MM inspired me to check and it's been a great year 2017 financially. Our retirement savings has gone up $131k so far this year with our contributions being $11k IRA and $12k into 401k. The taxable accounts are up $97k for the year. So we are up around $228k in net worth conservatively.
I hope the year continues like gang busters. At this rate we are on track within 5 years to be FI at our crazy spending rate. We are definitely FI if we would sell the house and live in a cheaper COLA. This is how compound interest works out in people's favor. The longer and earlier you start the more you have.
MM inspired me to check and it's been a great year 2017 financially. Our retirement savings has gone up $131k so far this year with our contributions being $11k IRA and $12k into 401k. The taxable accounts are up $97k for the year. So we are up around $228k in net worth conservatively.
See below entry
Okay I managed to resize some of the photos. I will start adding them probably in no reasonable order because I'm finding it difficult enough as is.
Asakusa Temple Daytime in tokyo.
Asakusa Temple Night
Asahi Extra Cold
Disney Sea Food (mochi ice cream and Gyoza dog)
Shinkansen (bullet train)
Kobe Cable Car, Port Tower, Zoo
Nara Deer park and Todaji Temple (day and night bon festival)
Osaka Castle, Kaiyuken (aquarium), Skybuilding
- one of world's largest
Hong Kong - Victoria Peak, Big Buddha, glass tram, buns
Hong Kong Disney
So we start October 2nd our basement/garage remodel. We signed a contract and put down $15,000 deposit. After the drywall is up we pay another $10,000, and after all work is done we finalize our payment. Right now as it stands we are signed on for ~$47,000 to finish our garage, replace all windows, remodel our bathroom.
This does not include new garage doors which was quoted at $3700 from Costco installer or cabinetry in the laundry, family room, and garage. The cabinets in laundry we were quote $3250 from closet factory. They also quoted us $3000 for family room and mudroom/garage $3000. We haven't decided exactly what we are doing either.
We also only have a $3500 allowance for gas fireplace which could cost more with the gas line and installation. Also we have some low tile allowances so depending on what we choose we will run over.
I'm budgeting $75k for this project though right now the numbers are looking more like $65k. I figure 10% over run is to be expected and if I can stay close to that 10% I'll be happy.
Time frame we are looking at is being done they said by Thanksgiving. They have other projects they already have booked to start so they don't want to dawdle any longer than they have to. I'm nervous about anything they could find.
This is a pretty big project. We have to move everything out of the garage and basement before we start. This weekend we've been sorting what we want to put into storage and what we want to keep. We are renting a 10x10 unit drive up for $148/month with $1 rental the first month. We wanted a pod but our driveway didn't seem to have quite enough space for a pod + dumpster and deliveries. So we were forced into a storage unit. The storage of our stuff if it's 3 months should be ~$450 plus the moving truck rental.
I'm hoping to get this photo thing working then I can document the stages we got through. Another cost is our washing machine will be out of service so I'll be forced to use a laundromat eek.
So we just got back from our trip. I can't wait to post pictures. They were amazing.
Our entire trip was around $10,000 for 3 weeks - 2 weeks in Japan and 1 week in Hong Kong. The breakdown.
Hotels $1240 - my parents covered the hotels for the part we were were traveling with them except for 1 night. The total cost was $4500 for 14 days for both our rooms and theirs. So I covered the last night @ $179. Then we paid $745 for the week in Hong Kong and at the last minute we decided to do the last night @ Hong Kong Disney Hotel for $316. This is the most we've ever spent on a hotel by far. I mean $315 for 1 night. It was a little insane. We typically spend $100/night and Japan was expensive because it's Japan but we were spending around average there.
We spent $660 on tickets to Tokyo Disney Sea, Hong Kong Disney, and other attractions. We spent $1360 in cash on who knows what eating out, stuff, etc. Finally we spent $1724 on our credit cards on eating out, uber/lyft from airport, etc.
Our total spending on the trip was $7835 for 3 weeks. About 50% of what I budgeted and expected. I actually thought we'd spend between $15-20k. Even if I added in the $2250 for hotels my parents very generously gifted us, we've still be at $10,085. Which for 3 weeks isn't terrible for a family of 4 traveling for 3 weeks without cooking a single meal.
But to get away with under $8k for 3 weeks? That included all the transporation, we used trains and cabs (which is were most of the cash went), I have to say we did well.
I'll discuss it more in depth later. Can't wait to share photos. But disney in Tokyo and Hong Kong was ridiculously cheap the tickets. For us 1 day at each place we spent $222 for 4 tickets and $246 for 2 adults, 2 kids, and my FIL senior ticket. Crazy. That's the price of entry to Disneyworld and Disneyland for 2 adults. Strangely the food in the parks was CHEAP. I've been to enough parks to be surprised that they were charging like $5 for a meal which in the US runs around $10-$20.
DH and I were chit chatting in the car, seems like we always talk in the car. Probably because the kids are strapped in and can't distract us as much as in the house fighting. Maybe because we're trapped in two seats and not focused on our cell phones, cleaning, work, dealing with kids, cooking.
Anyway I asked him in 5 years at 45 or so would he retire if he could? I was running numbers and it's highly possible if not sooner. We could potentially do it now if we were willing to cut our lifestyle. But seriously 45 is not improbable.
His answer? "And do what? Why would I want to?" I said "follow your zen". His answer "I'm following my zen now. I spent a year finding my zen, moving with you, and finding my dream job. I don't need zen. I really like what I do. If I stop liking it I'll tell you again and we'll talk. Until then I'll work and be content."
I sat there stunned. Here i am on a savingadvice forum/blog, I read early retirement forums and blogs, and I'm not married to a spendthrift. I married a guy who wants to work.
