Homeownership

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.

Will My Home Vaporize My Debt Snowball?

November 10, 2019 by tanya

Audio version of this post, read by the author.

I’m grateful that I have some equity in my condo. One day in the future, I’ll be able to reap the benefits of that. In the meantime, this home of my mine is putting a significant obstruction in my debt free plan.

Condominium Special Assessment

I’ve previously mentioned that my HOA Board is planning to issue a special assessment for the replacement of the roof on our building. Each unit owner must pay his or her proportionate share of the cost of the roof replacement, based on the size of their unit. This wouldn’t be a big deal if I lived in a highrise with plenty of units. Given that our building only contains 14 units, however, the projected cost of the roof on a per unit owner basis is several thousands of dollars.

When the initial projections for the roof were first presented, I was told that my portion to pay would be around $6,000. At our HOA meeting earlier this week, I learned that my contribution will be closer to $8,200. The HOA Board wants to ensure that we add some financial cushion to account for any construction overages or unexpected costs. As we all know, construction projects typically go over budget and the Board wants to ensure that we don’t end up in a bind to cover the entire cost when it comes due.

Each unit owner is supposed to be ready by February 15, 2020 with the first half of our portion of the payment; the other half is due 3 weeks later, during the first week of March, 2020. That gives me 3 months to come up with $8,200.

That gives me 3 months to come up with $8,200.
~ Single Girl

As someone who is following Dave Ramsey’s baby steps, I only have $1,000 in a baby emergency fund. In anticipation of the special assessment, I started putting money aside to be prepared to make the payment. I saved $1,000 last month toward that end. I also reserved some of the money I earned from my recent commission and put it into my sinking fund for home repairs. Currently, the account holds $2,058. In my budget for November, I’ve allocated $1,000 toward savings for this as well. So, as of the end of this month, I should have around $3,000 towards the $8,000 I’ll owe.

That gives me 3 months to come up with the $5,200 balance.

The HVAC Unit Strikes Again

Last weekend, I discovered that my HVAC (heating, ventilation and air conditioning) system went out. Completely. The thermostat wasn’t displaying anything and the unit wouldn’t heat or cool. Given the time of year this is, my heat was the main concern. I think that because half of my walls are brick, I don’t experience significant temperature fluctuations. Plus, we have both electric and gas service in our units. The oven is operated on gas. Gas payments are covered in my monthly HOA dues (which is the same payment every month). So what did I do? To warm my place while my HVAC was out, I’d heat the oven to 450 degrees then open it up and let the heat escape. I kept the oven on for as long as I needed the heat.

In September, the problem with the HVAC was that it wasn’t cooling. I spent $419 ($169 over what I budgeted) getting a short-term fix for that issue. This time, I had no idea what the problem was. My biggest fear was that it had totally died on me and that it would need to be replaced entirely.

I got a referral from a friend for one of the maintenance guys who does work at the apartment complex in which she lives. Because I’m really watching my coins, I wanted to get as low-cost a diagnosis as I could. If the issue was a major one, I’d then be more inclined to have the work done by a larger company – one that would be bonded and insured and could provide a formal warranty for their work. But, since this was a totally unexpected (and un-budgeted for expense), I needed it to be low-cost. Usually the lower-cost folks are those who do maintenance and construction work as a side hustle to their main gig.

I was happy to learn that the problem with the unit was a blown fuse. The maintenance guy changed the fuse for me and got the unit back to work.

Total cost: $100.

Water Heater

While the maintenance guy was on top of my bathroom diagnosing the HVAC unit (remember, my HVAC sits atop my bathroom), I asked if he could take a look at my water heater. A couple of weeks ago, the hot water in my shower started acting weird. The water gets hot, but it doesn’t get hot until I’ve turned the lever almost as far as it will go. Then, the water doesn’t stay hot for very long after that. (I’m no Jennifer Anniston, with her 3 minute “protect the environment” showers. I like to take long showers. Fortunately, water is included in my monthly HOA payment.)

The maintenance guy told me that my water heater is on its last leg and explained why my water isn’t getting and remaining hot like it should. He said that, if he were me, he’d replace it immediately. “I’m a budgeter,” I said. “I’m not going to be able to replace it this month.” He thinks I may have a month or 2, at most, before it completely goes out. I’ll wait a little longer.

Total cost for diagnosis: $20 (plus, I tipped him an additional $20).

The Plan

I have adequate space on my credit cards to cover both the cost of the special assessment and the water heater replacement. Plus, the HOA Board is considering allowing owners who are suffering a hardship to borrow from the HOA reserve fund, so that they have more time to come up with the money. I’m officially 102 days credit sober; borrowing the money for this in any kind of way is not an option.

