Farewell 2006!

2006 is ending on a rather blah note here... it's raining. Not thunderstorm rain, but soggy, dreary rain. I have a tingly feeling, like something exciting is going to happen today... but maybe I just drank too much coffee.

I just finished our final net worth calculation for 2006. Thanks to Yodlee Moneycenter, these only take about 10 minutes to do now. We ended 2006 just over $220,000. It's going to be down hill from here as we build our money-sucking monster of a garage and close on our investment property next month. We will be lucky if we can end 2007 where we began... but our goal is to make gains over the long-run.

Things that were good about 2006....
1. We maxed out our Roth IRA contributions, yet again.
2. My brother graduated college and joined the workforce.
3. We *finally* started the garage project.
4. I got a promotion!
5. We *finally* found our first investment property. The timing isn't great, but is it ever?
6. I quit smoking... by accident (you know you are working too much overtime when you quit smoking for four weeks and don't even notice).

Things that I hope happen in 2007...
1. I finish my MBA.
2. We somehow come up with the money to fund our Roth IRAs again.
3. The garage gets built and we miraculously come up with the money to put the driveway in (I have a sinking feeling it will be an either-or with the driveway and the Roth IRAs).
4. We get the property to cash-flow neutral by the end of 2007.
5. All this stress doesn't prompt me to start smoking again.

I think I'll post New Year's resolutions tomorrow. I have a feeling that none of them will have anything to do with money, but we'll see.

Electric Orange

The beginning of a new year is when I typically revisit all of my direct deposit and property tax escrow accounts - adjusting the amounts and switching accounts around. This past year, my paycheck got split between three ING Direct savings accounts, one of which is used to fund our Roth IRAs (two withdrawals per month), another is used as self-escrow for property taxes and hazard insurance (typically zero withdrawals per month), and other is our DRIP contributions (three withdrawals per month) and mortgage payments (two withdrawals per month). I can use savings accounts for these purposes because we are under the six withdrawals/month maximum mandated by law.

Preparing for this year was a little more difficult because we will be doubling the number of mortgage payments we make in a couple weeks, and we will need to escrow a LOT more money for property taxes and insurance. I want to automate all of our (many, many) mortgage payments and keep our savings on auto-pilot as well.

I really like using my ING accounts for segregating our money. We have six accounts under one customer ID and each of them is used for something different. It's very easy to get a snapshot of where we are at a glance, so I'm hesitant to switch my direct deposit to our credit union checking account. Enter the ING Electric Orange checking account... it has the features I need (free BillPay, ACH transfers in and out, ATM access) as well as 3% interest on all balances.

but....

It also has the downside of not being widely available right now. From what I've read, the beta wasn't available to all customers, but ING is taking requests from customers to be added to the list of invitees. Rumor also has it that it will be available to everyone on February 1, 2007 (this date has been a moving target, so I wouldn't hold your breath). I called ING's customer service number and requested to be part of their next wave of rollouts, but the CSR couldn't tell me when that would be.

So for now, I'm going to continue using the existing multiple-saving account strategy and hope that I get an invite in the next month or two.

If you don't yet have an ING Direct account, check out this post for information on how you can earn a $25 new account bonus.

advertising the open unit

I just placed a two-week ad for the open apartment, beginning next Wednesday, in the local paper. It was only $20.50, and hopefully it will generate some interest. I also placed an ad on Craigslist, and also responded to three "housing wanted" postings that I thought might be interested in the apartment.

I also visited the Apartment Association of South Central Wisconsin yesterday. I'm thinking about joining, but it's pretty expensive at $250 for the first year. It might be worth it because they have a lot of resources available to help property owners and managers, and they have a full time support person on staff just to answer phone calls and field questions, as well as a lawyer available for legal questions. It could save us from spinning our wheels and making stupid mistakes. They also have some seminars, provide tenant screening services, provide networking opportunities, and have a catalog of Wisconsin-specific forms (leases, applications, addendums, notices, etc) available at very reasonable prices.

There was a comment on an earlier post about using Project Home to get the water heater replaced. I will definitely look into this, but I'm not sure about the turn-around time. The water heater should have been replaced months ago (it's leaking), so the timing might not be great. As soon as we close, I'll try to get the information necessary from the tenants to fill out the application.

updates

Thanks for all the birthday wishes! My birthday was great, I started the day with some ice skating with my dad, brother, and Mr. Savvy, watched a great movie, celebrated Christmas with my extended family, and took a limo ride to see all the holiday lights with some of my relatives. It was a great first day of being 28!

We had the inspection on the four-unit before we left for the holiday. It went pretty well, there are, of course, some issues. We have a pretty long list of things that need to be done ASAP, the most pressing ones are some electrical work, replacing one water heater, replacing the fire brick in the fireplaces, and cleaning the chimneys. There's some other small things that we will get to as we have time.

