On Talking About Money

I mentioned in one of my posts yesterday that I sometimes teach financial literacy classes. I love, love, love teaching these classes, largely due to the fact that I enjoy talking about money. I am fascinated by how people think about money and the intersection of money and identity (all of those things we think our financial situation or other people’s financial situations say about us or them) and the incredibly powerful role that shame, emotions and willful ignorance play in our financial lives.

I can talk about shame and ignorance (willful and unintentional) because I am a recovered financial screw up who is quite familiar with those feelings. Credit card debt to the tune of $25,000 combined with student loan debt of $30,000 on a first job out of college salary of $25,5000 will afford one a nice long period of time to feel shame and panic about their financial selves.

I grew up poor and spent myself poor in college and early adulthood. The pervasive feeling of “never enough” that comes with being well and truly broke is something that takes a long time to shake off.  Mr. Monkey and I are more frugal than not and we have a healthy income and a solid savings account and yet every month I feel a distinct sense of relief when all the bills have been paid and the wolf has been kept from the door for another month, though there really wasn’t any danger that we wouldn’t be okay this month or next or next.

Sometimes I look at the lives of others and wonder what their finances look like. The magnificent houses in the fancy neighborhood near us– how do you get to live there? What do those people do and how much do they make and what is their net worth? The friends who, like us, are figuring out how to save for retirement and pay off student loans while paying the shockingly high costs of childcare– how are we all doing it? The person at work who is in the same pay grade I am and who takes fabulous vacations that I can’t imagine being able to afford (though I wish I could)– where does that money come from?

I wish it was easier to talk to people about personal finances. Sometimes I think it is interesting that I know exactly how many sexual partners some of my friends have had but I don’t know what their salary is and bringing up sex would be more comfortable than bringing up money.

Why do you think money is such a taboo subject for so many? I keep circling back to the idea of shame, since that is what I felt about my money life for so long, but maybe I’m projecting. I believe that most of us have a natural curiosity about the financial lives of others. We secretly want to know what people make and how they spend their money. I see this all the time on some of the financially related message boards I visit. The posts where people post their budgets consistently get the most views. My posts yesterday got the most traffic I’ve had in almost two years and yet I suspect most of us never talk to our friends and loved ones about our financial strategies or goals.

What do you think? How comfortable are you with talking about money? Do you secretly wish you could see into the bank accounts of those you know, or is that just me?

 

 

Magnolia Street: Another Epilogue

I know, how could I possible have more to say?

A few people DMed me on Twitter with additional questions so I thought I’d add the answers to those here:

1. We have not had any trouble finding a home to rent since the foreclosure. We were quick to explain our situation to our current landlord (we’ve rent two homes since the process started and finished) and provide character references from past employers and landlords. We were also prepared to pay up to six months rent in advance (if we had to) (a prime example of how cash can make up for poor credit) but we never needed to make that offer.

2. I have had to get a credit check as part of an employment screening and it didn’t seem to make a difference. I, again, explained the situation to my prospective employer and offered to provide documentation if needed, but they didn’t request it and since the credit report showed that with this one exception I’d always been on time with bills it didn’t hurt me in the process.

3. Speaking for Mr. Monkey, I don’t think this situation caused any particular marital stress. We were, thankfully, both on the same page about this and I think we just knew that we had to be kind to each other and not assign blame.

Magnolia Street Part 3

Now, a bit about the things we had to consider before we made the choice to go the foreclosure route:

1. Arizona is a non-recourse state, so we knew that the mortgage company could not come after us for the difference between what we owed and what the house eventually sold for.

2. According to our real estate agent, the average length of time a short sale was on the market in our town before it was approved for sale by the bank was 18 months. The market was just utterly clogged with them.

3. Because we now had two different mortgage companies any short sale would have to be approved by both, which would add time on to the whole process. Given that there seemed to be zero communication between the two companies, I was not encouraged by this development.

4. There didn’t seem to me to be a lot of credit score advantage to the short sale vs foreclosure route. It seems like most of the damage to the score happened from the past due mortgage payments. By this time my credit score was already down 100 points or so.

5. The deed in lieu option was the one that we had the hardest time getting accurate information about. It sounded good, in theory, but we could never nail down what kind of tax implications it might have.

We weighed our options and decided that, at that point, our main goal was to be done with the whole blessed mess. Foreclosure seemed like the quickest and surest way to do that. We let the main mortgage company know and continued to basically ignore all the past due notices, registered letters and scam mail we began to get (oh, the scam mail. If you go down this route you will get tons of mail from shady places saying they can “help save your house” and “protect your credit”. These people are lying lie faces).

