Month: February 2018

How to Buy Your Very Own Home

It has been exactly two months since Massimo and I bought our first ever house!! Needless to say, this was a dream come true for us. A dream we worked hard to realize. Like most adult things, houses do not just land in your lap. You have got to work for it. With a lot of grit, sacrifice, and reliance on God’s direction, we got our keys and finally have a place to call our own.

Owning your own home is not for everyone. Much like a college education, it is something that is quintessentially “adult,” but that does not mean it will fit in everyone’s lifestyle. For us, we knew we wanted a house as soon as we could afford it. We wanted the space, independence, stability, and opportunity for investment. For these reasons, we lived below our means in the four and a half years we lived on our own. We lived in small apartments that cost less. We saved aggressively and often. We had our eyes on the prize and got there just in the time we needed.

If you know a house is something you want someday, or if you even may want a house someday, there are things you can and should do now to help. Follow these steps for the smoothest, fastest path to home ownership!

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House hunting involves a lot of flashlights and imagination.

If you want a house ever: Maybe next year? Maybe in five years? This is what you should do if a house is ever on the horizon.

1. Get organized.

In the mortgage application process, your lender will request lots and lots of paperwork from you, some from several years in the past. They may also need explanations of things like credit or income history. Later on, when you are running your own house, you should know where to find your insurance declaration and how much your last fuel bill was at the drop of a hat. It is a great idea to get in the habit of being organized now: you can get those documents to the bank in a jiffy when the time comes, and your life will be less complicated in general.

I have several binders with tabs to keep track of all our important documents: a binder for tax returns and all supporting documents from the last five years, a binder with paystubs, IRA paperwork, and other financial records in another, and a binder of bills (electric, cable, health insurance) in another. Some records I just keep digitally. And be careful: just because you signed up for electronic billing or statements, you should keep them all saved on your hard drive or cloud as well because some companies only allow you to access the last 12 or 24 months on their systems.

2. Become budget people.

You will need a budget to save up for a house, to determine how much house you can afford, and to actually run that house. There is no better time than right now to start a zero-based budget and stick to it. Make adjustments every quarter or six months, and honestly track your spending. Like tracking weight loss, it does no one any good to falsely report your spending to make yourself feel better.

We keep track of all our budgets in excel or Google spreadsheets. It’s great because I can update digital versions wherever I am, and make graphs to show progress. I have written about budgeting and the app I like before – check it out.

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3. Start to imagine your home.

So, you want a house someday? What kind? How big? Where? These are critical questions to consider if you ever want a home. Buying a three-story colonial in California is a really different process than buying a modular home in North Carolina. Some goals take longer to achieve, and having your eye on a particular type of prize can help you stay focused and get yourself in order for when the time comes.

If you want a house within the next two years: We are ready. This is what we want, and we want it soon. Let’s do this!

1. Get a separate savings account.

I cannot emphasize enough how important it is to separate your savings from your spending money. It prevents you from accidentally dipping into money that is allocated for something else. It makes you feel like you have less money to spend, because you don’t see your growing savings account every time you pay a bill. It makes you really consider and slow down to access that money. It will take you 2-3 days to transfer your savings money to a place you can spend it, so you have time to think. Fun cheap or free says you should have 7 bank accounts for your family. I cannot manage that many, but I do have at least 4. My favorite place to save money is Sallie Mae Money Market (I have written about them before and their interest rates have risen since then.) This account has no fees, no minimum, and you can open it online right now. There is no excuse for co-minging savings and spending money – go do it now.

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2. Save like it is a bill.

When you make your updated budget to get down to hard-core saving, determine how much you can realistically put aside every month. And then add a little to it. We make ambitious budgets that force us to find extra income and say no to extras. You do not need to do that, but commit to saving so much it scares you. In our case, we ended up saving approximately the same amount as our rent, so we were essentially paying two rents every month. Then set up automatic withdrawals to your separate savings account (like you already have, per #1, above). Every month, you will be forced to make sure there is enough money for that automatic withdrawal just like you make sure there is enough money to pay all your other bills. Pay yourself first, and do not think of it as an extra.

