Our net worth took a hit this month, over $96k less than last month. I updated the value of each house we own. I don’t do this regularly anymore because it doesn’t change significantly month-to-month and it’s very time consuming. The market is cooling from the multiple-bid market we were in over the last few years, so home values are starting to come down ever so slightly. They’re still much higher than what they were 3 years ago (and I have tax assessments to prove the pain of that), but it does affect our net worth this month since it’s lower than it had been.
Also affecting our net worth is the market itself. It’s down, which it does around this time every year (confirmed through the history of my financial update posts). Our investment accounts are slightly down, our cash is significantly down because I paid off a large credit card balance and because Mr. ODA has transferred to a Treasury account for some of it, and our investment property values are down.
We opened a new credit card this month because we have purchased new carpet for our house (our entire second floor except 2 bathrooms, the stairs, and the living room all add up very quickly). As I’ve shared numerous times, when we’re about to have a large purchase, we look to open a new credit card that we can use as a loan. Sure, we have the cash available to pay this immediately, but wouldn’t it be nice to earn interest on your cash balance for 12-15 months and get some sort of sign-on bonus from the company?
I paid off our last 0% interest credit card at the end of September. But our credit card balance is still slightly higher than I’d expect because I haven’t paid last month’s statement on one, which is almost $3,000. I used to try to pay off all balances before doing a net worth update so that it was the most accurate, but now that we’re keeping Mr. ODA’s paycheck separate and trying to capitalize on interest to earn, credit cards aren’t paid until the last minute. We’re also still carrying about $30k worth of insurance money that we can’t seem to spend because State Farm is doing their hardest to drag their feet and restart our claims process each week.
I have a house that hasn’t paid a penny towards rent this month. She did let us know that it’ll be paid in October some time (no date or expectation given to me is infuriating). If she doesn’t pay something tomorrow (assuming we’re two Fridays into the month for pay checks), I’ll give a warning about the notice of default being given.
Today’s post is going to be short and sweet. Well, that’s how I think to start every thought I have to share, and it turns into a novel with research and ‘citations.’ Let’s see how this goes. Update: It’s long, there’s a legal citation, and I ‘teach’ math. Sorry. 😛
We have two houses with flat roofs. They’re a pain. They always seem to leak, and no one wants to work on them.
In 2019, we had issues with a house that had an internal ice dam and gutter system, in addition to a flat roof over an extension. Water kept leaking in the kitchen. After two years of issues, we finally had a roofer respond to our request for help on a flat roof. As soon as a roofer hears “flat roof,” they seem to shut down and say they don’t work on flat roofs. Here was the quote.
So we had this work done for $1,900, and we haven’t heard about the roof since.
We have another house where there was a flat roof added to an addition. In 2017, we had a roofer replace the roof. Somewhere, something was lost in translation of the job. We thought he’d address the flat roof and fix it, incorporating it into the main roof line. He finished the job, and it was clear that was not part of the scope as we thought, even though that was the whole reason we called him out. He simply said “I don’t work on flat roofs.” That wasn’t clear when we asked you to give us a quote, and how do you just ignore that there’s another roof line as a roofer?
The more we spent time and money on this roof, the more it came to light what happened. It appears that there was a deck that eventually was covered with a corrugated metal sheet. Then someone decided they wanted a laundry room, so they built a laundry room under this metal sheet. The roof line wasn’t properly insulated from water infiltration. We had several issues of water leaking into the laundry room. Mr. ODA put silicone and caulk along the roofline as a stopgap because roofers weren’t acknowledging us. We thought we had fixed it, and I had put a lot of effort into fixing the wet drywall and repainting the room. After two years, the silicone finally gave way.
Our property manager was able to get 3-4 roofers to come look at the job, but only 2 gave us a quote (why is it a norm to just ghost customers and not have the decency to close the loop and say you don’t want the job?). One of the contractors didn’t appear to understand the job, and that concerned me. He seemed to want to redo the entire roof, and that was definitely not in our finances for this house because we replaced the roof 3 years ago. Then he also suggested a ‘TPO roof’ for the flat roof. I don’t know what that is, and I didn’t like that the explanation to me started with “it’s a flat roof that…” No. I’m done with “flat.” Did I give it a fair chance? No. Do I care? No. I wanted a pitched roof line. This is important for later in the story.
I had several concerns about the other roofer’s estimate, but they were less fundamental (or so I thought). First, I was concerned about the terminology being used as a porch. Perhaps it’s just me, but I call the open-air overhang on the front of the house the porch, and the open-air part attached to the back of the house a deck. I was concerned that the terminology “pitched roof” was not explicit enough to our end goal. I questioned that his removal of the corrugated metal roof would leave the deck exposed, so the gutters would need to be rerouted and added. I also questioned about how he was going to cover the sides once the pitch was created – would it be just painted or would it be sided, and if sided, how would he match it to look right.
I had my property manager call him, I called him, and I emailed him, but I received no response. I was trying to confirm the scope of work. Mr. ODA told me that these contractors are good at their job, but not good at the administrative side, so just let it go. I was an auditor; accurate documentation for a job is important to me. 🙂
Here’s how it was written:
I decided to try to be easy going. There was a space for comments when I accepted the proposal. I added: I’m accepting this estimate based on the verbal agreement with [property manager] that the scope of work is confirmed as removing the flat roof over the DECK and laundry room (not sure ‘porch’ terminology), that the deck won’t be covered again and a lean-to roof will be put over the laundry room, and that all gutter systems will be appropriately rerouted to divert water from the house.
He gave me the quote on June 23rd. I accepted this work on July 5th. He kept delaying us. He would say “I’m going to get the materials today, so we’ll be there tomorrow.” Tomorrow never came. On August 25, he said he was going to 100% start the following Monday and be done by Wednesday. He finally called on Wednesday, and he said, “I got my guys out there today. I decided to do a TPO roof instead.” You’re kidding me, right? He kept pushing that it’s a “better” roof than a pitched roof, and I should be ok with it. Except, I signed a contract. The contract did not say their job was to install a TPO roof. I said that was unacceptable and I wanted a pitched roof. Here’s the picture that I received at that point. It looks really flat to me, and it has the point where it meets the main house still below the roof line (although you probably can’t tell there as well here).
On September 5th, he said they should be out the following day to finish it as a pitched roof. It took until September 11th for us to be told that the roof was done. As you can see, the gutters were not addressed. Luckily he said he’d get right out to fix that, and he did, which was appreciated.
While you can see that there has been a slight pitch added, it is not a sufficient pitch as required for asphalt shingles. Did I know there was a minimum slope requirement for asphalt shingles before September? Nope. But you bet I read up on it and figured it out as fast as I could. Nearly all manufacturers of asphalt shingles have a minimum requirement of a 2:12 slope. On top of that, Virginia Code has the same slope requirement.
This means that for every foot, the rise of the tallest point must be twice that in inches. A 7 foot long distance from the top of the pitch to the outer wall requires a 14 inch rise at the tallest point. That’s the simplest way I’ve been able to describe it.
