Picking up foodstamps in a Mercedes

"Frank Grimes" (FrankGrimes) 07/09/2014 at 13:27 • Filed to: None

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This was interesting.

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Jagvar > Frank Grimes 07/09/2014 at 13:31

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What exactly is a "2003 Mercedes Kompressor"? I think she means C230, but doesn't understand how model names work.

mr_gofast > Jagvar 07/09/2014 at 13:33

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yup..c230 kompressor coupe

Meatcoma > Jagvar 07/09/2014 at 13:34

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Could be a slk line, they have the Kompressor engines in them as well.

JGrabowMSt > Frank Grimes 07/09/2014 at 13:35

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It's an important perspective on life most people don't ever want to face.

Mattbob > Jagvar 07/09/2014 at 13:37

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She just took the supercharger maybe?

area man > Frank Grimes 07/09/2014 at 13:38

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I saw this, and I'm conflicted. On the one hand she makes a good point about keeping the Benz since they've kept it running well, and it is the low-end model. On the other hand, depending on the condition you could still get 4 or 5 grand for it, get a used accord for 2 grand + 500 for registration/taxes/fees and make a healthy profit.

area man > Meatcoma 07/09/2014 at 13:39

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I think with the twins they have it's probably the C class.

For Sweden > Frank Grimes 07/09/2014 at 13:40

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sm70- why not Duesenberg? > Frank Grimes 07/09/2014 at 13:41

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That reminds me about the story my grandmother told us. She was born into an affluent family. When they moved here from Britain in 1959, her father took his brand-new MkII Jaguar with them. A couple years later, she married my grandfather, who at the time had a desk job with the army, I believe in Providence, Rhode Island. She somehow ended up qualifying for unemployment or welfare or some such, (which I blame on Obama, because she wasn't poor) and for a period of about 3 months, she went to pick up her whatever check. Once, her father (my great-grandfather, an engineer) came to visit her and my grandfather. When she stated that she was walking down to the unemployment office, her father offered her a ride. So here she was, in the mid-60's, when imported luxury cars were even more of a status symbol than they are now, picking up her unemployment check in a shiny white-on-red Jaguar. Needless to say, she got a few raised eyebrows.

Meatcoma > area man 07/09/2014 at 13:41

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True.

Jagvar > mr_gofast 07/09/2014 at 13:43

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That actually makes the title of the article a bit misleading. The KBB value on that car is only about $3,500, and it was the very bottom-rung Mercedes when it was new. I wouldn't be surprised if there were others at the WIC office driving Corollas and Civics that were more expensive. Yet she says "Mercedes" like she's coasting in on some big luxury barge.

GeorgeyBoy > Frank Grimes 07/09/2014 at 13:44

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Kind of confused here. They could've sold it at the start of their money problems. They would've saved money by eliminating the high depreciation of it, insurance costs, etc.

Not sure "it's paid off is an excuse". You can find a great reliable car for <$4k.

mr_gofast > Jagvar 07/09/2014 at 13:46

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not really...the fun here is hte the concept of ppl who own mercs dont need food stamps ergo picking them up in a merc is a very weird situation to be in...collecting subsidized food coupons while driving a (apparently) pricey german coupe. No one will care if the car is worth 35 cents - seeing a merc implies to most ppl, someone is rich...

sm70- why not Duesenberg? > Jagvar 07/09/2014 at 13:47

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You know that. And I know that. And maybe she knows that. But the low-income moms and workers at the welfare office do not know that. All they see is the badge.

Jagvar > For Sweden 07/09/2014 at 13:48

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Exactly. She drives this:

Not this:

If it were the latter, the story would be a tad more compelling.

sm70- why not Duesenberg? > Jagvar 07/09/2014 at 13:50

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But since this was likely only a few years after the car was new, it would be more like her driving this:

jariten1781 > Jagvar 07/09/2014 at 13:55

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True today, but this happened 2009. Could have traded down for a similarly reliable car and pocketed a couple grand which is a ton of money when your income is exactly 0. You'd also likely save on insurance and registration depending on the location.

Not saying they should have, but it was certainly an option if they really had no savings, no job, no 401k/IRA to take penalty withdrawals, a new mortgage, and new twins. Bad situation to get yourself into.

MIATAAAA > Jagvar 07/09/2014 at 14:05

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I thought she meant this:

Chteelers > Frank Grimes 07/09/2014 at 14:07

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I hate to come down hard on anyone, but they did make a lot of big financial decisions that I don't think they fully comprehended. First, they made a combined total of $120k a year in similar careers, so I can assume that they both made roughly $50k/yr. That's not an awefully large salary to be buying an (overpriced) luxury car. I make $80/yr, and I bought a $28k car, not a $80k car.

