Archive | June, 2012

Why We’re Keeping Our Car

28 Jun

My husband and I have grown up in a major city our entire lives. Every one of our relatives, all older than us, has a car. Yet you will find that the younger generations, people around our age, do not seem to have a car. In fact, amongst our friends, we are one of the few to own a car. Most conversations will go something like this:

Disbelieving Friend: You have a car?
Us: Yes.
Disbelieving Friend: Why?
Us: Because we want one?
Disbelieving Friend: Do you have to drive around your neighborhood?
Us: No, we can walk. We also have trains and buses just like you because we all live in the same city.

Costs of Having Our Car

Owning a car is quite costly. My husband and I bought a car years ago, way before we were married, and split the cost. We bought a used car that was only two years old at the time and in pretty good condition. The best part was that it cost us no additional money because we each paid for the car with our own money and didn’t have to take out a loan.

Initial cost for a 2009 Chevy Impala in 2011? Approximately $8,400 including taxes.

Of course, the costs don’t end there. You have to factor in everything else such as:

  1. Gas and tolls
  2. Registration and inspections
  3. Regular maintenance (i.e. oil changes)
  4. Regular repairs (i.e. having your driver’s side mirror knocked off twice in less than a year)
  5. Additional desired expenses (i.e. car washes, buying a GPS, installing a new stereo)
  6. Insurance

Why Keep Your Car When You Have Insanely Good Public Transportation?

We don’t use our car everyday. In fact, most of its usage occurs on the weekends.

Funnily enough, I have always been terrified of driving. It has always been a very tense situation for me that produces a lot of anxiety. We have had the car for years but I only got my license four months ago. I have to say I love the feeling of freedom my car provides for me.  I love that I can drive a very short distance (though not within walking distance) for sales and do quite a bit of shopping that saves me a lot of money, even including the gas I spend.

Most of all, I love that at any time, we can drive to any place without worrying how we will get there. We love to hike, which involves quite a bit of driving out of the city to get there. How would we do this without a car? My husband needs to go to various camping activities that are outside of the city. How would he do this without his car?

Of course, all of my friends who do not have cars are the first ones willing to snap up a ride from us. One of my friends is getting married and one of the first things another friend asked me was if we were driving there and if so, could they get a ride? I don’t mind giving people rides to places; in fact, when I drive to work (only 1-2x/week) I drop people off at the train. But that expectation that you have a car, therefore you should, gets annoying.

Friend: Want to hang-out?
Me: Okay.
Friend: You want to come to my neighborhood?
Me: Why can’t you come to mine?
Friend: Ugh you’re so far. And you have a car! The trip will be so fast for you. The train takes forever!

My friends act like having a car is some sort of freebie—as if we don’t pay almost $200/month in gas and insurance plus all of the other fees, maintenance costs and repairs over the year—just because we already have a car paid in full. As bewildering as they find it to be for us to have a car in the first place, they sure love any chance to get a ride in our car.

Yes, I Will Probably Have a Car Forever

All of those years I was too scared to drive seem silly to me now. Sometimes I still get anxious, especially driving in a major city, but it no longer prevents me from driving.

I really love the outdoors and there is no foreseeable way of getting there without a car. We are embarking on a nine-night camping trip throughout the state in September, something we wouldn’t be able to do without a car. Considering how expensive it is to rent the smallest car in my area, the cost of a rental would be a couple of months worth of my usual car expenses.

Would I save a lot more money without a car? I would. But I already put all of my paychecks directly into savings, since my husband’s paychecks are enough to cover rent and bills with money leftover. We already live on a budget. We already sacrifice a lot of things. This is a thing we will not sacrifice.

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The Emotional Cost of Purchasing a Home – Part Two

24 Jun

I began by detailing the emotional costs of purchasing a home here.

3. Getting Your Hopes Up – The very first co-op that we saw has continued to be our favorite co-op. It’s not the nicest place in the world but it was almost everything we wanted—except there was no washer/dryer on-site.

We were repeatedly told how we could put a w/d in the basement. We were completely fine with this until we brought a plumber and he told us it wasn’t as easy as everyone made it sound and that it would cost thousands of dollars. Without a w/d, there was no reason to pursue the place any further. But in the back of our minds, we are constantly thinking that something will work out along the way and somehow we will get this place.