He further goes on to say "LAL your dad is still working at 86! My dad is still consulting at 66. I am not sitting here at 45 doing nothing." I said "do something you like." DH "I am doing something I love. Who else plays video games pretty much all day everyday? Who gets to be a gamer and paid for it? If I had told 10 year old Mr LAL your job will be video games I'd have died laughing and kissed the ground." LAL says "okay when it stops being fun, quit." DH "okay deal."
So back to the drawing board. Seriously I don't know when or how I'll be dragging him away from work. We're about to embark tomorrow on a 3 week vacation, I'll try to post pictures but I won't have a computer just my phone so we'll see. First trip for DH in a year and he's not even sweating it. I'm dragging him away since he hates traveling. He'd rather stay at home and do nothing. Hence retirement is not his cup of tea in that sense. He doesn't want to travel and see the world.
Have you actually planned your retirement? And thought about what you would do?
A lot of friends recently keep complaining about their lives. Some really are in a difficult situation. But others I keep telling them to count their blessings.
Some blessings are financial. Some blessings are just life. I can't explain but I feel like often times we take for granted everything we have and don't appreciate even the smallest things.
A friend complained about not having enough money and being on a budget. I said at least you have enough to choose how to spend your money. Be happy that you can make choices.
Another friend is getting divorced. She began crying about how she's giving her children a terrible life and she's ruined their lives. That they have less than they used to. I told her to stop right there before we couldn't be friends. If she truly believes that having a single parent is a lesser life we couldn't talk anymore.
I love my mom and kiss the ground she walks on everyday for the life she gave me. I appreciate the fact I was raised with good values and morals. That she worked hard and no matter what she gave me the best life she could and I believe truly succeeded even without money. I feel my mom sacrificed so much and I understand and appreciate everything she did. And my friend needs to get over it. Yes divorce and single parenting is hard. But it's not a lesser life.
Another friend was complaining about how hard it is to pay off debt. I said appreciate that you are paying down debt. It would be worse to keep digging the hole deeper. Every dollar is another you don't owe. Yes it sucks and is slow but it's better than staying in debt. Look at the cup half full.
Another friend is panicking about buying a house. I said it'll happen. Everything happens for a reason. That have some faith.
Finally another friend we passed boxes onto, her husband quit his job and they aren't sure what they are doing except moving. I told her follow where they feel lead and it will unfold. That sometimes you are doing what you are meant to do. I really believe that.
All these people have a lot to be thankful for but to only focus on the negative is harder than realizing all the positives.
Sometimes I get stuck in that place but I slap my face and tell myself I have so much to be thankful for snap out of it. I have to always look at my awesome kids and husband, the health of our family, the lovely home, the nice weather, and that we are happy. I could easily write all the negative things happening like I haven't found a school for my DK2. I haven't settled on a contractor, when 3 haven't gotten back to me arrgh! I am spending an exorbitant amount of money right now. But instead I have to keep positive. I have a lot to be thankful for.
Are you a half empty or half full kind of person? Is it easier to complain or appreciate?
When you think about spoiled kids you think of things like buying fancy toys, clothes, etc. But I'm starting to think there are other ways to spoil a child non-financial but that can lead to financial problems. Mostly it's the fact that it's easy to learn never being told no.
I've been watching a friend's kids a lot recently with her going through a divorce and packing. They enjoy playing with my kids. But watching them this Friday and Saturday it was hard. Friday her mom watched the kids for dinner and had to make do with what we had. It was an unexpected dinner and I didn't have anything her kids eat. They eat chicken nuggets. and that's pretty much it for real food. They eat candy and snacks and some fruits. So on Saturday she dropped them off with chicken nuggets and tortilla. I made a quesadilla for the kids and they told me they don't eat it. They didn't eat any veggies or anything else. I said there wasn't enough chicken nuggets for them to eat only that and there wasn't. She said to feed them anything because if they don't eat they wake up in the middle of the night demanding food and milk. She can't deal with it.
I get it now. She talks about having outrageous food bills and never having food. After seeing what her kids eat I get it. Everything is processed and packaged and expensive.
But real problem is that catering to every want and need I think could lead to problems. Yes it's food only but never being told no and having every whim catered to can lead to not understanding you can't have everything in life.
I tried to guide my friend to a budget. But she ignored it. That's fine but I pointed out that calling herself poverty stricken while getting $2500/month support seems a bit much. I pointed out that DH and I live on not much more a month. Yet she isn't responsible for anything but groceries, gas, and utilities. Plus she's working and making $1000/2 weeks. So it's a lot of money since she isn't paying mortgage, car, insurance of any kind. But it's hard to hear that other people live on a lot less. I pointed that out and she's like but "my kids will be deprived."
I can't help but wonder how people think kids manage when their parents make less? What happens to people who make the average?
So we put in the gas line for $700 and water pressure regulator valve for $700. I am feeling like things are crawling along. But slowly.
What we need to do is drywall/sheetrock the garage because it's a fire hazard and not up to code. The garage doors don't open and are also not up to code. The estimate from Costco for the garage doors is $3500.
Then redo the laundry room and put in new cabinets and windows and tear out the paneling.
And redo the bathroom downstairs as well.
So all new windows and paneling, moulding, trim, walls and ceiling. The ceiling is broken in multiple places. The garage is overinsulated but without the fire barrier. The rec room in the basement needs the same too.
So yes these are wants/needs. But we need to get the fire barrier up it's for our safety. It's grandfathered in since the house is 1966. But hey who wants to die in a fire? Plus the garage opener is improperly placed in the garage and could easily catch fire.
