I mentioned in my last post it's just been $$$ the last week. Figures I wanted to go to aerobics twice this week and my card runs out today. I haven't bought a card in like 3 months. Why TODAY? LOL. Well, for Saturday class anyway.
Just stuff like that. In itself not a biggie, but then 10 thing piling on at once is not good!
We also made an appointment to take the car in tomorrow. The minivan of course. The window also stopped working again. Though I wrote down which fuse to pull out and put back on (supposedly the magic fix - which I should try because if it doesn't work we'll ask the mechanic to fix it again - while it's there).
The engine light keeps turning on and then off. It was during tax season so I ignored it. I Can be pretty intent on taking the car in for the first sign of anything, but this car most of the time it's nothing. So I give up. It cycled on and off a couple of times and now it's been *on* past a second gas fillup. So I figured it's time to stop dragging my feet. I toyed with the idea of ignoring it another week because this was a bad money week. Then I thought better of it. Putting it off and making it worse isn't exactly the best course of action. I have plenty of cash for an auto repair - big or small. So yeah - time to take it in. The van's been completely fine otherwise. Just a little light that keeps turning on and off.
Reminds me dh's car is coming up on 100k miles and probably needs new tires soon. Something to look into this year.
All of these things are minor compared to buying another car. So no, not complaining!
I don't know why, but BM's school delights in having all of their fundraisers in March and April. I am not entirely sure how they have been going because I completely ignored them all (too busy with work). THough I grumbled to myself why they didn't have any fundraisers the rest of the year. Gah.
Well, I got my chance. They are having a big event this Saturday and they needed 7 volunteers from every class. Guess how many they got???? ONE! Well, one besides me. So I offered to cover 3 shifts to make up for lost time. I volunteered for 2 slots, and talked dh into a third. It's my first Saturday of the year not working (pretty much) but the day is looking pretty busy. Oh well - it will be fun. A change of pace, for sure.
Archive for April, 2009
I mentioned in my last post it's just been $$$ the last week. Figures I wanted to go to aerobics twice this week and my card runs out today. I haven't bought a card in like 3 months. Why TODAY? LOL. Well, for Saturday class anyway.
**The tide has definitely turned. We have been flush with cash infusions the last month or so. Last week the tide turned. Now it's just cash outflow. Mostly little things, but I swear if I get one more "$50 surprise" before Monday ("month end" for us). Gah. Just one of those weeks.
I am thinking we may have to pull a little money from my bonus after all. I am not sure. We over splurged the month of April which is our other problem.
I have mixed feelings about May. We have a pile of events that will mostly cost us little. We picked out a tent that we were going to buy next month. Since we have a wedding to attend there is the whole wedding gift thing. So it's still adding up, regardless. We have discussed going to Monterey, but haven't decided much. We talked about even spending the night there and not being super cheap like usual. But, we'll see. That can come from the vacation budget, so it doesn't really matter either way. But yeah, May will be BUSY.
Looking ahead to June, I am taking a week off - happens to be BM's last week of school. I figured I Would enjoy the peace and quiet the first part of the week, and time with BM the rest of the week. We have a camping-thing planned for one night and a trip to the minor league game (with the preschool) on another night. I think it will be a very nice staycation. Though I had wanted to maybe go on a day trip or something, BM only has Friday off and the campout is Friday, so I think it will just be a staycation. We won't have to leave the city limits. We are also going to family camp a couple of weeks after that. My May is filled with 3-day weekends, so I am really looking forward to both May and June.
PP's post reminded me. When we get the tent we will do a backyard trial run. The tent is more for the backyard than anything! We may take it somewhere once or twice a year...
**We got our internet back. Dh is driving me nuts. Enough said. LOL.
We're just in internet limbo while we decide how to proceed. IT's likely we will switch to phone VOIP/fibre optic internet with a more local company. DOwnside? May have to sign a contract. We don't sign contracts for anything, so it strikes me as odd. But it's a far better deal than most anything else, so why we are considering it. We may break our contract rule (the only other contracts we have are our mortgage and Verizon - we've only been with Verizon for over a decade... So that one seems rather moot as we have never found a better deal for our needs).
**As our cash grows (if the tide turns anyway...) we will have to consider our cash savings accounts. With, really, little cash to go around, I have been sticking with GMAC Online Savings account. The rate is overall pretty competitive. I have been with them a couple of years, at least, and they seem to be slow to lower rates; fast to raise rates. Win-win. Since our cash has mostly consisted of our emergency fund, this is fine. Plus the fees are $0 and the customer service is eons above most of the other banks offering anything similar. I am extremely particular. I haven't found much to like about many of the other popular high-yield banks.
