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Archive for October, 2009

I'm not broke and I feel guilty

October 27th, 2009 at 02:33 pm

It seems that many of my hard working friends are suddenly getting hit hard with the economic recession. I in turn feel bad and want to help somehow.

The guys who replaced our roof a few months back called yesterday offering us a great deal to get our windows repainted (They know we have some rotting panes and just need a new coat on the rest- and they are generally handy guys who specialize in roofing). Seems they have not been able to find work since our roof job months ago- the roofer has resorted to selling off personal items to friends just to try and stay afloat (I learned this from the mutual friend who purchased some of the items). When the roofing team called, BB told them that he would need to ask me about their offer. Before hanging up the phone the roofer suggested just hiring him to do a few windows at a time if cost was an issue. Then BB calls me asking if we can get our windows fixed because he feels so bad. I feel bad too- but windows were not in our short term plan. I went and tried to run numbers to see if we could even get the guy $400- but that would mean upcoming christmas would put us in CC debt.So I had to tell BB no. I feel so bad.

Our other friend is a realtor. He has had 4 closings in a row fall through due to financing issues and he has watched his savings account drain- drain- drain over the last few months. He is down to $400 and had a mini breakdown in front of BB today because of it. He doesnt know how he is going to pay his own mortgage this month. I feel so bad. I heard about it and tried to think if there was anything I could hire him to do for us around the house- (the realtor has a construction background)...but we are pretty done with our projects. And besides- this realtor has a very grand house and my $3-400 I offer him would not make a dent in his mortgage. I feel bad.

I just feel bad.

update- not buying another rental property

October 26th, 2009 at 08:03 am

okay, we decided not to jump on the rental property. You guys clarified a lot for me. It is risky- and it is foolish to take a financially solid life- and put it in a gambling type of situation.

The whole situation did force me and BB to talk and we did reach some agreement points:

We do want to eventually buy another rental property. We are not sure when, but decided we will do it when everything "feels" right. The deal has to be great (as this one was), and we have a solid downpayment (that we saved).

So that means we want to start actively saving money for the next downpayment. Do we have any way to squeeze more money from our turnip buget? Not really. We are pretty maxed out as far as my paycheck goes- but it is good to know we want to do this- it feels good to have goals and know what we want our future to look like.

We know that when BB gets a full time job-we will be in a position to take this step. It was nice to put some responsibility on BB, and to finally get some of his skin in the game.

We thought of partnering with our friend who wants to buy a rental property. That way we could split the down payment and only need to come up with $10,000 which would be much easier. But the profits would be split and I didnt think the return was worth the headaches. We would need to get lawyers involved, form an LLC, and put a good friendship on the line.

So as of now- it's a vehical we want to pursue to build long term wealth- but it's not in our 6 month plan. If BB gets a job- it might be in our 1 year plan- who knows- so we will prepare for the possibility by continuing to live a thrify lifestyle and saving as much as we can- but stop considering it as a viable option for right now.

One thing learned; buying a second property seems easier than buying a first property. I now understand the differences between major expenses, and minor fixes. I am not so attached to "finding my dream home" and can look at the building more objectively. Deciding if a property will work seems like a much quicker decision process this time around. I am glad- because the stress associated with finding the first one is not something I want to do again.

Need opinions

October 24th, 2009 at 07:47 pm

A new opportunity has come up that has caught my interest. I have been tossing the idea around in my head for the past day or so and need to kind of vent about it to see how I really feel.

A foreclosure has come on the market in my town. It is not advertised for sale yet- my realtor friend told me about it because I have a friend who is interested in investing in the area. The friend is interested in this property too- but I don't think it will work out for him.

I kind of want think it is a very good deal and am not sure if I shouldn't invest in it.

This is a 2 unit property- very similar to my own- but a little smaller. Shotgun style with a double balcony-one unit upstairs and another unit downstairs. Foreclosure asking price is $115,000. It is bringing in $1600 a month in rent.

Pros:The property is similar to my current property and asking price is $85k below what I paid less than a year ago.
The house is in good condition. Same condition as my current house. The property is in a better location than my current home. The property is currently rented with existing leases. The property is about a 10 min walk from my current house.

Cons:
Although the unit is in good condition- It might need 5-10k for hidden fixes/non emergency stuff I would want to take care of. Wont know that till an inspection.

BB is not very handy and fixing stuff is not his forte. I will need to hire out for any fixing problems.

Having 2 more rental units increases our chances of getting sued. We have 2 rental properties now and knock on wood we are all good- but adding 2 more might mean I will need to start an LLC and there would be legal/financial/stress costs around that.

