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Become Debt Free In 4-9 Years
Learn From My Mistakes

I do not want to deceive you into thinking that I have arrived at debt freedom. I have made a million mistakes, and am a fellow pilgrim just like you. I will attempt to tell you a few stories about my mistakes, in hopes you do not make the same mistakes and incur debt that you do not need.

I mentioned in my Table of Contents on my main website, JesusLovesMeThisIKnow.com, that I would write an article on how I made a million dollar mistake and survived.

I am still trying to correct one of the biggest mistakes of my life, and have hestitated writing about it, until I was able to correct it.

Without going into a lot of detail, it involved moving into a home in January 1990, that was valued at about $425,000 dollars.

Let me explain why I did that. I was living in a home in beautiful York County Virginia, not far from where Cornwallis surrendered to George Washington, during the War for Independence. The house was a waterfront home on a river leading into the Chesapeake Bay. It was valued at $250,000 and was paid for completely.

At age 50, I had achieved the ultimate American dream, of having my home paid for, and being debt free. So where did I go wrong?

During the previous tax year, my business had prospered, and I owed Uncle Sam, $150,000 income tax. Being self employed, I had sent in quarterly taxes totally around $100,000. So when the taxes were completed I had to come up with another $50,000 in cash.

This was a struggle at the time, since I had purchased several pieces of real estate that year, and cash flow was not the best.

So I visited my accountant and counseled with several folks who gave me some bad advice. They said, "You need to get a mortgage, so you can have a tax write-off and not have to pay that $50,000 next year." So they told me to find the biggest house I could qualify for, and buy it with a mortgage.

I had not learned that it makes no sense to give the mortgage company a dollar, and the Federal Government gives me back 28 cents. (Assuming I am in the 28% tax bracket) I would have been much better off the pay them their 28 cents and keep my 72 cents on the dollar.

So I sold my home on the water for $243,000 and financed it myself, and then borrowed 100,000 against that home to buy the bigger house. This home had a $3000 a month house payments.

Now in one sense, it did take care of some of my tax liability, but it took me several years to figure out how I really made a million dollar mistake.

If I had stayed in the nice waterfront home, and put that $100,000 dollars in a nice performing mutual fund, and added $3000.00 per month for ten years, the value of that fund would be over one million dollars.

So by listening to bad advice, and "keeping up with the Jone's", and pride, and a whole lot of other emotions, I moved into a very nice subdivision.

Then the bottom fell out of the real estate market a few months later. Eleven homes had been built on our street in a "Parade of Homes". After almost 18 months, 8 of them were still for sale, and the builders were dumping them at bargain prices to cut their losses. The value of my home dropped significantly over the next couple of years.

Then one of the developers committed suicide, and the promised swimming pool and tennis courts were not completed which were promised to add value to the property. The remainder of the 90 lots in the subdivision were not developed, and it looked like a disaster.

Then along came one of the remaining four developers, who attended my church, and he finished the subdivision. As the subdivision continues to mature, and lots in York County are very scarce, property values are now rising. One neighbor with a home similar to ours, sold recently for over $500,000 dollars.

My plan now is continue fixing up my home and restoring it to it's original condition, and marketing it for $600,000. Then I can pay off mortgages on both homes, and be totally debt free. My plan is to have this accomplished by September 2002.

I still have the home on the water, and it is now rental property under my control. So perhaps we will move back in that property.

My advice to you is if your home has adequate space, just stay there and pay it off, as I have suggested in this web site. Use the money that you would spend on a bigger home, to remodel yours if you need more room.

Probably the biggest lie you have been told is by your mortage company. They are not your friends, they are out to exact all the interest from you that they can, and if you get one or two payments behind, they become your mortal enemy. And Oh yes, you have to pay them massive closing costs, so they may charge you all that interest.

Elsewhere on the website, you can see where most of you are paying 60-90% interest on your home, even though they told you it was 6% or 7%.

I would be happy to discuss this further with anyone who might be making a similar mistake. Just email me or we can talk on the phone.

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Here are some other thoughts about vehicles. I was making a lot of money early in my career, so I purchased a new Ford F150 Loaded Pickup every year. Being somewhat of a wheeler-dealer, I was able to get a good price, and usually a year later I was able to sell if for 3-4 thousand less than I paid for it. So it really cost me about $330 dollars a month to drive a new vehicle.

Contrast that with the way I operate now. I own a eleven year old pickup with 200,000 miles on it, and seven year old Caravan with 180,000 miles on it. But they are paid for. Yes I spend a few dollars a month on repairs, but the last two years the total repairs on these two vehicles were about $1400.00.

That calulates out as about $58 per month for each vehicle. I do my own oil changes and minor maintenance, so that is one way to save a lot of money. New cars lose about three thousand dollars in value once they leave the showroom.

Let's talk about liquidity. I invested all my profits from my construction business into real estate because when I started, real estate was appreciating rapidly.

That soon slowed down, and some of the properties were worth less than what I owed on them. I also purchased a few properties in areas that were not a good neighborhood.

So when I had several folks default on the rent, then I had no ready cash available to fund the mortgages.

When I was in a bad accident a few years ago, I was unable to keep up with my two businesses, and accumulated a six figure debt on credit cards, lines of credit and building supply houses.

Thanks to the Lord, I received a tape series on how to get out of that debt, and was able to do that in a couple of years.

But now I am back in a cash flow crunch again. I have assets in real estate, and hate to borrow money against those assets, since I am working on the Debt Freedom Date also, but it looks like I will have to do that.

Sometimes we have to alter our plans to keep things afloat.

I will add to this site from time to time. I have made many mistakes, and hope this website will stop you from making the same mistake. Get good counsel. Talk to people who are knowledgeable in whatever area you need help.

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