4. Seeing Tons of Places – The obsession begins to grow as soon as you know you’re looking for a place. I find myself on Trulia every day, checking to see if something, anything, has been added. Every weekend we are checking for open houses and attending them if they are within our price range. We call to make appointments to see listings. You begin to see place after place as almost the same. It starts to get emotionally draining looking for something—perhaps something you just can’t quite find. When you find yourself on Trulia everyday, you find yourself lamenting over the fact that homes you really love are just slightly out of your reach and you feel as though you’ll never get what you want.

5. Heart vs. Logic – Realtors know that purchasing a home is a very emotional decision for most people. They know people will tend to walk into a place and have a visceral reaction of either love or hate. For me, turning off this “heart” button and turning on the “logic” button is a necessary evil. I don’t want to be blinded by the beauty of a unit only to know in a couple of years I might not be able to sell it at all or that I might lose money on the deal.  When I walk into a place, my mind goes into, “Can I fix this? Can I remodel this? Can this go here? Can this go there? Can I make money off of this?” For my husband, he did not think this way when we first started to look at homes but now I think he has started to see the benefit of thinking that way.

Have you ever purchased a home only to find it was an incredibly emotional experience?

The Emotional Cost of Purchasing a Home – Part One

21 Jun

For many years, purchasing a home has been a dream of mine. Of course, my city is so expensive that I can’t afford to buy a house, but I can still purchase some entity nonetheless.

Aside from the financial drain, purchasing a home can take a huge emotional toll on someone as well. Being that this has been a huge dream of mine, I should have realized that no matter how logical I am, there will still be some emotions involved.

How Purchasing a Home Can Be Emotionally Draining

1. The Savings Hit – We have worked very hard to save our money over the years in order to have enough money to put down on something. We withstood the jokes about us being cheap and we annoyingly answered questions from people who couldn’t fathom the idea of getting rid of their cable like we did. The savings account we have almost feels like a blanket to me — we have all of this money just in case. At the same time, we were saving for a down payment in the first place. When you work so hard to save a large sum of money, it feels incredibly scary to all of a sudden have that money disappear. We are going to be putting down 20% so for us, that is a ton of money!

2. Never Quite Right – We have been looking at places for over a month now. We had a short list of things we were interested in finding in a place such as:

  • Two bedrooms, though if the space was large enough or a junior four, we would consider one bedroom
  • Private outdoor space such as a terrace
  • Lower maintenance costs, considering I’ve seen maintenance costs at over $1,000/month
  • Washer and dryer must be available on-site; does not have to be within the unit itself
  • Must cost $350,000 or less
  • Prefer that there is at least one thing that can be remodeled; do not want something that is completely new
  • Must allow cats

There are so many co-ops in my area and the fact that this is so hard to find has been driving me crazy. I don’t think we even have a large list of demands so I don’t know why this has been so difficult.

  1. We have looked at numerous two bedrooms and one or two junior fours. (A junior four is usually a larger one-bedroom apartment that may or may not have a second room.) Many of the two bedroom units that we can afford are small and because of the second bedroom, the price exceptionally higher. There are a couple we have been interested in but things seem to not be working out for us. One of the junior four units that needed work had a no pets policy and exceedingly high maintenance.
  2. The outdoor space is something that is actually at the top of my list in terms of purchasing a co-op. I would really, really like to have a terrace and would take a one-bedroom co-op in order to have one. Unfortunately, terrace units are much harder to come by and usually more expensive.
  3. Maintenance costs are additional costs on top of our mortgage. Some of them make purchasing a co-op for us prohibitively expensive, even if there is a tax deduction at the end of the year.
  4. We actually really like one particular co-op and this is the only reason we haven’t made an offer—it has no washing machine on-site. I can’t imagine owning my own place and having to drag my laundry out every weekend.
  5. Given that maintenance costs for the places we have been looking at run upwards of over $700/month, we must be able to keep our budget on the lower end.
  6. We consider this a starter home and would possibly like to make money off of it down the line. If I buy something that has been completely remodeled before I get there, what can I personally add?
  7. Many co-ops around here do not allow dogs but most of them will allow cats—however, we have come across some places we liked that have strict policies against pets.

I think the most emotionally draining part of the points above is that we have found places that we really liked that are just not working out for us. We have been talking about this two bedroom co-op since we saw it almost a month ago and it’s the one we keep coming back to—but without a washer and dryer on-site, there is no point for us. The realtor for the seller has been pretty annoying about it and we seem to not be able to get our minds off of this place.

Until next time…

Do You Know About Your Money?

