Ahhh, the Good Life…

Last week, for the first time ever, we hired a local landscape company to come out and pick up our leaves.

It’s something that we’d normally do on our own, and in the past, it has been something we’ve done on our own, but it’s probably not something we’ll ever do again.

(Before anyone points it out, I know, I know, wrong time of the year for that sort of thing north of the equator.)

Next door to our house is an open lot which we also own. In the fall, it could be summed up as a leaf magnet.

Each year, we clear the main lot to make the house look nice; raking and blowing towards the empty lot.  Probably not the best strategy, but making sure the main lot looks nice takes priority.

From there, our city requires that we bag the leaves in those giant brown paper bags — like in the picture.

Idea is, you bag the leaves, leave them at the curb, and the city will come around and pick them up over the span of about a month — usually in November.

On paper, it sounds like a great idea.

But there are a few problems…

The first problem is probably unique to our situation — lack of time.

Working for the hockey team all of these years has sucked up our weekends. It’s difficult for us to find the time required (during daylight) to rake and bag the leaves at that time of year because, well, simply put, we didn’t have weekends from September through May.

Now that I’ve left the team, that should no longer be a problem.

The next issue is a financial one. The leaf bags aren’t free. They come in bundles of 5 and you can buy them at Home Depot, Lowes, Walmart, Stop-n-Shop, and pretty much any where else that has some sort of “hardware” aisle.

You can price shop all you want, but bottom line, they come out to around 50 cents per bag. Sounds like a relative bargain, huh?

Typically, at the start of “leaf season”, we’d pick up around 10 bundles. Let me tell you, there’s nothing more upsetting than walking out to the car with a bunch of oversized lunch bags that you just paid over $50 for.

And then it really hits you like a punch in the stomach… You just spent $50 on something that you’re just going to throw out in a matter of hours.

Making matters worse, we’ve always had to go back and buy even more bags. As a result, we’ve never actually cleared and bagged the *entire* yard. I always end up mowing the crap out of them with the lawn mower — finally chopping them into a fine powder by around August. It’s embarrassing to admit.

In the end, I’d say that over the past 3-4 years, we’ve averaged between $60 and $80 spent on those paper bags. That’s PER YEAR.

Add in the time it takes to bag over 100 bags of leaves. It hurts.

Once bagged, we’d end up building a huge pyramid of paper bags at the curb — it actually looked pretty neat.

But then the city wouldn’t come on the day they were scheduled.

Some children would topple the pyramid.

It might rain.

A bag would tip over, spilling leaves all around.  You know, that sort of thing…

Worst case scenario, and one that happened last year — an early snowstorm before the we’d even started bagging. Sigh…

Basically, there are a myriad of problems to be had each year… One big headache… Alongside a back ache, a butt ache, and two heavily blistered thumbs.

But this year, we solved it all with a phone call.

My wife called the company one morning before she went to work last week, and when I arrived home for lunch, our extra lot was clear.

We haven’t received the bill yet, but when you combine the savings on the bags and the time and the lack of blisters, we’ll, I’m pretty certain it will end up being a great deal.

Posted on April 14th, 2008 at 2:51 pm by Brainy Smurf
Bargains, Home Improvements | 3 Comments »

Emergency Savings – Should I Bother?

In a recent comment, Grant from the Corner Office Blog wisely pointed out that while its great that I’m eliminating debt so aggressively, I should probably be accumulating more of an emergency savings cushion, you know, just in case…

I agree and I disagree at the same time.

A lot of people in personal finance circles hem and haw about establishing an “emergency fund” (EF) containing 6 months worth of expenses. That’s probably good advice.

Obviously, I don’t have that (current savings is $575) nor do I really strive for it. Six months, while nice, is overkill in my book.

My pseudo-EF has always been just keeping at least $1000 in my checking account at all times.

Combined with the modest amount I have invested as I-Bonds, this would be enough to pay the next mortgage bill — which it seems to me is the most common worry when an emergency comes up.

I’m also routinely ahead by a month on all of my non-utility bills. Next bill due date is always a minimum of 3 paychecks down the road — so in my own “imaginary” sort of way, I actually do have an EF.

I may not have the money on hand right now, but I also don’t have to send it out right now either. I’ve got around two months leeway.

