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5 2891

My education cost as much as this Chevy MalibuWhile looking at the stats for PantsInACan.com, I noticed a new blog out there that has me listed in their blogroll. They’re shaping up to be my top referrer this month. I’d never heard of the site, but I’ve been checking it out for the last few weeks.

I’m guessing that we’re roughly the same age; I may be a couple years older. I’m also guessing that we make pretty close to the same amount of money, perhaps I make a little more having been in the workforce a bit longer. We both own comparably priced homes. We both invest aggressively.

Basically, there are a lot of similarities to draw from.

One thing is *very* different though. My total non-mortgage debt is under $10k. Their non-mortgage debt exceeds $200k.

The culprit?

Student loans.

I can’t fathom carrying $200k in debt for something that I can’t even put my hands on. I’m admittedly, very materialistic — hence the BMW and the airplane in my garage.

I’m not real well versed in student loan rates, I’m pretty sure they’re super low, but even still, at just 1 percent, $200k is growing at a rate of $5.50 per day. That works out to over $2000 per year?! And that’s just to keep it level.

Ouch.

That said, I obviously never had student loans. I went to school in Canada where most of your education is paid for through your taxes. Fortunately, my parents also covered my education 100%.

I don’t know the exact numbers my parents paid for me, but the using the 2007-08 school year tuition rates, my time in University cost a grand total of $13526.86. Toss in another $7k or so for food and housing.

Total education cost, for simplicity sake, was around $20000. (Remember though, this number is skewed — I’m sure tuition was significantly lower in the mid 1990’s when I went to school).

My sister, on the other hand, did have student loans as she went to school in the States. Her tuition for just one year, based on 2007-08 numbers, comes right up to the $20k my entire education cost. Multiply by 4, and we’re talking some pretty serious money — more than any average household could ever afford.

For perspective, my education cost the same as a Chevy Malibu. My sister’s education cost the same as a Porsche. My new top referrer’s education cost, well, Ferrari money. More than my house… Actually, more than my house, my BMW, and my plane COMBINED!

So what did we all get out of the deal?

Well, while I don’t know the specifics of my sister’s financial standing, I’m pretty certain that I’m carrying a lot less debt than she is. I know for a fact that I’m carrying a lot less debt than my top referrer.

I’m also pretty certain that neither of them make substantially more money than me, certainly not enough more to justify the disparity in the costs of their education when compared to mine.

As far as I can tell, the only thing they got out of the deal was debt.

That’s a pretty raw deal.

I wonder sometimes if they see it that way… or if it’s a deal they’d make again.

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The VaultIn another month or so, if all goes as planned, I’ll be out of credit card debt 100% for the first time in over a decade.

The deepest I found myself was $29k in November of 2006.

At the time, I was carrying around $l7k in credit card debt (down from $26k two years earlier) and I had just taken out a $12k loan from Bank of America (that turned out to be a credit card too) to have the roof of my house done.

Coming that close to $30k scared the crap out of me. I had worked so hard to get it down to $17k… only to be deeper than I’d ever been after one signature. That’s when I got serious about dropping the debt fast.

I started transferring balances — seriously this time — to take advantage of lower teaser rates and stopped using all but one of the cards. It wasn’t until November of 2007 that I started a snowball plan.

This time my plan worked. I don’t know how we paid off so much. I don’t where the money came from. I mean, I keep track of every penny using MS Money, but the thought of paying over $20k and receiving nothing in return is hard to fathom.

You just don’t have $20k of “extra” money, you just don’t.

But somehow, we came up with it, and sent it all to the fine folks at MasterCard and Visa.

Right now, this morning, my credit card balance stands at $5226.53. At my current pace, that number will be zero at the end of February. Maybe the first week of March… Depends on what we do with our tax refund.

I know I still have the outstanding car loan. I hate it when people call something “good debt”. My car loan is at a 5.35% interest rate. I’m around 5 months ahead on it and the payments are within reason. Basically, it’s a tolerable monthly bill or, ahem, “good debt”.

That said, I’ll likely go another 3-4 months like I have been and wipe that debt out too.

Then what?

In anticipation of this looming achievement, I’ve already increased my 401k contributions to get the maximum employer match, I’ve accelerated my mortgage payments, which I know some people don’t think is a good idea, but it’s mainly to eliminate the (overpriced) PMI I’m paying each month, and I’ve already got a plan in the back of my head to start putting more in savings.

