Monthly Money Check: Penny Punched By Back To School Expenses — August 2017

Dear Rich,

Looks like this summer has been keeping both of us pretty busy, huh? Neither of us has written very much. You, because you’re busy vacationing and getting settled back in the states. Me, because life is just busy, man, and I’ve been avoiding technology. But, now that September is here, I’m back to using technology a bit more again, and have been busy catching up on Norm MacDonald video podcasts on YouTube.

Also, I’m pregnant. Surprise! We’re expecting child number five sometime in the spring.

Now, let’s talk about my monthly spending.

This month was a bit of a doozy for us. A bunch of school-related expenses to deal with: tuition, a city bus pass, school supplies, all that fun stuff.

Here’s what it looks like:

And, here this is coming off a month where we set a record low in spending for the year. Oh, well. Our donations are a bit down just because we forgot to donate. We’ll probably make up for that later. Our mortgage payment went down from $843 to $747 because our insurance changed on that a bit.

I guess that’s about it.

Later,

Penny

Penny Has No Plans To Ever Move Again, And She Likes That

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Dear Rich,

Glad to hear you’re excited about your upcoming move. As for me, I am happy to be settled. During the first 9 years of our marriage (which is where you’re at now in your marriage), we moved 7 times. During the last 9 years (yes, we’ve been married for 18 years, crazy, huh?), we moved 4 times. We have no plans to ever move again, and I like that.

And I like owning a home. Over the past 18 years, we have owned 4 different homes. The first one, we broke even on. The second one, we made $30,000. The third one went astronomically down in value and we ended up doing a short-sale on it. The the fourth home, the one we own now, is worth approximately $120,000 more than what we bought it for.

As we’ve talked about before, I have thought about selling our house and using the money to pay off our student loans. But, the bottom line is that we will still need to live somewhere. And if we sold the house and paid off our student loans… then what? Buy another house at a higher price tag and just have the same amount of debt all again (except this time it would be entirely mortgage debt instead of student loan + mortgage debt)? Or pay money to rent something that is twice as much as our current mortgage payment?

No, I think we’ll stay where we’re at. Plus, I like owning. I like being able to paint the walls and plant a garden and having full ownership and control over something.

We bought all of our homes for under $130,000. The second home was a 4 bedroom, 2 bath, 2,200 square foot house in a small town that we bought for $35,000 and sold for $65,000. We currently live in an area where home values are $225,000 and rent is $1,500. We are currently paying $843 for our mortgage payment every month. We have $88,000 left on our mortgage, which we will start tackling after our student loans are paid off.

Continue reading “Penny Has No Plans To Ever Move Again, And She Likes That”

Rich Is Preparing To Move. He Enjoys Moving. Wait … He’s Paying HOW MUCH On Rent???

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Hey Pen,

Mrs. R and I are getting ready to move for the 6th time in 9 years of marriage. Even by my transient standards, that’s a lot of moves.

Some people hate moving. I’ve heard of people sticking with a crappy house or boring neighborhood just to avoid moving. The boxes! The packing! Getting everything organized! Changing your life!

True, moving is a lot of work. But I actually enjoy it.

Moving forces me to think about what I want to keep and I can do without. I’m forced to consider what I want my life to look like in terms of location, living space, and culture. In a sense, I’m choosing my destiny. And if I choose poorly, I can just move again. There’s a freedom to it. It can even be exciting.

Here’s the list of our moves:

2008 – East Coast apartment to East Coast apartment: From one apartment to another in order to get DirecTV and the NFL Sunday Ticket (needed a south-facing balcony). Yes, that’s why we moved.

2009 – East Coast to Denver, CO: Work assignment.

2012 – Denver back to East Coast: Work assignment.

2014 – East Coast rental house to East Coast apartment: We didn’t like our suburban house or our landlords after a tree almost killed me during a storm (long story).

2015 – East Coast apartment to foreign country: Work assignment.

