Embarassed to admit this but here it goes.

Investor Mindset
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Embarassed to admit this but here it goes.

Heather Pelletier
MA · Member since 2008 · 199 posts · 1 vote

OK, here is is...It's time for me to get real and do something drastic. We are broke, I just went to the grocery store and needed to use my credit card. I have been married 11 years, we have 2 kids. I work part time, my husband works full time. Up until recently we have been able to make ends meet, crawling into deeper debt over the years because of our poor choices.

We hit rock bottom last year (which was a good thing) we almost ended up divorced, went to conseling and worked on our issues. We realized we felt trapped in our current life and decided together we were going to do what it takes to change our lives. We made a big decision to use our credit card to invest in some education together. We paid 16K for some classes in REI and are currently taking them together. We knew we wanted to invest in RE, it's always been our passion, something we always talked about but never had the guts to do. (that's what I mean by hitting rock bottom was good for us, it forced us to get out of our comfort zone).

Recently we bought our 1st investment property with a partner, a REO for 55k. We are working on it now, our budget is 40 K and we hope to sell if for 150K. Once it sells we plan on putting our profit directly onto our credit card to pay for the classes we are taking. We have stopped buying things we can not afford but we ARE living outside our means which is why I needed to use my credit card for groceries today. The cost of living has increased so much we are forced to use our credit card to buy necessities.

My question is, how many of you found yourselves in embarassing situations like this and were able to dig yourselves out? I never pictured our life this way. We have good jobs, we are educated and are very hard working. What should we do to fix the mess we're in? Do we move (I'd hate to move our children from their home), Do I try to get a full time job? (then we'll pay more for daycare and our lives will be very hectic. ) Do we continue "floating" and investing in RE and putting our profits toward debt? Seriously...we know we need to make changes but we don't know where to begin. Obviously we'd like to keep our home. Quite honestly, I'm willing to move buy my husband is not. I am open to your harsh comments. Like I said, we have learned from our mistakes and are desperately trying to fix it.

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  • Tom C
    Real Estate Investor · OH · Member since 2008 · 1k+ posts · 86 votes
    18y

    Heather,

    Great post and a lot of good advice. As far as tithing goes, that is up to you and I certainly would not feel bad about not being able to give right now. As MikeOh always says on this board. There are 24 hrs in a day, you only need a few of them to sleep. With the kids being out of school right now, you may have to work on your rehab during the night, while the husband is at home taking care of the kids.

    Also, if the husband is not going to help you get out of this whole and jump on board with you, then get rid of him.

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  • Heather Pelletier
    OP
    MA · Member since 2008 · 199 posts · 1 vote
    18y

    Hey TC,

    Thanks for your advice. Perhaps I was misleading as far as my Husband goes. He is working his *** off at our rehab house. I do think he needs to be a little more realistic about our situation and a bit more willing to go without though. It is a hard thing to accept, I'm sure he will come around.

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  • Michael Patrimonio
    Renter · friendswood, TX · Member since 2008 · 4 posts · 0 votes
    18y

    And whatever you do, DO NOT go to a Payday Lender unless you are absolutely sure you can pay it back on time. Then again, if you're considering going to them in the first place, the likelihood of your paying back on time is low in the first place.

    But I'm sure it won't be a problem.

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  • Tom C
    Real Estate Investor · OH · Member since 2008 · 1k+ posts · 86 votes
    18y

    I hate to admit it, but I have had to use them when I was fresh out of BK. They have their purposes. I needed money to buy parts for my car. Without my car, I wouldn't have been able to work. Of course I was able to pay them back when I got my check, but they do come in handy for emergencies. Ohio now has put a cap on what they can charge in interest rates and most of them will end up going out of business.

    Sure the rate sounds bad, but when you consider, a 20 dollar fee for borrowing 200 bucks for a week in an emergency, it isn't all that bad. I guess we will see the return of the loan shark standing on the street corner. This is just another example of the government sticking their nose in our business.

    But then it's ok for the rental companies to charge people 5 times the retail price for a big screen tv. This is for something that people really don't need and are being completely taken advantage of.

