Bob B.'s Financial Soundingboard

We went to the bank to begin the process of borrowing money against the house we live in. That would be what is currently listed as Mort. 2. What's currently listed is money we borrowed from family members to renovate the house we live in. Interest rates are low, and it's time we borrowed money from the bank, and get them most of that money back. With the real estate market, especially in Michigan, we won't be able to borrow all of the money. I'm figuring somewhere between 56 and 58K is all we'll be able to borrow. The house is probably valued at right around 70K.

The mortgage originator ran all three of our credit scores. I don't remember exactly what mine came in at, but they were all greater than 700, and less than 710 (I think). What I remember for sure is that they were all +700, and pretty close together.

DW's scores were in the 7 teens. Like 715 or so. 20 months ago, my score was 580. I'm quite satisfied with the improvement.

DW texted me the other day to let me know that DR was on a station I don't normally listen to. I tuned in and listened a while. I hadn't listened to him in probably 5 years. It was nice to hear him again.

We're going to sign the house paperwork to get our house back on the market today. Our Realtor will FAX the pages to my office. They're not here yet, so I'm waiting.

We asked the Realtor to suggest a price that would hopefully lead to a sale by around September 1. As I mentioned yesterday, that's $20K less than our previous listing. We'll see where that goes. If we don't have a few serious lookers this month, we'll drop the price again.

If it's sold at list price, we'll have to go the short sale route. So, we'll probably end up getting Mort 2 financed through a bank prior to selling this house. In case you haven't been following my blog, or don't remember, Mort 2 is money we borrowed from family to renovate the house we're currently living in. The original agreement was that we would pay them back when house #1 sold. With the reality of a short sale, that changes things dramatically.

The next chapter in our continuing saga with our For Sale/Rental house.

Last July we rented our house out. The renters were interested in buying, but just "not yet". They figured they might be ready in a year. DW never believed them, and I wanted to. So, the deal we struck was to charge them an extra $100/mo. above our rental fee. Their "cost" for us taking the house off the market for them to save up a down payment, and line up financing.

We're getting near the end of the year, so we began a "where do we go now" conversation with them. When it became clear to me that they had no intention of buying the house, I gave them 3 options:

1. Let's negotiate a price, and you buy the house, as we had planned.

2. Pay monthly what we are paying for our mortgage, and we'll keep the house off the market for another year. That would be about $150 more than they are paying now.

3. Pay us the original rental fee ($100 less than what they had been paying), and we'll list the house for sale again. We'll need to give them 30 days notice to move out if/when the house sells.

Our rent check showed up in the mail yesterday. It was for $100 less than they have been paying. They chose door #3.

We're working on getting the house listed again. Hopefully by the end of this week.

It's nice, at least to know what direction we're heading.

Oh yeah, we dropped the price $20K from our previous listing.

Anybody need a house in beautiful N/W Michigan?

Here are the numbers for June.

June 2012 Debt
Mort 1 $102,768
Mort 2 $68,950
CC1 $2,470
CC2 $1,791
CC3 $771
CC4 $2,408
Van Loan $5,221

Difference from May debt: $1,517.

CC4 remains unchanged from previous update because I don't pay that at the first of the month.

I took a big whack out of CC1.

CC3 is melting away. Part of me wants to pay it off just to be done with it. But it's at a fairly low rate (5.23%) compared to CC1 at 8.9%. The math says wait, but the heart says pay it off.

The advantage to paying off CC3 is that it would (after it's paid off) increase monthly cash flow by $194, and if something happened (like lose a renter) that cash flow would come in handy.

I made a quick projection of one scenario of what a CC debt payoff projection may look like. It assumes around $520 per month paid toward CC debt principal. It could get paid faster or slower than that, but this projection shows all CC debt paid off September 2013. That's 16 months from now.

