Saturday, September 29, 2012
My mother is sort of a pack rat. Don’t get me wrong, she’s not a hoarder or anything like that, but she is one of those people who can see a use for just about anything and everything, and therefore, she likes to hold onto stuff. However, as she nears retirement, she’s begun to downsize, making her household easier to maintain, lowering stress levels, and opening up possibilities as to what she’d like to do in retirement, where she’d like to go, and how much it will cost to get there.
Positives of Doing a Test Run Now
There are multiple benefits in our doing a downsizing test run well before we retire. First off, we know that we can do it and how to do it when the time comes. We know what sorts of items will be on the chopping block, like clothing, dishware, bulky furniture items, and heavier things like books. We also know how much time and effort it can take to downsize. Going through stuff can be draining, both physically and emotionally. It can be hard to make decisions on items that we’ve owned for years. Thankfully, my wife and I have each other, and we work as a team so that we help one another make decisions on items that otherwise we might pointlessly hold onto.
Maybe one of the most important aspects of doing a trial run downsize is that we are now well-versed in how to make money off the process.
How we Turned our Efforts into Cash
We wanted our downsizing efforts not only to make our lifestyle more efficient, but make us a little cash in the process. Therefore, we tended to look for resale options for much of the stuff that we were getting rid of.
How and Where we Downsized
When we were finished, we had just enough stuff to fit into a 10 x 10 x 10 storage locker and the back of our SUV. Therefore, we were ready to move when our home sold, and when we relocated, we could buy a much smaller home, saving ourselves significantly not only on the home price, but on the moving process as well.
Thursday, September 27, 2012
Just a few of my early morning thoughts on the matter. Our accepted national and societal norms have been confounding me -- and frankly, concerning me -- more and more lately. Don't even get me started on texting and driving!
Wednesday, September 26, 2012
As a self-employed individual especially, I’ve certainly realized just how important tracking my income can be in helping me maintain a better overall feel for my financial situation.
Consistent and Accurate Totals
Of course one of the main benefits of tracking income is that I have consistent and accurate totals for my various income streams, which come tax time, is quite beneficial. But even before tax time rolls around, having a running total of my year-to-date income totals helps me with tax planning and setting aside properly estimated payment amounts for items like income and self-employment taxes.
Additions to Income
But I don’t just leave my tracking at “regular” sources of income that come with jobs that I conduct on a regular basis and that are employer-paid. I also factor in items outside this realm of regular income. Things like stocks, bonds, IRAs, and commodities fluctuate in value, and while maybe not currently taxable (since profits on items like my savings bonds and retirement account are deferred until converted to cash), are a part of my annual income nonetheless; and tracking them makes it easier to manage the next benefit of gauging my income -- making comparisons.
I find that making month-over-month and year-over-year comparisons of my various income streams is valuable to my personal finances for several reasons. First off, it allows me to watch and determine how various income streams are performing over time. Secondly, it helps me set goals for changing poor performing income streams, and looking for ways to push income higher.
For example, after reviewing last year’s income performance, I set a goal for this year to increase income by 20 percent over last year’s total.
Additions or Deletions
Through my comparisons and tracking over time, I’m better able to evaluate my various sources of income to determine whether there should be additions, deletions or adjustments. At the end of last year, I determined that there were several sources of income that were underperforming, and thereby not worth the amount of time I was investing in them. I therefore removed these income streams from my tracking portfolio. However, this left some gaps in my income that I could look to fill with new sources, which would also be gauged and evaluated over time
I noticed that several other income streams such as my blog and residual income from certain writing sites were lacking in progress or had even decreased over time. I therefore decided to put a little more effort toward working on these income streams in an attempt to bolster them. As I watch my efforts over time, I can come to a better conclusion as to whether my work has paid off or if these are areas that I should eliminate from my income and income tracking in order to focus my attentions elsewhere.
Monday, September 24, 2012
So now that we have to reestablish ourselves in a new place, there is plenty of stuff we need. From food and toiletries, to cleaning supplies, paper products, and similar items, we have numerous items from which we rid ourselves before our last move or that we gave away to family.
Most of our needs come in the way of food items. We must again load up on the staples. Everything from milk, bread and eggs, to salt, pepper, spices, ketchup, and condiments, we’ll have to start from square one, which means that our initial grocery bills will be hefty ones.
We had several gift cards at our disposal for these shopping purposes. The first of these cards were Wal-mart specific gift cards, thoughtfully given to us by my uncle as Christmas gifts. Another card, graciously came by way my wife’s aunt and uncle (also as a Christmas gift), and yet another card was left over from a small bonus my wife had received from her work the previous year. The cards from my wife’s work and her aunt and uncle were prepaid credit cards.
How We Planned Our Card Usage
Since we could use the prepaid credit cards (one worth $50 and the other worth $40) in a variety of locations, we saved those for more unique purchases. Since the Wal-mart gift cards (worth $325) were store-specific, we centered purchases such as our cleaning supplies and certain food items that we knew were available at Wal-mart for low prices, around these cards. And since there is a Wal-mart superstore located near us, we could actually load up on many of our grocery and toiletry needs as well, though we saved certain items on our shopping list for the local dollar and grocery stores.
