Tag Archives: house

Lessons in Adulting: How Much Should Living Room Furniture Cost?

When we moved in together two years ago, my Craigslist-purchased couch with ripped cushions and protruding feathers, along with my once-glued together, now peeling-apart IKEA coffee table and self-desctructive Tar-gey bookshelves which are not safe to be around a small child, seemed perfectly fine for a trancient space. With barren white walls and a few half-filled and altogether empty frames scattered about the floor, this now-married couple is trying to figure out how to create a place that feels like “home” without overdoing it (you know, like we (…ahem… I) overdid our wedding.)

Right now, we really can’t have guests over because the place is embarrassing, even on its good days when I’ve cleaned up the piles of mess. Our lease is up in May, but it is doubtful we will move next year or anytime soon (the only real reasons for us to move is 1 – rents going up an unreasonable amount, 2 – we have a child and said child turns 2, or 3, one of us gets a job super far away, like, in another state, and we need to move.) Otherwise, it looks like we’re hunkered down for a few more years in our 800-square foot, overpriced-due-to-Silicon-Valley-rental-costs abode.

This furniture has got to go. Continue reading

No Cable TV for Now, Fast Internet Instead

Since I’m determined to read more, get out of the house more to see friends and exercise, and generally not be a lazy couch potato, I decided to avoid getting cable for the time being. Instead, we’re getting 50MB internet and skipping cable altogether.

The cable bill for the first year wouldn’t be that bad, but then I’d get used to it and have to pay the ridiculous fees charged after the first 12 month rates expire. It really is ridiculous to pay $100+ per month for cable television when most of the shows are available through other means. I even already have Amazon prime which offers many shows and movies as part of the membership. There’s also the option to buy Hulu Plus or Netflix if this isn’t enough.

Instead of the cable membership, I splurged on a waterproof case for my Kindle ($70) so I can come home after work, fill up the tub, and read myself silly. Better that then starting mindlessly at the screen. I figure if I’m desperate for television I can sign up for the local gym, which offers tv screens in every cardio machine… at least then I’ll be able to get healthy while watching television instead of the opposite.

My Parents Spent $300k to Add On to a $400k House

After I left home 10 years ago, my parents decided to build a add-on to our house, and redo the entire kitchen. The add on was not decided on to add to the value of the house — it was purely because my parents wanted more space. They wanted a family room which would be open to the kitchen, making the entire area more open and inviting.

Today my dad told me that during the years he was making the most money, was also the years he lost the most wealth. Why? The $150k add on for the house ended up costing somewhere around $300k (he isn’t really sure how much it cost) and then spending elsewhere also added up. He was making $200k + per year, but losing even more than that.

He constantly talks about how he wants to re-do the other rooms in the house. He has grand plans for remaking the master bedroom to have a walk-in closet that would reduce the space in the room, and breaking down the walls of two bathrooms to make one master bath. I asked him if he thinks that would add to the value of the house and he doesn’t care. He just wants to make it look the way he wants. Even though, with only about a million left in the bank, the value of the house should play into some consideration when making changes.

Not that he cares, or should care — as I’ve mentioned before, he’s sick with terminal cancer, and all he wants to do is spend money on the house — on expensive constructive changes, and less expensive decorative costs that still add up. Meanwhile, my mother, who has no concept of the value of money, is likely going to run out of money some point down the line.

I asked my dad — why didn’t you just move to a larger house, if you were going to spend $300k on the addition? You could have sold this house and moved to a $700k house, which in this area gets you a fairly large house. And it would have been probably worth more later because it would have been a newer construction. Not that I’d want them to sell my childhood home, but still, financially that might have made more sense.

That sort of logic doesn’t matter to them, though. It’s not really any of my business, except for worrying about my mother running out of money later in life, and given that my sister is going into a lower-paying field than I am, I’ll likely be footing that bill. I would, of course, help her out if she needs it — but I’d rather help her make smart financial decisions NOW so it doesn’t have to come to that. It’s too bad neither her or my father would ever take any of my advice on these matters.

Savings 2009 Update

Since I don’t have a 401k, I’m always paranoid about not having enough saved for retirement. I know they advise workers to put at least the % match in their 401k above and beyond their Roth, but without a 401k, I’m still at a loss for where to save my money. Also, with grad school in the future (2-5 years away) I don’t know how much to save for retirement vs. that. Oy.

To be honest, beyond my Roth IRA, which I max out at $5000 each year, I don’t keep great track of what money goes into my other savings accounts. I save, I probably save quite a bit all things considered, but I haven’t really looked at what that means until today.

