am a miserable person, speculative savings only? gambling on house values, interest only mortgage ( that’s insanity).

Apr 26, 2009 - 5:57 am 12. Cato:

Rare is he or she among us who has not suffered significant loss over the past couple of years, and it’s impossible not to be empathetic here. What strikes me, however, is the high degree of risk knowingly assumed with an “interest only” mortgage, even with an “endowment plan” to provide a guarantee and a lump sum at term end (which sounds like it was not enough to pay the entire principal of the mortgage). Risk increased when a second endowment plan was funded with equity withdrawn from the property. It sounds like at that point the flat was “under water” — worth less than the total debt. I presume England does not have “anti-deficiency” and/or “single action” statutes that essentially allow a mortgagor to walk away from the underwater property and leave it to the lender – losing whatever initial equity she or he had, but without further liability.

And, then, Ms. Gould found out that the “endowment plans” had pretty much tanked. Ouch. One wonders what rates of return had been promised in these plans. Were they substantially above low risk rates of return? What were the quality ratings of the plan providers? What were her alternatives?

As to the pension scheme at Anglia, was it entirely managed by someone else, or did she have options to take greater or lesser risks?

With reduced property values, it seems to me the risk of the 2002 BOS equity withdrawal plan was excessive. When more could not be had from the property and there was a property boom, did Ms. Gould consider selling and clearing debt and reducing risk? No. Well, perhaps the proceeds wouldn’t have covered the debt at that point even so. Who knows.

Throughout this all, it looks to me as if Ms. Gould consistently decided to take on additional risk for the hope of greater returns. Most people, apparently including Ms. Gould, don’t understand (or don’t want to accept) that “risk” is real and that rates of return significantly above the “riskless” rate of return on treasury or equivalent securities (which represents the ‘time value of money – historically about 3% over the past 200 years – plus the anticipated rate of inflation) mean there is a significant risk of loss of principal. The key concept is “expected value” — if there is a 10% probability of total loss and a 10% return on a $100 investment, there is a 90% chance you will end up with $110 and a 10% chance you will end up with 0. If you’re speculating with money you don’t “need” — that is, if you lose the principal you will not suffer serious consequences — that may be a reasonable risk to take (depending on your appetite for risk. But, if it’s money that you literally cannot afford to lose, it’s a bad bet because you cannot afford under any circumstances to accept even a low risk negative outcome, as here.

Apr 26, 2009 - 6:00 am 13. jimpres:

Carol, I can relate to your story. At 71 I too am broke and have nothing after making plenty of money throughout the years. I was married to Mrs. Obama (phoney name) who thought you could spend your way out of debt. Well lost all my stock, home, bankruptcy and credit cards.
I am her to tell you that spending can NOT get you out of debt. Been there done that and it took 20 years of my life. So at least I am better off then you because I have SS. Luckily I have healthy.

Apr 26, 2009 - 6:18 am 14. Carol Gould:

RightwingHippyChick: I should have mentioned — glad you flagged this — that at Anglia I was one of only three Jewish members of staff in a workforce of 900 in 1981. My colleague John Rosenberg (I was Drama Commissioning Editor to his Head of Drama) used to joke that he walked up the main street in Norwich and could ‘feel’ people staring at him. This was true: one of the secretaries up there, an otherwise darling and very kind woman, said ‘I’d never seen a Jew until John came up to Anglia House and my family has been in Norfolk for 800 years.’ It was not meant in a malicious context; another secretary said she thought Jews had horns. If you think this preposterous, in my film ‘The Jewish Evacuees’ Sonya Serlin, who was evacuated to Wales during the Blitz, said she was asked to come to the Church Hall and the village had lined up to look behind her ears to see that she did not have horns. Absolutely true story. These were generous and good people whom she grew to love in her years away from London, ther East End of which Hitler bombed to smithereens because it contained the largest connurbation of Jews. Getting back to Anglia and Norwich: the city was, after all, the location of the Norwich Bllod Libel and the Jews were expelled in the 1200s not really ever to return. There is still no synagogue in Norwich. The myths about Jews perpetuate and ‘c’est la vie.’ It may

Apr 26, 2009 - 6:21 am 15. Carol Gould:

Cato, I think my final thought in the article still stands: tell your grandkids and godchildren to save in a piggy bacnk or mattress.

Apr 26, 2009 - 6:23 am 16. Paul:

You should of gone to work for local,state or Federal government, or one of its supported industries, like the paper mills of Academics.

You could of been working on your second pension by now. Granted you would of been bored into living brain death, but you would of been comfortably numb, retired and will full inflation( its coming ) benefits.

Apr 26, 2009 - 6:38 am 17. coniston:

You seem a very nice person, but your poverty is not through “no fault of your own”. I also moved to England (18 years ago) and one of the first things I learned from just asking around is “never get a endowment mortgage unless you have to – and get rid of it as soon as possible. It’s a bad investment.” It seems that you failed to ask for any professional advice when you made all of these investments. You put thousands and thousands of pounds/dollars into ventures that you did not bother to learn about. What was the rate of return? What was the risk? How did they compare to common stock or mutuals or whatever? Merely reading the financial pages of the newspaper could have given you that knowledge, not to mention specialist magazines and books. You put most of your eggs in one basket – another very basic investment no-no.

Pardon me if I sound harsh, but that is not the life of a capitalist, it is the life of an idiot. Starting now – learn about simple principles – I still recommend “The Only Investment Guide You’ll Ever Need” by Andrew Tobias, cuz 20 yrs on it’s still sound (it has been revised twice). You will kick yourself when you see how easy it would have been to avoid your mistakes, but start now and use sound principles and you may still end up being a wealthy woman.

Apr 26, 2009 - 6:43 am 18. Paul:

“..their East End of which Hitler bombed to smithereens because it contained the largest connurbation of Jews”

No. It was the industrial area, near the port and docks. Bombing even in clear weather then was a plus or minus miles type affair. I doubt the Luftwaffe had any idea of who lived there, other than the usual working stiffs found anywhere near ugly, job employing industrial areas.

Apr 26, 2009 - 6:44 am 19. Meryl:

I like what JFP.6 said, and I don’t equate what was said there with “it’s your own fault”.

There are realities that can be dealt with, sometimes by hanging on the money that actually is made, instead of always trying to make it in to more money.

If we persist in the economic myth that “everybody can and should make MUCH more money than they already have by using paper and pushing it this way and that way…right on time…juuuust right”….then we actually are saying that everybody has to do it the same way to survive.

That just isn’t true. Ask the Amish. They are one part of our culture that will barely be touched by the current financial chaos.

Ms. Gould’s motivations, efforts and skills in investing are not the issue.

Hesitate to make the point, but I’m already (over the past 12 months its getting to be a common thought again)getting tired of the refurbishing of the– “Jews make all the money” accusations and then the defenses against it– routine. I’m a 65 year old Gentile who was taught from childhood to respect and honor the Jews. End of story.

Apr 26, 2009 - 6:48 am 20. Stephen:

Okay, so lets say you were born and raised in Cuba. What result would you have expected for your life? What dreams of success and a wealthy retirement? I don’t mean at 55 – I mean during your lifetime. What experiences and chances? Maybe you would have dremed of getting on a small boat and making your way to America. Maybe you would just have accepted your lot in life as a commoner with Papa meeting your every need. Or maybe with some good looks and proper connections you could have entertained the political class and been set for life. Or maybe your right wing ideas and capitalist dreams would have landed you in prison. Sometimes it is the journey – no it is always the journey and the attitude. 55 years old. I’m 58, an American capitalist who owns a small business I built from the ground up with my wife. We work hard and hope to have some retired years when we can pass on our work to someone else – but it is the work, the journey, the now of it all. Damn the torpedoes. You’ve laid down and died over some lost investments. You may live another 30 years!!! Good grief, take a deep breath and get out there and live.

Apr 26, 2009 - 6:53 am 21. Cato:

My father, who survived the loss of family money in the depression, became hyper-conservative with money thereafter, to the point of caricature, did just that: after his death close to 20 years ago we found around $100,000 hidden among his things around the house. Even with an uncle who had been a director of one of the largest banks in the world for almost 30 years, he did not trust banks or investments! So, I know how you feel, and I’ve lived it.

