Yep, too tired to come up with a proper title.
What's happened since my last update? Not too much over the weekend, other than boxing up some stuff. We took it somewhat easy Saturday other than swim lessons, grocery shopping, cooking and cleaning. Sunday we went to the Twin Cities Pride parade. It was the first parade AA (age 4) really loved. REALLY loved. She was keyed up and hyper the rest of the day.
One other thing: NT reserved a storage space for July and a moving van for this coming Saturday, so we're going to move out as much of our stuff as we don't need. Bookcases, record cabinets, excess furniture, books and papers and board games and clothes the girls won't need for a while.
Today was interesting. First of all, NT's paycheck didn't hit our account. First time any of our checks has EVER not hit on the last day of the month, and of course it happens at the start of the tightest financial month we've had (or are likely to have) for a long time.
He got his usual notice about his paystub being available, so I'm hoping it's just a slight delay and not a technical issue. If I don't see it first thing tomorrow morning, I'll have NT raise a stink, because we'll be overdrawn by July 9 without that paycheck.
On the up side, we heard from our contractor and his team will start on our kitchen tomorrow! Tonight we cleared out all the cabinets and drawers and cleaned all the shelves. Sooo much grime! We went through about 5 magic erasers. Ah well, it's a big chunk of work out of the way.
On the down side, I'll be recovering from dental surgery Wednesday AND just found out our water and A/C will be shut off for several hours by building management. So that'll be fun, with the contractors there and all.
We got a snowflake today; received $250 for the right-of-way option for the WV deal. At least we got something for it, even if they decide not to go through with it.
I also realized that the kids have at least $75 in their piggy banks that needs to get put in their mutual funds, so I decided I'll deposit it now and pay it into the mutual funds when things are not so tight. (We're doing the same thing with our own Roth IRA contributions.)
So all told, that's $325 to help the cashflow not be as tight July through September.
Tomorrow is going to be a crazy spending day. Not only will we pay the $1040 mortgage and $1080 daycare tuition, but $2413 for the first half of the contractor bill. That's a lot of money to flow out in one day!
However, I had a very frugal and strangely tasty breakfast today. I took the last spinach tortilla, the last of some potato salad, the last few slices of veggie lunchmeat, and some of the way-too-much salad greens. I stuffed the tortilla with the other stuff and wrapped it up. It was actually quite good, and I was proud of not letting any of those foodstuffs go to waste.
I'm doing pretty good not using my spending money; I've got nearly $400 saved up! And NT had a brilliant idea for the three weddings and one shower we need to attend: give Amazon gift cards, which we'll be getting from Chase SW soon! We'll also give them a personal touch, like an invitation to dinner or a promise of homemade cookies. It's such a great idea because I can then save up more of my spending money for the back-to-back UK visitors.
Archive for June, 2014
Yep, too tired to come up with a proper title.
AS's student loan payment hit, with $137 going to principal. That takes us to $926 of debt paid for the month, exceeding the $900 goal.
Our total debt is $238,322: $227,597 in mortgages and $10,725 in student loans.
With the home deal, we'll be taking on a ton of new debt, but it's going to happen on July 31 at closing. So I think I'll treat July as a regular month of debt payment, and then start August with a new debt total that we can start to pay down.
Since we're just paying minimums for the time being, the July goal is another $900 of debt paid.
Nothing much happened on the home front today. I did tentatively schedule the floor guy for mid-July, but that's about it. Still waiting on broker for the list of things we need to provide for loan approval, the seller to write up the promissory note, and my other contractor to schedule his time to do bathroom/kitchen/etc. Hoping to get some movement on all fronts tomorrow!
This morning I saw that the $5K earnest money check had cleared my checking account! It was exciting and nerve-wracking at the same time. AS is laughing at me because every time something happens I say things like "It feels so real now" and "This is the craziest [week/month/year] ever!" But every step feels so huge and momentous since I haven't purchased a home in about 12 years (and it was less than half the price of this one!).
The broker emailed that they received underwriting approval of the loan today, but that "a few items" need to be taken care of, "nothing too crazy." I'm hoping it's just digging out some mortgage statements for the UK properties and stuff like that, but I won't find out until tomorrow.