Long term fixing the windows will make it more efficient to the heat and cool the home. But the cost? We also are getting insulation put in the attic and 2 tube skylights.
So we got our first two estimates. The first estimate was completely over the top. It was $75-90k rec room, Laundry $20-30k, Bathroom $25-30k, and garage $7-10k. Meaning we were looking at low end $127k. That's ridiculous.
The second estimate has come in at $54k. I'm not sure if that's more reasonable or low. We still have two more bids coming in.
So DH is now suggesting he gets back into home repair and start to tackle some of this himself. I think we have someone do the drywall and sheetrock and moulding and then we do the cabinets and stuff ourselves. We haven't sat down yet with the estimates since we're still waiting. He's also suggested he do the fan and insulation in the attic since he's done it on our last house. He can also do the cabinets but we'll need to hire a handyman to help him since last time I did it. This time with the kids it's a lot harder to find the time.
I'm struggling because we can afford it. Should we just pay someone else to do it? Should we do some of it? Stuff we've paid so far well we've never tackled real plumbing. Not changing a flap or new seal on toilet or tightening a bolt. But valve and gas lines? I don't think we can do the garage doors ourselves either but maybe I'm wrong. And for $3500 I thought it wasn't a bad price for 2 doors, 2 openers, installation and disposal.
I always hear about how people did their renovations on the cheap. I don't understand how it can be done so cheap.
Well since we bought the house our spending has been in free fall. Not unexpected nor unplanned. It just is something that happens. Everything we knew about but it's a bit insane to see the bills. We've never spent this way and I am going to guess most people on here haven't either. Otherwise they wouldn't be on savingadvice.
So we started with a playset for the kids. That was installed from costco for $1000. It was discounted when I ordered it memorial day weekend and set up within a week. They love it. They play on it daily. I wondered whether we should do it because they will age out of it. But then decided we might as well. We've been promising it for a long time.
Got the backyard cleaned up for $1200. I'm going to try and maintain it and have spring and fall cleanups but apparently the people before us never took care of the yard in 3 years. The fruit trees are overgrown and in poor shape both neighbors and the yard guys told me. We've even got a fire pit that we've used for s'mores 4x already. The yard is fantastic. We love it. We have 2 cherry, 3 apples, 1 pear, 1 apricot, blueberry bushes and raspberry bushes. Seriously I never imagined having this opportunity.
Patio Furniture just got on Friday was $500 from Amazon. DH put it together in 2 hours and it's amazing. The deck is lovely. I had my morning tea out there.
New TV above the fireplace $600 from costco. Our last TV purchase was in 2005 when we moved to our last house. It's interesting to see how much bigger and lighter and cheaper it is now. We also bought our much wanted king mattress for $1000 from purple. We love tempurpedic. When we bought our last mattress 10 years ago a king didn't fit up the stairs and it didn't come the way it comes now. Technology has changed a lot since 2005. Can't wait to try it but we haven't got a bedframe. That's next on the list to order.
Those were our big ticket items of spending thus far and we aren't done. We're renovating our basement and garage and I'll explain with photos what's going on later and price and decisions.
I'm not sure how long we are staying in this house but it really is lovely.
Other items on our list to order is a gas grill Weber summit series $2000, new couch, dining table, bedroom sets for us and the kids, and building the closets. The kids have our old queen size beds we had and it doesn't fit in the rooms. Until we moved here we decided to just make it work and they barely played in their rooms anyway. And until recently they slept in our room a lot. Well it's time to make rooms for them and let them have a say and maybe they'll feel more adult and "their" rooms. So far we've spent $4300 and another $2000 earmarked already plus the gas line for the grill I'm seeing numbers around $1500 installation.
This is not going to be a cheap summer. But this is down the street from me. The location is to die for. Both how we live and DH gained a minimum of 1 hour a day back on his commute more like 1.5 hours a day. His commute is now 30 minute both directions instead of 1 hour and 1.5 hours. He's really enjoying it.
More photos to come.
My friend paid me back the $5k I loaned her for her lawyer retainer. I am so excited. I figured the money gone. But she took a dividend payment from her 401k and paid me off instead. Sweet. Yes I know she should have left it in her 401k, but truthfully I told her that it's okay to tap her 401k right now. That getting divorced is more important than retirement and the situation she's in it really is. I can't explain but it's gotten so bad that if she had to cash out her entire retirement savings I would still think it's a good idea. And as it stands she just might have to do that who knows.
But the second $5k? DH got a referral bonus at work for referring someone that got hired and has been working now for 6 months. YES! Sure we saw $3300 of $5000 but hey it's better than nothing. And we certainly can use the money with our move. I think it just paid for the movers and few extras.
Nice found money!
Did I mention we are getting a free fridge in the garage of our new house? The sellers when we saw them and bought the lawn mower and seeder (awesome) asked if we wanted it. We said sure.
I guess it depends on if we use it. I guess we'll unplug it and sell it for $25 if we don't. I am worried that we'll buy too much food. I'm not sure how to use it.
I mean I can see leaving drinks and the freezer will be nice. In fact I was contemplating buying a 1/4 of a cow or and 1/8 of a cow to start.
Like I've mentioned my DH is anti-frozen anything but I really want to try managing food better. We don't do a lot of deals because he likes things fresh. But I hate shopping so much.
This is sort of a nice experiment without costing us money to buy a freezer. I think if it works out then maybe we could switch it out to a deep freezer and forgo the fridge part?
Anyone have an extra fridge? How much do you use it?
So we're doing our ESA at $2k/year for each kid. We have mentioned adding to that around $2k/year each kid into a 529.
