Author Topic: My situation  (Read 12128 times)

Jack

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My situation
« on: October 08, 2012, 11:49:42 PM »
I am a 28-year-old civil engineer. My wife is a 28-year-old video game artist. We live in Atlanta. (And this is my first post to this forum.)

Income
  • Me: $42k/year (W-2); $1300/2-weeks net
  • Her: $40k/year (1099); no deductions

Assets
  • Fixer-upper house in gentrifying neighborhood ~4 miles from downtown: we paid ~$110k ~3 years ago, but Zillow claims it's worth ~$150k (I don't believe it; we haven't renovated yet)
  • IRA/Roth IRA: ~$14k
  • 1998 VW Beetle TDI manual: ~$5k
  • 1996 Ford Ranger 4-cyl manual 4x4: ~$3k
  • Cash: ~$3k

Liabilities
  • Mortgage: ~$86k 30-year-fixed FHA @ 5.25%; $638/month including taxes, insurance, PMI
  • Student Loans: ~$81k at assorted rates between 2% and 8% (guess is 4-5% average), evenly-split between us
  • Credit Cards: ~$6k @ 10% 9%, $4.1k @ 0% for 17 months, $4k @ 0% for 18 months

Expenses
  • Utilities
    • Electricity: $50 - $150/month (varies seasonally)
    • Gas: $50 - $150/month (varies seasonally)
    • Water/Sewer: $70/month (we use less than half as much as the average household, but the EPA forced Atlanta to spend $4 BILLION -- with nine zeroes -- fixing the sewers, so water is crazy expensive here)
  • Internet: $30/month
  • My cellphone: $0/month ($40 month for 1200 minutes, unlimited text and (slow) data, subsidized 100% by my employer)
  • Her cellphone: $0/month (on her parents' family plan)
  • TV: $0/month (I just canceled DirecTV @ $90/month; I might get Hulu/Netflix)
  • Food: maybe $400-$500/month (?)
  • Clothes/housewares: $25/month (?)
  • Vehicle expenses: $100/month (?)
  • Travel: $0/month


Notes
  • Both my wife and I have suffered recent prolonged unemployment, which explains -- but doesn't excuse -- the credit card balances and lack of savings. In retrospect, I should have fallen back on my computer programming skills instead of holding out for a job that would count towards my P.E. license, but I my career perspective had not been influenced by the idea of early retirement yet.)
  • Since I started reading MMM last month and realized what an emergency it is (and my wife found a job), I've refinanced and been agressively paying down credit card debt. A month ago, it was ~$11k @ 16% and $7.5k @ 10%.
  • We paid 3.5% out-of-pocket for our house, but got ~$20k in down-payment/closing-cost assistance from our city (we intentionally bought just after I graduated college before I had a job in order for our income to be low enough to qualify). It's structured as a second mortgage at 0% interest, to be forgiven after 10 years as long as the house remains our primary residence.
  • My wife commutes 3 mi (one way) by bike. I had been commuting 3 mi (one way) by car, but recently switched to biking... just as my job responsibilites changed, forcing me to commute 28 mi (one way) to the suburbs 3 days/week! (My new responsibilites are better for career/skill development, so it's a trade-off... plus I don't really have a choice, except to quit, of course.)
  • I use Mint.com, but I set it up only recently. Plus, the card I use for daily expenses right now isn't compatible. Therefore, my budget is pretty fuzzy.

