With the foundation set, it’s time to bring the education players on the stage. Here’s a few lessons to share.

(These lessons apply to majority of people and homeowners in the U.S. today. If you’re lucky enough to be part of a grandfathered property and you, your ancestors and your posterity never have and never will move, pat yourself on the back and don’t bother reading the rest of this. Also, if you can buy a house outright with your own cash, you also qualify for an exemption. If you’re not part of this crowd, you probably should read this.)

Lesson #1) ‘Owning’ a home is a misnomer.
To own something signals to our minds a completeness, a finality if you will. You pay for something and then it’s yours to keep and control. To slap this description on a process that typically spans three decades is where the misnomer comes it. Until you’ve made that final payment you don’t own your home, you’re renting it. The owner is who you borrowed the money from to sign a contract allowing you to move in and become responsible for the property. Oh, and you’re also paying them for the privilege of using their money in addition to your rent. However, when it comes to maintenance and all other related costs, rest assured your ownership is immediate and complete. So what you really ‘own’ for 30 years (or until you’ve paid off your loan) is an expensive rental.

Lesson #2) The lender has one goal.
The lender’s reason for existence in this business realm is simple, they are there to make money. There are several ways for them to do this and they have several backups to protect their investment, some of which include:

• Mortgage Insurance: This can be collected in the event you are unable/willing to make your payments.
• Property Value: They can resell the property for it’s value price should you not fulfill your contract.
• Government Aid: This only applies to the current housing mess, but lenders are receiving bailout money for homes in foreclosure in an effort to keep them from going bankrupt.

When you hit the grand scale of lenders that are so common in the U.S. today, there is no such thing as people and common sense. It’s all business and numbers. Programs put in place to help the people don’t work because of this truth and this single objective. Banks have every reason to foreclose on homeowners, not help them. The point of this lesson is knowing the lender is not there to help you once the contract to secure the home is signed. In fact, after that point you’re on opposing sides of the game.

Lesson #3) The home as an investment is a misnomer.
While this is the number one selling point, it is untrue for the average homeowner. The reason this sell works is because generally we are slow and lazy with no desire to do the math. By definition, an investment provides a return or pay out equal to or greater than the amount spent. Some will argue that this is where your home equity comes in as you can leverage it to borrow still more money. That’s a hollow argument to me as borrowing money isn’t the same as earning it therefore your gain isn’t on the investment or net worth side, it’s simply an expense category item used to satisfy a need or want leaving you with still more debt. The greatest irony of this is the pattern of upgrading we so readily buy into. We believe that to be happy and successful we have to keep getting more which potentially leads us to a bigger house. We fail to recognize that more equals more - more commitment, more expense, more everything. So, to qualify as an investment your home has to provide you payout for ALL the money you put into it with an additional profit above that. And here is where we fail because we don’t do the math. If you’re fortunate enough to sell a home and reap the equity, you may feel like your home was an investment. The problem is you never factor in the rest of the equation which is balancing your gain against your expenses, you simply see money that didn’t exist before. That’s a wonderful thing, also something you never consider balancing with it’s opposite which happens when a home’s value suddenly drops through the floor and you can’t sell it even if you wanted or had to. In fact, it took this experience for me to really think on balancing the equation and here’s what I discovered for myself:

$432K (30/yr, 6% on $200k -$528k if 8%)
+$60k (General guidelines say 1% of a home’s value is a good yearly estimate for routine maintenance)
+$50k (30 years of repairs and major things outside routine maintenance - I know this is low but we’re just getting a framework)
+$50k (30 years improvements - again, low but it’s just a framework)

=$592k - or an even $600k for easy math. So this is the minimum you need to receive for your home to hit the break even point - not make money. Big fail for investment math.

Now if we flip this (and I’m not a mathematician and I don’t play one on TV so this isn’t accurate, just info to get you thinking) by saving that same money you were going to spend on the home (I’m not talking the necessary payment amount here, just that excess for maintenance and such) you’d not only do a great deal to increase your net worth you’d potentially earn enough money to buy a home outright in less time than it would take you to pay for one on the “regular” plan. Especially if you invested it wisely in some compounding interest money market account. Food for thought.

