The Weight of Money

We’ve not bought the house yet, but I’m already thinking of how to make the inside space work. I’ve always had an interest in interior decorating ideas but am having a hard time finding inspiration. I love seeing books on small spaces but all I’ve been able to find is books on “small spaces”. These books claim to be about small houses, but it feels like I could fit several of the room from the house into one “small house” rooms. So, I’m hoping to stumble on some sites of book suggestions where people really do work with small rooms and make things work.

We’ve got (gonna to have, hopefully) tall ceilings and plaster walls. The rooms are small and have no closets. I don’t know what we are going to do since the partner and I do not live together now and each of us have a double closet full of clothes that will have to be slimmed down to fit into a closet-less room.

Making this small space livable is going to be necessary if we get the house — I should probably be more important to worry about getting the house first.

(I’m still finishing out my vacation and will be back to regular posting soon)

I wanted to take a moment to commend the partner on his recent accomplishment of having all credit cards at less than 50% utilization. This has been a goal of his these past few months and it has finally happened. Seeing as how most cards were above 50% and at least one was above 70%, this has been a big improvement in the past few months.

The house saga is continuing, but I don’t have enough time to get into it right now. I’ll just say that I’m feeling a little shaky about everything right now.

This is a busy week/weekend. I graduating this evening and my mom has been in town since Wednesday to help get wedding stuff moving. She’ll be heading home this week and I can pick back up on my regularly scheduled programming. Thank you for your patience.

The home inspection was completed and I’ve just read over the report — bummer. He didn’t write up the report on the spot to deliver to us, which I was expecting and even our realtor expected — anyone else ever have that?

But the main issue is that there is more on the list than what he mentioned to us during the inspection. This really sucks because we’d already wrapped our minds around the issues he mentioned and figured we’d be able to get them taken care of. But now, I’m not so sure. Written up on paper sure makes it look a million times worse than it is.

There are tons of comments about cracking plaster ceilings and how they must be repaired, but they really looked more like minor blemishes on the ceiling. He is listing that the ceilings need repaired for every room, which will be impossible while tenants are in the house and may be out of our budget.

Now, this inspection is a sore point for me because, due our loan product, any needed repairs must be completed before they’ll approve it. The seller refuses to do any repairs and we said we’d do minor ones if it meant that we’d get the house. Yes, we want to know about the other issues wrong with the house because we’ll fix them once we move in. We just wanted to have the bare minimum repairs required in order to get into the house. I’m not sure how this will affect things and our ability to get the house.

I’m so pressed for time right now, it being finals week and all, that I am trying to avoid thinking about it.

I’ve been reading a book by The Motley Fool and one point is made time and again, we should not be investing if we’re carrying debt (mainly credit card debt). Now, I can understand this logic but it is so hard for me to accept that we’ll have to wait another 6 months to start investing if we follow this logic. I’m not suggesting that we put all our cash into stock investments while paying minimums on the credit cards, but I would like to be tackling both objectives because of the long term benefits I see for investing.

Now, maybe we should just spend the next few month kicking some serious debt behind — more than what is already being accomplished. Maybe I’ll just pick a few stocks and play the hypothetical stock market game of tracking how they do — however, their success or failure in the short-term is of little interest because it is the long term value that I am interested in. The partner currently pays about $1,000 above the min. payment required on credit cards and we’re making some honest progress. I would like to see that number wiped out along with my student loans, but I’m not sure I’m comfortable with starting retirement/investment planning until they (credit cards, student loans are not high on my list right now) are.

Warning: Tangent

In other news, due to housing progress I had to pull almost everything out of my savings account for paying closing costs and down payment. While I knew this was going to happen, I’m all out of sorts realizing that the money I’ve been saving for the last few months is now gone. And, to make it worse, I had to write a gift money check to the partner and actually put it in his account (ack!).

His credit qualifies us for a good mortgage and so he is getting the financing on his own (my credit is shot right now) and so he needs funds to make it happen. It really freaks me out to (1) taken it out of savings, and (2) have given over and beyond my control. So, I think we need to get cracking on the joint finances thing because I’m going to be a wreck at the idea that my money is no long in my control. For the record, we’re not married yet and I still feel like it is my money.

I’ve suggested that we walk over to the courthouse and just file the legal paperwork stating we’re married and I’ll feel much better — which makes me think I’ve got some unexpected issues cropping up about this combination of love and money. I think we’ll talk about it this weekend and go ahead and merge finances since he now has a large chunk of mine — the “we” thing isn’t an issue, I just don’t feel that we’ve got join custody of our finances and, because of that, letting go of some of my cash feels very scary all of a sudden (plus the “oh my god, we’re signing on for a huge debt” freaking out that happens with buying a house).

I park on campus 3 days a week and display the $185 annual parking pass required to park in a (specified) numbered lot. I’ve been doing this for almost a year with no issues. However, when my car needed towed after throwing a tensioner last month, the partner reminded me to pull my parking permit off the mirror so that I could borrow his car when I needed to go to class. It turned out that the repairs were done that day and no borrowing of car was needed.

This also meant that the parking permit was now tucked into my backpack and forgotten. How often, since purchasing my parking permit, have I thought about or even verified the presence of my parking permit? Not once. So, when I was back on campus a day or two later, I didn’t think once about the permit that was not hanging from my mirror and went off to class. At the end of the day a bright yellow citation envelope caught my eye and suddenly I had a clear vision of my hand removing the permit from the mirror and tucking it into my backpack. Sure enough, I looked in the backpack and it was shining from beyond the mesh pocket in front ready and waiting to be placed in its rightful and lawful position.

The citation – $75 – ouch! I’d just spent $57 on a tow and $175 on repairs, I couldn’t imagine paying another $75 for my car for that one repair incident. So, I took action and contested the citation and requested a review. I included a letter describing the situation and sent in copies of my valid parking permit, my towing bill, and my repair bill. Within 2 days of submission, I had a positive response and I was no longer going to be another $75 short transportation costs.

This ties in with the post by Frugal Upstate about Losing Money By Not Doing Anything. I would have lost $75 if I’d simply done nothing. Also, if I’d listened to friends, I would have lost $75. Most just argued that there was no way that I was going get out of the fine and I should just pay it and get over it.

progress update:

We offered 168.5K on the house, in writing, with a 5K ernest money check. Within a few hours, we had a response for 175K firm and no repairs. We already figured on the no repairs thing and haven’t seen much that would need repairs, just updates needed when we can find the money.

However, there is some concern about the financing we’re planning to use. It is a Maryland program that will give us the purchasing power we need to get up to 175K and an ideal interest rate (6% fixed with no points) and we can use a down payment/closing cost program to help offset the cash needed. The problem is that this loan program is known to be very picky about the properties and requires repairs. It looks like we may agree to do an amount of repairs within reason — I think we have to put a dollar amount on the within reason parameter but I can’t say what that should be.

So, tonight (hopefully) we meet with the loan officer to get the underwriting started. The partner is getting swamped with work and starting to feel very stressed with everything pulling at him from all directions. I’m trying to be supportive but I feel like all of my life is pulling me apart right now.

I mentioned finding a house we’re interested in the other day. Well, we decided to go forward on this house but there have been some bumps in the road. So, I’ll start from the beginning:

The house has been on the market for more almost 3 months, originally listing at 195K. I saw the house when it went on the market, got very interested, did crime survey of the neighborhood and dropped it from consideration. It lingered around long enough to be reconsidered (and I reconsidered my research results accuracy too).

As we were ready to see it, it dropped from 195K to 185K, a good sign since it was already a bit beyond out budget at 195K. We saw it, talked about it, and I did a ton of research. My research on the property, the issues with it, the local area, and the comparable properties state that the house is worth about 150K-165K and the seller is obviously hoping to cash in on the sellers market the fell out from under him. An aside, I must say that when researching an area there is an endless amount of information out there and I feel like I know more about this town and neighborhood than I knew about my hometown growing up.

So, we prepared to make a written offer for 158K but our agent didn’t think it’d fly and instead called the sellers agent for a verbal offer (argh — that wasn’t what I wanted). We get back an offer of 179K. Now, this is still about 15K beyond what I feel the property is worth. But, what I want to do now is put in the formal written offer, probably for something along the lines of 165K, and hope that he’ll have grown tired of waiting for a better buyer to come along and will take the hint that it isn’t worth what he is asking and also see that he has ready and willing buyers on hand.

Of course, I doubt this will get me where I want to be. I really want the property and am trying to not let that rule my emotions too much. It actually has a lot of investment potential — yes, I am actually rationalizing that this is an investment property that we’ll just take advantage of living in until we can actually buy a “real” house. I’ve got good reason to see it this way based on the community/neighborhood changes that are taking place and the commercial/retail potential that it will have when we move out (and after we’ve updated it).

We meet with our agent on Sunday to send in the formal written offer — it has taken a week to make this appointment (due to conflicting schedules) and feels long over due — but at least it’ll be another week on the market if no one else has come along – I hope no one does. Oh yeah, it is not owner occupied and I’ve yet to get the reason he is selling it. However, I reason to believe that this is simply an attempt to unload to make a profit and that is yet another strike against us.

I really want to send a cover letter with the offer that details why it is not worth the 195K, 185K, 179K he has priced it at — most importantly the comparable properties that sold for less and the fact that because it has a gravity heating system it is not going to be priced as high as houses with improved heating systems or even baseboard heat (which would be an improvement in this case). Can you send in cover letters like that? Sigh, I want the house but I don’t want to overpay, nor can we overpay since our limit is still under his last price.

I guess our prospects are pretty slim for getting the deal, but I have to try because we’ve got no other options at the moment. Homes in our range just don’t tend to show up on the market expect once every month or so. But damn it, I want the seller to realize he is way too late for the price he wants and needs to realize that it just ain’t worth more than 165K (if it is even worth that much!), because I want the house — I’ve already mentally moved in, sigh, foolish me.

This is a book that every personal finance focused individual should read and understand. It is not an investment book, per se, but instead a conceptual book that explains the math behind all of the major investments and major purchases we face over a lifetime. “You Can Do the Math: Overcome Your Math Phobia and Make Better Financial Decisions”, by math professor Ron Lipsman, really illustrates in detail how interest, mortgage payments, gambling risks, inflation, and taxation affect the financial decisions we make and explains the math related to each of those areas.

I know plenty of people highly interested in personal finance who are also silently leery of math and live in this off-center balance of investment/financial application and inability to truly conceptualize the mathematical concepts involved. This book brings the practical and informational realms together in a very easy to understand and follow method.

You can get through the book without ever doing any of the math and without touching the mathematical formulas that give your expected compounded interests or monthly car lease payments. However, I find it far more useful to actually practice the problem because then you can really see why it works and how each element (interest rate, initial investment, continued payments, taxation, inflation, time, etc.) plays a part in the puzzle.

I feel most personal finance focused individuals will get a great deal from the many comparison charts and situations that show how small manipulation of individual factors in a single investment can produce dramatically different results and, therefore, they will increase the overall productivity of their investment and financial choices with this information.

Topics Covered: basic savings, basic investing, taxes, inflation, real value of your salary, loans, comparing renting and owning a car or house, many types of insurance, credit cards, gambling, stocks, retirement.

Again, this book isn’t about investment or financial suggestions, it is about the math formulas and calculations involved in these transactions. Each of the topics presented are described in detail in how math fully illustrates the actual situation.

Finally, the book is not as dry or dull as might be expected — in fact, it was easy to get through it in a few sittings and amusing enough to keep me interested. Dry information may be helpful for some, but I’d never have gotten anything out of it if it was nothing but formulas and boring explanations. Lipsman did a wonderful job making this extremely useful information accessible.

Here is the new net worth. There have been some improvements in the reduction of CC debt — though more minimal than I’d like and influx of cash in hand and accounts. The partner had a sale to liquidate some machines and made a couple thousand in an afternoon. There are more machines that need sold and hopefully we’ll have some more cash on hand for the impending closing costs.

One thing I noticed is that I’ve left off the cash row in assets. This is because I don’t ever have cash but I forgot that the partner does. So, cash reserves have gone up about $1,500 because we’re not putting it into the bank due to impending home purchase. Instead, it is functioning as an at home atm — when money comes out of the envelope, money is transferred from checking to savings.