I don’t think that’s the answer, however. I think the right approach to saving is to distinguish first between ‘can’t lose’ money and ‘risk’ capital. Whenever you save – first I suppose to a piggy bank or insured account – at least in your own accounting allocate say 80% to ‘can’t lose’ and 20% to ‘risk capital’. When you have some 6 months living expenses in ‘can’t lose’ money, you might want to adjust your percentages.

Can’t lose money should always be invested in ‘riskless’ investments – treasuries or equivalents such as insured CDs. No matter what. That’s what I did with my kids college money, and, while I missed the huge gains of the internet boom (and was berated by my wife), I also didn’t lose anything and managed (just) to get them both through 4 years of private universities without either we or they borrowing. I had hoped it would also cover graduate school, but prices have escalated faster than I could accumulate riskless capital, so they’re on their own for that.

The only people I know for whom ‘interest only’ mortgages make any sense are those who have other assets worth far more than the mortgage amount (as well as significant equity in the property) and are paying a lower “rent” on the mortgage than they are receiving in their return on other assets and are in a position to pay the mortgage off easily if the rent goes up. One friend actually has an interest only mortgage at a rate below what he’s getting on a collection of insured CDs, even taking the tax effects into account.

Over time, you can build up your ‘riskless’ money. As your ‘risk’ money accumulates and you make some risky investments, many times you’ll receive good returns from them. When you do, use those gains to add to a significant part of you gains to your ‘riskless’ portfolio. When you make a risky investment, set parameters: if I make X gain, I will take the gain, putting at least half the (post tax) gain into ‘riskless’ portfolio and making another investment with the risk ’stake’ plus the remaining gain. Have a stop loss plan – once you’ve built a bit, you could make the stop loss set so you you’re only taking a risk with the ‘gain’ from the last investment, not the ’stake’ that started the last one.

The problem, of course, is catastrophic losses. Read Nassim Nicholas Taleb’s The Black Swan and similar works. It will explain this far better than I can.

Apr 26, 2009 - 6:59 am 22. Roger Godby:

Right Brain has a point abotu Japanese real estate, but the population’s shrinking and its the land, not what’s on it, that’s usually most valuable; but given the demographics, that doesn’t matter. Given Japan’s national debt around 180% of GDP, I keep waiting for inflation or forex collapse to erase those savings. Accordingly I oppose the piggy bank.

If you kept US citizenship, do the US and UK have a national pension agreement? If so, you should be eligible for SS. At 55, you might even be able to draw a bit before it collapses. What is the UK national pension worth? You might be able to pick and choose.

Marketable skills are certainly very good, but running your own business is probably best, if possible. After all, you can work as long as you’re healthy and thus won’t force yourself into early retirement or replace yourself with an H1-B.

Sexist it probably is but true as well: If you’re male, you can make your savings go farther by marrying a female in a developing country, although that can bring its own special hells, depending.

Apr 26, 2009 - 7:03 am 23. Cato:

I would add the ancient conservative Swiss banker formula for ‘risk’ money — Only use the “interest on the interest” for further investment. Ignoring taxes for the moment, if you invest in year 0 at 4%, at the end of the year you have 1.04, and at the end of the following year you have 1.0816. It’s the .0016 that you can withdraw and use for risk capital.

It’s slow — this is a strategy followed over generations — way to preserve the approximate starting value of principal over time (that is the interest that accumulates is your time/inflation value protection), and at the same time to free up a little for risk-taking.

Apr 26, 2009 - 7:08 am 24. DanO:

To all: anyone, on either “side”, who considers that the term “Capitalism” should even be mentioned here is completely ignorant of both Economics and History. The “free market”, unfortunately, has never been tried or ever existed. Some Western countries came close in the 1800’s, the U.S. in particular, I’m sure others…but that’s it.

Any country with a “Central Bank” is by definition not Capitalist. Read the latest scandal in the US about Bernanke et. al., and you’ll know what “economics” caused both the bubble and the collapse of real estate values, as well as any “boom and bust” cycle ever. It’s always about bad money and inflation. Always.

(And don’t say there has been no inflation. Unless you believe government stats. Let me digress:

The correct definition of inflation is NOT an increase in prices, but an increase in the money supply. See the 1920’s, where “prices” were stable (except for the stock market), because of productivity increases…but an enormous amount of fiat money was being pumped into the economy by the Fed…for the results, see 1929 and the 1930’s)…

As for Miss Gould, I both sympathize and yet say “caveat emptor”.

I am 59 and penniless, due to putting everything I had into my (former) house in 2000. I saw this coming 4 years ago, and put the house up for sale then.

Being in Michigan, and too close to Detroit, I was still 6 months too late. It never sold…Fannie now owns it, and good luck to her, and I look forward to an easy apartment (er, flat) life…but I still have a job…and have no complaints…

I take that back:

I AM surrounded by auto workers in my age range still crowing about their “guaranteed retirement packages”…some who “retired” at 50 or earlier (30 and out was the catch phrase, I know it well. Yep, in hindsight, I should have been a good ol’ boy and stayed in the UAW, instead of going to grad school)…

And I love irony. Here’s a headline from Rasmussen:

“Michigan Voters Say Auto Bailouts Good, Bank Bailouts Bad”…

On the record, one Michigan voter says: both bad…let them fail and get this over with ASAP…let the markets adjust (after all, this is about mere financial value, not physical value)…and we’ll see a real boom within months…

Chances of that happening in this administration: 0%.

So, hang in there, honest folks…hopefully, there will be a real choice for “change” in 2010…and not too much “damage done” before then…

Apr 26, 2009 - 7:28 am 25. Tolbert:

I am about your age and could have found myself in similar circumstances, I haven’t though.

I have assiduously avoided debt and using my house as a magical never empty piggy bank.

I have driven the same car for 13 years and intend to continue to maintain and drive it for another 10.

Have my 401k’s taken a hit? Hell yes, they are down about 25% at this time and probably will get worse.

My advice to my grandkids? Don’t buy anthing you don’t have a need for and if you do have to borrow money – pay it back as soon as possible and don’t always be relying on the next paycheck to survive.

Apr 26, 2009 - 7:32 am 26. brine:

Well said JFP and vsatt.

Man… Carol you sound bitter on this one… Marxism… Really…

Unfortunately, in this case you are your worst enemy. Easy to blame someone else for decisions made with presumptive arrogance.

Interest-loan only…
Wealthy part of London…

Where is it written that the world owes you something?

Apr 26, 2009 - 7:50 am 27. Tony R:

CG writes – “What advice do I give my goddaughter? Perhaps mattress money is the answer.”

How about telling them “Never buy what you can’t afford.”

Or how about telling them that there is rarely such thing as free money and that investments involve a thing called RISK.

Its tiresome listening to people harping on about the lack of free money they should have received over this or that shaky investment or why they haven’t made huge profits on mediocre assets. Nobody owes you anything.

Apr 26, 2009 - 8:06 am 28. Webutante:

My heart goes out to you. And there’s some good advice here in the comments. Also, are you familiar with the get-out-of-debt expert and syndicated financial radio host named Dave Ramsey? He’s been bankrupt and knows of what he speaks. He dished wisdom daily on how to proceed and principles to carry forward. He also has a course across the country called Financial Peace University and several excellent books. There’s hope if you’re willing to listen and have the discipline to do what he and others here are saying.

Apr 26, 2009 - 8:45 am 29. JCW:

Ms. Gould,
Had you not responded to the comments, I probably would not have sent this. But you chose to respond to the prescient points made (in particular, the interest-only mortgage) by citing the anti-Semitic comments of one secretary. This begs the question of why were you not more skeptical of financial plans and alternatives. BY commenting on the motives of this “otherwise darling and very kind woman,” you seem to want to shift the focus of your predicament away from your past choices.

Apr 26, 2009 - 8:46 am 30. GlobalObserver:

For years I endured criticism for buying real estate free and clear — and not taking out a mortgage when interests rates were so low.

Everyone told me how idiotic I was to keep cash in low-interest savings accounts, or wrapped in rubber bands in a lock box.

I would never make a fortune, I was told, unless I learned to leverage. Inflation would kill me.

But I felt too stupid. I didn’t understand the stock market, and still don’t. I only knew how to save, and how to live on next to nothing.

Sometimes stupid works.