For the HOA assessment, I’m deciding whether to put my debt snowball on hold over the next three months and save the $1,700+ per month that I need to cover the $5,200. It is possible that I may close on a small real estate deal between now and then, so I may get a couple of thousand dollars through that, which I could also use toward the assessment.

I plan to have the water heater serviced by the maintenance guy who is side hustling because (1) I was happy with his professionalism and his willingness to really take the time and effort to diagnose my problem, (2) I think his prices will be cheaper than most and (3) he thinks he may be able to get me a discount on the water heater. He said that a water heater like mine (a 40 gallon) should cost between $400 and $500. For labor, he would charge me $200, including picking it up for me from Lowe’s, Home Depot or wherever. Of course, I’m going to do my research on what the water heater and the associated labor should cost before making a final decision. I’ve got to look at the numbers for next month to determine whether or not I should move forward with it in December or January.

Broke + Homeownership = No Bueno

I cannot stress enough that a broke person should not own a home. When these expenses come up, you have to find a way to pay for them. And, clearly, these expenses can be significant.

Granted, I’m delighted that I have equity in my home. But that equity isn’t money that is accessible. I don’t plan to sell my condo for a few years, so, while (hopefully) my equity continues to grow in the upcoming years, I’ll be paying bills on this place all along the way – while trying to get rid of my tsunami-sized debt.

Geez, $8,900 could do A LOT for my debt snowball. But, I recognize that life continues to happen while on a debt free journey. I also have to remember – things could be a lot worse.

Homeownership: A Speed Bump on My Debt Free Journey

September 22, 2019 by tanya

Though I knew this debt-free journey wouldn’t be completely sans obstacle, I didn’t expect to get challenged so quickly. I’m just barely getting started! This week, when I was presented with some major home maintenance costs, I was reminded that this road will not be smooth.

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

“When you own a home and you’re broke, it is a curse financially. Homeownership by broke people makes them broke-r.”
~ Dave Ramsey, Dave Ramsey Show

I totally understand why Dave Ramsey suggests that broke people not buy houses. I also am completely on board with the reason Robert Kiyosaki encourages us to not view our principal residences as investments. When you are not renting, home care and maintenance costs are your own responsibility. When something isn’t functioning properly or breaks, the homeowner usually must identify and pay a service provider or fix it themselves. No leasing maintenance department will come to the rescue. Unlike an apartment dweller, a homeowner can’t just make a call and schedule service – at least, no broke homeowner who doesn’t have money in the bank. As Kiyosaki states, unlike a true real estate asset, my residence doesn’t produce income. I pay to live here. Until I eventually sell, assuming that the value continues to increase, I won’t see the true upside. I’m not complaining, because I truly believe there will be a financial upside to owning this condo (see below). I’m just saying that I can see things for what they are.

“If all your money is tied up in your house, you may be forced to work harder because your money continues blowing out of the expense column, instead of adding to the asset column, the classic middle class cash flow problem.”
~ Robert Kiyosaki, Rich Dad, Poor Dad

While I like my space and the convenience of my downtown location, this thing comes with responsibilities, beyond the mortgage payments (1st and 2nd mortgages, totaling $1,045.41 per month) and the HOA dues ($282.43 per month). Since I’ve moved back into my condo late last year, I’ve been very strategic and thoughtful about the handling of maintenance. I spent most of 2018 living in a high rise luxury apartment in a different area of town – an area in which I’ve wanted to experience and reside in for years. I called it my little “experiment.” It was an $1,850 per month (for a 1 bedroom!) experiment. I leased my condo to a tenant during that time for $1,620 per month. As the end of my lease and the lease with my tenant neared, I decided to move back into my condo. Though I would have loved to stay in my high-rise luxury apartment with concierge and valet dry cleaning services, I was coming to terms with the reality of my financial situation, and I moved out of the apartment and back into my condo.

Thankfully, Single Girl has generous man friends who prove themselves to be helpful. When I moved back into my condo, a friend of mine kindly (and without solicitation) bought me a new stove, 2 new ceiling fans, and a couple of other fixtures that needed to be replaced. (Yes, this was truly a friend. Though he expressed an interest in dating, we weren’t dating and weren’t physical in any way.) In recent weeks, my ex (who has been my friend since I was a child, and a friend for way more years that he was ever a boyfriend), fixed my dishwasher. I would have had to replace it, were it not for his determination to figure out what was wrong with the 19-year-old thing. About a month ago, Mr. Nice For Now fixed a leak I had in my toilet. He discovered the source of the leak, went to the store the next morning to buy the necessary part, then installed it for me. Whew! Thank God for man friends!

Before I even get into the recent home-related expenses being thrown my way, let me say that my mortgage payment just recently increased by over $200 per month, mostly on account of significant tax increases on both the county and city levels. Since my lender requires that tax payments be escrowed, I pay the increased amount every month, as tacked on to the principal and interest charges for my 1st mortgage. Apartment dwellers don’t usually experience such a significant increase in rent. For those of us who pay property taxes as homeowners, these kind of increases can occur.