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  • Account Closed
    Tucson, AZ · Member since 2008 · 945 posts · 45 votes
    18y
    Originally posted by "Heatherp":
    As far as the advice on tithing goes...Can I give my time instead of a monetary amount at this point? I just don't know if now is the time to start giving away $ I don't have. I do believe in karma however money is tight right now. Does that make me selfish?

    I haven't been ignoring you. Life happens, and I've also spent some time looking for an answer to your question "Can I give my time instead of a monetary amount?"
    From what I have found in googling and in reading my little booklet on tithing, giving 10% of your INCOME is what the tithe is. Google "tithe", and see what you find.
    Yes. It was hard to give $3.00 when all I had a week was $30, with 2 kids under 6, a dilapidated car, and living in a very cold climate. But in faith, I did, and that $30 a week steadily grew.
    Tithing works. Try it for 3 months. What do you have to lose? (let us know what does happen!)

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  • Charles Whitaker
    Real Estate Investor · Amarillo, TX · Member since 2008 · 173 posts · 15 votes
    18y

    Heather,

    First and foremost your story is inspiring, touches the heart indeed. I always seem to remember something I saw on a note one day which read, "I believe a hero is the one who does what they must, when they must".

    My only good advice is that hardships are what make people, are you the one who will sit and ponder the possibilities or are you the one who will go MAKE possiblities happen? RE really messed me up the first year, I maxed all my credit cards, my FICO dropped 200 points, almost lost my job, family, and friends.

    The boiling point is where hero's are made, you must trudge forward, regardless of who/what is dragging you down. Also, I can't honestly say that I have tithed in hard times but I would pray for guidance and it shall come in time.

    For the now, do what it takes. Strive harder than ever before, work harder than ever before. Show everyone including yourself what you are truly capable of. Sorry for the lack of ideas to get you through this but I figure motivation is almost just as good.

    P.S. The first year that was so bad for me was last year, made 11K from 3 deals in real estate. This year already up to 55K and still buying

    "in the pursuit of happiness"

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  • Heather Pelletier
    OP
    MA · Member since 2008 · 199 posts · 1 vote
    18y

    Charles,

    Thank you so much for yor reply. We are doing EXACTLY what you say...working hard and doing what we need to do to make ends meet. I truly believe we will get through this. My husband and I are both hard working, determined people. Honestly, I think we just need to get through the summer then I am able to work many more hours and sudddenly we are back to where we were, making ends meet.

    Thanks for the motivation!

    PS: I will try tithing for 3 months and let you all know how it goes.

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  • Account Closed
    Tucson, AZ · Member since 2008 · 945 posts · 45 votes
    18y
    Originally posted by "Heatherp":
    PS: I will try tithing for 3 months and let you all know how it goes.

    Terrific! A little jog to refresh the appropriate way for you:
    The First tenth, given to that place that you believe is doing your God's work.
    Given anonymously
    Given joyously.
    I'm so looking forward to hearing how it goes for you!
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  • Jim Sharp
    Real Estate Investor · Colorado Springs, CO · Member since 2008 · 108 posts · 9 votes
    18y

    This is a great post. The difference is made by those that look into into the unknown and take the leap anyway.

    I'm going to share my opinion about the statement in this thread, about Dave Ramsey, all though I like his motivation I think his system focuses too much on pulling people from lowliness to mediocrity.

    Loral Langemeier says that when you're holding your $4 latte in the morning... should you think "I really should stop buying these everyday" (Dave Ramsey method), her mindset (with which I agree) "how can I make enough money to have this latte everyday" My point is Dave focuses so deeply on your paying off debt rather than how you can make more money. You will get what you put your energy into. Which one is most important to you?

    I HIGHLY recommend a money management system, one focused on abundance. Try T Harv Ecker "Secrets of a Millionaire Mind' My wife and I have been doing the system for 5 months(I don't like the word budget) and the results have been unbelievable. My wife and I are now so much more TOGETHER on our finances and where our money is spent.

