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Archive for February, 2009

Not sure what to do

February 26th, 2009 at 09:26 pm

Checked out the rental today, figured I should since the plumber who provided the estimate eluded to the fact the tenant was not a good housekeeper.

I won't even consider renewing the lease with the tenant even if they were interested. I had an estimate today for a new HVAC system (ours is original to the home). And the front yard looks great, but I can't even begin to show the home. It would be an embarrassment to me.

I try to keep in mind the tenant is by herself with 4 kids because her hubby is deployed but the dog chewed up the door jam to the backdoor (small dog, thought it would be okay), the rain vent extenders have been placed up so water is accumulating at the foundation when it rains, the dog has dug holes in the yard, and we LEFT the backyard with grass. However, they put in a trampoline so what used to be grass is now dirt.

I contacted the property manager obviously upset about this. I value this home and was told that these are good tenants, I thought they were taking good care of the property.

In addition, there is dust accumulating on the air vents. The HVAC person today told me its due to a ductwork leak or no air filter, not replacing the air filter strains the current heating and A/C system - necessitating its replacement NOW. He confirmed there are no leaks so despite the tenants SAYING they have been replacing the air filters, evidence points to otherwise.

So the estimates are:

$6634 to replace the pipes (currently Polybutylene is in the home and its a matter of WHEN not if the pipes will eventually corrode and burst or leak causing structural damage)
$6000 for a new Heating & A/C system (we'd replace it with a 14 SEER system so at least thats a better advertising feature and offers a tax credit)

But because I can't even hope to show the place with the tenants in it, we are looking at having a month's vacancy ($1400/mo).

If we don't have the rental income coming in, we'll be in the red $300-$400/mo.

I'm going to plan for at least a 2 month vacancy.

The lease is up June 30th and I'm tempted to just let them go sooner cause I want my house back to original condition and renting out to a newer better tenant.

For the improvements, I'm not sure what to do first. The plumbing is just a matter of time, the HVAC system does need replaced. So I don't know.

Selling is out of the question at this point, the market has tanked even more so what equity I did have is $0 and I would have no way of coming up with money at closing.

All this though, I'm not going to let it get me down. The economy and all else is trying, the best I can do is have a plan in place and do my best to be responsible.

Here are pictures of our home when we left it. I'm so disappointed in the condition its in now. We will never rent to someone with pets again and adopting one will be grounds for eviction.

This has been our first landlord experience, so all I can say is "Live and learn." I will be more aware next time and not make the same mistakes again.

When the Dow is as low as it is...

February 24th, 2009 at 08:01 pm

Sometimes I question myself for slowly repurchasing back into the market with our 401K (I had moved it into a secured fund and put 10% additional 2x a month back into the market since our retirement is about 20 years off).

So in October, I had $16,659 in the market and have also continued to purchase shares.

Right now the 401K is $15,257 with 20% of that in safe secure funds. So to make me feel better I calculated what the 401K would be worth had I never pulled the money and slowly put it back, had I just left it there before the market tanked.

It would be worth $11,830 - a difference of $3426.

I need to keep focusing on the long-term goal. I didn't put all the money back in all at once. I started putting it back into the Lifecycle 2040 fund back when the Dow had hit 9500, then kept buying since.

Either way, I'm still $3426 better off than had I done nothing. Just have to keep remembering that.

Balancing Act

February 24th, 2009 at 02:35 pm

I find it increasingly challenging to maintain focus on our goals but at the same time, have noticed that my husband and I have a 2 year cycle of spending history.

Going back through the past and where we've gone wrong, it'll start with a purchase. Then we behave, focus on getting out of debt for a 1 year, then the next year we feel like "Ok, we've been good - how can we reward ourselves?"

We've been focused on getting out of debt since June '07, we just had 2 big milestones of paying off his CC and car. So right about now is when we tend to spend.

And I need to keep all this in mind to recognize this pattern so we don't fall back into old traps.

It starts with mild wants, he wants to see his family, get a used motorcycle, I want to see my family, finish my degree, the houses need improvements, kids need clothes... it can quickly spiral.

The good thing is - although the wants have crept up, we haven't spent anything. This time there are so many wants/needs that its impossible to ignore the limited resources and consider the best use for them. The history of buying things on a whim is at least gone. We've at least conquered that although I've been tempted.

So what do we need?

The other house needs an entire redo of the plumbing. Turns out the water heater problem was not the water heater, it was the plumbing. The home has Quest pipes in them and had we not bought the home in the middle of all the hype of 2005 & had a home inspection, we would have known about the pipes.

So it'll cost about $5000 to fix. My saving grace is... you know, we're young. And this was our cheapest home, better to learn 'never buy a home without an inspection' NOW than later on in life when the stakes are higher. And $5000 now will prevent the problems that can arise from these pipes which could result in structural damage to the home.

Aside from that, we are still going to Missouri next month. We're going to try to do it as cheap as possible by having the dog boarded by a friend, driving, staying at a place with a kitchenette that can occupy 6 people so we don't have to purchase 2 rooms, the place also offers free breakfast and we can go to the grocery store and make the rest of the meals in the room.

I can't get away from my tuition, but after this semester I'm 3 classes away from getting my master's degree. So I need to figure out how to come up with an additional $4000.

I also want to pay off my credit card with a balance of $9700 this year.

