big breath....

Hi. Here is my story so far:

January 2004 I began the year facing a divorce, ("You can't leave me in the middle of the holiday AMEX pay period,") with a half-heartedly-used Quicken, and roughly $87,000 of debt. I helped him pack and get started on his new path and then returned to cry in front of my Quicken screen. 39 y.o. and broke beyond belief but with a good credit score because I pay everything on time. My new motto: "I do whatever Quicken tells me to."

Fast forward to March 16th 2007. I'm now in year 3 of a 4-year-get-out-of-debt plan, (The grand plan is: pay off all credit card debt and then use those monthly payments to get rid of $44,000 in student loans.) I'm now 42 y.o. and have $6336 in a savings account ready for my tax hit. (Last year I decided to dump some retirement funds to close some credit card accounts. I did not shut my big retirement fund from my current job. I merely located all my "lost" piddling 401Ks from prior jobs and cashed them out. Yes I took a huge penalty. But I felt better having way less debt. "shrug" I'm ok with this decision and YMYL says to have no regrets. I move forward.)

I'm now down to 2 credit cards from 11 and my credit score has jumped 100 points since 3 years ago.

My housing situation for the last 8 years 3 months has been a $675/month 2 bed 2 bath rental. March 16th I get a call. The owner died. The house has cleared probate. The new owner wants to sell "As Is." You have first bid. Wow. Well this wasn't on my radar screen at all! What do I do????

I bought it. Qualified for the no money down mortgage, (80% 30 yr fixed 6.625 / 20% HELOC 25 ARM 8.25) had them tent for termites, upgrade the wiring, put a new roof on and pay my closing costs. I used some of my tax hit money for all the incidental costs, (Appraisal etc.) and then left the rest where it was. I opted to tell the feds to take the minimum each month from that account until next april because I ought to get a huge return next year that will offset what I owe this year since I can deduct the mortagae interest etc. Plus that gives me a $5000 emergency cushion account to use if needed.

Quicken told me my financial worth was -$1,199 on March 16th. After closing on April 16th I'm now worth $3430.

Amazing. Take on $138K of debt and your net worth goes UP! Instant equity is a beautiful thing.

So all this to say: Buying a house alone is frightening. Especially with no warning and no preparation.

But being a good do-bee with your money reaps unexpected benefits. When an opportunity knocks you will be in a position to take advantage of it! I'm so proud to finally own a house! A house I love!!!

I've made some slight changes to my finiancial daily life because I now own the house. I used one of my housewarming gifts to open a Shell Refillable Card. No fees on it and now I can budget my gas and use cash for it. (Yes I know the downsides but I ride a motorcycle and since I get 45 mpg I feel like I can commit my money to my closest preferred gas station and not shop around to save a few pennies.)

I've saved the gift cards I received as housewarming gifts to use for emergency repairs. I've lived in this house for more than 8 years and not much has gone wrong with it in that time. Last year they put in a new hot water heater and painted the exterior of the house so I have no huge costs looming since the roof, tenting and wiring is done. But I'm still quite scared of the responsibility of it all. It is a very different mind set owning it.

so. my next goal is to resist doing anything other than recarpeting the TV room. And I reserve the right to not do that if the estimate comes in too high. I ordered some baby trees from the Arbor Day folks for $3. I bought a $40 sleeper sofa off craigs list and bought a nice $75 stove from the home inspector: "This stove is horrible. Want to buy mine?" And I scored a $75 brand new GE Profile from a well-to-do co-worker who just wants the unslightly crumb-catcher gone from her new loft kitchen. (YES! It is $1600 fridge!!!)

And I read all my bookmarked blogs on personal finance every day for inspiration and I've learned to say to my friends "I don't have money for that" instead of apologizing for being thrifty or saying "I'm broke" when I'm really not but I just don't want to go to that $50 concert tonight.

Whew! this was a long coming-out post. Sorry for the bandwidth. Thanks for doing what you do here though. I appreciate very much!

You go, girl! (as my female friends love to say to each other) A very inspiring story, and you're clearly in the sunlight now after climbing out of that deep dark hole. Congratulations.

Personally I would rather die than take out a no-money-down mortgage, but that's just me. If you've got a house you love then that's really all that matters. There are more important things in life than money.

Cady, Cheers to you for keeping your financial head about you, post-divorce. What kind of degree did you get? I'm assuming that with 44K in student loans that you got a professional degree? Business/legal/medical? I'm about to graduate with an academic degree (MA) and I'm anticipating my salary will rise as I'm now qualified for higher positions in my field. Do you consider your student loans to be "good debt" that will help you launch or further your career? I'm curious.

Re: no mortgage down. Well if I'd had any warning whatsoever or had been *planning* on buying a house I would have put money down but I had exactly 24 hours to take the first bid on a house that had seven offers behind mine. One of those bid was from the university 1 block away that owns every other house on the block! Frankly I was lucky to qualify for any mortgage.

As for my student loans it isn't what I studied but where.... 3 ivy league schools for a B.A and 2 masters degrees. I got full scholarships to all of them but financial aid packages are built around the maximum allowable student loans first. Or at least they were when I went to school.

Thanks for the gentle replies... Quicken says the HELOC is paid off in 4.5 years. I can send double payments to it from the very first payment plus a anniversary gift to my mortgage of 3K every April 16th. After that I'll roll the baby mortgage payment over to the big mortgage payment and Quicken says that'll be knocked off in 12 years. 16 years to owning my house is a goal I can live with and seeing as I probably wouldn't have had the courage to do this anytime soon I'm glad fate arranged it for me.

Sorry Gnashchick. I didn't answer your other question. I think education is worth whatever sacrifice you have to make.

