Good News!

Financial Responsibility Hurts So Good

March 10, 2020 by tanya

I recently paid the $8,600 HOA assessment for which I’ve been saving for months. YAY! YAY! YAY! YAY!

A Huge Payment to Me

Of course, everything is relative. For some people, an $8,600 expenditure is not a big deal – especially an expense related to one’s home. Despite the fact that I’ve owned my condo for a decade, I’ve never made a lump sum expenditure of over $2,000 on it. It wasn’t an intended rehab project, and I haven’t done any major renovations or upgrades on it. When I bought it, it was only 6 years “old” – an authentic loft in an old 19th century industrial building that was renovated and repurposed for residential use in 2000. It already had stainless steel appliances and hardwood floors. The most I’ve ever done at one time with it was getting it painted and getting a new HVAC unit. Fortunately, I didn’t even pay for the HVAC unit (a $5,500 value) because my boyfriend at the time owned a contracting company and he handled everything for me.

I was used to doing things the credit card shortcut way.
~ single girl

When you’re on a deft free journey, you’re watching pennies and not wanting to spend money towards things that may not move you further along the journey. So for me – right now – $8,600 is a lot of money. I saw this beast of an assessment as a significant hurdle. Between the assessment and issues I was having with my HVAC unit and water heater, I felt like my debt snowball was melting before I even got a chance to really get started.

Doing It Without A Shortcut

I was used to doing things the credit card shortcut way. Back in my Pre-Debt Free Journey (PDFJ) days, I would have simply resolved to pay for the assessment on a credit card, and make monthly payments on the card. The credit card would have been a means for me to handle what I needed to handle (which would be getting the assessment paid), but it would be without me having to even consider an alternative approach.

My old way of doing things would have got my HOA assessment paid and a new water heater installed without me worrying about whether or not I would save up enough money to pay what I owed prior to when the assessment was due or prior to the heater dying or flooding my home. But, it also would have cost me in significant interest charges over the long term.

Now that I’ve eliminated credit cards as an option, I’m forced to come up with alternatives that work.
~ single girl

Now that I’ve eliminated credit cards as an option, I’m forced to come up with alternatives that work. With this HOA assessment, it was saving towards it every month and and having the discipline to put the required amount of funds into a separate account. For 4 months, I saved at least $1,000 toward the assessment. The money went into an interest-bearing account. I included the amount to be set-aside in my monthly EveryDollar budget. And, I followed through in transferring the money from my main personal account to the Home Maintenance and Repairs Sinking Fund (the interest-bearing account). With the new water heater that I need, it’s been me completely delaying its replacement and praying that the thing doesn’t fall apart before I can address the issue.

Doing It The Smart Way

Though I’m so not delighted about the fact that I had to come out of pocket with the money, I’m grateful and happy that I was able to do it. I’m proud of the way that I went about getting this done.

As with all habits, self-discipline is a learned art, and to master this art requires two basic steps: First, you must consistently analyze the probable, long-term consequences of your actions. Second, you must be tenacious in acting in accordance with what you have determined to be in your long-term best interests.
~ ROBERT J. RINGER, MILLION DOLLAR HABITS

The payment hurt, though. Really hurt. The tough part was when I would think about what I could have done with that $8,600. I could have paid off the balance of my 2016 Federal taxes, and had some to spare to put toward the 2017 taxes. Clearly, I was trying to torture myself because that was a really futile mental exercise.

Short-term discomfort or pain is usually directly related to long-term gain. Patience. Consistency. Stick-to-it-ness. All of that matters. In order to become debt free, I’ll have to relinquish many of the short-term comforts and pleasures I’d like for the long-term goal of being out of debt. While I’ve gotten better at doing that over the last several months, I still have a way to go before long-term thinking becomes my instinctive default approach.

