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.
___________________________________________________________
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...
They would only get taxed on the gain, if they sell the house. If the house didn't appreciate they won't have any additional taxes.
But they took out a $1M loan, that would have to be repaid.
My understanding is that yes, those who received Oprah cars had the same problem; I also understand that she did not buy any of the cars herself, they were donated by the auto companies.
Thailand?
No, Michigan.
Yes, they did! I remember seeing that written about in several different newspaper stories.
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.......
I have my eye on my dream home - a 2 bed/ 2 bath Cape Cod. Small, old, cheap and what makes it my dream home is that it has hardwood floors and a fireplace. I ditto the "don't take much to be happy....."
I remember reading about a guy who won some huge jackpot in Vegas, like millions. He then immediately gambled it all away, but he still owed taxes on the millions, so he ended up being hundreds of thousands of dollars in debt.
Exactly so!
Yes you do. A house is not a home.
Hey, I'm with you....doesn't take much to make me happy either. The best things in life are FREE!
He may have been determined, but he sure didn't plan very well!
$9000 for presents, scuba lessons and a go-kart. $11,000 to fix up a boat, when even before the tax bill it should have been obvious money was going to be an issue? $6000 for a dog run? A family of 3 with 7 vehicles?
No, can't feel sorry for these folk.
http://images.scrippsweb.com/HGTV/2004/12/12/frontext05a_e.jpg
http://images.scrippsweb.com/HGTV/2005/03/02/DH05_Shellysurprise_e.jpg
HGTV Revives Family's Dreams
Dream Home 2005 awarded to Don Cruz of Batavia, Illinois!
The "For Sale" sign in the yard says it all. Don Cruz is ready to move. And now he has a place to go — the $1 million HGTV Dream Home.
A television crew from HGTV surprised Cruz, a 40-year-old native of this West Chicago suburb, just before dinner at his home on Tuesday night to announce that he is the winner of the 2005 HGTV Dream Home Giveaway. Cruz' name was selected from the record 39.1 million entries in this year's sweepstakes, the network's ninth annual.
"This is a miracle. It's a true blessing," Cruz said, explaining further, "I injured my knees several years ago and have not been able to work. My wife took a job to support us, but money is tight. We live paycheck to paycheck. That's why the house and property are up for sale."
Cruz's winnings include a fully furnished, custom-built home with more than 5,000 square feet of living area and a dockside guest house overlooking Lake Tyler in Texas. In addition, the HGTV Dream Home Giveaway includes a 2005 GMC Envoy Denali, $250,000 from LendingTree.com, one year of AOL Broadband service, and even a Doggy Dream Home that matches the architecture of the house.
"I saw the Dream Home on television and told Don, 'This place is awesome. We have to enter,'" Cruz' wife, Shelly, said. "It's as if it was built for us, with what we need in mind, especially because of Don's injury." Shelly was referring to the Jacuzzi and two unique features in the rustic retreat – an elevator and swimming pool – both firsts for an HGTV Dream Home.
"Those could make such a big difference in Don's quality of life. The doctors just told him that he needed to do swim therapy," Shelly said. While Don and Shelly Cruz were overwhelmed with surprise at the news that their names had been selected from almost 40 million entries, their nine-year-old son Donny was not.
"I knew we were going to win. I just knew it," Donny told HGTV's Joan Steffend, host of the HGTV Dream Home 2005 special and the person who broke the good news to the Cruz family. "Mom and I sat at the computer and looked at every room in that house and I knew it was our dream house."
For Cruz and his family, it means a new start. "Shelly and I had a lot of dreams when we got married 18 years ago. When I got injured, the dreams had to go on hold," Cruz said. "I guess that's why its called a 'Dream Home,' because it really does have that kind of impact on a life. HGTV has given us back our dreams."
http://tinyurl.com/4a2gj
Most of the "rich" earned their money. They know how to make more. The few that inherit wealth typically lose it in one or two generations...mostly because they have no idea of how to earn it or keep it. Some who inherit wealth manage to keep it by hiring competent managers. Kennedy and Heinz come to mind. Neither of their alcohol pickled brains have the capacity to generate new wealth, but they have found a means of managing what was handed to them.
