I realize that my financial story is not uncommon.  I was reading a couple of days ago that 30% of all home owners are under water in their mortgage, and while the financial situation has improved somewhat foreclosures continue at a rapid pace.  I realize that for most of us this news is water under the bridge.  The decisions have been made, the loans closed and issued, jobs lost, and so on.  So the trick now is dealing with the fallout, learning how to deal with the reality of bad decisions, bad advice and our super awesome credit and banking systems.  The worst part is being patient because with credit the best medicine really is time.  Oh yeah, and it will suck.

So let's talk about my mistakes and lessons learned:

Mistake #1

Following the crowd.  We had a comfortable situation, no credit card debt, in fact no debt at all aside from the mortgage.  Looking back I believe that because I had been careful with money I had a false belief in my ability to make sound financial decisions during a turbulent financial market like Southern California housing circa 2005-2007.  In reality, my lack of experience and and an overabundance of confidence were a very bad mix.  Many people around me were buying homes, holding them for a short period and flipping them for a profit, or buying multiple homes for long term investing.  I assumed that I could come late to the party, do what everyone was doing and be successful.  I can almost look back on this and laugh now.  Almost.

Mistake #2

A house is not an investment.  A house is a place I live in, it is also a home where I raise my kids, a dog, grow a garden and make memories. If I live in my home long enough to pay off the mortgage it can also provide comfort and security after I retire.  Profits from a house are not realized until the property is sold and because we all need a place to live, if I sell my house I have to buy another one.  So I never realize a profit unless I downsize or rent or live in the basement at my In-Laws house.

I hear stories all the time about someone who buys a property, resells it, buys another one, sells that house and so on until they make enough money to pay of their last property and live happily every after.  Some of these stories are true.  Many more people try to flip homes and fail.  Flipping homes is a job, if I want to flip homes I have to work hard which will include doing renovations and repairs, do research and be prepared to fail.  A person who flips homes is actually making an investment because he plans to resell and roll those profits into another property.  Luck is also a factor.  Most people don't want to make that commitment or take that risk, I am one of those people.

Mistake #3

The bank is not my friend.  The bank is never looking out for my interests, a mortgage is a business relationship between myself and a person or organization who wants to make a profit whereas I only want to make a home.  Making a profit means that a bank will do whatever it needs to do to squeeze every penny out of me as possible.  My responsibility is to protect the long term financial stability for myself and my family; the bank will not do this for me.

Mistake #4

Overextending.  I readily admit that I took on too much debt.  Regardless of what others were doing or the advice I was given I should have realized that even a small blip in cash flow would be a disaster and I took no steps to minimize my risk and exposure.  In almost every way what happened is completely and totally my fault.  I got greedy, plain and simple.

In my next post I will discuss how I and my family dealt with the aftermath.  Hint:  It hasn't been pretty or fun.

My financial life

Some things on my mind lately.  Actually, these things have been rattling around my brain pan for a couple of years and I wish I knew five years ago what I know now.  Five years ago, I was living in Southern California in a modest, affordable, (for California) home.  There was no reason to move, there was no reason to be thinking about moving, or even thinking about thinking about moving.  I am a bit of a vagabond so naturally I convinced myself and my lovely wife that we did, in fact need to move.  The best part was that we weren't just going to upgrade out home but we would keep our old one as a rental and take out 100% financing loans on both properties.

Brilliant.  What could possibly go wrong.