So with all of that already on the go, when I get out of debt and if (a big IF) all of that proposed “extra” money materializes, over the next few years I want to:

  • Quit my extra job. (oops, jumped the gun on that one!)
  • Start a family.
  • Take a real vacation.
  • Have the entire first floor of my house remodeled. We’re talking the works. New floors, walls, ceilings, electrical work, plumbing…
  • Buy an all new living room set with a sectional couch so we can both sleep comfortably when football is on.
  • Have some trees removed and then have other areas landscaped professionally.
  • Tear down and build a new garage.

Best of all, I want to be able to pay for all of these things without carrying a balance. It just *might* be possible.

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This can be yours… for $816 per monthOn the “Your Money” message boards over on MSN Money, there has been a “Please Explain how Folks Afford these Homes” discussion going on for the past few days.I, myself, often wonder that exact same thing. You know, seeing people, even a few years younger than me and my wife moving into the new developments full of McMansions with 3-car garages, finished basements, and 30 foot ceilings in the entryway. Where did I go wrong? Did I make a wrong turn somewhere?

Once you make your way through the typical “Get a better job” or “Move somewhere cheaper” comments that some of the knuckle-draggers over there post in every single thread, there are some pretty decent real world examples among the responses.

One of the eye openers for me was that a number of people whole-heartedly agreed that, for instance, “a $267k home on a $100k income is quite affordable”.

Um… it is?

My first response to that, and a few other posters mentioned it as well, is that after taxes, a $100k income is really only around $60k. On top of that, where I live, insurance and property taxes add an additional $500-700 to the mortgage payment every month. For the fictitious $267k home, that just doubled the mortgage payment.

Among the reponses:

The payment for a 200k loan @ 6.5% is $1264/mo. You can’t afford that at 100k/yr? What else is going on?

I agree, with an income of $100k, you should be able to “afford” a $300k purchase, with about $250k mortgage (about 2.5 x your salary)

Am I crazy? Or are these folks crazy? Are the 20-somethings moving into these beautiful houses the crazy ones? I’m really confused.

On thing I will say is that, even with a combined income over $100k, my wife and I never even would have considered looking at homes in that range. No way. Not a chance. Why?

We can’t afford it.

I see that, “2 and a half times your salary” line thrown about from time to time when it comes to shopping for a home. I’m glad I didn’t take that seriously when I bought the house we live in.

I’m also glad that I had an honest mortgage agent that informed me that just because the good faith estimate says it’s only $816/month, when you get the first bill in the mail, expect it to be double that… cause it was.

On the other hand, the discussion on the message board got me questioning my own expenses…

I mean, your mortgage is supposed to be your biggest monthly bill by far, right? Ours, well, it isn’t.

Don’t get me wrong, it accounts for a large percentage of our monthly income, but could we afford a mortgage that was, oh, say twice as high?

I suppose we *could* do it, but why on earth would we?

I’ve come to the conclusion that I’m not crazy.

And I made one of the wisest decisions in my life inadvertently. Hooray for me!

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As mentioned earlier in the year, I found out the hard way that insuring a newly purchased older home is near impossible.

Now that we’re in the final stretch for the exterior renovations, it’s time to start thinking about acquiring some conventional homeowners insurance.

Currently, my carrier is a state run plan, called a FAIR plan. Most states have them, and I’ll be the first to tell you, they’re anything but FAIR. The premium is generally double what you’d pay to an insurance company you’ve heard of, and you coverage is half what a real insurance company would carry.

Illinois’ FAIR Plan website looks to be one of the best in the country, so I’ll use their definition:

The FAIR (Fair Access to Insurance Requirements) Plan Association offers property insurance to qualified applicants who are unable to buy insurance through the standard insurance market for reasons beyond their control.

The FAIR Plan may be an answer for responsible property owners or homeowners who are having a problem obtaining property insurance in the standard market.

Many insureds use the FAIR Plan as a temporary market for a year or two until they qualify for coverage in the standard market.

It’s been nearly 5 years since Allstate cancelled my policy. Surfing the web, I’ve yet to find a “successful” journey from the depths of the FAIR plan. Seems once you’re categorized as high-risk, it’s damn near impossible to get normal coverage. I’m hoping I can blaze a new trail.