Second, he worked as a copy editor for a local newpaper. You had to be aware even in 2007 that newspapers were going bust all over the country. Everything was going digital even back then. And she was a local TV news producer, again, a fickle industry. Planning for job instability should have been high priority.

Third, they had two (strike one) unplanned (strike two) children before they were married (You're OUT!). Kids ain't cheap, and having them unplanned and before marriage both demonstrate that this couple doesn't plan their life deliberately.

Fourth, they bought a $240,000 house during the same year that they had twins and got married. Talk about piling on all of life's biggest financial obligations at the same time. She doesn't give details about their loan, but I would wager they didn't do the traditional 20% down payment (which adds PMI throwaway money) and they may have even got a ARM loan (really dumb).

Fifth, $240,000 is too expensive of a house for them. Rule of thumb, never buy a house more than 3 times your salary. That's a very rough figure, but it gets you in the ballpark to make sure your mortgage payment is roughly 30% of monthly paycheck. And if either of them lost their job, they'd be living on a $50k salary. No one making $50k could hope to swing the payments on a $240k mortgage, not without quickly burning through your savings.

Sixth, savings. Judging by how quickly she said everything happened, I suspect they didn't have any. Everyone should have 6 months (or better, 12 months) of living expenses in the bank. So if you lose of job, total your car, get hit by a bus, whatever, you've got a financial cushion.

Bottom line, if you're financial life means you can't last 2 months without a job before going onto foodstamps, you are living WAY beyond your means. You gotta be able to weather a major crisis. Money should be a castle. Money should be a moat. Money should protect you from all the problems that life throws at you. /rant

All that said, I do wish someone had reached them sooner, and people in similar situations, to help teach them these financial lessons. Too many people live one major crisis away from serious, serious problems, and they really don't have too.

thebigbossyboss > sm70- why not Duesenberg? 07/09/2014 at 14:21

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All I see is the badge myself. I can't even help it, it really is a testament to MB's North American marketing. I used to ride around in mercedes vans with 500,000 kms on them easy, and I would still catch myself being like "dat badge".

Even though mostly they are completely worn out 3rd world transport busses.

The luxury man!

thebigbossyboss > Chteelers 07/09/2014 at 14:23

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I agree man. I sit here pulling $50K driving a $3K car and people always asking me why I don't upgrade. Because I can afford my current car. Don't get me wrong, I am the biggest car enthusiast, but I want to save up for some other things first.

davedave1111 > Chteelers 07/09/2014 at 14:25

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Wow, you're impressively wrong for someone so preachy.

First up, what the hell does marriage have to do with anything? More to the point, though, your 'financial advice' is mostly complete nonsense. 3x salary? $240k is a lot less than 3x $120k. In any case, round here your 3x income multiplier would mean no-one should buy a 3-bed semi in a London suburb without earning half a million dollars a year.

Chteelers > davedave1111 07/09/2014 at 15:58

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I didn't say marriage was wrong, just having kids before marriage, primarily as it relates to financial health. It's my belief that having kids before marriage (in the vast majority of cases) leads to financial difficulty. Many end up as single parents, and while being a single parent certainly isn't wrong, it IS a financial struggle. And I think havings kids before marriage demonstrates a lack of planning for the future, specifically as it relates to finances. A planned pregnancy has a much higher likelihood that there will be conscious decisions made about a couple's financial health, can we afford the cost of a baby right now? who will stay home from work to care for it? can our finances handle one parent at home? can we pay for day care? etc etc. An 'oops' baby just shows up, and then you have to figure it out afterwords, with limited financial options.

$240k is way more than 3 times $50k. That was my point. If one of them lost their job, they'd be living on one budget, so their mortgage payment should have reflected that. If you make $50k, you can't afford a $240k house payment. Not unless you put a huge downpayment, which I suspect this couple did not.

And you're correct. Because London. Purchasing a house there is fantastically expensive, so unless you're wealthy, you can't afford to buy a house there. No one is owed the right to own a 3-bedroom house anywhere, much less a highly desirable city like London. You should rent, or buy a less expensive place, or move to where houses are cheaper.

Chteelers > thebigbossyboss 07/09/2014 at 16:01

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You're doing it right. Too many people who make the same amount as you, leverage their financial life to the hilt. The temptation is to do like everyone else. Lease that BMW. Finance those flat screens for 3 years at $24 a month. Silly silly.

davedave1111 > Chteelers 07/09/2014 at 16:07

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You're completely mad. You sound like someone of my grandparents' generation when you talk about marriage. It's utterly meaningless in the modern world.

