I am not a financial whiz. If I were, you would not see my words on this blog, as I would be touring the world on a more-or-less permanent basis. I make a lot of mistakes with my money, thankfully most of them small ones (note to self at 18: don’t cash out that retirement plan your job made you get! You’ll regret it much later!).
Even though I consider myself only an average money manager in terms of ability, it still hurts my brain so much to read things like this. If you don’t feel like reading the article, let me summarize it for you:
1. Family lives in home that, due to whatever circumstances, is falling apart
2. TV show comes in and saves the day by giving family a COMPLETELY FREE home, along with LOTS OF CASH.
3. Family decides that best way to use this newfound stroke of luck is to take out a $450,000 loan on the FREE HOME to pay for a “construction business.”
4. Three years later, family is in foreclosure on the FREE HOME.
Now, let me just get on my soapbox. I know I’m not a money whiz. However, common sense is really not common when it comes to money these days. Let me just spell it out for those who would follow in the footsteps of this family:
- If your house is paid for, and you decide you want to start a business, your house does not then become a magic ATM. If you take money out, you have to be able to put the money back in–and the banks won’t wait for you to hit that lucky 7. Want to start a business? Save cash, take out a regular small business loan, or sell your house and downsize–use the money from the sale that you don’t use on the smaller home for the business.
- If someone gives you a free large house and a lot of money, and you’ve never had either of these things before, consult someone that does know what they’re doing. Not me. Not any blogger out there. Talk to a person that has a business card that says “Financial Planner” and has a lot of certifications on it. Do some research and get a person that doesn’t charge you an arm and a leg to make your money work for you.
- If you can’t or aren’t willing to do any of the above with your free/paid-for home and extra cash, then give it to me. I promise to do a better job with it.