Friday, April 30, 2010

Tackling Our Debt

On our 5 Steps to Acquiring the Dream, number 3 was getting out of credit card debt. To that, I would like to add an auto loan and a second mortgage. We also have our first mortgage, but getting that one done soon does not seem realistic, and I would like to hit the others before the mortgage. Actually, the 2 mortgages provide some tax savings versus the others, so I am going after the bad ones first.

I am going to list our debt in the order that I would like to attack them.
  1. Credit Card One: $7000 @ 4.99%.
  2. Credit Card Two: $7200 @ 1.99%
  3. Auto Loan: $21000 @ 5.49% for 6 years
  4. Second Mortgage $66,000 @ 6.25% with 13 years left
  5. First Mortgage $134100 @ 5.75% with 24 years left
That bring our debt total to $235,300, give or take a few dollars since I rounded everything up. I am going to hit that first credit card as hard as I can. Every bit of leftover cash we have at the end of the month will be going towards that one. My goal is to have it paid off in 15 months. That puts us at August of 2011. In the meantime, I plan on paying the minimum the second one. At about 2.5% as the minimum, that would leave around $4700 left there.

The next step would be to roll the payments from the first credit card, into #2. I see myself finishing that card off in 12 months. So, by August of 2012, all the credit card debt would be gone. Then it would be down to the auto loan, which at that time would be down to about $13000. Agian, rolling the old payments from the credit cards into the auto loan would finish that one off in another 19 months. This would put us out to about March of 2014.

That means in 4 years, we will have knocked off $35000 in bad debt. Our second mortgage will be down to about a $51,000 balance with 9 years remaining. Throwing the payments from the old credits cards and auto loan into this one would have us done with it in less than 4 years, putting us at Jan of 2018. At this point, we can tackle the last piece which is the first mortgage.

By 2018, the first mortgage will have $108,000 in balance remaining, with 15 years left on the loan. Now, will all that extra money from the old debts being thrown into this one, the house will be totally ours by 2020. That would mean we would be totally debt free have over $2000 a month going towards savings. I see us being able to put some money into a NYC property by then.

Of course, there will be setbacks from now until then, but there will also be bright spots, so I hope they will even out. If my wife can go back to work full time as well, then we can accelerate the payoffs. It is good to dream you know!!!

Thursday, April 29, 2010

On That Second Job

Number 2 in my 5 Steps to Acquiring a Dream had to do with adding a second income. Currently, my wife is out of work and is sort of looking for a job. I say 'sort of' because with our situation at home. We have two girls and the youngest one has medical issues that require my wife to be available for doctors and therapist appointments at odd times. Therefore, it is hard for her to do a 9-5 job.

Before her current unemployment, she was a part time tutor at a company that went out of business. It was perfect for her, because she could set her hours weekly. She was also in charge of scheduling, so was able to make sure she was taken care of. Well, it has been nearly a year now since she last worked and while we are still afloat, we will need to find some more income.

With that in mind, I have been contemplating what we can do for extra income. Then I looked at all the stuff we have around the house, and I thought maybe we could sell off stuff we do not use, such as books, toys and baby items. There are several options out there such as eBay and Craigslist, but what to do with books.

I did a quick search for selling used books and found Powell's Books. They buy used stuff and will send you prepaid shipping labels. You just have to box the stuff up and take it to the USPS. Now the price is not too great and they don't take all books. It is kind of hit or miss. So far, I have made a grand total of $5.50 from 4 books, but it is a start. I have some more boxes to go through, and am looking for more sites to try out.

All, this money is going straight into my PayPal account and will eventually be used to payoff some debts early. Also going into the PayPal account is money from tech toys that I have been selling on Gazelle. That is another decent site, that is comparable to eBay without the hassle of going through the bidding process. I have made some decent money by selling old cellphones and PDAs.

Wednesday, April 28, 2010

How About Renting in NY?

So we don't have the $2,000,000 to lay down for a nice pad in NYC. Would renting be an option? The Real Estate Group New York, which produces monthly Manhattan rental reports, has come out with it's April Report. The latest figures show that there was an uptick in rental prices, but most places are still pretty cheap when compared to last years.

Now cheap is a relative thing. I believe that prices are still crazy. Two bedroom apartments in the Lower East Side are running at $3000/month on average. If you factor that your gross annual income should be about 45x the monthly rental, that comes out to a salary of $135,000 a year. Still though, using a calculator for take home pay, that salary translates to about $7000/month. This means the average rental would be 43% of monthly take home pay. That is ridiculous!

Even areas like Harlem run about $2000/month, which requires a $90,000 salary. Also, these rate are for non-doorman apartments. You want a doorman, be prepared to spend another $1000/month. That is some price for the luxury.

So, this means that renting is not a good option unless I had a super well paying job. We would need at least a 3 bedroom apartment in a good neighborhood. That means paying almost $4000/month which requires a $180,000 combined salary. Right now we are almost surviving with a single income, so would like to maintain that as long as possible.

Wednesday, April 21, 2010

Why $2,000,000?

In my post on 5 Steps to Acquiring the Dream, Step one was setting a quantifiable goal for a piece of property in Manhattan. I said $2,000,000 was the price I was aiming for. This number was not pulled out of thin air. Some research was done to arrive at it.

