Mistakes

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Drew and his lamp -- looking a little sketchy...I often complain about how the invoices that I send out for my side business each month never seem to get paid on time, in full, or, at all…

Yesterday’s mail had two checks in it — one was for $150 from a client that has always paid promptly and the other was for $40 for some photo prints that I’d had done up last week.

I deposited them this morning into my checking account like they were nothing.

Sure, in the past I was dropping in checks totaling $3000, so an extra $190 might not feel like very much anymore, but I can’t tell you what I would have done to get checks for $190 ten years ago.

Do you know how much crap you can buy on eBay for $190?

I’ve been jonesing for a lava lamp for nearly 20 years, and I know they suck because my sister had one, but still, I could probably get like 6 or 7 of them for $190…

Man, I’m almost salivating at the thought…

(Mom — do NOT get me a lava lamp for Christmas.)

At the onset, right out of university, I started my side business to bring in disposable income. Plain and simple — it was supposed to be for crap on eBay, video games, hockey tickets, hockey jerseys.

Somewhere along the line, though, it turned into income that I counted on. It wasn’t disposable income anymore (probably a good thing as the checks began to get larger and larger) and before I knew it, I felt trapped — not by my *real* job, but by my side job!?

I wouldn’t be able to pay all of my bills if I didn’t work each morning before work, again after work, and every weekend too.

That wears you down… and for the most part, that type of lifestyle has passed.

I wish I could say that this latest $190 could be classified as disposable income, you know, like it used to be.

Not there yet…

I’m already transferring it from checking to savings…

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I Give Up!So, after all of this time of avoiding the subject entirely, I suppose it’s time to wrap up this whole PMI topic.

In last month’s net worth update, I briefly hinted at the fact that I was throwing in the towel for now…

I cast out one last line earlier this month to Countrywide when they completed my annual escrow analysis for my attached escrow account (which, in part, pays the PMI premium each month) and was greeted with the same response I’ve been receiving since July.

“Send us a check for $130, take a day off from work, and maybe we’ll drop it, but probably not. The current market conditions aren’t favorable, you know…”

So, for the time being, and likely the entire year of 2009, I’m just going to swallow my pride and continue to be ripped off because I’ve come to the conclusion that this is a battle I can’t win — there are just too many loopholes and specific conditions available in the law for them to fall back on to justify taking this money from me.

Yep, I’ve met all of the commonly mentioned benchmarks; the 22% equity being the most often referenced as a mark resulting in automatic termination.

But there are little sneaky things in there like termination, automatic or not, never happening until reaching the mid-point of the original amortization schedule.

Yeah — like 9 years from now…

In my instance, that’s another $9200 in PMI payments.

And, even then, there are ways for Countrywide to continue to hit me up for an extra monthly fee.

Aggravating is the only word I can think of to describe it.

Seems my only hope is to re-finance and, right now, I’m not ready to make a move like that.

I’m not really sure why I say that, it could just be laziness — it probably is, but for whatever reason, I’m just not comfortable making that move right now…

You know, with “market conditions” being what they are…         ;0)

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Game Worn Jersey CollectionIn the past I’ve talked about one of my hobbies — collecting game worn hockey jerseys.

I know, I know, totally weird to some — c’mon, dirty polyester?

Why?

But seriously, there’s a pretty sizable following and if you can believe it, the economy within the hobby is strong.

My best jersey commanded nearly 5-figures at the height of the boom (October 2007) and today, well, it still commands that same amount.

Almost makes it a wise investment, right?

I kid, I kid…

But the one downside to this hobby of mine is that for years it sucked me dry. Much of my former credit card debt can probably be attributed to my collection — I was easily dropping in excess of $500 per month, on average, adding to the collection. That’s a lot of money.

Some may even say it was wasted money. They might be right.

In 2008, I scaled it back. A lot.

Then, in June, I noticed that I hadn’t made a purchase in over a month — and I wasn’t really missing it.

Same thing in July. August, and then September!

Had I kicked the addiction?

Nope.

I relapsed this month.

Last week I bought a jersey on the secondary market (yeah, this bizarre hobby is big enough to have a very busy secondary market) for $115.

Anything under $300 is peanuts in this hobby so, for a sum that small, it’s not likely to increase in value anytime soon, or ever. Probably not a wise investment.

But, at the same time, for such a small price, I just couldn’t resist.

And that’s the bad part. This jersey’s arrival in the mailbox has me re-energized.

Just today, I was already pricing out $600-$1000 jerseys… Crazyness.

