Alan & Dawn at the 2-Year Mark

It’s been two years, one month since Alan and Dawn decided a change was in order for their financial situation. They were living paycheck to paycheck despite having a nice income and they were tired of it. Tired enough to get motivated to make some tough changes. Tired enough to do what neighbors, friends, and co-workers were unwilling to do despite facing similar difficulties. Alan and Dawn changed their behaviors towards money and the results are amazing.

In May of 2007, Alan and Dawn had $131,000 in consumer debt  including a BMW ($22,200),  mini-van ($12,100), one credit card ($10,500), two student loans ($17,500 & $37,000), a personal loan ($28,000), and a handful of miscellaneous smaller debts ($3,700). In addition to the consumer debt they had $259,000 on a negative amortizing home-loan. Combined, Alan and Dawn had a pile of debt adding up to around $390,000. To tackle this debt they had a take-home pay of $5,200 when they started…..and then they got to work!

They “downsized” their expenses by selling their two vehicles for two much cheaper ones, cut the budget (and the credit card!) in every possible way, and stretched every penny as far as it could possibly go. Doing this dropped $17,000 off their total debt, and saved them thousands of dollars worth of interest. About six months into the process they decided to take the big step of selling their home and renting until they became debt free. Not only did they knock $259,000 worth of debt out, but it reduced their total financial risk and dealt with the terrible loan situation they were in. They ended up with monthly expenses (including minimums payments on debt) around $5,000, leaving about $100.00 each month to throw at the remaining debt.

Two years later Alan and Dawn are doing great. The once $390,000 pile of debt has been reduced down to $69,537 without having received any significant pay increase or bonus. Taking any extra money they could find from garage sales, gifts, or the odd job resulted in taking a nice size hit out of the debt. Only the two student loans (now $16,500 & $33,687) and the personal loan ($19,350) remain to be paid off, and at this rate they will meet their goal of  being debt free in less than 5-years!

What Alan and Dawn have accomplished in such a short amount of time is amazing to say the least, but it’s not impossible. It has taken them hard work and caused them to be intentional to the penny every month for two years. I’ve sat with them when it was tough and tears were rolling, and I’ve witnessed the multiple little victories along their journey. Most people living paycheck to paycheck would like to be free from the stress and limitations that situation creates, but few are actually willing to do what it takes to change the situation. It’s tough! Anything worth anything typically is. But it’s completely worth it if you will commit to it! I know Alan and Dawn are going to make their goal and I’m excited to see how their life flourishes in the future because of the decisions they are making today. Great job guys, keep up the great work! I’m so proud of you!!!

Make the Call

Owning a commercial property management, consulting, and development business is great, but not a week goes by that some type of challenge presents itself. Each challenge gives me the opportunity to grow the business in one of two directions: positive growth or negative growth. I thought I’d share an experience from the past few weeks that displays us going in the right direction when it could have gone very differently.

Basically, my company took over the management of an older commercial building that has been going down hill for several years now (financially and structurally speaking) from a combination mismanagement and ownership neglect. It’s a 40,000 SF property with only 50% occupancy in a tough sub-market around Everett, WA. Beyond the maintenance woes, we inherited several tenant vs. tenant issues that needed quick attention, and a few of the tenants had/have serious financial problems within their businesses as well. Since the property hasn’t been performing well for several years, the income it currently generates doesn’t cover all the property expenses and the owners mortgage. Still, the property needs several big ticket items (aka lots of cash from owners) addressed to keep from losing what tenants are left (aka remaining income stream). Tough cookie huh!

Well, I enjoy challenges like this. At least I enjoy them until attorney’s get involved! Unfortunately for everyone, an attorney did get involved on behalf of their client (a tenant at the property) who made a checklist of claims against previous property managers, the property owner, and even us (who wasn’t even empoyeed at the time stated). Essentially, half the claims were fair while half were pulled out thin air, but regardless we had address the issue. We went back and forth via official letter this and certified that, while nothing positive was really taking place. Finally, I decided to make the call. Enough with the back and forth games, let’s get to the heart of the matter and deal with the real issues at hand. I called up the attorney sending me the wheelbarrow loads of paperwork and said, “let’s talk!” After listening to his concerns and detailing our position and action plan for the property, we came to a mutual agreement that made everybody happy within a few minutes. What had been a three week merry-go-round of letters and sidestepping was resolved within 15-minutes of a phone call. While there are times for tough negotiations and cloak and dagger like maneuvering in business, sometimes it’s more effective to just make the call.