HisHersMoney

Lots of people dream of owning a vacation home. Somewhere in the mountains, by the beach or maybe even in another country. But, what are the costs associated with such a property. Previous reading will explain how we came to be 30% owners in such a property. FOr us it was a ski condo right at the base of the mountain, just mere steps from the lift. We made the purchase with cash so we don’t have a mortgage to deal with but there are so many costs associated with it.

A lot of the costs we figured into our buying decision so they weren’t a surprise, but now that we are getting to our fifth month we are getting a look at the grand total.

Utilities / property management/pool, etc. = about $100 a month. This cost is not bad and we knew this going in.

Condo specific bills from the property (cleaning, maintenance to your specific unit, replacing kitchen items) = $500 a year. We really didn’t know about this entire bill. We figured probably around $200 a year as a rough estimate.

Furnishings, updating decor, large maintenance = around $3500 for the first year. This will not be a recurring cost as the unit was definitely outdated and needed all new furniture. Luckily the cost is split between the owners and we only owe our 30%. We knew that things would need to be updated but really didn’t know how much it would cost.

There are some other things in the condo that need updating that require some minor construction that are going to have to come either later this year or next year. I estimate anther $500 for those. This does not include the costs of a major kitchen or bathroom update that will have to be done in the upcoming years.

We had originally thought we could do a total rehab for $10,000 (our portion) but failed to take into account that with the unit being used on a consistent basis by not only the owners but also renters that the items purchased for the condo would need to be of a pretty high quality in order to not fall apart in just a few years.

The renovations and new furniture is complete for the bedroom. It involved some minor construction to move around the heating vents, new dresser, mirror, king size bed, headboard, frame and all new linens. Luckily the resort gets a little bit of a discount because of the quantity they purchase from certain vendors. It really helped us out.

We figure our total out of pocket expenses for the first year will be about $5700! That doesn’t even include a lift ticket or Apres Ski Beer!

As a result of our upcoming housing costs savings I spend a little time on the budget.   Currently between Him and Hers we get four paychecks a month. Usually our rent comes out of His paycheck in the amount of $1175 out of each check to make up our $2350 rent payment. (Rent is very high here!) Rather then split our rent payment in half each month we will just take it out of the last paycheck of the month in its entirety $1350. This will obviously fee up some additional money each month.

Our first priority is to replenish our savings since we raided them a couple months ago to buy the ski condo. We figure that we really need about $30k in savings as an emergency account as well as to have some cash on hand to do things we want to do. Another priority is our Roth IRAs. We are eligible to contribute the entire amount to a Roth IRA this year so we need to take advantage while we can, I’m afraid we will be phased out of our eligibility in the upcoming years.

Currently we only have $1300 put in to Hers Roth so far this year so that leaves another $8700 to go in order for both of us to max out at $5k each.

Our savings account is currently at about $3,000 so we still have another $27,000 to go there!

Our new budget calls for us to put around $1000 a month aside for out Roth IRAs with the final contribution to hit our max coming from Hers year end bonus

As of July 1st we are moving out of our apartment and into a house we rented. The new place is just over ten minutes from where we live now so not too far away. We currently rent a two bedroom apartment in a pretty nice building but with our lease renewal they wanted to raise our rent up more than we were willing to pay. We found a three bedroom three and a half bath townhouse that was really in great shape and had a big back deck so we decided the extra amenities that the apartment building offered weren’t enough to keep us. Our rent will actually be cheaper at the new place even though it is much bigger. RIght away we will see a $450 a month savings just in base rent (yes the utilities will probably be a little higher).

The townhouse is three stories high and the bottom floor has its own bath room and walk out patio area in addition to a large amount of space. We have a friend who was looking for a place to rent and it turns out that it is perfect for him. We didn’t ask for too much rent, just enough to save us some money and be a great deal for him.

After the additional rent savings due to our room mate we will actually save about $1000 a month! While we are psyched about this savings, we wouldn’t have done the room mate thing if the house set up wasn’t what is was where he have have his own space downstairs and we can have ours.

Hopefully it will work out for everyone! We will post in the future about how it’s working out.

