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Mortgage Race, Part 2

As I mentioned last month, Crystal and I are in a race to pay off our mortgages. The loser(henceforth known as “Crystal”) has to visit the winner. Now, since–judging by the temperature–Crystal lives in Hell, I think it would be good for her to visit in the winter. There something about the idea of going ice fishing, staring at a hole in the ice while sitting on a 5 gallon bucket, cursing the day I was born.

Today, she threw down the gauntlet again. She has apparently decided that, since her prerequisites are met, she’s going to win. Sure, she’s closed on her house and built her savings back up to $20000, but it doesn’t matter. I’ve sent a small army of arson-ninjas to keep her from getting ahead. They are so small, they can only carry tiny matches and single drops of gasoline, so the damage they can do is tiny, but it will add up. Just a word of advice: if you hire an army of arson-ninjas, go for the upsell and get ninjas that are at least 2 feet tall. Anything less is just inefficient.

When I announced the race last month, my mortgage balance was $26,266.40. Today, it is $25,382.53. In three days, there will be another $880 applied to the principal.

In February, our renters will move in and we’ll conservatively have another $650 to pay. When that starts, our balance should be around $23,000. Adding a portion of the rent payment should mean we pay off the house in May 2014. However, when I bring in our side hustle money, that will bring us back to September 2013.

Crystal’s projected payoff is July 2013, so I’ll have to hustle.

Selling Your Car

Finance

: English: Jalopy car in Joshua Tree National Park in Hidden Valley Campground (Photo credit: Wikipedia)

When it’s time to replace your car, most people focus on the new car, instead of the old, but that is ignoring real money. Your old car–unless it has disintegrated–still has value. Sometimes, it’s just time to ask yourself, “When should I sell my car?”

When you’re looking to sell your car (like with We Will Buy Your Car), you generally have several options:

Tow & crush. If your car has been wrecked, doesn’t run, or is just old and beat up, you may be stuck with calling a junkyard and accepting $50 for them to pick up your car and crush it for scrap.
Trade it in. This is probably the least hassle, but–other than #1–doesn’t pay well. Dealerships are willing to pay something under what they will get at a wholesale auction, which is quite a bit less than the blue book value.
Sell it yourself. Now you’re thinking, “He’s going to buy my car! Oh, bother.” It can be a pain, but it’s also the best way to get a decent price for your wheels.

When you sell your car, there are a few things to keep in mind, much like when you sell something on Craigslist.

Don’t be alone. There are bad people in the world, but they don’t like witnesses. Bad things are much less likely to happen if you have company.
Know your price. Specifically, know three price: your dream price, the price that would make you happy, and the absolute lowest price you are willing to accept. Make sure you figure these numbers out ahead of time. Know what you are comfortable with before it comes time to close the deal.
Check IDs. The buyer is going to want to test-drive your car. That’s fine, but you want to make sure you know who is driving off in your car. “Officer, Sumdood took my car. He was wearing jeans.” That won’t get your car back.
Clean it up. Get the car detailed before you show it to a potential buyer. A sparkling-clean car will almost always bring in a few hundred extra dollars. It’s well worth the expense.

Following this plan should make the sale go as smoothly as possible and bring you the most possible money.

Readers, what have you done to dispose of an old car?

This is a sponsored post written to provide some insight into the world of used car retail.

Taxes

Business, Finance

It’s almost time to pay Uncle Sam for the privilege of living in the US.

Since my business partner and I just finished our corporate taxes last week, I thought it would be a good time to finish my personal taxes. I’ve got a relatively complicated tax situation. I’ve got personal taxes, my side-hustle taxes, and our side-hustle taxes. I had my side hustle taxes done and my personal taxes were just waiting for the final numbers from our corporate filing. We’re an LLC, run as a partnership, filing as an S-Corp.

I was all set to get about $100 back from my personal and side-hustle #1 taxes. That’s a perfect tax year. No more money out-of-pocket and no free large loans to the government.

Side-hustle #2 ruined that. It started taking off in September, so we’d never paid any estimated taxes. When I added those numbers in, I owed a bit under $2000.

Ick. I hate owing.

Thankfully, I set aside 25% of all of my side-hustle income just to cover this.

