As the economy continues to tank, stories of financial hardship are becoming more commonplace. Businesses are going under and personal bankruptcies and home foreclosures are everyday occurrences in this pre-election, oil-centric environment that we are slowly accepting as normal.
As a small-business owner fending off client budget cuts and soothing potential customers suddenly stricken with T-Rex arms as they reach for their wallets, it is easy to empathize with others who are struggling to make ends meet.
Then I read the story of the Harper family from Lake City, Georgia, near Atlanta. If the name doesn’t ring a bell, their circumstances might. In 2005, they were one of the families on ABC’s “Extreme Makeover: Home Edition.” As is always the case, this family was living in a decrepit, old house and had it replaced with a mini-mansion – this time built by Atlanta-based Beazer Homes and an army of local volunteers. In addition to the house, Beazer raised $250,000 in contributions that included college funds for the children and a substantial home-maintenance fund to keep things going after the cameras were all gone.
A little more than three years later, the house has been foreclosed on. It seems that the family decided to cash in their newfound equity and take out a loan for $450,000 to pursue a brighter future by investing in a construction business. Needless to say, things did not go as planned, they cannot make their payments and next week their house is scheduled to be auctioned away.
Have a hard time believing anyone could be so stupid? Or so greedy?
Well, as a favorite ESPN football analyst and ex-FSU quarterback likes to say, “Not so fast, my friend.”
As I recently recounted, my laptop computer decided to stop computing while I was on the road, and I had to replace it. Just after I ordered it, I received the pleasant surprise that an insurance policy on the old laptop would pay for the new one. I got the check yesterday.
As I am looking at the check, knowing full well that the charge for the new Dell is weighing on my VISA card balance, I confess that alternative uses for the newfound and unexpected money began to flash before my eyes.
Now, a mid-level notebook computer is certainly no half-million-dollar house, but nobody ever gave me a house. Don’t we all do the same thing from time to time on a much smaller scale?
Haven’t we have paid for a dinner on our card and been reimbursed by a colleague in cash? Do we always set that money aside and use it to pay off the charge? The point is that we need to be disciplined enough to remain fiscally sound – especially in times like this.
When money is flowing, we can make mistakes and make up for them later. If we make a big enough mistake now, there may not be a later. So, I am speaking to myself and all the others tempted to think that reliance on credit is OK and it will be easier to pay off later when things get better.
It is a dangerous game that seems especially tragic when so much money is involved. I wish the Harper family the best and hope that faced with the same decisions on any level, that we would be a bit more prudent.
As a small-business owner fending off client budget cuts and soothing potential customers suddenly stricken with T-Rex arms as they reach for their wallets, it is easy to empathize with others who are struggling to make ends meet.Then I read the story of the Harper family from Lake City, Georgia, near Atlanta. If the name doesn’t ring a bell, their circumstances might. In 2005, they were one of the families on ABC’s “Extreme Makeover: Home Edition.” As is always the case, this family was living in a decrepit, old house and had it replaced with a mini-mansion – this time built by Atlanta-based Beazer Homes and an army of local volunteers. In addition to the house, Beazer raised $250,000 in contributions that included college funds for the children and a substantial home-maintenance fund to keep things going after the cameras were all gone.
A little more than three years later, the house has been foreclosed on. It seems that the family decided to cash in their newfound equity and take out a loan for $450,000 to pursue a brighter future by investing in a construction business. Needless to say, things did not go as planned, they cannot make their payments and next week their house is scheduled to be auctioned away.
Have a hard time believing anyone could be so stupid? Or so greedy?
Well, as a favorite ESPN football analyst and ex-FSU quarterback likes to say, “Not so fast, my friend.”
As I recently recounted, my laptop computer decided to stop computing while I was on the road, and I had to replace it. Just after I ordered it, I received the pleasant surprise that an insurance policy on the old laptop would pay for the new one. I got the check yesterday.
As I am looking at the check, knowing full well that the charge for the new Dell is weighing on my VISA card balance, I confess that alternative uses for the newfound and unexpected money began to flash before my eyes.
Now, a mid-level notebook computer is certainly no half-million-dollar house, but nobody ever gave me a house. Don’t we all do the same thing from time to time on a much smaller scale?
Haven’t we have paid for a dinner on our card and been reimbursed by a colleague in cash? Do we always set that money aside and use it to pay off the charge? The point is that we need to be disciplined enough to remain fiscally sound – especially in times like this.
When money is flowing, we can make mistakes and make up for them later. If we make a big enough mistake now, there may not be a later. So, I am speaking to myself and all the others tempted to think that reliance on credit is OK and it will be easier to pay off later when things get better.
It is a dangerous game that seems especially tragic when so much money is involved. I wish the Harper family the best and hope that faced with the same decisions on any level, that we would be a bit more prudent.
2 comments:
It is even more imperative to talk to your kids about this. The offers for credit cards flow into their mailboxes frequently and the temptation is just a phone call or postage paid envelope away. A dangerous game, indeed.
Using credit is assuming that the money will be there at a later date. However, we have no assurance that things will happen the way we plan. Recently, we won a bid on a project that would have been a significant financial benefit. We ended up having to retract our bid and lost the project because of circumstances that were beyond our control. Nothing is for sure, so living on credit nothing short of stupid.
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