So, what suggestions/face-punches do you have for me?
« Last Edit: October 10, 2012, 06:43:26 AM by Jack »

Nudelkopf

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Re: My situation
« Reply #1 on: October 09, 2012, 12:53:25 AM »
I use Mint.com, but I set it up only recently. Plus, the card I use for daily expenses right now isn't compatible. Therefore, my budget is pretty fuzzy.
Definitely keep track of these daily expenses - simple pad & pen should work! Or make an effort to put these numbers in manually (I assume mint.com lets you do this?), and do it every week/fortnight/month or what have you. This is preeetty important, as so called 'daily expenses' are a pretty big leak in my ship.

twinge

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Re: My situation
« Reply #2 on: October 09, 2012, 08:29:36 AM »
As you work towards better budget awareness, it can be useful to at least get a general historical account of inflow--outflow.  Since you have unemployment etc. you might just want to focus on outflow.  Just look over your records and see what the bills you paid, the cash you spent and the items you charged added up to each month without focusing on what went where.  This can give you a realistic target total to work from.  If it's way more than your estimates, you can dig in and understand why and set up strategies to address them.  If it's around where you thought, you can start anew with regular tracking.

sheepstache

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Re: My situation
« Reply #3 on: October 09, 2012, 08:30:14 AM »

  • Both my wife and I have suffered recent prolonged unemployment, which explains -- but doesn't excuse -- the credit card balances and lack of savings. In retrospect, I should have fallen back on my computer programming skills instead of holding out for a job that would count towards my P.E. license, but I my career perspective had not been influenced by the idea of early retirement yet.)


You know, I notice sometimes people here are hard on themselves for any and every decision they made that doesn't move them towards FI, but I feel like that's not necessarily the point.  A goal of FI is to be able to think about the big picture rather than basing your every decision on money.  Granted, credit card debt is a huge gaping maelstrom that can destroy you and everything you love, but it's not like you were ringing up cakes and ale every day; you were taking on the debt with some goal in mind.  That's different from someone who graduated college with cc debt from partying and then was like, 'oh god, I have to take the first job that comes along just to keep my head above water!'

Just my two cents.  It's not like I have a full mustache myself yet.  Why am I in the Ask a Mustachian forum??  I don't know!  I just click the link to see "unread posts since last visit"![/list]

ashem

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Re: My situation
« Reply #4 on: October 10, 2012, 05:12:38 AM »
Hi Jack,

We live in Decatur! I think you're doing pretty well. Your student loans are unfortunate, but I'm envious of your low mortgage.

Definitely try to get a clearer picture of your monthly expenses. Perhaps change to a card that is compatible with mint.com? It's the little things that will surprise you. Trips to Target, alcohol, holiday gifts, haircuts, etc. I'll bet you can pay that credit card debt off in no time.

How much are your student loan payments? How many years have you been in your house? Is it worth waiting for the $20,000 loan forgiveness if you can refinance at 3.5% or lower? Run the numbers. Also, it sounds like you may have enough equity to stop paying PMI. I'd call about that ASAP. It's always worth shopping around for lower auto and home insurance too.

Good luck, neighbor :-)


Jack

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Re: My situation
« Reply #5 on: October 10, 2012, 06:42:43 AM »
Quote from: Everybody
Keep track of these daily expenses!

Don't worry; all my expenses are tracked, just not in Mint yet. (They're in my monthly statement, plus I get an annual summary with a spending-by-category pie chart.) As of October I quit using the incompatible card, so it should be more convenient going forward.

I suppose the real issue is that I was too lazy to add them all up in my initial post...

You know, I notice sometimes people here are hard on themselves for any and every decision they made that doesn't move them towards FI, but I feel like that's not necessarily the point.  A goal of FI is to be able to think about the big picture rather than basing your every decision on money.  Granted, credit card debt is a huge gaping maelstrom that can destroy you and everything you love, but it's not like you were ringing up cakes and ale every day; you were taking on the debt with some goal in mind.  That's different from someone who graduated college with cc debt from partying and then was like, 'oh god, I have to take the first job that comes along just to keep my head above water!'

Good point; thanks!

We live in Decatur! I think you're doing pretty well. Your student loans are unfortunate, but I'm envious of your low mortgage.

Depending on what part of Decatur you live in (e.g. Oakhurst), I'm envious of your neighborhood!

I'll bet you can pay that credit card debt off in no time.

I'm aiming for 2-3 months for the non-zero-percent part, and (obviously) 17-18 months for the rest.

