Tuesday, November 20, 2007

Doozy, Part I

In case you haven't read it yourself, I received this comment on my "Thankful That It's Over" post:

Carol, you always mention your losses of about $700,000 in the past past two years but never described how this affected your family. Do you still have savings? Is your husband looking for a job again?

As for the accurate total of our losses, I probably won't know this until my husband records the capital expenses and sales on Quick Books for our accountant after the beginning of the year (he's a little behind since we've disposed of the properties). I will post it as soon as I know. I think the $700K is a low estimate. We lost some of it from the equity of the houses that we traded for the apartments. The rest came from our own funds for capital repairs and monthly expenses to run the properties.

We used our entire savings, equity line, credit card limits, overdraft--you name it--while trying to keep the apartments afloat and pay our own living expenses (not to mention my son's private college tuition). The good news is that we were never delinquent on anything (until our PM's decided not to pay our mortgages for the apartments). The bad news is that it was really stressful.

My husband, who had been in fundraising for non-profit Catholic organizations (sales by trade and degree), was able to take on a client for a couple of months twice during our ordeal.

My children knew that we were running out of money. We didn't buy anything except food and what was absolutely necessary. My children were always well cared for and had everything that they needed. However, there is so much waste in a day and so much junk that we normally buy, so "cutting back" really just meant that we were well fed and clothed. We received a bunch of hand-me-downs that I used to refuse, but these clothes were in such good shape that we were thrilled not to have to buy any clothing besides socks and underwear. One day we needed to buy the dreaded shoes. They are so expensive and it seems that someone in the family needs a new pair everyday. We were in the shoe isle at Wal-Mart when the worker pointed out some clearance items. These boys tennis shoes were $3! So we bought one in every size that my kids would be growing into and stocked them in my closet for future use. My children would have to do without variety, but they wouldn't have any holes in their shoes.

We stopped eating out--fast food and all. The kids never asked for anything when we went to the store. They knew that, at this time, we had to conserve in every way. I even started washing the laundry in cold water and drying multiple loads together. During the summer, I could take the wash out of the dryer while it was still wet and lay it out on the couch to dry. We drive a twelve-seater van, so we had to cut way down on our driving, too. We presented our situation as a good way to sacrifice. After all, we were still more fortunate than many in this world. And, I have to admit, living that frugally was an uplifting experience for me. I can't explain it.

In 2005, I endured two miscarriages. In 2006, we were blessed with another pregnancy. Our seventh child (second daughter) was born healthy and thrives today, but my pregnancy was wrought with problems. The baby was born premature and had to spend five days in the neo-natal intensive care unit. The prenatal procedures, delivery (fifth C-section), and postnatal care for both of us were very costly. We have good private PPO insurance, but the deductible and co-insurance limits are high. The pregnancy and delivery occurred in the same calendar year, so, after all the limits were met, our medical follow-ups were covered 100%. It's possible that the stress from owning the apartments played a role in my medical complications. (If someone would like to criticize me for having a baby at that time, don't bother. Each of my children is precious to us and to each other. I'd like to hear my kids being told that their baby sister was "bad timing.")

In April of this year, my husband had an idea for a business. In and of itself, having an idea is not a big deal. We have been batting around business ideas for years, but few have proven to be worth attempting. The last good business we owned (for the bad ones, you can read "Wrong Businesses" from October) was an errand running company in the early 90's. At that time, there was only one other company performing the same services in San Diego, but they were concierges in office buildings. We had private clients all over town. That business did well.

However, my husband worked 24 hours a day, it seemed, and we were too green (mid-20's) to hire an employee (I had a job). Our contractual housekeeper had broken a small glass fish when he was cleaning the penthouse of Mrs. Pardee (as in Pardee Homes) and she wanted her $5,000 reimbursed. My husband handled the most valuable assets of many wealthy clients, so this episode scared us into thinking that we could lose everything if an employee made a mistake. He decided to finish his college degree instead of expanding the business. Ever since then, we have been looking for another opportunity. In 2003, we almost bought a Papa Murphy's Take 'n Bake Pizza franchise. We backed out at the eleventh hour because none of the franchises in San Diego were making a profit and most have since closed down--although the ones up north and in colder states were booming. Finally, this year, he had a doozy.

Since this post is already somewhat long, and I've answered the questions posed to me in the comment, I will give you the doozy details tomorrow. Stay tuned . . . .