Monthly Archives: September 2012

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Raining MoneyThe point of having money is, from time to time, to spend it.

Not that I was ever that great at saving money anyway but I’m about to spend pretty much all that I currently have…and then some.

History has shown that debt repayment is one of the financial tasks at which I excel. And I’m gonna try my hand at it again.

Like a lot of other authors in this genre, I too have a negative connotation towards debt.

I don’t like it and I don’t want it.

No question, being saddled with debt puts a lot of unnecessary weight on your shoulders.

At the same time, though, as long as it’s not debt being carried for the stupidest of reasons (like an airplane, or a BMW, or dirty polyester), I’m perfectly okay with it.

Kind of like how a lot of people call their mortgage “good debt”. I guess I’d fall into that line of thinking too, though, I still have a tendancy to pay that down like the dickens when I can…

Anyway, like all of my recent big ticket purchases, this one is another home renovation.

Unlike the previous runs, I want to get my finances more in order. I mean, it’s not that they weren’t in order for the last one…

I had over $10k in a savings accounts ready to go but… then the estimate came in double what I’d been hoping for and then by the end of the project’s completion it ended up a full additional $10k more on top of it all.

I had $10k in my pocket, hoped for a $20k estimate, got a $30k quote, and ended paying over $40k. Ouch.

That said, we made it work.

And we had it paid for in roughly two years — hardly crippling. I don’t regret it.

This time, while I don’t plan on having the resources to pay for it all upfront in cash, I want to, at the very least, have the final bill fall close to where I expect it to.

We’re not talking about hoping it’s $20k but kind of expecting $30k and then coming to learn it’s actually more like $40k.

I don’t want that to happen. Not again.

I also don’t want the cost to “limit” my expectations.

Yeah, there are a couple coulda-shoulda regrets about the interior renovation in 2010…but we chickened out because we saw the price tag going up, up, up, and then up some more.

Mmm... GarageSo, with that, in the Spring of 2013, I’m hoping to replace my 20×20 detached two car garage (which is in a state of decay — for real) with a 24×36 two-story three car garage (kinda like the one I dreamed about in 2008).

My budget is $60k to demolish the current structure, remove the current foundation, cut down some trees, remove the current driveway, level the land, pour a new foundation, build the new garage, install a new driveway, add electricity, and finally landscape the redeveloped area.

I’m not a contractor but here’s what I’m “anticipating”:

  • $2000 to demolish and remove the current garage and foundation
  • $1500 for tree removal, driveway removal, and grading (a landscape company can handle all of this)
  • $5500 for the new foundation (this is an uneducated guess — I really have no idea)
  • $46000 for the structure
  • $1500 for subpanel and wiring throughout the structure
  • $2000 for a new driveway (again, this is a guess)
  • $1500 for landscaping

So how much do I have right now, you know, to get the process rolling?

About $5000.

Yeah… Not very much.

But here’s the thing… We’re still a few months away from breaking ground (and this is a pretty concrete goal) so time is on my side.

By early Spring (and barring anything crazy), I should have close to $15k saved up. That’s 20 percent.

Yes, I’m aware that that’s NOTHING.

But here’s the “payment” plan…

Demolition and site prep will go on a low interest rate credit card. No clue who we’ll use for demolition (I’d love to do it myself over the span of a few but I’d probably hurt myself). We might even get lucky and the landscape company that we’ve used in the past for tree removal and leaf pick-up will do it. As far as I know, they have all of the equipment necessary and, really, what team of guys wouldn’t really, really enjoy knocking over a building…

The project would be underway and we’d still have $15k in cash on hand.

For the foundation, I’d do a low interest cash advance from a different credit card for $10-$15k… This would pay for the new foundation in pull and also give us some “slush” money to play with should anything go over budget.

At this point, I’d have $9000 in credit card debt, $9500 in “borrowed” money, and (at the high end) $15000 in cash.

Oh, and a perfectly prepped construction site.

Next week we’re planning on meeting with the builder — it’s a modular custom pre-built elsewhere and assembled on site but a bunch of amish dudes type of place — where I’ll get some more solid details but it appears pretty standard for them to want 1/3 down and you can finance the rest.

Guess what?

I’ll have 1/3 in cash available.

Imagine that?

Yeah, that’s right. I’m planning.

The wildcard here is the interest rate. I don’t really know what to expect but it had better be under 10%. If it isn’t, I’ll have to do some long and hard thinking depending on what my minimum loan payment turns out to be.