Some will say, “What if you lose your income?”

Well, based on what I’ve already said, I’d have a few months to coast before the big bills came due.

I’d also like to think that that would enough time for me to be able to find a decent new income or more time to allow me to add new paying clients to my side business to cover my expenses.

If not, I’d likely end up using my credit cards to cover my expenses. You see, credit is my other EF. I have a zero balance right now, but in excess of $100k in available credit. Many will disagree, but as a last resort, and in a real emergency, that’s a pretty powerful thing to have in your back pocket.

On a side note, and something I should probably reveal anyway, in a pinch, my wife’s income is enough to pay all of our bills in the short term. It would require a bit of a lifestyle change, but it would definitely be possible for us to get by — and that’s just another (and the best) financial safety net going for me.

Posted on April 14th, 2008 at 10:09 am by Brainy Smurf
Finance, Savings | 6 Comments »

Financing for a Second-Time Homebuyer

Not that I’m in the market to buy a house right now, but if the foreclosures come like their forecasted too (I’m not holding my breath), I may take a closer look.

Having already purchased a home once, in hindsight, I kinda wish I’d gone the 80/20 route (taking out two loans) so as to avoid paying PMI. Not sure how much of a benefit it would have resulted in, or even if I would have been able to make the payments that first year, but at the time, I didn’t even know it was an option.

But let’s say, for instance, the house next door to me went into foreclosure. I’ve always kinda wanted to “own the block”, you know, take over the neighborhood and eventually name the whole street after myself, so this scenario would be a good start.

What would I do differently now that I understand how loans and, specifically, amortization schedules work?

Well, I’ll tell you…

Let’s say the house next door goes on the market at $200k and my GFI says the bank will loan me up to $240k. I decide to close on the house. For simplicity sake, let’s just say there is no down payment — 100% financed. Interest rates are about 6% these days, no? Well, let’s go with that figure.

I could go with the tried and true method I did with my first home purchase and just borrow the $200k at 6%.

Or… I could go and borrow the full $240k the bank is willing to spot me…

This time, the older and wiser Brainy would borrow the full $240k and then, with my first monthly payment, I’d send the mortgage company the extra $40k right back, knocking the balance back down to $200k.

Wait… what? Why not just borrow the $200k? You’re still sitting on a $200k balance… What’s the difference?

There’s a *HUGE* difference…

With the larger $240k loan, the fixed monthly payment would be $1438.92 which is roughly $240 more per month than a smaller $200k loan would be. That is the only disadvantage. And given the assumption that you can afford a second home, another $240 per month shouldn’t be that great of an issue.

Working greatly in your favor are the interest payments…

With the smaller loan, it would take 30 years and over $430k going towards interest alone.

With the larger loan, and an immediate “extra” payment of the difference ($40k), you’d only pay a little over $143k in interest. As an added bonus, you’d also knock off over 10 years on the term of mortgage.

The end result? A savings of $287k and 10 years of not having to pay a mortgage.

Hardly identical $200k loans, huh?

Sure, some will disagree, “Why not just take the smaller $200k loan and pay the “extra” $240 difference each month…”

Yeah, the number from that method works out about the same, but for me, I’d prefer to have more equity from the start and to be guaranteed to have the mortgage paid off early rather than leaving it up to my own personal financial discretions…

It would also be a great way of eliminating PMI on a 100% financed loan… ;0)

Posted on April 11th, 2008 at 6:14 am by Brainy Smurf
Bargains, Finance, Mortgage | 3 Comments »

Lost My Way & The Power of a Plan

I’m discombobulated. I had a plan that I stuck to…

And it worked!

Just a few weeks ago I paid off all of my credit card debt, $28k worth, on that plan.

Then, somehow, I ended up with dollar signs in my eyes.

I started sending even more towards my mortgage principle with the prospects of paying off my mortgage in April of 2014. I said I’d wait until May to get this started, but I started already to get a jump on things…

Then I started sending more towards savings seeing my $10k goal this year as *finally* possible.

I even thought up a way to send more towards my auto loan to finish it off too – even set-up a recurring e-payment just this week to get that one moving too.

All of these sound like good financial moves.

But I spread myself too thin. Way too thin.

