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Mortgage/Goal Update

December 23rd, 2015 at 06:53 am

**I paid down the mortgage below $175k, as planned. Woohoo! I threw an extra $800 to the last payment of the year, to get there.

**I am happy with financial goals and have updated sidebar. I think financially I am mostly done with this year.

The one goal that I will fall short of is our investment goal. I am waiting for end of year credit card rewards to sort out, but I expect to get to $4,300-ish of of our $5,000 goal. I am actually feeling very okay with this. We will get our total taxable investments up to $10k with our tax refund in a couple of months. & if dh works all year we will be able to throw a lot into investments. So I was okay with the short term sacrifice (being $800-ish short) since the longer-term is looking better than I expected.

Overall, these goals were pretty aggressive and I never really expected to meet them all. I will say that often writing down the goals seems like 99% of the battle. Sometimes it just seems to happen magically. Certainly not always, but this year was more of a magical kind of year.

**I expect next year to be more of a savings year and less of a splurge year. Will see what we can do. I am thinking we can maybe save 40% of our income next year. Need to sit down and work the numbers though, probably mid January when I find out my salary for next year. A lot of our bills/utilities are creeping up, and I know we have some home improvements to tackle, plus expect a lot of medical bills. It could be a spendy year on the not-so-fun stuff. But on the flip side, we can probably boost our savings rate by about 10%, if we save everything dh makes.

Doings, Snowball

June 26th, 2015 at 06:07 am

Just got back from annual camping trip in the Sierras.

Life continues to be stressful and crazy. The minor annoyances continue to pile up.

While my dad was here (we camp with my dad and in-laws) he fixed a couple of minor things around the house for us. But we found a new problem that we will have to call the gardener to fix.

Of course, we appreciated the break and our trip went smooth as could be. Phew! (A nice sea of calm in a month of crazy).

Finances:

**Dh has been earning tons of google credits and amazon gift cards for whatever survey stuff he is doing. He ended up getting a new roku for $25. (Our old one has been clunky for a while but I didn't really want to spend the money. In the end he spent a whole $25 and it is 10 times better).

I suppose that is unofficially his Father's Day present.

**I sent a payment to the credit cards today. I had booked summer classes for BM, our random wildlife vacation, and had charged dh's MRI. I had charged that all in June wanting to push off actual payment to next month, BUT the credit card balances were getting kind of crazy. Plus the one card has a low limit and so I think it was best to pay it down before the end of the month.

So much for delaying those expenses...

**I had to deposit my big check in person. For whatever reason (I guess since I was very nonchalant about it) they made it available immediately. Which was nice since I received the check Saturday night and we weren't back home until yesterday. Seriously, they asked me when I NEEDED it and I shrugged. Apparently that is how you get immediate access to large sums in this day and age. (If you haven't had a large deposit lately, they usually put a hold on some of it).

So I went home and took all the money out (online). I didn't NEED it but if it was available I might as well allocate it.

**So... I went ahead and made my big mortgage payment.

Mortgage balance is now $177,999. I project that we will be at $174,999 by end of year. $169,999 by April 2016.

**I had already opened a $10,000 CD (at my credit union) for a 1.50% rate and so opened up a second one. I don't know that I felt entirely comfortable tying that much up in CDs, but... we also expect a chunk of cash in December. I am always way too cautious, anyway. Odds are we will probably never never touch this money. (I consider about $15k of our cash savings completely untouchable but for extreme emergency). Of course, the CD is easy to access and there isn't much downside if I have to raid it later.

**Money continues to rain down from the sky. I had my piccolo on consignment and apparently it sold recently. Received a $300 check in the mail yesterday. Woohoo!

I am putting this $300 into investments.

{It was in disrepair and this was a very easy route to get it sold for more than I am sure I could have gotten on my own. Certainly was far less hassle than FB and CL have been of late}.

It was funny because I swung by that area yesterday and was stuck in the heat and traffic staring at the music store for a while wondering if they would ever sell my piccolo. (It's an area that I do not frequent). The check was, at that time, on a mail truck en route to my home. Ha! (We kind of reasoned summer/fall would be a good time to sell but had left it at the store at some point in the spring. Better than gathering more dust in my closet).

**The kids just told me that they have no piano lessons next month and so the snowflakes continue to fall. That's another $200 that I will move to investments. Plus credit card rewards this month (About $90?). Plus $30 to investments since we don't have a Ting bill this month. We also have a REI dividend to cash out.

Possibly a $600+ snowball for this month.

Fiscal Updates

April 18th, 2014 at 05:56 am

**I received my overtime for the year (paid as an annual bonus) and was able to fund a chunk of my savings. For the rest of the year all our monthly savings goes to IRAs, and my 2014 raise will go to savings. To top off those goals in my sidebar.

I can't believe how behind I feel still after last year. That said, though I would like to fund 2014 IRAs in 2014, it's not a necessity. That buys us a little buffer if crap happens.

Bonus:

$5,000 to savings
$ 300 to mortgage
$ 100 new kids bike

I was planning to spend more on the bike, but we just happened to find a $100 bike this week. So that worked out perfect.

Great-Grandma insists on giving me $300 for doing her taxes. I asked her not to, but I know her. Will see. This way I figure I already threw $300 to my mortgage so I really don't care either way.

If she insists, I could use $300 for summer classes for older child. I don't sweat that stuff any more. Whether they know it or not, Grandma (MIL) and Great-Grandma pay for that. BM is attending a camp with his school next month and I used Christmas money to pay for that. & I get the feeling Great-Grandma is paying for summer school...

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**My gross check was about what I expected, with extra overtime on a big project last year. BUT, the net did not reflect all that extra work. UGH!! I have said that if spouse worked we wouldn't take anything more home. But, my own income seems to be entering that black hole. It's extra shocking because I am used to literally keeping 90% of my paycheck. You get used to what you get used to.

I ran a tax projection and everything looks fairly breakeven for 2014.

Our tax rate on last $10k - $15k of income is hitting about 25%. So, it looks like we will be doing Traditional IRAs this year. I like the way this works out. Our taxes are even steven if we change our mind. But if we do the Traditional I should be getting about a $2700 refund. Which will go straight back into retirement savings. (This would bring our retirement savings rate up to 18%. But, I don't know if that is all good, as we give up the ROTH contributions to do so. I think it just means we need to save more to pay for future taxes. Saving more doesn't necessarily mean much to our bottom line. Though I suppose I will probably be able to work some tax magic on the back end. When we retire).

I also checked the extra property tax deduction and that would save us about 25% too. For several reasons, will probably do this year. I just want the simplicity of one tax payment per year. But I want to make the extra payment in a year I actually get a tax benefit.

We've been doing ROTHs for so long because we haven't been paying any income taxes of any note, since spouse stopped working. But I am not personally comfortable with paying $2,700 taxes that I don't need to. Circumstances change, so we re-evaluate.

In our young 20s I Was strongly encouraged to fund ROTHs. I kind of understand it more with age. There has just never been any tax break quite like it. So when I entered the tax profession it was, "Are you crazy??? Do the ROTH!!!" BUT, we were young and starting out and paying a crapload of taxes. We chose to fund my 401k and our Traditional IRA. I am sure we could have cashed flowed the ROTHs and whatever, we were saving 50%+ of our income. Not like we NEEDED the tax break. BUT... Absolutely no regrets. When dh stopped working, we converted *everything* over to ROTHs. It was win-win. Get a big tax break up front. Convert over at a lower tax rate. So, I am pretty partial to just taking the tax break. I don't know if we will ever be able to convert again, but we do have $100,000+ working for us in our ROTHs. As Dave Ramsey would say, that will be $5 million or something in 40 years. Wink (I don't think it will ever be near that much, but it will do nothing but grow, and I am happy with that. All our aggressive investments are in the ROTHs, for sure).

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Housing Update:

I guess housing has settled down here. Absolutely nothing has listed in immediate neighborhood for about 12 months. A house went for $400k last spring, which meant a 65%-ish increase over a couple of years. (Nothing new, around here. It's always a roller coaster!). But then, that was it.

SO... I saw 3 houses like ours up for sale this month and that piqued my curiosity. I just saw that one had sold for $400k. It will be interesting to see what the others go for.

Overall, I think this is a good sign. Anything much more than that is getting back into crazy bubble territory. Our house actually peaked at $650,000. Which is crazy insane. At this point, anything much more than $400k is "crazy insane". Especially given the chronic unemployment, regionally. But even in a robust economy, the local wages just don't support these kind of home prices.

So I am kind of marveling at the restraint. No huge bidding war??? Heck, the other two houses have been up a week and are still available. (Not a common sight in these parts, even when the bottom was falling out). I am hoping these are all good signs, overall. That things are settling a bit. A sellers market is good for us, but another market collapse would not be good. I am all for sustainable home prices.

Though, who knows... Bay Area real estate is crazy crazy crazy right now. & that always blows up our housing prices, because then our real estate looks super cheap compared to that. (Which is the only reason anyone ever paid $650k for a house in our own neighborhood). IT will be interesting to see how things play out this summer.

Fiscal Minutiae/Crazy Spending Sum Up

August 24th, 2013 at 09:48 am

Had some time today to see where things are with the checkbook and such.

**We are getting 2% back on our Visa this month, due to a temporary promotion. In fact, the 2% promo kicked in the day we bought our new garage door (& they did not accept our 2%-back AmEx). So, phew!!

**Sent $5,000 off to the AmEx, earlier this week, for plumbing bills.

Kind of a non-event, because I had already transferred $5,000 from savings when we got the first quote. I thought it was possible we'd need a lot of money *fast*. But, we were able to charge it in the end, so I got to hang onto it for a month. {We keep checking balance around -0- and so I don't bother to include it in my net worth. It has felt like the money was *gone* since the minute I put it in my checking account}.

**I was $10 in the negative, as of 8/31, so I decided to fix that before I forgot or got distracted. I didn't think much about it because it's been *crazy*. But I realized since we could not charge the garage door repair that I had paid cash for that from checkbook, without pulling the funds from savings. (Which makes me not in the negative at all).

I usually do one net transfer a month, but had not done the August transfer yet. Once I added that garage door money from savings to checking, I was back in the green. This was much easier than moving $100 over now and moving it back after payday, which was my initial plan. Phew!

This is one of the biggest reasons I really like using Quicken (or any electronic system). It's easy to move things around and just keep things simple. I threw in all the September deposits and bills, and it seemed to $0 out (income = outflow). So, phew.

**Total cash still seems to be hovering around "6 months of expenses." I stopped funding ROTHs, due to all this hoo-ha, so that explains the most of the why. If things settle down, we should be able to fund one entire ROTH by 12/31. I always send 20% of every month's pay, to savings. So, that is why we are treading water. I also receive January 1 paycheck on December 31, which is why it should be enough to fund an entire IRA, through the rest of the year. The worst case plan is to fund the rest of second IRA in Feb, March, April. I have already put $1,000 into one IRA (plus $500 credit card rewards). We should also have some Christmas gift money to help fund the IRAs.

**We did an unofficial inventory and this sums up my year, financially:

--Two Dead TVs (the only two we had/both fairly new)
--One major car repair
--One MRI
--Vet bills/lost pet
--Replaced computer (was crazy old)
--4 Plumbing Repairs in one month
--Clothes Washer broke
--A/C broke
--Garage Door broke
--Cell phone Broke (it was rather new)
--Major carpet cleaning (more ailing pet stuff)

& it's only August??? OMG - I am exhausted. (& I am sure I am forgetting something...).