Step away from the keyboard…

Credit Card Debt in AmericaFor most of last week, the talking heads had been gawking over the rising amount of debt American’s are carrying. The number thrown about was $8565 per household, apparently up almost 15 percent since 2000. And that’s just credit card debt.

I’m not really surprised. I’ve carried a lot more credit card debt than that with regularity.

Can you imagine if they roped in auto loan debt? I’d guesstimate that the average 2-car household owes more than $20k to someone just on their auto loans.

Student loans? Well, I think that those are more limited to people under 35. Tuition didn’t get stupid until the late 1980’s.

I don’t have student loans, but some of my friends do. My sister has ’em. Roll those into the equation, double it to make it a household number and, well, yeah, Americans are definitely carrying a lot of debt.

That’s pretty sad.

As a result, I’m all but certain that most people are only a paycheck or two away from living on the street — to a degree, myself included. And my non-mortgage debt is under $4k!?

How can this be?

The real story isn’t actually the debt people are carrying — it’s really a case of our expenses.

In my case, my monthly expenses routinely exceed $2500.

It doesn’t take a skilled mathematician to tell you that if my income were suddenly non-existent, I could only continue on for a few weeks, at best.

What the general population needs to come to grips with is that it doesn’t matter if you make a $100,000 a year when you then go out spend $101,000… You’re not not getting anywhere.

You’re actually going backwards. Again, simple math indicates that.

I’m semi-guilty of that sort of mindset. I got a raise and bought a BMW.

Wanna talk about stupid?

Yeah, that was stupid.

FDIC Logo
With the collapse of IndyMac and the news that it was the second largest bank failure ever (I’d never heard of them), the role of the FDIC is getting some press. So far, so good… In comparison to FEMA, the FDIC looks to have their act together.

Now I’ve always known about the whole $100,000 per account rule. Every bank teller window has a little sign. Every bank commercial mentions it with some super fast-talking at the end. It has something to do with the max that the FDIC would insure. Makes sense to me.

I don’t have any accounts that large, but when daydreaming about winning the lottery, I have put some thought into it.

Like, let’s say you win a million dollars. It’s no wonder that it’s suggested that you seek come money help before you even collect your winnings.

At first glance, it seems simple. Just open up 10 accounts and drop $100k in each one. Just to get you all set up before you start sending money this way and that way.

Simple enough, right?

But what about the interest? It’s going to put you well over the $100k mark in each account in no time…

Oh crap.

Alright, make it 12 accounts with $83k in each one. You know, room for growth. That would work, no?

I had it all planned out in my head. Probably not wisely, but I had it all planned out.

But now, having heard a few of the horror stories from account holders at IndyMac (as well as an hour or so or research on the FDIC website), I now realize that my plan wouldn’t work at all…

See, the FDIC really does insure $100000 worth. But it’s not per account like every single bank commercial I’ve ever seen seems to imply.

They only cover $100000 per depositor (in my case, per person) per bank.

There’s the catch. Per bank.

So my plan just got a lot more complex… Can you imagine having 12 different bank cards in your wallet?

(Oh wait, I can… I used to carry that many credit cards?!)

So now, upon winning the lottery, and before I start spending my new found fortune, I’d have to go out and find at least 12 different banks and open a new account at each one of them?

(I’m not sure I can even name more than 8 banks with local branches.)

The VaultThen, I’d have to keep track of where the balances fell in each account to make sure I don’t go over $100k or overdraw one of them. Wow… That’s a lot of work. And I’d still be too cheap to hire someone to do it for me…

Kind of makes the Scrooge McDuck method of banking look a lot more attractive…

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Previous Property Tax BillsYeah, sure, the personal property tax on my two cars went way down (un-expectedly far down) this year, but upon logging in to my Countrywide account this morning, I see that they’ve just paid the city $1912.09 on my behalf for the property taxes on my home.

That’s up nearly $269 from the last property tax payment back in January 2008. Ouch.

Now I can’t say that an increase was completely unexpected — back in April I posted an article from our local paper with this quote:

“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.”

With my personal property taxes (on the cars) dropping so much, I assumed that this tax increase (the budget was approved) would take effect in 2009. Evidently, I was mistaken. I hope, anyway…

So now I’m not sure whether to pat myself on the back because this proves that my house is more awesome than everyone else’s in town or if I should be irate that my taxes went up so much more than $150…

(In reality, my house is smack dab in the middle when it comes to awesomeness in the city.)

Sadly, though, this large of an increase will effectively wipe out half of the savings I’d receive if I ever manage to settle my PMI issue with Countrywide

Too bad I didn’t realize how great I had it back in 2003…

Real Estate BookWhen I purchased my home in the fall of 2002, I knew going in that it was going to be a work in progress. A fixer-upper of sorts.