Your views on house prices are amusing, but that's about all. They bear no relation to the reality, which is that things will be a bit tight if you're trying to pay a mortgage of five times your income, but it's completely doable if it's a priority.

Even on half their income, the mortgage was completely affordable. As the article said, though, they lost three-quarters of it and couldn't replace it for a long time.

Chteelers > davedave1111 07/09/2014 at 16:23

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But that's my point. Don't tie anchors around you're neck. If you signup for a mortgage payment that makes things "tight", that's an anchor. Then you decide to have two kids at the same time, another anchor. Get a Mercedes, anchor. All on a $50k salary in a tenuous career. In isolation, none of those are undoable, but taken together, they present a huge financial risk. Some people weather that risk, this author didn't. She put herself in a bad situation though the many decisions that she made.

I'm not without sympathy for people who get hit with hardships. Losing both jobs at the same time obviously sucked. And I'm thankful that there are social safety nets, like food assistance, which help in those situations. They sound like intelligent, hardworking folks, so they'll probably pull through this, and good for them. But she needs to take a little ownership of the situation she found herself in. I didn't get any sense of that in the article. Just kind of a "Oh no, a tidal wave hit me and now I'm screwed!" I'm saying that she was standing on that beach through a lot of warning signs.

davedave1111 > Chteelers 07/09/2014 at 16:36

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But you're talking a load of well, if not nonsense, ridiculously conservative stuff. There are millions of people who own houses in London, and the vast majority of them manage just fine.

The fact is, just after you buy a house for the first time, you're normally going to be pretty vulnerable financially. Unless you're extremely well-off, anyway. They may well have been a bit more vulnerable than was absolutely prudent, but not to any great extent - they were buying a house for two times their annual income.

That said, I'm willing to agree that with that house-price to income ratio, I'd have expected them to be making a very large deposit at the least. That could well have been wiped-out by the house-price crash, though, and by the sound of it the father was unemployed for quite a while, so it's not unreasonable to think they might well have had a large deposit.

Chteelers > davedave1111 07/09/2014 at 17:17

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Yes it is conservative, but hey, I'm also not writing an article about driving to the food stamp dispensary in my Mercedes. Not trying to be disagreeable with you, just ranting (admittedly) because I don't like seeing people make bad financial decisions. I am preachy because isn't that what's the internet is? Casting your thoughts out into the black ether?

A bit confused about you saying their deposit could have been wiped out by a price crash. A price crash on your house has no impact on your mortgage payments (on a traditional 30-yr fixed, anyways). At purchase time, you agree to a sale price, duration, and interest rate, and those determine your monthly mortgage payment. Your house could go up or down in value, and your mortgage stays the same. Just cause your house declines in value on the market, you would still be able to make the same monthly payment till your house is paid off. A price change only matters when it's time to sell.

davedave1111 > Chteelers 07/09/2014 at 17:39

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"A bit confused about you saying their deposit could have been wiped out by a price crash. "

Unless I misread things, the article didn't say how large their mortgage was. It said how much the house cost. It's quite possible they had a large deposit.

As for the relevance, having put down a large deposit is basically synonymous with having a fair amount of equity. That means you're secure for a while even if you lose your income, because the bank doesn't have to worry about losing its money: if you have to, you can sell up and pay them back, including any arrears.

Just for an example, my parents bought their house a few years ago for cash - quite a lot of cash, actually. Then my dad took out a very small mortgage relative to the value, because he was a bit short of liquid cash to do it up. (Normally borrowing money for decorating a house would be completely daft, but he was only temporarily short of cash - plenty of other assets.) The total was something under 10% of the value of the house. Even if he'd had no other assets, and had lost all his income, he was never going to be in trouble. The bank would have given him as long as he wanted to try and find some money or sell the house.

KingK90 > Chteelers 07/10/2014 at 12:44

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I'm sorry, but you sound incredibly ignorant and perhaps suffer from hindsight bias (or at least he way you are writing things). Did they make mistakes, yes...most humans do. But when people make over a certain amount in America, they are 'untouchable'. For some reason there's this idea of ''making six figures'' equates to being financially set. But that's just for one year and you have to work every year to keep that amount.