Many thoughts and comments on this (wanted to put this all in one place).

I've seen the comment to save 1% - 3% of home purchase price, for home maintenance. Given the overall low maintenance of our home (we aren't maintaining acres, and many other low-maintenance factors) and due the general higher cost of housing here, I find that 1% is more than ample. In the grand scheme of things, if we had done this from Day 1, we'd have about $30,000 saved today for home maintenance. (& I am not aware of any large repairs on the immediate horizon). The reality is we got about $-0- saved up specifically for home maintenance, because we had some really low income years and weren't particularly saving. Which is fine - our house was bought new and has been VERY low maintenance. Which was our plan, and has worked out fine. We can save more now to make up for lost time. If we save 2% of home purchase price, every year for next 10 years, is about what we are doing anyway. In the meantime, we have fully funded our car replacement funds (with no plans to replace anytime soon) so can borrow from that. Just to say, planning ahead is a VERY good thing, and is most of our ease with this crazy financial outflow.

When we started the year, we were thinking along these lines for things we might do this year: Replace carpet and reface kitchen cabinets. (The kitchen cabinets aren't the best quality and are really messed up).

In the end, we got a GREAT carpet cleaner who has our pet stained carpets looking like new again (we still have to bring them back to do the upstairs. I was giving it time to see if it was true - but yes, the stains are totally gone). SO, we completely crossed "carpet replacement" off of our list (might never do so as long as we can hire these people) and started thinking about the cabinet refacing. We like to do one big project a year, and just spread it out a bit. I suppose cabinets came next into our line of sight once we wrote off the carpet replacement.

But, this year has been crazy, so I think we will put that off to next year. I share because keeping on top of things and being able to be flexible, I think this is also all key to not panicking in times like this. Anything that has to be done, is done, but things that don't *have to* be done, we try to space out as much as possible. I can survive with fading cabinets a little while longer.

Notes on each of the above:

--It's unfortunate that dh's newer TV died, but the older one we were able to fix very inexpensively, all on our own.

Even if we aren't the most handy people, being willing and able to fix things or hire people to fix things, is a HUGE financial savings. (Versus tossing everything that breaks, which many people seem to do).

--Car repair and MRI - these are kind of usual and predictable, but just add to the insanity of this year, I guess. Seems like I have had a $1,000+ bill every single month. Gah. We do have a great very trustworthy independent mechanic to keep our costs way down.

--Vet bills... I think we got off easy with this. Could have been a *lot* worse. This just added to the overall crappiness of the kind of year it has been. Frown

--Computer replacement was more than expected - dh called it the old Frankenstein computer. Which bought us a lot of time. Why did it have to die *now* though? Gah! Dh built his own computer and got something way better for the money.

--Broken stuff:

We have reasonable low-cost contractors we can call for basic repairs. So, did this with the AC, the washer, and our new faucet.

We installed our own garbage disposal. That was a long time in the making, and we had already bought a new one, but it did literally die the end of June, before we had replaced it. It is one of those years!

We had a freezer water leak and fixed it ourselves before calling out any help. (That one was at least easy).

Major plumbing repair was a freak thing, but it happens. That's what "$30,000 saved" should have been for - something like this. We were lucky we had some time to do some research and to gather various quotes and opinions. A truer emergency would have not given us that time.

{This is actually the first time in 12 years of home ownership that I actually felt at a disadvantage for being less handy. It's possible we could have fixed this ourselves, for about 1/10 the cost, but the odds did not seem good. With the way things panned out, I think we made the right choice. I've mostly felt that our other strengths - computer and tax and financial skills - make up for hiring someone for $100 labor here and there}.

--Garage door - it's unfortunate we spent a fair amount of money last year trying to just fix the stupid thing. When it broke this year, even after we had just spent a large sum on plumbing work, we just wanted to replace it and move on. I could not stomach spending one more dollar to just put another bandaid on it. Our only complaint before was that it was loud, and just really cheap quality. It wasn't giving us any issues. But, it just wasn't worth saving, once it broke. I am so happy we ended up replacing it - it cost far less than we were expecting. & Was able to cross that off our more near-term repair list.

--Cell phone - not much to say to that - a freak thing but nothing substantial in the end.

The next question is: Are we done yet??? Because if this is it, I can deal. But, I don't know what else the year has in store.

The Jinx Continues...

August 8th, 2013 at 05:56 am

Well, it is *never* boring here. !!!

I am not sure we had a day of peace since July 23. Yesterday I made it through the day and to the land of zzzzzs without much event. But when the kids went to bed it woke me up, and it was kind of warm. & so I flipped on the A/C (also thinking to cool down the kids' rooms). Dh came up a minute later. I figured he just heard me awake and wanted to say good night or something. Nope. He asked if I turned on the A/C because...

It sounds BROKEN.

Seriously...

Couldn't make it *one* day without finding something broken, calling contractors, researching contractors, or dealing with contractors. At least dh had a bit of a breather - he must be going *insane*. I mostly get to go to work and let him deal with all this. HE at least had a quiet day!

Ironically, we bought some service plan from the plumber, so we figure we will call them out first. It gave us a substantial discount on the plumbing repair, and they would do tune up on all of our major appliances (A/C and heater and I forget what else). I figured we'd just start there because it's free.

I am not utterly and entirely jinxed because tomorrow is supposed to be like 20 degrees below average. PHEW!

Financially, the jinx is annoying me. I had a credit card payment and a mortgage payment lost in space. ??? Could have been the credit union. BUT, then the mortgage payment hit after a week, but they left the extra principal unapplied. ??? I also had two returns to a retailer, shipped. One made it back and was credited about a week ago. The other one is shown as received by tracking, but not on their website, and no credit. *Bangs head on wall* I don't have to pay any bills for about 3 weeks, and I don't intend to. Everything I touch seems to be messed up! The credit card payment did eventually show up, but it seems no avoiding follow up on the other two. [I can't recall *ever* have any problems with any of the above - so this is just crazy}.

Emotionally, I think I checked out quite a while ago. Obviously I have no say in any of this. For anyone who has never particularly read my blog, we tend to keep up on things around the house. IT's not like we keep everything in disrepair. Wink I am not sure if it is just so beyond our control that we don't even *care* any more. OR, there is also that we have dealt with so many health problems (us and loved ones) in recent years, that we just can't muster a lot of emotional energy for this stuff. I don't know. Maybe a little of both. It could be we are just both spent on the emotional front. We lost our pet earlier in the year, we both had loved ones in the hospital, yadda yadda. But I think we both have a renewed perspective that "stuff is stuff" and I can't say we care that much. We have plenty of savings to weather the storm, so no point stressing over it.

We did replace our garage door and that is *divine*. I am not upset about that at all. Forced to do it at a bad time, BUT, it's really nice, and we can cross that off the to-do list.

To be continued...

Our Garage Door Broke Last Night

August 5th, 2013 at 09:07 am

Murphy is getting on my last nerve. !!!

That is all...

Water Woes

July 28th, 2013 at 10:05 am

**Well, the child is back from England! That is a whole other thing and wouldn't know where to begin with that, but they had a blast!

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**We have actually managed "low maintenance" home ownership pretty well, for the first 14 years that we have been homeowners. I get a lot of comments that things don't always go as planned. I am well aware of that. But, doesn't mean you can't manage risk and odds.

Anyway, to set the stage, the city had a water main problem and asked us to turn off irrigation on Sunday night. & to use water sparingly. We obliged. Having grown up in drought country, it was a simple adjustment. We still conserve water pretty aggressively, anyway, just out of habit. But, in the meantime, our yard is very dry (it's hot and dry, like it always is during summer). & the laundry and the dishes are piling up...

No sooner than they fix that (late Thursday), then we had a break in our own main water line (to our house). UGH!!

We initially thought it was relatively minor, and we kind of inwardly rolled our eyes at the first in-person quote we got. Unfortunately, it only got worse from there. The diagnosis and the advice has been the same, 100% across the board, so the difference seems to be in the tools available. We had called a big plumbing company out first, because we thought they could come out sooner (which they did), but it turns out they have the tools to do the job with the least cost and disruption to our landscaping. So, after vetting plumbers for 3 days, we went with that option. (Though in general they are known for being way more expensive on smaller jobs). They need two days for permits, so if we are lucky we will get our water back on Wednesday night. Which puts us a full 10 days of super water conserving mode. FUN!

I did water the trees last night and we decided to water the grass with cold shower water. We are borrowing water from their neighbors (a hose is connecting our houses) and trying to run the outside hose made a noise racket, so I don't think the yard will get much more than cold shower water until its fixed. But, at least the trees got some water. The grass can take a lot of abuse, but is also a fire danger. Our lawn/yard is small though, so I figure a little shower water moisture will at least help. Though we aren't planning to take many showers either.

Oh, and the water tastes TERRIBLE (like a garden hose?) and so I will get some bottle water today. I have been melting ice, and will at least get the benefit of Alhambra water at work all week. I will smuggle some of that home too (the boss will understand).

So yeah, FUN times! Big Grin

We were actually waterless on Thursday night and we stayed at a hotel down the street for $50. If I had any idea we'd have a $5,000 repair job, I never would have done that. But I *really* needed a shower. We should have showered the kids when we were in San Jose yesterday, but was not thinking. (We had to go pick up the child from the airport). But they don't have to go anywhere the next few days, so they will be fine. The dishwasher and the washing machine don't use enough water to really worry about, but are trying to use sparingly, regardless. I am mostly thankful that we can still cook. The water is providing most useful for that, and for the toilets.

Can't really clean or sweat or make more laundry, so going for a low-key "read a lot of books" weekend.

Financially, we have the savings to easily cover this up front, and I think we have plenty of give and take for it not to particularly set us back. I might fund IRAs 3 months later (for 2013), will rethink paying property taxes early, and probably won't get anywhere near our mortgage pay-down goal. But, if we do delay IRA funding by 3 months (push back to April) I still may be able to stick with mortgage and property tax goals. Of course, China trip seems dead in the water, and we were already talking about just sending BM to Japan. I guess that is officially the new plan, because financially that is all we can swing now.

The finances aren't particularly stressing me out. I am more worried about just getting the job done for the quote, and not finding worse problems. Getting our water back will be VERY nice, too. I will probably worry about the finances and figure the rest all out once I know what the final bill is.

In the meantime, I think for the first time I REALLY feel like a homeowner.

Bubble 2.0 + Pets

March 23rd, 2013 at 08:24 pm

**I applied for improved disability insurance earlier in the year (offered by same provider I already have - was new more extensive coverage than previously offered). I just got word I am approved. Awesome!! IT now covers partial disability, which is a substantial improvement.

**Wow, real estate is HOT here. A house sold down the street for $375k (in minutes). That officially puts our home appreciation at 50% over 12 months ago. !! I thought, "Yeesh, I haven't heard anything about real estate picking up so much." So I caught up on the real estate news, and I guess our city is on fire. Apparently also high in the ratings for "flash sales" (or homes that sell within 24 hours). Flash sales have generally always been the norm since we have been homeowners (common enough even in the "slump."). But, it is definitely noticeable today that homes in our own neighborhood are 100% selling within days. (1 or 2 or 3 days - same difference to me. By the time you evaluate your pile of offers and sign on the dotted line, it might take a couple of days). In the "slump," homes priced right would always sell in a flash. (Yeah, it's hard to consider that a slump. Hence, the quotes). But others would languish at higher prices.