Apr 26, 2009 - 9:14 am 31. The UnPatriot:

I have hard time feeling sorry for Ms. Gould. Every decision she made in her effort to be a “capitalist” was fraught with a high level of risk. She, along with millions of others, are actually part of the cause of the current situation we now find ourselves in and it really has nothing to do with being a capitalist or a “right-winger.” Interest only loans and investments with “guaranteed” returns are always a bad bet in the long run. Every third sentence in this story seems to be about how to turn hard earned equity into cash. But, to do what with it. If it was to throw into other high risk investments – bad idea. If it was to be able to buy food and keep the lights on – bad plan. Living beyond one’s means for 30 years is a recipe for disaster. For an airplane pilot, this is known as being behind the power curve. A crash is inevitable. Being a “capitalist” includes understanding the risks associated with our financial decisions and a big part of the problem is that basic education about finances and economics do not address these at all. Don’t get me wrong, I certainly applaud Ms. Gould’s ambition, hard work, and desire for a good life and wish her and others in her situation well.

–The UnPatriot

Apr 26, 2009 - 9:15 am 32. Meryl:

Ditto what Webutante said about Dave Ramsey’s material. Magnificent stuff. Practical and useful for anyone at ANY point in financial success or disaster.

Apr 26, 2009 - 9:24 am 33. David Thomson:

Carol Gould should be angry at too much governmental interference in the market. Much of the mess in the United states is a direct result of the Clinton administration forcing lending institutions to provide mortgages to minorities possessing poor credit histories. Corporatism is our enemy. We can not allow the government to pick the winners and losers in the market place. It merely has the duty to play the role of “traffic cop.”

Apr 26, 2009 - 9:27 am 34. texasgirl:

Capitalism is not without risk and not everyone will “win” but at least we all get the chance to try.

Apr 26, 2009 - 9:34 am 35. Joe Bison:

My philosophy has always been pay off your
mortgage first. Then keep a certain amount
of cash in savings accounts for rainy days.
Avoid a lavish lifestyle.

Stock markets-invest what you can afford to
lose. Buy when people are selling and sell
when they are buying. Ignore hype or the
feeling you are losing out on easy money.

As you get to retirement switch more
investments to cash. You may not end up
rich, but you won’t be poor either.

Apr 26, 2009 - 9:54 am 36. steveg:

This story brings to mind Bernie Madoff and all the financial suffering he has brought to many lives. There were many who entrusted their entire life savings with Mr. Madoff and the outcome was financial ruin.

I am 53 and have retired early because I made myself become responsible in saving and spending (I am the absolute opposite of the US government). I went through all the pitfalls of life such as gambling problems, negative networth,etc.,but you have to reach a point in your life where you say “I am going to turn this around”. If you never do this you are doomed for a uncomfortable later life.

The American people just like the US government have been over-extending themselves for decades and even after this most recent major setback it would appear they still have not learned thier lesson. Credit is cheap again and the government is giving every incentive possible for everyone to go out and spend like drunken congressmen/women again.

Too many Americans who voted for Obama are now expecting the government to take care of them cradle to grave. This is socialism, and socialism with time always fails. As Margaret Thatcher once said, “The problem with socialism is that you eventually run out of other people’s money”.

Apr 26, 2009 - 9:56 am 37. RightwingHippyChick:

Ms. Gould:

Yes some stupid people do and say stupid things, but most of them time they are ‘racist’ because they are stupid, not the other way round. We have to of course do something about those beggars, but really, they are not the reason why you’re looking at poverty in old age nowadays.

As for your latest tip of piggy bank/mattress, you still haven’t learnt your lesson I think

Investing is hard work, you have to research what you’re investing in, do the math and maybe then you not only hold the current wealth you have, but also increase it. It’s not easy at all, and anyone who promises you returns that are good enough to make you and them rich is plain lying and trying to steal from you.

Money doesn’t materialise by magic, someone somewhere has to earn it, you were sold the fancy dream that by financial magic all you boomers will turn 30 years of work into 20-40+ years of retirement holiday at nearly the same burn rate of money as you spent in your prime.

You handed those magicians who sold that lie the free money to gamble with — those CDO’s and other stuff that scare everyone were bought with your very pension money. Can you be blamed? I think so, yes. Your generation had excellent education in English, History and Mathematics, there are lots of precedences you can look up in free libraries, and a simple calculation should have told you long ago that pensions are a Ponzi scheme that cannot (and will not) be honored by the next generation.

Btw, you probably lost more in fees for the investment sales people than you’ve lost in actual value of your money.

Anyway, that all said, it’s also good luck that your generation is probably the healthiest in all of human history. The punishment you got is harsh, but nothing can bring that money back, you need to look forward now. And it doesn’t look all too bad, it’s very likely that you will be able to work (and enjoy it) until your late 80’s — it used to be the case that people who retired died within 2 years and I remember old folks who would refuse to stop working for fear of this.

So, settle in for a longer productive life, all you’ve lost is the free ride which never was going to happen anyway.

Apr 26, 2009 - 9:57 am 38. 98ZJUSMC:

Yeah, I don’t know how anyone with financial sense takes an interest only mortgage. If there’s some advantage I am unaware of, I wish someone would clue me in. I have a paid for, free and clear house, 2 paid for vehicles, no credit cards, monthly Military income for the rest of my life. Unemployed when Circuit City went down the tubes. Have no idea if I will get another job.

Apr 26, 2009 - 10:12 am 39. Tim:

Right. Refuse to accept responsibility and then blame others. Calling yourself “right wing” gives you no extra credibility.

Apr 26, 2009 - 10:50 am 40. Swo - Houston:

I sympathize and identify. Because the grass was always greener, I jumped from one company to the next, almost always for more money and more authority. This worked until the dot-com bust in 2001. In 1990 I was making $70k and had a company car. What I wouldn’t give for that gig right now. But then again almost none of the companies I left exist, either at all or in anything resembling their former glory – many went out of business and the others were acquired or merged. The only good news is, I had jack in my 401k before all this misery so I, by definition, didn’t lose as much. Bottom line is I’ll be selling something or other until I croak and the only retirement program that will allow me to actually retire – possibly – is Lotto Texas.

Apr 26, 2009 - 10:54 am 41. David H:

The simple fact is that endowments would have worked if inflation continued to be high. Work all your investments and loans based on inflation, when inflation appeared to be lower I cashed in my endowments and did it before the companies started reducing the with payments.

Apr 26, 2009 - 11:15 am 42. David H:

And those companies like Standard Life and Prudential were criminally negligent in the UK, I am sorry but she has reason to feel that way, my father got caught too.

Apr 26, 2009 - 11:17 am 43. Delia:

It is easy to blame yourself for not having a crystal ball. My husband is a construction/carpentry business owner who decided to venture into ‘home-building’ a few years ago. I fought him tooth and nail about it but went ahead and co-signed loan after loan and we did well financially because the homes sold or pre-sold quickly but even so something kept telling me enough was enough and to back off the building biz.

Well, now we are upside down on 4 homes that couldn’t sell which we are renting for under the value which means we are out of pocket over 3,000 dollars just to cover the mortgages. My hubby cried this morning and told me he was sorry and I told him to pick himself up by his boot-straps and get busy because he got us into this and he sure as heck can get us out of this. I was angry for a time at him but now I’m resolved to let the chips fall where they may and have faith that things will turn around.

By the grace of GOD we are surviving by the skin of our teeth and keeping our employees working too.

Don’t lose faith. ♥

55 is still young!

Apr 26, 2009 - 11:18 am 44. Retire Loved:

Hi Carol, I sympathize with your plight, and indeed plan to buy your book, however…you are employed, and have been blessed with a tremendous capacity for writing. Living paycheck to paycheck no matter how hard one works, is how most of the world lives at all times. You have lead a truly wonderful life in many ways-certainly you had parents who sound like they were proud and supportive of their daughter. This is really the most important thing about your history from what you write. Something however, has been lacking and it isn’t money. It is a deep, committed relationship. One should pursue an interpersonal relationship as much as a financial plan — love and family and knowing who you are and who you belong to are the most wonderful things in life. Work hard to meet someone who you can love and who loves you. Money really can’t fill the hole. Start saving your cash, if possible and move into smaller digs. Downsize. And thumb your nose at those anti-Semites who talked behind your back and marry a Jew. Money you have had — but love and spirituality, perhaps, have been in shorter supply. Change your goals about what the goal and meaning of life are. So many people are fooled into thinking success is about “retiring rich”. I say success is about “retiring loved.” Also, I would encourage you to explore your wonderful Jewish traditions and beliefs. Judaism has a lot to say about the meaning of transitions and shifts (and tragedies) in life and what we are supposed to glean from them.
Hoping you can take a good look at the blessings you have, and create news ones as well.
Check out chabad.org or aish.com and see what you can see.