While the connection point in the second try is above the wall/roof intersection, and it may have been ‘fine,’ I wasn’t here to spend $3,800 on “fine.” He kept pushing that he guarantees his work for 5 years. He also pointed out that a tropical storm was on its way that coming weekend, so it would essentially be a good stress test. So, he was asking me to pay him for a job that was “good enough” and hope that if there was a problem, he’d come back and fix it. No thanks.
He got up on the roof, held up a piece of metal (with no level), and claimed that his zoomed in distance was 2″ off the roof, so it was 2:12. Once I finally got to the point of saying, “what’s the distance from the house?” He said 7′. I said “so the rise has to be double that, so 14″. Is it 14″?” He said no and that he’d fix it. He finally got it done last week. He took pictures along the way to prove that he did the job correctly since I called him on not doing it correctly (or let’s just do the work right to begin with instead of hoping a homeowner won’t question it – where’s integrity these days).
All that was to share that you should do your due diligence when hiring contractors. Don’t assume that they’re going to do the right thing because they’re probably going to assume you’re not well-educated in their field. By no means am I a roofing expert at this point, but I appreciate knowing something new. I just wish I didn’t have to learn things quickly in order to protect my ‘investments.’ So now you also know that there are manufacturer requirements, in addition to your expected state-wide requirements in most fields. Take the time to be educated just enough or have someone you can trust to point out where it went wrong. In this case, I said “that doesn’t look like what I expected,” and I had our handyman look at it. He said the pitch isn’t enough, and that’s where I learned that there are minimum slope requirements. It’s hard because I didn’t know what I didn’t know, but I appreciated having other trusted people to bounce questions off of.
Here’s an unpopular opinion: you don’t need to buy all the amenities to have a good vacation.
Our financial advisor has a saying in his family, “we can’t afford ice cream.” If they wanted to, they could clearly pay for their family to have an ice cream night on vacation. However, they choose not to spend their money in such a way for the sake of the big picture.
The point I’m trying to make here is that you need to stop and think about an expense. I can’t remember what the item was, but when I went to pay for it, it was $8. It’s not that I couldn’t afford to purchase something at $8. It was simply that this item was worth $2 to me. The value of it was not $6 more of my money.
This post (or rant) started because of this Facebook post that was made in a local mom’s group. Apologies for the large image, but you couldn’t read the numbers until I got it this big.
Quite a few people echoed my point – stop with the add-ons. You can have a great day without the additional amenities/activities, and without the all day dining options. We had a season pass to the Cincinnati Zoo. We ate before we entered, packed snacks, and then ate on the way home if needed – at McDonald’s, with deals (we lived over an hour away from the zoo, so sometimes we couldn’t plan it to have only one meal while out). At a similar place to Kings Island, I know people who have packed coolers and left them in the car because you’re allowed to exit and re-enter.
Not buying extras holds true for any event. Your kid doesn’t need a $20 light up wand, that will be promptly forgotten about at the 48 hour mark, at Disney on Ice. The show itself was exciting and a “treat,” so let it stand alone. Your kid doesn’t need a $15 ice cream at the theme park. Simply let them enjoy the experience without developing a sense of entitlement or expectation that they’re going to get a “treat” every time you’re out.
I completely understand the mentality of “go big” for vacations because it’s a special time. But what is that worth? I know some people spend all year saving up to go to Disney, and they want the “full” experience. Disney itself is very expensive, but then you start spending on gift shop paraphernalia and food in the park, you’ve now spent a small fortune for hours of entertainment.
DISCIPLINE
Instead of only being disciplined for those few days per year, focus on the question: what is each individual dollar worth? I have an entire post where I share the thought process and conundrum I faced for purchasing a $4 weighted tape dispenser. Seriously. While you’ve “saved” for this vacation, what if that saving mentality helped you be able to pay your regular bills along the way? Or what if instead of spending extra money on vacation, that money went towards paying for school supplies? It’s all about creating the mentality and discipline to ask yourself what the value of something is, both to you and to the economy – if you’d pay $2 for a water bottle outside a stadium, is it worth paying $6 inside the stadium? Or could you plan ahead and bring your own water?
This irritation isn’t only for vacations. A friend of mine would leave their house to go to a nearby gas station to buy gatorade and soda bottles. You were at home! If going to the gas station is a regular occurrence, and you enjoy drinking soda out of a bottle, why don’t you get a multi-pack and keep it in your refrigerator? Then there’s the person I used to live across the street from who would order door dash regularly. It probably averaged to once per day; some days there was two deliveries, and some times she may skip a day. Then she posted a GoFundMe for help to pay for her tuition and books to finish her RN. She also posted all the amazing toys (excessive and expensive) she got her kids for Christmas, while also complaining about her son’s behavior being out of control, and that her daughter was being so bad that she got tv in her room taken away – wait, why does a THREE YEAR OLD have a tv in her room? So tell me again how you can’t make ends meet, and how you need help finishing your degree, while you have zero discipline on spending the money you do have. Why is it everyone else’s problem to fix for you when you’re putting no effort yourself? I’ve digressed.
OUR RECENT TRIP
We just went on a trip to Jellystone. My son had asked to go back to a cave since we left a cave last year. He’s obsessed with space and Earth. He was 4 at the time of this trip. For 2 adult tickets, all 5 of us were able to take a 2-hour tour at Mammoth Cave (children 5 and under are free). That was $40 worth of entertainment. I figured it was a good time to take advantage of their pricing structure before it would become $60 next time we’d try to go. While I felt the $40 was worth our time and money, I mildly regret it. His excitement for the caves was worth it, but we missed out on activities at Jellystone that I think they would have enjoyed. At 4 years old, we could have easily skirted the cave desire because he doesn’t know that a cave is 20 minutes away when we’re at this location.
We paid $433 for a 4 bedroom cabin for two nights, and that included a $50 charge for bringing a pet. We packed all our food for all the meals. My choice to allow the kids to stay up way past bedtime and for the two older ones to share a room cost us on day 2; I promised them ice cream if they powered through the cave, so that was $14 for all of us to have ice cream, which wouldn’t typically be an expense we incur. Other than the cost of gas to go 260 miles roundtrip, we spent nothing else.
There were opportunities to pay for things. We could have rented a golf cart for $70 per day. We could have paid for the mining sluice, which didn’t have a price advertised, and would have been 3 minutes of entertainment. We actually did try to do their obstacle course, but none of our kids were tall enough. Instead, we took advantage of their amenities. We drove pedal cars, played at their numerous playgrounds, went swimming, went to their beach to play in the sand and swim, ran around the splash pad, did their craft times, attended their character greetings, played bingo, played minigolf. We probably just sat at the cabin for a total of 3 hours between 3 pm check in on day 1 and 11 am check out on day 3; we even let the kids stay up until 8:30/9 (their usual bed time is 6:30).
UPCHARGES
So let’s look into amenities at GWL. I’m going to look at Mason, OH’s location. First, because it’s the one closest to me, so I’m familiar with it, but also because whenever there’s a Groupon for $99 nights, Mason is always $149. That tells me that Mason’s probably on the middle-to-higher end of amenities and their cost.
