Archive for the ‘Life’ Category

The Thinker

Settlement shenanigans

Having recently completed a half-million dollar transaction (the sale of our house) I have been pondering the HUD-1 form we got at settlement. This is a standard form issued by the settlement agency that indicates all the costs of the buying and selling transaction. If a form could stink, this one would stink, at least a little.

Clearly commissions cost money, and the seller typically pays the commissions, both for the listing agent and the buyer’s agent. Traditionally this was six percent of the sale, split equally between agents. In recent years most realtors seems ready to bargain with sellers, perhaps because home prices are so inflated now. 5% is probably typical these days. Some sellers bargain for 4% and probably wonder if they get the same quality of service for this price. Some may get less than that. Our listing agent said she would take 2% in commission, so we agreed to pay 5%, with the buyer’s agent getting 3%. More than once I raised the fairness issue with our agent. She did most of the work and got 2% while the buyer’s agent earned more. She shrugged. That’s the way it goes. She often acts as a buyer’s agent and comes out ahead in those transactions.

Anyhow, the HUD-1 lays it all out. Since we sold the house for $505,000, our agent got $10,100 and the buyer’s agent got $15,150. Nice money if you can get it. But the buyer’s agent didn’t get $15,150. Unknown to us until settlement was the figure in the buyer’s column on Line 205. It’s called “Realtor credit” and it showed $7,000. This is money that the buyer’s agent will give back to the buyer for the privilege of being their agent. So she really got $8,150 from us for the sale of our house, and gave $7,000 of her $15,150 to the seller.

This means in effect that the buyer bought our house for $505,000 but really paid only $498,000 for the property. And this was because we were not savvy enough in the real estate trade to know we should try to discount the commission because the buyer would get a kickback, sorry a credit from his agent.

I am at once upset about this and wanting to shake our buyer’s hand. He’s one crafty dude. It’s not just us whose pocket he picked without us even knowing. He also got a kickback, sorry a credit from his lender (line 204), for $1000. Yes, for the privilege of taking out a loan with PrimeLending of Dallas, Texas, they gave him $1000 at settlement, which means in effect he paid only $497,000 for our $505,000 house. To the buyer’s credit, he did put 22% down in cash and financed the rest. Perhaps that had something to do with the credit.

Of course neither my wife nor I at any time knew we were effectively giving $7000 to the buyer. There was no piece of paper with the offer that said anything about this at all. Maybe there should be. We had two competing offers on the table, both for full price. Maybe we would have accepted the other one had we known. Or maybe we would have countered and asked for a credit from the buyer too. We could have asked for a higher asking price, of course, I just didn’t know these details.

What’s missing is transparency. These credits/kickbacks really affected the entire real estate purchase. Without them the buyer might not have made us an offer, or perhaps he would have raised his offer. We were just in ignorance.

The buyer’s agent just happens to be the top selling agent at our agent’s office. She has found a profitable niche. You see she is Indian and caters to the Indian community. Asians including many Indians are rapidly moving into our former zip code. I looked up the census data, and Asians went from 15% to 30% of our population between the 2000 and 2010 census, so it’s a growing market. There’s nothing wrong with this of course. Indians are likely to ask around mostly inside of their community when looking for an agent. Most likely they heard about her and heard that she offered generous credits on her commissions. In this case, it was a very generous credit, as $7000 is 46% of the money she could have gotten from us if she hadn’t kicked it back.

What she does get to do is to count the $505,000 sales price of our former house to her yearly sales total. It helps make her the #1 agent in that office. Doubtless nowhere in her marketing material is she calling attention to the fact that while she was one of two agents in the sale, she effectively earned a commission of 1.6%. So our agent really made more from the deal. The effect of our sale was that 3.6% was paid in commissions, but we were charged a 5% commission. We apparently gave the buyer a 1.4% rebate, but it’s not listed anywhere. The HUD-1 form at least provides this transparency; it just came too late to be useful.

I’m unlikely to do many more house sales in my lifetime. But if there is a next time I will be more wary. I will relate my experience to my new agent and suggest because we were effectively discounted, maybe 2% for each agent is appropriate. At least that way the buyer pays a higher percentage of the actual house sale, which will end up in our bank account. What I really want is all these details in the offer up front. I know I’m probably Don Quixote pointing my lance at a windmill on this issue.

So it’s too late for me, but not for you:

  • Sellers: if you are planning to sell your home you can at least be wise to what’s going on behind the scenes. Perhaps say you don’t want to pay more than 4% in commissions because you know it is likely that the buyer’s agent will give the buyer a credit.
  • Buyers: find an agent with both a good record of finding people the homes they want at a good price and who is willing to give you a substantial credit on their commission. Apparently 40 or 50 percent is not an unreasonable credit.

If this information is valuable to you, please send me 1.4% of the sale price. Thanks.

 
The Thinker

Home-ish

Another quick four hundred mile commute between states. The path varies a bit each time we go. Lately I have been trading money for time. The New Jersey Turnpike is no guarantee of a quick commute but when it works it’s worth the tolls. When you travel this path frequently you look for the optimal path.

There are two major obstacles between Easthampton, Massachusetts and Herndon, Virginia. One major obstacle is New York City, where the choice is either to drive through it or drive around it. If you drive through it, you should drive through it from east to west because the pricey George Washington Bridge is free in that direction. The cost of congestion sitting on I-95 in the Bronx is borne pretty much any day and at any time. Which leaves your options either avoiding the city and New Jersey altogether or driving around it. Around it means either I-287 or our more recent discovery: the Garden State Parkway that conveniently connects to the New Jersey turnpike west of Staten Island.

Obstacle two is Washington, D.C. itself, with arguably worse traffic than New York City. If you have to arrive there at evening rush hour it is better to go from east to west too because more people live in Maryland and work in Northern Virginia than the other way around. There are still inevitable slowdowns but it is less hellish.

