Monthly Archives: July 2012

My Ultimate Test In Minimalism

It seems that minimalism and personal finance blogs seem to go hand in hand. It makes sense — the less you purchase the more money you can save or invest. Over the years the number and volume of items I own have definitely decreased.I remember having enough clothes to fill up my current closet, but I have only taken up half after numerous donations and sales (I use e-drop off).

But it is still amazing the sheer number of items I own. Although I feel like I am constantly purging, each time I move I realize it is still too much.

Due to problems with our lender, the condo purchase is being significantly delayed. I need to move out of our current apartment since the landlord already has another renter lined up beginning Aug 1st, but we are not sure when we will be able to move in. Until we do move in to the new place, we will be staying with some friends who consider us family and have graciously offered  their guest rooms to us. We are so grateful and the last thing I want is to make them uncomfortable at their own home.

One of the ways to ensure I do not inconvenience them, I have decided to take only two carry-on bags for clothes and work related items. This is a bit more complicated than it sounds since I do not have an office and I need to have items that are travel ready in case I get shipped off at the last minute to some client engagement (oh the joys of being a consultant!). I also need to make sure I have all documents necessary for the mortgage, just to be safe.

So for the next two weeks, I will practice extreme minimalism. Maybe this will end up being a lesson in learning to live with much less.

Love,

C

Why I Am Not Sure About Owning Rental Properties Anymore

We are literally days away from the closing and I am still on the phone every day, having to deal with my mortgage broker. As I mentioned in my previous post, the mortgage approval process has been an absolute nightmare. I tried to be nice by not mentioning which “Big Bank” I was going through but, at this point I will just share it with the readers: my nightmarish experiences are all with Chase.

At this moment I am thisclose to just walking away from the property because if Chase is putting me through this much problems, I would rather walk away than to give them money. Yesterday we should have had answers but we find out today that they “hope to get a response” by tomorrow? Response? Tomorrow is the friggin mortgage approval deadline!!!

All this is making me realize, maybe rental property portfolio isn’t for me. If you can get something in foreclosure and can pay cash, great. But if financing is involved, it is getting way too stressful to do this every 2 years. I love the idea of having passive income but there is nothing truly “passive” about this.
Love,

C

Self Control

Moving is always expensive but it seems more expensive for me than others. This is because I am one of those people who needs to feel settled in ASAP. Even in college, when friends will hang out together after returning from vacations I would be busily unpacking, unwilling to do anything until I felt like I was settled. This, as an independent adult, has meant purchasing furnitures right away.

It was that way at the apartment I have been for the last seven months. I purchased furnitures such as the bed frame, desk, and nightstands right away, telling myself that being settled in quickly would translate to increased productivity. Yeah, needless to say that wasn’t the case.

So with this new place I am practicing self restraint and self control. My goal is to make do with the items I have for now, live in the space until the end of the year noting how I use the space and then see how furniture would fit into the bigger picture — utilizing every space efficiently and effectively. The difference between my current place and the new place is that it will be a space I own, one that I can customize. If I think the bedroom layout is funny (which, it is), I can actually change it to make it more functional. But I can’t just start tearing down walls — I need every action to be intentional.

I feel that I am constantly rushing into decision. It has served me well so far, mind you, but as I contemplate my career and pace of life I am beginning to think maybe it is time to slow down, to fully assess situations, to weight pros and cons thoroughly, then create a plan of action. Which is how I am trained to handle business issues, after all. I am also hoping that this more thoughtful and restrained period in home decorating will start to bleed in to other areas of my life.

Sorry for the boring post but, for some reason, I find myself more pensive and reflective of my decisions and my life path with this upcoming move. And this blog is my outlet to voice not just money issues but my thoughts on life. One of the goals in my life is for everything to be more intentional: no more wasting energy on things “just because” since that is the time and energy I could spend on things that truly bring me joy.

All these thoughts will be hopefully summarized more succinctly when I post my updated goals.

Love,
C

Do These People Work???

As part of me being “beached“, I went to Starbucks across the street, hoping being there will get me to focus better on work. It is Wednesday at 1pm when I go in and the place looks like the image below, but in day time with more women.