For a weekend in October, my room options range from $410 to $1035 per night. They provide a rate calendar option for you to see the rates on other nights because you may feel that $1035 for a night in a water park and hotel is absurd (I hope you do….). I also encourage booking with a code (there’s a Facebook group that shares active codes for deals), using a Groupon, or planning in advance and being flexible on dates.
You select a room option (I picked $410), and then it offers you a late checkout option. Check out is 11 am. For $50, you can stay in the room until 2 pm. What are you going to do with your room between 11 am and 2 pm? When this option is presented to you on the screen, what are you thinking? Are you thinking it must be a necessity because it’s being offered? Are you thinking that it’s needed because you don’t want to “leave” at 11 am? Or are you really thinking about the cost/benefit ratio of this charge? Are you expecting to be done with the water park for the day at 1:30, so you’ll go shower and change before the 2 pm check out? If I’m spending the day at the resort, I don’t see where I need the room between 11 and 2. I have one exception, which is very specific right now. If I hadn’t just paid $400 for a night there, I may consider the upgrade because we still have a napping kid from 11-1, so that could be helpful, but that’s not worth the additional $50 to me, personally.
GWL does a good job at pushing their pass options. There are 3 levels, ranging from $50-70. The options include a variety of: MagiQuest, Build-A-Bear, Mining Sluice, mini golf, bowling, GWL goggles, $5 to the arcade, candy, and an ice cream. Purchased individually, the price for the pass is a better deal by a few dollars than if you purchased these individually. However, do you have the time to do ALL of these activities and enjoy the water park? If you’re staying one or two nights, you likely don’t have the time to get the most out of everything. Don’t forget that they offer several ‘free’ activities (e.g., yoga, character greetings, bed time story, crafts, etc.) each day as well, not to mention that you’ve just spend $400 on the stay to play in the water park.
Don’t forget that on top of the room rate, there are taxes and a resort fee. If I wanted to stay for two nights with 2 adults and 3 kids (even though one is less than a year old), with no extra purchases, my total is $1,023.70. That’s $820 for the room, $124 for taxes, and $80 for resort fee.
These options that are presented don’t even include all the options you can pay for. For instance, you can rent a cabana. You have to call to book it, but I’ve seen it priced at $200 and at $500 for it. It’s not private. It’s not secluded. It’s not secure for your belongings. Make sure you ask yourself what you’re getting for that cost and if that money could be put to better use.
As a kid, we used to go to Lake George. We joked that it was our vacation from our vacation. The point of Lake George was to do nothing. You played in the pool at the hotel, walked the town, and got ice cream each night. It was relaxing. I remember lots of our trips, but Lake George sticks out as a favorite. Even our trips that were busy – it was busy because we were sightseeing and driving far; it wasn’t busy because we were paying for activities and trinkets.
We went to Disney on Ice, and my son still thanks me for the experience; he didn’t get any trinkets while we were there, and he still loved the experience. Your kids will remember the time they spent with you. That’s the point of the vacation – spending uninterrupted time with your family, not making it an exhausting, jam packed few days where kids are overstimulated and sleep deprived.
This isn’t a parenting advice post. It’s simply a moment to stop and think about your spending. Take the time to determine whether a dollar spent on an activity is worth that dollar’s cost in your day’s/week’s/month’s/year’s goals. The tape dispenser. Truthfully, I didn’t know it only cost $4. Regardless, I still took the time to consider whether buying this thing that I need for 1-2 days per year was really worth spending our money on, or could that money be put to better use.
In 2021, we purposefully took trips each month. We had looked into buying a vacation home, and we decided that we’d rather go to different places each trip than the same place over and over. The mortgage was going to be about $1200, so we allocated that much as our trip budgets. In May, we spend $618; June was $200; July was $690; August was $1069. I say this for perspective.
Take the time to analyze the spending that you’re doing, independent of the deals being offered. Will that one trip be worth the cost of it? Will the money spent for that trip be worth anything that you may have to give up to make that trip happen?
I share these turnover stories for both sides. I want to show landlords that others go through what they go through. I also want tenants to see that if you communicate regularly and are up front, a landlord can work with you in nearly every situation. It’s the surprises that landlords don’t want to manage. I think back to my time as a teller in a bank – if you were nice to me, I had leeway; if you demanded action from me without any polite undertone, I knew every single rule that there was.
We bought this house in June of 2017. We had to put a little bit of work into it, and we had it rented in September. That tenant needed to break the lease early, but she had a family member who wanted to take over the lease. She passed the background check and moved in mid-July of 2018. She’s lived there ever since. Her lease renewed on an annual basis, July 1 through June 30. She rarely asked for anything, kept up the house as if she was going to live there forever (at least as of my last inspection), and was friendly.
In February, she messaged us that she’d be leaving the house as of April 30th. Even though her lease went through June 30th, she had given us plenty of notice, and a May rental is easy enough to get rented (we typically see less people looking for a lease in the Fall and Winter), so we went with it.
Shortly before she let us know that she’d be leaving, I had an old tenant ask if we had something available. We didn’t, but once she gave notice, I messaged the old tenant back. We ended up going through the process of screening the person she had interested (a friend of her’s) and approving him. Not having to list the house for rent, show the house, and then review several applications is a positive.
TENANT NOTICE
Not that this matters now, but to share how people act, I’m going to include this story. Be a nice person. Be a straightforward person. Take responsibility for your actions. Skip this section to get back to the actual turnover work we did.
On February 7, she said she would move out on April 30 and will leave the house “in impeccable condition ready for the next tenant.” It was understandable that she needed more space, and she shared that she had secured another place already. She stated she’d send a formal letter, but that never happened. She also shared that she will leave a shed she had purchased, and that she already had paint on hand to give the walls a fresh coat.
On March 13, she shared concerns about the house that we should address (according to her) before another tenant moves in. She again stated, “the house [will be] spotless and freshly painted and the grass will be mowed.” She said the house needs a power wash, windows replaced, and the bathtub resurfaced. Then the fun. She changed the lock on the yard gate, and she hadn’t told us until now. She said she replaced the lock on the back door because she “was burglarized twice.” The house gets broken into and you don’t think to let your landlord know OR to let them know you changed the lock??
Here’s the next kicker. “I officially move into the new house on Wednesday, but I’ll be taking the extra time to get everything moved and in order for the [current] house.” That “Wednesday” would have been March 15.
There was a lot more back and forth, but we communicated through my property manager at this point because my property manager was handling her husband getting in there to get some work done. We were told that we could get in to start work before the end of April so that we could rent it right away.
Then comes April 19. “I had to push back the date to give a key for the contractor until .. the 26th.” Then came all the stories. Guilt inducing stories. She also stated she was about 80% moved out. She said “everything will be ready by my move out on the 30th.” So I laid down what we were told at that point. We had been told (either through our texts or through my property manager) of several “move” dates. Now we’re told she’s not out and has no intention of letting us see the property, let alone get work done, which is what we agreed to previously.
