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Net Worth & Finance Updates

September 1, 2014

In the weeks we were preparing to buy our house, it felt like money was flying around everywhere. From one account to another, a cashier’s check, wire transfers, checks to inspectors, escrow refunds, insurance premiums, ikea, home depot, target… Finally, we got our August paychecks, and everything is more settled financially.

Here are some tidbits about the net worth of the SP household:

  • I added a new category to our net worth: home equity.  I’m going to use Purchase Price – Mortgage balance, unless there becomes a reason to believe that the market value has fallen below the purchase price. 
  • About 70% of our net worth is in our retirement accounts.  
  • My retirement accounts are quite a bit larger than T’s, but he’s catching up.  
  • Sort of.  He’s contributing about 2x the amount I am, but our balances have increased almost the same amount.  Thank you, investment gains!
  • We’ve had a 30% increase in our net worth so far this year.  Yay!
  • I don’t expect major net worth growth for the rest of the year due to: property taxes (not impounded), a few home maintenance projects (boring stuff like furnace, seismic, drainage – not redoing the bathrooms), and reduced cash flow.

My near term financial goals are:

  • Continue retirement savings at this pace through end of 2014.  Then, we’ll likely reduce T’s a bit to support the 3rd bullet below.
  • Complete the house projects listed above.
  • Reduce mortgage balance.  I want to put at least $5k extra within the first year, but maybe more.  I don’t like throwing out numbers without doing the calculations, but $5k is a number I’m comfortable just throwing.  :) 

What We Gave Up For Our Home

August 11, 2014
After congratulating me and being generally excited about our new house, one friend mentioned that she was just spending all her money on travel.  I didn’t respond in the moment, but the comment stuck with me.
While our house is freaking expensive, we chose carefully such that we could afford the payments without a lifestyle shift.   It isn’t an either-or situation.  We plan to have a house, and to travel.  In the long run, buying should actually be cheaper than renting for us.  It seems impossible that this math works, but it (in theory) does.
What I don’t think that my friend recognized (and I wasn’t willing to point out), is that I’m much older.  She he is literally just starting her career, while I’ve been saving (while traveling) for years.  Not to mention the fact that I’m buying it with my husband, and there is also a fairly significant salary differential.
That said,  we are no longer planning to go to Patagonia this winter.  I really want to, but T has two awesome conference I want to tag along on early next year (one in the middle east, one in Asia).  It didn’t make sense to do another trip this December.  Time is just as much of a factor as money is.  The choice has little to do with the home purchase, though it made the answer more definitive.
Anyway –  I’m not giving up travel.  We’re also “over saving” in retirement, which we won’t need to do forever.  I want to do it this year since T was a little bit behind, but we’ll re-evaluate in 2015 or 2016.  But, I’m not sacrificing retirement savings either.  So, what am I sacrificing to buy a home?
  • Freedom to move with minimal notice and minimal hassle.
  • Short term cash on hand.  After having so much in the bank, it is sad to be dwindling down to just our emergency fund and some cash for near term expenses.
  • Ability to save cash at a quick rate while also funding retirement at this pace.
  • Ability to quickly reduce living expenses (by moving).

In summary, it is more risky in a lot of ways.   It restricts our options. This makes me nervous, as both T and I are quite risk adverse with money.  Continuing to rent had some other risks (rising home prices, rising rents, we have to move to a new apartment within another year anyway.)  I’m thrilled about our purchase, but I’m not blind to what we are giving up to have it.

What else, homeowners (or happy renters)?  What did buying a home require you to sacrifice?  Or what are you not willing to sacrifice to buy a home.

We’re buying a house! (Still…)

August 4, 2014

We are in escrow, and everything is going smoothly.

The general inspection ($570) was helpful and yielded no major surprises.  We have some immediate projects slated, and some items on the watch list. The geotechnical inspection ($460) was really helpful.  Among other things, he informed us that we are on a geologically sound site and our house is likely to be habitable after a major quake.  We have no foundation issues.  We are possibly on bedrock (best case), but if not, we are very close.  We are getting earthquake insurance anyway.  A lot of native California’s don’t (it’s expensive), but I can’t really imagine not.