This trip to our house settlement that spanned much of our week and that kept me from blogging was at least our last one, at least for the foreseeable future. Which is why I was glad to trade money for time. We have driven this route many times now and it is getting old. When the traffic is with you it is not too bad: six and a half hours without potty breaks with NPR stations along the whole route. But traffic can easily make it eight or ten hours or more, and there is no way to know; it’s a crapshoot. I don’t feel too bad doing 80 mph on the turnpike because plenty of others are going 85. Also, much of the turnpike is eight lanes in each direction, with four inner lanes reserved for cars-only. It’s so hard to police that the New Jersey cops have pretty much given up trying.

Still, it’s a sedentary trip and all the gear shifting (we were driving my wife’s manual car) and micro changes in speed to accommodate traffic dynamics hurt my feet. From bucolic Mount Tom in the morning to traffic soaked Reston, Virginia in the afternoon, but not to end up at our house in Herndon of 21 years. We ended up instead in a friend’s spare bedroom. Outside a Virginia spring told us we were going to miss the area. Dogwoods and ornamental cherry trees were in full bloom. The grass was a green as an Irish spring. And the temperature, at least this week, was ideal.

Also ideal were those last hours at our house before we said goodbye. Both our front trees were flowering, as were the flowers along the porch and in the main garden. The house was largely clean when the movers left. All that was left was some final sweeping and mopping of floors. Our buyers paid top dollar for our house. They deserved to walk into a house that sparkled. With almost everything outside blossoming, moving in should be a joy for them.

Last moments at our house

Last moments at our house

But for us this was an ending, not a beginning. Empty of our belongings our house looked surprisingly small, but it also felt lonely. Its future inhabitants will include a man named Rajkumar, his pregnant wife beginning her third semester and shortly after the baby arrives, her mother from India. Raj probably targeted our house for the mother in law suite in the basement, but also for its proximity to Washington Dulles airport. Years of working with Indians made me realize that they see themselves as part time inhabitants. At least once a year, sometimes more often, they jet half a world away to be with their real family, always very extended. Our modest house with the one car garage will doubtless seem palatial by Indian standards. In short, while we have departed, Raj has arrived, both figuratively and literally.

We arrived at the settlement a few minutes early to discover that they had beer in the fridge and plentiful snacks in the waiting room. I guess the writer’s cramp goes easier when you are mildly intoxicated and as long as it is just one beer, you are less likely to dispute items on the HUD-1 form. The settlement experience is much different when you are the seller. Within thirty minutes we had signed all our forms, turned over our keys and the remote controls to the garage door and a stack of manuals and had left, while an impressive stack of forms remained for Raj to sign. While settlement turned out to be the event that drew us back to Virginia, my wife had two medical appointments to keep. And there were family obligations too: a drive to Silver Spring to see my aging father and his wife, one final visit to Lake Anne in Reston to take a friend out to dinner and a six a.m. wakeup call on Wednesday to rendezvous with our daughter for breakfast. She works nights and goes to be around 8 a.m. The trip back from breakfast had us sitting in bumper-to-bumper traffic along traffic clogged Route 28 in a 75-minute trip that should take twenty minutes.

Yes, Virginia traffic taxed us to the very end. It was literally taxing, as we were forced to pay $768 for a “congestion relief tax” as part of the house settlement. Doubtless the money would only cause more congestion, as 35 years had taught me that in Northern Virginia developer money talks and politicians will figure out how to accommodate all the extra traffic and people when hell freezes over. Speaking of traffic, it was stop and go much of the way from Sterling, Virginia (where my wife had an appointment with an eye doctor) to Columbia, Maryland where we spent our final night with my sister Mary.

Yesterday we did the trip all in reverse, but at least we started near Baltimore, which kept us from more hellish commuter traffic, easy to see from the solid mass of cars and trucks going south on I-95 toward Washington. The New Jersey Turnpike did not disappoint us. While we were making our journey home, $415K in settlement funds was making its way electronically into our bank account. We gave up a beautiful house with a gorgeous lawn with trees and flowers in bloom for a tiny two-bedroom apartment in Easthampton. But at least we were debt free for the first time in more than thirty years.

Back in Easthampton four days later, our apartment did not feel like home to me, but home it will be for a few more months. Our real home is under construction in nearby Florence. It will be built almost entirely from cash from our settlement. While we have yet to actually purchase and occupy the property, in a way we are already part of our neighborhood to be. Sunday we attended services at the Unitarian Society of Northampton and Florence, and we almost immediately introduced to three people from our new neighborhood. We’re already booked to attend a party there later this month, and my wife has been invited to join their book club. Nearly everyday we pick up our mail from their mail kiosk, and our days are often spent with vendors nailing down the details of this new home to be.

So we are home-ish. I am wrung out from the last eight months, but with most of the hassle and work of relocation behind us I now have an opportunity to begin to recharge now and ponder what new adventures await us.

 
The Thinker

Breathing easier

I’ve spent three years now connected to a machine while I sleep. This is because I suffer from sleep apnea. Until recently much of that sleep was restless. For the first couple of months it was downright annoying. This was because while the respirator that controls my sleep apnea made sure I breathed regularly, it was loud and noisy.

In response, I plugged my ears with silicon to try to deaden the noise, but it didn’t work that well. Sound still leaked in. In addition it took months to get the air pressure adjusted right. Too little and the machine could trigger sleep apnea. Too much and it was hard to sleep. It’s like sleeping while taking a brisk walk.

When I could tune out its noise, I did sleep pretty well and I enjoyed all sorts of vivid dreams I had been deprived of for years. But it’s hardly natural to sleep connected to a tube and a machine. For example, if you turn in bed then the tube comes with you, and it sometimes drapes over your face, so you wake just enough to push it out of the way.

My respirator merely helps me cope with my sleep apnea. It does not solve the condition. Sleep physicians have all sorts of suggestions for maybe curing the problem. One involves losing a lot of weight. Even if you are successful the success rate is problematic at best, particularly since most people who lose weight eventually put it back on. Another involves trimming the uvula (the thing that hangs in the back of your throat) and various tissues in the back of the throat to improve airflow. This requires surgery and is no guarantee of success. There is also a dental appliance that forces the lower jaw forward to improve airflow through the throat. My brother tried it for his condition and found it painful and impossible to deal with.

