End of the Year Nerd Alert

I love Christmas. It is hard not to when you have small kids, especially a four year old who was sweet and thankful for all of his gifts and didn’t comment, not even once, on the fact that Santa did not get him the Polar Express train of his dreams (Santa, thankfully, realized that we don’t have the space for a train set like that and Santa also respects a modest Christmas budget. He’s a good guy, that Santa).

Our Christmas was quiet and lovely. We leisurely opened presents and noshed on Chinese food and watched A Christmas Story (“Randy lay there like a slug. It was his only defence”). I enjoyed the day.

But, truly, the post Christmas, pre-New years time is about my favorite time of the year. Not only do I have time off from work (thank freaking goodness) but I get to do my favorite nerdy thing: the end of the year financial report.

Every year I go through our monthly spending reports and tally them up. There are graphs involved. Then Mr. Monkey and I sit down and review the categories and see where we went over budget (hint: eating out. Always. It is a problem. But, I have a hunch we did better this year) and see where we were under (this year, I’m guessing “fitness”, which might not be a good thing). Then we talk about our categories and what adjustments we need to make for the next year.

Afterwards I feel so calm.

I think this is largely related to growing up poor and feeling like money was always, always, always something to worry about. I have come to realize that a sense of control where my financial life is concerned is hugely important to me. I also think this process, along with the monthly reports, is one of the reasons Mr. Monkey and I don’t fight about money. We talk about it every month, we share the same goals, and we trust each other…which is important since I do all the financial stuff. I love doing it but I want to make sure he always knows where we stand.

More than any resolutions, it is the end of the year financial wrap-up that makes me feel energized and ready to start the new year.

What do you do to feel in control of your money stuff?

A Magnolia Street Update

A while back I wrote a series of posts about what happened when Mr. Monkey and I had a home go into voluntary foreclosure (start here if you missed it or need a recap: https://athleticmonkey.wordpress.com/2012/01/24/magnolia-street-part-1/). It has now been just over a year since the foreclosure was finalized so I thought I’d give another update on the after effects of foreclosure now that it is a year later.

The Good:

– I, and speaking for him, Mr. Monkey continue to have no regrets about the decision beyond wishing we had done it sooner. occasionally I look up the house on Zillow, just out of curiosity about what they think the  value is. They are still estimating it at around $100,000 so if we’d held the house for another year we would have been down $10,000 in mortgage payments and would have gain absolutely no equity. There was so much worry that went into the decision but I feel nothing but relief that we did it.

– Though my credit score is still in the below average range, I was able to apply for and got approved for two store credit cards, in addition to the car loan we got last summer. The limits are low but having them has been helpful for trying to rebuild my score.

The Bad:

– My primary credit card still won’t increase my limit. This continues to annoy me since these were the people that once allowed me to have a credit line of $28,000 when I was making a $31,000 annual salary. I’d cancel the card out of spite but they are the longest open account on my record and I don’t want to lose that length of credit history variable on my credit score.

– Our home had an 80/20 mortgage and one company owned the 80 part and another owned the 20 portion. I pulled my credit report this morning (as I do every year) and discovered that the company that owned the 20% still has the account listed as open. I probably should have been pulling my report every quarter in the aftermath of the foreclosure so I realized this sooner, but I didn’t think about it since we were moving along just fine. I’ve now filed disputes with all three of the credit agencies and we’ll see if we can get them to correct the status.

The Unknown:

– I’d like to buy a house again someday though I think, for a variety of reasons of which the foreclosure is just one, I don’t think that will be anytime in the next five years. I don’t know how much the foreclosure will effect that decision, financially or emotionally. I suspect Mr. Monkey and I will be a bit more gun-shy on the whole process and might even wait until we can buy a house out right with cash. As much as I don’t regret the decision, I don’t ever want to be in that “no good choices” place again with an underwater house.

– I do wonder how long it will take to get back into the “good credit” range and whether or not I’ll ever have an 800+ score again. I’d like to, of course, but am realizing more and more that it doesn’t matter as much as I thought it did, as long as we keep our debt low and our savings stable.