18 Jun

This post should just be a reminder for anyone who has ever had money—so that means you.

My husband is an awesome guy. He really is. But sometimes he is just kind of a ditz. I mean that in the most loving way possible. Sometimes I don’t understand how his brain works or where he is in terms of his thought process but I digress.

Last week I opened up our mail and nervously opened one letter from Chase. “Chase? This isn’t a credit card offer—why are we getting a notice from Chase?”

I open the letter and scan it. It’s for a Certificate of Deposit (CD) at an awful interest rate. I look at the terms of the deposit:

  • Maturity Date: June 22, 2012
  • Term: 13 Months
  • Interest Payment Frequency: Monthly
  • Interest Compounding: Daily
  • Projected Value at Maturity: $3,518.61

WAIT, WHAT? Just stop right there; I don’t need any more bullets.

My husband, unbeknownst to him, had a CD of $3,500 just sitting around.

Me, to my mother: I don’t understand. It’s not like we’re rich and when this was opened KC probably made 50% less than he does right now. How do you just lose track of $3500???

My Mom: Rich people don’t lose track of their money they know where every penny is—that’s your problem.

At first my husband thought it was a mistake. He had a CD last year that he closed out and it was for less than half of the amount of this newly discovered CD. He thought the lines got crossed somewhere and he did not believe he had a CD. But after going to the bank and confirming it, he now accepts that he does have a CD.

But the question still remains: where did the CD come from???

My husband is pretty insistent that the CD he cashed in last year was the one he opened for himself. Back in the day, he received money from a particular event and put it into a CD without really even knowing what it was. But this CD he has no recollection of opening so our only assumption is that someone must have opened it for him. He had relatives who used to purchase things for him, such as bonds, pretty regularly so we are thinking this is where the money came from. As I said, my husband can tell you twenty-years ago about a game he was playing, the cards in his hands, and whatever else was going on at the time but he can’t remember where this magical $3,500.00 came from.

What You Should Take Away

I urge anyone who has ever had accounts or anything set-up for them, such as bonds, to check and see if they have ever forgotten about any of the funds they had in a bank somewhere. It actually happens quite often and I know this because once in awhile, the newspapers run the names of all of the people with unclaimed funds in various locations. Always be vigilant about knowing how much money you have and where it is going.

For us, this is perfect timing. Since we are looking for homes, this money makes me feel better about putting down 20% on a house. It adds to that little bit of cushion that we want to have before we move into somewhere else.

Ignoring “Advice” When Buying a Home

16 Jun

My husband and I have been looking at homes. We have had our eye on one particular contender. It’s a two bedroom, one bath co-op in a small unit of cooperative units that look like a row of townhouses—highly unusual in my area since most co-ops look like large apartment buildings. Aside from the stress involved in looking for a home, I have found that people tend to be less than supportive in our attempt to purchase a home. Instead, we end up hearing a stream of opinions from people who know absolutely nothing about our situation and who seem to know little about the housing market today.

Opinion #1: Don’t Buy a Co-Op! Ever!

People fear co-ops for a number of reasons. They do not like that you technically do not own a piece of property. They don’t like the idea of boards and people who can raise your maintenance whenever they want for whatever reason. I am perfectly able to understand where they are coming from and why they feel that way.

What I do not appreciate is when people wholeheartedly try to talk us out of purchasing a co-op. They do not know our situation well enough, financial or otherwise, to make that decision for us.  So many people are ready to talk us out of purchasing a co-op without talking to us first and that is something I do not understand.

Why purchase a co-op? Simply put, that is all we can really afford. Occasionally there is a condo that comes on the market that we can afford but that is very rare. Unlike the neighborhoods many of these people live in, co-ops are actually quite commonplace and regularly bought and sold where we reside.

Opinion #2: Try to Get…

My husband and I have what I consider to be a short list of things we want in a home.

  • Two bedrooms, one bathroom
  • Preferably some type of outdoor space
  • Washer and dryer on-site, not even necessarily in our unit
  • Dishwasher in the co-operative unit
  • Storage or a lot of closet space
  • Some type of parking even if there is a waiting period or lottery

Now some of these things are somewhat flexible. For example, the unit we are interested in doesn’t have a washer, dryer, dishwasher or parking on-site. However, we feel as though we must have the option to add some of these things in the future. Not having a parking space is not the end of the world either—it’s a preference but not necessarily a need.