The real problem may simply be the width of my windpipe. It’s inherited of course, and if that is the real issue I can’t make it wider. In this case, I will have to just deal with the problem. Moreover, the root of sleep apnea is really in the brain. During sleep it periodically stops sending signals to my lungs to breathe regularly. So far I’ve not opted for any surgery, mainly because of its poor success rate. And given my brother’s reaction to the dental appliance, I ruled out that approach as well.

So I’ve become accustomed to dragging around my respirator with me when I travel. It means I probably won’t be doing any camping, unless I have power source sufficient to keep my machine running overnight.

A couple of months ago I noticed that my machine occasionally rebooted itself during the night. It beeped when it did this, which at least let me know about the problem. After a while it was happening regularly. This is a bit alarming since without the machine on you don’t get a whole lot of air through the vents in the mask. When I went to see the sleep doctor, I asked for a new machine. Fortunately, my insurance paid for it. Since February I’ve been using the latest ResMed bi-level machine.

There are no more nightly reboots of my machine. But the real startling discovery was how quiet the new machine is. It’s nearly silent, even when wearing the same masks over my mouth and nose. With the old machine the vents in the masks typically hissed noisily during exhalation. With the new machine, there is no hiss at all. What I had thought was an issue with the design of the mask was actually due to the way my old machine was pushing air through it. The new machine seems to scale up the air pressure more evenly and naturally, presumably doing a better job of mimicking the way lungs take in air. It’s the difference between driving a noisy car and a Cadillac. It’s the difference between getting some sleep and sleeping very well most nights.

What a relief to be breathing (and sleeping) easier.

 
The Thinker

Life on Dartmouth Street

It’s a strange thing these days to see children at play. At least in Northern Virginia where I used to live, to the extent children play, it is at structured play. It is managed play. It is soccer league, or Little League, or basketball or for the girls perhaps 4-H or Girl Scouts. If mom or dad can’t attend practice, the nanny is there with a wary eye and taking notes.

They haven’t gotten the message here in Easthampton, Massachusetts that kids, even kids in their single digits, shouldn’t be allowed outside basically unsupervised just to play and roam. But play and roam they do here on Dartmouth Street, and in particular they play just outside the small two-bedroom apartment we now call our temporary home. No smartphones to distract them; they just want to be kids. Dartmouth Street is at best an irregularly traveled street, with large houses generally turned into duplexes with virtually non-existent lawns that hug the sidewalk. They are clearly rentals as of course is our building. There are lots of these houses, but most of them are rented and most suffer from somewhat deferred maintenance. They were built in a city that can trace its incorporation to 1785, and when such things as homeowner associations were unknown. This means gravel or buckled pavement parking lots (if there is a parking lot), bumpy roads where the potholes sometimes have potholes and curbs where chunks of the concrete may be missing. It means it’s okay for one of the renters to jack up the front end of his truck and work on it late into the night. Dartmouth Street is a neighborhood not built for show, or for improving your house’s resale value, or for fitting in with the Joneses, but for simple living. It means you rent a small apartment or duplex, your car is probably a little beat up but there is nothing particularly to be worried about. Easthampton may be old but at least it feels safe.

It’s so safe you can watch two kids (brothers?) sort of beat up each other in the middle of the road. There are no cars coming, and it’s clear there are no real body blows, but they laugh and wrestle and hoot and holler and in general are just excelling at being kids. It’s the sort of childhood I lived, when the phrase free-range kids had yet to be invented. The parents knew the neighborhood was safe and that if you were doing something really stupid one of the other parents would tell you about it. On Dartmouth Street it means squirt gun fights, yes, even in fifty-degree weather, lying on your back in the middle of the road giggling and then wrestling half-heartedly with your brother. It means kicking a ball down the street or into your brother’s groin. I am not sure where the parents are, but no one seems to care, and certainly not me.

Part of the reason no one seems to care may be that everyone here is about the same. Easthampton is not entirely white, just almost entirely. There may be a few lawyers and doctors here, but they probably live outside the city. Easthampton, and Dartmouth Street in particular is white working class. Mom is a teacher, or is bussing tables, and maybe doing both. Dad may be working at the auto body shop nearby or tending the package store around the corner. Life just sort of goes on here. No one seems to have pretensions. Pretensions are a relatively recent concept and largely unknown around here. You count your blessings for your job or jobs, you do your best, and you arise the next morning and then start the cycle over again. And if you are a kid, you are largely left to be a kid.

I’m the new Mr. Wilson in the neighborhood. Recently retired, it’s hard not to emulate my father who drew kids to him like moths to a flame, simply because everyone saw him as a wholesome, harmless and gentle man. So I smile at the boys across the yard and give another a wary stink eye when I see something that might get out of hand. I do that and I unpack.

We moved in yesterday. The morning was spent at a storage place across the Connecticut River. There me and two movers succeeded in getting all our long term storage stuff into a 10 x 20 foot storage unit, but just barely. Then the guys from JK Moving came here to Easthampton and deposited our much smaller cache here in this apartment. No complaints from me about JK Moving. They did a great job and everything went according to schedule. The weather even cooperated except for a little light rain. By three p.m. they had left and we were taking stuff out of boxes and setting up the apartment. Thank goodness for our wire cage in the basement. Some of the surplus we thought would fit in the apartment would not, so it is stored there, along with lots of boxes we will fill again in a few months.

From the outside our apartment is not much to look at. From the inside it has been gutted and rebuilt, and that includes the windows, doors and the walls. It’s all new; it’s just way too small. So my desk and our files are in the second bedroom and its closet doubles as an extra pantry and as our pharmaceutical chest. My wife’s desk is in the living room. The sofa has been replaced by a loveseat; it’s not big enough a living room for a real sofa. It takes us back to 1984, when we first started living together, and our quarters were only marginally bigger. But amazingly the technology all works. HD TV streams on our HD TV screen. Charter Communications delivers a reliable 64mbs download speed as well. I’ve moved 400 miles but the technology transition is flawless. As someone who made his living in Information Technology, this is definitely weird.