I am quite confused because most of these folks do not look like they are on a coffee break from work. A lot of women are dressed very “bohemian” or like they just got out of their yoga studios, which are all very not work appropriate for 90% of jobs out there. They are in their 20s or 30s and very few of them look like they are doing work. They are too old to be in college and they seem to have money (indicated by their Prada purses). It is one of the more affluent neighborhoods of Chicago but I still can’t quite grasp how they would have the money to just hang out. So what do they do that they can be here during a weekday midday?

Do I sound judgmental? I hope not because I am not looking down at them but am jealous that they have such freedom.

As I continue to ponder my goals for the next few years, I am realizing more and more of wanting to work for myself. When I was younger I thought I wanted that high powered life but, having it now, I am realizing that work travels, expense accounts, hobnobbing with executives… they all come at a price. That price for me has resulted in increased stress, physical toll (I have gained 25lbs due to nonstop travel for 13 weeks straight, I am constantly battling eye ulcer), and general unhappiness. I want to give it my 100% for 6 hrs because it is needed rather than putting in 12+ hr days while giving it my 50% just because that is what is expected.  It seems somewhat silly since I didn’t need an MBA to do the stuff I am thinking of starting to be self employed, but I am learning late in life what makes me happy. I will share more insights when I post my next goals, but I know I will not continue my job if I didn’t need the money.

Are you often perplexed by young people in their 20s and 30s wandering around the city midday on Monday – Fridays? Am I the only person jealous that they have the freedom to do so?

Buying A House Is Like A Full Time Job

This is my third day being “beached,” which means I have been working from home. I am always slightly worried about these time off because if it is extended I begin to wonder about the economy, the viability of the firm, etc. but I think it is a necessary mental break for the consultants to take a breath, regroup, and work on some non-client related matters. I had so many tasks and goals — finish my certifications, write a presentation and white paper on a business topic, etc.

Unfortunately, thanks to my mortgage broker, I am more frazzled than ever before and completely unable to focus on anything aside from the home purchase. Now I am really glad that I am beached because I can’t imagine dealing with this mess while being on a client engagement since stepping away for 2-3 hours a day during business hours would be a huge no-n0.

I found my mortgage broker through one of the top four evil banks in the US. I called to receive a pre-approval letter and spoke to him for over 30 minutes or so. He seemed attentive and funny so when the home purchase happened so much faster than I ever anticipated, I decided to give him a call for the mortgage. I should have realized that he might not be on top of his stuff when he would seem lost about what documents I had submitted to him during our conversations.

As we went through the attorney reviews, inspections, etc. I started to notice he just plain sucked at communication. I would send him an email with two questions and he would only answer one of my questions. Some questions I would bring up daily and it would take him three or four days to respond. Mind you, he would email me about something else during this time so I know he is reading my emails and in the office. He also would request certain documents “ASAP” and have me chase the document although they should have known they would be required earlier on. I notified my real estate agent that I was not confident about his competence and that we need to stay on top of him to ensure we can meet our deadlines.

Today was the deadline for the mortgage to be approved. Yesterday I received a list of 11 items, stating that if they cannot receive those items by the end of the day they will not be able to approve the mortgage prior to our closing, which is 1.5 weeks away. Of these documents, 3 were not applicable to me (they were internal processes), 3 I had already submitted, and 5 which had never been requested before. Some of these were really standard items he should have provided me earlier to complete, like social security number verification. Seriously? Because every document like the tax returns, W2, credit report, etc aren’t plastered with my SSN? And some were ridiculous requests, like wanting a copy of my diploma or transcript from my MBA program. Uh, I graduated over 3 years ago and I have no gaps in my employment for the last 4 years! This list came after weeks of me asking him if he has all the documents he needs.

I finally called his boss (his email signature always said if there are problems to report them to his boss and had the boss’s contact info) to express my anger, frustrations, and concerns. Movers are coming on the 29th and I need to vacate my unit by the 31st. If we are unable to close by the 27th (Friday), I am screwed. And I refuse to have to live in a hotel or friend’s couch and having to deal with my items temporarily being in storage because of my mortgage officer’s incompetence. Now I have been promised a daily update from the boss and I can tell the agent is more careful in reviewing what documents I have already produced to him before he makes new requests.

Lesson learned here: shop around and interview your mortgage brokers for some time. See how they communicate with you over a few weeks and how they answer your questions, etc. In hindsight the moment I started to think about purchasing a place I should have interviewed mortgage brokers for comparison, before even meeting with the agents. But, had I done that, I would not have been able to purchase my condo since I assume someone else would have made an offer (it was listed only for 10 days when I made the offer). I guess now I know what to do for our next home purchase.

