I actually had another installment of this series written back in February or so. I ended up scrapping it when life rendered it completely wrong almost as soon as I’d finished writing it. 🤦
Remember in part 3, where I mentioned that I got my windows replaced?
Apparently such investments have side-effects…
…Like frying the HVAC system, because it’s oversized for the house, when said house is properly insulated. Nothing like spending a hot, rainy summer in a house with crap natural airflow, without air conditioning.
Don’t get me wrong, I’m not the type to turn on the AC the moment it hits 70F. I grew up in houses built in the late 19th and early 20th century, when electricity may or may not have been a thing, and air conditioning sure as hell wasn’t. But here’s the thing: houses built then were designed for airflow. Houses built in the 60s (and apparently with the idea that air conditioning will always be a thing and never fail for any reason whatsoever)? …not so much. It turns out, those giant wrap-around porches on Victorian houses serve a vital purpose to the livability of the inside.
Oh, and this happened after a leak in our upstairs bathroom destroyed our downstairs one (this poor downstairs bathroom, this is now the second time it’s been ruined and redone due to leaks upstairs since we moved in; yay, wet walls :sad_trombone: ) and we subsequently remodeled the upstairs one (the expensive part being the bathtub area, which was the primary leak).
And both mine and my husband’s health decided to go such that required medical help (and in my case, expensive supplements) to correct, lest we be reduced to blobs in the bed with no energy to do anything at all, except sleep all day. (The lesson here, kids, is to always make sure your Vitamin D and B12 levels are where they should be, lest they fuck up ev-er-y-thing.)
Oh, and all this happened after a string of bad luck with regard to employment for me, resulting in me working for only about a third of this year. I’ve managed to nearly double my hourly rate (as W2), though, so that’s helped during the times I’ve been working.
But what’s that mean for my financial plan? Let’s start with the inputs.
It all started back in February, when I’d reached my breaking point with the company I was working at. For reasons I’m not at liberty to discuss, my tenure there ended. Before I left, though, I learned about a fun little resource called Payscale and found out what I should actually be making. (“Doesn’t Glassdoor do the same?” More or less, but I’ve found Payscale to be more refined and accurate toward what I should be making, as opposed to just how a handful of companies pay, and it illustrates things like gender pay gaps for a given title, not just in general, but by years of experience. Using them both together might not be a bad idea, though.)
Suffice it to say, I was way, way underpaid, even more than I already knew, and especially now that I’d officially acquired the title of Senior Software Engineer. Nothing like getting a raise that amounts to the income level of some households (even if it requires changing jobs)
…if I could get (and keep) another job.
And that’s where it’s been hard, because apparently in the time I spent at my last job getting that title, the local market decided to make a hard shift toward languages/frameworks I don’t particularly care for. The language I’ve spent the better part of the past decade mastering has suddenly dropped off the face of the earth around here, at best relegated to the horrendously underpaying and exploitative industry of marketing agencies.
So…it’s either hold out for a job in my skillset, or sweet-talk my way into a job while learning a new stack on the fly. In both cases, getting to the offer takes time and can be fairly high risk. As it turns out, I’ve had the “opportunity” to do both.
The first opportunity was the “new stack” variety. The upside is that I got a bit more Ruby under my belt. The downsides were that a) I found I really don’t like Rails, and b) the boss saying one thing and expecting another is a recipe for disaster for me and something I have zero tolerance for (for the sake of my sanity).
The second was finding that increasingly rare job in my skillset. It was a pretty sweet gig, too. Got to teach a junior dev stuff, my coworkers were great, I could basically set my own hours and got to toy around with a reduced-hour workweek (only downside there being I was paid hourly, so took the pay “cut” accordingly, but the hourly rate was such that the reduced hours resulted in an aggregate pay equal to my last job, so it was a good opportunity to try it). It was an exciting project, too. Things were going great…until they came to a screeching halt. I still have no idea what happened there, beyond one day finding myself again unemployed (and this, kids, is one of the many dark sides of “employment at will” laws and the culture of technically-not-defacto-employees contract arrangements the tech industry loves).