Apr 26, 2009 - 11:50 am 45. Erik:

Douglas, I did buy and airplane and now it’s worth less than I paid for it and nobody wants to buy it. You made the right decision. With aviation fuel at four or five dollars a gallon I’ll be holding on to it for years, if not decades. I’ll let my estate dispose of it. At least I didn’t buy it as an investment. So, if nothing else, I can still take to the air and have a grand day.

Apr 26, 2009 - 11:54 am 46. austin TX personal trainer:

You can come back. I was in deep debt and had contacted a bankruptcy lawyer after losing most everything after Hurricane Katrina. Maximum government flood insurance coverage went only to $250K for $410K house not counting the contents. Plan – move, work, and pay back what I owe. Three years later at age 55 – living in a small efficiency apartment, debt free, working, money in the bank, living small and very happy. In my house I had a $9k couch; in my apartment I have $150 futon. My dog prefers the futon. I do too.

Apr 26, 2009 - 12:48 pm 47. Boneshaker:

Carol – Buying a home to live in with an interest only loan should tell you all you need to know about your failed financial strategy.
What was your plan to deal with the outstanding mortgage principle when the loan came due?
Did you consider what would happen if home prices stayed the same or dropped?
Old fashioned strategies, like living below your income, paying cash as much as possible, paying your home off as fast as possible, paying the least amount of interest possible, and not trusting your money to people you don’t know and not investing in schemes you don’t understand have proven themselves over time.

Apr 26, 2009 - 12:58 pm 48. JFP:

There’s not much we can now do for Ms. Gould except to buy her books (which I will do when I go to England this summer).

But I’d like to think there’s something we can do to prevent this sort of thing from happening again (and by “this sort of thing” I mean the phenomenon of so many bright people doing dumb financial things).

Everyone who goes to high school should be required to take a class where they learn some finance. Everyone should come out of that class knowing that interest-only loans are very risky and that house prices do not always go up. They should understand the different kinds of mortgages and they should understand how credit cards work and they should understand the stock market and they should understand risk generally.

For example, when my wife and I bought our house, my wife had never even seen an amortization table. Once I showed it to her, she realized we would have a terrible time if we bought a house at the price for which we were approved. We bought one at about 2/3 that price and were able to pay it off quickly. Financially, it’s the best thing we ever did.

Our high-school graduates should know this sort of thing.

Apr 26, 2009 - 1:06 pm 49. sharonsj:

I understand her comment because it is assumed that all Jews are rich. They are not. I am a Jew with no cash thanks to medical problems. However, when I had some money, I knew enough to pay off my mortgage–otherwise I’d be living in the street now. I never trusted the stock market so I bought objects (such as movie posters) that have enough value to sustain me when I need to sell them to pay bills. I do believe that America has been completely screwed by big business and that we will continue to suffer from a near depression unless we can get rid of our lousy Congress.

Apr 26, 2009 - 1:16 pm 50. Richard L.:

What a load of crap this is. Ms. Gould’s strategy is the opposite of conservative. She gambled everything on the market rising and it didn’t.

Tough Debbie! You could have simply bought a place you could AFFORD! Instead you paid interest only gambling equity market growth would cover your principle.

The fact you blame “capitalism” for your own greed is typical of thousands of professional narcissistic twits who are waking up to find the world doesn’t owe them a living.

Whine all you want. You deserve no more than you got.

Apr 26, 2009 - 1:21 pm 51. Paul A'Barge:

my interest-only mortgage

One need read no further than this.

You made terrible choices.

Apr 26, 2009 - 1:52 pm 52. seven:

Loooks like some deliberately bad investments do not pay off. The no money down mortgage says a lot. Why do people do that?
The mortgage should have been paid off before age 50. There is still the opportunity to work and earn a living for another 20 years. I don’t see a fatal propblem in this sad story.

Apr 26, 2009 - 2:08 pm 53. gcblues:

capitalist?
hardly.
emotionally dependent and crippled, undoubtedly.

i was a single dad, two young women. when they were 4 and 1, my oldest received a bike and proceeded to show me she could ride with no hands in the street. at the far end of the street she crashed. i did not go to her, she picked up her twisted bike started to walk it back. her face was bleeding, a lot from the nose so she was blubbering. the first words out of her mouth were, “next time i ride this damn bike i will keep one hand on the handle bar.”

well my sweet, that is what the damn handle bar is for. my kid, Antigone, was more of capitalist at 4 than this woman will ever be.

yo girl carol girl, grow the hell up.

Apr 26, 2009 - 2:08 pm 54. Sara for America:

Your attempt to blame capitalism for your sorry state is perverse.

Not all “capitalists” live their life with the goal to be “a very rich woman” someday. Some of us have other plans: marriage, living a fulfilling life, watching our kids grow up to be happy adults. It seems from your little diatribe your whole life centered around obtaining cash for this scheme or that. Capitalism at least allowed you to do that. We can’t save everyone from bad decisions.

Apr 26, 2009 - 2:09 pm 55. Mike:

How I ended up where I am now after being broke and torn in two more than a few times. I am 49.
If you had seen me back in my teen years you would have thought I’d be dead by now. I guess the word for the family I was born into was, well, dysfunctional.
My mother is still alive, God bless her. It’s the irony of life. She has outlived all the men she has used and abused. Trust me, she was good at abusing. My Dad was a great guy and I was fortunate enough to live with him in my High School years.(my parents divorced right after I was born)In spite of that, I barely graduated high school and somehow, by the grace of God, ended up in a community college. From there, I fell into a State College and again, somehow, ended up with a BS degree. Yes, I worked at it,, I did my part, but I am telling you if it was not for the mercy of God I would not have finished. After that, I went into the Army. That was one of the best experiences I ever had. I began to learn discipline. After the Army, I came to settle where I am now with my wife and daughter. I found work and steadily we were increasing our standard of living. I had a friend, though, who talked me into buying a house he owned. I hated the house, but, he was my friend and I thought he was looking out for me. I was wrong. The house sucked us dry. Besides that, it was a double. You know the story,,, why pay rent when your tenants can pay the rent for you. Right, as long as they do actually pay your rent and don’t threaten your lives its all joy, I am sure. Well, after going into bankruptcy I lost my job. We were living off the generosity of friends and our church. I refused government services. Yes, I got another job, the years passed and we bought our dream house. Even bought a nice new car. Then, just a few months after buying the house and car, my wife lost her job. One week before Christmas. You know what we did?? We both thanked her employer for hiring her and said to him that we realized it could not have been easy letting so many people go a week before Christmas. I think he almost cried.
So what did we do?? We made a decision together,,, she decided to go back to school and I worked extra hours, did the laundry and cooked the meals, when I could.(by the way, our washer broke during this time. It would fill and empty but not agitate,, so for over two years we washed our clothes by hand in the machine.) We also prayed. A lot! And, again,, we had to rely on the generosity of friends and our church. Now in the middle of this, I had another friend I trusted say he would “make a dream of mine come true.” Without getting into details, he assured me he would take something I had and market it for me. To keep it short, imagine being in the midst of no money, trying disparately to keep your mortgage paid, keep your cars from being repossessed and here comes a friend you trust saying “I will make this dream come true.” Well, he left town and I was left with nothing. But, we continued on. My wife eventually graduated and now has a nice career. Heck, she’s making more than I do. It’s embarrassing.
So, here we are. Our bills are mostly caught up now and we are doing pretty well.
We’ve been through a few things, and I expect we have a few more things yet to go through. We did our part,, when things went bad we just kept going on. In the end though,, we both know this. Yes,, we did our part,,, we got out of bed every morning and kept putting our feet on the floor even if we didn’t want to. We had times where I would drive to work with two dollars on my pocket and not know how I would have the gas to get back home. As I said, we did our part,,, but we didn’t put all our trust in just ourselves. We trusted in the God of the Bible. We prayed and we prayed and we prayed. There were days we were so depressed. There were days we saw real miracles! But the thing is, we just kept going. And we didn’t blame anyone else and we knew it could always have been worse. So, this is the short story of how I ended up where I am,,, not broke at 49 and thankful to be alive in a still free America.