Still, our new pad is small and seeing a neighbor trying to fix his car on a gravel lot outside my bedroom window is not something I enjoy. So I’ll be content to leave Dartmouth Street in a few months for our more spacious house under construction. We drove by our house yesterday and noted that shingles went on during the day. The house is now fully enclosed. It seems like it should take a few weeks at most to finish the inside.

We are reliably informed the inside is the hard part. So many pieces have to come together, and each requires an inspection. Inspectors typically show up late. Meanwhile, we can contribute to the house building process by going through with an electrician and indicating where the wires should go. That will happen on Friday. And there will be more visits to various vendors to refine amenities like the color of our bathroom tiles and the model of our light fixtures. Our mailbox at least is already there, in a kiosk, and there was mail and a package waiting for us.

Mainly we are taking a breather today after four days of being mostly in hyperdrive. For me this means going through various papers and tying up loose ends. For my wife it means finding the local grocer and deciding if she will shop there regularly or opt for the more distant Big Y instead. It’s a day for ordering address labels and filling out forms for the DMV (it’s called a RMV around here). It means hauling my bike to the local bike shop for a tune up. When life settles down a little, I’ll be on the local bike trails regularly.

Meanwhile I am living on Dartmouth Street, eyeing the auto mechanic’s shop across the street and wondering about the Schlitz sign I saw on a building on Ferry Street. I wonder: do people still actually drink Schlitz? And are there some people that prefer it? I wonder if the roads are ever smooth around here. And I wonder if now that I am here if I will miss the crazy, traffic clogged place I used to call home.

 
The Thinker

Between states

It took many more boxes. Toward the end it took a quick trip to our local Public Storage for a few extra boxes. It took many more boxes and many six packs of packaging tape. It took takeout from the local Silver Diner for breakfast on the day of the move, since our kitchen was all packed up. It took me following behind the moving crew after they emptied a room with a vacuum and/or a broom. It took a large trash bag to toss stuff into. For the moving crew, moving us out of our house took about nine hours, and it involved disassembling lots of furniture, wrapping our furniture in blankets and packing tape and moving awkward pieces of furniture down a harrowing flight of stairs. For my wife it took a trip to a retinal specialist.

There are times when I feel like I married a Calamity Jane. It happens with such regularity that I’ve come to anticipate her medical surprises at the worst possible moment. The other shoe is always ready to drop in my house, so naturally it happened on the night before we were to move four hundred miles. Cooking dinner was not an option the last night in our house, so my wife used the event as an excuse for fast food. On her way back from the Arby’s, her cornea tore, obscuring most of her vision in that eye. So for her moving day was partially spent at a retinal specialist’s office. As emergencies go this one went pretty well. She was seen right away and they did laser surgery on the spot. In two to three weeks she should be back to normal, assuming some other sort of minor emergency doesn’t happen before then.

So it was up to me to supervise the moving crew. Mostly they could be left alone while I fretted over events I could not control. Still, if you have to move yesterday turned out to be the perfect day for it. Temperatures hovered near seventy. Our trees were flowering and spreading petals on our lawn. The sun shown pleasantly through the trees and fluffy cumulus clouds adorned the sky. The doors were flung open while three white guys and a very big moving truck did their thing. Slowly the house that I inhabited for twenty one years emptied. Toward the end we were reduced to sitting in lawn chairs on our deck communicating with our smartphones. (The cable equipment had been returned to Verizon around noon.)

The red stuff went first, by which I mean boxes with red packing tape. They will go into our apartment in Easthampton, Massachusetts so must come off last, thus had to go in first. The rest of it is destined for a storage unit across the Connecticut River in Hadley, Massachusetts. Sometime in July or August when our house is finished, all our possessions will be reunited in Florence, Massachusetts. Eventually all the boxes will be emptied and recycled. My incessant dreams of boxes and packing tape will recede.

For now though we are playing our parts in a well planned time stream. For two nights we are inhabiting a bedroom at my sister’s house in Columbia, Maryland, about an hour away. Sunday morning will find us driving to Massachusetts in separate cars (yes, it’s okay for my wife to drive), and we will begin two nights in a hotel in Holyoke. Monday will find us at our apartment but without furniture. We need to meet the cable guy and get all the internet plumbing working. Tuesday we will meet the movers in Hadley and wait hours while they dump most of our stuff into a storage unit. Then we will follow them to Easthampton and watch them dump the rest into our apartment. We’ll also see our new house which should have a roof on, pick up the key to our mailbox, and discuss electrical connections with the builder.

By the 28th we’ll be back in Northern Virginia one last time. My wife has two doctors’ appointments, one with the retinal specialist. But mainly we will be there to settle on the purchase of our house, which means a few hours more cleaning our now empty house and hopefully meeting our daughter one morning for breakfast as well. On the 30th we’ll make one last trip back to New England, all obligations settled and home for real.

Meanwhile we are literally between states, two wayfarers trying to close one door in our lives while simultaneously opening another.

 
The Thinker

Many partings and many boxes

How do you leave one life and start another? It involves lots and lots of boxes and lots and lots of money. And it involves lots of little goodbyes. And maybe it involves saying au revoir, which is not so much a forever goodbye as a temporary goodbye. Some part of me suspects I will be living in the Mid Atlantic again.

That’s not in the plan. The plan is to retire to Massachusetts. Yes, we constantly get sideways looks: you are supposed to move south when you retire. Yet my parents didn’t. They moved from Florida to Michigan. We really don’t know anyone where we will be living except for Craig and Roger. Craig is the realtor that sold us on Northampton when we spent two nights there a couple of years ago and asked to look around. And Roger is a client of mine across the Connecticut River in Amherst, who introduced us to Joe’s Cafe in Northampton where the pizza is so legendary it’s hard to get a seat.

We move in part because we can and in part as an act of love. For thirty years of marriage my wife has complained about Northern Virginia. Finally with retirement I can fulfill her wish to escape the whole area. I am dubious that the climate there will agree with her. She is very weather sensitive. Weather changes seem to trigger muscular pains, headaches and even sinus infections. Maybe there will be less of that up there, in part because the seasons are better defined. Here spring often lasts about a week then feels like summer, but then it may revert to spring for a few weeks and occasionally will even revert to winter. It’s a schizophrenic place to call home, but for however short spring turns out to be, it is beautiful. I doubt we will find such an intense spring further north.

