Beating Broke

Personal Finance from the Broke Perspective

Debt Ceiling Crisis?

By 13 Comments

If you’re even slightly interested in the US economy, and, let’s face it, most of the world is, then you’ve likely been at least marginally following the last few weeks worth of debt ceiling news.  The quick and dirty of it is that the US government has a debt ceiling that puts a cap on how much debt the US federal government can carry.  If they reach that cap, they can no longer issue treasury bonds and the like to raise money to pay for things.  Based on what I’ve read, everyone would like us to believe that it’s a major crisis, and the world will end if we don’t raise that debt ceiling and allow for more debt.  But, is it really a crisis?

Let’s think about this just a little bit.  Replace “U.S. Government” with John Doe in everything I’ve just said, and all the news you’ve read.  If we were talking about an individual, we wouldn’t be talking about how the world would end if they weren’t allowed to accumulate more debt.  We’d be talking about how they need to radically cut costs, increase income, pay off debt until they can get their finances in order.  Would  it be called a crisis?  Maybe on a personal level, John Doe would believe it was a crisis.  But, it certainly wouldn’t be world ending.

Bus1I’ll admit that it is a bit different when it’s a government entity that we’re talking about.  If the US government goes bankrupt, there will be some pretty serious problems with the economy for a while.  Which brings up another issue altogether.  The US economy needs some diversification of it’s revenue streams.  Way too much of the economy balances on how much money the US government sinks into it each month.

It’s time we start asking the same questions of the US government that we would be asking of John Doe.  Do you really need that expenditure?  That service?  All three cars?  The McMansion?  Unfortunately, those that are in charge in Washington are playing political ball instead of really trying to solve the problem.  They think way to hard about what programs they can cut that won’t lose them votes in the next cycle, or how much they can raise taxes without losing votes, when, instead, they should be looking to make the US government financially solvent and stabilizing it’s fiscal situation.  You or I would start with a balanced budget, I don’t see any reason why the government shouldn’t do the same.

What do you think?  I don’t think I’m being to idealistic in asking that they carry a balanced budget each year.  Or that they cut costs until they can do that.  Yes, they’ll likely have to raise taxes some to pay off what they’ve got for debt, but if it doesn’t come with some pretty significant cost cutting, they’ll all be looking for new jobs in 2012 anyways.

photo credit: Public Notice Media

New Home Sales Down

By 2 Comments

So, are you surprised by that news?  That new home sales dropped like a rock in May?  I can’t say that I am.  I try hard to keep my politics out of this site, but what the heck were they thinking?  If you look at the chart that CNNMoney has posted, you can clearly see that, not only did they drop, but they dropped below where they were before.

And obviously, there is a very nice spike for a while.  Incentives do make a bit of a difference.  And, in all honesty, if we had been in a situation where we felt we could afford a new home, we would have jumped at the opportunity to take advantage of those incentives.  But the spike was just that.  A small percentage of people taking advantage of an incentive that made it very attractive to buy a new house.  What it didn’t do was return home sales to anything like previous numbers.  In fact, it didn’t even get the numbers back to 50% of what they were in 2000!  And now, after the incentives have expired, they dropped 33% to an all-time new low. The last time the numbers were this low was in 1981!

I think everybody has the right to purchase a home.  You shouldn’t be dis-allowed from purchasing a home.  But, you still have to pay for it!  Owning a home is not a right.  The ability to purchase one if you can afford it is.  Years and years of politicians buying votes by pushing lenders to finance houses to people who couldn’t afford them is what caused the housing market (and our economy as a whole) to be in the condition it is in.  And that crashs’ ripples are still being felt throughout the country and the world.  Creating incentives to buying a home just extends that streak.  People see that $8000 and think that they can afford a home that they really can’t because they will get a nice $8000 check to help pay it down.  But, when that money comes around, what are they going to do with it?  Spend it.

And in five years, when those mortgages adjust, we’ll have a nice little mess to figure out again.  Sure, it won’t be anywhere near as bad as the current one, but it’ll be there.  If only we could teach people to be responsible consumers.  To not buy what they cannot afford, and to only spend what they earn or less.  If we could do that, then they wouldn’t need those incentives to buy a home.  They might actually be able to afford it without them.

