April Mortgage Payment: Posted payment half a month early

Last month (March):
Balance:$26,923.26
Years left: 2
P =$1,103.46, I =$110.94, Escrow =$788.73

This month (April):
Balance:$25,815.43
Years left: 1.9166666666666666667
P =$1,107.83, I =$106.57, Escrow =$788.73

One month’s prepayment savings: $0

We sent off the mortgage payment for March before February ended.  By the beginning of the second week of March it still hadn’t posted.  So we called up and were like, what happens?  They said to wait a few days and if it doesn’t post, then call up and make a payment over the phone.  No late fee until 3/15.

So we did.  On 3/11, it still hadn’t posted, so we paid via phone.

On 3/13, we checked our account and not only had our 3/11 phone payment posted, so had one on 3/9!

Which means that we paid our April mortgage payment early.  Luckily it didn’t post as a pre-payment after all that deciding to stop prepaying!

(In other news, it looks like escrow is going up $20/month starting with our May payment.  Fun times.  Fun times.  Not really.)

What do you do when a payment doesn’t post after you’ve sent it?  Do you avoid late fees or being double-billed?

Recessed lighting and energy efficiency

We had an energy audit done on our house (free from the utilities company!)

We thought he’d go around the house with a fancy heat gun checking for drafts or something, but he didn’t.  But no, first order problems don’t require any fancy equipment.

What were his main suggestions?

1.  Put a tent over the stairs to the attic on the attic-side in the air conditioned access part.  He was shocked that we have attic access from inside the house and not just from the garage.  This has turned out to be difficult because there’s an inconveniently placed pipe up near this access point in the attic.

2.  Do something about the old-fashioned recessed (bucket) lights.

3.  Get black screens for our sun-facing windows.  (These look pretty creepy from the outside, like the windows are painted black, but our HOA must allow them because all sorts of folks in our neighborhood now have them.)

The recessed lighting has a light in a can, basically.  The cans (from before 2004) have holes in them because if they don’t, then the lights get so hot that it’s a fire hazard.  Because of the holes, the hot attic air comes down into the house because of some sort of pressure convection thing.  When the air conditioner is on, it pressurizes the house which means it blows cold air up into the attic.  Not only that, but these lights are supposed to have no insulation within three inches so that things don’t get so hot that they catch on fire. When people do temperature readings, you can see where the recessed lights are.

Since then, they’ve made new models that don’t have holes that you can put insulation up against.  Also compact fluorescent lights and LED lights are not as hot as regular lights.

He said, we’d really like to seal off those holes.  Our choices:

A.  Switch out with the new cans.  They may not be air tight but it’s better than just the holes.  Just like any fixture, they have a light shape and maximum wattage.  Their maximum wattage is lower than the old-style cans, but that’s clear on the can.  With this option, you can also do B because the cans themselves are metal and still transfer heat into the house.

B.  Buy covers that are insulation tents that you can just drop over the cans.  These can be used with the old-fashioned hot bulbs, but you have to be sure to open vents within the covers for safety reasons.  But then there’s a hole again.  With the modern lights you don’t need to open the vent.

C.  Tape off the holes in the current cans.  You can only do this with the low-wattage bulbs.  The internet is full of horror stories about what a bad dangerous idea this is.  We have opted not to do this one.

We have 9 of these recessed lights.  DH switched out 7 for LED and 2 for compact fluorescent (we’d already swapped those out when the previous bulbs burned out).  Finding them in the attic was difficult– one of them was buried in insulation underneath the air conditioner and took 20 min to find.

DH is concerned that if we just do option B that at some point in time someone will put in a bulk that the fixture says is ok, keep the vents closed, and it will start a fire.  Who?  Maybe a tenant or someone who buys the house after us… something small probability but a scary one.  We could remove the tents prior to someone else living in our house, but we’d have to remember to do that.