Where We Spent and What We Saved
Our first shopping excursion was to Wal-mart for cleaning supplies and toiletry items. This first run was done the day after closing on our condominium so that we could clean the place before officially moving in.
Monday, September 17, 2012
We learned a valuable lesson relating to the relativity of prices when we purchased our first home. We made sure not to get so caught up in the tens of thousands of dollars we were negotiating in price that we neglected other smaller, yet still important amounts.
Here are a few of the ways we cut costs during our home purchase, as well as a few areas in which we found surprise expenses.
The first quote we got for a home inspection came in at over $300, which we thought was a little pricey for the inspection of a two-bedroom, one bath condominium. Therefore, we contacted another home inspection company. They quoted us $260, but told us of a coupon on their website for an additional $25 off, so our total price paid was $235, more than $70 less than our first quoted price.
Real Estate Lawyer
Real estate lawyers are often just a part of the home buying and home sale process here in the Chicagoland area. However, since our purchase was an all-cash deal, there was very little in the way of stipulations regarding the contract, and we only made one repair request which was hashed out between the real estate agents, I thought the lawyer was getting off pretty easy.
Therefore, I asked for a discount. I thought $450 was a little high considering the amount of work he had to do, and since we had made his life relatively easy with our offer, I thought he could afford to give us a price discount, which he did, taking his rate down to $350 and saving us $100 in the process.
Since my brother-in-law’s friend is a mover, we were counting on his good graces to help us move. However, some things came up at the last minute that prevented him from assisting us. Had I known he wouldn’t be helping us, I might have reconsidered buying several floors up in a building without an elevator, but that’s neither here nor there.
I had planned on paying him and his helpers around $500 for their services, but instead decided to tackle the job myself. With my wife pregnant, this meant the majority of the work fell upon my shoulders. However, after multiple trips with our SUV (the gas for which cost us about $50), and a few bruises, cuts, strained muscles, some popped pain relievers, and the assistance of a brother-in-law, I completed the task and saved us about $450 in the process.
Mailing and Wire Transfer Fees
There were a few expenses that we weren’t expecting though when it came to our condo purchase. Some of these expenses came in the form of mailing and wire transfer fees. You see, I was unaware that for a cash deal that involved an amount of $50,000 or more, we couldn’t bring a cashier’s check, but instead had to wire the funds directly from our financial institution(s). Finding this out at the last minute resulted in some scrambling to get the necessary documentation to the banks, and a FedEx overnight fee in the amount of $43, plus, two wire transfer fees in the amounts of $15 and $25.
Title Company Services
I jokingly told our real estate agent that I could have rented a palatial suite at a downtown Chicago hotel for what we paid the title company to use their little conference room for our half-hour closing, but I do understand there’s more to their services than just providing the location to close a real estate deal.
I’m not sure if such services were worth the $960 we ended up paying, but at least our cash deal resulted in reduced costs elsewhere at closing.
Tuesday, September 11, 2012
On the electrical portion of our home inspection, our inspector noted in the “smoke detector” portion that, “Current law requires a detector on each level and within 15’ of any area designated for sleeping.”
This wasn’t a big deal to us, and since the home sellers had to pass a local village inspection as well, we figured they’d get nailed on this and have to install the proper safety devices. Fun enough, they didn’t, but guess who did. When we sold the home three years later, the village inspector made us install two more fire/carbon monoxide detectors at a cost of about $30…oops!
There were cracks visible on the front stone portion of our home at the time of the inspection, and it needed some tuckpoint repairs. Unfortunately for us, we didn’t press the issue at the time, thinking it wasn’t that big of a deal. However, when we sold our home, the buyers did press the issue since moisture had gotten inside the front wall from those tuckpoint issues, a repair job that ended up costing us $650.
Once again, during our local municipality inspection when we sold, we were dinged for splices in the electrical panel that should already have been repaired by the previous owners. This repair, paired with several other electrical issues ran us about $1,000 to repair when we sold.
Tuesday, September 4, 2012
We didn’t limit ourselves to just what our real estate agent provided us in the way of comps. Sure, he gave us some area comparables to which we could gauge our property and that gave us a general idea of the value of the condos in our building and surrounding buildings. However, we’ve learned in our past experience not to take just one person’s word -- even if they are trained in the field of real estate -- when it comes to buying or selling a home.
Therefore, we pulled up information regarding comps online from sites such as Zillow.com, Trulia.com, and similar websites to get a better idea of what condos of similar size and location were selling for. We also walked the area surrounding our condo of interest to get a better feel for prices and price locations before making our offer.
Property Tax Research
In the Chicagoland area especially, knowing as much as we can about property tax rates before we buy, is a huge consideration in our opinion. With our previous home’s taxes over $5,000 a year -- in a not so hot area -- we wanted to make sure that we weren’t burned again when it came to how much we were taxed.
We were able to discover the past year’s tax rates and exemption history on the property in which we were interested by following a link on Zillow.com to our county assessor’s office site.
We took time to get to know the area, spent time walking around, talked to people, and ate in the restaurants where we could people watch. We looked up the school district online, and as I previously mentioned, we researched our area comps and tax rates, as well as real estate market trends, and we ensured that we would have plenty to keep us occupied and entertained all within walking distance in this new living location before ever making the decision to buy.