It is interesting now that we are done with the situation how blurry the timeline on all of this is. I think it was about 9 or 10 months from when we stopped paying the mortgage to when the house was officially foreclosed on. I would say the worst time, in terms of phone calls from the mortgage company, was the first three months. After that it was a pretty quiet experience in a lot of ways. I never felt harassed. Nobody called me a deadbeat or yelled at me. It just seemed like, well, what it was: a business transaction.

I want to say something here about the “moral” aspects of all of this. I know that there are some people who think that walking away from a home when you can technically still afford it is morally wrong. I don’t agree and part of the reason I can talk so openly about this experience is that I don’t have a sense of shame about it. I still feel disappointed that it worked out the way it did, but I’m not ashamed. In my mine we met the terms of the mortgage contract. We lived up to the agreement with the bank. A mortgage is a contract that says, basically, if  you (Monkey family) pay X amount on time each month for 360 months you will get to have this house (option A)  If you don’t, you don’t get this house and we ding your credit score (option B).  You have two choices. We chose B.

What also probably helped us deal emotionally with all of this is knowing that what was financially best for our family was very, very clear. I happen to teach financial literacy classes so I could calculate all the lost savings we’d be facing if we didn’t do this and could not justify it. We were also in the place where we could say, eh, we probably don’t need a lot of credit for the next couple of years. We don’t plan to buy a house again for a good long while and, frankly, we now have healthy savings so there are few problems in life that you can’t solve as easily with cash as you could with credit.

************************

So, what happened after the house wasn’t ours anymore? A couple of things worth sharing:

- the house eventually (after months and months and months on the market) sold for just under $100,000. More than a 50% drop in value in less than 5 years.

- When it was all said and done, my credit score had gone down almost 200 points and Mr. Monkey’s went down about 120 points or so. I still officially have “bad credit” but my score has gone up about 80 points in the last year.

- The most annoying outcome was that my credit card company (the one that I had once owed gobs and gobs of money to) cancelled one of my cards and dropped the credit limit on the other to a ridiculously low level. Mr Monkey’s credit limits didn’t change at all so we still have his for emergencies. Depressingly, the credit card companies were much more willing to lend me credit when I was in debt up to my eyeballs. A lowered credit score for someone who doesn’t carry a balance= major reduction in credit line (we are talking like a $28,000 reduction).

-Another semi annoying thing was that mortgage company #1 never told mortgage company #2 that the house was foreclosed on and sold, so I finally had to break the news to them myself after still getting random bills from them for the next half year. This did not give me a sense of confidence that they would ever have been able to figure out the short sale between the two companies.

- About six months after the foreclosure we found that we needed to replace our ancient car. We went to two dealerships. One would finance us, one would not. The one that did gave us a 2.9% rate, which we were very pleasantly surprised by. Part of the good rate probably came from the healthy down payment we put down but still, better than expected.

- I have zero regrets about our decision. Well, not true, maybe one: I wish we had done it sooner. Knowing what I know now, I think we should have pulled the trigger sooner. But I think we took the time we needed to feel good about the decision and I can say with certainty that we are in a much better place financially than we when we started this process, even though my credit score still kind of sucks.

***********************

Bless you if you made it through this multi-chapter saga. If you want to know anything else, please feel free to ask in the comments. I’m glad to talk about it and hope it helps someone someday.

Magnolia Street Part 2

So, there we were: living in Iowa with a home in Arizona that we couldn’t sell. Great credit scores but anemic savings. A mortgage company that couldn’t or wouldn’t work with us because we weren’t “in trouble”, at least on paper. We had renters but rent checks that were starting to come in late.

What I remember most about this time was feeling so frustrated that there wasn’t a single good option open to us. No matter what we did we would lose money, our credit score or maybe both. And we hadn’t done anything wrong. We hadn’t bought more house than we could afford. We hadn’t lied on our mortgage application. We weren’t trying to make a quick buck in a real estate boom. We just wanted a house to raise a family in.

Mr. Monkey and I circled around the “what to do” question for months. In hindsight, I think I knew all along what we were going to have to do: voluntary foreclose. But we were hesitant to pull the trigger and stop sending in that monthly check.