Bubble 2.0 is definitely here. I call it that, due to the abundance of zero-down home loans. (And 3.5% FHA loans).

Regional real estate is interesting because it seems to have little to do with regional economics. Unemployment is sky high here and wages/employment have never been overly fruitful. But home values are hyper inflated by outside investors and transplants from LA and San Francisco. So, I wouldn't be surprised if home values fly past $400k this summer. (& if they fly past $500k, $600k eventually, as they have before). Especially since buyers seem more concerned with monthly payments than home values. I have never really gotten a sense where things would settle down. For the past 13 years, real estate has been a rollercoaster ride every step of the way. I think it's some of why I find it so fascinating. If my home didn't swing wildly in value, it wouldn't be so interesting to keep track of.

**We got the catalog for the courses my 4th grader can take this summer at college. O.M.G. It's becoming clear to me he got the engineering genes from my dad. (& my dad will be so jealous!!). I've already guessed what classes he will want to try for, so will see. Electrical engineering, circuitry, designing, that kind of thing. Anyway, I am so relieved we can fit in two weeks of classes with our busy summer schedule. This summer will absolutely fly by.

That's 2 weeks of engineering classes (most likely) and 10 days in Europe. We have our annual camping trip, and summer break is only 8 weeks for the kids. I doubt we will plan anything else in particular. Except finding something fun to do with LM while his brother is in Europe.

**It's been a sad, sad week since we said good-bye to our fur baby. Frown

Dh and I, fatigued by the care of our elder cat, had many many talks probably for years about all the things we would do when we were some day petless. *No more pets.* (At the least, no pets for a couple of years so we can do some longer-term travels).

Well, spiritually, I had a very quick change of heart. I did peek at the shelter. Well, the many shelters and the gazillion homeless cats in our city. & it immediately hit me that I no longer cared for the simplicity of being petless. We have a nice, stable home, and I just couldn't say no. Of course, my spouse is in a space where he thinks this is a choice of grieving and he is actually open to it. I don't think it has anything to do with grieving. IT's realizing that having a pet is a lot of work and responsibility and a PITA, but that's what all the *best* things in life are. & I don't think anything has taught me that quite as much as having children. So, on some level, I think it's just an extension of being a parent. When I Was 23 and picked up my fur baby from the shelter I couldn't imagine being petless. IT was my first decision as a renter-turned-homeowner. These days I can imagine being petless and enjoying it (mostly because I am in knee deep with kids), but I also have very well learned what is truly important in this life. It's love. Bringing more pets into our home is just more opportunity to love.

Anyway, so we will take our time. But, I look forward to adding all that crazy to our life again, when we are ready. Crazy and love.

FREEDOM!!

March 15th, 2013 at 06:40 am

We have crossed over. Woohoo!

More cash and mutual funds than DEBT!!!

*Most* our our savings is in retirement funds, so obviously not planning to cash that all out to pay the mortgage. But I am very pleased to be here. What might not be that exciting of a milestone to some is extra huge to us because of the high cost of living here. I don't think we would be in this financial position without or low-cost move.

This is a very tenuous goal, as these things seem to be. So, the next goal is just to KEEP it this way. To get so far on the other side that we will stay there. That might take one year or five years. I don't know. (Historically I find these kind of goals take about 5 years to stick, but that's with the economy in the crapper and everything).

There is nothing spectacular we have done over the years. Save a little every year. Don't borrow any money against home. That's really it. Time does the rest. I share because it's so important just to save what you can. To consistently save and to stay the course. I am sure I would have found these numbers overwhelming or impossible when I Was younger.

Being very debt adverse, the mortgage still has never bothered me much. (Though obviously no plans to keep it forever!!). Why not? Because if we wanted to be 100% debt-free tomorrow, we sell the house. The End. Debt Free. There is certainly a lot of bad mortgage debt out there, but we have avoided putting ourselves in that type situation.

So why is this such an exciting milestone? For the first time I can envision paying off the mortgage and being 100% debt-free, *while keeping the house.* That feels AMAZING!! That means, keeping a roof over our head and not having to pay rent or a mortgage. & to me, this is a level of financial security we have never achieved before. Woohoo!!

I totally understand it's a little premature to get too excited about it. But then again, it only took about 4 years to turn $100k to $200k. Our savings level is back to where it was last we both worked - trying to save about $30k per year. At some point it becomes an obvious choice to save and invest rather than to be "debt free, today."

At current, I still envision paying off the home age 45 or 50. I am 36 today. If we have another good stock market run in the interim, I'd consider cashing out at a peak and being debt free. It just depends on all factors. With these low interest rates I lean towards investing in mortgage payoff (4%) versus bonds and more cash. If interest rates were higher I'd maybe keep more conservative investments in cash or bonds, earning more than our mortgage rate. I am a risk-adverse type, so will not be putting 100% of our money in the stock market. & it seems silly to settle for less than 4% with the more conservative portions of our investments (above and beyond more immediate cash needs). This is something we just evaluate constantly as economic factors change. What I am doing this year might look totally different next year. It wasn't that long ago I had a 6% CD at the bank. Big Grin So, will see.

In other news, real estate is HOT here. Our house might be worth $350k today and will easily hit $400k this summer. Homes are selling in minutes and going up in $25k increments. Bubble 2.0 is here. (I call it Bubble 2.0 because no one is putting down any money on these homes, nothing seems to have been learned in the first Bubble. I don't feel like we ever got anywhere near true rock bottom with all the investor speculation keeping home values artificially inflated. The market is spiking as real families are actually starting to buy these homes, to live in).

Death to the Mortgage

September 5th, 2012 at 07:07 am

Or maybe more to the point, "Death to the Mortgage Interest!"

I am at the point where shorter term mortgage are extremely enticing with lower rates, BUT not willing to give up the liquidity. So, I need to put away the amortization tables, at least until next year. Or until something significantly changes.

Our current mortgage goals are "to pay more principal than interest, going forward," and "To pay $10k off per year." At the least we are committed to paying more principal. In good years (gainfully employed) we can commit to the $10k annual payoff.

We've been in our house for 10 years, and have refied 3 times. We have only ever refinanced for lower mortgage rates - no cash outs.

Out of curiosity, I looked at where we are today on the principal balance, versus where we would be if we had never refinanced. Keep in mind, we have 30 years left on this loan, versus would only have 20 years left if we had never refinanced.

As of today? Our principal balance is $3k higher than it would have been if we never refinanced. Which is interesting because we were planning to pay about an extra $3k this year. I have the cash, but just making sure no one has surgery this year - probably won't commit this amount until 11:59pm on 12/31/12. But, I think that makes it pretty even steven!!

I found this really surprising (up to today, we have basically never borrowed against mortgage or prepaid anything - so this is basically just with regular payments). How is this possible? Well, our mortgage payment is about $600/month smaller than it used to be, BUT more of the payments are going to principal with the significantly lower interest rate.

Yes, I do still have 30 years left on this mortgage (versus the 20 I Would have otherwise) so it's not apples to oranges. But, obviously it's going to be pretty darn easy to knock off those last 10 years. If we commit to pay more principal than interest...

As of today, we are pretty committed to never refinancing at 30 years again. But, I may have said that before. Ask me again is I can get 2% on a 30-year. But I think the point is we would just get a 20-year mortgage in that case.

I was always amused by advice not to refinance again at 30 years because "one should have no mortgage debt in retirement." Our mortgage goal pay off is age 45-50. Who said anything about a mortgage in retirement? Wink I think we have already knocked off a year or two off our newest mortgage (with some very small pre-payments). So, if not of concern to us. Worst case - age 63-ish payoff. By next year we may have knocked it down to age 60. Odds are we will refi to a 15-year or a 20-year at some point. Which would be age 50-55 payoff.

All this to say, be careful of overly simplistic financial advice. I am all about keeping it simple, no doubt! But, I am also about thinking about the big picture and running different scenarios.

A Beautiful Sight!

March 22nd, 2012 at 08:57 am

Apparently our refinance was funded, because our old mortgage is showing as paid. (It probably funded Monday, but is just showing up online).

Better yet, when I logged into my CU account today, I saw the new mortgage there.

Talk about simplicity!

Now, what are the odds that they will keep the loan? Hmmmm...

Until and when/if things change, I will really enjoy the simplicity of just having our mortgage with our primary banking instutution.

I have a huge principal payment to make mid April, so it will be a good test. As is, it wasn't "100% set up" yet so I couldn't check out the "extra principal" interface. Though I could send a payment today if I wanted to (for however much I wanted to pay). So, that is good.

I was only going to send about $400 of my bonus to principal - first payment due - but that would make it a $1000+ principal payment. Holy low interest!

Refi Progress

January 12th, 2012 at 06:40 pm

Though I would rather refi with CU than a bank, I believe this is the slowest refi we have ever done. With exception of 4 month refi from hell (which probably should have never been approved in the first place - was in order to buy second home - we kept that loan 5 minutes because were able to sell property immediately after refi).

Anyway, though we only refi when interest rates are rock bottom and there is a stampede, this definitely takes the cake for *slowest.*

I finally just e-mailed the CU today to ask status of appraisal, not expecting a response for quite a while. But, I JUST got a response that appraisal is fine and well.

I knew I was overly paranoid. Gee, what a surprise? I needed $250k value for 80% loan to value. I guessed $250k. They appraised $250k.

Has anything changed since the boom? Rolleyes

I told dh I was so good that I could do an appraisal without even doing any work. Wink Clearly I don't understand the whole process - it is just always magically what it is supposed to be, it seems to me.

This is good news for property taxes and bad news for net worth. Property tax went with $263k assessment at 12/31/10. So this will be another $13k or so drop to value. The value date for property taxes next year will be 12/31/11. An appraisal dated 12/23/11 will be useful if they try to assess at higher than $250k. So far I have found assessments to be on the low side - I am sure they don't want to spend a lot of time and effort on appeals, so they just aim for the low side. Seems to be how it has been. So I am guessing our tax assessment will be under $250k for the next year's property taxes.

As long as I can refi, have 20% equity, and my property taxes are going down (especially since no plans to sell right now) then is fine by me. Maybe property values can shoot up when we are ready to sell and downsize. In the interim, we enjoy the reduced taxes.

$199,999

December 19th, 2011 at 05:36 pm

I am really surprised the bank updated their balance so fast. They tend to be a little slower.

So, it is official!

Per bank:



I suppose this is the first time our debt load has ever been under $200k, since being homeowners.

Woohoo!

---------------------------------------------------

My checking account is also drained, as mentioned before.

I am not really sure how much money to expect for Christmas. I don't know if 10 years at my job buys me a bigger Christmas bonus?

BUT, whatever cash we receive this week, I will be hoarding for our refinance. It probably won't be too much of a cash drain in the end, to pay cash for the closing costs. Will probably receive enough cash this month to cover it. That wasn't my plan, but it works out very well!

----------------------------------------------------

Tomorrow is our day of many anniversaries. (Primarily, 10 years of owning this home and moving to our low cost haven). I thought of more (I've had my CPA license 10 years, too). Boy were we BUSY 10 years ago! I am not feeling very reflective or philosophical, so maybe tomorrow I will think of a better post. For today, I am just relaxing and enjoying this milestone.