One thing I have read is that when an insurer cancels your policy, they must send you a letter explaining why they’ve cancelled you. Over the weekend, I peeked into the old filing cabinet in search of the old Allstate folder.

I was skeptical that I’d still have the letter. At the time, it was like a punch in the stomach. I’d just paid my first ever mortgage bill, I had no money left to my name, and now suddenly, I was about to let my insurance lapse before the second mortgage payment. I thought I’d likely thrown it out in anger.

To my surprise, there it was…an interesting read. It almost made me more angry seeing how trivial all of the ‘problems’ were. I kept thinking that they were nailing me on the electrical system, but in fact, there is no mention of that.

Here is what the letter listed:

  • The roof of the dwelling is damaged and lifting/buckled.
  • The soffits/fascia/eaves are damaged and needs paint.
  • The renovations are not completed.
  • The detached structure has dry rot, glass broken, trees overhanging and needs paint.
  • Your chimney is crumbling, separating, in need of tuckpointing.
  • The foundation of your dwelling or garage is crumbling.
  • The siding or frame exterior of your dwelling is damaged, has peeling paint.
  • One or more of the trees on your property poses a risk to your property because it is overhanging.
  • The windows of your dwelling or garage needs paint.

According to much of what I’ve read, technically, if I correct Allstate’s laundry list of problems above, they should take me back. That said, since they burned me so bad back then in 2002, they’re not exactly my first choice.

Cancellation Letter from Allstate.  I’d love to know why they didn’t even sign it.Oh, and Allstate is no longer issuing homeowners policies in my state because we’re apparently in a hot hurricane zone.

Um, yeah… One, Hurricane Gloria in 1985 — 22 YEARS AGO!? — and it was just a heavy rain, but whatever…

A little back story first… when Allstate sent out their inspector, I was having a cable line added to the second floor of the house so I could have cable internet in my home office. Being broke at the time, the cheapest route, rather than snaking it through the walls, was to have the electrician run the line in one of those PVC tubes up the side of the house.

Apparently, while the electrician, a fellow in his 70’s, was working on the side of the house, the Allstate inspector stopped by and asked to go inside the house. The electrician said, “No.” When I arrived home that evening, the electrician explained to me that he’d had a “run-in” with an aggressive insurance inspector trying to enter my home.

I thanked him for not letting the inspector in my home. I was never made aware that an inspector was coming by, and thinking about it, I never recall having an insurance inspector ever enter our home when I was living with my parents. I was thankful that the electrician hadn’t let some stranger in my home without me there.

Then the cancellation letter came and it all became clear. I’d guess that the insurance inspector thought the electrician was the homeowner and refused to allow him entry. Ticked off, he essentially checked off every box on his standard form, in an immature “I’ll show you!” act of rage.

Windows need paint? Um… they’re vinyl windows. At that time, they were only 2 years old. That aside, you don’t paint vinyl windows.

Renovations incomplete? Um, okay, the contractor was there working on them at the time you stopped by without notice.

Trees overhanging the home? This is New England. I challenge you to find a residential home within a 100 mile radius of my home that doesn’t have a tree limb near the structure.

Those boxes were checked out of spite. Pure spite.

The rest of them… I could call legitimate… at the time. Which is why I didn’t dispute the letter.

The roof was old. The roof was ugly. But you know what? It didn’t leak. But I still spent $14k replacing a roof that didn’t leak.

The chimney was crumbling…we had it removed entirely.

The foundation was crumbling…we had it repaired.

All of this business about needing paint and peeling paint — well, vinyl siding is taking care of that.

All of that aside though, it is a little troubling that your insurance company can essentially cancel your coverage because your house could use a new coat of paint.

I can understand the “crumbling” brick work being a bit of an insurance problem, and realistically, that is where their list should have begun and ended. And I would have taken care of that immediately, but to pile on all of the additional cosmetic issues seemed a little unjust.

Especially when they agreed to insure the home for the closing, and then cancelled the policy less than 30 days later.

Hopefully we’ll have normal insurance in the coming months…

1 2683

For the third weekend in a row (week 1 was the knob-and-tube removal, week 2 was the dryer vent and outdoor light installation), we made a trip to a big box hardware store with the intention of doing another project ourselves.