Having 2 more rental units kind of throws the "stay diversified" rule into chaos. I don't know how to measure what my diversification will equate too- I will have 5x as much real estate value as stocks/bonds...

I will be getting into further debt. I mean, it will be a mortgage- so that's good I know. But I will be taking on $95k of additional debt (assuming I put $20k down- around 18%). It seems kind of insane to be walking around $200k in debt (including my house mortgage) when I earn just over $30k a year.

I was not prepared or expecting to go in this direction. We bought our home less than 1 year ago. We have just barely started to get back on our feet recovering from the purchase of our home. We talk of buying another property- buying rentals as our way to financial freedom- but talk about it off in the future. I wouldn't even consider this if it wasn't such an insanely cheap deal.

Financially we are strapped-BB is "in the market" for a job- but not employed- don't know if he will even have a job in 2010. If he does get a job- it will be starting around $30k which would push us into such a good financial position we could afford this property easily. Right now my income covers our expenses but not much left for savings. The money for the down payment would come from my inheritance that has been earmarked for retirement.Currently the inheritance has $200k in stocks and bonds it could come from- but I worry that it wouldn't be the right thing to do.

I worry because we have already made so many big purchases in the past year. First we had the wedding about this time last year-then we bought our house and put in about $25k to "make it ours"(including a new 10k roof). I worry that if we buy this...we are just getting in the habit of buying big ticket items and maybe getting high off the excitement or something. I worry that we will spend ourselves broke if we are not doing a financially smart thing- but telling ourselves we are because we like spending money.

I worry because there are all those real estate investors declaring bankruptcy because they over-leveraged. Why would I be any different? If I lost the renters I would have to pay for the mortgage out of savings. Right now MY emergency savings would only cover a month or two- then I would have to go to those stocks and bonds. But that's because my savings is only cushy enough for our current situation- I could beef it up by scrimping more pretty easily in a few months to cover the possibility of needing to cover a 2nd mortgage.

What would this do for us in terms of our goals? We wanted to convert our current 2 unit property into a single family home within 5 years- eliminating the rent we earn off it. We also want to do some home renos in the $50k range when we convert the property. We wanted to have the 50k saved up to pay in cash. We wanted to be in a position to pay the mortgage ourselves (right now the renters upstairs are paying it.)

BB has 130,000 miles on his truck. We have not started saving for a new car for him yet. I guess a car is an insignificant expense when you are talking "$15k car or $115k rental property"...but a car is also a necessity and a rental property is not.

We also wanted to have a child within 5 years.

So will buying this property put us in line to accomplish those goals- or make us unable to achieve those goals?

I don't know- I don't think it is a good idea with BB unemployed. I keep thinking we shouldn't do this "now". If we could just wait till BB had a job and was working a few months...but then who knows what the real estate market will look like and if we will be kicking ourselves regarding missing this deal. No. I think we should wait, save up the 20% ourselves and then look around for a good deal. We might not get the best deal from waiting- but we will be using our own money to spend.

Lets grade the money management skills here

October 23rd, 2009 at 12:17 pm

A family member of mine has been trying to change her image from a high maintance, consumer-ish type girl to a smart, financially savvy woman.

She has been trying to project this image for about 2 years. I could never really tell if she was trying to project this around me- or to me- because those are my values - or if she really understands the concepts behind what she says she wants. I know the family knows I am a hard ass about saving money, thats kind of my reputation. But she has been quick to say she bought this on sale, or that at a discount store...and I have never really known if she was "fronting" to earn respect, or if she has genuinely changed.

She has done some pretty big doozys over the last few years in regards to mis-handling, being immature about money- and once labeled- it's very difficult to change peoples perceptions.

Anyways- recently she was put to the test. Her car was totalled in a wreck and she was forced to get a new one. I watched this whole thing go down intently. This was a big test for her. Would she be smart or blow it? Does she really want to be frugal or just be trendy? Let's judge:

She was given her brand new car in high school and has driven it for almost 10 years now. (thrifty!)

She has wanted a replacement car for a few years now but has always said it is stupid to get a new car when the one you have works fine. (thrifty!)

She went to a car show a few months ago "to see what kind of car she would want when the time comes for a new car." (thrifty!)

She insists her fiance start driving her car to and from work an hour away "because her car has better gas milage", while she used his brand new truck to go back and forth to her own work. (thrifty? spoiled? I cant tell.)

