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Why Purchasing a Co-op Isn’t For Everyone

23 Sep

I have been looking at real estate for the past year. I know my neighborhood, considering I have been living here my entire life, and I know what I like. I know more than anything I would like a house. But, my husband and I cannot afford that. We live in one of the most expensive cities in the world and purchasing a home right now is not an option. In fact, where we live, it may never be an option. This is something I have reluctantly come to terms with at this point in my life.

I have always read pieces, blogs, message boards—you name it, I’ve probably read it—written by people who tell you to never purchase a co-op. It kind of makes me chuckle, because they make it sound like you always have an option. My own father tells me I should buy a house when it’s obvious we cannot afford one. Theoretically, it may be better for you, since you can do what you want to your own home but it’s not always the most practical choice.

Right now my husband and I are in contract to purchase a co-op. And without reservation, I can honestly say I will never purchase a co-op again. I have now become a naysayer!

Why Did I Look At Co-ops In the First Place?

In certain parts of the States, I am sure you will find people who have never even heard of a co-op. The idea that you are not actually owning something and in fact, just own shares of a corporation, would probably completely bewilder people. The fact that you must abide by and answer to a group of people who decide how you should live (also known as the cooperative board) may seem outrageous to people.

For us, it’s just a fact of life. Co-ops are ubiquitous where we live. The buildings in my neighborhood (that look like apartment buildings, yes) are almost entirely co-ops—not condos. There is a certain precedent for this. And they will continue to exist primarily because this is a launching pad or a way of life for some people. Co-ops are the only thing that my husband and I could reasonably afford. In fact, the mortgage and the maintenance will be lower than our rent.

What Has Changed My Mind

I knew that I would be charged fees for everything—but I had to start keeping a log.

Sure, you have to pay the bank. Closing costs. Fees for this. Fees for that. My eyes glaze over just thinking about it.

And yes, you have to pay the lawyer. Good times.

And then, lest you forget, the management company. We have to pay them for the application ($400), we have to pay them for one other thing that I already forgot about ($250) and we have to pay them separately to fill out one page—ONE PAGE—$150. They give you a list (yes, a list) of things they want from you—as intrusive as a physical examination from a doctor—that paint your financial history. Tax returns. Pay stubs. W-2s. You need a million references. Not enough, you say? Well it’s a good thing you have to make seven copies of every document so the board can have enough copies to go around and know your entire life story.

Everything takes so long and everything is such a huge hurdle. After we submit everything, we need to also have an interview with a board, where they will decide whether or not we are worthy.

And really, this is more than a month away. After all is said and done, the board can reject us. That’s right—after paying the fees, after paying the lawyer, after putting 10% of the purchase price into escrow, the board can simply say no for whatever reason they feel like.

Only the Strong Survive

Purchasing a co-op is a very long, drawn-out process that is definitely not for everyone. I say that I would never do it again but I guess I would if I had no other option. But if I did have an option, I would never do it again. Sometimes I look at my husband and tell him I regret doing this. I’m not sure if I really regret it or if I am just complaining because things are getting so tough with the co-op. But I think I will be happy once all is said and done and we finally move into our new home.

Have you ever though twice about purchasing a property? Do co-ops exist in your area?

It’s Time to Lighten Up

16 Jul

Toward the end of last year, I had this whole idea that I needed to make a budget because we didn’t really keep track of where our money was going. We had always saved money but I didn’t actually know how much we were spending on random things here or there. This resulted in the creation of a budget that could be flexible here or there. We have been pretty good at sticking to the budget with the occasional exception here or there.

I became focused. The goal? Purchase a home. We need to put down twenty percent. We have had the twenty percent for months. But I hadn’t been able to let go. Keep saving, I thought. So we have been saving. And saving. All of my paychecks go directly into the savings account, untouched. I kept telling myself I would start an IRA only to find myself putting it off so I could get to the next big number in my savings account.

But what have we been doing?

Basically, nothing.

I realized I started to detest spending money, even on things we needed or that we would enjoy. We needed a new couch for quite some time but I was very reluctant to actually purchase one. I didn’t want to use the state pass I purchased in order to visit the parks because I didn’t want to spend the money on gas to get there. Essentially, we would put off having fun or doing something that might be fun for us because I didn’t want to spend the money.

I decided that I need to stop being so tightfisted because it was having an impact on my life. I don’t really spend much on activities—so why can’t I let go once in awhile? What’s the point in having a little extra money in the bank if I’m a lot less happy for it. We aren’t anywhere near struggling financially so why am I keeping myself from taking a day trip to the lake? It seems so ridiculous.