This week we went to Lowes and while headed for the paint aisle to browse, a display of light fixtures caught our eye. PULL-CHAIN LIGHT FIXTURES!!!

It’s almost impossible to find ceiling mount pull-chain fixtures anymore. Especially if you don’t want the “naked bulb” look.  Sure, that works just fine in a basement, garage, or attic, but it really looks like crap in your living space.

Upon closer inspection, they were the type that usually mounts to the bottom of a ceiling fan, but my wife’s limited Spanish skills came in super handy, “Poro ceiling-o install-o”, or something like that…

For whatever reason, this weekend, it seemed like everything had the Spanish side facing forward, but that’s a rant for another day.

Forty-nine dollars later, we were on our way home to replace the long-dead pull chain fixture in the center of the ceiling in our kitchen.

The original fixture was a horrible, slightly rusty circular thing, about 18 inches in diameter. The lighting consisted of two of those circular fluorescent bulbs — which provided great light when I purchased the house but it was UGLY. Rusty fixture, two naked tubes, and no place to mount a cover (because of the pull-chain placement) to hide how horrible it looked.

Over time, the fixture started to buzz like that annoying light we all have at the office. Then one of the bulbs would never turn on, even when I replaced it. Thankfully, it never flickered.

One ambitious weekend, I took the whole thing apart and replaced the ballast and it worked like a charm for about a month. Then the buzzing started up again. And then the pull chain snapped.

That was probably two years ago. Since then, we’ve made out with just a couple of old ratty lamps. The result? A dark, yucky kitchen.

We took down the old one and installed the new one. The instructions were very cryptic — sorta merging the “fan installation” and the “ceiling installation” into one very confusing mess. Turned the power back on, and voila! A bright kitchen!!!

It doesn’t hurt that the white balance is way off on the before photo…It was still ugly though. The old fixture had a HUGE hole in the ceiling above it where you could see the electrical box. We needed one of those big plastic cover plates to hide things — and mount the new fixture tightly against the ceiling.

A quick trip to Home Depot, $17, and another 15 minutes re-installing the light and we were done. It’s not ideal, but for around $60, it made our relic of a kitchen a lot more livable.

And that’s three consecutive weeks playing with electricity… without an injury! Woo-hoo!

Slow day at the regular paycheck job.

Currently, I’m redesigning the company’s website, which is a nice needed change of pace from the regular daily grind. Unfortunately, it’s something I work on whenever I get a chance or things slow down, which isn’t very often.

It’s been a very productive day so far though — I’ve figured out how to prevent Firefox from looping an Adobe Flash file, when every other browser out there loads and displays things fine. It’s something I’ve been planning on sitting down and figuring out for a few weeks, but I finally did it this morning. I’d had a feeling it was something simple… and it was.

I’ve also filled in the content to two sections worth (16 pages so far). As I’m using a PHP template for this site, this part is really repetitive and *really* boring allowing my brain to ponder other things. If you hadn’t guessed, this is the project that isn’t bringing in any income that I’ve mentioned a few times in previous posts.

On the brain right now? Well, with the pending siding project nearing fruition, I’m starting to look even further ahead. The next potential obstacle to overcome for our homeowners insurance problem is the original knob and tube wiring throughout the house.

I removed some myself this past weekend, but it was all in full view. It’s the stuff behind the walls that’s out of my league. And lately, I’ve really been wishing that we had light switches like a normal house. (Most rooms have a pull chain fixture in the center of the ceiling.)

The greedy side of me would also like a sub-panel installed in the detached garage so we could have power out there again, but that’s just like extra frosting.

This week, I’ll dig up the number of the electrician, John Cyr, from when he upgraded the 60amp fuse box to 200amp service three or four years ago. He also wired a new outlet to the dryer and washing machine at around the same time.

Deep down, I know it’s not the type of project I can get a quote on, it’s understandably, as they say in the business, a “Time and Materials” type of project due to the number of variables hidden behind the plaster, but I think he charged me fairly for work done in the past.

That, and I learned a ton just from watching him and being a “stand-in” assistant. I’d be comfortable with him working in my house, really the most important thing, so I’m hoping he’s up for the project and some quick easy money for a job he can work on at his own leisure.