Tomorrow we do dinner out - lots to celebrate.

4% Locked

December 9th, 2011 at 11:51 am

Does it sound too good to be true?

You betcha!

I'll get back to you in about 60 days.

I see no reason why we can't close a refinance in 60 days. But, from prior experience, and considering the insane rate of refinancing right now... All I Can do is not think about it or get too excited until it is official and those closing papers are signed.

But, a commitment has been made, and a huge leap towards 4% has been taken.

4%, 30 year mortgage. I can't even tell you how much this improves our long-term financial position. Will most likely pay it down as a 20-year-loan, by simply paying old payment which also very low to begin with, while still trying to scrounge about $4,000 per year in extra principal payments (outside of my own income). In the first year, we would knock out $10,000 in principal.

Anyway, I absolutely can not think about it until we sign the papers! It is too good to be true! (& yes, I Said the same thing last time - I think that one was almost more shocking, because we knocked our mortgage payment to the realm of the crappy studio apartment rentss I was looking at in the mid 1990s. I will never complain about paying $1100/month for this beautiful home, neighborhood, community. $900 is simply too unreal to imagine).

-----------------------------------------------

What's funny is that last time we refied was the year my identity was stolen, and I was in the middle of some pretty serious 0% credit card arbitrage (more free money from credit cards). The refi was after the identity issues were cleaned up, but while I had several credit card balances (& tons of cash earning a high interest rate).

I've never opened up so many credit cards in my life, and here I am with another amazing refi opportunity.

Is the greater purpose of this blog simply to say, "I can do a lot of credit card deals without hurting my credit score!" ? IT feels like a theme. I know there are people out there thinking I am insane to do all these credit scores because it will ruin my FICO, and stuff like that. You can see why it doesn't worry me. Wink

Christmas Crazy

December 7th, 2011 at 01:01 pm

I ordered some prints from Walgreens - some more of my dad's prints (one for gift - some to keep - I couldn't decide so picked 3 - got 50% off). OF course, they only print poster-sized prints at another location. IT's about a 5-minute drive from work and kinda sorta can be on the way home, so just went by there at lunch yesterday to pick them up. Ate lunch at home.

Holy Cow.

Firstly, the traffic was insane, since I had to drive past the mall. Though I try to avoid the mall in December, it didn't occur to me that driving past on a weekday noon hour would be such a painful experience.

Secondly, the line inside Walgreens was a mile long. I needed to pick up a couple of things, so just paid with the photos - there was no line at the photo counter. Phew!!

Mental note: No more "quick trips" anywhere in the vicinity of any mall.

--------------------------------------------------

I need to get another frame, and just saw that Michael's has *buy one get one free* this week. I will brave the crowds. That shopping center has the worst parking lot ever - I hate it any time of year. BUT, Michael's is kind of off to the side, so it is not too hard to get in and out without bypassing the rest of the traffic. I will give it a go. Crossing my fingers! This is for myself, so no deadline. But I want to see if I can get more of the same frames I already have - is the only rush.

Lord knows when we will ever hang these pictures - dh can never seem to agree on anything when it comes to home decor. I tried to get him to help me hang them over the weekend - it was a no go. I wanted to replace an "ugly picture." Dh does not agree. Beautiful pictures, but no idea where they will end up. Will see...

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Okay, I can't take it any more. 4% for 30-year mortgages. I know this is not the first time. But I e-mailed our broker. One more thing to piss dh off about - he hates refinancing.

Just call me the perpetual refinancer.

If we keep our old payment, we will shave about 6 years off our current loan - would go from 27 years left to 22 years left. (If not - still pay off by about age 64 - which is about my maximum). I'd rather go through this broker because he was great and low stress and no problems. The fees are the exact same at our credit union. I'd rather get a credit union loan but they seem extraordinarily inflexible on waiting for an interest rate lock. With broker guy, I think it took over a year to get the rate we wanted, last time. Talk about service. Anyway, I informed him we had paid down our mortgage a bit, and I want 4%! Will see what he says. Last time it took two weeks, from rate lock, so who knows. May be refinanced again by 12/31? Dh won't be too surprised. I already said the ugly word a few times in recent weeks: refinance. Would be 0 point refinance, will pay cash for closing costs. New payment - something like $950 down from $1130.

This is not the *last time ever.* I made the mistake of thinking that the last 2 or 3 times. It is possible we can pay down a chunk and get an even lower 15-year rate, at some point. So, I give up on "this is the best it gets" thinking. Who even knows? I would hope this is the last 30-year loan we ever refinance. I feel uncomfortable with a *worst case payoff* any higher than age 65-ish.

Mortgage Update

December 1st, 2011 at 05:49 pm

Just deposited my paycheck and paid the mortgage.

Mortgage Balance? $200,874!


What I have so far to apply to the balance on 12/31 is:

$311 regular payment (principal portion)
$150 payroll tax holiday
----
$461 Total

Leaves about $415 to come up with. I am just crossing my fingers for Christmas money. If I don't get enough, will transfer from savings.

Ending balance should be $199,998

Wahoo!

I will probably wait until Christmas so that I can use Christmas money to pay it down. Merry Christmas to me!

Anyway, most extra payments made were from credit card rewards this year. Here are the extra principal payments made this year. I haven't had to touch savings for any of these, so crossing my fingers that I can say the same for December:

JAN - 72.79
FEB - 132.79
MAR - 156.00
APR - 177.79
MAY - 65.00
JUN - 552.79
JUL - 50.00
AUG - 300.00
SEP - 450.00
OCT - 150.00
NOV - 150.00
DEC - 876.00
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TOTAL $3133.16
--------------

Boy do those mortgage chips add up fast!

I did mention none of these payments came from regular income? & just a place to park the payroll tax holiday, so I don't get used to it.

------------------------------------------------

I also wouldn't be surprised if we refinance AGAIN. The refinancing never ends. I am holding off and attacking the mortgage a bit in the hopes of getting 3%-ish for a 15-year loan. The 30-year isn't quite worth it, but getting close. I could never regret our last refinance - it freed up $200/month and locked in a GREAT rate. I wasn't sure if the value of our home would hold, and I am not one to wait for better rates when they are ROCK BOTTOM. But I knew there was a chance that rates would go even lower. So, we just refinance again. Every time I tell my hubby, "This is the last time ever - I swear!" He just hated those loan people, and the whole process. He knows I wouldn't bring it up unless we could save a ton of money! Our home value has held, and I just saw my FICO was 800, credit card dealings and all. So, now I just wait for the right time. (& if I miss the boat - oh well - I can't complain about 4.875%!) One thing that is interesting is that our rate is so low as is, that a small interest rate drop is rather significant. Also, the many times we have refinanced, 15-year rates were generally close to 30-year rates. So I am in awe of these low low low 15-year rates and trying to figure out how to snag one of those without regretting the bigger mortgage payment. All I can do is pay down the principal as much as possible, and hope these rates hold a while longer.

Mortgage Milestone

September 25th, 2011 at 10:05 am



Was just paying the October bills since we will be on vacation soon. Making sure everything is in order and paid ahead of time.

I am not 100% sure, but think we have reached the milestone of lowest mortgage balance ever. $201,333. Woohoo! (Hard to tell because all I have record of is some mortgage payoff when we sold our first home - the payoff included interest).

We are on track to hit $199,999 by 12/31. I expect a $250 Christmas bonus, and so just have to scrounge $165 Christmas money to top it off. $199,999 will most definitely be the lowest mortgage balance we have ever had. Big Grin

& so I welcome FORWARD PROGRESS.

Story is that our first mortgage was $210k or so (for just a condo). But we traded for a luxurious home (+ yard and garage and stuff like that) for a $230k-ish mortgage. My dh also got laid off and we had a child, so we dropped the 15-year mortgage. Which basically means it took us, oh, 10 years to get back to where we started. A $202,000 or so mortgage. But, you know, no complaining here. The infinitely nicer home, and the spouse not working for a decade - all that is 100% WORTH IT. But I am just excited to make FORWARD PROGRESS. Versus, owing as much at age 34 that I did at age 24.

In another 10 years, we pretty much expect to have our home paid off. (I can handle the 15-year amortization, and dh doesn't need to bring in that much income to knock off 5 more years).

Woohoo to forward progress!

The super plus side is that we were paying in the realm of $1800/month for a smaller mortgage in the year 2001. 15-year amortization. For the next year, looks like we can cobble together $1400/month to the same end (15-year payoff). Low mortgage rates are definitely not all bad. (We can't even justify refinancing below 4.875%). That said, if interest rates stay low, and we can knock off enough principal, we will refinance to a 15-year. I am salivating at 3.25% rates. We just aren't quite there yet.

Hard to whine since we are saving $400/month over our last 15-year amortization. 10 years ago I was paying $1800/month for a flipping condo in a so-so neighborhood. Today we pay $1400/month to pay off dream home in 15 years (same mortgage balance). I suppose we have experienced much forward progress - just nice to move forward with the debt numbers, too.

Credit Card Reward Round Total Update & Mortgage Update

September 7th, 2011 at 01:00 pm

Officially Received, between 1/1/11 and 9/7/11:

$1030 cash (Chase Sapphire)
$1015 gift cards (Citi $500 + SW rewards $500)
$ 350 deposit to ROTH (Fidelity Am Ex)
-$99 annual fee (SW card)
-$23 lost value for exchanging some Citi gift cards for cash and amazon gift cards
---------------
$2273 TOTAL

cha-ching!

Dh is still due $200 cash from Chase.

=$2473 TOTAL

Today I signed dh up for a reduced Southwest deal. Deal is to make one purchase, pay a $69 fee, and get $250 in amazon gift cards. (HE is eyeing the new kindle, so this will cover it. & how easy is it to just make one purchase)?

I've got my eye on a Citi deal - $300 gift card reward + no fee first year. BUT, I am going to hold out a bit and see if I can get a better direct mail offer. Or, maybe close all the other cards before I start this merry-go-round again. I think you have to spend $1500 in 3 months? I am waiting to redeem that $200 cash from Chase in a couple of weeks. So, I will re-evaluate at that time. For now, the SW card was a no-brainer since it only involved one purchase. Anything more complicated than that, I rather close the chapter on all the other cards first!

-----------------------------------------------------

If I get that $300 deal, I will probably turn it into cash for the school. Will see!

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MORTGAGE UPDATE

Expect to make an extra $450 mortgage payment this month, with credit card rewards.

This puts the balance to about $201,750. I had expected to use savings/Christmas money, etc. to pay this down to my $199,999 goal, but doesn't seem too necessary. Normal principal is around $300/month, and I can add $250/month for the rest of the year with no cable + payroll tax holiday (& piano lessons covered by MIL). So, that about covers it.

This is good, because I probably need to divert about $1500 from savings, to max out our ROTHs in 2011. We are on track to put in a full $10k this calendar year, but also diverted a LOT of that to fund tax year 2010. So, I ran the numbers and a $1500 deposit will get us maxed out by April.

I am keeping an eye on the market. If it REALLY tanks, I will slip in that $1500 earlier. IF not, will wait until the last minute (either December or April - just depends). For now, seems like lots of downward pressure on the markets, so I will wait it out and build up more cash, first.