Apr 26, 2009 - 2:22 pm 56. gcblues:

one more thing.
i taught my daughters about debt. i explained there is good debt and bad debt. bad debt is when you use leverage to buy a depreciating asset. cars, furniture, meals, etc. good debt is when you use leverage to buy an appreciating asset. i also explained that keeping reserves in equity higher than the lender requires is a matter of saftey.

i see a lot of posts that see interest only loans as a bad thing. that is naive. it depends on how you use it. i leveraged all my properties out on interest only loans and used the cash as investment principle. i have been doing this since the post 9 11 rate crashes. my rates go up and down from as low as 4%, to over 7%. if ever i cannot make more than that on my money i should put a gun to my head. any savy person , especially with the tax advantages, can beat that spread by a mile. if you make more than the cost of leverage you have good debt. pure and simple.

i have had some great years. this year was the worst. however, i still made money, still beat the spread. i simply NEVER listen to any commissioned brokers. i have never met a commissioned broker that was not an idiot. if they had good advice, they would have used it on themselves and been rich. there are plenty of quality money managers whose fees are based on percentage of PROFIT. what type of fool listens to a commissioned broker? then the government bails those idiots out and insurance idiots too. its a world gone mad.

the USA is no longer distinctive. it has become just one more country in central planning hell.

Apr 26, 2009 - 2:26 pm 57. Anony:

She spent way too much time “fighting” people. It was a mistake to even try to take 5% equity out per year and then she wastes time fighting them on what the valuation of the property should be. Apparently they were right.

A “few bad years” takes us from 1991 to the 2000’s? Sounds like a decade of bad years and try to live off capital that evaporated.

Apr 26, 2009 - 2:31 pm 58. John:

My question is:

How many people would have fired their black secretary in order to continue working at JE Entertainment?

(And this happened in 1990!)

Big government and big finance are not answering well for themselves. The sad thing is that all big government has to say is: “We care!” and whole swathes of the population becomes instant suckers (literally and figuratively).

Apr 26, 2009 - 2:36 pm 59. 888:

I feel for you, Ms. Gould, but like many of your commentors here said, don’t give up — you’re still young and may have many more years to live. Count your blessings — after all, it’s not like you’re in Sudan, Somalia or Myanmar and being oppressed or tortured.

Learn from this incredible experience, and move forward with your head up high. Because of bad financial decisions, you are where you are. Thus, swallow the pride and ask your government for help. UK has a substantial and thriving welfare system with even housing provided. I know because one of my aunts lived in a Surrey govt housing project for decades. She may even be there still.

Get a job — ANY job, and begin working your way out of the situation you’re currently (temporarily) in. There’s no excuse for a Philly lass to not make it. You’re better than that, and you know it. You go, girl. Start living.

Apr 26, 2009 - 2:49 pm 60. Dave:

David Goldman, aka “Spengler” lays it out here:

http://firstthings.com/article.php3?id_article=6564

In short, Baby Boomers like Carol thought they could have full, prosperous, exciting lives without bothering to get married and have children, and this immoral choice has pushed the entire developed world into an L-shaped permanent recession.

If I’m poor, I can at least enjoy raising my kids. If she’s lucky, Carol will find a home that lets her keep a cat.

Apr 26, 2009 - 2:55 pm 61. James:

Okay….a good friend of mine woke up last week to a nagging cough. Yesterday, he discovered that he has advanced lung cancer. He is 37 years of age. Another friend of mine won the NJ state lottery at the age of 24 (11 million dollars). One month ago at the age of 36 he died of a heroin overdose. He died penniless. I just lost $150,000 on a real estate investment. My mother is 64 and must continue working to pay her $800 monthly mortgage. Someone I don’t know just died, another just got raped, and some other unknown couple just had a beautiful child come into the world. I may die tonight, it may be 40 years from now. This is the thing we call LIFE. As Tom Petty once said, “take back your insurance, baby nothing is guaranteed…” Is the purpose of this article by Ms. Gould an indirect appeal to have government save us (or her) from Life’s hardships? Maybe Mr. Obama can make everything perfect?

Apr 26, 2009 - 2:57 pm 62. vicsmith:

Thanks to #20, Stephen, for the pep talk. I believe you’re right.

Apr 26, 2009 - 3:16 pm 63. Ramba bamba:

Aside from illustrating the folly of living on borrowed money, there is one thing I really don’t understand.

The author bought a flat in St. John’s Wood in 1984? Even with an interest-only loan, the value of that flat had to have gone up several-fold since then. Even if the Bank of Scotland refused to lend money in 2002, I’m not sure where all the money could have gone – one would have thought that the flat could be sold at a sizable profit over the 1984 price, even today. It sounds as if the author has been living beyond her means for a long, long time.

Apr 26, 2009 - 3:38 pm 64. Delia:

Wow. A lot of harsh comments towards a woman who has [obviously] taken her lumps.

Honestly, I don’t think Ms. Gould is blaming anyone but herself in the end for things she thought were solid investments. Heck! Real Estate used to be a solid investment. Did she make mistakes? Sure and so have I and so have many of you at some time in your life.

I don’t think she’s asking for a ‘pity party’…I think she’s just in a bit of shock like many of us who thought we were doing the responsible thing by investing in 401k’s, putting money away in savings/nest-eggs etc.

Our own nest-egg is wiped out and now we have only a home equity loan to cushion us for the next year but I’m not keen on going into an equity loan debt either but survival for us and our employees is first and foremost.

The problem with capitalism is when socialism comes along and pulls the rug out from under you…

Apr 26, 2009 - 4:02 pm 65. Carol Gould:

Another aspect of this is the fact that people on low salaries like me — yes, even in TV I earned very little because in those days it was not a big-bucks job — have to decide whether to put that extra £100 a month into a piggy bank, small savings account or a pension/endowment fund. Maybe I was a mug, like millions of other British citizens talked into endowment packages, but I now tell young people to have a little set aside in a small savings account with a ’safe bank’ ( if there is such a thing!) or in Treasury Bonds/good old fashioned National Savings certificates. Back to what our impoverished and prudent parents and grandparents did….

Apr 26, 2009 - 4:31 pm 66. Carol Gould:

Delia,
Thank you for your kind words. When I wrote a piece on PJM about my friend of 33 years’ standing who was on Life Support but who survived grave illness, the comments on this blog were shocking. I have a tough hide as a journalist, but was stunned that people failed to understand that the article was a celebration of the genius, selflessness and generosity of the British National Health Service, of the miracle of her recovery and of the power of prayer, faith and hope.

Rambo-bamba seems to think I was ‘living beyond my means’ but when I set out to lead a meticulously-planned, successful and prosperous life I did not expect to have to endure seven successive bereavements including the murder of a dear friend; breast cancer surgery; endless bouts of shingles; chronic fatigue syndrome and recently Diabetes 2. Even if I had been earning hundreds of thousands, Statutory sick leave payments run out after awhile and even the most well-off and well-organised folks can end up ‘living beyond their means’ when their investments all tank and illness prevents them from earning.

Apr 26, 2009 - 4:54 pm 67. Delia:

65. Carol Gould,

I hear ya, darlin’! People who invested in retirement funds here in the USA (401ks) who though they were doing the mature and responsible thing by investing their money rather than spending it are reeling with the losses now. -And, you’re right…’safe bank’? HA!

Scary times.

I’m even beginning to wonder how ’secure’ CD’s are?

The, there’s the issue of everyone grabbing their money out of the banks in a panic… OY VEY! Another kettle of fish to fry.

You’re not alone, Carol…that’s for certain. There are plenty of us scared to death for our futures.

Sometimes…all we have left is prayer.

Apr 26, 2009 - 5:06 pm 68. Sam:

YOU GET NOTHING.

Apr 26, 2009 - 6:42 pm 69. myth buster:

Cardinal rules for mortgages (and all other contracts):
1. Never sign something without reading it.
2. Never sign something you don’t understand.
3. Don’t trust the person trying to sell you on the contract.
4. Never commit to anything you aren’t sure you can follow through on.