Her fiance totals the car going to work and goes to the hospital for minor injuries. The car is towed to an impound lot. Once out of the hospital they go directly to a dealership to look at new cars. She skips informing her insurance company of the wreck- she skips finding out about her coverage options- if she can get a rental car or money for the car. (bad)...and a few days later it is determined the car has no value, and she does not have rental car insurance either.

She does not come home with a new car that night. (thrifty!)

She has narrowed her choice down to a certain American brand and model. The dealership tells her there are no '09's left and she can only buy a '10 model. She refuses to believe them. (thrifty!)

It actually turns out to be true. An internet search reveals that cash for clunkers has cleared out the inventory. A family member finds her one '09 with 3k miles on it for 10k below an '10 price. She turns her nose up at it and says "she does not want to buy someone elses car." (BAD!)

She finds out that her car that has been sitting in impound for 3 days is charging her by the day. She is furious no one told her. (just funny)and has it towed to the house.

She negotiates a deal for a fully loaded brand new '10 for $38,000.00 -no money down- 0% financing for 3 years. (good credit=thrifty...)

She earns $45k a year, her fiance $50k a year, and they both live at her parents house under the agreement that it is the best way for her to save money for a house and their wedding next year. Her fiance contributes $800 a month to the wedding fund- and she was paying $600 a month on her student loans, arguing that her student loans make it impossible for her to save money herself for a house or wedding.

It is unclear where the rest of her money goes. It is unclear how much money they have saved for the wedding or a house. She has no other bills besides car insurance and clothes.

Recently it was determined that she cannot pay both student loans and her new car payment so her father is currently paying her student loans. I dont know if this is a long term or temperary arrangement. (bad)

Overall- what do we grade her at? Maybe a C+? She seemed to have good intentions- but when it came down to doing the responsible, smart thing (buying a used car)- she just couldnt do it.






BB is making headway

October 20th, 2009 at 03:48 pm

I think BB is going to be ok. Together we are getting him some leads.

I have been posting weekly on craigslist an ad for his baseball lessons and after 3 weeks- BB finally got a phone call. The first lesson was tonight and it was a success. The player is pretty good and is very responsive to BB's teaching style. The father watched the entire lesson and was impressed. The father arranged for another lesson next week. The player is going to be in a game on Saturday, and once the other players notice his improvements- the parents will start asking about BB. It always works that way- being patient and waiting for it to happen is what frusterates me.

But the snowball is beginning.

Last night I structured an email for BB to send the head coach of a local university asking to be considered for a pitching coach position. This is a division 1 school and they do not have/ never have had a pitching coach on their staff. BB is asking them to basically create the position. I feel good about the email- but BB said it can be tricky when you are dealing with coaches egos and especially because BB has much more experience than this head coach. I guess sometimes coaches dont like really experienced people under them because they worry about people second guessing them and trying to take over the program. Which BB would make a concious effort not to do- but the coach doesnt know that.

Plus money is tight- and the athletic program may not have money in their budget for another coach- but in all reality- a pitching coach on staff would do alot to improve their program. -so maybe BB has a shot. I dont know. We will see.

And we are still waiting to hear about the MLB job.

But things are starting to turn around. I am really proud of BB right now. At least the lessons will keep him afloat for a while.

working and thinking...

October 19th, 2009 at 08:35 am

At my job, I have been given the fredom to take initiative and help market an MBA program we are offering. The MBA program is 1 year long and students attend classes 2 Saturdays a month- completing the rest of the work online. Each class is 1 month long (12 classes in total). It is offered here in Savannah, as well as in Atlanta.

Any ideas? The department already spent it's advertising budget on direct mailers- so I am trying to think of cheap or free marketing.

I have been calling some of the larger retail businesses to set up a 5 min instore presentation to the workers during one of their regularly scheduled meetings...but not having any luck.

I was thinking of trying the police department but dont really know the infrastructure of who to ask, or how to ask.

Really, I am just trying to raise awareness of the program. The 1 year MBA is brand new, and holding classes 2 Saturdays a month was designed for working professionals.

...any ideas of how to best tell the community about it?

Stock Market musings

October 16th, 2009 at 06:29 am

The stock market is doing well. Phew! I survived the crash and didnt wind up homeless. This was my first experience with a stock market dip and I learned somethings about myself:

1. I get more sorrow/stress from losing than I gain/feel from increases.

2. I would have pulled out the day after the stock market dropped way way down if it were not for this blog and everyone telling me it will come back.

3. That alot can happen in less than a year. If I have 30 years till retirement- I really dont need to be concerned right now.

4.That my parents money is very important to me. Being responsible with it is a way I honor their memory.

5. That when the news, people and everything is predicting hard hard times to come, and a recession or impending depression- my fears of whatthat means are not nearly as bad as the reality.