Also, the Mercedes was already PAID for. Read it fully. So it was the house payments and kids that interfered. I'm not sure if getting married would have solved anything (what is this, the 1960s? Should they have sent the kids to a 'wedlock home' or aborted them?). Maybe contraceptives should have been used. But then again, I'm a guy who just doesn't participate in sex until I'm ready for whatever comes out (no pun intended), as condoms don't 100% protect from babies and STIs.

I'm not sure if the writer was a 1st gen college student, but that could contribute. I think people have a harder time realizing they make ''less'' than what they actually do. Most people think things that are here now are here forever (much like youth). They 'should have predicted' their jobs would be in jeopardy? Hm...there's some guy working in Silicon Valley right now at Google making mid six figures that doesn't know his industry will crash and he will be out of a job.

Chteelers > KingK90 07/10/2014 at 13:31

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So you kind of agree with me, in that you recognize that maybe they should have made a couple better choices. I think she made several decisions which, compounded together, put her in a precarious financial position. She should take ownership of those decisions, and others should see in her an example of what not to do.

KingK90 > Chteelers 07/10/2014 at 14:26

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Yeah, it wasn't that I never fully agreed with her situation. Reading the story, my first thought was "unexpected kid....kids only come from sex!".

I was just stating that everything is good until it's not. Some people think I'm negative, but I'm not (family/friends) it's just that Murphy's law always seems to come up SOMEWHERE. As a broke college student I made a lot of terrible choices, assuming money would come from ''somewhere'' and credit doesn't matter. Suze Orman helped some, but I realized that we live in a life of uncertainty and the best thing is to reduce risk.

My family for example went from food stamps to six figures to food stamps and the struggle continues. But the biggest problem is, as I've found out, a lack of planning. Reducing risk. Growing up this was not taught to me (glad I learned it in college though) and caused some problems. A credit score doesn't matter until one's car is totaled and one needs a new car only to find out....oops! Bad score, 20% interest!

Most people don't realize life is about reducing risk rather than looking at the glass as half-full all the time because that glass just might break...make sure you have a gallon somewhere.

Chteelers > KingK90 07/10/2014 at 14:46

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Totally agree with everything you say. Most good financial decisions are simply risk assessments and preparation. You can't hope to be right 100%, so you try to put yourself in the best position possible, and have a buffer should life throw you a blue shell.

KingK90 > Chteelers 07/10/2014 at 14:53

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Yeah. I read the article again and notice she said "I grew up in a white, affluent suburb... ". Yes, because being white somehow made her 'immune' to crap happening. I really think at this point she thought she was invincible.

Lol, Mario Kart is an excellent analogy to life. You're in 1st, near the finish line then a blue shell takes all of your dreams to 8th place..Mario Kart 8. Good times...

Svend > Frank Grimes 07/12/2014 at 13:36

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I've just read through her post and yes I agree with her "you hang on to the things that work, that bring you some comfort. That Mercedes was the one reliable, trustworthy thing in our lives." The car is paid off and a safe reliable car. Sure they had two children before marriage as some have said but this isn't the 30's anymore, the children were twins not like someone has pointed out had one then another. Sure they could of planned better for the future with the money they had coming in but hey we all could. We all think 'it could never happen to us' but sometimes it does. They are making the best of a bad situation, they don't want sympathy but a little empathy would be nice all the same.

I wish her and her family all the best for the future and hope that things for them and others in the same situation improve very soon and can put the whole thing behind them and learn from it.

Svend > Frank Grimes 07/12/2014 at 13:47

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Not sure how several below think that she should of sold the car for $4-5k and bought a reliable second hand car for $2k and used the profits. They have a reliable car that's paid off and they know how it's been looked after. A used car always has something hanging over it's head and that is that you never know just how well the previous owner drove or maintained it. It's a complete non start. Sure if the car was a massive several $100k car yes but it isn't and never was.

They may not have had much money but you do have to make do with what you've got and not have to drive a jalopy to appease others that couldn't afford a Mercedes in the first place.

Frank Grimes > Svend 07/12/2014 at 14:09

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yeah I think some people didn't read the part where she makes a pretty solid argument on why they kept it. and she describes the times her honda needed work so she had to take the mercedes I am not sure if this is during the time she was on assistance because then it would be weird they had two cars.

Svend > Frank Grimes 07/12/2014 at 14:34

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I think quite a few with large articles pick sections rather than the whole thing and then make their own assumptions for the bits in between.

Situations like these can happen to anyone. Driving a Mercedes while going through it is not and shouldn't be a slight on them. Not making any effort like some these days should be. More power to people who want out of the hole they've found themselves in and a kick up the butt for those who merely wallow in self pity and blame others for putting them there and not making any real attempt to get out of a bad situation.