    To Your Success,

    Jim

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  • Catherine Coy
    Lender · Huntington Beach, CA · Member since 2008 · 154 posts · 30 votes
    18y

    Please elaborate. :D
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  • Jim Sharp
    Real Estate Investor · Colorado Springs, CO · Member since 2008 · 108 posts · 9 votes
    18y

    I think most couples would agree that money is one of the toughest issues they face. My wife and I have been happily married for 6 years. Like most people, money was definitely an issue. A lot of time it was just agreeing what we would spend our money on. We made decisions with little direction.

    Even though we didn't spend our future with credit cards, we spent our, what we call financial freedom money (pay yourself first). We now have a lot more direction since we're on the same page when it comes to spending money. We know exactly where our money is going... There is very little stress with how we will spend money. We are on the same page. We still have discussions, but the discussions are about what "jar" the money will come out of and why.

    The most powerful part of this is that we are both much more in-line with the vision of our future. The future is no longer fuzzy, it is crystal clear.

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  • Shari Posey
    Residential Real Estate Agent · Long Beach, CA · Member since 2008 · 432 posts · 63 votes
    18y

    Hi Heather,
    Your first post was on June 22 and I'm wondering if you've been able to read the books recommended and how much you have saved or paid down your debt. The only reason I ask is because asking for advice and actually putting it to use are two different things.

    I totally agree with reading Dave Ramsey's Total Money Makeover ASAP if you haven't already. (Hopefully you have already read it because it's a very easy read that you can get through in a few lunch hours.) I gave this book to a friend who was in your situation and she never read it and just keeps complaining about her situation.

    I also read Secrets of a Millionaire Mind recently because we have our debt under control and I wanted to expand my thinking. I think Ramsey's book is most important for you right now because you are in a crisis.

    Many years ago my husband and I went through a terrible financial time as I floundered trying to start a business. We basically just got regular jobs and lived on cash only. Yes, cash only and no credit cards at all. We did this for 2-3 years until we were able to get rid of all debt and get an emergency fund. We didn't have a TV, no cell phone, we rarely went out for dinner (maybe once a month), etc. We rented a cheap studio apartment. We did lots of free stuff like hiking, walking, BBQ at home, etc. We actually found it fun to see how little we could spend!

    Now it's about 15 years later and we have totally turned our financial situation around. And yes, real estate has helped but the foundation was controlling our spending and debt. We have 2 homes paid off, 1 home has lots of cash flow so we are excellerating paying it down, and another home has a mortgage that is the next target to pay down. We have a 6-month emergency fund and misc. investments. No credit card debt. We still have a long way to go but we are in the right direction.

    If you are so hot on REI, then you MUST get your RE license! You paid $16k for a class on how to invest but it's almost free to get your license in most states. When you get your license you can help others buy and make more $$. I'm assuming you guys are doing the rehab work yourself--maybe your husband can get some extra work rehabbing for some of your future clients. Good handymen are hard to find and get paid very well by real estate agents who need repairs done on listings, etc.

    Sorry this is such a long post. I think everyone who has posted to you is passionate about helping you out of your situation. Many of us have been there before so hopefully we have motivated you to take drastic action.

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  • Celine Fang
    Real Estate Investor · New Orleans, LA · Member since 2008 · 18 posts · 1 vote
    18y

    Reading your story very much reminds me about myself.... that I was in probably worse mess...

    I have always wanted to do something to make my family proud... A few years ago I joined some kind of "get rich quick" thing and I actually lost a lot of money and energy very quickly. I then started another company with a partner who turn out to be working very little and spending very much money.... Those are my bad experiences because at the time I was young, ignorant, un-coachable...

    However, those are my good experiences because they made me realize that I need to be realistic, paitient, focus on my goals and take every step necessary achieving them.

    I know I didn't want to work a "job", but I took a job so that I could be exposed to professional training and network... I see how other sucessful people handle their career and lifestyle. I went to many networking events and seminars that were not even relate to real estate investing, but those events help me grow up to be more mature, and learn how to handle different people / situation.

    I am glad that you are taking investing classes. I am actually taking a few from WIA and I think they are totally worth the cost. Not like other experienced investors who could pick up a book or two and know excatly what to do... I needed 100% hand-held training from my coaches and mentors so that I can have more confidence to invest right.

