Wiping out Savings?

My credit cards are finally paid off, completely! Hubby owes about $14,000 on his, but he's making progress on 'em. I had hoped that his would be less than $5k by the new year, but I think a more realistic number will end up being $8k.

One of the first things I did when my card was paid off was to take care of some much-needed house/lawn maintenance. Cost so far is over $800, but I'm glad we did it. I took the money from our emergency savings to cover that, but will replenish it by the end of this month.

The problem is that we now would like to redo our driveway, as it's in poor shape and is a bit of an eyesore. When we bought the house, our home inspector told us a new driveway (asphalt) would be about $8000. We'd like concrete, which would be even more.

We've debated attempting the driveway as a DIY project, and enlisting the help of some friends/family. Removing our current driveway would be the most difficult part, we're still trying to figure out the best way to dispose of all that material. Neither of us has a CDL, so we'd have to hire a dump truck with driver for probably two full days. I think we could form and pour/finish the concrete without too much difficulty. We might hire out the removal, if we can find someone reputable to do it cheap enough.

I will only do the driveway if we can afford to do it cash, I will not go in debt for it. I'd rather not wipe out all of our cash savings, but it is really tempting to get it done so that our house will look nicer though. We can't decide if we should get estimates and just go for it, or if we should hold off (and if so, what's the minimum amount that we need to keep in the emergency fund immediately AFTER making a large purchase/expenditure?)

Anyone have experience with replacing a driveway, to know how much it costs? If not, what's your thought on the money side of it?

Property Tax Assessment

Our City property tax assessment for 2010 arrived in the mail yesterday, it was quite a surprise.

From 2006 (when we bought the house) to 2009, our "fair market" value dropped by about $24,000. From 2009 to 2010, the fair market value dropped another $34,000. In a little less than four year's time, we have lost nearly $60k in home value, plus the nearly $30k in improvements we made made since moving in.

And it's even more frustrating to see what we could buy now for the amount we paid only a few years ago...

2010 Budget

We have our normal monthly budget, but I also like to be able to project out major expenses for the upcoming year (and thereby I can figure out how much debt we can pay off during the year).

Here are the major anticipated expenses, with the amounts we have currently budgeted:

Car Insurance, $1600 (half in Mar/Apr, half in Oct)
Income Taxes, $800 net (April)
Sister's Wedding, $1000 (May)
Home Maintenance (repairs, lawn care, small projects), $3000 (May - Sept)
Kitchen Remodel, $7000 (late summer/ early fall)
Vacation/Travel, $3000 (now - Dec)
Misc Spending, $2000 (now - Dec)

Home Repairs & Improvements

It seems like quite a few PF bloggers put a halt on all home renovation & maintenance projects while they try to pay off debt. But not me. 

Maybe it's because I like to have several things going all at once, or because I know it'll be several years before we're debt-free and it's not worth it to me to wait that long, but I want to tackle home repairs just as aggressively as I tackle debt. Which, at times, means sort of a bumpy road, with months of absolutely no progress whatsoever.  ;)

I've got several projects in various stages of completion right now, and many that I'm hoping to finish before winter hits. And although I've purchased a significant portion of the necessary supplies, there will still be some expenses.

• Deck:  $200 in materials (estimated)
• Misc. Tool Rentals/Purchases:  $150 (estimated)
• New Gutters: $800 (estimated total cost)
• Landfill Disposal Fee (hazardous waste & construction debris): $150 
• Replace exterior door: $150 in materials (estimated)
• Re-caulk exterior: $100 in materials (estimated)

Right now I've got $1000 set aside in the home-repair fund, and $1550 in estimated upcoming expenses. If we are successful in completing everything before winter hits, it might delay being able to pay off "my" credit card by the end of the year. It would only push it back by a month or so, which is a tradeoff I'll happily make. 

Property Values

We bought our current house at near the peak of housing prices. We settled on a purchase price around $180k, and felt that we had an ok deal. We made the mistake of getting too attached (and desperate to settle, after being unable to find something that met all our criteria but was still in our price range!), so we felt that we had overpaid slightly, but we made that tradeoff when we placed our final offer. 

Three years later, our house is valued somewhere around $145k, a drop of $35k (almost -20%). It means that we're upside-down on our mortgage, and we're pretty much locked in to a house that we can't afford to sell. We'd love to "move up" into a bigger nicer home, but we wouldn't be able to come up with the difference on what we owe, much less a down payment on the new house. So we're stuck where we are, and we're trying to make the best of it. 

Although the entire state has suffered some pretty significant drops in property values, I knew that where we live hasn't been hit as badly as others. For curiosity's sake, I decided to check and see how it's affected property values of some of our friends and family who live nearby. 

One couple we know paid $140k in 2003, and their house is now worth $120k (-14%).  Another couple paid $95k in 2004, and their house is now worth $45k (-47%). And yet another paid $265k in 2005, and their house is now worth $215k (-19%). 

It definitely sucks that values have dropped so much, but it's oddly reassuring to know that so many people we know are in the same situation. We've lost a lot of money on this house (if we were to sell it now), and especially if we include the money that we've put into repairs & improvements (not even talking about mortgage interest and property taxes!), but it could be worse. I'm sure that we'll end up taking a loss when we move (because we don't plan to stay put for more than a few years), but hopefully we will get enough to at least pay off our mortgage when we do finally sell. 

Escrow Analysis

We just received our annual Escrow Analysis from the mortgage company, where they re-calculate how much we need to set aside in escrow for property taxes & insurance for the upcoming year. The total amount estimated came to $3643.31, for a required monthly escrow payment of $303.61, a reduction of almost $60/mo.

There is some regulation that only allows them to keep a "cushion" of 2 months worth of escrow (so when everything is paid, they would still have an extra $607.22 - which could be used in case property taxes or homeowners insurance premiums increase). The cushion in our account exceeds that amount, so they also notified us that we'll be getting a refund check for $145 next month. 

Because our property values have declined so much over the past year and a half, our taxable value has actually been dropping. We received our assessed value statement from the City, and they estimated that, as of January, our property had gone down by nearly $14,000 from the same time last year.... and it has continued to decline since then. 

The plus side is that this means our property taxes have gone down too. For the upcoming year, our property taxes will be almost $250 less than what we paid this past year. This decrease in taxes was not reflected in the latest escrow analysis, so I expect that we'll get a refund of $250 next summer.