I'll try to write a proper update this week -- there haven't been any huge changes but some bits of financial and/or house news -- but with family in town of course I spend way less time online.
Just wanted to check in since AS's student loan payment hit. $137 went to principal, which takes us to $928 of debt paid this month, exceeding the $900 goal.
I'll try to set a rough goal for September soon, though I'm not sure how much principal will get paid in our first mortgage payment. And since the initial company doesn't do online billing, it might take a bit of time to find out.
Archive for August, 2014
I'll try to write a proper update this week -- there haven't been any huge changes but some bits of financial and/or house news -- but with family in town of course I spend way less time online.
I'm on staycation! First set of UK visitors got here Thursday night. Besides making them feel welcome and showing them a good time, my main concern is not spending much. Luckily they are both cost conscious and fair minded, so they have made sure to ask about costs and put in for everything so far. So I think we'll be OK. We have to be, because we would need to cut elsewhere if we went over, and we don't have many more places to cut.
Went to a city open house about accessory dwelling units, because one of my long term goals is to turn the garage into a tiny home and rent it to our friend. The city plans sound promising, though I need to see if our yard size is sufficient. Should be voted on this fall, so we'll know soon whether it's feasible to start planning.
Meeting with realtor didn't go as hoped. She refused to lower her commission. We didn't threaten to cut her yet; we have a showing tomorrow and will see how that goes. If nothing comes of that we will give her an ultimatum. NT knows a realtor we could talk to as a replacement.
Got the first few utility bills and they were reasonable, but still waiting for our first water/sewer/trash/recycling bill. That's the one that could be big, I think.
Got a small ($140) refund on our homeowners insurance! That was welcome. Will pay for our moving van and a medical copay with a bit left over.
AS's last day at her job was yesterday. The day before that, she got another freelance job, a small $300 writing assignment from my company. They loved the first one she did! She's now partway through funding November.
My latest writing assignment at my job is not going great, but there are lots of external elements causing confusion. I'm pretty confident my boss will realize that and not have doubts about completing my transition to writer. I'm going to push for the official change to happen once I get back full time after my time off, Sept.12.
AS got some dollar amounts on the two projects she's been offered: $2300 and $1400. With that, her paychecks are replaced through October, and it's not even September yet!
I'm feeling much more relieved and relaxed and hopeful that this freelancing idea could not only be feasible but maybe lucrative!
(Explanation of replacing paychecks: Even though AS is leaving her job after this week, I've left her take-home pay in the spreadsheet so we know how much freelance income she needs to bring in to stay even. When she gets a freelance job, I can reduce the amount of take-home pay she needs to substitute.)
Our goal for this year is just to stay afloat, which means replacing take-home pay and the cost of funding her own healthcare. Basically $2750 a month.
So she just needs to make $5500 more by Dec. 31! She's decided to shoot for replacing January's income as well this year, since February is when things will really start to loosen up for us. So $8250 more is the goal.
Next year (or sooner if this does turn out to be a lucrative thing) I'm going to start focusing on also replacing the tax and retirement portions of her paycheck. But if she can at least make enough the rest of this year to make up for the regular paycheck she's not getting anymore, it will get us to next year, where things are looking a lot less tight.
I'm so exhausted; had a dramatic couple of days with a family member seeming to have a mental break of some kind. After we lost contact, I had my sister check on this family member (whom she doesn't really know, but she was great about doing it) and it seems she's doing better.
Monday night we were supposed to have a free date; I had bartered babysitting from my friend I'm helping learn to budget, and there was a movie and music in the nearby park. We cooked and packed picnic food and headed over, but found out it had been moved indoors because of the threat of rain and that it was full to capacity. So we decided to just have a nice leisurely picnic. Unfortunately soon after we finished eating it did start to rain. We didn't want to cut our date short, so I treated us to wine and snacks at a nearby bar. $56 coming out of what I'd saved for the UK visitors, but felt like the right thing to do given how much stress we've been under.
Unfortunately I drank a bit too much wine and had a mild hangover-y feeling all day today. I also didn't sleep very well probably for the same reason. So with the drama plus the hangover plus the poor sleep, I'm pretty wiped today.
I got a free lunch at a nice Indian buffet near work today; my college sent out a planned-giving representative, and I have my college in my will, so they courted my favor a bit. It was a nice treat! I also got a nice big tote bag out of the deal.
Well, the tenants found somewhere to go Sept. 1, so that means they're moving out the end of the month! The budget will be that much tighter but it'll be so worth it to be in our new place and not living in staged-world anymore. We've reserved a moving van for Sept. 5, but we might move a few things in before then. We'll see how busy we are with family -- this is a rare visit so we definitely don't want them to feel neglected in any way. NT pointed out they're all mellow and somewhat introverted, so they might appreciate some quiet down time.
The latest viewer of the condo didn't express any interest to our realtor (she was the one showing it), so we've asked to talk about lowering the price -- and about her giving us a break on her commission. Based on advice from a couple of realtor-savvy friends of mine, we're asking her to reduce her commission on the sale from 3% to 1%. (If she came back with 1.5% or 2%, that would be fine too.) So just waiting to hear what she'll say.
NT is in promising talks for a raise at his job, so hopefully he'll know something this week. He's taking on official managerial duties, so he's going to try and push for a larger bump.
My supervisor is working on getting my raise straightened out, but I don't know what it'll be yet, not even a ballpark. I'm working on a writing project already, and it's really out of my comfort zone, so I'm just trying to stay calm and focus on that and try to learn quickly what I need to do for this type of writing assignment. Our temp proofer is working out well and learning quickly, so hopefully I can be fully transitioned after my vacation.
I'm on vacation this Friday through Labor Day, and then from Sept. 2 to 11 I'll be working half days while our second set of UK visitors is here. Then, hopefully, full speed ahead into my writing job!
AS got some really good job news: another proofing job coming her way next week, plus potentially an even higher-paying editing assignment. If both come through and she gets the rates she hopes, she could have all of September, all of October and maybe even part of November's paycheck amounts replaced! And this is just the work she's drummed up while working full time. I'm starting to really feel good about her trying to be full-time self-employed.
Overall, things seem to be going well, though I'd like some of these potential good things to turn into ACTUAL dollar amounts!
So we'll be moving into the new place Oct. 1 -- or possibly sooner!
We checked on the private student loan I applied NT for, and they're just waiting for confirmation from the university that the amount is right and he is enrolled. We have a month before tuition is due, so I'm not concerned about getting it in time.
Therefore, we decided to give the renters 45 days' notice to vacate by Oct. 1. Things would be tight financially, but we would all be dedicated to finding creative ways to make it work.
The renters got back to me a couple days later, asking if they could vacate early, by Sept. 1, since it might be easier to find a new place vs. waiting until October.
We talked it over. It would be an extra $2175 out of the budget, which is a lot, but not much more compared with what we'd already taken out of the budget by deciding to move Oct. 1. We figured out a way to make it work -- cut back a few more budget categories, and dedicate part of NT's bonus toward making up the shortfall. (He always get a couple thousand every December, and this has been a particularly profitable year for his company.)
And we just can't wait to get out of this staged living situation -- it's very wearying.
So we told the renters that would be fine, but that we would need to know for sure soon. We'll need time to reserve the elevator at our condo and hire a moving van.
If this works out, it will happen in the middle of our spate of UK visitors. So a little additional chaos, but on the up side, we'll have a bigger space (albeit only partly furnished) in which to entertain them.
On the condo selling front, we didn't have any showings for over a week, but now we've got one scheduled for this afternoon. Fingers crossed! If we don't get an offer in the next couple of days we're going to talk to our realtor about lowering the price. If we do that, I also intend to ask her for a discount on her fees. If she refuses, I'll probably tell her that we're considering taking on a realtor who has the ability to post to Realtor.com, Zillow and Trulia, and see if she relents then. Hopefully it won't come to any of that!
If we do sell, even at a great loss, it will be easier on our budget than what we're currently prepared to do, which is carry both mortgages (plus association dues on the condo and utilities in the new home).
Meanwhile, I'm preparing the budget (and my family members) for the worst-case scenario. We have a plan to deal with any eventuality.
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): $31,263
NT's Roth IRA: $7,292
AS's 401(k): $13,520
AS's trad. IRA: $1,682
AS's Roth IRA: $19,572
CJ's 401(k): $73,157
CJ's Roth IRA: $7,292
NT's flat: 140,000 pounds ($224,000)
CJ & AS's condo: $145,000
CJ/NT/AS house: $440,000
Total Assets: $1,028,714
Total Debt: $682,221
Current Estimated Net Worth: $346,493
July 2014 estimate: $379,845
Change in net worth: -$33,352
Summary: I decided to go with Redfin value minus 6% for the value of the new home, which means the debt we took on is greater than the asset value we took on. So that meant a large drop in our net worth. Also, the markets were flat to slightly negative and we didn't put as much into retirement as usual, so there was no help there to our net worth. And we didn't pay down much debt either.