By the way, I was mistaken: the ~$6k credit card balance is at 9%, not 10%.

How much are your student loan payments?

$328/month (My wife's are still on deferment right now so that we can pay higher-interest stuff first.)

How many years have you been in your house? Is it worth waiting for the $20,000 loan forgiveness if you can refinance at 3.5% or lower? Run the numbers. Also, it sounds like you may have enough equity to stop paying PMI. I'd call about that ASAP.

I've attempted to refinance (I talked to both the bank that holds our existing mortgage and a local credit union) and been told that:
  • I didn't buy quite long enough ago to qualify for HARP
  • Since the down-payment assistance was structured as a second mortgage, it still counts and I therefore have essentially zero equity
  • Even if I were below 80% loan-to-value, the mortgage is small enough that closing costs to refinance would negate the savings from the lower interest rate

It's always worth shopping around for lower auto and home insurance too.

I use a broker and periodically ask him to shop around for me, but the same companies keep turning out to be the cheapest. At this point I've been with those companies long enough that I'm at the "super-platinum-executive-preferred" (or whatever) long-time customer discount level, so it's unlikely any other companies would be willing to do better.

ashem

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Re: My situation
« Reply #6 on: October 10, 2012, 07:54:07 AM »
We DO live in Oakhurst and can't imagine ever leaving. We pay $500 a month for taxes alone on our 3br, 1 bath, 1300 square foot bungalow, but the schools make it worth every penny.

Just to give you some perspective. I'm 37 and my husband is 44. We live on the same income as you and your wife (but are a one-income family), with 2 kids, and no other debt. When I first moved to Atlanta after college, I rented an apartment in Candler Park, and was only making $20,000 a year. I would walk around that neighborhood, look at the $300,000 bungalows and think, "I will NEVER be able to afford to buy a house in a neighborhood like this." When we first got married 13 years ago, we racked up credit card debt to pay for our relatively inexpensive wedding and honeymoon, so there were some stupid mistakes made along the way. We paid it off within a year and have been CC debt-free since. My husband even bought a brand new truck, put $10,000 cash down and financed the rest. Stupid, right? Anyway, we bought our first home in Mableton (urg) and after 7 years we sold it and managed to put 20% down on our house in Oakhurst. All of this is my long-winded way of trying to encourage you. You're young and if you continue being frugal, you'll be in a very good position in 7 or 8 years.

One more thing - our mortgage, insurance, and taxes are 3 times yours, and since our income is the same and we have 2 extra mouths to feed, I think you could pay at least $1000 or $1200 a month extra toward your credit cards and then knock out those student loans.

Best of luck!



DocCyane

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Re: My situation
« Reply #7 on: October 11, 2012, 05:59:02 AM »

You know, I notice sometimes people here are hard on themselves for any and every decision they made that doesn't move them towards FI, but I feel like that's not necessarily the point.  A goal of FI is to be able to think about the big picture rather than basing your every decision on money.

This is a fantastic sentiment and I wanted to highlight it.

Jack

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Re: My situation
« Reply #8 on: October 31, 2012, 10:23:33 PM »
Now that I've been using Mint.com for a month, I have a better idea of my cash flow:

Net income: $5798
Spending: $1638

Payments on 9% interest credit card: $5452; remaining balance: $2247
Cash balance: $1765 (down from ~$3200 at beginning of month)

Spending breakdown:
  • Mortgage (PITI): $638
  • Utilities: $141
    • Water/sewer: $50.08
    • Natural Gas: $32.38
    • Electricity: $58.91
    • Internet: $0 (usually $30, but not paid due to billing dispute with Comcast)
  • Food: $683
    • Groceries: $523
    • Eating out: $160
  • Vehicle expenses: $198
  • Other debt repayment (minimum payments): $454
  • Other discretionary spending: ~$600
    • Supplies for wife's jewelry making (soon-to-be side-gig): $127
    • Furniture: $162
    • Fall landscaping supplies/plants: $85
    • Clothes: $51
    • Pet supplies: $41
    • Etc.

