Would Winning the Dream Home Become a Nightmare?

January 07, 2014

Updated June 14, 2017

HGTV’s Dream Home Giveaway continues to fascinate people like my mom, who love watching each year’s winners tour their incredible new homes. Whenever a new contest kicks off, my mom always asks me to help her enter, since her eyesight isn’t good enough for her to fill out the form anymore. Like the good daughter I am, I dutifully set a reminder to complete the entry form each morning that the contest is open, which makes my mom happy.

What if she wins?

But what if she did win? Would my elderly parents move across the country if necessary, leaving their home state of Maryland behind? If the home they won was in a state like California, that would mean higher state taxes, not to mention the cost of maintaining their new state-of-the-art home. And first, the IRS would want their share of taxes on the value of the home she hopes to win.

When a dream turns into a nightmare

Just like many lottery winners, the stories of the prior Dream Home winners sometimes end up being more nightmare than dream. Several of the winners ultimately lost their Dream Homes to foreclosure or ended up selling the home, after not being able to keep up the carrying costs and real estate taxes of a luxury home. They often would have been better off taking the cash instead.

Ski resort dreams dashed

The 2011 Stowe, VT ski lodge winner had the idea of turning the Dream Home into a vacation home and figured they could rent it out the rest of the time. But with real estate taxes of over $27,000 and all the other expenses associated with rental real estate (including probably a local management company since the winner lived in IL) the house was put up for sale after the family only stayed there 5 times.

The property certainly met the first rule in real estate:  location, location, location. But when considering the rental real estate rule of thumb that a property should be able to provide gross monthly income equal to 1% of the property value, this WAS only a dream – since the property had a supposed retail value of $3.8 million but may never have been able to yield $38,000 every month of the year.

Bed & breakfast special rules

What about a bed & breakfast business? These Dream Homes are so beautiful, with typical square footage at around several thousand feet, and of course, the setting is usually in a resort area as was the Texas Dream Home at Lake Tyler. That was the idea of the 2005 TX Dream Home winner, but town regulations wouldn’t allow him to open a business on the property.

The moral of the story

The lesson here: do your homework before considering a home-based business. Whether it’s a B&B for guests or a doggy day care for 4-legged friends, make sure local rules don’t prohibit running a business out of your house BEFORE you open the business. With the B&B idea a bust, the winner eventually couldn’t keep up with the monthly carrying costs and after a few years, lost his Dream Home but even after the foreclosure – said he had no regrets, and he’d do it all over again.

So if my mother gets an unexpected knock on the door one of these springs, it could be HGTV informing her she is the winner. I’ll pack my bags to go with her on the “winner weekend” to visit the Dream Home. Then after she’s had a few hours to admire her new home,  I’ll tell her to take the cash prize of $1 million+, say goodbye to the shiny new home and leave behind all the hidden pitfalls of her probably-not Dream Home.

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How I Plan to Kick Off The New Year

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A new year often brings new changes. In fact, some research shows that we’re more likely to initiate changes in our behavior during the beginning of a time period like a year, month, or week. Here are 3 steps I plan to take this month to kick off the new year: Continue reading “How I Plan to Kick Off The New Year”

New Year’s Eve Traditions Can Be Costly

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How Your “Time Perspective” Can Impact Your Marriage

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Last week, my wife wrote a blog post to kick off the “couples and money” series.  One of the hot button “budget busters” she talked about was the urge to splurge on non-essential luxury items like clothes, purses, household items, etc. (I thought her timing was perfect for the busiest shopping period of the year.) Admittedly, she isn’t the only one in our household with a taste for big ticket items as I have a long list of wants (definitely not needs) on my list for Santa.  I would love to have a paddleboard, upgraded golf clubs, football season tickets for next season, or a trip to Brazil for the World Cup.  Continue reading “How Your “Time Perspective” Can Impact Your Marriage”

6 Ways to Save on Holiday Get Togethers

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The holiday season invariably presents a variety of ways to separate your money from your wallet. There’s entertainment like shows and concerts, gift giving for friends and loved ones, and let’s not forget about tipping and gratuity – you can’t forget your child’s teacher, your dry cleaner, or even your postman. Although you never want to look cheap, it is important to save money during the holidays wherever you can.  Continue reading “6 Ways to Save on Holiday Get Togethers”

Being Married to the “Money Doc”

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This week, I will begin a series of blog posts about money and relationships. My wife, Heather (and the real brains of our family), had the idea to start off this series by exposing some lessons that we have learned along the way. Heather is self-employed full-time as an occupational therapist and specializes in working with incredible children who have developmental challenges. Despite occasionally minimizing the role she plays in managing our household finances, the reality is that Heather is also a co-financial planner in our household. Continue reading “Being Married to the “Money Doc””

Explore Your Hidden Volcano

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The Earth is still so full of mysteries even though we have had scientists exploring what seems like every nook and cranny of Earth’s surface, the oceans and the atmosphere. As much as we think we know (from a global perspective, not an individual one) about how the planet works, there is still much to learn and discover. Recently, there was some volcanic activity in Antarctica and the implications for the planet are completely unknown at this time.  It’s fascinating stuff!  (or at least it is to me) Continue reading “Explore Your Hidden Volcano”

Need a Lyft?

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I recently had to drop off my car for some repair work and rather than call a taxi, I decided to try a new “ride sharing” service I had heard about called Lyft. Before using it, I really didn’t know what to expect. I thought it was the car version of Airbnb, in which practically anyone could sign up to give rides for a fee to people using the service. I figured that at the very least, it would be more interesting than the typical cab ride and could possibly save me a few bucks. I was pleasantly surprised to find that it was a whole lot more. Continue reading “Need a Lyft?”