That said – there’s a lot of positive that has come out of this situation. The primary thing is that I proved to myself that I can save substantial amounts of money, consistently, over a period of months toward a goal. I haven’t done that since I was a tween and was working to save $60 for a Guess jean jacket that I wanted. Another great thing that comes out of this is that I found a way to have that amount of money ($1,500) in my budget. If I was able to reserve that money for an HOA assessment, I can have that amount of money available to add to my debt snowball. That’s huge!

Found $500!

February 25, 2020 by tanya

I recently obtained a business loan to use in connection with a transfer of some of the business card debt I have. After the lender deposited the new loan funds into my business account, I started the process of paying off the card.

Something told me to call the bank to confirm the balance due on the card before making a payment online. When I listened to the uncircumventable automated list of account details, I learned that I had $500.33 of cash rewards available on the card.

When I listened to the uncircumventable automated list of account details, I learned that I had $500.33 of cash rewards available on the card.
~ single girl

What?!!! I had no idea I had these rewards available! When I looked at the card information online, my account showed that I had zero dollars of rewards, so hearing that I had that much money available was extremely surprising. That’s a lot of money! It’s just over the amount I was paying in monthly finance charges (about $483/month!).

I waited to speak to a representative and we went through the process of applying the available rewards to the balance of the business card.

LESSON: Before paying off a credit card with “rewards,” confirm what rewards you might have available so you don’t miss out on them.

I’m grateful for this win.

It’s My Birthday!

December 11, 2019 by tanya

Another year of life . . . another reason to be grateful.

I’m not, generally, a big birthday person. I don’t proclaim that I’ll be celebrating each day of my birthday month. Although I love, love, love gifts, I’m not the type to be fussy if I don’t get them or don’t get nice ones.

When it comes to milestone birthdays, however, I might do a little sumpthin’. For my golden birthday (my 11th) my mom got me a limousine for my friends to hang out. My 16th birthday was a business venture for me; I had a big birthday party at the convention center of my home town. I got a small loan from my parents, hired the hottest DJ in the city at the time, and charged other teenagers to get in. I paid my parents back in cash the night of the party and pocketed my profits.

My 21st birthday was fairly low-key; my college roommate and I went to Benihana for dinner. My 30th – also uneventful – so uneventful that I cannot recall what was done (that’s a shame). My 40th birthday was a different story. Twenty-one friends and family members celebrated with me in Playa del Carmen, Mexico. For my 40th, I was dating a man who was financially well-off, so I didn’t have to concern myself with the cost. In fact, for two of my prior birthdays, he took me out of the country. Being in another land is always my preference at this time of the year. I’d like my 45th birthday to be another overseas extravaganza, but we’ll have to see how that goes.

Whether my international soiree occurs for my 45th birthday will likely depend on where I am in my debt free journey and where I am romantically. So, like I said, I’m not someone who always makes a big deal out of my birthday, but I might do a little somethin’.

This year, my mom’s taking me to my favorite restaurant for dinner (remember the one that serves the amazing octopus?). Jameson is taking me to a mystery “activity” at the end of the week. I love surprises, so I’m all the way down with dealing with the unexpected. The Bulldozer got us a 2 bedroom/4 bathroom suite with concierge at the Aria for our Vegas trip; he said that the dope suite is part of my birthday present. I’ll take it. My homegirl paid for my ticket to a concert that she, myself and another college friend of ours will be attending in March.

Other than that, I expect to hear from friends and family via text, Facebook, or call throughout the day. Whatever happens, I’ll be happy.

If you’re a fellow Sagittarius, enjoy your birthday this month! Let’s celebrate another year of lives! Xoxoxo

Water Heater Hack

November 20, 2019 by tanya

My hot water heater started acting up recently. I like to luxuriate in the shower so when I realized that the water was getting cold much too quickly, I was irritated that I had yet another home maintenance issue to address.

Audio version of this post, read by the author.

A couple of weeks ago, when a fuze on my HVAC system blew, I asked the guy who fixed that system to take a look at my hot water heater while he was up there handling the HVAC. He told me that the water heater is “about to go” and that I need to plan to replace it. The cost would be about $400 to $500 for the water heater and about $200 for the labor.

