March Spending – Week 1

Okay, I promised I’d track my discretionary spending so I could keep it under one paycheck, and here goes the first week of March:

Friday March 1st – no spend!

Saturday March 2nd – no spend!

Sunday March 3rd – $36.70 for Groceries

Monday March 4th – $52.99 for  dress (may return)

Tuesday March 5th – no spend

Wednesday March 6th – no spend

Thursday March 7th – $75 cash for several events.

Total: $164.69

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New Plan for March

I have been FREAKING OUT about money over the past several weeks, but haven’t blogged about it.  I know that I have not been doing my best, and it’s hard to admit that to myself and it’s hard to admit it to the anonymous internet!  I look at the past and I look towards the future, and I think – I should have spent less, saved more.  That’s the real key to personal finance success, right? So simple.  But so hard to execute.  I read a lot of PF blogs because they are entertaining, educational, and inspiring.  A lot of bloggers have talked about feeling guilty (or not) for spending money on anything from travel to a nice outfit when they still have a huge pile of debt.  Without getting too far into that debate, I feel like I need to allow myself to have an enjoyable life, within reason (and without more debt), even while I work to pay off my debt.  I’m not going to put my life on

I have slowly but surely been decreasing the amount I charge my roommates for rent, and the difference really does add up.  I have been looking ahead to the next few years of my life and what is coming down the pipeline in terms of finishing both of my graduate degrees and the associated increased expenses as I transition into completing my second degree (the degree I’m working on now has no real expenses associated with it, but the degree I’ll finish second will require thousands of dollars in textbooks, licensing fees, and interview costs).  I’m also looking to finally get a dog, and I’ll probably want to hire a dog-walker to come at lunch time when I’m in my second degree because I will be working for 12hour days and not have time to come home at lunch like I do now.  I know that I have a few years before all this happens, but I’m already getting anxious about it.  This means it’s time to get a little proactive.  I think my idea of allocating one set of rent collections ($620) to savings every month is a good one, and I want to keep doing it so I can see progress like that, get some positive feedback to keep me at it!

– Take the one rent check, $625 and allocate it to a savings goal (either as a whole, or I could break it up)

– Take the other rent checks ($1310 total) and use that for mortgage ($937) and put the remainder into my “Taxes” savings account ($373) as sort of a mini-escrow account for my property taxes, since I’ve been doing a terrible job of keeping that straight.

– Focus on being extremely mindful of my spending.  Try to put all expenses on the one credit card for easier tracking, and update my budget spreadsheet each day with the spending.  Report weekly spending on the blog, and keep discretionary funding below $1000.  I feel like my spending has gotten crazy and I need to reign it in…the ordinary spending is fine, it’s these random extras that happen and really wreck my budget.  A big part of that is shopping…I have a lot of clothes and I need to stop buying more.  I’ve been slowly going through all of my clothes and I think by …

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negotiating as a live-in landlord

le sigh…it’s happening again.  The problem with being a live-in landlord is that your roommates/tenants will constantly be asking you for things.  All sorts of things.  Can you redo the ducts so my room is warmer? Can’t I get a pet? Can you put in a different wireless internet system? I’m having a crisis, can I please pay you rent a few days late this month?  It’s always something.  I tend to be an unusually accommodating landlord, so I do try to deal with whatever they are asking right away, or explain why it’s not feasible.

Unfortunately for me, I’ve had one roommate/tenant who has been an excellent roommate (quiet, courteous, keeps things generally very tidy), but who has been a giant pain-in-the-ass about trying to get away with paying as little as possible.  I understand, you’ve got to try to get yourself the best possible deal.  But I find it frustrating to constantly be asked to make exceptions.  It started with the very beginning: my roommate was moving in towards the beginning of the month and wanted to get pro-rated rent for the few days he wouldn’t be there.  That seemed reasonable, as I’ve seen rental agreements with commercial apartment buildings do that.  We had a short-term lease so he could see how he liked the place for the graduate school semester, with the option to renew for the rest of the calendar year.  However, he wanted to travel during the summer break and only wanted to sign a lease starting in the next semester, leaving me hanging for two months.  I told him that I would hold his place as long as we could find a summer sub-letter, which worked out well.  I was worried that with the upcoming winter break he’d want to try and pro-rate the rent again, but that thankfully was not the case.  Instead he asks to negotiate a lower rent rate.  The rate I’m offering is pretty darn reasonable, so I’m not too keen on lowering it.  HOWEVER, he has been a pretty great roommate and I’d love to count on having him for the 2+ years left of graduate school.  Knowing what type of roommate I’d have, for a guaranteed time period, could be worth taking in less in for rental income.  For example, say I normally rent the room at $650 but drop it to $600 to accommodate him.  That’s a decrease of $600 for one year.  If it takes me two months to find a replacement roommate, the room is empty for two months, losing me twice as much money as it would be to simply lower the rent and keep the room filled!  Mike at Renting Out Rooms wrote a great post about this very pricing dilemma.  I think I will try and negotiate with him to find a rental price that will keep both of us happy.  (and yes, I realize almost all commercial apartments INCREASE rent each year, not decrease.  But I have to LIVE WITH my tenants, so finding someone who is the right fit is more important than simply filling all the rooms with paying bodies)