Love,

C

 

Weekly Money Check-Up

1. The most I’ve spent this last week was a dinner out with friends. I have been on a spending diet to save as much money as I can for the down payment and the moving costs.

2. Today I am thankful for being benched at work this week and next week. Having this freedom during an impending move makes such a difference.

3. Money can’t buy happiness. One free thing I did last week that made me happy was cuddling and falling asleep on the couch with my husband. We are fixing up the condo he purchased before we were married to rent out while I am purchasing a place for us and getting ready for the move so we haven’t had much time to spend together lately.

4. I will consider this week a success if I can successfully balance work and the closing and the move. There are so many moving parts I am afraid I will drop the ball on something!

5. One recipe I want to try soon is any recipe from the cookbook my sister picked up for me in Turkey. Turkey is by far my favorite country to visit in terms of their cuisine and I would love to learn to make something.

Negotiating: Tougher Than Your Average Girl

I’ve created an eloquent post on this previously, which then got lost. Please bear with me as I try to remember the gist of the previously written post.

My guy friends constantly tell me that one of the most interesting traits about me is what I am not. They say visually, I seem like a stereotype of a tiny (being a size 0 doesn’t help) woman — light hearted (I read this as “air-heady” although they deny it), reliant on others, and probably submissive. Whenever I tell them some story on how I would stand up for myself, they laugh saying they doubt anyone would look at me and think I’d be an alpha, fighting and pushing back to represent my interest.

I wasn’t always this strong or forward but as I have gotten older, I have enough experiences that have taught me only I am interested in the best scenario for me.  I push back and negotiate hard, whenever I deem stakes are high, and have come out ahead each time.

First time I discovered this was when I was accepted by my MBA program. I received a hefty scholarship package already, which is somewhat unheard of in top business schools. I was telling my friend from undergrad that attending that school over my dream schools would be much easier with more monetary incentives. She asked “why don’t you negotiate?” Huh, I had never thought of that! So I wrote a letter to the dean of admissions, restating my qualification and noting that while I would love to attend more scholarship money would make it easier for me to accept the admission. I had asked for additional $10k a year, anticipating that we will settle on additional $5k a year. I received a letter back stating all scholarship monies had been allocated to accepted students but I will be put on the list to receive any scholarships as they become available. In the meanwhile I was given additional $10k/yr of 0% loans. I accepted.  A few months later I received a letter stating more scholarship monies had become available and I was given additional $5k/yr. For writing one letter, I ended up receiving additional $10k of scholarship monies and additional $20k loan at 0%. That is what I call a great ROI!

When I accepted my summer internship for a full time position, I again negotiated hard.  When I couldn’t push the salary any higher, I started to push for sign on bonus, relocation costs, etc. I ended up with a package worth $20k higher than the original offer.

With the recent condo purchase, it was more of the same. Already my realtor had negotiated the terms hard for me but I negotiated further after the inspection report was available. Because the condo was old and no updates had been made in over a decade, I used these as areas of contention. I reached out to my inspector to ask for estimates to change the problem areas and received high level estimates. When I researched those specific issues, the estimates came in much lower. Even when the seller made it seem as if they were willing to walk away due to this cost, I held firm and made it known I would be willing to walk away due to the disagreement as well. In the end I was able to receive costs of my closing waived at a greater amount than the fix estimates.

I think often times we assume that certain items (like scholarship packages) cannot be negotiated. I regret that I didn’t think of negotiating sooner (like my undergrad scholarship package) and with all major steps in life I try to negotiate. One area that has really helped in negotiations is to know my range of acceptance (min/max) and being ready to walk away if that range cannot be met. I never would have walked away from my condo just because of those disagreements because it was within my range but pushing hard made me come out ahead.

Do you have any negotiation stories you would like to share? Any tips?

Love,

C

Passive Aggressive Landlord and Knowing Your Rights

Today was the first time I’ve had to step away from my apartment for my landlord to show the place to potential renters. He technically didn’t give me the required 48 hr notice but, since it was close enough, I didn’t mention it at all. It was set for 7 and he and I agreed that I will be gone for an hour. It is annoying since 7-8 is my preferred dinner time but since this has yet to become a regular occurrence, I didn’t think about it too much.

