Two Year House-iversary!

Two years have passed since Courtney and I became homeowners. It’s been (knocking on wood) a strangely peaceful ride thus far. After a great first year, the bar was set high for our second year of homeownership. Let’s check in, shall we?

Our Old House: There have been no major repairs to deal with and no crises (still knocking), with only voluntary improvements to make. We’ve painted all but one room, added a kitchen floor, installed a chair-rail and crown molding (almost fancy enough to call it crown ‘moulding’) in the dining room, added hand-made curtains in most rooms, and loads of smaller touches throughout – from hanging recycling bins to installing shed locks to refinishing old furniture. I’m realizing fully a truism a good friend told me when we bought our house: You’ll never be bored again!

It has been incredibly satisfying, educational and even fun doing all these things. Especially doing them together. We’ve found our strengths compliment each other very nicely. Courtney has a fantastic eye for decorating and a steady hand with a brush, while I handle the carpentry, demolition and installation projects – one hand on the hammer, the other holding one of my grandpa’s 1960′s era Black and Decker DIY books.

But this site is about our journey to the mecca of financial fecundity, so let’s get to the numbers!

Homeowner Math 101: The more astute of you will no doubt notice that even though we paid more on the principal in Year 2, we cut less time off the mortgage than Year 1. That, dear money nerds, is the power of reverse compound interest at work! In the first year, the Principal to Interest Ratio (or ‘PIR’, copyright pending) is at it’s lowest, with the greatest bulk of the monthly payment going to line the bank’s coffers. That means it takes a relatively small amount to match that monthly principal and ‘double-down’ (our first month, the principal portion was just $167). But with every payment, that ratio shifts ever so slightly in favor of principal. This past month, our PIR was nearly twice what it was our first month ($331 principal). That’s really a good thing (less interest paid) but it’s a somewhat bad thing in that it takes more and more money to cut the same amount of time. It’s the one big downside to vigorous mortgage prepayment: it takes more bucks to get the same bang.

One To Grow (Your Equity) On: The time to dramatically alter your mortgage future is NOW. Even if you’ve never paid a dollar extra, now is the time: every dollar you spend today is worth more than the one you spend tomorrow. If you’re about to buy a home, do whatever it takes to make your first two years big, even if you can’t do it ever again. If we had to stop tomorrow and never paid another extra dime again, those 14 years are ours, baby! And no market volatility, no bank restructuring, no economic hullabaloo can take them away.

A CareFREE weekend!

After some much needed yard work, Andrew and I decided to finally check out Niska-Day, an annual community day, right down the street from our house.  We’ve known about Niska-Day since moving into our house almost 2 years ago (stay tuned for our Two Year House-iversary post on or around June 1st), but haven’t had the chance to check it out.  I thought there would be an admission, but lucky us…it was FREE!  We like free =)

There were lots of rides to choose from. Sadly, we did not partake. If only we had a child…

Lots of yummy treats, too…

but I saved myself for the best fair/festival food of them all…

I did not feel moved to share.

FREE pony rides, but I was pretty sure there was a weight limit.

There was a rock climbing wall, food, games, rides and lots of tents full of craft vendors (I bought an olive dish from a local pottery lady), local businesses, and Niskayuna sports teams and organizations raising money.  Andrew checked out the rowing team tent…

and he decided to put a 16-year-old to shame…

This picture was taken after that kid fell off of the machine.  Andrew won a Niskayuna rowing team t-shirt.  Score!

All-in-all, it was a really nice (and FREE) afternoon.  It was great weather and we were glad to finally check out this awesome annual event.  If you have kids, definitely check this out next year!

Quick Orzo Pasta Salad

Thursday night was the perfect weather for grilling.  Andrew grilled us some chicken sausages to have with fried peppers and onions on a bun!  We had to eat quickly because we were heading out to see Ani Difranco at The Egg.  (AMAZING show, by the way).  I thought to make pasta salad to go with our sandwiches, but I realized the only pasta I had was orzo.  I also had some leftover veggies I had used earlier in the week that needed to be used up.  So, I created this easy and quick orzo pasta salad recipe.

