January 2012 Progress Report

Boy, how quickly time flies. I can't believe that January has come and gone. I've been keeping busy with my condo rehab/reno work and I've lost track of time.

MY DEBT

	Starting Debt (6/08)	Last Month	This Month	DIFFERENCE
Private SL	$49,528.99	$0.00	$0.00	$(0.00)
Fed'l SL	$55,852.68	$50,334.47	$50,115.88	$(218.59)
Car Loan	$9,779.33	$0.00	$0.00	$(0.00)
Mortgage (1/6/12)	$274,000.00	$0.00	$274,000.00	$274,000.00
Bank of Mom (1/6/12)	$68,500.00	$0.00	$68,050.00	$68,050.00
CC	$18,753.00	$0.00	$18,753.00	$18,753.00
TOTAL	$476,414.00	$50,334.47	$410,918.88	$360,584.41

Oh boy. I'm swimming in a big sea of red. The mortgage and Bank of Mom debts were incurred to buy my condo. The $18,753 credit card debt was incurred to pay for my couch and renovation work at my condo (50% completed at this time). The credit card debt will continue to increase next month when my condo rehab/renovation work will be completed. The credit card debt is currently financed with 0% interest for the next 21 months.

Incurring so much cc debt to "pretty-up" my condo wasn't a prudent decision on my part, undoubtedly. But quite frankly, I would rather eat rice and beans everyday to pay for a "pretty" condo than to live in the squalor that the prior owner lived. I hope to retire in this condo free and clear before I hit 60, so doing as much renovation work now makes sense to me. Besides, what's done is done. I can't turn back the clock.


SAVINGS

LAST MONTH	THIS MONTH	DIFFERENCE
$14,338.29	$14,437.72	+$99.43

The savings I report here is with respect to my emergency fund only and does not include my future spending earmarks. Currently, the total amount in my liquid savings account is $23,430.54.


MY ROP (LIFE INS) FUND

LAST MONTH	THIS MONTH	DIFFERENCE
$1,709.88	$1,823.93	+$114.05

Long story short, I'm pretending to pay myself an additional $55/month for a "hypothetical" return of premium (ROP) term life insurance policy. I'm basically trying to "earn" back the term life insurance premiums through savings and investments. I had a nominally negative return in 2011 but 2012 is starting to look pretty decent. I've so far "recouped" 55.88% of the premiums I've paid so far and I still have 27 more years to go.


MY NET WORTH

LAST MONTH	THIS MONTH	DIFFERENCE
$179,586.72	$187,878.14	$8,291.42

My networth chart now includes a new asset for "home." Problem is, what IS the market value of my home? I know the answer is the amount for which a buyer is currently willing to purchase my condo. But unless I put my home on the market, I really won't know, would I?

Zillow is claiming that my home value is up $40,000 from when I closed. Suuuuuure. I believe that! Just based upon my limited search of my co-workers'/friends' home values, I think Zillow's proprietary algorithm is biased favorably towards recent purchasers. Rather than using the Zillow valuation for my home, I'm just going to use my cost basis (i.e., purchase price plus cost of renovations). This probably isn't an accurate reflection of the market value of my home, but it will at least keep me updated on my cost basis.

The breakdown and the history of my net worth can be seen here.

The Whole Year Inn (Actually, The Hole I'm In)

I've dug a financial hole for myself and I can't seem to stop digging. The total cost of my renovations is... drumroll please... $30,355. And this doesn't include appliances (fridge, washer and dryer) or living room furniture.

Everyone tells me, "Don't try to do everything at once." I know, I know. I hear the advice and my common sense tells me this is absolutely correct. But I've succumbed to my demons and I've resigned myself to massive consumer debt once again.

This is no excuse, but I'm almost turning 40 and I've lived like a college student for the past 22 years. I'm sick of it. I've lived in a 1 BR/1 Bath apartment forever with a daybed as a sofa. I'm not saying I deserve a richly furnished/decorated home, but I finally want to be able to put my imprint on a place I call "home."

Due to my excellent credit, I'll be able to finance most of this project on a 0% interest loan for 2 years. Only time will tell how well I pay this down.