Lesson #4) When things go wrong, they go terribly wrong.
The saddest lesson in home ownership has come in recent years with the mortgage industry crash. The reality is, your home isn’t worth what you paid or even what the economy says it’s worth at the time, it’s only worth what someone is willing to pay for it. And the extension of this is it’s only worth what your lender is willing to accept. To further complicate things, a big mess, like the mortgage industry created with inflated values it couldn’t support, can result in a wave of consequential changes from new programs, to new legislation. The impact is far reaching and will be felt for years to come. The things you know and understand today may not be the same tomorrow. This is also the point at which I learned how the bank is actually on an opposing side from you. See, if they chose not to accept an offer when your home is upside down, you lose and there’s nothing you can do about it. And remember all those ways listed above for a lender to make money? They all work against the buyer. The bank will make more money by refusing or messing up a short sale offer and pushing the home into foreclosure than to help the buyer resolve the debt. Oh, and conditions of need over want in regards to moving - say for a new job, they have no influence. This is all about money and you’re on the short end of the stick. The worst part of all this is learning the hard way about the instability of what you thought was sound. It’s a rude wake up call to realize that circumstances completely beyond your control can change everything and leave you helpless. In fact, it’s a rotten feeling indeed.

Yes, it’s been a wicked learning curve. While we’ve successfully navigated away from the drowning Titanic, we’re still watching helplessly on the sidelines and feeling the waves of the aftermath. But we’re fortunate, we’re fine. Our credit will be marred by circumstances beyond our control, but we don’t need it to live and enjoy life as we’ve known it. We’ve been blessed to have a great job with a terrific raise, a comfortable and nice home we’re renting, money to meet our needs/wants and the knowledge that we did everything we could regarding our home in Arizona. Most people who have lost or are losing their homes today aren’t anywhere near as fortunate. I feel for them. We’re all wiser for our experience, but it doesn’t ease the pains of weathering the storm.

There seems to be more broken about our system than works. Did you know you can’t start a short sale process until you are behind on your payments? For us that meant we had to deliberately not make a couple months of payments to qualify for the only way we could sell our home. Some suggested renting in hopes the value would increase to the point we could sell it. Unfortunately we could never rent it for anywhere near the monthly mortgage payment and a partial payment is looked on the same way as no payment. Further, the recovery time looks to be about 12 years. Two mortgage payments are out of the question, especially when one was already our limit and we moved to one of the most expensive areas in the country. So with no option, we hired a real estate agent to list the home, agreed to maintain our utilities to the property and skipped a couple months of payments. We were encouraged when the bank approved our status for the government short sale program and although that was a bugger of paperwork and red tape, the offer was submitted to the bank. All was looking great until the bank decided they wanted more money and countered asking both seller and buyer for more. That did two things, first it caused the buyer to withdraw their offer and second the added paperwork and process delayed the process. To our disappointment, the next thing we learned was that our approval had been disapproved because of timelines not met - not met because the bank delayed the process. The ray of light was that we had a second offer ready to submit and while it would be a pain to restart the application and approval process for the short sale program it could be done. Well, it was supposed to be an option until we received foreclosure notices in the mail yesterday. Now we’re told that because the process is too far into foreclosure short sale is no longer an option. Apparently, while the left hand of the bank was processing our short sale program, its right was simultaneously pursuing foreclosure procedures. I am so saddened for our good neighbors too. Our home had the potential to be inhabited with new owners and continued home care. Now I fear it will fall into a state of ugly abandonment and for absolutely no reason. While we’ve always known we’re at the complete mercy of the bank and system, it is still utterly disappointing to see it work against us.

So let’s recap. A program is devised to alleviate insurmountable challenges with relocations. Approval is granted and two offers are obtained. The first isn’t accepted and the second isn’t considered. Bank forces both credit damage and foreclosure as a result. Epic fail - definitely broken. Is there any wonder that our legal system is now littered with lawsuits over messes like this?