I politely stated I had concerns. I went into the background of who these people are that are “working” for me, and that they’re friends. I tried to ease her feelings of a random man entering the house (that she had told us she had moved out of on three different occasions). My biggest issue at this point was having a new tenant commencement date. No, I don’t need access before the end of your lease, but that’s not the expectations that were set. So I made future plans based on the agreement we had. If the house wasn’t going to be ready, I needed to line up contractors for the first week of May. I wanted to know the needs now, not on April 30th when no one is available for weeks.
She had said she was going to paint, but it was clear that her timeliness was not in line, and that this would fall on me. I said “You had mentioned that you would repaint the walls before the end of April. That was very generous of you, but it’s not required. However, if you won’t be painting the walls, I need to know that now because I need to get a painter scheduled basically today to be able to have him there on May 1st.” She double downed that the house would be painted.
I also was upset that she changed the locks without telling me (a lease violation, as well as a common sense violation). Had I known and been provided a key, then I would have already given my property manager the key. Instead, she’s holding the key hostage because she doesn’t know MY property manager, and that was unacceptable.
On April 23rd, she told me that no one was to do work on the house until after her lease was over. I was too frustrated to provide pleasantries at this point. I said “I explicitly asked the status of that.” And I said “you said we could be in after Wednesday and that May 1st wouldn’t be an issue. I was trying to prevent exactly this situation – a last minute surprise that affects our schedule/business.” More excuses. And I do understand that people who hand out excuses like lollipops in a doctors office don’t realize that’s how they’re acting, but it’s quite frustrating being on the receiving end of an endless list of excuses that are meant to cause guilt.
My handyman went over there on April 26 and took pictures of two rooms (it’s a two bedroom house…) with stuff packed to the ceiling. And then she shared that she forgot about things in the attic during the final walk through. “80% moved.”
We ended up pushing the new tenant to May 5th as the move in date. Had we kept it on May 1st, we would be liable for “damages” in some way by not providing him a place to live on the commencement date. So we quickly got a new lease signed with a commencement date of May 5th.
TURNOVER WORK
We had the entire house painted. There were an obscene amount of decals left on the walls that had to be removed. They had been on too long, and the paint came with the pieces or it left indents, so they had to be sanded down. Then there were also an obscene amount of command strips all over the walls that had to be removed, and the walls repaired because they were knock off command strips and not the real ones that actually come off easily. Since the house was beige and needed so much prep work for painting, I decided to just change the color. Our handyman had to do all the prep work and then do two full coats of my light green color on all the walls.
On top of painting all the walls, he had to fix some of the trim. My tenant decided to [poorly] paint SOME (not all) of the trim black. Doors were painted black, trim was painted black. It was not good. So I then had to pay for 4 coats of paint on the trim work to get it to white. It was originally the same beige as the walls, so for $3,500, the house now has all white trim and a pretty light green wall color, which probably brightened the space nicely.
When we bought the house, the tub had been painted and started peeling. It wasn’t something we had the expertise to manage. The tub was original (read: cast iron, heavy), and the paint wasn’t horrible enough to warrant immediate action. We covered the main issue with a mat in the tub, but over the last several years, it wore away. We had our handyman epoxy bathtub. While he was at it, he also epoxied the walls to cover the blue tile. I didn’t hate the blue tile, but someone at some point had repaired the wall by the toilet, and then replaced the blue tile with white/beige tile.
That’s what it looked like when we bought the house, and this is what it looks like now. The decal on the toilet is icing on the cake for this saga.
Then there were random little tasks that my handyman had to do, like replacing door knobs that had been removed and scraping the paint off my brand new windows. He also had to change the locks on the house because we think she kept helping herself back into the house, and we had to change the lock on the laundry room door because she couldn’t find the key.
SECURITY DEPOSIT
In Virginia, I have 45 days to return the security deposit or share the charges placed against the deposit. I learned early on to take the full 45 days because tenants don’t provide their final utility bills (as required by the lease), and so I don’t want to return the security deposit only to find a surprise utility bill 30 days later. So while I knew the charges by the end of the first week after this tenant vacated, I waited to ensure no surprises popped up.
In my disposition letters, I reiterate the lease agreement terms, including the amount of security deposit that was held from the beginning of the lease term. In this case, I reiterated that her lease term went through June 30th, even though her notice was given through April 30th. I also shared that the itemized list I provided doesn’t include items that I couldn’t fix yet or that I hadn’t fixed yet (e.g., stickers on the once-brand-new vanity, spray foam on windows, and the lack of proper yard maintenance). I also stated that we had days of lost rent due to the condition of the house when it was vacated, which she isn’t charged for. With all those caveats, the total still came to about $2,800. The security deposit I held was $945. This left a balance of $1,937, which I chose to not pursue collection on.
I have not heard from that tenant since the letter.
NEW TENANT
The first tenant ever had contacted me and asked for a place for someone she knew. I didn’t have one at that moment, but this house came available shortly after that conversation. I sent the background check to the new person, and he passed everything. We had agreed on a May 1st commencement date. I had some delays with the passing of my mother, but then I gave the new lease to our property manager. The new tenant dragged his feet on getting it signed, which was a red flag. He struggled with getting the first month and security deposit funds together, which was another red flag since he had two months notice for this agreement. Luckily, there have been no issues since we got everything squared away on May 5th.
When we first started renting this house, the goal was 1% of the purchase price as monthly rental income. This would equate to about $650. However, the market rent at that time called for higher, and we had rent set at $795 from 2017 through 2023, never having raised the rent on the tenant. With the drastic increases in property values, therefore causing increases in my taxes and insurance bills, rent was now set at $925. Had I listed the house for rent, I would have listed at $950. Since this was an “off market” agreement, I was comfortable with a rent reduction.
SUMMARY
All in all, this was an easy turnover. Having the contacts of a handyman is greatly beneficial at this point. For a small house that’s under 900 square feet, we spent a lot more than we typically would for turnover. We project turnover to cost 10% of the annual rental income. In this case, that would have been under $1000. However, we didn’t have to turnover the house for 5 years. That’s about $5,000 had we turned over the house every year. So the total bill coming in at just over $3,800 essentially says we’re still “coming out on top.” It also provided us an opportunity to increase rent closer to market value. We’re 4+ months into this tenant’s tenure, and all seems well.
It’s the calm before the storm with rental payments. We’ll owe multiple jurisdictions’ tax payments over the next month. We only have 5 houses with an escrow account, so I’m responsible for insurance and tax payments on my own. I don’t mind it because that means I don’t have to keep money tied up in an escrow account balance, but it does mean that there are large outlays multiple times a year that need to be properly accounted for.
I recently made a post about late rent payments this month. The one who I continue to charge late fees didn’t even pay on the day they said they would. I despise having to hunt tenants down for payment. She emailed me that “September 5th payment” would be late (ugh … it’s due on the 1st, maybe plan for that day instead), she said it would be paid on the 8th. I had to ask on the morning of the 9th where the payment was. I was giving her a few hours to respond and planned to send a notice of default. Lucky for them, I got distracted and busy, and I didn’t get around to it. They finally responded Saturday night that they had lost power and were distracted, but they sent payment then.