And then we got a bombshell: the house next door to ours (a house that was larger than ours) went into foreclosure and was sold by the bank. For $78,000. It had been valued at $245,000 when we bought our house. Overnight our house went from maybe being listable at $130,000-$140,000 to being worth less than $100,000. We still owed probably $190,000 on it. We were screwed.

So, we pulled the trigger. We didn’t send in the mortgage that month. The rent check came in and we put it right into savings. We agreed that if we were going to knowingly ruin our credit, we were also going to bust ass to build up savings. We thankfully were credit card debt free and only had one car payment and my student loan as debt, which helped a lot.

The worst part of that first month of non-payment was wondering what would happen next. Would I get mean calls from the mortgage company? Would they call me at work? Would we get letters? How fast would everything happen?

The next month we got a mortgage statement with a past due balance and a rent check. We put the rent check in savings and filed the bill.

That month I got my first call from the mortgage company. They were civil and even helpful on the phone. I told them we didn’t have any intention of getting caught up on the bill and would be pursuing a short sale or foreclosure. They reminded me that they’d have to report to the credit agency and asked for additional phone numbers to reach me at. I declined to give them any other numbers (a wise move, I think. Made it so all the calls only went to my cell and I didn’t have to worry about getting called at work).

The next month we got two notices: a past due and notice that the bank had sold the 20% mortgage to a different company. This ended up being significant, though I didn’t really realize it yet. We also got the rent check and put it straight into savings. I have to say, seeing our savings go up $2400 in three months was so encouraging.

A few more months passed (this process was so very slow). Our renters moved out and the home was vacant. We finally needed to make a choice: short sale, foreclosure, or deed in lieu.

To be continued in the next post…

Magnolia Street Part #1

Last night I stayed up far past my normal bedtime talking about underwater houses and foreclosure on Twitter and it reminded me of when Mr. Monkey and I were faced with making the tough choice about what to do with our house in Arizona after we moved to Iowa and how it seemed like there were not a lot of first hand accounts of what happens when you have to walk away from a house you once loved.

So I’m going to write what happened to us and share the kinds of things I wish I had known back when we were so far underwater with a house that we needed scuba gear to see the surface.

In 2006 Mr. Monkey and I were living in Arizona. We had jobs that at the time seemed stable. We had just finished paying off all of our credit card debt (BEST.DAY.EVER), were building some modest savings and were watching friends left and right buy homes. I wanted to buy a house, my first house. Mr. Monkey wanted to wait a bit, to build up more savings, but eventually we decided to look. We went to a mortgage lender who said that we were pre-approved for $250,000, which we knew was crazy for us but she assured us that we’d be able to refinance in six months or a year at most because house values were increasing so fast. We, thankfully, kept a level head, said no thanks and went to a different lender and got pre-approved for a more modest $210,000.

In short order we found a great little house in an incredibly stable older neighborhood (seriously, I think that neighborhood maybe averaged one house for sale every 5-7 years). We purchased for $205,000 and did an 80/20 loan with no down payments. We had some savings but decided to hold on to it for emergencies instead of using it for the house.

We settled into the house and every month I dutifully sent in two mortgage checks, always paying a bit extra to try to pay down the 20% loan. We were happy and the house was an easy fit for our budget.

And then things started to change. The housing market began to slow down and Mr. Monkey and I’s job started to seem less stable. We began to think about moving for better career options, something we’d discussed but thought was five years or more away. Soon though I was offered a great job here in Iowa and we moved.

When we decided to move, we talked our real estate agent and he told us he’d probably have to list the house at $160,000 to get any interest. We were a bit shocked. Nothing in our neighborhood had sold for less than at least $200,000 in five years. Hold on to the house for a year, he said, and rent it out. The market will gain some ground back.

So we signed up with a property management company and rented the house out. Because the rental market was filled with houses (probably owned by people just like us) the best rent we could get was about half of what our mortgage was. We’d be losing $800 a month. Okay, we thought, we’ll lose the $10,000 for the year we carry it but we’ll save our credit and “do the right thing”.

A year passed. The market continued to nose dive. We continued to lose money every month. We were trying to build our savings, which was down to levels that were concerning for me but paying rent and the mortgage was a tough balance. We maybe got $300 a month into savings and kept sending $800 to a house that was worth less every month.

(On a side note, you know that whole “rent is throwing money away” line? Bullshit. Paying money for rent is nowhere near as depressing as spending money on a house that is worth a fraction of what you bought it for. All that extra money I faithfully paid on the mortgage for three years. TOTALLY WASTED).

