“FROM THE PENTHOUSE TO THE OUTHOUSE”
In early 2005 I had a fistful of money ($2,400,000) that I obtained by refinancing my Monterey Bay, California home. This fortune came to me thanks to the real estate bubble that swept thru the world beginning in the early 2000’s. In 1987 I had paid $250,000 for this house and now I was a multimillionaire!
After so many years living like Ralph the Cheap, I began to treat this windfall money as if I were the Donald Himself. I bought an oceangoing Chris Craft, two polo ponies, a home theater the size of Grumman’s Chinese Theater, and took vacations to places that Carlos Slim and Warren Buffett didn’t know even existed. I joined the exclusive Pebble Beach Golf and Tennis Club and took weekly golf lessons from Greg Norman and tennis drills with Chris Everett. (They were still together at that time.) I built a three-car garage with a cozy apartment above to house my newly acquired Bentley, Porsche, and Landrover (for Edna).
Edna, my dear wife of forty years, would question my sanity over my transformation from once a money mouse, to now, a voracious King of the Jungle spendaholic. I assured her that I had every thing under control and that I had a master plan to cover all contingencies. I was also very canny in justifying my monetary bender to her, extolling the macro and micro benefits arising from spreading our wealth around.
I explained that some of my spending created macro (the big picture) benefits in that every dollar I sent forth multiplied its beneficence to all my many vendors, blessing them with income that they would otherwise not have to support their families. On the micro or personal level, there were untold benefits to be had arising from “investing” in various programs, for example, such as acquiring the latest version of expensive custom golf clubs. This purchase, I explained, would serve to improve my golf game and thus reduce the number of high dollar checks I was handing over to my golfing “friends.” This was an opportunity for big savings for our household.
And so I continued my unrelenting spendorama as if I had won PCH Sweepstakes giving me a million bucks a year for the rest of my life. I kept the loan current by paying only the interest required. I made no payments to reduce the principal as I needed this money to live on. My backup plan was simple: next year – be it 2007 or 2008 or whenever – I reckoned that our house would gain another million or so in market value and when it looked like the prices were topping, I would sell the place, clear off the debt, and go home with at least $1,000,000 in the bank. And I could keep all the goodies I bought along the way.
I was oblivious to the possibility of a sharp “reversal of fortune.” I was clueless that Bubbles could burst! I knew nothing of a place named “Waterloo,” nor knew the existence of a coop where the chickens came home to roost. However, these foreordained realities soon overtook me and slammed their doors shut behind me!!
When the NY investment firm, Bear Stearns – known as “the father of mortgage securities”- went belly-up on Mar. 9, 2008, I took this as my signal to execute my foolproof plan. On March 10, I listed our house at $4,500,000 which was about $500,000 under the market level at that time for a quick sale. My phone never rang. Nobody ever came by to look. Two months later with no action I reduced the price to $4,000,000. Nothing happened. Nothing ever did happen and one year later, I was robo-signed, spindled, mutilated, tapped-out, and sequestered on Mar. 1, 2009.
It all went: the cars, the boat, the house, the golf clubs, Edna’s furs and jewelry (she is still bitter). Everything we owned was attached. The only thing left unattached was our monthly Social Security stipend and my old bicycle.
But strangely enough, Edna and I are right back where we started – at our house overlooking the beautiful Monterey Bay. I am now the gardener and Edna is the housemaid. We live in the apartment above the garage rent-free in exchange for our servitude.
It was quite a ride from the Penthouse to the Outhouse!