The old me would have decided pretty promptly to go ahead and get the thing replaced. If I didn’t have the cash, I would have just put the water heater and associated labor on a credit card.

The new me, however, makes decisions more intentionally and thoughtfully. I knew right away that, since I hadn’t budgeted $700 in November to fix a hot water heater, and it wasn’t an emergency (after all, the water was still getting hot, just not as hot or for as long as I like), I wouldn’t be spending the money right away for the water heater. I’m working on my credit sobriety, so the use of a credit card isn’t an option.

(Don’t get me wrong – I’ve taken cold showers before. When I studied abroad in west Africa, a hot shower wasn’t even an option because there was no hot water in the home of my first homestay family. I can tolerate a cold shower; I just really, really don’t want to have to take one.)

Last weekend, because the water in the shower was getting cold so quickly, I decided to wash my hair in the kitchen sink. Then, after I washed my hair, I did something in the bathroom (can’t remember what it was) that caused me to run the water in that sink as well. I was concerned that my use of the water in the kitchen and in the bathroom might infringe upon my available hot water for my shower.

To my surprise, the exact opposite occurred. I ended up having plenty of water to luxuriate in the shower. I even ended my shower when I felt like it, with the water still being hot. I’m assuming that this had something to do with me having already had the water in the house flowing from the other faucets. I assure you, prior to this weekend, the cold water was truly an issue for me.

I’m not sure why this is happening, but I’m delighted. I had a guy look at my dishwasher about a year ago (doesn’t it seem like my whole house is falling apart?) and he noted that my dishwasher water doesn’t get hot unless I first run the water in the sink next to it. When I did a quick Google search, I learned from an article by thekitchn.com that “Especially in the winter, the pipes in our homes can get cold even if the water heater is working. Running hot water will clear out any cold water from the pipes and warm them up, which helps any appliance in [the] home get hot water faster.” Maybe that’s what’s going on with the water heater/water in the shower.

Now, whenever I want to take a shower, I first turn on the kitchen and bathroom sink faucets and let them run for awhile. Then, I have more than enough hot water.

If I can delay the replacement of the water heater, I can focus on pulling together the $8,000.
~ Single Girl

The reason this discovery is such a big deal for me is because having the hot water reduces the level of urgency for me with regard to the replacement of the water heater. Yes, I know I need to get it replaced and am working that into my plans. I’m also in the face of an $8,000 HOA assessment. I need to come up with that money by February. If I can delay the replacement of the water heater, I can focus on pulling together the $8,000.

What makes me happy is that I’m being thoughtful in how I solve these unexpected money problems instead of engaging in knee-jerk spending. This is different for me. Looks like the girl is turning over a new leaf.

Let Us Celebrate!

October 31, 2019 by tanya

Audio version of this post, read by the author.

We’ve come to the end of the month – and what a month it was. I paid off 5 debt obligations, including the top 3 listed on my September Tsunami Situation Report. I also paid off both of my Federal and State tax obligations for 2018 ($3,238 to the Feds and $2,819 to the State). See The Tsunami Situation – Tax Edition for details.

What I’ve read and heard from other people in the debt free community is that celebrating one’s wins along the journey is essential.

I’ve never been much of a celebrator. I operate more like this: I did it. It’s done. I’m moving on. I’ve been that way since I can remember. Even for my college graduation, I couldn’t be bothered to fully participate. There were two graduation ceremonies – one for my particular school of the university and another for the university, as a whole. As far as I know, most of my classmates attended both of the graduations. Once I got my degree in the first ceremony, I told my family that we were clear to go.

I’ve been the same way about my accomplishments since then. The professional licenses earned, the deals closed, and the jobs acquired often go unacclaimed. Once the goal has been reached, I don’t spend much time appreciating or basking in what I’ve done.