 

The bottom line continues to be, thankfully, that there very much is financial life after foreclosure.

 

 

Dog Days

45 days.

45 days is how long I expect my work life to be at Def Con 4 levels of crazy. I work in higher ed, in a student services area, so while the faculty are out enjoying their summers and occasionally spotted wandering around campus in shorts and flip flops, I am gearing myself and my staff up for the coming onslaught of students. It is stressful and tiring and totally predictable. Despite our best efforts we know this to be true: August sucks and everyone feels overworked and underappreciated. It is a tough time for the front line staff and it is a tough time for me as a supervisor as I know I’m pushing them hard but I also know this is the make or break time for our institution to get our new class of students in.

Last year at this time I was working hard but also looking forward to a trip to Bayfield Wisconsin to do the Point to LaPointe race (I was also busy getting pregnant, but I didn’t know it at the time). This year I am not getting pregnant and I’m not swimming the race either.

I’m really bummed about one of those things.

I know I can’t do the race. I’ve swam once this summer. I’m out of shape, out of vacation days, out of money to travel with. I really am not sure that I’d want to drive 8 hours with an infant and a four year old. But, man, I’m feeling bummed about it today.

It has been a long hot summer already and I wish I had the cool of a lakeside town to look forward to right now.

Next year, next year.

How about you? Any late summer trips to look forward to?

How Do You Do It?

We are now about two weeks into our new normal: two kids, a working mom, a stay-at-home dad. It is going fine, by the way, though I do miss the kids fiercely sometimes and the bigger kiddo seems to be having some mama angst the last few days. Mr. Monkey is a great parent and though I do wonder how they are doing or what they are doing during the day (though I’ve found that it isn’t helpful to picture them frolicking at the park while I’m trying not to scream about some frustration at work) I never worry if they are doing okay. They are with their Dada. He’s got this.

One thing that has been interesting in the last couple of weeks is the reactions that I get when I tell people that the kids are home with Mr.Monkey. I’d say I get about 75% in the “oh that is awesome” category, 20% in the “my husband would never/men aren’t competent” category, and 5% that were overtly “how do you afford that?”. The 75% seem like the reasonable reaction, the 20% make me roll my eyes a bit and the 5% interest me. I suspect there are more than the 5% who wonder how we are making the finances part of this work, who wonder how we are doing this.

As much as I like talking about personal finance and I’m not uncomfortable talking about how we manage our money, I find it hard to talk about this without sounding, frankly, like kind of a douche about it.

Because here is the truth: we don’t have credit card debt, we do have savings, I make a decent salary and we generally live below our means. We are, and this is the part that sounds perhaps a little douchey, doing what we’re all “supposed” to do where money is concerned.

There isn’t a big secret, no magic trick. It is basically the financial equivilant of trying to figure out how to lose weight (eat right, move your body, lather rinse and repeat forever) and just like losing weight it is more about regular habit than anything else.

Does that mean that I am totally without anxiety about us basically being a family that relies on just my income (Mr.Monkey will be doing some adjunct teaching so we won’t be totally just on me, but mostly)?

Not at all. Anxiety about money is kind of my default setting so even though I’ve run the numbers over and over and I know that while we can’t add a lot to savings for the immediate future, I know we’ll be able to pay our bills. I know the numbers add up. I know that giving up Mr.Monkey’s salary is more than 50% offset by not having to pay for childcare. I know that we’ll save on gas and a few other expenses. I know it will work.

I know, logically and like 99% of the time, that managing our money isn’t magic. It is habit.

Once again I find myself wishing we (the cultural we) talked about money more openly, where we didn’t keep our financial successes and failures so close to the vest.

But maybe I just think it should be easier because my biggest financial failures are (I hope) behind me. There isn’t the same shame about having $25,000 in credit card debt now that it is paid off debt, all past tense. Maybe I want to talk about it more because I am like the zealous new religious convert: where I once was a broke clueless financial sinner, I am now saved and fired up about it.

Maybe I am kind of annoying about it. Maybe I overestimate how much other people wonder about my finances.

