emoore's 2011 journal

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emoore
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emoore's 2011 journal

Postby emoore » Sun Jan 02, 2011 10:26 am

So I decided to try one of these fiscal fitness journals for 2011. I enjoy reading others journals and it seems like it helps to stay on track.

I am looking forward to a much better 2011. 2010 was a terrible year for me. Financially is was ok but personally it was probably the worst year of my life. One of the biggest things that is finance related is that I am going through a divorce. So I need to reevaluate my finances and my financial goals.

The biggest thing is I am keeping the house but I need to refinance to put the loan in my name only. I have a year to do this so I hope rates drop a little. I think I will start out by listing my budget and see if there are any areas I can improve on.

Monthly Income (net): $5178

Mortgage $2,052
Car $175
Auto Ins $80
Fuel $100
Phone $45
Internet $60
Pet $50
Groceries $300
Dining $200
Water $80
Utilities $225
HOA $41
House $100
Daycare $200
Kids $100
SL $200
BB CC $50
Netflix $12
Spending $100

Total $4170
Left Over (Saving) ~$1000

A little explanation of my budget. The Mortgage includes property taxes and insurance. I have a 2.5 year old that I split time and finances with my ex. That is the 200 for daycare and 100 for kids stuff like clothes and diapers, gymnastics, etc. I have a Best Buy CC that is no interest for 3 years. If I pay 50 per month I will pay it off in 3 years. Netflix is my cable since I canceled cable and now have over the air tv and netflix. Spending is my fun money for the month. Budget suggestions are welcome. Thanks.

My next post will have my financial goals for the year and balances for savings and debt.

emoore
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Re: emoore's 2011 journal

Postby emoore » Sun Jan 02, 2011 10:48 am

I can't decide what my main financial goal of the year should be. I have 2 options. One is to pay off the car and the other is to build the emergency fund. Paying off the car has its obvious benefits but the interest rate is only 2.9%. The reason for building up the emergency fund is that I am worried that I will need to replace the roof on my house in the next few years. That will probably cost between 8k and 10k. Here are my savings/debt balances right now.

Savings $2772
Car $7787 (2.9%)
BB CC $1847 (0%)
Student Loan $25607 (2.25%)
Mortgage $301466 (4.75% but need to refinance)

As you can see I don't have much savings. There are a couple of reason for that but I won't go into that now. So I think my plan is going to be save as much as possible and if it looks like I won't need a new roof at the end of the year then I will use the saving to pay off the car. I know its not the best interest wise but it would make me more comfortable.

kombat
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Re: emoore's 2011 journal

Postby kombat » Tue Jan 04, 2011 12:36 pm

I'd recommend paying down your car debt. My main concern for you is whether or not you'll be able to refinance your house and keep it, or whether you'll be forced to sell.

Rates have already risen since November, and they're expected to keep climbing. That, combined with your debt-to-income ratio, has me concerned that you will have trouble getting approved when trying to refinance your home.

You're carrying a lot of debt. $8,000 for a car, $2,000 on a store-charge credit card, $25,000 in student loans, and of course the $300,000 mortgage. Your income appears to be around $60,000/year, after taxes.

Be prepared for the possibility that the bank will not permit you to refinance the mortgage on your own. I don't know of many banks that would sign off on someone carrying $335,000 in debt on a $60,000 net income. Maybe 5 years ago, but not today.

I know you have to refinance to get your ex-wife's name off the loan, but you need to have a plan in case it turns out keeping the house isn't even a choice that is offered to you.

emoore
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Re: emoore's 2011 journal

Postby emoore » Tue Jan 04, 2011 4:39 pm

Thanks for the advice kombat. Refinancing may not be an option. If not then I will have to sell the house. Not that big of a deal but I would like to keep it if I could. I will just have to apply and see what happens.

My financial goals so far for 2011 are to:

1) Refinance the house
2) 10k into EF
3) Payoff the car

I will add more if I think of some but for now those seem good.

suzwantstobefree
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Re: emoore's 2011 journal

Postby suzwantstobefree » Sat Jan 29, 2011 5:53 am

Emoore - I am sorry about the divorce. Even if it is the best thing in the long run it is difficult. I know, I went through it!!!

As for the refinancing - you don't have a bad rate currently. Have you talked to your bank about converting the loan? I had to refi my mortgage into my name as part of my divorce as well. My loan was with BOA and I called them right after my divorce was final (although I had 5 years to get it refi'd). They charged me $600, had me submit some things like my current paycheck stubs, bank statements, the divorce decree and some other documents. It wasn't a complete requalification but they basically wanted to make sure that I had a job and the means for repayment. At any rate, it may or may not work for you but it is an option that you can look into. That would satisfy the terms of the divorce and it is relatively inexpensive. All the terms of the mortgage remained in effect and it was quick and easy for me.

You don't have a huge balance on your car loan and you have the ability to set aside $1000 per month in savings (according to your budget). Have you thought about putting $500 a month in savings and $500 a month towards your car loan? That would allow you to pay off your car in a little over 14 months (if I remember correctly) and beef up your ef. For some reason, an EF doesn't seem to give me the same satisifaction as paying down debt so I try to compromise with myself when I can!

