Sunday, November 2, 2008

I'm debt free... financial freedom!? Part 1 of 2

Mr. Mubulee is a proud man. He’s proud because he believes he has achieved financial freedom. His favourite word phrase is “I achieved financial freedom because I’m debt free”. He has fully paid for his house. His car and his wife’s are also fully paid. He always pays by cash or cheque. He has 2 children, Stevie, studying medicine in Ukraine and the other, Ronie studying engineering in US.

Mr. Mubulee and his wife, Elika bring in a total income of $20,000 per month. Mr. Mubulee started to save at young age, almost 20% of his salary. The current house he’s staying is worth $200,000 at the time he bought it. He bought his house cash. Same goes for his cars; he paid cash. Since they don’t have any debts, they started to live quite lavish life. They don’t really save much money now days as their income is just enough to pay their living and children’s college fee.

Mr. Mubulee is a proud man. He proudly claimed himself to has achieved financial freedom.

One fine day, Elika received a phone call from Mr.Mubulee’s office. She was shocked. She was informed that Mr.Mubulee collapsed in the office during a meeting. She rushed to the hospital and found out that her husband had a stroke. Luckily, he was admitted on time, or else it would have been a danger to his life. Mr.Mubulee looks so helpless.

They were worried, confused. Mr. Mubulee discharged from hospital, but he’s paralyzed. He’s not fit to work. His company had to release him from his job. Mr.Mubulee’s income has stopped. So, the only breadwinner is his wife, Elika. Her income is only $7,000. Since Mr. Mubulee is bedridden, they need someone to take care of him. If Elika quit her job to take care of him, there won’t be any income. They get a maid to take care of him.

Elika started to feel the pressure. Now, she has to pay for everything; their household expenses, their children’s college expenses, transportation expenses and their latest expenses, Mr.Mubulee’s medication and maid services. She started to use her credit card and live with debt.

As months pass by, she couldn’t handle the financial situation. Mr.Mubulee felt helpless, he couldn’t do anything to help his wife. Stevie and Ronie, their children has been barred from attending their courses as their fee has been due for months. Elika had to sell off their car to support Stevie’s and Ronie’s education, and bought a cheap secondhand car.

Elika’s credit card debt started to pile up. Now, the bank is going after her. She has only one choice, to sell their only home sweet home. Mr.Mubulee has to agree with Erica’s decision. So, they put the house for sale at market price of $300,000. Unfortunately, the property market isn’t doing so well. It has been 2 months and there were still no buyer, and the banks are chasing her. Their children also started ask for more money for their education.

They have no choice but to sell their house for $220,000 below the market value of $300,000. She had to use the money to settle her credit card bills and send some money to her children. Mr.Mubulee and Elika have to move to a rented house. The economy started to get worse. Erika’s company had to deploy pay cut. Now, she’s panic as she can’t afford the maid service, and her credit card bill start to pile up again. Their struggle continues as time pass by.

Mr. Mubulee’s proud has totally vanished into thin air. What he was proud of being financially free now is just a myth. What was the mistake he did? Isn’t being debt free means you have achieved financial freedom? To answer that, tomorrow we’ll look into the story of Mr.Leebumu, who has different idea of financial freedom.

(Click here for Part 2)

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