Saturday, 31 August 2013

Spare Change: Housing edition




Get Rich Slowly - Personal Finance That Makes Sense.





Spare Change: Housing edition



This post is by staff writer April Dykman.

For the last seven months, my husband and I have been renovating our new home. But before that, we spent months searching for the right house. There were a few times when I wondered if the right house even existed. This is my own fault because my list of wants was maybe a little difficult to satisfy. For instance, we wanted to be in the city, but I still wanted a large lot with big, established trees. I also wanted an older house that needed some work. Recent granite and other upgrades? Not interested. I had my own plans!

A couple of times I took my husband and real estate agent to total dumps. “Uh, I think we’d have to tear down the entire house,” said my husband, who was stubbornly refusing to share my grand vision. “April, you sure can pick ‘em,” said my real estate agent. But eventually, we found The One. It was in the city, on a half-acre lot, and an older house with a great floor plan. It needed work, but it wasn’t a health or safety hazard, which is apparently important to some people.

Kidding aside, I’m glad I listened to my husband’s concerns about taking on too much work. Renovating a house is not like an episode of “Extreme Makeover: Home Edition.“ Magical elves do not send you off on a Disney vacation while they turn your shack into a charming bungalow. No, renovating is a lot of work, and everything takes three times longer than you think it will.

At any rate, becoming a homeowner has made me much more interested in housing news, so I thought I’d make it the subject of this edition of Spare Change. First up, let’s check in on the housing market…

Where housing is recovering, and where it’s not. The housing market is on an upswing, but whether you’re benefiting all depends on where you live. “Housing has turned up nearly everywhere, with the average home price nationwide up about 12 percent during the past year,” writes Rick Newman for Yahoo! Finance. “But some markets are going gangbusters while others barely seem to have escaped the gloom.” For instance, recovery is strongest in Rochester, N.Y., Cape Coral, Fla., and Albany, N.Y., which have a lower unemployment rate and greater property appreciation than the national average. The city with the weakest recovery is Baltimore, which has a 7.9 percent unemployment rate, coupled with just a 9 percent appreciation since the housing bust.

35,000 NYC properties now in flood zone. What happens when the property you’ve owned for years is now in a flood zone? That’s the case for 35,000 NYC-area businesses and houses, since new flood maps put the properties into a flood zone. The change could require property owners to pay a great deal more in insurance or to elevate their homes to an acceptable height. In addition, those rebuilding after Hurricane Sandy may face greater complications in rebuilding. For instance, if people in wheelchairs are required to elevate their houses, that means they’ll need a longer ramp to access their home. Typically, every inch of elevation means another foot of ramp. “If a home needs to be elevated eight feet off the ground, the homeowner would need a ramp as long as a basketball court,” reports Tracey Samuelson for WYNC. “It becomes impractical very quickly.”

Single ladies put a “sold” sign on it. Last year, 18 percent of homeowners were single women, compared to 10 percent who were single men. “We’re seeing more women in workplace leadership roles, which leads to greater financial earning power,” writes Hale Walker, cofounder and senior vice president of Michigan Mutual, Inc. “This translates to greater ability to purchase a home — single women have the credit and the finances on their own to make this purchase.”

Houses at dollar-store prices. The city of Gary, Indiana bought a dozen homes at county tax sales and put them on the market for $1 each. The catch? The houses need a lot of work. Also, the sale is part of a neighborhood stabilization effort, so buyers had to meet several requirements. “Buyers must have lived in Gary for at least six months; have $1,000 in savings; earn at least 80% of the median annual income of $35,250 in the area; and demonstrate that they have the financial ability to rehabilitate the home,” writes Les Christie for CNNMoney. “The program is open only to those who do not currently own a home, and they must occupy the house for five years before they assume full ownership.” The restrictions reduced the 400 interested buyers to just 25 applicants. In September, a random drawing will determine who gets a home. If the program works, Gary’s mayor, Karen Freeman-Wilson, has said she’d like to sell as many as 50 homes per year.