The fine print is something I’ll not miss again. I may never own a home again - by choice. If I do, it will be when it can truly be an investment because it’s paid for from the start. But through all this, I feel we have been truly blessed. The weight of the ball and chain are gone. The mess isn’t cleaned up yet and I have no idea how long it will take with the bank running the show, but it will eventually be cleaned up. A whole new world is open to us with these cables of home ownership keeping us anchored. Maybe we’ll end up in Spain for employment yet. Regardless of where we go in the future, the knowledge that we can, and the freedom and ability to reallocate our income to our advantage are liberating and wonderful. Life is good.

Chalk it up to lessons learned. One very, big lesson to be exact: home ownership and what it really is and isn’t. Now, to be fair, this isn’t a news flash lesson but it is definitely a course correction and eye opening learning curve. Think of it as an expanded view. I literally feel like I just climbed on top of the barn and got a whole new perspective. This is good, this is a sign of growth and if I can keep it in my memory a sign of potential wisdom.

To understand where I’m coming from I must back up the train about 18 1/2 years ago, for this is where the seeds for independent living and home ownership began. The time is spring of 1992 and I’m engaged. Blake and I are talking about our new life we’ll be starting together in May, we’re making plans, dreaming, plotting our future course and such. One of the topics on the burner is where we’ll live. While apartments are the most common and expected avenue, we start thinking that if we could get into a little duplex we’d have something to show for the 4 or so years of expected rent. Problem: we have no money for a downpayment and we’re going to be living in a new and unfamiliar place. Extension of the problem, we can’t convince Blake’s dad, our only source for a solution to the problem and super smart accountant, that this is a wise investment. He counters that we don’t know where we’re going to be after graduation which is only a few years out and thus staying flexible with renting makes more sense. Hindsight shows this would have been very wise indeed, however all is not lost as through this exercise Blake’s younger brother received the fruits of planting these seeds a few years later. You’re welcome, Ryan. ~wink~ But I digress. The point of this share is that even before I was married I had a belief in the value of owning a residence; an accepted social truth that it would be an investment instead of flushing money down a toilet never to be seen again.

Blake and I spent the next 5 years spending every possible downpayment dollar on taxes. We were DINKS (dual income no kids) and we had no deductibles. It was most disheartening and we grew accustomed to the reality that we were locked into renting. In our 5th year of marriage we moved back to Idaho where Blake had taking a job for a start up company. This was a turning point as after 6 months, Blake’s dad asked us why we weren’t settling down with a home, which would be a wise move. We explained the lack of downpayment and this time he offered to help which made it possible for us to purchase our first home. ~Thanks Dad!~ It wasn’t anything fancy, only 1,000 sq. feet and $65k, but it was ours and it felt wonderful. We spent the next six years making it ours, creating a yard and increasing it’s value. When we moved in 2002, we felt it payed off as we were able to sell it for about $87k. The point of sharing this is the reality that our fist expectation of ‘making money’ or receiving a return on our investment was achieved.

2002 was an ugly year for us. Our business had gone under, I’d suffered a medical disaster that stretched over 3 long months building a mountain of medical bills and there was no work for Blake in the small Idaho town. Suffice it to say it was a miracle we were able to purchase anything when we moved back to Arizona. We found an affordable townhome for about $120k. It took us 5 years to dig out of the hole we’d dug with our financial disasters, but toward the end of year 4 our home provided us some additional help with a home equity loan that helped us clear our consumer debt. In 2006 we were blessed with a nice salary increase for Blake. This coupled with our cleared consumer debt gave us a new lease on life. We decided it was time to really “settle” and bought our first dream home. I describe it this way because the first two homes we bought were choices made by lack of options more than anything. This time we went looking for something we wanted and we found it. A great home, nice sized yard, pool in the backyard, everything we thought we wanted to live the good life and be super happy for the rest of our lives. We had added confidence as the townhome we’d bought 5 years before had nearly doubled which fueled our ability to purchase our dream home for $374k. The point of this share is multi-faceted; 1) we gained experience with the process of buying and selling, 2) we were able to use home equity to help us make progress on financial goals, 3) we capitalized on selling high returning more profits, 4) we followed the typical ‘American Dream’ pattern of upgrading.

So far so good right? I thought so too. However, my lesson was just beginning.