Ingredients:

• 2 cups orzo, cooked
• 1 large tomato, seeded and diced
• about 12 black olives (or more if desired), sliced
• 3 roasted red peppers, chopped
• 1/2 medium red onion, chopped
• 1/2 batch of balsamic vinaigrette (see my recipe below)

Balsamic Vinaigrette:

• 1/3 cup olive oil
• 1/3 cup balsamic vinegar
• 1 to 2 TBL agave nectar
• 1/2 tsp dried oregano
• 1/8 tsp black pepper

1. Cook orzo in boiling water with a pinch of salt for roughly 7 minutes.  Drain and rinse with cold water.  Let it remain draining while preparing the rest of the salad.
2. If using homemade balsamic vinaigrette, combine all ingredients in a screw-top jar and cover and shake well.
3. Dice and chop all other ingredients.  Add to a medium bowl.  Add orzo to veggies when finished draining and combine.  Add as little or as much balsamic vinaigrette as you prefer.  Toss salad to coat.  Cover and refrigerate if you’re making this for company.  Let sit at room temperature for 15 minutes before serving.

Bon Appetit!

Repurposed Earth Friendly Easter Baskets by GOOT

Andrew and I were in the grocery store last night and we came across the candy aisle in all of its Easter goody glory.  Andrew turned to me and asked if we were going to leave each other Easter baskets to wake up to on Sunday morning and I exclaimed, “YES!” (because we are that dorky).  We both wondered if we had any baskets for that and as we approached the cereal isle, I instantly came up with a repurposed, earth-friendly, GOOT idea!

What you will need:

• cereal box (1 for each basket you’ll be making)
• stapler
• packing tape or other sturdy, clear tape
• paper shredder
• scissors
• box cutter
• paper (I used old bills, etc. that needed to be shredded anyway, plus some green sheets for color)

Step 1: Close the top flap of the cereal box and tape it shut with packing tape or other sturdy, clear tape.

Step 2: Cut out the front panel of the cereal box using a box cutter.  Keep the panel, you’ll need it for Step 3!

Step 3: Take the front panel that you just cut out.  Using scissors, cut 2 strips from the longest edge of the panel.  Try to make them the same width because you will use these to make the basket handle in Step 4.

Step 4: Staple the two strips together, overlapping them by 1/4″, stapling them together at one end.

Step 5: Staple the handle in place by centering each end of the strip in the middle of each side of the basket.

Step 6: Using the paper shredder, shred your old bills, junk mail, and any extra paper you have lying around to add some color to your basket.  Fill your basket with shredded paper to hold your goodies!

Step 7: Fill your earth friendly basket with your favorite Easter treats, enjoy, and don’t forget to recycle your basket when you’re done!

Have a GOOT Easter!

Driving the Drive

There comes a time in every frugal man’s life when financial temptation comes to call.  You have to ask yourself; am I thriftily walking my penny-pinching talk?  It’s an important moment.

Open Mouth, Insert Wallet: If you preach simplicity and thrift, but leap at the first opportunity to upgrade to a 60” Plasma TV you don’t need because it’s 15% off, you have to accept that you’re a fraud of Televangelist proportions.  My own test came this past month when I was given the opportunity to receive a free car.  Said potentially free car would be given to me by my sweet old Granny.  It’s a 2006 Buick Lacrosse – boxy, slow, pearl white (of course), and waddles like a drunken penguin.  But with only 19,000 miles on it, Kelly Blue Book lists it at close to $12,000 for an expected dealer price, so by any definition this was a ridiculously good deal.

Ain't she a beaut?

Courtney and I had been saving to replace my Mitsubishi, a fast and fun rally car, which was approaching 8 years and 160,000 miles.  I had visions of something more family-friendly (no, there is NO news!) but still with a little flash and fun built in.  Although value and practicality are my highest priorities for any purchase, I’m enough of a guy’s guy to want a little ‘cool’ in my car.  Court encouraged me to accept the car only if I would be happy with it, not just because it was free (she’s kind of awesome).

Obviously, there was only one thing to do in a case like this: to the Pro/Con list!

So I took it, gratefully (with flowers sent to thank Granny), and did what any good money nerd does to salve his ego; I ran the numbers.  And I was reminded that passing on even a single car purchase can have a very powerful effect on your finances…

Drive Your Retirement!  Let’s say we spent $12,000 buying an equivalent car.  According to Edmunds.com, the value of a typical $12,000 used car today drops to around $3,000 after 5 years.  That’s a 75% loss on our money.  Taking the Granny deal, let’s say we put that $12,000 into a good mutual fund instead; a ‘No Car Fund’ if you will.  Assuming 10% average returns (you may adjust up or down according to your personal cynicism/optimism scale) we would have nearly $20,000 in the same 5 years – over SIX TIMES the value of that hypothetical purchased car!  Even if we never skipped another car purchase or put another dime into the No Car Fund, that $12,000 seed would grow to over $90,000 in 20 years, and almost a quarter of a million dollars by retirement age!  That’s a major deposit on our future for the price of just ONE car purchase.