Sam
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Re: emoore's 2011 journal

Postby Sam » Sat Jan 29, 2011 9:28 am

I would strongly consider selling the house. First your housing expense, if you include the HOA is 40% of your net monthly income, that is too much by most every guideline. I'd also assume the house, if it was a marital asset, is now more house than you need. Besides the actual housing costs, you need to factor in upkeep costs and higher utilities for a larger home.
Sam

http://adventures-of-sam.blogspot.com
(Follow Sam's financial and real estate adventures.)

emoore
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Re: emoore's 2011 journal

Postby emoore » Sat Jan 29, 2011 4:53 pm

Thanks for the advice and the encouragement suz. It has been difficult but the last few months I feel more like myself. I have not called the mortgage company but my first question is going to be to see if I can assume the mortgage instead of refinance. I know this is an option for the military but I am not sure if I can do it. It makes me nervous to pay off the car and not have some money in the bank. My plan is to save all the money and then at the end of the year payoff the car. It will cost me some money in interest but I will feel better doing that.

Sam, selling the house is an option but if I can refinance I would rather not. At least not right now. It may be too big of a house but I really like the neighborhood and don't want to lose that. My house is one of the cheaper houses in the neighborhood. I don't know what guidelines you are going by but they are usually with your gross income not net and I am less that 28% of my gross income. Not that the guidelines are that good to follow but that is why I think I will be able to refinance.

suzwantstobefree
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Re: emoore's 2011 journal

Postby suzwantstobefree » Sun Jan 30, 2011 5:53 am

I am not military and was able to assume the mortgage - instead of refinancing. It was really a good option for me because the costs were so much less. I would wait to sell the house also since the values now are probably a lot less than they will be once some of the foreclosures and short sales are off the market. That is why I am holding on to my rental - it would mean selling the home near the "bottom" right now. If you can hold on to your home for a few years it will probably mean a lot more money in your "pocket". I don't know how old you kid is, but I am a big believer in stability for children and personally I would try to keep them in the same home and schools especially right now. The kiddo is going through enough right now with out being uprouted from the home and schools too.

That is a really good idea to save the money and payoff the car at the end of the year.

emoore
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Re: emoore's 2011 journal

Postby emoore » Sun Jan 30, 2011 9:44 am

I would much rather assume the mortgage than have to spend the cash to refinance. I hope that is an option for me. Luckily in my area of the county house prices have been pretty stable for a while. I would break even possibly even gain a few bucks if I were to sell the house. My daughter is almost 3 years old and I agree that stability is very important right now. She doesn't completely understand what is going on but she has been pretty good about it. Selling the house now would only cause more confusion for her. Another big reason I want to keep the house.

suzwantstobefree
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Re: emoore's 2011 journal

Postby suzwantstobefree » Sun Jan 30, 2011 11:43 am

Often we have to think about more than just the money when we make choices. I hope the modification/assumption is an option for you as well. If you have your original mortgage papers it will tell you if the loan is assumable. Otherwise, I would call the mortgage company and just find out. Before you know it the year will be up and it is better to just get it taken care of. :) You are very fortunante that the home prices in your area are stable. I am completely underwater in my rental house but am hoping that it will rise in the years between now and retirement.

emoore
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Re: emoore's 2011 journal

Postby emoore » Tue Feb 01, 2011 7:45 am

Time for the January update.

1) Emergency Fund ($1890/$10000) 18.9%
2) Payoff Car ($159.69/$7787.72) 2%

My plan to pay off the car is save the money throughout the year and pay it off at the end of the year. It will cost me some money in interest but I would really like to start stockpiling cash this year.

suzwantstobefree
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Re: emoore's 2011 journal

Postby suzwantstobefree » Tue Feb 01, 2011 1:12 pm

Looking good E :)

Make sure you call your mortgage company and find out your options! I am hoping you can assume it too. Much cheaper alternative for now and it will fullfill the terms of your divorce settlement.

emoore
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Re: emoore's 2011 journal

Postby emoore » Wed Mar 02, 2011 10:51 pm

February update.

I used some of my tax refund to pay off the best buy credit card. Even though the card was at 0% it was bugging me that i had credit card debt. I guess it was just an emotional thing but I am glad it is gone. Now I have $50 more per month that I will put toward the car.

I did call the mortgage company and they don't let people assume a loan. Looks like I am going to have to refinance. At least rates seem to be coming down a bit but the downside is that it seems home prices in my area are also coming down. Don't know when I am going to try to refinance but I hope it's soon.

Here are the number for my 2 goal this year.

1) Emergency Fund ($4144/$10000) 41.4% Most of the increase is due to my tax refund
2) Payoff Car ($315/$7787) 4%

That's it for now.
Last edited by emoore on Mon Mar 14, 2011 5:31 pm, edited 1 time in total.

Panda
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Re: emoore's 2011 journal

Postby Panda » Thu Mar 03, 2011 7:52 am

I think you're making great progress and I'm sure you're doing the very best you can in dealing with life.

But I found this statement strange - "Don't know when I am going to try to refinance but I hope it's soon. " When you try to refinance is entirely in your control. Don't "hope" you try soon - go get the ball rolling.

emoore
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Re: emoore's 2011 journal

Postby emoore » Mon Mar 14, 2011 5:31 pm

Talked to the mortgage company today. Apparently I have to provide the divorce settlement papers in order to refinance the house. So I will have to wait until mid April before I can start the refinancing process. It does stress me out a little about the rates moving up but there is nothing I can do about that. I just need to relax and wait until things are finalized.


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