Trees fall down

One of our big oaks got some kind of borer beetle and had to come down.  Then two weeks later during a big storm, our last ornamental pear tree fell over (fortunately it did not take either our deck or our fence with it, though it did grab some of the wisteria off our fence on its way down).

So we paid $335.58 to get the oak taken down and the stump ground, along with trimming back our crepe myrtle so it would stop hitting our roof and grinding another stump from a tree the previous owners had removed (the stump had been bothering DH for lo these 12 years, who knew?).

Then a few weeks later we paid another ~$200 to get the pear tree taken out of our backyard and its remaining stump and roots ground.

Next month we’re planning on buying another oak to replace the beetled oak (apparently the beetles are only a problem when the trees are distressed, so that won’t be a problem with the new oak) and a cherry tree for the back.  DH also wants to buy a few more experimental fruit trees for the remaining places in our lawn.  (Every year he buys a few and one will take root and flourish even if it never fruits again and the other two will die.  I think he’s going to keep doing this until he runs out of spots.)  This year he’s gonna get a crabapple, which I love.  We’ll see if it survives and fruits.  Cost:  ~$300 all told, including mulch.  (It’s way more expensive if we get the tree company to do it, but DH has found a nursery he likes, and we’ve had better luck with keeping cheap younger trees alive than expensive older.)

*Activism Update*

Speaking of things on your lawn being removed… All of the democratic signs in my neighborhood for a specific race were stolen Saturday night.  If that happens to you, be sure to file a police report.  The police can’t do anything based on rumors.  They are more likely to investigate if they see a pattern.  And an entire HOA losing its signs is a pattern.  We went to Target and got materials to make our own sign.  Then we bought 30 signs at the Dem HQ when they opened and gave them to people whose signs had been stolen.  And a few for local candidates while we were at it.  Make some good come from evil.

This weekend we also did postcards from postcards to voters:  https://postcardstovoters.org/

and letters from votefwd.org

And I’ve been hooked up with a post-card service that only sends stuff in my state.

Do you have trees?  Have you ever had problems with them?

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Replacing more light fixtures

A few years ago, we had an energy audit and replaced all our bucket light fixtures with cooler, more efficient ones that would allow us to insulate the holes they created in the ceiling.  (The electrician DH tried to hire basically told him that was the best option and to do it all himself instead of paying the electrician, so he did.)

This year one of the fluorescent ballasts in the kitchen sort of broke (it could still be used, but even with a brand new bulb, it took a long time to turn on and then still flickered and after some observation DH suspected it might be dangerous).  The fluorescents in a couple of the other rooms, including my closet, weren’t in that great shape anyway (nothing like a strobe effect to trigger migraines…), and DH wanted to move to LEDs, especially since the fluorescent hum was driving him crazy.  Although LEDs fit in the sockets it wasn’t clear that just swapping them in was safe given the various electric ratings.

Given our track record of the electrician coming out only to tell DH how to do small jobs himself, we decided it was time to get rid of all of our fluorescent lighting (make it a big job!).

Here’s what that consisted of, according to the electrician’s quote:

CHANGE LAMPS IN 3 GARAGE FIXTURES TO LINE VOLTAGE LED
REMOVE WRAP IN UTILITY ROOM AND REPLACE WITH DISC LIGHT
REMOVE WRAP IN 4 CLOSETS AND REPLACE WITH DISC LIGHT
REMOVE WRAP IN PANTRY AND REPLACE WITH DISC LIGHT
REPLACE LAMPS IN TWO KITCHEN FIXTURES WITH LINE VOLTAGE LED LAMPS

The quote for all of this was $925.  That’s a lot!  But it’s also 11 light fixtures.  (Some of the big rectangular fluorescent lights were actually two ballasts next to each other.)

According to DH, two of them worked for three hours, installing 5 fixtures’ worth of line-fed tubular LEDs, removing 6 fixtures and replacing with disk lights.

