Bob B.'s Financial Soundingboard

I don't know how much snow you got this winter, but we got barely any, until the last couple of weeks of February. And, when the snow finally came, we learned quickly that we needed new tires on the van.

DW bought them yesterday. They were $85 each.

I sure am glad that we ended up getting our rent check this month, because we seem to be going through cash like water.

I started blogging here about 11 months ago, and it's taken this long to hit 100 posts.

For my 100th blog post, I'd first like to thank everyone who has offered advice and words of encouragement to me over the past 11 months. I've come a long way since I began posting here. With that, I'd like to offer what I've found to be the benefits of posting in the SA blogs.

1 - Accountability. I've never met any of you personally, and I wouldn't recognize a single one of you if I met you on the street. But I feel accountable to you. Of course, I'm first accountable to my family, and second to my debt holders, but each month when I post my debt progress, I'm looking to hold up my end of the "bargain" that I've made with you as a group to make good progress in paying down my debts.

2 - Advice. You are full of good advice. I've found 97.5% of it to be very good advice. The SA forums are very good for advice as well, but it seems to be offered at a more personal level here in the blogs.

3 - Organization of thought. Just typing things out helps me organize my thoughts, and set my priorities.

4 - Perspective of others. Following other blogs helps me set goals, and also shows that others are struggling, or have struggled in the past with debt similar to mine.

That's it for now. Thanks for following as many of my other 99 posts as you have. Hoping to report more progress over the next 100 posts.

I've been targeting CC1 - my biggest CC balance and also greatest interest rate card.

A year ago, when we owed a bunch of money, the minimum payment due was always about $100 plus interest charged for that month. As I've been making progress on it, that formula seemed to change, the minumum amount due was something less than $100 plus interest charged. In February it was just about $90 plus interest charged.

In February, through a combination of a balance transfer and a hefty payment, the balance decreasd from mid $7,000s to mis $3,000s. Now the minimum due is about $42 plus interest due.

I'll keep throwing as much money as I can toward this card. It's funny the mental games CC companies play depending on if you're paying the account slowly or quickly.

I know some of you have been following my tax refund situation. In January we adopted a special needs child, whom we had been caring for since last April. Someone else illegally claimed him as a dependent.

You also may remember that we filed our 1040 without claiming him as a dependent, and once we received our partial refund, we filed an amended 1040 claiming both him as an dependent, and also caliming our adoption tax credit.

Well, we received the remainder of our State of Michigan refund last week. That's god news. We're still waiting for our federal refund (plus adoption credit). But we've heard that we could wait until Jume or July for that.

Now I'm working on an assumption here. Please correct me if I am not thinking correctly. But, I would guess that the state would not send their refund until after they got some sort of green light from the Feds. That is, is our state refund good evidence that the feds have found us worthy of claiming our son as a dependent? And now it's just a waiting game for the balance of our fed refund and adotption credit?

...but I just need to mention ... about the NCAA tournament bracket... GO MICHIGAN STATE! I'm grad, and no fair weather fan. We're a #1 seed!

And the Big 10 as a whole has a really nice presence in the tournament.

I'll make this financial by mentioning that I don't plan to bet on any of the games. OK that works.

GO GREEN!

OK, remember how we had $1,200 set aside for replacing basement windows? And the contractor bid $800. And I was happy that it came $400 under bid?

Well... the new windows necessitated that we re-route our sump pump line. We hired a plumber to do that job, and a couple other odd jobs around the house that we had been putting off. The plumber bill came to $467. So, we actually ended up being $67 over budget. Not too bad, and the re-route of the sump pump line is a great improvement.

I don't think I've ever posted twice in one day, but this just couldn't wait.

Our rent check showed up in the mail today.

Actually, renter called at around noon to explain her situation. She said the check was returned due to insufficient postage. Whatever. DW called at around 2:00 to say that it was in the mailbox.

It still has to clear, but we are much more optimistic than 24 hours ago.

