Posted on 01/06/2007 10:53:35 PM PST by Omega Man II
NEW YORK (MONEY Magazine) -- Don Cruz had always assumed that the only time he would ride in a stretch would be to his own funeral.
Instead, his heart was definitely beating, maybe a little too fast, as he and his son Donald, 10, stood like guys at a bachelor party with their heads out of the sunroof of a 30-foot Cadillac on the way to see their new house for the first time.
-snip-
The biggest problem, though, is that the Cruz family can't afford their new bounty. Don, a stay-at-home dad, and Shelly, an administrative assistant who's gone back to school to become an accountant, are quickly running through their winnings as they struggle to pay thousands a month for electricity, household help and other outsize bills for their outsize home.
On top of that, they had to take out a loan to pay off a $672,000 tax bill on their winnings.
Most people will never have to worry about the unexpected fallout from what looked to be a huge windfall. But like the Cruzes, millions of Americans may soon find themselves struggling to pay the bills for a house that's bigger than they really need and suddenly more expensive than they can afford.
Blame the strain of gigantism that has crept into U.S. home design, as well as rising interest rates and the expiration of low-rate introductory periods on popular adjustable-rate loans.
Economy.com estimates that at least 1 million homeowners will see their house payments double in the next two years. A study by First American Corp. suggests that one in seven who have recently taken out adjustable-rate mortgages will have trouble making their payments.
-snip-
(Excerpt) Read more at money.aol.com ...
Why not just sell it?
And it's a financial nightmare because this doofus won't sell. I don't care if it's his dream house; if he can't afford it, he can't afford it. Sell it, take the cash, live happily ever after - elsewhere.
quickly running through their winnings as they struggle to pay thousands a month for electricity, HOUSEHOLD HELP and other outsize bills for their outsize home.
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I'm guessing they are having trouble keeping up with a higher class of Jones' than before. If you have a ten year old why do you need to higher domestic help?
So first they get taxed about half the value of the house as a prize, then they'll get taxed half of their receipts should they sell it, leaving them with about a quarter of the original value in their pockets. I'd probably still sell if I was in that situation.
if this doofus is not smart enough to manage his own finances orcut loses then he deserves to lose the home. cry me a river.. I don't have a dream home, but I have a job, a family, and lots of love.
and now having read the article I feel less sorry for them. this dude has stumbled into cash amounts a lot of us will never see in a lifetime... irresponsible behavior on his part.. especially him being disabled. first thing I would have done is invest the money. screw the dream home sell it and put it all in the bank for the family
Further proof that if magically all the money from the rich were transferred to the poor, the original rich would have it all back within a few years.
I don't have a dream home, but I have a job, a family, and lots of love.
Very well said.
"In the 10 years that HGTV has run the contest, the Cruzes are the only winners who've chosen to live in the Dream Home.
Most of the rest sold, happily pocketing the cash. The Cruzes say they too had offers, for millions. But as soon as Don saw the house, he was determined to find a way to make it home."
Stupidity IS painful. As you said, they should have sold it, since they had to pay the tazes on the value of the house anyway, and could have bought a house they can afford and put away money and became financially stable.
But if they sell it any money they wind up with in the end would be more than they would have had before the contest.
I have a friend who kind of was in a similar situation and had to sell what she won. Yes she wound up with less than the prize was supposed to be after taxes but she still had about 20,000 more than she did before she entered the contest.
Ditto. I would've sold, ASAP, paid off the tax debt, and pocketed the rest. I can afford that kind of debt every day. What an idiot.
I know, which is why I said I'd still sell if I was in that situation. It's a shame though; the real prize winner ended up being the government.
Lots of people fail to realize that one has to pay taxes on what they win, in contests. I don't know why that is, but it is so. *shrugs*
Most of the rest sold, happily pocketing the cash. The Cruzes say they too had offers, for millions.
They should've been able to retire and live a comfortable lifestyle with no worries. Especially if they had stayed in East Texas.
But as soon as Don saw the house, he was determined to find a way to make it home.
Doh!
Upkeep is $2,900 a month. Homeowners insurance runs $7,000 annually. The insurance and gas bill on the Cruz fleet (they own seven vehicles, including the SUV they won in the contest) costs $1,000 a month. That's on top of the $1,000-a-month mortgage payment for the Batavia house, which they've kept, just in case.
Then there are the incidentals. Fixing up the family boat, which got little use in Illinois, cost $11,000. A dog run for their three dogs was $6,000. Between family and friends eager to see the Dream Home, the Cruzes have company nearly every weekend.
The tab: about $1,000 a pop. They've donated $40,000 to charity. And then there have been the splurges - $5,000 on Christmas presents; $2,000 for scuba lessons; an $1,800 go-kart.
The upshot: The Cruzes have just $36,000 left from their winnings.
Can't say I feel sorry for these dopes.
And they own seven cars!
My dreamhome would have a garden in the back, maybe a stream nearby full of trout, a front porch with a rocker and a good ole dog sitting on it.
Don't take much to be happy.......
Didn't Oprah winners have this problem when she gave all those cars away????
Actually, they will pay about a third of it's value in income taxes as a prize, leaving 2/3 of it's value to sell, of which half could be subject to capital gains tax if they turn right around and sell it. Minimum net gain in worth of at least 1/2 of the home's value. Keeping the house in their condition was greed or fantasy, or maybe both.
I do not feel a bit sorry for these idiots. They were given fifteen minutes of fame and a couple of hundred thousand dollars, but they deluded themselves into thinking they were now rich. They hired domsetic help and kept the thermostat at a comfortable temperature all year around. The father was a stay-at-home dad for a ten-year-old!?!? I think he was just lazy. And now, as they head back to the trailer park or wherever they came from, they want others to feel sorry for them. No, thanks.
"So first they get taxed about half the value of the house as a prize, then they'll get taxed half of their receipts should they sell it"
Nope... If they paid for it with after tax money, they only have to pay tax on the gain if they sell it. And if they owned it over 2 years, they don't even pay tax on the gain...
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