In the now distant past, I had 5 credit cards with roughly $5k on each one. I was paying them all down aggressively — for a few years. Yes, the balances were falling, eventually I had them all down to around $4k each.

Progress? Yes, but it still felt like I was spinning my wheels.

Balances weren’t really falling. Finance charges weren’t falling. The balance in my checking account was the only real thing falling at a decent clip.

But once I set out targeting one thing at a time, I was knocking stuff out in a matter of months.

When I started with a real plan back in October, I still had three of those original credit cards. Coincidently, all three had a balance hovering around $5k.

With a real plan in place, the first card was wiped out by the end of November. The second was gone in January. And the third and final balance was gone a couple days before the end of March. One, two, three…

Now it’s April.

Today was my first paycheck since becoming credit card debt free. My auto loan balance sits at roughly $6670.

Eh, what’s that, like 3 months until it’s paid off?

Well, that should be the case…if I’d stuck to that original plan.

I hinted at it earlier this week, but I’ve come to realize that my current priorities are definitely backwards. I started attacking the mortgage ahead of the auto loan and that was the wrong course of action.

In an attempt to compensate, I overstretched myself.

So from here on out, again starting in May (for real this time) so I can catch my footing, the auto loan comes first, then the mortgage (until PMI is eliminated), and then savings.

With the summer season coming, and lower utility bills as a result, the combined monthly budget for these goals will remain $2000.

Best of all, this strategy still makes achieving all of the 2008 goals possible by year’s end.

Posted on April 10th, 2008 at 10:17 am by Brainy Smurf
2008 Goals, Finance, Motivation | 5 Comments »

Rising Property Taxes: Argh?!

When it comes to taxes, Connecticut is by far the worst state to live in.

I know, I know, everyone knows it’s expensive to live in New England, but Connecticut takes it up a notch from Massachusetts and Vermont.

Did you know that if you live in Connecticut, you have to pay local property taxes on your automobiles?

 It’s called a personal property tax. Roughly half of the country has a similar tax.

Making matters worse, in Connecticut, is that the tax on identical vehicles can swing wildly from town to town, based on the communities’ relative wealth. It’s not a state tax, it’s a local tax.

So my BMW may leave me with a yearly tax bill of $350 right now, but if I moved one town over, it would only be $100. One town in the other direction, my bill could be $500.

In the past I’ve seen figures for a generic car, like a Ford Taurus, where one owner will have to pay around $75 while another will have to pay in excess of $200. For the *exact* same car. Hardly a fair tax.

This is the main reason you see so many illegal Florida license plates up here. Tax fraud is rampant. And it’s not enforced, much to my dismay.

With three cars in our household, each July, the city comes looking for between $850 and $1000 dollars from us. Hardly chump change.

Now word comes in that our regular property taxes will be going up this year:

The Board of Finance is briefed on the city’s fiscal situation Monday in City Hall.

Most homeowners will see a property tax hike of at least $150 this year if the proposed budget eyed by the city’s Board of Finance is approved.

The $171.5 million spending plan that fiscal overseers appear poised to endorse this month would drive the mill rate up by 6 percent, officials said.

The City Comptroller said spending requests were up more than 8 percent to $177.3 million. But revenues, he said, are flat.

His department recommended cuts totaling $5.8 million that bring the increase to a more manageable 5 percent level.

But revaluation makes the pain greater.

Because almost all the property in the city is worth more than it was in 2002, up an average of 42 percent, the mill rate could drop from today’s 34.71 to 24.95 to bring in the same amount of money to city coffers.

The budget, though, requires a mill rate of 26.45 to bring in the necessary revenue to cover anticipated costs.

The Comptroller said that means most homeowners will pay more than $150 extra this year and some will pay much more than that, if their homes rose in value by significantly more than 42 percent.

Condominium owners are going to take some of the largest hits because their assessments generally rose much faster than single-family homes.

The finance board plans to adopt a budget April 22. A joint session of the City Council and finance commissioners will put the final seal of approval on a new budget in mid-May.

The budget takes effect July 1, when a new municipal fiscal year begins.

Thankfully it won’t break the bank for us, but I have a feeling, based on our 2007 tax assessment that jumped well over 50% from the 2002 assessment, we’re going to get hit with a big increase.