Their approval is contingent on the additional loan (promissory note from the seller) having certain conditions: it can't have an early payment penalty, and it can't have a balloon until 10 years have passed. The first condition was one I was going to insist on anyway, but our purchase agreement had said the promissory note would have a 5 year balloon. But my realtor talked to the seller's agent and it sounds like it will be OK, except they may only agree to interest-only payments for the first two years, and after that it will be principal + interest. I asked for details about the amount of the two types of monthly payments, and the realtor has passed that question along to seller's agent, but I don't see a problem with that. I don't intend to have this loan for anywhere near 10 years!
Still haven't heard from the contractor when they'll be able to come in, so I'm starting to doubt they'll be able to finish by end of June. Hoping mid-July is still feasible! But, if it's not, we'll deal with it. We have a lot of different timelines running concurrently so it would be a miracle if there weren't a few hitches. The important thing to me is that we've got those upstairs renters, so there's no urgency to get rid of the condo other than really wanting to move into our new home. No financial urgency, so that's good.
Haven't heard from the floor contractor at all yet. I need to follow up with him.
NT put on some doorknobs and replaced another light fixture. I brought a box and some packing tape home from work. Every little bit of progress helps!
Just got notice that the gas company sent out our option checks; will only be about $250 but will definitely help our budget feel looser!
Getting closer to the home purchase and trying to sell our current home! For a while it's felt like hurry up and wait, but now things are really snowballing and moving quickly, I think.
- The appraisal went well; home actually appraised at $550K, well above the $464,500 we'll be paying for it. Good news! Now I'm wondering if we can refi the $407K main mortgage almost immediately and get out of PMI. But we don't even officially have that loan, so trying not to count my chickens just yet.
- Heard back from our main contractor; he's not sure about dates but feels confident he can fit us in really soon (we asked him to move us way up in the schedule from our initial consultation). Haven't heard much from our floor guy, but I'll bug him again in a day or two. Our realtor said he's really good, so I want to use him if possible!
- Since we've decided to try and list in July, before we close on our new home, we need to move some of our stuff so our condo looks less crowded. We found a storage place near the new house with good rates, so we're going to pack up stuff we don't need, rent a U-Haul and get that stuff out -- hopefully the July 4th weekend. Then we can move it all into the basement of the new place Aug. 1, so we'll only need to pay for a month of storage.
- Bought some things at Ikea and on Amazon: light fixtures for bedrooms and dining area, living-room lamp, sofa cover, duvet cover, shower rod. About $130 at Ikea and $130 on Amazon (using CC reward Amazon gift cards). We still have a couple hundred dollars' worth of credit on Amazon and should have another $500 coming in early July, so hopefully we can use it to buy any other staging/decorating stuff we need. We had so much gray paint left over that we've decided to do the whole condo in it; it's a really nice gray that seems to change color depending on decor and lighting, so I think it'll look OK. Lots of places for sale do all gray these days.
- This week (maybe tonight), going to map out a to-do list by date, so we know what's happening when (at least the stuff we can control; the contractors are wild cards). I think our main tasks are:
--paint bedrooms, kitchen and bath
--replace toilet seat, towel racks and shower rod/curtain
--replace light fixtures in bedroom, dining room and kitchen
--box up and move out stuff we don't need (obtain boxes, rent truck, rent storage space, get friends to help us move)
--clean kitchen, bath & floor before contractors tackle each
--clean clean clean, especially the balcony floor
--buy a few more staging things to make it pretty
--get pictures taken (our friend will be able to do this; he's a photographer as well as a lawyer!)
--hold breath and hope for best!
So things are looking up a bit, but there are still too many variables for me to declare victory over my budget!
A couple of snowflakes came in:
- $25 Amex rewards
- $280 found in an old business checking account of AS's
I also moved things around in the budget quite a bit. Things are tight especially in July, August and September, when we have over $6K of tuition, $5K of renovation fees and other one-time expenses. So I had a mini-revelation today when looking at credit card statements; I typically pay the current balance twice a month, but had been looking at moving it to once a month. But I suddenly realized you don't need to pay the current balance to avoid paying interest: You just have to pay the full amount shown on the statement. So you can avoid interest for over a month. Yes, I'm kind of dumb about credit cards! When I was using them in debt I'd just pay the minimum every month, and after I paid them all off and started using them again, I'd pay them off every payday so I never felt like I was carrying a balance.
