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September Financial Update

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We have two kids in school now, and my days are chaotic to say the least. I have not figured out my organization of all the “required” activities I have. I’ve written our schedule out several times over the last few weeks. It seems so easy because nothing overlaps, but my days are full of stress. I have 3 little humans’ emotions to manage on top of the organization of activities. Everyone’s tired because this is a change from the summer process. I keep hoping that “next week” will be better, but better isn’t coming. So, I missed last week’s post. I am taking several days to write this post. We’ll see how it goes.

Kid1 went to kindergarten this year, and Kid2 moved up to Pre-K. She went to school two days per week last year, which was $175 per month. Now she goes 5 days per week, which is $375. Since Kid1 is in public school now, I saved $175 per month, right? Mr. ODA is going to hate that line. 🙂

We got hit hard with charges this credit card cycle. I purposely held an insurance payment until our main credit card’s statement started over so that I could feel like it was a less expensive month. I paid that the day $1500+ that the new statement started. Unfortunately, the remaining payment to the electrician also came due on that day, and that was $1,766 hitting the card at the same time. Mr. ODA went on a work trip, which gets reimbursed, but that hotel is still increasing the credit card balance. A gift for the grandparents keeping the kids while we went to NY last month, three invoices for rental work, and our YMCA membership are all on there. Our actual spending on things outside these costs is quite low, but it doesn’t look that way with the credit card balance.

I hit 100% of August rent paid as of August 30th. So I knew that I wasn’t going to be at 100% for September right away. I have one tenant who still owes half her rent, which is hopefully be paid over the next week and a half. They have blue collar jobs and seem to be caught up in layoffs. But they get a ton of credit because they always get right back up. They just ask me for a few weeks during that transition period, and I can’t respect that enough. They’re late a few times each year, but I’ve never charged them a late fee.

NET WORTH

Our net worth is up almost $600k from this time last year. From last month, it has increased by about $50k. Our credit card balance is similar to last month. Our cash has decreased a good amount as we had a roof replacement get paid out, but otherwise most line items moved in the ‘right’ direction.

Buying versus Renting

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I have a tenant who, in the same day, told me that she couldn’t pay rent on time and asked whether she could buy the house. She said she paid $60,000 to me and that could have gone towards owning a house. While I understand the lump sum of what you paid being a pain point, owning a house isn’t that simple. I thought I’d break down a comparison of what she would have done to own this house versus her renting it over the last several years.

RENT HISTORY

Based on the proximity to Main St and the comps in the area, we went into the purchase expecting about $1,000 per month in rent. At the 1% Rule (where you set monthly rent at 1% of your purchase price), we should have been at $1,020. Knowing that it was October/November by the time we would get it rented (there aren’t as many people looking for a new rental in the Fall, after school has started and holiday activities are ramping up) we chose to list it at $975 and keep it below that 4 digit threshold. It sat for 3.5 weeks with hardly any activity, and we dropped it to $875. We found a tenant in under 2 weeks then, but we weren’t thrilled amount our cash flow on it.

The tenant’s lease started on November 1, 2019. Her rent was $875. My property manager incorrectly established a one-year term lease instead of an 18-month lease like she was supposed to, so we had to do a 6-month extension after the first year. Then in March 2021, we tried to increase the rent to $900, and she complained that due to the pandemic, she couldn’t afford that. We let it go and she renewed a year lease at $875.

Come February 2022, we were significantly under market value for rent and she hadn’t been a friendly tenant, so we were content pushing a raise to $950. If she didn’t want to pay that, she was free to leave and we would take the vacancy hit to fix it up and get it re-rented. She complained about the increase, and our property manager told her to take a few days to look around to see if she could find somewhere to rent that was at a price she would feel more comfortable with. She came back and said she couldn’t find anything and accepted the increase to $950.

Not including a few late fees she has owed over the last nearly-five-years, she’s paid us $52,850. While in total that appears to be a significant number, that number does not mean that you’d have $52k in equity in a home had you paid towards a mortgage.

OUR PURCHASE INFORMATION

We paid $102,000 for the house in 2019. We asked for several options for the loan structure. We asked about putting 20% versus 25% down, and whether the rate for a 15 year, 20 year, or 30 year loan would have the best rate. Going through those details is something I’ve done in the past, so for this purpose I’ll just note that we chose to put 25% down because then we didn’t need to “buy down” the rate. The rate for each loan length was 4.55%. With no incentive to do a shorter loan term (and therefore increase our monthly payment), we chose the 30 year term. I do want to note that our interest rate is higher than the average for 2019 (3.9%) because it was an investment property and not a loan for a primary residence.

Based on the 25% down and the closing costs, we had to come to the table with $26,589.12.

Our mortgage was $538.46, which includes escrow. We paid off this loan fairly soon after we closed on it, so we don’t have a monthly mortgage payment. However, I do need to plan for our current mortgage and insurance payments each year, which is currently over $2,000.

FACTORS TO CONSIDER

To keep this more consistent in the message, note that the loan discussed will be based on the purchase price of $102,000.

First, you need to have favorable credit to qualify for the mortgage. In an example, the lowest credit score I could plug in was 620. However, in much of what I’ve read, anything below 680 is questionable on qualification. Our requirement to rent a property is to have a credit score of 600. Perhaps there are lenders that will process a mortgage if your credit score is below 620, but you’re going to pay a premium via the interest rate.

With a credit score of 780, say you’ll have a rate of 6%. But then with a score of 680, you’re looking at 6.5%. At 6%, your principal and interest payment (doesn’t include the escrow required) would be $599.19. At 6.5%, it goes to $631.69. That’s only $32.50 per month extra; over 30 years, that’s an extra $11,700 paid to the bank. I have some tenants where an extra $32 per month is a big deal.

Without at least 20% down on a loan, you’ll likely have to pay private mortgage insurance (PMI). This amount could add a monthly premium to your mortgage payment anywhere from 0.2% to 6%. I did a quick calculator with the example of $102,000 purchase price, $3,060 down (typically the lowest available without any special loan structures is 3%), and a credit score of 620 (lowest it allowed). The PMI was calculated as $187 each month.