Assets are up over a million dollars in worth! But that will drop back down once we sell our condo.
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..60 for every British pound.
It's almost net worth update time, and I'm scratching my head trying to figure out how to value our new house. Which source would you trust?
Zillow says $369K
Redfin says $467K
Listing price was $469K
We paid $465K
But with closing costs it really cost us $473K
The bank appraised it at $550K
Taxable value according to city is $381K
I'm tempted to go with Redfin, because they showed the houses they compared it with, and they all sold for $460K-$500K. Our bedroom count is one less than the $500K sales.
Now that my family and I have discussed the cutting things to the bone idea, our options have simplified considerably. We've taken a temporary apartment off the table, as well as living with our friends for a couple months. Now we're down to two options:
- Giving the tenants notice and moving into our place whether or not we sell the condo.
- Giving the tenants notice and moving in once we sell the condo.
We're 95% set on the first of the two options. And that one has two options as well: Give the tenants this week so we can move in Oct. 1, or give them notice next month so we can move in Nov. 1.
Again we're leaning toward the first option. Being at the new place but not being able to get into the unit that will be our home makes it so tantalizing to get started in our new place, even if we have to watch every penny to afford it.
The only reason I'm still hesitating is I want one more piece to fall into place. bluesfemme had the excellent idea of getting a student loan for NT's last semester tuition, so we don't have to shell out all that money ($4500) right now and can have a little cushion. As soon as I read that I applied for NT, and we're just waiting to see if the loan is approved. Tuition is due 9/15, but if the loan covers it, we can hold that money and pay the loan off later. I'd like assurance that the loan has gone through before I commit to kicking the renters out. I need to give them notice by 8/16, and it should be sent a day or two earlier so they get it in time for it to be 45 days notice.
If we get confirmation in the next day or two, I'm going to ask the seller's agent (who is offering his services free for the first half of the month to help us transition) to give them notice.
If we decide to hold off, I'll have to give them notice myself, but the seller said he'd send me a form letter I could use.
Either way, I've looked into the rental license change-of-ownership and renewal, and I am going to have to do that anyway since we'll be renting to our friends. So I'm going to get that going, and I'll see how much it costs to get both units approved or just one. (Seller's agent said it would be about $20 more to get both, so I might just do that, especially if we decide to keep the renters for an extra month.)
We had one showing of the condo last week and none this week so far. So I think it would be agony to wait for the place to sell before we moved. (We wouldn't want to kick the renters out in the dead of winter, so if we stayed, we'd need to take the condo off the market if it didn't sell by 9/15.)
Also, living in a staged place is no fun, for the grownups or the kids. My makeup routine that I started in March and really enjoyed has fallen by the wayside because I run around in the morning doing finishing touches to the condo (vacuuming, dusting, wiping surfaces, rearranging things).
And, the budget would only be this tight until about February, when we can try to refinance the mortgage and get rid of PMI. Several raises are imminent and several expenses will be done with next year. Six months of watching every penny vs. six months of watching every bit of dust and clutter? They'll both be challenging, but we're really good at tightening our belts when we need to, so hopefully it'll be less stressful.
After all the creative wrangling and trying to come up with different solutions to keep our budget on track with the new house, I'm starting to think of going back to our original idea: kick out the upper tenants, move in, and carry both mortgages until we sell.
The last straw was that last night, the seller's agent and I were going back and forth about how to get the rent to me. He also mentioned that the rental license was up at the end of this month and would need to be renewed if we planned to keep renting, and that it would need a change of ownership application and inspection. $500-plus, all told.
OK. I was willing to swallow that. But then I thought, wait, do we get the inspection for the upper unit, and then what happens when we kick out those kids and start renting the lower unit officially to our friends? Another inspection/application/set of fees?
Coupled with the strain of living in a staged home, and the stress of knowing we aren't fulfilling our FHA obligation until we move into the new place, it felt like too much.
So I talked to AS and then NT about just kicking the renters out ASAP and moving in. What would it mean?
- Monthly expenses would increase by $2000. This would mean we'd have to cut our spending money in half, not do Roth makeup contributions this year, and cut back on other discretionary spending (what little we have left, carshare and groceries basically).
- This plan would depend on AS getting enough freelance to equal her take-home pay from her old job through December. After that she wouldn't have to, but we would have virtually no fun money until she did.
- The UK savings would need to come back into play as our actual emergency fund, because we wouldn't have that small budget surplus that I'd managed to keep throughout this. Any UK money we took out would need to be replaced by June of next year so the UK reno could happen and the UK flat could stay rentable.