I paid out the invoice from our handyman that I had been waiting on, which was $810. I had mentioned that I’m waiting for an invoice from our HVAC guy, but I think he’s not charging me for the service since he had to go back after installing a new condenser. I’m STILL waiting on the roofer to complete the job on one rental. I signed the proposal on July 5th. He finally started the job at the end of August, but decided to change my scope of work without approval. That delayed the project another week. Then I have no idea what has happened over the past week and a half, but supposedly it’s finally done.
A plumber came out for a hot water heater issue at one of the properties. The tankless water heater wasn’t powered on. I don’t even know how that happens, but it seems like something that may become a bigger issue. The company even said they don’t service or work on electric tankless water heaters, so I don’t even know where we would go from here.
PERSONAL FINANCES
In my last financial update, I mentioned that our insurance adjuster had finally came out, three weeks after the tree falling on our deck. He took a week to get us the estimate. We then responded the next day with all the errors and omissions in the estimate. It then took 3 weeks for our email to be acknowledged (even with multiple phone calls). We finally escalated this two weeks ago (State Farm doesn’t make it easy to escalate beyond your desk adjuster answer the phone), had an estimate redone by our adjuster (supposedly) about 12 days ago, who then told us the supervisor approval process would be 3-4 days. Giving the holiday of Labor Day and benefit of doubt, we didn’t push it until Monday, hoping they’d do the right thing and get us information. Mr. ODA saw that we had been reassigned a field adjuster on their portal. So guess what? For an event that occurred over 10 weeks ago, we’re starting over! Lovely.
I paid the kids’ tuition for preschool late. Luckily there’s no late fee charged. The school “opens” links each month. I tried to pay it around the 20th of August for September because I knew the last two weeks were going to be crazy with visitors. When I couldn’t pay it that day, I completely forgot about it. I was part of the “hey, you didn’t pay” email from the director – so embarrassing. Our oldest is going 5 days a week, so now his tuition is $350 per month; our second’s tuition is $175 per month.
Our 0% introductory interest rate on our credit card we opened 15 months ago expires at the end of this month, so that’s over $5k that needs to be paid. Then our credit card statement balance owed on our regular card is about $4,800 because of large rental property expenses. I haven’t paid it yet because I need to transfer money from savings, so I’m waiting until the last minute to do that so we can earn interest on that amount.
NET WORTH
Nothing too exciting to note here. Credit cards are still high, but that will be significantly different next month with our 0% interest card being paid off.
I asked Mr. ODA for his 401k updated amount yesterday, and he made a comment that I should wait to update until today because the market went up yesterday. I had already done the majority of the work, but an ailment and children meant I didn’t get to posting yesterday. So this morning, I updated just our investment account totals to see the difference. The chart above is yesterday’s numbers. Today’s 401k, IRA, and taxable investment account totals are $10,000 higher today than yesterday. That means that if I had updated the numbers today instead of yesterday, we’d be showing an increase in net worth from last month’s update by about $6,000. Instead, I’m showing a slightly lower net worth by about $4,000. It just goes to show how much the market can affect the numbers on any given day, and my net worth in trending generally upwards, but it may not seem that way because of one day’s market closure.
Rent is due on the 1st of every month. There’s a grace period until the 5th. (Aside: I find it frustrating when someone says to me “rent is due on the 5th”) At 12:00 am on the 6th, rent is considered late. At that point in time, there’s a late fee applied to the amount owed. Typically, the late fee is 10% of the monthly rent. If your rent is $1000, then your late fee is $100. Legally, with no rent paid by the end of the day on the 5th, I can send a “notice of default” letter. This letter states that you have a certain amount of days (varies by state and/or local law) to pay rent, or I’ll file for eviction. Rarely, do I get to this point.
LATE FEES
There are two schools of thought (well, maybe more, but these are the main two I’ve dealt with). First, a late fee is free money. We had a handyman who was showing us a portfolio of houses say, “go ahead and let them be late; that just means more money for you.” Second, I wasn’t planning any of my finances on collecting late fees, so why collect them? This is the one I follow most of the time.
Sometimes, I feel that a late fee is a lesson. I typically follow through on charging a late fee if I had to “hunt” someone down to pay their rent or if they’re perpetually late and ignore that a late fee is owed when late.
RENT INCOME MANAGEMENT
I have 13 rental properties to manage. Each month, I record all the rent I collected with the date it was collected. I then do a simple “SUMIF” function in Excel to add up all the rent collected and attributed to each month, which I then compare to the total amount of rent I expected to collect for the month. This is how I manage who has paid and who hasn’t, and whether anyone is owed a letter of default (a letter stating rent is late, and if it’s not paid in X amount of days, I’ll file for eviction). I’ve had two tenants who were regularly late with zero communication, so I automatically sent the letter first thing on the 6th. More often, I have tenants who tell me that they’ve had some struggle, and they 1) Request a delay in rent payment; 2) Share their plan to get caught up (e.g., I’ll be able to pay $600 today, and then I’ll pay the remainder on Friday); and 3) Offer an apology.
If you communicate with me before the 6th, there is a 0% chance that I’ll be sending a “notice of default” or filing for eviction. Now, if you say you’ll pay by the 10th, and then you don’t pay and there’s no communication, then there would be a letter at that point.
If you communicate with me before the 6th, you’re not typically late with rent, and you have a plan to get caught up, I won’t charge the late fee. I have a chance to make someone’s day. In their head, I’ve “saved” them money at that point. Nearly all of my tenants are living paycheck to paycheck. If they’re late, that means they’re already worried and juggling bills. I don’t want to saddle them with another $100+ worth of a bill.
With that said, there are times that I stick to the late fee. I have a tenant who didn’t communicate up front, and then still had to be asked when we should expect payment. I held tight to a late fee on that one. I want it to be known that there are consequences. I can ease up on any future need for a late fee, but I’m setting a precedent there. If you don’t communicate nor pay rent, there’s a hefty consequence. In this case, it was $160.
THIS MONTH’S LATE PAYMENTS
Note that the 1st fell on a Friday. In these cases, I expect to see rent paid very timely. When the 5th falls on a Friday, then I expect to get the majority of my rent on the 5th. If the 6th is the 1st Friday, then I expect to receive a higher-than-average amount of late payments, and don’t charge late fees.
As I mentioned, I have 13 rental properties. – I had 5 houses pay all or partial rent before the 1st of September (this is very unusual). – I had 2 houses pay full rent on the 1st, and 2 of those who had prepaid rent paid the rest owed. – I had 1 house pay full rent on the 3rd. – I had 2 houses pay full rent on the 5th. – I had 1 house pay partial on the 5th, with the intent to pay the rest on the 9th.
That leaves 2 houses that haven’t paid anything.
Here are texts or emails I’ve received.
Good morning! We had a change in pay dates which of course affects everything. Can I pay $750 today and the remaining $1000 on Friday? What will the late fee be?
I hope you’re doing well. I was wondering would it be okay if I paid rent on the 8th? …doc appointments have been a little more pricey than anticipated.