I mentioned that our final closing costs were over $26k. If I remove our down payment, that leaves $1,089 in closing costs. I will note though, that our contract had $2,000 in seller subsidy (a credit). Without that purchase agreement structure, that means your closing costs are actually $3,089. This means that you need to come to the table with $6,149. Buying a house is not like buying a car where you can roll all the costs into the loan, and I feel like people don’t realize this.

Your debt to income ratio also plays a factor in whether you can qualify and what your interest rate would be. So even with a decent credit score, you need to show a low debt-to-income ratio, meaning you can’t have your credit cards maxed out. The lender wants to see that you don’t have high monthly costs that would prevent you from paying your mortgage.

That brings me to the flexibility of paying rent. She paid $475 worth of August rent (due August 1st, with a grace period to August 5th before a late fee is owed) on August 20th. If you pay your mortgage late, there’s a late fee and it gets reported to the credit bureaus. Your late payment of rent doesn’t get reported to anyone. She also has the extra advantage that I’m willing to work with her on late payments. An apartment complex type owner is going to immediately file for eviction on the 6th without full rent payment, regardless of your story.

SUMMARY

While a mortgage payment of $538.46 looks favorable against a rent payment of $950, it’s not that simple. I was able to qualify for the mortgage, qualify for a favorable interest rate, and put significant money down.

If I add a premium to the rate we were able to get, assuming my tenant’s credit score is similar to what it was when she rented our house, and then add the PMI that would be applied by not having 20% down, then the mortgage payment (including escrow) would have been $903.02. PMI stays on the mortgage until you reach 78% loan to value ratio (unless you pay for an appraisal and can prove 80% earlier than that). That threshold in this example is $79,560. That principal balance would be achieved in over 11 years, which means you’ve paid $25,058 for essentially nothing.

Then on top of paying these premiums for the mortgage, she would need to pay for the maintenance of the property herself, which is included in my rent factors. I’ve paid over $3,000 for repairs and maintenance on the house over the last 5 years (which is fairly low). However, that includes a deck replacement that we did ourselves and probably would have cost $4,000 instead of the $400 we paid in materials.

So the next time you think that you could be paying half of your rent with a loan, know that you’re not looking at the whole story. There are many factors that go into a mortgage, especially the initial ability to qualify for such loan.

August Financial Update

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Many of our activities over this last month were already paid for or minimal cost. We went to Colorado, and we’ve been doing back to school type activities. Mr. ODA was in Colorado longer than the rest of us (I flew home on my own with 3 kids!), and he went on a work trip for a week, so my goal has been activities outside of the house as much as possible in this final stretch before school starts. We’ve had quite a few activities on rental properties too.

RENTAL PROPERTIES

Historically, if the 1st through 5th of the month falls on a Friday, that’s the day that I receive rent. Meaning, if the 3rd is a Friday, then I get rent that day. This month, the 2nd was on Friday. I received very little rent. Going into the 5th, I was still waiting on 60% of rent payments; I was already told by 3 tenants (making up 23% of that amount I’m waiting on), that rent will be late this month. Luckily, 2 of those 3 tenants had paid partial rent already. That left 4 houses going into the 5th that hadn’t paid and I hadn’t heard from. That’s more than normal and was a bit worrisome. By the time of this post, I’m missing nearly $2,000 worth of rent, which is over 10%.

We’ve had several small actions that needed attention from our handyman, so I paid out on that. We had an AC go out before a hot weekend, so we had our technician go out and fix that (I haven’t seen that bill, but it’s expected to be around $1,000). Mr. ODA went out to a local house to properly fix their kitchen cabinets that were apparently never installed correctly (before we owned the house) to install them into the studs.

I was called for a garbage disposal that wasn’t working, and I attempted the fix on my own. I was nervous going into it, but I successfully fixed it in about two minutes. That felt good. I also went out to check on a roof replacement at a local house, and Mr. ODA replaced their deck. This tenant doesn’t communicate well whatsoever with us. She said “the deck is in bad shape.” That was it. Didn’t send a picture, didn’t give any details. I went out to check on it, and the deck stairs were hardly sturdy and none of the pickets were installed anymore around the decking part (it’s more of a landing than a deck when you think of size). It’s infuriating that people could not communicate such a dire issue. Most of my tenants do a great job, but this is why annual inspections are necessary.

PERSONAL ACTIVITIES

It has been a crazy month! I have thrived with the busy scheduled and a sense of accomplishment.

I was elected to our Homeowner’s Association board of directors this past month. I’ve spent a significant amount of my time going through that information and trying to get things organized and back on a schedule. I had my first meeting on the Landlord/Tenant Advisory Committee. And I joined on with a start-up school to be their financial consultant.

We signed our oldest kid up for Fall Ball and our second for gymnastics. She did acro last year, but I said all year that she would thrive better in actual gymnastics where they do more activities than dance. Our oldest started kindergarten, which is really exciting. That also required a lot of attention between back-to-school activities and paperwork to be filled out. I ran a 5k with zero training (I had run 1.4 miles the week leading up to the race), but my friend and I beat last year’s time by 5 minutes!

We worked on our own deck. A tree fell on it last July. We had to get our insurance company to understand our issue and fully cover the repairs that were necessary (it took them forever to get an engineer involved instead of all different adjusters). We finally got started in March on the replacement. After weeks and weeks and weeks of our contractor working on it, he finally ghosted us because he couldn’t get the waterproofing to be waterproof. So this past weekend, we tore up our deck boards and repairs the waterproofing issue. It’s supposed to rain this weekend, so hopefully we’ll see that our fix worked finally. Once we prove to ourselves that no water is getting down there, we can have the electricity finished. We also built a little wall to hide the storage being kept under the stairs under the deck, which was cool.