Apr 26, 2009 - 7:20 pm 70. Archivald:

I don’t understand. I don’t even know what it means that the bank “down-valued” the property. Maybe I’m unfamiliar with how things work in the U.K.; but, in a capitalism, a lender does NOT define/dictate the cost/value of the thing that you but with the money borrowed. If you mean that housing prices fell, that is a risk that everyone takes when they buy property, and it only affects you if you sell the property or if you unwisely take out a second mortgage (to pay for what, exactly?).

Further, you never had a “pension” plan. A pension is a benefit deferred until retirement that is guaranteed in the employment contract. What you had was a retirement plan that invested in the stock market. was worth a fraction of what it was supposed to have been worth when I was given the projections in my 20s. What the hell do you mean “supposed to have been”? You were gambling your retirement on the success of the market.

NEWSFLASH: Sometimes the market goes up, … and sometimes it doesn’t.

Ooh .. you were given a “projection”! This projection (i.e., a prediction, … a prophecy, … a BET) failed to come true. This is the fault of Capitalism? Are you joking? If you had wanted a GUARANTEE, you should have gotten a GUARANTEE (can you guess why no one actually provides such guarantees?).

Capitalism is about RISK and POTENTIAL reward (if the reward were not potential – i.e., if reward were guaranteed – there would be no risk). You took risks and fooled yourself into thinking that the rewards were somehow guaranteed.

Instead of a normal mortgage, you gambled the money that you could have been using to pay off the principal in the stock market (that’s what an endowment mortgage does). Now, there’s nothing wrong with this if you understand that sometimes the gamble pays off – allowing you to pay the principal AND get investment profits as well – and sometimes the gamble does not pay off.

Capitalism is not your problem.

Not having the faintest clue how capitalism works is your problem.

You’ve posted here to condemn Capitalism (”my capitalist life has brought me nothing but anguish”), when your own ignorance of the most basic and self-evident aspects of the free market system is actually why your (unreasonable) expectations were not met. That said, Americanism IS Capitalism. Anti-Capitalism IS Anti-Americanism. And you say you wrote a book on “Anti-Americanism Abroad”? If you’d like to see the face of Anti-Americanism abroad … look in the mirror.

Apr 26, 2009 - 8:13 pm 71. Delia:

66. Carol Gould,

Oh, hon! I wish I could give you a great, big ((HUG)). You’ve been dealt some harsh circumstances that I wouldn’t wish upon my worst enemy.

Please, keep fighting the good fight and think positive thoughts. Physical/Mental pain can hinder your overall health but please fight the good fight. You’re a voice for people going through what you are going through both health-wise and financial-wise and a great writer too.

Diabetics can have cooked cold red potatoes and they are full of vitamin C and potassium too which is good for your heart. Eating canned oysters will give you a big boost of zinc which will not only help your horomones but boost your immune system. Vitamin C,D and all of the B vitamins are HUGE boosters too which can jump-start your energy. If you’re feeling a tidge of depression and sleeplessness…try some L-Trypophan (the stuff that naturally occurs in dark meat from fowl).

I’m a bit of a health nut so I won’t go on infinitum (which I could).

Because you’re the blog-master you *should* know my email I’m posting from right? If you’d like to pick my brain about helpful stuff regarding your health, feel free to drop me a line.

Also, don’t forget to SMILE. Research shows that even a ‘forced’ smile actually causes good things to happen in your body. Go figure eh? So force a smile and you might even get a giggle out of it to boot.

((Supportive HUGS)),

Delia =0)

P.S. You are absolutely precious… YOU ARE! God loves you and SO DO I!

Apr 26, 2009 - 8:28 pm 72. GlobalObserver:

To post #61. James:

I think you are an idiot, and the way you phrased your comment proves that, with the attack on Obama at the end, which was irrelevant.

On the other hand, the essence of what you had to say was wise and insightful. I think you hit on something.

Like my father once confessed, a Baptist minister who I had many issues with: “The one thing I have never come to terms with, is why the innocent suffer and the evil prosper”.

You’re right. It’s just life. And government intervention won’t correct that.

Apr 26, 2009 - 8:43 pm 73. mshatto:

myth buster – somewhat off topic but your post might have helped all of those in Congress who voted affirmative for the bailouts.

Apr 26, 2009 - 8:54 pm 74. Eric:

Too many people seem to have forgotten about personal responsibility. What a fool to have taken out an interest only loan. What a petty person to blame capitalism for her mistakes. The US, and apparently the UK as well, have a serious problem with responsibility. We seem to, as a culture, want to avoid taking any and all responsibility for our actions and to point fingers at others when things go wrong. My God, no wonder Obama is making such gains. He’s promising to relive Americans of responsibility. “Surrender to me and I will make all your worries go away.” Grow up.

Apr 26, 2009 - 9:48 pm 75. delight:

As a 24 year old double Economics/History major, I find it hilarious to read your silly old fogie comments. Wait, wait, give me a minute to catch my breath.

What exactly over the last 100 years of European history (know any?) led you to believe that your meager investments were safe?

As you all felt more secure in wealth, you supported ideologies opposed to the engines of prosperity and communal safety. You degraded Judeo-Christian culture to the point of irrelevency, forced multiculturalism down our throats with your propaganda media, and think that’s progress.

Here in the US, we look forward to the secular humanist baby boomers being forced to end their lives early due to rationed Obamacare.

Good bye nimrods, you will not be missed.

Apr 26, 2009 - 10:23 pm 76. Mary Jackson:

Good grief, take a deep breath and get out there and live.

Can’t argue with that. You’re 55 – that’s young. The way you write sometimes – so defeatist – I thought you were much older.

You’ve got time (and ability, much as I disagree with your arguments sometimes) to make a go of it.

Apr 26, 2009 - 10:40 pm 77. klrtz1:

Thank you, God, that I am not 24 years old anymore. Thank you for giving me the gift of compassion at age 42. I wasn’t asking for it, I didn’t feel the lack but your gift has given me a whole new appreciation of your creation. Amen.

Re: Andrew Tobias. Dittos.

Apr 27, 2009 - 4:24 am 78. JFP:

In thinking over what you have written, Ms. Gould, I’m starting to see why you feel betrayed. At first, all I saw were the mistakes you made. But from your perspective, you were doing things right. You were either doing things that many others were doing (like these interest-only loans backed by endowments) or that were better than what others were doing (like thinking about retirement early and buying your flat instead of just renting). I’m sorry things didn’t work out. But you have plenty of company, as those who invested with Bernie Madoff will tell you.

I wish you had read Andrew Tobias’ book or maybe Liar’s Poker (”If you don’t know who the fool in the market is, you are the fool in the market”). They would have given you some kind of idea of what’s going on and how to invest wisely. And I do wish they’d teach finance to high-school students.

But you should be able to write another book about all this and make money that way. Good luck.

Apr 27, 2009 - 5:29 am 79. Another Chuck:

Carol,

I am very stupid and can’t follow your various transactions. It’s not your fault: My brains switches off at all financial discussions.
To look to the future, is something along these lines at all possible for you?
Get the hell out of London? There must be pleasant, cheaper regions of the UK to live. For that matter, can’t you plunk yourself down anywhere in the whole EU? In your line of work, all you need is an internet cable. You could raise some zlotys teaching English on the side.
Have you friends in similar straights? Could you pool your resources and jointly buy a house, preferably with a garden?
Or: Could you swing a small apt building in a small city? Near to a college would be a +; students always need a place to live. These days I imagine there are plenty of adults as well. Say, 3-4 units, keeping one for yourself?
Or: Can you house sit? There are still winners in this game; they’re always taking jobs in China or someplace for a few years and are just happy to have somebody watch their houses.
Keep us abreast of what you do next. Unfortunately, your situation is timely.
Good luck,
Another Chuck

Apr 27, 2009 - 5:42 am 80. Carol Gould:

I am so touched by the stories being sent in. It humbles me. Thank you for sharing in such a public forum.

Apr 27, 2009 - 5:43 am 81. Bobby:

Hi Carol, I really hope things work out for you. But I would point out that market systems correct themselves and we will see a turnaround. Its always darkest before the dawn. One other thing. Consider getting married. Two incomes under one roof really makes a difference. Also on your books I think the key to success is marketing. If you can get on Larry King Live, Hannity, Morning Joe, talk radio etc here in the USA you’ll be in the biggest book market in the world. I’m writing a book myself (not political) and plan to market the dickens out of my book. We need your strong conservative voice out there so please keep on fighting. Here’s looking at you kid! Bob

Apr 27, 2009 - 5:50 am 82. vivo:

Very good comments on this thread. Congratulations to all who wrote.
Everybody makes mistakes, but learning from them is precious.

