Hardway Finance Part 5

Hardway Finance Part 5

The end finally came in May of 2016.  I had put the house up for sale in September of the prior year, but the realtor stretched things out to see where my divorce was going.  Almost as soon as she had proof that there was no chance of anything going sideways with claims towards the house, it was sold.

I have no idea how to communicate the stress I was under trying to unload that house.  Like I’ve mentioned before, I was never late on a payment, and if you’ve seen me, I clearly haven’t missed a meal, but by the end, the house was all bad memories, stress, and heartbreak.  I spent roughly $115,000 in monthly payments in six years, plus at least another $8-10,000 in repairs, and when I sold it, after commissions I received a check for less than $2,000.

I once again cleared out almost every bit of my savings in anticipation for purchasing my new house.  I bought all new furniture, replaced the stove, and got a dish washer and microwave (all cash/ layaway purchases.)  I also purchased a central air unit, also a cash purchase.  Once again, the year I bought a house was the year of a record income.  This time, however, I didn’t max out on my mortgage.  I maxed out on making it reasonably comfortable.  The main bathroom is smaller than one of my closets at the old house.  The ceilings are lower.  There’s only one level, and the windows are older than I am.  I got a 20 year mortgage, which I figure is a safe middle between making sure I pay it off “early” and also making sure that I had a small enough payment in case of a drop off in overtime.

Coincidentally, within five months of buying my cheaper home, work cut off all overtime for three months.  Even with a car payment, for a car with a V8 that requires premium, I was able to make three trips to Chicago just to try new steakhouses.  That car? I paid it off in 9 months (with some help from my tax refund and the sale of some stock.)

I’m also saving a lot more money.  With my new lower budget, I am taking sometimes up to $500 per check and stashing it in long term savings, just in case things go really bad.  It comes right off the top, before anything else.  I’ve also started putting 15% of my income into my 401k, and have switched it to the more expensive (in effect not tax sheltered) Roth 401k which will be better for me in retirement.  I went from a negative $50,000 net worth owning my old house to over a $100,000 net worth one year into having my new home.  That net worth is going up fast, too.

One day, I did a search on what I paid for the stocks I sold to purchase that house in 2010.  Had I kept them, I’d nearly have been able to pay for my current house.  It reinforces everything I’ve heard about long term investing and “buy and hold” strategies.  I’ve started again.