Really shows the need for an EF.

We probably would have begun the eviction process Monday.

I drive a 1994 Chevy Lumina. It has 143,000 miles. Nearly all the miles I put on the car are back and forth to work - about 30 miles per day. The car has always been fairly reliable. But its days are certainly numbered.

I got a call out of the blue from my aunt yesterday. It seems that the Mazda that their son drives had a transmission blow out. This is the car that my aunt and uncle drove about 10-15 years ago. Their son has been driving it for about 5 years or so. Anyway, my aunt made the following proposal to me: They would put anew transmission in it, and simply give it to me. WOW! She also suggested that I take the Lumina off insurance and park it, as she cannot guarantee the reliability of the Mazda.

My uncle is meticulous about car care, and I know that this car has been well cared for. I don't feel as if I need the charity, but the deal is too good to turn down.

I called our renter yesterday. She (of course) didn't pick up. We want to give them all the chances in the worl to make payment, or at least contact us about a plan before beginning the eviction process. But I did stop by the courthouse yesterday to pick up the needed paper to begin the eviction process.

It's amazing how quickly my outlook has changed. For those of you who have been following my blog lately, you have probably noticed how much more upbeat I have been about my financial outlook. That has quickly changed. Now I'm wondering how we're going to keep up on bills with the loss of rental income.

We haven't received our rent check yet. It's due on the first of the month.

I've been out of town for a couple of days. When I left, I told myself that if the check wasn't here by time I got back, I would have to do something.

I guess I'll start with a phone call.

I hope this doesn't get nasty.

Our previous renters were chronically late with rent, but they always ended up paying. These renters have been so good.

Until now.

Ugh, I really hope this doesn't end up going bad.

It probably won't.

But it might.

Mort 1 $103,373
Mort 2 $69,580
CC1 $3,317
CC2 $2,190
CC3 $1,340
CC4 $2,606
Van Loan $5,794

Difference as compared to last month: $3,739

BAM!

I transferred a big chunk of money ($1,290) from CC 1 to the now interest free CC4. The rest of the reduction is due to our tax refund.

It's flowing ---- out. Tomorrow is pay day, so more will flow in.

Our window guy started yesterday, should finish today. We also called to have a plumber stop by. Long story, but with the new basement windows we needed to change the configuration of the sump pump, and needed a plumber.

Also, I ordered heating fuel again.

We have the cash set aside for all these bills, but it will nearly wipe out our savings. But, it's nice to be able to pay bills.

This is an interesting time for me financially. We were able to pay down quite a bit of debt with our tax refund. Now that we have our CC debt somewhat tamed, I've been using more of my mental energy on our mortgage debt, unsold house, etc.

I'm guessing most of you watched M*A*S*H. When the choppers came in with wounded soldiers, Hawkeye and Margaret would triage the patients. They took the terribly worst off ones first, and the really bad ones second. That's what my finances feel like. I concentrated on the high interest credit card debt first because it was killing us, and left the really bad mortgage debt for later. I feel as if it's later now, and we need to start addressing the mortgage debt, even ahead of the CC debt now.

I'm sure I've mentioned it before, but we have renters living in our house #1 now. They are interested in buying the house, so we agreed to rent to them for one year, take the houde off the market, and revisit in July.

Wheter or not they are the purchasers, we have to unload that house this summer.

So, I'm going to start hoarding cash ahead of paying off CC debt, so we can be in a better position to close on the house when the time comes. I'll still pay more than minimum payments, but not as much as the past 16 months.

I hope this is the right decision. If not, I'm sure someone will let me know.

It snowed here last night. Actually, it's still snowing. The window guy was supposed to start today, but he cancelled. I'm not sure if he plows snow, and that was the primary reason for the cancellation. But given that they're basement windows, and the windows are at ground level, it seams reasonable to put the job off until Monday.

We got a bid for replacement windows for our basement. Acually, I called three other people for bids, and only one of them returned my call. He's booked through August.