Good luck, everyone!

Apr 27, 2009 - 6:16 am 83. submandave:

“My colleague John Rosenberg used to joke that he walked up the main street in Norwich and could ‘feel’ people staring at him.”
“Getting back to Anglia and Norwich: the city was, after all, the location of the Norwich Bllod Libel and the Jews were expelled in the 1200s not really ever to return.”

The 1200s? Well, we don’t hold a grudge, do we?

Like another commenter said, racism is real and, if allowed, can be a real problem, but I don’t believe it is as deterministic and all pervading as some. While I didn’t see your “Jews are good with money” comment as anything other than a light joke, please indulge me in offering a general caution against letting a racism chip get too big for one’s shoulder. I may flatter myself, but I think my experiences have allowed me to appreciate better than many white Americans the wearing effects of racism.

While living in Japan, for example, I was refused service at bars and intentionally passed by empty taxis simply because I wasn’t Japanese. While visiting my girlfriend a lady almost called the cops to report a suspicious foreigner until she realized I was dating someone in the neighborhood. I had people watch me closely and even move away from me on the train. And, yes, I experienced jumping to the conclusion that someone’s treatment of me was “because I’m gaijin.” The last was indeed an epiphany in understanding how one in the minority can project and assume about the attitude and intentions of one in the majority.

Please don’t take this as a personal affront, but I have never fully understood the pathology of the eternally-persecuted Jew, the person for whom almost all action or speech is analyzed with an eye or ear for anti-Semetism. Some of the worst villiany has been visted upon Jewish people simply because of their being Jewish, but this has generally been as part of a concerted organized effort, not at the hands of random individuals. For example, your colleague’s feeling of being watched by strangers, unless he was wearing a yarmulke or was Hassdic, seems to verge on the paranoid. I’m not a skilled practitioner of “spot the Jew,” but I simply don’t think physically you guys stand out from the crowd as much as, say, a Black man or Asian woman or someone with a strong Russian accent, etc.

As another indicated, ignorance is not necessarilly synonomous with racism. I also think its important to remember that if someone treats a Jew poorly it often has less to do with Jewishness and more to do with that person simply being a jerk.

Apr 27, 2009 - 9:01 am 84. Joey:

I won’t point out all the poor financial decisions you made (I’m in the investment business). I will point out that capitalism does not promise security and an awesome life. What it does promise, however, is the freedom to persue an awesome life.

You say that through no fault of your own you are left shamefully begging your friends, but how is that different than the government just doing it for you as a middleman? Really, nothing other than whoever happens to be in power getting there greedy hands in it.

I do feel sorry for you as you have been completely screwed by crappy circumstances. It is not your fault. But then again, I think people are generally good and that’s part of why capitalism and freedom work. It’s in all of our best interest to help others.

Apr 27, 2009 - 9:34 am 85. Heather Cook:

Wow… I know I’m only in my 30s, but these were not smart financial choices. You can never rely 100% on a “financial advisor” who profits from your financial moves. You MUST do your own research.

Apr 27, 2009 - 9:59 am 86. Fearsome Comrade:

I got to the part where you said you took out an interest-only mortgage and quit taking anything you were saying about your “prudence” seriously.

What I don’t see is where you said you were saving and accumulating large cash reserves in case anything bad happened. Because you weren’t.

Apr 27, 2009 - 10:20 am 87. Mike T:

I agree with Fearsome Comrade. Your post didn’t show much in the way of prudence. A prudent person would not trust a pension fund to be there, nor would they take out an interest-only mortgage.

Apr 27, 2009 - 11:53 am 88. Matt:

Many of you who spent your entire post criticizing Carol’s choices are pathetic and mean spirited. People make mistakes, especially with money. And nobody could predict a market downturn like we’ve had (well I took all my money out of the stock market when the idiots liberals took the legislature but people told me I was insane). Hindsight is 20/20 but listening to some of you jerks, you’d think you were precogs.

Does criticizing somebody elses choices make you feel better ? Superior ? Smarter ? Because this article was about you, right ?

Apr 27, 2009 - 12:02 pm 89. baluc/ka:

Carol,

Don’t knock being homeless. I went through it 5 years ago. I had a shamanic experience (sounds a lot better than a nervous breakdown), wound up being diagnosed as bipolar.

I decided not to work while I sorted everything out and moved into a well regarded homeless shelter in San Diego, CA (I was living in Los Angeles at the time).

I’m back on my feet, enriched by the experience. I’m a 40 year old male, college educated, and once had a job in Wall Street in the early 90’s. And I don’t see what happened to me as a fall from grace.

Living in a tent city or a shelter or sleeping on the pavement (I prefer to call it urban camping) is not the end all be all.

The story of your life has yet to end. And I am willing to bet that you will indeed realize what your mom said being a very wealthy woman one day.

It may, however, not be in the form of coins, banknotes or property.

Perhaps an enriched soul.

baluc/ka

Apr 27, 2009 - 9:23 pm 90. donttreadonme:

Financial planning 101:
Housing payment(incl taxes and insurance) never to exceed 28% of gross pay. Total debt(incl housing) to never exceed 36% of gross pay. While kids are young, use term life insurance to protect your family. Have six months of basic living expenses socked away in a US Treasury-only Money Market. Save 10% of your pay pre-tax in a ret savings vehicle. Save 10% of your take home pay. Draw up a will, living will, health directive, Power of Attorney, and Guardianship papers for minors. Ta-da! Now you’re all set.
…Oh, and vote for conservatives.

Apr 27, 2009 - 9:33 pm 91. Larry:

some of the comments here have indeed been so heartless and unnecessarily cruel. Yes Carol made mistakes, maybe the problem doesn’t lie with Carol who is only human after all and doesn’t pretend to have precognitive powers, but with a system that feeds off speculation, short-term gains, and is run by self-serving idiots who really don’t even know what they are doing.

Some people here worship capitalism like it’s their religion, in fact it is their religion, and attacking it is like attacking their faith, they respond with bitterness, a ‘let Carol eat cake’ sneering and irrational anger that only proves the point – that capitalism (like its unquestioning faithful) is heartless and ruthless. As we proceed from one capitalist disaster after another, like a falling down drunk, they want to blame its victims (like Carol) and not the perps.

and like Carol I am no liberal, never mind a communist nor socialist. I cannot stand the Left, and yet have nothing but antipathy to a capitalist system so inherently ruthless and built on the insanity of profit for its own sake – inevitably we end up where we do.

Apr 29, 2009 - 1:13 am 92. Carol Gould:

Eric,
In the UK in the 1980s and 90s all building societies and banks offered endowment products from Britannia to Abbey to Midland to Lloyds to National and Provincial (then called the Provincial/Burnley) etc etc To me the concept of an investment plan with an old Quaker firm as honourable as Friends Provident, and with as successful a firm as Abbey National seemed the right thing to do and the idea that at age 27 I would reap a reward for staying with them for 25 years was attractive. Fool?
If I was a fool, Eric, then about 10 million other young British taxpayers/house buyers who took endowment plans were as well. Also, if FP and Abbey are still going strong but we are told there is nothing in our fund why are we fools? I want to know where my lifetime investment moneys went if there is a s^^t-load of money still available to pay the FP CEO a hefty salary.
Delia and others here generously sharing my pain and telling your stories – thank you.

Apr 29, 2009 - 4:13 am 93. Carol Gould:

One point needs futher clarification: at age 27 I was told that the investment plans would come to fruition in 23-25 years, pay off my mortgage and give me an added lump sum for my older years. Millions of people took this up. Yes, had we all piut £200 a month into little savings and loan branche in our wee local shires we would have done better, but nobody had a crystal ball, especially when the companies offering these schemes were of such sterling repute at the time.

Apr 29, 2009 - 5:19 am 94. Carol Gould:

Matt,
Well said!

Apr 29, 2009 - 5:21 am 95. Mary Jackson:

Where I would take issue is this about “ended up”. 55 is no age to retire anyway, especially in a job like Carol Gould’s – people go on writing and broadcasting till their seventies and beyond. Look at the late Clement Freud and Humphrey Lyttleton. So there’s time to turn things around, health permitting. (And if health doesn’t permit, good job this isn’t America, where there’s no NHS.)