    I was so much in debt that I couldn't access any more credit lines and I couldn't affort to fail another time. Real Estate seems to be the only quickest and most promising way for getting me out of consumer debt and enable me to enjoy the liftestyle I wanted. I certainly can not affort to lose money or not make as much without proper training. If I couldn't be a surgeon who only read a few books and never went to school, I don't feel comfortable investing without enough training.

    When I had so much debt and accesed my very last credit line for my coaching classes, it would very much make financial sense for me to get a "real" job to pay my bills. But I refused to get a job and became a full time investor. Although I had to spend time on setting up and making deals and there were several months of non-paying results... when good deals finally came they just seem keep coming, and I have to say the rewards are pretty good and I am on my way to reach many more goals.

    I treat RI as a full time business, not a hobby. I know I would have waste all the money for training if I didn't commit the time and effort to do what I have to do.

    Have you read Kyosaki's books? Robert and Kim were so poor at the time but they refused to get a job because they wanted to build their business.

    I think it is when people are in the worst situation they become most motivated.

    I hope you do well

    :D Celine

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  • Heather Pelletier
    OP
    MA · Member since 2008 · 199 posts · 1 vote
    18y

    You guys are the best, I truly appreciate you all taking the time to offer support and share your stories. I do believe hitting rock bottom is a good thing and we will learn from it.

    What have we done to turn our future around? Well, I have ordered the book by Dave Ramsey, it's not here yet. I needed to wait until I got paid. I didn't want to put it on the credit card!

    I'm shopping at a discount grocery store, it saves a lot of $.

    My husband has taken a few overtime shifts, to help us now.

    We are working like dogs to get our rehab house fixed and ready to sell!

    I have asked for an additional 8 hours/week at work.

    My mother will help with summer time daycare when she can.

    We changed our cell phone plan, ( we do not want to cancel because we really do want to keep our #s so we can start wholesaling as soon as our rehab is complete) Our business cards are already made and we have ordered signs with our phone #s on them.

    We have 3 coffee cans in our bedroom, we put 50cents in each one every day. Savings, Investments, Tithing. We're starting to pay ourselves 1st every day. Advice from Rich Dad Book.

    I've resisted buying everything I've wanted.

    How are we doing so far? We are making changes! Our credit is still excellent. If we can maintain that and get through this we'l be OK.

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  • Account Closed
    Tucson, AZ · Member since 2008 · 945 posts · 45 votes
    18y
    Originally posted by "Heatherp":
    ...We have 3 coffee cans in our bedroom, we put 50cents in each one every day. Savings, Investments, Tithing. We're starting to pay ourselves 1st every day. Advice from Rich Dad Book...How are we doing so far? We are making changes! Our credit is still excellent. If we can maintain that and get through this we'l be OK.

    How are you doing? Fantastic!
    A little more of my hisstoory :roll: :mrgreen:
    When I first started tithing, when my youngest was still in a backpack, we'd take the tithe every Friday to the place I had been led to, so they got early training. Your coffee cans reminded me that when I finally got a full time job (still only about 19K a year, I was paid once a month. I cashed my check and brought the greenbacks home. We-the kids and I-took the paystub and the money, and the bills, to my bed. They read the stub and counted the money to make sure it was all there. (By this time they were about 5 and 9.) Then we figured out how much was ten per cent, and they counted that out, and attached a slip of paper marked "God's money" to it.
    Then we read each bill, counted out the money, and paperclipped it to the bills. The remainder was divided this way: 1/10 for the house (groceries), 1/10 for the kids, 1/10 for me. The kids split theirs, each getting half. Then THAT was divided into 1/10s: 1/10 was God's money, (Because they too, had to tithe) 1/10 went into their savings, 1/10 they could spend however they wanted. Lots of math and learning about money and responsibility there. After their savings built up, they could spend it on something they wanted or needed, beyond the ordinary.

    I think you are doing really well. I'm just so impressed with you and your husband. You're winners for sure.
    How do YOU think you're doing?

