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.
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