$12 per tubular LED Keystone KT-LED15T8-48GC-850-DX2
$30 per disk light SunSet 15W LED by Luminance

5*2*12 = $120 for the tubulars.
6*30 = $180 for the disks.

So $300 in parts, let’s round up to $350 for incidentals (ex. wires, putty for the holes left by the fluorescent ballasts, extra screws. etc.).

The quote was for $925. So $575 in labor.
$575 / 2 / 3 = $95.8/ person hour.  Which is a little high but is within a reasonable range of going rates for the area.  And it helps assuage a little of the guilt I had for us calling the electrician out twice before only to have him give DH good advice and detailed instructions for what to do in exchange for no money.

Overall we are really happy with the results.  One exception was that the light in my closet wasn’t bright enough and left eerie shadows.  Fortunately that was an easy $30 disc light swap that we could do ourselves.  Though now we have an extra light in case one of the other ones breaks sometime before the 22 year expected life of the new LEDs…

What kind of lighting do you have in your place? 

(Hopefully) the Conclusion of the Water Filter Saga

We have been trying to get a whole house water filter installed in our house since last summer.  Last week we finally achieved installation.  You can read about the saga from Summer to January here.

We finally got the plumbers to come out again after the shed misadventure.  This time the owner said he’d come out himself.  So he did.  And he said that there was no reason that the side filter stuff had to be spread out horizontally, with some high tech plumbing it could be stacked up vertically.  He’d get back to us to schedule in the next week.

He didn’t get back the next week, but a week or two after that either he got back or DH called again.  The new estimate was $1700, which is about $700 more than the original estimate, with a promise that it would cost less if it ended up taking less time.

The plumbers came.  It took a day and a half.  We also had them replace the guest bathroom faucet while they were here since we noticed the old one flaking when my in-laws were visiting and DH had tried and failed to install a new one himself.  There were many surprises, like the water line doing another split where it was not expected to, and so on.  In the end they had to cut holes in a couple of walls which they did as unobtrusively as possible and then taped back up.  And we got the final bill of $1570, including the $30 to replace the guest bathroom sink faucet (it would have been $80 for that if they’d done it in a separate visit).  So they must have been expecting even more surprises than the ones they got!

Of course, there was no difference from the filtered kitchen sink tap or my filtered shower tap.  But the flavor of the water from the main kitchen tap is now unnoticeable which is a pretty big deal given how awful the water tastes around here.  And my hands didn’t tingle after washing them in the sink faucets.  DC2 has taken a few baths and hasn’t broken out in rashes after.  So zie doesn’t need to use our shower anymore unless zie wants to.

So… do I still wish I hadn’t bothered buying this?  I don’t know.  I’m glad we have it now (and given our current financial health, I don’t mind the ~2.5K it cost), but I’m not sure I’m so glad that it was worth 9+ months of hassle (unlike the amount of glad I have for other 9 month projects, say, my children, though I guess this was really just intermittent hassle and we could have pushed harder to get this done quicker, unlike babies where pushing only works right near the end).  If we didn’t have the under the sink filter and the shower stall filter, then I might be feeling differently about this, but it would have been so much easier just to get $80 shower filters for the other two showers.  At least this one isn’t supposed to need to be replaced for another 10 years…

Next up:  Kitchen renovations.  We plan to dip our toes in that water this summer.  We’ll see what happens.

Ask the grumpies: Pay for renovation in cash or take out loans?

Ellie asks:

I am moving to take a new job and have been fortunate enough to be able to buy a house in New Town right off the bat. There is, however, some fairly significant work to do on said house, also right off the bat. I will have enough cash from the sale of my house in Current Town to cover the cost of this work, but am wondering if I should. Given what’s going on with interest rates, would you pay for renovation work in cash? Or take out a second mortgage/HELOC to cover reno expenses and invest the house proceeds? Once moving expenses work their way through the cash flow pipeline, I would be able to pay off a second mortgage pretty aggressively.

