Net Worth Update

April 4, 2013 By 4 Comments

I looked back at the spreadsheet I use to track my net worth, and realized that I have been filling it out quarterly, though I can’t say that has been on purpose. Apparently, I get an itch to see my score about four times per year.

This quarter is the first time in a long time that my net worth has dropped. We got our property tax statements last week and found out that our houses have dropped a combined $21,700. Since we’re not planning to sell, that doesn’t matter much.

What’s interesting to me is that, even though our property values dropped $21,700, our total net worth only fell $10,567. We’ve been hustling trying to get the Tahoe paid off. It’s going a little bit slower than I had hoped, but it’s progressing nicely.

I do feel good that, even if I would have been focusing on my mortgage, I still would have lost the mortgage race. That means my misplaced priorities of acquiring more debt to snatch a fantastic deal didn’t cost me the race. Now, I’ll be forced to take a vacation in Texas, coincidentally in the same town as my wife’s long lost brother. I think we can make that work.

I rounded off the credit card and vehicle totals because one is used every day and paid off every month and the other has a steady stream of money getting thrown at it, so the numbers change often.

All in all, I don’t have any room to complain. I am looking forward to paying off the truck and focusing on the mortgage. We could swing quadruple payments, which would pay off the house shortly after the new year starts.

Net Worth 4/13

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Rental Property Update

October 8, 2012 By 11 Comments

As I’ve mentioned before, we are fixing up the house we inherited in April to rent it out.

We already have renters lined up starting in February. My wife has known the couple for several years, so we’re not worried about strangers wrecking the place. We will be doing a lease, because skipping that is dumb, even if you know the tenants. They will be paying $1200 per month, plus electric, water, and garbage. We’ll be covering gas and-of course-property taxes. We’re paying the gas bill because we’re going to have most of the appliances on the repair plan through the gas company so we won’t have to worry about appliances breaking.

Those expenses will run about $325 per month, leaving $875 as profit. We’ll probably save another $200 of that to cover future vacancies and for property issues that I’m not foreseeing, leaving $675 to save and invest.

Over the summer, we have spent quite a bit of money fixing the place up.

  • Dumpsters x3, $1200. Did I mention my mother-in-law was a hoarder?
  • New boiler, $4500.
  • Electrical repair, including running power to the garage, $1400.
  • Plumbing & gas repair, $900.
  • New stove & refrigerator, $1000.
  • Landscaping, $2500.
  • Other repairs, $8000.

So far, we have spent about $19,500 fixing this place up. There is still a bit of work left to do.

Are we done?

Crap, no.

  • We have two rooms of stuff that we need to research and price individually before we sell. This includes some old cameras, typewriters, and collectibles.
  • We need to buff and polish the hardwood floors that are in surprisingly good shape.
  • We have to scrub the entire house. Cobwebs and mouse crap show up in interesting places when 90% of your house is buried for most of 30 years.
  • We have to clean the last of the debris out of the basement. This, and some other stuff, will mean yet another dumpster.
  • We have to paint walls and ceilings all over the house and the basement floor.

The to-do list will come with a price tag somewhere between $1000 and $1500.

That comes out to about $21,000 spent to make $675 per month. In just 3 years, the property will be turning a profit, then it becomes an actual profit center for us, hopefully forever. The expenses are all tax deductible, but only as depreciation, which means the cost has to get deducted a bit at a time over the course of the next 5 to 30 years.

On the other hand, we could probably sell the place for $200,000. It’s going to take 25 years of renting to make up that difference.

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Reason #45,682 Why It’s Good To Have An Emergency Fund

May 9, 2012 By 3 Comments

My mother-in-law died two weeks ago.

It’s sad, but I’m not going to get into the emotional devastation that comes with the death of a loved one here. At least, not today.

Today, I’m going to talk about the money, but not the funeral expenses.

I’m talking about the expense of taking over her stuff. When she died, she was living in her own home, paying her own bills.

Now, we have a small stack of expenses we weren’t planning for.

She had 2 cars. She actively drove one, and kept storage insurance on one that was parked in the driveway. Combined with the homeowner’s insurance, that’s $110/month.

One of the cars has a loan. The car is worth $4000 more than the loan, so it’s not worth letting the bank repossess it. That’s another $200/month.

The gas and electric add $50 to the monthly tab.

Setting aside money for the property tax adds nearly another $200 per month and the first half is due next week.

I rounded the numbers off here, but that’s $562.58 that’s outside of our regular budget and doesn’t address some bills that we paid off instead of arguing with bill collectors while we straighten out the estate.

This is the kind of scenario that makes me happy to have an emergency fund. We are able to pay the property taxes and keep the lights on because of it. A few years ago? The car would have been gone and the house dark within a month.

Now? The emergency fund covers the immediate expenses and we have some breathing room to adjust our budget. For example, the money we were setting aside for our next car is now being earmarked for paying off our surprise car loan.

 

 

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The Do-Over

June 10, 2011 By 9 Comments

This post is from Kevin @ DebtEye.com. Kevin is a co-founder @ DebtEye.com, where he helps consumers manages their finances and find the optimal way to get out of debt. . This is guest post is part of a blog swap for the Yakezie, answering the question “If you had one financial do-over, what would it be and why?”.

I usually look on the brighter side of things. There’s never an incident where I wish I could go back in time and change things. Everyone will eventually make mistakes, but it’s up to them to learn from these mistakes and make sure it never happens again. However, if there was one moment in the past I could change, It would be not buying a house straight out of college.

Throughout my college days, I have been fortunate to have saved up enough money for a down-payment on a house. That’s not enough to maintain debt-free living. I worked with several internet gaming companies and acted as an affiliate for them. I saved up around $25,000 and decided to buy a condo with my brother.

I thought it would be cool to own a condo in the city. I was really looking forward to turning this new place in a bachelor’s pad. This was probably the worst decision I’ve made. I always believed that it was better to buy a property instead of renting one, since some of the payment would go towards paying down the loan. Of course, I realized that this wasn’t the smartest of ideas.

Here are some reasons why I regret it:

  1. Property Taxes: Property taxes in Chicago are one the highest in the nation. For a $320,000 property, annual real estate taxes were roughly about $5,800/year. Property taxes usually go up every year, it can be difficult for some people to maintain these payments.
  2. Valuation: Thankfully, the property only decreased 10% in the past 2 years. It’s not as bad as some areas, but the timing to buy a property was poor.
  3. Cost: Buying a property involves more money to spruce up the place. New paint, new appliances, new floors, etc. Most of us won’t get a free appliance from the government. Many homeowners have to put in extra care of the property, so when they sell it, it’s still in great condition.

Looking hindsight, I definitely wish I rented instead of owning a home. In this day of age, I think most people can make the clear argument that renting is worthwhile to look into.

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