Saw in the paper an employee is going bankrupt

I saw in the paper one of my employees is going bankrupt. I am actually surprised, as I pay her a lot. The only debt I see if a house and car. Both are nothing special. She got divorced a coupe months ago. It says in the paper 190k liability and 160k assets. Can someone explain what this means? I dont want to ask but would like to know,

I saw in the paper one of my employees is going bankrupt. I am actually surprised, as I pay her a lot. The only debt I see if a house and car. Both are nothing special. She got divorced a coupe months ago. It says in the paper 190k liability and 160k assets. Can someone explain what this means? I dont want to ask but would like to know,

It probably means she and her husband owed 380,000 on the house. And now its only worth $320,000.... So between the two of them theyre upside down 60K.... WITH her husband she probably had no problem staying in the home and making payments..... But with the divorce if she stays in it, she now OWES HIM his share of the equity.... And obviously, she cant do it. He may be able to force the sale.... And the Bankruptcy may allow her to stay in the home as opposed to a forced foreclosure.

There house is about 150k. Nothing special. Probably a 40k car lease. She got the house and her husband got a truck, h2, 2 four wheelers, and an expensive motorcycle. I bet she got stuck with the house and he got the toys. You would think she could afford those two things with a 50k salary. Must be some credit cards or something.

$500/month car payment

$150/car insurance

$150/gas

$300/credit cards

$180/energy bill

$150/association

$200/property tax

$1100/mortgage

$300/homeowners insurance

$400/groceries

$100/cell phone bill

$120/Internet, home phone, cable

etc

etc

 

 

$50,000 won't get you much these days. Especially if you are in a high cost of living area. It is basically living paycheck to paycheck, or upside down.

ou should bail her out

ou should bail her out

 

He's already helping bailout 95% of the US population.

If you don't mind, what is her position at the job? And what's the location?

$300/homeowners insurance

 

is that a month? or a year?

 

is that a month? or a year?

 

Month.

 

In Miami, for a regular home it can be easily $500-600 a month for a regular run of the mill home.

 

Also I didn't include health insurance, life insurance, retirement, and spending money into the mix. As you can see, unless you are renting a small place, have your car paid off, and have no credit card debt, you are screwed if you are single making that much.

 

I have a friend of mine that is about to finish his Masters Degree, and has never lived on his own or paid his own bills (at 28 years of age), and he asked me as a married couple with kids, what is the minimum that I think you have to make to be comfortable? My answer to him was that to have a non extravagant $500,000 home, 2 decent cars, insurance, retirement, minimal savings, and have money to take non-extravigant vacations, with Miami costs of living, you need to be roughly in the $250,000 household income bracket to not be living paycheck to paycheck and to be comfortable.

Financial illiteracy and living well beyond their means, I would say a good majority of people dont know how to spend/save money.

 

Month.

 

that's crazy.

For a house double in value $300k to $400k here you pay that or less than that in a year.

That was the reason why I asked because I saw all the other expenses were monthly and I couldn't believe insurance would be that expensive.

How much would it be to insure a $4 mil to $6 mil home there?

50k isn't much these days. And if that's before taxes your phuuuucked if you have a family (unless your one of those 30k millionaires haha). I sold a three plex to a attorney that was living in West Palm. He converted it back to a house & moved in. Jokingly, I told him he was doing things in reverse. He said the jobs were impossible to find & his home insurance had tripled in Fl. That was probably three years ago.

He's already helping bailout 95% of the US population.

that's crazy.

For a house double in value $300k to $400k here you pay that or less than that in a year.

That was the reason why I asked because I saw all the other expenses were monthly and I couldn't believe insurance would be that expensive.

How much would it be to insure a $4 mil to $6 mil home there?

 

 

The insurance companies have had to dish out a lot of money from previous hurricanes, so they screw us. A normal $300k-$500k home is probably $500-$750/month depending on your deductible, and coverage.

 

Not sure what it would be to insure a 4-6 million dollar home. I bet some other FL members could tell you.

The killer on a home that costs 4-6 million here is property taxes. For a house that costs that much depending on variables such as location and land size you are paying anywhere between $35,000-$80,000/year depending if you have homestead exemption or not.