Maybe I’m rambling and keep almost deleting this entry because I worry I sound annoying. Maybe I’ll just stop typing now.

 

On Talking About Money

I mentioned in one of my posts yesterday that I sometimes teach financial literacy classes. I love, love, love teaching these classes, largely due to the fact that I enjoy talking about money. I am fascinated by how people think about money and the intersection of money and identity (all of those things we think our financial situation or other people’s financial situations say about us or them) and the incredibly powerful role that shame, emotions and willful ignorance play in our financial lives.

I can talk about shame and ignorance (willful and unintentional) because I am a recovered financial screw up who is quite familiar with those feelings. Credit card debt to the tune of $25,000 combined with student loan debt of $30,000 on a first job out of college salary of $25,5000 will afford one a nice long period of time to feel shame and panic about their financial selves.

I grew up poor and spent myself poor in college and early adulthood. The pervasive feeling of “never enough” that comes with being well and truly broke is something that takes a long time to shake off.  Mr. Monkey and I are more frugal than not and we have a healthy income and a solid savings account and yet every month I feel a distinct sense of relief when all the bills have been paid and the wolf has been kept from the door for another month, though there really wasn’t any danger that we wouldn’t be okay this month or next or next.

Sometimes I look at the lives of others and wonder what their finances look like. The magnificent houses in the fancy neighborhood near us– how do you get to live there? What do those people do and how much do they make and what is their net worth? The friends who, like us, are figuring out how to save for retirement and pay off student loans while paying the shockingly high costs of childcare– how are we all doing it? The person at work who is in the same pay grade I am and who takes fabulous vacations that I can’t imagine being able to afford (though I wish I could)– where does that money come from?

I wish it was easier to talk to people about personal finances. Sometimes I think it is interesting that I know exactly how many sexual partners some of my friends have had but I don’t know what their salary is and bringing up sex would be more comfortable than bringing up money.

Why do you think money is such a taboo subject for so many? I keep circling back to the idea of shame, since that is what I felt about my money life for so long, but maybe I’m projecting. I believe that most of us have a natural curiosity about the financial lives of others. We secretly want to know what people make and how they spend their money. I see this all the time on some of the financially related message boards I visit. The posts where people post their budgets consistently get the most views. My posts yesterday got the most traffic I’ve had in almost two years and yet I suspect most of us never talk to our friends and loved ones about our financial strategies or goals.

What do you think? How comfortable are you with talking about money? Do you secretly wish you could see into the bank accounts of those you know, or is that just me?

 

 

Magnolia Street: Another Epilogue

I know, how could I possible have more to say?

A few people DMed me on Twitter with additional questions so I thought I’d add the answers to those here:

1. We have not had any trouble finding a home to rent since the foreclosure. We were quick to explain our situation to our current landlord (we’ve rent two homes since the process started and finished) and provide character references from past employers and landlords. We were also prepared to pay up to six months rent in advance (if we had to) (a prime example of how cash can make up for poor credit) but we never needed to make that offer.

2. I have had to get a credit check as part of an employment screening and it didn’t seem to make a difference. I, again, explained the situation to my prospective employer and offered to provide documentation if needed, but they didn’t request it and since the credit report showed that with this one exception I’d always been on time with bills it didn’t hurt me in the process.

3. Speaking for Mr. Monkey, I don’t think this situation caused any particular marital stress. We were, thankfully, both on the same page about this and I think we just knew that we had to be kind to each other and not assign blame.

Magnolia Street Part 3

Now, a bit about the things we had to consider before we made the choice to go the foreclosure route:

1. Arizona is a non-recourse state, so we knew that the mortgage company could not come after us for the difference between what we owed and what the house eventually sold for.

2. According to our real estate agent, the average length of time a short sale was on the market in our town before it was approved for sale by the bank was 18 months. The market was just utterly clogged with them.

3. Because we now had two different mortgage companies any short sale would have to be approved by both, which would add time on to the whole process. Given that there seemed to be zero communication between the two companies, I was not encouraged by this development.