This year, so far, I’ve put $4850 in my Roth IRA. I have invested $5000 in ETFs and stock purchases in my Sharebuilder account. Plus, there’s about $600 in my 529 plan. Ok, so I think I stashed away $10k this year, or more. That’s not too bad. Then again, I know people who are saving 30% or more of their after-tax income. Which would be probably more like $20k.

Granted, I lie to my net worth spreadsheet and tell it to deduct more taxes then I will need to in order to have a fiscal boost come April 15. But that usually goes straight to next year’s Roth IRA. I always like to start it out with a $3000 one-time investment in April, then add in for the rest of the year until I hit the $5000.

I really wish I could buy a house right now, but besides not having the money to do that (I only have $30k saved, and much of it is in retirement accounts) it just wouldn’t make sense. So I’ll keep throwing away $600/month on rent. I was at my friend’s house yesterday — the one she bought with her engineer fiancee — and I’ll admit, I’m a bit jealous. But then I remember I don’t NEED a house right now. What would I do with a giant house besides pay a lot in bills and make a mess of it?

I’ve Got $7 in my pocket…

I’m a person of extremes. I eat basically nothing, or, alternately, everything in site. I work my ass off and stay up all night to get projects done, perfectly, or I barely lift a finger. Same goes for my finances. It’s not the healthiest way of living, but it sure works a charm when I’m on the more positive end of it.

This month, I’ve been extremely frugal. Well, not in the sense of purchasing two pairs of jeans. One, my favorite brand, was on sale at the local mall for $100 and I couldn’t resist. I actually thought it was another style, which I realized it wasn’t, so I promptly went on eBay and bought a “slightly damaged” pair of the ones I actually wanted for $70. Given that the original pair I bought last year cost me $170 for one, I felt good about setting up this two-for-one designer jeans deal.

Regardless, that was really my only big spend in the past month. I’ve also been frugal about eating, in ways I probably shouldn’t be. I tend to go for as long as possible without buying food. Around the house, that’s fine, I still have some random frozen things and tuna. But I’m never home. At work, sometimes I’ll work straight through lunch, and live off the various snacks in the office. Lucky for me, at least my work provides some granola bar-type things. Still, not healthy for mealtime, but I survive.

I’ll be posting my January spending charts soon. Lately, I thought about making a goal to reach $50k in Net Worth by the end of the year. I’m still trying to figure out if that’s obtainable. I need to see what my Net Worth is after taxes this year, and then make a plan. I may not be in debt, but I can still live like I’m getting out of debt, so I can one day buy a house.

My Dream House

When I was a little girl, I dreamed of one day living in a house with a big backyard, a view of the ocean (or at least twinkling lights), a heated pool, hot tub, a grande foyer, marble, a mix of contemporary architecture and classic detailing, each room decorated and designed to perfection. These days, I’m a bit more reasonable when it comes to contemplating a home purchase, but my irrationality is kick-starting my savings for a down payment.

Actually buying a house may be years off, but one day I hope to do it. I have friends (who live in more affordable areas, and who generally are engaged or married) already taking the mortgage plunge. I’ll admit my jealousy, a bit, but I feel much better about it when I pay my $632 rent and have the rest of my money to save.

I can deal with living in cramped quarters for cheap rent, but I’m not sure I’ll be willing to make such a compromise when it comes time to seriously think about buying a house. I grew up in a mid-size home. It had a downstairs, an upstairs, 3 nice sized bedrooms (large by modern constructions standards), a master bedroom, a den, a kitchen, a living room and 3 bathrooms, not to mention an incredible, grassy backyard. Growing up in such middle-class luxury, it’s tough to think about raising a family in any place smaller than that.

But, as it goes, my dream house will likely be well out of reach.

A quick peak at any local real estate guide showcases my dream house for, at minimum, $1.5 mil. That is, in the Bay Area (San Mateo County), even a tiny house goes for $800k. You’re lucky to get a decent studio for $500k.

Back home in New Jersey, my parents nice house that I spent my entire childhood in isn’t even worth that! So it seems if I ever hope to own the house of my dreams, or anything close to it, the Bay Area is out of that picture.

Living in the Bay Area for the past three years has made me realize just how important it is to live a place that makes you happy, beyond just an apartment or house. Here, I have so much natural beauty around me I could live in a (waterproof) cardboard box and be happy (assuming I have gym access for a shower every so often).