So most likely we’ll go with option A and option B combined and have an electrician do it.  DH has been banned from home wiring projects after a mishap wiring a fan.  (This ban is ironic given his educational background and the other types of home improvement projects he has not been banned from.  But an alive husband is the most important thing.)

How much will that cost?  Well, the new LED lightbulbs cost ~$30 each, so ~$210 for that.  The new cans are ~$10/each, so ~$90.  The tents are ~$15/each on the direct webpage (the amazon link above is more pricey), so ~135.  We’re not sure how much an electrician will cost– that’s something we need to find out.  But this little project will most likely cost more than $500 total.  How long will that take to pay for itself in lower utility bills?  No idea!  But our summer energy bills are pretty awful, so it might be less time than we think.  If only we could also do something about the water bill.

Have you done an energy audit?  What do you do to keep your energy costs down?

The love language of economists is money

I actually just said this to my associate dean who stopped by to say I’m doing really well in Google analytics.  Which was nice of him.  I said I felt all warm and fuzzy, but then a little warning bell went off in my head– warm and fuzzy cannot substitute for showing me the money.  So I added that I hoped it would show up in my percent raise next year.  After all, I noted, money is the love language of economists.  He said he’d noticed that.  Then skedaddled away as quickly as he could.

Was that the wrong direction to go?  Maybe.  As a woman I’m damned no matter what I do.  But I also have options and I know I’m underpaid (compared to similarly impressive [but male] people).  On top of that, our raises were figured out in the most stupid way possible last year and I would like to NOT see a repeat of that.

He may not stop by to sing my praises again, but hopefully he’ll keep this in mind when setting raises next year.  I also put in a good word for two of my (similarly underpaid, but similarly impressive) junior female colleagues.  We’ll see.

More thoughts on class

We love being upper-middle class.  Upper middle class is a wonderful world.  #1 never ever wants to go back.

Visiting DH’s family for the holidays provides perspective in many ways.  They have a lot of money pressures that we don’t have because given our current economic class, we don’t have anything to prove.

One of the weird things about our current social/educational/economic class is that … for example… I don’t throw away a sock just because there’s a small hole in it.  I don’t really care if there’s a hole in it or not.  The hole doesn’t say anything about me or my needs.  I don’t wear thick socks often enough to need a bunch of extras, so some of the socks with holes end up getting packed when we visit the in-laws over break.  I don’t really think it’s a big deal, but my SIL comments.  My MIL got me thick socks for Christmas this year.

And we don’t have car payments because we never bought an SUV.  Two kids in carseats fit into a 10 year old Hyundai Accent.  (And we never did get the cosmetic work done when DH’s Civic got hit while parked.  I wonder if they think we’re misers.  Though my SIL must not have noticed, or she would have said something.)

Another example– we’ve talked about the crazy gift-giving before.  We only get that from DH’s side of the family.  So Santa just does stockings and we get a small gift for each DC (this year it was a winter coat for DC1, nothing for DC2 because ze is too young to notice who gives each gift).  My parents mainly get us books.  (My parents are kind of weird class-wise.)  This insane amount of gift-buying is standard for DH’s family– even when they didn’t have money when DH was little, they still scrimped and saved to spoil their kids at Christmas.  DH’s extended relatives who are even less well-off go into deeper debt each year to provide presents– spending more money on each kid (and on their worse-off extended relatives) than we would spend even if DH’s parents didn’t provide presents.  It’s a way of proving that they’re not poor that keeps them from ever getting ahead of their debt.

We also haven’t had to buy much clothing for our children other than shoes and the occasional set of underpants or socks because of the generosity of DH’s parents and hand-me-downs we’ve gotten from friends, colleagues, students, etc.  Families we know making hundreds of thousands of dollars/year in Northern CA have extensive hand-me-down chains.

DH’s brother’s (SAH) wife was talking about how they get that huge amount of gifts and clothing new from both sets of grandparents, and now that they’re having a third child (whose gender will presumably match the gender of one of the first two children), they are buying more things on top of that.  Why do they buy clothing when the children already have more clothing than they could ever wear?  Because children shouldn’t wear hand-me-downs.