This changed everything in the way we saved for our house. At first, I was only putting aside whatever we had “left” as “bonus” money after paying all our other bills. By setting up automatic withdrawals, I was forced to treat this budget item just like rent and student loans. I owed myself that money. I did pause the automatic savings for a couple of months when we really needed to (like when we took time off of work when Theodore was born), but we also added extras to this account when we had a bonus or tax refund.

3. Start your must-haves checklist and scan the internet for listings.

Remember the idea of a house you started in the first section? Refine that list. Look at options available in your potential price range and location. Think about why you want a house and what it needs to do for you. Our list focused on our family and my husband’s job. We knew we wanted kids, and that my husband wanted to run his guitar shop out of our home. These two requirements set the list for us. From there, we started looking on realtor.com and zillow.com., and  set up automatic searches based on our preferences. We were inspired and encouraged to find options that fit our list, and reviewed them together. We also learned what things we did not want by looking at these options.

4. Keep your job.

When applying for a mortgage, your lender is going to want to see at least 24 months’ history at your current job. Obviously, some circumstances are not in your control and you may have to change jobs. But if you are considering it and can have some say, try to get in a job you like and keep it at least two years before you want to buy. It will simplify the process and make you a lower risk for your lender.

If you want a house in the next six months: We have been saving, we are getting tired of this apartment, and we have a baby on the way. We see the finish line!

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1. Find a realtor.

Get a recommendation from someone you trust and hire him or her. You may not know this, but in Connecticut, in most cases the seller pays both realtors out of his proceeds. You probably will not have to pay him or her, but you get the benefits of having a realtor. The realtor can help you decide if a price is right and how to frame your offer. She can get you into houses for tours, has access to the official property listings, and refers you to everyone you need: inspectors, banks, attorneys, etc. They also help coordinate and organize all the dirty details towards the closing. Realtors are very helpful.

2. Find a lender.

It is very helpful to go to a lender first, give them your basic financial information, and get a prequalification for a loan. This will give you a very good idea of your ideal home price. You can also learn about other types of loans besides a traditional mortgage, such as construction or renovation loans. They can help you have confidence in how much any given house would cost you, and a prequalification letter can strengthen your offer if there are multiple parties looking at the same property.

A tip when talking to your lender: let him or her know exactly how much money you have to spend. They may look at your bank account and see $20,000.00, but be honest and tell them you want to keep $6,000.00 after this house purchase as an emergency savings account or to help pay moving expenses. They really, really need you to be honest and it makes every thing easier to be on the same page.

3. Keep looking online and reviewing those automatic searches.

Your realtor is great, but she may not see something you happen to. In my experience, it works well when both you and your realtor are looking for places. The more properties you review together (either in person or online), the more you both know about what you want in a house. Both Zillow and Realtor.com have automatic searches that send you emails with new properties which fit your specific needs: location, price, etc.

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4. Save like never before.

You have been working hard and scraping and saving and you finally have enough for your down payment. Guess what? It’s not enough. In Connecticut, where I have closed dozens of mortgages and just purchased my own home, there are plenty of extras. There are loan and inspection costs – about $1,000.00. There are closing costs – add at least $7,500.00 to your down payment. There are also moving costs, which vary depending on how far you are going. There are also things you will have to and want to buy for your first home: curtains, rugs, smoke detectors, a snow shovel. In this final stretch, eat out at little as possible, get side gigs, and move in with relatives to save even more if you have to.

Pro tip: with most mortgages, the first payment is not due the first month you are there. We purchased December 16, and our first payment was not due until February 1 – they build in a whole month where you have no mortgage payment and possibly no rent. Use this month to your advantage, but be prepared anyway!

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It’s our’s!

People always ask me: how much do I need to save for a down payment? To save the most money in the long run, you will want to put down 20% of the purchase price. This will pretty much guarantee that you do not need to pay private mortgage insurance. But 20% is a lot of money, and that may sound insurmountable to you. So keep a few things in mind. (1) If you are a veteran, you may qualify for a house with a 0% down payment. I do not recommend it, but it is possible. (2) There are basically five types of mortgages: 3%, 3.5%, 5%, 10% and 20% down. They each have pros and cons, and different fees attached to each one. My advise is this: shoot for 5% or even 10% down (plus extra for closing costs and some in reserve for your extra savings), and you will be very well-positioned to buy.