They have been *ITCHING about it BEFORE they ever moved in and it CONTINUES!!!
I'm sure someone else would have APPRECIATED the win and sold it and MOVED ON with their lives! Not these DEADBEATS!
Friday, December 30, 2005 9:33 PM PST
Go ahead and dream about HGTV home contest -- just don't count on moving in
By: TIM WHITMIRE - Associated Press
LAKE LURE, N.C. -- Go ahead and dream. That's what Home and Garden Television's annual Dream Home contest is all about. Just don't get too attached to the idea that you'll actually live in the 2006 grand prize, a 5,700-square-foot traditional-style mountain home perched atop a ridge in the Blue Ridge foothills near Lake Lure. Even if you're lucky enough to have the winning entry out of the more than 40 million expected to pour in between Sunday's start of the contest and the Feb. 17 deadline, you might find that taking up residence is prohibitively expensive.
The contest's 2005 winner, Don Cruz, moved from suburban Chicago to Tyler, Texas, to take possession of his dream home, a lakefront property valued at $1.5 million, plus furnishings. But taxes on his winnings are expected to total more than $650,000, and local officials slammed the door on Cruz's plan to pay his bills by renting the boathouse and a master bedroom.
In a recent interview, Cruz said he's still living in the house in Tyler and has no plans to leave, even as April 15 looms.
"We plan to stay," he said. "God will provide. We'll say a prayer, turn it over to him and he provides. It'll all work out."
The daunting fiscal math of the Dream Home -- even if you survive the initial tax crunch, there's the annual expense of local property taxes, plus maintenance and upkeep -- has kept all but two of the nine winners from ever living in their homes.
This year, the prize package includes $250,000 from Charlotte-based Lending Tree to help the winner with the tax bill. But HGTV spokeswoman Emily Yarborough emphasizes that the network still doesn't expect winners to actually live in the Dream Home.
"He (Cruz) is not losing money," she said during an interview on the patio of the Lake Lure home. "It's just his idea of the dream is wrapped up in that house. Whereas our vision of the dream is that it enables you to do what you want to do."
That's a notion seconded by Kathi Nakao, the 2004 winner, who spent several extended vacations at the home she won in St. Mary's, Ga., before selling it in July.
"Ordinary people cannot keep a home like that," she said from Sacramento, Calif., where she lives. "I think it's meant to change your life, more than that they (HGTV) expect you to keep it."
The twist to the Dream Home competition is that unlike a cash lottery, what attracts millions of entries is not a vague dream of wealth, but the tangible reality of the home itself.
Starting Jan. 1, the Lake Lure house's assets will be shown off during several hours of HGTV programming, climaxing with a live broadcast April 22 in which one of three finalists will be given the key to the home.
Hopeful entrants can take 360-degree Internet tours of its rooms; the truly eager can even travel to Lake Lure and walk through the house.
The combined effect is a depiction of a lifestyle as detailed as the picture on the Pioneer Elite plasma television that hangs in the home's game room: A life that includes a wine cellar, an exercise room and your own sauna.
"You start imagining, salivating, fixating on that home," said Anthony Pratkanis, a professor of social psychology at the University of California at Santa Cruz. "It's a 'phantom fixation' -- an unavailable alternative that looks real. ... The contest plays along with it."
The same principle -- a fantasy seemingly made real by its details -- is central to much advertising, pornography and many a con scheme, Pratkanis said.
Fantasy or not, the contest has been a real-world smash for HGTV since the first Dream Home, in Jackson Hole, Wyo., was given away in 1997. It generates hours of wintertime programming and is popular with sponsors who like the buzz and product placement it offers.