NET WORTH

Obviously, our investment accounts diminished slightly since last month, as the stock market has been a constant discussion point recently. Last August, my updated said: Our overall net worth went down slightly from last month because of market fluctuation. So this seems to be a typical cycle! Last year it was offset by a large insurance check we received, while this year our cash balance is much lower from last month to this month.

I have about $9k to still pay out on a roof replacement (insurance is covering most of it), about $1k to pay to a plumber, and a couple of other odd jobs that are waiting on invoicing. Our net worth isn’t 100% accurate this month because I don’t have access to a few accounts (well, I have the log in and password, but it requires either text or email verification to get logged in, and Mr. ODA holds those and isn’t available – annoying!). I also have a $1500+ insurance payment to make, but I’m purposely holding off until this credit card statement cycle ends so that I can feel like one month isn’t a crazy high balance.

To update our net worth, I have spreadsheets set up that I overwrite from last year. Last year’s August update had our net worth at $3.78 million. So even though this month is over $27k less than last month, we’re still up over $500k from a year ago without any drastic changes in investment portfolio.

Expense Analysis

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Back when I spent my days working in front of a computer, it was easy for me to analyze our spending. These days, with 3 kids in tow, I’m lucky to record our finances timely. There’s no time for analyzing. But over the past two years, I haven’t been happy with our spending total for the year, so it was time to look into it a bit more. It’s hard to know what has changed since I don’t have month over month, or year over year, trends to compare this data to, but it’s a start.

There are some caveats.

  • I don’t include any spending that isn’t on a credit card here. That means some of our rental property bills aren’t captured (they’re paid via Venmo or check), but I decided that’s ok because I can see that in a different way (a separate spreadsheet). Those expenses are reactive and a necessity to running the business, so it’s not like I can change a spending trend there. I’m more curious about our actual expenses and where our money is going for personal decisions. There will be some rental expenses captured here though.
  • I’m doing this analysis for the first half of the year. If this was for a month at a time (which is a goal), then I’d be able to dive deeper into spending at each place. For instance, at Walmart, those expenses aren’t always ‘grocery.’ However, I don’t have the time to go through all the purchases and siphon out non-food purchases. I did go through most of the Amazon purchases and categorize them.
  • If a purchase was made at Lowe’s or Home Depot, it’s classified as home improvement. It may have been rental property work, but generally it’s related to something we’re doing at our house.
  • If a purchase was made while on vacation (such as amusement park, tolls, hotels, dog sitting) , it’s categorized as ‘vacation.’ If we were on vacation and purchased food, it wasn’t labeled as vacation. All fast food or restaurant purchases for the first half of the year are categorized as ‘restaurant.’
  • If we did an activity from home, it’s labeled as ‘entertainment.’ If we did something related to sports (this includes swim lessons, ticket purchases for performances, etc.), then it’s labeled as ‘sports.’ The entertainment versus sports delineation is because something like a single tournament could be considered entertainment, but I kept all sports items as ‘sports.’
  • None of this includes whether we were reimbursed by someone else for a purchase. For example, we purchased tickets for 15 of us to go to an amusement park on vacation, but we only paid for 4 tickets of that personally. Mr. ODA is a personal shopper for restaurants, so much of our restaurant shopping around town is actually later reimbursed in that process (but not captured here because it’s not a credit card line item).

In the process of going line-by-line on my expenses, I discovered that I never received a refund for something. I placed an order on Etsy for a personalized gift for my niece’s birthday. A few days later, I went to check the status of the order, and I discovered that the shop I ordered from was no longer selling on Etsy. I was frustrated that I received no email that told me my order wouldn’t be fulfilled. I contacted Etsy customer service. At the time, I misunderstood Etsy’s billing process. I assumed it was charged when the item shipped. As I was just going through charges, I realized that the amount was charged on the date of purchase (e.g., not when shipped), and I had never received a response from Etsy. After another frustrating round of attempting to contact customer service this morning, I finally received a resolution. Now my ‘to do list’ has to keep track of this refund appearing. It’s $10.01, so it’s not the end of the world. However, it would be nice if Etsy shuts down a seller (their words), that they manage the outstanding orders without me having to take my time to get it corrected. Plus, if I let every “it’s just $10” go, it could add up quickly.

FIRST HALF OF THE YEAR SPENDING

By far, our largest slice of the pie up there is for rental expenses. Honestly, I’m happy to see that so much of our credit card expenses are taken up by rental expenses we had. I pay our insurance premiums (where they aren’t escrowed) via credit card, and I can pay our county taxes for one house with a credit card, which I do for the cash back rewards. There was flooring replaced at one house, which was a significant amount of that slice.

The ‘home improvement’ category includes new patio furniture we purchased, but were reimbursed by insurance (a tree fell on our deck). It also includes the electrician work and dirt fill purchases that we needed for the deck rebuild. Our house has a few more fairly large projects we want to complete, so I expect that to continue being a larger chunk.

I know that our “grocery” expense isn’t completely groceries. I’d like to focus on this category of spending more in the second half of the year. I want to quantify what’s purchased at Walmart that is actually grocery versus personal shopping type purchases. I think that our grocery purchases are higher than they should be, but I can’t put my finger on exactly why. Historically, I’ve blamed it on ‘bulk’ shopping; Mr. ODA will go to Kroger for the “buy 5” type sales. I’m not sure that’s it though.

We don’t eat at restaurants very often. We usually eat at fast food places while we travel or are away from home at an inopportune time. When we’re at home, we’re usually eating at a “personal shopper” experience where our food cost is mostly reimbursed (although that’s not captured in the chart).

Our health insurance deductible is $3,200 per year, so we expect slightly more than that each year in the medical expense category (and based on how deductibles work, that expense is front loaded in the year). I actually pre-paid a bill at a child’s urgent care visit. I paid them $50, but that visit, along with two more visits since then, came to a total of $12. I’m waiting for their reimbursement of that difference.

