zero percent interest

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.

March Financial Update

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I purposely waited to update our net worth for this month. Two months ago, we had incurred a significant amount of expenses on our credit card. We purposely held off on paying that amount until today, which is that statement’s due date. Waiting to pay the card meant that $25k sat in our savings account earning interest during that time, as we “floated” that money. It was extremely stressful for me, so I’m glad those due dates are behind me, and I don’t have to manage that timing and coordination anymore.

Speaking of “floating” money, we also have our 0% interest credit card that we opened last Fall when we were incurring expenses on our new house. That still has a balance over $6k on it, but we just pay $500 towards it each month. We’ll pay it in full when the 0% interest runs out this Fall.

I don’t even know where to begin on what we’ve been managing with rental properties. We’ve learned the world of insurance claims. Prior to this month, we only had one claim because an intoxicated driver (on a Sunday morning) ran off the road, through a fence, and over our HVAC outdoor unit. I’ll have a separate post with the details that we’ve been managing, but here’s a run down.
– I still have a lease that needs to get out for signature, and then information on that house sent to our property manager so she can take it over.
– We had a tree fall on a house here in Lexington. The tree was removed, but getting the adjuster out to see the damage is taking 3 weeks, and we can’t do any repairs until he sees the damage.
– The house that had a burst pipe is nearing completion. Walls and ceilings are back in place, insulation is back in place, and cabinets are installed; they still need to do painting and flooring. We’re going to have our handyman install new counter tops when the insurance contractors are done with their steps, and then we’ll need to get it rerented.
– We had roofing damage on 3 of our houses in Lexington from that same storm that knocked a tree on a house. Mr. ODA fixed one roof himself. Another one is under the purview of a townhome HOA, and hasn’t been fixed. And we’re biding our time on the last one because it’ll end up being a full roof replacement; only a few shingles flew off, but the roof is so old and so steep that it wasn’t an option to repair.
– Frustratingly, I had 2 overdue tax bills. Our jurisdiction’s taxes are due by 12/1 each year. If you pay by 11/1, they give you a 5% discount. I paid the bulk of the bills in October. There was a supplemental bill due to an increase in the Board of Education tax. When I received the supplemental bills “off schedule,” I just filed them. It didn’t occur to me that there was a second tax bill in the year. They sent that one notice. Didn’t send a second to say “you didn’t pay early, but by the way, it’s due now.” So that was due by the end of February. I didn’t pay it and received the “delinquent tax notice” last week. There was a 5% penalty assessed on the balance due. So all-in-all, I cost us an extra $11. Not the end of the world, but kicking myself that I missed it. Also annoying, they sent it to our old address instead of our updated address that’s been in place since November.

We haven’t done any big projects around the house because of newborn life. I just painted the wood parts of our stair railing and treads black. I’ll then paint the spindles white (they’re already white but need touched up and a whole new fresh coat). I already had that paint on hand. We’ve also cleaned up the yard from that big storm earlier this month, along with some odds and ends that needed to be done in the landscaping. We got the first mow in and some new bushes with mulch in the front yard so that it’s looking nice for my family coming into town this weekend.

No net worth calculation update. I’ve done the majority of the account checks, but just haven’t been able to pull together the final bit timely.

New Credit Cards

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We turned over a rental in April, bought a new house that requires work in June, and turned over another rental in July. Those activities have a lot of expenses associated with it. While we could have strategically spent the money and paid off credit cards, it’s nice to have a cushion. When we’re faced with a lot of large expenses, Mr. ODA searches for a new credit card.

Why do we open a new credit card for big expenses? Because it’s a free short term loan for us. We’re looking for a card that provides an introductory 0% interest period, as well as some other bonus(es). Carrying a balance on a credit card and paying up to 25% interest is a non-starter in our financial portfolio.

Mr. ODA had searched for a new credit card back in the April timeframe, but we had multiple credit hits around that time, and I didn’t want to risk it. We paid off the expenses for the first rental turnover through our regular credit cards. Once we bought our new house and we knew that turning over another rental was looming (with big expenses like carpet replacement), Mr. ODA found a credit card he wanted.

At the last second, Mr. ODA switched which card he wanted. The card gave an introductory offer of $200 back after you spent $1000 within 120 days, up to 5% cash back on two categories you choose, 2% cash back on one everyday category, and 1% on all other purchases. It had 15 months of 0% APR and no annual fee. He received a credit limit of $500. Seriously. He called to get a credit increase and find out why it was so low, but they said they required another credit report pull to talk to him about anything. Nope. So we have this random $500 limit credit card in our portfolio. We’ve spent our $1000 and will get our $200 cash back (unless they find a loophole, which I would expect based on how this company’s relationship has been so far), and then this card will just sit unused until they close it years from now due to inactivity.

Since that was a bust, Mr. ODA opened a different credit card in my name (spread the wealth on credit inquiries). I was granted a $9,000 credit limit, and we got straight to work spending that. There’s no annual fee; it has a 15 month 0% introductory period; and earn 5% cash back on purchases in your top spending category (automatically, without choosing a category) up to the first $500 spent and 1% cash back after that. It gave us $200 cash back after we spent $750 in the first 3 months.

Two of our first few expenses were a vanity for our new master bathroom and 1,000 sf worth of vinyl plank flooring for a rental. Our balance within the first week was over $5,000. As much as I can’t stand to see that balance sitting there, it has helped us move money around. Usually we focus our spending in the categories that each credit card offers with higher rewards, but for these bigger expenses, we’re focused on being able to float them for several months.

We used a Home Equity Line of Credit (HELOC) for the down payment on the new house. Originally, we had been paying down the principal on that, and put $14k towards that over the last month. We then decided we should focus more into buying the dip of the stock the market instead of paying down that account with 4% interest rate (although that’s variable). That’s what we’re currently focusing on, knowing that when we sell our current house, proceeds will pay off the HELOC in a short few months. We currently have about a $1500 cash cushion because we know that we have the HELOC to fall back on. For instance, we’re replacing the driveway and walkways at our new house, and we’ll pull cash out of the HELOC to pay for that (they don’t take credit).

If your credit is in favorable standing and you have large expenses looming (without a need for a new loan/mortgage in the near future), then look for a new credit card. Don’t open any random one. You’re looking for 0% interest for 12-15 months, no annual fee, and the possibility of a reward system (whether it’s an introductory offer related to spending, a cash back incentive for spending, or some form of both).