It was late in 2007, the housing market had already started to tumble and home prices had dropped an incredible 20% in our area already.  My thought was that historically a 20% tumble was pretty high and it looked like there was some positive financial news so maybe it was time to make an investment and make some money.  It seemed like everyone around us was doing the same thing or something similar.  Money still flowed from lenders like water, or that chocolate river in Willie Wonka, and I figured that if they thought I could afford it then of course it would be OK.  We had it all planned out, buy the new house, keep the old one and rent it for a year or so while it appreciated in value then sell the old house for a nice profit and live happily ever after.  What followed is the New American Story.  At first everything went as planned, but then the housing market continued to plummet.  I got scared and tried to short sell what had become our rental property.  We got lucky, an all cash buyer looking for a bargain.  The bank turned us down flat for the short sell.  No more buyers came around.  Then we lost our renter.  Finding another renter was impossible, many people were in the same boat as us and the rental market flooded.  We had no income coming in, and our savings ran out quickly; we had to let the rental go into foreclosure.  We thought, no problem we have a primary home, a good job and no plans to move.  So of course I lost my job.  I did find a new one right away, in Utah.  The good news was we were able to short-sell the second home this time, moved to Utah and rented for a while.  I am a terrible renter; I just can't make myself comfortable in someone else's home.  We thought we had hit bottom, or close to it, but then our medical bills started to stack up.  (side note: my oldest son has cerebral palsy)  Our only option was to pick up again and move into the basement at my in-laws house, which was waaay better than living in a rental with our own space and privacy.  We have now been here for almost three years.  We've managed to stay sane, and somehow not drive my in-laws insane. I have a great job, make plenty of money and aside from the housing fiasco in California I have nary a ding on my credit.  Unfortunately, the fallout from my financial decisions has proven to be longer lasting and more difficult to overcome than I ever realized.  Details on how I arrived at Point B, living in a basement, blown credit rating, from Point A, stable and living within my means, will follow in subsequent posts because there is just way too much to lay down in one sitting or post.

To me this is funny, irreverent, but funny

I am not someone who takes myself too seriously.  Sometimes.  But I ran across this today and found it to be hilarious.  Besides, if I can't laugh at myself someone else will do it for me, and that person would be doing something wrong so if I beat them to it I am really just helping other people.

The Colbert Report
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Montpelier KOA, Yeah we did that.

Had our annual campout with my wife's side of the family.  Normally we just do it in the backyard at my in-laws, we have water fights, grill stuff, chill.  This year we decided to go all the way and make this more of an Event, so we decided to do it at Bear Lake.  Here is how it went down.

The original plan, stay at the East Shore campground, which according to their website, at least when we first made our plans, is first come first served.  However, as Helmuth von Moltke the Elder so eloquently stated "No plan survives contact with the enemy".  When we called the Monday before our trip the very polite (not) person on the phone informed us that the campground is in fact reservation only, something that they just started this summer.  Delightful.  Frantic calling ensued resulting in a reservation at the Montpelier KOA for roughly 5x the price we had planned to pay and about 35 miles further away from the lake.  Whatever, vacation right.  Arrival on Thursday and the location is nice, right next to a creek, we have a little space around us so we don't feel crowded.  So far so good.

We get there on Thursday, on Friday we hang out, go to a surprisingly good museum in Montpelier and everyone else arrives on Friday night, late.  Now it gets fun.  The Big Plan is to rent a boat (reserved already), play on the beach and get really sunburned tan.  The water year in Utah/Idaho has been fantastic, YAY, because of all the water Bear Lake is full for the first time in umpteen years, YAY, because the lake is full most of the beaches are underwater, OH NO!  The good news is that we found a place on Rendezvous Beach right away, the bad news is that we had dogs in our group which they don't allow on the beach.  Some drama later... ok, 2 1/2 hours of drama later wherein a number of locations were scouted and options considered, we ended up at the original spot at Rendezvous Beach with the dog tied up to some trees just off the sand (totally legal so don't freak out).  In the end it worked out, we had a good time, enjoyed the beach, the water and the company.

We love Bear Lake but there are some lessons learned:

1. Always, always, always reserve everything in advance.  First come first served is not a good option for Bear Lake anymore, particularly with a large group.  Bear Lake used to be pretty sleepy, but now it is a touristy mess on the weekends.
2. Pay attention to the events happening during your stay, did I mention that the Bear Lake Triathlon was going on last weekend?
3. Be prepared for crowds, arrive early.
4. Did I mention reserve everything possible in advance.  By advance I mean a year-ish in advance.
5. Be prepared to spend some $$$ unless you get one of the few spots in the Utah and Idaho state parks or if you don't mind being cheek to jowl with everyone else.