This will kill any chance of reaching my 2007 financial goal, but as long as I finish the year higher than I started, I’ll still be satisfied.

Saturday’s Cessna purchase is still ongoing as well. I was unable to pick it up today, but the plan is for a fellow from work to help me lift it into my wife’s truck tomorrow morning. The weather isn’t likely to cooperate, but I think it should be okay. For whatever reason, I’m pretty excited about getting it home.

Now I can honestly say that, “I own my own company, I drive a BMW, and I recently purchased a private plane.”

Hey — it’s true in a wacky sort of way.

All that’s left is for me to turn my house into a palace — and we’re working on that!

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Removing Knob & Tube wiring from the attic.This morning, the first $8k check to the contractors cleared (even though I post-dated it for June 11). The ball is now rolling and I’m getting excited to finally get the whole thing going even though it’s putting me back in the hole financially.

Last night, we picked out and purchased the door hardware for the front and side doors that we’re having replaced. It was tough to pick a style or even a colour when we still don’t really know what colour the wood grain on the door is going to be. We decided on a brushed nickel finish — though it’s got a bit of a copper finish to it.

My wife also finished clearing out the attic. We hadn’t really ventured up there since the roof was completed in December of 2006; let’s just say there was some yucky debris…everywhere. A quick shop-vac run took care of that.

We also tore down some of the paper stapled up to “hide” the insulation. It wasn’t hiding anything, and it was hanging down and just looked sloppy. We also rearranged a bit to make it easier to the contractors to get to the windows in the gables. I hesitate to say that it looks good, but compared to what it looked like just last week, yeah, it looks good.

This weekend, I still have to remove some of the unused knob-and-tube wiring up there and then somehow cap off the live lines that extend over to our detached garage. Yes, we have our own personal power lines that run from the house to the garage through the air. Don’t ask.

Insulation removal to expose Knob & Tube Wiring which will be removed.

The downside of doing this is that the garage will no longer have power, but I’d hate to have the vinyl siding elaborately go around something so outdated. This way, the exterior of the house will look nice and right now, that’s priority number one.

We also have a few holes along the roof line that various critters like to call home at various times during the year. Right now I believe it’s vacant. The birds have moved out. And the squirrels won’t move back in until the fall.

I think if I pull down some insulation (right near where the wires I’ll be working on are), I’ll be able to see into their home — and out of the holes from the inside.When we had the roof done, the roofers plugged the holes with some wood blocks.

Sadly, those were nothing but a mild inconvenience for the squirrels. Persistent little animals. This time I want to plug them for good and somehow make it so that they never return. Apparently fox urine does the trick. But getting a fox to pee three stories up may be more of a challenge than I am up for.

Either way, I’d hate to have them work their way through the brand new vinyl that goes up in a few weeks.

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June 2007 Numbers

Another month passes, another step in the right direction.

A gain of roughly $4k was less than I’d hoped for, though it’s been our average gain for the first 5 months of the year, but we’ll need to step it up a bit if hitting $100k by the end of December is going to happen.

Since the mid-month report, I’ve added back in the trade-in value of my second car that was involved in the accident. We don’t have it back yet from the body shop, but apparently it’s going to look as good as new — but with that amount of body work on record, it’s value dropped over $1k. That’s okay though — I can’t say there was ever a real solid plan to sell it or trade it in anyway so it will continue to “decorate” the garage.

Another good month on the stock market too. While the 401k didn’t go up as much as it did in April, it’s still becoming very apparent that the secret to wealth lies there. I really don’t have much in there and I’m sadly not contributing much while I attack my debt, yet it manages to go up well over $1k per month consistently — and almost $2k for the past two.

On the liabilities side, we wiped out the home improvement loan I’ve complained about, which is a huge load off of my shoulders. Since March, we took it from over $8k down to nothing, perhaps making this the last month (finally!) of really aggressive debt reduction. Right now, we don’t have anything left sitting at a rate higher than 5.35%.

On the flip side… there is the credit card debt. It nearly doubled this month, but that’s due to the 0% transfer we’re taking advantage of to finance the home improvements we’re planning to make this summer. The balance is currently sitting in an ING Direct account making us about 77 cents each day so it doesn’t really feel like debt. Get back to me on that next May!

Can You Dig It?

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