Sunday, January 15, 2012

Net worth update: January 2012

Approximate value of our house: $175,600* (down $7,700)
Roth IRA: $22,110 (up $1,183)
Simple IRA: $4,500 (up $402)
Savings (including emergency fund): $12,811 (up $5,924)
Total assets: $215,021

Mortgage: $183,073 (up $101)

Total net worth: $31,948
Difference since last quarter: $-292

Wow, so I do all that work to save money and my retirement accounts are slowly climbing higher without any additional investments, however my net worth still decreased due to the house losing $7,700 in value in just 3 months. Apparently we are not done with the housing crisis because values are still dropping at a faster rate than we can pay down the mortgage. It's sad our house has turned into such a money pit. Since my last net worth update, we paid 3 payments of about $1,100 for our mortgage and it lost $7,700 in value - so essentially we've sunk $11,000 into the house in 3 months - so that's like paying $3,666 per month to live in our house - or $122 a day - which is more money than I make in a day - before taxes. It's frustrating to do all the right things but barely keep our heads above water.

Even though I do have over $12,000 in savings, about $7,000 of that is allocated to replacing our windows and siding on our house (the rest is our emergency fund). I don't know how much we will increase the value of our home by making these improvements, but I'm guessing we'll probably only regain about half the value we put into it. So the house is even more of a money pit!

So why did our mortgage balance go up? We just signed papers to refinance our mortgage at 4.5% interest rate (down from 5.75%)! They "pay off" our old mortgage before starting the new one, so the pay off value was actually more than our principal balance. But on the plus side, I think (although I'm not 100% positive) we won't have a mortgage payment for February since this new mortgage is set to start on March 1. So although we took a couple steps backwards in getting the balance of the mortgage lower, we should save about $1,000 next month by not having a payment. At first I thought I'd just throw that extra money at the principal of this new mortgage to get the balance we owe closer to where it was before we refinanced, but then I remembered my current goal of saving $20K by September 1. Setting this extra money aside would help us reach that goal faster.

Monday, January 9, 2012

My first financial goal for 2012

Here is my first financial goal for 2012. My husband really wants us to get new windows and siding on our house this year. The tough thing about making this goal is I have no clue how much it costs to replace windows and siding on a house.

I found an online calculator for replacing vinyl siding for a home our size (approximately 1750 sq ft) with a "mid-range" budget came up to $7,875.

Windows are tougher to estimate. I counted 11 windows (including the 2 small ones in the garage), but most of the windows have more than one panel so I don't know if that counts as more than one window. The one in our living room for example is a big window, but it's divided into 4 panels. So if each panel is considered a window then we have 21 windows in our house. But I think the official count is 11 and they just may vary in price for the different sizes. We also have to replace our front door and the door going into our garage. So since I have no idea how many official windows we have, it's tough to estimate. One website says this:

Expect to pay an average of $300-$700 per window for replacements placed inside existing (and structurally intact) window frames, but it could go as high as $1,000 per window, for a range of $3,000-$10,000 for a one-story, three-bedroom home with 10 windows. Larger, two-story homes with more windows can run $10,000-$20,000... If the existing window frame is rotted or damaged in any way... it can cost as much as 50-100 percent more than replacement windows, or $5,000-$40,000.
So we could get lucky and only have to pay $3,000 (doubtful) or go as high as $40,000. Some of the windows are showing a little damage, I just hope it didn't damage the frame.

If I estimate our windows will cost $500 on average and we have 11 windows plus 2 doors (I'll guess $500 each on those too), we would spend about $6,500. I'm guessing it's probably an additional fee to get them installed too. We had a patio door installed a couple years ago (that I'm hoping is still nice enough to keep), and I think it was $2,500 just for that! So, $6,500 is probably too low.

So without getting an estimate, it is tough to know how much to save. Maybe I should just save as much as possible until August and then get an estimate from whatever company we are considering. If it fits in the budget, then we can get them done in September. Otherwise, we will have to hold on for one more winter.

For now, I'm going to make it my goal to save $20,000 by September 1. Right now I have $6,791 saved (and that's ignoring our emergency fund). My after tax income is roughly $1,500 per month and there are 8.5 months left until September so I should make $12,750 to add to the $6,791 and would be $19,541 which just under $20,000. But, I'm hoping to adjust my tax withholding once we file our income taxes in a few weeks and I'll (hopefully) have a better idea of how much to withhold. So I'm hoping just by adjusting the tax withholding I'll be taking home at least another $100 per month and then this goal will be more easily attainable.

Saturday, January 7, 2012

Extra Cash Challenge

I am going to continue my challenge to earn extra money outside of my job this year. My full time job is slowing down again, so it is important to diversify my income. Here are the results from last month:

Part time job: $12.38
Blog advertising: $131.42
Amazon affiliate: $7.89

Total made for December: $151.69

My goal for this month is to try to start selling stuff on Ebay again. I'm sure there is some stuff around the house that we no longer need that we can turn into cash.