It was still too much. What could I do to lower my tax bill?

My IRA!

I’d only contributed $100 to my traditional IRA last year. Contributions are tax deductible and you can make them until April 15th of the following year.

That’s great. I had money sitting in a savings account, earmarked to get wasted by the government, and I had an unused tax deduction that I could still contribute to.

That got it down to a $1000 tax liability.

Was there more? What could I do?

When I paid off my car last year, I started sending half of my car payment to an account earmarked for the next car. I had $1700 sitting there, so I sent $1200 of it to my IRA, leaving $500 to hopefully cover any car repairs that come up. Hope isn’t a good financial strategy, but I’ve also got a straight brokerage account that’d doing pretty well, so I can cash that out, if necessary.

Down to $800.

Contributing a bit over $3000 to my retirement saved me more than $1000 right now. That’s sweet, but I still owed money.

Did I miss something on my first side hustle?

$67 to oDesk? How did I manage to keep my annual oDesk bill down to $67? I had a full-time guy in the Philippines for a while last year, and I regularly hire writers for my niche sites.

So I hit oDesk and ran some reports. I was off in that deduction. By $2400. I have no idea where that $67 came from. Including it dropped my side-hustle profit considerably, and brought my total tax bill to a net $7 refund.

There is a reason I never file my taxes as soon as I finish with Turbo Tax. I always wait a week or two, and I always come up with something I missed. This time, the wait saved me nearly $2000.

SOPA Is Evil

Business

Piracy So the record companies, the movie studios, the obsolete media, and some large software companies want the ability to nuke a website from orbit if they find any of their intellectual property there.

Or a hint of their intellectual property.

Or, “Oops, I guess that wasn’t ours. How much business did you lose during the 6 month appeal of a non-judicial takedown?”

Pure crap.

I’m not saying that from the perspective of some junior high pirate watching free porn in his parents’ basement. Intellectual property is the basis of my livelihood. I am a Microsoft Certified Professional; a software engineer. I am a blogger; a writer. I am a web developer; again, pure IP.

Giving private companies the right to arbitrarily take down sites for what may or may not be an actual violation is absurd.

Over the last few years, a law firm called Righthaven(spit!) has been teaming up with news agencies around the country to extort fees out of websites–generally small sites–for violating their copyright. Most of those cases involved individual users–not owners–posting fair-use snippets of articles. Since the cases were filed in Nevada, it would have cost more to fight the suits than to simply pay the blackmail, typically $5,000-$10,000.

Now, add the ability to threaten to administratively shut down the site if settlement isn’t made in 24 hours. That eliminates the ability to consult with an attorney, undermining the legal system completely.

All because once-successful companies can’t cope with the current world.

I’m not a fan of piracy. I enjoy buying movies because that encourages the people who made them to continue to make movies. The delivery system sucks.

Netflix has developed a successful business model out of making it easier to watch movies legally than to pirate them. For $8/month, you can watch as many movies as you’d like. If you have a $50 Roku, or any number of other devices, you can watch right on your TV. Add another $8/month to that, and you can get new DVDs delivered right to your door. For less than $20/month, they are delivering licensed, legitimate content and making a profit doing so.

How did the movie companies respond?

Did they increase the availability of their libraries, to get more wanting-to-be-honest customers paying a small fee to watch their content?

Of course not. They reduced the instant library and extended the amount of time before they would license new movies for rental. They made it harder to get their content legitimately, which increased the amount of piracy.

Now, since Plan A is biting them in the ass, they are pushing for yet more legislation to salvage their failed business models.

Here are three options for watching movies I don’t own:

Option 1: Instant

Through the magic of Amazon Instant, Netflix Instant, or any of the magical Roku channels, I can…

Open an account. Once.
Find a movie I want to watch.
Watch it immediately. This could be included in a membership fee, or as an individual rental.

Option 2: Piracy

I am not recommending illegal activity. This is for the sake of example, only.

Download torrent software, like uTorrent. Once.
Go to a site like Torrentz.com and find a movie I want to watch.
Click the torrent link, let the torrent software open it and download the movie.
Watch the movie in a couple of hours. For free.

Option 3: Buy it.