$30,000 cash goal is still so close but so far!! Kids have dental appointments today, which is never good news! I also need to set aside about $1500 for taxes. (The usual was not withheld from my overtime - so will owe)! & that ROTH money I just mentioned. & so it goes - on and on and on!

----------------------------------------------------

I got $10 off at Kohls (Kohls cash) for buying stuff with my free gift card. Woohoo! (I think usually when I spend enough to get Kohls cash - the last thing I need to do is go shopping there again)! But this was a little different.

I also have a 20% off coupon, so will buy myself a treat today. Probably a nice top that I can wear to work. I don't think I've bought any work clothes this year, and I am feeling the boring-ness of my wardrobe.

Refi Relief

July 28th, 2011 at 10:55 am

I think my cautious nature, plus other random circumstances, and continually falling interest rates, has contributed to the fact that we have refinanced more times than I can probably remember at this point!

Every time I can save 1% interest, it seems like a no brainer to refinance. (I am not talking about cash out refinances, borrowing money, blahdeblahdeblah. JUST lowering the interest rate!) But, hell if I was going to sit around and wait for something better. I didn't have the crystal ball that said rates would slide down to rock bottom the entire first 12 years+ I owned a home. I could have just refinanced once or twice to the same end - had I known!

Anyway, I was *just* seeing 15-year mortgage rates at 3.75%, and I had to salivate. They've probably been around awhile, but I completely wrote off the 15-year mortgage at this point in time. Easy peasy if we are both working. But, just a tad too much to take on without a second income.

For whatever reason, I ran the numbers anyway, on the latest and greatest. The extra push to get our balance down to $199,999 this year, seemed to significantly decrease the payment from last I checked. Probably lower interest rates, too (though just barely). We also have the cash to pay the closing costs (maybe we didn't last time I looked).

Payment? $1450 per month.

Really, it's nothing. Our initial 30-year mortgage was MORE Than that. $1500-ish. We've paid $1300-ish on FAR less income.

But, alas, I have really taken a liking to my $1125/month mortgage payment. It's really the only reason we are making progress on our other financial goals. $1450 is probably extremely reasonable considering my income. BUT, I am also paying $1000/month for health insurance. That's obviously the reason I can't really stomach what is otherwise a VERY Reasonable payment.

I decided to run the numbers as if we just paid $1450/month on our current mortgage. Any time I have done this exercise before, we come out MILES ahead on the refi. We are talking a 1.125% decrease in interest!

The verdict? Not so much this time. Huge sigh of relief!

I need to pre-pay $15,000 at some point. If I do so, the $1450 payment knocks out the mortgage in exactly 15 years.

$15,000 might seem like a lot, but once you consider the cost to refi, the hassle factor, the tying up of cash, and the $325 increase to our minimum payments, it's nothing. So we maybe have to come up with $10,000 more - than refi costs - in exchange for some huge flexibility (a LOW minimum payment).

For the first time ever, it just doesn't make sense to refi. Hallelujah!

All that said, I am excited because my goal to pay off our mortgage at age 45 seems little more than a pipe dream lately. I think *this* 15-year plan is doable, and it puts us at mortgage payoff about the time of my 50th birthday!!

Dh then just needs to work enough to knock off 5 years off the mortgage. That, plus the $15,000 I mentioned. If he never works again? I can live with the age 50 pay off. It would mean only 25 years of even having a mortgage, and we'd have our parents beat by a couple of years.

I think between gifts, overtime, etc., we can aim for the extra $3900 ($325 x 12) per year to the mortgage. I am motivated because forming the plan to pay an extra $3000-ish this year seemed like a huge pipe dream, but we are well on the way. I am motivated by how powerful thought and a plan is.

I haven't tried before because too behind on other financial goals. The last decade was definitely: *screw the mortgage - time with our kids is more important - working more would be insane anyway.*

But, today, we are at:

**Rebuilt cash savings. Should reach $30,000 by the end of the year. Have not had this much cash since the DINK years. I feel like we are getting back on solid ground.

**We are maxing out our ROTHs. $10,000 per year.

**As of next week, dh has about 7 hours per week day free to work (no daycare costs). With the economy and all, I don't expect him to be working full-time next week. Hardly! But, being overly aggressive on the mortgage for one or two years doesn't really mean much as we ramp up our income. The last decade it might have left us behind in other savings goals. We might have to be creative for the next year or two, but eventually a second income will take up the slack.

I go back and forth because I regret tying too much cash in the mortgage, in the past. That said, I also feel defeated at how little progress we have made on the mortgage since having kids. I just need to find better middle ground. (In addition - seeing way too much under-employment once hitting age 50 - in the family and such - even before economy really went south. I feel extra motivation to be mortgage free by that age. Age 45 goal comes from the wish to be mortgage free before kids start college).

If interest rates stay low, though, I wouldn't be surprised if we take on a 15-year mortgage if we have an income boost. Though I always caution taking on more mortgage than needed, the flip side is we are talking about extremely reasonable territory with these LOW interest rates. The more we pay off, the more reasonable the 15-year payment is.

Another one for Baselle

May 6th, 2011 at 01:01 pm

Love it!

http://www.mymoneyblog.com/housing-bubble-history-book-cover...

You have to click on the link to appreciate it.

Basically, shows a series of books by one author, about how you are missing the real estate boom! Books published 2005 - 2007 (well after the boom was OVER -here - though I admit books were maybe written a little before real estate began the falter - particularly the first one).

"Comparing old and new reviews for the books can also be a nice lesson in investor psychology."

Yes - I bet those reviews are fascinating. I should probably save this link and send it to anyone I know who gets overly bullish on real estate. I'll have to show this to my kids when they are getting ready to buy their first home. What an education in just these book reviews...

Home Prices - Am I On the Same Planet?

March 10th, 2011 at 02:54 pm

I hear almost on a daily basis how home prices are rock bottom throughout California, and the "deal of the century."

????????

Honestly, I've read enough articles and talked to enough people to know that the majority of home buyers around here are outside investors (other cities, other countries, other states), and buyers with little-down loans (FHA?). That's what is keeping the home market from collapsing in Sacramento, specifically. People who know nothing about the local market, and more creative lending.

Oh boy!

I know a handful of people who got off the fence and bought - maybe with some decent down payments and fixed rates (but I wouldn't know for sure - the terms of their purchases). But, that's rare. I know far more broke people buying because "it's a good investment and no money down required."

The more I talk about this with people, the more disconnect I see between their lofty "get rich quick" schemes and the real estate reality.

I even went through zillow and examined historical home prices in several cities I am familiar with because there is such a huge disconnect between what people are spouting about home prices, and reality. As I expected, home prices are largely higher today than they were in 2001 or 2002. Zillow backs up my impressions. (Zillow runs pretty accurate here because home sales are so constant. Home sales prices are a good indicator, and there are tons of sales).

Sure, prices are lower than the peak, but any year before or since about 2005-2008 would be lower than the peak. That doesn't MEAN anything!

----------------------------------------------------

Anyway, in 2004 or 2005 I saw a graph of Southern Cali Home prices compared to median incomes. It was a historical graph with a HUGE and sudden spike around 2002-2004.

I had seen similar graphs in regards to Sacramento real estate. Back then, it seemed obvious that home prices were unsustainable.

So as I hear all this nonsense, in recent days/months, I was poking around to see if anyone had updated any of these graphs through the year 2010 or so. I'd mostly expect home prices to either have leveled off, or still be quite high. I wouldn't have expected prices to have dipped down to some historic low. Because they haven't. Not from the long historical perspective.

To the next person who tells me I am a crazy investing know-nothing about real estate:



Courtesy of econintersect.com

http://econintersect.com/wordpress/?p=4487

Look at all those graphs on this blog post. Beautiful!

"And the irrelevance of interest rates to home prices during a housing market depression is obvious when one looks at the ultra-low interest rates of the 1920s and 1930s accompanied by home prices one standard deviation below the historical average."

"There is no way that a thorough look at the data can lead one to rationalize that the housing market is poised for recovery."

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If you are wondering why I am not running out and investing in real estate, this would be why...

Mortgage Update

January 26th, 2011 at 02:28 pm

My raise barely covered our health insurance increase (if it even did), but this year we get some tax breaks compared to last year.

So, we decided to put $50/month extra to the mortgage.

I didn't for January since my raise was only in effect for half the month.

However, dh has had a good ebay/amazon/craigslist month and so we should get a $50 deposit around 1/31 (from amazon). I was also going to add a $20 gift he got to the 2/28 payment. With the new found money I canceled the initial mortgage payment and will pay it directly on the mortgage bank's website to make sure the principal gets applied correctly. +$70 for January. Looks like I will have even more for February (more expected sales).

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I haven't been big on the mortgage pre-payments. So, what has changed? Well, being able to max out retirement is one (that was our primary goal - mortgage paydown being secondary).

We also borrowed money (closing costs) to refinance the last time, so we feel an extra priority to pay those costs down. We've never borrowed a penny against our home, otherwise (even through many other purchases/refis. We usually pay cash for closing costs).

Then there is the psychology of breaking the $200k barrier. Not only is it a big fat six figure number, but we had paid our first mortgage down to almost $200k in 2001, before we moved. Logically I know our community is very high end, and we have a real house, a garage, a yard, and over twice the space, for a mere $30k more in loans. But, by the same token, we paid our first condo down very quickly (we both worked) and it's a bummer that in 10 years all we have accomplished is nothing on the mortgage balance. Back to where we started... This wasn't exactly what we had planned, anyway. I suppose that is the part that bothers me. Making no forward progress on that debt in 10 years, was not part of the plan. We have more and we work far less, but expected to make more forward progress all the same.

That said, paying down the mortgage is still not a huge priority. If we came into some extra money, we'd consider paying down a small chunk to make up for lost time. Mostly our plan is to resume our old $1300, $1500, or $1800/month payments, once dh returned to work. How much would depend on his income. Last we both worked, we were able to swing $1800/month for a 15-year mortgage (higher interest rates than at current). I think $1800/month would be very reasonable with 1.5 or 2 incomes. I make much more money now than I did in 2001. Our current payment is $1100 - we refied from $1500 to $1100 over the years, with dropping interest rates. We are sticking with the 30-year as long as the interest rates are this low. I don't want to fret over a $1800/month payment in case of a lay off or something like that. I certainly can't afford that on my income alone. But when we are both working, we will gladly pay the extra principal.

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ETA: I received a $20 rebate today for my Visa. I get 1% cash back on this visa - only used for vendors who do not accept my AmEx (3% cash back on that one). The Visa rebate is just deposited to my checking account automatically, every January.

So, I Was able to keep the 2/28 mortgage payment @ an extra $70 as well.

Talk about timing! I took out the $20 I moved up to January, and another $20 *magically* appeared in my account. Too funny! So I added $20 back to the 2/28 mortgage payment. This was in Quicken. I will actually make the payment closer to the due date - see what else turns up.

An Easy Repair

December 1st, 2010 at 05:51 pm

I've had a toilet jinx this week!

When I flushed the toilet at work, I felt the little chain "give."

It was funny because we already had a broken toilet at home!

Dh noticed that the toilet was leaking (thank goodness!). There was stuff sitting around the toilet and it was hard to notice, otherwise.