However, as long as I can avoid paying interest, I don't mind carrying balances for a little over a month.
By planning to pay credit card statement balances instead of current balances, I was finally able to get rid of the budget shortfalls June through October.
That's not to say there won't be other curveballs. I may have to bring more money to closing to cover the higher insurance cost; I have a $1400 surplus through the end of the year but if I had to pay it out in July, that would make things tight again. And the mortgage amounts are still just estimates; my mortgage may well end up a bit higher (or lower) than I'm currently budgeting for. And of course there are curveballs you can't predict until they happen.
I may have necessary repairs to the new home when we take ownership in August. There again I'd have to try and float credit card balances for an extra couple of months to pay that off in early 2015.
But it's not all potential expenses. I resolved this weekend to find more money; the main problem is there's not quite enough income in July-September to cover expenses. So I sent a few emails letting people know I'm available for freelance work. AS too is starting to tap her network for possible freelancing. Also, even though it appears the WV deal is in limbo, it sounds like they'll at least pay us each $250 soon to hold onto the option of a pipeline right-of-way. If we can bring in a bit more money before October, that would help considerably with not feeling so tight.
But I'm just happy there's a potential path where we won't have a shortfall for the next few months; we'd have had to take a reserve line loan, or pay interest on credit card balances, and I'm thrilled that we might avoid that!
I feel very good about our net worth increasing $9K this past month! Glad I got some good news, because I got two pieces of bad news and one good but challenging.
First, the insurance policy I found is more than my mortgage broker thought it would be, by over a thousand. This means closing costs probably won't cover it and I'll need to come up with more money at closing.
Second, AS got another medical bill from her procedure. I was expecting another hundred or two, but instead it's for $1400 more! She'll call the insurance company, but I don't have much hope it'll change. It wasn't a strictly necessary procedure so we were pleasantly surprised by the insurance co's estimate of what they would cover. Apparently they're wrong. So we didn't set enough money aside for it.
Our budget was looking doable with about a $2000 surplus through December. Now the surplus is more or less gone. Shouldn't be a problem, just a bummer that we won't be able to start renovating the new home until next year. I'm sure there will be some things that NEED to get done this year, so even if/when I get a raise for my new position, it'll probably go toward bare necessities at the new place.
This is what it feels to not have a cushion, and I don't like it much. Will enjoy building our cushion back up again next year. (Note that we DO have a $16K cushion, but it's money that I would really like to use for the UK renovations, so I try to pretend it's not there.)
Since our budget loosens up a lot in Oct./Nov./Dec., one thing I did to even things out for the next few months was to cancel our Roth contributions for July through November. I still have them on the budget, I just moved them down to December. Cancelling them altogether would be a last resort. If anything I would postpone them a bit longer instead.
Oh, and the good but challenging news: our best UK friends are coming to visit immediately after our UK relatives visit. Which is awesome! Except we don't have any vacation money in the budget, so entertaining will come out of our weekly spending money. After this weekend I'm going to buckle down even harder on stashing as much of my spending money as possible. No eating out, no new clothes, no movies or other entertainment (unless it's free). I'll chip in for the weekly wine and buy gifts when necessary (weddings and shower) but that's it. I want to have SOMEthing set aside when we have basically 4 weeks of visitors.
I do feel it was the right move to make an offer on this house, which is uniquely suited to our needs, but since it was nearly a year before I felt ready to do so, the next 6 months to a year are going to feel a bit stressful. I'll be glad to get to a point where speed bumps don't stress me out as much!
NT's UK pensions:
#1: 17,105 pounds ($27,368)
#2: 19,653 pounds ($31,445)
#3: 4,452 pounds ($7,123)
NT's 401(k): $30,812
NT's Roth IRA: $7,327
AS's 401(k): $13,420
AS's trad. IRA: $1,682
AS's Roth IRA: $19,658
CJ's 401(k): $73,009
CJ's Roth IRA: $7,327
NT's flat: 140,000 pounds ($224,000)
CJ & AS's condo: $145,000
House down payment fund (shared): $26,285
Total Assets: $614,456
Total Debt: $238,459
Current Estimated Net Worth: $375,997
May 2014 estimate: $366,696
Change in net worth: +$9,301
Summary: Big growth again this month! Some of the increase is due to upward movement in our retirement funds; the rest because we've been saving aggressively for a home.
