The House Story
I just wanted to document in one place the story of how and why our Omaha house has been such a burden to us. One reason is so I can look back and make sure we never go there again! Secondly, if I can help someone else avoid being stupid with their money or encourage someone else, then that would be great. And finally, just so when I talk about it, ya'll know the history. This may be a long post, but I'll try to keep it relatively brief (just a heads up - I failed in keeping it brief :-] ).
How We Got There
We bought this house exactly 11 years ago (April of 1998). We moved to Omaha, Nebraska from Topeka, Kansas because I had a job opportunity and David knew I wanted to be closer to family. So, he willingly gave up his job for me. I started working as a manager of a customer service team (managing 16 woman-that's a whole 'nuther story, if you know what I mean!!). David decided to try his hand at a home business.
Home Business
David found a business initially to work from home. It seemed good. However, we both were under the age-old adage - "you have to spend money to make money". So, we stocked up on inventory. Initially, we weren't too bad because I was working, but this is when the problem of spending more than you make (i.e. credit cards) really reared it's ugly head!
We're Expecting!
We'd been in Omaha about 18 months when we found out we were expecting Jessica. We were thrilled. The only thing I was disappointed about was that David's businesses hadn't really taken off yet so I wasn't sure about being able to stay at home with Jessica after she was born. So he decided to look around for a 2nd home business.
Business #2
He found another business that was an Internet business. The good news was no inventory was required. The bad news is we still felt like we needed to spend money on a 2nd computer and some professional web design. So we were still spending money we didn't have. Again, still not doing too badly because I was still working. He found this business about 6 months before Jessica was born.
She's Here!
We were blessed with the birth of our first daughter in June of 2000. I wanted to stay home with her so badly, but we just couldn't yet. Reluctantly, I went back to work when she was 10 weeks old. David was still working hard at both businesses, and the Internet business was really showing some promise!
I Quit My Job!
When Jessica was about 8 months old, we decided that I would quit my job. David was not making enough money to support us, but the Internet business was taking off. Each month, he was making a little more money and we felt it was only a matter of time before his income would sustain us. We decided that we would use retirement funds to get us by until we could sustain ourselves with his business.
Continued Growth
David's home business steadily grew! We were very pleased. It was small steps but each month, his income went up in some way.
We're Expecting Again!
David had been working his business about 18 months when we found out we were expecting again. This made us a little nervous (financially speaking), because although David's income had been increasing, we didn't have maternity insurance! He continued to work hard while we waited for this 2nd blessing!
Top Salesman
At the end of 2001, David found out that he was among the top salesman in the business and that earned us an all-expense paid cruise the following summer. I was about 6 months pregnant and we were looking so forward to that cruise. We'd be gone a total of 10 days. This was the first time we had left Jessica for that long, but we had so much fun! We learned on the cruise about the plans for the future of the company and although they didn't come right out and say it, we knew the compensation plan was going to change. We weren't sure how this would affect us.
2nd Mortgage
David was working on commission. His income had steadily increased (although still not making a ton, it was doable). One thing we felt that was really a burden on us was the really large credit card debt we had incurred over the course of the past couple of years while building the businesses. We decided that if we could just get rid of that and start 'fresh' we'd be able to make it on what David was earning. So, around August of 2002 we took out a 2nd mortgage on the now infamous Omaha house. We pretty much maxed out the value of the house and we were able to retire the credit card debt. We felt like we had a clean slate and could go on from here!
Compensation Changes
About a month after we took out the 2nd mortgage, we found out the business that David was working was going to have drastic compensation changes that literally took effect immediately! By the end of the first month (around September), his compensation was cut by a third! Unless he really made some changes, it would continue to go down over the several months. We felt that we had worked too hard to build up the business and we just didn't have it in us to try to build it back up. So David started to look for another job that was a typical '9-5' job.
New Baby; New Job
In October of 2002 Eric was born and David was offered a job. It was his former bosses job in Topeka, Kansas (the God-thing about this is he wasn't even looking in Kansas! A friend out of the blue called him to let him know about this job). He started in November when Eric was a month old. So, now we had to move and try to sell the house. Have you ever tried to sell a house where you just took a 2nd mortgage?? We tried to sell it for about 6 months (David commuted to Topeka - stayed with friends during the week and came home on the weekends). There was no way we could get the price we needed and pay realtor expenses. We just wanted to break even (sound familiar??). So we decided to go the rental route. We got our first tenants in April of 2003 and we were finally able to be together as a family in Topeka.
