Hold on, this here's a whopper

Tuesday, January 8, 2008

I've wanted to post something new for a while, but just haven't gotten around to it. Kind of like I haven't gotten around to laundry, getting the tree down, picking up all the junk all over my floors....k, so it's getting harder to bend down. That's my excuse and I'm sticking to it....

I wanted to be able to post pictures of our little reno project, but it's not quite done yet. Unfortunately, the only before pics I have really, are ones we took when we were buying this house, so it's got all the previous owners furniture in it....well, when I get them up, you'll probably still see what an impressive change has been wrought...

I wanted to post this really funny homeschool-version of the 12 days of Christmas....maybe I still will.

I wanted to post some funny pictures of Verity as she's been toilet training...but they wouldn't be rated for general audiences.

I wanted to talk about....so many things.

The thing most occupying my mind right now is our current housing/financial state. Without planning to, I suddenly one night started a reassessment of our finances. Maybe it was an end/beginning of year kind of housecleaning thing, but one night off the top of my head I just made a comment to James that we needed to take a serious look at our money, and we sat right down and did it. It was not such a nice picture.

Ever since starting to use the Mvelopes system, our finances have never looked the same (in a good way!). I crow about it to just about anyone who has the misfortune (not really, as being introduced to Mvelopes would be a great thing for just about anyone) to mention any kind of financial problem. Unfortunately, budgeting well is not the cure for all ails.

First of all, we had a number of cuts to our income last year. A few in particular have to do with the various Child tax benefits we get. I probably posted when the Universal child tax benefit was cut when Jairus turned 6, because I was just so annoyed about it. What exactly changed in our finances, or Jairus' need for clothes, food and housing, from March 29th to March 30th is beyond me. Why the age of 6 was arbitrarily chosen is a mystery equal to the Caramilk bar.

Some of the other cuts I don't really want to go into, but on the opposite end, we also saw some rises in a few key expenditures. For instance, our property taxes. Well, Leslie, you say, property taxes go up, it's a way of life. Yes, but our taxes didn't go up due to the natural inflation (or whatever economic term determines taxes going up), but because the bank screwed up. When we moved in 2006, instead of porting our tax account from one house to the next (keeping in mind that we kept the same bank so this shouldn't have been a huge problem from my perspective), they for some reason added the significant balance to our sale profit and handed it over as part of the cheque we got from our lawyer. Happily, we spent it on new hardwood floors and a new Ikea kitchen....having no idea that we were spending money that should have been going to the city of Hamilton 2 months later.
Come 12 months later, the bank finally realizes that our overdrawn tax account was just not magically refilling itself. So out comes a notice that they would be raising our tax portion to the tune of 100$ a month.

Shortly after that came another large cut in our income (the one I don't wish to discuss). We did see some small help throughout the fall with James training in the reserves, but it didn't cover the operating deficit.

I kept telling myself I needed to sit down with my excel spreadsheet that maps our income and reassign some stuff, as every month through the fall our mortgage plus taxes payment was always overdrawing the envelope from whence it comes and I was scrambling to cover the deficit. But I didn't get around to it until last week. The total numbers I was staring at, considering the cuts to income, and raises in expenses made for a depressing evening.

I went to Crown to use some of their calculating tools to try and figure out where we could improve. Instead what I found out was that despite living in what I believe is a fairly modest home, we are using about 20% more of our income for housing then Crown recommends in order to keep a balanced budget.

How could we have reached this point? Why were there no indications before this? I laid awake that night, and woke up early that next morning with those questions burning in my mind. And moreover, what could we do about it?

Well, first off, I set about cutting a few corners here and there. I called our internet company and switched our phone service over to them, taking advantage of a bundle deal. That saved 40$. I called the bank and asked if we were in any position to lower our mortgage payment. We do pay biweekly, which is a plus in the banks eyes. I breathed a sigh of relief when she said it could be done without penalty. Another $100 a month freed up.

The immediate problem of our deficit taken care of, I turned back to the long term issue of living beyond our means. I thought we had dealt with this particular downfall. I love to tell people how when we started budgeting, we disovered we were spending 1000$ more per month then we were making. (Why I love to share that, I'm...not...sure). That was a huge you-are-living-way-beyond-your-means kind of slap in the face. Since then I thought we had nipped that. Finally the question of who came up. Who told us we could afford to live in this house.......?

Why, the bank, of course.

We did what every responsible couple does when starting to look for a new house, we went to the bank and got a pre-approval. And what did the bank base this on? What they always do, our debt-to-service ratio.
Well, it so happened that after a few years of careful budgeting, we had manage to lower our debts. We had actually been quite pleased with the amount the bank told us we could afford on a new home. Considering the prices on the west mountain where we had decided we should live (mainly so James could quickly hop on the 403 to get to London), the number the bank told us was great. We'd surely be able to find a home for that price. And we did. In fact, I was quite smug that we had found a house for about 15 thousand less then what the bank said we could spend. Surely we'd even have extra money now. Hhhhyeah.

This line of discovery only solidified something in my mind that I've been slowly discovering about many industries in our world: they are not on our side. They do not have our best interest at heart. You'd think someone in the banking world would have looked at the thousands of people declaring bankruptcy and losing their houses and figured out that this could possibly be a reason. I'm sure they have. And they've done nothing about it.

So now, it seemed, the solution was that we needed to move. This certainly seemed drastic. I mean, we just moved a year and a half ago. It's a huge deal. Honour was traumatized for months and still to this day will once in a while announce that she liked our old house better. Moving would involve consideration of many things. We'd still need to live close to the 403 so James could get to work. A job in Hamilton would be amazing, but we've been looking for years and nothing has worked out. This would limit our housing area. And the purchase price would need to be significantly less then what we paid for this house, to lower our mortgage. And while we could likely determine beforehand how much a monthly mortgage payment could be, the other housing costs could be more or less depending on many aspects of the new house: we put a new furnace in last year--that's made our gas bill less. Property taxes could be higher, insurance costs could be higher, electricity costs could be higher....it would be almost impossible to foresee an accurate monthly housing amount before we actually bought another house.

Why is our system set up this way??!

I still look on mls just to imagine. Last night I found maybe four possibilities, but all had significant problems. There was only ONE house on the entire mountain that fit into the up front purchase price range. It had no basement. Hmmmm, been there, done that. West Hamilton seemed a possibility, that yielded two-three possibilities. But resale in that area, my mom pointed out, is getting difficult, as so many houses are being turned into student housing. In fact the 3 houses listed were former student housing....which was why they needed significant repairs.

I don't know where this leaves us, except frustrated.


Post a Comment