I mean, it was one of those real estate listings with “AS-IS” tagged on. Never a good sign.

I remember my real estate agent calling me up at work and saying that he had a few new listings come in that I might be interested in.

On the way home (my bedroom in my parents house), I stopped by the RE/MAX office and picked up the MLS sheets printed out from an inkjet running dangerously low on ink. It was nothing new, I’d been doing this for at least two months without anything that remotely peaked my interest.

For whatever reason though, that night, after dinner, I brought my younger sister along for a “drive-by” of two of properties the realtor had printed out for me. It was about a half hour ride in total and neither house really interested me.

The next morning, while at work, the real estate agent (who was obviously growing impatient with my complete lack of excitement from his suggestions) called again and I asked if I was interested in any of the properties on the MLS sheets.

“Nope.”

Now, at the time, in the summer of 2002 — houses were selling even before they hit the market. Certainly a different climate than we find ourselves in today.

I’d found a few homes that were perfect, only to find out that by the time they made the newspaper (or even the internet) and I’d caught wind of them, they’d already been sold — usually within the same real estate office that listed them. It was really frustrating.

It was almost to the point where buyers were putting down deposits on homes sight unseen.

Over my lunch hour, I did another drive-by of the two “better” homes that I’d driven by the night before.

One was an updated cape, but a bit smaller than I’d like, it only had a 1-car garage, and it was on a busy road.

The other was a big dark decrepit looking thing with grass approaching the 2 foot mark. Short of boarded up windows, it was obviously abandoned.

Hmmmmm…

What did I have to lose? I hadn’t actually gone through a house for a few months at this point, so I called my agent back and said, “You know what, yeah, let’s take a look at the red one and the tan one…”

I took the rest of the afternoon off from work and headed down to the real estate office — I had become a bit of a familiar face (and probably an inner-office joke of sorts) and as I was waiting for my agent to get his stuff together (i.e. find his lighter), the listing agent for the big red house, an older gentleman, said to me, “I think this is going to be your day…”

God damn shyster… Don’t you tell me… That’s what I was thinking — I didn’t vocalize it.

So we hit the tan house first.

The agent opened the front door and we walked in to two cocker spaniels barking their heads off. They were penned in the kitchen using one of those baby gates people use at the top of the stairs.

The house looked alright I guess, but it reeked of, well, dog piss. I mean really bad. We’re talking so strong that an entire case of Lysol canisters wouldn’t be enough to solve this. Needless to say, it didn’t leave me with a great impression.

MLS PhotoOff we went to the red house. That’s the actual photo attached to the real estate listing — from a distance, yeah, it looked semi-decent.

As we pulled up in my agent’s ashtray of a car, this time *he* said, “This is going to be the one for you!”

“I just hope it doesn’t smell like dog piss,” I replied.

We worked our way up to the front door and he struggled to get the old fashioned latch style storm door to open. One of the panes of glass on it cracked. Not a good start. We broke the house.

He finally gets the front door open and we walk in… Wow! Dark wood paneling (warped too!) and shag carpeting. I’d never actually seen a home so out of date in real life… Then the smell hit. Stale. Musty. Damp.

The house had been vacant for around 6 months and, well, let’s just say that it was pretty apparent. Still fully furnished with, well, cheap, old, sometimes broken, and, really, just crappy furniture…

Peeling wallpaper in the rooms that actually had wallpaper. Cobwebs everywhere. It really did look like a haunted house. Smelled like one too!

The MLS sheet stated that the home had hardwood floors. I guess that was truthful, but they failed to mention that they had been painted battleship grey.

The toilet had a post-it on it saying “Don’t flush”. I tempted fate and gave it a try. It didn’t flush.

No matter, it was a neat old house and I was feeling adventurous, so I went through single every room. Two of the bedrooms had 4 miniture size beds in them — not twin size, but not toddler sized either. Odd — unless the seven dwarfs resided here.

I checked out the walk-up attic, looked around the scary basement, and even hit the “play” button on the answering machine that indicated that there were 5 new messages.

As we left I was thinking, “Hey, that was kinda fun… No way in hell I’d live here, but it was a neat walk through…”

When we returned to the RE/MAX office, we looked through a few more listings through what they considered their “super secret agent only website” (I’d already seen every listing on realtor.com) and the listing agent for the big old haunted house poked his head into my agent’s office and said, “I really thought that was the one for you…”

I laughed him off, “Yeah, right…” and called it a night.