And you do not need to have all of that to start looking. It will take a while to find the right place, so start shopping now. For us, it was seven months between touring our first house and moving into our very own home. For most people, it takes even longer.

Happy home-buying! I hope you found this advise helpful and that you can implement some of these tips to become a home-owner in no time at all! It is a big, big dream, but if you want to own your own place some day, I say go for it! It took us about two years of hard-core saving to buy our house – a blink of an eye in the long run. And now we have this adorable, perfect home in which to raise our family and run our businesses. Truly, a worth-while sacrifice.

-D. E. Barbi Bee

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Beware of falling fire extinguishers

On Wednesday morning, my biggest concern was the weather. There was a messy snow-sleet-freezing rain event predicted for that afternoon, which would be just about the worst when I was due to travel to Niantic for an emergency probate hearing.

Little did I know the precipitation would not be the most significant object falling from the sky. Instead of watching the weather reports, I should have been watching out for falling fire extinguishers.

It was already an unexpectedly hectic morning, since I forgot my pump parts at home and had to go there to pump during lunch. Then I went straight to the gas station to fill up before making my way out of town. I left myself over an hour to take a thirty-five minute trip, because I was anticipating a slick ride.

After filling up the car, I leaned into the driver’s seat to get my phone. I always took it with me to take a picture of my check after pumping gas, to keep a sort of “receipt” on hand. With my phone in hand and put my foot back on what I thought was the ground and instead stumbled backwards off the edge of the raised area of cement around the pump kiosk.

While clearly *not* gracefully falling backwards into the cramped, filthy space between the pump and the steel post beside it, I somehow either hit or instinctively grabbed at the massive fire extinguisher hanging in a bright red encasement on the steel post. The red plastic broke, and just after my butt hit the ground, a deep and heavy “clang” hit my head.

I thought the roof was caving in, but I soon realized the fire extinguisher – ever at the ready to aid in an inferno emergency – had eagerly lunged from it’s post and came crashing down on my skull during it’s very brief escape,  which quickly ended with a slight roll and then a halt in the parking lot behind me.

It is difficult to explain the sound of a fire extinguisher hitting your own head, but imagine the sound of a mostly empty 55-gallon steel oil drum hitting a concrete floor. Very close to that. And shockingly loud.

After conducting an assessment of life’s basic functions, and suddenly realizing no one was asking me if I was okay, I looked around to see no one was there. All the cars around me were abandoned, and I was in odd position of deciding what to do next. Cry? Try not to, dear. Yell? I think I can get up. Call Massimo? Not now.

Let me try getting up.

I did, and after a brief near-breakdown leaning over my front seat, I made my way inside, if for no other reason than to inform the clerk she should pick up the fire extinguisher before someone hits it with their car.

I did not exactly know what to say when I got inside. I was upset, dirty, and beginning to shake from the adrenaline. I opened my mouth. “I don’t… I’m not sure how to put this…. The fire extinguisher fell on my head.”

The staff took a moment to register what I said, and then rushed to give me a seat and I asked for ice for my head. They gave me water, which helped me stop shaking.

After a while the pain came, but I realized this was not nearly as bad as it could have been. I had no blood. Did not lose consciousness. I wasn’t feeling concussed. And other than the facts that I had left myself ample time to get to court and now I would be late, and my black pants and coat were filthy, I was mostly absolutely fine.

Banged up, but fine.

My co-worker drove me to court because at that point I was concerned my condition could change and I would rather not be behind the wheel when that happened. Everyone continued to ask and question, and practically force me to go to the hospital to get checked out but by the next morning, the only evidence of the accident was the bruise on my thigh. My head was completely painless.