The insurance companies have had to dish out a lot of money from previous hurricanes, so they screw us. A normal $300k-$500k home is probably $500-$750/month depending on your deductible, and coverage.

 

Not sure what it would be to insure a 4-6 million dollar home. I bet some other FL members could tell you.

The killer on a home that costs 4-6 million here is property taxes. For a house that costs that much depending on variables such as location and land size you are paying anywhere between $35,000-$80,000/year depending if you have homestead exemption or not.

 

is homestead similar with a principal place of residence?

Those taxes are insane, we pay for that value house where I live around the $10k year mark max depending on your water usage, insurance is max $2k/year.

I understand now why the insurance is so high where you are.

We were/are contemplating moving to the states, all this info is quite handy, I think what you guys are making on your cars you loose on the property taxes and other expenses which seem to be a lot more expensive than what we are paying here, I think I am happy to spend an extra $250k on a Gallardo considering the fact that you my have to pay out that amount within 3 years on your property taxes.

Thank you for the info and sorry about the OT

Correct. A homestead exemption is a tax shelter for your primary residence, and it makes it so the government can't raise taxes over a certain percentage each year irregardless of increase in property value.

Correct. A homestead exemption is a tax shelter for your primary residence, and it makes it so the government can't raise taxes over a certain percentage each year irregardless of increase in property value.

 

so there is some tax protection on your primary residence, good to know.

Sorry for the OT as well. It may vary from state to state with regards to property tax. What I spoke about is Florida. Floridians also enjoy home protection where if someone sues you, and you claim bankruptcy, they can't take your primary residence away. Hence the reason OJ Simpson lives here, and I see him all the time in Kendall. Also something to mention is that Florida and Texas are the only states that don't have a state income tax to my knowledge. That may or may not make a difference for you.

Thank you pikemike maybe we should open another thread to discuss it.

Back on topic

Here in Southern Cal the easiest way to get a close estimate of property taxes is to multiply the price of a home by 1.15%. If you're talking about buying a 4million dollar home, your area will be one of the higher bracket properties (so 1.15% is a close number maybe a little high but gives you an idea what you should be prepared for). Standard homes ($350k-$600k) is closer to .80 - 1% of the homes current value.

 

So a $4,000,000 home will be paying $3,833 a month in taxes alone, yes sir you read that correct...

 

As for the original post, a definite profile of a person that was spending UP TO her monthly earnings (including her husband's income), that got pinched in a big way after the household income got cut in half. Really easy to happen. Doesn't matter what you pay her, unless you wanna double her salary. It's especially bad if in spite of what you paid her, the husband actually made MORE than she did...We see it a lot with dual income families. the husband gets laid off or a separation and now the only income coming in is hers and she can't handle it all. Its so important for people to NOT live over 40% of their household income. Those Banking guidelines all of a sudden are starting to make sense now to a loooooot of people...

Thank you pikemike maybe we should open another thread to discuss it.

Back on topic

 

if you have any more questions, please do. I am sure there are dozens of members that know much more about the information you seek than I do. Especilly those that have lived in multiple states or currently own homes in more than 1 state.

 

Regarding Swil's comment, I completely agree. It is SO easy to see all your monthly combined income coming in, and to live paycheck to paycheck, but have a nice home and cars. It is basically socially unnacceptible to live well under your means even in the current economic state we are in.

Holy crap. My homeowner's insurance is included in my mortgage somehow but I think it's much much cheaper than all those numbers

Holy crap. My homeowner's insurance is included in my mortgage somehow but I think it's much much cheaper than all those numbers

 

Florida is an anomaly. My the rental property I own rolls the homeowners insurance into the association dues which are $295/month. Not bad, but on a property that is now worth $130,000 it's alot. The problem in FL is not the mortgages and home prices, it is the additional costs to live here which drives many to bankruptcy once an income is lost.

 

I was looking at a home today online that was listed at $595,000. The property tax paid last year was over $16,000. So over $1300 a month in property tax alone. Then figure another $750/month for property insurance. Then most neighborhoods have an association of at least $150/month. You are over $2200/month without your mortgage and utilities! This is what breaks the bank of most families here.

Why was this in the paper?

 

is that common practice to have personal bankruptcies in the paper? I can't recall ever seeing that in the local papers.