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Let me check….

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?

Black Friday Eve

Finance

Today is Black Friday Eve. It’s the day when people gather around the table and gorge in preparation for the mighty battle to

Black Friday shoppers at Walmart — Ick! Who thinks this is fun?

come on the fields of Wal-Mart.

We won’t be participating this year. My wife got laid off 3 weeks ago and I started a new job on Monday. The new job has a 2 week delay between pay period and pay check, so I won’t see a check until the middle of December.

We aren’t hurting but we are tapping into our savings to bridge the gap to paycheck #1. I just transferred $1200 to cover the gap. With that, the money we have to cover things not in our regular budget is $36. You can’t go too crazy on Black Friday with $36.

That isn’t draining our savings. We took some, but not all of it.

It isn’t raiding our Christmas present fund.

It isn’t taking money out of the braces fund.

Or any other fund.

This isn’t pain and we won’t be tasting poverty for Christmas. We just have to de-prioritize blind consumerism for the holidays.

Instead, we’ll sleep in a bit, then cuddle with a couple of little girls who will want to watch something horrible like Horseland first thing in the morning. We’ll follow that up with a leisurely breakfast, maybe a walk around the neighborhood pond and Thanksgiving-A-Day-Late with my wife’s family.

And a bit of remodeling and repair work on our rental property whenever my Dad can drag himself out of bed and come over.

It will be a good day and shouldn’t cost a cent. That’s what I’m thankful for.

Net Worth Update

Misc

Time to update my net worth. Here are the highlights:

We paid off the Tahoe we bought last fall, but the value of my Pacifica fell $5,000 since April. That made me sad.

In August, we had $1000 worth of car repairs and $5500 for braces. We had most of the money saved for braces, but had to juggle some savings accounts around to cover it. We didn’t have enough money in our car repair fund to cover the repairs. Between the two, we beat up our credit card a bit more than usual last month. I’m not happy about it, but I’m confident we’ll catch up this month. My current goal is to get that paid off by the end of September. If I do, I should be able to avoid paying any interest on the balance.

All in all, it’s not bad progress. Our assets dropped $171.61, but our liabilities dropped $10,931.13, so our net worth is up $10,000. You won’t catch me complaining about that.

What’s going to happen in the future? We’re going to remodel both of our bathrooms this winter. We’re hoping to buy a pony before spring.

I’m excited to see our budget evolve over the next few months.

My wife is working and my kids are all in school. With the way our schedules work, we’ve pulled the youngest two out of daycare, so that expense is gone. And there are a couple of other things in the works that I’ll be sharing when they are finalized. If things progress the way they are looking, we’re going to spend the winter living off of my income, and saving her’s. That makes me feel like putting on an ant costume and kicking grasshopper’s butt all over town.

Missing Money

Finance

Last week, I checked my credit card account only to discover I was over budget by nearly $1000.

What.

The.

Heck?

It threw me into a bit of a panic. How could we possibly have spent an extra grand without knowing it?

We didn’t buy new furniture. We didn’t buy new computers. We didn’t buy a new car. We didn’t take any trips.

Oh, wait.

I did take a trip. I went to work headquarters for three days. That’s about a $500 mileage allowance, plus three days of restaurant meals.

I forgot to file my expense report.

That’s where my money went.

Somehow, in all of life’s wonderful hustle, I neglected to ask my company for the almost $1000 they owe me. That’s an oversight, for sure.

Luckily, we keep that much padding in our other accounts, so I don’t have to pay interest on that money, but still.

That’s my money and I forgot about it.

I’m so not happy with myself.

What’s worse, is that even though I figured out the problem last week, I still haven’t gotten that expense report filed.

It’s not procrastination, I swear. I’ve just been absentminded and keep forgetting to do it. Right now, I’ve got “EXPENSE REPORT” written on my whiteboard to remind me to file it.

Cuz I’m going to do it tomorrow.

Mortgaging a Rental Property

Finance

Now that we’re down to the last ten grand on our mortgage, we’re starting to look into getting another rental property. The one we’ve got has worked out pretty well over the last two years, giving us about $800 extra each month. We broke even on all of the repairs we had to sometime in the spring. That’s almost $5000 in pure, almost-passive income.

With numbers like that, if we can get a similar property and keep the mortgage under $800, we should be golden for getting another property and avoiding having it as a new drain on the budget.

However…

There’s always a however.

