In Over Your Head

I have a friend who had the good fortune to purchase his long-time dream home, a classic mid-century glass house in California. He’d worked long and hard to achieve this goal and, after doing so, considered his personal association with this beautiful house a part of who he was. My friend’s living experience in this dream home became an important part of his self-worth.

Unfortunately, after the recession hit in 2007, his income was cut in half. Keeping the house became a great burden. He started to seriously dip into his savings to cover the mortgage on his home. When he asked me for advice, I told my wonderful friend to get out from under the mortgage NOW: sell the house, take the equity, and buy something smaller and less painful to afford. Those were tough words for me to  “hand out” and even more difficult for him to swallow, but it made important financial sense.

After doing that, the pressure has lifted and my friend loves his new house as much as the previous one, although for different reasons. And he loves his new neighborhood even more. The point here is to always focus on your financial health. The pressure associated with maintaining a lifestyle when circumstances change needs to be dealt with proactively. Financial stress is awful: get out from under it and do it quickly.