Construction resumes on “Versailles.” In May, I wrote about the documentary “The Queen of Versailles. To briefly summarize, the film follows Jackie and David Siegel, owners of Westgate Resorts, as they build the largest and most expensive single-family house in the country. Modeled after France’s 17th century Palace of Versailles, the 90,000 square foot mansion boasts 13 bedrooms, 23 bathrooms, 30-car garage, roller rink, baseball field, children’s theater, and bowling alley. When the film ends, the economy has tanked and construction halts. There’s talk of foreclosure. The house was eventually put on the market for $100 million. Well, flash forward to June 2013, and construction has resumed! “We’re very excited about it,” David Siegel told CNBC. “We plan to live there.”


    














Friday, 30 August 2013

Reader Stories: 5 money-savvy tips for recovering from a divorce




Get Rich Slowly - Personal Finance That Makes Sense.





Reader Stories: 5 money-savvy tips for recovering from a divorce



This story comes from reader Julia Lawrence. Julia thoroughly enjoys writing about finances, pop culture and selling diamonds! When she isn’t hard at work writing, she spends her time wither with an absolutely adorable Mini Golden Retriever, Jake, and her [new] husband, Mr. Julia Lawrence. Follow Jules at Google+ & @DiamondLining.

Some reader stories contain general advice; others are examples of how a GRS reader achieved financial success or failure. These stories feature folks with all levels of financial maturity and income. Want to submit your own reader story? Here’s how.

Going through a divorce was one of the most stressful times in my life. Instead of growing old as a couple, I was forced to start over, alone, and I was confused as to what direction to take. After the emotional dust had settled, the most frustrating aspect was trying to rebounding financially.

Fortunately, I had some divorced friends and relatives, and I was the recipient of some incredibly useful advice. It took some research on my end as well, but most people can not only recover financially from a divorce, but end up better off than when they were married. Here are some of the hard-earned financial lessons that I learned when going through my divorce.

Planning for retirement

The first thing I did was educate myself on the insurance, investment and retirement planning that my soon-to-be ex and I did. Even though we largely collaborated on these decisions when we were married, I didn’t pay the premiums on the life insurance, nor did I know how to access his company-sponsored 401(k). In fact, I didn’t even know where to access an old 401(k) from one of my previous employers, so I had to do a little digging on both his assets, and my own. Once I located all of the assets, I had a financial planner friend help me calculate the long-term financial benefits of the insurance and retirement plans. Calculating compounding growth and tax consequences isn’t an easy task, and there is a little art mixed with the science when it comes to determining what you think stock and bond growth rates will be in the years and decades to come. But with some help I was able to arrive at a reasonable approximation of the value of these assets.

Credit check

The next thing that I did was to check my credit report. It turns out that my credit was very good, largely because I was listed on all of the accounts with my husband, so I received credit for paying our bills in a timely manner for years. However, I have heard horror stories from women whose names weren’t on their accounts, and therefore had virtually no credit history for the years that they were married. Even worse, many times, an ex suffers consequences that are the result of the other partner’s poor financial habits. Knowing what my score was gave me a lot of peace of mind, something that is in short supply when you are going through a divorce.

Single budget

After I understood the value of the assets we had, and accounted for the money in the bank, I decided to create a realistic budget for myself as a single person. Some friends had made it clear that as a divorcee, I probably wouldn’t be able to maintain the same standard of living I had while married, but I needed to find out for myself. Knowing what I could and could not afford helped me make a couple of major decisions, like where to live, or that perhaps I didn’t need a new laptop.

I made a couple of changes, including kicking caffeine once I realized just how much money I was spending at Starbucks, but things weren’t as bad as I had anticipated. For example, I was used to having a cleaning woman come to the house once a month, but in a smaller apartment I didn’t need one. Since I wasn’t constantly fighting with my husband, I had more free time after work, so I was able to cook more meals and eat out less — another money saver! I also had to cut back on my retirement savings a little in order to make my budget work, which taught me the most valuable financial lesson I learned during my divorce: Don’t ignore the future.

Prioritize saving

Building up a savings account gave me more peace of mind than anything else that I was able to do during my divorce. I received more psychological benefit from seeing that nest egg growing than anything else. It was a cathartic experience, and I used the opportunity to shed some of the assets from the marriage that I didn’t need any more. I sold a lot of our furniture that neither of us would need while living alone, like a formal dining table. I got a newer but less expensive car, and I managed to sell my diamond ring online in order to fund my savings account.