But then there’s my hope to raise a family, two or three kids, and that takes a house big enough to fit those kids. That takes a lot of money. I don’t think it will come from my won’t-ask-for-a-raise boyfriend. So that means I need to start saving for a down payment, and also forcing myself to think realistically about what sort of house I will be able to afford.

For starters, I’m going to try to save $300 a month towards my down payent fund. The question is, where do I save this money? The stock market is probably a bad place for it, though it’s possible this is a good time to invest the cash if I hope to put a down payment on a house in 5 to 10 years. Or maybe that’s an awful idea. Maybe it should just go in an ING CD and stay there until I’m read to spend it.

The other issue is graduate school. If I decide to go, there goes my down payment, and then some. My lifetime earnings may increase, but not my purchasing power in 5 years.

I just can’t fathom saving $200k for the downpayment on a $1M home. Even half of that seems impossible. Not to mention that someone making $60k is not supposed to buy a home that costs that much. What’s the rule… no more than 4 times your income? Uh, I can’t get ANYTHING for $240k in this area.

I could probably borrow the money from my dad’s 401k once he has access to it, but as I’ve written before, I want to try my best to be financially independent from my parents, as I have been since graduating college. Being a spoiled kid is one thing, but you can’t really be an adult until… you go into debt buying something you really want, and need, and that will make you money in the long run.

My Friend’s Giant Brick House

When I went back home over the Thanksgiving Holiday, I spent a little bit of time with my childhood friend, Sara*, who always had a bit of competition going with me. We were frienemies for much of our adolescent years, but as we got older we started to get along again.

This trip home I got to see her brand new house. While she’s still in school, she’s engaged to an engineer who seems to be footing most of the bill for the residence. To give Sara credit, she’s also working full time while studying full time. She’s also terribly judgmental and seems to think that if one is renting it’s silly because you should just buy a house. She also thinks her house isn’t big enough, despite that only two people will be living there and it has four bedrooms (two will be used for offices, one for a guest room.)

The other thing is, back on the east coast, you can get a lot more for your money. Her house, which cost about $475k, costs as much as a studio does out here in The Bay Area. Nuts. So she’s living an hour from NYC and can get a damn house for that. A nice house. With a pool in the backyard.

She is doing tons of renovations to the house (well, her fiance is… he’s redoing the entire inside.) She’s in charge of the design. He does the work. They both seem fairly happy about it. They own a home. Sara owns a home. She’s 25. Like me.

I got back to California a few days ago. The bright winter sun warmed my skin as I stepped out the door in the morning. I took my daily drive down 280, a highway which has a beauty that never grows old despite how often I drive it. I smiled because here I feel so happy, and what makes me happy here is entirely free. The nature, my boyfriend, the sun. Even my job – for the most part – makes me happy here. So I figure back east people need huge houses to decorate because everything else is so fugly. Or at least in Jersey, where I grew up.

Still, I’d like to own a house. At least, I think I would. But I’m not dating an engineer. I’m dating a guy who makes $17 an hour and refuses to ask for a raise. It makes me nervous that who I’m with defines partly what my life will be. When, or if I’ll ever be able to afford a house. And I’m jealous of my friend who is marrying a very charming engineer. And I wonder if I ought to be strategic when it comes to love over the long term. Or if I should just deal with the fact that I’ll be part of the disappearing middle class, able to rent but probably not to own. These sorts of things have me rather attracted to any men I meet who have that breadwinner sort of vibe. That’s a dangerous thing to feel… especially when there are so many men out there who take pride in making money. My boyfriend, on the other hand, would be more than content living in a cardboard box… as long as he had access to a daily shower.

So with him, it’s up to me to make my fortune. To earn it. And I don’t trust that I’m the type who can make that kind of money. I mean, enough to buy a house. A house in the bay area. With a view of something other than another house. And a little bit of land. And such.

What is my American Dream? Do I need to date someone different to achieve it? Should I be envious of my friend… or just determined to prove I can make enough money to support myself and live a life of relative luxury?

Forbes Billionaire’s List and How Rich is Rich Enough to Give to Charity?

A few days ago Forbes posted its annual list of the world’s richest people. While the billionaires gracing the normal list were mostly obvious — Warren Buffett, Bill Gates, etc, the list that I found more interesting was the sidebar “World’s Youngest Billionaires.”

Many of the world’s youngest rich inherited their wealth. Some, like Facebook’s Mark Zuckerberg, are self-made billionaires. At just 23 (he’s only a year younger than me) he’s set for life. And a few other lives, as long as he can reincarnate and claim his savings on his return to earth.