Immediate projects / fixes:

  • Seismic upgrades (more shear walls, remove unused chimney), cost is TBD
  • Fix a venting issue with the dryer, quoted at $600
  • Pest control, $600
  • Stair handrail
  • Some basic roof maintenance
  • Clean up the landscaping

Eventually:

  • Finish decorating.  I imagine we’ll start slowly.  We don’t really need all that much above what we already have.  A guest bed, a new desk, and a chair or two for the living room, and a few patio chairs.  Window things.  Rugs, eventually.  We’d like a new dining table, but it isn’t urgent.
  • Upgrade windows and doors.  Many are original (it’s an OLD house), but in remarkable shape for their age.
  • More complete electrical upgrade (as needed)
  • More complete plumbing upgrade (as needed)
  • Bathroom upgrades.  We have 2 baths, and they both are fairly old.
  • New roof.  This should be several years off, but we’ll know more after the basic maintenance is taken care of.
  • New furnace.  Again, a few years off.

The kitchen is already updated and good.  The paint colors are neutral enough to be OK for now, and we haven’t thought enough about what we want to do with them, so we’ll leave them alone to start.  Also, there are hardwood floors in most of the house.  I’m super excited about this.  Not only do they look great, but I’m allergic to dust mites, and dust mites can’t survive on hardwood.   I’m not allergic to anything else (recently tested!), so this should help a lot.  I guess we’ll have rugs, but it still should help.

The loan is approved, the inspection contingencies are removed, the appraisal is complete.  I’m honestly not sure what is going on in the next couple of weeks while we are waiting for close of escrow, but I’m getting impatient!  And excited!

 

First Offer for a Home

July 30, 2014

We put in our first offer on a house last week!

We struggled for a while on the question of whether or not we should buy a home now, or if we should wait a bit longer.  I did numerous rent vs buy calculations, varying my assumptions.  I read articles speculating whether or not we are in a housing bubble.  I analyzed how much it would matter to us personally if we were indeed in a bubble.  I considered the risk of buying.  I considered the risk of continuing to rent.  I looked at our budget, our savings, and our plans.  We know we’ll be here at least 7 years, and we think that it will be much longer.  We talked, and talked, and talked.

Finally, we decided we did want to buy, if we could find something that worked for us.  We’ve been going to open houses all summer, getting a feel for what we like, what the market is doing, and where we want to live.   T loved this, while I found it a bit tiring.  We watched homes we liked go for WAY more than we wanted to spend.  We heard horror stories of people who’d made 10 offers and were still trying.   We didn’t see anything we wanted to make an offer on.  Most things we liked we knew would sell for too much, or were in areas we weren’t ready to consider yet.

Finally, after months of looking, we found something we loved that we thought we had a chance at.  It is a home I can see us in for at least 10 years, maybe even more.  There is enough space, but not too much.  The neighborhood is perfect for us.  We both really liked it, and decided we’d put in an offer.

I’ll give you a quick explanation of how homes shopping works here, as it seems like it varies a bit.

  • Houses are listed and have 1 – 2 open houses with a specific date set for offers being due, usually Tuesday or Wednesday after the final open house.
  • It is typical for houses get from 4 – 10 offers
  • If you really like a home, you may pay for a pre-inspection and remove the inspection contingency in advance of your offer.
  • Houses nearly always go above list price by 3% – 40%.  The average is closer to 8% or 10%.
  • About 30% of all sales are cash (supposedly).
  • Most decisions are made within 24 hours of the offer date.  Our agents said that if we didn’t hear within the first few hours, we probably didn’t get it.

The offers were due last Tuesday, so we spent Monday evening finalizing everything.  We’d done our own research on the comparable properties and decided what it was worth to us and what it might take to get it.  Our agent speculated that the home may go for another $50k over what we offered, so we didn’t get our hopes too high.  We knew if it went for that much, it wasn’t for us.

By 3 p.m. Tuesday, I started to guess we probably didn’t get it.  At about 5:30 p.m., our agent called and confirmed we didn’t get it.  The winning offer had already removed their inspection contingency and had offered more money.  We were offered the back-up position, and since there was no reason not to, we took it.  But most offers do go through, so we were sad and started to move on.