Other than being extremely happy and thankful I did not get seriously – or even minorly – injured in this odd episode, the other strange experience to come from the falling fire extinguisher is that it was the first time I got hurt as an attorney. And people are weird about attorneys getting hurt.

Most assume attorneys are litigious folks – who can and will sue at the drop of a hat, and drag it out, for that matter, and make your life miserable! But, in my experience, most attorneys are the opposite. Maybe it’s something about how doctors make the worst patients, and caregivers look out for themselves last: with all the litigation around me, the last thing I want to and have time to worry about is a lawsuit of my own!

Maybe it’s because I see the ugly side of litigation. I love my job, but it is hard, and litigation is hard and exhausting and long, and even if you win you never really “win.” All that to say, I know how difficult litigation can be, and even though I am a lawyer myself – or perhaps because I am a lawyer myself – I do not have any interest in being a party in a lawsuit.

I also know the reality. People threaten to sue all the time, in the heat of an argument, anticipating the sweet judgment they receive imminently will release their feelings and make the other party feel the weight of their wrong. But those are hot-headed feelings. They go away (or at least they should), and I know that litigation takes a long time. I know it takes trips to court. And letters. And decisions. And discovery. And phone calls. And meetings. And in the end, their insurance company pays out and lawyers take their bit and your insurance company takes what is their’s and you get what is left. And those feelings you started with are a distant memory. And the other party you were so eager to get to feel how wrong and evil and bad they were didn’t even pay anything.

Now, to be fair, in my case I would have had no choice but to demand compensation for my medical bills, because with my insurance plan, they could be tens of thousand of dollars out of pocket if I had a true injury. But I have no interest in going to doctors, getting tests, getting treatment, paying bills, and demanding compensation. I have no interest in suing anyone. I have no interest in stressing anyone out. I have no interest in getting hurt!

There is a time and a place to sue. There are strategic and necessary and justified reasons to go to court. There is a way to go through litigation with as little pain as possible. There is a reason for the judicial system and for my job, or else I would not be here!

But this, thankfully, was not one of those times. It was an accident. I am literally fine, and we can all move on with our lives.

– D. E. Barbi Bee

Favorite of the Moment: thredUP

I saw the ads and thought to myself: “90% off top brands? There must be a catch,” and moved on.

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But then my cousin sent me a referral to use the site (by the way, referrals to friends get you each $10.00 credit when the friend places her first order. But watch out – the credit does expire!), so I knew it had some credibility because my very intelligent cousin could not have been swindled.

So I dove in, and it is my new and irreplaceable source for clothing! I have already placed several orders with thredUP, and the completely online store came into my life at the most perfect time: as a new mom, I have no interest in packing up myself and my son to spend hours shopping in a brick-and-mortar only to find limited styles and high prices! Online is the only kind of shopping there is, as far as I’m concerned.

So here it is, broken down for you. Here’s the skinny on the self-proclaimed Largest Online Thrift Store and Consignment Store: the good, the bad, and the 100% my opinion.

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What is it?

I’ll tell you what it is not first. ThredUP is not Wish (an app that sells clothes, electronics, makeup, and accessories at apparently deep, deep discounts because they are actually Chinese knock-offs.). I was afraid that is what it was at first, because their claims seemed too good to be true. But it is not.

ThredUP is an online thrift and consignment shop: they sell clothes, shoes, and accessories for women, children, and babies at discounts way below their retail price. You can even get a “clean out” bag to send them your own unwanted items to add to their stock.

I cannot vouch for the authentication techniques for their designer and luxury brand goods (I know that is very important to collectors, I just don’t really go there), but I can tell you that this site sells actual, brand-name clothing at great discounts. And although it is called a “thrift shop,” not all items are used. Some items are brand-new, and labeled as “new with tags.” If you sell items on their site, you either get paid when you give them your unwanted items, or on consignment, receiving a commission when they sell.

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The Goods

My favorite feature is the user interface.  The first time I used it I exclaimed to my husband how nice it was to see a site actually built for the on-line experience! Most e-commerce sites started as in-person stores, and build a site after to go along with it. This is the opposite. It is so easy to add filters, see comparable sizes, and even similar brands. The best feature is that you can save your size and brand preferences, and when you search they automatically filter the results for your size every time! You can turn this off, and see all results, too. But, man, what a wonderful feature.

