Tuesday, October 18, 2016

The Dangers of Stretching Too Thin

Remember our neighbours who are always looking to make more money despite having similar incomes to ourselves? Well, more drama and more issues keep cropping up for them.

Seemingly, out of nowhere, they decided to sell their house, moved out of their house and found a place 10 minutes away. To rent. After a quick Google search, I was able to determine the asking price for the rental was $2,500 a month. Yikes. As they purchased their house 1 year after we did, there's no way their mortgage is $2,500 a month.

So what happened? Well, based on conversations my in-laws had with the grandmother of that house, this is our best guess.

The father, always looking to make money with his side hustles (yes, hustles with an 's' at the end), was constantly taking calls related to his many side hustles. From what I heard, money was good with the side hustles. Coupled that with his full time job (with defined benefits pension), he was pretty much set.

About a month or two before the move, he was even bragging to his wife (yes, they fight a lot... about money) that he contributes a lot more to the family finances and that he even has a pension to retire on. Personally, I find it an odd thing to say to your wife, but whatever. The point is, he was proud of what he brought to the table and let his wife know about it.

Seems, somehow, he lost his job. According to what he told the grandmother, he quit his job and has the option to go back to work in 1 year. Which, to be frank, doesn't make sense at all. Considering they've been fighting about money for the past year or so, quitting a job that provides stable income now and in retirement makes as much sense as open bar at an AA meeting.

What wifey and I posit, is that he did something (maybe answer his phone to deal with his side hustle while working) that was a suspendable offense. As he is part of a union, I would assume the union would fight for his reinstatement after 1 year has passed. He probably answered the phone with a hands free device. Otherwise, he'd likely be fired as he would have been acting against Ontario's Highway Traffic Act.

So why sell the house and rent? Likely, they need money. Immediately. Without the stable income from his job and the fluctuating income from her work as a real estate agent and his side hustles, cash flow likely has been affected. Additionally, they purchased a new build a few years back and probably will require an additional down payment.

Problem is they didn't sell the house first. Instead, they decided to move out first and pay rent in addition to their current mortgage. Their reasoning is that they want to stage the house for selling. Of course, the grandmother has another theory of her own. It also happens that one of their neighbours is also a (former) co-worker of the father. Her theory is that the neighbour was the one who reported him to management and that is how he got in trouble with whatever he did. As a result, the father doesn't want anything to do with the neighbour and the family immediately moved out. Like basically in two days!

So what the heck?

Yeah, like I said. Drama and issues.

So how could this whole mess have been avoided?

Well, the simple thing is just knowing when you have enough.

They have 2 cars, 2 houses, tons of computers, tablets, the latest phones and gadgets, a whole assortment of video game systems, toys toys toys for the kids, home theatre systems for all their televisions... the list goes on. That doesn't include the tools the husband has for his side hustles or the clothing for wife's work in real estate.

Another thing is just to spend less. For every dollar saved, that's equivalent to two dollars earned (thanks to taxes)! Why stretch yourself to earn more when you could get the same amount of money by spending less. That's half the work!

They keep buying things they don't need. They recently leased a new Audi ($65,000 MSRP) for the wife's real estate work. The husband now drives the Mercedes. Dear goodness. Wifey and I are making due with our one car. Because of the crazy hours, they eat out pretty much all the time. Like McDonald's for the kids and fancy take out at some Chinese restaurant for themselves. All the time. The grandmother is always cooking at home, but no one eats her cooking and the food just ends up going to waste.*

Did I mention the son is being sent to private school? Yeah... that's $1,000 a month. Soon the little girl will go to school too. That will be an additional $1,000 a month. Wifey and I will send our kids to public school. I went to public school and turned out okay. I'm sure our daughter will be fine as well.

So yeah... that's a lot of problems. Many of them self-inflicted.

The sad part is all this could have been avoided if they lived within their means. His job paid really well. She could have stayed home and sent the kids to the school that is just two streets over from ours. Instead, in pursuit of more money, they ended up with lost income and extra expenses they need to cover that really they didn't need to take on.

The most upsetting part?

The grandmother won't be around as often to regale my mother-in-law with stories of how the husband treats her. In comparison, that makes me look like the ideal son-in-law.

*Grandmother complained to my mother-in-law that she doesn't know when to cook because they never tell her when they are eating take out. When the grandmother cooks, the family eats take out. When the grandmother doesn't cook, the family doesn't eat take out and when they get home yell at poor grandmother because she didn't cook. Yikes. Also, the husband (grandmother's son-in-law) sometimes just walks out of the house to eat at a restaurant when he doesn't like the food the grandmother cooks. That's just rude.