I've Dug A Hole For Myself Again

Out of sheer frustration at the amount of work needed to rehabilitate my condo and because I'm not so handy (I don't even own a power drill), I contacted a highly recommended general contractor to do some work for me. My list was initially short and modest. But as I was going through the work that needed to be done, I started adding in extras that I wanted.

Here was my original "need-to-do" list:
1.) Fix garage door opener and hardware ($650);
2.) Patch drywall and paint ceilings/walls and replace baseboards ($5,000);
3.) Replace corroded pipes under sinks ($1,000);
4.) Replace broken fire door ($950);
5.) Get HVAC/furnace serviced ($100 + repairs extra);
6.) Remove heavily soiled carpeting and replace ($4,000);
7.) Replace kitchen sink and broken garbage disposal ($1,325);
8.) Refinish tubs in master and guest bathroom ($1,650).
TOTAL: $14,675

Not too crazy, right? After all, most of those items were recommended by my inspector.

As I was walking through the condo explaining my needs, my mouth detached from my brain and started spouting off stuff I wanted done as well. Suddenly, I no longer wanted carpet; I wanted hardwood floors. I couldn't live with the ugly fluorescent lights -- I wanted recessed pot lights in the living room and kitchen. I also wanted a ceiling fan with lights in the master and guest bedroom, which requires additional electrical work. The drab laundry room needed some pizzaz, so I wanted a glass backsplash added to the walls between the cabinets. And here's the pièce de résistance -- I want the guest bathroom entirely remodeled because the fiberglass tub is old and cracked.

*Sigh*

I'll let you fine folks guess how much my revamped rehab/remodel job is going to cost me. I'm a bit depressed right now to tell you how I intend to finance this as well, but as I'm sure you've already guessed, I'm going back into consumer debt.

*Sigh*

Manual Labor is Hard (Or Maybe I'm Just a Wimp)

Thank you for your well wishes! I spent most of the week cleaning and dusting the condo. Unfortunately, the prior owner was not much of a housekeeper was a disgusting pig and the place (especially the kitchen), was pretty nauseating. To be fair, though, I really have no basis to criticize. After all, I had difficulty locating a bottle of pledge in my current apartment. :-P

The one thing about short sales is that the seller really doesn't give a sh!t about the home. (Although in my case, I don't think the prior owner ever had any concept of scrubbing/dusting/wiping.) I've heard about owners throwing fire crackers or cement down toilets and virtually gutting the place before they lose their home. I don't have anything egregious like that, but this owner has pretty much neglected this unit for the past 14 years she owned this.

For example:

14 years of dust accumulation in the fireplace screen:



Debris on kitchen floor:


Filthy dishwasher:


Deeesgusting kitchen sink:


As I've said, I've been scrubbing like I've never scrubbed before.

Before and After of the Gross Kitchen Drawer:


Before and After of the Dirty Countertop Tile Grout:



Tile Floor Grout Cleaning in Progress:


I am completely pooped from the scrubbing, sweeping, mopping, that I've been doing this past week. And I still have to do the Master Bathroom and Laundry Room. Manual labor is hard and I'm not even doing the heavy stuff! I'm a total wimp.

I (Finally) Closed!

I finally closed yesterday evening. I immediately went to my condo and discovered that I had no electricity. I had to inspect the unit using my flashlight app on my phone. Although my vision was limited, the prior owner had completely removed all of her belongings and left no trash behind, which was a relief. Now comes the hard stuff like cleaning, painting, installing new flooring, fixing the garage door, etc.

2011 Final Financial Progress Report

I hope you all had a wonderful holiday.

I started writing a rant about how my idiot lender failed to step up to the plate to fund my mortgage by 12/30/2011, the deadline of the short sale consent. But I also hated the thought of starting the New Year on a negative tone. I guess I'll just do a 2011 financial progress report wrap up first and then go on my rant.

MY DEBT

	Starting Debt (6/08)	Last Month	This Month	DIFFERENCE
Private SL	$49,528.99	$0.00	$0.00	$(0.00)
Fed'l SL	$55,852.68	$50,486.69	$50,334.47	$(152.22)
Car Loan	$9,779.33	$0.00	$0.00	$(0.00)
CC	$13,610.75	$0.00	$0.00	$(0.00)
TOTAL	$128,771.75	$50,486.69	$50,334.47	$(152.22)

I'm really proud of the fact that I had reduced my debt by 61% over the past 3.5 years. Although I still have a big student loan balance (>$50k), looking at this chart always makes me happy because it shows how far I've come.