With about a week to go until the moving van arrives, all semblance of our home is gone. Pictures are off the walls. Boxes occupy floors and stuff closets. Some boxes are still to be assembled. Most of these boxes have been used in moves before. When we put out the word that we were moving, it wasn’t hard to find people with boxes to unload. Some came off FreeCycle, but many came from friends at my church. Thanks to a general decluttering that started six months ago, boxing is straightforward. We spend a couple of hours a day at it. There actually is not much more to do. Most of the rest must wait until the very end.

Boxes must be carefully loaded, sealed and marked, for we are not moving once but twice. Most of our property will go into a storage unit. Stuff to fill out a bedroom, study and a living room will go into an apartment in Easthampton, Massachusetts. We’ve come up with a system: transparent wrapping tape for the long term storage boxes, red masking tape for the short term stuff that will go into the apartment. We have a 10×20 foot storage unit reserved. So the long-term stuff will have to be unloaded into it first, then they will move the rest into our apartment. If we fill up the 10×20, there is a cage in the basement of our apartment complex that can take the overflow.

Moving has made me appreciate the value of money. It neatly solves lots of complex problems. However, it takes a pile of money to actually move, at least if you are moving four hundred miles. It’s not something you are likely to try yourself with a U-Haul. The cost of transporting, loading and unloading all our stuff will be around $5000. Money gets you a storage unit rental, and writing four figure checks in advance gets you a place to stay for a few months. The Internet also vastly simplifies the moving process. You can scope out neighborhoods and services from afar. It’s hard to remember how we did this stuff in a pre-Internet age.

Some stuff about moving remains as much of a hassle as it has always been. I can change my address electronically now with the post office, but it still takes about as much time as if I went there in person and filled out a form and it costs you $1.10 to do it online. All our various service providers need notification that you are closing or establishing services and for the most part you can’t do it online. Take Verizon, our Internet and cable provider. Their website tries to do pretty much everything online, but you can’t disconnect your service online, not that this is obvious. I looked and looked but there was no way to do it. It took some searching to figure out what I had to really do: call them on the phone, but only during regular hours. They sure don’t want to make it convenient for you to stop giving them money.

The same was true of our Washington Post subscription, the water company and many others. The sole exception was Dominion Power, where you can stop service easily online. Of course, you don’t get a human very easily when you call these providers. You get an automated telephone tree instead, and it involves listening to boring pronouncements and eventually being put into a queue. A recording sincerely tells you that they are sorry that you have to wait. So you wait and wait and hear bad music. You wish just one provider would state the truth: “Your call is not that important to us. You are being put in a queue because we are too cheap to hire sufficient human beings so that your call can be quickly answered.” Instead, they all lie saying they care when they clearly don’t. I spent one morning doing nothing but waiting for what turned out to be hours to talk to agents.

The hardest part in leaving is not being in a call queue, boxing crap or writing large checks but simply saying goodbye. It’s not that I dislike saying goodbye, but it’s that each goodbye inevitably invokes feelings of sorrow at parting and stokes feelings of regret and that you are making a big mistake. We discussed having a goodbye party, but it was one more thing that we would have to schedule and coordinate and there would be more emotions to process too. Instead, there are lots of little goodbyes. Some happened six months ago when I retired. People come by after services to shake my hand and wish me goodbye. At a board meeting last night there was card, cake and goodies for me. My covenant group will be taking us out to dinner on Monday night.

I go to places and wonder if it will be for the last time. If it is the last time, should it matter? Yesterday I went to the local BJs to pick up a few things and realized I will probably never be back inside that store, where we have been members for 25 years. There we have bought literally tons of stuff as well as emptied our checking account. There will be BJs and Costcos in Massachusetts as well; different faces but it will be largely the same experience.

I deal with all this by trying to tune it out. It is too much. As with the feelings of giving up the perks of my job when I retired, I simply have to let it go at the appropriate time. We will doubtless be back here many times. My father, sister and daughter all live in the area. It’s just that next time we will be in a hotel, or in someone’s bedroom. There will be no home to come home to, but there will be no daunting traffic to navigate either. So there is some joy as well as sorrow that will come with moving. Once all the hassle of multiple moves is over our new life is likely to be much simpler, less costly and far more convenient.

Still, the Washington region has defined roughly half of my life. It’s going to be hard to let it go. Which makes me wonder if I’ll be living here again someday. Should I lose my spouse, will I have incentive to stay in New England? Or will I like lots of aging adults simply choose to be closer to family? If so then I will be back. Time will tell.

Meanwhile, it’s time to pack another box.

 
The Thinker

Affording retirement and running the numbers

I’m a bit anal about money. It probably comes from being a child of someone who lived through the Great Depression. So our retiring last year was a leap of faith. Of course being anal about money, I spent some time with our financial adviser basically to hear him tell me we could actually afford to retire. I retired, but didn’t quite believe it could last, particularly when we started spending thousands of dollars fixing up our house to sell it. The money going out far exceeded our retirement income.

April 29 is our settlement date, but will be important for another reason. On that day for the first time since at least 1981 I will be debt free. That’s because with settlement I won’t own a house anymore and thus won’t have to sweat the mortgage payment. Never mind I never technically owned it. I never got the mortgage balance to zero, although the balance is now under $20,000. With settlement the loan balance will be paid off. We expect a check for about $440,000, which will probably sit in a high yield checking account for a few months. Then it will go to purchase the next house.

We have no car loans and our home equity loan will be paid off at settlement. So we’ll be living totally debt free, assuming we don’t take out a mortgage on the next house. That’s our goal although we will probably draw from other savings to pay cash for our house to avoid a mortgage. Over the years we refinanced our current house twice, so our mortgage payment has lately been under $1200, and that includes escrow for property taxes. $1200 a month is very cheap housing in Northern Virginia, particularly since the next owner of our house is paying $505,000. Even with 20% down he will likely have a monthly mortgage payment in excess of $2500. Mortgage payments will hopefully soon becoming a distant memory for us.

