Making Financial Decisions - Part Two

A couple of nights ago it was a cool evening and we turned off the air conditioning and the house remained quite comfortable.  On those nights I treasure sitting on the back deck, with a cup of coffee and reading a book and talking with my DH.   It's a nice way to spend an evening. We started talking about painting the house and how hard it was to start the project with the rain and heat, which led to a new discussion. 

My DH talked about getting a loan next year to side the house, install new windows and first and foremost to put a new roof on the house.  He added that he would like to also check into the cost of making our back deck/porch into a four season porch, but that it wasn't necessary - just a dream. 

Next July the only debt we will have is my car payment and our mortgage.   Since interest rates are very low, this could be a good choice for us to make.  But is it? 
Here is what is going into our decision making process:

1.  Our house is old and the wood siding on it is over 130 years old which means it is not holding paint very well, the house is not insulated very well and the downstairs has the original windows.  We will be living in this house until they carry us out of it either on a stretcher to a nursing home or to a funeral home.  My DH and I know that we cannot continue to paint the house on our own and that it is a goal of ours to have the house sided.  Couple that with new windows and I know that our monthly utility bill would be greatly reduced.  The value of the house would increase but that is not the primary factor.  The primary reason to do this would be for ease of upkeep and lower utility bills, especially in our retirement years.

2.  I've already touched on this one - we plan to continue to live in this house through our retirement years. Many times people will renovate their home to increase the value hoping to make a killing when they go to sell it.  Unfortunately when the housing bubble burst many people found themselves stuck with a house that had beautiful renovations, but they were upside down in the mortgage.  We buy a house and live in it.  Yes, it is an investment but any renovations we make to the house are renovations that we want done so that we can enjoy living in the house.  For example, a four season porch does not add a lot of value to a house in our area of the country, but if we can afford it, we would enjoy it for years. 

3. We will be taking on new debt but our mortgage payment is very low.  We could afford a second loan payment next year.  A big push to have this done is we know that we would have to obtain a loan whenever we take on this project and interest rates are low and should continue to be low one year from now. 

4. We will not go overboard.  If it will cost a lot to do what we would like to do to this house, then we will not make renovations and in 3 or 4 years when the economy rebounds, we will sell it and buy a house that has new windows and siding. We will not over extend ourselves and get carried away just because interest rates are low and we are able to get a loan. A loan is just what it is – borrowed money – and is not “found” money.

5. If we take out a loan, then we will not be able to hire out any remodeling projects for the inside of the house. We will be doing a lot of DIY projects. When we talked about those projects, I made a mental list and realized that we can do the majority of the projects ourselves. It’s a trade off.

6. Should we even be thinking about this in light of the economy and unemployment being high? This is a very tough question. It’s a gamble. While my DH’s job appears to be safe, I cannot say that with 100% assurance. Who can? How did I settle this question? I didn’t. This is just one of those unknowns with a risk to it. I have no idea what the future holds, but since we will not face getting a loan until next year, we have plenty of time to think this over and in time we will see where the economy is heading.  If we reach next summer and we are a little uncomfortable in getting a loan, then we will wait. 

7. Let’s also bring into the discussion this point. I could go back to work and earn the money over the next year to pay for these projects and we wouldn’t need a loan. Yes, I thought of this. When I brought up the possibility of my looking for a job, my DH made a comment to me “Your job is to take care of us.” Ten years ago I would have been hopping mad at him for making that comment. Today our lives have changed so much for the better with my being a SAHW/SAHM that we are not willing to give that up, nor should we. After one year we have become accustomed to one income living and even though some months we have some financial challenges, we are making it.

Is it frugal to take out a loan? In looking at our situation I know that since we will need to take out a loan to complete these projects, it is better to take one out when interest rates are low IF we can afford it.  If interest rates are low and we can't afford a loan, then it does not make sense to take on the added debt.  We have to look at the total loan amount and not just at the payment. 

Thankfully we have a year to think this through and make the best decision for our family.

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Air Conditioning Season is Here

It's air conditioning season here in Iowa and that is one area I will not be cheap.  I am so sorry but when it is 90 degrees and there is a lot of humidity, I want to be comfortable and cool. One other thing I won't be frugal on is "Skinny Cow" ice cream sandwiches.  They are well worth the expense.  I never  see a coupon for those but I buy them anyway. 

 We do a couple of things in our morning routine to guarantee that our air conditioners do not have to work too hard.  Since the front of our house faces east, I always pull the drapes to block the sunlight.  The same goes in the back corner bedroom that faces west.  When the sun reaches high in the sky that back bedroom can start to get really warm.  I invested in some heavy, insulated drapes to keep the room cool/warm depending on the season. 

The main floor of our home is heated by a boiler so we have window air conditioners to cool the downstairs.  The upstairs was a former attic and it has a separate force air furnace with a central air unit to keep it cool. 

There are many days when I have the drapes pulled downstairs that I do not even need to run the cool setting on the air conditioners.  Yes, it is dark, but as long as I am comfortable I can deal with a little darkness.  Actually housewives have been doing this for years to keep their homes comfortable in the summer.  My grandmother always pulled the drapes to keep the sun out and she placed a few fans in strategic locations to keep the air moving in the house.

As to the upstairs, I apply the same principle of closing blinds to keep the hot sun out.   Also on the days when it is unbearable I run the central air at the start of the day and keep the setting at 80 degrees.  Our airconditioner/furnace repairman has always told us to keep the thermostat set at a constant temperature and don't move it around a lot.  He also recommends not waiting so long to turn on the air conditioning so that the air conditioner unit has to work non stop for an hour trying to get the upstairs cooled down. 