Another cool feature is the Dressing Room, where they give you recommendations based on your favorite brands and past purchases. They even save all your past orders and show you them in “My Closet,” which also has items similar to or that can be worn with the pieces you already bought.

Can we talk for a minute about their prices? I do not go around buying clothes brand-new, but if I did, I would be saving hundreds on my clothes every time I buy them through thredUP instead. Pretty much everything I get is less than $20.00. I love that I always know I am getting a good deal, instead of hunting through the clearance sections of my favorite stores. And I have never, ever had an issue with their quality. Every piece comes perfectly clean, not stretched out, and feels brand-new. They also almost always have some kind of sale going on, and you can usually get great discount codes in your email inbox.

I love shopping at thrift stores, because they save me money, they are good for the environment, and they are full of unique pieces that aren’t in every window at the mall. But the problem with going to Goodwill and others is the endless searching through racks and racks to try to find something from a good brand. I just don’t have that kind of time right now. With thredUP, I can search for specific brands (L.L. Bean, Ann Taylor, Calvin Klein, Anthropologie), or something I need in particular (a white button-down shirt, a black shift dress, a floral romper) and save tons of time from both going to a store and searching through the racks.

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The Less Goods

There is always, of course, room for improvement. One thing you may not be used to with thredUP is the way the items are presented. Clothes are put on a mannequin and photographed very well, but it is not the same fit and presentation as when a brand photographs it on models. ThredUP adds thousands of items everyday, and you can imagine that when they are trying to post inventory so quickly, they don’t have time for custom photoshoots. So sometimes the shirts are ill-fitted on the mannequin, or the dresses haven’t been steamed thoroughly. It is just something to get used to, but it never affects how the item looks in my hands.

Something else to be aware of is that they don’t have Amazon’s two-day shipping. In fact, their shipping takes a little while. It is strange how quickly I have become accustomed to free two-day shipping, when catalog orders used to take four weeks to get to your door! ThredUP isn’t that bad, my most recent order will probably take about ten days to arrive from when I placed my order. These things are not coming from China, so it is not months, but it also not Amazon Prime fast. Just be aware when placing your order for a special event.

You can’t let items linger in your cart for days. Because everything is one-of-a-kind, you can’t put something in your cart to leave it and think about it for a few days. In fact, the site only promises to reserve something for your cart for 24 hours. So you can save it, but after that period someone else could snag it. It makes sense in a thrift shop, but it is a habit I have with other sites I can’t really do on this one.

How to make the most out of thredUP

  1. Use discount codes. They often offer 20% percent off, or free shipping. But you can sign up for emails and wait for a 40% off deal! They come around often, so just be patient.
  2. Know the brands you like and your size in that brand. Every item has detailed measurements so you can check the fit, but it is best to know your size ahead of the purchase, to avoid any fit issues (There are free returns within 14 days with most items, for store credit.). While I love discovering new brands, I also love snagging items from labels I know and trust. That is the beauty of thredUP.
  3. Be aware of what the “savings” numbers mean. Every item has a thredUP price and a strike-through estimated retail price. They also compare the two and tell you how much you are saving from retail. Just be aware that although I have never seen any estimated retail price that didn’t seem accurate to me, they are just estimates of a comparable item from that brand, they may not necessarily be what the original retail price was.
  4. Look at the Condition. Every items has a condition description, in addition to the measurements and fabric. I have never had an issue with the condition of items I have bought, but you can get something that “looks brand new,” “is brand new with tags,” or “has minor signs of wear,” among other descriptions.
  5. Buy special items. ThredUP is not where you should buy your plain black socks and white tank tops. It is where you should buy maternity clothes, a dress to go to your roommate’s wedding, and a fleece pullover.

I hope you enjoy the frugal, high-end options available at thredUP and all it has to offer! I am a big fan, as you can tell, and love helping you save money!

Happy Thrifting!

D. E. Barbi Bee