financial zen

I’m taking that “oh-so-forbidden” (I kid, I kid) route to personal finance shame - I’m buying a house.

Guess what? Interest-only mortgages are making a comeback. Guess what? On houses people can’t afford. Because, in theory, you’re going to take the difference (i.e. “savings”) and hope to get a return on it higher than what you’ll be paying down the line - or maybe you’ll pay more than you owe and have your house paid off in less than twenty years. Maybe sixteen, maybe ten - who knows? The point is to not buy a house you can’t afford - but then would Interest Only loans on a house you can afford work in your favor?

Free Money Finance has five tips to get the best deal in buying and selling (from parade magazine) - buying is what I am doing (did?) and we (Wife and I) hit it pretty much on the head. We’ve got great credit ratings, our debt is almost extinguished (I promise to update my networth this week! And my NCN Network!). Overall, we’re doing incredible - on top of our finances, enough cash to cover emergencies, and we landed a great deal in a great neighborhood - a house that was on the market for 180+ days, passed inspection with flying colors.

But why housing? Why not investing?

We want a house. We, being my wife and I, want a place to call home, where our neighbors are not against our walls, their dogs aren’t scratching at our door, and they aren’t blaring their polka music at full blast at 3am. We’re wanting stability, and a place where we can have space to grow a family, a backyard to throw Barbecues in, and a place we can decorate and design the way we want it, how we want it, without the landlord complaining.

Yes, it’s an emotional thing. But you have to weigh the cost (financially) with what we will get out of it (utility). Trust me, it’s something we’ve debated, gone over, checked our selves on renting vs. buying many times (and we’re not the only one) - we came to this decision after a lot of thought. We won’t have to deal with misinterpretations of our lease, or poor maintenance (I get to be poor maintenance!).

It’s a hefty decision - but like many bloggers have pointed out, sometimes you save too much for retirement that you miss out on life. I’m not saying they aren’t right about investing or renting, I’m saying that a person who buys a house has more in mind than just making money.

No doubt if you’re involved with Personal Finance, you’ll have figured ways to reduce your bills by some.

“Ways You Can Decrease Recurring Household Bills” from the Real Estate Journal brings it up but I think they’re missing a few key points.

They are working on cutting their bills down - but it seems they also went for more bang for their buck! They didn’t reduce prices, they allowed themselves to be upsold on their cable and internet. They didn’t look to decrease their bills, they looked for more for what they were paying.

It’s not that getting more for less is bad, but when your goal is to reduce spending, keeping bills at the same levels is detrimental and counterproductive. So you get ten more channels for the same price - great! Now you have more to watch instead of doing something with your life. Maybe that’s a bit too harsh, but do we really need 100+ cable channels when you know nothing is on that is going to satisfy you?

At the end of our test we racked up a net savings of $323 a year. Not bad, but we hoped for more after negotiating through the tangle of phone trees and inscrutable pricing plans. We actually let ourselves be talked into paying more for an upgraded service from one provider and struck out completely with two others. On the bright side, we’re no longer completely in the dark about our electric bill after hearing a clear explanation of it for the first time.

I think that one line (emphasis mine) is the saving grace. They got a better explanation of one of their bills - my problem is why didn’t they do this sooner? You should very clearly understand every bill you are paying - if not, why are you paying it? Why are you getting that bill? Will you pay my bills if I send them to you?

I’ve found an effective way to help my budget is to sign up for the budget plans with the utility companies - I’ve done it with gas and electric. They give you an estimated bill monthly, and after a year’s time they reevaluate it - I saved a ton going this route, although I initially overpaid, at the end of the year my next year’s bill was much cheaper - but I monitored my usage and made sure I wasn’t abusing the system. Personal Responsibility!

Have you had any experiences lowering your bills, or getting a better understanding of them?

(Note: My Personal Finances is calculated using my salary - not my wife’s income, so we’ve got a good idea what will happen after the baby’s born)

Our personal finances for the month of April - we went over by $146.11! - mainly because of our inattentiveness to our fast food fix! I’ve noticed my weight slowly declining since we noticed the unhealthy fast food trend. Our goal for this month is to keep our dining out to <$40 (I promised The Wife Sonic if we can manage our budget this month). We had a slight increase in clothing expenses - namely a couple prego clothing items (we buy mainly used - but we found a couple cheap garments we'd prefer new). We also bought sunglasses! Stylish and $10 from a mall kiosk (I love to haggle). A large chunk was dedicated to paying off bills (and knocking out some student loan).

Also increased! Medical bills! Who knew kids were so expensive? He's note even born yet and The Baby Logan is looking at a $2500 bill (possibly less).