The naysayers, of course, have to insert their own opinions as to what we should be looking for—why not try to get something with a backyard? Why don’t you get something with a big kitchen? Why don’t you get something that has been renovated? Why are you buying a co-op again?

Opinion #3: Why Don’t You Just Buy a House?

I really hate this question because it assumes that I wouldn’t want to buy a house if I could buy one. Do you think I would be purchasing co-operative units if I could afford a house? What makes you think we can easily afford a house? Do you guys mistakenly think my husband and I are rich? My husband and I would gladly purchase a home if we could afford it. Affordability is key and most of the people telling us this bought houses twenty or thirty years ago when houses were still easily affordable in our city.

What to Take Away

It’s always smart to listen to people in terms of housing, especially when you have never purchased a home before. However, you need to remember that this home is for you and that there is a difference between good advice and opinions from your friends and families. When you begin your search, keep these things in mind:

  • Always ask for advice but make sure your advice is from the right people
  • Before you ask for feedback, make sure whoever you are discussing your situation with has the entire picture
  • Don’t allow other people to push their opinions on you and push you into something you don’t want

How have your home buying endeavors been? How have people responded to what you are looking for when you tell them about it?

Getting My Education — For Free (Almost) – Part One

14 Jun

I am one of those people who absolutely hates school but always find myself in school. I think it’s a sick form of mental masochism that I am always doing this to myself. Once again, I applied to school and I am starting to question my sanity.

But the point of this post is not only to allow readers delve deeper into my insanity—it is to tell you how I have received the majority of my education for free.  For this, we must go back in time to nearly ten years ago, when I first found myself applying to colleges.

HIGH SCHOOL

I would consider my high school years as apathetic with a hint of care. I took honors and AP classes but I did the bare minimum required. I rarely ever studied and sometimes I would have to take days off from school because I was so massively behind on homework I needed to stay home just to catch-up. When I was growing up my parents never really pushed us—it was you either go to school or work. So since all of my friends were going to college I thought, “Hey, I don’t want to work. Everyone else is going to college. I might as well just go to college!”

Since I obviously didn’t put any thought into it, I only applied to the college system in my city. For one application fee, you can apply to numerous colleges within the city system. I figured I would live at home like most of the people in the city system and go to school from there. At the time, tuition was only $4,000 for the entire school year as a full-time student, which was a steal compared to other schools.

COLLEGE – THE UNDERGRADUATE YEARS

For whatever reason a last minute decision sent me to a particular school. I hated it there but because of my parents’ income, I was able to at least have my entire tuition covered. I also received a grant because I had maintained a B average or greater in high school. This allowed me to at least pay for additional costs such as books and transportation.

After my first year, I transferred to a different school within the city system and they offered a much better financial package. In fact, I was making money going to school. It was great.

For my third year, something stirred inside of me and I transferred up to a state school. I had practically the same financial package, lost the grant I had from the city schools but gained two other grants from the state school because of my grades. However, to stay in the dorm, I needed to take out a loan. I took out more than I needed, because I didn’t have a job at the time and had no idea how much things would cost me. This was the only loan I ever took out for school—something small like $5,500. I wouldn’t say I regret it but I definitely could have taken a loan for a smaller amount.

After that year, I transferred back to the second city school I was at. (Are you still with me?) I still had no idea what I wanted to major in and I was now in my fourth year of college! Eventually I just picked something I thought I could potentially get a job in and actually followed through with it. I spent two more years as an undergraduate which totals to six, yes six years as an undergraduate. That might not sound so bad except that I was a full-time student the entire time.

Now after my fifth year, I couldn’t receive money anymore from a particularly source of financial aid. Luckily, at the same time, my program told us about a grant we could receive for $3,000 if we wrote an essay. Unlike most people, I did it and ended up getting the grant. And finally, after six years I graduated with a degree—that I didn’t even want to use.

COLLEGE – THE GRADUATE YEARS

I ended up disliking my major and jumped into something else immediately after I graduated. I applied to a program that was very similar to the Teach for America that would essentially pay for your graduate degree. So yes, a month after I graduated I started a graduate program in something completely unrelated to my field.

The program was funded through AmeriCorps so each year I received approximately $4,750 to apply to my tuition. Since I was at a city school again, my tuition remained low even though I was in a graduate program. Two years later, I graduated with my M.S. and left the field. Aside from paying taxes on the over $9,000 I received to pay my tuition, I only had to pay for books and a registration fee at the beginning of the semester. Considering I was working full-time, this was not a problem. I actually had money leftover from my grant, over $1,000, that I was able to apply to my student loans.

