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Slumlord Update

We’re six weeks into our new lives as slumlords. Our tenants moved in late in January for a lease that started February first.

Our tenants are paying $1200/month for a two bedroom, 1 bathroom house and 2 of the 3 stalls in the garage. This is in a first ring suburb. The house itself is a bit under 2 miles from the border of Minneapolis.

The rent is on the lower end of the curve for the size and location, and my wife has known the tenants for years.

Of the $1200 we get each month, here are our fixed expenses:

Water/sewer/garbage: $170 per quarter
Property taxes: $2359 for last year

That’s $253.25 per month we pay for the property.

The tenants pay gas, electric, and cable.

That leaves $946.75 in profit for us each month. Yay!

But wait.

Two days after moving in, the new boiler went out. It was a pain in the butt, but the company fixed it for free. They even loaned our tenants some space heaters, since this happened when it was -20 degrees Fahrenheit.

A couple of days after that, the drain pipes coming from the bathtub gave out. Eighty-year-old cast-iron pipes do that. $325 for that fix.

The paint we put in the kitchen is peeling? $250 and a day of painting.

Part of our project with Sammy has him maintaining the property. For the winter months, he’s been cleaning out the snow every time it falls. $425 for February and March. Welcome to Minnesota. I’m not sure this is going to be a continuing part of the property service next winter.

Sink clogged further down that we can reach with our pipe snake? $125.

3 feet of snow melting faster than the ground underneath is thawing, allowing water to seep through the basement walls? We don’t know, yet. That fix has to wait until the snow is gone.

Of the $1893.50 “profit” we’ve received so far, we’ve had to pay out $1125. Of the remaining $768.50, we’re setting aside $500 per month for future repairs, which we expect to keep making for at least a few months.

Hooray for a -$231.50 profit! It makes all of the work for the last 10 months worth it.

Girls Don’t Fart

Finance, Life

A few years ago, I was playing a game a friend was developing. As part of the setup he asked me to tell him something I believed as a child but now knew not to be true. My answer? Girls don’t fart.

When I was at summer camp one year, a camp counselor gave me that glorious and confusing bit of knowledge. He sounded serious and I was young, with no sisters. Naturally, this entered my personal Canon of Life’s Facts. Over the next few years, I’d get into arguments with my friends that went something like “I don’t care if you have 10 sisters! You don’t know what you’re talking about!” Yes, I could be a little jerk. I don’t think that misconception was actually cleared up until high school. It’s not that I actively believed it, but I had no reason to think about it. That was just the way it was. Girls certainly didn’t fart around me.

I’m married with three kids, two of which are beautiful(and gassy!) little girls. A belief doesn’t get more shattered than this one.

Now, some 25 years later, I find myself occasionally running into other beliefs that I’ve seemingly always had, but have no reason to keep. These are–or were–part of my personal Canon. Once accepted, even if they were only accepted implicitly, they have been unexamined and unquestioned. It’s just the way it is.

For many years, I thought debt was normal. Everybody had payments. Everybody used credit cards. Everybody lived beyond their means. Right? No. The reality is that it’s not everybody, and the people who are living beyond their means are living a broken system. Normal is spending actual money for things you can actually afford. Normal is not paying for the use of someone else’s money. Everything else is dysfunctional.

Another Canonical Misconception was that money could take care of itself. I didn’t know anybody with a budget. The closest anybody came was the “balance available” line on an ATM receipt. Couple this with an unquestioning acceptance of debt, and it’s no wonder how I ended buried under my credit cards. Having a budget is important. Knowing where your money has gone and where it is supposed to go is important. Without this, you’ll never be in control of your finances.

I’ve often thought that you get what you pay for. Assuming that more money somehow causes something to be of better quality or utility is dangerously expensive. There is a level that means something is so cheap it can’t possibly be worthwhile, but there is a huge spectrum of quality above the garbage price point. There is also a line above which no manufacturing can improve the cost and you are paying strictly for the brand or the ego boost. In today’s world, with stores and manufactures all around the world just a click away, it’s easier than ever to find a good deal for a good price.

These are just a few of the ideas I’ve held without question until they were shattered suddenly. Now, I try to examine my beliefs and make sure they still make sense in the face of my current knowledge and experience.

What Canonical Misconceptions have you overcome?

This post is a blast from the past. It ran a couple of years ago and I think it’s worth reviving.

Let me check….

Finance

A few days ago, I asked a coworker if she wanted to go out for lunch. She said she’d have to check her bank account before she decided.

What?

If you have to check your bank balance to know if you can afford something, you can’t afford it. It really is that simple.

Now, strict budgets aren’t for everyone, but everyone should know how much money they have available to spend. If you don’t know what you have to spare, you need to set up a budget.

Period.

After you’ve done that, you can ignore it, with the exception of knowing how much you have available to blow on groceries, entertainment, and other discretionary purchases.

If you don’t know where your money needs to go, how can you determine how much you can spend on the things you want?

Phone Insurance

Finance

Thursday, at parent/teacher conferences, I sat on my phone and broke the screen.

English: Part of the Sprint Nextel logo (Photo credit: Wikipedia)

Not just the glass, but the LCD.

Not a problem. I pay for Sprint’s repair plan.

Little did I know that Sprint–in their infinite #$!$%#$%–considers a phone unrepairable if there is more than one crack on the screen. That effectively means that any broken screen is a total loss.

It’s good to know my $4/month has been wasted.

Other than a phone I had stolen last year, I still own every phone I’ve ever owned. None have had water damage or anything catastrophic happen to them, so I didn’t get the replacement side of Sprint’s insurance plan.

To summarize:

I broke my phone in a way that Sprint won’t fix, even though I pay for the fixit plan.
My phone costs $600 when you aren’t signing a new contract.
My phone has the most expensive LCD to replace at the moment.

The Total Equipment Protection program costs $11 per month. Given my history, that’s a waste of $11, though it would actually be a waste of $7, since I have been happy to pay $4 for the repair plan.

$7 per month since I got my first smartphone in about 2008, means I’ve saved $420 in insurance fees I haven’t used.

Today, I paid $298 to replace the LCD on my phone. That includes overnighting the part to the shop since it’s not stocked and I’m leaving town tomorrow.

An insurance claim from Sprint comes with a $150 deductible.

All told, I’m $270 to the good.

Would I get the insurance if I were signing papers today?

Probably not. A $7 monthly bill doesn’t hurt, while a $300 surprise does, but that’s why I have a repair fund.

Do you have insurance on your phone? Have you used it?

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.