Right now we are positioning ourselves to be financially independent soon enough not including college. DH will be 52 and I will be 50 when our youngest goes to college. I always had it as a goal that we would be Financially independent by 45 and I think it'll happen. But realistically I think we may have to wait until age 55 for DH to "retire" so that we could cash flow college.
But reading more about investing in real estate and I think in 2 years we could save enough to perhaps consider investing in it. I wonder if it would make sense to do a rental property for each child and use that instead of 529?
There are a lot of negatives including we're starting late, they won't be paid off and the cash flow might not work. Plus we'd need at least 2 homes for each child. But I wonder if this would make sense?
I can't do it for something that generates $100/month cash flow even with the depreciation tax break. I think that means we'll have to invest in something away and be an absentee landlord to make it happen.
Plus I need DH to get on board. I know he'll be anti-real estate. So anything I find has to make a lot of financial sense.
Any thoughts or experiences? Do you think this is a good idea? This is a long term play so I think with our financial situation we need at least 2 years of stability right now and planning. I need time to research to present my report to DH about where and how we will invest and who will manage the property for us. This is not something I feel we can jump into since we'll be needing to foot most of the cash down payment, emergency fund at first.
Stuff costs a lot. I mean buying yes costs money. Sure you can save money buying it used. Thrift store or garage sale shopping. But even if you buy everything used and cheaper it's still stuff. You need somewhere to store it. You need to move it. You need to organize it.
I saw this as we are about to move and everyone asks me how the packing is going and I say it's not. I say I am throwing things out and I'm trying to organize what I have so that I don't move it. They nod and look really confused.
I say that I think I need to purge more than pay movers to move unnecessary stuff. I've got friends seriously on both sides of the spectrum. Those who buy new and have tons of stuff. They tend to have big homes and lots of space.
The idea that we are moving to a smaller house that cost more seems well ridiculous and in some ways it is. But then we also have friends who buy second hand everything but also have tons of stuff. They are in their home and paying for a storage unit for 5 years because they can't fit everything into their house but they shop all garage sales, craigslist, thrift stores. I get it they probably don't spend as much but I really question that. I mean 5 years of a storage unit?
I don't say this but I'm thinking this in my head. Either way the things in your house costs a lot. I'm not perfect, not by a long shot. I have a lot of junk in my house that I am struggling to downsize and be motivated to get rid of it.
I write this because I am panicking that we are moving into a really small house compared to what we were hoping for and I know there isn't storage. So I am trying to come to terms that I may have to purge more upon moving.
But ever item I look at and ask "does it make me happy" I tell myself it's just stuff. Yes it cost money to buy. But it costs just as much to store. And my life can't be ruled by things.
I need to live comfortably and having less stuff to fit into the house we bought is a priority. The answer is not make more money and buy a bigger house. The answer is make your space work for what you can afford. Maybe if you can't fit your stuff then stop buying things is the answer.
Today's mini goal purge 1 box from the garage. Go through it and sort what I keep and I was discard.
We can't unfortunately make it to my cousin's wedding. I'm not sure how much to give in "gift" value. Culturally my mom has always said you give the value of your meal if you go. This is pretty much true and usually it's cash. It also increases if family. However we aren't going.
I'm sad to not be going but with everything the way it is, we just couldn't have gone. It's a super busy time for us with moving that it wouldn't have made sense.
That being said I was thinking from their registry a $39.99 gift from bed bath and beyond with a 20% off coupon so still free shipping at $32.00. Then use a BBB gift card I bought on Giftcardgranny which I save 10% on so $22.50 for $25. And that will bring my spending to around $30? Is this ridiculously cheap? Do I seem cheap?
I know it's the thought that counts. If it were a friend I might have just sent a nice card. But I usually send gift cards to target when other relatives haven't registered.
I guess I don't want to look too cheap. But at the same time I wonder if I have to give $100-200 gift since we aren't going? UGH. I hate this social etiquette thing.
So we bought our house. We still have about 1.5-2 years of living expenses in cash. But we are planning on doing some extensive remodeling of the basement. We also have to stash another $15k for 2017 Roth IRAs and college savings. I'm thinking also that we should start $2k for each DK into a 529. That would take our savings to $19k plus $18k into the 401k.
I find myself hesitating because I don't want to not enough cash on hand to do a remodel cash. But it's a strange feeling after sitting on so much cash to be down to a more reasonable number and still hesitating to invest it.
Plus I feel like we have a tentative spending budget but there are a lot of variables we can't account for yet. Maybe by the end of the year I'll feel comfortable enough to invest some of our cash.
What about everyone else? My goal is 6 months cash on hand and the rest is invested. We used to live like this but when we moved without income we bumped it up to as much as possible.
I see a lot of gofundme pages for people. I get it that people are not financially prepared for something to happen to them. It's always unexpected.
I've never donated but now a friend has been diagnosed with cancer. And is really pushing donations because they are out of work. Being self-employed they don't work they don't make income. I haven't donated yet.
Do most people donate? If so how much? I have dropped off food every 3-4 weeks for the past 5 months instead. I felt it more personal it has certainly cost me more than $100. Should I have just donated cash?
I guess I get uncomfortable donating to all these things. I don't mind donating to organizations and I do. I also don't mind people's fundraisers. But this more personal donating to someone feels strange.
Do people really do it?
No way will my DH go along with paying down the mortgage early. It goes against all his brain power. It's an emotional thing and I get it. Paying down the mortgage isn't logical nor mathematically correct. But it feels good emotionally. It makes you mentally happier I think personally. But he's data driven so no way am I getting around him on this.
But being 38 and 39 and starting a 30 year mortgage is annoying. I don't care that it makes sense. I don't care that even after retiring it makes sense to draw from a portfolio and pay our mortgage. I like the idea of not owing anyone on our house when we retire. But marriage is a compromise.