Negotiations after the inspection were strained, but I *think* we have everything worked out (I haven't talked to my agent to confirm yet). We are getting a small amount to help pay for some of the repairs, we will have to use it very frugally. We plan on doing most of the work ourselves, if we can. We've never replaced a water heater (electric), so that will be fun (tips are appreciated!).

Cleaning the four chimneys is actually the most expensive item on the list, coming in at $650. If anyone has any recommendations for doing this ourselves, without climbing on the roof, I would appreciate it. I don't mind spending money on equipment if it means savings in the long run.

I hope everyone is having a safe and healthy holiday season!

Happy Birthday to me!

w00t! I'm 28 today! It will be double-y fun because my mom's family is celebrating Christmas today and I will get to spend it with my cousins and other relatives.

I will try to post more about the inspection we had on Thursday and the subsequent negotiations later today or maybe tomorrow. We had some trouble coming to an agreement on some of the repairs, but I think we have everything sorted out.

Inspection tonight!

Our inspection is tonight! I'm really excited, I hope it goes well and we don't find any major (or even minor) problems. The building was built in 1983, so there will probably be some small things.

Question for anyone experienced in the investment property arena... we are paying some of the expenses that go along with buying a property (inspection, some of the mortgage fees) this year, but we won't be closing until next year. Are we still able to write off the expenses incurred this year even though we don't own the property yet?

why do you tempt me?

Why do the credit card companies wait until the absolute worst time to tempt me with cheap money offers?!

After some pretty dry months for 0% balance transfer offers, our mailbox has overrunneth with tempting deals. I only hope they are still there after we close on the apartments.

Nothing New Here -- And That's the Point

Property Mgmt Co

The apartment building we are buying is currently being managed by a large local property management company. We will not be using the company ourselves, we will be doing the management on our own, but I wanted to make sure we had good communication with them during the transition. I called the company this morning in order to make sure they knew what was going on, and also to get some documents and information from them.

I requested copies of current leases, copies of any outstanding rental applications, and notified them that I am starting to advertise the units even though we aren't closing for a couple weeks (I have the permission of the sellers to do this). The woman at the property management company was very helpful and said she'd send over all the information this morning, and they were fine with me advertising the units myself prior to closing.

I feel like things are progressing well! We have the inspection scheduled for Thursday, and pending a good outcome, I will start posting adverts for the open unit on Craigslist, in grocery stores, and on our company bulletin board first thing Friday.

money convos

Mr. Savvy and I have been having a lot of conversations about money in the past couple weeks... so many that even I'm getting kinda tired of talking about it. We have some big expenses coming up with the garage project that is underway (check the left sidebar) and the investment property we are buying.... and we are going to go from a little debt to a LOT of debt in a short amount of time.

The timing is such that both will require big cash outlays in the same period of time. We've been pretty flush recently (we paid off a loan this summer and I got a raise in September) and it's so easy to get used to having extra money, but we both agree we are going to have to go back to being "poor" for awhile... no more buying something just because we want it, cutting back on the expensive meals and some of the extras, and being more cognizant of where our money is going. We have done it before and I'm sure we can do it again, it will just be a change in our spending habits.

We are going to be landlords!

It's been a busy week, but it looks like Mr. Savvy and I will be the proud owners of our first investment property come January. We have a signed offer (it's even for $2,000 less than our verbally agreed upon price - my agent and I have no idea how that happened but we'll take it!), and we've been approved for financing and have our rate locked. I've also talked to our insurance agent and lined up coverage for the new property as well as an umbrella policy.

The sellers agreed to let us market the vacant unit prior to closing, so I'll probably be putting an ad out on Craigslist in a week or so. I haven't decided if we will raise the rent yet, I'm thinking we'll keep it at the current rate for the tenants that stay, and raise it for any new tenants.

On the down-side, I think our May 2007 goal of $12,000 in an emergency fund is out the window. We aren't going to have much spare cash at the beginning of this year. I might take some money out of brokerage accounts and keep them somewhere more liquid, but I think I'll wait until after closing to make any more big decisions.

We are close to an agreement on the four-unit....

I had a feeling the sellers weren't going to budge much on price, so I spent more time this last weekend looking at comps. According to comps the property is worth almost exactly what they are asking - especially considering its condition, but I'm trying for as much of a discount as I can possibly get.

We don't have anything in writing yet, but I'll post more info when I have it.

counter offers

Well, there's been a tiny bit of progress on the investment property front... the sellers were planning to counter my offer, but their agent called my agent and gave him "the number". My agent called me with "the number" and I told him they didn't need to bother putting that particular number on paper, and I gave my agent a new number to send back to the sellers. If they like it and are willing to negotiate from there, then we will go back to putting offers on paper, but it makes no sense to be killing trees when we are so far apart on price.

