Changing Circumstances

August 3, 2012 By 4 Comments

When I started this blog in 2009, I was broke and in debt to my eyeballs. It began as a way to publicly hold myself accountable and vent my need to talk about my money problems.

Those needs are changing for me because my circumstances are changing.

When my mother-in-law died, she left us a big physical mess in her house, but the financial picture is coming out nicely. Even though the details and paperwork have been horribly scattered and difficult to piece together, the end result is significant.

I have 2 side businesses that are not generating enough money to quit my day job, but should be by this time next year.

Right now, I have just under $17,000 in credit card debt. By Monday, it will be $3500. By December, it will be gone.

We’ll be dropping $15-20,000 into modernizing the house we’ve inherited, but then we should be able to rent it out for a net profit of $800 per month.

We paid off the inherited car last night. We haven’t decided if we’ll keep it or sell it.

All told-by the end of the year-we’ll have no debt except our primary mortgage and the additional income stream of a rental property. By the end of next year, our mortgage may be gone.

That’s a significantly different place than the one I started in 3 years ago.

What’s it mean for Live Real, Now?

It’s hard to talk about paying off debt every day when you don’t have debt. I imagine I will post more about making money and increasing the top line rather than shrinking debt and reducing the bottom line.

What’s next? I’m not sure, but I do know that I won’t be going away. You’re stuck with me. What would you like to see?

Enhanced by Zemanta
Filed Under: Finance, Life Tagged With: , ,

Handling a Windfall

July 27, 2012 By 8 Comments

What would you do if you were handed $10,000 tomorrow? $20,000?

The easy default answer-if you spend time in the personal finance world-is to pay off debt and save the rest.

But is that the right answer?

When my mother-in-law died, we inherited a little bit of money, a house that hasn’t been updated since the 60s, and a new-ish car that still has an active loan.

We also have about $16,000 in credit card debt and a small mortgage.

The Dave Ramsey answer would be to pay off the card at all costs and worry about the inherited house later, but that seems off. If we modernize the house and fix the things that are broken, we have a mortgage-free rental property. Our local rental market is strong; we should be able to clear $800 per month after expenses.

Is the right answer to pay off our card and scrape to get the house ready or should we fix up the house and use that new income to pay off the card?

My wife has also inherited an IRA that-due to its status as a Beneficiary IRA and the fact that there have been disbursements-has to be drained within 5 years. It’s not huge. After taxes, it’s about the size of the car loan. Should we make the $200/month payments, or cash out the temporary IRA and make the car loan go away immediately? Should we cash out the IRA and open one for my wife?

Although the cause was sad, these are good problems to have. If we manage this right, we’ll be more financially stable than we would have been for decades, otherwise.

I want your opinion, please.

2 questions:

1. House or credit card?

2. What would you do with a $10,000 IRA that has to be cashed out over the next 5 years?

Enhanced by Zemanta
Filed Under: Finance Tagged With: , , , , ,

Becoming a Landlord

June 20, 2012 By 4 Comments

For those of you just tuning in, my mother-in-law died in April.

Since then, we’ve spent nearly every available moment at our inherited house, digging out and cleaning up.

My mother-in-law was a compulsive hoarder. I’m not going to get into the details of her compulsion, but we have-so far-filled a 30 yard dumpster. For perspective, that’s big enough to fit our Ford F150.

Now that the house is approaching the point where we can begin updating and remodeling, I’ve been looking into the requirements to rent it out.

In my city, I need to get a business license that costs $95 per year. This comes with a requirement to allow the city to inspect the property every two years.

Before they will issue the license, I have to take an 8 hour Minnesota Crime Free Multi-Housing Program class that covers tenant screening, lease addendum, evictions, and “etcetera”, followed by a physical audit of the property to ensure minimum security standards.

The lease addendum basically reads “If you are loud, obnoxious, threatening, criminal, intimidating, or doing/dealing drugs, you will be evicted.”

The actual costs to become a landlord are going to be:

  • Something under $100 for my wife and I to take the landlord class. The price varies from free to $40, depending on the hosting city.
  • $95 per year for the privilege of using our private property to conduct a private transaction with a private individual.
  • The remodel. I don’t know what this is going to cost, yet. There’s an unfinished bathroom in the unfinished basement. I’d like to finish both of those, though the basement will never hold a 3rd bedroom, due to code. The entire house need to be painted and have the trim replaced. The dining room and hallway have hardwood floors, hiding under linoleum that was never properly put down. We may need new windows.

If possible, I’d like to keep the project under $20,000. Since we’re not adding a 3rd bedroom, or tearing out the kitchen cabinets, it should be possible.

In the meantime, expect to see a bunch of remodeling and renting related posts coming up.

Enhanced by Zemanta
Filed Under: Business, Finance Tagged With: , , , , ,

Making Up Stories

January 9, 2012 By 7 Comments

Saturday night, as I was walking out of the pizza place, I saw a beautiful young brunette standing on the sidewalk talking on her cell phone.

As I walked past, I heard, “I could pay my rent if they’d just give me my last paycheck! They owe me like $200.”

That’s it.

Have you ever heard a tiny piece of a conversation and used that to build a back story in your own mind?

I do that all of the time.

In fact, I’m going to do that now.

First, what can I know from those two sentences?

  • She was unemployed. She was more worried about her last paycheck than her next one.
  • She had worked for a scummy, fly-by-night, something-or-other. Good companies don’t withhold paychecks.
  • She had no emergency fund. If she had one, $200 would be an inconvenience, not a disaster.
  • She rented, and had roommates. This conversation occurred in the parking lot of a pizza place in a reasonably affluent suburb. For $200, she wasn’t living alone. Whether she rented a room or shared an apartment would be a mere guess.

Those items can-I believe-be taken as fact, given the evidence at hand.

Now for the conjecture:

  • She was a waitress. A $200 final paycheck probably means her hourly wage was low. Besides, pretty, young, unskilled girls often become waitresses. It’s one of the few ways to make good money without a degree of any kind.
  • The restaurant wasn’t a chain. Chain stores have lawyers and procedures. They don’t withhold final paychecks.
  • She invites drama into her life. When you work for a company that makes a habit of shady practices, like withholding final paychecks out of spite, you know it happens. It’s not a surprise. If you continue working there, you are just waiting in line for your turn to have problems.
  • She wasn’t close to her family. In an emergency, $200 from Mom & Dad is nothing. In my mind, she only has one parent and isn’t close to that parent, but that’s purely invention.
  • Her friends are in the same boat. Short-term planning, no reserve cash, no room to let a friend couch-surf for a couple of weeks.
  • Next month, she’ll be having the same problems, but she’ll find someone else to blame. Her ex owes her money, or her roommate stole the last of her cash.

That’s my entirely unsupported guess of a young stranger’s life story. My opinion isn’t flattering, but how could it be, when $200 is enough to make the young woman panic?

Have you ever played this game?

 

Enhanced by Zemanta
Filed Under: Finance Tagged With: , ,
«Older Posts
Newer Posts»