I think every once in awhile you need to take a step back and reevaluate your goals in life. Once your needs have been covered, it’s time to establish your wants. What do you want?

I want to enjoy my time doing things with the people I love.

And that is what I plan to do this day forward.

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.

To Buy or Not to Buy – Our First Home

11 Jun

I am currently in the midst of freaking out and incessantly thinking about the possibility of purchasing a home.

I thought I had most of the figures down until I found myself on this link: Is It Better to Buy or Rent? According to the numbers that I put in, it would be better for us to rent for the time being, which makes me sad in a way.

Purchasing our first home is an incredibly scary thing for us. We have been saving up money for a few years now and we finally have enough to put 20% down on certain properties. In our area, a major city, we cannot afford anything but co-ops and the occasional condo. I have a feeling that when I ask for a cashier’s check of nearly $70,000 to put down as a down payment, I might throw up. Really.

Part of me feels conflicted because I want a place of my own. Part of me feels conflicted because a co-op is not my dream home. My dream home has space, a backyard and a pool. My dream home is not what I could only describe as “having that apartment feel.” By space, I don’t mean a huge house—I just mean something we could grow into together.

My husband and I have been pretty set on purchasing a two-bedroom co-op. Right now we rent a one-bedroom apartment for $1300.00/month. We actually live in a pretty nice building but it has a lot of things I don’t like such as:

  • The only thing the kitchen has going for it is the space—it’s actually a big kitchen for most apartments I have seen in the area and has a lot of cabinet space. The kitchen has an ugly laminate floor that is not only coming up in certain areas but is put on in such an incredibly lazy way that the second half of the kitchen “tiles” do not line up with the first half. The backboard is crooked and not even against the wall. There are holes/spaces near the floor.
  • The bathroom is disgusting. Both the pipes in the sink and tub seem to ALWAYS be clogged. For whatever reason the ventilation is awful and we always have mold growing. The stuff is coming up off of the tub floor.
  • Last year we had an awful storm and water started to leak through the brick. The building had to be repointed and the super said after it was finished, he would come in and paint over where the water leaked through and left yellow stains. Never happened. We have a live-in super and considering he had to do this on every floor for multiple sections of the building I find it hard to “forget.”
  • Awkward things like a door to the living room, a super dark hallway, small foyer that ends up being a haphazard desk area
  • Roaches!

At the same time there are things I do like:

  • Rooms are a nice size
  • Daytime doorman
  • Building, overall, is nice and has laundry downstairs; close to train
  • Rent is okay for us

WHAT WE WANTED FOR OUR HOME

  • Wanted a two-bedroom or a one-bedroom large enough to perhaps alter into a second room
  • Wanted a private outdoor space such as a terrace
  • Lower maintenance costs
  • Washer/dryer on-site

THE CONDO

There has only been one condo for sale that we could remotely afford. Crunching some numbers, paying the mortgage plus the maintenance would actually cost us either slightly less or slightly more than what we pay now. The taxes were relatively low and given the fact we could claim our mortgage interest, I think it would work out to our benefits.

PROS

  • Cheaper for us
  • Had a terrace
  • Had a W/D in the unit
  • Had a small storage space in the basement
  • Had a parking spot—extremely, extremely rare

CONS

  • My guy absolutely hated it
  • Definitely need a little work
  • Smaller than the place we’re in now

SUMMATION

I guess I have a little more vision but I saw some potential in there to really fix up some things and turn a profit on it. I liked the fact that we could rent it out in the future, unlike most co-ops, and I think we could actually turn a profit on the place either renting or selling. However, as much as I am willing to make an offer, my man is not and I’m not going to force him into something he doesn’t like even though I have really tried to sell it to him.

THE CO-OP

The very first co-op we saw is the one we keep coming back to. It’s approximately 280 square feet larger than the condo (880 square feet) and has two bedrooms.

PROS

  • Sick of living in big buildings and this is a very small co-operative unit that looks like a row of houses
  • Two bedrooms
  • Open feel
  • Terrace
  • Very low maintenance that is 50% tax deductible—the maintenance rate is unheard of in our area
  • Separate/private entrance
  • Private storage area in the basement
  • Doesn’t need a lot of work—mostly cosmetic stuff that we could live with for now

CONS

  • Kitchen is kind of small
  • Bedrooms are kind of small
  • Currently no W/D on site—we have to see if they’ll let us put one in the basement—additional expense
  • Eventually would like to add a dishwasher—another additional expense
  • Parking in that area is worse than where we are now and there might be three spots somewhere but they are wait list and I doubt we’re anywhere near the top
  • Would cost us more than our current rent
  • Cannot sublease in the future

SUMMATION

We are actually working on bidding for this place. We are going to bid quite a bit less than the asking. We’re still in the process of figuring out our loan stuff (trying to get a better rate) and obtaining a lawyer.