Right now, the sellers are telling us that they have $x invested in the place (purchase price + improvements + selling fees) that they need to get back out. I can see where they are coming from, but this is the second time this property has been listed this year, and it's really not worth what they have into it. I know what they bought it in January of 2003, and I think they probably paid too much for it at that time.

No word on the offer...

Our offer to purchase the four-unit expired yesterday. I'm fairly certain they didn't accept it (our agent would have called), but I still am hoping we get a counter today.

I also found a really great real estate website and message board this weekend... BiggerPockets. There's a ton of useful articles, tools, and wikis, as well as active message boards. I've been playing with their property analysis tool and really like it.

On another note, it's supposed to be almost 40 degrees today, so we are getting the concrete slab poured for the garage!!!!!!!!!!!!!!!!

Just submitted an offer...

... on the four-unit apartment I saw for the second time last night. Even Mr. Savvy gave his approval (which is rare, he's pretty picky), so we decided to submit a low offer. I don't expect them to accept, but a counter would be nice.

I'll update as I know more.

new blender!

We just got a new blender and it rocks! My brother thinks life without the occassional blended drink is hardly worth living, so he order this awesome refurbished Kitchenaid from Amazon for only $35. It weighs a ton and does everything a high-end blender should do, include looking nice on the counter. I can't wait to get home tonight and make a margarita... or maybe a mudslide....

2006 Property Tax Bill

It's that time of year again... I just received our 2006 property tax bill and am happy to report that it is up only $20 over last year! The means that my property tax account at ING Direct is over funded by about $450 this year, which will help as the expenses for the new garage keep adding up.

2003 tax bill: approx $2,600 (I don't remember the exact amount)
2004 tax bill: $3,311 (ouch)
2005 tax bill: $3,127 (nice 5.5% drop)
2006 tax bill: $3,147 (less than 1% increase)

Some of you might remember that I was recently voted onto our village board of trustees (similar to a city council) and am the finance chair. One of my first tasks was to work with a small team and our clerk/treasurer to finalize the 2006 budget for our community. It was a good process and the outcome had a direct result on our property tax bills now and probably will for a couple years.

five hundred and twenty-five

This is post number 500 at the Savvy Saver! I didn't even realize it until today, otherwise I would have come up with something more momentous.... instead I bring you $25 ING Direct new account bonuses!

Here's the deal... you open a new account with ING Direct via one of the referral links below and you get $25. My freshly-graduated, just started his new job, baby brother gets a $10 bonus for each referral that I promise will be deposited in his very first IRA! You get $25 AND good karma!

ING Direct BONUS

I will add new links as these get used. The links will also available on the right sidebar.

Chase/Sony promo is back!

The Chase/Sony card promo is back, this time a $150 card credit will be given 8-12 weeks after the first purchase. Mr. Savvy and I have taken advantage of this offer multiple times in the past. We will probably hold off this time because we might be applying for a mortgage loan soon, but my brother will most definitely be signing up.

Questions? Check out this Fatwallet thread for more info.

Net worth - 1 year review

This month marks the 1 year anniversary of our use of NetworthIQ. I was looking forward to this event because it allows me to do a very easy comparison of where we were this time last year and where we are today. I'm happy to report that our net worth has gone up $104,362 (92%!) in the past twelve months, aided greatly by real estate appreciation and the performance of some of our investments.

I dug a little deeper into what really drove the six-figure increase, and found that 38.5% of it ($40,246) was increases in the value of our retirement accounts (both contributions and gains), 60% ($62,295) was an increase in home equity (appreciation and debt reduction), and 1.74% ($1,821) was miscellaneous (increase in non-retirement investments, decrease in car value, etc).

All-in-all, I think this is a year to be proud of. I'm especially thrilled by the retirement account balances - making contributions has become second-nature and choosing investments is getting easier as I learn from my mistakes. Hopefully we can continue this this growth in the coming years.

(scroll down to see the chart, I'm having table issues that I *think* are template related)

Assets	Nov 2005	Nov 2006	$ diff	% diff
Cash	33261	50554	17293	52%
Stocks	900	3756	2856	317%
Bonds	3000	4071	1071	35.7%
Retirement	87000	127246	40246	46.3%
Home	169000	225000	56000	33%
Cars	10500	7000	(3500)	-33%
Other	2300	2575	275	12%
Total Assets	306,321	420,202	114,241	37.3%
Debts	Nov 2005	Nov 2006	$ diff	% diff
Mortgage	158986	152691	(6295)	-4%
Credit card	27238	50062	22824	84%
Other	6650	0	(6650)	-100%
Total Debts	192,874	202,753	9,879	5%
Net worth	113,447	217,449	104,362	92%