So I contacted a friend of a friend (actually a friend of my sister) who works for a contractor, and does some jobs on the side. He put in a bid of $800. We had $1,200 set aside for the job.

They're not actually windows per se, but glass block. We have 5 windows, and are having him put glass block in 4 of them and a vinyl window in one of them.

So, that's 2/3 of what we had set aside. Great news! Too bad we didn't get any other bids for comparison. We could wait for another bid, orjust get it done. The price sounds right to us, actually better than alright.

I've been hearing that quote or some related derivative a lot lately.

Congress passed this or that tax cut - because it's an election year.

Congress passed this or that spending bill - becuase it's an election year.

Let's be perfectly clear about one thing - every second year since the costitution was ratifoed has been an election year. Sure, it's a presidential election year only every fourth year. But, the entire house of representatives, 1/3 of the sentate, a bunch of state governors and state level representives/senators are up for re-election every other year.

I'm sick of hearing that our tax money is being wasted, or elected officials are too timid to make tough decisions because it's an election year, or next year will be an election year. It's a perennial election cycle.

In my state of Michigan, state level elected officials were term limited about 20 years ago. That seems to have made things worse. State representatives and senators seem to have the feeling that they are in the legislature for a limited amount of time anyway, so they do anything but make tough decisions to insure their re-election.

Throw the bums out! But not my guy, because he's good! (Sarcasm intended)

I applied for and was approved for a new credit card about a month ago. The money I had transferred over is transfered now. It's at a 0.0% APR through Jan. 2013. All is well.

I received notification via email that my new Feb. bill was posted. To my mild surprise, they have charged me approximately 3.5% of my balance - $94 on a $2,700 balance.

I'll pay it - no problem there at all. It's just a bit surprising to have an actual legitimate amount to pay on a brand new credit card. I was expecting $30, or $50 or $60 max.

DW and I will probably be looking in to getting a new mortgage on the house we're currently living in to pay family member toward Mort 2. We're looking at an April time frame to apply for the mortgage.

I thought it would be a good idea to get some pre-approval information. I made a spread sheet detailing our current net worth, our montly obligations, and projections of what our front end and back end DTI ratio would be after the new mortgage.

I took a print out of that spread sheet to a morgage originator yesterday. And boy was that interesting. I consider my situation to be "struggling financially". But it turns out that, as long as I can verify the information I submitted, and both our credit scores are considered good enough, that we will qualify with no problems. In fact the mortgage originator said that anyone with a DTI ratio (with the new mortgage payments calculated in) of any where at or below 45% - yes 45% - would qualify for a new mortgage. I couldn't believe what I was hearing. I wanted to scream "YOU HAVE GOT TO BE KIDDING ME! THAT'S WHAT GOT US INTO THIS TOXIC MORTGAGE BUSINESS TO BEGIN WITH!"

But, she did ask for verification of employment, W-2's and two years of tax returns. So, I guess it's better than the NINJA loan days of the recent past.

BTW, our DTI ratio, with the new loan would be 34%, which I consider to be plenty high.

It seems as if when I run out of financial things to blog about, I list a bunch of my personal financial calculations. I've run out of things to blog about, so here goes...

Daily interest for the month of February:

First a couple of caveats -

I was comparing my Nov. daily interest to my Jan. daily interest. I was patting myself on the back for reducing daily interest by what seemed quite a bit. Then I realized that Nov. is a 30 day month and Jan. is a 31 day month. That extra day makes quite a difference. A month like Feb., even with the leap day would be even more over stated. So, I'' make my calculation using 30.4 days, the average number of days in a month. Makes for a better month-to-month comparison.

Also, I've transferred the balance of CC4 to a 0.0% card, but the transfer didn't happen fast enough, and I was charged interest in Feb. So my totals will reflect that.

Drum roll, please.