Although the money maintenance and mortgage would be more than our rent right now, our rent would eventually increase again. Additionally, the mortgage interest and half of the maintenance are tax deductible, so I think this will almost allow us to break even.

NOT FOR THE WEAK

Buying a house is emotionally draining. It really is. And as much as I try to stay logical about it, I still find it to be such an emotionally wrapped up decision. As much as I can make an argument for the condo, will we be happy in a place we don’t particularly like? I need my home to be a place I enjoy being in—not somewhere I want to run from.

Creating & Assessing a Budget

6 Jun

Toward the end of last year, I decided to make a budget for our tiny household.

You see, my husband and I were always decent with money. We have both worked since we have graduated from college and managed to somehow save money even when we weren’t paying attention to our finances. However, once we had to pay for our wedding in its entirety, I started to think we should draw-up a budget.

Budget

My budget, for the most part, is somewhat flexible and somewhat rigid. I am going to share my budget here with you and include the analysis I did via my six-month mark:

Regular Expenses – Regular expenses are those that are generally a fixed amount every month.

  • Rent: $1300.00
  • Phone Bill: $130.50 (+/- $1.00)
  • Auto Insurance: $91.42 (This has occasionally gone up or down but seems set for now.)
  • Internet: $39.95
  • Student Loan Deduction: $50.00
  • Netflix: $8.00
  • Gym: $10.00

Variable Expenses – These are expenses I have budgeted for every month but are in no way fixed.

  • Home Care: $50.00 – Current six-month analysis says my average spending in this category is between $20-$25/month, including some months in which the amount is zero.
  • Groceries: $300.00 – Only had one month where we went over budget; otherwise, a six-month analysis puts our average spending at approximately $222/month.
  • Dining Out: $250.00 – I am the first one to admit that eating out is a money pit and this is the only place I lack restraint. The thing is, I rarely spend my money on things I enjoy and this just happens to be something I love. This includes any fast food, coffee stops, etc. I have gone over budget three out of the six months and my average spending is approximately $238/month. Ouch.
  • Car Gas: $125.00 – I actually had this at $100/month but I changed my budget around because I realized I hadn’t budgeted enough for gasoline. This especially holds true if we are taking day trips and considering the constant increases in gas prices. Six-month analysis has us spending a little over $100.00/month but I know that will increase.
  • Haircuts: $20.00 – In actuality, my husband only gets his hair cut about once every two months and I almost never get my haircut because I grow it out and donate it. Thus our average spending has us at slightly under $5/month. I also do not do anything to my hair—no dyes, no treatments—and I’m lucky to have nice hair.
  • Electric+Gas: $125.00 – This is actually an overstatement for most months. Considering we use very little in terms of electricity when it is not summer, our current average is around $71.00. When we are running the air conditioner, however, it is incredibly easy to go over the $125.00 mark so that is why I budgeted for so much.
  • Misc: $200.00 – This is for anything we want to buy that is extraneous, such as a new video game, a park pass, etc. I cannot really analyze this area except to say it can be easy for us to stay under it; however, we have made some very large purchases that I put into here (such as a $3500.00 couch) which completely throw off the numbers.
  • Transit Card: $25.00 – I actually had this at around $50.00 for when I was trying to take a class but then I took over $25.00 and moved it to the gasoline. I actually haven’t purchased anything for mass transit in months because I no longer take the class and I am lucky enough to walk to work most days.
  • Clothes: $50.00 – We actually don’t shop very often so we have averaged out at around $30.91 per month for clothing purchases. This may change in the future though because my husband has recently ripped a ton of clothing.

Irregular Expenses – These are expenses I have listed in my budget but vary so much that I have them in a separate category. I do have a budget set-up for them and hope not to exceed it.

