Three short years ago ABC’s “Extreme Makeover” reality TV show demolished the Harper Family’s old home to make way for a new, 4 bedroom Mc Mansion. Flash forward to today, and the Harper’s are one of the latest families to face foreclosure.
My first thought when I read this story was, “How can this be possible? Don’t the families receive their homes mortgage free?” That got me thinking about what kind of money mistakes the Harper family made.
Apparently they used the home as collateral when taking out a $450,000 loan. Yikes!
As if that wasn’t bad enough, they then used the proceeds of that loan to start up a construction business that has since failed.
To me, this just proves the necessity of financial literacy and learning good money management skills. Giving this family an asset like this at a time when the housing bubble was just taking off is like giving a fully loaded howitzer with a hair trigger to someone who’s never even seen a handgun before.
The article states:
“ABC said in a statement that it advises each family to consult a financial planner after they get their new home. “Ultimately, financial matters are personal, and we work to respect the privacy of the families,” the network said.”
Which is indeed the saddest part of this, to have to sit idly by and watch someone not take heed of the advice they are given and knowing the eventual outcome won’t be pretty.
“”It’s aggravating. It just makes you mad. You do that much work, and they just squander it,” Lake City Mayor Willie Oswalt, who helped vault a massive beam into place in the Harper’s living room, told The Atlanta Journal-Constitution. “
I’ve often wondered how these Home Makeover families (who often have little income) afford the taxes on their new homes, even if they don’t take out loans!
Yeh that is sad to see. I can’t believe they wasted such a nice house like that.
http://zombiemoney.blogspot.com/
@ Shannon:
I’ve often wondered that myself. It’s the main reason I would seriously think about flipping the house once I lived in it for a couple years (to avoid the capital gains taxes), buying a house I could afford and investing the difference…
@ Zombie Money:
I thought Zombies preferred grave yards, or office buildings in post-apocalyptic cities!