2017 – Foreign country to East Coast apartment: Work assignment.

2020 or so – hopefully moving again!

Much of my financial planning energy right now is going toward the move. I alluded to this in my latest money check. Here’s what we’ll need to do over the next few months, along with cost estimates.

Click on image to enlarge.

Unfortunately, this means I’ll need to put a lot of my savings plans on hold until the end of the year. That’s life. No one should cry for me and I’m not complaining.

I should address the elephant in the room here, which is that rental price of $4,000 per month. How in the world is this reasonable? Well, first let me tell you a little about our area and then I’ll tell you more about our apartment.

We had a few priorities when choosing where to live. These priorities were non-negotiable.

  • Short commute. Commutes in our area can be up to an hour each way in traffic if you live in the burbs, leading to 11 hour workdays, less time with family, and general misery. Our commute will be 15 minutes.
  • Close to a good school. We will be able to walk to our kids’ public elementary school, which is Spanish-English immersion.
  • Walkable to good food and activities. We’ll be able to walk to the grocery store, to restaurants and coffee shops, and to the subway.

Right off the bat, there are only a few neighborhoods meeting all these criteria. It turns out we’re not the only ones who want to live in such a neighborhood, and this is reflected in the cost of living. I’m not going to give away where we live, but here are some data for our zip code according to Trulia:

Averages in my zip code. Click on image to enlarge.

So it looks like we’re right in line, even slightly under, the average monthly rent.

What do we get for $4,000 per month? Again, I’ll list the non-negotiables.

  • 2 Bedroom, 1200+ square feet, with a decent layout. Our apartment is a 2BR + Den clocking in at 1246 square feet. The layout uses space well. Some modern apartments have weirdly curved walls and such that make them difficult to arrange.
Our floor plan.
  • Gym and pool in the building. The pool is outdoors but will come in handy for the kids during the summer. The gym will come in handy for me.
  • Garage parking. 2 spaces will run us $175 per month. Indoor parking is great in winter.
  • Intangibles. These are not necessarily non-negotiables, but they are factors that are difficult to measure, like the culture (is it full of rowdy yuppies?), the quality of construction (are the walls paper thin?), and building management (are they responsive?). Our building scored well on these points.

There are a bunch of other amenities — like free coffee, a “cyber lounge”, convenient package and dry cleaning delivery, etc — that are also included.

I admit, $4,000 per month is a huge number. To make sure I wasn’t insane, I Googled “How much should I spend on rent?” The rule of thumb is no more than 30% of household income.

Click on image to enlarge.

It turns out, $4,000 is only 18.5% of our monthly income, so you could say we’re being frugal. Hardy hoo hoo.

You might say, “Hey Rich, with that monthly payment, you could easily buy a house!”

Sure. Let’s say I did that.

Continue reading “Rich Is Preparing To Move. He Enjoys Moving. Wait … He’s Paying HOW MUCH On Rent???”

Monthly Money Check: Penny Racked Up $98 In Birthday Freebies — March 2017

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Dear Rich,

In this month’s edition of There’s Always Something, we were hit with a $228 bill to repair the ignitor switch in our oven and we needed to get a new printer ($75). Boo! Darn these unexpected expenses!

Now, before I get into the nitty-gritty, I’d like to point out something that you might find amusing: We went to a fundraising event for the school my kids go to. In the past, these events have been for general school things. But this year, and we didn’t fully realize this until we got there, it was a fundraising event specifically for Tuition Assistance (which, being low-income, we already get from the school). So, when we went there, we were thinking about how we were paying money at this thing that would go to assist ourselves. I thought you would find this an interesting paradox, since you’re always picking on me for giving to charity and stuff. Ha ha, real funny stuff.

Anyway, back to business.

So, I was hoping to break the $2,000 mark in spending (before student loans), and let’s look at how I did:

As you can see, we didn’t do it.