In fairness, things were really good for about the next three years. When the dust settled, our monthly house payment was about $500 more a month than promised when we purchased the home but it didn’t kill us. However, when Blake took a job he really wanted that let him work from home we sacrificed some monthly income and in the 4th year we’d have some bigger home maintenance and growing kid financial needs. We didn’t actually see the results for about a year, when we started noticing the consumer debt had crept back up to compensate. Naturally, this would be about the time the nation would experience financial distress and our area was hit with the demise of bank mortgage disaster. The long and short is that the value of our home fell to half what we paid for it. For the first while this was disappointing to be sure but it wasn’t a show stopper. We had no intention of moving so we figured we’d weather the storm and eventually the value would come back up to what we’d paid for it - by all practical and realistic projections about 7-12 years. I was blessed with a work opportunity about this time that would allow us to tackle the consumer debt and with some diligence we’d be back on top of things soon. If you’ve read many stories, you know this is the point where the curve ball comes. And sure enough it did, Blake got recruited for an amazing job opportunity in a different state. The point of this share is unforeseeable consequences can come from circumstances and factors beyond your control and vision.

So let’s recap the history:

• I believe in the theory that home ownership is a wise investment and will provide a return for monthly money spent on housing.
• I experience this ‘return on investment’.
• I gain experience with the process of buying and selling, am able to see the value of home equity, made a high return on our home sale and followed the upgrading pattern.
• Unforeseeable and uncontrollable events generate substantial consequences on the home buying decision.

I’d keep writing, but I’m exhausted so I’ll break this post out into two parts. I’ll tackle the wealth of knowledge gained and my personal thoughts as a result in Part 2.

I was just reading a news article about help and the home owner dilemma, a real mess to be sure. President Obama was in my home state this month and addressed the government plan on funding to help struggling homeowners in foreclosure and this article was reporting on it. It shared how great the intentions are but how little good will come of it. The problems suggested are first, the number of homeowners that qualify for the aid are very small because the qualifications are so limiting and second, refinancing at a low interest rate over a longer period doesn’t solve the real problem because selling the home can’t recoup the debt. I agree with these problems.

I may have a school girl mentality, but this whole mess seems a lot easier and more basic to me than complicated economics algorithms. A mistake was made, but instead of erasing we’re piling on more scratch marks. The mistake involves two sides: the lenders and the buyers. Lenders created a stage of inflated home values, made it easy to buy into and buyers did. I use the term mistake loosely because cheating would likely apply with great accuracy. However, because there were a lot of innocent people affected I think I’ll stick with mistake here. I just want to know how much it would cost for an eraser? Why can’t we just erase the untrue and inflated values off existing mortgages? If we can pull billions of dollars out of thin air to ’stimulate’ our economy, why can’t we just erase what never existed? The banks can’t claim they’re losing because it was all make believe to begin with, in fact they’re at greater risk of default and losing by doing nothing.

Why can’t the good and honest people still paying on their mortgages be released from the cheating and lies of the industry controllers? You wouldn’t even need to refinance, just write off the unrealized inflation value that doesn’t exist anymore. This is the real problem and it’s what needs to be addressed. In fact, in my area a common scenario is a home costing $300,000 three years ago and those same homes are worth half that today. Nothing changed with the homes, just the make believe bubble surrounding them. Can you imagine having to sell and move knowing that you’d still owe $150,000 AFTER you’d sold your home? Neither can I.

So I’m just wondering how much an eraser would cost in all this. It seems like erasing not bailing is a better verb for this particular situation.

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I just got off the phone with an interviewer. He had questions about our adoption website: HopeToAdopt.com and was considering adding it into a TV story he was working on. Oh I wished for such a break years ago! But today our site is in transition. It was a delightful conversation and I’m so tickled he’d find me, call me and care about my input. I asked him where he was 9 years ago when we paid to have a story done for public television that never went anywhere!