(I realize doesn't all quite add up correctly; Mint miscategorized some stuff and I haven't fixed it yet. This also doesn't include ~$150 in spending (gas and auto-debited bills) on the credit card that Mint can't track.)

I'm not too worried about the "other discretionary spending" category; most of that was durable goods or annual/quarterly/unusual expenses. (For example, I spent $51 this month on clothes, but those were the first I've bought in 6 months.)

I am worried about my spending on food; it's clearly excessive. (My budget came in mostly on track for eating out, but 150% over on groceries!)

I'm also concerned about the utility bills, given that I had basically zero A/C or heat usage in the last billing cycle.

Jack

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Re: My situation
« Reply #9 on: October 31, 2012, 10:41:37 PM »
One thing I'm wondering about is, once I finish paying off the remaining high-interest debt ($2247 @ 9% on credit card and $1363 @ 8.75% on a student loan), what should I do next?

Choices include:
  • Pay down lower-rate debt (6.55% and lower)
  • Contribute to [Roth/traditional] IRAs in tax year 2012
  • Save to buy a rental property (I really want to get in the market before interest rates or prices rise!)
  • Save to renovate our house (we'd be improving it from sub-standard to normal condition, so if we're smart we should be able to get a net equity increase, which would hopefully allow me to re-fi at a decent rate or at least drop PMI)
  • Open a [taxable] brokerage account and start investing in equities

Angelfishtitan

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Re: My situation
« Reply #10 on: November 01, 2012, 07:49:05 AM »
One thing I'm wondering about is, once I finish paying off the remaining high-interest debt ($2247 @ 9% on credit card and $1363 @ 8.75% on a student loan), what should I do next?

Choices include:
  • Pay down lower-rate debt (6.55% and lower)
  • Contribute to [Roth/traditional] IRAs in tax year 2012
  • Save to buy a rental property (I really want to get in the market before interest rates or prices rise!)
  • Save to renovate our house (we'd be improving it from sub-standard to normal condition, so if we're smart we should be able to get a net equity increase, which would hopefully allow me to re-fi at a decent rate or at least drop PMI)
  • Open a [taxable] brokerage account and start investing in equities

Couple of comments:

After seeing your new mint data, I agree with people above to not be so hard on yourself, you are at nearly 70% savings (above if you count principal of your mortgage and student loans). That is an incredible accomplishment and will swiftly bring you to debt freedom.

For your debt, 6.55% is still pretty high and is a gauranteed return when you pay it, unlike the market. Take into account your tax situation when determining how quick you should pay down student loans and the mortgage, which may lower your actual APR enough to make it worth investing instead. Also, 17 months seems far away but it will sneak up on you and the last thing you want is to get hit with a huge amount of back interest on those two other credit cards.

After you get anything high interest (I would probably call that anything 5.5-6% plus) then you can start putting more in an IRA. Right now it looks like your top tax bracket is probably 15% after deductions so a Roth is probably a better choice for you.

I would not start investing in rental until you have a little more equity in your own home, but that is just my opinion. If you find what looks like an amazing deal (and still seems so after careful research) than that may be a choice if you still have funds left over. Don't go down this path until you pay down your high-rate debts (and max out your IRAs)!

How bad is your fixer upper? You should be putting more sweat than money into any renovations you have to do, so you can even start some of those projects now. Unless you have repairs that require a professional (and are not just "updates" that you want) then try to fit it in where you can. Better to spend some money now than a lot of money later to fix a bigger problem.

A regular investment account should be one of the last options on your list. Go ahead when you reach most of your goals, but you have a long way to go before you get this point.

You are young and still have a ton of time to finish up your short term goals, try not to be hard on yourself for the past (especially since I would hardly call them mistakes anyway).

Jack

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Re: My situation
« Reply #11 on: November 01, 2012, 01:05:28 PM »
After seeing your new mint data, I agree with people above to not be so hard on yourself, you are at nearly 70% savings (above if you count principal of your mortgage and student loans). That is an incredible accomplishment and will swiftly bring you to debt freedom.