Atlanta-based Land Resource Companies is the developer of Grey Rock at Lake Lure, the 4,000-acre community to be built around this year's Dream Home. For the company, it's a return engagement -- the Georgia house won by Nakao two years ago was also in one of its developments.
Spokesman Cameron McLemore said Grey Rock received 6,000 inquiries the day it was announced as a Dream Home site; meanwhile, St. Mary's, Ga., is still getting HGTV-driven inquiries two years after its Dream Home was given away.
Nakao's own story offers an illustration of how the contest hits the sweet spot for the network, its audience and its sponsors. In 2003, she happened to turn on HGTV and "catch a program that was showing some furniture."
"I said, 'I'd like to get that kind of furniture,"' Nakao said. "And they explained they had given it away in the Dream Home."
The following Jan. 1, she watched as the 2004 Dream Home was unveiled. Later, she took an Internet tour. And 11 of that year's approximately 36 million entries were hers -- including the winning one (contestants can submit one Internet entry per day and as many mail entries as they want).
Nakao spent 29 years working for the finance department of the California state government; with an accounting background, she knew as soon as she won the home that she would not be able to keep it.
"I never let myself get where I thought I was going to stay there forever," she said.
With the money from its sale, she said, she paid the taxes on her prize and financed a renovation of her Sacramento home. She and her husband gave money to a local charity and helped their children. Nakao also bought herself a coveted 1956 Chevrolet hot rod.
"That's my prize," she said.
"I truly believe that HGTV is doing something great and they're doing it to change your life for the better," she said. "It's a rollercoaster ride, but I was at the top of it for a long time -- and I still am."
She has followed media accounts of Don Cruz's effort to live in his Dream Home with sympathy.
"When they were moving there, I felt so sorry for them, because I thought, 'Oh, you just don't know. You just don't know what it entails to keep a property like that,"' she said. "Hopefully they'll be able to sell it and have their own, smaller version of a dream home."
On the Net:
HGTV Dream Home site: www.hgtv.com/hgtv/dream--home/
And here's the 2007 Dream Home, in Colorado:
http://www.hgtv.com/hgtv/dream_home/
http://www.bridgerscache.com/thelatest.htm
$2,795,000
(Quarter-acre building sites are over $1,000,000!)
I would love a old farm house or a log cabin, the stream and the porch with about 10 acres and a barn. I would be in heaven and out of NJ!!
Apparently Don Cruz thought he was Tom Cruise.
THaks for posting the original story of when he won the house.
" "I injured my knees several years ago and have not been able to work. My wife took a job to support us, but money is tight. We live paycheck to paycheck. "
They were barely making it them, what made them think, that with NO income, they can just live in the house?!
God has probably sent him numerous financial advisers he chose ignore.
"""a 2 bed/ 2 bath Cape Cod. Small, old, cheap"""
Thats what you want....cozy.
I have a friend who lives beyond his means. They have nice stuff. Alot of nice stuff. But it uses 99% of their paychecks to pay for it all.
Forget vacations. Forget going out to eat every now and then. I swear, if one of their cars broke down, they would be ruined. And got forbid one of them ever gets sick.
I couldn't live like that. I have had plenty of times where I was stressing out over money and it doesn't feel good. The pleasure that alot of fancy toys brings is not enough to outweigh the worries of having to pay for it all.
The lights in the great room are going out one by one because the lamps that hang from the ceiling are so high, they'd need scaffolding to change the bulbs.
Don, 41, and Shelly, 38, have never slept in the master bedroom--it's too secluded. At night, Don obsessively checks a live video feed of Donald's room, two floors away from the bedroom they occupy, to make sure his son is okay.
There was a man stuck and drowning in a river. His faith was so strong that he believed that god would save him, so he prayed.
Someone on the bank tried to give the man a rope, he refused and said "no, god will save me."
Someone in a boat came up next to him and said "get in the boat", "no" the man said, "God will save me."
