Change of Plans: Private Mortgage Insurance

Hi there!

A few months ago, I changed the layout of my Statement of Net Worth Updates to include the smallest 3 debts coming up in our debt snowball.

Since the beginning of our journey I have expressed interest in paying off additional principal on our mortgage in order to get rid of the Private Mortgage Insurance on our account.

We bought our house in 2011 for $73,500 under land contract. You can read more about what a land contract is in my post here.

We put $10,000 down in 2011 and made payments throughout the years and then in 2015 we got a traditional mortgage through Quicken Loans. At that time we had paid the principal down but with extra costs added in to our mortgage our loan amounted to $64,800 and Quicken estimated our home’s value at $72,000. We were unable to come up with another down payment for the traditional financing since we were advised that we had to do repairs in order to qualify for an FHA loan.

In the end, our house wasn’t eligible for FHA lending because of an inaccessible crawl space under a kitchen nook that was added on to our home many years prior to our purchase. Since we were not able to give access to the crawl space without significant damage which we refused to consent to, our loan almost fell through completely!

Thankfully we were able to back track and get a conventional loan seeing as this is what we originally requested in the beginning. I think some strings were pulled because of our poor experience with being guided in to doing an FHA loan and spending our down payment on repairs under their advisement.

Since then, I have done research on how to get rid of our PMI. I understood there were 2 ways for it to fall off: We can request its removal early once we reach 80% original loan to value of our home, but we would have to pay for an appraisal to prove the value. The second way is if we had done substantial improvements to the home, boosting the value which would then bump us in to a lower loan to value ratio. Again, we would have to pay for the appraisal to prove the value. The third way would be once the loan reaches 78% original loan to value, the PMI would come off automatically.

I decided the latter was the best course of action because we would not only be saving tens of thousands of dollars by making big payments very early in our loan term, but in addition our mortgage payment would be reduced $54.54 a month. We would of course continue to make the same payment to our mortgage that we had all along so this would result in an additional $54.54 a month to principal for the rest of the term of the loan.

78% of our original value would have been $56,160. Currently, we owe $61,038 on our mortgage. Getting rid of PMI has been the #3 priority on our debt snowball until a few days ago when I got this letter in the mail which effectively threw a wrench in that plan.

Change of Plans Quicken Letter

It turns out that PMI is written in to our contract to remain until the originally scheduled date that we will reach 78% LTV:  8/2022. I called to verify and the rep advised that we could (surprise) pay for an appraisal and get rid of PMI early without the extra payments. I am supposed to get a call next week to tell me what the cost of that would be, since our home values are going up like mad currently. According to our May 2018 Statement of Net Worth our home is worth $88,617. That number comes from Zillow so may not be too accurate, but if it is that means our mortgage is 68% of our home’s value.

My husband is a little nervous about this transaction because it could blow up in our faces and determine that our home isn’t yet worth $78,250 and we will be stuck with having wasted our money on that appraisal and still paying PMI. But, I think it’s worth a shot. Do you have thoughts?

Update

It’s been a week since I last wrote. Since then I have spoken with Quicken’s PMI Removal department and was advised that a home evaluation will cost $200, and that they will be looking at the interior and exterior of the home, counting bedrooms, number of rooms, and looking for any updates.

In order to request the appraisal I need to submit a request in writing, and give my payment over the phone. It will then take 3-5 days to schedule the actual appraisal, and 10-14 days for Quicken to get the numbers. I was advised my home needs to appraise at $81,333 in order to remove PMI.

I have also done a little more research in to how accurate a Zillow Zestimate ® is. One article I read stated that that Zillow’s estimate is within 5% of the true assessed value only 50% of the time. It can be as much as 10-20% difference in the actual value. That article was written by a real estate company, so their opinion could be biased, but I’ve decided to wait until our Zillow Zestimate ® is $95,685 before we move forward with scheduling the appraisal. That will give us a 15% buffer, and it isn’t very far from what the value already is. Plus, I have more updates I would like to do coming up. The first of which will be adding a half bathroom to our basement. We only have one bathroom currently and it’s terrible.