We started getting very serious about CC debt reduction 20 months ago. That means we're on the downward slope (I hope anyway). Here's my projection:

Date CC Debt
2012 Jun $7,346
2012 Jul $6,826
2012 Aug $6,305
2012 Sep $5,783
2012 Oct $5,259
2012 Nov $4,740
2012 Dec $4,219
2013 Jan $3,695
2013 Feb $3,194
2013 Mar $2,689
2013 Apr $2,180
2013 May $1,659
2013 Jun $1,142
2013 Jul $625
2013 Aug $108
2013 Sep $-

I'm fairly certain the debt will get attacked faster than that. And, of course, each month more money goes toward principal, and less toward interest. But, I wanted to have some sort of end date in mind, without spending too much time over analyzing things.

I'm late this month (almost a month late) because I've been busy with work. But here are the numbers:

May 2012 Debt
Mort 1 $102,970
Mort 2 $69,160
CC1 $3,059
CC2 $1,925
CC3 $961
CC4 $2,408
Van Loan $5,413

Debt reduced by $1,181.

I wasn't as aggressive this month on debt repayment, mostly because I was busy with work, and couldn't spend the time figuring out what I should pay, so I winged it a bit. Our checking account shows it, too. Our end of month balance is about $1,100.

Nice to see CC3 down to triple digits, and CC2 below the 2K mark. As things quiet down at work, I can spend a bit more time allocating payments toward debt.

Hopefully I can post my June debt update in a week or so.

Hope everyone is enjoying their spring. It sure was hot over Memorial Day.

I posted a while back about my aunt and uncle gifting me a car. They delivered the car a couple of weeks ago. They ended up selling the car to me for one dollar. I guess to properly transfer the title, and remove the car from their insurance, it needed to be sold.

When I took the title into the Secretary of State office, I had to state fair market value, so the state could get their share of sales tax. I had no idea what FMV was, so I said $2,000? The guy behind the desk was nice enough to tell me that was probably a bit high for a 1997 Mazda with 200,000+ miles. We settled on $1,500. I just checked kbb.com, and it turns out that that car may be worth as much as $2,036. It's in good condition. Turns out I was closer than the guy behind the desk, and he saved me $30 in sales tax.

So the car is legal now. Have I mentioned the it has an automatic transmission? Learned to drive on a stick shift, so not a problem with me. DW, however didn't know how to drive a stick. Until yesterday. She needed to drive the car, and I needed to teach her. If you were Facebook friends with both me and DW, you could see our respective sides of the story of me teaching her to drive the stick. Let's just say it was entertaining.

I'm keeping my old car. It's a 1993 Chevy Lumina with 140,000+ miles. If the Mazda craps out, I'll have a back-up. Plus my sister drives a POS, so she can have the Lumina if she needs it.

I got a text message from our renter yesterday. She asked about our asking price and taxes and insurance. No offer, and it doesn't matter until there is an offer, but it is a step.

My grandfather built a chicken coop in the late 1940's. At the time, it was a state of the art building. In fact, the coop was visited by a poultry specialist from Michigan State College named John Hannah. Dr. Hannah went on to become president of the small agricultural college as it transformed into Michigan State University.

As a child I occasionally helped my grandparents by feeding and watering the chickens and collecting eggs. When my family moved to the farmstead nearly three years ago, DW and I (briefly) considered restoring the chicken coop ourselves so we could raise chickens. When we realized the restoration would include at minimum a new roof, we quickly decided against the idea.

Fast forward to two weeks ago. The farmers to whom my dad rents the farm land hired a bulldozer to clear out some fence rows behind the farmstead. I asked if the man on the bulldozer could knock down the chicken coop. This action would serve two purposes. First, it would remove what had become an eyesore. Second, it would allow the farmers to square up the field directly behind the chicken coop, making it easier to farm, and giving them a bit more tillable acreage. So the chicken coop went down.

Part of clearing this land included picking up pieces of iron from old fences and ancient equipment. We found an old harrow and an old packer. In total, we found 1,460 pounds of iron. Some of it came from other iron abandoned from other parts of the farm, but the majority was from immediately around the chicken coop. I took it over to the salvage yard, and was paid $126 for the iron.