Rental Income
Many folks might think that having a rental house is a good income. In many cases, it probably is. But in our case, it was a money sucking hole the entire time we rented it! It all stems back to the 2nd mortgage. Because our mortgage payment was higher, we couldn't get someone to pay that amount in rent to cover the mortgage payment. Take also into consideration, we were out of state. So, we hired a management company to take care of the house for us. Also, take into consideration what you might be willing to let go that a renter doesn't want to let go. So, on the months where absolutely nothing went wrong with the house, we still had to make up a couple hundred bucks to cover the mortgage. In the other months where something needed to be fixed, we had to come up with more. Our first tenants were in the military and they stayed about 18 months before he was re-deployed. So, that left the house vacant from about November of 2004-April 2005 (winter in Nebraska - no one is really looking for a house).
In April of 2005, we got some good tenants who signed a 3 year lease. We thought that was perfect, because we were hoping that by the end of their lease we would be able to sell the house and at least break even. Surely the housing market would go up even more by then, right??
In April of 2008, they left and we decided to update the house (new carpet, counter tops, paint, vinyl flooring, remove wallpaper, etc.). Hard to do long distance (we are now in Texas) so we had to rely on our property management company (who wasn't too motivated to help us sell because there goes their income) and our realtor (who just wasn't a good realtor at all). The house was vacant from April to the middle of September and some of the updating still wasn't completed. The house never actually got a 'for sale' sign put in front of it! So, we ended up renting it again for 3 months to someone who apparently failed to understand that they had to pay us to live in the house!
OK - Now Let's Back Up A Little
Have you ever had the hind sight to see how God answers prayer before you even know you have it?? In November of 2006, David found out that he would would be let go effective January of 2007. Thank goodness he would get a severance package until the end of April of 2007. I was sincerely hoping for a job in Topeka or a move back to Nebraska. I was even willing for David to take a pay cut. But, as always, God knows the big picture. We got a job in Texas!
David was blessed to find a wonderful job that he loves and paid more than what he was making in Kansas. The first realization that I had that God answers prayers before we even know about them (in theory I know that happens, but it was just a huge 'slap upside the head' when I really saw it in writing) was when I figured out our taxes for 2008. Remember, during 2008 is when we decided to try to sell the Omaha house - we updated it, we rented it to non-paying tenants, etc. We came up with a lot of out of pocket expense in 2008.
When I did our preliminary taxes and then sent them off to our accountant, I calculated the loss to be almost identical (within a few hundred dollars) to the raise that David received when we moved here. I just thanked God for his provision. What would have happened had He answered my prayer for David to take a job that had a paycut?? I was so thankful for God's protection of us (even though we were, and still are, so undeserving). Not only were we able to pay 2 mortgages, we were still able to do some things that we wanted (He provide for all of our needs and for many of our wants). God is good!
House is Sold
So, finally, after about 3 months on the market (again, isn't God good!! Although it seemed like an eternity, 3 months in this economy is not that bad), the house sold. We still had to suffer a pretty big loss in the sale of this house (it's like we'll be paying 2 mortgages for about 5 more months to pay off the loan we took to get the house sold). But the end is in sight. We no longer have to worry about whether we'll get a good tenant - will they pay, will they damage the house, etc.; we no longer have to worry about paying a double mortgage when the tenant leaves - it is a financial burden that has been put to rest.
What Have I Learned?
Are you still reading this?? If so, I commend you for making it through this very long post! It was good for me to get it all in one sitting. It's hard to believe some of the things we actually did - what were we thinking?? I'd be remiss (and I think God would be disappointed) if I didn't learn something through the last 11 years (boy that seems like a long time)! So, what did I learn (I'm not sure I'll be able to fully articulate them all):
How We Got There
We bought this house exactly 11 years ago (April of 1998). We moved to Omaha, Nebraska from Topeka, Kansas because I had a job opportunity and David knew I wanted to be closer to family. So, he willingly gave up his job for me. I started working as a manager of a customer service team (managing 16 woman-that's a whole 'nuther story, if you know what I mean!!). David decided to try his hand at a home business.