I consider my October spending to be the "baseline" -- in other words, the amount I spend before I start really trying to be frugal. (Remember, I had been spending similar monthly amounts for several years now; the only difference is that it was more than my income 8 months ago!) I still want suggestions on how to cut expenses!


For your debt, 6.55% is still pretty high and is a gauranteed return when you pay it, unlike the market. Take into account your tax situation when determining how quick you should pay down student loans and the mortgage, which may lower your actual APR enough to make it worth investing instead. Also, 17 months seems far away but it will sneak up on you and the last thing you want is to get hit with a huge amount of back interest on those two other credit cards.

After you get anything high interest (I would probably call that anything 5.5-6% plus) then you can start putting more in an IRA. Right now it looks like your top tax bracket is probably 15% after deductions so a Roth is probably a better choice for you.

The plan for the 0% cards is to make minimum payments in November (because I'm paying the 9% and 8.75% debts completely off), then divide the balances by however many 0% months are left and make equal payments.

Taxes are something I need help with, especially because our income streams weren't consistent through the year (I had 9 months of W-2 salary and my wife had 9 months of unemployment and 3 months of 1099 independent contractor income with no taxes taken out). I've never been good at figuring out the relationship between withholding, quarterly 1099 payments and liability/refunds, let alone the implications for IRAs. I've done done taxes by hand at the end of the year, but I don't really understand how to estimate and plan ahead of time.

How bad is your fixer upper? You should be putting more sweat than money into any renovations you have to do, so you can even start some of those projects now. Unless you have repairs that require a professional (and are not just "updates" that you want) then try to fit it in where you can. Better to spend some money now than a lot of money later to fix a bigger problem.

[The house deserves its own topic in the DIY forum, but here's a summary:]

You know that "hedonic adaption" that gets mentioned here occasionally? That works both ways...

The house was built in the 40s but renovated/doubled in size in 2001, cheaply. It's in decent structural condition, although some of the window frames are rotten (temporarily patched with butyl flashing). The fixtures in the master bath are all broken (and it never had a shower to begin with), so we use the hall bath (which is very small: it even has a 2' wide door). The previous owner was running out of money when the kitchen was installed, so the cheap particle-board cabinets were installed haphazardly (part of them just have laminate remnants sitting on them instead of a proper countertop and aren't even attached to the wall). All other finishes are builder-grade (cheap carpet with stains, fiberglass shower enclosures, $99 home-depot bathroom vanities, $100 flimsy gas range, etc.). Half the house has an unfinished basement under it, but there aren't any stairs so you have to walk around outside. The yard is graded improperly such that water flows into the basement (from the basement door, not through the foundation wall) when it rains heavily.

So far, we've only done things that could be accomplished without much material cost: we've painted and re-hung the kitchen cabinets (which helped some, but it still sucks). Plans for the future include:

  • Re-grade the yard and re-pour the driveway such that we can knock out a basement wall and turn it into a 2-car garage (no idea on cost)
  • Gut-rehab the master bath (estimated $5k budget)
  • Gut-rehab the kitchen and hall bath (which is adjacent), including [re]moving walls (estimated $10-$15k, not including structural work)
  • Add a stairway to access the basement from inside the house (no idea on cost)
  • Replace rotten windows and expand glazed area for more natural light (no idea on cost)
  • Add a deck or patio to back yard (no idea on cost, because I haven't decided on how big it will be yet)
  • Replace the worn out, stained carpet and cheap laminate with either bamboo or hardwood floors

You are young and still have a ton of time to finish up your short term goals, try not to be hard on yourself for the past (especially since I would hardly call them mistakes anyway).