We burned the old lumber from the coop last night. It was a big fire. The pile of stones and concrete remain. We'll have to wait for the bulldozer guy to return with his back hoe to bury it.

Yesterday, 3:30. DD1 struck the gavel to make it official! Emotional day for all, except the guests of honor. They had no idea what was going on. But, they will some day.

We got a letter from the IRS yesterday (or Friday). I can't remember for sure.

As a reminder, someone used the SSN of our newly adopted son on their tax return to claim him as a dependent, despite the fact that we provided his care for 8 months in 2011, and can legally claim him.

The letter stated that they had received our amended tax return. That the case was being moved on up the chain. And that we should expect to hear back from them within a month or so.

Things are just about to get crazy busy for me at work. I'll be tied up for about six weeks. So my posting frequency will drop off substantially through May. Unless it rains a lot over the next couple of weeks. In fact, I started posting to this blog late last April because it was raining. A lot. I had very little to do at work because I was stuck inside, so I began posting here. Then I got busy, and quit for a long time. Clearly I came back. So, hopefully I'll be back in full personal financial blogging mode in June.

And now on to the current personal financial stuff.

So remember how we're supposed to get a federal adoption tax credit? And remember how that person claimed our adopted son as an exemption?

Most people who claim the adoption credit (at least according to the online forums DW follows) seem to receive it in Junish or Julyish. Apparently a topic came up in this forum tonight. "Have you gotten you adoption credit yet?". One person responded that they didn't get their 2010 credit until September 2011. Another person responded that they didn't get their 2010 credit until just last month. And none of these people had their kid's social security number hi-jacked!

We got a letter in the mail on Friday. The letter was from the state Department of Human Services office about an adoptive child/family enrichment program. This program will reimburse families who have adopted through foster care up to $500 for certain expenses. "Fun" type expenses. The letter listed things like family vacations, senior pictures, camps for the children, etc. The funds are limited, and it's on a first-come-first-served basis.

We thought our new fence would fit nicely. Our reimbursement form and receipts went out in the mail today, so we think we stand a good chance. DW called it an Easter miracle.

We got our rent check yesterday. It must have crossed in the mail with the eviction notice. Part of me feels we jumped the gun and should have had a couple more days patience. Part of me says "Rent is due on the first of the month, dammit!"

My daughters have a couple of laying hens. We got them (I'm thinking) last August. Late summer anyway. When the weather is nice, we pasture them under an mobile coop that is open to the ground. I move the coop every second or third day to give them fresh pasture. The grass looks nearly destroyed by time the coop is moved. But, a few weeks later it comes back greener and thicker than the surrounding grass. Natural fertilizer! So yesterday I had the bright idea to place the coop over our not yet planted garden. In addition to fertilizing the garden, they're doing a nice tillage job with their scratching and pecking.

We're heading to my in-laws today to celebrate Easter. Whether you celebrate Easter, or Passover or nothing at all, I hope you have a pleasant weekend!

Our front yard fence is up. Sorry, no pictures. I'm not really the picture taking sort. It's working out moderately well.

A coupe of nights ago when it was warm we let the boys out to play. I busied my self picking up fallen sticks in the yard. DW was happy doing something, and the girls were happy playing too. I can't think of a time when all six of us were outside and happy at the same time. DD1 even let her two chickens peck around in the fenced area to the great delight of DS1.

Then a slight problem happened. DS2 figured out how to climb out the side of the porch. Argh! So, we bought some lattice that we'll have to figure out how to attach to the ends of the porch and the brick house. It won't look pretty, but we'll have to do it.

The fence ended up actually looking fairly attractive. It's as solid as can be for what we spent.

(pause rant)

Thanks to everyone who offered congratulations yesterday. I really do appreciate it!

(resume rant)

For the second month in a row, our rent check is late. Disheartening. We sent the notice to begin eviction today. That gives them seven business days to either send the rent check or move out. I hope they send the rent check.