Like I’ve said before, it’s easy to pay off a bunch of debt when life is going swimmingly and you can maintain the status quo of everything for years on end. It’s not so easy when life decides to slap you in the face every couple of months.
I know what you might be thinking - just get a service or retail or [insert gig here] job until I can land a “real” job. I’ve thought about that, and it’s certainly something to consider, generally speaking. However, at my level, it’s actually not that simple. I’ve got a Bachelor of Science degree, Master’s in business, and a significant level of experience under my belt in a lucrative industry experiencing a skill shortage. In short, I’m overqualified as hell, which means I very likely wouldn’t even be able to get one of those jobs, because they know that I’ll be leaving as soon as I find something that actually matches my skillset. I can’t really blame them.
Then, there’s the whole thing with having time for interviews and whatnot. I’ve worked retail before. “Part time” means 31.5 hours a week (because 32 makes you “full time” and eligible for benefits), with whatever hours they need you and you might get 1-2 week’s notice. That makes it very difficult to arrange interviews, actually making it harder to get back to where I was (especially now that we’re getting into the holiday season, and especially considering my industry’s love of “code days” or similar tactics to try to better gauge fit).
It’s still something to consider, but it’s not really feasible or ideal if I’ve still got other options available to me, especially when it’s impossible to tell for how long I’d actually need to be looking for the next job. Also, at it happens, while I was in the process of writing this, I landed a sort of freelance-style gig that should have full time-ish hours (and I can again leverage reduced hours with a higher hourly rate to work on passive income projects).
If it’s not obvious at this point, my decisions may not seem intuitive or with the conventional wisdom of…well…anything or anyone, but there’s a method to my madness. Some of them do carry some risk, though, so be sure to consider your own circumstances if/when you’re in a similar situation.
So, we found ourselves in a situation where things needed fixed, but we couldn’t take on any more (unsecured) debt. Even if the banks would let us, making the monthly payments would be challenging until I got working again. And that’s really what was killing us - the monthly payments from the number of different sources. The bathtub job required two separate loans to pull off, which increases the total amount paid. None of our accounts, except for the one credit card we hadn’t paid off yet*, had particularly high interest rates, so even being able to pay a few dollars over the minimum would have made substantial headway over time, but that requires enough money to make the monthly payments to begin with.
* We were actually doing very well with getting it paid off, which was supremely frustrating. I had managed to get it nearly halfway down – from maxed out – by the time all this started happening. It still had several thousand dollars left on it (largely thanks to the interest rate), but I had been on track to pay it off somewhere around early 2019 had I been working the entire year.
However, we needed to fix the HVAC system. While we could (more or less) live without the AC, we knew the furnace wouldn’t be far behind (they were put in at the same time and suffered from that same fatal flaw of being oversized), and this is Ohio. To go without heat in winter here is bordering on a death wish (not to mention a recipe for plumbing disaster). I’ll take financial debt interest over structural debt interest any day. The last thing we needed was to have the furnace go out in January, given how quickly the weather’s already turned cold.
There was only one problem – the banks wouldn’t give us any more money. Fair enough. Our debt to income ratio sucked at the time, and now my work history has been blown to smithereens. Yeah, I wouldn’t lend to me, either.
There is another option, though – a secured loan. Specifically, cashing in on the increased value of our house with a Home Equity Line of Credit (or HELOC). Situations like this make this the biggest benefit to owning one’s own house. It’s still a loan, which sucks, and is basically a mortgage in its own right, so it’s definitely something to tread carefully with, but it can be useful if handled correctly.
