Monday, March 19, 2012

the path (ix)

Two years ago, I wouldn't have classified ourselves as people who had been impacted by the recession.

Back in 2010, homes all around us were foreclosing and people were losing jobs. But we were relatively stable. We owed less on our home than it was worth, and I was gainfully employed by one of the top-earning companies in the world. Although Charlie had been laid off in 2009, it was his decision because he was not willing to work full-time and accept a relocation to Los Angeles. But almost immediately after Charlie's employment ended, he was employed again -as his own boss - when his client called and asked if he'd still continue to do work for them.

Even though we'd taken a substantial hit to our annual income when we had four children in less than three years and gave up the equivalent of one full-time salary so we could raise our children, we never really felt a financial pinch when we were in California.

At least not until we sold our house in California and bought a new one, in one of the strongest real estate markets in the entire country.

If we'd been wise enough to know, years ago, that: 1) we were going to have four children in less than three years, and 2) we were living in an economic bubble that wouldn't just pop, but rupture and turn gangrene, we might have done things a little differently. We might not have opted to buy and drive three brand new cars (all at once) and spend more than $20K landscaping our tiny front yard. If we'd been more savvy, we might have taken that money and invested it in to gold. Or better yet, CorVel, First Solar, Emergent BioSolutions, Select Comfort and Entropic Communications.

Alas, life is for learning. And hindsight is always 20/20. Although I think it's important to note that we thoroughly enjoyed our three new cars and beautiful landscaping. We have some wonderful memories of that time and greatly enjoyed our lives.

Enjoying Life is Important, I say.

But because the housing bubble in the community where we'd been living in San Diego was having a meltdown of epic proportions, when we sold our home in 2010, we lost a large sum of money. Of course, everything is relative, so the sum that we lost might not be a lot to some people, but to us it bordered on catastrophic since we were planning to move and buy a new home. Granted, that money had always been "on paper" and wouldn't have been realized until we actually sold our house … so some might argue that money was never ours to begin with. (Although it was our neighbor's, who sold his home two years before we sold ours, and walked away with $300,000 more than us. And he didn't even have a fancy front yard. Pfft!)

When we arrived in Virginia, we went searching for homes. Within less than a day, Charlie and I both realized that we were way out of our league and there was no way we would find a home in the location that we wanted, with the pittance we'd have from our California home sale. So we said a prayer, crossed our fingers, and bumped up our price range. The next day, we found the house that we're in and we knew from the moment we pulled on to the street that this was it. The neighborhood was idyllic. The setting was picturesque. The utilities were sub-grade.

And the house … well.

The house had tremendous potential.

We grabbed our calculators and figured out what we needed to do to get in this house. And then, in the midst of our dual nervous breakdowns, WE DID IT. I'm not so sure Suze Orman or Dave Ramsey would agree with our mentally unstable strategy, but I can truthfully say that in this moment in time, I have absolutely no very little regret for the choices that we've made.

I certainly don't regret moving to the east coast.

Nor buying this home, in this neighborhood.


Because we lost so much of our equity in California, we didn't have as much to put down as we would have liked. So I borrowed 20% from my 401K to supplement our down payment. As a result of that loan from myself, to myself, our mortgage is virtually identical to what our mortgage had been in California. Which means we can afford it on my income. Yay!

However, there's definitely a financial stress here that we didn't feel before. Not just because my income has been reduced so I can pay myself back, but because we're in a house that hasn't had a single upgrade in almost 50 years and there's a lot of work to be done. As in, sometimes I think it might cost less money to just knock the whole thing down and start over.

Also, the cost of living in northern Virginia is very high. For example, in California, we belonged to a community with a pool, tennis courts and an abundance of parks. We also belonged to a YMCA that was two-miles from our house and cost $75.00 per month. There were two-hours of free babysitting and discounted gymnastic lessons, that came with an "open gym" every Friday. Charlie swam Masters that was included in the cost of his membership.

Here, we joined the closest YMCA but then canceled after a month because the 45-minute drive (each way) was getting too long; especially with all the horn-honking wackos on the road. So we joined a local community recreation center that cost almost twice as much as what we'd been paying in California. There is no gymnastics, nor babysitting, and the Masters swim fee is $250.00 per month. When I looked in to signing our children up for a seasonal swim team at a local facility, I audibly gasped when they told me it would cost nearly $3,000. PER CHILD.

Those expenses might have been more palatable if I'd had any kind of pay increase when we made the move from west to east. But alas, my income has not changed one iota since we transferred from California. That's right, I traded my relaxed home office environment for a stressful corporate headquarter environment, in a more expensive environment, where I'm easily working twice as many hours, for the same salary. Recently I noticed that I have a pattern of freckles across my forehead that very clearly spell out the word, "SUCKA."

