Monday, April 30, 2012

Diane Weighs in on Condos v. Houses

Diane Crowley tried to leave a comment on my recent post about Condos v. Houses. It was a great comment but too long for Blogger's comment section.


I'm reprinting it here in full:

Hi Grace,
Boy, do I have a lot to say on this subject. I have owned two houses and two condos. I still have one of each so perhaps this makes me qualified to chime in on the subject of condos.

First and foremost, make sure any condo association you're considering has fully funded reserves. Don't buy in one that's not or you will be facing higher dues and assessments. A high level of foreclosures in the development is a red flag, as people stop paying their condo dues first, which strains the association's budget. Another negative is a high percentage of rentals. Banks don't want to see more than 30% renters. Even if you're paying cash, it's an excellent rule of thumb. Attend a board meeting before you buy. Find out who the management company is and speak with them. Most of these companies manage multiple HOA's and can tell you who the good ones are. Make sure the complex has no signs of deferred maintenance. Walk the complex early in the morning and talk to the people who are out walking their dogs. Get a history of dues and assessments. If there were assessments in the past ten years, find out what they were for.

"The Board" is a group of your neighbors, not some evil empire. Many people complain about "The Board", but refuse to attend a meeting. Don't be one of them. If you buy a condo, plan on attending meetings until you are asked to join the board. If you're not willing to do this, don't buy a condo. Same for the rules. Read them first. If you don't like them or find them onerous, don't buy there. The rules are clearly spelled out before the purchase and shockingly few people bother to read them. They then complain vociferously about "The Board" and "The Rules".

I've been in my present home for nearly eleven years and on the board most of that time. Our meetings are rarely over one hour and everyone works together to lighten the load. We are fairly conservative and frugal. To save money, we have a team of volunteers who deliver our newsletters and anything else that doesn't require a postmark. As a result, we kept our dues at $275 for three years. Last year, we reduced the dues to $260, as our reserves are 100% funded and we had a surplus. The rate will stay the same this year. Our dues include care and feeding of three pools and lush, mature landscaping, so we are getting a lot of bang for our hard-earned bucks. The only assessment was over twenty years ago, due to insufficient reserves. We make sure to keep the reserves fully funded and do not anticipate any assessments in the future. In your discernment process, always ask about assessments. They generally loom on the horizon long before notices go out. Get a copy of and actually read the minutes from at least a year's worth of meetings. If there is an assessment coming, it will be in the minutes.

When I went shopping for my current home, I knew I wanted my own driveway, no speed bumps, and a place that looked the same whether I was home or not. I got all of this and great neighbors to boot. My unit is attached to two others. The dog-walking neighbor places our newspapers on our porches every morning. On trash day, the one who is home when the cans are emptied brings everyone's up from the curb. We watch out for each other in lots of other ways, big and small. Last year, we had a neighborhood food drive and collected over 650 pounds of food for the local food bank.

Here's a story about the value of being on the board: When my first condo board announced that there would be an assessment equivalent to 1.5 month's mortgage to replace the roofs, I asked if it was necessary to replace all six roofs at once. We had them inspected and photographed. It was determined that we could do two buildings per year and avoid the assessment completely.

Obviously, I vote for a condo, but it must be the right one for your needs. It's not hard to find if your goals are clear and you do your homework. One myth I'd like to bust is that of taxes. As a renter, you are still paying taxes indirectly. They are included in your rent. Your landlord is paying them with your money. That's part of why rents always go up, roughly on pace with inflation. If you have a fixed rate mortgage, or none at all, your taxes may increase, but it's generally a much smaller percentage of your total budget.

Whew! That was a long one. It's hard to proofread in the tiny comment box, so I hope I've explained things clearly enough to help you with your decision.

Your blog has helped me in so many ways. I hope I can return the favor.
Kind regards,

Thursday, April 26, 2012

Looking for Cheap Therapy? Become a Blogger

I've added new blogger, Jessie, to my blogroll. She's a forty-something newly-minted real estate agent wondering if her new career is worth continuing. (At least she lives in Texas, cuz given the real estate market everywhere else, the answer would have to be "Are you kidding?")

I like the ambiguous title of her blog, Fumbling At Joy.

In Jessie's welcoming message, she mentions that one reason for opening a blog is that it is cheaper than therapy.

Got that right, and therapy is something I know a whole lot about. Having adopted five daughters as older children over a twenty year period, I practically had therapists on retainer. As I often said about one particularly difficult daughter, the counselor didn't do much for my child, but her therapy was the reason I survived that kid's adolescence.

There are as many reasons for blogging as there are bloggers. Working out one's issues on an anonymous yet public stage seems to me to be a good one.