The crazy thing is I actually gave the one adoption site that’s been on my crap list for the past decade a media referral! I figure if it does anything good for the adoption world in general it’s worth it. I’ve never cared for the attitude, approach or monopoly factor of Adoption.com but I do care deeply for adoption and those affected by it. So I passed him on to them. *gasp*

On the bright side, he complimented me on our site and efforts and said he thought it was a great story that should be told! I feel that way too. I will never regret what we put into it or all the great things that have come from it! Too bad this call was 9 years late.

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It’s been eight years ago today that my husband and I officially launched our adoption website: HopeToAdopt I’d been chatting in adoption chat rooms for a few months and became aware of a growing need for waiting families to have reasonable options for creating online profiles. A few websites were offering the service, but as web developers and adoptive parents were unhappy with the high prices being charged for the minimal effort of an “online birthparent letter” so we created HopeToAdopt.com. My husband wrote the program that automated building a 5 page website by answering questions and making selections. I designed the main site and several personalized themes for families to choose from. While other sites were charging $400 for six months for a two page letter we launched our site giving families their own 5 page site, a personal site address and access to personal site stats for $39 a year. I had two dreams with the creation of HopeToAdopt, both of which happened within the first year: 1) I hoped at least one family would be formed with the help of their H2A profile, 2) I secretly hoped our daughter’s birthmother might find us.

I’ll never forget the first notification that a placement happened. It was an e-mail from a former online friend who had been deeply discouraged with adoption and online efforts after a recent scam. It was early January, 2001 and the e-mail stated that she thought I’d like to know they’d just brought their son home and that his birthmother found them on HopeToAdopt.com! I just started to cry. I was so happy for her, even more so because of her recent heartbreaks with online adoption efforts and I was so overjoyed to have played some small part in her success. It felt wonderful to give something back to the world of adoption that had given me so much. Within a few weeks I received word of two more families whose profiles played a role in their matches and successful placements. I knew if nothing else happened and the site went away that day I’d be happy and satisfied, but there was more in store.

In June of 2001 I would receive an e-mail from our daughter’s birthmother. It brought into view a door of reuniting and opening our adoption. A few months later we all met again. Cidnie was almost 4 years old then and to watch her run into Monica’s arms with the biggest hug reduced me to a teary mess. It was an incredible moment. However, the crowning moment would come that November when we were present at her wedding. My dreams were not only realized, they were bigger and better than I could have imagined.

Today, eight years later our site is adapting to the many changes of the Internet. Today marks the day we are no longer creating/accepting new profiles on our website. One year from now there will be no more HopeToAdopt.com profiles. The service simply isn’t required anymore, blogging is the new medium for personal websites and it’s free. I’m grateful for the run we had. We turned down offers to buy our website and the two of us have run it successfully for these eight years. Other websites and agencies copied what we did, which tells me we did something right. *wink* And we did it all while proving it could be done for a fraction of the cost of others. While we’re working on a continuation of beneficial online adoption services, the reality that today marks a big milestone is ever present in my mind. It’s a sign of growth, a sign of change, a sign of progression while at the same time marking the end of something that’s been very near and dear to my heart. It’s truly bittersweet.

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I’m amazed at how many things can be about business these days. From the business of motherhood to an office in a high rise, business continues to flourish, grow and change. Change seems to be the one constant in the universe. But keeping up with it can be a real challenge.

I’ve often wondered why that is. I think the real reason is that although we often hope for change, even work for it, we are scared of it and we resist when it comes. It’s hard to let go of our comforts and routines, even when they are causing us discomfort or struggles. They’re like the adult’s version of a baby blanket or favorite toy and we cling to them just as fiercely.

The mark of a good leader in any business is the ability to do what is necessary, especially regarding change; to look it straight in the eye and find new ways to adapt. It’s not easy, in fact pain is usually a factor. The good news is knowing the opportunity that comes with every situation. When you focus on that, when you starve the problems and feed the solutions good things happen.

I’ve had to make a few necessary changes lately as both a mother and business owner. I’ve had to give a little more space to my children as they explore some independence. I’ve had to let go of some business ventures online because there are just so many new options out there with blogs, etc. that I can’t possibly compete with and don’t really want to try. But even as I make these necessary changes I’m putting a smile on my face reminding myself that I’m simply making room for what’s coming next and it will be bigger and better!

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