I included U.S. savings for a home in our assets, since the money will go toward our down payment on the new home, which will become an asset. I did not include our UK savings, because the UK flat's value listed above is contingent upon the renovations that will wipe out our UK savings.
I'll update the Individual Net Worth page shortly, breaking it out by person.
Notes on the numbers above: House value estimates are approximate. I don't have a way to check NT's UK pensions or flat value, so their values stay static for the purpose of this update (unless I happen to get some info by chance). UK asset values and debt amounts are calculated figuring $1.60 for every British pound.
The house purchase seems to be on track!
- Broker's office asked for a few more documents, which I provided
- Home insurance policy has been chosen and first year will be paid for at closing
- HOA appraisal happens tomorrow, and if that goes well, it will be the last inspection
- Got a copy of the renters' agreement and can confirm they're month-to-month with 45 days notice required
- Contractor got back to me with adjusted quote, which was to our liking, so I've asked him to look at what days might work, and I've asked NT to contact the condo front office to see if there's anything we need to do on that end
- Told realtor that we want to list our place sooner than Aug. 1, because we realize there's a narrow window between now and fall, especially with the 45-day requirement; our new goal is to list July 1 or as early in July as possible
- Left message with floor guy; will need to call him again if he doesn't get back to me soon (fixing the floor is key to home value)
- Earnest money was sent to seller today
I think that's about it on the home front; I'm braced for nasty surprises but there haven't been any recently. Fingers crossed it continues to go this smoothly.
On the job front, I may have scored some freelance writing for AS, which will help with her portfolio and resume as well as our budget if it works out. Her boss told everyone at work that she's leaving, which is a big relief and means she can start tapping her network for job leads.
And the big news -- my boss called me into his office yesterday and says he wants to make me a writer! And he says this comes with a significant bump in pay! I'm very excited and trying not to doubt myself; after all, he's basing this on the work that he's seen from me over the past few months, so he already knows and likes how I write.
I've been pretty good about stashing most of my spending money the past month or so, but the past week has seen a lot of frittering, including tomorrow:
- Liquor store coupon from CrowdCut ($20 for a $40 value, so pretty good deal); I'll use it to buy wine for a little party we're having this Wednesday
- Father's day for my dad $10 (postage and card; the gift was free, a copy of a book from AS's publishing house)
- Drinks/snacks at trivia $10 (nice and cheap because we won a small gift card to share
- Soda after free music show $4 (it was a gourmet local soda, and I wished I'd just gotten a $2 Diet Coke )
- Plants $10 (one for NT for Father's Day and one as a bday gift for one of AA's little friends)
- Soy ice cream (big tub) $5
- Brunch tomorrow for Father's Day $? maybe $30 for my share: me plus half of NT, AA & SL's
Whew! Mostly pretty frugal, but all told about $90, so exceeding my $80 weekly allowance and cutting into the money I'd saved up. But I have plenty of time to save up more before NT's family visits (which is why I'm trying to hoard money right now).
I do have a wedding shower and two weddings (will need gifts) this summer, and maybe a day trip to the organic farm that does our CSA share next weekend, and a couple of other things I'm willing to spend money on. But overall I've been resisting the urge to eat out at lunch or go out anywhere at night. I've been making do with last summer's wardrobe and don't think I'll need to buy any clothes. And I don't have any other gifts to buy that I know of right now. The long slog of March birthdays, Mother's Day and Father's Day is nearly over!
There are some free events tonight that I'd like to attend, but it was a busy weekend so far, and it's kind of stormy out, so I might just stay in and relax. Too bad because it's a once-a-year community art/performance extravaganza tonight, but it wouldn't kill me to skip it.
Today was the inspection and the meeting with contractor #2. Both went really well; the inspection raised some concerns with the house but nothing too expensive and no deal-breakers. Some may be fixed by the sellers or we may be able to wrangle a couple thousand off purchase price; if not we'll probably just deal with them ourselves as money comes available.
The contractor's quote was breathtakingly reasonable. He has to add a few things to it that we discussed and didn't get added, plus one more task we decided we couldn't do ourselves (installing closet doors in the bedroom). But seeing his rates for the other tasks I'm not worried. He definitely has an eye toward doing a good job so we'll hire him for more work in the new place, which seems good.