Final separation

Finally, I completely separated myself financially from my ex. I closed joint accounts, transferred the car title and registration to my name. I even updated my will and insurance beneficiary information just to ensure a complete break and a fresh start.

It wasn’t easy, or fun, and it took a lot of work, but I was able to make good decisions thanks to some great advice, and come out of the divorce with my financial life intact!

Reminder: This is a story from one of your fellow readers. Please be nice. It can be scary to put your story out in public for the first time. Unduly nasty comments on readers stories will be removed.

    














Thursday, 29 August 2013

4 signs you’re over your job & 5 things you can do about it




Get Rich Slowly - Personal Finance That Makes Sense.





4 signs you’re over your job & 5 things you can do about it



This post is by staff writer Kristin Wong.

Over the summer, I read a book that likened a miserable job to hanging onto the edge of a cliff. I thought it was an appropriate analogy. Like most people, I’ve been there, and that’s totally what it feels like. You know you have to let go, but letting go is scary. You could land in a better spot, or you could meet your ruin.

The author argued that sometimes letting go of that cliff is gradual, but once you do, you usually experience success. She had examples, but I imagine there are plenty of “letting go” stories that didn’t turn out so well.

Still, I’m a fan of letting go of things that don’t serve you well. I also understand that some don’t feel this is an option — for financial reasons or otherwise. I’ve been thinking about this a lot lately: How do you know when you’re on the edge of a cliff? What can you do about a job you hate, and how do your finances fit into the equation?

4 signs you’re over your job

You feel taken advantage of

In my experience, this is the first sign that you’re mentally done with your job: you feel more than just unappreciated; you feel your boss is taking advantage of you. It’s one thing to not get a pat on the back; it’s another to feel you’re being manipulated.

In my own experience, failing to speak up for myself has led to this situation. Some bosses viewed me as the good little worker bee who didn’t give them trouble. Thus, if they had outrageous demands, I was the first person they’d go to, because I was the easiest. I’ve learned to slowly break myself of this meekness and set a boundary between being a pushover and being a hard worker.

A study from Florida State University backs up my experience. It found that when given an unreasonable amount or type of work, loyal, dutiful employees became jaded. When workers felt they were being taken advantage of, researchers found a 50 percent decline in “helping behavior” and a 35 percent increase in “anger at supervisors.”

Getting fired doesn’t sound too bad

I was once contracted on a project known throughout its company for being, frankly, a s*&t show. Workers were expected to put in 50 hours a week for no other reason than to showcase their dedication. The project was so miserable, even seemingly kind colleagues would throw each other under the bus if it meant saving themselves. My cube mate, Ron, hated the project.

Once, I went to pick something up from the printer and found Ron’s resume in the lower tray. I discreetly handed it to back him. Slightly embarrassed, he laughed:

“Wow. That shows you how much I care about getting fired.”

If getting fired doesn’t sound too bad, it’s probably time to let go of that cliff.

(Side note: Ron did let go. Shortly after, he found his dream job and moved to Hawaii. An extreme but inspirational example.)

You purposely slack off

That Florida State study also found that hard workers had a 25 percent decrease in productivity when they felt they were being asked to do too much.

I hate to admit it, but I’ve been there. In the past, I’ve purposely slacked off due to resentment. I was angry, frustrated and stressed out, and to protest, I passive-aggressively put in less effort. This is a really dumb thing to do, because it doesn’t really get the point across. Instead of being sympathetic to your dissatisfaction, your boss is more likely to focus on the fact that you’ve turned into a slacker. Also, work ethic is something I mostly cultivate for myself. So submitting half-assed work is doing myself a disservice.

You feel stuck

It’s a terrible feeling: the desire to move forward when your current situation is holding you back. You feel captive, and the more captive you feel, the more frustrated you get.

To me, this is the primary sign it’s time to let go. I don’t cope well with feeling stuck.

But letting go means different things for different people; my mom, for example, has felt stuck at a job, and her “letting go” was more of an emotional process. More on that later.

5 things you can do about it

Find something better

If you feel taken advantage of, you probably feel undervalued. If you think you have a lot to offer a company, perhaps you can find something better.

However, you also have to consider what exactly would make you feel valued. For some people, that’s not always money. It might mean a better position or more time off or simply more praise. Finding something better might mean earning less, in which case, you have to weigh the practical factors with the emotional ones.