We began to have to think about our options. I should note that at this time in my life I had literally never paid a bill late and had a credit score that would have given Suze Orman herself a tingly feeling in her pants. We called to see if we could do a loan modification but couldn’t because we weren’t living in the house anymore. We called the mortgage company to see about a short sale and they wouldn’t talk to us about it because we weren’t behind on payments. We talked to a real estate lawyer who said that in his 35 years of practice he’d never seen a market this bad and to plan that it would take 10 years for it to recover and houses to go back to 2006 prices.

Ten years of losing almost $10,000 a year for the hopes of breaking even?

No freaking way.

Adventures in Logic (Starring a Three Year Old)

The scene: driving in the car, quietly listening to the radio (NPR, as required by law for all of us pinko liberal parent types)

The kid (suddenly): I want a baby cow. Not a stuffed cow but a real baby cow and I want him to sit on the couch with me and watch the Polar Express movie.

Me: What? Why do you want a baby cow to sit on the couch with you?

The kid: Because a grown up cow would be too big to fit on the couch.

(said in a “Duh, Mama” voice)

***********************************************************************

The kid: Strawberries are an every day food, right Mama?

Me: Yep. Strawberries help you grow big and strong so they are an every day food.

Kid: And red peppers are an every day food too, right Mama?

Me: They sure are

Kid: And candy is a some times food, right. Because candy isn’t a healthy treat.

Me: Right. We can eat candy but just sometimes, not every day.

Kid: And and and…Popsicles! Popsicles are an every day food!

Me: Well…maybe more like a some times food…

Kid: No! They are an every day food because I want to eat them EVERY DAY. See. That’s right.

*************************************

Me: Time to pick up your toys and then go potty.

Kid: No. I don’t want to do that.

Me: It is time, so you need to start picking up now.

Kid: (Whining) I don’t want to do that.

Me: I know, but you played with the toys so you need to pick them up.

Kid: (brightly) I have an idea! My idea is that you pick up the toys and I get a cookie. That is my idea.

Me: Um, no. That isn’t how it works.

Kid: Yeah. It can work that way. I have the idea and then we can do it. Come come Mama (as he pats me on the knee).

On Doing

I find it all to easy to look at my life sometimes and see nothing but things undone. The Christmas decorations still up, the floors that need cleaning, the pile of paper on my desk at work that just seems to grow higher every day, the myriad things that need to be cleaned or organized or planned for or just dealt with one way or the other. This is especially true at work where I can’t escape the fact that I have, frankly, shit that needs to be dealt with before April when I have to go on leave.

It paralyzes me, this seemingly unending amount of doing that needs to happen. When I am productive and crossing things off the list, I feel high and energized by it. I like the doing. But when I’ve done that all day and then I look at my desk and there is still more to do and then there is a beloved boy needing to be picked up and played with and fed dinner and loved and then there is a partner that I very much want to engage with and talk to and related to as more than the parents of that beloved boy. Add to that a house that isn’t self-cleaning and the writing and exercising I don’t do enough of and then I am exhausted by the doing.

This morning I found myself growing cross with my boy as I tried to get him to school. He didn’t want to get dressed. He wanted to stop and get a cake pop at Starbucks (one time! You stop one time and they never forget). He didn’t want to go to school. There was crying and kicking of the back of my car seat and I could feel my irritation level rising as I looked at the clock and realized that I was surely going to be late to work, again, the third day in a row this week. He whined from the back seat and I could feel my face clenching in response.

And then we got to school and he informed me that he couldn’t remember how to walk. “Carry me, Mama” he cried, a fat tear squeezing out of his eye and freezing to his cheek. I scooped up his bulky, snow suited self and held him against my 27 weeks pregnant belly and quickly started waddling as fast as I could to get him into daycare.

I was thinking about my desk and my email and my busy day when I felt his little face pressing against mine, his breath in a whisper against my ear.

“Slow down Mama. I want to watch you make footprints in the snow. I want to hear the squeaky noise from your boots”

I slowed down and set him down and we walked hand in hand and made footprints in the snow and for a moment I forgot what I need to do and he forgot to be sad about going to daycare.

In a perfect world, that would be the end of the story. Fade out on the mom learning the valuable lesson to be more present and mindful and to slow down and enjoy the sound of boots crunching through fresh snow.