Questions Worth Questioning: Yes, this is an unusual example; being handed a free car is rare but focus on the concept.  The same math would apply when considering a $12,000 car instead of a $24,000 car, for example.  The idea here is to start asking some questions about how we view and purchase cars.  Are they necessities?  Are they luxuries?  Somewhere in between?  Perhaps we can put the concept of the car opportunity cost to work to recoup at least some of this money without giving up the convenience.  Can we get by with less expensive cars?  Can we do with one car instead of two?  Can we work harder to extend the life of our vehicles through proper care and maintenance and by using public transit or our own resources (biking, walking) more frequently?

The opportunity may be worth answering some of these questions for yourself.

One Twelfth of 2012

Everyone does New Year’s posts.  Set goals!  Lose weight!  Make the pie higher!  The old ‘Year in Review’ trope gets nearly as big a workout around January first as all the newly-devoted exercise nuts hard on their way to Resolution burnout.  But it seems to me that looking back on an old year completed wouldn’t be as interesting without also taking a look at the new year already in progress.  With one twelfth of 2012 under our belts, it’s fun to see how what we learned and accomplished in 2011 – beyond just checking off tally scores – is dramatically shaping 2012.

2011 was a very good year, to paraphrase Old Blue Eyes.  It was our first full year as a married couple, and it was also the year we got out of debt.  We made big strides on our home payoff goal, but also our savings and careers.  If those seem like largely financial accomplishments, think how much these types of goals dramatically affect your personal life, relationships, family, happiness and peace.

• Doesn’t debt add stress to your relationships and undercut your personal outlook?
• Doesn’t saving money make you feel like you’re taking steps toward a real future, and add a sense of peace and security?
• Doesn’t making strides in your career give you pride, hope, and a sense of accomplishment (yeah, I’m talking to you too, Nurse Ryan!) when all is said and done?

So it holds then that financial goals, beyond their intrinsic dollar values, lead us where we want our lives to go.

The End of an (Indebted) Era:    I’ll be writing in an upcoming post about the specifics of our (and by ‘our’ I really mean ‘my’) saga with debt, but to put a bow on it in brief – 2012 has the distinction of being our first year begun together with absolutely no consumer or personal debt.  I paid off my car and student loans in 2010, but as of February first last year, we were still paying off personal loans of a few thousand dollars from our home purchase.  (I realize that I referenced being debt-free last year; for some reason, those little loans didn’t register on my radar).  Those debts were put to rest in August of 2011.  Having them gone definitely let me release a mental breath I hadn’t realized I was holding.  You truly do breathe easier with no debt!  Plus, those payments added more power to our monthly cash flow.

     But what to do with that money…

Saving and Spending…and Saving:  Though it pained us greatly, we had to spend some money last year.  I needed several thousand dollars worth of dental surgery to repair bone loss resulting from my chemotherapy treatments in 2007-2008 – it’s not an uncommon side effect, the chemo drugs had deteriorated the bone density and soft tissue in many areas, the jaw being one of them, and continued even after treatments stopped.  We blew through my insurance coverage and paid about $4,500 out of pocket.  The dentist generously let us pay ¼ at a time for four months (no debt!) and we were able to cash flow it 100% without touching savings.  That came at a time when we were furiously striving to pay off the small personal loans, and by cutting into the budget a little more, we were able to do both.  But the combination of dentist and debt made us realize that we wanted a little extra cushion in our cash savings.  As we finished off those big payments, we dialed back on the mortgage a bit (gasp!) to up deposits into our savings.  Fortunately, without those two large payments, we were able to pile it on like crazy and as of the end of January 2012, we have over 1.5 years of expenses in cash savings. 

     With that done, we turned our attention back to our mortgage…

Raising the Roof:  Anyone who’s read us before knows our biggest (and most radical) financial goal is paying off our mortgage early.  As I wrote this past summer, we’ve been making big strides on this front since we bought our home in June 2010.  After the slowdown in the second half of last year for our savings push (see above), I’m delighted to say that as of the Feb 1, 2012 payment we are back in full attack mode, posting our first SEXTUPLE payment (six times our required monthly principle and interest payment).  With that, we have cut a full ten years off our 30 year mortgage.  The power is in getting above your minimum payment by any amount.  Once you hit that for a month, every extra dollar has a dramatic effect.  For example, that sextuple payment I mentioned – tho technically equal to six months of interest and principle – actually shaved ten months off our mortgage in one shot.  I’m not up on the exact math but it works something like this:  Our standard payment is only about 30% principle.  Every payment above that ignores interest and puts 100% of that same amount fully to principle.  So each extra month’s payment after the first cuts somewhere around two months off.  It has the added benefit of reducing the next interest calculation as well.  I get a gleefully evil grin watching the bank’s amortization calculator writhe in my grasp!

