Wow. This is a Must-Read.

Here’s how the story begins (all emphasis mine):

If there was anybody who should have avoided the mortgage catastrophe, it was I. As an economics reporter for The New York Times, I have been the paper's chief eyes and ears on the Federal Reserve for the past six years. I watched Alan Greenspan and his successor, Ben S. Bernanke, at close range. I wrote several early-warning articles in 2004 about the spike in go-go mortgages. Before that, I had a hand in covering the Asian financial crisis of 1997, the Russia meltdown in 1998 and the dot-com collapse in 2000. I know a lot about the curveballs that the economy can throw at us.

But in 2004, I joined millions of otherwise-sane Americans in what we now know was a catastrophic binge on overpriced real estate and reckless mortgages. Nobody duped or hypnotized me. Like so many others — borrowers, lenders and the Wall Street dealmakers behind them — I just thought I could beat the odds. We all had our reasons. The brokers and dealmakers were scoring huge commissions. Ordinary homebuyers were stretching to get into first houses, or bigger houses, or better neighborhoods. Some were greedy, some were desperate and some were deceived.

So, the author starts a new family with a second wife, and buys too much house– his budget is stretched to cover alimony payments so he gets a no-doc mortgage. Then his credit cards get maxed out, not just because he and his wife are spending a lot, but because his overdraft protection hits his credit card with a minimum $100 charge every time he’s overdrawn! Before you know it, he’s broke:

I felt foolish, ashamed and angry as I confessed to Bob. Why had I been trying to live a lifestyle that I couldn't afford? Why had I tried to keep up the image of a conventional suburban family man, when nothing about my situation was conventional? How could I have glossed over the fact that we had been spending about $3,000 more than we were earning, month after month after month? How could a person who wrote about economics for a living fall into the kind of credit-card trap that consumer groups had warned about for years?

But guess what, it gets worse. Bob the mortgage guy helps him “solve” his money problems by consolidating his debt into a new, even bigger adjustable rate mortgage that could potentially hit rates of 11.5%:

The paperwork was so confusing that I was never exactly sure who was paying what. I hazily understood that I was paying most of the fees, one way or another, but I couldn't figure out how, and I couldn't see any better alternatives. After it was all over, I figured we had paid about $5,800 in fees to Bob's mortgage company and the settlement company, on top of the sales commission that came out in higher interest rates every month.

I won’t spoil the rest of the story for you– it’s a long article, but read it all!

My Personal Credit Crisis, by Edmund L. Andrews. The web article is a preview from the 5/17 New York Times Magazine.

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