The only thing I consider to be a mistake is not "settling" for a computer programming job, which would have not only been almost as fun and much easier to find, but apparently (if MMM is any example) a much more lucrative career than civil engineering. (I had been expecting a $60k starting salary in either field, but my civil engineering job started at only $40k.)
« Last Edit: November 02, 2012, 03:10:37 PM by Jack »

Angelfishtitan

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Re: My situation
« Reply #12 on: November 01, 2012, 02:50:27 PM »
The only thing I consider to be a mistake is not "settling" for a computer programming job, which would have not only been almost as fun and much easier to find, but apparently (if MMM is any example) a much more lucrative career than civil engineering. (I had been expecting a $60k starting salary in either field, but my civil engineering job started at only $40k.)

Ah, but you know it is a mistake and that is most of the problem solved. I would stick with most of what I said and when you are through the first few steps start worrying about the house. The only things I would maybe do in the mean time is the windows and the re-grading just because those are your main problems while the other ones are nice to have (albiet quite large improvements to your enjoyment of the house).

 As far as your spending I would agree that your biggest area to work on is food and your should be able to take a few bucks off electricity/water.

Make sure you are planning your meals every week and pick a few cheaper meals to add into the rotation like bean and egg based dishes. Do a little research for recipes and eating cheaper will not mean eating worse, spices are your friend. If you have a cultural grocer near you like Indian or Asian (you do) then you can start making some cultural dishes on the cheap as well. Start eating meat every other day. My monthly budget is around $325 for groceries, about $500 for everything (eating out, alcohol, coffee), and I don't really try harder than just cook at home most nights with atleast one vegetable so you have some room to work with.

For eating out when you really find the need try to find a cheap local place (scour the internet, you can find some real gems). You'll be suprised how good twenty bucks between the two of your worth of Mexican or Polish food tastes compared to fifty of a chain restaurant's. Or better yet, just make a slightly nicer meal on a Friday (like lasagna, chili, jambalya, a few cheese and crackers) and crack open a bottle of wine. Once again, twenty bucks and you get to chill out fully in the comfort of your own home. If you like sweets, visit your local bakery as your "cheat" for the week.

Your electricity and water aren't bad but I would definitely do a thorough check around the house for things to bring it down - low flow showerhead, CFL/LED lightbulbs, turn down the water heater. There are plenty of suggestions around the forum and Bakari just put up a guide the other day.

There is always fat to trim but you honestly are doing a good job. Remember that after you pay off your debt your monthly expenses are going to be lower still. Keep up the good work.

mindaugas

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Re: My situation
« Reply #13 on: November 02, 2012, 11:30:20 AM »
Quote
Since I started reading MMM last month and realized what an emergency it is (and my wife found a job), I've refinanced and been agressively paying down credit card debt. A month ago, it was ~$11k @ 16% and $7.5k @ 10%.

I'm curious what you did or went through to get refi on the credit card. I have a little over $5k at 18%, if I could get that interest down it would be a lot easier to pay off.

ashem

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Re: My situation
« Reply #14 on: November 02, 2012, 01:42:02 PM »
If you were to rent out your current house (after small upgrades), how much would you get each month?
I'm not sure how attached you are to the place, or if you would even be interested in making IT a rental property and buying a more upgraded place to live in.

Our house is 90 years old and needs lots of work (roof, gutters, kitchen, a second bathroom addition, insulation, HVAC, etc). We're about to close on a construction loan through Fidelity bank, where we'll refinance the existing mortgage plus the construction costs into a 3.5% loan. While there are closing costs involved, they pre-appraise what the house will be worth once the renovations are done. So, your LTV ratio is based on that post-renovation appraisal.
Of course, you'll want to check comparables in your neighborhood.





« Last Edit: November 02, 2012, 02:17:41 PM by Ashem »

Jack

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Re: My situation
« Reply #15 on: November 02, 2012, 02:45:12 PM »
Quote
Since I started reading MMM last month and realized what an emergency it is (and my wife found a job), I've refinanced and been agressively paying down credit card debt. A month ago, it was ~$11k @ 16% and $7.5k @ 10%.

I'm curious what you did or went through to get refi on the credit card. I have a little over $5k at 18%, if I could get that interest down it would be a lot easier to pay off.

