Slow Progress

Things have been pretty tight lately, and we're not making much headway. Last month I only paid the minimums on my credit cards, so that I could set aside the rest to put towards several upcoming expenses:

We thought we were going to owe $1300 in income taxes to the IRS, due to some errors with our employers withholding too little, but it looks like it'll come out closer to $600 (and we will be getting a refund of close to $500 from state). It will be close to a wash in the end, but we need to front the $600 payment. We still haven't filled out our tax returns, so I don't know the exact amount.

Our car insurance renewals are due, for both vehicles, just shy of $1000 for six months. It's predictable (every April & October), but this time our premiums went up. Nothing we did, but the insurance company said that they've had more claims than usual (with most makes/models), and when that happens it means they adjust premiums upward.

Hubby spent $700 (he has a $2000 annual budget for discretionary 'big-ticket' items, like a computer), and we've got about $500 in normal springtime house expenses (weed killer, pesticide, grass seed, new mulch & topsoil, minor maintenance items).

We also have several smaller expenses over the next few weeks: a new windshield ($300), traffic fines ($125), vet bills ($150), water/sewer ($90), quarterly student loan ($120), wedding gifts ($150), wedding apparel/accessories ($75).

Prepay Rent?

Earlier today I had a discussion with a friend who is planning to move later this spring. Her & her husband are going to try to negotiate a lower monthly rent amount, and are going to offer to prepay a significant amount (6-12 months) if the landlord or management company will agree to reduce the payment by about $100/mo (roughly 15%).

I think this is a really bad idea; it seems like they would be putting themselves at significant risk with little room for recourse if something bad happened. When I pointed that out, they didn't seem to think it was a problem (or even a real risk). Some specific scenarios that would concern me:

- The building catches fire and is damaged or destroyed. Renters insurance only covers the contents, so although the owner would likely have insurance to rebuild, they would need to find another place to stay (and it takes time for insurance claims to get processed). The insurance won't refund prepaid rent, so they would need to get that back from the landlord (possibly by filing suit, if things turn sour).

- The building has plumbing or mechanical problems (a pipe freezes then bursts, or the boiler/furnace goes out for several days, etc.) and the building or their apartment unit becomes uninhabitable, they have to trust that the landlord will take care of it expeditiously.

- If any repairs are necessary and the landlord isn't responsive, they have no real recourse to make sure the repairs get done. Typically, tenants are legally allowed to hire someone to make repairs (if the landlord doesn't take care of necessary repairs in a timely manner), and then deduct the cost of the repairs (with receipt) from their rent payment. Since they'll have already paid, there's nothing they can do except wait or pay out of pocket.

- The biggest concern, if the owner gets into financial trouble and can no longer afford to pay his mortgage. They will have prepaid the rent, but if the landlord stops paying and is foreclosed on or sells to someone else, all they have is a piece of paper saying that they've paid. The new owner may not want to honor that contract, and could make life very difficult and unpleasant for them (which could also go back to the repairs/maintenance thing too). I think, technically, the contract would still be valid, but they may have to go to court (which means attorney & court fees) to have it upheld. And if they tried to recover any of that prepaid rent from the owner, they would likely just be one of many lien holders (that would go away if he/she declared bankruptcy).

How much is too much?

Hubby & I have been talking through plans for the next year or two. Not surprisingly, we aren't really on the same page.

I want to pay off the credit card debt, then aggressively tackle our 2nd mortgage. While we're working on that, I'd also like to cashflow several home renovation projects.

He has his eyes on a brand-new $38,000 sports car (financed, not saving up for a few years to buy it with cash). In the meantime, he's planning to buy some new electronics and go on a few trips.

I'm not sure that there's any middle ground that we can both agree on. I think one or both of us will end up not getting what we want.

Swagbucks Update

I wanted to give an update on my Swagbucks earnings so far.

I'm still only using Swagbucks as a search engine, I haven't attempted to earn any extra bucks by completing offers or buying stuff. But in just over 3 weeks, I've earned 45 Swagbucks, which is equivalent to a $5 Amazon gift card. The cost for other prizes varies greatly, and there is a complete listing here - but the Amazon gift card seems like the most practical overall. Over an entire year, that would be $75-100 in free money just for using the search a handful of times each day.

I haven't had anyone else sign up using my referral link (anyone, please?!), but I think how it works is that I get extra Swagbucks whenever people I refer get them - so I could pretty easily double or triple my rewards. I guess in that regard, it's sort of a Ponzi-type setup.... but it's legit.

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)

I've Been Avoiding this Blog

It's been a rough few weeks, our spending has been pretty high and we also found out that our income tax bill will likely be even more than I'd previously thought.

We bought most of the supplies to finish out our current remodeling project, and that was $1300.

I found out that some professional expenses ($470) isn't going to get reimbursed by my employer. Unfortunately, I was already told by my supervisor that it would be covered, so we spent the money we had set aside for this (and a bit extra!) and used it to splurge on a big-screen TV. Had I known at the time that the company would take back their word, we would not have spent the money.

Another $265 in professional fees won't be reimbursed until late summer, but I had to front it last month. I'm slightly annoyed at having been told that other things will be reimbursed/taken care of, only to have someone at a higher level reverse that decision (unfortunately, it's happened a few times since I've been at the company), but at this point I'm still pretty sure that this will eventually get reimbursed (unless I get laid off first).

Because of these three things, the credit card that I use for regular monthly expenses/spending (and try to pay off each month) has a balance of around $2600 right now, FAR more than I'd like it to be. And I won't be able to pay off much over the next few months, because:

We will owe roughly $1300 to the IRS, as it appears that our tax withholdings were screwed up when the "Making Work Pay" tax credit went into effect last spring. We're still not quite sure how this happened, because I declare "0" exemptions on my W-2 & Hubby declares "1" on his, but somehow BOTH employers reduced withholdings by the full amount for a married couple. I think we'll end up getting $400-500 back from the State, but the net total is that we'll end up owing a lot of money. Have I mentioned before that situations like this are why I disagree with Dave Ramsey and think a $1000 baby emergency fund is not nearly enough?

Our semiannual car insurance payment is due in April, and will likely be $800-900. We actually have two separate policies that renew within a couple weeks of each other. We probably should set aside $150/mo so that we have the full amount when the bills come, but instead we've always just chosen to cash-flow it. Instead of paying extra to our credit cards, we just shift the money to the bills instead.