I feel like this should be a relatively simple opportunity cost calculation, but somehow it doesn’t feel as simple as it feels like it should. Secondary question: Is there any way to blame the Ongoing Unpleasantness for making this a harder decision that it ought to be?

Well, if you’re asking what we would do, we would pay in cash.  It’s possible you could open a HELOC in case of emergency and then just not use it unless there’s an emergency. But, we also left carpet in the childrens’ bathroom until our mortgage was mostly paid off (and #2 doesn’t even own a house), so we may be too risk averse.

In terms of what is optimal:  If this is just a short term cash-flow thing, then you won’t be wasting much time not being in the market and can put the moving expenses into it once they’re done.  Second mortgages are a hassle and sometimes you are not allowed to prepay them or you still have to pay for mortgage insurance even after you’ve hit 20% loan to value ratio (this will depend on the mortgage terms– some of them are pretty nasty).  HELOCs tend to have interest rates that are higher than your first mortgage and make the uncertain gains of the stock market less attractive compared to the certain losses of the HELOC.

If this were a longer term thing in terms of repayment, say, more than a year, you’d want to look at the bigger picture more carefully and it might be more worthwhile to take out some additional debt (probably the HELOC rather than the second mortgage just because the hassle factor is smaller, but intelligent people will disagree on this).  Mainly the margin I would be looking at would be an employer match for retirement.  If paying in cash for renovations means that your retirement savings isn’t going to happen, then I’d take a long hard look at that– what renovations need to actually happen, and what are interest rates on loans?  Getting an employer match will blast past most interest rates, even high ones.  Then after that you’ll have to think about whether you’ll remember to set up more retirement savings once you have money again– if not, then you might want to set that up and take out more loan just so you don’t lose out on retirement savings by not getting around to setting it up.

The Ongoing Unpleasantness makes long-term planning difficult for many people.  Uncertainty at large makes things difficult at small.

So:  tl:dr

If you’re going to have the money in a few months, pay in cash.
If it’s going to be longer, make sure you get your employer match for retirement and take a loan if you have to.
Then: think about hassle, interest rates, and how likely you are to set up retirement savings later.

Update with some numbers:

The total cost of the work will be in the neighborhood of $40,000. So a very decent chunk of change that could do a lot of things. Once the down payment on the new house is made, I should have about $59,000 left of the proceeds from selling my current house and I have $40,000 or so cash in savings. I don’t have any other debts that would be logical first priorities—student loans and car are paid off, and credit cards are paid in full every month. But there will be some decently expensive travel & transition costs in the immediate term, as well as some concerns about cash flow because the new job pays 9-month contracts over 9 months, without the option of distributing payments over 12 months. So there will be a couple of months between the last paycheck from my current position and the first paycheck from the new one.

It looks like the local credit union there is offering home equity loans at 4.75%.  [No numbers for a second mortgage.]

Investing options are… my Roth [IRA and] my TIAA-CREF [presumably a 403(b) through work].

One thing to remember is that you’re most likely not going to have to pay all of the renovation costs upfront.  So it is possible that some of the bills will not come due until after your reimbursements have come in, possibly after your paychecks have started (depending on how long things drag).  You won’t need to decide on the IRA until April.  It sounds like you will have enough leftover that you should be able to start your retirement savings via direct deduction from your paycheck without worry when school starts.

Given the numbers above– the HELOC rate isn’t terrible, but it’s not low enough to make investing the difference a slam dunk.  Personally I’d figure out how much you intend to contribute to the 403(b) and get that started with the school year (so that it goes on auto-pilot) and then decide on the IRA after all the renovation stuff stuff has been figured out or April happens, whichever comes first.

#2 says:  Pay cash because it takes time to open a HELOC (apply, get approval, etc.) and you want the reno done ASAP so you can move in and not go insane.

Grumpy Nation:  What are your thoughts?  Any experiences with HELOC/2nd mortgages/renovations/etc.?