For the month of February I will spend each day:

$2.99 on credit card interest
$3.67 on above plus auto loan interest
$21.45 on above plus mortgage interest

Another calculation. In August I calculated my credit card balance to retirement savings ratio. At that time it was 20%. That is for every dollar I had saved toward retirement, I had $0.20 in credit card debt. My current ratio is 10.47%. It's been cut almost in half since August! Of course, I heard on the radio that Jan. 2012 was the best month the stock market has had since 1997.

That's it for no. If you've made it this far, thanks for reading.

I had a chance to cash in coins again. Today's total: $16.84

I had a chance to listen to Clark Howard a few nights ago. I'm pretty sure it was Thursday. I don't get a chance to listen to hime very often, because I have to be a bit west of my house for the station that carries his show to come in clearly.

Anyway, he was talking about the settlement between the 5 big motgage holders and 49 states (all but Oklahoma) so, this is my interpretation of his explanaition, from informstion I heard 4 days ago.

Apparently the 5 big mortgage holders that were part of the settlement represent 60% of the home mortgages in the country (no, our morgage holder is not one of them). And they have 12 months to work with their mortgagees.

The banks need to make one of two offers to their mortgaees - either write down their principal balance or allow them to refinance even if their house is underwater. Oh, and they need to supply mortgagees with one point of contact at their bank.

And, I guess the settlement may be expanded to include other banks in the next several weeks.

This settlenment may never include my bank. I'm holding onto the hope that this settlement wil ultimately break the log jam that is the housing market, and after some time our house will sell for something that resembles what we owe. That's my hope anyway.

I'll be taking some time to follow this settlement, and learn more about the specifics.

Our Federal income tax refund was direct deposited into our checking account last night. What a great surprise today!

The refund was $3,434. I held back $600 for our basement windows project, and $750 for our final heating fuel fill up. The $2,084 balance was transferred to CC1.

Wow is that great!

I paid off twice our monthly debt retirement amount in one fell swoop.

Our small rural electric co-op now accepts on-line payments.

If you're familiar with the Rural Electrification Administration, under FDR's New Deal in the 1930's, that's how our electric co-op started. In fact, my dad has told me a story about how my grandpa was paid $0.50 per hole that he dug for the electrical poles when electricity first came to our area.

To this day, we as cooperative members write down on our bill (or now submit via the web) our monthly electric meter reading. Or, pay $5 if we forget, and someone has to come out and check it.

Anyway, now that they accept on-line payments, we are taking advantage. That will save us one more written check and stamp per month. No wonder the post office is going broke!

I feel as if I'm in a financial holding pattern.

DW checked the status of our federal refund last night. It's estimated that we will receive our refund on February 14. Plenty of time to pay our bills before the end of the month, but I want it NOW nonetheless.

Also, as I've mentioned previously, I opened a new CC for balance transfers. I transferred all of CC4 and part of CC 1. The transactions still haven't shown up. The new card stated that it could take up to two weeks for the tranfers to complete. This Friday will be two weeks for the transfer of CC4, and next Monday (I think) will be two weeks for the partial transfer of CC1.

Total credit line on new CC is $9K. I transferred $2,700 total from the two cards. That way I'm utilizing 30% of the new CC, which I've heard helps your utilization ratio for your credit rating.

Also on hold is the total state and federal refund because of someone else claiming DS1, and the adoption credit.

So, we wait. Good things will happen.

We're finally (I think) at a position financially that we can set up a new account to save for non- monthly occuring expenses. Things like property taxes, heating fuel, garbage pick up, and even Christmas spending.

We've been scrambling each time most of these expenes occur to figure out how to pay for them. So, here are the annual totals:

Property taxes (summer and winter) - $540
Heating fuel (three fill ups per season) - $2,238
Garbage pick up (paid quarterly) - $200
Christmas - $700

All totaled - $3,678
Montly expense - $306.50

So, I'm going to start allocating that amount to a new savings account each month.