We did the same thing with our previous renters. Two days after we sent the notice, they sent the rent check. About three weeks after that they sent notice that they would be moving out. And about three weeks after that our current renters moved in.

So, there's no way of knowing how this will turn out. But right now it's not good.

April 18.

You may remember that we adopted DS1 in December. We have not yet adopted DS2, despite that fact that we've had him for two years now.

Juvenile court is held on Wednesdays. We opted for the last time slot of the day - 3:30. We hope to fill the court room with family and well-wishers. It's a small court room.

The judge and his staff came into court from their Christmas vacation to complete the paperwork for the adoption of DS1. So, we have asked the court if we could have a ceremonial adoption for DS1 on the 18th as well.

We'll have a cake, ice cream and hors d'oeuvre celebration at our church following the ceremony. Our church is about a block and a half from the court house. We're shooting for a $200 budget for the celebration.

It's been a very long road full of red tape and other assorted BS. As foster parents DW and I have constantly reminded ourselves and each other that it's FOR THE KIDS. No one in their right mind would do it otherwise.

Yesterday when I updated my monthly debt progress, I upped my monthly debt retirement goal from $1,000 to $1,050.

I was thinking about how that $1,050 number was pretty much pulled out of thin air. I didn't base it on anything other than my gut feeling that it was an amount I thought I could handle without stretching myself too much. I thought I should base that figure on something real. Like, my average monthly debt retirement over the past year. I've already confessed to over-analyzing things.

So, I went through my monthly debt retirement figures over the past year. I omitted the month where I got my tax refund, and I averaged the remaining months. And it turns out I came up with $1,052. Darn close to what my gut feeling was yesterday.

Is it really a good goal to match last years debt retirement? Probably not. So, I will set a new goal. My new goal is to pay off debt at a rate of 5% more than last year's average - or $1,105 per month principal payment.

What a month was March! It seemed as if money was flowing in and out at an abnormal pace. Here are my new updated debt figures. Slowly chipping away.

April 2012 Debt
Mort 1 $103,172
Mort 2 $69,370
CC1 $3,220
CC2 $2,058
CC3 $1,151
CC4 $2,502
Van Loan $5,604

Total principal paid as compared to last month: $1,123. CC 3 is scheduled to be history in October. It's nice to see it melting down. We're also sending $190 worth of principal toward the van now.

I've decided to up my monthly payoff goal. For a year, my goal has been $1,000 per month. I've hit that most (not all) months. I'll up that 5% to $1,050 per month. I think that doable without stretching too much.

I guess the title says it all.

He ended up renting the auger. Just as well, because he's running into tree roots. The posts should be set today, let the concrete set for a couple of days, and erect the panels on Monday.

Pretty good for just deciding on the project a week ago.

I stopped by mom and dad's house last night. They live less than a mile away. They gave me a $550 check. It was a payment for labor at the maple woods. That was on top of a $2,100 check they gave me last summer. They said that the two checks added together was 1/2 of profit from 2011 syrup sales. They really didn't have to do that. When I protested, mom said that was how Grandpa and Grandma used to do it.

So, that $550 is very extremely close to the cost of materials for the fence that will be going up this weekend. Wow.

I'm guessing most of you have heard about the Mega Millions jack pot - $500 million. I don't play the lottery, so I'm not familiar with Mega Millions. I have no idea how many numbers you play out of how many numbers total, but I'm guessing there are a lot of numbers to choose from.

So this "historic" jack pot has been on the news a lot over the past couple of days. It was being discussed on the morning show I listen to on the way into work. I was listening to the segment where the financial guy comes on and updates world wide market activities. His quote on the Mega Millions jackpot - (okay so maybe I'm not quoting him verbatim, this is from memory, but it's close: "The lottery is the world's most punitive tax. Fortunately, it's only levied on those who aren't very good at math."

Sums up my opinion pretty well.