I've considered taking out student loans to cover the tuition and use whatever extra to pay down the CC.

Then DH gets a bonus in October for the military and that should pay off the credit card.

After graduation we'd owe about $36K on student loans. $13K of that at 2.77% and the rest at 6.8%. So I'm looking at a $300-$400/mo payment after graduation.

Then aside from that we'll have the HELOC and my van. For a total of $1175-$1275 for monthly payments in a year from now. Sounds like a lot but its down from $1700 just a few months ago.

My oldest needs partial braces at the moment, thats $900

I'd love to take advantage of the home improvement credits for 2009 and 2010 by putting new windows, doors, a tankless water heater, and insulation in the home. I'd also love to improve the landscaping in the yard for $2K.

All of this I know is not IMPORTANT or needed, but things I've been thinking about.

Realistically what will probably happen is, we'll...

1) Do an interest rate reduction on our current home. We won't have to pay on our mortgage for 2 months (savings of $5000) and our monthly payment will be approximately $150 to $200 less. Right now its 5.5% fixed and I'm trying to wait till it gets to 4.5% fixed. That $5000 we'll use on the pipes.

2) I'll pay the first half of my daughter's braces with cash, then the rest is $70/mo for 8 months

3) I'll take out student loans to pay for my tuition and use the extra to pay down the Credit Card

4) All else is wait & see because we may have a vacancy in the rental this summer and that is $1400/mo

I swear, its all a balancing act. But the good news is starting in June, my son will not be going to preschool anymore so that is $375/mo more we will have and my husband is set to take more trips so he should get additional per diem.

So yeah, when I lay it all out like this, I know there isn't much room for WANTS yet. Even the needs need careful management. I'd push off visiting DH's family, but really... we haven't seen them since 2005 and we are at least paying for the trip with cash.

Fraudulent activity and bursting tanks

February 12th, 2009 at 06:53 pm

Crazy week!

Yesterday eBay suspended my account due to fraudulent activity, I had been assured my account information (Credit cards, banking, etc) had not been compromised but to be on the safe side I changed/closed all/any accounts I had that used that username and put a fraud alert on my credit report.

Today, I got a call bright and early that our water heater in our rental burst. Which is ironic because I bought a BRAND NEW one in March of 2007.

Thankfully it is covered by the manufacturer and the store I bought it from, I also have a homeowner's warrant so the worst I would have to come out of pocket for it would be $85.

Craziness. But I am very thankful that these things were caught early and addressed. eBay even told me I shouldn't have to worry about my banking information being compromised but I decided I'd rather be safe than sorry.

Hopefully these things stop happening and its smooth sailing after this.


February 7th, 2009 at 07:10 pm

The payment to pay off the CC hadn't even CLEARED and DH asked me yesterday if he could get a motorcycle.

I simply said to him "I don't know HOW"

He didn't push it after that. But half an hour later said "You never told me why I couldn't get a motorcycle"

"I don't know how we could. We can't increase our monthly expenses and we don't have the money in the bank to pay for it outright."

He hasn't said much since. Mostly he's been sulking and not his usual happy-go-lucky self.

Usually this is where I give into the temper tantrum. We were supposed to take our son and go looking at Karate programs today but DH wanted to spend all day looking on the computer at motorcycles. I feel bad for my son cause he was really looking forward to it.

I even tallied up our debt after paying off the GTI & the CC. $95K non-mortgage debt, $700K WITH mortgages

On a monthly cash flow basis, because groceries went up we have $300 left over every month that I'm trying to put down to paying off MY credit card.

That doesn't even account for the $2K I put in savings so we can pay for our Missouri trip to see his family next month.

The lease is up on the rental at the end of June so I know I need to put some money aside in case they don't renew the lease and I have to deal with a vacancy.

I have 3 more classes I need to pay for before I have my master's, so I need about $4K for the rest of the year for school.

This doesn't even factor in trying to visit my Dad.

So I KNOW I'm making the right decision, and DH isn't throwing an all-out temper tantrum, but the sulking about it isn't exactly helping things. If I knew we could afford it, FINE. But I hate being treated like the "bad guy". I didn't even say he COULDN'T get it, but I laid it out pretty clearly that I don't know how he plans on paying for it.

Seriously, don't blame me, blame the bank account - its missing a few zeros!

Setting up 2009 Goals

February 4th, 2009 at 10:54 pm

We seem to be on-track with our goals so far.

Paid off the GTI, will pay off DH's credit card in a couple weeks.

So now I need to start thinking of additional goals.

For starters, we are going back to see DH's family next month. I've allocated $1700 for the trip between gas/food/hotel. DH's dad has pretty much decided against getting a pacemaker so this may be the last time we see him.

1) I'd like to save at least 1 month's worth of living expenses this year ($7300)

2) I'd like to also pay off my credit card

3) Visit Hawaii in October so that I can see my Dad and he can see the kids again

4) Graduate with my M.S. in Accounting and have an accounting job lined up so that I can take the CPA exam next year

I'll probably have to take a paycut coming up this year if I switch jobs. Right now I work from home and because I don't have to worry about childcare, its almost like I'm making $57K/year.

If I work outside the home, but in the industry I'm trained, a more likely salary would be around $45K+.

So we'll see. Overall these are my goals for the year.