Let me tell you, being strapped for cash totally bites the big one! The whole goal of living our frugal lifestyle is so that we won’t have to live paycheck to paycheck and yet, here we are, looking forward to pay day like the day will never get here quick enough.

We recently posted that we were buying a ski condo share in Colorado, Steamboat to be exact. Well we are actually buying a portion of a ski condo for $18,500 plus a few hundred in closing costs. We are paying cash for the condo which means we had to raid every account we owned to come up with the money. Not only our joint accounts but the individual savings accounts that we had from before we got married this past fall.

Well, we scraped together the cash. We were able to hold off on cashing in the savings bonds and scraping the bottom of all the barrels thanks to a $2700 tax refund which arrived prior to the closing date which was today.

We finalized the offer about three weeks ago and knew the amount we had to come up with so we have been in a cash is King mode ever since. Every time we even spend a dollar on groceries it required thought as to how it affected our bottom line and our ability to pay for the condo.

Once we were under contract we had our $2500 earnest payment on the line and we weren’t walking away from that. We also weren’t going to run up our credit card or get a loan so cash was the only way to go.

So, how did we do? The cash was wired to the title company yesterday in full and closing went through today without a hitch. Condo done.

Our living expenses while we pulled together the cash on the other hand were tight and I have to say we really didn’t do a very good job at “cutting back” during this time. In fact, our effort lacked all commitment on both of our parts! We ended up with about $550 put on the credit card this month. There are a couple grocery charges, a few eating out and social bills as well as a $200 Breville Juicer that I had to have (post to come).

We plan on paying off the bill before any interest is charged but it just means when we get back on our feet with our paychecks it will be another month before we get back ahead of the game and stop living paycheck to paycheck. Our lesson learned here is that we wish we had a bit more in savings because now our savings is cleaned out and we are starting from scratch but it’s also another opportunity to do the right thing.

The best part: we own a ski condo free and clear!!!

Everyone knows that the real estate market is in the toilet and if you have the resources, now is a good time to buy. Well, we’re not in the market to buy a house or condo in the area we live, Washington DC/Northern VIrginia, but that doesn’t mean we can’t take advantage of the down market.

We have been silently keeping our eye on real estate in Steamboat Colorado were we like to ski. Over the past few years we have spent anywhere from $2000-$3000 a year on lodging there when we visit during the winter skiing months. We have been looking at what they call fractional ownership. It’s were some number of you own a particular condo and share it throughout the year.

The calendar is split up between you and your co-owners in advance and you know which weeks you have. We were originally looking at a place that sold out in either 1/8th or 1/4th shares. We were looking at the 1/4th share which included one week each month and a second week one month of the year which rotated each week. You had the choice of either using your weeks or putting them in a rental pool.

The price on those units right now is between $80k-$90k. In order to finance the cost you needed to put down around half of the cost. The kicker on these particular units was the HOA fees where were a hefty $300+ per month! While this condo wasn’t completely out of our grasp we didn’t have the down payment required so we were busy saving away.

In the meantime, about two weeks ago a unit came on the market in the building next door. It’s pretty much the same situation but the building isn’t quite as nice or as new and also doesn’t come with the hefty price tag either. The unit started out at the $30k price but had dropped to $22k with HOA fees of $100 a month and taxes of $500 per year. This was definitely closer to our price range.

This particular unit is a 30% ownership and includes 6 consecutive winter ski weeks as well as a few weeks in the Spring and Fall.   We made a low offer on the pace of $15k and settled with the seller for $18k. We plan on paying cash for the purchase and we close on the condo in about 10 days!

In upcoming posts we will go into detail about the cash payment as well as the impact to our day to day finances.

This weekend I was flipping through an old Money Magazine from November of 2007. We usually use the library for books and reading material, to include magazines. Typically you can get recent copies as soon as they become a month old but occasionally I will pick up some older ones as well. The content really doesn’t become outdated to the point of uselessness.

This one particular article was about the number of jumbo mortgages in default, specifically a 65% increase in the number of prime jumbo mortgages in default between June 2006 and June 2007. I can only believe that the trend has continued right into 2008. We live in the Washington DC area so in order to buy a house we would fall into the jumbo mortgage category since a typical 3 bedroom house is priced in excess of $600k.

