Beating Broke

Shopping for a New House

November 2, 2011 By Shane Ede 8 Comments

When we decided that it was time for a new house, (read this post for the reasoning) we knew that we had to be smarter about it than we had been when we bought our first house. We weren’t going to just jump into it and make a rash decision that might cost us down the road. What we discovered when we started really talking about it was that we had a slightly different idea of what we wanted in a new house.

One of the biggest reasons that my wife wants a new house was because she feels (rightly) that our current house is too small for our growing family. Between the two kids and the big dog, we just don’t have room for all the stuff. Yes, stuff is just that. Stuff. It can be gotten rid of, but it seems to just re-accumulate. There are certain luxuries that we allow ourselves, that some people would just call stuff. Will it cost us money to keep those luxuries? You bet. Are we willing to pay that price? You bet. While I’m sure there are some who can live on $7,000 a year, and do so enjoyably, I’ve come to the conclusion that I’m not one of them. Call it what you will, but I like my stuff.

But, I also like my space. So, for me, one of the biggest things I want in a new house is a sizable yard. It doesn’t have to be huge, but a small postage stamp yard isn’t going to cut it. We’ve got a dog, and he needs room to run, too! Yes, there are parks in town. Yes, we could go to them and run and play there. But, it’s easier to just do that in my own back yard. I imagine that part of that is from my experiences growing up where we always had some land to play on.

We’ve got other requirements, as well. The kitchen has to be comfortably large. It doesn’t need to be one of those huge kitchens you see on the home remodeling shows, but it needs to be large enough that two people can pass each other without one of them having to practically stand on the stove to do so. It was a mistake we made in buying the house we have now that the kitchen was just too small and makes any combined activities pretty much a n0-go. Also, as our family grows, we’d like to have more than one bathroom. It wasn’t so bad when both kids were in diapers and could go wherever they were, but now that they’re both out of diapers, it makes it very difficult to get everybody ready and out the door in the mornings. Impossible? No. But damned difficult.

So, with a few requirements in mind, we set about looking for a new house. Luckily, most of the realtors in the area are pretty good about taking enough pictures to really help you get a good idea of what the house looks like before you go and see it, and we’ve been able to weed some of the less than desirable ones out before we wasted our time to see them.

We quickly weeded through the available houses, and came up with only two that were even close. The one was a bit older house, but had the land. It’s failing was that, despite being bigger than the house we are in, it was configured all strangely, and all the extra room was in all the wrong places. The second house is on the edge of town. This was a bit worrisome to my wife because the town isn’t known for it’s excellence in snow removal, and there’s a chance that, being on the edge of town, it might get even less attention than the rest of town gets. It does have a large yard (2+ acres), and has plenty of room inside. We found ourselves slightly excited by our first visit. Enough so, that we went for a second visit. And then made an offer.

The owners countered our offer, and we took their counter, so now, we’re in the process of getting all the ducks in a row and buying a house. We will need to sell the house we are currently in, to use the funds from the sale for a larger down payment. God willing, we might be able to close on the house and be moved in before Christmas.

photo credit: lumaxart

Create Your Own Layaway Plan

October 31, 2011 By MelissaB 9 Comments

The stores are already starting to advertise for the holidays, and several major retails are pushing the option of layaway as an option to finance your gift giving. While layaway was not offered in stores for years, it is making a comeback due to the current economy. You can choose to use layaway or not this year, though it is certainly a better option than financing gifts on credit cards, but why not also start your own layaway program?

One idea that revolutionized the way I budget is to set aside money each month for recurring expenses. I used to be a teacher, and I could choose to teach classes in the summer or not. Sometimes I did teach the classes, but a few summers I chose to take off, which also meant that I was choosing not to get a paycheck for three months of the year. Considering I was the sole breadwinner at that time, summers could pack a painful punch.

However, I began to enjoy my summers off and not suffer financially when I began setting aside money for monthly expenses. At the time, we required on average $2,500 a month to live, so that was $7,500 I needed during the summer months to survive without a paycheck. I received a paycheck nine months of the year, so I automatically deducted $833 a month into a special account to live off of during the summer.

Even if you have a regular paycheck coming in all year long, you can benefit from this plan. For instance, I know that over the course of a year I would like to spend $500 on gifts. Some months I may not spend anything, and other months I may spend $100 or more. To make sure I have the money set aside, I would take $500 and divide it by 12. Then I would put aside $42 a month for gifts. It would be its own little gift fund, and I would draw from it when I needed to purchase gifts.

Likewise, my energy bill is very low in the winter because my landlord pays for the heat, but the electric bill is high in the summer because I have to pay to air condition or drafty apartment. I set aside $50 a month for electricity. During the winter months, my electric bill may only be $25. The remainder of the $50 after I pay the monthly bill goes in savings in a special fund to help cover the high summer electric bills.

If you set your monthly budget up based not just on your exact expenses for that particular month but for the average you will spend all year long divided by 12, you essentially create your own layaway plan. On months that may have higher expenses, you simply dip into the money you have already put aside. This type of budget makes your monthly outflow much more stable and protects you from the highs and lows of creating a budget based on each month’s actual monthly expenses.

photo credit: robertstinnett

Back to a Cash Economy?

October 21, 2011 By Shane Ede 12 Comments

With the recent increase in new fees at banks, and the backlash it has caused, people are starting to determine what the alternatives are. At the moment, there are still banks and credit unions that are maintaining their current fee structure without adding anything new. Many of those are also maintaining their “free” accounts. But, if the Durbin Amendment remains, it may be only a matter of time before they buckle under the costs and start removing “free” accounts and adding fees.

What then? It that happens, we might see a financial world where all debit cards have a monthly fee. We might see more annual fees on credit cards, and higher interest on credit cards. We might see more and more checking and savings accounts having a minimum deposit amount and/or a monthly fee.

As a card-carrying member of the NGPAF (Not Gonna Pay Any Fees) club, that might just make me decide that I don’t want to use any of their services anymore. My depository institution might just have to become the coffee can in my backyard. Seriously, though. If all of those services become services with fees, we might see a pretty drastic increase in the usage of cash again. Many of us don’t use cash all that much. I know I don’t.

And what happens if we return to a cash economy? The banks get even less transaction fees. Their income drops because of it. And we all see what happens when their bottom line is threatened. More fees. It could send the banking industry into a never ending spiral of more and more fees until the only people who still use banks are the ones who don’t feel comfortable keeping thousands of dollars in a coffee can in the backyard.

Luckily for me, I belong to a credit union that isn’t likely to add any additional fees anytime soon. What about you? Do you belong to a Credit Union or Bank that hasn’t added fees recently? What if they did? How long do you think it will be before we have to choose to either pay fees or carry cash?

photo credit: flattop341