After sleeping on it, I felt my initial reaction was the correct one. Haunted houses are neat, but not exactly an ideal place to live. Even so, I drove by it again on the way to work.

It was a good 600 square feet larger than any of they other houses they’d steered me towards in my price range. It looked HUGE from the street. It had a two car garage. It was on a quiet street with well kept homes (excluding itself). It had an empty lot next door.

I arrived at work and called my agent to inquire about the lot next door — was it part of the property?

“The red one?”

“Yeah, the red one.”

He wasn’t sure. I heard him call out to the listing agent. He wasn’t sure either. I asked them to find out…

About an hour passed and the phone rang.

“Paul from RE/MAX is on the line.”

I took the call. He started off with his canned, “Good morning, how are you…” like he’d never spoken to me before. I really hated that. He did it all the time. Nice guy and all, but when you’ve been dealing with someone for a few months, you can drop the whole act…

Anyway, the property went all the way to the corner. It was just one lot, but a big one. I asked if the listing had been advertised yet.

“Nope, not beyond the MLS sheets.”

“Can I take another look?”

“Really? Yeah — sure!”

I went through the house again that evening but this time I didn’t treat it as a total joke…

This is the first post in an ongoing series I’m working on dealing with the large upgrade and renovation expenses involved when you purchase and live in an older home.

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Nintendo WiiOne of my more recent readers, Magic Penny, is a self described 50-something woman trying to come to grips with her financial situation. She’s very new to the blogging world, but she is certainly getting things together in a hurry with a set of goals, a budget plan, and a debt reduction plan.

I almost had to laugh out loud when I read her “Falling off the Wagon” post just three days after getting started! Hey, it happens to everyone.

No specific numbers are given, but it doesn’t really matter — she’s on the right path already. Of late, she’s been beating herself up over a recent impulse buy — a Nintendo Wii.

I ordered a Wii … there’s no getting around the fact that this was not in the budget and that I just put $344 on my credit card when this is the week I’m supposed to be facing my debts and planning to REDUCE them … I can have compassion for myself about this, but the fact remains that these are emotional buys, not needs and not thoughtful purchases.

We’ve got a Wii in our house. It was a gift from my wife for Christmas, and while I’m sure that she spent a fortune on it, I don’t really look at it as an un-wise purchase and here’s why…

First, sometimes you need to go out and treat yourself. Most everyone likes to spend money. It feels good. And as long as you’ll be able to pay for it down the road, there really isn’t anything wrong with spending a few hundred bucks now and then. I sometimes find myself falling into a miser category and in some ways, I think that’s a worse path than being a flagrant spender.

For me, yeah, I’m really tight when it comes to most things, but to keep me balanced, I’m also pretty well known to go out and blow a few hundred bucks each month on dirty polyester. Keeps me sane.

And second, while the upfront costs of purchasing a Wii are obviously high, if you’re wise about the games you purchase, you will most certainly get your money’s worth in the long run.

For the first month or so, the game the unit comes with was plenty of entertainment for us. We bowled. We played baseball. We played tennis. We golfed. We didn’t box very much though… it’s just not that fun in comparison. But the point is, that first game, that FREE game included with the system, provided us with probably 30 hours of entertainment in that first month.

Using Magic Penny’s purchase price of $344, that works out to about $11.50 per hour of entertainment. As we lost some interest in those original games (and our sore shoulders told us to take it easy and recover), I went out and bought Guitar Hero III. With shipping, that cost me around $100.

That game too has superb replay value. We played it for hours on end for a couple more months — say 35 more hours of gameplay time. Now, with $444 invested in the Wii, the hourly entertainment cost was already down to $6.83/hour. And in only 3 months time.

Then I got stupid. I went out and bought Super Smash Brothers for $50. With all of the hype surrounding its release, I relapsed to my 6th grade self (when Double Dragon was released) and just bought it the first week it was available.

The game sucks. I mean, it *really* sucks. Just a bunch of random button smashing. It isn’t any fun at all and I’d even say it has no replay value. None. My wife won’t even play. It’s just not fun. Seriously. I cannot stress enough how bad this game is.

Lesson learned, though. The Wii is a total money pit if you’re going to end up going out purchasing games for $50 each on a regular basis. But if you’re going to sit back and make wise purchases on games you’ll play over and over and over and over, it’s amazingly a pretty good value.

With kids, as Magic Penny has, the entertainment value is well worth the money — but the key is making wise game purchases.

Up next for us, probably sometime in August or September, is the latest MarioKart game or WiiFit — two more titles that look like endless fun.

Can You Dig It?

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