Tuesday, October 9, 2012

The Not So Short Sale

When I started my blog, I never imagined anyone would read it. I thank you for those who took the time to read my first (any only) blog back in April. I had plans to blog once a week, detailing my journey to debt freedom. Imagine my surprise when God had other plans for my time!

I believe in the philosophy of "each one, teach one". So when a family member asked for help, she got it. Her and her husband had fallen on hard times. He had lost his job and could not secure a new one with his skill set. They ate through pretty much their entire savings. And then she lost her job, too. With neither of them really making significant changes in their spending habits, disaster soon struck. Bills fell behind. Creditors were calling night and day. Things were spiraling out of control.

I was truly heart-broken when I received the call. "I never wanted you to know how bad things really were. I'm lost. I don't know what to do." These were the words that squeaked out from the other side of the line. Luckily, I had enough sense to call home and tell my husband the situation. "Drop whatever your doing. This is an emergency." And together, we came got on the phone and came up with a plan.

Zig Ziglar said "If you aim at nothing, you'll hit it every time." My family member was walking around aimlessly, with no direction, no way out. But there is. It's called a plan. We immediately assessed how much debt they has incurred, what bills were due and set up a budget. Then we went through what could be sold to keep their four walls secure (when you pay food, lights and water, shelter, and transportation).

The hardest part came and reared its ugly head in the conversation. They would have to downsize and sell beloved their home. They were upside down on their mortgage and behind on their payments. We decided to contact a ELP (Endorsed Local Provider http://www.daveramsey.com/elp/realestate/ictid/elp_content/) to start the process. I have never done a short sale, so I had no idea what to expect. We found a ELP realtor who has done several short sales and would be willing to hold my family member's hand as needed. And trust me, she needed it. A lot. He informed us it could take awhile to get a buyer, complete the paperwork and finally get the banks approval.

That was a year ago.
If you ever have to go through a short sale, be prepared for the long haul. Her house was listed in Oct. 2011. She finally received an offer in April 2012. There was a mountain of paperwork to be completed. And even she thought she completed exactly as the bank requested, they would send it back for her to change something. This happened numerous times. On top of that mountain, there were several documents she had to provide the bank to prove why they were eligible for a short sale. Here is just some of what she had to provide:

1.      Most recent mortgage statements
2.      BANK financial worksheet
3.      BANK listing addendum
4.      BANK Contract Addendum
5.      BANK closing date addendum
6.      Affidavit of Arms Length transaction
7.      Sales contract
8.      Buyer Pre-approval or proof of funds
(The original list contains 21 items. And it was added to on what seemed like a daily basis.)

Between the revisions to paperwork, additional paperwork, phone calls, showings, inspections, etc., my head was starting to hurt. I mean, we started this a year ago! Is there light at the end of the tunnel? And then the email came. As of Oct. 2012, the bank finally approved the short sale. As of this posting, we are a week or so out from the closing. Everything has been moved out of the house. All that's left is the buyers signature on the dotted line. And the healing to begin.

Monday, April 16, 2012

The Free Spirit - Let's Get It Started

Well, where to begin? I have been reading a great book a dear friend recommended called "What Color Is Your Parachute?" by Richard N. Bolles. In Chapter 6, it is suggested that a job hunter start blogging about a few areas of specific interest. My interest just happens to be our household's personal finance.  And how far we have come.

My husband and I started attending a Financial Peace University class at our church last year, before we were married. It completely changed our outlook on finances, spending habits, marriage, our future, etc... It's amazing how attending one class can transform so much of your life. I was all for it, at first. A class that can teach you how to get out of debt? Sign me up. Then I realized the hard work that was involved, and I was ready to run and hide.

You see, I am not very good at math. I actually hate it. But, I am very good at saving money. Even as a teen, when I started making my own money, I saved up. I was not sure exactly what I was saving for, but my grandma always told us to "Save for a rainy day". So, to a certain extent, I did. As a young adult, it was up to me to buy whatever I wanted outside of an essential "need", such as clothes, makeup, etc. I learned early on that money was important to make what I want happen. But my financial education as far as making my money work for me was limited at best.

That's where the FPU class came in. My husband and I learned how debt was dumb and cash is king. In the grand scheme of things, what we learned was a lot of common sense. Spend less than what you make. Have an emergency fund. Create a budget. But after a few weeks, and listening to Dave Ramsey's radio show, we realized we were learning so much more. We were learning how to revolutionize our family tree, our marriage and our collective life. Our children were able to see that we were delaying pleasure (instant gratification of buying what we want, want, want, now, now, now) for evaluating what we really needed and researching the best deal. They were paying attention to the fact that we could still go out to dinner on a budget. And they were able to visualize a life with no debt, even though it is on the horizon. Our debt snowball, listing our debt smallest to largest and attacking the smallest debt with gazelle intent, is still on our fridge. My son walks by it daily just to see if the pie chart shows we are over halfway through our debt.

Our marriage started out differently than we had planned as well. I was a single mother of 3, who kept my finances separate from my husband's (then fiance) since we started dating. Six and a half years into our relationship, we got engaged on the beautiful beach of Cancun, Mexico. We were planning our life together. But we were planning on keeping our finances separate. It's the way I had always done it, and my husband as well. It had worked so well this long, why should we change it now?

What we failed to take into account is the "together, now you are one" part of our soon to be new life. How are we supposed to be "one" when we are leading separate financial lives? And why should more financial burdens be more on one spouse instead of the other? The most important lesson I took from Dave Ramsey is communication. When you combine your finances, live your life as one and set your goals, you communicate with your spouse. You set a plan in motion in order to obtain a common goal. You make your marriage stronger, because you are in it "together". There is light at the end of your tunnel, and it is not a train. It is financial freedom. And you did it together, as a team. What can be better than that?

As of this blog, my husband and I paid for our entire wedding and honeymoon, over $40k, in cash. We had absolutely no debt from our wedding. And as of August 1, 2011, we have paid off $35,344.02 in debt. We have 1 more credit card to pay off and my car and we will be debt free (except our house). Not making a payment to a creditor with interest is my passion. And it will soon be completely in reach :)