Get Outta Debt

So I have to admit that this is a very ambitious and intimidating blog for me.

Firstly, I help people build wealth using real estate and I make sure that my clients make sound financial decisions when it comes to Real Estate that enhance their financial lives.  I am a mortgage banker in Houston, Texas and I have attained the designation of Certified Mortgage Planner. Fundamentally, I enjoy helping people. I love Real Estate and I enjoy making the process of buying or owning a home more fun, easier, and safer.  I stayed away from scary “you shouldn’t be buying that home” types of deals.  My job is to make sure that people make sound financial decisions that enhance their overall financial goals.

So it is time for me to take some of my own medicine.  For the last 5 years I have counseled clients on how to get out of debt, specifically consumer debts such as credit cards.  Generally I view consumer debts such as these as evil.  They are generally lousy debts that most people have acquired because the money was “available”.  I, however did not acquire debt from consumption, as did most.  I acquired debt from starting a business and investing in that business.  In the first years of my business, obviously, there was not a lot of income compared to the expenses so I used credit cards and lines of credit to live.  As the business grew, I began to invest more and grow the business more.  Suddenly I woke up and the debt was starting to overwhelm me.  The real wake up call was in 2008 when business started to slow down. I realized that I had massive amounts of overhead and income that could not support the staff, office lease, insurance, etc. that came with running a business.  I was also the sole producer in my business after hiring a number of loan officers that could not produce loans as I could.   I began to realize how much the overhead was sucking the life out of me.  I spent most of my time dealing with employees’ problems and dramas that I never had on my own deals.  I was trying to keep my clients happy, as well as their clients, and in addition deal with changes that were occuring by the minute as the mortgage markets were imploding.

I never made it to the place where I missed payments or couldn’t pay, but I was losing sleep over how I was ever going to be out of debt.  Naturally, I used the “rob peter to pay paul” method some months.  Finally, I decided that I’d had enough.

So there I was. I had to create a get out of debt plan for myself.  It was not an easy plan and it involved sacrifices. The first thing to go was my office space.  I created an expense sharing arrangement with a competitor whereby we could share an office, and the staff that we required.  I also got rid of my expensive car payment for my Jaguar.  I replaced it with a sturdy (but not at all fuel efficient)  used Ford Expedition that I was able to pay cash for.  Though I miss the Jaguar, it feels really great to be free from a car payment and the obvious upkeep that a luxury car requires. I leased my vacation home out for a year. I trimmed expenses and went to cash only lifestyle for my personal expenses. If there wasn’t money in my checking account, I didn’t need to buy it.

Suddenly my business was profitable again. These seemed like huge steps at the time, but in reflecting back, they were babysteps for what the future held.