Hopefully next year as a result of the proposed lower mill rate and the fact that our cars will have depreciated another year, the city won’t tax them as high. If we could only be so lucky.

Even so, we’re looking at between $5000 and $6000 in property taxes alone next year.

Good grief.

I just hope the city uses the piles and piles of extra money wisely instead of building a “skate park” for skater dude thugs — which is actually the plan. Ugh…

Posted on April 9th, 2008 at 7:14 am by Brainy Smurf
Rants, Taxes | 2 Comments »

Festival Inclusion and Pants Update

My Find IT on eBay posting was recently featured in the Festival of Frugality hosted by A Penny Saved.

They even complimented this site’s name! How cool is that?

Anyway, perhaps I spoke to soon when I said the jeans on eBay were a great deal — they *still* haven’t arrived. I’m not anywhere near chalking it up as a loss quite yet, but man, could they ship any slower?

I won the auction on March 19. Their listing loudly stated that “Payment it is a must in 7 business days” which, of course, I complied with…

I wonder when they plan to ship? One would hope it’s “a must in 7 business days”.

Sigh…

Posted on April 8th, 2008 at 6:32 am by Brainy Smurf
Blogging? | 2 Comments »

Goal Priorities Backwards?

I have 3 financial goals remaining for 2008, and right now I’m the furthest along in my quest to eliminate Private Mortgage Insurance (PMI) from the mortgage.

With momentum on my side, I’m eager to finish this one off, but is it the wisest move?

Let’s see…

The other two remaining goals are paying off the auto loan and piling up $10k in savings. Comparing the interest rates of all three, the goal of coming up with $10k in savings comes dead last:

Goal	   Rate
------------------
PMI	   6.735%
Auto	   5.350%
Savings    2.960%

Add in that I only currently have $500 in savings, earning me less than $2 per month, well, that must make it the third priority. It’s not doing anything for me at this point.

To eliminate PMI, as of this morning, I need to take another $3147 off of the total balance of my mortgage.

By accomplishing this, my monthly mortgage bill will not change in the short term, but instead of $85.15 being taken from escrow each month, it will remain, well, in escrow.

When my mortgage company reviews my payment again, usually towards the end of the year, I might see my monthly payment fall around $60. (Not the full $85 due to tax increases and higher insurance premiums which are also paid from the escrow account.)

The auto loan currently has a balance of $6668 — double the amount I need on the mortgage.

Though I’ve been overpaying it since the start, it’s minimum payment each month is $289. By eliminating this debt, the result will be $289 that I can send elsewhere each month — but it will take me twice as long to get there (because the auto loan balance is twice as large as the number I need to hit on the mortgage).

Hmm…

In the long run, it’s obvious to me that paying down the mortgage makes the most financial sense. It will undoubtedly save me tens of thousands in the end — especially if I keep up with the additional payments.

But if the real goal is to have more money in my pocket at the end of the day (and by the end of this year), then the auto loan goal should take precedence as it will allow me to have more money in pocket to fund the savings (and even the mortgage) goal.

I’ve got a couple decisions to make as I’ve already gotten going with the mortgage being priority number one…

And that was probably the wrong move in the short run…

Posted on April 7th, 2008 at 9:41 am by Brainy Smurf
2008 Goals, Finance, Mortgage, PMI - Mortgage Insurance, Savings | 3 Comments »

Charlton Heston 1923-2008

I really liked the Planet of the Apes movies. Even the cartoon shows that they used to air.

I still do enjoy sitting down and watching them, though more often than not, the Marky-Mark version is the one on television these days.

I never did like Charlton Heston though, in the original or the Marky-Mark remake.

He died last night at the age of 84.

To me, in movies, he was a bit like John Wayne or Clint Eastwood.

You know, a good looking guy with a huge ego and zero acting skills.

Funny how all three men are considered “legendary”. I wonder why? (Really, why isn’t Steven Seagal a legend too?)

I disliked him even more for his work with the NRA.  His one-sided ignorance and arrogance on the subject of gun control, and the reverent attitude he received from those who supported him, has definitely hurt this country. Celebrities should not put their weight behind causes.

I’m hoping no celebrity replaces him as the face of the NRA — or if someone does, I hope it’s someone with a little less ego and a lot more substance.

Charles Bronson? Oh wait, he’s dead too… Shame, he might have been a good fit.