So, in this scenario, now I’ll have $9000 in credit card debt, $31000 due in some sort of construction loan, $9500 in “borrowed” money, and zero cash.

Once the building is up and good to go, I’ll bring in the electrician that we used when we re-wired the main house and make it “functional”. Lightings, garage door openers, you know, that sort of thing.

This is where I’ll be forced weigh a few options depending on how I’m feeling financially…

Technically, a new driveway and landscaping are “finishing touches” that don’t really need to be done right away so if I’m feeling in over my head, I’ll just give the $8000 that are left right back to the credit card company I took it from.

That scenario would mean I’d finish with $16000 in credit card debt, a $31000 construction loan, empty pockets, and a brand new and totally functional 1728 square foot outbuilding.

Otherwise, I’ll just blow the whole load on a new driveway, some landscaping, and any other bells and whistles that the money will allow.

The break point is $800 per month.

If my monthly loan and credit card payments exceed $800 per month, I’ll have to put the project on hold.

We’ll see…

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Prepared Lines of Defense

Q: Hey Brainy, why are you only building a three car garage when you have four cars?
A: By the time this all comes to fruition, we won’t have a fouth car anymore. Whether we sell one outright or do a two-for-one trade-in is still to be determined but we’ll most definitely be down to three cars once this thing is up.

Q: Why not make it a little smaller to cut the cost down when a 20×30 would suffice for a 3 car garage?
A: Two reasons. First, a 2011 Toyota Sienna Minivan is nearly 18 feet long. We don’t have one of those but, even still, that’s tight. Our current 20×20 garage fit two cars, snuggly, and little else (which is why there’s only one (very small) car in it…). That won’t do.

Secondly, I’m only doing this once. If there’s one thing I’ve learned from past projects it’s that you should overextend as far as your comfortable with. I will never regret having an extra 264 square feet on two floors when the added cost isn’t really substantial to do so.

Q: Two floors? Really? Do you need a second floor? Chop it down to just a garage to keep things under budget….
A: The answer here is essentially the same. Sure, a three car garage will add value to my house all on it’s own. An additional 864 square feet of storage space (and possible even living space) adds a whole lot *more* value for, again, somewhat minimal cost.

Q: Dude, just go all out and build a four car garage already…
A: I wish I could and I’ll even inquire about it but I’m pretty sure zoning will give me the big NO if I try to get a variance to go that big.

Q: Is you garage really that bad? Juest deal with it…
A: Yes. I’m not making this stuff up. It is in a state of decay but I’ll take pictures to prove it. Upnon viewing them, you might even set-up a “Rebuild Brainy’s Garage” fund just to make it disappear.

Q: Wouldn’t it be smarter to revamp your 1940’s style kitchen?
A: Hell no! It’s vintage! You can’t buy that kind of authenticity.

Actually, the garage has risen to the top of our priority list as it’s about to fall over, it’s an eyesore, and we hate it. The kitchen, while an eyesore and something we hate, is still functional.

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At the end of this month, I’ll have been in my house for 10 years.

When I bought the place (an as-is special) in 2002 for $141k, I’m not sure I’d thought far enough into the future to imagine where I am now but I’m going to take a peek now.

One third of the way into my original mortgage term, I still owe $93,361.64.

If you do the math, that means that I’ve also paid down almost exactly one third of my loan.

That sounds about right until you look at an amortization schedule….

A typical 30 year mortgage takes around 15 years to be paid down to the level I am now.

Basically, though I’ve taken the last couple of years off (by not adding sizable additional payments), I’m still 5 years ahead of schedule.

All those extra payments years ago may have been worth it after all!

Day One

And, on top of it all, somehow I could afford to make it look nothing like it once did…

Gone is the carpet, the latch closure storm door, the wood paneling, the drop ceiling, and even the deer head

Okay, the deer is in the attic, but you get the idea…

The address might be the same but it’s a different house.

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September 2012 Net Worth UpdateConsidering how much I spent last month, I’m a little suprised that it turned out to be a positive month…

Cash:
Direct result of my spending is clear right here.

Making matters worse, I briefly fell below the $1500 minimum so I’ll get dinged with a Bank of America maintenace fee of some sort soon.

Yep, $2.96 under the threshold for less than 6 hours because of the Labor Day holiday will cost my $14 or so… Love this bank.

Savings:
So, for the past few weeks, I’ve been hinting at the fact that I’m saving up for something BIG. This is proof that I’m pretty serious about it.