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  • Lynn Z
    Member since 2008 · 689 posts · 23 votes
    18y

    Yes I lost everything in the late 70's due to alot of factors--mostly the economy. And yes there was alot of property involved. Going through divorce and losing everything means you start from rock bottom and yes, it does make you stronger if it doesn't kill you.

    I went to a "free" seminar advertised by my local REI put on by a group from Florida ForeclosuresDaily and they went over their programs with everyone. I felt the presentation was similar to sales pitches on t.v. It was several thousands of dollars to get the same information you can get at the courthouse spread out on websites, your own website, etc. etc. ie, lots of bells and whistles. And the list of properties you got were only in 1 county. Ridiculous but people were really responding to the "get the course today and we'll sell it to you 1/2 price". These people make money by selling this stuff to unsuspecting people.

    The interesting thing about my club is I checked on the coordinator/leaders and they don't own any real estate except their home. Also, membership is down half of what it was last year. In all these meetings alot of naive people really believe in the get rich quick schemes presented by the lecturers.

    Look up Dave Ramsey Financial Peace University and locate a $100 9 week class at your local church and haul your husband and yourself to it.
    It will give you stunning information that you both can learn from but is basically a worthwhile set of classes (and you get all of the books you need with the $100). When you do that zero based budget you'll know where you have to cut and do it.

    Do without and get yourself out of the hole you're in. Real estate investment is a high stakes game and you have to have gobs of money yourself or available to you to just break even sometimes. One commenter said flipping houses isn't investing...I consider it gambling. Long term holding of real estate is definitely a safer way for most.

    My family has 30 apartments and houses and has lived off of them for 30 years and they are doing their own touch up painting this week and hauling rugs in to protect their floors and doing the yard work because they're trying to save money. You all have youth on your side..that's good.

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  • Shari Posey
    Residential Real Estate Agent · Long Beach, CA · Member since 2008 · 432 posts · 63 votes
    18y

    Hi Heather,
    I'm glad to know you are already making changes...here are a couple of other ideas:
    1. Don't buy books when you can check them out at the library. Until you are out of debt, check them out and you can always buy them later. (Actually, studies show that you retain more information when you take notes so borrow the books and take lots of notes to keep.)
    2. Keep a daily budget of expenses. We have a computer database with everything from groceries to taxes itemized to the penny every day. It will help you determine where you can cut money or where you are overspending.
    3. I know I'm financially conservative compared to most people but I think it's foolish to think about investing in RE while you have credit card debt or even car loans. Dave Ramsey's plan to reduce all credit card debt is wonderful. All the money from your extra jobs and extra house will go to pay off the lowest balance and it will be amazing how fast it's all paid off. (FYI--We have great credit even though we pay off the cards in full each month.)
    4. Price your house to sell!!! I've seen SO many investors with flips try to get top dollar and listing high because they think people will offer low. People will offer low no matter what but by price your house the lowest in the neighborhood even though it is the best and you'll have a chance at multple offers. Get rid of that house fast! The longer it is on the market, the less money you will make.
    5. Borrow a RE licensing course from the library and sign up to take your state exam.

    Be careful that you are not expanding your spending with the extra income coming in. It seems like you can do much better than 50 cents per day in those categories if you are getting overtime and extra hours.

    I hope this does come off as criticism. I am the type of person who likes specific advice so I hope this helps.

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  • Heather Pelletier
    OP
    MA · Member since 2008 · 199 posts · 1 vote
    18y

    I think we are doing pretty good. I know in my heart once the kids go back to school things will fall back into place. Paying for daycare and working less is what put us over the edge. Not to mention my husband's overtime being cut for a few months. ( Thank god that is back! )

    I can also see the progress on our rehab project and it is going to be beautiful. I think we'll be able to sell it no problem! Maybe not for what we want but we will make a profit! Once that is complete we will be able to pay off a chunk on our credit card and do a lot less traveling which will save a lot of $ on gas.

    I am not wishing for things to get better magically but these are the things that should happen over the next few months and it will help us get back on track.