But in the real world, the kid gets crabby again the second he gets inside and drop off takes three times as long as it needs to and then I get in my office and I’ve already missed four phone calls and realize I’ve forgotten my breakfast and then it is donuts from the vending machine and a pile of doing to be done and the persistent sense that life is out of balance and no easy answers to fix that.

Happy New Year!

I woke up to the sound of my sweet boy’s voice hollering “MAMA DADA I’m not sleeping anymore. I AWAKE!” at the indulgent (for parents of a small child) time of 7:25am. I retrieved him from his room and tucked him into the cozy flannel sheets of our big bed. I could hear Mr. Monkey’s steps creaking on the wood floors as he came up from the basement where he was working on some writing. He climbed in on the other side of the bed family cuddle time. We read a book and talked about our favorite colors and then decided to take a family outing to go get pancakes for breakfast.

Now there is a large ham cooking in the oven and friends scheduled to come over and play games and eat snacks tonight and a baby with the hiccups making my belly bounce beneath this laptop.

I hope that your last day of 2011 is as relaxing as mine has been and that your 2012 will be as peaceful and prosperous and joyful as I hope mine will be.

Crass Consumerism

So, did you have a lovely holiday? Have some fabulous family time? Perhaps sleep in late and read some good books?

Maybe even get some delightful presents?

Allow me to share some of the new toys and fun things that have come into the Monkey household this month (and, of course, all of these are things we bought, as I am not nearly a fancy enough blogger for companies to want to give me things for free. Though, if this was a sponsored post, the sponsor would have to be Costco, which I love, so call me Costco!)

First, Mr. Monkey and I got ourselves a SodaStream

We love it. It is super easy to use and I would guess we’ve each doubled the amount of water we’ve been drinking since we got it. We actually really don’t use it to make soda all that much (although the diet cranberry flavor was delicious) because it turns out we both just really love some fizzy water.

During the same Costco trip that landed us the SodaStream (a trip where we literally went in to pick up some photos and to have a slice of pizza and came out having spent over $700. Whoopsie) we found these completely ridiculously soft and snuggly sheets. We finally got a new mattress so we needed new sheets and I think I am almost more excited about these sheets than I am about the mattress. So cozy.

So, how do you end up spending $700 at Costco? Well, in addition to the SodaStream and the sheets, you go ahead and get yourself one of these:

I’ve only used the bike once so far as I got the cold turned sinus infection that wouldn’t die the day after we got this assembled but I really liked it. I think it will be a great way to keep cycling for the rest of this pregnancy (I don’t feel comfortable riding the actual bike anymore) and will give me another way to get back into shape once baby girl monkey joins us in April.

Mr. Monkey got me these for Christmas:

I am going to assume that they are awesome because we are having a weirdly warm December (I think the temperature is supposed to be 56 for the high tomorrow) so there is no actual snow to shoe through right now. I’m hoping we get some snow soonish so I can try them out before I feel to pregnant to attempt it.

 

I would show you all a picture of the kiddo’s favorite Christmas present but I don’t think showing you the tiny car that came with the random Pez dispenser I stuck in his stocking as an after thought would really wow you. But let me assure you, that stupid little car is getting played with every single day so far. That and the $5 fire truck I picked up at a garage sale this fall. I love three year olds. Total joy and delight for $6.75 total.

A Less than ideal patient

I know that there are some things (famine, war, Ann Coulter) that suck more than being sick while pregnant but the list is short because being sick while pregnant sucks. There are limited amounts of medicine you can take and you always feel vaguely guilty about taking medicine any ways. This is, of course, largely due to pregnancy websites that are like “oh, just drink some tea! Use the neti pot! Eat some raw garlic! See lots of ideas…oh…you are Googling “medicine you can take while pregnant…oh…well.  If you have to (you lousy fetal host with poor moral character) you can maybe gently lick the top of one Tylenol and see if that helps (selfish whore)”

I’ve had a cold for four days now and I keep waking up hoping that today will be the day I feel better and, nope, still stuffy, still congested, still crabby, still bitter that I’m on the couch, surrounded by crumpled tissues and half eaten pieces of toast.

I’m what you would call a less than ideal sick person (Mr. Monkey just cracked his neck nodding too vigorously). I don’t like to rest, especially since I am on an extended break from work and I have! an! agenda! of things I wanted to get done. There are things to be cleaned and organized and particular activities I wanted to do with the kiddo. And I can’t do those things and I am crabby about it. I should just enjoy the couch and the reading time and the guilt free napping but I yearn to cross things off my to do list.

Wah.

Pass the tissue.