One other thing we have done to help with keeping our home cool is to plant some trees.  Three years ago for Father's Day I purchased two trees for my husband and we planted them on either side of our house.  They have grown a lot and are already giving us quite a bit of shade.

As I have mentioned in previous posts, we live in a very old house.  Our plans are to someday side it and put in new windows.  At that time we will also add insulation.  I wouldn't be surprised if there isn't much insulation in some of the walls of the house.  Even so, our heating/cooling bills are not too bad and I truly believe it is because we are vigilant about keeping the thermostat set at a constant temp, having it set at a lower setting in the winter and a higher setting in the summer and we are keeping the drapes closed on those summer hot days and open for the sun to help warm the house in the winter.

One other thing we do is to have our heating/cooling systems serviced.  On Wednesday of this week we had our central air conditioner checked.  We will have to replace it either this year or next year.  I asked for an estimate of the cost and someone will be here next week to go through the house and give us an estimate for not only a new force air furnace and air conditioner unit for the upstairs but also for a new boiler to heat the downstairs.  We are also going to get an estimate to run a separate air conditioner system to cool the downstairs so that when we do side the house (several years down the road) we won't have to install window air conditioners.

I love to dream.  Many evenings we sit on our back deck and talk about what we would like to do to the house if we had the money.  It's always fun and actually some of those dreams have come true.  My DH will tell me something like "actually I think in a few years we will be able to afford to do that."  I never dreamed we would be able to live on his income alone and continue to renovate and update our home. 

I know we don't have a lot of money right now to put into the house, but we will be in a better financial position in a couple years.  It would be costly to replace everything at once but knowledge is power.  Knowing what something will cost helps with planning out when to replace something.  We can do the central air conditioner this year, perhaps next year we can afford a newer furnace.  One thing I keep in mind when we discuss spending money on our house, is that we have every  intention to live in this house well into our retirement years.

How does this affect our household budget?  I keep on buying the "Skinny Cow" ice cream sandwiches ($3.99 for a package of six - oh and they are oh soo good and only 160 calories) and I try not to overspend in other areas of our budget so we can continue to plug away and pay off bills and put money in savings.

The Bathroom Remodel was Easy Compared with Finding a Shower Curtain

In March of 2009 we had saved up enough money to have our main floor bathroom remodeled. It was in terrible condition.  The tub was cracked and the toilet had issues.  The sink was pulling away from the wall, just to name a few of the problems.  The prior owners to our home had done a lot of the "cosmetic" renovations themselves and they should have saved their time and hired out instead.  The walls in the bathroom were uneven from where the drywall did not meet.  I'm not kidding.  Also if there was any type of oak - wicker accessory available in 1982 when they remodeled, then they bought it.  For a small bathroom all the walls were covered with shelves, mirrors and cabinetry.  It was awful.

It was a hard decision when it came to parting with the money.  We did know at the time that there was a good chance that I would be losing my job that summer so this made the decision more difficult. After a lot of thought we decided to go ahead and spend the money as it would definitely add to the value of the house.  With all the other remodeling jobs that we need to do to our house, this is the only project that we cannot do on our own.  Also the bathroom needed to be done as we were having plumbing issues with the tub and toilet and so we bit the bullet and spent the money.  The key here is this:  we had saved up.  We didn't need to borrow the money and best of all, we never went over budget.

When we had the money saved up, we hired a contractor and he got to work making it a bathroom that we were not afraid to have a guest use.  When he gutted the bathroom we found wallpaper from the World War I era.  It was beautiful.  Then we found lime green, pink and yellow wallpaper from the 60's.  Oh my.  I never took pictures of the bathroom before it was remodeled because I knew I will never, ever forget what that room looked like. 

I was determined to not have a too modern looking bathroom in an old Victorian house and I was also determined that we were going to stay on budget and not break the bank.  This meant I would be putting in a lot of sweat labor while working a 50 hour per week job. 

I spent hours taking layers of paint off of the woodwork around the door frame and the door itself.  We found a local carpenter that was able to mill woodwork to match the rest of the 125 year old woodwork in our downstairs, then I stained it.  It took me 18 hours to get the layers of paint off of the radiator.  Yes, it was hard work but the result was a nice bathroom with touches of the past. 

This bathroom is used by our youngest son and also by overnight guests. 

Yes - I still need to stain some of the door frame

The infamous radiator.

Picking out the cabinetry, the fixtures, the tile flooring and the wall color was easy in comparison to finding a shower curtain.  For the past year the only thing up in the shower is the white vinyl liner.  I had searched the internet, been to Bed, Bath and Beyond and numerous other stores to find a shower curtain.  While we were on vacation I went into stores and looked.  I then started to look into fabric stores to find what I was looking for.  Then I started to ask myself, "what am I looking for?" I knew I wasn't looking for anything "modern" or with butterflies or flowers all over it.  It had to be something that was vintage looking.

Yesterday I was at Wal-mart looking at Valentine fabric and I looked across to some new bolts of fabric that they had just received and there it was.  Yep - I had found what I was looking for.  It is perfect.

The colors on the fabric look great with the wood, the wall color, the tile floor and the sink.  I am so excited to finally, after almost 1 year, have a shower curtain for that bathroom.  Rather I should say the fabric to make a shower curtain. 

Perhaps this post isn't very frugal, but I wanted to get across that sometimes spending money can be a good investment.  Especially if that money has been diligently saved up for the project.  I would have never been comfortable with taking out a home improvement loan.  If we didn't have the money to remodel the entire bathroom, we would have had to make a decision about what we would be able to afford to fix in that bathroom.  Pulling out the cracked bathtub was going to lead to replacing some plumbing, getting the walls fixed and so on. 

Putting money into a bathroom remodel has added value to our home.  It had to be done.  Now when guests need to use our bathroom, I don't cringe.