PERSONAL SPENDING

I’m going to dig deeper into the ‘personal’ category. I labeled a bunch of things as ‘personal’ as a means of not having too many small slivers of the overall spending pie. This includes all gifts, needs for kids (new shoes), clothing for kids, gym membership, sports, etc. It includes a ‘shopping’ category. I spent some time going through my Amazon orders and categorizing them, but the ‘shopping’ category was too daunting and difficult to parse out further. About a third of the ‘shopping’ category is Amazon orders through Mr. ODA’s account that I didn’t pull up to categorize. The rest is random purchases that were probably related to gifts or kids clothing.

For entertainment, this is small things like going to the movies (which we go for $2 per ticket), bowling, and aquarium. The largest chunk of this pie part here is actually 4 season pass lift tickets for our family’s future winter season. I put the ‘mom’ category to see what I’ve purchased for myself that wasn’t a necessity (e.g., a travel cosmetic bag, baseball shirts to wear to my son’s games), as well as my one hair cut and one pedicure that I’ve gotten this year so far. The ‘other’ category is boring stuff – utilities, car maintenance, professional fees, etc.

Had I gone through my Walmart orders in detail, I would have been able to identify some more purchases that could be removed from ‘shopping’ and put into other categories. For instance, the ‘dog’ category is actually higher because I order his glucosamine and tooth cleaning treats from Walmart most of the time, and that’s a monthly expense. His annual vet appointment is in the Fall, so this will be a larger slice of the pie for the end of the year.

SUMMARY

Our annual credit card payment total for the last three years have been about the same. While it’s a ‘win,’ that it isn’t increasing, it’s still at a number that I don’t like. Mr. ODA has been working towards a ‘retirement’ date. We’ve pushed it back just because his job hasn’t significantly impeded our lifestyle, but the day will eventually come. If it’s next year, I’d feel better if our credit card payments weren’t as high.

I went into this expecting my grocery category to be higher than I’d prefer. I didn’t identify much of what is causing that, so I’ll try to focus heavily on watching that expense each time it hits the credit card, rather than trying to remember what each purchase entailed six months later.

I was surprised to see the gas category such a small sliver of the pie. We’ve done a lot of trips (although, I suppose a majority were in July, which isn’t captured in this data). It appears living in a smaller city and doing things mostly on this side of town means we’re not having to fill up our tanks too often.

Overall, I didn’t notice any egregious spending. We don’t spend for the sake of spending. This year we traveled more than we had the previous two years, but mostly our spending is the same. Now that we’re two years into our house, there are less projects that we’re putting money towards. I’m encouraged that now that I’m looking at this, I’ll be able to identify areas to scale back.

July Financial Update

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RENTAL EXPENSES

We took a trip to Richmond, VA to work on rental properties. It was fairly last minute. I had a schedule of work at each house that I planned. However, I didn’t plan on the heat index being 113 and 112 for the two main days we were there. I was able to get everything on my list done except for staining the new deck at one of the houses. I didn’t want to risk it not applying or curing correctly because it was too hot and in direct sun. Plus, the tenant didn’t even clear it off so I could work on it.

I had multiple houses pay rent late this month. I was surprised. One let us know on the 5th that they had an emergency, so they wouldn’t be able to pay until the 17th. I had someone pay half their rent early in June, but then haven’t received an answer as to why the rest of her balance ($345) hasn’t been paid yet. Another tenant misunderstood her maternity leave pay, so she asked for more time to pay rent. She paid $800 on the 7th. I told her not to worry about it, and just pay when she can, without the late fee; she only has $150 remaining.

I’m currently working through two roof replacements. One of them will be covered by insurance, but then I’ll be paying to have vents added, the chimney torn off and capped, and the soffits repaired on top of what insurance can do. Then the other one we’re paying out of pocket for. It’s original to the house, which was built 24 years ago. There has been storm damage to it over the last year, and it’s just generally time to address the age even though it hasn’t caused any problems yet.

PERSONAL EXPENSES

Our medical insurance company had some glitches in their claim processing through the first half of the year. Now they’ve caught up, meaning I’m paying large sums of medical bills. Mr. ODA took on booking lodging for his guys trip later this month, which meant that the second half of AirBnB payments were applied to the credit card.

Mr. ODA increased each kid’s UTMA from $75 to $100 per month. That means we’re investing $3,300 each month into accounts, on top of maxing Mr. ODA’s TSP contributions and both of our Roth IRA contributions for the year.

Our contractor has ghosted us on our own deck build. We bought some new furniture for the main deck area. Once it’s not 100 degrees outside, we’ll work on doing the waterproofing of the deck ourselves so that we can start living on the patio under the deck and get that hot tub ordered this fall.

NET WORTH

I updated the valuation of the houses this month. I typically only do that 3 or 4 times per year. I try to account for the big increases we see at the beginning of the spring, and then adjust slightly around this time of year once the comparable houses have closed and sold. This update added $140k worth of equity into the equation. All of our liabilities decreased since last month, and all our assets increased since last month. That has equated to an increase of over $200k in our net worth.

June Financial Update

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Welcome to summer, where we’re traveling and I’m not posting on time. This time it was because I had to figure out a few things with bills and health before I had the time to get to the update. I can schedule content in advance, but not this post where I need the most up to date numbers when talking about our net worth.

We’ve been busy with baseball and activities around the house, so our spending was lower than it had been. However, this time of year is typically where we see a lot of our rental property expenses come through. We purchased many houses around this time, which puts their insurance payments due now. Then the City of Richmond’s tax payments are due in June and December also. The City of Richmond doesn’t post our escrow payments timely, and it drives me crazy. Every 6 months, I get notification that I have unpaid taxes and it’s the due date. I have then go through every escrow and prove to myself that they were in fact paid out over 3 weeks ago, and then I have to go back and check that Richmond posts them eventually. I stopped sending checks into them for the accounts that aren’t escrowed because it took too long to monitor, so I pay the $0.95 fee to pay via their ACH option online.