I went to the Trulia NYC website, and looked for 3 bedroom, 2 bath apartments/condos/co-ops on Manhattan. A minimum of 2000 square feet was also chosen. The results started at $1,500,000 and went all the way up to $30,000,000. Needless to say, I stayed closer to the bottom end. Even at that price, the home sizes were pretty decent. Ideally, I would like to be somewhere nearer to midtown, which would offer good walking access to the theaters and central park. I did find some deals there.

Now of course, right now in April 2010, we are probably near the tail-end of a major recession and real estate prices have taken a hit. Who know what prices maybe when we can afford $2,000,000. Lets hope we don't have another run up like we did before this last bubble.

Monday, April 19, 2010

Curbed NY Real Estate Website

I was looking around for blogs on NYC real estate and ran into Curbed NY. It quite a feature packed place. They have quite a few daily updates with information on local sales and news. Some of the information here is a bit on the entertainment side, such as a post on where Matt Damon has been real estate shopping. For the most part though, the information is good, such as daily open house listings as well as a complete Sunday open house guide for buyers and renters.

Then there are sections for current sales and rentals. Their listing cross multiple agencies and allow you to narrow down your search, whether it is the number of bedrooms, bathrooms, or the max dollars you want to spend. The results are given is the normal list format that is sortable for varied fields such as bedrooms, square footage, or price. The indiviual listings provide photos as well as an embedded google map that is expandable.

All in all, Curbed NY is a great site for a NYC real estate junkie. They also have sites for the Hamptons, San Francisco and Los Angeles.

Saturday, April 17, 2010

5 Steps to Acquiring the Dream

This post outlines the 5 steps needed to attain our dream of owning real estate in New York. While this is our goal, I believe it can be adapted by others to fulfill their dreams. This could be owning real estate or saving or retirement or maybe buying a boat or RV. It could be whatever you want to achieve.

  1. Setting a price goal: I believe that $2,000,000 is the minimum to get a decent property in Manhattan, whether through a cash purchase or finance. We may find something for less depending on how the market is, but this is what we should reach for.
  2. Getting a second income or increasing my income: Right now, we are working with one income, since my wife has been out of work since last year. Either she needs to find a job or I need to find a better paying job. I could also try and work part time online somehow.
  3. Getting out of credit card debt: This is a tough one. We have some debt that we have built up due to my wife being out of work. While we have stabilized that for now, we need to get rid of it.
  4. Paying off our mortgage: After the credit card debt is gone, it will be time to work on this one. We still have 23 years left right now, but is we can eradicate the $300+ dollars we are paying on step 3, that money will go towards the mortgage.
  5. Look for a place and move: Self explanatory, but still complex, with all the details involved with uprooting.
The list is not set in stone of course, but is a good guide to use in trying to reach for our goal. This would all be thrown away if I were to find a good paying job in NYC and we were to move closer to the city, whether is a suburb or in a neighboring state. Then we would go directly to step 5.

Friday, April 16, 2010

Acquiring a Dream

I have always been fascinated with New York City. As a child, it was movies like King Kong, Arthur, Escape from New York and Ghostbusters and later Wall Street that introduced me to the city. They all used the city in different ways, but I was intrigued by the large building and busy streets. Of course Escape was quite dark in tone and visual appearance, it did highlight some of the streets.

Then as I got older, I could stay up New Year's Eve to watch the ball drop in Times Square. It was quite a sight, even on our small tv, to see hundreds of thousands of people on the street waiting for the new year to come. Throw in all those Macy's Thanksgiving Day Parades and I thought that this was one happening city. I had to see it for myself.

It was not until my teenage years that I got to visit, but that was only in short spurts for the St. Patrick's Day Parade. I was in high school and the marching band would travel to take part. We really did not get to see much, because we would take the four hour drive there in the morning and leave in the evening. The time we walked about was on the parade route and at the end we had to jump back on the bus. I did enjoy looking at the city though, while on the bus. The tall buildings really fascinated me, as they do till this day.

In the 1990's I did travel there once for an overnight. A couple of friends went to a concert at the Beacon Theatre. We drove in, went to the hotel, then the show, then back to the hotel to sleep, woke up and drove home. Not much happened on this trip, but the show and theatre were cool.

It would be another 10 years + before I got back to the city. By then, I was married with 2 kids. The dream of moving there had waned due to priorities, but the love of the big city was still there. The family has been there several times on our way to and from vacations. We usually spend the better part of the day walking in the Midtown area seeing the large sites, such as Rockerfeller Center, St. Patrick's Cathedral and Times Square. Having one pre teen means we have also made the trip to the American Girl's store quite often.

Also, my wife and I spent as lovely day and a half there a couple of years back, to take in a theatre show. It was probably my favorite time, because it was a rare opportunity for the 2 of us to be alone and we got to walk about the city quite a bit. We plan on going back later this year to see another show. This time it will be 2 nights and we are looking forward to visit the lower part of Manhattan.

The dream of moving to NYC has pick with these little trips there. It would mean quite the uprooting for the family. My wife and I always discuss the possibilities of moving to different places and at least we do share these common thoughts. I am the only one working right now and it would only mean one job change for now. Also, there is the possibility of just buying vacation property there, but that would be quite the expense. You never know though, that's why we have dreams...