POST-GRADUATE SCHOOL

I decided that I would return to the field I had received my undergraduate degree in and although it was difficult, it is far less stressful. I had to study for my exam in order to get state licensure two or three years after I graduated, I did it and became a licensed professional within my state.

Funnily enough, I am now in a place that is associated with a union so I am back in school as of Fall 2012—only I am working backwards and I’ll be pursuing my A.S. The union will pay for up to six credits a semester or twenty-four credits per year.  I am at the point in my life where I figure—why not? In fact, I can see myself pursuing another graduate degree in the future!

Tune in next time for some very specific ways to keep college-related expenses down.

So You Want to Buy a Co-Op—Or Do You?

12 Jun

Co-ops, or housing cooperatives, are one of the many housing options available to people looking to have their own home.  Many people don’t even know what they are, especially if you find yourself living outside of major cities. Where I live, cooperatives are everywhere and they can be highly sought-after.

If you don’t know what a co-op is, or if you’ve heard of it but don’t really understand the purpose, you might find it to be kind of bewildering.  Sarah Siddons sums it up:

When you acquire a home in a housing co-op, you don’t actually buy real estate — you buy shares in a corporation, whose only asset is the property. This corporation owns the home you live in; you own no greater part of it than any other member. You gain the right to occupy it through what’s called a proprietary lease or occupancy agreement.

Technically, unlike a house or condo, you do not actually own the piece of property you are paying for so you might be scratching your head and wondering why anyone would want a co-op in the first place.

Why would anyone want a co-op?

Even though some people might be put-off by the idea of cooperative units, they actually have quite a few benefits.

1. Co-ops are generally more affordable than houses or condos

Where I live, co-ops can be significantly cheaper than condos or houses. By significantly cheaper, I mean hundreds of thousands of dollars less for properties of comparable size. In my area, I could not afford a condo let alone a house. To be fair, I have seen a total of two condos in a year and a half of looking on Trulia that we could afford and both needed work, which is not even a problem for me.

2. Co-ops are good for people who aren’t good with maintenance or lack the funds for upkeep

Currently, I am a renter in a co-operative building. People who actually own units in my building pay maintenance fees somewhere between $500-$800/month depending on the size of their unit on top of their mortgage payment. Maintenance includes a lot of things, which I will discuss below, but it also includes contributing to the buildings finances. If the elevator breaks down or if the building needs a new roof, you are not suddenly finding yourself responsible for thousands of dollars in repairs.

3. Co-op maintenance fees may work in your favor

Maintenance fees in co-operative units can range quite drastically depending on the building you’re in and may benefit you in a number of ways. You may find that :

  • Some of these fees include certain utilities such as gas or electric
  • Some co-ops have additional things like gyms, doormen, storage units, maintained gardens and a live-in super
  • Taxes and other charges such as water and heat are often included
  • And the biggest factor— maintenance can be anywhere from 30%-70% tax deductible
Why would I avoid a co-op?

Just like anything else, co-ops can their disadvantages. Many of these are really off-putting to potential homeowners.

1. You never technically own your property and may not be able to make a profit

As mentioned above, you are just purchasing shares of a property so you do not technically own the property itself. On top of that, some co-ops have a flip tax which may take all or part of any money you would otherwise make from a sale. Additionally, because most co-ops do not allow subletting, it virtually eliminates the potential for an investment property.

2. Co-op boards can be a hassle

If you know anybody who owns a co-op, you might have heard about the infamous “board” that may be the bane of his or her existence. Depending on where you are looking for a home, co-op boards can be barely noticeable or a constant annoyance. Boards can be notoriously choosy as to the people they allow into their units and can reject people for a variety of reasons. On top of that, restrictions on what you can do to your unit can be placed at any time. For example, my uncle had a washer installed in co-op and not too long after that the board decided that people could no longer install them.

3. Maintenance can be awfully high for not very much

Maintenance can vary widely from co-op to co-op. In some buildings, you get a lot more for your money than in others. For example, a co-op that I looked at this past weekend had the maintenance listed at 32% tax deductible, which is far cry from the other co-op I looked at that had the maintenance listed at 50% tax deductible. While some will include certain utilities and other extras, others will include only the very basics. Many people will find that maintenance can be prohibitively expensive for people on-top of a mortgage payment.

How do you feel about co-ops? Would they be a viable option for you? For us, it’s currently the only option.