Our current tenants are moving out at the end of the month, which means the passive part of the income is over while we either find a renter or hire a property manager to do that for us. Since that came at the same time I got the opportunity to be unemployed, there was a bit of panic at my house.

The idea of having a mortgage, no job, and no renter scared us into waiting to buy another property.

It’s not stopping us from getting ready for the next property, though.

We live in a fairly high-cost area. Our house is on an eighth of an acre and is valued at around $250,000. Our rental is on a slightly larger lot, but is a smaller house valued at around $200,000. We don’t have a quarter of a million dollars laying around waiting to hatch into a new house, so we’ll be getting a mortgage. A mortgage for a business property is a bit different than one for a home you’re planning to live in.

First major difference? You need a 20% down payment, with a 25% down payment getting you a much better rate. We don’t quite have that, but if we pushed, we could have it in 6 months, I think. And then we’d have no cushion if anything bad happened in our lives.

The next thing is that we’ll need a reserve that covers all of our expenses–personal and investment–for 6 months. That can be home equity, savings, cash, or retirement accounts. We’ve got this one covered.

We don’t qualify for a standard mortgage plan right now, but there are options:

Live poor and save hard for a year. We could make it happen in 6 months, but I will still want an emergency cushion just in case a job or tenant go away.
Buy as an owner occupant. This would mean we buy a new house, then move into it and rent out our current house. We’d have to stay there a year before we’d be allowed to rent out the new property.
Compare mortgages online. The internet is a wonderful thing, full of the complete knowledge of the human race. There is no better way to try to find an affordable mortgage than hopping on the net. Just make sure you’re looking at a reputable site and dealing with a legit mortgage company.
Live comfortably and save slower, then buy the property in 2 or 3 years.

Honestly, of all of the options, we’re probably going to do a combination of 3 and 5, but 2 is a serious consideration, since we’ve talked about moving out of the suburbs a bit anyway.

Did I miss anything? How would you fund a rental property?

Olivia Wilde is Having a Baby: What are the first-month expenses?

Celebrities, Gossip

English: Olivia Wilde at a San Diego Comic-Con... — English: Olivia Wilde at a San Diego Comic-Con panel for Tron Legacy in July 2010. (Photo credit: Wikipedia)

Olivia Wilde recently announced her pregnancy with fiance Jason Sudeikis as she’s due with her first child in the coming year. Although the couple have declined to reveal their due date, they likely are expecting to set aside a budget for their baby, even with their high incomes. With forty percent of moms saying that having a baby is more expensive than they initially assumed, it’s important to look at the overall costs in the first month for plenty of preparation and financial planning.

Food

The first-month’s expenses can slightly range, depending on if the mother is using formula to feed the baby or is breastfeeding.

Breastfeeding is free and will not cost a dime, besides the breastfeeding supplies that cost an average of $15 in the first month due to nursing pads and milk storage bags for freezing.

Name-brand formula can be expensive, an average cost of $25 a week as the baby will be feeding on it several times a day, totaling about $100 in the first month. Generic brands of formula cost half the amount, an average of $12 a week.

Medical

Health insurance is one of the most expensive costs for newborn babies with 39 percent of mothers paying $1,000 with their childbirth. Some even pay at least $5,000. Health insurance will also likely increase to $200 a month for the child with co-pays that range from $30 to $100 per visit. Some health insurance will refuse to cover certain costs, which include vaccines and immunizations.

Daycare

Paid maternity leave is considered a luxury in the U.S. and is often unavailable for mothers who are self-employeed or do freelance work, making daycare a necessity. Daycare for newborns averages to $100 a month, but can be at least $1,000 for celebrities that use an in-home nanny.

General Care

Wipes will cost an average of $13 in the first month with a $5 increase in the water bill for the baby’s laundry and baths.

Diapers are one of the scariest expenses that are priced at $80 for basic Pamper diapers for newborns. Using cloth diapers are a one-time expense, so if provided by a friend or relative at a baby shower, they are free to use consistently and do not require much water or detergent to wash every other day.

Bath soap, detergent, and baby-safe shampoo will cost $30 a month to maintain the hygiene of your baby.

Although Olivia Wilde’s baby will be unique in its feeding habits and the materials for diapers used, the average cost in the first month will likely total $200 and can go as high as $4,000 for a celebrity. Many of the costs simply depend on the baby and are determined by the type of diapers used, the amount of doctor visits, daycare that may be needed, and whether the baby prefers breastfeeding or feeding on formula.

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