For one thing, we had the oven repair and the printer. The entertainment expense was higher than usual, due to some concert tickets that were bought for a concert in the future. The restaurant expense was higher because I counted the school’s fundraiser thing as a restaurant expense since we ate there, plus we bought gift cards ($65 worth) for restaurants to be used in the future (that money also went to the school). Higher gift expenses than usual due to birthdays this month (mine and my daughter). We bought my daughter minimalist athletic shoes that cost $81 for her birthday, but I filed that under Clothing. (As you know, minimalist footwear is one of the few things that I value, so we spend more money than we normally would on stuff like that.)

And, well, there you have it. I’ll aim to get under $2,000 next month. I know we can do it one of these months.

Now, let’s talk about all the Birthday Freebies I got this month!

Continue reading “Monthly Money Check: Penny Racked Up $98 In Birthday Freebies — March 2017”

Penny Tells Rich What She Thinks of His 3 Year Plan to Pay Off $173,000 in Student Loans

Dear Rich,

Okay, here’s what I think of your 3 Year Plan for us to pay back our student loans:

Let’s start with your first scenario…

Slow and Steady + Increase Your Income. Well, duh. If we wanted to do this, we would be doing it already. Ultimately, we value me staying at home with the kids more than we value having money and paying down student loans. But, as my husband’s chiropractic business continues to grow every year, we will hopefully be able to put more money toward the student loans every year. So, yes, this plan makes sense, and we will implement it when we can.

Here’s a graph on how the net income of my husband’s chiropractic practice has grown since it opened:

​So, ideally (and presumably), it will continue to grow and we will be able to throw money at that great wall of student loans that much more.

Now, onto your second scenario…

Go For Broke! Literally. You’ve already acknowledge that this is a risky and bad idea, so let’s just move on.

Your third, and favorite, scenario…

Continue reading “Penny Tells Rich What She Thinks of His 3 Year Plan to Pay Off $173,000 in Student Loans”

Rich’s 3 Year Plan for Penny to Repay $173,000 in Student Loans

Dear Penny,

I don’t want to dwell on the past. At some point I want to hear the story of how you amassed $173,000 in student loans, but right now I’m more interested in where you go from here. Still, let me take one moment to process your situation …

Holy Mother of Zeus By The Power of Greyskull Sweet Aunt Jemima that is a CRAPLOAD of bad debt!

Ok, I feel better. And you seem to feel ok, too. Most people would be completely down in the dumps, but you are maintaining good humor. I respect that. Now, what to do?

You probably don’t have HBO, but here’s my analogy. You are in the midst of a very brutal story called Game of Loans, in a fight to the death with The Mountain … of Debt. The question is, are you a Lannister, always paying your debts? Are you a Snow, magically rising from the dead? Or are you every other character, getting the crap beat out of you? Join me, the Father of Dragons, and let’s figure out how to defeat this enemy. Continue reading “Rich’s 3 Year Plan for Penny to Repay $173,000 in Student Loans”

Penny’s 13 Year Plan to Repay $173,000 in Student Loans

Dear Rich,

I find it amusing to think that in 13 years you will have amassed close to your 2 million dollars in savings and I will just be breaking even. Ah, life! Crazy, isn’t it?

I think your plan looks great. But, then again, what do I know? We have $173,000 in student loan debt! Ha ha. Anyway, so here is my plan to pay back pay our $173,000 in student loans in 13 years. My handy dandy spreadsheet with yearly numbers is at the top of the post.

 

We are currently putting $20,000 a year toward our student loans. Right now, it feels like we’re throwing money at a wall, like it’s doing nothing. So much of it is going toward the interest. We have to pay $918 a month just to keep the loan from growing any bigger. Which sucks. At the end of the 13 years, we will have paid over $86,000 on the interest alone (which is 49% of where the loan is at now), but what can you do? (Seriously, what can you do? Do you know of a better way???) Continue reading “Penny’s 13 Year Plan to Repay $173,000 in Student Loans”