On Thursday morning, we took off for a 5 day backpacking trip in the Sierra Nevada mountains:

We planned to postpone the trip if our offer was accepted, but with that out of the way, we were excited to escape town for a bit.  We spent 5 days and 4 nights in the mountains, enjoying the alpine lakes, mountain views, and quiet life.

We came back to civilization (and cell service) early Monday afternoon to discover that first offer fell through on Thursday morning, and we had advanced to the primary position!  (At our realtors advice, we had written a “dear sellers” letter and mentioned our love for nature & backpacking – the sellers must have quickly realized we weren’t kidding when we were out of touch for 4 days while we were supposed to be moving forward with inspections!)

So, we might be buying a house soon.  There are still quite a few steps to get through before we are sure this is the home.  The sellers provided a recent inspection, so there shouldn’t be HUGE surprises, but you never know.  Since this is California, we are also getting a geotechnical inspection to make sure the soil is good.  If all goes well, close of escrow will be late August.  Keep your fingers crossed for us!

Home Browsing in the Bay Area

July 12, 2014

In short, it is frustrating.   I think home shopping ANYWHERE has potential to be frustrating, but here is what I’ve seen in our casual browsing of the local real estate market.

Links to virtual tours that are really just a slideshow of the photos already found on the site.  WHY?  I don’t care that there isn’t a virtual tour, but why pretend?

Earthquake / soil / fault information is not available until you get the disclosures.  And even then, I’m not sure what you get (we didn’t get that far yet).  I am generally not freaked out about dying in an earthquake.  You are actually statistically quite likely to survive.  I am, however, freaked out about spending hundreds of thousands of dollars on a home, and having it get destroyed in an earthquake.

Every time I find an interesting home I have to check if it is in the fault zone (EVERYTHING is going to be near a fault, but I don’t want something that has a risk of surface rupture).  Or in a liquefaction zone (google this, it is freaky).  Or in a landslide zone.   SO MANY hazards!

I wish redfin and the like would just summarize for me:  how many feet from fault zone, soil type (bedrock = good, fill = liquefaction risk), and any known landslide risks.  Also, can’t they just TELL me when the floors are slanted?  You are going to make me go to the house to find out about that?

Listing price is arbitrary.  It could go for slightly more.  It could go for WAY more.  In rare cases, it may go for less.  But don’t put much weight on the list price.  This is so annoying and seems like some serious psychological manipulation to get people to pay the most possible for a house.

$1M+ for an average, nothing special home.  What?!  Why?

Links and Randomness

June 28, 2014

I have exciting plans to dig through my finances this weekend and see how we are doing so far this year.  I may have some topics next week.  In the meantime, here is some interesting randomness!

Women in STEM

Love this video!   I’m so glad my parents were so encouraging of everything we girls did.  Sometimes I feel sad that I’m not working in STEM anymore, but I may go back someday.  And even if I don’t, I will always be an engineer.  That stuff doesn’t wear off.

The Brain

This short podcast on applying electrical current to the brain in order to stimulate learning blows my mind.   Especially since someone could buy something that does this,  it is completely uncontrolled.  Seems a bit scary.

I’m listening to this book on audiobook while running, and it is crazy interesting.

Dr. Gazzaniga [...] created an experiment in which the (mute) right brain could “talk” by using Scrabble letters. He began by asking the patient’s left brain what he would do after graduation. The patient replied that he wanted to become a draftsman. But things got interesting when the (mute) right brain was asked the same question. The right brain spelled out the words: “automobile racer.” Unknown to the dominant left brain, the right brain secretly had a completely different agenda for the future. The right brain literally had a mind of its own. Rita Carter writes, ‘The possible implications of this are mind-boggling. It suggests that we might all be carrying around in our skulls a mute prisoner with a personality, ambition, and self-awareness quite different from the day-to-day entity we believe ourselves to be.

I’ve been thinking about my mute prisoner ever since!