Drive to the store each time I want to watch a movie.
Spend $15-$20 on the movie.
Drive home.
Fight the bank vault of plastic and tape they wrap the movies in.
Put the DVD in the player.
Watch 5 minutes of “Don’t Be a Pirate” garbage. Hey jerkface, if I’m watching the DVD, I didn’t pirate it. Bad market-targeting here.
Watch 15 minutes of commercials that I can’t skip through.
Watch 15 minutes of ~~commercials~~ previews that I can’t skip through.
Watch the movie. This process takes longer than the piracy and costs more than option 1.

On top of that, I’m told I’m a pirate if I back up my movies for archival purposes. Or if I rip my movies to my network to allow me to watch them conveniently. I’m told that I’m merely licensing the content of the disc, but if the disc fails, I have to buy a new one. I can’t just download the content again.

This is a failure, and it isn’t a legislative failure.

The companies that are embracing modern options are succeeding, and will continue to do so. The companies that refuse, at the expense of their potential customers, will sink.

Expensive Cheese

Finance

Saturday morning, I woke up to a room-temperature refrigerator. I dislike drinking milk that’s 40 degrees warmer than I’m used to.

We called the repairman who showed up at 9PM and poked around in the fridge for a bit before announcing that he didn’t have the needed parts in his truck.

The parts came Monday. The next repairman got there Tuesday afternoon. For those of you keeping track at home, that’s nearly 4 days without a refrigerator.

That poor bacon.

Tuesday’s repairman didn’t think highly of Saturday’s. Apparently, the two parts Saturday ordered never go bad at the same time, so he was guessing.

He also didn’t notice the slice of individually wrapped American cheese that had slipped between a shelf and one of the cold-air vents, preventing any air flow at all.

Grr.

I wish I would have noticed that on Saturday. I now own the most expensive cheese in the world. It’s not Pule, which comes in at $616 per pound. This lowly slice of American cheese cost me nearly $200. At one ounce per slice, that’s $3200 per pound. Of course, I’m counting the lost food. My hamburger, eggs, bacon, milk, and mayonnaise are gone, along with every other perishable bit of food we had on hand.

I don’t know how much the repairs cost. Saturday’s visit, minus the parts, was billed at $95. I didn’t see the total for Tuesday’s visit.

We pay for a repair plan through our gas company. For around $15 per month, we get a list of appliances protected. We don’t have to worry about our washer, dryer, water softener, stove, refrigerator, or our sewer main. Assuming Tuesday’s visit was billed the same as Saturday’s, this one repair paid for the plan for an entire year. When you count our sewer main–which backs up with tree roots once a year and costs at least $200 to fix–the repair plan is definitely worth it for us.

When we get tenants in my mother-in-law’s house, we’ll have the repair plan set up there, too.

Do you use any kind of repair plan? How is it working out for you?

Property Managers

Finance

As of last Monday, we don’t have any tenants in our rental house.

That makes me sad.

It makes me sadder that we were too nice and gave them an extra week free to get their stuff moved out.

Now we get the fun job of painting, replacing the linoleum, and probably cleaning the place up to get it ready for new renters that we haven’t found yet.

New renters.

Ick.

Now, we could put an ad on Craigslist and try to find renters ourselves.

Background checks.

Credit checks.

Interviews and walk-throughs.

Then, when we find someone, we’ll be collecting rent and dealing with any whiny issues that come up.

Yuck.

Or….

We can hire a property manager. The big name property management company in our area charges a $99 set-up fee plus $80 per month.

That covers:

Rent collection
Coordinating maintenance
Accounting
All of the other mundane details

If we add on the tenant-finding service, we’ll be paying them one-month’s rent, but they’ll handle the showings, advertising, background checks, and the lease. And their average tenant placement is 19 days. Another house in the neighborhood that used them had the house rented in about a week.

That moves our landlording firmly into the passive side-hustle category and all it costs us is (essentially) one and a half month’s rent with the added bonus that we’ll be asking the right amount for rent according to the market, instead of guessing. Our last tenants were probably paying $300 too little.

I think the property managers are the way to go, but I have absolutely no experience here.

Have any of you used a property manager? Was it good? Bad? Hell-on-Earth?