Instead, Holly finds herself alone in Jack’s office, staring in disbelief at Jack’s QuickBooks balance sheet report.
The sudden change in Jack’s plans started at the Halloween party Saturday night. Jack’s friend Yuri, a fashion designer, invited a large number of people to a party at his tiny studio in San Francisco. Holly and Jack recycled their old Dr. Seuss Thing 1 and Thing 2 costumes: of course Jack had to wear the new Stomper’s boots.
They were trying to talk above the noise when Yuri grabbed Jack and dragged him to the bar to meet Sophie, a tall, gorgeous brunette dressed in a blue satin sheath dress. Sophie extended a white-gloved hand to greet Jack, and smiled one of those big movie star smiles. Holly arrived in time to hear what they were talking about–the Vogue Paris November 2009 issue. Sophie, one of Yuri’s models, got the idea of a shoot featuring her wearing Yuri’s clothes in front of selected Paris metro stations, fitting since Yuri’s designs have a deco flair. Yuri decided it was a fabulous idea and immediately thought of Jack as the photographer of choice.
A Paris shoot!
Jack hasn’t stopped talking about it since. This is a big break for him–a $10,000 contract, not to mention the glamor of a trip to Paris. There is so much to think about and plan. Jack was in a hurry to leave for a meeting with Yuri just as Holly arrived. Apologizing profusely, he jotted down the QuickBooks password and asked Holly to please check the books and let him know of any problems.
Back to the balance sheet. Holly knew Jack had financed the initial business capital via credit cards, but didn’t realize his business credit card debt was a whopping $35,000, or that he’d recently provided a loan of $25,000 to Heather. This loan is listed on the balance sheet as an asset. Heather has been making interest-only payments, making Holly wonder about the exact terms of this loan. When are principle payments due? The loan has a funny account name in QuickBooks–Real-Estate Investment Opportunity.
Oh no. Holly remembers now. Heather attended a Laurel Langemeier seminar a few months ago, something about flipping houses. When Holly heard about it she did a little internet research, finding links like this one, this one, and this particularly distressing testimony at ripoffreport.com.
Holly knows you can’t necessarily believe every complaint you read on the internet, but the whole business seemed fishy to her, especially when she found out that Heather paid a few thousand dollars for the seminar!
Holly suspects Heather has made another unwise real estate investment of dubious value. This could potentially wreck Jack’s chances of obtaining a business line of credit, despite consistent increases in his revenue over the last two years.
It reminds her of the really well-done NPR episode This American Life — Bad Bank, in which Alex Blumberg and Adam Davidson explain how a bank’s balance sheet is negatively impacted by toxic assets, loans for homes that have lost 50% of their fair market value.
What did Heather purchase and what is it worth now?
The thing is, unlike the bank, Jack most likely has no ownership interest in the home, so the loan is not secured. If Heather can’t pay him back, he can’t foreclose on the property.
What a mess. Holly decides to call Kate and Ben and see what they know about Heather’s property.
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Very enjoyable! I like how Jack is consistently making bad financial decisions. It’s so true in many relationships that one person may continuously make really bad mistakes.
thanks again for the story!
I love your valuable links such as the NPR plug for This American Life – Bad Bank. What a great way to provide valuable resources in such an interesting and dramatic context!