- Any necessary home repairs, medical emergencies or other unavoidable expenses would need to come out of the UK EF, or else get put on a 0% credit card and paid off next year.
- Not having to live in the staged condo; much less fretting about every little bit of clutter and dust and whether our finishes would get messed up.
- Not having to worry about what the tenants are doing to our unit.
- Not having to mess around with living with our friends, or renting a short-lease apartment, when the condo sells.
- Fulfilling the HOA mortgage commitment.
- Being in our new place!
I am still working out the money details to see if I really am comfortable enough with the plan and confident that we could get through to next year that way. I'm not sure where we'll end up on this whole thing.
I did end up having to leave work right after I last blogged; AA threw up her breakfast and really wanted to come home. The showing was done by then, so I just brought her home.
I had an interview with a job prospect in the afternoon, so NT came and relieved me. AS came home early in the evening so he could get to class on time. Sometimes it's so great to have 3 parents for the kids!
Once I got AA home, she started asking for snacks and drinks and managed to keep them down. She seems a lot better tonight, just a little tired.
I was interviewing a prospective candidate to replace me at work and really wanted this one to work out. She seemed really nice in the interview but kind of bombed the proofreading tests. :/ Back to the drawing board. Every time someone doesn't work out is another couple days I don't get my promotion and raise.
We got feedback from today's showing. All good, but they decided they wanted a 1-bedroom. Sigh. At least we seem to have gotten rid of the cat smell.
Overall a decent day. AS's proofreading project was the big win! Feeling very good about her prospects as a freelancer.
And it's only 10 am!
The promising: There was a showing today, 9-10. Fingers crossed.
Worrisome: Our older kid (AA, 4) woke up complaining of a stomach ache and sore throat, and threw up right before we left for daycare. We took her anyway, and the daycare lady just messaged to say she hasn't thrown up again, so hopefully just a little bug or indigestion.
Awesome: AS just got a third proofreading job, this one for $1160! With that, she's replaced (what would have been) her 9/15 take-home pay, made enough to cover September healthcare, and started chipping away at the 9/30 take-home pay amount. Also, my co-worker just told me the client had no changes to the article AS wrote for us, so that's a good indicator she'll get more work from my job!
Also great: I checked Paypal and NT has accumulated $15 in Pinecone payments.
So overall more ups than downs, though I'm worried about my little girl. Let's see if this day continues to be a rollercoaster.
I checked NT's account online to see if the fall tuition amount had posted. It had, and was about $400 more than I'd estimated! And it's due two weeks earlier this year! Ouch!
One bright spot in the day, though, was discussing with one of our friends who's moving into the lower unit of the duplex whether we could potentially move in with them if the condo sells this year.
Even if we didn't have them pay any rent while we were there, it would be cheaper than kicking the upper-unit tenants out, and about the same cost as renting a whole different place for a few months. Plus we wouldn't have to come up with a security deposit.
He still has to talk it over with his husband, but he was open to the idea. There's a big room in the basement that's the size of an efficiency apartment, and a three-quarter bathroom as well as space/hookups for a kitchen. The main floor unit where they'll be living has two bedrooms and a bathroom. So it's a possibility.
It would be a bit cramped, and complicated if we had to be in the basement while our kids were in a main-floor bedroom, to avoid our cat being in the main unit (our friend is allergic). But it would only be for a few months at most. And it would give our friends a break on rent so they could use that money for other things. And it might not even come up if our condo doesn't sell this year.
It just feels nice to have several different possibilities for getting through these next few uncertain months!
Nothing big has changed over the past few days, but I feel like blogging anyway.
We went over to the new place Saturday and I meant to take pictures, but it was raining pretty hard by the time we got there and didn't clear up until it was dark outside.
I'm sure we'll be over there a lot, so I will get some pics to share at some point! Of course I can't take any of the unit we'll eventually live in since it has tenants, but I can take some others.
Our friends have our contractor who renovated the condo coming to look at a few things, such as poor electrical wiring, installing a ceiling fan in their bedroom, and faulty drainage (going to ask if the gutter can be rerouted). Since we're not charging our friends for this first month but are letting them move in whenever they want, I figure they can pay for the equivalent of a month's rent, and we'll help pay for any amount over that.
Being over there really makes us want to start living there. But no matter how I squint at the numbers, it just doesn't make financial sense to do so yet.
We're still open to various scenarios, but one thing we're agreed on is that we can't move until we sell the condo. Even if we moved and rented the condo out instead, we wouldn't be able to make as much rent money as we do on the upper unit of the duplex, plus we'd have to worry about whether the renters would keep the place staged for sale.