Home Business
David found a business initially to work from home. It seemed good. However, we both were under the age-old adage - "you have to spend money to make money". So, we stocked up on inventory. Initially, we weren't too bad because I was working, but this is when the problem of spending more than you make (i.e. credit cards) really reared it's ugly head!
We're Expecting!
We'd been in Omaha about 18 months when we found out we were expecting Jessica. We were thrilled. The only thing I was disappointed about was that David's businesses hadn't really taken off yet so I wasn't sure about being able to stay at home with Jessica after she was born. So he decided to look around for a 2nd home business.
Business #2
He found another business that was an Internet business. The good news was no inventory was required. The bad news is we still felt like we needed to spend money on a 2nd computer and some professional web design. So we were still spending money we didn't have. Again, still not doing too badly because I was still working. He found this business about 6 months before Jessica was born.
She's Here!
We were blessed with the birth of our first daughter in June of 2000. I wanted to stay home with her so badly, but we just couldn't yet. Reluctantly, I went back to work when she was 10 weeks old. David was still working hard at both businesses, and the Internet business was really showing some promise!
I Quit My Job!
When Jessica was about 8 months old, we decided that I would quit my job. David was not making enough money to support us, but the Internet business was taking off. Each month, he was making a little more money and we felt it was only a matter of time before his income would sustain us. We decided that we would use retirement funds to get us by until we could sustain ourselves with his business.
Continued Growth
David's home business steadily grew! We were very pleased. It was small steps but each month, his income went up in some way.
We're Expecting Again!
David had been working his business about 18 months when we found out we were expecting again. This made us a little nervous (financially speaking), because although David's income had been increasing, we didn't have maternity insurance! He continued to work hard while we waited for this 2nd blessing!
Top Salesman
At the end of 2001, David found out that he was among the top salesman in the business and that earned us an all-expense paid cruise the following summer. I was about 6 months pregnant and we were looking so forward to that cruise. We'd be gone a total of 10 days. This was the first time we had left Jessica for that long, but we had so much fun! We learned on the cruise about the plans for the future of the company and although they didn't come right out and say it, we knew the compensation plan was going to change. We weren't sure how this would affect us.
2nd Mortgage
David was working on commission. His income had steadily increased (although still not making a ton, it was doable). One thing we felt that was really a burden on us was the really large credit card debt we had incurred over the course of the past couple of years while building the businesses. We decided that if we could just get rid of that and start 'fresh' we'd be able to make it on what David was earning. So, around August of 2002 we took out a 2nd mortgage on the now infamous Omaha house. We pretty much maxed out the value of the house and we were able to retire the credit card debt. We felt like we had a clean slate and could go on from here!
Compensation Changes
About a month after we took out the 2nd mortgage, we found out the business that David was working was going to have drastic compensation changes that literally took effect immediately! By the end of the first month (around September), his compensation was cut by a third! Unless he really made some changes, it would continue to go down over the several months. We felt that we had worked too hard to build up the business and we just didn't have it in us to try to build it back up. So David started to look for another job that was a typical '9-5' job.
New Baby; New Job
In October of 2002 Eric was born and David was offered a job. It was his former bosses job in Topeka, Kansas (the God-thing about this is he wasn't even looking in Kansas! A friend out of the blue called him to let him know about this job). He started in November when Eric was a month old. So, now we had to move and try to sell the house. Have you ever tried to sell a house where you just took a 2nd mortgage?? We tried to sell it for about 6 months (David commuted to Topeka - stayed with friends during the week and came home on the weekends). There was no way we could get the price we needed and pay realtor expenses. We just wanted to break even (sound familiar??). So we decided to go the rental route. We got our first tenants in April of 2003 and we were finally able to be together as a family in Topeka.
Rental Income
Many folks might think that having a rental house is a good income. In many cases, it probably is. But in our case, it was a money sucking hole the entire time we rented it! It all stems back to the 2nd mortgage. Because our mortgage payment was higher, we couldn't get someone to pay that amount in rent to cover the mortgage payment. Take also into consideration, we were out of state. So, we hired a management company to take care of the house for us. Also, take into consideration what you might be willing to let go that a renter doesn't want to let go. So, on the months where absolutely nothing went wrong with the house, we still had to make up a couple hundred bucks to cover the mortgage. In the other months where something needed to be fixed, we had to come up with more. Our first tenants were in the military and they stayed about 18 months before he was re-deployed. So, that left the house vacant from about November of 2004-April 2005 (winter in Nebraska - no one is really looking for a house).