I took a run through the budget for the rest of the year, and it looks like we can fully fund the downsized renovations by early November. We need to do it all in the next couple months, so that means we'll need to float some of the work on credit. This contractor doesn't take credit cards, so we'll charge other things and defer paying them off until we have enough money to do so. I'm not sure when it would be OK to apply for a new 0% credit card, so I'll probably ask the broker his opinion.
It'll be a bit complicated, but no more so than the credit card churn or a lot of other budget things I've done. And, even if we're advised not to get another card and have to use our interest-bearing ones, we won't be carrying balances for very long. Even if there are necessary renos to the new place before December, it won't stretch it out too much longer.
It looks doable, and there's even some room for error. I'll still be glad when we're on a more routine budget, but I'm feeling pretty confident. I can't believe how quickly things have happened! So much has changed in the past month. Now that there's less uncertainty with financing, inspection and cost of renovations, I'm allowing myself to get more excited about the new home.
Whew, we met with the mortgage broker tonight. Although there are a few weird things to clear up (such as getting the additional loan written up as a promissory note; our lawyer friend said he would handle that), the credit and income and retirement stuff is all in order and so everything should go through as long as under-writer is cool with everything and inspection and appraisal go OK. Mortgage broker is very bullish on housing prices in our area, but he's not the appraiser or inspector so we shall see.
We got a nice rate of 3.75% locked in, so if the promissory note payments come in as estimated, our bills may be $100 or so less per month. Due to something with FHA and low rates, we don't have a loan origination fee. Somehow our closing costs came in a shade under $9000 which is what we said the seller would pay up to. (What would we have done if the loan origination fee pushed that over? I shudder to think.) So the good news is the appraisal will be covered in closing costs.
NT couldn't come and had to sign everything at home, so next step is to courier the papers back to the broker. If inspection on Friday goes well he'll schedule the appraisal.
Whew! I'm drained, but there were surprisingly few bumps tonight. This was the scariest of the hurdles left to clear, so I'm feeling a lot better.
Oh, and I did a League of Ordinary Savers blog post this week, about checking bills, receipts and paychecks to save money by preventing human error. Of course I'm preaching to the choir on SavingAdvice, but check it out if you want! Go to ordinarysavers.com (I'm too tired to make a link! ).
And we're only in the beginning of it! Let's see if I can remember everything, along with the price tags.
Yesterday NT got a quote back from the guy who's going to fix one of our windows: $282 (half due now, half when it's done).
Also yesterday, set up a meeting with the broker and gathered all the paperwork we need to bring (account statements, tax returns, etc.).
Also yesterday, NT and AS went to Home Depot and the hardware store for towel racks, door handles, toilet seat, new door for the balcony closet, stains, brushes, sandpaper, etc.: $212
Also yesterday, we had our second contractor come over and look at what we wanted done to renovate the bathroom and kitchen.
Today, I heard back from second contractor that he's ready with a bid and wants to go over it with us, so got that scheduled.
Tomorrow night AS and I go to meet with the broker. I'm glad we're seeing him soon, because I won't relax until I know we've got the mortgage. I imagine we'll also talk about the appraisal ($?).
Thursday we actually don't have anything specific scheduled to do with renovating or moving!
Friday afternoon we have the inspection of the new house ($500), and Friday evening second contractor will stop by to go over his bid with us ($?).
This was a tough weekend. We thought the seller would sign the final offer Friday. Then Saturday by 3:30. That time came and went. That night around 7:30, my agent forwarded an email where they were still saying nothing was wrong but that it hadn't been signed yet. Finally we decided that we wanted it to end, either way. So I had my agent give an ultimatum: A signed agreement by 6 p.m. Sunday or we withdrew our offer completely.
Lo and behold, she got the signed documents she needed by 11 am Sunday. I still don't know what their game was, but I'm glad we put a stop to it. We got the house!
So why aren't I using all caps and tons of exclamation points? Well, we still need to confirm that our financing is good, we still need to go through inspection and appraisal. We still need them to show up at closing and get the deal done. So I know there are lots of hurdles to jump still.
But I'm feeling much much better. One of the biggest ones is out of our way. I've emailed the broker so he can get his end of the deal in motion. Our agent has set up an appointment with an inspector.