New Issues On The Homefront

(1) The Air Conditioning Unit

This week, I was presented with bigger issues than a toilet or dishwasher. Lately, my air conditioning unit has not been cooling as well as it should. A new A/C unit was installed about 7 years ago (cost: $6,500, but Single Girl’s boyfriend at the time owned a construction company, so she didn’t end up paying for any of it), but I haven’t had it serviced since then. Sure, I’ve had the filters replaced, but haven’t really had someone come to inspect it and see if anything needed to be fixed or adjusted on it. Part of the reason it hasn’t gotten as much attention as is probably should is that part of the thing is located on top of my bathroom and the other part of the unit is located on the rooftop of our condo building. There’s no ladder or fire escape that goes to the rooftop, so it’s always a production when any service provider needs to get up there. With the unit not cooling well lately, I decided to get someone to come out and look at it.

The A/C unit is the big green thing on the left side at the top of the image. It sits on top of the bathroom.

The air duct over the bathroom connects to the A/C unit.

Long story short: the first provider I had come and look at the unit tells me that the unit has a leak (although he doesn’t know exactly where it is) and that the unit is extremely low on coolant. The coolant is $95 per pound, and it looks like I’ll probably need at least 3 pounds. There are some other issues with the unit, including some rusty coil thingamajiggy. All in, the costs look like this:

Leak Detection $430.25
Leak Seal $207.90
Coolant $95.00 per pound (3 pounds = $285)
Replacement Coil $2,550.00
TOTAL $3,473.15

Or, as the technician suggested, I should just consider replacing the unit entirely. As I mentioned, a new unit would be somewhere between $6,000 and $7,000. I paid the provider $99 for the cost of diagnosis and sent him on his way.

I usually get more than one quote when I’m having work done, so I got a referral from Mr. Nice for Now. His guy had much better news. To my delight, he didn’t even mention the possibility of replacing the entire unit or the rusty coil thing. He ended up putting 4.2 pounds of coolant (his price was only $55 per pound) into my unit, which should get me through the remainder of the summer and into the early part of 2020. This will buy me some time so that I can properly plan and save up for the fixing of the leak. I ended up paying him $320 for the diagnosis, the coolant, and the labor associated with putting the coolant in the unit. The system is now cooling well.

For September, I only budgeted $250 to diagnose the issue. I ended up spending a total of $419. To cover the budget shortfall, I took some money out of a sinking fund I have designated for personal care.

(2) Condominium Special Assessment

I also received news this week that I need to be prepared for a multi thousand dollar special assessment by my condominium association. Our building needs a new roof. Though we’ve known that the roof would, eventually, need to be addressed, we didn’t realize that it would need to be addressed so soon. Over the years, we’ve had it patched and repaired in pieces only to find that our patchwork approach caused additional damage. At this point, several of the units in the building (not mine, though) are experiencing leaking whenever there is a heavy rain.

In our homeowners’ association (“HOA”) meeting this week, the HOA Board presented potential solutions to the roof problem. The roof is going to cost $90,000 to replace. There are only 14 units in our building. Do the math on that. Each unit owner is going to be responsible for over $6,000 for this roof! The primary solution the Board is proposing is a special assessment for each owner’s proportionate share of the roof replacement. The Board is going to present more details in the upcoming weeks, including how payments can be made on this.

Single Girl, Why Don’t You Just Refinance?

The current Zillow value of my condo is $277,128. I owe $107,649 on it. Given the amount of equity in the home, one would think it would make sense to refinance and pay off about $150,000 of my debt.

(1) The terms of my modification would require that I share the “income” with the bank 50/50. Several years ago, I modified my loan. It was at a time when the market was still way down and people were buying similar units to mine in my building for less than half of what I paid. Since I’m a lawyer, and I actually read some things, I saw that the terms of my modification required me to hold on to the property for a number of years before selling or refinancing. If I didn’t wait for the requisite period of time, I would have to split any sale or refinance proceeds with the bank. I’m not willing to do that. I’ll just wait. The time period expires in 2021. That gives me time to continue to work through this debt repayment journey.

(2) I wouldn’t want to encumber my home on account of credit card debt or car debt. If I were to default on my credit cards, the credit card companies couldn’t foreclose on my home.

(3) I don’t want to use any of the equity in my home to help me clean up my mess. I want to use the next several years to develop the habits that I’ll need in order to have a productive and healthy financial life, moving forward. I want to use this time to become disciplined about using a budget, become accustomed to making sound financial decisions, and planning for the future. When I sell my home, I want that equity to be a gift to myself for working hard and taking my debt free journey seriously.

Now I’ve got to figure out how I’m going to come up with the money to cover both the assessment and the repair of the air conditioning unit.