    I am worried we will need to put fuel costs on our credit card (pellets for the stove and oil) I am trying to think of a way we won't have to do that.

    Bohemiana: I do not consider your advice as criticism. I appreciate you taking the time to share your knowledge. I have a computer program that I want to use to track our income and expenses, I just need to figure out how to use it. It's nice because it has a graph which is a visual way for me to see where we need to cut back.

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  • Account Closed
    Minneapolis, MN · Member since 2008 · 691 posts · 12 votes
    18y

    Heather,
    Hard to come up with anything new to say, but I will say that you should not allow the guru or whoever you took your $16K course from, to upsell you on any additional services or mentoring. It would be natural for you to think that your were "protecting your investment" by buying more services, but I would advise against that. Now is the time to take action. Take a strategy like sub-tos, lease purchases or wholesaling and work on that at the same time as you complete the rehab. Pay off the credit card asap. Good luck! Mike

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  • Heather Pelletier
    OP
    MA · Member since 2008 · 199 posts · 1 vote
    18y

    Thanks Mike,

    I appreciate the advice. I will NOT buy any further education until I am out of debt and I can pay CASH. I am reading Dave Ramsey's book, Total Money Makeover and loving it. It gives me hope and a plan all in one.

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  • Account Closed
    Tucson, AZ · Member since 2008 · 945 posts · 45 votes
    18y

    How are you doing?
    This is just a friendly nudge-it's the end of the month, beginning of a new one. Because of my situation I tithe at this time, and am reminding you it's time, if you are going month to month.
    ofgift

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  • RICARDO RUIZ
    Homeowner · SO. CALIFORNIA, CA · Member since 2008 · 46 posts · 3 votes
    17y
    Originally posted by Heather Pelletier:
    Not to mention my husband's overtime being cut for a few months. ( Thank god that is back)


    Never depend on overtime to make the bills. Ive seen people fall into that trap and lose it all..

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  • Connie Brzowski
    Real Estate Investor · Mont Belvieu, TX · Member since 2008 · 85 posts · 35 votes
    17y

    I missed this thread last summer-- but Heather? If you're still around and reading this, it sounds like you're doing a great job and you have just the right attitude to get out of this and move on to building true family wealth.

    Yes, we were in a very similiar place at one time. If you want, you can read about it over on my blog... won't go into the whole story again here :D

    One little aside: When we were at our tightest (paying for bills with credit cards :oops: ) DH and I talked about cutting expenses. We'd cut back most everywhere except food and I knew we could save a couple of hundred every month by serving beans and rice, cutting out fresh veggies and fruit and buying in bulk. (We'd already cut out all chips, snack food and processed convenience foods long ago.) DH's reaction was a resounding, "NO FLIPPIN' WAY"

    I'd forgotten that dh had grown up without enough to eat and spent most of his childhood hungry. He absolutely would not stand to see our 4 kids without all the fresh fruit and real meat they wanted (not hotdogs or Spam :mrgreen: )

    Anyway, we made it just fine without canceling the cable or the veggies. The key was increasing our income, not lowering expenses. DH worked on his off-days from his primary job doing remodeling and odd jobs for friends and the families of friends, cleaning houses for a local real estate office and other not-so-fun stuff while I learned about business and real estate. Our kids are in college now and we're doing very well, thanks :wink:

    Good job, hon :cool:

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  • Account Closed
    CA · Member since 2008 · 277 posts · 11 votes
    17y

    Connie wrote: I'd forgotten that dh had grown up without enough to eat and spent most of his childhood hungry. He absolutely would not stand to see our 4 kids without all the fresh fruit and real meat they wanted (not hot dogs or Spam).

    Good for your husband, Connie! I agree with one of the above posters that the key isn't cutting expenses but earning more money. I, too, vouch for T. Harv Ecker's Millionaire Mindset. One can buy his CDs used on eBay or borrow them (if you're lucky) at the library. What a shot to the belief system they are.

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  • Ana Hyler
    Lincoln, NE · Member since 2008 · 249 posts · 46 votes
    17y

    Heather, we have not heard from you in a while. How are you doing? How are your plans coming along? What happened to your rehab?

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