No mortgage payment frees up a lot of cash, which is a good thing for many reasons. One reason is because when you are retired, you live on less money than you used to. To enjoy the same standard of living, you pretty much have to pay off your mortgage. Until recently I wasn’t confident that we could actually do it, and it has made me nervous. Now it’s becoming clear that we can actually retire without sacrificing our standard of living. More money will still go out for a while. Simply moving our stuff will cost us close to $5000. There will be settlement fees with the new house, perhaps a couple of thousand dollars. And there will be one time costs with moving into a new house, which mostly involves window treatments. Toward autumn though these should be in our past as well. With time I hope we can recoup these major one-time expenses.

I do know that when we move to Massachusetts we’ll be spending far less to live. Moving to “Taxachusetts” is supposed to be just the opposite, so much so that Massachusetts is frequently cited as one of the most expensive states to live. In our particular case, most of our income is my pension. Massachusetts won’t tax this income. Running the numbers today I quantified the savings: about $380 a month. These savings essentially continue until we are dead. Assuming we live 30 more years and never move out of Massachusetts, that’s $136,800 we can spend on something else.

With a new house under construction, we’ll be renting for three to four months. We’ll be paying $975 a month to rent a two bedroom, one bath apartment in Easthampton. Rent is not the same thing as a mortgage and since we are renting month to month we have no legal commitment beyond the end of the month. The landlord takes our rent and pays for the apartment’s upkeep as well as its property taxes. As a percentage of our monthly income, $975 will be hardly anything and much less than we pay to live in our current house, when you add in the other expenses like lawn care and water.

Of course it’s not quite that simple. We will eventually move into our house paid for with cash, but houses have expenses too. Our property taxes will be more, $15.80 per thousand dollars of assessed valuation, last time I checked Northampton’s property tax rate. We’ll pay more in property taxes in Massachusetts than we do in Virginia, about $1300 a year more. Property taxes alone should cost us around $620 a month, which is as much as a mortgage payment in many places. Since we’ll be in a condominium, we’ll pay about $350 a month to the condo association, compared to $62 a month we pay now to our homeowners’ association. However, the condo fee includes exterior maintenance, so I won’t have to worry about having the money to replace the siding or the roof. Electricity and water are likely to be more expensive as well, although many houses install solar panels and often get credits from the power company for putting electricity into the grid.

So there’s no way yet to fully quantify our net savings by relocating, retiring and selling our house, but it is likely to be substantial. I don’t expect that we’ll have more money to spend as retirees than when I was working and making more money. That will become clear in time. With a relatively fixed income it will become important to track expenses against a budget and regularly adjust our lifestyles accordingly. Not all costs can be anticipated. But it looks like on April 30 we will not only be debt free but retired both in body and spirit.

 
The Thinker

Ducks in a row

Houses are not really sold until closing. That’s something I am beginning to understand in my gut after our house was “sold”, i.e. put “under contract”. A real estate contract is actually a highly conditional contract that gives the buyer plenty of reasons to later opt out. These typically include a satisfactory home inspection, a termite inspection and a radon test. No house is perfect, of course, and home inspectors are paid to find stuff.

The home inspector for our house sure found stuff, stuff we would have never noticed in a million years and stuff that really didn’t matter. A handrail we added for support on the stairs to the basement had pickets too widely spaced in this inspector’s opinion. A really stupid child might fall through somehow and hurt themselves. So Elias, our handyman, is busy adding these redundant railings to preclude any such thing, although we are pretty sure the buyer is a single guy. He also noticed a vent missing from a room in the basement and wrote that one up too. And lots of other stuff. But we could get rid of the contingency just by reducing our sales price $7000, the maximum price to fix these “defects”, which included a pool of water from snowmelt in our backyard too he felt should require us to regrade the lawn. Apparently, someone had not informed that the buyer the house was 30 years old, not brand new. I guess if you are a home buyer, you have every incentive to shoot for the moon.

We fought back of course and figuring we had the better bargaining position (given that we had two full price contracts to choose from) told him we wouldn’t fix the swale or tear up the stucco ceiling to add a vent that really wasn’t needed. And we crossed our fingers he wouldn’t walk away. He didn’t. The rest of it we can fix up for another $1000. So that contract contingency is satisfied, as is the radon test. The termite inspection will come in time but that has never been problem. Which leaves the appraisal. The appraiser may tell the buyer that he paid too much for our house, so he should pull out of the contract, or negotiate a lower price. I doubt that will happen.

This is the downside of owning a house. The mortgage interest deduction is nice, but a house is a second child that never stops going to college. It means you don’t have to sleep on the street, providing you can keep up the payments for thirty years. To translate its value into hard cash you have to jump through these flaming hoops, the next one more daunting than the last. But increasingly it looks like we will get through them all with only minor burns, but not without ingesting a lot of antacid.

So now we are here back in Western Massachusetts looking at a hole in the ground. It’s not any hole in the ground, it’s our hole in the ground, what will be our next house, a condominium in a 55+ community which is actually a single family house. As holes go it looks pretty good and that’s because the foundation is laid. Moreover, despite the freezing temperatures and most of the snow unmelted the land is reasonably graded. What’s missing is all the rest that makes a house a home, like a frame and a roof, but that will come in time. We have to be ready for that time, which is why we are here not only pondering our frozen concrete filled hole in the ground, but shuttling around Western Massachusetts talking to vendors about stuff like floors, lighting, cabinets and appliances. Gas or electric appliances? Which of the hundreds of chandeliers we looked at today will hang from our foyer? Hallway lights in the ceiling or on the walls? The builders need to know these details, not immediately, but they must be planned for, and now is the time to figure out these details.

Then there is the minor matter of living somewhere until the house is ready. There are plenty of places to rent out here after our house is sold near the end of April. Unfortunately, almost all of them require a yearly lease, so we have to spend time calling around and scouring Craigslist for sublets and month-to-month rentals. It’s a hit and miss process, but we found a renovated apartment building in Easthampton that will work, only because it is nearing completion. The investor-landlord need tenants in an otherwise empty building. New carpet and appliances make it appealing, but the neighborhood is a bit sketchy. An auto repair shop is across the street and down the street are many old Victorian houses, some somewhat dilapidated. It will do for the four months or so we need temporary lodging. The good part about paying rent is you don’t pay a mortgage, or property taxes, or for the general property upkeep. Owning a house in many ways is a foolish thing to do. The owner is willing to cut us a deal just to start to get the building occupied.