In April of 2005, we got some good tenants who signed a 3 year lease. We thought that was perfect, because we were hoping that by the end of their lease we would be able to sell the house and at least break even. Surely the housing market would go up even more by then, right??
In April of 2008, they left and we decided to update the house (new carpet, counter tops, paint, vinyl flooring, remove wallpaper, etc.). Hard to do long distance (we are now in Texas) so we had to rely on our property management company (who wasn't too motivated to help us sell because there goes their income) and our realtor (who just wasn't a good realtor at all). The house was vacant from April to the middle of September and some of the updating still wasn't completed. The house never actually got a 'for sale' sign put in front of it! So, we ended up renting it again for 3 months to someone who apparently failed to understand that they had to pay us to live in the house!
OK - Now Let's Back Up A Little
Have you ever had the hind sight to see how God answers prayer before you even know you have it?? In November of 2006, David found out that he would would be let go effective January of 2007. Thank goodness he would get a severance package until the end of April of 2007. I was sincerely hoping for a job in Topeka or a move back to Nebraska. I was even willing for David to take a pay cut. But, as always, God knows the big picture. We got a job in Texas!
David was blessed to find a wonderful job that he loves and paid more than what he was making in Kansas. The first realization that I had that God answers prayers before we even know about them (in theory I know that happens, but it was just a huge 'slap upside the head' when I really saw it in writing) was when I figured out our taxes for 2008. Remember, during 2008 is when we decided to try to sell the Omaha house - we updated it, we rented it to non-paying tenants, etc. We came up with a lot of out of pocket expense in 2008.
When I did our preliminary taxes and then sent them off to our accountant, I calculated the loss to be almost identical (within a few hundred dollars) to the raise that David received when we moved here. I just thanked God for his provision. What would have happened had He answered my prayer for David to take a job that had a paycut?? I was so thankful for God's protection of us (even though we were, and still are, so undeserving). Not only were we able to pay 2 mortgages, we were still able to do some things that we wanted (He provide for all of our needs and for many of our wants). God is good!
House is Sold
So, finally, after about 3 months on the market (again, isn't God good!! Although it seemed like an eternity, 3 months in this economy is not that bad), the house sold. We still had to suffer a pretty big loss in the sale of this house (it's like we'll be paying 2 mortgages for about 5 more months to pay off the loan we took to get the house sold). But the end is in sight. We no longer have to worry about whether we'll get a good tenant - will they pay, will they damage the house, etc.; we no longer have to worry about paying a double mortgage when the tenant leaves - it is a financial burden that has been put to rest.
What Have I Learned?
Are you still reading this?? If so, I commend you for making it through this very long post! It was good for me to get it all in one sitting. It's hard to believe some of the things we actually did - what were we thinking?? I'd be remiss (and I think God would be disappointed) if I didn't learn something through the last 11 years (boy that seems like a long time)! So, what did I learn (I'm not sure I'll be able to fully articulate them all):
- Trust God! Even in all our stupidity, God still provided! We were so undeserving, but somehow we survived and are stronger for it.
- Listen to God - even when you don't understand why (like moving to Texas), listen and follow.
- Be wise with your money. We are certainly not perfect (we still spend on things we probably shouldn't), but we are Dave Ramsey followers and have a budget that we follow. We try to use mostly cash and have different categories of where and how to spend our money.
- Pray, pray, pray before any big decisions. We didn't really do that with our move to Omaha, starting a home business, or me quiting work before we were financially ready. I truly believe we could have saved a lot of heartache, worry, and money had we prayed earnestly before each of the decisions.
- The thing I think I struggle with most is quitting my job when Jessica was 8 months old. I really felt (and still do feel) that it is important to stay home with your children. However, had I worked another year or so, would that have been so bad? I don't know. It would have helped us financially; but I waited a long time to have kids and I wanted to be home when they were home.
- God is faithful. It seems like so many times He could have given up on us. But He didn't!
- Be thankful and content in what you do have.
If you are still here, you need to get off the computer now!! Have a blessed day and thanks for 'listening' to my story!
Comments
I for one am glad you moved to Texas! I love your incredible family and am blessed to know you!
Thanks for sharing! We are all in this together! Its encouraging to read how others screw up too :)
We love that you moved here and your family and friendship bless us continually!!