Boston Gal's Open Wallet

I guess this could be considered a personal question so you don't have to answer. I know you mentioned having to get new windows (and I have no clue how much that might cost) but why are you keeping $86K in savings? Why not invest that money (outside of what you consider your e-fund)? Or, unless your investment condo mortgage is at a really low interest rate, why not pay that off in full?

 

Hi Geckogirl,

ING account is my emergency account - so that cash stays put.

The HSBC account is my spending account. I have improvement projects planned for my primary residence. That cash will pay for fixing my "fixer-upper". It is also there to eventually pay for a "new" car (once mine needs to be replaced), vacation spending, etc.

So, it might seem like I have a lot of cash on hand - but it is all ear marked for specific purposes.

If I could pay off my investment condo's mortgage I would - but I don't think it makes sense to pay that off to then borrow money to make home improvements....

 

hi,

Usually financal statements are for previous time periods e.g. 2006 annual reports are released in early 2007, Q1 income statement released in early Q2. I guess the same would go for Net worth statements as well. So the post should ideally be labelled as March's net worth.

Just wanted to let you know...

Btw, great blog... Very informative...

Kevin

 

Seems like a lot of money came in this month from saving - like $7000. Do you ever do an income and spending break down as well as the net worth balance sheet?

 

Hi bostongirl -

Not sure if its too personal but with your strong hold on finances ... what is your viewpoint when you walk down that aisle? I mean, not sure if you are planning for one soon, but its definitely a new challenge from coupledom.

dragonfly ...

 

Hi DFly,

It is pretty simple and can be summed up in one word - prenup.

 

I've been wondering how pfbloggers include their home equity in their net wroth statements. I mean, I get that it's fair market value minus mortgage/2d mortgage/home equity loan/whatever, but how do you arrive at a number for fair market value? Is it whatever's on the insurance assessment? Based on zillow? What you paid for the property multiplied by the rate of appreciation in the locale? A blind guess? I have been using my insurance assessment, but that wouldn't take into account market appreciation, cosmetic improvements, or renovations. How do you do it?

 

Hi Mattie,

I wish I could just use Zillow since that would be an easy 3rd party valuation. However, the values in my neighborhood are all over the place and frankly it does not really reflect true market value.

I keep pretty close tabs on the homes that get listed for sale and then are sold near my current properties. This gives me a pretty good idea of what my home should be worth. I value my investment condo at the low end of the valuation scale. My philosophy is I would only sell it I reached some crisis point. Given that scenario I would be more likely to accept less for the property to unload it fast.

My primary home is valued more at the top of the range. That is because I would be in no rush to sell this home. I would happily wait for the right price before I would leave.

Now, that may not be sound logic - but it is my logic. Appraising a homes value is not scientific. While it is based on some sound numbers (comprable sales, $ per sq footage) it is also based on some fuzzy numbers (sunny rooms more valuable than dark ones, view value, popularity of home style, "charm").

 

Bronx chica... love your breakdown especially of showing it on an excel sheet(maybe it is or not). This year is more important than last years because I'm keeping track of everything I earn/spend and hae been opening up more accounts to save.

 

I use the purchase price of my house in my net worth statements, even tho current market value is about twice that amount. Why do I use the lower figure? I guess I'm not sure if prices will plunge again before I sell, and also I have sort of mixed feelings about including primary home equity in net worth statements, so this allows me to include some equity but not what might end up being an overly optimistic amount.

Purchase price in 2004: $70K
Current mortgage balance: $49K
Houses on my street selling for: $130K-180K.

 

Boston Gal,

Your condo is valued at $145,000 and you only have $29,462.20 left on your condo's mortgage. Why are you so unleveraged? Your Internal Rate of Return (IRR) is likely pretty poor. If it were my investment property, I would pull out some of that money. You could invest in your taxable portfolio and make a much higher long-term rate of return. Or you could use it to purchase another investment property. You should have no difficulty generating a small bit of positive cash flow even after pulling out a large chunk of that equity. Am I missing something?

I enjoy your blog. Thank you for your response!

- A Reader.

 

Boston gal,

I have an IRA and a 401k with my company, but don't know why I shouldn't roll the IRA into the 401k to take advantage of company match. I notice you have 4 retirement accounts. Is there a good reason to have more than one?

 

With your Brokerage investments, do you favor on line vehicles such as Scottrade or Etrade? Have you used an online brokerage? Which do you think is best?

 

Do you know about Countrywide's online savings account? They pay 5.40% for balances exceeding $50k and 5.25% for balances between $10K (I think) and $50K.