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Twitter Weekly Updates for 2010-05-29

Misc

Becoming a Landlord

Business, Finance

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.

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My Credit Cards

Finance

This announcement is a bit premature, but not everything that’s premature has to end in an evening of disappointment.

At the beginning of the year, I transferred the balance of my last credit card onto two different cards, each with a 0% interest rate.   One card got a $4,000 transfer and the other got $13,850.  The approximately $415 in fees I paid for the transfer saved me nearly $1500 in interest this year.

The card that got the big balance is the card we use for a lot of our daily spending.    On my statement dated 2/18/2012, the balance on the this card was $14,865.23.  At the same time, the smaller card had a balance of $3,925.09, for a total of $18,790.32.  When I started my debt-murder journey in April 2009, it had peaked at just under $30,000.

When my payments clear later today, that balance will be gone.

That is nearly $19,000 paid down in 8 months.

Now, the inheritance we picked up did accelerate our repayment a bit, but only by a few months.

Starting from $90,394.70 in April 2009, we have paid down $63,746.70, leaving $26,648.00 on our mortgage.

I’m more than a little excited, which–as usual–is the cause for the prematurity.

New goal: pay off the mortgage in 2013.

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My Favorite Present

Parenting

My favorite Christmas present this year was the one I gave to my 13 year old son.

Allow me to walk you through his evening….

First, he opened one of his presents.  It was just a small box, about 3 inches by 4.  A Japanese puzzle box.  Inside the box was a note that read:

Closed off in the smallest room you will find a clue to bring you closer to your prize.

When he checked the cabinet below the sink in our basement bathroom, he found another note that sent him to my business website one a page with a url that contained “the square of my children”.   When he eventually figured out that I meant their ages, not their quantity, he found a clue on my website.

This lead him to a section of his Minecraft server.  It’s effectively a no-man’s land because he and his friends set off a nuke and turned it into a giant pit.   They fall down and die there.   Inside the pit was a cave.  Inside the cave was a clue.  The clue read:

Grandma and Grandpa love you.

What do you do when someone says they love you?  You either get scared of the commitment and end a perfectly good relationship, or you say “I love you, too”.     When the kid finally called his grandparents to tell them he loves them, they told him to give his parents a kiss.

I’m a jerk.

He came over and gave me a hug and a kiss.  I handed him a piece of paper.   When he looked at it, he asked if it was supposed to be torn in half.  I reminded him that he has two parents, so Mom got a hug and a kiss, too.   The resulting clue read:

The Answer to the Question of Life, the Universe, and Everything

Naturally, this points to The Hitchhiker’s Guide to the Galaxy, but the boy hadn’t read far enough into the book to understand the reference, so he had to hit google.    After spending time looking for chapter 42, he finally thought to look at page 42, which had this clue:

My Little Pegasus

Two steps to the right

Two steps forward

Two steps up

This clue started at the My Little Pony I set next to a Pegasus in my daughters’ room.   The boy was in dense mode because he had to ask his sister what a Pegasus was.  She also had to suggest he open the closet door when one step forward made him bump his nose on it.

For all of that work, he got the Ticket to Ride game.  He laughed the entire way through the treasure hunt, then decided he hated the whole process.  However, for two nights running, he’s stopped the video games to play his new game with his family.

It’s a present he’ll remember forever.

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Twinkies: A Failure of Unionization

News

Box of Twinkies
Box of Twinkies (Photo credit: Wikipedia)

Twinkies may survive nuclear warfare, but the iconic sweet treat ultimately couldn’t withstand the might of the unionized workforce. Faced with mounting losses and overwhelming debt, due in no small part to the relentless demands of the various unions representing the nearly 19,000 employees, Hostess Brands filed bankruptcy for the second time in January 2012 and ultimately requested permission to liquidate it’s assets in November of last year when a buyer failed to materialize. While many factors played a part in the demise of the maker of such all-American snacks as Ding Dongs and Ring Dings, as well as childhood favorite Wonderbread, there is no denying the fact that costs imposed by union contracts were a major factor in the shuttering of this once-beloved company.

While there is certainly plenty of blame to go around, the simple fact is that nearly 97 percent of the company’s unsecured claims were from employee pension funds, according to the Chapter 11 filing. How did those claims arise? Simply put, the skyrocketing pension expenses were caused by the unions continuing to push for overly generous retirement rewards despite overwhelming evidence that the company could never sustain those costs. True, the unions did agree to considerable concessions prior to and even following the first bankruptcy filing in 2004. However, that was only after union officials had pushed wages and other benefits into the stratosphere, even though Hostess has been struggling for years to remain competitive.

Certainly America’s changing eating habits, increased competition from such companies as McKee Foods, makers of Little Debbie snack cakes, and rising commodity costs all contributed to the ultimate demise of Twinkies. There is no doubt, though, that union contracts inhibited the company’s ability to adapt and make the necessary changes to remain profitable. Not only were employee costs out of control, ridiculous union rules made it nearly impossible for the company to make money. These are just a few of the rules that hampered Hostess’ management:

  • Twinkies and Wonder Bread could not be delivered on the same truck.
  • Drivers could only deliver one product, even if they did not have a load and a load of another product was waiting to go out.
  • Drivers could only drive. They had to wait for loaders to fill their trucks.
  • Likewise, loaders could only handle one product. Their contract prohibited a Twinkie loader from helping out if the Wonder Bread loaders were shorthanded.

Yes, management agreed to these terms, but often they were forced to do so in order to prevent a costly strike. In fact, it was a labor strike that lead to the decision to liquidate.

Unions are meant to protect workers from dangerous working conditions, overbearing management and unfair labor practices. Ensuring a living wage and decent benefits is another of their responsibilities. However, it is evident that in this case, the unions became as much an enemy of the Hostess employees as of the company’s management. As a result of their unwillingness to compromise and make wage and benefit concessions, almost 20,000 people no longer have a job that needs to be protected. In the end, the unions drove not only the company but themselves out of business.

Not to fear, however. Two private equity firms acquired Hostess’ assets last fall and are beginning to turn the company around. Production of Twinkies began again in June, and the gooey sponge cakes returned to store shelves on July 15. The workforce has been dramatically reduced and will not be unionized. In the end, probably the only winner in this battle is America’s sweet tooth.

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