Anyway, now that PMI is getting knocked off the debt snowball, that moves one of my Navient accounts, SL #1 in to its spot.

I have long dreaded when the Student Loans will make it in to the Debt Snowball countdown because they are going to take so long to get rid of. I am worried about debt fatigue.

Also, I have not been participating in my side hustle for about one month so I haven’t been making those extra weekly payments either. If I continue like this, we will have the biggest percentage rate student loans paid off sometime after 2020.

Thank you for reading if you made it this far in to my post! Don’t forget to follow me on Instagram for daily updates on our debt free journey. If you are a follower, you were privy to the PMI drama as it unfolded, and how fun is that?!

Thanks again.

XOXO,

 

Dolores

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May 2018 Net Worth Update

Hello and welcome to our May 2018 Statement of Net Worth Update.

I am late updating again, because, well things are just more fun to report when they’re going well. Things aren’t going badly right now, we are just keeping up and it’s not as enjoyable as when we are killing our debt!

May 2018 Breakdown

Assets

House – There was a huge $4,295 increase in the value of our home in May.

Savings – Emergency – This account decreased $200 because we let our son borrow $200 from it for an emergency car repair.

HSA – This account paid for a filling and I also got a fluoride treatment for my recessed gums due to my aggressive brushing. I also need new glasses soon, so I’ll probably be making an appointment this coming month. Hubby’s medical and dental doesn’t seem to have kicked in yet, so we are waiting for that before we proceed with his more extensive treatments.

Liabilities

Only one increase in liabilities this month: Once again, it was the CP – Visa account. We have the hardest time keeping this one under control.

This past month we used it for my husband’s oil change ($50) and both the dog and the cats needed food ($50).

 

Planned Debt Pay Off/ Life Update

I have set up a new sinking account for the pets which I will set aside $5 per week because I never plan for their food and it always blows a hole in the budget. And kitty litter, too. The plan for this account is to have money set aside specifically for their food and litter, vet visits, and grooming.

My mom and I have been talking recently about opening up savings accounts for our home maintenance. I have read that a good rule of thumb is to save 1% of the purchase price every year, so for my mom that’s less than $10 a week. For me, it’d be around $15. This is also a plan I want to implement when we have our rental properties.

Seeing as we also had to charge my husband’s oil change, I’m thinking that a car maintenance fund would be wise as well. That’s something to think about. We already have so many savings accounts! I may wait on this one for after one of the cars are paid off. It might be a vehicle maintenance/future car purchase account. I’m not sure yet.

Last month I reported that I would need a car repair, and we got that repair done: $849! We didn’t need to dip any further in to the Savings – Emergency account, but since we cash flowed the repair, we again didn’t have any extra money to send to debt at the end of the month.

At the time of writing this, the end of May is quickly approaching and I am pretty sure that will be the 3rd month in a row with nothing extra put toward debt.

But I’m not complaining. There is always, always a bright side. None of our payments were late, our net worth increased, and the light at the end of the tunnel is growing!

Our smallest 3 debts as of 5/2018 are:

  1. Personal Loan – $1,232 (9.5% interest rate)
  2. CP Visa – $3,776 (9.5% interest rate)
  3. PMI – $4,878

Conclusion

We decreased our debt $1,093 in May, and increased our net worth by $6,436 (thank you housing market boom) for an overall net worth of $(26,914)! I set a goal of being worthless by the end of 2018. It’s really starting to look achievable!

Thank you for reading.

XOXO,

 

Dolores

April 2018 Navient Review

Hello, and welcome to out April 2018 Navient Review!