  • Car Maintenance: So far I have really only had to buy new brakes this year. Note: I am incredibly lucky in this category because my dad is a mechanic so I don’t pay for labor or oil changes.
  • Medical Costs: This year I have obtained incredible insurance which allows me office visits, generic prescriptions, etc at no cost. My husband has not-so-great insurance and pays $25 for PCP visits and $40 for specialty visits.
  • Medicine: Generics cost him $15 and he has two-ongoing prescriptions for things. I used to pay $15/month for my prescription but not anymore!
  • Gifts: This one gets pretty crazy depending on the month. December is a hot mess because of Christmas and we end up spending well-over $500 for gifts because there are so many people we have to buy gifts for so I’m not a fan of December. Certain months are also killers for us — May included three birthdays and Mother’s Day!

Overall, I think the budget has been all right. Considering that we made a large purchase this year (the couch), we have saved a good amount of money. I think if I could change one thing it would be the eating out portion of it but I love food too much. 🙂 Does anyone else have a budget? Do you think mine is crazy in some areas?

When a Cheap Person Wants to Exercise…

25 May

When I was a kid, I used to be fairly active. I would play outside all summer long. Gym, like many kids, was my favorite period of the day. I would spend my entire summer playing tennis multiple times a week for hours a day. Sometimes I found myself on softball teams. Summation: Good stuff.

Then…

I got older. Why does this happen? There was no one left to play tennis with and I couldn’t get enough people interested in playing a game of softball. I found myself sitting in front of the TV more and more. I was always studying for an exam. There were no more athletic activities for this old soul.

Years go by and I am still lazy. I am thankful for the genes that have allowed me to stay on the thinner side while I continue to stuff my face. To be fair I am not as thin or toned as I was in high school but I am no where near being overweight either. Go me?

Every once in awhile I get this crazy idea in my head that I want to exercise. Yeah! I want to be in shape. I want to get rid of these love handles. I want to tone up. Of course, then you remember that you’re too cheap to join a gym and want to partake in free exercise. Maybe I need some more inspiration or maybe I want to try to figure out what I should do because I currently do nothing. Maybe that’s why I am documenting everything for you guys.

For kicks, here are my attempts (and subsequent failures) for my exercise on-the-cheap:

Jogging

One day at an old job of mine I made an astute observation—everyone who was a “runner” was a type A personality. I am not so I should have known that I would have immediately failed at this venture. Every once in a while I decide that I am, once again, going to take up running. I get the sneakers on. I get the sweatpants or other related gear on. I put the headphones in my ears. I’m off! I have an absolutely gorgeous spot to run that is right next to the water. The views are spectacular. You would think this would be nothing but inspirational.

But then again, you don’t know me.

For whatever reason, I am the queen of side stitches. No matter what I do, no matter what I try to do beforehand, I end up with side stitches. Sometimes I try to jog through them. Other times the pain is so bad that I have to stop. In fact, the last time I jogged my side stitch was so bad I think I ended up tearing something behind my rib cage! (I know they can’t do anything for rib injuries but allow them to heal so I just found myself to be in pain for two weeks.) I also have a lot of trouble breathing whilst taking a jog, so much so I need to stop at times.

Thus I have failed at one of the cheapest forms of exercise—but I am sure it will make its triumphant return one day! I mean, triumphant attempt. Yeah.

Biking

I have to say I always liked being on a bike. I used to ride a bike when I was a kid. Bikes are fun.

Except I find that I have a general hatred for people on bikes.

People on bikes seem to think they can do whatever they want. Something in their way? Sure, just dart right in front of your car. They’re coming from behind? Get out of their way. There are some seriously angry people on bikes and as a result, there are some seriously angry people in cars (read: me) who find themselves behind these bikers.

Now I have had bad knees since I was about thirteen. I did ride a bike on occasion after the age of thirteen but not very often. One day a couple of years ago I got a bike from my grandma’s basement and brought it to my apartment. “I don’t want to jog. I want to ride the bike. Much easier!”

Words of infamy, my friends.

I started off well. I biked down to that same beautiful landscape that I can run on—it has a bike path as well. At first, all seems to be going well. And then I realize it’s happening—the knee pain. I think that I can bike through it. I keep going. I get to a point not too terribly far that I realize the knee pain is overwhelming.

I can only describe this pain as someone is violently stabbing me in the knees. Repeatedly.

You see, I have found that biking must bother my knees far more than anything else because they are essentially completely bent when I am biking. Something about this really hurts the old joints. I took a breather. I sat down for a few minutes. “I’m ready to bike back,” I thought. This thought process was so successful that I ended up walking my bike halfway home.

The Result of Failed Ventures

I don’t know about you, but I foresee myself attempting to jog or bike in the near future.