So the pay-off of a debt – especially a relatively little debt – isn’t something that I would have previously deemed to be celebration-worthy. It’s just not my style.

Howeva . . . this is a new day and I’m on a new journey. I’m willing to do whatever I need to do to stay on my path. My road to debt freedom is not likely to be a short one and, with that being the case, I will do what those who have succeeded in this have done to keep themselves motivated to continue.

Members of the debt-free community identify the celebration as a way of formally acknowledging the accomplishment of getting one step closer to the ultimate goal of debt freedom. It’s an opportunity to appreciate the choices and sacrifices that were made in order to crush that particular debt. Taking the time and energy to appreciate what you’ve done helps encourage one to continue onward and not give up. I can dig that. I really can.

That said, I’m officially converting to celebratorianism, that is, the practice of engaging in merriment and appreciation to commemorate a job well done. I’ve established a model for my festivities. After all, there will be 15 of them by the time I get to the end of my journey. I don’t want to be all willy nilly with my celebrations, lest I get out of hand in the name of rejoicing. Willy nilly freestyling is what got me into this mess in the first place.

For each debt paid, I will allow myself to celebrate by spending an amount of money equal to 1% of the outstanding balance of that debt as of July, 2019. The significance of the July, 2019 date is that that’s the month during which I got very serious about my commitment to pay off debt. The use of a percentage works well because it will allow for larger celebrations as I move along my list of debts. In other words, the celebrations will be commensurate with the debts paid.

I’m officially converting to celebratorianism.
~ Single Girl

For example, for the payoff of my 2015 IRS bill, I’ll be able to buy something or engage in some kind of activity that costs up to $17; for the pay off of my second student loan, I’ll allow myself up to $868.

You’ll find my Milestones and Rewards schedule below.

A word about the octopus: you’ll notice that one of my first rewards for the debts I paid off in October is the octopus app. I’m not referring to an app for a mobile device. I’m talking about the best octopus appetizer in all the land! I’m so excited! One of my favorite restaurants serves this Mediterranean-style octopus and I’ve been in love with it since I first had it. To celebrate what I did this month, I plan to get an octopus appetizer (maybe 2), along with this gin and hibiscus martini-style drink that that serve (which is also one of my faves). I haven’t been to this restaurant in several months and the last time I went, I didn’t pay for it. The time before that, I didn’t pay for it, either. So, this will be the first time in a while that I have gotten myself my lovely octopus appetizer. I’m so looking forward to it. I’m also fired up about going to the movies, eating popcorn and having a half blue raspberry, half cherry slushie.

When you’re making sacrifices and actually being intentional with your money, these “little” things are delightfully exciting.

How do you celebrate when you pay off a debt?

A $14,000 Windfall!

October 13, 2019 by tanya

YYYYYAAAAAAYYYYYY!

One of my side hustles is real estate sales. I first got my license years ago just after I took the bar exam. Since I was already in test mode, I figured that I should go ahead and get it done. After the beast known as the bar exam, the real estate licensing course and exam wouldn’t be too big of a deal. I had recently began my career as a real estate attorney, and I thought it made sense to get the license. My former boss at a previous firm (a firm where I was a paralegal), an attorney who had been practicing for decades, once told me that he had often felt like he should get a sales license because he saw many deals in which commission dollars were being “left on the table.” So, I went ahead and got the license.

Audio version of this blog post, ready by the author.

Right after I got my license, I purchased my condo. As a licensed agent, I was able to collect the commission on the buyer side of my own deal. In the end, I ended up walking away from my closing with a few thousand dollars in my pocket.

Then, I proceeded to do nothing with the license for years. Since I wasn’t doing anything with it, I figured it best to let it lapse. That was until around this time last year.

As I began to come to terms with the gravity of my financial situation, I thought that getting the license again would be a really good idea. This time, however, I would use it. I needed a way to supplement my law firm income. And I needed a way that could, potentially, produce some windfalls – big chunks of money at one time.