As I cleaned it up and looked around, I could see it looked like the wall behind the toilet was stained with water. I realized it leaked when it flushed. I am not engineering-minded AT ALL and so I assumed it was a leak in the water line. After toying with it a bit, and even googling fixes, dh was smart enough to look in the tank. It was actually kind of spouting out of the top (& dripping down). The gasket in the bottom of the tank looked kind of tired. The water line on the other hand, was just fine!

Dh told me he would run to Home Depot and see if he thought he could fix it. Initially, stuff like this has scared him off. But over time, he has realized these kind of things are pretty easy to fix. (As for me - I don't think I could fix these things if I tried. It's just not in my DNA in any way shape or form).

Concerned with potential for water damage, and knowing dh doesn't move very fast with this stuff, I told him it was up to him. If he called a plumber, I wouldn't blame him. We've just been flushing it once a day with a towel to catch the water. (My bladder is very small and I awake often at night - wasn't in the mood to trek down the hall in the middle of the night, which would wake me up).

Well, today is my birthday, and dh decided to fix the toilet. Said it was easy peasy. The cost? $8 for parts.

Can't think of a better present? Big Grin

I asked dh to consider replacing the parts in the other upstairs toilet. We rarely go in there, and I don't want to find the same water mess in there - if the kids aren't going to notice. The one downstairs, we use enough, so will wait until that one self destructs too.

Lesson learned - don't keep stuff sitting around the toilet!

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Birthday presents?

No cash this year. (Surprised since dh's family tends to be heavy on cash).

2 sweaters that I had picked out (from Grandma)

Entertainment Book - (We don't use nearly enough, but when MIL asked, I decided what the heck. Will get some use).

The kids got me some puzzle books

Dh fixed the toilet

The fam is making me sloppy joes for dinner. But dh had gotten groceries for 3 or 4 of my favorite recipes. I will dine well this week!

Last but not least - Marie Callendar pie - Lemon Cream Cheese

I have tried to instill much better eating habits in my kids (the ones I was raised with would make you cringe), but I think celebrations will always equal food. Maybe that is somewhat universal as dh doesn't seem to protest. He was raised with exceptional eating habits, but pigging out for any celebration is just kind of given.

I treated myself to lunch, and some soda and chocolate, since I couldn't have justified the expense otherwise. Decided it was a small splurge and I was worthy. I have cut my soda consumption lately - lord knows why. Really - no idea why i have had any motivation to. I just no longer keep it in the house (a habit I started since having kids - sleepless nights and caffeine needs, I suppose). I haven't seen anything compelling enough to make me want to quit. But, "quit" is a liberal word - I still drink soda when out, etc. Today I just wanted a big cold soda! I've probably gone back and forth in that it is much cheaper to keep soda at home (buy in bulk), but in the end, I rather just buy it once in a while (even if it costs several times more to drink it less). Maybe subconsciously it has to do with my health issues. I haven't been compelled by any studies, etc., because even when I keep it in the house, I just don't drink that much? But realistically i know less soda is probably better.

My mom told me my present was in the mail. Lord knows - could be anything. I'd guess maybe a check, or else she would just wait until she saw me (wouldn't ship anything probably). But, will see!

Property Taxes

October 20th, 2010 at 08:17 am

**I scored some *free* toothbrushes. They were on sale for 99 cents, and I got $1 0ff coupons for Walgreens, for buying them. I bought one, and went back and snatched up 3 more (I hadn't realized they were on sale, and I didn't realize the coupon was for the toothbrush, so I got another one). If I had realized I would have bought one at lunch and one after work (the Walgreens is on my way home), to make them all essentially FREE. But what I did was run back first thing in the morning to snatch up more before the sale ended. I hadn't realized they were on sale until I got home and looked at the receipt. Doh.

Was nice, since I like a particular kind of toothbrush that usually cost more like $4 or $5.

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I got our new property tax bill. No surprises since I had looked up our property assessment earlier in the year.

In our state, property taxes can not go up more than 2% per year, but they can go down as low as property values go, any given year. (These rules were put in place when absurd price appreciation meant a lot of seniors could no longer afford the property taxes to keep their homes).

I have no complaints about our property taxes, as they have steadily gone up 2% per year (even while the price of our property more than doubled in a very short time). But with the economy, I welcome the chance to pay even less.

Last year our bill went down $400 for the year. This year, it went down about $300. That's some pretty substantial savings. We are still in this sweet spot where we have over 20% equity, etc. (Last year, our assessment fell to the price we paid for the house. This year, down another $15k or so).

For net worth purposes, I long ago decided just to track the assessment to value our home, since it was only a steady 2% increase. (Fair market value has been crazy and volatile, on the other hand). On the flip side, a large loss of value would be more important to track and is accurately reflected with this method. It just works for my purposes.

SO, I have to lower my assets by $15k for the year. But I won't complain too much, since I have no plans to move anytime soon, and welcome the lower tax bill. Phew!

Real Estate Update

May 14th, 2010 at 12:59 pm

I haven't said much about real estate lately, because it's pretty same old, same old here. What is the phrase I keep using to describe it? Manic depressive? Balancing all the foreclosures and market depression with the enthusiasm of first time homeowners and wanna-be investors. Means a nice house will sell in minutes, if the price is good. But there is a lot of empty homes and foreclosures going down all the same. I think "manic depressive" sums it up pretty darn good.

The single story homes in our neighborhood had bottomed out around $200k. Anything priced $199k or below would ignite a bidding war of bubble proportions. (Which is good to know, since we owe about $208k on our mortgage, still!) The split level homes (like ours) had settled around $250k. Maybe a little more.

So anyway, I peeked to see what was going on. Tons of foreclosures in our neighborhood. But a house sold for $292k!!! Woohoo! I looked at it to see if it was a large lot. It was a house facing the empty field. They might have fetched a small premium for the view, but otherwise, nothing much unique I could see about the house. It looks like a slight uptick in price. It's hard to tell though since so little is actually selling.

Another interesting observation was a single story home, listed for sale at $250k. The home was purchased in 2002 for $340k. Ouch! I keep thinking that people's memory is so short term - that we bought well before the boom - but we only bought a few months before this home owner did (though I admit they must have had a TON of upgrades or something. Or the public figure could be wrong). I suppose people were really getting into bubble terrirtory as early as 2002? WOW!

But that is not the interesting part. The interesting part is that our neighborhood peaked out at $650k prices in 2005. Only a few really gullible people bought at that price (most after the market started to turn - REALLY gullible people). But, I remember getting little flyers about all these homes in our neighborhood, for JUST $3000/month. Some of these were ARMs and etc. JUST $3k/month mortgage payment! (For reference, our payment was $1300/month, at the time).

Right now, our payment is $1100/month (we refied below 5% - fixed rate), and this house advertised home ownership for as little as $1041/month!

A larger home advertised a mortgage payment of just $1200/month.

I don't think I have ever seen advertisements of such low payments, in our neighborhood. (Or in this state, ever, for that matter!) IT's a combo of the prices and the interest rates. My how things change...

For now, we get to stay in "well above water land." But, I am still wary what the short term will bring. For now, our neighborhood is attracting first-time borrowers and anxious wanna-be investors. Phew, for that. What makes me nervous is the sheer number of people I know who are borrowing for home with like 3.5% down. Those FHA loans, correct? I don't know anyone putting any real money down on any home purchases. I still get the feeling no one has learned anything, and this mess will be prolonged for a while. It's kind of a mess, and I don't think I have had anything new to add. I have said all of this before, pretty much. Big Grin We may be the only ones in our age group, with some equity to spare around here, but we are ALSO quite clearly the only people in our age group (+10 years) who ever considered putting a real down payment on their house. It just boggles my mind that this "no down payment business" still prolongs. $9k down payment on a $250k home? Give me a break. OF course people walk away when the going gets rough!

Amazon Market Place & Birthday Plans

May 10th, 2010 at 01:06 pm

I am well aware that Amazon has some of the same issues as Ebay, BUT, we were fed up enough with recent Ebay/Paypal issues, that dh decided to give Amazon Marketplace a try.

It's been about 48 hours, and he already made 4 sales, so he decided to list a bunch more stuff today. So far, so good?

The only real reason that I was more in the loop with Ebay is that he used my account (I had bought a few things over the years and so had some positive feedback, to start). So, I don't know all the details.

BUT, the fees really seem rather similar in the end. I read that ebay has lower fees, but not really, once you consider both ebay and paypal fees.

I also read that Amazon buyers tend to pay more.

So, we don't really expect to make less money, per items that sell, and so far this has proven to be the case.

Amazon is also infinitely more easy to list items on.

So, it's a good start. I am relieved that we can still work on that income stream, because we both have kind of had enough of ebay. But the income was good. Just not so worthwhile with recent hassles.

Maybe we should have done this sooner. The video games and accessories that dh's sells, I read that sellers tend to prefer Amazon for that kind of stuff.

Anyway, for now, is just a start. I'll keep you updated how it goes!

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In other random news, the rental vacancy next door to us was short and sweet. I am kind of surprised. They were asking $1600/month (for a much smaller home than ours) and as I recall, that is what they requested last time, before much of the bust. SO, I thought it would be interesting how it would pan out. The price equaled a lot of interest and a quick renter. Color me surprised. I figure we could rent our home, comparably, for $2000-$2200/month. Not bad (for current state of economy and rental market). Our own PITI runs $1700-ish monthly, at current.

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Went to a GREAT birthday this past weekend. Aaaaahhhh, it was so refreshing compared to recent parties jam packed with kids and rushed at these big kid play places.

I'm sold!

We usually do a pretty frugal at-home party (ages 1 - 5?). Last year we did a weekDAY Chuck E Cheese party for the kids, for about $150-ish. I would never go there on the weekend - you couldn't pay me to do it. So I know a lot of parents didn't like it, but oh well. I'd rather have only a couple of kids show up, than deal with it.

As a compromise, I did look at some of the other places, but they completely gouge you and offer very little outside a super rushed party with a billion kids. (Most of them are just like Chuck E Cheese! Though they cost a ton more...)

SO, yes. This was a new play place in the area. The kids LOVED it. The entire play area was reserved for the party. They did EVERYTHING, right down to writing down all the gifts, and making a little viedo of the day. The kids DELIGHTED in watching the video of themselves while they ate pizza and cupcakes. I am sure dh won't be impressed with the video (he's a pro) but it caters to the 4-6 age group quite well. Big Grin

So, it will be about $300 for the whole thing. I had my mind made up when we left, but I didn't consult the kids. They both told me on the way home that they wanted their party there, too. Well, that makes it easy - so we all agree.

I told them it was okay but that they would have to share a party. They don't seem to care at all. So, phew. Their birthdays are a week apart which makes this kind of stuff easy. LM is not in school yet and doesn't have quite the number of friends, so it still just makes more sense to do one big party for them. Maybe we will separate them down the road. Then again, they have a lot of the same friends...

The only added cost I can see - with 2 kids - is a second video. I am quite sure we can work something out - they must do twin parties and such. So - will call the place and get that reserved.

Was it frugal to have the kids close in time and age? Um, yes it has been! Big Grin Not that I can take credit for the birthdays being so close. Not quite sure I have that much control over all that - but I did try.

This may be the "Easiest" birthday party yet. We won't have to do a thing! I expect a $250 Chase rebate next month, so will consider it covered. I can squeeze $50 from the budget. We probably won't buy them any gifts either - dh has a stockpile of games and books to gift them. Phew! (I've got savings for this kind of stuff - but even better not to need it!!)

It's Done!