Ask the grumpies: whether or not to purchase insurance

H.I.P. Person (Home Insurance Purchasing Person) asks:

How do you decide if you need insurance for something? We are updating our home owners coverage and they are peddling the following:

1) service line coverage –  up to $10,000 per event
2) systems coverage (a/c, hvac, water heater, furnace, and the like) – up to $50,000 per problem
3) sewer back up (?? not sure of max coverage)

We live < 75 miles from the coast; <20 miles from two major water coastal inlets but  not in a flood zone. What hurricane related insurance should we own? The policy comes with wind/water but not flood and they don’t really want to sell us flood (they are offering #3 instead).

Are any of these worth it?  What price point would make them worth it or not?

DISCLAIMER:  We are not financial advisors.  Get advice from real professionals or do your own research before making important monetary decisions.

So in economics, you purchase insurance when the expected utility of the insurance is greater than the cost of the insurance.  So, assuming you knew how your utility function was shaped (the important part for this purpose is that you know your coefficient of risk aversion, in this case specifically how much you hate the possibility of loss), and you know the probability of a bad thing happening, you just multiply that probability by your expected utility plugging in the amount you’d be out if the bad thing happens and then add the probability that the bad thing doesn’t happen and multiply that by your expected utility plugging in the amount you’d have if the bad thing didn’t happen.  Problem is… in reality, we usually don’t know the probabilities of these negative events occurring (or even what those negative evens could be!) and we definitely have no clue about what our utility functions look like.

So how does one decide what to get insurance on in reality?  Well, if you have rough ideas of probabilities, you can look at the expected value of something happening.  Expected value is like expected utility, but it tells you what the break-even point is assuming you have no emotions.  You’re neither a gambler nor risk averse.  But risk averse you can look at those numbers and think to yourself, “How do I feel about this calculation?”  In general, the insurance company is out to make money, so they’ll be charging more than the expected value of the thing happening, but does the amount more that they’re charging seem reasonable to you?

If you don’t know the probabilities of something bad happening, you can still play with worst case scenarios:  If the bad thing happens, what would you have to pay out of pocket to fix it without insurance?  What would you have to pay out of pocket with their insurance?  Is the peace of mind for the difference between those two numbers worth what they’re charging?  (And again, if you have rough ideas of how probable these events are, you can factor that in as well).

Another thing to do is to google around, preferably with reputable sites, to see what kinds of insurance are usually a good idea and what kinds are generally scams.  You can ask people around you too, though people often do things that don’t make sense if there’s good marketing on the part of the insurance company or if they’re more credit constrained or risk seeking than you are.

An important thing to note is that you want insurance to insure against risk.  You don’t want it as a pre-payment for things you’re going to pay for eventually.  You don’t want a high monthly cost if you can avoid it by sharing some of the pain should disaster strike through a higher deductible.  The goal isn’t to save money, it’s to smooth your consumption over good and bad states of the world.  Don’t try to beat insurance– in the best states of the world you give them money and they never give you money.  But you want it there when disaster strikes if you can’t handle the disaster on your own.

If it were me, I’d definitely eschew the service line coverage unless it was really cheap– we can afford a 10K emergency.  Since the limit is capped, it is not actually useful insurance unless paying up to 10K would be devastating.  (Capped insurance is often a red flag– if they stop paying after a certain amount is spent you may be better off self-insuring because if something really terrible happens they’re not going to be much use, and self-insuring means you’re not paying for the additional administrative costs of going through them.)

Systems coverage again, we probably wouldn’t pay… replacing a/c, hvac, water heater, furnace etc. is all stuff that has to get done some time anyway (and none of these should cost 50K, unless that’s including the damage after a water heater explodes or something) so paying them is like pre-paying for bills you’re going to have, but it is likely you’re going to have less choice about how to make those replacements and you’ll be paying their administrative costs over what you’d be paying if you did these things yourself.  And, again, it’s capped.  This is unlikely to be good insurance.