Speaking of big chunks of money . . . I just got my first commission on a sale listing!
~ Single Girl

Speaking of big chunks of money . . . I just got my first commission on a sale listing!

I sold a strip shopping center on behalf of a client. Here’s the breakdown of the money.

Sales Price: $1,700,000
Commission Rate: 2.5%
Commission Split with Broker: 70% (me)/30% (them)
Other Fee to Broker: 6%
Commission Split with Other Agent: 50%.

A couple of things to note:

(1) Commission Rate: In a commercial transaction, the commission rate is usually higher than that in a residential real estate transaction. In a residential transaction, the rate is around 3% per side. The commercial rate usually ranges between 3.5% to 5% per side. I made the mistake of agreeing to cut the commission on account of the size of the deal and the fact that the seller wasn’t going to make much on the transaction. The seller was in a bad financial situation with their business and were desperate to sell quickly. Lesson learned. I will not cut my commission in the future. This was also an unusual deal because the buyer agreed to pay their own agent’s commission. Typically, the seller pays the commission for both sides of the deal.

(2) Commission Split With Other Agent: At the time I received the listing, I was overwhelmed with business travel and a couple of speaking engagements. The client was very high maintenance and, as I mentioned, desperate to sell quickly. In order to get the property listed swiftly, I needed help from another agent who could take action promptly and handle the initial research and other work that needs to be done upfront to get a commercial property listed.

Here’s the breakdown of the money in dollars:

You never know whether a deal will actually close. When it comes to income, it isn’t . . . until it is. In other words, I try not to count the money until the wires have been sent or the checks have cleared the bank. That said, I didn’t include these funds in my October budget. I’m handling these funds completely separately.

My business and life coach suggested that I allocate the funds according to percentages and to do it prior to actually having the money in hand – at a time when there’s no itch to spend the money because I see it in the account. I thought through the various parts of my life that need to be handled, then allocated a certain percentage of the funds to the different categories. This will allow me to address certain parts of my life that need attention, but will still allow me to tackle my highest priority – my debt. By using some of the money for sinking funds, I’ll be able to stop allocating money on a monthly basis for such purposes. For example, for clothing and car repairs I’ve been allocating $50 to each category every month in my budget. By funding these accounts with lump sums, I can refrain from funding those accounts over the next few months and focus on my debt snowball.

Overall, by handling the money this way, I feel like I am covering a lot of ground. From an emotional perspective, I see that I am making headway by paying off some debts, but am also managing my needs in a responsible way.

The one thing I know for sure is that I want to pay off the taxes that I owe for 2018. After that, I like the idea of using the percentage allocation model.

Here’s how the money will be spent:

Amount available after high-priority items are paid.

55% ($3,569) – other debt, in addition to the 2018 taxes
10% ($649) – Health (e.g., eye exam, contact lenses; maybe eyeglasses)
10% ($649) – Personal care and clothing sinking fund
10% ($649) – Home repairs
10% ($649) – Miscellaneous
5% ($324) – Car care sinking fund

I didn’t set aside any of these funds for the payment of taxes – not because I didn’t learn the lesson from my recent tax debacle (see The Tsunami Situation – Tax Edition). When I checked the amount of taxes I’ve paid this year through payroll I found that I’ve already paid close to what I owed for last year’s taxes, even though my adjusted gross income this year may be a little lower than last year’s income. I’ve been making additional tax payments through payroll (i.e., an extra $150 per payroll check).

The reason I didn’t allocate more funds for home repairs for the special assessment that I’m expecting from my HOA (see Homeownership: A Speed Bump on My Debt Free Journey) is because I was told by the HOA treasurer that this likely won’t happen until 2020. I’m thinking that I can cash flow it, once the HOA details the payment structure for the assessment.

I’m grateful that this deal closed and that I’m in the position to pay off some things and fund some accounts. I’m also hopeful for additional side hustle income. I’m really going to need it!