Gov’t Bonds
I earns just a couple of bucks per month but the fixed portion of the interest rate that these I-Bonds are earning is just too good to let go of. But, again, I’m earning like $30 per year on these… It’d be sweet if I had a 5-figure balance in here but with such a small balance, there’s a frequent internal debate on whether or not to hold on to these…

401k:
Must be that stumbling economy or something

Home:
Eh, I’ll take it.

Auto 1, Auto 2, and Auto 3:
Apparently banged up Land Rovers are in demand these days… Who’da thunk?

Credit Cards:
My oldest son often says “I told you!” and that’s what I’ll say here too… The Credit Card Balance on last month’s update was a total fluke. I told you I’d pay it off.

Auto Loans and Other Loans:
Nothing to report.

Mortgage:
Did you know that paying an extra $25 towards your mortgage each week early on can knock 10 full years off of the term? You might want to look into that…

Anyway, of late, I’ve been tossing a few dollars towards principle each month to make my balance fall in nice $250 increments. Gone are the days (early 2010) when I was knocking $1k per month off… I’m still not sure how I was able to do that… I kinda wish I still could…

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Vote!Last night, Bill Clinton rhetorically asked, as I’m sure President Obama will again as well later tonight, “Are you better off today than you were four years ago?

I know, I know, every presidential candidate asks that same exact question when looking to be elected to office — really, I’d bet there’s an entire chapter about it in the ‘United States Stump Speech Handbook’ if there even is such a thing.

[If there isn’t, I call dibs on the idea.]

During the RNC last week, the Republicans asked the exact same thing.

At first thought, and because they asked first, I sided with Mitt Romney and the Republicans.

While I’m admittedly a negative-minded person anyway and the culture here in New England that surrounds me is pretty negative leaning too, in general, I do think that things are clearly worse than they were in 2008.

Duh?

But then, last night, President Clinton’s charisma alone begged me to take a closer look when posed with the same question.

So I clicked on the archives here and, lo and behold, things are clearly better today than they were four years ago.

My first hunch was completely wrong.

Now I know the argument can be made that my personal finances have very little to do with the question posed but I’d counter that by saying that the Republicans have chosen to make this campaign about the economy this and the economy that.

The economy has a HUGE impact on my finances.

Just looking at my 401k alone, which for the most part just goes along with the Wall Street tide, my balance was $66455 in September of 2008 and it’s $131200 now.

I’ve made minimal contributions since the “economy” tanked and the company match was removed.

That $64745 gain is a direct result of the apparently recovering economy.

Sure, it doesn’t “feel” like we’re better off today but almost $65 grand more in my own personal treasury tells me that we are.

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Spending RobotWell, this explains why I have no money…

$902.20 : Day Care
$705.85 : Business Expenses
$611.33 : Mortgage
$600.00 : Vacation/Hotel
$570.00 : Hockey Jersey
$440.81 : Auto Repairs
$371.60 : Gasoline
$340.00 : Cash
$228.27 : Auto Insurance
$232.76 : Family/House Stuff
$165.73 : IKEA
$162.44 : Electricity
$146.18 : Cable/Internet
$116.40 : Water/Sewer
$40.08 : Life Insurance
$29.86 : Natural Gas
$20.00 : Auto Emissions Test

The total spent this month was $5683.51.

August was one of those transient months that seemed to go on forever for me this year…and cost me a ton too, apparently.

When it started, which feels like forever ago, we were in the middle of a vacation so those expenses creeped in.

Once home, I upgraded some of my equipment for my home business. Again, that seems like it was a long time ago but apparently all this expensive stuff is only a few weeks old.

Then we decided to finally, finally, finally, start putting some stuff up on the walls (it’s been nearly two years of barren walls) resulting in an IKEA trip.

It’s weird, it feels like the shelves have been up forever already but, again, it’s just been a few weeks.

And then, just a few days ago, we had some repairs done to the Scion xA that we’d put off earlier in the year.

Put it all together and, ouch. Not a good month.

And I’m sure you noticed the hockey jersey expenditure up there too. Well, good news there. I know I’ve said it before and that I’m not trustworthy when it comes to this but I’ve got a new target in sight, a new thing to save up for, a new goal really.

The hockey jersey thing is a result of, well, “available” money on hand. That’s how hobbies should be — if you can afford it, go for it. If not, find a new hobby.

I’m ceratinly not about to find a new hobby but I will be taking a hiatus of sorts to focus my “available” money elsewhere.

Okay, how about a $100 per month cap?

Please?

Can You Dig It?

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