We transferred $4k of the 16% card balance to my wife's old Visa (she hadn't used it in a while, so she was getting 0% balance transfer offers as if it were a new account) and I opened a new Discover card with another $4k balance transfer. We paid down most of the rest ($3k @ 16% and $7.7k @ 10%) aggressively over the span of 2-3 months, and will pay the $2.3k @ 10% remainder before the end of this month (I scheduled a $500 payment today, in fact).

Unfortunately, I had to pay fees for each of the balance transfers, but it was better than paying the interest (as long as I actually use the benefit of spreading the 0% payments out and pay other debts with the cash it frees up).

If you were to rent out your current house (after small upgrades), how much would you get each month?
I'm not sure how attached you are to the place, or if you would even be interested in making IT a rental property and buying a more upgraded place to live in.

Our house is 90 years old and needs lots of work (roof, gutters, kitchen, a second bathroom addition, insulation, HVAC, etc). We're about to close on a construction loan through Fidelity bank, where we'll refinance the existing mortgage plus the construction costs into a 3.5% loan. While there are closing costs involved, they pre-appraise what the house will be worth once the renovations are done. So, your LTV ratio is based on that post-renovation appraisal.
Of course, you'll want to check comparables in your neighborhood.

Technically, renting the house out before we've lived in it for 10 years would violate the terms of our down payment grant, forcing us to (immediately) pay it back in full. I'm not sure how the city development authority would find out about the situation, though, except maybe if we changed our mailing address in the tax records.

However, if or when we do decide to move, my plan is to absolutely keep this house as a rental. Comparable houses in my neighborhood in good condition rent for $1000-$1500/month, I think. The wide variation is because some of the neighborhood is old Craftsman and Victorian houses with lots of "character," and some of it is post-WW2 "American Small Houses" (it's a house style now, look it up!) -- like mine -- and ranches.

That "construction loan re-finance with pre-appraisal" sounds like an excellent idea; I'd been trying to find such a thing but kept getting told that it didn't exist. Maybe I was talking to the wrong bank (I tried Chase, Bank of America, and a local credit union)?

ashem

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Re: My situation
« Reply #16 on: November 02, 2012, 03:22:40 PM »
Construction loans are definitely a local thing. You have to use an approved contractor, the appraisers they use know the intown neighborhoods well, and the bank divides the construction money into 5 payments. Before each payment, they send somebody from the bank out to ensure the contractor has done what they said they would do. The homeowner has to sign off on each check as well. All the work has to be done in 9 months. Our mortgage banker at Fidelity, Lane Carter, has been terrific. Let me know if you want her e-mail address.

If you're just going to rent it out eventually, I'd put off the basement-turned garage job. Save that money for your next abode.


Jack

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Re: My situation
« Reply #17 on: November 02, 2012, 03:32:54 PM »
Construction loans are definitely a local thing. You have to use an approved contractor, the appraisers they use know the intown neighborhoods well, and the bank divides the construction money into 5 payments. Before each payment, they send somebody from the bank out to ensure the contractor has done what they said they would do. The homeowner has to sign off on each check as well. All the work has to be done in 9 months. Our mortgage banker at Fidelity, Lane Carter, has been terrific. Let me know if you want her e-mail address.

If you're just going to rent it out eventually, I'd put off the basement-turned garage job. Save that money for your next abode.

The part about the "approved contractor" is unfortunate, since I was hoping to DIY the majority of the work. It might still be helpful for some of the structural stuff, though. Please do PM me Mrs. Carter's email address.

Re: the basement-turned-garage, I really want somewhere to work on my car without having to put my tools away when I take breaks, and I don't want to wait 7 years for it. (My car is a hobby as well as transportation.) Besides, if I have to re-grade the yard to fix the drainage anyway, the garage comes at only the cost of a beam, a door, and some drywall and insulation (to meet fire code).

ashem

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Re: My situation
« Reply #18 on: November 02, 2012, 04:22:00 PM »
Makes sense about the garage, especially if you can do some of the work yourself.