The Great Kitchen Remodel

By 11 Comments

As I mentioned before, part of what were doing with our tax refund is to remodel our kitchen.  Our kitchen was in a bit of rough shape, as some of it was likely original to when the house was built in 1950.  The linoleum had been added, as had the carpet and the counter-top, but there was little evidence that anything else had been upgraded in 60 years.  I don’t know about you, but that just screams for updating.  We’d put up with it for almost 6 years, and it was one of the “must do” items on our list of things that had to be done in order for us to eventually sell the house and upgrade to something a bit bigger.  When the opportunity came in the form of our tax refund, we felt that it was a justifiable usage of the money. Here, I’ll let the picture speak for me.  That’s all the old stuff.  Built in place.  The doors on the cabinets had been painted so many times (I counted 6 layers of paint) that they wouldn’t close.  The drawers had the same issue, except that they rubbed on their cases and dropped dust from that rubbing onto all of the pans and such that were in the lower cabinets.

Old Kitchen

Could we have lived with that for a couple of more years?  Probably.  But there’s a limit where saving, budgeting, and repaying debt become a true detriment to your happiness.  When you reach that limit, you can become truly miserable.  We could have used the money we spent on the kitchen on debt repayment.  That would have felt good, but not nearly as good as it is to not have that kitchen any more!  So, that just about covers the why of our kitchen remodel.  Let’s move on to the how.

We didn’t (obviously) want to spend a whole lot of money on the kitchen, but just merely update it.  We hit the not-so-local (100 miles) Menard’s and went about ordering the pieces for delivery.  Also, we managed to squeeze in a dishwasher that was on clearance.  It wasn’t really part of the original plan, but it was actually cheaper than the cabinet that would have had to go where it went.

Here’s how the cost on that broke down.

  • Cabinets: ~$1700 (They are the budget models, but have solid Oak facing and doors and look quite nice.)
  • Dishwasher: ~$180 (again, it was on clearance and was the last one they had.)
  • Flooring: ~$450 (laminate that was on sale to replace the chipping linoleum and stained carpet.)
  • Delivery: ~$180 (it’s a long ways, and it wouldn’t fit in our car.)

All told, that first trip cost us a shade over $2300.  I didn’t go out and compare, but I think that’s a pretty good deal.  Once all the parts and pieces were delivered, my dad came out to help out over a long weekend.  He lives about 950 miles away, so it was quite the trek for him.  And I must admit, the remodel would have likely turned into a small disaster had he not came.  He’s a contractor, so he’s done a few of these before. And there were a few unforeseen issues that would have caused me a huge problem without the knowledge and help.

In the end, the four day weekend turned into a 5 day weekend.  It was more like a 5 day workweek, but with far more physical labor than I normally do.  But, it got done.   There’s only a little bit of trim that I’ve got to put up, and it will be 100% finished.  I’m hoping that I can find the parts for that here in town this weekend and get that wrapped up.

And now, for the grand unveiling!  Here, in all it’s splendor, is our new kitchen.

New Kitchen

What do you think?  Quite the change, isn’t it?  After it was all said and done, we added around $600 more to the bill with odds and ends that we needed throughout making the total bill come in at around $2900.  Of course, if we had had to pay for labor, it would have significantly raised the costs.  Yet another reason to at least try DIY.  You’ve got to know your limits of course.  I got lucky and my dad was able to come help, otherwise this would have easily turned into an example of what happens when you don’t know your limits.  But, it didn’t.  We’re extremely happy with the way it turned out and even though the space is still very small, the luxury of the new cabinets and drawers along with the dishwasher makes it all seem just a tad bigger.

Side note: While my dad was here, he was telling us a story about a remodel he recently worked on where the kitchen alone came in at about $100k.  Incredible.  The client put in solid granite counter-tops that cost $20k!  Even if I won the lottery, I don’t think I could bring myself to spend that much money on something like that.