4. There didn’t seem to me to be a lot of credit score advantage to the short sale vs foreclosure route. It seems like most of the damage to the score happened from the past due mortgage payments. By this time my credit score was already down 100 points or so.

5. The deed in lieu option was the one that we had the hardest time getting accurate information about. It sounded good, in theory, but we could never nail down what kind of tax implications it might have.

We weighed our options and decided that, at that point, our main goal was to be done with the whole blessed mess. Foreclosure seemed like the quickest and surest way to do that. We let the main mortgage company know and continued to basically ignore all the past due notices, registered letters and scam mail we began to get (oh, the scam mail. If you go down this route you will get tons of mail from shady places saying they can “help save your house” and “protect your credit”. These people are lying lie faces).

It is interesting now that we are done with the situation how blurry the timeline on all of this is. I think it was about 9 or 10 months from when we stopped paying the mortgage to when the house was officially foreclosed on. I would say the worst time, in terms of phone calls from the mortgage company, was the first three months. After that it was a pretty quiet experience in a lot of ways. I never felt harassed. Nobody called me a deadbeat or yelled at me. It just seemed like, well, what it was: a business transaction.

I want to say something here about the “moral” aspects of all of this. I know that there are some people who think that walking away from a home when you can technically still afford it is morally wrong. I don’t agree and part of the reason I can talk so openly about this experience is that I don’t have a sense of shame about it. I still feel disappointed that it worked out the way it did, but I’m not ashamed. In my mine we met the terms of the mortgage contract. We lived up to the agreement with the bank. A mortgage is a contract that says, basically, if  you (Monkey family) pay X amount on time each month for 360 months you will get to have this house (option A)  If you don’t, you don’t get this house and we ding your credit score (option B).  You have two choices. We chose B.

What also probably helped us deal emotionally with all of this is knowing that what was financially best for our family was very, very clear. I happen to teach financial literacy classes so I could calculate all the lost savings we’d be facing if we didn’t do this and could not justify it. We were also in the place where we could say, eh, we probably don’t need a lot of credit for the next couple of years. We don’t plan to buy a house again for a good long while and, frankly, we now have healthy savings so there are few problems in life that you can’t solve as easily with cash as you could with credit.

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So, what happened after the house wasn’t ours anymore? A couple of things worth sharing:

– the house eventually (after months and months and months on the market) sold for just under $100,000. More than a 50% drop in value in less than 5 years.

– When it was all said and done, my credit score had gone down almost 200 points and Mr. Monkey’s went down about 120 points or so. I still officially have “bad credit” but my score has gone up about 80 points in the last year.

– The most annoying outcome was that my credit card company (the one that I had once owed gobs and gobs of money to) cancelled one of my cards and dropped the credit limit on the other to a ridiculously low level. Mr Monkey’s credit limits didn’t change at all so we still have his for emergencies. Depressingly, the credit card companies were much more willing to lend me credit when I was in debt up to my eyeballs. A lowered credit score for someone who doesn’t carry a balance= major reduction in credit line (we are talking like a $28,000 reduction).

-Another semi annoying thing was that mortgage company #1 never told mortgage company #2 that the house was foreclosed on and sold, so I finally had to break the news to them myself after still getting random bills from them for the next half year. This did not give me a sense of confidence that they would ever have been able to figure out the short sale between the two companies.

– About six months after the foreclosure we found that we needed to replace our ancient car. We went to two dealerships. One would finance us, one would not. The one that did gave us a 2.9% rate, which we were very pleasantly surprised by. Part of the good rate probably came from the healthy down payment we put down but still, better than expected.

– I have zero regrets about our decision. Well, not true, maybe one: I wish we had done it sooner. Knowing what I know now, I think we should have pulled the trigger sooner. But I think we took the time we needed to feel good about the decision and I can say with certainty that we are in a much better place financially than we when we started this process, even though my credit score still kind of sucks.

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Bless you if you made it through this multi-chapter saga. If you want to know anything else, please feel free to ask in the comments. I’m glad to talk about it and hope it helps someone someday.

