From ordering steak & lobster to serving it: a Wall St trader's fall from the top.

Discussion in 'Politics, Religion, Social Issues' started by Unspeaked, Jun 3, 2009.

  1. Unspeaked macrumors 68020

    Unspeaked

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    #1
    What a depressing story. The worst part is that it sounds like he and his family were actually on top of things, financially.

    Sure, he owned a million dollar home and took nice vacations, but when you're living in NYC and making $200,000 a year, that isn't really living above your means. He put down 20% on his place, bought it pre-construction, his wife kept track and bills and savings which lead to them being totally debt free (no credit card bills, even) and have some cash tucked away, and even with all that, he's behind on his mortgage and they're worried about losing their place...

    LINK

     
  2. waiwai macrumors regular

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    #2
    harsh... sad story indeed... hope the economy recovers soon...

    i guess sometimes it makes me feel really lucky to work for the feds... stuff like this doesn't happen when you're with the public service.
     
  3. notjustjay macrumors 603

    notjustjay

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    #3
    While I sympathize, the simple answer, if he can't find similar work to what he had, is to sell the condo (yes, even it if means only breaking even) and move to somewhere else. It should come as no surprise to anyone that working a minimum wage job isn't going to keep you living in NYC, not when you have a $6,000 per month mortgage.

    Together, he and his wife bring in $4,000 a month, working as a waiter and an administrative assistant. Even assuming they retain those job titles, there are plenty of places where they could live comfortably on that kind of income.
     
  4. Music_Producer macrumors 68000

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    #4
    Exactly. People always live beyond their means. They are not used to downgrading their 'lifestyle'. Sure he made $200 k a year - but that's nothing if you're living in NYC - and considering their expenses - it's easy to lose everything if you do not have substantial savings.
     
  5. Unspeaked thread starter macrumors 68020

    Unspeaked

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    #5
    The tone of the article suggests that that's what he'll eventually be forced to do - sell at a loss and move.

    The only reason he's there now is a combination of savings prior to the hardships and a hope that he might get his job back. I'm thinking he's smart enough to sell and move before the bank takes everything from him.

    But I don't think that he was living beyond his means, nor that he particularly deserves this. Unlike a story I posted a link to a couple of months back about Wall St. traders who lost their bonuses this year, this guy has truly got a bad. There's a big difference between going from making $200,000 to $25,000 and worrying about how you're going to pay the bills and going from making $200,000 plus a $25,000 bonus to making $200,000 with no bonus and complaining about not being able to afforded the spoiler on your race car and settling for a medium-range BMW instead.
     
  6. Mousse macrumors 68000

    Mousse

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    #6
    He lost is high paying job 2 years ago. WTF didn't he think about selling the condo earlier? For TWO *bleep*ing years, he lived WAY beyond his means. If keeping a condo whose mortgage payments is more than your family's total income isn't living beyond your means, I don't know what is.:mad: Wait until the water up to your neck before panicking. Real bright.:rolleyes: No sympathy here. I've seen lots of well off people put their houses up for sale within a month of losing their jobs.
     
  7. Unspeaked thread starter macrumors 68020

    Unspeaked

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    #7
    Only because they didn't have the means to stay there.

    That's what impressed me about this guy - he was debt free enough and had enough saved up that he was able to keep the roof over his family's head for two years while hoping for a turn around and looking for a job.

    I don't see how you can condemn the guy for that...
     
  8. Mousse macrumors 68000

    Mousse

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    #8
    The only think I'm condemning him for is waiting. After the first year, the condo should have had a for sale sign hanging on the door. Waiting until the barbarians were at the gate before preparing a defense. Waiting until the water is up to ones neck before preparing for a flood. Waiting until it's too late. That's what gets under my collar.

    Now if he had moved to Jersey earlier, where the cost of living is substantially lower, he and his family could still live comfortably. Now all he can look forward to is moving to Jersey with a black mark on his credit history and no money in his savings. A brilliant plan A, but no plan B. No sympathy here.

    My plan A is the same as his (debt free and a year's expenses worth saved up). I've got several back up plans if I should lose my job. All of them involve putting the house up for sale within a month. I know it'll take at least 4-6 months of find credible buyer.
     