May 4th, 2010 at 07:44 pm

& so it is done...

Dh called me around noon to tell me the painters were done, and called me back in the afternoon to tell me the paint company's owner picked up the check.

I just got home, and boy, they did a GREAT job!

I had wanted to do a once over before dh handed over the check, but I guess it didn't matter.

They just have to come back tomorrow to put the weather stripping back on the front door.

& so ends our first "big maintenance" as homeowners. Heck, the only other maintenance we have done, is bird proofing. We've been homeowners for about 10.5 years.

$2200 to paint the exterior. Definitely worth every penny.

I am just in awe in how quickly they painted the house and what a great job they did. It was about 12 hours of prep, painting, and cleanup, I'd say. Not including a couple of hours of power washing, last week.

I will post pictures, later. Big Grin

Not So Manic Monday

May 3rd, 2010 at 04:02 pm

I think dh mentioned it, but I remembered my LONG put off optometrist appointment was today. I decided to postpone it, with the pink eye and everything. BM also stayed home from school today - because he looked terrible. LM and I look like we can *fit in* with normal looking eyes. Though we shouldn't be contagious; just kept BM home to be safe. He has been really difficult to give drops too - not sure how much is making it into the eye!

I was relieved that his eyes looked a little less red, at lunch.

I suppose this is another reason I am glad I just went with my HMO for the appointment. It was simple to reschedule, online on a Sunday. I just put off to next week.

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Painting has started on the house. How exciting!

I have heard that the first 8 (or 10?) years is when a new house really settles. There are lots of little cracks to fill in and such - it is more than just about the paint. Though we didn't wait for the paint job to look "horrible," I still look forward to the facelift.

Oh - I believe there will be some "hidden costs" to the paint job. I presume they will use our electricity and water, which we tend to be quite frugal with. So, will expect a big bill, for May!

Also, we have a LOT of natural light in our house - it is so open and has so many windows. Anyway, with the windows all taped up, it was eery how dark the house was. We will be using way more lights than usual, I am sure. They should finish up Wednesday.

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Here's something I had never heard of before. A friend told me that her neighbor paints one side of his house, every year.

May be a little overkill, but it is definitely an interesting approach, to just bite off a little at a time. I suppose the every year thing keeps it looking fresh. One wall every 2-3 years might start to look a little more weird?

Maybe part of me is glad to have a very tall house so I don't have to do the math and feel guilty for not doing it myself. Paying a $1500-ish premium (over cost) to not break my neck, sounds good to me. If I had a single story, I would consider the once a year/frugal strategy.

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Had the funniest exchange with dh over the weekend.

I am probably guilty of not vocalizing all my plans - I keep a lot of things up in my head. IF it's "hell no we can't justify that right now," I just file it away (in my head) for later.

Anyway, I saw some decent patio set on sale, in the paper, for $300, and I just said aloud how maybe we should buy something like that, next year.

My dh flipped out a bit. To which I took great offense. Thing is, he rarely wants to buy anything for less than $1k-$2k. It's always big things, with him. So of course I told him to give me a break - it was flipping $300. Since when do I get to buy anything?

Anyway, we both calmed down, eventually. I told him that we had treated our patio furniture really bad, and I just wanted to start over. To which he replied, we never use it. To which I replied, because it's repulsive.

So anyway, AGES AGO, I bought a cover for the table, and dh hemmed and hawed about how ridiculous it was and how hard it was to remove the umbrella. To which I pointed out that I didn't really have issues with the table, or all of the chairs. Maybe we just needed an easier to remove, umbrella. IT really should be brought in every winter, with the chairs, and the table covered. The cover still sits unopened in the garage. I swear I bought it before we had kids.

NEedless to say, at some point dh went outside, and hosed off the umbrella. He opened it to dry off. IT was a bit windy and I saw it spinning around and suggested he put it down (I just meant close it). I would open it later when it settled down. It gets wasp nests when it is closed, and so then we can never use it!

SO, dh misunderstood and put the thing in the garage!

So I Ask him - if he left some of the pole sticking out or if I could actually put a cover on it. HE said the table was ready for a cover.

Oy vey! All that hemming and hawing, and he was able to remove the entire umbrella twice in one day.

So, all I had to do was threaten to spend $300??? Give me a break.

The whole thing is still not resolved. We have 3 white chairs that have turned a dark rust color. They are disgusting. The other 3 are fine. I will commit to bring them inside during winter. The other three can go in the trash as far as I am concerned. I told dh I may still buy some chairs - they don't have to match 100%. He doesn't agree. Sometimes he drives me nuts. Lord forbid I Want a chair that doesn't look disgusting.

In other home imrovement news, I am so tempted to get a screen door. With the house all spruced up, and a little cash, I think it would be a nice touch. I have wanted one forever - like a storm door so we can open up the front door in the summer and get a cool breeze through the house. Maybe it will save us some electricty (AC) costs in summer. Big Grin

But, I may put that one off. We need a custom door, is the problem.

Anyway, I can identify with ceejay. Having some money to get some stuff done around the house - and I have some long put-off projects in mind. I'd just like to get it taken care of so we can jump into super savings mode, for next year.

For whatever reason, dh was not opposed to the door. Maybe because I mentioned it multiple times over the years. Seriously, I am sure that's all it is.

Well, glad I mentioned it. I am going to scrub the patio table, and get out the nice chairs, and enjoy the backyard a bit this spring. Hallelujah for shade (from the umbrella).

Contractor Stories

April 22nd, 2010 at 12:48 pm

Our first home was a condo (little upkeep, but had been completely remodeled before we moved in, so we didn't do a thing to the place). Second home was bought brand new.

Needless to say, I don't have a lot of contractor stories, even if we have been homeowners for a decade.

We are probably going to have our house painted in the next couple of weeks.

We have been waiting a year (or two) for some neighbors to paint. To get a good recommendation. To see who was good and who to stay away from.

We gave up on this angle. Since no one has painted their home.

I haven't really asked many friends. I asked a couple of financially savvy friends for referrals. They have never painted their home. This is they kind of thing I wouldn't just taken any referral. I think people tend to be really stupid. I have had terrible referrals in the past. If it's not family, I am wary of any recommendation of this type. I just want a good/ethical contractor that is reasonably priced.

All that said, it's not an area we have any experience with!

I think we may have lucked out with this painter, but won't speak too soon. Found an ad online. Has been in business forever, A+ rating with the BBB, properly licensed and insured, and all that jazz. I picked him because he was giving rock bottom prices "due to the economy." I would stay away from any ad that had the word "cheap" in the price. I don't want cheap - I Want quality. The way his ad was worded, sold me.

Of course, he looks good on paper, but the next step was to meet him in person, and get a quote (and a gut feeling).

I would generally get multiple quotes and maybe we should, but from what I know about prices, I know the price we did get is rock bottom. I know no one has complained about this guy to anyone who matters (licensing board, or BBB) in the last few years. I know he has been in business for many decades. Liked him as much in person. He does not even ask for a deposit (which would be standard). It seemed clear he would go above and beyond the minimum standard - looking at the contract.

So, will see how it goes. & so we bite the bullet. Dh is supposed to call him this week. Though with all the rain, lord knows when we can get it done. No rush - my angle was just to get a discount with the pre-season. Plus, probably best to paint before the wasps move in. Why I kind of wanted to beat warmer weather a bit. But I Can wait a couple of weeks!

Of course, I am open to ANY advice on the subject.

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We actually hired a contractor when we first bought our home, to get the backyard landscaped. Concrete, lawn, irrigation, plants/trees.

I am sure it was in the realm of $5k, though I don't remember for sure. At the time, we had tons of landscapers going door to door. We asked a couple of our neighbors who actually did their yards (most waited YEARS - ugh). They all had horror stories and said they wouldn't recommend their landscapers. If nothing else, they don't show up.

Great!

We started talking to the door to door guys and settled on someone who sounded like they really knew what they were doing, and was really "cheap," to boot. Wasn't the lowest quote we got. Just the "best feeling" we got. We were really young and no idea what we were doing. Though I am sure we got advice about what to ask about and look for.

The results are mixed. In the end, turns out the guy was using a relative's license (he had a very similar name). The whole thing was kind of frustrating. We would never know, but he didn't pay for the concrete, and so the concrete company put a lien on our house. Yeah. So, dh calls them, and they tell us that they are going to report us for hiring someone without a license. Okay then. Report away. How do you explain how you allow a non-licensed contractor to get a lien on our house??? Maybe they found out after the fact. I have no idea - but they seemed to have a clearer picture of the situation than we did.

Dh tracked down the actual licensed contractor we thought we had hired. HE paid the bill, apologized for his relative, and that was that. No more lien.

So, yeah, not a great experience.

Don't get me wrong - he did a nice job. But we tried to do right, and the whole thing kind of sucked in the end.

Anyway, in the end I suppose it worked. He showed up and did a nice job for a reasonable price. Extra reaosonable because he was a fraud, I suppose.

Sometimes another perspective can be so eye opening. Only recently, one of our neighbors commented how we had the nicest landscape job. I had never really thought about it. But, they had bought a second house in the neighborhood and both the homes just had terrible backyards. She was telling me how much she loved our trees when she lived behind us, and how nice our landscaping look compared to theirs.

I suppose though the guy was a fraud, he obviously knew what he was doing and did a nice job. We asked for "low maintenance" and that is what we got. It was only looking at my neighbor's crappy looking yard that I appreciated that we really could have done a lot worse. So, phew.

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Needless to say, when we met with the painter, we asked to see his I.D. He also apologetically told us he had to disclose about the whole lien thing, legally. "Oh, but I've never had to put a lien on anyone's home." Dh and I just looked at each other when that subject came up.

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Actually, I am also looking for someone to clean our gutters and do a small repair. I thought that maybe we should just rush that out before the paint job. Probably should, but I can't find anyone. I just want someone license/insured who doesn't have terrible reviews all over the internet. A lot of contractors say they are, without sharing their license #. Clearly not licensed - so probably not insured. Still more homework to do for that one. There's no (big) trees so we have never cleaned our gutters. Dh found a leak and was going to take care of it, but has never got around to it. I had to climb up on the lower roof to remove some of the Dish equipment and saw the buildup in the gutter. It does need a cleaning, to prevent more damage.

Funny enough, a lot of gutter places around here do pigeon cleanup and bird proofing, etc. I had NO IDEA. We hired a guy to put up bird proofing and he moved away. Last time we just called a big pest control company to fix one area, but they didn't clean up all the bird droppings on the roof. Looks like we can get the painter or the gutter cleaner to spray that off. & it's nice to know who to call if we ever have any problems. (Knock on wood, but haven't had any bird issues in a while. The birds are pretty bad around here - well, they were).

I may renew my gutter cleaning/fixing efforts this weekend. Might as well get it done.

Why not do our own? Oy vey! Not the proper tools/ladders/guts for the crazy high gutters. Will spend $150 for a pro. It's a steal.

Going forward, will probably have to do a wee bit more often than once a decade.

Oh yeah - we never wash our windows either. I don't see the point. Painter said they would be "cleaned" in the process with the spray - and they go over them with a squeegee so they look nice. Our house will look so shiny!

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I know - I have been so knee deep in work, I haven't felt terribly bloggy.

But, now I am knee deep in home improvements and long put off stuff - all costing money - and thus I swing the other way, to very bloggy.

