NYT: Life on $7.25 an Hour

[Tom Rinaldo]

37. Very True

But while looking at the actions of ordinary individuals who got caught up in it I think it important to reflect on that phrase, "desperate times call for desperate measures". I actually bought a house I couldn't afford once in California. I did so at a time when skyrocketing rents were approaching the point where I couldn't afford those either. For complex personal and interpersonal reasons that I won't go into here, it wasn't an option to uproot my life to move anywhere significantly cheaper in what was then the near future. This fortunately was in 1998, and I was astute enough to recognize that the small (825 square feet) home in question seemed slightly under priced for the then market and had probable upside potential (it was in a beach town).

I sold it three 1/2 years later and moved across the country when it then was more viable for me to make that move. I had already taken out a second loan on that house and I could not have remained there for 6 more months even if I wanted to, but that purchase A) bought me the time I needed and B) went up enough in value that I came out ahead after repaying the first and second mortgage plus some loans friends made me to help me buy that first house initially. The profit paid for my moving costs, a significant upgrade on a used car, and let me put down a 40% deposit on a much cheaper somewhat larger house in upstate New York, with a 15 rather than 30 year remaining mortgage at half the cost of my two prior mortgages combined.

I wasn't eager to play that real estate game in the first place, but all of my other options were fast eroding. Had I not made a play then they would have eroded even faster. I knew it was a gamble but standing pat looked like a clearly losing hand. I was almost 50 at the time. My point is that when the deck is rigged against you there usually are few if any "good" options left. Think of the classic scenario of someone who shoplifts food to feed a hungry child. Maybe there was another way out open to them, maybe not, but it is hard to always act in the most ideal rational manner under that type of stress. People grab at straws when they are floundering in water over their heads, and that is what the shift of assets in America away from the 99% to the 1% over the last 40 years has led to.

Hard working Americans shouldn't need two jobs to survive, they shouldn't need two jobs to secure decent housing in their home community either., and they damn well shouldn't fall short of that goal when they are working two jobs. And how the hell is anyone supposed to save for their retirement under conditions like these?