Bank of Mom and Dad Shuts Amid White-Collar Struggle

[Liberal_in_LA]

Bank of Mom and Dad Shuts Amid White-Collar Struggle

By MARY PILON

FAIRFIELD, Conn.—When Maurice Johnson was laid off a year ago from his six-figure salary as a managing director at GE Capital, it wasn't his future he was worried about.

It was his children's.

The family income of the Johnsons is a fifth of what it used to be. And the children are about to feel the pain. Mr. Johnson's two oldest are attending his alma mater, Johns Hopkins University, at an annual cost of $50,000 apiece. And his youngest daughter, 15 years old, recently began her own college search. Mr. Johnson isn't sure whether he'll be able to help her to go to college, or even to get the older kids to graduation.

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"We saved like crazy from the minute they were born," he says. "Then, it all fell to pieces."

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This comes as young adults could use a financial helping hand more than ever. The unemployment rate for workers ages 16 to 29 was 15.2% in March, the highest rate since 1948, according to the Bureau of Labor Statistics.
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Mr. Johnson made up to $550,000 a year, including bonuses, before losing his job in March 2009. The Johnsons had stashed $250,000 away for college.

If that money isn't tapped sooner for household expenses, it might buy two years of schooling for each of his children, Mr. Johnson calculates. Further expenses such as first homes and weddings are out of the question. "They're going to have to elope," he says.

In the summer of 2007, the Johnsons paid $1.5 million for their Fairfield home and took out a mortgage of $852,000. Mr. Johnson figures it could realistically sell for $800,000 today. Given the numbers, the family is trying to avoid moving and recently refinanced their house at a lower interest rate.

"It's emasculating," Mr. Johnson says. "I'm supposed to be providing for them, but I can't."


http://online.wsj.com/article/SB10001424052748704207504575130171387740744.html

[rfranklin]

1. It is ridiculous that college costs $200,000 without any guarantee...

that one will have a job upon graduation.

[lumberjack_jeff]

4. What's also ridiculous is that someone's skills are worth $550,000 a year on Tuesday,

and nothing on Wednesday.

[DJ13]

2. I feel so sorry that the well off spent it all

:nopity:

[virgogal]

14. That's how I feel. The money he was earning should have given

him a very nice education nest-egg,and then some.

He thought the party would go on forever.

It's over.

[TwilightGardener]

3. Welp, it's time they did the old student loan thing, maybe. That's how I went to school.

They're still better off than most kids.

[TwilightGardener]

5. What parent has ever bought a HOUSE for their kids? I missed that little tidbit.

[Liberal_in_LA]

8. The well heeled... Many of the parents of my upper mid class friends gave the down payment for the

kid's first home... Or parents died, and kids bought home with inheritance. Generational wealth. That's is why the huge differences in savings between ethnicities leads to generational poverty.

[TwilightGardener]

10. Geez. And I used to be jealous of the kids in my high school whose parents bought them

their first cars. I thought THAT was what rich people did, LOL.

[deaniac21]

6. I submit that a better deal than 50k annually could easily be

found.

[JBoy]

7. "Saved like crazy from the minute they were born..."

and then bought a 1.5 million dollar house.

[DainBramaged]

12. That's my thought too......

they didn't think of the kids.......they had a college fund they put money into like a Christmas club every week........divide 18 years into $250000 and you'll see what they really saved out of all of that money they made.....they saved less than $14000 a year who are they kidding.

[Jennicut]

9. I am sorry, but as someone from CT....anyone living in Fairfield in an 1.5 million

dollar house is not that sympathetic. I had to go to a state school, Central CT State U. No choice with the cost. I took out student loans. My Dad made 50,000 a year instead of $500,000. None of my friends had their parents pay their entire education outright. None. This was 1995 to 1999 when the economy was good too.

[bluestateguy]

11. This is a big reason why I am not likely to want to have kids

I like kids (mostly), but boy they ain't cheap. And I don't want to bring someone into this world unless I can give him/her all of the things my parents were able to give me.

That, and I'm not married yet.

[FarCenter]

13. You are advised to save during the fat years in order to make it through the lean years.

[lunasun]

15. Tsk tsk..the saddness of it all...

Not :nopity: