Author Topic: Two Houses, Zero Clues  (Read 4393 times)

zoe2dot

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Two Houses, Zero Clues
« on: September 06, 2017, 03:48:06 PM »
Topic Title: Two Houses, Zero Clues

Life Situation: single, zero dependents, Bronx/NYC, 38 yo female – raised poor with no financial education or positive financial role models

Gross Salary/Wages: $100k (plus discretionary $50-70k)

Individual amounts of each Pre-tax deductions
401k – $1,500/month average - no match offered so max out as quickly as possible (90% of paycheck in Q1 goes straight to 401k) – maxxed in 2016 and 2017 (risk of getting laid off each March so incentive to contribute as early as possible)
HAS – none offered
FSA - $10.41/month ($250/year total as have very low medical expenses)
IRA – none (would love to know what a back door IRA is)
Health insurance – none, premium covered by company

Other Ordinary Income: none

Qualified Dividends & Long Term Capital Gains: none (tbh I don’t know what this means)

Rental Income, Actual Expenses, and Depreciation: unsure how to calculate this (the 1st house is my primary home (a studio) and the 2nd house is for my mother to live in—I pay the mortgage, she pays everything else)

Adjusted Gross Income: $157k

Taxes: need some insight on what to put here (from pay stub? From w-2?)  -- taxes are definitely my weakness

Current expenses in a normal month:
Mortgage 1 (my studio) $1,125/month
Mortgage 2 (mom’s house) $1,250/month
Insurance studio home owners $27/month
Insurance mom's home owners $88/month
Insurance car $166/month ($orig 171/month - ditched road side help and rental car coverage)
Car $265/month
Bridge tolls $350/month
Gas $100/month
Other transit $25/month (subway, taxis, Lyft)
Electric bill $35/month
Entertainment $155/month (misc drinks, dinners)
Hobby $150/month (horseback riding, surfing lessons; orig had $300 for this...will cut it down for the next fews months)
Food & Dining & Groceries $250/month (originally thought $400)
HOA $750/month (co-op maintenance - not a typo!)
Phone $30/month (orig $80)
Hair $50/month
Wax $25/month
Gym $35/month (orig $50/month - called to "cancel" and got lower price!)
Storage unit $175/month (living in studio makes it hard to store bikes, surf board, horse riding gear…have considered giving up the unit it but unclear where I would put the items and use most of them seasonally) (got on wait list for smaller unit--will consider moving locations if one doesn't free up in October)
Cable/Internet $0 (use Amazon prime video, mooch friends’ HBO GO)
Student loans $0 (paid off three loans over 10 years as scheduled with original borrowers)
401K $1500/month

Expected expenses: lots of weddings this year + family reunion + two 1 week vacations meant a lot more spent on travel this year than normal, though travel is where I splurge most years

ER expenses: unsure

Assets:
As of 9/6/17 checking cash balance $31,817.13
As of 9/6/17 savings cash balance $32,938.44
As of 9/6/17 401K balance $70,656.71
House 1 (my studio ) $215,000
House 2 (mom's) $165,000
*I used two large chunks of cash as down payments on properties, one in 2016, one in 2017 so my current savings seem low to me compared to my salary vs monthly expenses. I expect my savings to increase fairly rapidly in the remaining months of this year.

Liabilities:
Car $260/month (balance of $15,963.27) / 3.990% APR (just bought a used car)
Mortgage 1 (my studio) $1,125/month (balance of $147,996.12 @ 3.250% FIX)
Mortgage 2 (mom’s house) $1,250/month (balance of $138,270.22 @ 3.875% FIX)
*need help with what PITI is (specifically where to find the taxes etc)

Specific Question(s):

Real estate: what advice can you give on owning two properties, tax advantages, things to be aware of?
For context I bought my first apartment in March 2016. I bought a second home for my mother to live in in May 2017.  (I pay mortgage, mom pays all other expenses.)  I have had no examples of home ownership in my family so am clueless about the benefits of having a mortgage.  TurboTax was pretty straightforward this year because I only had the one apartment…now I will have two properties.  My mom needed help and I was reluctant to give her cash so decided to buy a house in the state where she lives.  It’s been a few months and is going smoothly.  She knows I may need to sell it if my financial situation changes; I know she may not want to live there indefinitely.  Having this additional mortgage has made me want to get a deeper understanding of my finances.

Accountant: should I hire an accountant to do my taxes?
Taxes are my biggest weakness (aside from the general ignorance of finances in general).  I’m considering hiring an accountant.  I work in NJ, live in NY, plus NYC taxes…and now two properties in two different states.  I just don’t feel like I have expertise in this area (taxes, specifically; real estate in general).

Cash: Should I pay off my car? pay down a mortgage? open a Vanguard account?
I feel like I have more in cash than would be necessary for an emergency.  Would you agree? How much would have in an emergency account in my situation?

Backdoor IRA: what is this?  I’m still vague on Traditional vs. ROTH IRAs.

Clarifying my goals:  I would like to continue working for the next ten years then have a tiny house on the rural outskirts of a bigger town, preferably also near the sea.  What should I be concerned with now in regards to that goal?  Any towns to consider that have equine communities and surfing?  Traveling is also something I anticipate continuing to spend money on.

Looking forward to the punches!  I'm ready!

Thank you x1000!



 


 
« Last Edit: September 22, 2017, 02:06:24 PM by zoe2dot »

pbkmaine

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Re: Two Houses, Zero Clues
« Reply #1 on: September 06, 2017, 03:55:19 PM »
You include the mortgages on your properties but not their fair market values. Add that to your assets.

zoe2dot

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Re: Two Houses, Zero Clues
« Reply #2 on: September 06, 2017, 04:01:07 PM »
Done - added the FMV for both houses
House 1 (my studio ) $215,000
House 2 (mom's) $165,000
« Last Edit: September 22, 2017, 12:21:38 PM by zoe2dot »

RidetheRain

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Re: Two Houses, Zero Clues
« Reply #3 on: September 06, 2017, 05:52:35 PM »
Liabilities:
Visa current balance is $1,100 (habit is to pay it off monthly—I use it for the expenses above and all misc
Is this a balance you carry or just regular budgeted expenses? If it just happens to be the current balance and you PIF each month then remove this debt. Otherwise, knock this out first.

Accountant: should I hire an accountant to do my taxes?
Taxes are my biggest weakness (aside from the general ignorance of finances in general).  I’m considering hiring an accountant.  I work in NJ, live in NY, plus NYC taxes…and now two properties in two different states.  I just don’t feel like I have expertise in this area (taxes, specifically; real estate in general).
I have found very little use in hiring an accountant. I worked in three states last year and my company paid for an accountant for me. I followed along with Turbotax and found that the back and forth with the accountant took more time and energy than doing it myself. Your mileage may vary depending on your ability to understand the questions presented by Turbotax. You can always call the IRS for specific questions if you have an unusual scenario (ie is your mother technically a dependent because of the mortgage)


Cash: Should I pay off my car? pay down a mortgage? open a Vanguard account?
I feel like I have more in cash than would be necessary for an emergency.  Would you agree? How much would have in an emergency account in my situation?

An EF is up to you. How secure are you in your job? How long would you expect to need to look for work if you got fired? Some people keep no EF and just have a line against their home. Others have several months. I suggest putting the cash you're not using into anything other than a checking account. Try an online saving, money market, etc for quick cash. Checking accounts are crap and are only good for this month's expenses. My checking gives me basically no interest. Ever. My online saving gives me 1.2% APY which is at least not zero. By keeping that much cash in a checking account you are LOSING money because of inflation.

I'm sorry you just bought a used car on credit. Sell your WAY too expensive car and buy a used car that doesn't require a loan. A 3-5 year old Hyundai costs much less and you could still get fancy things like a GPS and sunroof.

Mortgages are tricky. Are you planning on living there for a long time? Is your Mom? There isn't anything inherently valuable in dumping money into your home. Imagine you have 100,000 in gold and 100,000 in real estate. You still have 200,000 total regardless of the form of your money. Depending on the market for gold and the market for real estate your money may grow or shrink. Real estate is often thought to be a "good" investment, but like the 2009 recession showed us, that isn't always true. If you want to live there forever? Then that's great! Buy your home and never work about it again. If you're going to move in a few years, then what's the point in adding money to that particular investment over another? It's a balancing act.



Other notes:
OMG 400 on groceries just for you! Less! No more waxing and quit your gym. Those are both things you can do at home. Phone could be cheaper - especially in a big city. Look at MMM Recommendations like Republic and Google Fi.
The storage unit needs to go. If you don't have enough room for your stuff then you probably have too much stuff. Try upper shelving or something? There is some nice cabinetry that can hide things away near your ceiling where you rarely look. Small spaces are hard, but you don't want to live beyond your space.

The bridge tolls are a bunch - anything you can do to avoid roads with tolls/ take the train?
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zoe2dot

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Re: Two Houses, Zero Clues
« Reply #4 on: September 07, 2017, 07:22:02 AM »
Thank you for your thoughts, RidetheRain.

Visa - I removed the Visa as debt as I do pay it off each month.

Accountant - hiring one this first year and following along so I can do it myself next year is a great option.

EF - job is fairly secure in that I've been here more than five years; the insecurity comes from a mercurial boss.  If I got fired I would expect to be rehired elsewhere in 6-8 weeks.  I will move my cash out of my checking account and get into the habit of keeping just this month's expenses in my checking account.

Car - You wrote the car was WAY too expensive.  I did a quick search just now on autrotrader.com.  What is the value in buying an older used car with more mileage closer to major repairs for $12,000 rather than keeping the one I have?  This one already has GPS and a sunroof.  The car is well priced as it was returned after six months so was in great shape with low mileage, essentially a new car for $17,000 with 100,000 mile warranty.  I had the same model (also used) for five years and would have kept it indefinitely but it got t-boned while parked.  I'll think about selling the car based on additional feedback.  I would be very interested in thoughts on whether I should pay off the car loan in full, or make advanced payments on it.

Mortgages - I'm planning on living in my studio indefinitely so do not worry about it other than wonder if I should make additional payments.  My mom is harder to predict; she agreed to live in it for two years minimum so in two years I'll have a better idea of if it is a good long term fit.

Other notes:

Groceries - in reading other case studies $400 did seem a bit high.  At first I thought this was because I include all household expenses like paper towels, shampoo, etc.  But in doing a search on Mint I see this year's average per month is $250.   (I will edit that in the original post.)

Waxing...it's daunting to think of waxing myself and I start giggling at the idea of trying to give myself a brazilian.  I'm willing to try it once or twice!

Gym...I have a weight problem and a motivation problem.  I've tried working out on my own with mixed results.  I will consider cutting this out but worry it will worsen my health since I do go 4-5 a week when I have the membership.  (This is to a shabby, no frills gym.  I downsized from the $150/month fancy gym.)

Phone...I will look for a cheaper phone plan as suggested. 

Storage unit...I live in a 500 sq ft studio with normal height ceilings.  I use the items seasonally and don't keep anything I do not use.  Camping gear gets used 3-4 times a year, surfboards weekly from June-August.  Riding gear gets used every other weekend.  I have the right amount of stuff and would just be paying for it again a few months later to replace it if I got rid of it.  Building storage in my apartment would be tricky as it is already heavy on built-ins for my clothes, household supplies etc.  I have a couch, a desk, a bed and two bookshelves.  The kitchen is a nice size but is immediately off the room.  The ceilings are not high but I'll think about where I could add more storage. 

Tolls...the more expensive bridge is non-negotiable, the cheaper bridge saves me 25 mins each way.  Taking the bus would be a 2 hour trip each way plus a half mile walk; no train option anywhere near my office.  I don't think I can cut the tolls...saving $5 a day by avoiding the cheaper bridge but adding 50 mins in the car seems crazy.  (But that's why I made this post!  Maybe it will seem more appealing if more people chime in.)

Thank you so much for your thoughts!  I really appreciate it!

So my current to do list is:

1. Immediately move cash from checking to savings.
2. Investigate money market account
3. Look for cheaper phone plan
4. Google home waxing
5. Think about storing activity gear in my home vs storage unit

Raenia

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Re: Two Houses, Zero Clues
« Reply #5 on: September 07, 2017, 07:36:18 AM »
I don't have any experience with real estate, so I'll just weigh in on your expenses.

Current expenses in a normal month:
Bridge tolls $350/month - I see you already addressed why this is so high - honestly, with this much expense on transportation, I think you should consider moving closer to work.  If the difference between your current mortgage and rent/mortgage on the other side of the bridge is <$400/mo, you might actually save money by moving.  Especially if it allowed you to walk or use public transit to work.
Gas $100/month
Other transit $25/month (subway, taxis, Lyft)
Electric bill $35/month - This is very good, nice job keeping utilities down.
Entertainment $155/month (misc drinks, dinners)
Hobby $300/month (horseback riding, surfing lessons)
Food & Dining & Groceries $400/month - I see you addressed this as well, but it is still rather high.  I spend ~$100/mo on food, including housewares/paper products/toothpaste/etc.  You need to look at why it's so high.  Are you going out to dinner all the time?  Eating work lunches out?  Throwing out food that goes bad before you can eat it?  Start meal planning and packing lunches to get this down.  You can easily cut $50-100 off this.
HOA $750/month - Please tell me this is a typo and it's actually annual or something, this is insane.
Phone $80/month - I see you are looking for a cheaper plan, good job.
Hair $50/month - Very high, how often do you need to get your hair cut?  Try to cut back here.
Wax $25/month
Gym $50/month - If you feel you're getting good value out of the gym, then don't cut it just to save money.  Look into other local gyms and see if there's a cheaper one, but don't compromise your health.
Storage unit $175/month (living in studio makes it hard to store bikes, surf board, horse riding gear…have considered giving up the unit it but unclear where I would put the items and use most of them seasonally) - This is a tough one.  You say you use all the things you're storing here - I'd leave this as low priority to cut.
Cable/Internet $0 (use Amazon prime video, mooch friends’ HBO GO) - Nice job!
Student loans $0 (paid off three loans over 10 years as scheduled with original borrowers) - Very good job :)

Assets:
As of 9/6/17 checking cash balance $31,817.13
As of 9/6/17 savings cash balance $32,938.44
As of 9/6/17 401K balance $70,656.71
House 1 (my studio) FMV $220,000
House 2 (mom's) FMV $165,000
*I used two large chunks of cash as down payments on properties, one in 2016, one in 2017 so my current savings seem low to me compared to my salary vs monthly expenses. I expect my savings to increase fairly rapidly in the remaining months of this year.

Liabilities:
Car $260/month (balance of $15,963.27) / 3.990% APR (just bought a used car) - Most people around here advocate spending under 10k for a car.  You're right that the difference between a 17k car and a 12k car isn't that much, but the difference to a 6-8k car is significant.  If you do decide to keep it, however, I wouldn't pre-pay the loan.  You're better off investing the extra money (see Investment Order posted below)
Mortgage 1 (my studio) $1,125/month (balance of $147,996.12 @ 3.250% FIX)
Mortgage 2 (mom’s house) $1,250/month (balance of $138,270.22 @ 3.875% FIX) - These interest rates aren't too bad, I would not be paying extra on the mortgages.  The Investment Order linked below should explain why in more detail.
*need help with what PITI is (specifically where to find the taxes etc)

You're keeping a LOT of money in cash, between your checking and savings.  I would keep no more than 1.5x monthly expenses in your checking account, and no more than 6 mo expenses in the savings account.  For what to do with the remainder, I recommend reading the Investment Order thread.

Quote
Cash: Should I pay off my car? pay down a mortgage? open a Vanguard account?
I feel like I have more in cash than would be necessary for an emergency.  Would you agree? How much would have in an emergency account in my situation?

Backdoor IRA: what is this?  I’m still vague on Traditional vs. ROTH IRAs.

This is not my area of expertise, so anyone feel free to correct me if I get anything wrong.

The difference between traditional and ROTH IRAs is taxes.  The trad IRA is funded with pre-tax money (you get to deduct it on your tax return), and you pay taxes when you withdraw the money in retirement.  The ROTH IRA is funded with post-tax money (not deductible), but the withdrawals are tax free.  However, because you're such high income, it changes the situation a lot.  You are above the income limit for deductible tIRA (see here: https://www.fidelity.com/retirement-ira/contribution-limits-deadlines), and you are also above the income limit for ROTH IRA (here: https://www.fidelity.com/retirement-ira/contribution-limits-deadlines).  Unless your deductions bring your MAGI below 133k, you will not be eligible to contribute to a ROTH.

As far as learning about taxes, I recommend printing out a tax form from last year and attempting to work through it, seeing what lines you understand and what lines you are confused about, and see if you can get the same number that you got on your actual return to check your work.  That way you can come back with specific questions about your tax situation, which might be easier for us to help with.  Hiring an accountant for one year and having them teach you is also a reasonable option, but I'd try to learn on your own first.

Good luck, and keep us updated!

Laura33

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Re: Two Houses, Zero Clues
« Reply #6 on: September 07, 2017, 09:03:43 AM »
I can help on the backdoor Roth.  As Raenia noted, you cannot contribute directly to a Roth or to a deductible traditional IRA.  But what you can do is open up a nondeductible traditional IRA (another way to say that is that you can always open a tIRA, but you only get to deduct your contributions on your taxes if your income is below the threshold, and you are not).  So that is step 1 -- basically, you are taking post-tax money from any of your bank accounts and using it to open a new, nondeductible tIRA account.

Step 2 is then to roll your tIRA into a Roth the next day.  This works because while there are income limits on contributing directly to a Roth, there are no income limits on rolling over a tIRA into a Roth.  The brokerage where you open the tIRA will do this for you easily -- I literally just called them and they walked me through it online.

The caveat to this is that you have to pay taxes on any gains in your tIRA since you opened it (because you have never been taxed on that income).  But that's why you roll it over the next day -- that way, you have only one day's gains to deal with, which keeps the taxes minimal.

The other big caveat that catches most people is that the taxes are a lot higher if you already have a lot of money in a deductible tIRA.  If you roll over a deductible tIRA into a Roth, you have to pay taxes on the full amount you roll over (because you never paid taxes on either the gains or the original contributions).  So if you have a deductible tIRA and then set up a new nondeductible tIRA, and then roll over the nondeductible tIRA into a Roth, the IRS will treat it as though you are rolling over some of that money from each of the IRAs, and so your taxes will be higher.  But this is not an issue for you, because you do not have any other IRAs, so you can do the simpler path above.
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With This Herring

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Re: Two Houses, Zero Clues
« Reply #7 on: September 07, 2017, 09:13:37 AM »
Why are you living in NYC if you work in NJ?  Especially as your dream home is somewhere rural close to places to ride and surf.  As far as I know, most people who cross the bridges live in NJ and work in NYC because the jobs are in NYC but the houses are cheaper in NJ.

If you moved near to work, you might be able to cut $350/month in tolls, $750 (?!) /month in HOA fees, and possibly other travel costs.

I agree that you should talk to an accountant for your taxes this year.  Interstate stuff can be very messy, your mother may be your dependent (don't let her file until her dependency is determined!), and you don't seem to have a good understanding of taxes yet.

In your list of monthly costs, please move up your mortgage payments.
I would suggest looking at the spreadsheet linked in the How To Write a Case Study post to see where your case study can be fleshed out.

Backdoor IRA: what is this?  I’m still vague on Traditional vs. ROTH IRAs.

Traditional IRA - If you contribute money to an account this year, you get to exclude that money from your taxable income (for income tax purposes); your contributions are tax-deductible.  The money in your IRA does not get taxed as it grows.  When you withdraw money at retirement age, all of these distributions get taxed as ordinary income.  Since you are covered by an employer-sponsored retirement plan (your 401(k)), you cannot make tax-deductible traditional IRA contributions.

Roth IRA - If you contribute money to an account this year, that money STAYS in your taxable income (for income tax purposes); your contributions are NOT tax-deductible.  The money in your IRA does not get taxed as it grows.  When you withdraw money at retirement age, all of these distributions are untaxed.  Roth IRA income limits

A "Backdoor" IRA is a way for someone who is otherwise excluded from making normal IRA contributions (because of income limits and employer retirement plans) to put away money in an IRA and get tax benefits.  It is a process, not an account.  The steps are:
  • Make a NON-deductible contribution to a traditional IRA.
  • ASAP contact the IRA provider and convert that NON-deductible traditional IRA to a Roth IRA.  (You don't want the contribution to earn money before you convert it.)
This is a video from Vanguard explaining:   https://personal.vanguard.com/us/insights/video/2505-Exc2

Don't get confused, but there is an unrelated maneuver called a "Mega-Backdoor Roth" where, after you have maxed out your deductible 401(k) contributions, you make non-deductible 401(k) contributions up to the higher $5X,000 total limit, and you rollover each non-deductible 401(k) contribution ASAP to a Roth IRA.  For this, your employer's 401(k) plan needs to permit non-deductible 401(k) contributions and "in-service" rollovers.
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zoe2dot

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Re: Two Houses, Zero Clues
« Reply #8 on: September 07, 2017, 02:04:24 PM »
Raenia - thank you for your post.  My replies are below since I'm still learning how to repost replies directly.

Laura33 - thank you for the IRA notes.  Your post opened my mind to the concepts of what is being done so when I re-read the IRA posts made by others I think I'll have a better understanding of what they are trying to accomplish.

With This Herring - I think I will get an accountant this year and I will find out about the dependency re: my mom.  I moved up my monthly mortgage payments in expenses.  I will re-read your IRA notes several times and watch that video tonight.  See notes below on why NY vs NJ.  Most people cross the bridge daily from NJ to NY because they can't find a job in NJ that would support their families or be in their industry.  The houses are cheaper in the sense that there are not a lot of houses in NYC that have yards--it's more that you get more for your money than cheaper.  Especially when you consider the higher taxes in NJ.  They also sacrifice a lot of their personal time on the commute.  Everyone I know who can afford to have a big apartment in NYC stay in NYC until they absolutely cannot do without more space.  They also talk a lot about schools.   

To clarify why I live in NYC and work in NJ:
1.   I live in NYC because I love it and could live here indefinitely if I can spend part of the year somewhere rural.
2.   My commute is 15-20 mins and under 10 miles.  I have a far shorter commute than my colleagues that live in NJ. 
3.   The NJ suburbs around my office are so expensive I couldn’t live there if I wanted to.  My office is ringed with the highest property tax areas in NJ.  The houses are palaces and there are no apartments I could afford closer than 25 minutes away and they are not someplace I would want to live.  The exception of Hoboken would mean a more expensive apartment plus a 55 min commute twice a day plus would have to pay for parking.  Anything west of the office seems like the end of the parts of my life I enjoy (the city, socializing).
4.   Living in NJ would cut out the tolls and reduce the HOA (co-op maintenance) but raise the amount of time in the car and I’d be paying NJ property tax.  Homeowners in New Jersey pay the highest property taxes of any state in the country.
5.   It is also likely that if I leave my current job or get fired my next job would be in NYC.  My current apartment is in a great location to work anywhere in midtown.  I am a 5 min walk from a commuter train station.  A monthly train ticket is $208.00.
6.   As I type out this list out it seems like working the city would be a better fit than moving to NJ.

To clarify my end goal: I’d like to live in a tiny house in the rural outskirts of a larger city, not the suburbs.  To me there is a difference.  I do not want to live in the suburbs EVER.  Perhaps further up/across the Hudson Valley (near NYC), south Jersey (near Philly), Oregon (near Portland)…would love input on people who live near a big city and still take advantage of it. 

My current goal is to thoroughly enjoy living in NYC while I am young(ish).  I have no interest in leaving right now.  I do not want to live in a house right now with all the work and expenses entailed.  Houses in NJ are not cheaper than my studio apartment in NY, especially when you consider I could not afford to live in work + higher property taxes. 

Groceries: I do not waste much food and buy in bulk.  As the feedback in general is that my grocery expenses are high I will do a deeper dive into what I’m buying.  I will save my grocery receipts for an update at the end of September.

HOA: the $750/month is not a typo.  It’s the monthly maintenance on my co-op. 

Hair: I get a $15 cut at Supercuts every six weeks and $125 highlights every three months.  I put $50 as the average for each month.  I’ve tried the DIY methods, the beauty schools, anything to make the cost of highlights more reasonable but it’s not the same as a professional.  My hair is thin and fine and I look like a zebra if there is not a practiced hand involved.  I’ve tried going natural but I looked tired and mousy. 

Thank you so much for your thoughts!  I really appreciate it!

So my current to do list is:

1. Immediately move cash from checking to savings.
2. Investigate money market account
3. Look for cheaper phone plan
4. Google home waxing (ruled it out)
5. Think about storing activity gear in my home vs storage unit
6. Think about moving to a job on my side of the river
7. Save September grocery receipts for analysis of purchases
8. Read investment order link
9. Re-read posts about IRAs
« Last Edit: September 18, 2017, 03:31:57 PM by zoe2dot »

Raenia

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Re: Two Houses, Zero Clues
« Reply #9 on: September 07, 2017, 03:47:42 PM »
Definitely looks like getting a job on your side of the bridge might be a good choice, if you can get something similar.  In your situation, I'd even be willing to take a slight pay cut to do it (you're currently spending almost 5k/yr on transportation, so take that into consideration.)  I'd carefully consider your options on your home as well, though.  You're paying >22k/yr on housing - your HOA fees alone are more than my rent.  I know NYC is very expensive, but I'd look around and see if that kind of HOA is in line with what other places are paying.

If you're dead set on having highlights, could you try getting them every 4 months instead of every 3?  Every 6 weeks is also pretty frequent for haircuts, unless you're getting a style that doesn't grow out well.  I only cut my hair abut twice a year, but that depends a lot on what kind of hair you have, how fast it grows, etc.
 
You're doing very well so far!  Check back in with those receipts, and we'll see if we can't help you with your grocery spend :)

With This Herring

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Re: Two Houses, Zero Clues
« Reply #10 on: September 07, 2017, 05:56:55 PM »
Good explanation on NYC vs NJ, thanks.  One more thought - Where is the house you bought for your mother?  If it is in NJ near your work, maybe you can store your hobby stuff there, as you are already paying for it.  If not, consider raising your bed significantly for underbed storage space (if you haven't already done so).
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zoe2dot

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Re: Two Houses, Zero Clues
« Reply #11 on: September 08, 2017, 06:39:09 AM »
Mom's house is in Arizona so not an option for storage.
I spoke with her last night and she's game to become a dependent if it helps me with the taxes. 

FYI I opened a CIT money market account @ 1.35 APR%.
FYI I will give up my storage locker on Nov 1 to see how it goes (have a few house guests in October)
FYI I added insurance to my original list of monthly expenses, all of which I pay in lump sums when due:

Insurance studio home owners $27/month
Insurance mom's home owners $88/month
Insurance car $171/month

So my current to do list is:

1. Move cash from checking to savings
2. Investigate money market account
3. Look for cheaper phone plan
4. Google home waxing (ruled it out)
5. Think about storing activity gear in my home vs storage unit
6. Think about moving to a job on my side of the river
7. Save September grocery receipts for analysis of purchases
8. Read investment order link
9. Re-read posts about IRAs
10. Google implications of making mom a dependent
11. Find out if company 401k can do mega ROTH (waiting to hear back) (no post-tax contributions allowed in plan)
12. Continue reading about IRAs
13. Start trial of YNAB
14. Give up storage locker Nov 1; see how it goes
« Last Edit: September 18, 2017, 03:33:37 PM by zoe2dot »

ambimammular

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Re: Two Houses, Zero Clues
« Reply #12 on: September 10, 2017, 01:53:38 PM »
NYC has an income tax to consider as well, I would work the numbers and see if that would hurt you worse than the job in NJ.
For someone single with Adjusted Gross Income (line 38) of 50k-500k it's $1706 + 3.648% of the excess over 50k.

katscratch

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Re: Two Houses, Zero Clues
« Reply #13 on: September 15, 2017, 08:16:10 PM »
How's your month going?

I don't have much to add on the big items, especially investment or tax related, but wanted to stop in and say hello.

Regarding waxing- I find the type that can be microwaved is much easier for eyebrows than prewaxed strips. I have brows that would take over my entire face if I'd let them and I've reluctantly been doing them myself for six months. Tweezing just isn't enough to keep up. They definitely aren't as perfectly shaped, and get shaggy much faster, but only one friend has even noticed.


zoe2dot

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Re: Two Houses, Zero Clues
« Reply #14 on: September 18, 2017, 07:37:22 AM »
Thanks for checking in!

Monthly expenditures are waaaay down now that I have put more thought into how I use my money. 

I haven't been to the grocery store yet since I'd just done a shop at the end of August so September might not be a good month to evaluate the receipts.  I noticed there is an Aldi's near my house that I will check out. 

After some Googling I am 100% not going to be giving myself Brazilian waxes at home--that is $25 that will stay in the hands of a professional. 

I realize now my car is a luxury and have reframed my thinking on it.  I still feel like I got a great deal on it but realize a cheap beater car would have saved me money and been more in line with my goals.  No plans to sell it, just to stop thinking of it as a justifiable expense. 

I've been using YNAB and ferreting out all the quarterly/annual expenses I need to be planning for (like my biannual family reunion). 

Baby steps:
--asked some friends to chip in for gas on outting, an expense I normally would have absorbed
--packed my lunch for after horseback riding lesson instead of usual nearby dining out

I have not reached out to a tax planner yet but like the idea of hiring someone for this year's filing to learn how to do it myself for the 2018 filing. 

My 401k plan does not allow for after tax contributions so I need to focus on the regular back door ROTH.

I also reorganized my storage locker and think I can get a smaller one -- my original plan of getting rid of it Nov 1 just doesn't seem feasible since I don't want a bunch of horsey stuff in my tiny studio.  I might be able to stow the surfboards up on the ceiling so that means I can get a smaller unit.  I found a pair of fins I can sell/get rid of and a wetsuit that doesn't fit right--so there were a few things that I didn't need even though I thought otherwise originally.  ;)

Still working through my to do list.
Need to figure out what to do with my cash.


RidetheRain

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Re: Two Houses, Zero Clues
« Reply #15 on: September 18, 2017, 09:59:44 AM »
I'm glad to hear that you are changing your mindset! That is barrier #1 for people and acknowledging that you have a luxury makes it that much more luxurious! Enjoy the beautiful parts of life you get to have.

For the tax planner - make sure you're upfront about wanting to understand how it all works. Some planners will just take everything and hand back the final forms. You may want some more explanation for one or two things and if you let them know ahead of time they may be able to clarify better. I had a wonderful accountant do this for me to explain how all the different state taxes impacted the federal form. Cleverly, he showed me that doing them in a particular order saves time.

For the horse stuff: I totally get not wanting that "barn flavor" all over your studio. Even fresh and clean they have a distinct smell. Does your stable have any storage for things? I know some places have a tack room that you can rent a post from. My old roommate did that and they just tacked (heh heh) it onto her other fees. To me, it makes way more sense for all that to stay where you use it.
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zoe2dot

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Re: Two Houses, Zero Clues
« Reply #16 on: September 22, 2017, 01:24:10 PM »
Small update:

Gym reduced to $35/month.
Lowered car insurance coverage to $166/month (ditched road side assistance and rental car coverage).
Phone now $30/month.

Am on wait list for smaller, cheaper storage unit.

The horse items: I ride at several different stables depending on the time of year so easier to have everything in one place.  I've lost too much tack over the years by simply never going back to get it.

katscratch

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Re: Two Houses, Zero Clues
« Reply #17 on: September 22, 2017, 01:44:09 PM »
You've made some huge steps. The mindset is really the biggest difference for a lot of people. I think for many of us on a less-than-$xx income it can be harder to see the line between a want and a need for some line items.

Haha, I've never been tempted to self-brazilian either :) My eyebrows however are still limping along with my unskilled attention.

Thanks for updating!

When you start looking at grocery shopping - in my area Aldi is much lower priced than the neighboring stores, so I stock up there first and then go to my neighborhood store for the other items on my list. It took me a few months to figure out the regular staples that Aldi carries, but it was worth the effort of making my list around Aldi's offerings as it made a nice dent in my grocery spending.

zoe2dot

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Re: Two Houses, Zero Clues
« Reply #18 on: October 19, 2017, 01:15:09 PM »
Hi all!

I picked a bad set of months to track spending on groceries to determine an average spend.

  • October - annual two week vacation was this month so no real need to buy groceries for the first half of the month since food was included in vacation cost, plus out of town with visitors one weekend and another weekend away at a wedding.  Groceries for October mostly covered by existing cupboard stores and $45 of Costco food (eggs, tomatoes, etc).
    November - one weekend away for friend's birthday, one weekend away for wedding.  Will stay put for Tday.  Grocery needs TBD/hopefully low.
    December - the first month this year with no trips!  But with holiday tips ($600) & gifts for family members ($200) will still be a spendy month. 

I went to Aldi's yesterday for some reconnaissance. 
Didn't buy anything but was interesting to finally be in one. 

Still working on the mindset.  I look at my car with less lovey dovey eyes than previously.  And I took the long way home twice to cut out the second bridge toll since I was coming from the other side of town those days.  Brutal to be in the car for the add'l 20 mins or so but thought I'd give it a try.

RidetheRain

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Re: Two Houses, Zero Clues
« Reply #19 on: October 19, 2017, 03:15:01 PM »
And I took the long way home twice to cut out the second bridge toll since I was coming from the other side of town those days.  Brutal to be in the car for the add'l 20 mins or so but thought I'd give it a try.

This is great! Probably! Just a reminder that your time is also worth money. I would be careful to weigh the cost of an extra twenty minutes in the car against the toll. If you burn too much extra gas, put too many extra miles on the car, and waste too much of your time you might come out behind and unhappy!
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With This Herring

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Re: Two Houses, Zero Clues
« Reply #20 on: October 19, 2017, 07:09:36 PM »
Hi all!

I picked a bad set of months to track spending on groceries to determine an average spend.
*snip*
December - the first month this year with no trips!  But with holiday tips ($600) & gifts for family members ($200) will still be a spendy month.

What people are you tipping?  This is huge!  Or should this have been "trips"/travel?  I honestly am not sure.
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zoe2dot

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Re: Two Houses, Zero Clues
« Reply #21 on: October 19, 2017, 07:25:35 PM »
Building staff, 6 x $100ea

bluemarie

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Re: Two Houses, Zero Clues
« Reply #22 on: October 21, 2017, 11:56:22 PM »
Building staff, 6 x $100ea

Yeah, there may be some incredulous responses to this as with the monthly maintenance, but it's a thing!

FWIW, although I don't know how full-service your building is, $100 for every single staff member sounds generous to me.  More for super/less for staff seems to be the approach around here.  I won't tell you this is urgent to cut down, though, since it's likely very appreciated by folks who presumably live on less.

civil4life

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Re: Two Houses, Zero Clues
« Reply #23 on: October 29, 2017, 10:34:21 AM »
Awesome job so far!  Changing the mindset!  Taking a dive into the financial/investment world.

One thing I thought I would mention.  I have a long commute a few years ago I discovered Overdrive and Libby apps.  With your library card you can check out audiobooks directly through the app and automatically check back in after the rental period.  I love my commute now because I am listening to a great story.

zoe2dot

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Re: Two Houses, Zero Clues
« Reply #24 on: October 31, 2017, 11:44:33 AM »
Grocery bill for October: $61.75 total.
Don't give me too much credit as half the month was on vacation/traveling.
Will see how November goes.

The promised lower gym rate didn't show up on the last bill so need to look into that.

Basically I'm still here mentally digesting all the ideas, suggestions, etc.

:)

Penelope Vandergast

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Re: Two Houses, Zero Clues
« Reply #25 on: October 31, 2017, 10:47:56 PM »
Not sure if anyone asked this yet, but is the HOA fee on your co-op used to pay the mortgage on the building? (separate from the mortgage on your unit) If so, how long will it be before that mortgage is paid off? because that should cause the fee to drop. I ask because I have experience there myself -- once the building's mortgage was paid off, the monthly HOA fee went from $450 to like $150 overnight.

If not, what is the fee for, and is it possible for you & other co-op owners to negotiate it down?


ShoulderThingThatGoesUp

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Re: Two Houses, Zero Clues
« Reply #26 on: November 04, 2017, 05:14:48 AM »
Out-there idea, but could your salary vs. cost of living ratio be substantially better in another city where you could still do city stuff? Atlanta, Houston, even Phoenix where you could keep an eye on that substantial investment of yours that might be occupied by a stranger soon?

(I got married just before my 21st birthday so my sense of what young single people with good incomes do with themselves is...not strong)

former player

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Re: Two Houses, Zero Clues
« Reply #27 on: November 04, 2017, 09:26:36 AM »
You are getting a lot of things right.

I agree it would be a good idea to investigate the HOA fee.  You should be able to get access to the financials which would tell you whether you are getting value for money or there are places which could be improved, and then think about getting involved.  The payoff is not just in reducing your costs but a potential substantial uptick in value of your studio if the HOA fees come down (while still covering al the maintenance, of course).

Re the Brazilian, have you thought about doing away with it altogether and just doing a self-trim?  I used to ride a lot, and the thought of riding with a Brazilian does not appeal at all.
Be frugal and industrious, and you will be free (Ben Franklin)

zoe2dot

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Re: Two Houses, Zero Clues
« Reply #28 on: November 06, 2017, 12:35:32 PM »
HOA - I will find out the details about the mortgage.  We were given that information in the annual report but if I cannot find that document I'll ask at the next building meeting. 

Brazilian - I might do a short trim over the winter to save some money. 

Other cities - not considering a move right now and those cities aren't near the sea.  I'd like to stay on a coast. 

zoe2dot

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Re: Two Houses, Zero Clues
« Reply #29 on: November 07, 2017, 08:07:10 PM »
Derp...just got a tax bill for mom's house for $1,700.  Half of it due now. 

I've been stellar on groceries so far this month.

Gym rebilled at lower rate. 

Two steps forward, $1,700 steps back.

Aimza

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Re: Two Houses, Zero Clues
« Reply #30 on: November 08, 2017, 10:09:38 AM »
Just chiming in that I'm a NYer and have a co-op in NJ and my HOA fees are almost $1,200 per month. Your HOA is pretty low for a co-op in this area.

It's also unlikely that your building's mortgage is going to be paid off anytime soon. Usually in this area, they just keep refinancing and pulling money out for big expenses like a new roof or upgrades.

Good luck with everything. It sounds like you're doing a great job.

Tick-Tock

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Re: Two Houses, Zero Clues
« Reply #31 on: November 12, 2017, 07:53:35 PM »
Derp...just got a tax bill for mom's house for $1,700.  Half of it due now. 

I've been stellar on groceries so far this month.

Gym rebilled at lower rate. 

Two steps forward, $1,700 steps back.

Is part of your mortgage payment on your mom's house going into an escrow account for taxes and insurance?  We get tax and insurance documents, but until our house is paid off the taxes and insurance actually get paid through our escrow account.  Your mortgage statements should list what portion of your payments are going to principal, interest, and escrow.

zoe2dot

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Re: Two Houses, Zero Clues
« Reply #32 on: November 13, 2017, 09:13:16 AM »
Tick-Tock!!! You are my HERO today.  I called my loan holder and they DO pay it on my behalf!
Wow.  What a relief.

zoe2dot

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Re: Two Houses, Zero Clues
« Reply #33 on: November 13, 2017, 09:23:50 AM »
Amiza - that's the case w my building.  They just re-upped the mortgage for some major work in the two level garage and to redo the pool deck. 
It's nice to read that you think the HOA is good for the area.  I thought the same when I picked this building.  Some of the nearby co-ops had studios with over $1,000/month maintenance and I just couldn't stomach it.

Tick-Tock

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Re: Two Houses, Zero Clues
« Reply #34 on: November 13, 2017, 07:06:37 PM »
Tick-Tock!!! You are my HERO today.  I called my loan holder and they DO pay it on my behalf!
Wow.  What a relief.

I'm so glad!

KnitsWithFIRE

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Re: Two Houses, Zero Clues
« Reply #35 on: November 17, 2017, 02:48:27 PM »
Just chiming in because I didn't see it mentioned here, but if you haven't already, check out the E-ZPass site for some serious commuter discounts.  I just started a new job, and stumbled across a commuter deal that sliced my daily rate nearly in half.  NONE of my colleagues knew about it, and some of them have been commuting for 20+ years!

https://www.e-zpassny.com/en/about/plans.shtml

zoe2dot

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Re: Two Houses, Zero Clues
« Reply #36 on: November 17, 2017, 03:05:26 PM »
Interesting link.  I don't see my bridges on there but will read it more closely over the weekend.  I know some of my coworkers could benefit from this.
Thanks!