As our cash grows I do become more concerned about spreading it out a bit. PArticularly with so many banks in trouble. Confident in FDIC, I would just prefer not to lose access to all my cash at once, for a time, if my bank(s) went under.
Yeah, I Was looking at some of the other higher paying banks the other day and didn't find much. One of the more popular ones lately has our mortgage. The customer reviews are atrocious. I thought that one might be convenient, but have had second thoughts.
Along the same lines, we will probably start a CD ladder in the future. We just aren't quite there yet. We may also investigate Treasury bills, etc., etc. We will have much to look into as our cash balance grows. It's hard to "set it and forget it" and really make progress. So these are all things I see in the near future. Things change as circumstances change.
**I think we may start paying down the mortgage a bit extra. It's the thing I eternally struggle with. I could literally flip a coin most of the time.
If we deposit $1500 to the mortgage around christmas we will literally hit our 10-year home owning anniversary with the same mortgage balance we started with.
Sounds terrible, huh? 10 years and the SAME mortgage!?!
There's much more to it than that. We literally only borrowed $30k in addition to get twice the house (+ LAND!). It's just been slow going with this whole one-income/kid thing. We actually paid $10k off during our first year on our first home. It was a 15-year mortgage. But things change and we spent the last 7 years or so paying off about $20k.
The tide seemed to turn when we were hitting $4k per year in principal. Certainly no $10k per year, but better than the SLOW process we had been making.
Which I guess is the other thing. Simply paying another $1k per year would put us where we left off (paying off old amortization - shaving a few years off the new loan - to where we were).
We were in no hurry to get there because our recent refi no doubt made an earlier mortgage payoff an easier reality. But we have other more important things to take care of in the interim. So we decided.
But yeah, adding another $1k per year is starting to look so simple and psychologically rewarding. (Still paying $1300 less annually than we were with our old higher-interest mortgage. Win-win).
So I am thinking about it. I may flip a coin come January. I'll let you know what I decide then. January 2010 will be our 10-year milestone.
Our mortgage balance has never been below $200k which is a big psychological milestone. That one is kind of exciting too... Give me 3 years...
I have been thinking about it because it seems so many people are home shopping. So here are my observations/advice for potential new home buyers.
**Be careful out there. In the last decade everyone was running out and snatching up houses because "they could never afford to buy a house" if they didn't act fast. As if the double digit appreciation could be sustained forever? I tell you, I never quite *got* that thinking. Though it was a factor on when we bought our first home, it was only because it was well within our means. Since a single detached home was not even in the realm of reasonable we didn't even bother trying. (We moved instead). I have people all the time tell me I don't understand because I own a home. Uh, believe me, I understand what it's like to be priced out of a home market. When that happens, the smart thing to do is to not buy. Not to snatch it up before it gets even more expensive!!! & that is precisely what we did (not buy in the unaffordable market).
I share this because the pendulum has swung so far in the opposite direction, I see much of the same stuff going on. People are stretching into homes they can't afford because they are worried prices and interest rates will never be so low again. The same wisdom stands. I mean really, what is the freaking rush? Buying a home you can't afford because of the "low price" and "low interest rates" is little more than crazy. You have a certain amount of time and power that has not been seen for a long time. Enjoy it!
I just have to roll my eyes when so many people are running out buying houses like the world will end if they don't do it today. Take a deep breath and SLOW DOWN. Enjoy the BUYER'S market, for sure. It's been a long time coming. I have to say I am a wee bit jealous of the opportunity to buy in a buyer's market.
But yeah, to sum it up simply, "It's not a deal if you can't afford it!"
Our first home had an interest rate of 8.25%. It's all relative. My parents' mortgage was in the double digits for a long time (they bought in the 80s during the era of high interest rates). In the 1990s, an 8%+ rate was not the end of the world. It was a "good deal." If nothing else, prices tend to drop as interest rates rise. If you can't afford it, did you ever stop to think no else can either? Stop with the panic already!
**My second point is a bit of a rant as well. Since we moved somewhere a little more inexpensive, and prices rose very rapidly here in the mid 2000s, this is the norm we came across with our friends. & I NEVER understood the thinking at all, because back home owning an apartment was far cheaper than renting. So though I understood on some level, the high desire for home ownership there, I never quite got the whole desperation when we moved somewhere with cheap rent options. I guess what happened is home prices just got so astronomical ($250k homes were selling for $650k within 3 years) that people panicked and decided they could never afford a home if they didn't jump prematurely. As a result, I got a pile of friends renting for pennies, who can't save a dime, taking on $3k/month PITI with $0 down.