Mr. ODA had been in a relationship with a financial advisor, which was $35 per month. Over the last 3 months, Mr. ODA has been working to become his ‘apprentice.’ He passed his Series 65 exam and will begin working on this guy’s team. Not that $35 is a huge amount, but that’s one less ‘subscription’ that we’re paying monthly.

Speaking of subscriptions, we did something that I’d venture to guess other people wouldn’t put the effort into. One of our credit cards (that we rarely use) had a promotion for a $15 statement credit if we had at least $100 worth of subscription and/or utility payments go through. Most of our utilities can’t be paid with a credit card without paying a fee. The fee for our internet service was low enough that we went ahead and switched that one over for one month. Then I went into our Y membership and switched the credit card on file for that payment. With a few button clicks in May and then later this month to switch everything back, we made $15. It doesn’t seem huge, but it’s the compound of that thought process and awareness that makes a difference in your finances.

The ‘bigger’ expenses of the month were one kid’s school registration fee ($175), purchased baseball tickets (the Oriole’s don’t charge for 2 kids per paying adult!), got an oil change ($65 ugh), paid two homeowners insurance policies that aren’t escrowed ($1,371), paid for pet sitting for a coming trip ($155), paid car insurances ($567), and built a few steps in a new walkway ($275). Our deck isn’t complete because the waterproofing isn’t waterproofed. We haven’t paid out the last $3,500 on that, but we also haven’t heard from our contractor in several weeks.

We initiated a homeowners insurance claim for one of our properties. The tenant wasn’t complaining about the house/roof, but we knew the roof and soffit were in rough shape. I was hesitant to contact a roofer because I wanted the job done right. I expected the house is really old, and there would be decking problems to fix. I dragged my feet on finding someone, but I did click with someone finally. He went out and actually suggested we go for a claim to cover the replacement. We’re in the process of that now. An adjuster has been out to see the damage, and now we wait for the estimate. In the meantime, another property had water spots on the ceiling show up. I had the roofer go out there to check it out, but he didn’t see anything glaring. That roof also needs replaced, but I’m going to get at least one more quote on that job since it’s not through insurance.

All the good things (assets) went up and all the bad things (liabilities) went down! Our net worth increased by $60k over the last month.

Hitting our Goals

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I mentioned at the beginning of the year that our general financial goal is $4 million net worth. I acknowledge that this is not a specific goal that most people can relate to. But I also pointed out that we weren’t always sitting with nearly that amount in our accounts, and that made me start thinking about where we were. This is long, but I didn’t think it worth splitting into multiple posts. I’ve gone into the topic in general, but this is our actual story and the steps we experienced.

This is just meant to show you that you can grow each year and slowly chip away at a goal. Everyone makes fun of the “don’t buy Starbucks everyday” philosophy. It’s not that saving that $7 per day is literally going to make you a millionaire in itself. It’s saying that if you’re willing to spend that $7 daily, that’s likely indicative of other spending in your day, and you should be more deliberate with your spending. I saw a meme on Instagram that said something similar about buying decor for your home, and if you’re willing to spend “just $25 on this lamp,” those little expenses add up over the year. I’m a broken record in saying make every purchase a deliberate, thought-out action; I went into how much effort (and years) I put in to purchasing a $4 tape dispenser on this post.

The background here is to first show you how I had no money, but I’ve been diligent on my spending and working towards goals. Mr. ODA was more of a saver and more prepared for the big life expenses in your early 20s. The part where we work towards buying a house is where we really buckled up and made life decisions that kept us on that track. Our money philosophies have gotten us to where we are today – every dollar has a purpose.

MY FINANCIAL HISTORY: COLLEGE, WHERE I STARTED MY INDEPENDENCE

I never liked relying on other people, so I was interested in making my own way as fast possible. My parents gave me an ultimatum during my sophomore year of college – either become a resident assistant for free room and board, or take out loans to help pay for it in the next two years. I didn’t want to take out loans, so I started looking for off campus housing. I didn’t mind living on campus. I have no idea why I was so dead-set against taking out loans and how that would have been ingrained in me at that time. But living off campus would allow me to pay month to month, instead of living on campus where I’d have to pay each semester’s housing costs up front.

On top of that, my dad offered me to buy out his car. He had let me drive the car to college that year, but around Christmas time, it started acting funny. It turned out that second gear in the transmission needed to be replaced. He said I could pay for the fix, and then it could be my car. I didn’t like the idea of being 3.5 hours away from my family and having a car that appeared unreliable. So I went car shopping, and I leased a Honda Civic. My car payment was about $300/month. I leased it instead of buying it because I didn’t need to put any money down.

I worked three jobs that summer after my sophomore year of college. It was so hard. I was working 40 hour weekends, and then I’d put hours in during the week. I remember getting burnt out and being overwhelmed because I had to miss my sister’s graduation party. I was working at a catering hall, which meant late hours on Friday and Saturday, and early hours on Sunday. I was also working at a bagel shop (big on Long Island), which was a 5:45 am call time, but at least I’d be done by 10 am. Then I was working as a cashier at K-Mart, which was Monday through Thursday in the afternoon or evening, and sometimes on Friday.

Even though I was working all those jobs, I still struggled with paying my bills once I got to college for my junior year. I paid too much for rent because I wanted to live on my own. None of my friends were interested in living off campus, and I was too afraid to live with someone I didn’t know. My parents ended up giving me $100/month for 6 months so I could pay to run my heat. I remember it being October, and I told my mom that I hadn’t turned my heat on yet. So she sent me the money each month to cover the heating bill instead of trying to live in layers and blankets because I didn’t want to pay for it.

When I moved back up to college, I was working at JCPenney while going to school. I did pretty well. My grades didn’t suffer, and I still felt like I had a life so I didn’t get burnt out with only work and school. I took on extra shifts and stopped going home for the smaller holidays (e.g., Thanksgiving) so that I could work.