Full disclosure: I really don’t like having to continue borrowing money. I seriously hate it. If it were up to me, I’d get everything paid off and start working exclusively in cash. When both my husband and I are working, there is really no reason we can’t do that. So I can’t emphasize enough just how seriously I’ve taken having to borrow yet more money, especially via the equity of my house. I just keep seeing that timeline to getting everything paid off stretch farther and farther into the future, and I don’t like it.
But…going this route for our situation actually decreased the amount of money going out on a monthly basis, because we treated it basically as a loan consolidation. See, the nice thing about secured loans is that their interest rate tends to be lower and you can usually get your hands on more money, which means they can usually pay off several of your unsecured loans.
Bye bye high interest credit card.
As an aside, I just want to mention how ridiculously hard it is to find a good gif of N’Sync doing that signature move as the puppets.
Also, bye bye one of the loans from the bathroom, and – after some more time paying it down during one of my employed stints – the car loan.
Astute readers may remember that my car had (I kid you not) a 0% interest rate on it. So why would I pay that off, instead of one of the other debts that had interest on it?
It (almost) all comes down to the monthly payments.
While the general debt payoff systems have the goal of paying as absolutely little amount of interest as possible over the life of the loans, which saves money in the long run, my priority right now is to keep the monthly expenses as low as possible. Prioritizing a lower-payment loan because it has higher interest doesn’t make sense if doing so still leaves me a couple hundred dollars a month short of paying the other stuff. That zero-interest deal came with a monthly price tag of nearly double everything else.
It was also a lower balance than the other debts, allowing me to pay it off where I wouldn’t have quite been able to with the others, and would have required two other loans paid off to get the same monthly amount back.
That also means that I now officially own my car outright. :happy_dance: (Okay, maybe it’s a technicality, since I did use borrowed cash to pay it, but as far as the dealership, bank, and DMV are concerned, it’s entirely mine, and that’s a nice feeling in a year of disappointments like this one.)
Any who…where were we?
So! Now that we’ve looked at this past year, let’s look at what’s ahead. Here’s hoping for an uneventful year and everything on track. I could use it.
Unfortunately, our bathroom wasn’t the only leaky thing. Our gutters were rather poorly designed, and part of the top section of roof drains right onto the roof of our back deck. This was…okay…until all of that water (like 500 square feet of water from the top roof, times however many years of above-average precipitation) basically eroded the roof away and had destroyed that section of deck roof, and the rest of the deck roof isn’t far behind. Heaven forbid we ever need to climb out of the windows over it for any reason, too.
That, among other things, has resulted in a collection of water near the foundation when it rains, to the point that there’s a spot that leaks like a small river. That’s very, very bad. (Our saving grace on the overall damage front is that the worst in the unfinished part of the basement, so it leaks onto concrete and flows to the drain, but even that’s still on the backside of drywall that I’m not convinced is wet area rated.)
So, we plan to redo that segment. Our plan is to replace the back deck with one that comes out of the top level of our house (this also has the added safety benefit of an escape route from the top floor of our split level that doesn’t require attempting to climb out of a window, and improving the safety of exiting from a couple of the other windows). Ideally, we’d like to do that this spring or summer, which is doable via the HELOC, provided I can keep working.
I also plan on doing some landscaping, which includes a fair bit of water diversion from the back of the house to the front yard (and away from the foundation), where a bunch of thirsty plants will await to soak it all up. That’s going to be a lot of “sweat equity,” though.
I know. :(
I really don’t, but it comes down to a choice between:
- Not doing anything and have things continue to degrade.
- Doing a stop-gap thing (in this case, only re-run the gutters to bypass the gutter part of the problem) and hope things don’t continue to degrade (which they will, because this wouldn’t include solving the issue of the falling-apart deck roof, the air patterns of that section that lead to the drain getting blocked, the probably-improper grading of the yard that doesn’t allow for proper drainage away from the house, and so on).
- Going big and redoing the deck and attached gutters to fix most of the problems entirely (which would fix a number of the other issues by virtue of the deck job).