Magnolia Street Part 2

So, there we were: living in Iowa with a home in Arizona that we couldn’t sell. Great credit scores but anemic savings. A mortgage company that couldn’t or wouldn’t work with us because we weren’t “in trouble”, at least on paper. We had renters but rent checks that were starting to come in late.

What I remember most about this time was feeling so frustrated that there wasn’t a single good option open to us. No matter what we did we would lose money, our credit score or maybe both. And we hadn’t done anything wrong. We hadn’t bought more house than we could afford. We hadn’t lied on our mortgage application. We weren’t trying to make a quick buck in a real estate boom. We just wanted a house to raise a family in.

Mr. Monkey and I circled around the “what to do” question for months. In hindsight, I think I knew all along what we were going to have to do: voluntary foreclose. But we were hesitant to pull the trigger and stop sending in that monthly check.

And then we got a bombshell: the house next door to ours (a house that was larger than ours) went into foreclosure and was sold by the bank. For $78,000. It had been valued at $245,000 when we bought our house. Overnight our house went from maybe being listable at $130,000-$140,000 to being worth less than $100,000. We still owed probably $190,000 on it. We were screwed.

So, we pulled the trigger. We didn’t send in the mortgage that month. The rent check came in and we put it right into savings. We agreed that if we were going to knowingly ruin our credit, we were also going to bust ass to build up savings. We thankfully were credit card debt free and only had one car payment and my student loan as debt, which helped a lot.

The worst part of that first month of non-payment was wondering what would happen next. Would I get mean calls from the mortgage company? Would they call me at work? Would we get letters? How fast would everything happen?

The next month we got a mortgage statement with a past due balance and a rent check. We put the rent check in savings and filed the bill.

That month I got my first call from the mortgage company. They were civil and even helpful on the phone. I told them we didn’t have any intention of getting caught up on the bill and would be pursuing a short sale or foreclosure. They reminded me that they’d have to report to the credit agency and asked for additional phone numbers to reach me at. I declined to give them any other numbers (a wise move, I think. Made it so all the calls only went to my cell and I didn’t have to worry about getting called at work).

The next month we got two notices: a past due and notice that the bank had sold the 20% mortgage to a different company. This ended up being significant, though I didn’t really realize it yet. We also got the rent check and put it straight into savings. I have to say, seeing our savings go up $2400 in three months was so encouraging.

A few more months passed (this process was so very slow). Our renters moved out and the home was vacant. We finally needed to make a choice: short sale, foreclosure, or deed in lieu.

To be continued in the next post…

Magnolia Street Part #1

Last night I stayed up far past my normal bedtime talking about underwater houses and foreclosure on Twitter and it reminded me of when Mr. Monkey and I were faced with making the tough choice about what to do with our house in Arizona after we moved to Iowa and how it seemed like there were not a lot of first hand accounts of what happens when you have to walk away from a house you once loved.

So I’m going to write what happened to us and share the kinds of things I wish I had known back when we were so far underwater with a house that we needed scuba gear to see the surface.

In 2006 Mr. Monkey and I were living in Arizona. We had jobs that at the time seemed stable. We had just finished paying off all of our credit card debt (BEST.DAY.EVER), were building some modest savings and were watching friends left and right buy homes. I wanted to buy a house, my first house. Mr. Monkey wanted to wait a bit, to build up more savings, but eventually we decided to look. We went to a mortgage lender who said that we were pre-approved for $250,000, which we knew was crazy for us but she assured us that we’d be able to refinance in six months or a year at most because house values were increasing so fast. We, thankfully, kept a level head, said no thanks and went to a different lender and got pre-approved for a more modest $210,000.

In short order we found a great little house in an incredibly stable older neighborhood (seriously, I think that neighborhood maybe averaged one house for sale every 5-7 years). We purchased for $205,000 and did an 80/20 loan with no down payments. We had some savings but decided to hold on to it for emergencies instead of using it for the house.

We settled into the house and every month I dutifully sent in two mortgage checks, always paying a bit extra to try to pay down the 20% loan. We were happy and the house was an easy fit for our budget.