We currently rent and live in a brand new, very nice apartment building that we are perfectly satisfied with. I don’t expect us to be calling up a real estate agent any time soon in this area. But, yesterday we were taking a little drive to go see the new Extreme Makeover, Home Edition house that they are building this week in MD. We drove down a long, windy road through what turned out to be a very high end, beautiful area.

The houses on both sides of the street were HUGE, not just big, but HUGE! I’m talking jaw dropping, have to look kind of houses. We thoroughly enjoyed the drive and getting a chance to see these homes. What surprised me was the number of For Sale signs out in front of these places. So, I decided to do a little online research into what these homes actually cost and how many were on the market.

I plugged in a started search criteria of greater than $1 million and the results I got back exceeded the max allowable number of 250 so I bumped it up to greater than $2 million and was able to it down to about 200 results. I was in shock that one little town could have that many homes in that price range on the market. This really was a small area that wasn’t too densely populated as each home sat on a significant lot.

In general, about $3 to $5 million got you seven bedrooms, seven bathrooms and if you went up to the $8 million dollar range you got around ten bedrooms. Yes, they were beautiful homes, but everyone would agree that this is a bit excessive! I have to believe that people got themselves into mortgages that they just couldn’t handle and in this case multiple mortgages.

If you can’t afford a traditional mortgage on a piece of property than you really can’t afford it in my opinion, clear and simple.

So, in recent posts I have eluded to the fact that we just moved into a new apartment. Our lease was up on our old apartment and it just really didn’t seem to have enough redeeming qualities to keep us there, let alone the fact that they wanted to jack our rent up. We were paying $1875 a month and they wanted to raise it up to around $2300. Add to that the monthly fees of $100 for utilities, $175 for parking two vehicles, $70 for storage and $35 for the pet fee.

Now the only thing this place had going for it was location. Yes, I know how the saying goes: location, location, location but that only carries so far. It was right on the metro route and had a number of places you could walk to to get either a bite to eat, a few drinks or do any retail or grocery shopping. Sounds great right. it was but we realized we just didn’t use a lot of those things. Yes, we would walk over and have a couple of drinks now and then but other than that we usually drove elsewhere to retail places that had lower prices.

So, off we went in search of a new residence. We looked at a number of places including a number of places which would have even lowered our monthly rent bill but none of them were really jumping out and saying “come live in me” to us. Then we decided to go look at a brand new tower that just went up. Originally the building was supposed to be condos but when the market fell they decided to make it apartments but prices were way out of our league. Luckily the market continued to decline causing them to have to lower their prices.

So, here we are. Our new rent is $2300/month with a pet fee of $50 and parking of $75 and then an electric bill of whatever the electric companies charges us that month. Our rent will be higher but our new apartment is about 300 sq. ft bigger and about a billion times nicer so for now we are willing to pony up the additional cash.

As, I previously posted, now I can walk to work so we have tossed around the idea of going down to one car between the two of us but for right now we are going to settle in and think about that later. I have to believe my chi is worth something!

Below is a paragraph from a poker-playing friend of mine from California who has so simply summed up the majority of my feelings concerning the entire subprime housing ‘crisis’ that I had to share it with everyone. Head over to Blinders’ site to read the entire article and to share your comments.

Blinders: Subprime Mess – Who Are The Real Victims?: “Now if interest rates were rising it would be a different story. If the fully indexed rate is 6% and you can afford to make those payments when you take out the loan, but interest rates rise to 8% by the time the payment adjusts up you can have unplanned issues. The problem is that interest rates are not rising. If somebody took out a subprime loan exactly 2 years ago the federal funds rate was 4.75%. Today the rate is 2.25%. Two year old sub-prime loans adjusting today are adjusting to a rate that is 2.5% below what was planned. The fully indexed non-teaser payment is much less today than what would have been planned for when the loan was taken out. How this can lead to massive foreclosures is beyond me. Adjustable Rate mortgages get more affordable every time the fed lowers rates, and rates are dropping fast.”