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A $50,000 Lesson Pays Off Comments

  • By Olivia, a DailyWorth Reader
  • September 19, 2012

Beach House

About three years ago, in my late 30s and still single and living in a big city, I decided to buy a weekend beach house.

I didn’t have a husband, kids, so it kind of made me feel normal, to have something of my own.

Of course, I also thought it would be a good investment. I bought it in 2009, so prices had already dropped. But since then, it’s continued to lose value.

Plus, I had to pay all these bills on top of the mortgage—the landscaping, alarm system, plumber. You don’t really think about that.

I thought it would be a great place to invite my friends. But the town didn’t offer much for single gals, and half the time I’d just hang out with my family (who live nearby). I did date my sprinkler guy one summer. That was fun.

But then my financial adviser told me I needed to be saving more than 10% of my income—he wanted me to go up to 15%. I realized that I couldn’t, because of the house. I really was losing money.

So a few months ago, I decided to sell it. I bought it for $330,000 and I’m selling it for $280,000. So that’s a $50,000 loss—not including the realtor’s fee.

But as the final bills come in, I’m realizing how much money I’m going to save by cutting my losses. At least now I’ll have my money back. I can travel—go shopping!—and put my money into something that will grow.

Power Point
The best way to let go of a possession, project (or person) that’s depleting your resources is to focus on what you’ll gain, one study shows. Quit thinking about your sunk costs, i.e. how much you’ve put into it, or you could end up losing more.

 

Throw in the towel. Are you holding onto a losing proposition?

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