I roughed out a budget based on when rents will be due and when mortgages and other payments will probably be due. It's looking very good; since the upper level renters will cover most of the new mortgage and utilities, our budget is actually not affected all that much. Also, we get our first month of rental income Aug. 1 but our mortgage will not start coming due until Sept. 1, so we'll be able to use the previous month's rental income to cover each next month's mortgage. This gives us plenty of time to plan if there are nonpayment issues.
Assuming everything goes as planned, it's very good news for NT's family as well: They're coming for about two weeks from England for a visit in late August, and hotel prices were daunting to them. Now they'll be able to stay in the basement and/or the lower unit (our friends may not move in until Sept. 1, so there would be only a day or two of overlap). This would save them well over a thousand dollars.
The home deal negotiations continue. Seller was supposed to sign the counter-counter-counter-counter-counter-offer agreement last night. He didn't, but his agent says he's confident he will sign today.
Fingers crossed please! I was ambivalent about this deal because I knew that carrying two mortgages and trying to sell our current place would be a massive strain on both our budgets and my sanity. But a funny thing happened along the way ...
The seller rented out the upper unit (the one we would live in). They weren't supposed to do this, but they apparently couldn't bear to not be making money. And they said if they had to kick out their new tenants, they would want our deal to include a forfeiture of the earnest money if the deal fell through.
The choice was easy for me. Having month-to-month renters in our unit is perfect, because it gives us time to renovate and stage our home. Having the lower unit empty is perfect because our friends can move in right away and start paying us rent. Plus, we can start storing our stuff in the basement of the new place to help the condo look less cluttered for selling. "Free" storage -- bonus!
The new renters would need 45 days notice if we wanted them to leave. They knew when they moved in that the house was being sold, so this wouldn't come out of the blue if we asked them to move in 3 months or whatever. If our condo doesn't sell easily, we can keep renting the new home while we wait. If it does sell, we'll just make sure the closing date gives us time to move out the renters and move ourselves in.
Before, I was looking at this as our monthly housing costs until the condo sells:
- Condo mortgage $1040
- Condo dues $700
- (Minus parking spot rental $85)
- New mortgage $3100
- New secondary loan $100
- Utilities on new home $400 (highest estimate)
- (Minus friends' rent $1100)
Total after rents: $4155 per month
Now, with all the same considerations, except $2200 for upper-unit rent and $200 less utilities because renters will share that expense?
$1755 per month! In other words, only $100 more than our current housing expenses of $1655.
So now I REALLY want this deal. I wasn't too bummed at the thought of it falling through before, but now I would be rather devastated if it does.
I repeat, oh man.
Well, negotiations are dragging on in this home deal. The seller countered our offer (which we were under the impression was not a counter so much as accepting *their* counter, so it's like they're countering their own counter!). They asked for more money and a few other conditions.
I was inclined to just say "no," flat out, since they've now reneged on the asking price they said they'd consider. But my realtor convinced me to look at it, and wait to talk to the broker about what the new terms would mean to our monthly payment.
Depending on what he says, there's a chance we will make another counter. More money would be absolutely off the table for me at this point, but we might consider a few of the other conditions, though not all of them. So I'm not even sure if it's worth countering, but if it looks like we can counter with an offer that would not add much to our already-stretched-thin monthly budget, I guess we'll try.
In a way, just saying "no" would have been a relief because the uncertainty is getting to us all, and this is just dragging that out further. But we've gone this far, so we might as well go a little bit more.
On the good side, we have decided to really cut our condo renovations down to a few essentials and see if it will sell with just those improvements. So that could potentially save thousands of dollars we were planning to spend.
The US mortgage hit, with $478 going to principal. So that brings me to $789 down, $111 to go on the June debt goal.
The house deal is still pending; we've sent the formal offer in and are waiting for the seller to respond. It's pretty much what they asked for in their counter offer, so it's likely they will accept, but you never know until it happens. Emotions are high right now but I'm trying to look at everything from the numbers side.
If seller accepts, we'll schedule an inspection in the next week and probably close at the end of July!
We're still waiting on estimates from our first contractor, who has been swamped at work. Now we have another contractor coming over Monday who comes very highly recommended by a co-worker, so we'll see what he says.