Right now our condo is listed at $155K. After Sept. 1 we'll owe $151K on the mortgage, and the realtor has said she'd get $9K plus we'd need to fork over about $2K more in fees. So even if it sold at the current listing price, we'd have to come up with $7K for the privilege of getting rid of it.
We'll see how we feel if we get a lowball offer. I'll have to crunch numbers and feel it out. I did figure that if we lost $15K on the place (so sold it for $8K under listing), we'd have a $450 monthly payment on an unsecured loan. We couldn't afford to take that on PLUS kick the renters out, so if we took a lowball offer like that, I think we'd have to find a short-term-lease apartment to move into temporarily until we were on better financial footing.
So I have mixed feelings about whether I even want an offer on the condo this year. Next year will be a different story; by March the mortgage will be down to $149K, which means we'd only lose $5K if we sold at the current listing price. Our incomes will probably be way up and our expenses (tuition, dental) way down.
But staying in the condo isn't ideal either, since we spent $1400 getting the main floors redone and now have to carefully tend them. And a short-term rental if we do sell isn't a fun idea either, both because we're so eager to move into our new place, and because we wouldn't be fulfilling the FHA commitment to make the duplex our primary residence. (We are declaring it as such, and do intend to make it so when we can afford it, and will be over there all the time visiting our friends, so it's really a technicality, but it still doesn't feel right.)
Ah well. Enough meandering. Other updates:
- We took LF's advice and are keeping the litter box in the bathroom when we're home, only moving it into the closet when we're out.
- We have a showing scheduled for tomorrow.
- I'm finalizing interviewing candidates to replace me tomorrow, so hopefully we can make a hire soon and I can move into my new role/office/salary!
- The coin-op washer in the duplex isn't working, but it broke before we took ownership. The seller's agent tried to put it off on me but I wrote back making it clear I expect them to repair or replace at their expense. Haven't heard from him yet.
- He gave us the tenants' security deposit but still waiting to receive August rent. Apparently all 5 people write separate checks so he might be waiting on one or two.
- Less than three weeks until the first set of UK visitors arrives. If I don't spend any money between now and then, I'll have $800 saved up. Not a ton, but better than nothing.
All our mortgage payments hit:
US condo: $480 to principal
All told, that's $791 down, $109 to go on the August debt goal.
Well, we closed on the new home yesterday!
Considering how hellish this process has been compared with the last time I bought, the closing was entirely routine and the least stressful thing that has happened so far. I had already internalized all the dollar amounts, so I didn't have any freakouts about the debt or the huge cashier's check we gave them ($27,000).
We went over yesterday to celebrate with our friends who will be living with us. Although I don't feel jubilant -- there are way too many other huge hurdles to clear before I can be relaxed and happy -- I'm glad to check another thing off the big list.
We had two more showings on the condo but no bites. One of them gave us a negative review because of "cat smell in unit." We used to keep the litter box in the bathroom, but unfortunately the only place it makes sense to keep it for staging is in the front hall closet, where the smell can kind of build up and, if so, will be one of the first things someone experiences when walking in. NT cleaned the box thoroughly, I Febrezed the heck out of the closet and everything in it, and this weekend we'll move the litter box onto the balcony whenever possible to give the closet (and box) time to air out. Hopefully that will help.
I've kind of accepted that we might not sell the condo this summer. If we don't, we'll take it off the market for the winter, get some cheap carpeting to put over the refinished portions of the floor, try to keep everything else in decent shape, and relist in the spring. It wouldn't be our favorite thing in the world, but we'd be in a much better financial place next year, so we could afford to sell it for less if need be.
Anyway, on to our new debt totals and goals. It's a huge leap, but I'm feeling pretty good about it.
Old debt amount: $237,390
New debt amount (breakdown):
US Mortgage (condo) $151,955
US Mortgage (duplex) $414,122
Promissory note (duplex) $26,500
Loan from friends (duplex) $5,000
UK Mortgage 1: $52,239
UK Mortgage 2: $11,013
UK Mortgage 3: $11,595
Total home debt $672,424
AS SM $7,382
NT SM $3,206
Total student loan debt $10,588
TOTAL HOUSEHOLD DEBT $683,012
Really high but, for owning three homes with a combined worth of about $870,000, not depressing. Even without selling the condo we could be rid of all that debt by the time I'm 63, and when we do sell the condo it will be less time than that.
Since the new mortgage doesn't come due until Sept. 1, the debt paydown goal for this month will only be $900, as it has been for the past few months. So the goal balance will be $682,112.