So instead I'm going to track our progress to having enough money in our taxable accounts to pay our mortgage in full. Since every penny and bonus we don't spend we invest/save it's reasonable to assume I might be able to talk him through cashing out and paying the mortgage when we retire.
I also think at that point we'll be really FI. Right now we are can pay off 18.93% of our mortgage.
Do I have any goals? I'd like to have 10% of our mortgage a year saved. That is a very big stretch goal. We are on track with principal paydown to paydown about 2% a year in the beginning. Adding another 10% seems like a lot. That would put us at 10 years until we have enough to pay off our house. Life has a way of happening. Plus having enough to pay off our house isn't enough to retire on. That's just a start.
So I wanted to see how compounding has worked for LAL and DH. DH started saving in 2005 when he got his 1st job and LAL started probably in 2001 but didn't save much! I have never had a 401k so my entire retirement account has been in Roth IRA. Here are my balances on the first of the year. In 2005 was the first time I contributed the maximum of $4000. The total contributions for 2005-2016 is $59,000.
On January 1st, 2017 I would have contributed at total of $59,000. But in reality I only contributed $53,500 since I didn't make my 2016 contribution till 4/1/17. So based on compounding I made $39,554. ($39,554/53,500)/12 for a rough estimate return of 6.16% return. The proper way would be to calculate each year but I'm tired.
Currently though with my $5500 2016 contribution I have $104,926.89 in my Roth IRA. Not to shabby considering I have now contributed $59,000 and still have to do 2017 $5500 contributions.
DH is a lot more impressive but he's had a 401k with match.
DH Roll DH IRA 401k B 401k V 401k F
$4,000 $0 $4,871
$8,322 $9,351 $38,895
$27,149 $13,642 $21,491
$18,497 $38,484 $59,763
Starting with zero in 2005 he contributed in 2005 the maximum IRA $4000 and $4871 to a 401k. Not bad considering he worked 2 months out of the year. As of January 1, 2017 he has a total $532,991 for retirement in 12 years. He also did not contribute for 2016 IRA but did max out the 401k for 2016 so we didn't miss a year. He contributed $251,000 so an approximate return of 9.36%. Not too shabby. Plus with the $5500 2016 contributions and 401k this year he's at $598,962. We broke the $700k retirement savings mark combined.
I'm not sure where we are heading but we are up $77,840 for the YTD and 2016 we went up with contributions and returns $73,501. 2015 we made $40,157, 2014 we went up $73,151.
I am going to guess we're getting over the hump where our returns will be more than our contributions annually. Which is $29k/year.
While not fantastic or super exciting I'm thinking that overall we're average boring investors in index funds now. Before DH would try to pick stocks which might explain why our returns are poor compared to the market. It also could be we had a few bad years in 2008-2010. But overall I think in another 10 years we'll see around average 8% returns.
We closed on our house yesterday. Nothing different. Didn't even move. Just said thanks and ate dinner. Little less than 2 years.
Someone said to me "buying a home is the road to being wealthy." I said "I feel more poor because our mortgage is way more expensive than renting." The person rolled their eyes at me.
I said it doesn't matter whether you rent or buy. The person who becomes wealthy is one who can save in either situation. If you can save the difference between the rent and mortgage then you'll become wealthy. Truth is that anyone who saves the difference and invests it will come out ahead.
But owning is nice stability. FWIW renting probably put us behind because of the appreciation of homes in the areas we sold and bought in. But at the same time we did bank all the extra money and in 1 year we're back to where we should have been financially before we took a sabbatical.
So owning is NOT the end all be all to becoming wealth. Saving money is.
There was an article I read recently that saving $2000/year per year your child is will allow you save half the cost of a public university cost in state. $2k rule
The article says if you save $2000/year for a child that you will have $36k after 18 years. Pretty obvious statement. The article says most people don't save for college because they have no guidelines and think it unachievable. But if people followed this guideline it would seem more reasonable goal.
I figure anything you save like retirement will help. I just checked and DK1 has $19,976 and is 7 years old. We haven't contributed this year so we've contributed $12k. And DK2 is 4 and we haven't contributed this year so $8k contributions but has $13,024. Granted the markets have been good to the kids. But I'm just investing in VTI and being boring.
I will contribute after we buy the house each another $2k this year. I'm thinking maybe by 18 each kid could have $50k? Definitely about 50% of the cost of public school tuition. Also assuming we don't save any more.
I'll keep everyone posted as we go along. Since we really did start when they were born and are saving $2k into a ESA it'll be a good litmus.
I can honestly say I laughed when I read this article about this women who spent $41,000 on Amazon
She realized that she bought 427 items in 2014 or more items than days in the year. She makes a lot of money (I think $170k/year) and works for google. But she talks about how easy it is to mindlessly spend online.
I agree 100%. I know MANY people who spend thousands of dollars a month online shopping. I am friends with tons of them. I hear things like I just spent $1000/month on Amazon. I buy everything on Amazon. When I ask what do you spend, it's shocking.
I've spent $79.74 all year on amazon on 4 items. I am spending another $89 on 2 book collections this weekend Roald Dahl 15 book $48.99 and Laura Ingalls Wilder $33.99 9 book set. We do go to the library weekly but I try to buy books that are classics for my kids. I am not sure where my books went but these we'll keep and we love going to the library otherwise.
I bought ada twist scientist 10.99, usually I don't buy these sort of new books, desk chair 44.99, face ski mask 9.99, and pencil sharpener 13.79. Yep 4 items. Before buying I tend to shop around even online.