It’s unclear where all our possessions will sit in the interim. There are the usual storage facilities out here and we visited a few to discover they can’t take our stuff, at least not yet. Check with them a week or two before we move up, they tell us. We’ll have to find something. For now we take it on faith that it will somehow work out.

When not occupied with these logistical maneuvers, I ponder this major life change we are about to make. I know I will miss many things about Northern Virginia, where I spent the last 31 years. I will leave behind a daughter, the bulk of my friends, a whole network of doctors and  various other professionals, and many pleasant memories. There’s really no going back. It’s a big gamble that life will somehow be better up here in Massachusetts, and it’s harder to believe two days from spring when the temperature here is below freezing, the winds are gale force from the northwest, piles of snow are everywhere and killer potholes pocket virtually all the streets. If it had been just me, I’d probably not have chosen to live here, but of course it’s not just me. It’s also my wife, who hates Northern Virginia and needs a colder climate. It’s what we could agree on. I know that it will take a long time to feel this place is my home, and not just another way station in life.

Selling our house though will be a gigantic relief. It’s been a money pit and a constant hassle. I’ll be glad to finally cash in on that asset, which may mean no mortgage at all for the new house. A new house will buy us, at least for a time, a respite from worrying about infrastructure. Then perhaps retirement can genuinely begin.

All it requires is getting all our ducks in a row. After much work they are at least all moving in the same direction. That’s progress.

 

 
The Thinker

Sold to the man with $505,000

Now here’s something I won’t miss I thought as we sat in capital beltway traffic during the middle of the day. How many weeks or months of my life had I squandered sitting in Washington traffic? There was no possible way to tally it, but at least it was coming to an end soon. While we were escaping to Baltimore, there was no escape from Washington’s predictably unpredictable traffic, at least not while we still lived here.

Or maybe there was. Ahead was the spur to I-270 north. A relatively new Intercounty Connector now connects Montgomery and Prince Georges counties in Maryland. For $3.20 we could avoid yet another tedious beltway tie up. It was hardly the shortest route to Baltimore but unsurprisingly it was the fastest today.

We were escaping to Baltimore because escaping was what our realtor recommended during open house weekend. Baltimore served the purpose of keeping us close but distracted while allowing our newly listed house to be easily inspected freely by prospective buyers. The big event was Sunday’s open house from 1-4. The calls from realtors had already started. Bright Photoshopped images of our house were now online, emphasizing light filled rooms, wood floors and empty kitchen countertops. Based on the calls we were getting, all the hassle of transforming our home into a house was clearing working. Come by anytime, we would tell the always-polite realtor on the other end of the call. The calls came while we drove down Eastern Avenue in Baltimore, in search of landmarks recommended by my sister who lives nearby. And they came in while we ate an early dinner at Matthew’s Pizza, Baltimore’s renowned hole in the wall pizza institution, also on Eastern Avenue.

The idea of escaping during open house weekend would only be partially realized. There was no escape Friday from the below freezing temperatures, endless snow banks and the partially snow filled parking spaces of Baltimore. There was no escape from the usury parking rates near the Hyatt Regency hotel at Inner Harbor, where we had a room for two nights. At least there wasn’t until we opted for the Arena parking garage six blocks away where the socialist City of Baltimore’s daily parking rate was just $16.00.

Inner Harbor was bone chillingly cold and mostly empty on this Friday night. We had made sporadic forays to Baltimore over the last thirty years, mostly to its touristy Inner Harbor area. In 1984 my then girlfriend Terri had surprised me with two nights in this very same hotel, a perk of being the one who made travel arrangements at her office (and being known by name by the Hyatt reservations staff). It is still an impressive hotel, but Inner Harbor was not quite as impressive thirty years later. The shops were less upscale and there were some vacancies. Thirty years ago Mayor (and future governor) Donald Shaffer might have been seen here strolling among the stores. Inner Harbor was his idea and it was very successful. While Shaffer is dead, his statue is still here overseeing Inner Harbor.

Saturday found warmth slowly returning and snow melting. The free Charm City Circulator made it relatively painless to get from point to point downtown. It helped if you liked to walk. Federal Hill was snow covered, but the walks to Fort McHenry were at least shoveled. The place known for the rockets’ red glare during the War of 1812 was unvisited by my wife, but even on this frosty morning the view of the harbor was still spectacular. The most spectacular find of the day turned out to be the Walters Museum accessed via a slow moving Circulator bus. William Thompson Walters was clearly filthy rich (he was a railroad tycoon). He and his son created a staggering collection of mostly European art, almost all of it in excellent condition that highlights medieval periods and the Renaissance. It’s all available for free but is largely unknown, perhaps because it is hard to get to.

Part of our mind was stuck back home. We wondered how many realtors had come through our house with clients in tow. The phone calls had slowed down, but some realtors might have not tried our cell number and simply brought their clients by. We had seen that happen routinely the last time we had a home on the market.

Sunday morning my sister Mary, who lives in nearby Columbia, volunteered to give us a driving tour of Baltimore. Mary might as well have been born in Baltimore. She adopted the city and likes to dress up like a Baltimore “Hon” with a beehive hairdo during Honfest week. She gave us a tour of areas of Baltimore we had never seen. Baltimore has an undeserved reputation. It’s actually an amazingly diverse but very urban city, known for its endless brownstones and many ethnic areas, most of which are quite safe and festooned mostly locally owned businesses. Urban prospectors would be smart to check it out. We checked out the Broadway Diner on the far side of Eastern Avenue for breakfast before starting our driving tour. We also checked out my father and stepmother on our drive back home, and stayed for dinner with them as well.

