GI Jane Finances

November 6, 2010

Joneses Chronicles

Filed under: Uncategorized — Tags: , , , , — gijanefinances @ 1:05 pm

I am not a money guru by any stretch of the imagination.  Over the past years, I have had several epiphanies along the way.  However, my good friend and her husband’s journey has been interesting to observe.  They got married in 2004.  He is far more gruff and less personable than my girlfriend.  We thought she hit the jackpot with him because he earned about $150,000 at the time working two jobs.  She was earning about $40,000 a year at a job she hated.  Nevertheless, earning nearly $200,000 a year between the two of them is pretty good.

Shortly after they married, I was at their house hanging out in my sweats.  The husband decided to call me a “bum” for the way I dressed.  I was like “whatever, I have no desire to impress you.”

Girlfriend: “What do you think of the house?”

Me:  “It’s big with 4 floors, but it’s pretty sparsely furnished.  I prefer a ranch house…can’t deal with hiking up and down the stairs like that.”

Husband: “Well, you can’t afford all of this!  You wish you could afford something like this.”

Me: “No, I do not.  I own two houses thank you very much.  I do not envy what you have, so get over yourself.”

In hindsight, owning two houses made me overleveraged and later lose money.  This conversation took place in 2004.  Both of them ended up visiting me at one of my houses a couple months later.  He thought I furnished it to impress him.  What an ego!

Flash forward six years later.  When I visit this past September in Chicago, he tells me that his house is $100,000 underwater.  My friend lost the job that she hated.  He wants her to work after just having a baby.  He just bought her a new car.  She has student loan debt.  I sold the house I bragged about at a $10,000 loss and about $10,000 in taxes, improvements and realtor fees.

I decided to check out his house on zillow.com and discovered that he lost $195,000 in value.  He is carrying a $339,000 note from when he purchased it in 2002.   I am actually shocked that his house lost so much.  It has a lot of square footage.  If he did not tell me about being underwater, I would not have believed the zillow estimate.

In Dec 07, I had $270,000 in mortgages and $11,565 in student loans. The neighbor who bragged about wanting to buy my house in addition to his also foreclosed, thus depreciating my house by $10,000 when it finally sold.  I now have $100,935 in mortgage debt.  A house just sold on the street my rental sits on for $189,000, even in this down economy.

It does feel good to have unloaded $180,630 in debt over the past three years.  If I could do it, anyone can.  I am excited that my rental mortgage will be $99,615 at the end of the year.  I also will have saved $388.85 in interest.  By the end of next year, it will be $83,000 and save $1136.58 in interest.  Love it.  If I did not pre-pay, it would have taken me 8 years to reach that.

The overall lesson of this story is to not be cocky.  The Joneses are broke…if you don’t believe then just check out zillow.  I have another friend who told me that he has four properties!  People are nuts…I was one of them when I had two homes.  

My goal is to reach $200,000 by the end of next year.  It will be hard to do, since I am moving.  For some reason, I want to use my favorite quote in the post:  Marine General Oliver P. Smith said, “Retreat, hell!  We are just advancing in a different direction.”

Cheers,

GI Jane

Advertisements

5 Comments »

  1. I think that quote very aptly sums it up.

    Forgive me, but my eyes popped when I read the post. 4 houses? 2 houses? DAMN!

    That guy had a real ego that’s for sure, but he was definitely making up for something with his projected insecurity.

    Linking to this in a post 🙂

    Comment by FB @ FabulouslyBroke.com — November 10, 2010 @ 3:07 am

    • I know right! I think my friend’s husband my have pulled equity out of his home. I do not know how they are going to recover.

      Thanks for some more link love! You are the best.

      Comment by gijanefinances — November 10, 2010 @ 6:24 am

  2. […] Jane Finances: The Joneses Chronicles (Fabulous article. Made my eyes pop. Loved […]

    Pingback by Ranting: Is it different coming from a man or a woman? — November 15, 2010 @ 10:01 pm

  3. Interesting post GI Jane.
    There’s no point trying to copy or follow anyone and their lifestyle.
    Funny that you mention that you dislike stairs – same here! There’s nothing worse than forgetting something upstairs and having to climb the stairs again to fetch an item.
    I don’t think the idea of owning 4 houses is preposterous though.
    It’s pretty common where I am, for investors to have multiple investment properties. It’s something that I’m aiming for myself- to build an extensive property and stock portfolio.
    It’s only risky when there’s not much equity, the loans have an LVR (loan to valuation ratio) exceeding 80% (so not much deposit when the loan was originated) and the properties aren’t positively geared (thus rental income<mortgage payments).

    Comment by L — November 16, 2010 @ 12:27 pm

  4. You are right about owning 4 houses. I just found out he gets a nice bonus every year, so he may not be overlevveraged in the houses.

    Comment by gijanefinances — November 16, 2010 @ 1:37 pm


RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Blog at WordPress.com.

%d bloggers like this: