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Taking a Loss on Your House Sale, Time to Hit the Reset Button on Life

Housing-Market / US Housing Nov 28, 2011 - 02:24 AM GMT

By: DailyWealth

Housing-Market

Dr. Steve Sjuggerud writes: "We're going to have to write a big check to get out of our house," a friend told me.

He's moving far away from here.


"We close on our house this month," he told me. "I'm trying not to see it as a big loss, though. I figure we're just trading out... I figure the house we're buying where we're moving is probably at the same kind of discount."

My friend and his family have to recalibrate their lives...

Back during the real estate bubble, they were living high, hardly working. They'd borrowed heavily and put it into real estate, which gave them a large and ever-increasing net worth... until the bubble ended. I'm not sure how much of that net worth has disappeared – but there's a chance most of it is gone.

The regular vacations and extravagant lifestyle are things of the past, for now. He is back to work – hard at work – in a new town, with a new life. With his willingness to change and his work ethic, my friend will be a success at whatever he chooses.

He is one of the few smart ones out there now... He is moving on. He has changed careers. He's moved far from our bubble area. And he's recalibrated back to a more normal standard of living.

Surprisingly, many intelligent folks haven't acted as smartly as my friend.

You see, where I live on Florida's east coast, real estate and tourism were the top businesses in the bubble. When the bubble ended, they both collapsed. Yet the guys who were successful in the bubble haven't moved on. They're still sitting on their real estate or their tourism-related business, hoping for a return to old times.

While the tourists have returned and real estate prices are the lowest I've seen in a long time, the brutal reality is, we won't see the same levels of spending and real estate prices for possibly a decade or more – longer than that crowd can wait.

So what can you do?

Taking a huge loss on your home doesn't sound like fun. Finding a job far away in a non-bubble industry is a tough decision to make as well. But my friend is doing the right thing, and he has the right attitude.

In short, instead of sitting around hoping the good ol' days return while his investments fall in value, he bit the bullet. He's making a new life with a more normal standard of living.

In a decade, he'll have the money to buy all the real estate around here he wants. Meanwhile, the guys who sat around moping and hoping won't have the money or the optimism in a decade to buy.

If you're in a position like my friend was – in a bubble town, in a bubble industry – don't forget, you have a choice. You can stay and hope the bubble days return. Or you can leave and try to create a better life.

I realize 99 people out of 100 will stay and hope. But it might be time to do something bold... something like my friend did. He can always come back, and it will be just like he left it. But now that he left, he's succeeding... And I'm not sure when he'll return.

Good investing,

Steve

http://www.dailywealth.com

The DailyWealth Investment Philosophy: In a nutshell, my investment philosophy is this: Buy things of extraordinary value at a time when nobody else wants them. Then sell when people are willing to pay any price. You see, at DailyWealth, we believe most investors take way too much risk. Our mission is to show you how to avoid risky investments, and how to avoid what the average investor is doing. I believe that you can make a lot of money – and do it safely – by simply doing the opposite of what is most popular.

Customer Service: 1-888-261-2693 – Copyright 2011 Stansberry & Associates Investment Research. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This e-letter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Stansberry & Associates Investment Research, LLC. 1217 Saint Paul Street, Baltimore MD 21202

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Daily Wealth Archive

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