Our gas intake is under control some - we're averaging about a tank a week (it's a long drive to the office - thank God we car pool!) My car should be back from our Friend the Mechanic this week - for a lot less then my first estimate (it was between $800-$1100). Thank God for Mechanic friends.

I’m moving to a new office closer to our home, but that could change in the coming month (I’m weighing a few job options - one is a lot closer, the other is right next door to my current location). This should effectively increase my budget - it depends on the location and pay.

Lastly - I’ve got a chart with the No Credit Needed Network! I’m anxious to update my progress - all in good time, I suppose! I’ve got a lot going on (hence my less than stellar posting) but I will not neglect writing! I’ve got a stash on incomplete writings I’ll try to have ready (and relevant) so I can hopefully keep this up every morning.

I’ve read a number of articles and posts talking about how it is cheaper to rent your living space instead of buying a house. It’s all about maximizing your returns, and where you can earn more money in that alloted time (because stats don’t lie, right?)

With that in mind - I’m going to take a different approach. Put your heart into this decision and decide - do you want to make extra cash, or do you want a home you can be happy in?

It’s a delicate balance! Happiness in renting, or happiness in home-owning?
The Real Estate Journal reinforced my thoughts on the issue - they discuss home improvements and whether they really add value - basically, recognizing your bad investment for being exactly what it is - making you happy, with a possibility of a cost (or loss).

In other words, do you temper your desire for what you want your home to be, because what you want may temper a future buyer’s enthusiasm? Or, do you disregard the future to enjoy the present?

Basically, as the article states: Your style is their disaster.

Just think when you are house hunting (or apartment hunting), and even when you hang out with friends. What goes through your mind? Probably something along the lines of “I like their style, this is cool” or…

“What in the WORLD were they THINKING?”

You may think Greco-Roman is in this year. Maybe a little Asian Zing. You drop a lot of money to get a style into your home, either with decor or by remodeling. But you’re doing it for YOU - not for resale, unless you are keeping it as basic and simple as possible. It’s important to remember:

“I want our house to fit our style while we’re here,” my friend says, “but unless I plan to die here, I want to recoup as much money as possible from a remodel.”

That’s it - it’s realizing how long you’re going to live in your house - spend money to make yourself happy in it - and it especially makes sense if you think it’s the house you’re going to grow with your family in.

As for my future home? I plan on making a couple improvements, maybe a remodel here or there - but basic. Making it less dated, a little more roomy and functional - but I won’t be installing the Kitchen of my dreams until we’re settling and in the area when intend to live and grow for the rest of our lives.

Maybe not the law - but I definitely fought my apartment complex.

When you are in an apartment complex, you’ve got the benefit of never doing lawn work, never doing repairs, and never having to stay (you can break your lease, you know).

But when you’ve got difficult neighbors, and a very bad management office, things can get hairy, like they did for me.

I pay rent mid-way through the month for the next month - I like paying early. It prevents me from spending it, using it for something else, or ever being accused of not paying rent on time. They returned it, stating I needed to add utilities. I called them up and let them know - if they want utilities, I’d need a copy of the utilities. They dropped off a new note the next day with my utilities statement, adding $50 for a late fee.

Two days later, we received my first ever eviction notice for non-payment. I hold in my hand a check for rent, with a date of March 14th (I pay mid-way for the next month). I informed them quite explicitly, the lease states utilities and rent are separate payments - to which their rebuttal was “if you read the lease you’d know they are one and the same.” I sent out another check - with utilities, no late fee.

It’s a good thing I’ve got my filing together! I bust out my lease and ask what paragraph that gem is in. “15,” they say. Paragraph 15 is about rent/lease increasing, not utilities or rent payment schedule. So I quote my lease were it states that “once the utilities bill is received, I have 20 days to pay it. Suddenly, their financial manager needs to get the apartment manager. He says that he’s not sure where it says it - but it does say it.

I told him to prove it. I’ve got a lawyer on-call to verify, if need be, and I let him know he can let me know where it states that, because otherwise their constant returning of my rent (and trying to charge late fees) are unfounded. He asks for a day, and that if he can’t, their District Manager will e-mail me.

Four days pass, and I’ve e-mailed the DM twice about my upcoming eviction, and asking about the state of the utilities/rent dilemma. The 16th I finally receive a reply.

Guess what? I AM RIGHT. I called them out on their statement of “company policy” and “lease terms” when I knew they were nothing of the sort.

It’s been four months of these kinds of battles with this apartment complex that has lead to my search for a house - something to call my own, away from pimped out Hondas, bass-rattling stereos at 2am, and beer bottles lying outside. Yes, I’m moving out of the college-life apartment and moving into a house.