But what's worse? How many people are mindless drones and they shop on amazon though the prices are not the best. I have a friend who has laundry detergent, soap, etc all delivered for the convenience. But I pointed out she's a member of costco and shops there anyway why not buy the stuff in bulk cheaper. Her answer is that it's easier to have it delivered instead of shopping sales at costco and waiting for deals. The true irony is she wonders why they can't afford to buy a house or save money?
Probably because when I make a suggestion like shopping at costco and watching deals the answer is it's not worth their time. And pointing out that online shopping can easily lead to overspending. The answer is that it doesn't it saves money because it's cheaper.
I would have to guess that the truth is overspending is overspending whether you do it online or in stores. I actually think it's easier online because you are so disconnected from the feeling of spending that you click and buy it charged to a debit or credit card.
The woman in the article talks about it. I have to admit I try to not online shop because I think I spend more online. I think I lose track of my spending. But maybe I'm in the minority if so many people do it.
Do you shop online a lot? Does it save you money? Or do you spend more? Are you sure it's cheaper?
I just spent an hour pricing out boxes from amazon versus uhaul. Yes I have to go to uhaul but most packing supplies are cheaper at uhaul except tape, and they have an better return policy. Of course I have to go to uhaul but it's worth it.
This is the first time we are moving into a place and having a list of things we have and want to buy. Usually we move in and make do with what we have. I guess because this feels more permanent, and we have money we are making a list of items we want.
We are buying the king size bed we've wanted for 10+ years but never gotten. Just the mattress, we have to figure out the frame later. Also a tv and grill are on the list. 2 years when we moved we didn't have any income so it didn't make sense to spend money when we had none coming in.
We are also replacing the kids beds. They are both in queens and we want to move them to smaller beds and get them desks. For now the DK1 will get a twin bunk bed and the DK2 will keep twin until we figure out our guest room situation. So we are able to sell/recycle two queen size beds. The truth is one is our old bed which we handed down when we bought a foam mattress. The other a friend gave us and so we didn't pay for it.
Right now we are looking at $1150 for a king size purple mattress for us. Two twin mattresses for the bunk bed.
We also need stools for our island. But since I can't recall if it's extra tall or regular counter height i'll buy them asap when we move in.
We also shopped playsets but they are so expensive that DH instead wants to try and buy a used one on craigslist because it appears that many people just try to get rid of it after their kids outgrow it. So though we budgeted $2000 we're going to see if instead we can spend $500 and get something better quality.
Interestingly we bought a lawn mower and seeder from our sellers. We were driving by their house yesterday and they were having a garage sale. DH and I were going to drive by when he sees the lawn mower. He stops and hops out and offers them money because hey we need it. So for $25 we got a mower and seeder.
As far as packing? Right now we are starting to sell and purge what we don't need. I think more than packing selling and getting rid of stuff we don't need will probably help more in the long run. We have quite a few items we are looking at and will start selling or donating.
Interesting change in plans. We are no longer closing on June 9th instead we negotiated a closing of June 7th. In return we got possession of the house June 24th instead of June 30th. This all came about on Tuesday. It's been a crazy few days. It actually worked out greatly in our favor.
I won't tell our realtor this she'll be pissed and honestly I don't think she's working in our best interest. But heck it's not her money and not her house. I sucked it up and worked with her mortgage guy but only by forcing him to match our deal with capital one.
Our landlord was very accepting and is allowing us to get out of our lease June 30th. Fantastic. We are out a month early. Today I showed the house to a woman and her daughter who are very interested and turns out renting another property managed by my property manager. They are being kicked out of their rental because their landlord is selling. Our PM turned them onto our house so it appears to be a match made in heaven. I hope she gets it.
Anyway we save $1200 because we were going to move over fourth of July and keep our rental until July 15th. Being out by June 30th saves us enough to makes the hassle worth it.
I got an estimate of $1100 to pay movers, and $1100 extra for them to pack. So $2200 to pay full service movers. Instead however my DH and I are leaning to the hourly company we used when we moved 2 years ago. They charge $79/hr for packing and $95/hr for moving.
I think that 11 hours of moving is more than enough. So I'm leaning toward that. Especially since we also have a 22 hour budget to have them pack up the house as well. I'm not sure how it'll work out and we could afford the full service. But I'm a little nervous about timing the packing plus moving.
So we're moving out of our place. I negotiated moving out 2 weeks early and not losing our deposit. Saving us $1200. Our plan is to have it cleaned July 1st. Then move in a mix of us and movers July 2nd-5th. Then be out by the 5th and let our property manager clean and the new tenants in by the 15th. 10 days should be enough to have it cleaned and repaired. The property manager agreed and I agreed to show the house as needed.
Now I had friends who were interested in the place. They are a family of 5 with a parent staying with them so 6 people. They live 5 minutes from me in a townhouse complex where they rent a 2 bed/1 bath townhouse with 1 car garage for $2275/month. Their lease is up end of May. They can resign for $2275 (it was $2200) or they can pay month to month for $2775. The lease breakage is 3 months or $6825 if they break their lease. I told the mom (my friend) she's better off going month to month because the $500 works out cheaper than signing a lease. They are house hunting and the realtor told them they are likely to be able to buy in November/December when there is less people looking.
However I don't think they are in a position to buy since they were approved for less than the mom hoped. She initially thought they'd get approved for $600k. But the bank told them $450k. This puts a big damper on their house hunt. She said they don't have more than $30-35k to put down and she needed help selling her jewlery to get more. I told her don't sell her jewelry. But that will bring in $10k for closing costs she thinks. I have no idea how selling jewelry works except I feel like you don't get much.
They have a house from where they moved that they could sell and it would help with the downpayment. Currently it's rented out. I told her that would really help them with the downpayment and minimize risk in buying. She said they have to think about it. They want to try to be "rich" by being landlords.