I was planning to snowball my remaining student loan debts and pay it off by 2014. I instead got impatient and antsy about plunging into the real estate market because both the housing market and interest rates are really low right now. I realize that both the housing market and interest rates could go lower in the upcoming year(s), but it probably won't matter. Unless the housing market suffers another catastrophic drop and the other unit owners default en masse, the price of my unit is irrelevant. I intend too live in my condo for a long time, possibly for the rest of my life.

Next month, I will be incurring significant debt. My additional debt will include a $274,000 mortgage (@ 3.825% interest) and a $68,500 "personal loan" from mom (@ 0% interest). If all goes to plan, I will pay off my student loans by 9/2019, Bank of Mom by 2/2022 and my mortgage by 2/2030. I suspect neither Suze Orman nor David Ramsey will approve my recent financial moves but c'est la vie.

Note: A commenter made a good point that the IRS will impose an imputed interest upon the lender in a 0% loan. I call it a "loan" but my mom will actually be on the deed to the home. When my mom quit claim deeds or passes away (and her interest gets transferred to me), there will be tax implications.

SAVINGS

LAST MONTH	THIS MONTH	DIFFERENCE
$14,038.86	$14,338.29	+$299.43

The savings I report here is with respect to my emergency fund only and does not include my future spending earmarks. My unreported earmarked savings (i.e., spending fund) balance is currently $5,343. This money is earmarked for expected expenditures like car repair, insurance premiums, etc. I have another $5,450 set up towards the repair costs of my condo. I suspect that amount is woefully inadequate.


MY ROP (LIFE INS) FUND

LAST MONTH	THIS MONTH	DIFFERENCE
$1,647.08	$1,709.88	+$62.80

Long story short, I'm pretending to pay myself an additional $55/month for a "hypothetical" return of premium (ROP) term life insurance policy. I'm basically trying to "earn" back the term life insurance premiums through savings and investments.

I guess my investments were flat this year because I deposited $660 and my balance increased only by $644 since last December. This is a 30-year experiment so I won't be too discouraged by this.


MY NET WORTH

LAST MONTH	THIS MONTH	DIFFERENCE
$196,830.87	$179,586.72	-$17,244.15

Oof. The big reason for this drop is because I recently withdrew $14,314.07 to pay for points ($5,822.50 for 2.125 pts) and closing costs ($8,491.57) on the new condo. As noted above, I also set aside another $5,450 for immediate repairs I'll need to do on the condo.

The breakdown and the history of my net worth can be seen here.

ARRRRrrrggggh!!! Closing Hits a Snag Due to Incompetence

We're down to the wire and we may not be able to close by 12/30, all because my loan processor is a freaking, lying, incompetent idiot.

On December 16, my loan processor inquired whether she can charge $85 on my credit card for an HOA questionnaire fee. I authorized the charge.

Last Friday, on December 23, I was contacted by my insurance agent that my lender requested Evidence of Insurance. I authorized payment on my credit card and my agent submitted a binder to my lender.

On Tuesday, December 27, my loan processor advised that all documents were received and that my file was with the underwriter for final approval.

On Wednesday morning, December 28, my loan processor advises that she needs me to authorize another credit card charge for an HOA certification for the second association. This time, she doesn't advise me of the charge amount in advance. When I inquired, the charge was $217. I discover that the charge includes an expediting fee. When I inquired why she didn't order the documents back on the 16th, she dances around the issue and blames it on the first association for not providing all documentation and the underwriter for not getting back to her until yesterday.

Now, we're scrambling to meet the 12/30/2011 closing deadline placed by the short sale lender. It irritates me that the idiot loan processor neglected to order the necessary documents from both HOAs back on the 16th. Because of her negligence, I may not be able to close in time by the 30th, which has tax implications and other monetary consequences like having to pay 31 days worth of interest in advance. The worst part is this idiot loan processor's failure to admit fault.