Overall we had a great time, we'll do it again next year.

I'll try it so you don't have to

Installed a new Netgear N750 router tonight.  You may ask yourself, why do you need another router, you already have a wireless router (actually more than that if you count the ones in a box that I don't use anymore and can't seem to throw away) and a 1 Gb switch, you don't need the ports so why would you go through the aggravation of putting another device on the home network and making the two routers work together along with the DSL modem.  The reason is that I just can't help myself, I require mental pain and lost sleep to feel whole and satisfied.

Actually, the real world reason for the lost sleep is that I wanted to provide another level of security to my home network and implement some parental controls. The kids are getting more internet savvy and the availability of questionable content continues to multiply as well.  I did a bunch of research, I am looking for something that is easy to implement and manage, keeps logs of internet access and prevents as much malicious activity as possible and it came down to two options.  The first option is what I installed tonight, which is a combination hardware and internet based solution with the integration of Netgear and OpenDNS on a Netgear N750, cost of $149.99 from Amazon.  The N750 is one of Netgears higher-end models for home, but the functionality is available on most of their newer models.  I like that I don't have to install an intrusive client on each computer, smart phone or other access device on the network, anything that connects is automatically protected by the router.  There is a very lightweight client that can be installed on a single computer that will update OpenDNS as my dynamic IP address changes (if it changes).  What I don't like is that the protection does not follow the device outside of the home network, not a big deal while the childrens are still young and under my complete control (muhaahaahaa), but at some point I will have to address that too.

The other option was an internet based only solution that requires a client on every device in order to provide protection.  I found a couple of providers, but I think the solution provided by netnanny.com seems to be the most complete.  The overall protection level is very high, even giving parents access to their kids social media (Facebook) accounts and it follows the device no matter where it is connected, at home or at the local free wi-fi hotspot.  I don't like the cost, $50/year for 3 devices plus $25/year for each additional device.  So for my house it would be about $100 annually for this protection which seemed a little over the top.  Depending on how it goes with my current solution NetNanny may become a more interesting option, or when the kids are older and more independent, but for now I'm gonna pass.

So there it is, a high level overview.  If you want more details contact me so I can tell you to do your own darn research.

Close The Door

An age has passed.  For good or ill I cancelled my Rift account today and already cancelled my World Of Warcraft account months ago.  I thought when I stopped playing that I would miss it, and I did for a couple of days, but whether I've grown up or just become bored with the genre I just don't care to spend hours and hours playing games anymore.  Weird.  Of course, there could be other reasons.  Maybe it was because my 6 year old son was becoming way too fascinated with my games and having dreams/nightmares about it, which I totally understand since some stuff creeped me out too.  Maybe I moved on because my wife finally forced me to see the damage that being online all the time was doing to my relationships with her and the kids and my job and everything else and I made a decision about what was more important.  Actually, the answer is "all of the above".  Don't get me wrong, I love video games and I love to play appropriate games with my kids.  This also doesn't mean that I won't game no more forever.  I am also not passing any judgement on anyone else, it's me, not you, I am like a crack head who just won the lottery when I get absorbed in a game.  Good thing I don't smoke or booze it up, I'd probably have to figure out how to kick those habits too.

Ok, end rant.

This is a proud day

I never really had a game system growing up, not that they weren't available, but with a ton of kids under one roof it seemed like we always had to spend our money on food and worthless stuff like that.  So imagine how proud I am that my son <sniff> is playing Super Mario Brothers for the first time today.  True evidence that:

1. He has it much better that I ever did .  I bet he doesn't even have to walk barefoot to school in the snow, uphill!
2. Some things are just classic.
3. I love my children more than my parents loved me, obviously.  (Sorry Mom and Dad!)