(obviously, Brainy Smurf is of the anti-gun stance…)

Posted on April 6th, 2008 at 8:02 am by Brainy Smurf
Current Events | 1 Comment »

Considering a Hybrid to Save Money? Think again!

With gas prices on the rise, and likely to continue to rise, I’m sure you’ve thought about it. What, with all the press “going green” and hybrid models have received lately, it’s hard not to let it cross your mind.

That’s right — plonking down some coin to get a hybrid vehicle to save money in the future.

Recently, the Orlando Sentinel featured a calculator to see if there really are savings to be had:

For me, the answer is a definite NO.

My daily driver is a subcompact hatchback that gets 39 miles per gallon.

Even my BMW gets over 30 miles per gallon!?

Though I really like the look of the Prius, it wouldn’t “pay for itself” for over a decade.

That’s not a money saver by any means. And besides, gas *still* isn’t that expensive.

Posted on April 4th, 2008 at 4:32 pm by Brainy Smurf
Cutting Costs | No Comments »

Benefit to Losing an eBay Auction

So Wednesday night, I ventured onto eBay again, except this time I wasn’t looking for a good deal…

Finding myself with a bit extra in my checking account and without any credit card bills in sight (woo-hoo!), I took a big step backwards and went hunting for game worn hockey jerseys. My vice.

I had one in my sights. Thankfully it wasn’t a really high priced one, but still one that would fit nicely into my collection. I set-up a last second sniper bid and went to bed confidently thinking it would be mine in the morning.

I lost.

It doesn’t happen very often, I have to admit, but I was outbid.

The strange thing is that there wasn’t that feeling of disappointment when I saw the email letting me know that I had been outbid — an obvious sign that I didn’t really want the item in the first place.

But throughout the day yesterday, it had me thinking, I was totally prepared to PayPal out a few hundred dollars the night before.

Since I lost, I still had that money in my checking account…

You know what I did?

I sent it to the mortgage company instead.

That should teach me not to lose any more auctions. ;0)

Or perhaps I’m just turning over a new leaf.

Nah…

Posted on April 4th, 2008 at 7:25 am by Brainy Smurf
Hockey Jersey, Mortgage | No Comments »

PIAC Site Stats for March 2008

Who doesn’t like to talk numbers? Sure, I’d much rather go over financial numbers this morning, but over the past few days, I feel I’ve beaten them to death. There isn’t much left to go over there until my next paycheck comes in.

So for the first time ever, and like many other sites on a slow day, I’m going to go over my monthly stats for PIAC (Pants in a Can).

March was the first month since I started that I managed to compile 31 posts — effectively making PIAC a blog that’s updated daily. It took a lot of work on some days, but others, well, I was able to write two or three posts in one sitting so I could relax for a few days.

The more rigorous scheduled turned out to be very beneficial for the site as I nearly doubled my previous highs for unique visitors and visits.

For the month, the site had 3366 unique visitors and 5261 visits — far and away the most traffic the site has seen. I also topped out at 40 FeedBurner readers part way through the month.

This was due largely to participating in my first carnival, a mention in Laura Moran’s “Today On MainStreet: Personal Finance” article on TheStreet.com, another mention (of the same post) on Tricia’s Blogging Away Debt site, and the top listing (for a few hours) on Google for my “Vatican adds Accumulation of Wealth to 7 Deadly Sins” posting.

Often times the posts that I think are my best aren’t the most popular. Funny how it always seems to work out that way, and this month was no different. The most popular posts in March were:

1. $28k+ Credit Card Debt Eliminated – Nice accomplishment, but hardly a great post.
2. Vatican adds Accumulation of Wealth to 7 Deadly Sins – A quoted article post.
3. Moment of Clarity: When I Figured Out How to Fix my Finances – My favorite
4. A Life Where ‘or Plastic’ isn’t an Option – Eh, mostly a quoted article.
5. Live like Most Won’t to Live like Most Can’t – Another good one.

The top blog referrers were:

1. Blogging Away Debt
2. Million Dollar Journey
3. Windy City Blues
4. Consumerism Commentary
5. Corner Office Blog
6. How to Make 7 Million in 7 Years
7. Debt Kid
8. Five Cent Nickel
9. The Happy Rock
10. Dedicated to Financial Freedom

Many of them were due to the frequency of my posting this month, which led to the site being listed on the popular pfblogs.org blogroll pretty regularly.