We are totally on board with hand-me-downs.  But many of the hand-me-downs we get are very nice quality (because they were presents to our likewise-affluent friends).  Of course, we also don’t mind putting our toddlers in heavily stained (but otherwise clean) clothing either– they have both been very good at adding additional stains.  Nobody that we work or socialize with is going to think that we can’t afford nice clothing or that we don’t take care of our children if they wear a shirt with stain marks across the front.  We’ve got the luxury and privilege of people not making negative assumptions about our income or net worth based on what our children wear.  (Also, DC1 wears uniforms to school.  And I don’t have to go to SAHM playgroups.)  We also have the luxury of handing the clothing down again and being able to feel affluent about that, rather than needing to sell it.

Being able to buy high quality clothing that lasts a long time also means that it’s easier to buy classics that don’t really go out of style, which means they can be worn longer.  I have a lot of basics in classic styles.  When you live an H&M lifestyle, you have to keep changing out your clothing because it’s easy to tell when something goes out of fashion, and the quality isn’t good enough to keep it for 30+ years even if it weren’t fashionable.  Current fashion changes mean I can mix and match sweater sets rather than wearing matched sets, but I can still wear the same pieces, just in different combinations.  And again, nobody is going to think I’m poor because I’m wearing a (thrift-store purchased) 10-15 year old Ann Taylor or Brooks Brothers business casual outfit because nobody is going to know.  The same isn’t necessarily true of Walmart’s finest (though I do have some t-shirts from Walmart that I got in high school that are just now wearing out…).

As a (mostly lower middle class, occasionally genteel poor, always worried about lack of money) kid there were definitely more pressures to spend for appearances’ sake.  But people didn’t just tease me about the rusty VW bug my mom drove (that I loved) or my lack of an Express bag (I eventually got one)… my material possessions were pretty low on the list of things I was bullied about (and the only thing that was external to me).  It was easier for me to just reject their views of fashion and go completely into my own funky style (which involved a lot of thrift-store hats), at least until grunge came into fashion (a style I completely embraced).  But those pressures are gone among the people we associate with and we only see them in action when we visit DH’s family.

Feelings and privilege are complex.

Now, we’re in the educated liberal crunchy upper-middle-class.  Not the wealthy (lower) upper-class.  We don’t rub shoulders with movie stars or even corporate lawyers or financiers.  We’d love to be making that kind of money, but still living our crunchy upper middle class lives.  We hear from people who do rub shoulders with lawyers and financiers that there’s lots of stupid money stresses there too.  Cars and diamonds and so on are back to being status symbols.  Items are expensive not because they’re quality but because they’re in fashion.  It all sounds very nouveau riche.  Crass.  Obviously I must come from old money… or my parents are Northern Californians instead of Southern.  We probably have something we compete on or use as a class marker that we’re too blind to see, but it isn’t $tuff, and that saves us a lot of money.

Update:  This NYMag article is really interesting.  (It definitely does show that my family growing up is very weird class-wise.)

Do people judge you by how you spend your money or what kind of clothing you wear?  Do you have to spend money for status reasons or can you save money because you don’t have anything to prove?  How do you deal with the pressure of trying not to seem poor?

March Mortgage update: And why we’ve stopped prepaying

Last month (February):
Balance:$28,026.73
Years left: 2.083333333333
P =$1,091.24, I =$123.16, Escrow =$788.73

This month (March):
Balance:$26,923.26
Years left: 2
P =$1,103.46, I =$110.94, Escrow =$788.73

One month’s prepayment savings: $0

After a lot of time on Craigslist and Zillow looking at apartments and houses in Paradise, and quizzing people on utilities costs, and so on, and then sitting down and doing a bare-bones BOE about income vs. outflow, I started getting titchy.