March was a tough month for our family, financial-wise. I went over that in our April 2018 Statement of Net Worth Update. I struggled again in the early part of March with putting myself on the schedule. I did not have a check on March 9, and March 16’s check was accidentally absorbed in our checking account so I didn’t set aside any money for taxes or Navient, but I did get $20 gas. That check was $71.16.

I know I have been saying that I want to get my crap together and get going again, and I think at the time of writing this that I am back on track!

April 2018 Breakdown

3/30/2018

  • $101.65 Paycheck
  • $30.50 Saved for Taxes
  • $25.00 Filled the Tank
  • Sent $50 to Navient!

3/31/2018

  • $105.00 2018 First Quarter Cash Tips
  • $31.50 Saved for Taxes
  • Sent $75 to Navient!

That’s all I had to offer for the April 7th Statement! I was able to bring Navient #1 down $122.23, with an overall decrease of $113.05. Don’t forget in addition to these extra payments, I also make my regular payment of $217.47.

I am on a mission to get rid of the highest interest accounts. If I had not made those extra payments, I would just be treading water with Navient. Of course that is better than when my Income Based Repayment Plan payments were $90.61 and my total account balance grew over $200 every month. In November 2015 and 2014 my payments were $0 so it grew even more! I wasn’t tracking back then so who knows what the damage was.

Presently, I must admit attacking Navient #1 is not as fun as Navient #9 was. I was able to knock #9 below $1,000 right away, and once it was in the triple digits every little payment I made seemed to have a huge impact on the overall balance.

Navient #1 is not giving me that quick win, so I’m not as motivated as I was when I first started. Of course, my side hustle was shiny and brand new back then so maybe the novelty is just wearing off. I will keep plugging away, motivation or no.

My apologies for the late update. Running the numbers was a little confusing for me because of it! I’ll be back in a week or 2 with my May 2018 update.  Hope to see you there!

Thanks for reading.

 

XOXO,

 

Dolores

April 2018 Net Worth Update

Hello, and welcome to our April 2018 Statement of Net Worth!

We are a lot later than usual because we are still recovering from all that went wrong in March. Murphy is continuing to kick our butts in April, but we are almost through it now! The future looks bright. May is a 5 Pay Day month for me, and June is a 3 Pay Day month for my husband’s biweekly paychecks so we should be recovering nicely soon, and saying goodbye to our Personal Loan soon along with its $150/month minimum payment. That’ll be a nice reduction in monthly expenses.

But, as for April we could only make our minimum payments and it took us a few pay days in to April to be able to cover those expenses. But, even though we have had a couple tough months our debt continues to fall and our net worth continues to grow.

April 2018 Breakdown

Assets

House – The housing market is doing something wacky. These numbers are all a snapshot in time at around 4/9/2018 when I was able to make my last minimum payment for the bills due in April. Since I am now writing this 10 days later, the house value is continuing to sky rocket according to Zillow. The one year forecast has our home pegged to reach nearly $100k. That’s unthinkable to me, and now instead of being excited, I’m watching this cautiously. Are we heading in to another bubble?

Our real estate company recently posted a Facebook Live video stating they have stacks of files for pre-approved buyers, and not enough homes for them to buy. Demand is high and people are missing out on opportunities because they are beat out by other buyers, so they are settling for homes they don’t love, which I find sad. I wonder how long this will continue, and if the market will fall by the time we are ready to move on to purchasing our first rental property. Let’s hope so!

Savings – Emergency – Again, since I am privy to information I wouldn’t normally have when I should be writing these posts, I can tell you that we had to use some money from our Emergency Fund for my son’s car repair so we will see this asset decrease next month. I also need a car repair, but I’m not sure how much that will be and if we will be able to swing it or need to dip further in to our Emergency Fund.

Liabilities

There was only one small increase in Liabilities this month. Since we were only able to make our minimum payments, all our balances decreased as usual with the exception of the CP – Visa account.

I was able to make a few extra payments to Navient with my side hustle at Shipt resulting in a decrease of $331, which I am proud of.