6. Karma. People who are irresponsible with money and keep up with the Jones's with money they dont have really do get what they have coming to them. No need for jealousy- let reality play out.

7. Diversity is really the way to cover your butt. Even though stocks are doing great right now- I know I need to get more in bonds to maintain a healthy diversity.

I myself have recovered significantly. I am going to rebalance my holdings so I am a in a little bit of a safer position. Today I am moving 30% of my stocks into bonds as a way to safeguard my heart in the event of another decline. Hopefully it will work out.

I hate to sound like an ultraconsumer but...

October 13th, 2009 at 07:24 am

...why cant somebody invent a floor to ceiling refrigerator???!

Dont laugh, I have thought this through. I hope someone on this board likes my idea and runs with it (and it is only fair I get a discount on it).

refrigerators are lovely. They do wonderful things and American kitchens all have them.

But they are fat. They are big, bulky and jut into the middle of the kitchen.

Why has a floor to ceiling one not been invented? Take the extra 2-3 inches that juts out of the front and add it to the top. I know they make counter-depth ones now- but they dont seem to add the loss inches to the top! So you are left with a shorter/thinner fridge that is aestetically pleasing but holds less items.

Now to answer your questions:
"But Gamecock...no one can reach so high up beyond the 6 ft they make fridges now-it is all wasted space." -No its not!! They make cabinets that go above refridgerators and nobody can reach those! People can store excess items such as frozen meat/water bottles/whatever up there. Besides that, why do they make extra long cabinets that go up to the ceiling if no one can reach?- Because humans are resourcesful and will never turn away storage space! I dont mind getting out a stool- I do mind a huge refridgerator that takes up 5-6 inches of floor space beyond the counters. They can even add in a little stool that pulls out for people to step on to reach the upper limits of the fridge.

"But Gamecock- people dont need so much storage space." ....my inlaws have 4 (4!!) refrigerator/or freezers in their home. People need the extra space.

If it gets built- people will buy it.

I WANT it!

not much to report

October 12th, 2009 at 12:15 pm

BB and I are slowly evolving into a more comfortable place.

He is still in the market for a job since retiring from baseball. I say "in the market" because "looking" is the wrong word. He gave up after one solid day of craigslist looking. He has pinned all his hopes on an MLB job that was told to him in confidentiality that will open up once a whole long line of firings/rehirings happens that if 1 friend off BB's is hired for then he promises to hire BB. Sounds like a long shot. A super long shot.
Nothing like putting all your eggs in one basket there BB.

And we know nothing until the season ends in late October.

I have given up with the whole BB looking for a job thing. He's like a stone. Always has an answer for why he wont get hired/shouldnt apply for any job but this one that might/might not open up in a month.
Talking/writing about it gets me angry.

In the meantime BB has settled into being a very good house-husband. He runs all my errands for me and does an ok job keeping the house clean. And he is not costing a lot of money either. I must say having him around to take care of house stuff/chores has been great.

When I am not thinking of the goals, responcibilities and money aspect of everything- I am very comfortable having him home unemployed. It has been nice having dinner cooked and all that.

But I do hope to hear one way or another about this MLB job soon.

I am ready to be a real 2 income family for a little bit.

Homestead Exemption

October 1st, 2009 at 08:20 am

Here is where I show my ignorance.

I have heard about this "homestead tax exemption" but never really knew what it was. People would talk about getting it when I lived (rented) in Florida and I never really understood it. Here in Savannah, People have mentioned they dont know what current property taxes are now because of the homestead exemption.

I just kind of assumed it was something that was offered a long time ago and did not effect me.

Then I got a bill in the mail from my mortgage company. They have been under charging me for my taxes. They plan to increase my payment by $31.00 a month!

That directly eats into my $100 a month additional payment to the principal!

I got angry and motivated. I pulled out a "tax assement" that had been sent to my house a few months ago that listed alot of values that did not make sense to me because they were valueing my house at about 1/2 of what I paid (so I was hiding the paper in shame), and told BB to march his way over to the courthouse, mortgage company or somewhere and FIX THIS while I was at work the next day.

BB did. I am still not sure what he did, but he locked in our taxes using this homestead exemption so they can never be raised. ?? I think. He was told it was locked it in at $50,000 below the stated value of the house. ?? So we essentially locked in paying taxes on a $50,000 property? That does not really make sense to me.But BB is saying its true. But BB has been plenty wrong before.

So I am not getting my hopes up- but am faxing over the documents to the loan company today and I hope they return my payment back to it's original number. I'll keep you updated.