If we 1.  stop contributing to my retirement next year other than the required 6% plus match (not counting the changes I made last month to max out the 2015 403(b)), and 2. stop contributing to 529s, 3. get someone to cat-sit for the cost of utilities rather than rent our house and 4. don’t cut back our frivolous spending, then, given only our take-home pay, we can afford to spend 2K/month on housing from our cashflow.

Of course, we cannot get a 2br/1ba apartment even in an awful part of paradise for 2K/month.  And we have our heart set on someplace in walking distance to school and public transportation and a library (that allows pets and has w/d and a dishwasher).

We planned for that though.  As of this writing, we have 72K just sitting in a savings account doing nothing waiting to be turned into goods and services.  Some of that is going to need to go to get our house painted [Update:  This has happened– we’re down $4500, but the bathroom is no longer shredded].  Some of that is going to go towards moving expenses.  Some of that will go towards travel costs to find housing, and deposits and so on.  But some of that is earmarked to go towards rent.  (And some of it will go towards weekend trips to places a day’s drive away from Paradise that I’m longing to show my family!  Camping!  Bed and Breakfasts!  The beauties of nature!)

We’re aiming for rent between 3K/month and 5K/month, depending on what we end up with.  We won’t know what we end up with until closer to the time we need to go.  The market seems to be 2-8 weeks before you move in.  And some of those 3K/month apartment reviews are really scary (maintenance badly needed but never coming, paper-thin walls and floors, etc.).  Many of them aren’t, but we won’t know what’s available when we need it– right now is a slower part of the year than summer and we only have a limited window for shopping.  Wiggle room is nice to have.

And even at 5K/month, we’ll still have wiggle room given our savings.

So why stop the mortgage pre-payment (thus freeing up 6K total that we wouldn’t have had had we continued those last three paid months)?  Because our scenario above assumed that other than the 2015 403(b), we wouldn’t be contributing to any tax-advantaged accounts.  And tax-advantaged accounts are a bigger priority.

Previously when we started prepaying without maxing out our retirement savings, that was in order to manage risk.  Pre-paying the mortgage meant that we could lower our monthly fixed payments in an emergency through recasting or get some of that money back when needed by selling the house while we were still young.  Now, with the mortgage balance so low, we don’t really need to get it down much lower in order to manager risk– we could re-amortize at any time and our monthly payment wouldn’t be much more than escrow.  It makes more sense to direct our money towards use-it-or-lose it savings.

So now these tax-advantaged accounts are a greater priority than mortgage pre-payment (with which we could save at most, 2K in total interest over the remaining life of the loan, at this point).  We can pre-pay the mortgage any time, but 457s are use it or lose it.  We might be IRA eligible next year, and that’s use it or lose it.  529s aren’t use it or lose it, but contributing early helps more than contributing later.  And there’s charitable donations… we’re not paying school for DC1 next year but we’re thinking of offering a scholarship to another student while we’re gone.  We’re not sure yet.

So that’s why we’re not pre-paying the mortgage.  Because we don’t want to cut our frivolous spending because we’re really not Mustachian (though we’re also not Vanderkamdian).  Because tax-advantaged retirement savings is a bigger priority than mortgage prepayment right now.  Because we want to enjoy our year in paradise without worrying too much about money, even the unexpected expenses.  Because we think 6K more in cash savings will make me feel a little less anxious.

(This is actually the first time we haven’t done *any* prepayment… given increases in property taxes, the bill is just a little bit over 2000, so I can’t round up to 2000 and rounding up to the next 500 is just too much.  I feel really weird writing a check that isn’t a round number.  Makes me wish I’d prepaid the escrow difference when I had a chance to keep the monthly payment under 2K.)

In which we pay an estimated tax penalty

So, last year, with DH’s unemployment and our various deductions, we ended up getting $500 back from the government at tax time, even though we hadn’t paid in estimated taxes.  So this year we figured we weren’t required to pay estimated taxes because Turbo Tax said we hadn’t last year.  We were wrong.  Why?