For me, my education allowed me to glimpse my full intellectual potential. It taught me how to think, not what to think. For that I would take that debt all over again. And again, the schools I attended cost $40,000 per year and they asked me to take out $7,500 per year and they paid the rest. That was a good investment for me. I earn good money. I just ran through it thoughtlessly for many years and am now trying to be more in control of it. I have no regrets. I'm just learning how to say things like: "I have enough. I don't need anything else."

I didn't mean to sound like I was chiding you on the no-money-down mortgage...I understand your situation and I bet I would have done the same thing, despite my deep reluctance to pay interest to banks!! If I had my druthers I'd buy my home with cash, but that would mean saving another eight years or so, and at 48 years old I think it's time I finally buy a house.

My new motto: "I do whatever Quicken tells me to."

I love this! Unfortunately, the Mac version of Quicken doesn't tell me to do anything.

Loved your story, Cady. It sounds like you have things moving in the right direction. Keep an eye on that HELOC. Mine makes me nervous, and that's why I'm getting the thing paid off. I don't like anything with an adjustable rate.

"Keep an eye on that HELOC." Thanks JD. I'm already nervous about it and I haven't made my first payment yet. My loan officer told me to come in when the teaser rate is up and we'll look around for other options. Of course there are fees involved with that so I might be better off with the current arrangement and hope for the best.

***

Journal entry for 4/29/07:

Owning a house takes up a lot of real estate in my head. It is like having a co-dependent now. Everything I see or do generates a running commentary in my head. Like I was returning two items today. Came to only $11.75 but I'm way more diligent about getting my money back now that I only use debit cards.

It made me feel less dirt poor and more frugal to think in terms of:
"These two items equal my new tub faucet handle."

And then the next thought was: "Drat. I never looked into a longer screw that'll reach through the universal handle to the brass stem in there."

**

I was happy leaving Walgreens though:

I bought 2 boxes of kleenex, on sale for $1 each.
(Kleenex 200 tissues, limit 2 but I pass another store on my work tomorrow I'll get 2 more.)

I also bought 2 snickers dark bars (.69 each or 2 for $1.25)

and 5 packets of seeds, (usually $1.59 each now 5 for $1)

Total was $4.48 & I paid with a $5 and got $.55 change. (extra .03 for no reason.)

I looked at the receipt leaving and everything I bought was on sale and what I came for.

Hooray. Score one for mindful spending.

Why are there so few books on what to do AFTER you buy your house?

Keep your journal, talk to other homeowners, and write one

I would publish a book on it but I have no time between coats of primer!

So carpet was estiamted at $547. I paid it. They move furniture, take out the old and lay new padding and carpet and then put my furniture back. I got $100 off the carpet with my coupon though. Not too bad and way cheaper than the laminate I wanted. I can always go back and do something with the room again when I have more money. at least the nasty rental carpet is out of there. yuck.

I've used Kilz2 as a primer. Done two coats of that and then put on a semi-gloss in pale yellow. Put on a white semi-gloss trim as well. Looks nice. So far I'm under my $1000 fix-it-up budget. I have enough room left over in the budget to put ceiling fans in the two bedrooms and the TV room. Yay. Without central air I need all the air movement I can get. I'm too cheap to run the inefficient wall units and I won't spend money on a/c until I can upgrade the windows. They are currently casement. Very sturdy and in good condition. so I have no real incentive to rip out something that is good to put in something that is going to cost me lots of money in the long run. My august electric bill is under $100 right now and all my friends with a/c pay $200 and upwards.

I read somewhere that lipstick sales go up in difficult economic times. I just discovered my own "small purchase that gives instant gratification." A new door-stop.

Who knew that a shiny new brass door-stop from the marked down table at Home Despot could bring such satisfaction for $0.50! It made my first complete wall look truly finished.

I also won $55 at the dog track which paid for Nana Jr.'s birthday lunch and bought my new door-stop and the food I have to take to a BBQ tonight. Yay!

Got my first statement from my HELOC which was sold to Countrywide Bank. It is a 15 day billing cycle. It is interest only. WTF! Wow. And they charge $4.00 per transaction to auto deduct from your checking account!! WTF!!! I have to pay them for the privilege of getting paid on time? I have to pay them to have access directly to my money? I have to pay them to NOT have to use a clerk in a basement somewhere processing my check... K! I have new incentive to pay the HELOC off ASAP. I just sold my Burning Man ticket. I got the hotel refund check back. I'm eyeing my 60 year old steamer trunk in the corner and wondering what I can get for it. I am of half a mind to pick up a weekend job to get it paid off but I'd rather dedicate my time to getting my second year of spanish under my belt. It is being completely paid for by my job and I don't know how long that benefit will last and I think becoming fluent in spanish will be a good long term investment. Then perhaps I can work at a bilingual call center and practice spanish and get paid. Hmmmm.

Well so does anyone out there have this 15 day billing cycle on their mortgage?
Is this unusual? How can I work it to my advantage (assuming I have any advantage?)

Do you have to let them auto-deduct your bill? If the bill doesn't change, maybe you could set it up so that your account is auto-paying them, which gives you the same peace of mind, but (depending on your bank) should be free. $4/fortnight seems pretty steep!

Well. Now we know how Countrywide is able to offer such attractive interest rates - they make up for it in fees.

Paying a bank so they can get their payments on time should be criminal. Yes, I agree, target that debt for swift termination.

Wow. WTF indeed.

Cady, your post regarding your HELOC just gave me a good reminder on why I want to be debt free. These 'banks' seem to have the authority (and the will) to change the rules, terms, etc. at will. Yuck!