MY FINANCIAL HISTORY: MY BIG GIRL JOB

My guidance counselor told me that financial firms would be expecting internships on my resume. This was 2007; financial firms were fat and happy, so they weren’t paying interns. I kept my eye on the job boards (which were literal bulletin boards) in the financial building. I found an internship with the Federal government that was paying $13/hour! I applied in August. I heard nothing for weeks, so I gave up hope. Suddenly, I received a call asking me to come in for an interview on Halloween! I had never interviewed before, so this was scary. Then the guy told me that they didn’t even know if they were going to hire a mid-career hire or go the internship route, and they had never had an intern before. That was the second time I gave up hope. A month later, I received the job offer, and I started working in December 2007.

From the start, I put money into the Thrift Savings Plan (TSP), which is the government’s 401k equivalent. My parents told me to take each raise I got and put it right into there also. If I was used to living on the lower amount, then keep the rest in savings. I followed that advice until I maxed out the contributions. I didn’t have trouble paying my bills, but I wasn’t saving as much as I should have for rainy days.

MY FINANCIAL HISTORY: MEETING MR. ODA

Mr. ODA showed up in my office in October 2009. Shortly after meeting him, we were hanging out, and next thing I knew, he was asking me my social security number. He was signing me up for a rewards credit card, since I had a credit card through my bank that was getting me no incentives. By the time I met him, I was living comfortably, but I wasn’t saving with a goal in mind. Whatever was left over became savings, and it didn’t matter to me what that number was. I was maxing out my TSP and paying my bills comfortably, and that seemed good enough for me.

OUR FINANCIAL HISTORY: IN A RELATIONSHIP

Mr. ODA came with a lot more money than that into the relationship. He had always been planning to save for two big purchases: an engagement ring and a house. To me, buying a house was somewhere down the road, but I didn’t have the confidence to move forward on that. I hope to instill that confidence in my children because that would have made a big difference.

Mr. ODA designed my engagement ring at a little mom and pop jewelry store in Harrisburg, PA (long story on where we’ve lived, for how long, and why). He proposed in November 2011. In December, I moved to DC, and Mr. ODA joined me shortly after. We lived in an apartment. We lived halfway between where he and I worked, but I admit we paid way more for rent than we prudently should have. Even though I grew up in the shadows of New York City, actually living in a big city was scary to me. We went on a house hunting trip, and I struggled with anything that didn’t look really nice/new. We were able to get a reduced rent rate, but at about $800 per month for each of us, it was significantly more than the $450 per month I was paying in Albany, NY.

The goal was to rent for a year while we scoped out the area to find a house to buy. We didn’t know anything about Northern Virginia, and we wanted to go to open houses to learn how far our money would go. Newsflash: not far.

OUR FINANCIAL HISTORY: A WEDDING

While we explored the area for a house, we were also planning a wedding. We paid for more than half of our wedding. My parents gave us a chunk of money towards it. If I had been married in Kentucky, it would have covered most of the wedding. However, I grew up on Long Island, and a wedding is a very different kind of event there. I probably wouldn’t have known any different had I not attended several weddings in South Carolina, where weddings were low key. After looking at venues in both Kentucky and New York, I ended up breaking down one day that I had always dreamed of a specific type of wedding, and Kentucky just wasn’t it.

I saved as much as I could in all the other areas since the venue was so expensive. The venue cost included all the catering, staff, and cake. I went cheap on invitations, my dress, favors. I just didn’t have the cash on hand to do a lot, and I wish I had done more. I also wish that I had been married on site at that venue instead of in my hometown church, but it is what it is. I also went cheaper on the photographer, and the day was terrible because of him. I recommend to everyone to get a good photographer and really check their portfolio (and if they do crazy things for photos, don’t trust that they’ll not do crazy things when you ask them not to).

We got married in August, after our November engagement. We had to lay out over $12k for that. The unexpected part of that was that we found a house to buy earlier that summer.

OUR FINANCIAL HISTORY: OUR FIRST HOUSE

Mr. ODA was a good saver. The problem was that he didn’t expect to pay for a wedding, and he didn’t expect to live in Northern Virginia. He was expecting to buy a house around $150k. We were struggling to find a house with walls and floors (literally) at $350k.

We lived a meager state for that year. Our goal was to spend less than $5 per day on food. That meant we weren’t spending money at restaurants. We were packing our lunches for work days. We were living off of macaroni and cheese. We weren’t taking trips. And yes, we were literally tracking our expenses on food each day.

THIS IS IMPORTANT: We were preapproved to buy a house up to $750,000. THAT IS STUPID. We didn’t want to pay PMI, so our purchasing power was based on our down payment being 20% (if you don’t come to the table for a conventional loan with 20% of the purchase price, the bank tacks on PMI). Between loans we could take from each TSP, cash on hand that we projected to have with our savings over the year, and possible liquidation of investments, we projected we could have about $70,000 on hand. That means we were shooting for $350,000 as the purchase price.

Our Realtor knew we were approved for double that, but we held our ground on our price range. We considered several properties. We put an offer in on a house at $380k. It was a bank owned foreclosure that they had flipped for resale. The flip was bare bones, but the house looked ok. We wouldn’t need to put immediate work into it. Our offer was declined. Then later that day, the bank called and asked if we still wanted it. We were instructed that the previous bidder attempted to counter the bank, and that’s why we were given the offer. We weren’t willing to lose it and accepted. We were under contract for a $380,000 house. That meant we needed at least $76,000 by closing.

Mr. ODA and I each took out TSP loans, we were gifted money from our parents, and we used our savings. Our final closing costs were just over $78k. We got our 20% down, so no PMI. We then spent the next 3-5 years paying ourselves back in our TSP. The loan payment amounts were adjustable, so we paid more when we could, but we had the flexibility to back off some of the payment totals if we needed to.