The More Things Change, The More they Stay the Same (Housing)

January 17th, 2010 at 07:35 am

Having graduated college in 1999, it's been interesting. I'd consider myself an adult long before that, but only since 1999 have I been investing in real estate and the stock market. Thus, my only experience in those things is during the "lost decade." & what a decade it was!

I guess it's extra interesting since the dot com bust was in my backyard, as was one of the biggest housing bubbles in the country. I have always had a lot of extra insight to all this as I watched it unfold before my very eyes. (I know a lot of people in the world weren't quite aware of all the insane borrowing going on around here, etc. & in the end both collapses had worldwide effects).

Anyway, as our 10-year anniversary of home ownership passes, I was reflecting a bit on it.

The wisest advice I can give people is to not give into the hype. It's kind of funny, but everything I hear about housing TODAY is everything I have been hearing the last decade. Nothing really changes. We have had the luck to be homeowners in a most volatile real estate market decade. In 1999 people were saying the exact same things as they are today. Mainly, "If I don't buy now, I will never be able to!!!!" Irony is that I have heard the same frantic statement every year for the last decade. On the way up and on the way down - it's all the same.

I suppose it's a lot like the stock market. You can't time the market. You just have to buy when it makes sense for you. & make it a fiscal decision, not an emotional one. What's the point of "buying now because it's my last chance," if you can't afford it and end in foreclosure.

Another juicy tidbit I heard up until 2008, I suppose, was that it was stupid to pay down our house. (Told to me by people with multiple homes and ARMs, who eventually lost all their houses to foreclosure. Not surprisingly!). As our house value falls to about the price we paid for it, I am relieved it has another $90k to go before we hit "upside down." & though we put a fair amount down, I understand the sentiment not to put too much into your house early on. I understand inflation and all that. BUT I am talking people who thought have a fixed rate mortgage was stupid. (Not even getting into large down payments, 15-year loans and extra principle payments). I remember people telling me I was stupid, and me wondering what planet THEY were from! (Stupid because I want to pay off my house some day? BEcause I am locking in the lowest mortgage rates of the century?)

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Anyway, when I think back it is kind of funny since dh and I were so young and naive when we bought our first home. Some smarts and good financial advice helped us through though.

As was the entire last decade, we decided to buy in an extremely volatile market. I would have never bought a home if not for dh. Living near San francisco the prices of homes were absurd in 1999. It was somewhere near the end of college that dh told me he didn't want to get married until we bought a home. I had actually been waiting 4 years, to finish college, to turn my engagement ring into a wedding ring. When he first told me this, I thought he was stalling. I REALLY thought he was insane. Who can own a flipping home here, right out of college? What is he thinking?

In the end, it wasn't a stall tactic. Since my family had come from more reasonably priced areas, we had never really heard of the "start with a condo and move up to house" strategy. So dh told me we should buy a condo. At first, still thought he was crazy. But I did my homework. At the time, the cheapest house we could probably find was about $500k, whereas nice condos were to be had for as little as $150k. & when we did the math, it made sense. I Was renting a room (had roommates) for $400/month. Dh was living at home. Thing was, we couldn't get our own place for less than $1k per month. PRobably would cost more if we wanted anything safe and decent. When you run the numbers, condos were far cheaper. & this is somewhere we grew up and intended to stay forever. No doubt about it.

There was just one problem. Though the asking prices looked okay, all condos were selling in minutes with up to 6-figure over-bids. Condos and town houses were appreciating FASTER than houses, which was a selling point to me (my parents were wary if we wanted to invest in a condo, but the region was unique enough to make sense). So yeah, honestly, I didn't think we would be buying a condo anytime soon. I had heard the horror stories from the trenches.

The next part of my story is why I would never do a real estate transaction without a GOOD realtor. A relative referred a realtor who was worth her weight in gold. She had a lot of insights into some of the better neighborhoods, and some of the inside info that no casual buyer would have. (i.e. she told us not to buy in the complex next to where we ended up, because there were construction defects, etc.). Anyway, and I suppose this is how we stumbled upon our home buying MO. Find a TERRIBLE selling realtor - the rest is in the bag. Not a conscious decision at all, but over the years we have stumbled onto homes worth farm more than ever advertised. Way underpriced, etc., etc. I suppose "no realtor" is better than a bad one. But I would personally never buy or sell, without a good realtor on my side.

So, that's how we did it. We wanted 2 or 3 bedrooms, though were sure we would probably end up with 2. We were only shopping end units. I didn't want to share all our walls with neighbors. So, we come across this 3-bedroom condo, remodeled to the hilt, that had been sitting on the market for 6 months. At which point, I swear to you, we just about turned and ran the other way. It was impossible that anything semi-decent was on the market for 6 months!!! (I still think to this day - what if we didn't give it a try). We walked in, and we fell in love. (In the end? Problem was terrible selling realtor. SO penny wise and pound foolish for the sellers - I can't even tell you how much so. We were relieved to narrow down the problem and know the place was just fine. It was a GEM!)

I suppose some of our friends or family thought it was a bit much to take on 3-bedrooms. Dh and I were always looking for the long term. Though we hoped to ride the equity wave up to a house, we wanted somewhere where we could have kids, etc., if it didn't work out. We weren't sure if we could ever afford a house. Let's face it - this might be our "forever home." & we were happy with that!

Anyway, the condo was at the top of our price range, and they immediately accepted our full price offer. (Bad realtor had said they had lower offers and would accept nothing less. Can you believe our relief that we didn't have to get into a bidding war with 100 people? Full price it is!)

The financial advice I got from my parents at the time was to:

1 - put 20% down
2 - get a fixed rate mortgage
3 - No pre-payment penalties
4 - Don't escrow taxes/insurance

They didn't really give advice on how much to borrow, but I presume if we bought a $500k house, they would have said something. Wink At the time, lenders were still pretty conservative (1999). I mean, our lender was trying to talk us into ARMs, and 0% down, of course. But beyond that, the income guidelines were pretty strict even then.

So, we put 20% down ($52k), and financed the rest ($208k) at about 8%. At the time, we borrowed a fair amount - PITI was probably 36%-ish of income. We didn't really care about that so much. The place was dirt cheap when it came to renting anything similar, and with the homeowner tax breaks, would not cost us much more than renting a studio apartment, anyway. So, we did think hard through the finances and were happy.

Dh and I both got a $10k raise within the year, and with dropping interest rates, refied to a 15-year with a much lower interest rate, soon after.

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The thing about San Jose, is that the place was *nothing* in the 70s. It was just a little farming comunity, and by the 90s, its housing prices rivaled Manhattan.

Most of the people I know want to buy there because that is where they grew up. BUT, a lot of them seem to think they will make their riches in housing, like all our parents did. Dh and I have always felt it was a little insane. Um, that ship has SAILED? How do prices appreciate from "most expensive in the country" to twice as much, overnight? It's not going to happen. It's like chasing stock market returns. You have to find the good values. The "Manhattans of the future."

Considering dh and I didn't want to work into eternity, to buy a HOUSE (or to afford rent), we pretty quickly decided just to leave the area. Our condo appreciated $100k overnight, but houses went up $200k. IT started to feel pretty futile. Couldn't save fast enough, if you tried. Even with equity to help us along.

At the time, most of our friends with kids were moving to Sacramento. But we had a few single friends who made the move, to. Why pay $500k for a house, when you can get the same thing for $100k, in Sacramento?

We weren't exposed to much real estate crazy in San Jose. I mean - the people who were buying, were buying before they were "priced out forever." I would put dh and I in that category. (Which in the end, was over dramatic).

BUT, the real real estate crazy was in Sacramento. We bought a beautiful home for the same price our condo had been, and with no condo HOA fees, and lower interest rates, it was actually cheaper in the end - for us. Hell, our utilities are lower here - all the energy efficiency.

The people I met locally, never understood. We were labeled as "rich" or "crazy" to have such a nice home. Or we came with buttloads of equity. (Truth is - $0 equity - by the time we sold the condo). To us, it was just a matter of perspective. These prices were a dream!

But as people moved here from more expensive areas (LA, San Francisco), in droves, prices got pretty sky high. Then the locals started getting sucked in and paying $400k-$600k for homes, before they were "priced out forever."

I had been trying to talk my dad to invest in real estate, forever. Sacramento was going to be HOT! In 2004, he actually became open to the idea. I remember one of us came across a graph of the local real estate market, for like decades. The usual market was a series of hills and valleys, but the current cycle was a hill with no end in sight. It took just one look and we both said, "Now is not the time to buy." You know, we could wait for a valley...

So, you fast forward to today. What are my friends saying? The ones "who would never buy a house!" in particular. They are running out and snatching up houses before this "low" disappears forever. You know what the irony is? I have local relatives here, and when we bought this house, in 2001, they thought we were INSANE. Because they just didn't grasp how expensive our home town was. I remember precisely, one relative was in the process of selling his investment real estate. He had a good run, and as far as he was concerned, it was over. I always thought *he* was the foolish one, honestly. Seeing the potential for the market, from my eyes. & so - you fast forward to 2009/2010. What the locals thought was an "insane high" in 2001, is not an "insane low" in 2010? I suppose you realize through all this, how short-term people's minds think, sometime. I think that is what struck dh and I the most through all this. We are VERY long-term thinkers. Which is why I commented quite a few times, we do have friends/relatives who thought we were insane all along, who are now running out to snatch up houses for the same prices today, with little thought. In fact, they brag to us how they waited (& mostly paid more for the same thing). Because their memory ain't too good. It's like they try to rub it in our face that THEY Waited for the low of the low. & we go, "huh?" I thought this was the high of the high? Make up your mind? (I suppose that was before housing doubled overnight and all that).

Anyway, which is the final chapter in all this. Interest rates! Interest rates are the low of the low. No doubt. BUT, if you can not afford said house if the rate went up 1%, um, can you really afford it???? This is what drives me crazy about people these days. I know we are young, but we bought before most of our peers did. As such, we started out with a 8% interest rate. I don't know if people really grasp how that even with a fixed rate loan, they could be forced to refi, in death or divorce, etc., etc. IF you can afford 4.5%, but not 5.5%, I think I would step back and think it through a little more. For us, being able to refi down to 4.875% has been super awesome for our finances. But fact is, we could easily afford our house payment if we had to reset it at 8% for any reason. Even 10%. In the era of low interest rates - the advice I would add to my father's, is, "Don't let affordability be dictated by interest rates." Just consider it a nice bonus. I know we do!!!

I think the low interest rates are a big driver in the "crazy" in the real estate market here. The thing is, that good properties are getting snatched up in bidding wars here, today. In the end, it falls very deja vu. In the bubble, in the bust, always the bidding wars and the "if I don't buy it today, I never will!"

I've actually got home-owning friends with NO CASH who are buying investment real estate with $0 down in this "time of opportunity." (Um, did they know the vacancy rate on houses was sky high? Not sure who they will rent to). I just cringe as I watch it all unfold. On some level I wonder what is to stop another bubble from forming fast and furiously.

Anyway, typing all this out makes me curious about the insights of people who have been home owners for many more decades than I. You know, my parents have told us about the days of 13% interest rates (when they bought their house!), etc. & I appreciate having an intelligent, long-term perspective, when it came to the whole subject. It helped us from doing anything too stupid!

I know this is LONG, but these are all some thoughts I had been wanting to put out there, for a while!


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