Seriously. I have no idea what to do with my money. I didn’t meet my goals last year. I’m falling on my face with this year’s goals. Since starting this blog I have only paid down about $5K in credit card debt (over 2.5 years).
My boyfriend has asked me to move in. I’m pretty excited about that, but boy does it change a lot of things for me financially.
1. I am underwater on my mortgage. I cannot possibly sell my condo right now. Renting is my best option.
2. I need to renovate the rest of my condo if I plan on renting it out.
3. I don’t have much cash on hand to do the construction.
4. My best option is to finance my construction with credit card balance transfers. (Much like last year.)
5. I am going to sell my motorcycle to raise money.
6. I have tax implications if I move from VA into DC.
7. I have tax implications if I rent out my condo.
I know those all sound bad. But there is an upside. If I rent out my condo at a loss, I will end up with a small tax refund every year for the next 5 years. (The depreciation schedule on the renovation is that long.) Strangely I will also have better monthly cash flow. I will actually end up with ~$200-400 more per month for debt repayment if I do this. (I will be paying a small amount of rent to my boyfriend vs whole rental income.)
I’m bummed about all this because I felt like I was on a good path with my financial goals this year. But I also have some personal goals and since my relationship is growing, I shouldn’t grouse about this move. It is daunting to realize what we have to do to get fully integrated. It’s not just moving my stuff little by little, but an entire project to decide where my furniture goes, rearranging his house and which rooms we’ll be using for what, etc.
But I’m very excited.
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{ 11 comments… read them below or add one }
Congrats! Those are the happy kind of problems to have.
It takes alot of guts to admit that not everything is going as well financially as we would like.
At least you’re trying!
First things first: congratulations on the big move-in with the boyfriend! That IS exciting.
Also, we’re all a work in progress so no one’s expecting perfection out of you. It’s definitely helpful to see the ups and downs of working out your financial situation in the real world. I’m sure it’ll all work out
Don’tcha just hate it when real life interferes with your financial goals? Even when the real life is an emotionally good deal? Of course, I should talk! My total debt reduction for March is going to be about $81. I’m not sure I’m even going to post it!
There’s more important things in life than just money. I like to put life first, money second. It’s definitely good to be smart with your money and have savings goals and budgets and all that, but I’ve put those things first and it just made me miserable. I like to say, “Live your life, but don’t be stupid.”
Hey, Mapgirl. I followed a link to this post from the New York Times “Your Money” page. Pretty cool, huh?
Sounds like you’re doing well.
TBH
The second sentence in the last paragraph is the most important… and so congratulations on the move! Don’t worry, even if you go over-budget, we’ll still keep on reading.
Thanks everyone for the encouraging comments. Thanks especially to Tired But Happy for the heads up. I had no idea I was on the NYT.
I’m looking forward to the move, but wow. It’s a lot of work!
Congrats on the move and the excitement it brings you. I can at least say that it looks like, financially, you’re going in with your eyes open to all the financial consequences. That’s better than flying blind!
Best wishes with the move and relationship.
When you say “I am underwater on my mortgage. I cannot possibly sell my condo right now. Renting is my best option.” Is that simply because you would make a loss by selling up (eg. have to take out a personal loan to settle the mortgage balance)?
If so, think through the option of taking a known loss now by selling up, and compare it to what may well happen if you hold onto the property and rent it out. What would you situation be like in five years time if the property value is down another 10% from here, and rents also drop during the recession while your mortgage repayments stay constant?
Imagine that you didn’t already own the house – would you want to buy it at the current price as an investment rental property? If not, the why keep it now? The money already lost is a ’sunk cost’ and shouldn’t be allowed to influence your decision making.
Making rational investment decisions where a loss would be crystalised is one of the hardest things to do as an investor.
Congratulations! That’s exciting news and I wish you the best. I assume it makes more sense (location, apartment size?) for you to move into your bf’s rental apartment than for him to move into your condo? Just wondering.
And don’t feel bad about the money stuff — I don’t think any of us are doing that great this year given what’s happening with jobs and the economy. It’s an ongoing process with plenty of downs and (hopefully) ups!