OUR FINANCIAL HISTORY: SELLING OUR FIRST HOUSE

We bought our first house in July 2012. We sold the house in September 2015. In that time, the house appreciated by $70k. On top of that, we had the 20% equity we had put down, and we had the equity for the principal payments we made over the previous 3 years. We were moving from the DC area down to the Richmond, VA area. We ended up purchasing a new construction home for about $360k. After putting 20% down on that purchase and paying off some debt (I had a car payment, and even though it was 0.9% interest, I wanted to manage less payments per month), we needed to decide on what to do with the rest of the money from the sale. Mr. ODA convinced my to put that towards rentals.

OUR FINANCIAL HISTORY: RENTAL PURCHASES

With that extra equity we had sitting in our account (which we had in an interest earning account), we purchased 3 rental properties (all with at least 20% down). The leap of faith we took into a landlord role, while figuring out things we didn’t know as we went is why we’re where we are now. We created a semi-passive income stream with these rental properties. Our savings continued to grow, which we used to purchase several more rental properties (again, with at least 20% down each time).

OUR FINANCIAL HISTORY: MRS. ODA ‘RETIRED’

By 2017, we had several rental properties, had paid off all our debts (e.g., car, TSP loans, IVF cost), and the net from the rentals was enough to replace my six-figure income. At that time, we had no kids, so there was no ‘real’ reason for me to not be working. As I continued to work, we kept it in mind that we’d be losing my regular income in the near future. I kept working, drawing down my leave balances, until our son was 8 months old (May 2019). I’ve worked a few random jobs here and there since then, but that was for something to do and not because we needed money.

MAKING GOALS

Mr. ODA had a goal of $1 million by 30. He exceeded it. At no point did we say “reach $4 million by 40” or anything like that. However, we’ve regularly tracked our net worth and made smart moves with the money we have. We don’t keep money in a liquid state for long. We make sure our money is working for us as much as possible. We take calculated risks that allow for interest earnings.

We also keep our ears open for extra income opportunities. We’ve been secret shoppers before, and I’ve taken on different short term work roles. That extra income isn’t meant to be frivolously spent; it’s income that we still utilize to move our family’s goals forward. We don’t buy the latest gadgets, but it’s not like we don’t have nice things. We spend will intention within our means; we don’t take out personal loans (e.g., furniture loans, layaway loans).

A goal that keeps moving due to preference is that Mr. ODA will stop working a full time job as well. The lack of insurance options is keeping that from becoming a reality, but if we really wanted to push it, he could quit tomorrow because we’re in a good financial spot. Nearly a year ago, we set up a separate bank account to have his pay check go into. It’s nice to know that we can live without his income, all the while having that bank account as a safety net.

April Financial Update

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I had this post mostly written by Wednesday, but we traveled earlier this week, and I haven’t kept track of the day very well. This is the first I’ve been able to update our net worth and get this done. Ironic, considering how I started this post when I expected it to be on time. And now..

This past month has been exhausting on me. I knew March was going to be busy. We had a bunch of sports schedules to manage, lots of kids birthday parties, hosting my dad for a long weekend that coincided with 3 family birthdays and the first anniversary of my mom’s passing, an assortment of Easter activities, a trip, and random other events. On top of managing these day-to-day things for our family, our deck replacement started, and we had to work on a massive turnover of a rental property. I’m in a perpetual state of tired these last few weeks.

DECK REPLACEMENT

On July 2nd of last year, a storm blew threw that destroyed our neighborhood. Honestly, we’re surprised by how little actual structure damage there was for our neighborhood because it looked like a war zone with the amount of trees down. A couple of houses had a tree fall on their roof, but only cause minimal damage that resulted in shingle replacement. We appeared to bear the brunt of the worst, which was a tree falling on our deck, crushing our furniture, moving all the supports, and cracking the concrete blow it. Another tree missed falling on one of our cars by centimeters, but that limb ended up cracking our driveway apron. We struggled communicating the extent of the damage with our insurance company, and they eventually realized what was needed and paid out on it five months after the incident. Our construction started on March 18th.

It hasn’t been an easy process. It’s emotionally draining on me because there were communication issues with our contractor that he wasn’t taking responsibility for. Then there were minor issues, but issues nonetheless. For instance, they installed waterproofing so the patio would be a dry area, but they cut through one of the barriers. Instead of realizing that was going to be an issue and fixing it themselves, I had to point it out. Then we went out there while it was raining to check it, only to see that there are 3 spots where water is just pouring through the seams. That just takes a lot out of me to have that conversation. They cracked off the top of our sewer cleanout, which not only made a mess in the yard, also caused a backup into our basement tub and toilet once it was glued back on because of a pressurizing issue (we think).

Then there are those hidden things that take energy, such as managing how to move money out of savings (while not exceeding the maximum of six transfers) and keeping track of all the bills, while ensuring the checking account has the right amount of money to cover the bills paid.

RENTAL PROPERTIES

Everyone paid rent on time! I had two technically pay on the 6th, but I sat waiting to see if it showed up before reaching out that morning. One of our tenants bought a house and vacated as of March 31st. They actually had left the house a little early, which was really helpful to us because the house needed a lot of work. The house had been flipped before we bought it. We knew everything was going to eventually need attention, but we hung on as long as possible. The neighborhood is really nice, so it was time to bring the state of the house up to a better standard. It had been “good enough” all these years, but there were definitely some items that should be replaced. This ended up being a huge overhaul, costing us over $10k. I’ll go into all the details in a future post.

NET WORTH

We’ve made a few substantial payments on the deck. We had been investing the money from the insurance company, while we waited for them to finish their estimates and then while waiting for the contractor to begin. Our taxable investment accounts have decreased a bit from that, and they’ll continue to decrease as this project finishes up in the next 2-3 weeks. The market is lower than it was a month ago, but our house values are starting their upward Spring trend, offsetting some of that loss. Overall, our net worth increased over the last month, but only by about $4,500 instead of the drastic increases we had been seeing month-to-month.

2023 in Review: Personal Spending

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I’ve been working on the ‘year in review’ posts for 3 months. I really want to be consistent on tracking our spending and making sure I’m being intentional in our spending. Our main credit card had the nerve to tell me that it was exporting 461 line items for me to categorize and manipulate in Excel. We have 8 credit cards. So that wasn’t a fun realization.

