Wednesday, July 30, 2008
Free Houses Aren’t Free
The show “Extreme Makeover” takes some dilapidated house, fixes it up in an obscenely short time, and turns it over to the owners. They make for some very exciting TV viewing and bring a warm glow to the hearts of their audience while lifting up the standard of living of their benefactorees. Sounds good, but…
The recipients of this largesse do not always live happily ever after. Case in point: The owners of the mini mansion in Atlanta, GA, that was built in six days in 2005, are about to undergo foreclosure. Possibly due to being inspired by the show, they decided to start up a construction business, except that they didn’t have any money with which to start such a company. Hmm, what to do, what to do? Ah! They had a house worth $450,000 – voilà, loan collateral! Unfortunately, they weren’t very good businesspeople, as evidenced by the fact that their business failed and the beautiful 4-bedroom house will go up for auction on August 5th.
My first impression when reading this was: There was a reason these people were living in a house so bad that the “Extreme Makeover” team demolished it, namely poor money management, either due to their lack of knowledge or having fallen on hard times (or, as the liberal whackos say, having been downtrodden by the evil rich). In either case, building them a huge new house is not a solution. If they have fallen on hard times, they probably don’t have the funds to keep up the new house. If they don’t know how to manage money, how will they manage the finances this new house requires? This includes the managing of the $250,000 in contributions, scholarships, and a home maintenance fund. Where did that money go?
But, gee, maybe they were an exception, not the rule.
Of course, there are the winners of the HGTV Dream Homes. These poor saps clearly are not usually aware that they are liable for income tax (state and federal) on the market value of the house and other prizes, as well as property taxes, utilities, any HOA fees, and maintenance costs. With the house being worth over $1 million, plus additional prizes such as an SUV and $250,000 in cash, the tax bill alone would be hefty, to say the least. Don and Shelley Cruz certainly found this out the hard way. Not only did they find that this splendid house was too much for them, but the financial burden was rather onerous.
Ever take a slice of cake that was way too large because the cake just looked so gosh darn yummy? Sure, we all have – either cake or pie or something else equally scrumptious. The same goes for people who grab at too much house. The Cruz’s aren’t the only winners to opt out of the “dream” after a short time.
I’m not saying that people should not enter the HGTV Dream Home sweepstakes. They should just read all of the fine print. I have and, therefore, will never enter for fear that I would win. Besides, I like the house we live in now. We resisted the loan officer’s gently persuasive techniquest to try to get us to go for more house. (“With your credit rating and financial status, you could qualify for a much higher loan.” Yeah, right, you make the monthly payment, lady.) Thus, we ended up with a house that not only suits our lifestyle but our financial goals. We don’t care to be house poor.
That brings me back to being financially responsible. Whether you win your home, get one built for you by the Ty Pennington gang, get a government-sanctioned bundle of booty to bail you out of a bad mortgage you signed on to, or just plain overbuy, you are financially responsible. Unfortunately, Bush signed that bailout bill, so all of you who didn’t read the fine print before signing, you can pop that champagne cork now. Your neighbor is going to have a gun pointed at his/her head while the politicians reach into his/her wallet and pull out a wad of money to keep your butt off the street and seated in that La-Z-boy.
Yipee – not!
Copyright © 2008 A.C. CargillGo to full article...
The recipients of this largesse do not always live happily ever after. Case in point: The owners of the mini mansion in Atlanta, GA, that was built in six days in 2005, are about to undergo foreclosure. Possibly due to being inspired by the show, they decided to start up a construction business, except that they didn’t have any money with which to start such a company. Hmm, what to do, what to do? Ah! They had a house worth $450,000 – voilà, loan collateral! Unfortunately, they weren’t very good businesspeople, as evidenced by the fact that their business failed and the beautiful 4-bedroom house will go up for auction on August 5th.
My first impression when reading this was: There was a reason these people were living in a house so bad that the “Extreme Makeover” team demolished it, namely poor money management, either due to their lack of knowledge or having fallen on hard times (or, as the liberal whackos say, having been downtrodden by the evil rich). In either case, building them a huge new house is not a solution. If they have fallen on hard times, they probably don’t have the funds to keep up the new house. If they don’t know how to manage money, how will they manage the finances this new house requires? This includes the managing of the $250,000 in contributions, scholarships, and a home maintenance fund. Where did that money go?
But, gee, maybe they were an exception, not the rule.
Of course, there are the winners of the HGTV Dream Homes. These poor saps clearly are not usually aware that they are liable for income tax (state and federal) on the market value of the house and other prizes, as well as property taxes, utilities, any HOA fees, and maintenance costs. With the house being worth over $1 million, plus additional prizes such as an SUV and $250,000 in cash, the tax bill alone would be hefty, to say the least. Don and Shelley Cruz certainly found this out the hard way. Not only did they find that this splendid house was too much for them, but the financial burden was rather onerous.
Don, a stay-at-home dad, and Shelly, an administrative assistant who’s gone back to school to become an accountant, are quickly running through their winnings as they struggle to pay thousands a month for electricity, household help and other outsize bills for their outsize home.Seems that they suddenly found themselves in a tax bracket reserved for those evil rich people, the ones that Democrats are declaring they will sock it to when they regain the White House (as if Obama’s coronation – uh, er, inauguration were a foregone conclusion). They finally had to put the house up for auction, selling it for $1,325,000 to Rick Mullins. The Cruz family has returned to Chicago and put this two-year fantasy experience behind them. They are probably very happy to do so, since they are no longer faced with an annual property tax bill of $25,000 (many people’s annual salary). They know what they can handle financially to feel comfortable.
On top of that, they had to take out a loan to pay off a $672,000 tax bill on their winnings.
Ever take a slice of cake that was way too large because the cake just looked so gosh darn yummy? Sure, we all have – either cake or pie or something else equally scrumptious. The same goes for people who grab at too much house. The Cruz’s aren’t the only winners to opt out of the “dream” after a short time.
I’m not saying that people should not enter the HGTV Dream Home sweepstakes. They should just read all of the fine print. I have and, therefore, will never enter for fear that I would win. Besides, I like the house we live in now. We resisted the loan officer’s gently persuasive techniquest to try to get us to go for more house. (“With your credit rating and financial status, you could qualify for a much higher loan.” Yeah, right, you make the monthly payment, lady.) Thus, we ended up with a house that not only suits our lifestyle but our financial goals. We don’t care to be house poor.
That brings me back to being financially responsible. Whether you win your home, get one built for you by the Ty Pennington gang, get a government-sanctioned bundle of booty to bail you out of a bad mortgage you signed on to, or just plain overbuy, you are financially responsible. Unfortunately, Bush signed that bailout bill, so all of you who didn’t read the fine print before signing, you can pop that champagne cork now. Your neighbor is going to have a gun pointed at his/her head while the politicians reach into his/her wallet and pull out a wad of money to keep your butt off the street and seated in that La-Z-boy.
Yipee – not!
Copyright © 2008 A.C. CargillGo to full article...
