rental expenses

October Financial Update

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I feel like I have a lot of balls in the air right now, but looking at our finances, they don’t say that there have been a lot of charges. However, this post sure says that I’ve been juggling a good amount of things over this last month, and most of the issues are related to insurance in some way (and I despise insurance!).

Last month, I mentioned that we had two large charges hit our credit card. One that I purposely held off until the new credit card cycle (an insurance charge) so that the previous month’s credit card was lower than average (psychological play for myself). Then we had the electrical work completed on our deck rebuild, and that was another significant balance that needed to be paid. After that, we just had a a few medium-sized, if you will, charges that hit. I paid an extra payment to keep the balance closer to the $3000-3500 range. Well, it didn’t work. Another two service calls to rental properties and the dog’s annual vet appointment, and we were back up to $6k. We have the cash to pay it off every month; it’s just not something I want to see!

When we have a large purchase, we open a new credit card. The new credit card gives us some sort of bonus, and we get 0% interest for 12-15 months, typically. Last Fall, we replaced the carpet on the first and second floor of the house for over $10k. I paid $500 per month up until last month’s payment. The balance wasn’t a round number, so I went ahead and paid that little bit while also upping the payment to $1000. That balance is at $7,000 now and will need to be paid by December 13th. The new credit card will be used to purchase a hot tub and pay for the electric work associated with that (as well as an electrical panel upgrade).

INSURANCE CLAIM

Since our deck work is now complete, we submitted a request for additional funds. The concrete replacement was controversial in the claims process. They eventually agreed to pay for it, but they held back a significant amount of depreciation on it. We submitted the final work order showing the concrete costs and that the job was complete, and they sent us a check for about $6,550. Additionally, the electrical work was projected to cost about $1,700, but it actually was about $3,500. Luckily, we submitted the invoice and, with no questions asked, they cut us a check for the difference.

Just for the record, the job was never fully completed. Mr. ODA pulled up deck boards and retrofitted the waterproofing. We never paid out the final payment. The City’s inspector came out and started asking a bunch of questions, and the foreman finally acknowledged that they hadn’t completed the waterproofing. We didn’t tell them we fixed it, but we have no intention of being in touch with them again. Outside of the waterproofing and concrete subcontractor issues, the contractor was great at the work he does – but they should stick to simple deck construction.

PERSONAL CHARGES

We actually had a low number of transactions over this past month. We took a trip, which I covered in my last post. Mr. ODA negotiated a refund of some of the cabin charge since we booked it with a hot tub and discovered at 8 pm that there was no water in the hot tub. They refunded 10%! We had our typical charges that occur monthly, and I paid several health insurance bills for various reasons.

RENTALS

Luckily, everyone has paid their rent this month. We have $750 outstanding, but it’s not technically due until the 19th with how I’ve structured their lease. One person did pay half her rent late (on the 15th), but I didn’t charge a late fee since she actually paid when she said she would this month (always a gamble). We had a few smaller maintenance issues come up in the last month, as well as a range replacement at a property that will be installed this Saturday.

  • INSURANCE

Due to a claim on one of our properties, that insurance found a reason to drop us. They notified us that we have a couple of months to find new insurance. I’ve been working on that for the last 3 weeks. It hasn’t been easy. They want pictures and then want all different angles, as if it’s my home and I can just take these pictures on a whim. Then for some reason, the agent I found through a local real estate group is great about answering questions on one property, but won’t answer questions on the other. It’s pretty frustrating. As of 10 minutes ago, I at least got the policy executed on the one he hadn’t been responding on. I started this process on September 23rd and got this run-of-the-mill policy executed today – ugh. So that’s over $900 going on the credit card today.

We have a roof replacement occurring on a property in VA tomorrow. I found out that our partner switched insurance companies without us knowing. That seems fine, except that I discovered our policy went from $600 to $1400. It turns out, he switched because that original insurance company was requiring a roof replacement. Conceptually, that’s annoying because they find some action for us every year with no warning or previous mention of something being on a watch list. However, it turns out that the roof was bad enough that no one would insure us. Again, I’m finding all this out after the fact. Our agent found someone to cover us for short term, and we’re paying a hefty premium on that. As soon as I found out, I requested quotes from roofers. I signed a contract 3 weeks ago, and that’s finally under way with materials dropped off this morning. As soon as the roof is done, I plan on sending documentation to our agent to get us switched to a “regular” insurance company and hopefully reduce that premium substantially.

We had issues with our Commercial Liability Umbrella Policy issuance this year. It was all due to the company’s poor communication. They asked for a new document to be completed, which I did in less than a day. Then I heard nothing from them until a cancellation notice for not providing supporting documentation. I had to scramble to gather all the documents, only for them to not even review my information timely and cancel the policy. They reissued with no lapse in coverage, but goodness that’s so frustrating that they can do whatever they want with no repercussions. In that process, we learned that one of our houses isn’t included in the CLUP because that insurance company’s rating fell below a reasonable threshold. So now I’m shopping for insurance for that house.

I had to pay one property’s insurance of $270 (it’s a townhouse with HOA insurance also). I also had to contact one of my escrow accounts to find out why they didn’t pay on time, which is so much fun (and I still don’t have that resolved).

  • TAXES

It’s that time of year again where I have to pay out on KY taxes. Relatively, they’re low amounts, but they add up to a decent amount when you have 4 to pay at once. I’ve issued payment on these, but they haven’t cashed the checks yet (it would be nice if businesses would allow electronic payments without exorbitant fees!).

NET WORTH

We’re over $800k over this time last year. It’s crazy to see that number because I don’t feel comfortable with our finances. I can’t put my finger on it, but I just don’t like how often I need to transfer money out of a savings account to cover obligations in the checking account. It’s just a psychological thing for me. I can’t figure out why I can’t get past it, when I know for sure that we have 18 safety nets out there if we were in a bind.

Last year’s update mentioned that our finances took a big hit between September and October, but this year, we’ve recovered a good bit and increased over $115k from last month. It appears last year I paid off a large credit card balance this month, whereas the large credit card balance pay-off will be December this year. I’ll also have additional charges when the hot tub gets delivered in a few weeks, which will increase our debt.

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.