Good evening, Sept 5th rent will be a few days late. We will have it to you on Friday 9/8/23 along with the late fee. Sorry for the inconvenience.
For the first two, I won’t charge a late fee. In #1, I let her know that it wouldn’t be an issue. I appreciated the advanced notice. She’s been late once before over 17 months, so it’s not a common occurrence. In #2, she’s been late once or twice before, but has always communicated well and is taking care of the house. I note though that I don’t expect tenants to share personal, health related information with me, but this is typical conversation with this tenant.
In the 3rd, this tenant will pay the late fee. Notwithstanding the “Sept 5th rent” part ;-), this tenant is routinely late. We’ve made excellent progress in the communication side of things though. Now I get an email that lets me know when rent will be late. Their routine late payments led us to change their lease set up. Their lease was $1450 per month. We offered them the chance to pay twice per month, $750 each. This would allow them to pay more related to their paychecks. Yet 5 of this year’s 17 payments owed are still late. They don’t take care of the property, and they don’t communicate well. We attempted to remove them from the house by drastically increasing their rent, but they accepted the increase. Since the change to rent being owed twice a month, their late fee is only $75 per late payment, instead of the $145 it could have been if they couldn’t pay every month in full.
SUMMARY
The original point of this post was to share that having multiple properties provides a luxury to allow for late rent payments without the collection of late fees. Outside of any abnormal maintenance charges, I owe 5 mortgages each month, totaling over $4,600, and property management fees worth over $700. I need 5 of 13 houses to pay their rent for me to cover those expenses. Note that this doesn’t mean the remaining 8 houses are all income for me; I still have other expenses in property management each month.
If you have to pay rent late, your landlord will appreciate anything you can put towards rent at that point in time. I shared with a tenant once that if they could pay something, that’s better than nothing because I still have a mortgage to pay, even when they don’t pay rent.
Understand that there are due dates and consequences for missing due dates all over life. If you don’t pay your mortgage by the due date, there’s a fee. There may even be larger consequences like losing a promotional rate. Similar with a credit card. There is interest accrued on credit card balances, late fees for lack of timely minimum payment, and the possibility of losing any promotional opportunities given.
Charging a late fee is completely within my legal ability, but I also understand that issues come up and that my tenants are humans. I’m not here to take advantage of them, so if I can “throw a bone,” I like to be that bright light in their day, especially when they were probably so timid about even sending the notice that they’d have to be late.
Our church had a series about “taking significant steps toward financial freedom.” In their terms, financial freedom doesn’t mean FIRE (Financial Independence, Retire Early), which is usually what we’re referring to here. They mean that they want people to be free of financial burdens and not “bound up” by finances. Mr. ODA and I have been in control of our finances for a long time now, so this isn’t teaching us much about what to do differently. However, I’ve enjoyed learning their perspective and have several take aways to share.
Many have heard of Dave Ramsey when it comes to christian-based financial teachings. Dave tells you to pay off all your debt and pay cash for everything. We disagree with that approach. Debt is not bad when it’s used responsibly and you’re being a good steward with your finances, and that’s what our church’s lesson is too.
People seem to think it’s ‘cool’ to talk about how ‘broke’ you are. And yet, it’s taboo to mention if you’re in a good position with your money. What if we made it so that you’re taught that when you find someone in a better financial position than you, you ask questions and learn what decisions got them to that position?
The lesson is how to manage your mentality with money. It’s not about restricting your spending or making you feel guilty for buying your coffee, but it is about how you make informed decisions day-to-day that grow you towards a position where money isn’t controlling every aspect and decision of your life in a stressful manner. If you take control of your money, instead of your money controlling you, you’ll work towards eliminating that stress.
THE WHY
The workbook starts by asking you to determine your net worth. Money-in minus money-out is your cash flow, while assets minus liabilities are your net worth. The goal here is the gauge the current status of your money and where you should probably plan to be. There’s also an exercise where you determine your motivation. Are you motivated by freedom from financial burden, having a feeling of security, having power, or through love and giving? When you determine your “why” behind making money, you know what direction to go.
Making more money isn’t always the right answer. To make more money, you may need to take on a second job or more hours at your current job. Is putting that time in worth the extra money that you’ll bring in? Will putting those extra hours in make you more happy? If not, perhaps decreasing expenses is that way to go to make ends meet. If you don’t have the ability to take time for yourself or do things that bring you joy or have “down time,” then it’s not worth taking more time from your week.
I quit working in May 2019. Since then, I’ve done odd jobs just out of excitement, not financial need. I learned different industries and only had to commit part time. I was recently feeling the pull to find another part time job. There’s a consignment sale that comes into town twice per year, and they were hiring. They said they pay $8 per hour with at least a 4 hour per shift commitment. The consignment sale is being held 30 minutes from my house. That means that a 4 hour shift requires me being out of the house for 5 hours. The gas to get there and back would cost me about $7 per day. That means I’m out of the house for 5 hours (away from nursing my baby and being with my kids) for $25 before taxes. That cost/benefit ratio was not worth it to me.
THE PLAN
My favorite analogy given was to a plumber. A plumber doesn’t just start laying pipes in walls and hope it works out. He will have a plan of how to get water from the source to the faucet. Without that plan, how would you know that the water will get to where you want it to go? Same with money. If you don’t have a plan for your money, how will you know that it’s going to the right places with minimal effort? Without a plan, that’s where the stress comes in.
If you’re worried that you’ll be able to pay your electricity bill, then money is controlling your life. Sit down and make the plan. Allocate funding to the necessities first. It’s ok to eat at a restaurant or buy a coffee, but is putting your money towards those expenses creating financial freedom or causing more stress?
Mr. ODA and I have a money-spending mentality, rather than a budget. In my opinion, when you create a budget, you’re either looking to spend everything you’ve set aside in that ‘envelope,’ you’re willing to move money around without discipline, or you think of left over money in that ‘envelope’ as a bonus and you spend frivolously. If you put $500 for the month’s groceries in an envelope, but you only spend $450, what are you doing with that $50? I’ve seen it happen plenty of times that someone splurges. Instead, Mr. ODA and I weigh every single purchase. Literally every purchase, I swear. I told the story about my weighted tape dispenser.
Every single year, I sit on the floor and wrap Christmas gifts. I don’t seem to notice during the year when I’m doing birthday gift wrapping (or perhaps I’m quick to grab a bag instead of wrapping paper for those instances), but at Christmas it’s apparent. I need a weighted tape dispenser. Having to find the tape on the floor in a mess, then having to use two hands to get a piece of tape off the little plastic dispenser, is just so much stress. It was YEARS of thinking “I need a weighted tape dispenser. Nah, I don’t need it for just this one week every year.” I finally bought one. It was $4.22. I agonized over this purchase because I didn’t feel it was truly a necessity and it turned out to be less than $5.
Grab your bank account statements and credit card statements. How much money did you spend? In what categories did you spend that money? Was it for necessities or was it spending that creates a strain on your ability to pay the necessities?