Anyway I told my property manager about them and gave them his contact info. They offered him $2275 a month to rent. I slapped my head. Seriously? Less than I'm paying they thought was a good idea? It was ridiculous and he said he didn't get back to them. They asked me to inquire if he had gotten the email and that's when he told me what they offered. I told him just tell them no. It wasn't feasible.
Oh well. Since he has 8 offers now for showings on Tuesday 4-6 pm I guess we'll be fine. It's for $2500/month and I am guessing that it'll be taken on Tuesday. So we are set to save money.
As for my friends? They lost out on renting a bigger house for $125/month more. Maybe $125/month is a lot but at the same time they would have had space for 6 people better than in a 2 bedroom townhouse. It's cheaper than a 3 bedroom townhouse in their complex which was $2500/month. Sometimes people are penny wise, pound foolish. In trying to score a deal and be cheap they lost out I think on a better house and a better flexible rental agreement. I sent them a copy of mine so they could read it for lease breakage. Oh well. Say La Vie.
So the appraisal came through and we are set for closing on June 9th. We actually were already done with our mortgage and cleared to close sans appraisal. I'm very excited and happy. It's a relief. We know we are set to close and no longer waiting on an appraisal and worrying what happens during negotiations with the sellers.
That being said now my DH is ready to talk moving. We have decided we're buying the king size bed we've desired for years. Until we moved two years ago we didn't have a choice since it wouldn't fit up the stairs to our bedroom.
We also have to decide what to do about the kid's beds. They both have queen size beds, one we got for free and the other is our old bed from when we got a memory foam. I think we should do twin beds but let one keep a queen? We don't have a guest bedroom.
That's the other thing. We have to decide how to manage the renovations we are planning. We need to replace the windows, ceiling, and paneling on the 1st floor but the question is do we do an extension/bump out or do we just reconfigure the space we have? We have 700 sq ft but it's poorly laid out. We could probably create a bedroom downstairs if we got rid of the laundry room.
But of course this is something we have to consider carefully so we don't do something stupid and overspend or not do something that doesn't cost much more to improve the house.
This is stressful. Plus we are nervous about movers and planning since the sellers are living in the house supposedly until June 30th. But what if they aren't out? Or if they move sooner? These are all questions swirling about.
Now that we know we are closing I feel like I next will contact the school and register the kids. I also need to determine if we are doing private school as well for the DK2. I think she's a bit young for kindergarten and was considering private school so she'll have extra help for the 1st year and more attention. So much to do and so little time.
I was thinking a lot about friends discussing how renting is throwing away money. It's really, really not. I can see how people think buying a home builds wealth. It's an enforced savings plan. Every month you build up savings by paying down the principal of your house.
But here's the truth! If you saved that principal payment and invested it, as well as invested the entire down payment of your home I'm pretty sure you'd come out ahead of the home owner. But the reality is three-fold.
One how many people would actually save the principal difference between renting and owning? So in that sense yes homeowners do tend to build wealth faster because they are forced to. And typically renters don't have the discipline to save. This is usually true as well because renters often times lack the discipline to save the principal for a down payment on a house. So home buying will build wealth but renting often doesn't because of lack of discipline. I see it too often with most of my long term renter friends they say "i could afford the same monthly payment as rent but I have no down payment." My point to them is then why aren't you saving?
Second, usually people's mortgages are more than rent. Renting often is less perhaps due to the fact that many people will rent the minimum space needed but buy a home much bigger because they are stretching the budget. I can attest to that. Our townhouse we sold was 3bd/2.5 bath townhouse 1500 sq ft. We were DINKS without kids. We didn't need that much space but we bought 5 years before kids to "grow" into to. Probably would have been smarter to rent a 1 bd apartment (like we had just sold) and then moved into something bigger 5-6 years later when we had kiddo #1. So for sure we were pretty dumb, but we liked owning and having dogs. I'm sure our rent would have been something like $1600/month (it was $1400 for a month to month studio at the time) instead of our $3k/month mortgage. But we could afford it and enjoyed the space. So if we had invested the $1400/month difference? We'd likely have made more money. Granted out of the $3k we were paying down I think $700/month principal so we were saving about half the difference. But still $700/month = $8400/year for 10 years is $84k and we could have invested that. So renting would have built up our wealth just as well.
Third I've noticed and perhaps I'm wrong when you renter you get a better location than when you buy. Most people have to compromise on something. So everyone I know compromises and has long commutes of 1-2 hours to get a "big" house. This means if they rented they could usually get something closer to where they needed to be but to afford to buy?
Right now if we wanted to save money DH and I could buy the place we're in for $600k. Instead we're buying something closer and more expensive but about the same size. So we compromised on size of home instead of location. We are paying for location. Also the $600k home would probably break even with our rent which we are overpaying because we had a dog. It should have been $2k/month we paid $2400/month for a dog. Our mortgage now is quite a bit more. But we also could have tried to rent in the same neighborhood we bought at it would have started at $3500 and we probably couldn't have a dog. So to us it's a wash.
But I don't think renting is losing money. I actually think to buy a home many times you are paying a premium to own. I think that many renters don't take advantage of the financial side to keep up with savings and match a homeowner. I think if they did it would become clearer how renting can be financial advantageous.
Have you ever considered renting if you own? And have you ever considered buying if you rent? Did you run the numbers?
For us we banked the extra money so renting we easily matched a homeowner. But I like owning with the stability and I like having a dog. I like feeling like we can do something to the house and not worry. Will we be paying a premium? Absolutely but it's one that my DH and I are willing to make because we want to. We know the financial disadvantages and advantages but still want to.