I started my blog nearly five years ago (Sheesh! Has it really been that long? And I STILL have all this debt?) to keep myself honest as I move financially and emotionally toward retirement. As with the recent post on condos, I tend to do much of my thinking out loud. It helps me sort out what's important, as do the responses, which range from supportive to "You did WHAT??" Most of all, I appreciate hearing what others have done in similar circumstances and how it is working (or not) for them.

Good thing I can blog, since the one thing I cannot currently afford is a good therapist.

Monday, April 23, 2012

Condo v. House

One of the decisions I will need to make someday is whether to keep my house, downsize to a smaller place or move to a condo.

I've pretty much decided to eliminate the middle choice. I like my current home a lot, even though it is old (built in 1929), large, and has too many stairs and too much yard.

Need I say that ranch-style bred moi first fell in love with the house BECAUSE of the stairs and the yard and its age?

I live only ten minutes from city center (20 minutes if I'm traveling by bus).

But I am very attracted to life in the middle of my city--the sheer walkability, the restaurants, the magnificent library, how close the cultural institutions are.

I've never minded apartment life, and I certainly would not mind NOT having to worry about upkeep. I refer to my yardcare as 'Darwinian.' I have the lawn moved and the flower beds weeded, but whatever grows is what survived the rainy season. Nothing is planned, so I'm always as surprised as the next person to see what comes up when.

So, in general terms, I think I'm the ideal condo-dweller.

BUT, I worry a lot about monthly condo fees and how unpredictable they are. Isn't the point of paying off my mortgage prior to retirement, NOT to have more monthly fees? At least with a home, I make a personal decision as to what I want fixed or updated. It's scary to think of a condo board making those decisions for me, possibly at a cost that I could not afford.

Then, too, I wonder if I'm ready or ever will be for the rules and regulations that come with owning a condo. I've never been part of an HOA nor wanted to be. I prefer eccentricity to cookie-cutter houses.

Finally, at some level, I am concerned that condos are seldom good buys--the recession hit their market far harder than the housing market, which was bad enough.

I'm starting to read up on the advantages/disadvantages of condos versus homes See here and here--read the comments as well.

Thursday, April 19, 2012

Debt in One's Last Decades

The May issue of Money magazine arrived today. As usual, I devoured it in one sitting.

But that doesn't mean it was without its depressing moments. One of the first articles talks about the increasing debt loads carried by people older than 65. I'd link to the piece, but it's not yet up at the Money site.

Apparently, in the United States, a third of those age 65 or older still have a mortgage--up from 20% in the 1990's. The median amount owed is $56,000.

Worse, seniors owe an average of $10,235 on credit cards.

I will likely be among those with some remaining credit card debt when I turn 65 though I don't plan to retire until I get rid of it.

But my mortgage will be paid by the time I turn 65. The article's statistics are scary and do not describe a group I want to be part of.

Friday, April 6, 2012

Why Grace Didn't Win Mega Millions

The easy answer?

I didn't buy a lottery ticket.

Before anyone starts telling me how smart that was, let me say that I thoroughly intended to buy one but I forgot.

Who knows if that $2 could have solved all of my financial problems--now I'll never find out. At least until the next $100+ million dollar lottery.

I read somewhere (and, of course, can find no reference to it now) that one's chances of winning, while witheringly slim, are somewhat better if the jackpot goes over $100 million. So when it does, and if I remember, I buy ONE ticket.

That's right. I blow $2 on a virtual impossibility.

Donna at Surviving and Thriving knows whereof I write. She even admits to buying a lottery ticket or two or six over the course of a year.

I never win lotteries, not even local ones. When my youngest daughter's school put on a fundraising dinner/auction each year and requested (more like demanded!) that each child sell 10 raffle tickets at $25 a piece, I couldn't bear the thought of hitting up my friends, so I bought all the tickets myself (which seemed fair to me because the raffle funded scholarships, and my daughter was getting a significant reduction in her tuition as a result). Over the course of four years, I had 40 chances to win, and never came close.

But like Donna, I don't think $2 is too much to spend for the chance to dream of winning millions. It's a lovely exercise to mentally spend all of that money on myself, my children, my charities, my world.

In a good year, I've spent, at most, $20 on the lottery. It's money I haven't spent on nail salons, super-fancy coffee drinks, or jewelry. (I have nothing against any of those, they just aren't my particular vices.)

Donna quotes one financial guru as calling the lottery "a tax on people who can't do math."

Yep. That would be Grace. Bad at math. Good at dreaming.

Tuesday, April 3, 2012

Quarterly Net Worth Going UP!

For once--a good Quarterly Net Worth statement.

I'm now at my highest ever amount--$609,959.24

Not only are my retirement funds getting larger but both my primary residence and my rental have increased equity. Maybe the Pacific Northwest is coming out of its real estate funk? I can only hope so.

This is all particularly good news since things seem to be getting tighter on the day-to-day front. Every month that I think I'll have more money to throw at my debt, something happens.

Why do I think Murphy is sitting on my shoulder with a score pad?