I was completely lost as this whole thing unfolded. You don't know how many people told me they simply could not afford to save a DIME for a down payment, but they were taking on these massive house payments, far above what local rents were going for. Huh? & how in the heck can they afford such a massive mortgage payment if they can't save a dime with a $1k monthly rent payment? Have they lost their minds?
The short answer is, "YES!"
It was not sustainable, home prices have tumbled back to 2001 levels, very rapidly, and every single one of those people have lost their homes to foreclosure.
Anyway, being able to save up a significant down payment on a home is by no means the only indicator of the affordability of a house. BUT it is a BIGGIE. Quite simply, if you can't afford to save 20% down, I honestly think you have no business buying said house. Mortgages are expensive. House maintenance is expensive. & if you can't save 20% down, odds are you are going to sink. I know it's an extreme view for this day and age, but it's true. I haven't come across anyone who put 20% down on a home and lost it. Not that it doesn't happen, but it is certainly more rare. & with lower down payments comes the expense of PMI, etc.
Along the same lines, if you can't afford the fixed mortgage rate, you can't afford house. All it becomes is a gamble. One that most people are currently losing. I know there's a couple of people around here with ARMs who can AFFORD IT. No issue there. But if you don't have enough assets to pay off your house if things go horribly wrong, back away from the ARM!
I think this is why I often say any more, "If you can afford to save 20% down you can probably afford the house." It's not a hard and fast rule, but you are doing a million times better than most people who live in my city, which I guess is my point. You stand half a chance to catch the curveballs of home ownership if you are a good saver.
BTW, people need to get real. IT can take YEARS to save up a down payment. & that's how we did it in the olden days. Even though we bought our first home quite young, my dh simply saved most of his wage from age 15-23. That is where most of our down payment came from. Sure we were in a unique position to be able to save so much so young, but if not, we would have waited a few more years to buy a home. No doubt about it.
**So how much house can you afford???
Obviously be wary of the loan products out there and what greedy brokers tell you.
All that being said, be wary of even the hard and fast rules of thumbs. Everyone's situation is so unique.
I was playing with a pile of online calculators, and using the usual hard and fast rules of thumbs, all of the online calculators said I could afford homes that I personally would feel very uncomfortable buying. An "ideal" PITI range for us is $1800 - $2300. Um, no thanks???? (We're at about $1700 today). These were mostly $400k homes. (Dh and I made a commitment to draw the line at $300k home price, when we were 25. Needless to say, as we age, the less we would consider tying up in a house. $400k sounds a little crazy if you ask me. Bought with equity? Perhaps. But I was assuming we used the same 20% down we already had. I was not running these calculators with home equity to spare).
The irony is since I live in California I am probably willing to stretch it a little more than most of the frugalites around here. Which I think says a lot when I feel extremely uncomfortable when a calculator tells me I can afford PITI of 35% of my income. No thanks!
When we were younger and just starting out we stretched more because rents were astronomical (higher than owning) and because we had just started out in well paying careers (both of us). We may have pushed it with 40%. I also know our PITI was higher than 40% (50%+?) when my spouse stopped working. That being said, both situations were extremely temporary. Neither of us had any urging to get in over our head with a house payment. At 30 our PITI is around 25%. That is about as high as I would go any more. (& that is 25% of only one income. We wouldn't increase it simply because dh returned to work). Which reminds me, yeah, I was running all the calculators on my income alone.
Reminds me, I would advise to run the calculators assuming you only live on one income (if you are a dual income family). We certainly bought both our homes when we were both working, with payments we felt we could afford on one income. Boy it would be interesting to run these calculators with a second income. Scary!
Our goal is to lower our PITI with time. We have no plans to upgrade our home, ever, and we are young enough in our careers that we expect our income to grow considerably in the future (though we have already had a lot of income growth in our 20s). Thus if we were just buying a home today for the first time we would play it far more conservatively than we did in our early 20s. In our 40s we would like to have our house paid off. Which basically means I would have little desire to buy anything we couldn't pay cash for, or pay off rapidly, in our 40s. Thus, though we were aggressive on one end of the spectrum, individual circumstances certainly change how we approach things.
& some other food for thought - if you are single - don't push it. You have only yourself to fall back on. We always tried to aim for a house payment WE felt comfortable with on one income. But having a second income to fall back on increased our ability to stretch a bit. I find myself in the forums thinking some people can likely afford more house than the forum gives them credit for. But then I feel like I am just contrary because a single person will come along and everyone gives them a thumbs up. & I just cringe. I could not personally imagine taking on such a large mortgage (standard rules of thumb) if I were single. Little details like that really change the playing field, in my opinion.
