Author: Nick Pagano
Topics: Family, Major Life Purchases, Life's Little Surprises
This week I have two house updates for you: one, regarding our place of residence and another pertaining to a friend and his tricky housing situation. Janice and I finally have a close date (4/28) and are seriously looking for a new place to call home. We are still unsure whether it will be a house, condo, or apartment – let alone what the pricing or location will look like. Yet, no matter what situation we find ourselves in, it is very comforting to be able to regroup with our financial planner at the end of a confusing week. Now about my friend’s predicament:
He called me this week to tell me that he found himself in a foreclosure notice situation and did not know where to turn. As I listened to my friend, two things ran through my mind: how do we solve this problem now AND make sure it does not happen again.
The now problem. I asked him what he had done. The answer was “nothing.” On one hand, I was shocked, yet on the other, I get it. When an apparently overwhelming situation occurs, there is one of two natural responses that occurs: fight or flight. With the typical reaction being, flight. The fear of a mistake is paralyzing and rather than fight the fear with action, an easy “solution” is to do nothing. Needless to say, not doing anything leaves nothing accomplished and in this case, has negative ramifications due to the sensitive issue of time. In order to get his wheels turning a little bit, I outlined a couple of options that popped into my head and contacted some friends (a lawyer and mortgage broker) that would be valuable resources.
When it was time to discuss his options with his mortgage company, we first roleplayed the situation. I am glad we did, because instead of telling his tale of woe (his initial instinct), he was able to calmly and clearly ask the woman what options were available to his family. I suggested that he let them know that he once again had a well-paying job.
The long-term problem. Now that he is working and making very good money, he and his wife a) have no idea where the money is being spent and b) are not on the same page with their finances. When I walked him through a simple budgeting process he knew the amounts of his net pay, mortgage payment, car payment, utilities, etc.; yet no idea where the surplus money that existed on the paper was in real life.
Lessons learned from that experience. Two people can look at the exact same set of facts and come up with very different answers due to their background, knowledge, resources, fears, and doubts. It is my hope for everyone, that you talk through it with a certified financial professional before you find yourself in a situation similar to my friend.
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