Planned Debt Pay Off/ Life Update

My husband is now about 6 weeks in to his new position, and he likes it! Adjusting to the biweekly paycheck has been a struggle. The typical way that we would break up our spending money when we both were paid weekly would look like this:

Wednesday – $100 for gas and spending (usually takeout)

Friday – $100 for groceries

We used to do $50 a week budget for groceries and $50 a week for spending cash ($20 each for my husband and myself and $10 for my daughter), but since nixing the grocery budget we haven’t been able to do the spending cash. I feel like this is resulting in lots more debit and credit swipes for takeout and overall decreased happiness. Having that pocket money to save up or to spend on whatever we chose made us happy!

Since he now gets paid every other Friday I assumed that if we tucked an extra $100 in to Savings – Reg and then took it out on Non-Pay Friday that it would work out just the same. In theory, yes but it just doesn’t seem to be a smooth transition at all! Maybe that’s because of the tough couple of months we had.

I base my husband’s paychecks off 45 hours per week, and his last couple of checks have been nearly $200 more than my projection. For now, instead of adjusting my projection I’ve decided to continue with the “base” projection at 45 hours and whatever extra, is extra. This is allowing us to take our spending cash out again which hopefully will reduce the amount of swiping in our checking account. Last week I had to take $100 extra out of Savings – Reg on 3 separate occasions because we were burning through it so fast! It really was an off month. With this new tweak, I’m hoping the money I project to have in savings at the end of the month will STAY in savings!

Last month I projected we would have another $375 to send to our smallest debt, but we didn’t have anything extra at all. In fact we weren’t able to cover all of our April bills until April 8th.

At the end of April (only a few days away now as I write this) we again won’t have any extra money to send to debt. We will be able to pay all of the May bills by May 2nd instead of the last payday of April which will be April 25th.

I’m really looking forward to May and June when we will have excess savings and things will get exciting again!

The smallest 3 debts in our Debt Snowball as of April 2018 are:

  1. Personal Loan – $1,366 (9.5% interest rate)
  2. CP Visa – $3,754 (9.5% interest rate)
  3. PMI – $5,003

Conclusion

Although we had a tough couple of months we still increased our Net Worth by $3,950 for a total Net Worth of $(33,400)! The nice, round numbers are continuing!

Please don’t forget to follow me on Instagram for daily updates on our journey to a positive net worth.

Thanks for reading!

XOXO,

Dolores

March 2018 Navient Review

Hello and welcome to our March 2018 Navient Review! It’s been a weird month. I didn’t do too much work for Shipt this month because I was getting overtime left and right at my full time job. When I take in to account the cost of gas and the time spent shopping and delivering an order, I come out way ahead getting overtime hours at my full time job.

That being said, I did catch a few shops here and there.

March 2018 Breakdown Image

2/9/2018

  • $573.12 Excess Tax Savings
  • Sent $310.81 to Navient #9. Paid in Full!
  • Sent $275 to Navient #1

I also cashed in my Shipt Income Tax Savings since I got a refund! This resulted in a huge payment that got rid of Navient #9 once and for all! Now the attack starts on Navient #1.

2/9/2018

  • $56.54 Paycheck
  • $16.96 Saved for Taxes
  • Sent $25 to Navient!

2/16/2018

  • $47.85 Paycheck
  • $14.36 Saved for Taxes
  • Sent $25 to Navient!

3/2/2018

  • $51.16 Paycheck
  • $15.35 Saved for Taxes
  • Sent $25 to Navient!

Recap

I sent a total of $660.81 extra to my student loans for the March billing cycle, and reduced my loans a total of $673.05! Not bad at all.

I know I said last month that I was hoping to get back in to the swing of things, but we had an unexpected turn of events at my full time job which resulted in me being needed there so I didn’t have much time for Shipt at all.

I am hoping in the future to start making around $100 per week again so I can continue getting these debts paid off!