This is an exercise worth doing if you feel you’re drowning. I see posts daily in my mom groups that people say they make “good money,” but they can’t seem to pay the bills. I want to intervene. “Did you stop at the gas station on the way home from work to get a gatorade?” You could buy a 16 pack of gatorade, put it in your refrigerator, and have it waiting for you when you get home, which is probably about the same amount of time for not stopping at the gas station to make that inflated purchase.
So many people don’t seem to realize how fast those daily, small expenses add up. Ask yourself if there’s a better way to get such gratification, but in a way that furthers your dollar earned. Create the habit of weighing each purchase, determining if it brings you joy, and then either walking away or purchasing it. Know that if you purchase it, that will have ripple effects. So if you’re worried about paying that electric bill, then that instant joy gratification wasn’t a step towards financial freedom, where money isn’t controlling you.
I manage all our income and expenses (at a high level, like credit card payments, not individual line items). I have a spreadsheet that I set up in 2012 and have used religiously since then. I’ve shared how I set it up in the past, but we’ve entered a new phase that makes my spreadsheet even more important to me.
BACKGROUND
FIRE. Financial Independence, Retire Early. This isn’t a post about FIRE specifically, although it’s the movement that sparked Mr. ODA to go down our financial path.
The purpose of our rental portfolio was always for both Mr. ODA and I to quit working. We had covered my income before any kids were born, but I kept working because there was no reason to not be working. Once our son was born, I took 14 weeks maternity leave (not a separate bucket for Federal employees back in 2018; it came out of my own accumulated sick leave), then I worked about every other day for 8 months while Mr. ODA and I swapped child care roles, and I burned down my leave.
While we don’t plan to work full time, we do plan on keeping part time positions. We’ll work on things that bring us joy, rather than an office job with office politics. Since I stopped working, I’ve done odd jobs, part time. For example, I worked as a census taker and served beer at a local race track over the last 4 years. These were all seasonal, part time positions, with no long term commitment.
Now that I quit working, it’s Mr. ODA’s turn. We hardly skipped a beat when we left my six-figure salary behind (although a pandemic probably helped curtail spending on our behalf!). However, the thought of losing his salary as a safety net and losing insurance are two items that have caused some pause.
THE SPREADSHEET
For you to understand my panic that I’ll get into here, I thought a quick reminder was necessary. This is how I manage our money. It’s nothing fancy, but it works. I don’t miss payments. I can allocate expenses to a specific 2-week period against what income is brought in at that time.
There are two parts to the spreadsheet. Well, there are about 10 tabs, but this first tab, with two sections, is what’s pertinent.
Part 1 is this section. This image is a very scaled down version of the section. We have 13 houses, 6 mortgages that get paid, 6 credit cards that get paid regularly, and a few other lines that I removed.
All numbers are made up place holders, except the investments. I deleted my IRA contribution line because it’s wonky (but I will max out IRA contributions), but I wanted to show how much we’re investing regularly. There’s $75, per kid, per month, going into their investment accounts. Then there’s general investing happening with one $1000 transaction and two $800 transactions per month. Mr. ODA is investing into his IRA to max it out ($6500/12=$541 per month..sort of).
You can see that I’ve listed Mr. ODA’s pay dates at the top, and then his salary income on the next line. The gray section accounts for all rental income. I’ve allocated the income into the salary two-week period that makes the most sense (about half pay me on the 1st or 2nd, and the rest pay on the 5th). The green section shows routine rental property expenses. The entire next section are our personal expenses. The blue is left over from when I was managing two personal homes last summer (but kept it to differentiate our house bills versus other bills). The next gray section (which I’m only just realizing is a second gray and should be a different color as to not conflate the two grays.. what a rookie mistake) accounts for expense that come out of Mr. ODA’s bank account. Finally, I have an “other” section. This is where I capture large expenses that don’t need their own line item because they only happen once or twice a year. Here I’ve put tax payouts that will be due in October (that’s 4 houses worth, and it’s last year’s numbers – because I want to know how this year’s amount owed, when it comes in, changed from last year’s to discern if it’s reasonable or if I need to dig into it).
This is part 2. Now, part 1 accounts for the general timing of income and expenses, but it doesn’t perfectly capture the due dates, scheduled payments, or whether I’ve paid it and it’s hit the account.
The top line is linked to the section that I update our checking and savings account balances. Then I transfer all the items per pay period into this list format. In this example, let’s say I’ve already scheduled the gas payment. So I mark it as gray and put the date in the left column. Similarly, our investments are automatic, so I mark them in gray as we get to that two-week period.
At each border lined, I put the total for that section. You can see that at the end of the 9/2/23 pay period, I project a negative balance. Truly, we seem to have more income than I project (rewards cashed out, someone paying partial rent a little early, etc.), so I don’t take any action until I need to. There are Federal regulations regarding savings accounts; so we can only make 6 withdrawals from the savings account before fees apply. I manage these projects to know whether I need to make a withdrawal. If I need to, then I project what other expenses I may have and transfer a little more than I deem necessary.
THE PLAN
So our first step to him leaving is to pretend we don’t have his salary. Mr. ODA set up a new bank account. The majority of his paycheck goes into that account. We still have $250 going into another account, and about $400 going into a third account because we need to meet the requirements of direct deposits to prevent any account maintenance fees.
Our general principals in account management was always to take money into our main checking account, pay out bills for that two week period, and put the balance into savings. However, that wasn’t creating any forced feeling of managing without Mr. ODA’s salary. I’m more of a visual learner, so I appreciated this concept of having the money automatically transferred to a completely separate account.
EXECUTION OF THE PLAN
The first month of this plan had me on edge. The accounting in the checking account meant I was constantly back down to a balance of about $500. When I worked in an office, I was at the computer everyday checking our money. Now that I’m responsible for 3 tiny humans, I’m rarely on the computer. I project out our routine expenses, but there have been plenty of times where a $100 or $500 charge goes through that I didn’t have listed in my expense column for that period. Therefore, I like to keep at least $1000 as a buffer in the checking account to cover those little expense that can add up. So keeping the projection to less than $500 in the checking account panicked me.
Now wait. It’s not that we only had $500. We have a savings account linked to that checking account. We have this online account that’s taking Mr. ODA’s salary and just building the balance because we don’t use that account for anything. We have Mr. ODA’s old personal checking account. And last but not least (as my adorable 3 year old says all day long), we have plenty of investments that can be liquidated within 24 hours. We have the money. It’s just the panic of having the money in the spot where the bills are being paid.
SUMMARY
I’m sure there are easier ways or “better” ways to account for this. I don’t like automatic payments for bills because I like scheduling them against our cash flow. I’ve used this exact set up since 2012, and it hasn’t failed me. Taking full responsibility to pay bills means I am very scared to miss a payment and cause a negative hit on either of our credit reports.
Now that we’ve eliminated about $5,000 per month of income, without changing our spending in any way, I’m interested to see how things go. We have a great spending mentality – we’re not spending on frivolous items and we weigh the cost benefit of a purchase to us. That’s not to say we can’t do better. I’m sure we can be more diligent about our grocery spending or at least cooking what we already have in the house (we don’t spend much at restaurants in a month). I’ve already started tracking our expenses month to be sure we can watch our trends and re-evaluate our spending if needed.
