I’m working on starting a series of reader profiles and interviews. However, it recently came to my attention that my readers do not know a lot about me. It turns out one of my regular readers thought I was male. While it’s not a big deal whether I’m male or female, it made me realize … Continue reading
I’m working on starting a series of reader profiles and interviews. However, it recently came to my attention that my readers do not know a lot about me. It turns out one of my regular readers thought I was male. While it’s not a big deal whether I’m male or female, it made me realize I should tell you a little more about myself. So here is the first interview of what hopefully be many. My hope is that as these interviews go on you will learn a little, recognize someone in a similar situation to yourself, and also realize that even people who are very different can still have similar financial issues and goals.
Tell us a little about yourself including any relevant financial info.
I’m in my mid thirties and live in a very urban area in the Midwest. I’m married, have a toddler and another baby on the way. Mr. NoTrustFund and I both work full time although I recently cut back to 80%. Currently our only debt is our mortgage and we hope to someday be mortgage free. We own two cars, the youngest of which is an ’05. We are in the market for both a new house and a new car but are having a hard time taking the plunge.
What are your biggest financial challenges right now?
In the short term my biggest financial challenges are saving for a house and a car. Buying a house has been a challenge for us as we want to buy a house that doesn’t lock us into our current income for the the next 30 years and we live in an area where the cost of housing is still fairly high. We also currently live in a 2 bedroom apartment and will take a large loss on this place when we finally do sell. In the longer term it is saving for college funds and saving for retirement.
Another big challenge I spend a lot of time thinking about is balancing working with having the time I want to spend with my family. I’m motivated to keep our expense as low as possible so I can keep my options open.
What is the best piece of financial advice you have ever received?
In one my classes in business school we talked a lot about always having a f-you fund. What is a f-you fund? It’s having money tucked away in the bank so that you can leave your job in an emergency. In this instance an emergency that a job that is making you absolutely miserable in an extreme, unhealthy way, or in a situation where you feel your values or ethics are being compromised.
Of course the only time I’ve ever needed a f-you fund I did not have one. It was right after business school and I had just spent all my money on tuition, a condo, and a car. I was having such an awful time at my job but I could not afford to quit. I was at the point where I was considering selling my car so I could quit my job. As soon as I moved on to my next job after that, I focused on paying off my car as quickly as possible. I now keep a particularly large emergency fund, which for me is also a f-you fund. While I always recommend finding a new job before quitting your job, there will likely be once or twice in your career where you would do anything to quit. If you have a f-you fund, you have that option.
What is the best piece of financial advice you could give?
Beyond the generic but fabulous live within your means it would be to always save all financial windfalls. Whether it is a bonus, a tax refund, or some sort of gift, tucking this money away, or using it to pay off debt, is a painless way to grow your wealth.
What is your biggest financial extravagance and in what areas are you most frugal?
This is something that has really evolved for me over the past few years. While my biggest extravagances used to be travel and a fair amount of shopping, I no longer spend a lot of money on either of these things. On a week to week basis my biggest extravagance is eating out. In the big picture my biggest extravagance is my career. I used to make a lot more money than I do now, but I was miserable and had to work all the time. With my skill set and experience there are jobs I could apply for that would pay a lot more than my current job but would require me to work all the time and have a lot more stress. One of the biggest things that keeps me motivated to keep our finances in order is the desire to have this kind of professional flexibility. I still work hard and I am and investing in myself and my career, but I am not focused on maximizing my earnings. To me this is a huge luxury.
I’m probably most frugal when it comes to cars and eating out during the workday. I have a car that I really love but it is almost 7 years old and I have no plans to replace it any time soon. I also try to bring my lunch almost every day. Since having baby #1 this has gotten a little harder, but I still hate to shell out money for food during the work day and bring my lunch as often as possible.
What would you do if money were no object?
Besides buying what Mr. NTF refers to as my ‘barbie dream house’? I would always fly first class, take a yoga class everyday (which with my current life would probably require having a private instructor), and try to take a longer maternity leave for baby #2.
*If you might be interested in sharing your financial story in the interest of helping other people please contact me at notrustfund <at> gmail <dot> com and we can discuss different options.
There are numerous costs to consider beyond mortgage costs when buying a house. While insurance, heating and cooling, as well as the cost of other utilities and basic home maintenance can really add up, they likely pale in comparison to the annual cost of property taxes. It’s always important to look at property taxes before … Continue reading
There are numerous costs to consider beyond mortgage costs when buying a house. While insurance, heating and cooling, as well as the cost of other utilities and basic home maintenance can really add up, they likely pale in comparison to the annual cost of property taxes. It’s always important to look at property taxes before you buy, but the taxes on any house you look at may come as a particularly big shock to you in the current market as housing prices continue to fall. Asking prices on homes may be coming down, but taxes are often calculated off of stale assessed values.
In our ongoing housing search, Mr. NTF and I looked at house a few weeks ago that we both really liked. While it is at the top end of our price range, we could probably get lower than asking price which would make the house much more affordable for us. However, as soon as we saw the property taxes on this house all talk of making an offer came to a halt. This house has been on the market for well over a year and the sellers have slowly taken down the price before lowering it by a full 20% last month. The house is now being offered at 60% of the original asking price! Unfortunately, the taxes are still calculated off of the price from a couple of years ago.
But Can’t We Challenge the Taxes?
We live in a high property tax area. Not only that, but our city is the not-so-unique situation of having a lot of fiscal problems. So while our property taxes are based on an assessed value, the city also needs to cover its expenses. The assessed value on our current residence has gone down over the past couple of years, but our property tax rate has gone up so the city does not have to take such a revenue hit.
If we purchased this house for 60% lower than its current assessed value I am sure we could challenge our taxes to some extent. However, the city still needs the same amount of money and in talking to others who have recently purchased their homes below assessed value, it seems the city is slow to make any big adjustments in assessed value.
While I do think we could challenge the taxes on this house and have them lowered, I still think the assessed value would be higher than what we paid for the house. In addition, with the fiscal issues going on at the city, taxes would likely go up in the future.
Property Taxes Are a Permanent Expense
I am always looking for ways to lower our fixed costs. While costs such as gym memberships and eating out can be cut out of your budget, fixed costs cannot. There are few items that are truly fixed costs in your budget. You will always need to buy food and some sort of clothing and transportation, but most other costs can be whittled away. Even your mortgage can be paid down over time. Property taxes, however, are always there.
Given the permanent ongoing nature of property taxes we have taken a pass on this house for the time being. This house appears to be very well priced by many metrics and I thought the most recent drop in price would lead to a quick sale. Apparently we are not the only ones looking at the massive tax bill as the house is still sitting on the market. If there is another big cut in the price of this house we may reconsider. But for right now, our search continues.
*Photo by imuttoo via flickr
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