Expensive things I want buy will not buy (yet?):

Maybe if I learned how to make affiliate links and convinced you all to buy them too, I would feel OK purchasing?

Earthquakes

Partially inspired by this article, I have finally got around to developing our earthquake disaster kit.

Over the past few months, I’ve acquired:

We have first aid and other random supplies for backpacking, but they aren’t organized in an “emergency” fashion.  I think we have the most major items from lists I’ve seen online.  What do you think?  Now we just need to figure out what we should keep in our car and offices, if anything.

I also learned about liquefaction (which I intentionally like to call liquefaction, because it sounds scarier), importance of the type of soil a home is built on, and earthquake retrofitting of homes.  Also, more scared than EVER to buy a home in this area!

Mountains / California

Netflix has a new documentary available on streaming:  Mile, Mile and a Half.  The title immediately made me smile.  It is about a group of photographers / artists who hike the 220 mile John Muir Trail.  Highly recommended for outdoor lovers.

We’ve done a few sections of this (particularly in the Ansel Adams Wilderness and Yosemite areas) and it renewed my desire for another backpacking trip.  We are planning a 5 day one late this summer, and I am SO excited!

A few weekends ago, I was up in the mountains and lucky enough to fall asleep to 6 waterfalls, no one but me, T, and our friend in sight.  That is 2 personal waterfalls per a person, if waterfalls were the type of thing you divided among friends.

California

 

On that note, I’m off to enjoy the rest of my day!

Changing careers: Good and bad

May 31, 2014

I’m about 5 months into my new job, and I have to admit, it has been a bit of a roller coaster.  There have been a lot of really great things, and a lot of lows that I wasn’t really expecting.

My job is project based, and my first project is a longer term  (10 – 11 months) not-very-interesting project.  There are a bunch of plusses with this project:

  • it is great to be consistently assigned a project
  • I don’t have to travel
  • I work in the city
  • The hours are good.

I like my company, and everyone has been really friendly.  I’m working in new industries doing new things, and I didn’t have to take a pay cut to make a change.  All in all, things worked out as planned.

That said, I’ve had some challenges.  For this project in particular, the work is not very interesting nor very challenging.   It isn’t where I want to go with my career in the long run, although it is an OK place to be for now.  Coming from what I was doing before, the work is not inspiring, and that makes me sad.

I’ve also had to start over, at least much more than I would like to have.  I get it – it makes sense – but I don’t have to like it.  Perhaps I was naive, but I wasn’t really expecting it, at least not to this extent.  While I know my experience translates well, I have been less great at figuring out how to sell it, market it, and make other people see that value.  I’ve got some ideas on how to do better at this, but it is kind of exhausting to have to prove myself all over again.  It’s a hard change, but the only way to get somewhere better is to figure out how to thrive in the place I’m at.

I have been comparing my new job to my old job, and it really isn’t holding up.  That said, it is an unfair comparison.  I invested years into my old job.  I put hours of effort, lots of emotional effort, and it was even what I went to school for (undergrad and grad).  The reasons that I didn’t pursue a job more similar to my old job are still there.   Nothing has changed.  I still don’t want to make the commute required for a similar job, I still don’t think that I was getting as many marketable, transferable skills, and I still question the long term health of the industry.  None of these things are insurmountable, and if I end up deciding it is the best option, I can go back in that direction.  But the reasons I wanted to try something new still outweigh the fact that my old job was more awesome than my new job.  I’ll continue to search for a job that provides autonomy, mastery, and purpose.  I hope this job develops into something like that after I invest some time.

(Similarly, I am always comparing my new neighborhood to my old neighborhood.  My old neighborhood, in my opinion, was pretty much the best place in the entire world to live.  So, maybe comparing to that is unfair.  At minimum, it is unhelpful.)

I don’t know what my long term plans are.  I could stay at this job for years, or maybe not.  It could open some different doors for me, or I could go back to engineering.  I could even go back to school and do… something.  I do like to have a plan, but I’m really more concerned with having a direction or a strategy.  I will make choices that will put me in the best possible position for the future, given the information I have now.  I’ll seek out new information, and push myself to grow. Because that is the best any of us can really do.

 

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