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2013 Action Plan

I’ve previously set several goals for 2013.  In order to achieve my goals, I’ll need to come up with a an action plan, or a series of clearly defined steps, in order to reach them.  These were my financial goals:

  • Max out Roth IRA at the new max contribution limit of $5500
  • Pay off my car loan to my parents ($4000)
  • Set up repayment plan to my parents for the refinance loan
  • Make a deliberate effort to put money aside each month for savings goals
  • Continue to apply for property tax credits to keep my bill low

To achieve my goals, I’ll need to put money aside towards each of my goals each month, and still pay off all my bills.  In order to achieve my goals, I am going to try a new method for the month of January: I know that I can reasonably pay all my bills using my graduate school stipend and the income from two of my three renters, so I will take the rental income from the cheapest of my rental rooms and apply it directly towards one of my dedicated savings accounts.  This way I get the satisfaction of seeing a big chunk of change ($620) go directly towards a goal each month.  I will track my spending every week in order to make sure I am keeping my spending below the rest of my income.  At the end of the month, whatever monthly income is left will be calculated and then deposited towards another savings goal.  I’m starting slow with the very achievable goal of “reserving” only one of my rental incomes…once I get used to spending less money, then I can try and add on part or the whole rental income from a second tenant/roommate.  I think this method will be effective because it’s simple and I will have the satisfaction of seeing major progress every month.

January’s savings goal that I will deposit $620 towards is….the puppy fund!  The puppy fund is now at over $2000, so I should be all set for the high start up costs of purchasing the puppy, all the toys and equipment, vet bills, and training classes.  Still not sure when the puppy will come home, but by dedicating my initial savings deposit for January to the puppy fund, I know I will be financially ready whenever I get the call that I’m going to be a puppy-momma!

 

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2013 Goals

Financial Goals:

  • Max out Roth IRA at the new max contribution limit of $5500
  • Pay off my car loan to my parents ($4000)
  • Set up repayment plan to my parents for the refinance loan
  • Make a deliberate effort to put money aside each month for savings goals
  • Continue to apply for property tax credits to keep my bill low

Personal Goals:

  • Get back to working out 5-6 days a week! (I’d love to feel confident in a bikini at the beach)
  • Push hard to finish this graduate school project and set myself up for an early graduation!!
  • Stop being so afraid of relationships failing…enjoy the moment!
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2012 Recap

Well, it’s the end of another year and the start of what will hopefully be a very successful one!  2012 was a roller coaster for me.  My personal life was a train-wreck as I started dating a long-time friend and fell hard and fast for him.  When he ended things, I was devastated for months and just felt incredibly depressed, which was compounded by the fact that most of my friends from my graduate program graduated in May and moved away, while I remained behind to continue work on a second graduate degree.  In all my wallowing, I lost track of my personal, professional, and financial goals and got pretty off-track.  Once I started to move on from that relationship, I was able to get myself back on course: I trained for and completed another half-marathon, renewed some old friendships, continued learning to cook, found new roommates/tenants who are a much better fit than my previously messy and obnoxious roommates, finished saving up for a puppy and related expenses, continued Roth IRA contributions, made a huge amount of progress on my graduate school project, and met a wonderful new man that I’ve been dating for several months now.  I hope to keep things on track in 2013 and that if things don’t work out with this new man, I don’t want to let that completely throw me off again.  I’m so thrilled to report that I have a positive net worth!

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2012 Net Worth Snapshot

Well.  I have rather failed at blogging this year.  My personal and professional lives were topsy-turvy in 2012, and I just couldn’t bring myself to blog about my failures to maintain my financial plan.  Maybe I didn’t want to hold myself accountable and just wanted to let myself SPEND, as if that could possibly ever be a way to make myself feel happier.  It didn’t.  All it did was leave me with a sick, sinking feeling in my stomach when I went to tally up my finances for the end of 2012…I frittered away so much money on little things that all adds up to a LOT of money I could have put to so much better use!

Enough.  It’s almost a new year, and while I think New Year’s Resolutions often fail, this is as good a place to start over as any.

Here’s a snapshot of my Net Worth:

2012-12-SnapShot

I was so excited to see that I had a positive net worth! (even without including my depreciating asset of the car).

Soome quick additional explanations: The value of the home is listed at what I paid for it, not what it is probably worth now (less than that), but I do not intend to sell until we are at least back at what I bought it for!  Also, I pay for almost all of my monthly expenses (besides my mortgage) with credit cards (easy tracking and 1-5% cash back!) BUT I pay off both of my credit cards in full every month.  I included the balance on the credit cards here because I haven’t come to the due date yet on the cards, and I consider that money already spent, even though I haven’t yet paid it off with cash.