Apr 29, 2009 - 11:18 am 96. Blackwell:

Abe Lincoln went broke more than once.
Col Sanders didn’t invent his chicken till he was almost 60.
John Paul Jones died penniless in Paris.
Winston Churchill was almost bankrupt more than once.
Michael jackson seems to be stretched thin too.
Men in the US are routinely disembowled financially at 55 by a divorce.
Soldiers back from Iraq missing a leg have to work too, and with one leg.

But not one would, I dare say, swap with some russian peasant or a nun with guaranteed subsistence.
Pick up. Dust off. Move on.

Apr 29, 2009 - 2:07 pm 97. Carol Gould:

Mary, so true.
Incidentally, my article was originally entitled, ‘Wy am I Broke at 55? ‘ but sometimes PJM like to change titles.
Indeed, my new book ‘Don’t Tread on Me’ might just take off — what with the bumper sticker campaign across the USA — and my older years salvaged from catastrophe…

Apr 29, 2009 - 2:13 pm 98. Mary Jackson:

Carol, we’ve had our differences, but I really hope so.

Apr 29, 2009 - 2:38 pm 99. Cynthia Yockey, A Conservative Lesbian:

Carol,

Two of your health problems — the chronic fatigue and diabetes — may have one underlying cause: obstructive sleep apnea. If you have access to health care, consult a sleep specialist to see if you need a sleep study and treatment for a sleep disorder, if one is diagnosed. You will be amazed at how every aspect of your life improves once you are sleeping well.

Good luck.

Apr 29, 2009 - 9:08 pm 100. Carol Gould:

Cynthia,
Thank you for the information.
I think my next piece should be about the life-threatening tactics of creditors. The BBC has done a series of radio programmes (they were ‘Money Box’ and ‘You and Yours’) about people who have died because of financial woes and creditor harassment in the UK. I do think financial worry excerbates medical conditions.

Apr 30, 2009 - 5:01 am 101. Carol Gould:

Mary,
Thank you.

May 1, 2009 - 10:43 am 102. Mary Jackson:

Pax.

May 1, 2009 - 2:10 pm 103. Harry Bergeron:

I, on the other hand, sold my home during one of the booms, put the money in gold, and moved to cheaper digs. I reckon this means Capitalism worked just fine.

No, I am not a financial genius, I just have a basic understanding of economics, which my fellow citizens fail to share.

All the signs were there for those who cared to see them, just as all the signs of cultural degeneration are there for all to see them. And yet, the herd will be soooo surprised when it all goes upside down…

May 4, 2009 - 5:46 pm 104. Zoe Brain:

I’m not broke – not yet.

We paid off our house, then we bought the house next door for my elderly in-laws to live in. Paid that off too. We ate a lot of rice and beans. The last holiday we had was our first, a delayed honeymoon in 1986. My car is old enough to vote – even to drink alcohol.

I put aside as much as I could in my superannuation (401k equivt). Some money in blue-chip stocks – banks, insurance companies, large stores. What I could afford to lose in risky ones. When my son was born, a quarter of my salary into his education fund. All this despite very patchy employment circumstances, years when I’d get 80k, then years when I’d get 2k, if I got paid for the work I did at all.

We’ve had about $50,000 of medical expenses out of the blue, all excluded by our health insurance. We’ve dropped that now. The one time we needed it, the claims were refused, and we have no money to fight that.

My super is worth a bit less than half what it used to be, and not quite as much as I’d paid into it over the last 30 years. I was conservative you see, taking minimal interest in return for minimal risk. About half the risky stocks are waste paper, the other half did well, so I almost break even there. The blue-chips have halved in value – and again, I’d been conservative, always re-investing, never withdrawing dividends. They’re worth less than I paid for them.

The one good thing – my partner is in the Public Service, and the pension there keeps on increasing, regardless of what the real world does. My partner will retire and withdraw everything as a lump sum before that particular Ponzi scheme collapses.

May 4, 2009 - 7:52 pm 105. LordAzrael:

Re the devaluation of the property

The problem here is the property is security for a loan. In a principal and interest loan this usually isn’t a problem as you have been reducing the outstanding loan balance by principal repayments and hence its less likely that any decrease in valuation will drop the security value below the liability. In an interest only loan though, suddenly the bank has an unsecured liability to the extent of the shortfall between loan balance and property value. This in itself may trigger action on the bank. The same principle applies to margin lending versus normal loans for investment.

May 4, 2009 - 8:21 pm 106. Anna:

Thanks for the insigns. I will try to follow your tips.

May 5, 2009 - 3:00 am 107. tim maguire:

I’m not familiar with many of the instruments you used, but from your description, it looks like you did some things carefully and some things stupidly (you spent a lot of future earnings, then when the future earnings didn’t materialize, you suffered) and in the end, it didn’t make much difference how careful you were–everything broke against you.

This probably isn’t the time for one of those “things always work out for the best” speechs, but WTH? there’s no turing back, so why not?

Use this disaster to start over for real, clean break with the staid life you planned for yourself with all the mechanations designed for your comfort.

Starting over stinks, but it can open new doors, lead you to try things you otherwise wouldn’t. Get you living in the thick of things again. Know that when you look back at this when you are 80, maybe, just maybe, it will be a great moment, a turning point.

Good luck to you.

May 5, 2009 - 9:47 am 108. Jillsy:

Carol – there are some bitchy responses here.

Ignore them.

You did the best you could with what you had. Now, it seems, there is another topic for you at hand – How to Survive a Financial Crash in your Life . Maybe dissect what you did and why it failed, and it will help others who fell into that trap.
Perhaps you can explore the finacial world and add to the self-help books on finance (and how do deal with it when you know nothing about it) that so many people need. However the basics do appply, if one can get one’s act together (I don’t, yet).

Take heart – there are tons of budget blogs and websites which deal with how to start from zero. I’m sure that by the time you get thru with them you’ll have a whole new book ready to publish!

May 5, 2009 - 10:37 pm 109. George:

She’s not an idiot just for taking out an interest-only mortgage. Finance and taxes are different in the UK than here in the US.

First off, the common practice was to pair an interest-only mortgage with an “endowment” — an investment plan designed to grow what would have been principal payments so as to pay off the mortgage at the end. This is very different from taking the savings from an interest-only mortgage and spending it all on shoes.

Until 1984, there were two big advantages to this strategy of pairing an interest-only mortgage with an endowment. First, you got a tax break on the endowment payments because it was a form of insurance. Second, your money would go to work for you immediately in an endowment, whereas in a principal-repayment mortgage, it might not make a difference until the end of the year.

It sounds like the author got her first mortgage around 1983, so presumably she (along with hundreds of thousands of other UK homeowners) was counting on these advantages.

More about endowment mortgages can be found here: http://en.wikipedia.org/wiki/Endowment_mortgage

Again (and I think previous commenters have made this point), interest-only mortgages are only a problem when they’re not sensibly combined with another investment strategy.

My advice to the author would be: 1) sell the flat — it sounds like the only way to get further equity out — and get a cheaper place (possibly a rental); 2) pursue a court case against the insurers or brokers who sold you the endowments for misrepresentation; 3) never, ever, ever believe a salesman again.

May 6, 2009 - 8:11 am 110. Sandy:

She is not wrong for taking out an interest only loan. Many people did this. It made our payments low and we were able to have a home.. In my case the house was just until I was able to sell and have a smaller home after my daughter graduates in 4 years. In addition, I have NO intentions of staying in the area. I am in an expensive area and have to stay, because I have joint custody of my daughter. I am a self employed realtor/loan agent. I have also gone to school and have become a certified phlembotomist. I have done all of this on my own with no help. Though it is a struggle to pay everything, ( my house payment is 2,900 alone) I am upside down in the house. At the time I did my loan I had over 100,000 in equity, and I knew I would sell the year of her graduation and move back to an area that is far less expensive to live. Now I feel trapped, and all of that is gone, but I will NOT give up!!!!!!

May 8, 2009 - 9:13 am 111. Sigfried:

Carol, thanks for writing, sharing your pain and giving us an insight into the U.K. side of things.

At 54 I am having to rebuild my job and financial life also. I have no advice to offer, only an exhortation. Let us pray for one another and for the millions in similar circumstances.

May 9, 2009 - 8:57 am

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