I have also decided to clean out my cash tips jar quarterly so we will see those payments 3/31, 6/30, 9/30, and 12/31.

Thank you for reading!

XOXO,
Dolores

March 2018 Statement of Net Worth Update

Hello, and welcome to our March Statement of Net Worth Update! I’m a little late this month because I have been so busy at work, but we have a couple of exciting changes going on this month that I’d love to share with you. Just keep reading!

March 2018 SNW Breakdown Image

ASSETS

There were quite a few decreases in our assets this month.

House – We are never really worried about when the house value falls a bit here and there. The house across the street from us is being foreclosed on so we will see if that affects us in the future.

Dodge Dart – I downgraded the condition of our Dodge Dart from “very good” to “good” since I was in a wreck with a deer last October, and it has had a couple of run ins with runaway grocery carts at my husband’s old workplace.

Savings – Taxes – I withdrew the savings in this account as we didn’t owe taxes this year. I sent the extra money to Navient.

HSA – This is a new asset account! I mentioned in my last post that my husband has some medical concerns that we have been ignoring, and since being wiped out by medical bills is a huge fear of mine, I decided we would start tucking money away here. The goal is to get the savings up to our combined deductibles ($4,250), and then anything extra we will invest. I guess we are jumping the gun a little bit in to retirement savings, but this makes me feel better about my fear of medical bills.

LIABILITIES

No increases this month! I remember when I used to have a goal that we would see no increases in liabilities, and now it is expected that there will be no increases.

We do have some larger than normal decreases which I will highlight below.

Personal Loan – In March I estimated that we would have an additional $500 – $750 to send to our smallest debt. We actually had $400 which I sent to our personal loan along with the minimum payment.

Navient – I was able to pay off one of my student loans with our Savings – Taxes account mentioned above. The overall balance decreased $479!

Planned Debt Payoff/Life Update

Here are the changes coming up this month that may result in some challenges.

My husband starts a new job this month! At the time of writing this, his first day is tomorrow. We negotiated his salary 41% above his original offer. That sounds super impressive, but the original offer was sort of insulting. The drawbacks of the new position is that he now will have a 30 minute commute while in training and his paychecks are biweekly now. The latter shouldn’t be an issue since we haven’t lived paycheck to paycheck in quite a while but still, it’s different.

Another drawback is now he won’t have medical insurance until 30 days from March 12, but a good side of that is that he was on a high deductible plan at his last position, so with the life changing event we can get him in to an insurance plan that better reflects our needs.  But, that higher coverage insurance will likely cost more at the new job than the HDHP did at his old one, but that’s just conjecture at this point and not really worth debating since he needs better insurance.

This could change our HSA savings goal as well. Remember, the goal is the sum of our deductibles and anything extra invested. Higher coverage may mean less deductible. We will of course look in to what we expect to spend and estimate which will help us come out more ahead.

At the end of March, I estimate we will have an extra $375 to send to our smallest debt.  Here is our updated debt snowball for March 2018

  1. Personal Loan – $1,506 (9.5% interest rate)
  2. CP Visa – $3,746 (9.5% interest rate)
  3. PMI – $5,127

I hope that we have closer to $400 extra to send, because together with our minimum payment we could get our personal loan below $1,000!

Conclusion

We increased our net worth by $1,058 for a total net worth of $(37,350)! How’s that for a nice round number?

Please don’t forget to follow me on Instagram for daily updates on our journey to a positive net worth.

Thanks for reading!

XOXO,

Dolores

Addressing My Biggest Fear: Financial Ruin Via Medical Bills

I am an unusually healthy person and only go to the doctor for annual checkups. I rarely get sick and I have a high pan tolerance so when I do get sick or injured (think: The Haunted House Incident), I often muscle through it. It’s a source of pride for me if you can’t tell. This makes me a perfect candidate for a High Deductible Health Plan.