So…now that I can see the bigger picture, what are the best steps I can take in 2013? Let’s first look at the assets:

I plan to continue contributing the maximum allowed to my Roth IRA ($5000/year).  I am not yet sure what my additional savings goals and mechanisms will be, so I will have to touch on that in a later post.

Now let’s look at my debts:

I have three separate loans from my parents, and one to the bank for my mortgage.  This is somewhat of a bizarre situation to be in, but my parents helped me put the initial downpayment on the house (at a rate of 6%) and then helped again with a downpayment when we refinanced (at a rate of 3.375%), and I owe them the money for the car without any interest.  The mortgage is currently at 3.375% and may go up in 10 years.

Now I now that all good financial advice out there usually suggests paying off your highest-interest loan first, but I don’t think that’s what I’m going to do here.  I have owed them the money for the car the longest, and I think I can manage to save up the last $4000 this year and pay that off outright.  Getting rid of one source of debt completely would be incredibly satisfying and would help keep me motivated to do more.

My parents have been incredibly slow to get back to me with actual numbers for my downpayment loans, so I will have to post an update when I hear from them.  The idea for the original downpayment was that my parents would be investors in the home and when we went to sell would collect their initial investment with 6% interest.  This was based on the fact that when I bought the house, we thought we had hit the bottom of the market.  Well, three years later and now we know that the bottom kept dropping dramatically.  At this point, I don’t know that we will be able to sell the house in the next few years for a good profit.  It may take another 10 years.  I have been mentally toying with the idea of keeping this house as a rental property – it’s a great set up for a rental and we would have a ready supply of good renters.  The problem with holding onto the house as a source of passive income for the long term is that I would need to pay my parents back this huge lump sum of money that they initially put into the house.  This is one issue I will be revisiting again and again!

The second downpayment from my parents came when I went to refinance.  I thought our original mortgage interest rate of 5% was outstanding, but then rates dropped even lower!  Thinking that I had a maximum of 4-7 years left here in my city, we looked at a 10 year ARM to get the lowest rate for the time we expected I would be interested in holding on to the home.  Unfortunately, due to a glut of foreclosed properties in my city, the appraisal on my home came back extremely low, and we therefore needed to bring additional money to pay off the difference between the original loan and the new, lower amount of money in the loan.  This second downpayment loan my parents agreed to give me at the same cost as the bank rate and over a 10 year period…but they haven’t given me the numbers yet, so I have not started repayment.

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Staying Strong in the face of shopping Temptation

Yesterday was a tough day to NOT spend money.  Both Lilly Pulitzer and Kate Spade were having HUGE sales….$300 dress for $50, etc.  Both are brands whose items I love but cannot normally afford, and I only buy when I’m looking for something specific and can find it on sale or previously owned.  Getting their items at such a big discount is a huge incentive to shop, but right now it’s a bad idea because:

a) I don’t NEED any particular items from them.

b) this is a VERY expensive summer for me (need to detail in a later post)
So I’m holding out.  I wish I wasn’t tempted – I’m jealous of the PF bloggers who are so into minimalism!!  I want things.  From reading PF blogs, this seems almost like a bad character trait…but I do want to have a beautiful home and beautiful clothes and items that make life more convenient or more fun.  But right now I want to get my financial house in order and for purchasing Wants, I’ll need to save up money for something specifically in mind, rather than just buying because it’s at a big discount.

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round 2 – won!

So I have not updated for a while, but there had been a few major financial issues I was working on, mostly involving my home/property taxes.  I just got notified in the mail today that my city has corrected its mistake and agrees with my property assessment appeal!  Woo hoo!  A lower home assessment (due the majorly falling home values in my city this year) means I will get a lower tax bill for July 1st!  Very excited that this came before the tax bill (when I called the city, every week since December, they kept pushing the date of the result further back) because it would have been very difficult to get a gigantic bill, pay it, and then argue the city to refund me the amount once our little “issues” had been resolved (in August).

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success – refinanced! (finally)

After 6 months of trying, we finally closed today on a refinance!  We thought we had a great rate a few years ago when I bought the house during the $8000 government sponsored first time homebuyers credit, but interest rates had dropped and I was able to snag a more-than-1% drop in my rate!  More details later, but I thought I’d briefly share a few thoughts on the process:

Don’t expect to be given information in a timely fashion.  We got our closing date about a week beforehand, and didn’t get our HUD statement (the final numbers for the loan) until this morning.

Read EVERYTHING with a fine tooth comb.  Don’t be afraid all of the agents and other people at closing will be mad at you for taking so long (although the sellers at my first closing were!), this is a binding legal document you are signing and you want to make sure you understand and agree with what you are signing….which brings me to the next point:

– Expect to make changes.  When you are going over the documents line by line, you will most likely have questions about where a certain number came from, or what a term means.  ASK!  Double check everything!  We found several errors, from the term of the loan to misspellings to incorrect fees.  A small typo could mean problems when the deed is recorded, etc etc.

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