Sewer back-up is the only one of these that doesn’t sound 100% scammy.  Check all your other insurances to see if this is covered under them.  Estimate how much a sewer backup could destroy.  Make sure that it’s unlimited covered and not capped and there are no other strings attached.  Think about the probability of this happening.  Look at how much they’re charging for it.  Then go with your gut.

We have no idea about hurricane insurance.  The internet has a bunch of pages about it, noting you should get wind and flood on top of home, but I’m not getting a good idea of what numbers you should be looking at or even how to make that calculation.  You may also want to look into the different deductibles they offer, because none of these sound particularly cheap, but it may be that if you have a high deductible the insurance cost will be more reasonable (assuming you can afford the deductibles).

Good luck!

Grumpy Nation, do you have any better advice for H.I.P.?

 

Ask the grumpies: Worthwhile renovations?

Chacha1 asks:

Well, I am deep in the throes of remodeling angst so this is a house-and-home but also finance-related topic that people might like to discuss:

What do people think was the BEST money they spent on home improvement, and what do they wish they had left alone?

This is partially a cost/benefit question, because a lot of people think of owning a home as an investment (I think of it as a forced savings plan with really high barriers to entry), but also a Greatest Domestic Happiness question. e.g. I read anecdotally that people love the idea of a huge multi-stage bathroom (separate tub & shower, toilet in a little room with door, double sinks) but personally I see that as a gigantic waste of space. And from a ROI perspective it is also, not anecdotally, a waste of money. So has anyone done such a thing, are they happy about it a few years down the line, etc.

Note, as renters we are not considering any such thing. For us it’s more “do we get the entry door with sidelight that requires reframing or do we choose a standard door with half glass which would mean we can replace BOTH entry doors.” (You can probably guess which way I’m leaning.) :-)

This is definitely a personal question for each homeowning (or formerly home improving) individual of Grumpy Nation to weigh in on.  We have done remarkably little home improvement other than replacing things when they break or when feral kittens or toddlers destroy them past the point of regular aesthetics.  I guess our kitchen looks nicer without gingham wallpaper and our window dressings look better with new blinds.

We have one of those multi-stage bathrooms as our master bath.  The first few years it made me feel kind of dirty, since it literally is the same size as our first efficiency apartment (100 sq feet).  I’ve gotten used to it, but don’t get any additional happiness from it than we would get from a normal bathroom like we have in our MIL suite.  I don’t feel at all deprived at hotels or visiting relatives.  The water closet is one of DH’s favorite places to escape when the kids are going wild– if we can’t find him, chances are he’s in the water closet.  But I’m sure a normal-sized bathroom would function the same way so long as there’s a door to close!

So, grumpy nation, what home improvements have you felt were worth it?  What home improvements do you regret?

Ask the grumpies: if I want to give my kids a huge amount of money as young adults, how should I do it?

Sandy L asks

Should I buy my kid a house or pay for tuition?

Student loans can be deferred etc. if the kid is paying their own way they may be more serious etc.

Tuition. The pay your own way thing is BS. Here’s our deliberately controversial post on that topic. You can compromise by having them pay their own extras (clothing, meals out, etc). Then they’ll have the same experience of learning how to budget and not living high on the hog but without the huge amounts of debt at the end.  Also, note that if you’re paying tuition directly, it isn’t subject to the gift tax.  “Under current IRS rules, a payment made directly to an educational institution to pay for the tuition of a student does not count as a gift to the student for gift tax purposes, ” according to fastweb.

Buying a child a house could lock the kid in place and create additional expenses.  A house is a lot of responsibility when you’re just starting out, and trying to deal with selling and repairs on top of job searching and dating and hobbies and anything else that young people do might be more hassle than help.  (And if the kid decides to sell the house in order to pay off hir education, basically you’ve just given realtors a bunch of transaction fees and paid gift taxes for nothing.)  If you’re only talking about providing a downpayment, that’s even worse because a mortgage is a big fixed expense and the kid might not be able to sell very easily if the house goes underwater and they get a job elsewhere.

What do you think Grumpy Nation?  Any experiences with either?