FWIW I think buying property and being a landlord is different. I think it's different numbers and cash flow and it's an investment not a primary residence you live in. I think it's something that can match stocks easily but you have to know what you are doing for arguments sake we aren't talking about RE investing.
I've heard twice today from friends that they owe their kids a certain quality of life. One was the friend who is about to have a lifestyle change. She said she was struggling with the realization she can't give her kids the lifestyle they have now. I said that's not true. The lifestyle they have now is funded by debt so it's not real. You can't compete with that. Even staying married you'd be cutting back and "decreasing" their "quality of life" anyway. She thought about it and agreed. But said it still sucks because this is all they've know. I agree.
Then at lunch another friend was discussing about how she is desperate to buy a house because renting is throwing away money. That renting is making their life unstable and shouldn't they buy because it would stabilize their life for their kids? I mean they are rushing to buy a house with less than a 10% DP and she was talking about pawning her jewelry to get more money together. I wanted to shake her and say no you don't need a house to be stable. The kids are okay. But I get it. I get the feeling of instability. I asked her if they were preparing for retirement and she said no. They are struggling to save for the house.
But that got me thinking. I've never felt we owe our kids anything. I feel like we need to be responsible adults and making good decisions about our financial future is being good parents. I don't think we had to buy a house for our kids. We bought it because we wanted a house. We also don't think that we have to provide x, y, or z.
But I'm realizing that parents of all different economic levels feel this pressure to provide everything. We're expected to provide a nice home, college, car, house down payment, wedding. It's insane. Don't get me wrong I get wanting to give your kids everything. But I'm still firmly in the camp that you take care of yourself and everything else will fall into place. I see these parents giving EVERYTHING of themselves and their money for their kids. What happens when it's time for them to retire or not have a job? How will their kids manage if everything is handed to them? Or worse will their kids be able to turn the tables and support them if these parents give anything for them.
Are we doomed to failure if we continue down this path? What do we really owe our kids?
I told DH full disclosure. I ended up showing him a few emails and photos and he agreed she needed the money. She retained a lawyer today and was advised not to wait to file for divorce but most as quickly as possible.
Well things are worse than she thought. So she thought it was just cheating Nope. Well she went into their garage and started opening up all the mail they've been ignoring for years. She hasn't paid a bill since 2007 when they got married. They had separate checking and savings accounts and he paid all the bills. So she never bothered to open a bill or inquire how things were going.
Her husband has played her and everyone for a fool. He's built a house of cards spending money he makes as fast as he can and then some. As I've helped organize the paperwork and explained some of the debts I said to her it's time to cut her losses and pray she can get out of this without declaring bankruptcy. But it might already be too late. She is so far in the hole.
The lifestyle she's become accustomed to is too champagne taste for her beer budget. How will she go back and change her mindset? I can see it in the way she handles money now? I can't tell her right now but she needs to realize that the house of cards money even after the divorce won't cut it. Maybe the sale of the house will wipe the slate clean of debts. But the days of going to the grocery store and buying whatever she wants is probably over. I asked her once before how much they spend on groceries and she guessed for a family of 5 about $3k/month. She put down in the budget $2k/month on groceries. That's not counting the eating out, starbucks, take out. We've found receipts for an average of $600/month lunch at her husband's club. That's on top of his eating out daily.
I dare not say the truth, but perhaps she had a suspicion that the lifestyle they were leading was way more than $200k/year. That the spending was so over the top, but she thought they were making enough to cover it. Yes she was saving for retirement but she made much less money. I really wonder how she had no idea they were living an unsustainable lifestyle. Or maybe he has been burning through his inheritance faster than even he imagined.
I don't know but the unpleasantness of the money situation I think will be hard. I can't even fathom how hard this fall will be. Tougher still to realize that he dug them into a deep hole and if not for the hole she might have a chance. I know BK seems irresponsible, but I wonder if it's not the best option in this case? How do you live on a $50k salary when you've been used to 5x that or more?
We'll see how this all plays out. But it turns out that more people than you can imagine are living lifestyles they can't afford. I never dreamed that she would be one of those people.
I spent yesterday shopping around for the best deal and rate. So what did I end up with and how? Well my agent said we could shop the rate but had to the use the lender she suggested because the seller's would feel betrayed. They had talked to our lender and asked questions. But at the end of the day I said no way. I said if he can't match the deal we're moving on.
I got from Capital One no fees everything waived from their end. Also $1300 towards 3rd party fees like title insurance, appraisal, deed, sales tax, etc. Finally $500 for having a checking/savings account. Of course the rate we locked was 3% for 7/1 Arm. Very solid deal.
Chase initially offered me $995 in fees, 3.25% 7/1 Arm. Of course I said no go too much in fees around $2800 which is a lot of money and .25% which on our loan was around $125/month. Over the life of the loan that's substantial since it's $1500/year. No go. I would have walked over the interest rate a loan but to add in $2800 in fees I wasn't about to tolerate it and the seller's could try to get out of our contract.
Chase agreed to all terms and matched it. They agreed to 3%, $0 fees, and $1300 towards 3rd party fees. I also got $595 for having a checking with them, I now need to open one to get that final bonus. So I got what I wanted.
Don't let people push you around. Further my DH has/had no idea. Everyone who thinks women are the ones who are dependent are crazy. Even my realtor called me a shark and said it's really unusual for a stay at home mom to do the financials. Really? If anything I almost think a stay at home should be more involved because we have the time to do it.
Next up? Getting our home insurance in place. Deciding how to approach our landlord to get out of our lease early by a month. If not we'll eat the cost.
|<< Newer Entries||Older Entries >>|