Example: When I was a technical writer, I felt stuck. I knew the chance of switching careers and earning less money was high. So I asked myself some questions:

  • What’s the likely difference in the amount of money I’ll be earning?
  • How long am I willing to earn less before I decide to go back to a dissatisfying, but more lucrative, career?
  • What lifestyle comforts am I willing to give up?
  • How hard would it be to return to that career? How much would I earn upon reentry?
  • Is it worth the difference in salary to try doing something I love?

My answers weighed more on the side of switching, so I let go.

Transition

Unless your job is weighing on your health, which does happen, it might be best to gradually un-stick yourself from a sticky situation. You can definitely take the plunge, and that might work for you, too. But the other option is getting your feet wet and gradually easing into unfamiliar waters.

“Easing in” might mean finding part-time work somewhere else, until you can let go of your job completely. It might mean searching for another job in your free time.

Change your job without quitting

Can your feeling stuck be remedied by working from home? Would you be happier with a different schedule? If there are simple changes that could drastically improve your work life, it might be worth negotiating them with your boss before deciding to quit altogether.

There’s also the option of applying for a different position. If what you hate is something specific — your boss, your work environment, a project — perhaps it’s not a bad idea to simply change your position at your current organization.

Especially if you haven’t been there long, staying at the same company might also be better for building your resume.

Communicate

There have been at least a few times in my working life where I felt overworked and underpaid only to realize this was easily fixed with a simple conversation. Asking for a raise can be awkward, but many times, you won’t get one (at least not for a while) unless you ask.

Lately, I’ve been working on speaking up about my frustrations. I don’t throw a fit, but I’m learning to make issues known in a polite and diplomatic way. A few things have helped in airing my grievances effectively:

  • Don’t get personal. I make the situation the issue, not my boss or the company. If I’m not getting paid enough, for example, I’ll bring up the issue of those darn budget cuts rather than blaming my supervisors or their decisions.
  • Be honest. Your boss is a human being, so he or she can probably relate to why something bothers you. It might not hurt to simply be honest about the issue, but avoid talking about how it makes you feel and instead focus on why, logically, the situation doesn’t work for you: Not getting a raise affects your budget. Tackling another project keeps you from spending time with your spouse.
    I was once honest about a time issue with my boss, and he responded: “Yeah, come to think of it, don’t send me anything after 6pm. My wife’s been complaining that I work too much.”
  • Emphasize your work ethic. I try to remind my boss that I enjoy my job and that I’ll continue to put in loads of effort. I feel like this eases any concern that I’m only interested in what I’m owed and not what I can contribute.

Of course, I understand that “talk to your boss” might not be a viable option for all of us, because some bosses are not open to hearing what you have to say.

Change your outlook

My mom has a story about the power of changing your outlook. She realizes this isn’t the best option for everyone, but sometimes, it is. I asked her to guest write about it:

“I used to work in retail — a job that was supposed to be a stepping stone. But before I knew it, I was there for seven years and growing increasingly dissatisfied and ungrateful. So I asked myself, ‘Do I change my environment or my outlook?’At that moment that I realized I had over-stepped this stone! So, I chose ‘change my environment.’ I went back to school to improve my chances of getting a better job. And that’s how I ended up at [my current] office job.

I was excited about my new job, and I enjoyed the work. But a year later, a new supervisor and new co-workers changed the atmosphere. It got so bad, I allowed it to affect my home life, which I regret to this day. So I found myself asking the same question: ‘Do I change environment or outlook?’ I felt unappreciated and ignored by the new supervisor and taken advantage of by co-workers. I chose, this time, to change my way of thinking, because I liked the work I was doing, and I had to think about providing for my young family at the time. I did my best to not allow my coworkers or environment get to me. I did my work and went home. Eventually, things got better.

Looking back, choosing to change my way of thinking not only helped me to overcome that work environment but also to grow as a person.”

My mom weighed the pros and cons of staying versus leaving and decided that staying was the best decision, financially and career-wise. At work, she shifted her focus to her family. She says it’s a decision that’s served her well.

Most of us have had a job that made us feel stuck. What did you choose to do about it, and how did you consider your finances when making your choice?


    














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