tnrkitect: (Default)
I have been remiss in sharing my thoughts here on a regular basis. What with the economy tanking putting so many architect friends out of work, the bad times bringing out the true colors of my previous bosses, the new job which involved a move to another state, learning how things are done in the Corps of Engineers (hint, it's not like the outside world), attempting to sell our house in Knoxville (two contracts fell through, this last one seems to be actually happening - 3 weeks until closing), and a good bit more, things were just plain hectic and writing, unfortunately, was preempted by life.

Now that the new year is upon us, and life has settled down a bit, I hope to have more time to share my life and my thoughts here on the glowing screen. (It helps that I have been off the past week, allowing me to relax, rest, and recharge my batteries).

Looking forward, I see interesting times, in the Chinese curse sort of way. On a personal front, this will be the year in which I start truly decimating our personal debt. The new job meant a 66% raise over what was comfortable to our needs. And although I just succumbed to the lure of getting a new truck, (no really, there is a 2011 Ford Ranger Extended Cab sitting in my driveway right now) it was bought yesterday, in the old year. The new year will be one of paying off debt like a madman.

Why I bought new, plus pics! )


For those that are not aware, I keep close tabs on our finances. I have a custom spreadsheet that I use on an almost daily basis, in which I keep track of income, daily expenses and timing the paying of bills. I can use this spreadsheet to project "what-if" scenarios out into the future, and can look back at the last three years of our finances to see where the money has gone. Thanks to this spreadsheet, I can optimize and forecast the paying down of debt and know that baring some major unforeseen event, we will be debt free in three years. (It would have been two, but the truck isn't free).

The reason I am such a stickler about debt is that in the minds of both my wife and I, debt = slavery. Debt free = freedom. Neither of us like debt, and after the uncertainty of the past year or so, we are bound and determined to get our debt paid down. If I hadn't found a better job, I don't know how we would have met our bills up in Knoxville. :-/ Yes, I added to our debt by buying the truck, but the usefulness and dependability, not to mention lack of repair bills for the next several years, in my opinion trump the additional burden.

So, beginning this month, we are buckling down and focusing on reducing debt. Mind you, we are not going to be denying ourselves everything, but we will be weighing each purchase against the chance to pay down the debt a bit more.

tnrkitect: (Default)
This is sort of a follow on post to the one from last week, but from a different view point, that of personal finance.

As you may recall, we are in the process of refinancing our house using an FHA 203(k) loan. This is commonly referred to as a "renovation mortgage". The way it works is simple. You finance (or refinance) a house, plus the additional money to renovate or add onto the house, so long as the the (re)financed loan plus the construction costs are less than the appraised value of the house after the construction is complete.

We will turn a 2 (technically 3) bedroom 1 bath one and a half story Victorian cottage into a 4 (technically 5) bedroom 2 bath house by finishing out the attic space into livable space. While doing so, we will also fix many of the problems that the house currently has, as well as improve upon its current condition.

We currently have about 7.5% equity in our house. After we do the renovations, we will have approximately 28% equity in our house, due to the cost of the renovations being less than the increase in value the renovations will bring.

Now, we have a higher mortgage payment (between $50-$100 more per month), but as you can see it will be more than worth it. Especially since we are seriously considering putting the house on the market after we get the renovations completed.

Why?

Why go through the effort and hassle of refinancing and living in a construction zone for 6 months only to sell it?

Easy. That 28% of equity after construction is complete translates into enough money after the sale to just about pay off all our debt. So, when we consider being debt-free and renting versus being in debt but in this house, we honestly would prefer to be debt-free.

Neither of us consider this house our "Dream Home", and although we like it a lot, we like the thought of being debt free better.

Debt free means less worry about finances, and frees up lots of options. Not to mention that it means we will be out of debt about 2 years sooner than we are currently budgeted for. :-)
tnrkitect: (Default)
Well, even though I may not necessarily agree with the concept of the recently passed stimulus package, I am not above accepting the aid it is giving, in both the personal and professional aspects of my life.

The personal aspect was covered previously, and resulted in a HUMONGOUS tax return a few weeks back thanks to our buying a house last year. This allowed us to pay off our credit cards, and pay off the last of the mortgage on the land across from mom, as well as pay down some other bills and give us an emergency fund. The paying off the credit cards was particularly satisfying in that I received a notice from Capital One that effective April 17th, they were changing the terms on my credit card with them, going from the fixed 8.9% interest rate I've had since I got it over 5 years ago to a variable rate equal to 17.9%. It seems that I am not the only ones getting hit by this either: http://www.consumeraffairs.com/news04/2009/02/cap_one_revolt.html

I had the option of not accepting the changes and closing my account, which I did to spite them. I don't need their credit, especially if they are treating good customers this way.


The professional aspect of the stimulus is beginning to surface now. A major part of our team's work has been renovations and the occasional new construction projects for a good number of the public housing authorities in east Tennessee. In good times, this sort of work tends to be poo-poohed by architects, as it is not glamorous, there is a good bit of leg work involved, and most of the projects are piddly renovations that don't earn much such as window replacements or re-roofing jobs. But, they are still profitable, especially if you know what you are doing.

Now having contracts with the housing authorities is turning into a boon, as they are still spending money. Plus, the stimulus package just passed is giving them approximately 140% more funds (for a total of 240% of their normal yearly allotment), and the bonus amount has to be "allocated" within 1 year or they lose it. In H.A. parlance, allocated funds are those that have a project under contract with a contractor.

So... we are getting busy busy BUSY!

In other news, I have a headache tonight, that is making studying difficult. :-(

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tnrkitect - Musings of an Unconventional Mind

June 2011

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