January 19, 2011

Not Fortune Telling, Just Good Sense

Crystall Ball

About two years ago, actually the date was November 10, 2008, I got the following email from a client and friend. It read:

Hey Ben,

Hope all is going well. Everything is going well here. I need your input on house that my wife and I are looking at. My wife and I are looking at a buying a foreclosure. We have submit an offer as soon as possible. My proposal is to use a substantial amount of my account as a down payment and then replace the money in my account when our current house is sold. I'm thinking that my current house may take a month to sale. Do you see any issues with this plan?... I look forward to hearing from you.


Client X

My response was:

Hey Client X,

Sorry you couldn't reach me. Feel free to call me on my cell at anytime. The voicemail was full because as you might guess, I've been getting a lot of calls lately...

I would really like to answer your question thoroughly. So that I cover most of the pro and cons of this financial decision, I will take a little more time to write something up. But, for your immediate gratification, let me say that I think the plan you have laid out has significant financial downside. That is not to say executing your plan the way you've spelled it out won't be the right thing for you and your spouse to do. It may suit your immediate lifestyle and emotional needs. However, financially, there are much better ways to approach the purchase of a new home given your circumstances and the current environment. In a nutshell, I think the plan as laid out would set you back financially but that your finances are not the only factors that should be considered. There are the lifestyle/emotional factors as well.

I will write something up for you that will explain more thoroughly the financial downsides tonight and email you promptly. I will be available to speak by phone anytime after 3pm tomorrow.

Til then,


The letter in its entirety can be found here. My advice then:

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About Brick Financial Management, LLC

Blogged by Brick Financial

160 Maplewood Ave, P.O. Box 263
Maplewood, NJ 07040
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Brick Financial Management, LLC specializes in providing investment management services to individuals, families, organizations and institutions. We implement highly focused stock, bond, and balanced portfolios using an investment approach commonly referred to as value investing. Disclosure


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