1.  One of my legacy stock funds (American Century Trust from back when my father took care of my investments) decided to sell parts of itself and cause a capital gain of 6K which it then reinvested in itself.  It did this last year but only for 2K and hadn’t done it for the previous 12+ years so I thought last year was an aberration.  I was wrong.  Now I want to sell the entire thing so I don’t get these surprises each year.  (On the plus side, when I investigated last year, this capital gains thing they do lowers the capital gains that will accrue when the stock is actually sold.  Still, unlike my father, I prefer my investments to be simple and predictable.)

2.  I was stupid and made major charitable donations Jan 2015 instead of Dec 2014 because I didn’t understand our state tax situation for next year because … yes I know I have a phd in economics don’t judge me.  (I suspect Brigitte Madrian thinks I’m stupid too.  This is one of my great sorrows in life.)

3.  The stupidest of the stupids… I ridiculously assumed that if we claimed 0 deductions on withholding that the government would take out about the right amount of tax for our income so I wouldn’t have to think about taxes on the wage part, just the non-wage income income.  That is apparently seriously untrue.  Yes I know we are how old and never realized this before… but we never had to stop paying estimated taxes for a year and then start up again (and we had bigger mortgage tax deductions…).  Gov’t withholding  on your wages is not enough once you hit a high enough income.  I don’t know why I assumed it would be… it’s not like they can take out larger percentages of your paycheck as your income goes up.  [Update:  The gov’t DOES take out the appropriate amount of income if you’re single (and work steadily).  And the way it does it is by taking a larger % out of larger paychecks (unlike Social Security which takes out the same % and then just stops when you hit the cap).  The gap between monthly payments as a single vs. as a married is substantial and at my income level seems to be assuming that the spouse is earning less.  Which, in this case, he really isn’t.]

4.  We’ve never actually made more than 150K/year before and hit the tax penalty.  So we thought we only had to pay 100% of last year’s tax, which we were sure we’d do because DH has been employed all year instead of unemployed half the year… turns out we actually needed to pay 110% of last year’s tax.  And somehow we paid something like 108% of last year’s tax, give or take.

Add to that are the things we knew were changing, like less housing interest, and it turns out we both owe the government a pretty hefty 4 figure check and have incurred a penalty of $31.  It’s a good thing we’ve been saving up.

By the time we figured this all out, I was basically like, $31?  Screw it.  (Should we figure out if we can pay estimated taxes for 2014 now to eliminate the penalty?  Whatever.  Screw it.  It’s $31.  Which feels like nothing when you’re already writing a check for over $6K.  Even though it really isn’t nothing, I’d pay $31 not to have to think about taxes anymore this year.)

Apparently if we pay our tax bill early, we can cut the penalty to $21.  At least according to TaxAct.

Now to figure out the estimated taxes for next year… because there’s nothing like following up a huge check with another huge check.  But hey, rich people problems.  If only I didn’t feel so dumb.

Ask the grumpies: Why did they stop taking social security taxes out?

High earner asks:

I just noticed that for the last few months of 2014, there was no social security tax deducted from my salary, and then in January, it went back up to where it was before that. Does that make any sense???

then a follow-up:

I think I just figured it out. Do they deduct the standard percent each month of the calendar year until you reach the maximum based on the annual taxable limit of $117,000, and then they stop deducting?

We at grumpy rumblings thank high earner for answering hir own question.  (Note:  In 2015, the maximum amount of taxable earnings is $118,500.)  When policy makers talk about eliminating the tax cap on Social Security, this is what they’re talking about.

We are pro- this tax cap elimination because it comes as a surprise to most people the first time they hit it!  (And it’s a lot more progressive than cutting Social Security benefits for people who need them, though some cuts make sense given longer working lives.) In the mean time, though, we wish we earned more money so we could take advantage of it…

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