Or, as I see it: spend nothing now and very likely spend more later to fix the broken stuff; spend some money now and still very likely spend more later to fix things anyway; or spend a good chunk of money now to improve the status quo and not have to worry about it anymore (also, lifetime warranties are a beautiful thing).
Thankfully, as long as I can clock a decent amount of hours at this new gig, I should be able to easily pay off a fair bit more of the HELOC than what I’ll actually need to do this.
As always, my long term goal is to still get these damned debts paid off. The addition of the HELOC and what it would take to do more for the house than just keeping things limping along does complicate things a tiny bit, but not much.
See, as long as both my husband and I are working, we make bank. After all, I’ve trimmed down our expenses to the point that we can live off his income almost indefinitely. So, when I make…basically anything…I can use all of that money for quality of life improvements. This means that I should have the HELOC paid down enough to pay for the deck in just a couple of months, provided I get the full time (or near full time) hours promised by this new gig.
Once I get that allocated, it does leave a bit of a conundrum: do I continue to pay down/off the HELOC so that we have the money to do the rest of the renovations/improvements/fixes that we want to do, while we still have it available to us?* Or, do I get only what we need for the deck, plus probably a little extra to cover unforeseen expenses, and then switch back to the other debts?
*A note about HELOCs: HELOCs are a bit special in how they work, because you have a revolving line of credit for the first ten years that the account is open. That means you can spend and pay it off as much as your heart desires (and your wallet allows), for the first decade. After that, that account freezes and essentially becomes just like any other loan, with a fixed payoff period.
Ideally, I want to take the second route. If I can truly get the amount of money that my calculations are projecting (which is still rather mind-boggling to me), then I should be able to make some pretty massive payments to the other debts and get a great many of them paid off by the end of the year. [Insert comic-book style “ka-CHUNK” sound text here.]
Getting those paid off kills yet more debt and removes their monthly payments, which, if nothing else, will only further help in the lean times.
There is also a third route that I may consider: alternating what gets paid off/down. The idea here would be:
- Pay down the HELOC enough to get the deck.
- Switch to one of the other loans and pay it off. By my calculations, this should take 1-3 months for all of the remaining loans that aren’t things the mortgage, the remaining car (the remaining car is currently a lease, but will likely become a purchase loan when the lease expires in a year), and student loans.
- Switch to the HELOC and pay for 1-2 months, which should pay a large chunk of it down, freeing us to make home improvements as necessary (the idea here being that either we don’t do big projects unless necessary or “saved up” for, or it frees us up to do some of the smaller quality of life improvements).
- Repeat steps 2 and 3 until the smaller bills are all paid off. 4a. Pay off the car.
- Pay off the HELOC, then proceed to the big loans. 5a. Whenever we use the HELOC, switch back to it until it’s paid off.
The advantage of this method is that it pays off the other debts while also paying down the HELOC enough to help us take care of the house. That way, we don’t have to try to put a total freeze on getting things fixed while we pay off the other stuff.
The disadvantage is that it requires that I’m working more or less full time, or bringing in the equivalent amount of money through some means or another, during that entire time. Sadly, I can’t consider that a given, and therefore can’t plan one way or another what strategy I’ll use. (It doesn’t help that I haven’t really gotten going at this new gig yet, and since it’s freelance, I can only bill when I’m actually contributing.)
Here’s to another fire under my ass to find other sources of income, because clearly me and traditional employment don’t mix.
As usual, this post is plenty long enough, so additional side stuff will go into one or more dedicated posts. Thanks to the Motley Fool podcast, I recently discovered a podcast about financial independence and the FIRE (financial independence, retire early) movement, and I’d like to talk about it, because the hosts of the podcast have a definition of FI that I agree with (in short, the ability to make choices, and that it’s not a binary thing). We’ll get to that then, and once I’ve had a chance to listen to some of their podcast episodes, so that will be next time.