So the fence we picked out was a special order. We would receive it three weeks after order. We initially went with it, but changed our minds to one that is in stock. It's a good fence too, but maybe not quite as attractive. Our contractor will pick it up today, and start on it either Thursday, or early next week. He has another job lined up that he may or may not start this week, depending on his client's needs.

The fence that we went with is cedar. We'll need to get on a schedule to stain it. I would guess every two or three years. We might not need it beyond three years, or we might need it for the next eight. We'll see.

The fence is $760. The contractor is charging $500 to construct. So that's on the outer limits of our budget. Too bad. But, as I've already discussed, it is a need. So far we've met my goals - attractive as is possible, and it doesn't appear that it will break the bank. Only time will tell if it's sturdy enough to withstand the strength and persistence of our boys.

The fence guy stopped by yesterday. He's actually the same guy who put in our basement windows. We picked out the style of fence we wanted. We'll order from Menard's. It's nearly impossible to discern the cost of the fence, because they publish the cost of the sections, but you need to figure in posts, hardware, gates, etc. And the cost for those items are not as easy to find. We're figuring it will be $1,200 for an 18X24 fence (those dimensions will be expanded a bit by the posts). Our front porch will act as one of the fence "sides".

I'll probably dig the holes for the posts myself. We'll rent a gas powered auger. Hope to have it completed in a couple of weeks. We have real March weather again, so a couple of weeks is OK.

I've blogged about a couple major themes: debt reduction and the need to build cash reserves. One of my minor themes is that of a foster/adoptive parent. Both of our adoptive sons have special needs. You can read that as "they are difficult to parent."

Spring has sprung in Michigan. We like to go outside and job around, and do yard work, and generally enjoy ourselves. That is difficult with two boys with special needs when your yard has no fence. they tend to run away, In fact, I felt like a prisoner in my own home last summer because we couldn't take them out.

So, DW and I have decided that we will need to purchase and erect a fence for a play yard this spring. Of course, that will necessitate a side track from other goals. But, we need this fence for our own mental health. And, of course, we receive payments for care, and I think this fits nicely.

So, we begin researching fencing options. Something sturdy, and as attractive as is reasonable, and something that will not break the bank.

As always, I will keep you all posted on our progress.

Have any of you done the True Colors/Real Colors personality sorter? It's a new twist one the Keirsey-Bates temperment sorter.

I'm a Green - the analytical type. We analyze things to death, and usually need a yellow (my DW, for instance) to take action, and actually get things finished.

My pesonality shows through on this blog, how I am always posting different personal financial calculations. Well, to ring true with my Green personality, I compared my current daily interest cost with my daily interest cost last April.

Current daily interest cost - $19.95
Daily interest cost last April - $24.46

Or, each day I'm paying 82% of the interest that I was last April. I'm such a Green.

This month, I will spend each day:

$1.55 in interest on credit card debt.

$2.21 in interest on credit card debt plus auto loan debt.

$19.95 in interest on credit card debt plus auto loan debt plus mortgage debt.

That total is now less than $20 per day! Of course $19.95 is still a wretched abomination. But, as I always say, I'm moving in the right direction.

A couple people asked me to expand a bit on my maple syrup entry – so here we go.

My great-great-great grandparents settled what the family farm in 1882. The original farm was 80 acres, including 8 ½ acres of sugar maple. GGG Grandpa George produced syrup from about 30 trees – enough for family use, and a bit for trading for household goods. George’s three sons expanded the operation to include all 8 ½ acres. My grandfather farmed from the mid 40’s to the 80’s, expanded the farm to 200 acres, and continued maple production. My dad continued the maple operation, but all of the farm land is now rented out.

The current operation consists of about 350 trees, and 700 “taps”. A tap is the individual hole drilled into the tree. Some of the bigger trees are tapped three times, and the smaller trees are tapped once. The average tree is tapped twice. Each tree needs to be tapped new each season. The hole in the tree heals over, and cannot be used again. We start the season at the beginning of March. We’ve tapped as early as about Feb. 26, and as late as about Mar. 5. We have a gas powered drill, with a 7/16 bit. It takes 7-8 hours, with two people working to tap our woods.