My husband however is not so lucky. He has a medical condition that has been ignored for years: a dangerously low heart rate. Recently, he failed a physical because of it. His heart was beating a mere 32 beats per minute, and he was advised that he is at Stage 2 of having a heart attack. Stage 3 is heart attack and possible death. He went from getting a standard physical for an exciting new opportunity to a scary reality check. We cannot ignore this anymore.

I dealt with this news by becoming angry which is my usual method of adjusting to a stressful situation: Anger, Defeat, Acceptance, and then eventually Planning.

To be completely honest, this has always been my worst fear since starting out becoming financially secure, attaining good credit, and buying a home.

I am reading a book called The 9 Steps to Financial Freedom by Suze Orman, and she advised us to address what we are afraid of. I am afraid I’m going to lose everything. The one thing I see that could wipe us out is a medical emergency resulting in medical bills we can’t afford, debt, collections, law suits,  bad credit, financial ruin, AH!

My husband and I ran numbers a few years and found that we were both better off paying for our insurance individually. Since I enjoy good health, I have been part of a HDHP for a couple of years now. In 2017, I contributed $500 to my Health Savings Account in order to get a maximum $250 match from my employer. I used the savings for medical, dental, and vision bills for my family, and any bills above the $750, I contributed after tax dollars and deducted that from our income at tax time.

Even though I am the only person covered on my plan, I am still able to pay for bills for my spouse and my dependents.

Knowing all of this, and having this medical scare for my husband brought out the planner in me.

I have mentioned before that every debt free journey is going to be personal because we are dealing with personal finance. This is another way that I am tailoring our debt free journey to our specific needs. A medical emergency scares the living daylights out of me. I don’t want to hide anymore. I don’t want my husband to go on pretending he is healthy only because his condition hasn’t become serious enough to affect his daily life yet because in reality, eventually it will and waiting will only make it worse.

We are going to do what we can with what is available to us and start preparing for the bills that are coming as he gets his work up done by his cardiologist. I’m going to decrease my take home pay in order to increase my HSA contributions.

I have read that a good rule of thumb to contribute each year to an HSA is the amount of our deductibles. My deductible is $1,750. His is $2,500. Yes, that’s right. My unhealthy husband is in a high deductible plan. We will have to fix that coming up! More about that later.

Since I am the only one covered on my HDHP Plan, the most I can contribute is $3,450 even though our deductibles add up to $4,250.

Now, I know that we could use that $3,450 a year to pay off debt and keep going on our merry way, but like I said this medical issue needs to be addressed and it needs to be worked in to the budget. This is how we are going to do it. Maybe it’s a little wacky, a little doomsday if you will, but it makes me feel worlds better. We will be adding the HSA balance as an asset account in our Statements of Net Worth Updates beginning in March 2018.

Here are some notes from a little research I have done.

HSA Notes

2018 limit is $3,450. After age 55 you can contribute $1,000 catch up.

Only I am covered on my HDHP, but I can pay for medical, dental, and vision bills for my husband and children. Hearing is covered as well.

Unused money rolls over year to year and is able to be invested once your account exceeds $1,000 (I plan to keep the amount of our deductibles as a “cash reserve” before investing in a mutual fund).

If I leave the plan, I still own the money but I can’t contribute any additional funds.

All contributions (matches from employer, gifts, after tax additions, and pretax additions) all count toward the maximum annual contribution.

After age 65, you can withdraw the funds for any reason just like a 401(k).

I am not eligible for an HSA if I have other insurance in addition to my HDHP.

A Happy Ending

Remember that failed physical? Well, the cardiologist declared my husband healthy enough for the opportunity which brought him to the Medical Center for his drug test and physical in the first place!

He has a new job training to be a manager with a competing company. This is a life changing event, so you can bet your bottom dollar I will be pouring over his medical plans and not letting him go in to a HDHP again!

I hope you learned something from our experience and my notes above.

Thanks for reading.

XOXO,

 

Dolores