Right now, I’m not really optimistic about April going as well as March did, but many of the posts over the past week or so have garnered some comments and I’m pretty happy about that.

I like to think that my financial situation fills a small void among the various PF blogs. I’m not poor and I’m not paycheck-to-paycheck but I’m also not contemplating quitting my day job to blog fulltime either. But hopefully more folks in my situation find their way here and follow my lead!

Posted on April 2nd, 2008 at 8:46 am by Brainy Smurf
Blogging? | No Comments »

Credit Cards Paid Off; Up next…Mortgage & Auto Loan

By my calculations and over the trend of the past few months where my income has dropped, but stabilized, and after all of the monthly bills are paid, I should now find myself with roughly an additional $1500, on average, in my checking account each month for “daily life” expenses.

Prior to this month, 100% of that (and then some) went towards debt repayment.

I still have debts to repay, mortgage and auto loan, but the credit card debt is gone.

I’ve found some time to run some numbers and weigh a few different options to see what the best route to take with the “extra” $1500 would be and I think I’ve settled on one.

For all of my examples, I’m going to assume that each month has 4 weeks — it’s just easier to figure out that way.

At the start of April, I already chipped into the original $1500 dollars when I set up a weekly $75 auto-transfer into my ING account. I’m not planning on altering that right now.

$1500 – ($75 x 4 weeks) = $1200

This is where the decisions need to be made. The interest rate on my auto loan is 5.35% and I get hit for around $30 in finance charges each month. The interest rate on my mortgage is 6.735% and I get hit for around $650 each month.

Dave Ramsey would say I should attack the auto loan because it’s the smallest balance and not the mortgage. Clark Howard would probably say the same thing, though he may make note of the fact that the auto loan has the smaller interest rate.

But I’m considering going the more logical route. Yeah, the rate on the mortgage is higher, but that’s not the main reason. The Private Mortgage Insurance (PMI) I’m continuing to pay is the reason.

PMI is extra insurance that the mortgage companies require from homebuyers who obtain loans that are more than 80 percent of their new home’s value. Basically, if your down payment was less than 20 percent, you’re going to have to pay PMI until you reach that 20 percent mark.

PMI is costing me $85.15 each month. That’s over $1000 each year. I’ve paid my mortgage 66 times so far. That means I’ve paid PMI 66 times and that adds up to $5619.90.

That could have, and should have, gone towards principle. With it, I’d have hit the 20% mark long ago. In the first few years of a 30-year loan, an additional $5k thrown towards the principle would have made a HUGE difference!

Basically, PMI hurts a lot more than the monthly $85.15 let’s on.

Eliminating PMI (on top of paying down the higher rate first) would be the most beneficial route, financially, for me so that’s the route I’m going to focus on.

For the remainder of April, I’m just going to let the dust settle, just pay the mortgage and auto loan like I have been for months, and build up a bit of a cash cushion in my checking account.

This new strategy will commence in May.

I’m going to double the weekly principle payment on the mortgage, from $125/week up to $250/week.

$1200 – ($125 x 4 weeks) = $700

This will allow me to eliminate PMI (and, in turn, subtract an additional $85.15 from the principle each month) by September 2008.

It will also put me on pace to pay off the mortgage in February of 2014, though that isn’t the real goal. I’m thinking more short term just to eliminate the PMI at which point I’ll weigh my options again.

For now, this will leave me with $700 worth of “spending” money each month. I’m thinking I can throw half of that towards the auto loan with each monthly payment.

$700 – $350 = $350

This would put me on pace to have the auto loan paid off in January of 2009. Based on my goals for 2008, that’s not good enough, so any additional money that comes my way will be tossed this direction as well.

In the end, this plan will continue to pay down my debts at a hectic pace, but still allow me to have $350 worth of spending money each month — and that’s $350 more than I have in my pocket right now.

Crazy what eliminating a little credit card debt can get ya…

Posted on April 2nd, 2008 at 6:42 am by Brainy Smurf
2008 Goals, Finance, Mortgage, PMI - Mortgage Insurance, Savings | No Comments »