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Just venting, rambling and organizing my thoughts...

November 9th, 2011 at 09:19 am

Greetings, this blog posting is going to be a vent just to get all my jumbled thoughts into an organized process.

First I feel like I have had a wave of financial problems hit me all in the same month. Stupid October. And I feel like the problems stem from a bad decision I made by buying the Impulsive Purchase. I wish I could say it was a Stupid decision but it was actually a good decision. Short term pain (right now) for long term gain.

To start with the decision that caused the problems: Husband (BB) and I were living in Ĺ of a duplex that we owned, and rented the other half out. Our financials were pretty secure but then BB got a big time job and our finances really improved. We decided (in 2010) that the real estate market was at a great time to buy and we really needed more space, and would like to live in a better part of town. We found a rundown duplex on a great street in an ideal part of town for way below market value. And within a few days we bought it without really, really considering the possible consequences.

At first things were good. We left it rented out for 6 months while we replenished the savings from the 3% down payment and closing costs. During this time we took out a HELOC on the first home to use for renovations of the 2nd home.

Once we began renovations, our budget was completely unprepared for this building. Our contractor found unanticipated structural problems, and we learned along the way that his ďvisionĒ of what we wanted and our ďvisionĒ was vastly different. So all the things we thought we would be getting suddenly turned into an extra cost. Itís not that we got taken advantage of; the contractor is BBís best friend. And every time I went to the job site (2-3 times a day) the men were working. No sitting around or wasting materials. But it was a ďoh you want crown molding in this room?Ē and ďwait, you want subway tile in the shower not 12 x 12 tiles? The subway costs a lot more to put in because of the labor and additional time it takes to install. And subways are like .50 a piece versus a 12x 12 for $1 a piece.Ē (To tile 2 showers was $1338.00 in just tile). So it was little things like upgrades that I thought was standard and my contractor didnít anticipate when we were discussing budgets. And it was things that were needed that the contractor didnít think of like blinds for the master bedroom. $350.00 for 3 wood blinds! And $160.00 for light dimmers! Then there were big expenses like the original Air Conditioning unit breaking 2 weeks into moving in. That was a $3200 unanticipated expense. And $1729.00 in dumpster charges! I look at the detailed budget I kept and nothing sticks out as ďthe biggieĒ charge, just a lot of unanticipated and more expensive than thought charges.

So the budget went from $40k to an end product of $120k. And I know that is mind blowing. I thought it was mind blowing for a long, long time. Luckily the we gained about $50k in equity over the renovations we put in; the building 2 doors down equally renovated just sold for $90k over what we are into for our place. I congratulate myself that we walked away with debt of the $45k HELOC and $15k in credit card bills. The rest we covered out of savings and paychecks. And we did get the card down to $7k but then October came along and things are complicated and overwhelming.

BB lost his job. Thatís the real issue at play here. If it was not for this, we could weather any of the rest of the things that came along. BB was on a year to year contract and his job called in Oct to say they are not renewing when the contract runs out in December. That was a totally unanticipated blow that hit us financially and hit BB hard mentally. He loved the job and was crushed. Aside from the depression and despair and disconnect he is now in, I donít see another job of that caliber coming his way. He is a baseball coach and those jobs are hard to come by. We have sent out his resume to all teams 3 times since he got the news and we have gotten back 90% negative responses. There is one glimmer of hope with a team but they wonít know until mid December. Iím not counting on it.

We also contacted the local universities but there are no openings right now.

If the coaching does not pan out, BB has no other skills to fall back on. He has no degree, no office skills, no experience. He is exploring getting a phlebotomy? License but that will be 6 months of courses and just knowing BB I know he wonít follow through with it. Though right now he thinks he will. So he is counting on a Phlebotomy salary of $12-14 an hour, maybe with benefits, even though he is not signed up for courses, has no idea how to get into the field and has no contacts in the industry. He is kind of useless to long term plan with. Iím on my own in the realistic planning department.

So without his salary, we can get by on my salary and our rental income. We will be able to pay about $500 a month toward the CC and still live somewhat comfortably.