I have cleaned the house, put boxes where it is inconvenient for me so that it allows for maximum view. I came home and did a last minute clean up then made dinner (grilled burgers on the balcony) to take with us to the park while they were looking at the unit.

I returned to the apartment with the lights on everywhere and the screen door open. Especially since I pay for the electricity, I emailed the landlord to let him know that the lights were on and it would be great if he could make sure that the lights are turned off. As is, the utility bill is 5x what he had told me (he said electric and gas would be about $20 a month, it is consistently between $75 and $100 with AC not turned on and most electronics on smart plugs) and if he is going to do a lot of showing, this will become an issue.

He had the nerve to tell me that because the place “shows better when there is no food odor” that he is requesting that I do not cook before showings. Seriously? I replied back that if showings are around my dinner time, I am already being generous by agreeing to step away for an extended period of time and I will not schedule my cooking to occur after the showings.

As I have previously mentioned, I am lucky that Chicago has a strong Landlord Tenant Ordinance that outlines each of our rights on top of our lease. By having thoroughly read it, I know that my landlord is not allowed to put requirements on when I can and can’t cook. Further, it states that I need 48 hrs notice to let him in and nowhere does it require me to step away from the apartment during the showings. If he pushes back on the cooking or other ridiculous requests, I will push back. And since I did not put down a security deposit, there is nothing he can hold over my head.

If you are currently renting, I believe it is really important to review your lease terms and also to research whether your state and/or city has additional protection for you as a renter. In a lot of business transactions such as this, people look to take advantage of you and knowing your rights is the only way you can really protect yourself.

Love,
C

Reexamining My Goals

I set 1 year, 3 year, and 5 year goals at the beginning of 2012. The goal was to spend 2012 paying down student loans and the home purchase was more in the 5 year goal. Needless to say, my goals have changed significantly in the last 30 days. So now is the time for me to reexamine my goals and to create new ones. This is a personal finance blog so a lot of the goals will be financial but some are more life related, such as long term career path.

As a forward-looking person who suffers from slight ADHD, I find it helpful to have my long term goals written and visible, making me constantly ask the question “how will this benefit my goals?”  I also try to make sure that my goals might be slight stretch goals but still achievable; if they are unobtainable I believe it is setting yourself up to fail. That means I will be crunching numbers multiple times and thinking about my life desires.

I can’t wait to share them with you. Do you create long term goals? If so, how often do you adjust the goals? Any advice? I’d love to hear from you!

Love,

C

Mortgage Debate: 15 vs. 20 vs. 30 year loan

One of the most frustrating part of the mortgage process has been the sheer amount of paperwork I am bombarded with. Certifications, contracts, slew of documents from the mortgage lender… it never ends.

I finally took some time to comb through the mortgage documents with a fine tooth comb. I was surprised to find that my mortgage was set as a 20 yr loan, which I did not expect since the standard is 30 yr or a 15 yr.  It got me thinking and I started to request the different interest rates and monthly payments from the mortgage lender.

I found that the 20 and 30 year loans have the same interest rate but the 15 yr loan will drop the interest rate by 0.5%, increasing my loan only by <$200 than the 20 year loan. Which loan makes more sense? Doing the math and learning what the interest rates paid would be, it seemed like 15 year loan makes most sense. But I have been feeling the extra stress lately, realizing that my emergency fund is nonexistent thanks to the new condo purchase.

I chose the 30 year loan. This article by Len Penzo made me realize that since my biggest concern is the lack of emergency fund, having the lowest payment allows me to build up my emergency fund much faster (we are talking ~$500/month). Although I am selecting the lowest monthly payments available, I still have the option to make over and/or extra payments.

Other major consideration was our intention of the condo. Our goal was always to live in the space for a few years, take the time to make the upgrades, and then rent it out when we finally move to a single family home in the suburbs. We know that the rental prices of similar units in the area go for about $1700 which is less than the monthly payment for the 30 year loan, about the same as the 20 year loan, and a few hundred dollars less than the 15 year loan. If the economy continues to stall in 2 – 3 years, which I think it might, we may try to refinance then when the upgrades should have improved the appraisal value and the emergency fund should be built up.

I find that when it comes to most of my money debate, I am risk averse and will almost always choose to beef up my emergency fund. Now only if I can put emergency fund over silly purchases…

Love,

C