• The Takeaway – Apply this idea to the extent you are able, it is hugely powerful!  Even $100 extra each month onto the principle of a standard 30 year mortgage will knock 5 to 9 years off the length of your loan, and tens of thousands (or more!) off the interest paid. 

Be the Change:  Many of you have seen Courtney’s posts about her GOOT business, as she creates beautiful clothes, gifts and accessories from repurposed materials (Valentine’s Day gifts on sale now!).  What many of you don’t know is that she started a second business in 2011; her own music therapy practice called Music Speaks.  She left the agency she had been with for three years, and was surprised that her first clients were set and ready for her, smiles on faces and ducks (and lawyers) in rows.  It wasn’t the result of high-powered connections or deft networking, it was simply a matter of good work truly being its own reward.  By focusing on the kids, teachers, and families she served instead of the bottom line, the work was waiting for her and the bottom line almost took care of itself.  At the end of this first twelfth of the new year, she is working hand in hand with her students and their families and teachers in a way she thought might not be possible.  She is able to do what she loves on her own terms, which has lifted a huge amount of stress from her life (and therefore mine).  As for me…I’ll write about me later, this is already getting long.  Don’t worry, I’m good.

So Feb 1, 2012 – the end of our first twelfth of 2012 – finds us in good spirits with our goals for our life and finances firmly on track.  We’re happy and always grateful for our family, friends, health and home (and each other).  It’s good to keep that gratitude in mind, wherever you are in your first twelfth.  No matter what goals or resolutions you’ve set or how they’re doing (anyone got a new gym membership already gathering dust?), be happy that you’re here to set them – and the opportunity for an amazing next 11 twelfths is yours for the taking.

A Life Well ‘Done’

No decision is ever truly a binary, this-or-that, yes-or-no moment.  Every choice you make, by nature of choice itself, excludes a host of other possibilities.  It’s easy to get caught up in endless ‘what ifs’ if you think about this long enough.  This is especially true when you apply this thinking to the major turning points in your life.  For me, such questions include; “What if I hadn’t joined the military after high school?” and “What if I hadn’t left?” and “What if I hadn’t been diagnosed with cancer at 32?” and “What if I hadn’t survived?”  Financially, I wonder what would have happened if I had the knowledge and insight at 25 that I had at 35 (and I’m sure I’ll ponder a similar thought when I’m 45 about the man I am now, youth being wasted on the young and all).  It’s a rabbit hole you can spend a lot of idle hours exploring; an activity that can be a fun way to examine your life and the evolution of your values and dreams, or as a means to berate yourself for what you should have done.

The Road Unraveled:  But there are no ‘should haves’, my friends.  The Done (capital ‘D’) is done.  In recent years, especially since I met and married Courtney, I find myself more able to see and shape the road ahead rather than obsess about the road behind.  It’s a result of finally deciding what I wanted for my life, or perhaps more accurately I decided the man I wanted to be, and started walking as if I was already there.  I lived without much of a plan through my teens and 20s, at least no plan that looked past the next passing fancy, and I’ll freely admit I had a great deal of fun.  I traveled and lived all over the country, and had unforgettable experiences.  But I also dealt with crippling debt, a lack of direction and vision, self-doubt, and fear for my future.  Would I trade any of it for a different path?  Does it matter?

A question that does matter is this; what is going to be your next Done?  Here are some others: What are the decisions you are making today whose consequences, good and bad, you’ll be pondering next year, or next decade?  When you look back, will it be with pride or regret?  Are you guided by values that resonate right down to your bones – that give direction to your life – or just letting events and other people shape your future by default?  If there are changes you’ve wanted to make, get your feet pointed away from the past and take your next steps with purpose.  It doesn’t mean trying for perfection every time you make a decision, that’s a fast track to paralysis, but it does mean thinking about where you are going and why.  It means looking past the next sensation and into a future that matters to you.

The Next Steps:  It is said that the best time to plant an oak tree is 20 years ago.  The next best time is today.  It is never too late to start something good, because your very next tomorrow – and the one after that – will be that much better for as long as you have them.  Each good day is built on your last good step.  Each ‘Done’ done well – with purpose, with passion – is a building block for a future to look forward to, and a past to be proud of.