It's all food for thought.
& I have to say, I am glad I am "out of the game" so to speak. Buying a house is not an easy decision. It is a decision that needs much more thought than it has been given by most in the last decade. For that, I wish all you new home buyers lots of luck!
ETA: I was thinking about this because I have a relative in her 60s, single, who just bought a home recently (partially with inheritance). My dad asked me if I thought she should pay it off rapidly (because she is hitting it hard). Considering her age and economic circumstances I told him it wasn't the worst - there is always a reverse mortgage for a case like hers. She pretty much makes minimum wage. She lives in small town Kansas. I mentioned paying off a small mortgage makes sense. I'd be more keen to hit mine harder on the front end if it would be gone in a few short years. Anyway, my dad told me he thought her mortgage balance was $60k-$80k. I simply gasped. O.M.G. I am sure she would look at my $210k mortgage balance and gasp. But I am merely 31, I've already paid off $90k, and I make about 4 times her income. To be fair, my dad merely ventured a guess from her broke status, the cost of the home (known) and the inheritance they received (known). So though he was guessing, I think his guess was reasonable. & all I Could think is, "Yikes!"
Today we have tee ball (we paid our whopping $100 back in January?) For the rest of spring it's "free" entertainment/activity, if you ask me. IT's probably how they suck you in. Make it cheap for tee ball and becomes more expensive as you move up the ranks.
Anyway, the high school is putting on a free play (Aesop's Fables) for little kids, in the afternoon.
The library at the same location is offering free books to kids.
So it sounds like a nice, cheap day.
ETA: Speaking of nickel and diming, dh did go to McDs and the Wifi was $3 (for 2 hours). HE said, "No Thanks!" Too expensive for his blood. Stuck with the libabry until Monday diagnosis... But it is interesting he can sit outside and use the Wifi during off hours. (It's just not the greatest area and I Will consider it a blessing if we still have our laptop come Monday. We usually never take it out of the house so if nothing else it makes me nervous every day he takes it out somewhere. Um, there's a reason you don't usually see people at the playground outside the library with their laptops out!)
Yeah, the thing about McDs is we generally only go there for the playground. willing to make a trip and buy some food to let the kids play or enjoy free wifi. $3 too? Forget it. Won't bother going... As dh said, "I already bought their crappy food... & they want $3 too???"
**Weather is a lovely 67 degrees (inching up to low 70s perhaps).
May that be the last time I go upstairs in April and see the thermostat at 85 degrees! Ugh. We lived AC-free downstairs (thank you energy efficient house) though it was high 90s a couple of days. Of course, can't say so much for the upstairs. We turned the AC on briefly before bed the last few nights to make sleeping bearable... Otherwise it was much like summer. The days can be pretty horrid but the nights are usually cool. So no need to run the AC all night or anything. It was probably a little extra cool at night so the downstairs stayed much more bearable.
**As far as FREEDOM, tax season is winding down and I feel like a giant load is lifted from my shoulders. Rest of the year will be easy peasy at work.
Sad to say, Chase has dropped the WAMU School Savings program so I just got word I don't have to take over next year after all.
As much as that sucks, I feel like I have little responsibility for the rest of the year. So I feel "free" in that regard. I have a tendency to do too much and as long as my kids are young my priorities have changed. I have no inkling to take on a pile of responsibilities. I already have plenty. It's a little different for me, but I am enjoying. The school savings program would have been minimal work, but I am kind of glad not to be in full charge of something. Woohoo.
**Got a surprise refund of $70 from the city. They overcharged on some bonds paid with our property taxes. GREAT! I was annoyed I didn't notice (not sure how I would know though). The interesting thing is since our property is in a living trust, they made the check out to "_____ Family Trust." I am not sure how hard a time our bank will give us with this (depositing a trust check). Depends how trust educated the bank employees are. (There is no difference between a living individual and a living trust - they are one. IT only makes any difference when you die - then the trust becomes a seaparate entity). Yeah, I don't expect much. This could be the catalyst to open a new bank account in the trust's name. We just haven't bothered because we don't have much cash and we haven't opened any new bank accounts since the trust was established.
I have no idea what is involved in converting our current bank accounts - but maybe it's time to find out. I seem to recall our lawyer giving us letters to send to our financial institutions (Example letters anyway). Time to dig them out?