We returned home near sunset, our house emptied of people but with the back doors unlocked and a stack of real estate business cards on our dining room table. We spoke by phone with our realtor. The open house was a huge success. So many cars were parked along the side of the street that our neighbors had a hard time getting down the street. One prospect had driven up over our curb into our driveway, leaving tire tracks on our sod. Our house was still clean, but the driveway was full of muddy boot prints and tire tracks.

Our realtor was proactive enough to hire an assistant. They had prospects leave their boots and shoes on our porch. Debbie (our realtor) handled the front of the house while her assistant handled the back of the house. Rooms were frantically inspected and closets peered into while various couples tried to imagine if they could live here and afford our $505,000 asking price.

Debbie said we had an offer and to come by her office Monday afternoon. When we arrived on a spring-like Monday afternoon, she had two offers for us to consider. Both were at our full asking price. Both buyers were highly qualified, putting 20% down in cash and financing the rest. Both were happy to pay our asking price. And both were single men. The offers were essentially the same. We chose the Indian guy mainly because his settlement date worked better for us. (We imagined he had a bride to be back from India, and that our house would eventually be full of children.) We drove home with an Under Contract sign to place atop our For Sale sign. Our house had been on the market exactly three days.

This outcome was surprising but should not have been. It’s not for the same reason that we sat in beltway traffic three days earlier. Despite the hassle of living in the Washington region, people still have a frantic need to live here, and are willing to pay the price. It is a seller’s market in our area right now. Moreover, we were the only house for sale in our desirable neighborhood, and our house is in excellent condition. We hit the jackpot, but it was by design, not by chance. It meant about $10,000 more in fix up expenses in the last six months, and a huge amount of labor. It meant cringing while a stager turned our home into something we did not recognize. And it meant a weekend in Baltimore playing tourist while buyers assessed our house and pondered offers on our hot property.

It was a triumphant and to me stunning conclusion to our house selling odyssey. We now have to figure out where to live while our house is built, and we already have an unexpected offer from my sister Mary to live with her rent free in Maryland.

The Walls of Jericho have fallen down. A new adventure in Massachusetts waits for us.

 
The Thinker

Some taxing mistakes

The tax code giveth and the tax code taketh. In 2014, the tax code tooketh, to the tune of about $3000 in checks I did not expect to write to the U.S. Treasury and Virginia Department of Taxation. Ouch! No one likes paying taxes and I don’t like paying mine anymore than anyone else, but I particularly didn’t like it this year when instead of getting refunds I was writing four figure checks. Because of my success in previous years I sort of assumed that it wouldn’t be a problem in 2014 either. So I kept things on autopilot. I didn’t change withholdings or exemptions. I figured it would sort itself out.

But it didn’t. And the answers of why I suddenly paid so much more in taxes when the tax rates haven’t changed were lessons for me and maybe for you too if you read this. What were the causes?

  • We lost an exemption when our daughter moved out. She was employed all year but lived with us until October. She paid for her automobile expenses but otherwise lived off house fare and got free rent. I assumed because we paid most of her expenses we could still claim her as an exemption. An exemption is worth almost $4000 off your taxable income. If you are in the 25% tax bracket like we are, that’s about $1000 in taxes. How much of her expenses we paid does not matter to the IRS. What matters is how much money she made and since she made more than $3,500 we could not claim her as a dependent. So in our benevolence to help her acquire the savings she needed to live independently, we were also taxed for the privilege. Ouch!
  • We started earning interest again. We put a lot of our cash into Ally Bank, an online bank, which pays about 1% interest. 1% interest is not much, but it beats the .01% we were getting through the credit union and USAA Savings Bank. It’s nice to earn interest, but it’s income so you have to report it. $219 in additional interest effectively cost us $53.50 in extra taxes.
  • When I retired I was paid for six weeks of accrued annual leave, a significant lump sum of money for which I was disproportionately taxed. There is wisdom in retiring on the first of the year. That way your lump sum applies to the next tax year when your income will be less. I didn’t do that and retired August 1. Despite our retirement for five months of 2014, our earned income was just $16,500 less than in 2013. This was largely due to the lump sum paid on my retirement.
  • My business income went up but I didn’t want to pay quarterly taxes on the income because of the paperwork hassle. It worked out in the past by making my four-digit tax refund three digits. This time it worked against me.
  • I could not claim my health saving account deduction. Last year I got the full $2500 credit. Since I wasn’t employed all year in 2014, I actually only put about $1700 into the HSA, but there is no requirement for money to accrue for it to be paid out. $2500 was paid out. The end result was that I could not claim the credit at all, so that effectively cost me $625 in taxes.
  • I hassled my wife to put money into her employer’s 401K while I kept putting money into her IRA. Because her 401K money was tax deferred, her IRA money was not. It’s good to save money but because it was not tax deferred it effectively cost us $812 in extra taxes. Hey, it seemed like a good idea at the time! On the plus side some day I will be able to take out the money we put in for 2014 and not pay tax on it.
  • Because I made more money consulting, I had to pay more self-employment taxes. Cost for the extra income: $128 in taxes.
  • Our cars depreciated, so we paid fewer personal property taxes, which added $33 in taxes.
  • Our mortgage is almost paid off, which means there is less of a mortgage interest deduction. That effectively meant $150 more in taxes.
  • We gave less to charity. This is mainly because my wife stopped going to her temple and feeding them regular checks. I didn’t think to make up the deduction with other charitable spending. This effectively cost us $566 in taxes.

The above was slightly offset by some good things: lower earned income, more consulting income and of course the pleasure of being retired. But I have learned that tax-planning vigilance is needed. Moreover, I learned that major life transitions can cost you a lot in taxes if you don’t anticipate them. When we lost an exemption, it was not entirely bad. We won’t be paying for our daughter’s expenses in the future.

2015 will not be any easier for us tax-wise, as we will be relocating and buying and selling homes. But it was clear that I was not withholding enough money for income taxes. I tried a number of online calculators but even the IRS’s calculator is really deficient. It turned out to be easier to estimate income, deductions and credits in a spreadsheet based on the fields in a 1040, calculate my estimated 2015 tax from it and then figure how much I needed to increase my withholding so not to end up in this situation again. It’s about $500 more a month.

I hope in 2016 I find I am not similarly surprised.

 

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