And then things started to change. The housing market began to slow down and Mr. Monkey and I’s job started to seem less stable. We began to think about moving for better career options, something we’d discussed but thought was five years or more away. Soon though I was offered a great job here in Iowa and we moved.

When we decided to move, we talked our real estate agent and he told us he’d probably have to list the house at $160,000 to get any interest. We were a bit shocked. Nothing in our neighborhood had sold for less than at least $200,000 in five years. Hold on to the house for a year, he said, and rent it out. The market will gain some ground back.

So we signed up with a property management company and rented the house out. Because the rental market was filled with houses (probably owned by people just like us) the best rent we could get was about half of what our mortgage was. We’d be losing $800 a month. Okay, we thought, we’ll lose the $10,000 for the year we carry it but we’ll save our credit and “do the right thing”.

A year passed. The market continued to nose dive. We continued to lose money every month. We were trying to build our savings, which was down to levels that were concerning for me but paying rent and the mortgage was a tough balance. We maybe got $300 a month into savings and kept sending $800 to a house that was worth less every month.

(On a side note, you know that whole “rent is throwing money away” line? Bullshit. Paying money for rent is nowhere near as depressing as spending money on a house that is worth a fraction of what you bought it for. All that extra money I faithfully paid on the mortgage for three years. TOTALLY WASTED).

We began to have to think about our options. I should note that at this time in my life I had literally never paid a bill late and had a credit score that would have given Suze Orman herself a tingly feeling in her pants. We called to see if we could do a loan modification but couldn’t because we weren’t living in the house anymore. We called the mortgage company to see about a short sale and they wouldn’t talk to us about it because we weren’t behind on payments. We talked to a real estate lawyer who said that in his 35 years of practice he’d never seen a market this bad and to plan that it would take 10 years for it to recover and houses to go back to 2006 prices.

Ten years of losing almost $10,000 a year for the hopes of breaking even?

No freaking way.

Crass Consumerism

So, did you have a lovely holiday? Have some fabulous family time? Perhaps sleep in late and read some good books?

Maybe even get some delightful presents?

Allow me to share some of the new toys and fun things that have come into the Monkey household this month (and, of course, all of these are things we bought, as I am not nearly a fancy enough blogger for companies to want to give me things for free. Though, if this was a sponsored post, the sponsor would have to be Costco, which I love, so call me Costco!)

First, Mr. Monkey and I got ourselves a SodaStream

We love it. It is super easy to use and I would guess we’ve each doubled the amount of water we’ve been drinking since we got it. We actually really don’t use it to make soda all that much (although the diet cranberry flavor was delicious) because it turns out we both just really love some fizzy water.

During the same Costco trip that landed us the SodaStream (a trip where we literally went in to pick up some photos and to have a slice of pizza and came out having spent over $700. Whoopsie) we found these completely ridiculously soft and snuggly sheets. We finally got a new mattress so we needed new sheets and I think I am almost more excited about these sheets than I am about the mattress. So cozy.

So, how do you end up spending $700 at Costco? Well, in addition to the SodaStream and the sheets, you go ahead and get yourself one of these:

I’ve only used the bike once so far as I got the cold turned sinus infection that wouldn’t die the day after we got this assembled but I really liked it. I think it will be a great way to keep cycling for the rest of this pregnancy (I don’t feel comfortable riding the actual bike anymore) and will give me another way to get back into shape once baby girl monkey joins us in April.

Mr. Monkey got me these for Christmas:

I am going to assume that they are awesome because we are having a weirdly warm December (I think the temperature is supposed to be 56 for the high tomorrow) so there is no actual snow to shoe through right now. I’m hoping we get some snow soonish so I can try them out before I feel to pregnant to attempt it.

 

I would show you all a picture of the kiddo’s favorite Christmas present but I don’t think showing you the tiny car that came with the random Pez dispenser I stuck in his stocking as an after thought would really wow you. But let me assure you, that stupid little car is getting played with every single day so far. That and the $5 fire truck I picked up at a garage sale this fall. I love three year olds. Total joy and delight for $6.75 total.