Additionally, if I track it more than once every two years, I may be able to better categorize our spending. For example, a Walgreens purchase may be pictures that I printed, or it could be a prescription. My Amazon purchase may be clothes for the kids they needed, a gift for someone, something in the home improvement category, etc. The entertainment category can include exercise that we’ve paid for (e.g., 5K, ultimate frisbee, kids’ activities) or a trip we went on.

There’s also no direct way that I’m tracking where a credit card expense has been offset by someone paying us back. For instance, I put $980 on my credit card for a trip, but someone paid me $480 for it via Venmo. That offset is in my year’s total transactions, but not in a manner where I can capture it for this year-long-view of expenses. Additionally, we go out to eat at restaurants, but Mr. ODA gets paid for some of those as a secret shopper.

EXPENSES

This doesn’t identify the actual money spent in each category, but it shows how categories align with each other. To simplify this graph (and to allow all bars to even be seen), I combined several smaller categories into an overarching category. For example, the entertainment category includes anything from doing a brewery tour to traveling to another state. Home Improvement includes $10,000 worth of new carpeting, so it’s an outlier. This also doesn’t include expenses that were paid for out of our checking account(s); although nearly all of our expenses are paid via credit card to gain the rewards.

MEDICAL: We spent the first half of the year managing doctor appointments. They were mostly for the baby, and then halfway through the year, I started having serious vertigo issues. The baby was born a little early, had jaundice, diagnosed with reflux and put on medication, and then had trouble gaining weight. My 3rd baby then needed to have formula supplemented, after I nursed two kids and had extra milk to donate to NICU babies. That was an unexpected psychological and financial change. Once he started to become healthier, I hit a wall. After a week of wondering why I kept feeling lightheaded and dizzy, I woke up one morning not able to walk a straight line, and if I even attempted to, I’d throw up. I was diagnosed with an ear infection, which seemed to make sense, but the antibiotics didn’t stop the vertigo episodes. After several specialists, I was given the same thing that I always am: “your symptoms don’t fit neatly into any one category, and I don’t know what’s wrong with you.” Luckily, most of my symptoms have died down at this point. And thankfully, outside of random viruses and a bout of pink eye through 3/5 of us, the others were healthy.

SPORTS: We joined the Y and were really strong for the first 3 months. Once my mom died, I didn’t have it in me to go exercise, and then I got sick for most of the summer with that vertigo issue. Mr. ODA played softball, vintage baseball, and ultimate frisbee; I was able to play some ultimate frisbee and run a 5K. The kids did swim lessons at the Y (and was quite a terrible experience). Our oldest attempted soccer for the second time, and then cried through all practices and games. Our middle thrived in ‘acro’ for the second half of the year. I plan to finish our this semester with her in acro, but I think she’s going to love gymnastics after that.

TRAVEL: We traveled to NY for my mom’s funeral. I took 3 flights in a few days with the baby, all with points (which American Airlines was super easy to work with for last minute flights and using points). We went to the middle of nowhere Tennessee with Mr. ODA’s family, to NY two more times, a short family camping trip, to Indy for some kid-related fun, and a trip to Cincinnati to see Christmas lights and take the kids skiing for the first time. I bought myself new skis (I had been snowboarding for the last 13 years), which led to buying the kids ski equipment (although, it’s noteworthy that we bought them second hand and their skis and boots totaled $100 for two kids). That then led to buying mid-week season passes at our local ski resort. On top of our family trips, Mr. ODA took two work trips, a golf trip, and a mountain biking trip.

GAS: Typically, our gas usage can correlate to our travel because we usually drive somewhere instead of fly with 3 little kids and all the gear they come with. In June and November, we drove to NY, so those have bigger spikes in the graph below (June also included a trip about 4 hours away). In the beginning of the year, we were more interested in staying home because we had a new little baby, but we ventured out more towards the end of the summer.

RESTAURANTS: I was pleasantly surprised to see the amount spent each month in this category. I didn’t feel like we ate at restaurants all that much in the last year, but I was concerned with whether the numbers who support that. There’s an outlier in March because we spent a lot at one restaurant during the week of my mom’s funeral. On Long Island, food is a big deal; while every one else was paying for meals, I felt it was our turn. We don’t need to actually mention how much that meal was. May’s spike was simply the volume of times we went out to eat, and the majority of them being related to Mr. ODA’s secret shopper gig.

HOME: In July, we had a storm come through that wrecked our neighborhood. No one reported the damage to the National Weather Service, which makes me sad because I wanted to know if it was a tornado! We had several trees fall. One took out our deck, another took out our fence, and another cracked our driveway, but missed Mr. ODA’s car by centimeters. We fought insurance for 5 months, and now we’re in the queue to have it replaced some time late Spring.

CAR: We bought a car. That’s $6,000 worth of the “Home Bills” category. Since most of our bills actually can’t be paid by credit card, it’s surprising to have such a high category for that on the graph, but that’s why. They allowed us to do two $3,000 transactions on a credit card so we could get the points, and then we paid the balance by personal check.

GROCERIES: I’d like to watch this spending more in the future. A purchase at Walmart may include non-grocery items (e.g., shoes), but that is being lumped in with the groceries because I can’t possibly siphon out individual transaction expenses for an entire year in one sitting. So here’s a graph of our “grocery” spending per month, but noting such a caveat.

SUMMARY

While I know we’ve had some larger one-time expenses, I’m still not happy to see the amount spent in each category. I feel we’re diligent in our food spending, but I think we can reduce that amount.

I removed rental information, any rewards received, the $6,000 car purchase, and the $10,000 worth of carpet purchase to try to show that our spending is consistent month-to-month. Again, the baby kept us home in January and February, but we’re generally consistent in spending. I hope that I can review our expenses more often going forward so that I can more accurately categorize our spending.