I have friends who had our contractor add a second bathroom to their home, but they did all of the finishing work. They might have used a home equity loan though.

Here you go:

L A N E  C A R T E R
Mortgage Banker | Fidelity Bank Mortgage
160 Clairemont Avenue
Decatur, GA 30030

c: 404.849.2528 | o: 404.553.2042 | f: 404.393.9173

Jack

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Re: My situation
« Reply #19 on: November 02, 2012, 05:19:54 PM »
Actually, now that I think about it... if you like your contractor, can you give me a referral to him, too?

ashem

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Re: My situation
« Reply #20 on: November 02, 2012, 05:23:46 PM »
Yes! Neil Struby. I have several friends who've used him for jobs large and small.

http://www.strubyconstruction.com/index.html

« Last Edit: July 02, 2015, 07:50:21 AM by ashem »

Jack

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Re: My situation
« Reply #21 on: November 16, 2012, 07:31:57 AM »
Quote
Since I started reading MMM last month and realized what an emergency it is (and my wife found a job), I've refinanced and been agressively paying down credit card debt. A month ago, it was ~$11k @ 16% and $7.5k @ 10%.

I'm curious what you did or went through to get refi on the credit card. I have a little over $5k at 18%, if I could get that interest down it would be a lot easier to pay off.

We transferred $4k of the 16% card balance to my wife's old Visa (she hadn't used it in a while, so she was getting 0% balance transfer offers as if it were a new account) and I opened a new Discover card with another $4k balance transfer. We paid down most of the rest ($3k @ 16% and $7.7k @ 10%) aggressively over the span of 2-3 months, and will pay the $2.3k @ 10% remainder before the end of this month (I scheduled a $500 payment today, in fact).

As of yesterday (when a payment from Nov. 9 finally posted), the balance on the 10% 9% credit card is now ZERO!

Next up is my $1367 @ 8.75% student loan; I could pay it today but I'd only have $284 left in my checking account, so I might pay half now and the rest next week.

sibamor

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Re: My situation
« Reply #22 on: November 16, 2012, 08:01:33 AM »
As of yesterday (when a payment from Nov. 9 finally posted), the balance on the 10% 9% credit card is now ZERO!

Next up is my $1367 @ 8.75% student loan; I could pay it today but I'd only have $284 left in my checking account, so I might pay half now and the rest next week.

Awesome!! Keep up the fantastic incremental progress!

Paul der Krake

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Re: My situation
« Reply #23 on: November 16, 2012, 08:16:59 AM »
Good work! Seeing your debt fade away is a fantastic feeling. Keep it up!

grantmeaname

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Re: My situation
« Reply #24 on: November 16, 2012, 11:56:01 AM »
Nicely done, way to knock 'em out! Once that's done, what's next?

Jack

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Re: My situation
« Reply #25 on: November 16, 2012, 12:01:42 PM »
Nicely done, way to knock 'em out! Once that's done, what's next?

After that, I need to choose between paying off a $5514 @ 6.55% student loan or putting $10k in my and my wife's [Roth?] IRAs before April 15 (for the 2012 tax year).

grantmeaname

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Re: My situation
« Reply #26 on: November 16, 2012, 12:10:52 PM »
Yes, you want Roth and not traditional IRAs. If you don't have Roth accounts yet, you could always throw like $1000 in each to get them established, work on the debt, and then top them up as your budget allows. Am I correct in inferring that you'll be able to fill up your 2013 Roths no matter what you do with your remaining 2012 savings?

Jack

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Re: My situation
« Reply #27 on: November 16, 2012, 12:18:33 PM »
Am I correct in inferring that you'll be able to fill up your 2013 Roths no matter what you do with your remaining 2012 savings?

Yes, assuming both my wife and I are working next year (my wife's job is a 3-month 1099 gig... we're hopeful that they'll hire her as W-2 in 2013, but not sure yet).