As I’ve been figuring out my budget upon my upcoming raise, I noted that I feel like I’m almost making too much money, and I don’t know what to do with it all.

Of course, that’s not true. Now that I actually have money to put into savings, I can start seriously saving for things I want, like for the down payment on a house.

The other day as I was driving I was thinking about how nice it would be to make enough money that I could donate a substantial chunk of it to charity. Then greed clouded my head and I thought – why donate money when I can save the money? My Roth IRA isn’t maxed out yet, and even then the extra cash put into a SEP Ira, a high interest savings account for the house down payment, a CD or some other saving mechanism would probably be a wiser move.

I always thought that charity should be given in time, not money. If you’re going to be charitable, go do some volunteer work, help build a house with Habitat for Humanity, or volunteer to mentor in-need kids in a local town.

Then I got into the “real world” where I realized time is money and I have more money than time. Yet I still don’t feel like I have enough money to donate yet.

Obviously, given my pay bump I could donate $100 a month instead of putting that to my investments and just pretend it never happened. It would probably make me feel all warm and fuzzy inside, but I don’t know how warm and fuzzy I’ll feel when I retire and the government has run out of money for social security.

At what point in one’s wealth-building career does charity become a necessity? Does everyone donate to charity? How much is the proper amount to donate, percentage wise, of one’s income? What if one’s job is unstable and while he or she is making a good amount of money now (in the $55-$70k range, dependent on how many freelance projects are completed), but in a few months she might be unemployed? What if, as a freelancer, my entire life is lived like that? And then what if I have kids and more than just myself to worry about one day, financially speaking? When do I give to charity and when do I just be selfish and keep all my money?

Saving for a House… or a Condo?

I’ve always wanted to save up enough money to buy a house outright, without dealing with paying double for the house because of mortgage rates. I don’t like the idea of buying anything piece by piece and paying more for it.

How hard would it be to save up for a condo on my own? Well, pretty hard given the cost of living in the Bay Area, but is it entirely impossible?

I probably should get my rent down quite a bit if this is my goal, for wasting $1050 a month on rent that could be put towards monthly house payments seems to be just as ridiculous as paying interest on a mortgage.

This is the first time in my life (as soon as my raise kicks in) that I feel like I’m making more money than I need. I’ve always spent too much as it is, but yesterday when I was re-doing my budget I found that I had the luxury of liberally deciding where to place my hundreds of dollars of savings per month.

I feel guilty for making so much, but when it comes down to it $60k after freelancing and working 40 hours a week is not *that huge* of a paycheck. It’s certainly more than I ever expected to make, and yet I know people my age making much more. What do they do with all that money? I guess the only thing to do… other than living frivolously… is saving for a house and retirement.

Of course, I’m making $62,400 a year between my 40-hour-a-week gig and my stable 10 hours a month marketing writing job, plus any extra freelance pay I take in over the year… but all that’s without any benefits. Last gig I was making $50k plus the $400 a month for the freelance gig, but I had great health benefits at no cost to me. So in the end I think now I’m making just a little more. Plus, I’ve chosen a crappier health insurance so I’m not spending as much on that as I would had I chosen to stay on COBRA.

In any case, if I keep doing a good job at my current gig, and gee I hope I will, I’ll only be looking at raises down the road. Who knows how much… and I’m not sure the marketing writing gig will last forever… but it seems fairly stable (I work for my uncle and write for four different newsletters he designs and sends out each month for his marketing company and the only reason I’d stop writing them is if he loses a client).

I feel overwhelmed with the money I’m making. It’s not that much, yet it’s way more than I know what to do with. Except I certainly could spend it all at the mall in one day, given a slip into depression and a pick-me-up shopping spree.

Instead, I really want to focus on saving. It’s tough seeing my Roth IRA, stocks and mutual funds slipping, but it’s nice to have some extra cash to play with. The major question is, where do I put the money? I know they say to max out your Roth first, but that seems kind of silly if you want to go to grad school or buy a house. This year, for instance, I’ve put $4000 in my Roth, so I have $1000 left to contribute. Next year, though, I’ll have less savings up front to dump in my Roth. I’ve put $7000 in there total for the last two years, I think. It’s down to $6800 or something right now.

Meanwhile my CDs, even those with crappy interest rates, are obviously up a few hundred dollars after being locked away for a year.

