I'm $1.8M In Debt With No Job

Summary

In this financial coaching session, Tom, recently laid off from a high-paying commercial real estate role, seeks guidance on managing multiple mortgages, a car loan, and a credit card. With his wife still earning $130,000 and savings of $12,500, he navigates property sales, overdue taxes, and forced insurance payments while exploring income options like Uber. The coach emphasizes realistic property valuation, avoiding risky mortgage takeovers, and understanding the real-world risks of debt. The session highlights strategies to reduce financial risk, stabilize cash flow, and leverage transferable skills to regain financial security.

Takeaways

• 💰 The client is over-leveraged with four mortgages, a car loan, and one credit card, creating significant financial stress.
• 🏠 Selling rental properties is a priority to reduce debt and mitigate financial risk.
• 📉 The client is struggling to find work in their specialized field of commercial real estate credit risk due to market conditions.
• 🔄 Transferable skills in financial and risk analysis can be applied to broader job opportunities beyond their previous role.
• 📊 The true market value of properties should guide sale decisions, not wishful listing prices.
• ⚠️ Avoid unconventional deals like lease purchases that may transfer risk but not legally resolve mortgage obligations.
• 💵 Emergency funds should be preserved for genuine emergencies and not used to cover routine property shortfalls.
• 📉 Excessive leverage increases exposure to financial risk, especially when tenants or market conditions do not meet expectations.
• 🏦 Buyers must be verified, and mortgage clauses considered before attempting property sales.
• 📈 Strategic, realistic property sales and job search expansion are critical steps toward financial recovery.
• 🛑 Desperation moves can worsen financial problems, so caution and planning are essential.
• 📌 Prioritize selling underperforming or high-risk properties first to reduce liabilities effectively.

Q & A

What prompted the caller to seek financial advice?

The caller had multiple mortgages, a car loan, and a credit card, and had been laid off for seven months, creating a financial mess he needed help managing.

What was the caller's previous occupation and income?

He worked in credit risk for commercial real estate, earning $130,000 annually.

Why was the caller laid off from his previous job?

His position was eliminated after $2 billion in debt assets were sold to another asset management firm, and due to the current interest rate environment, hiring in his niche field was slow.

What steps had the caller taken to manage his finances?

He and his wife had been building an emergency fund, trying to sell rental properties, and he had recently signed up with Uber for temporary income.

How many mortgages does the caller currently have and what are their details?

The caller has four mortgages: his primary home ($540k at 5.75%, $4,400/month), a rental property ($453k at 6.5%, $2,956/month P&I), another rental ($192k, $1,119/month P&I), and one with a business partner ($184k at 11.5%).

What challenge did the caller face with selling one of his properties?

He had a potential buyer offering to take over the mortgage, but this was risky due to a 'due on sale' clause, and he was also behind on payments and property taxes.

What advice was given regarding the sale of the properties?

He was advised not to accept the buyer who wanted to take over the mortgage, to assess market value realistically, and to continue selling properties to reduce debt exposure.

How much money did the caller have in his emergency fund?

$12,500.

What lesson about risk did the financial advisor highlight?

The advisor emphasized that taking on significant debt increases financial risk, and that real estate investments carry risks beyond tenants paying rent, which the caller had underestimated.

What was the overall financial goal for the caller?

The goal was to sell the properties, reduce debt, stabilize finances, and hopefully secure a new job to restore income.

How did the advisor suggest the caller approach his job search?

The advisor suggested broadening the search, using transferable skills like financial and risk analysis, rather than focusing narrowly on commercial real estate credit risk.