**I don't think my allergies are getting worse, but I am starting to notice what I once thought was illness was probably allergies all along. The area, that we have only lived in a few years has a horrible reputation for allergies. & I definitely suffer every spring. I just realized I get fall and summer allergies too... Dh heard that eating local honey helps with allergies, so he bought a pile of honey from a local outfit. We'll see if it helps. He was sweet and bought me honey from Oakland a while back (Oakland is 2 hours away?) because it was all he could find. Now we have a variety of locally harvested honey.
I do know I am allergic to grass. I am not sure if honey will help me (I am skeptical). Unless dh can find "grass honey." He got like alfalfa and some other kinds of honey...
**The local radio station has been paying people's car payments (up to $1000 by the way) as part of a promotion. Most of the payments end up being $300-$500. But still. I just don't *get* people and their cars.
Plus I am kind of bummed I don't qualify since I don't have a car payment. I'll take a house payment? (They ran that promo in the past - I think they've certainly gone cheaper in the economy).
**How could I forget? Still no internet. Dh called ATT 100 times and they upped their day to come out to Monday from Wednesday. Still at least one full week without internet, at the least. Assuming they can resolve it Monday even.
I've adjusted remarkably well to no internet at home, though I spent a couple of lunch breaks manning dh's ebay auctions. & the truth is I have internet at work. Coming in Saturday doesn't seem so bad this week either. That being said, I usually do most of my internet time at home. So it is surprising how little I have missed it. & why my blog has been quiet!
Dh has also done amazingly well. He found if he takes the kids to the playground behind the library before the library opens, he can download things for later, and catch up on e-mails. Library wifi. We also found out the McDonalds by the kids' old preschool has wifi. Thank goodness for the laptop. (When the library is open the wifi connection is slow - too many to share with I guess).
I am fed up with ATT. I am done. There is no excuse. Dh wants to wait and search out other options once he has more internet time. HE called Surewest about Fibre Optic and they said it would take 10 days to hook up. If it took less than a week I think we would have signed up. But for now we will wait and peruse our options. We haven't been happy with Dish either so we may peruse cable options again. Dh has some research to do.
I don't know how many times I have stayed away from a company that has a reputation for not coming through when things go bad (or like when you need anything). So, the second ATT said they couldn't help us for 10 days I Was out. That's just crazy. On the flip side, we don't seem to have a lot of options. *sigh*
Well, hope everyone has a nice weekend!
The weather is atrocious. Though I hear it is even worse in So Cal.
Today is s'posed to be something like 95 and then it will cool down.
I finally saw the final sales price on our latest foreclosure. It was priced low and sold in a flash. & it was bid up. To $226k. We are back to the prices when we moved in. 2001. But I think the whole selling in a flash and being bid up thing is a good sign. Prices are still falling, but priced right we could sell our house in just days (for more than we paid even).
All that being said, as prices inch down you can't help but wonder how low they will go.
I read median price in region fell to $160k. I know the locals think the median price will fall to $100k but I think honestly they are crazy. I think it is possible it may bottom out there for a short time, but I don't think $100k home prices will become the norm.
I read an interesting article the other day that living trusts are imperative if you live in California, but not really necessary in places like Texas. Basically, it depends where you live. Article writer recommended just about everyone in California have a living tust (excepting young and single with no assets, etc., where it makes little sense).
My personal experience, in California, is that probate is a complete nightmare. IT is expensive. & it is time consuming. For our clients with trusts it is easy as a breeze, and for those without living trusts, even just following out the wishes of a will, can take years. Even for those with little in assets, it can be quite costly. & the truth is the lawyers do get paid more if you don't have a living trust.
So I cringe when I come across well meaning frugalites who wouldn't touch a living trust with a 10-foot pole. Talk about penny wise and pound foolish. So I shared this for that reason. To the rest of you, maybe you are right. But if you live in California, it's a good thing to have. I always tell people the expense is more often emotional than anything else. Most of our clients are dealing with the death of their parents. Having to deal with the courts and probate and everything is emotionally exhausting. HAving a living trust greatly simplifies things. I think that is the best part about it. There is definitely money saved, but that is honestly just a small piece of it. It seems like every year I have someone sitting across from me telling me the nightmares of California probate. I haven't been through probate personally, but I have heard enough to know it is something to avoid. I am also relieved our parents have living trusts because we have been appointed as their trustees.
No one executing a living trust has sat across from me, poured out their heart and cried during their entire appointment. That's all I know! IT seems with a trust it is easier to get on with your life. But, my only caveat is if you have someone you can trust. Probate is good if you have quibbling beneficiaries. Everything goes through the court process and I see how that could be better than a trustee who may not follow your wishes. IT does happen.