If we didn't live in such a picturesque environment with such wonderful neighbors, I believe I'd be a lot more frustrated about this situation than I am. But when I look out the old windows that we inadvertently painted shut and can no longer open (oops!), I'm filled with a feeling that can only be described as convicted. Convicted that there HAS to be a God and I'm supposed to be learning a BIG lesson, here.

Based on the value of homes in this neighborhood, we believe that any improvements we make will increase the value of our home and will make it more enjoyable for us to live here. Remember my motto? Enjoying Life is Good. So for the first year that we were here, just to make this home more livable by our standards, we took whatever monies we could find hidden in the cushions of our couch and from companies that would offer 12 months, no interest and we put them in to basic improvements: Tree removal. Chimney repairs. Carpeting in the basement. Closet modules. New interior doors. Lighting, electric, paint.

Within six months, we had spent a small fortune and hadn't even touched the big ticket items like the kitchen, bathrooms, windows, hardwood floors, roof, partially finished laundry room, uninsulated garage (directly beneath our children's room), furnace, water heater, HVAC, crumbling 500-linear foot asphalt driveway and landscaping. There's definitely more to do - but I can't think about it too much, or I find myself slipping in to an overwhelmed coma.

If only we had an extra $300K floating around…

(Don't think about it, Jen. DO NOT THINK ABOUT IT.)

On the upside, our house has increased in value ~10% since we've moved in and we really do love this neighborhood which is a hidden gem in this area. On the downside, because we're still recovering from the expense of moving from one "finished house" to a "very needy new/old house", it feels like we're constantly broke. But on the upside of that downside, this year we're on track to pay off every bit of debt that we've accrued, including a fast track to pay off all the money that is still owed to my 401K. But on the downside of that upside, the mind wonders, what would we have done with all of that money if we weren't funneling it in to an old house? I'm guessing that first class travel around Europe for SIX MONTHS is a distinct possibility.

All I know is that debt is a prison and I don't want to be captive. This birdie needs to spread her wings and fly. Even if it means that she has a funk old kitchen and master bathroom with a hole in the wall directly to the cinderblock. The draft that comes in, makes up for the defunct ceiling fan. Bonus!

As a result of my DESPERATE desire to be completely debt free, Charlie and I are currently credit-cardless. Because a few months ago, when we started entertaining thoughts of finishing our floors and having new baseboards installed, I had a CTJ moment and yelled, "THIS INSANITY HAS TO STOP!!!" I then ran around the house and chopped up every single credit card in our possession. I was so out of control (or in control, depending upon how you look at it), I inadvertently chopped up our public library cards.

We've estimated that if we were to stay the current course with no excess spending, we'll not only pay back all of our debts this year, minus our house payment, we could pay off our mortgage within the next five years. And then, if we want, we could do all the home repairs over the next two to three years. All we need to do is stay the current course. The current course that, provided they don't move us to Texas, feels very stable and will offer me a pension and medical benefits when I retire at the age of 55 (aka: The Golden Carrot Course).

The problem is, the current course has brought me such angst the past 20 months, I've considered selling off whatever we can, cashing out the rest of my 401K and building a cabin like Thoreau, in the middle of the woods. I will hunt my own meat and sew my own pelts and our children will learn to love acorn salad (aka: The I Can't Handle Reality Course).

Charlie has a hard time with that scenario because he thinks I'm irrational. As for me, I think he is oblivious to the stress I've been under that could drive even the sanest people to do crazy things. Like, for instance, chop up public library cards at 2AM.

So as I wonder what we're going to do, I gaze out our window that has been painted shut and the sight of our four children running around our beautiful yard catches my eye. They are playing with some of the amazing neighborhood children; including the family of nine that just moved in across the street. Since we've moved in, four other families with children the exact same age as our children have also moved in and our kids have become the best of friends. These experiences that our children are having, running across huge lawns, hiking through forests and jumping in creeks, are visions from story books. For a child, does it get better than this? Everyone is smiling and laughing and happiness permeates every nook and cranny and enters in to the space where I sit working.

On a Sunday.

Anyway. This is just a long rambling post that makes me think about our life journey. And money. And what we are supposed to be doing on this life journey, with the money that we have worked so hard to earn. Are we supposed to be living in fancy houses within wonderful neighborhoods with wonderful people that will hopefully, give our children a lifetime of wonderful memories? Or are we supposed to be living more simply and less stressfully, squeezing as much joy out of life as we can, each and every day?

The destination seems obvious.

The path to get there isn't always so.