What Eating Halloween Candy Can Teach Us About Financial Success

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When I was a little kid, I used to look forward to being able to gorge on all my Halloween candy. It didn’t take long for me to realize what economists call “diminishing marginal utility.” Each additional piece of candy would bring me less pleasure than the last. It would eventually get to the point where eating more candy would only make me feel sick. Continue reading “What Eating Halloween Candy Can Teach Us About Financial Success”

Financial Trick or Treat?

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Along with the cooling temperatures and falling leaves that mark this time of year, comes the annual parade of children dressed as ghouls and goblins, marching door-to-door asking that most provocative question: trick or treat? It may seem silly when the question comes from a little boy and girl dressed up for Halloween, but when it comes to your money, how many times do you think you are getting a treat, when in reality you might be falling for a trick?  The following are examples of financial tricks that are disguised as treats: Continue reading “Financial Trick or Treat?”

A Message in a Bottle

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Sometimes I read something that touches me and makes me remember that, no matter what is going on in my life, things could always be worse.  And then I remember to pick myself up, dust myself off and get back to the business of living my life with less whining.  When I read this article, I had one of those moments.  Continue reading “A Message in a Bottle”

SPEND MORE now to SAVE MORE later

October 23, 2013

As financial educators, it is important for us to solicit feedback from end users so that we know if our education is making a positive difference in the lives of those that receive it. It is also important to report this information back to our clients, so that they can make adjustments to their programs based on the feedback we receive.  Since our education is sometimes delivered through live workshops, we often have stacks of evaluations that must be mailed back to our home office in El Segundo, CA. Continue reading “SPEND MORE now to SAVE MORE later”

Take the America Saves Pledge

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Want to win a $50 gift card?  By taking the America Saves Pledge and agreeing to receive text messages with  tips to help you find money to save and reminders to save for your specific goal, you will be entered to win 1 of 5 $50 gift cards during the month of October. You’ll be joining over 310,000 people who have pledged to save so far, and even if you don’t get the gift card, you will win by staying motivated to save. Continue reading “Take the America Saves Pledge”

A Dream Wedding or Tax Nightmare?

October 11, 2013

I recently had the opportunity to speak with a wonderful young lady who considered herself very lucky to have won a “Dream Wedding” from a bridal magazine contest. Having a daughter in college, it sometimes crosses my mind that I’ve seen her go from preschool through entering college and her next milestones could be getting her first job in the “real world,” getting married (hopefully not any time soon!) and becoming a mother (hopefully VERY far down the road….). So when talking with this “bride to be” and hearing that she won a $100,000 dream wedding, I was incredibly happy for her.  Continue reading “A Dream Wedding or Tax Nightmare?”

Contract Free at Last

October 01, 2013

For the past several months, many of my friends and co-workers have been hinting that it is time for me to upgrade to a new cellphone. I wasn’t quite at the same point as comedian Bill Hader in the commercials where he has bandages on every finger due to a broken screen, but I did sound like a broken record from another cell phone commercial as I repeatedly would say “Can you hear me, can you hear me now?” My biggest hesitation in getting a new phone was having to get locked into yet another 2-year contract with my current carrier if I took the bait of their 99 cent upgrade offer.  Instead, I finally took action and went contract-free, but that entailed having to pay outright for a decent smartphone. Since I don’t have to be totally cutting edge, I went for the iPhone 4 instead of the iPhone 5 and here’s where I will save in the long run: Continue reading “Contract Free at Last”

What Bothers Me Most About a New School Year

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Don’t Forget the Warranty

September 18, 2013

Just about every product manufactured on the planet today comes with a warranty, but how many of us actually read it or know how or when it applies?  I for one have a tendency to assume once a product breaks that my only option is to buy a replacement, but that’s not a very good assumption. For example, I recently broke the clip off of my cell-phone holster—the thing that holds my cell phone on my belt—and I was content to just buy a replacement.  As I began searching, I came across a comment from someone whose holster had suffered the same fate, and they said they called the manufacturer to request a replacement under the warranty.  This prompted me to pick up the phone and to see if I could get a replacement as well, and what do you know—I did! Continue reading “Don’t Forget the Warranty”

The Importance of Staying In-Network

September 17, 2013

My husband Dave recently broke up with our family dentist, and it wasn’t his idea. He felt jilted when he got a letter in the mail a few months ago notifying him that Dr. Muller was no longer going to participate as an in-network provider through his employer’s group dental insurance. In the letter, Dr. Muller encouraged patients to continue to see him, just not with the advantage of the negotiated rates. Would it really make that much of a difference? Continue reading “The Importance of Staying In-Network”

It Never Hurts to Ask: How to Negotiate a Better Deal

September 11, 2013

About a year ago, I wrote a blog post on the importance of being assertive when it comes to managing your finances. People’s unwillingness to simply ask for more —financially speaking— has always been a pet peeve of mine.  Whether it’s buying a car or bargaining at a garage sale, it never hurts to ask for a lower price or for a better deal, yet somehow as consumers we have been conditioned to just accept the price set by merchants without question; something that gets financial talk-show host Dave Ramsey up in arms. Continue reading “It Never Hurts to Ask: How to Negotiate a Better Deal”

How to Say “No” to Your Boss

August 29, 2013

Unless you’ve been living on a deserted island, you’ve probably heard about the exploits of my now former mayor, Bob Filner. The most notorious were the allegations by numerous women  of various forms of inappropriate flirting, sexual harassment and possibly even assault. Less provocative, but also quite disturbing, were reports of improper demands for financial concessions from developers and the misuse of a city credit card for personal expenses. Continue reading “How to Say “No” to Your Boss”