For more than a decade, Scott and Lori Pustizzi did everything right. They have two happy children, a good marriage and a beautiful house that they got with a manageable mortgage.
They also have good jobs. He is a human resources director; she’s a pharmaceutical sales representative.
The couple earned their comfortable life through hard work. They met 15 years ago at a local Publix Grocery store, where he was stocking shelves and she was working the cash register. They paid for their own college education and their own wedding. Now they’re both in their 30s, and they figured this was the time to start doing some wise investing.
So back in 2004, when Florida was seized with condo fever, Scott and Lori wanted a piece of the action.
Unfortunately, they put all of their eggs into the one real estate basket and borrowed way beyond their means.
Absolutely #1. While this story is a sad one, these people clearly did not understand what they were getting themsleves into. If you’re not going to live in the dwelling or rent it for at least break even, you better have a lot of cash reserves on hand. For these people to try to flip real estate is similar to me to go out tomorrow and try to be a Bishop (or even Rector). You can get in way over your heads if you’re not careful.
This is a sad reminder that leverage is a two edged sword. It makes the highs higher and cuts deeply to make the lows lower. I guess a pertinent question is how much does the government need to do to protect people like this from themselves, and how much should the taxpayers have to pay, if at all, to do it. These poor folks are poster children for irrational exuberance and failing to “know what you don’t know.”