  9. madmaxmedia macrumors 68030

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    #9
    We can only speculate

    We can only speculate on the price of his condo, but based on the general timing I am guessing he has been underwater on his condo for awhile since he bought at a bad time (2005).

    Granted that does not eliminate the possibility of a short sale. But listening to the guy's story, I doubt he didn't consider the option of a sale. Even when he was bringing in the money he seemed to be careful with their finances.

    I give him credit for actually continuing to pay his mortgage this whole time, many people would have stopped paying and just walked away after living rent-free for 6-8 months until foreclosure. That's almost $50,000 considering his high mortgage.

    But yeah, your point is a valid one. If after a short time he could see the writing on the wall (horrible job climate on Wall Street), then he first thing he should have tried to do is sell the condo. Problem is it may have been too late.
     
  10. CalBoy macrumors 604

    CalBoy

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    #10
    Although I find it trite and cliché, I think the expression, "hindsight is always in 20/20" seems to apply here. If the market hadn't gone the way it did, and his condo had matured in value, any decision to sell it prematurely would have been derided as 'foolish.'

    We feel quite comfortable now saying he made the wrong decision, but only because we have the comfort of knowing what's happened.

    Do you have children? Would you really move your children around after only one month of unemployment? Would you keep doing this if your secondary and tertiary "back up" plans failed?
     
  11. mkrishnan Moderator emeritus

    mkrishnan

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    #11
    This is true, but... to apply the at-this-point-hackneyed MR abacus... were he a high-level blue collar UAW worker at an auto plant, who found that he could not parley his specialized skills outside of his industry at his standard of income, we would expect him to rip the band-aid off and get on with life.

    Did commodities traders cause the fall? No. But it sounds like he's doing a good job of transforming the kinds of skills he has to applicability elsewhere. Who knows. With his knack for gauging the feel of a room, maybe in a year or two, he can run a restaurant.

    I do, however, feel, that it's less a national priority to keep traders in $200k/yr lifestyles than it is to keep blue collar families in $50 or 60k/yr lifestyles.
     
  12. CalBoy macrumors 604

    CalBoy

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    #12
    Well I certainly wouldn't expect any band-aid ripping myself, but I assume I'm in the minority in that regard given the tone of this thread. :p

    I'm not really advancing the idea that he should expect to perpetually live the $200k lifestyle, but I do want to advance the idea that judging is very easy when one isn't in the hot seat.
    Can't disagree with this in the least. I just didn't care for the judgement that his decision were wrong in the absolute sense, because I think that if I was a father of two, my priorities would be rather different, something I think some posters haven't weighed quite as heavily as I think this person did.
     
  13. mactastic macrumors 68040

    mactastic

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    #13
    Lots of hardworking talented people have been laid off during this recession through no fault of their own, myself included. This guy just got hit at the wrong time in the housing market. I had the opportunity to buy at that time too, and in fact was being encouraged to do so, but simply wasn't willing to pull the trigger in that kind of market. Many others did.
     
  14. mkrishnan Moderator emeritus

    mkrishnan

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    #14
    This is very fair. The problem with that kind of lifestyle isn't that there are evil people who tread over the backs of decent folk in order to seize it for themselves. It's that it is unsurprisingly quite appealing to otherwise good people, and then it has devastating consequences for them. The fact that the finance industry is hemorrhaging people like the fella in the original story is less a testament to the fact that we need to help the finance industry create more overpaying jobs to get these people back to their lifestyles and more a question of why, as we have been talking about throughout the crisis, do so many more talented individuals in the US end up there than elsewhere, and if not through salary control to prevent these outrageous salaries, then how can we have more balance?
     
  15. Rodimus Prime macrumors G4

    Rodimus Prime

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    #15
    This guy seem to do everything right. Clearly he had 6+ months built up in savings. Loosing a 200k job one can expect a few months of unemployment while looking for something new. He had the savings for me.

    People who say should of sold is using hind sight. If he had put his place on the market in 1 month most people would call him stupid at the time. Reason being is at the time it was safe to assume that he would get a new job before he ran out of money or even before funds started running low.

    He just got screwed by the current economny like many of the rest of us.

    Being unemployed sucks. I am been that way for 3 months now and am heavily battling going into a deep depression and losing it. It sucks and it really takes it toll on people month after month. I have to give this guy credit for going though 2 years of it.
     
  16. firestarter macrumors 603

    firestarter

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    #16
    This is a sad story - and this guy's luck has run out.

    But he has been lucky. Essentially he's uneducated and unskilled - he dropped out of college to go trading, and at $200k it doesn't sound like he was a very good trader... that's not actually very much. He was lucky to fall into that job, and be picking up that salary.

    Now he's left that, he has no education and work skills to fall back on - he has to go for a blue-collar job.

    I'm not trying to make any sort of point here, except that this really underlines the necessity to get educated and build transferrable skills, so you can actually transfer into a job outside your industry if you need to.
     
  17. beatzfreak macrumors 6502

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    #17
    I agree. There's thousands of people here in NYC in his position. A lot of them got sucked into wall street the same way this guy did, some of them had degrees and were able to find comparable work.
    The housing market is just now starting to suffer in NYC, he could have sold last year and probably made out ok. I have friends who did that. They rented something comparable to this guys place for less than half his mortgage. Their kids are still at the same schools. Life goes on.
     
  18. rhsgolfer33 macrumors 6502a

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    #18
    He's not unskilled, he's highly skilled, unfortunately for him it is fairly difficult to apply highly specific commodity trading skills to other arenas. He may have been able to make it in other banking or trading jobs, but those all pretty much took a hit as well. You're correct that he may have had an easier time finding another job if he had a degree, but even so, it still would have probably been a huge pay cut and its quite probable he could still be in the same situation. But no one can say what would have happened or what he should have done, hindsight is always 100% accurate, foresight isn't.

    And $200k is a pretty good salary as a trader. Compensation for traders is mostly through bonuses, the article mentions that his salary was $200k, they make no mention of his other compensation, which has a fairly good probability of being very high (quite possibly higher than his base salary).
     
  19. firestarter macrumors 603

    firestarter

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    #19
    The figures don't add up. He paid $400k on his condo after 13 years trading? I don't think he was making that much on bonuses (you're right though that $200k is about right for a basic salary). The article makes him out to be some sort of BSD - but that's not the case.

    By braking even on the sale of the condo, does this mean that he can still get the $960k pre build price back? That's not so bad, he'll still walk away with $400k+ of equity.
     
  20. Mousse macrumors 68000

    Mousse

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    #20
    Speaking from experience, a few years ago I got laid off. I handed out hundreds of resumes, posted on the Net, scoured the classified and wore out a pair of running shoes all within the first 2 weeks. I placed a "For Sale" sign in front of my house after 3 weeks. For another 6 months I continued to look for a job while my funds dwindled away and no credible buyers to be found.

    I got lucky and found a job after about 7 months. Coincidentally, that was when someone with the funds necessary wanted to buy the house. He had seen the 2 weeks earlier. He saw the listing a day before I had the it pulled. BTW, just because you put your place up for sale, doesn't mean you have to move out first. Paying mortgage on an empty house AND rent on a place to live while you have no funds coming in? That's the height of stupidity, IMO.

    I feel your pain. But these guy WAS employed. He wasn't pulling in $200 a year anymore, but he and his wife combined for $48K a year. Lots of families live comfortably on that amount; just not in a $1M condo.:rolleyes:
     
  21. rhsgolfer33 macrumors 6502a

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    #21
    In New York? A family of 4 can live comfortably on $48,000? :rolleyes:

    Maybe in North Dakota, but no way in a decent neighborhood in New York City.
     
  22. 63dot macrumors 603

    63dot

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    #22
    This reminds me of some stories of some local norcal dot.com kids almost a decade ago.

    Joke: "What do you call the Domino's Pizza Delivery Guy?"

    A: "Former dot.com CEO
     
  23. iGary Guest

    iGary

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    #23
    My significant other went from making six figures last year as a branch operations manager to the mid-five figures this year. Needless to say, we've cut back on quite a bit. It's amazing what you consider necessity and luxury when the incomes are down.
     

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