Now that we have this account growing with no need for it to pay the bills, we will use it for fun things. We’re not very good about doing fun things. Two summers ago, we wanted to buy a vacation home at a nearby lake. We decided that instead of spending $1200 per month on a mortgage to go to the same place all the time, we’d plan vacations each month and spend up to $1200 without “guilt.” It was great. We had so much fun. But it lasted 3 months. Having a newborn put a damper on activities, but we’re ready to do the same again.
It’s getting to be that time of year when large payments need to be made. I’m projecting out our account to cover several tax payments in October and December. I’m also paying insurance amounts, such as $1500 for two houses that’s currently on the credit card. We also have about $5,000 sitting on that 0% interest credit card that will need to be paid off by October 1st (when the 0% incentive expires).
Our credit card balances are higher than average because of rental payments. In addition to the insurance payments, we had an invoice come in that I knew was going to be high. We paid for the water line from the street to the house on a rental to be replaced, which was $3,080.
June and July were rough sick months on us, so now I’m paying those medical bills almost daily it seems. We reached our deductible early this year, so these are just the coinsurance amounts; those $5-20 payments add up though.
Our insurance adjuster finally came out, three weeks after the incident. He literally said “I’m not a contractor, and I’m not from here so I don’t know the codes,” and then proceeded to do the estimate wrong. He was missing items, called things the wrong thing (like a Trex water proofing system that costs $1500 just for materials, he called it a “vapor barrier” and put $190). Now we’re waiting on a second adjuster to come out and meet the deck contractor to go through what actually needs to be done. All the while, our 3 year old keeps sadly saying “I don’t like our broken deck.”
I had to call a medical provider and get some money back. I told them I didn’t want to pay in advance because then I have to call them to get my money back. They said “we’re good about sending it back” and said “it’s simple, it’s just 5% of the total cost.” I said “the total cost isn’t what the insurance allowance is, so whatever I pay you will end up being less.” So now I had to take time out of my day, after giving them a month to do it on their own, to call with 3 kids in the background making noise, and get my $5 back. But then there was a surprise where another urgent care that we saw almost a year ago sent me back the $20 I paid them. That one had slipped through the cracks on me. I had noted that I overpaid them, but then I had a baby!
We had two rentals not be able to pay rent on time this month. One was able to pay on the 12th, which they did. Another paid what they could, and I’m still waiting on the rest. I actually told them to catch up as they could because I didn’t want them to not be able to get their 3 kids ready for school. I’m waiting on an invoice from our handyman for work he’s done on multiple houses, an invoice from an HVAC guy who did work weeks ago, and a roofer to start his job that’s been two months in the making.
Our overall net worth went down slightly from last month because of market fluctuation. Our cash increased by over $30k, but that’s because we received a check from our insurance company to replace our deck after a tree fell on it last month. Some of that is going towards replacing furniture that has been bought already (so it’s on a credit card), and some of it is a reimbursement for the outlay I already made to remove the trees that fell on the deck and fence, but some of it is still to be paid out when the deck is replaced. In the meantime, we’re earning interest in our savings account on it at least.
I’ve not been quiet about the benefits of a credit card. We put every dollar we spend onto a credit card for the rewards, and we pay it off every month. Some cards give 1% back on purchases, some give another 1% back for payments (important to cash out your rewards to your checking account, and not as a statement credit because they don’t give 1% back for the credit), some have bonus categories where they increase the percentage back (e.g., 5% back for gas purchases), and some have retailer-specific incentives.
PERCENTAGE BACK
There are the flat rates given by some credit cards, and then there’s some bonus categories that provide an additional percent back.
In some cases, the percentages are fixed categories. You’ll get 1% back on all purchases, but then there are bonus categories. Their categories are 2% cash back on grocery store purchases, 3% on dining purchases at restaurants, and 4% on gas station purchases. However, this particular credit card caps the earnings at the first $8,000 in combined purchases in these categories annually, per your opening date. If you spend $300 per month on groceries and $200 per month on gas, that leaves about $165 per month on restaurant purchases. Those numbers are doable, but we spend more than $300 on groceries.
Then there are other credit cards with a revolving cash back category. This requires you to ‘active’ the reward and keep track of which reward is occurring in which quarter. However, these have lower spending limits before you run out of that extra bonus. “Earn 5% cash back on up to $1,500 on combined purchases in bonus categories each quarter you activate.” The bonus will default back to 1%, so it’s not a complete waste, but you may have a credit card that has a better-than-1% bonus for that category. We have a credit card that operates like this, and the only category that I seem to remember well enough to actual use is the gas one.
RETAILER BONUSES
While I’ve shared a lot on cash back type bonuses, I haven’t really touched on retailer-specific bonuses. Someone on Facebook recently shared a screenshot of their bank’s bonus. It’s an ability to earn 10% cash back when purchasing a Great Wolf Lodge stay.
It’s important to pay attention to the fine print on these types of offers. There’s usually a low cap on what you can earn, and there’s usually a fairly quick deadline associated with it. It also requires you to active the offer. That means that you can’t make the purchase and then go back to active it; you need to know about these opportunities in advance, active the code (usually by clicking something within your credit card portal), and then make the purchase. In some cases, it may even require you to use the link embedded in your portal to make the purchase.
Opportunities change frequently, but there are some that rotate fairly often. I currently have 25 offers available to me to activate. Some of them expire as early as 8/13, while some are good until October. Mr. ODA clicked a Kroger fuel offer. It states, “Earn 5% cash back on your Kroger Fuel purchase, with a $3.50 cash back maximum.” That means that if I spend more than $70 at the pump, then it will revert back to the 4% gas category. Here are the categories on this credit card.
SUMMARY
When looking for a new credit card to open, I always suggest looking for extra bonuses. Typically, we open a new credit card because we’re about to have a large spending need, so we’re looking for an introductory rate of 0%. There are other initial bonuses, such as spending $1000 in the first 3 months for a $300 bonus. We’re also typically looking for a $0 annual fee. I say typically because we have had credit cards with annual fees if we thought the incentives were worth the cost. In some cases, a credit card company may provide incentives that effectively reduce their annual fee (e.g., travel statement credit, paying for TSA pre-check).
When using a credit card with categories of cash back at a retailer, it’s a good practice to check back on how you earned cash back. For example, we have a credit card that provides bonuses for gas stations. However, their coding specifically only allows for purchases at the pump, and not purchases in the convenience store associated with those pumps. This was particularly frustrating because the “everyday spending” category only earned a quarter of a percentage, not even a whole percentage back.
We manage our purchases through 8 credit cards. That’s a lot to keep up with, and we’re not 100% on picking the “correct” card for the category that we’re spending (particularly when it comes to the card that rotates bonus categories each quarter).
In 2022, we earned over $2,000 worth of cash back based on our purchases, being diligent with the spending categories, and paying our credit cards off each month.
One Dollar Allowance 