To buy a house, and to make money off my money, it seems the Roth might be the wrong place to put my money. Of course I want my savings to multiply towards my retirement, and it’s nice to think of what the money would do over the years if I max out my account every year… and I don’t have a 401k at work or anything, so it’s up to me to save my money for retirement.

It’s funny, because my boyfriend isn’t thinking about any of that yet. Every time I try to tell him to start saving his money in a Roth he gets all defensive and doesn’t want to talk about money matters. He thinks I’m being preachy. Meanwhile, I’m just trying to educate. Oh well, he usually isn’t so stubborn about things, but when it comes to money he wants to figure it out on his own. Fair enough. I just consider him the man I will one day marry, and if I’m going to have money in retirement and he won’t, that will make for one lousy retirement.

Of course, I might die well before retirement (hopefully not) or he might (no!) or maybe we won’t get married at all. Life has too many uncertainties to put all my eggs into one tax-free basket. Right?

But still, the question remains… how do I save $500k for a house so I can pay off the house (or at least most of the house) up front?

I really wish I could save $500k and my boyfriend could save $500k and then we’d both buy a $1 million house. How long would it take to save $500k?

If I save $2000 a month, that’s $24,000 a year.

So it will take some time. It will take 21 years.

So I could buy a house in 2029 when I’m 45. That seems in poor rational.

But… what if somehow I get a raise and I start saving $3000 a month somehow? That’s only 13 years. So I could buy a house in 2021 when I’m 36.

The sad part is that house prices will likely go up by then. Now, and in the next few years during this recession, is the best time to buy. The money I’ll end up paying on inflation and such might end up matching what I’d pay on a mortgage.

I don’t understand how I could save for a house.

First Generation with Fiscal Suckage?

Frugal Zeigeist has a great post today about whether we’re the “first generation to be worse off than our parents.” She writes:

…I’d say that I’m way behind because of the way the work world has changed. My dad worked for a single employer in Canada and a single employer in the US; although he went through reorganizations, I don’t think he ever worried about layoffs or downsizing the way I do. He also has traditional pensions both from his years of work in Canada and from working in the US. Between that and Social Security, my parents have never had to touch their retirement savings. — Frugal Zeitgeist

At my age (24), my parents were living in New York City, renting an apartment. In a couple of years their apartment would go ‘co-op,’ and they’d buy and sell their place within a few years for enough profit to put a down payment on the house in New Jersey where I grew up.

My mom was a fashion designer, working for fairly low wages, and my father was… well, I think he was a grad student when he was 24. He was going to grad school for physics but dropped out and ended up working as an actuary (pension planner). He stayed with the same company UNTIL HE RETIRED. He obviously had a good pension plan in place as well. My mom… she stopped working as a fashion designer 10 years into her career to have children (waves).

I’m not sure where they were financially at 24. Were they struggling? Possibly. I assume that if my father had started his job as an actuary, his entry-level salary was probably pretty high. And back then it wasn’t so painfully expensive to live in a city like New York. Then they got lucky with buying their condo and selling it, and the rest is history.

Looking at where I’m at now, I don’t see myself buying a condo anytime soon. It’s not that it would be entirely impossible to make enough money to buy a small studio apartment, but I’d have to live extremely frugally and, even more so, I’d have to be sure I want to stay in this area for the foreseeable future. And I’m just not ready to make that kind of commitment.

Then again, the housing market seems to be pretty attractive right now. I don’t know a lot about it other than the fact that lots of people are losing their houses because they can’t afford their mortgages. That’s sad for them, but good for potential buyers.

I don’t want to just sit back and watch another housing boom happen without having the opportunity to partake. Still, I don’t think I’m ready to buy a condo.

So, instead, I spend $12,600 a year on rent. Ouch.

My 25-year-old boyfriend… he lives at home and works part time. I don’t think he’s ready to make that commitment either. :X

I wonder how much monthly payment on a studio condo would be. Would that help me be as successful as my parents were at my age?

In any case, Frugal makes this important point:

They key point that this thought exercise brought out for me is this: The rules of the game have changed big-time. In the modern economy, the cards are stacked in such a way that if I’m ever going to be better off than my parents, I can’t rely on employers or government to lend a helping hand as a reward for loyalty or years of service. It’s definitely possible to end up being better off than my parents ever were, but I have to make it happen on my own. — Frugal Zeitgeist

Personally I think the opportunity to switch employers and make oneself more of a commodity is to the advantage of the employee. It might hurt when it comes to long-term savings, but salaries (and benefits) are higher if the employee has well-sought skills.

Here’s to hoping that my skills will develop into ones that people want to pay me for!