Until 8 years ago, each of the taps had an individual bucket that needed to be collected by hand every day that the sap would run. Then we took a great step forward, and put in a plastic tubing system. Now, all but about 15 trees are on the tubing system. This saves a tremendous amount of labor. It has also increased yield by about 15-20%. Very little sap is now lost to spillage, or rain contamination.

The sap comes out of the tree at a sugar concentration of about 2-2.5%. The sap needs to be boiled down to a 67% sugar content. We have a specially manufactured maple evaporator that is fueled by wood. Others use fuel oil or propane. On average, it takes 40 gallons of raw sap to make 1 gallon of finished syrup. This amount varies throughout the season. At the beginning of the season, it takes about 35 gallons of sap to one gallon of syrup, and at the end of the season to ratio is closer to 50:1. A way to visualize that is that a 5 gallon bucket of sap will boil down to a pint of syrup.

Last season, we took another technological step forward, and purchased a reverse osmosis (RO) system. The RO removes about 40% of the water from the raw sap, before we begin the boiling process. The RO concentrate boils down much more quickly, and saves a lot of fuel.

A season may last anywhere from two to seven weeks. The end of the season is driven by weather. When the trees start to bud new leaves, the season is over.

This season was a short one, because of the unseasonably warm temperatures. An average year will yield 160-175 gallons of finished syrup. In 2011 we produced 230 gallons, and this year 120 gallons.
We sell some of the syrup to friends and neighbors who have purchased nearly every year. I mentioned in my previous blog about opening the woods to the community. DW has begun marketing on the internet. Mom and dad still travel to flea markets and community festivals. It’s our hope that by time DW and I take over completely that we will not need to sell at festivals and flea markets.

We gross anywhere between $7K and $10K, and expenses run at about $6K. So, not a lot of money. Plus, once you figure in our time, we work for peanuts. It’s a labor of love, really. A hobby that doesn’t cause us to go broke. We sold $2,500 of product this past weekend at the home school tour and community open house.

If I can figure out how to upload some pictures, I will.

My family produces maple syrup. I don't think I've ever blogged about that before, probably because we don't make very much money at it.

DW also home schools the kids. I don't think I've blogged about that either.

For the past four years, on the third Friday in March we open up our woods to local home school kids and offer an educational tour. I use the term local loosely because we usually have families from up to 80-100 miles away participating.

So, today is the day. We run two sessions, the AM session from 10 to noon, and the PM session from 2 to 4. We have 175 parents and kids scheduled for the morning and 45 scheduled for the afternoon. We'll have 5 stations this year, hosted by me, DW, my mom, my dad, and 9 yo DD1 will give it a shot by hosting her own station for the first time today. We've got about 107 gallons canned, and ready to be sold, and these home school families sure do buy the syrup.

Tomorrow we open up the woods to the community. Four years ago when we tried the open house for the first time, we had 700 people trudge through the woods. Each year since that number has dwindled, but we have a lot of fun with it. We'll see how successful we can be on St. Patty's day. We always serve pancakes with fresh maple syrup during the open house. My aunt makes Mickey Mouse pancakes for the kids. Tomorrow, she'll make 4 leaf clovers.

The open house usually leads to good sales too. Last year, the trees didn't run well until the second half of March, and we sold out of our entire inventory by time the weekend was over.

DW had the ideas for the home school tour and open house. Prior to that, my parents (and grand parents before) sold the syrup chiefly at local festivals and flea markets. We've found it to be much more efficient and effective to bring people to the woods and sell directly to them.

This is the 130th year that my family has produced syrup from the woods. I represent the 5th generation. We tap about 350 trees in 8 1/2 acres. Small potatoes compared to larger operations that tap thousands of trees, but it's a great family tradition.