A group in a helicopter came and offered the man their help. "No." he said again, "God will save me."
The man drowned. Upon visiting God, the man pleaded "Why didn't you save me?"
God responded "I gave you a rope, I gave you a boat, I gave you a helicopter; what more did you want?"
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.
******
After high school, Cruz went into the flooring business, met and married Shelly and bought a house, a two-bedroom Cape Cod in Batavia, an hour west of Chicago.
The house was tiny but had potential, sitting on an acre of land. Don figured he could double its size for just $40,000. On his $60,000-a-year salary, he figured they'd save the cash in a few years, no problem.
But an injury at work, suffered in 1999 when Don tumbled down a flight of stairs, put an end to those plans. No longer able to crouch or kneel as his job required, Don got a disability settlement of just over $100,000 and retired from the field at 34.
Don struggled to find other, comparably paid work. Living expenses drained the settlement as well as $20,000 the Cruzes had saved for renovations.
So they switched roles: Don stayed home to care for Donald, almost four, and Shelly got a job as an administrative assistant, earning $40,000 a year. "Once I got injured," says Don, "we put all our dreams on hold."
Until the Dream Home Sweepstakes, that is. The family first entered the contest in 2003, then again in 2004 and 2005. When they learned last year that they'd been picked randomly out of 39 million entries, only Donald wasn't surprised. With its elevator and hot tub, he notes, "The house was made for my dad."
In their current desperation, they seek Divine inspiration? That's not a plan.
That joke was exactly what I thought of.
This trend of McMansions has produced alot of over-sized houses on small lots. They generally have less square footage than it may appear but have alot of cubic footage due to the unnecessarily high ceilings. They are hard to heat because of the ceilings and hard to cool because of the vast number of windows. Changing light bulbs is a full-time job and just keeping the place properly lit is a challenge. Worst of all, most of those bulbs are expensive.
I have heard that in some communities there is a glut of these houses. They all greatly resemble each other. The irony is seeing retirees move into them. Now that the kids are gone, they are in six-bedroom houses. When the kids were home, they were in 3-bedroom ranches. Makes no sense.
Don immediately began strategizing about ways to make living there affordable.
Plan A: Turn the place into a bed and breakfast - a reasonable enough plan until Don found out that he doesn't own the land under the house but instead has a 30-year lease, with the right to renew. Without full ownership, he is subject to town rules, which don't allow new businesses in the lake area.
Plan B: Sell the guest cottage. Without ownership of the land, however, the Cruzes are obligated to keep the property whole. Scratch Plan B.
Still, Don figured, they'd be okay. After all, they had the $250,000 in cash that they'd won with the house. "We were used to living on $40,000 a year," says Don. "I thought we'd be able to live on the prize money for a few years at least."
But living expenses in the Dream Home, like the house itself, are far bigger than what they were used to in Batavia.
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. What's more, to pay off the tax bill, as well as cover other expenses, they had taken out a $1 million loan. Monthly payments on it are around $8,000. They won't be able to pay it off in full until they sell the house.
"I couldn't live like that. I have had plenty of times where I was stressing out over money and it doesn't feel good. The pleasure that alot of fancy toys brings is not enough to outweigh the worries of having to pay for it all."
Economic insecurity in the past has created stress I've never experienced. I NEVER want to feel that way again. It did teach me to save, save, save which is good. I may not have what I want, but I have what I need.
Cruz orginally tried to sell on his own, putting up a Web site, Doncruz.net, and listing the house for $5.5 million. But he went several months without a serious offer and recently hired a broker.
But some agents in the area say he's aiming too high. They say the house is worth $2.5 million and may go for a lot less since million-dollar homes are rare in that part of Texas.
They say they have no regrets. "It was great to live the life of the rich and famous, if only for a year," says Don. Adds Shelly: "Even if we only break even financially, I feel like we came out ahead."
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