Assets
House 1 $80,000
House 2 $73,000
Retirement $94,051
Autos (2) $7,440
Cecking $2,368
Total Assets $256,859

Liabilities
House 1 $103,572
House 2 $69,790
CCs $12,594
Auto $5,984
Total Liabilities $191,940

Current Net Worth $64,919

Net Worth last month $56,404

Change compared to last month $8,515

$5,941 (70%) of that change came from the increase in retirement fund.

Something tells me that the situation in Greece, or heaven only knows what other factor will send that crashing down in no time.

We didn't do anything more than what we should have done. We continued to pay our mortgage.

But thousands (tens or hundreds of thousands? I really have no idea what the number is) did (or are) walking away from the mortgage. We didn't.

Oh, I know that many people didn't have a choice. But it seems that a great many did, and chose to walk away. We didn't.

We thought about it. Very hard. In fact August and September 2010, we were very darn close. In fact, the subject came up again between my wife and me just six weeks ago.

A little back story - I took a new job four years ago this month. Yes, February 2008. Just as the bubble was bursting. The job allowed us to be much closer to family, so our kids could grow up knowing their grand parents. We lived in a beautiful gorgeous Victorian house in a small village in north west Michgan. We put the house on the market in Jan. 2008. And we still own it.

I'm still glad we moved. The improvement in quality of life is priceless.

But, we were short on cash maintaining two houses. From February of 2008 to October 2010, we had choices to make - namely which bills to pay. We always paid the mortgage on time and in full. We fell behind on credit card payments. I know, we shouldn't have credit card debt, but we did and we do.

Then something happened in Oct. 2010. DW had done a massive free lance project, and se was paid $10,000. Also, we had renters move in to our for-sale house. These events allowed us to become current on all past due bills, and allowed us to remain current, and
we have ever since. And of course now we have foster care payments to help out. Trust me, we take care of the kids first and ourselves second with theses foster care payments.

The bottom can fall out again. All it would take is to have our renters move out or stop paying or trash the house or have the furnace go kaput. We are still walking a thin line. But, we continue to make our mortgage payment.

And that is satisfying.

Our state of Michigan income tax refund was direct deposited into our account today. $603.

DW and I have different opinions as to what to do with it. I, of course, want to put it all toward debt immediately. She wants new basement windows. We do, of course, need new basement windows. They'll keep water (and cats) out of the basement, and help to some extent keep the house warmer.

My sense is to wait, her sense is to fix them now.

We'll be getting our federal refund shortly, and the money will be enough to get new windows, and take a sizeable chunk out of the debt balance.

Mort 1 - $103,572
Mort 2 - $69,790
CC 1 - $7,335
CC2 - $2,322
CC3 - $1,526
CC4 - $1,410
Van Loan - $5,984

Difference as compared to a month ago: $1,322!

Some changes to note: we finally began making some progress in paying family members on Mort 2. $210 per month. Not an incredible whole lot, but one drip at a time.

Also, I transferred the balance of CC4 to a brand new credit card. 0.0% introductory APR for 12 months, and no balance transfer fees. I don't really like that I'm playing the balance transfer game. Obviously, at some point I'm going to have to buck up and pay it off. But, I do like the idea of concentrating efforts on the behemouth CC 1, which has an APR of 8.9%.

Back to the real highlight of this post - we have $1,322 less in debt that we did a month ago. That's about 10% of our total credit card debt. Gone!

Still lots and lots of progress to be made, but things are getting better - a lot better than they were fifteen months ago.

Woot!

I sent the final payment for our heating fuel in the mail this morning. It was all paid in 30 days. The fuel company charges 2% per month for anything over 30 days, so that was avoided by 4 days.

It's nice to see our bank account at such a high level, even if it is only for a couple of days. We have several payments scheduled on the first day of the month, including mortgage, insurance, and most of our CC payments.

So, on Thursday, the amount of money in checking will be much less, but it's nice to live a fantasy for a couple days.