But then my long term renter in CA is moving out in January due to long term unemployment. For 13 yrs she paid $1750 a month and last year it was reduced to $1200 to accommodate her job loss. I recently blogged about whether to continue to rent, renovate or sell the property. Iím still undecided and constantly thinking about it. Iím kind of leaning towards selling to ease the current financial strain of BBís job loss, the CC bills and the HELOC. Though I worry about missing out on long term benefits of having the property to ease short term problems. (Although BB is not very employable, I do think a baseball job will come along in the next 2-3 years.)

And now one of my renters here in GA announced they are not renewing their lease which runs out in January. I think we can get that rented out within a month, so it is a loss of one monthís income but itís just an added stress that weighs on my mind. With the loss of that rental income just for the month January combined with the other lost revenue streams, we are going to scrape by that month.

How could this have been avoided?

I used our emergency fund to pay down the CC bills that were charged for the renovation. I had never touched the fund before and figured getting rid of the interest on the CC was a justified reason to deplete the fund.

I used the $18k I had saved for the CA rental property on the renovation. I had saved that money to put towards the time when the renter moved out and I would need to renovate the property and/or cover several months of it not being rented. But during the renovation I justified that ďthis renter had been there for 13 years, what were the chances she would move out before we could replenish the account?Ē (BB blames himself for that because he talked me into doing it. I blame him too.)

If either of those funds were still intact I would feel a lot better about the unemployment situation.
So Iím not sure why I am writing. I just donít have anyone to talk about this with. I donít have anyone in my life that is better or more experienced with finances than me. That sounds so egotistical, but my dad is the person who managed the family finances and he did very well. And he died before he taught me anything about money. My mother squandered a good portion of the money when it was left to her. And she died too, not that I would ever ask her for financial advice. My friends are young and struggling, or just getting comfortable, but donít have a track record that makes me want their opinions. Some friends would look at my situation and tell me that I donít have a problem at all. Other friends would rant on and on about how BB doesnít carry his weight and he is the source of my problems. But all friends would probably look at me differently if they heard me use actual numbers in reference to my life. And BBís family has made poor financial decisions as well. I wouldnít want their advice. So that leaves people like my financial advisor who I feel has a stake in what I decide (He would advise me to sell and give the money to him to manage). Sounds odd, but I go to this forum because you guys are checked into your finances, aware of financial basics and can offer me perspectives that I had not considered.

So I donít have any questions right now. Just a lot of factors on my mind that I wanted to organize and vent about. Thanks for listening.

4 Responses to “Just venting, rambling and organizing my thoughts...”

  1. MonkeyMama Says:

    I think you have learned a LOT the past year or two (or three and four). Big Grin
    & I think you are wise to be wary of financial advisor. In my profession I have seen too many instances of advisors looking out for #1 - themselves. Even if selling the property is wise, it is the obvious thing that any financial advisor would say (for any one who makes profit off managing your investmens, anyway).

    It's hard to guide you when you seem to not know what to do. But I think if you run a potential plan of action here you will get good advice and certain things to consider. (Problem is you get a lot of opinions - but I think that is better than one inexperience or biased opinion. You still have to sort out all the opinions and work out what is best for your situation).

  2. Ima saver Says:

    I know, it is really hard to guess at remodling costs. Dh just turned a large deck into an enclosed sunroom and it cost $50,000. (But added 450 feet of living space.)

    I think you should sell the california rental and that would ease up all your money woes!

  3. patientsaver Says:

    You've had some bad luck with the series of events. Kind of scary to read about, becus it could happen to any of us. And I can understand why you made the decisions you did.

    But I think a good contractor would spell out in detail, item by item, what is included and what is not,the type of materials to be used, etc. It should be in writing, friend or not. Hearing that the contractor is DD's best friend makes me a little nervous, but maybe it's me. It's hard to fire a friend, much less criticize, if a friendship is at stake.

  4. frugaltexan75 Says:

    No advice here, just wanted to say hi and that I understand. Sometimes the best and hardest teacher is the mistakes we make - financial and otherwise.

    I hope you are able to find new renters for the places quickly.

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