ceebeegee | Entries tagged with finance

I'm starting to settle into my new place and establishing a rhythm of sorts. I have a couple of priorities I'm trying to honor--the main one is financial stability. After buying the new place I have a larger monthly nut than I did when I lived with Anya--the mortgage + maintenance is more (not much more but still), plus I now have twice the cable/internet bill (since I got Fios) and an electric bill (when Anya and I lived together I paid for the internet and she paid for ConEd, and we would figure the difference once a year). So for the past month or so I've been seeing how much I can cut other expenses--how much fat is in the budget? A lot more than you'd think, and I've eliminated a lot of it. When I shop for groceries now, I force myself to get *only* what's on the list. If I hang out with my soccer team afterward I get one beer and that's it. No Pinkberry, no afternoon treats at work, turn off the lights every chance I get--it's what I like to call my Nicolae Ceaucescu Austerity Program. So it's worked quite well so far! My ConEd bill went WAY down and I cut over $200 from my monthly MasterCard bill. I know I can get it down even further, but that will have to wait until the winter. Between taking Thing 1 and Thing 2 to the vet last month and this (each visit is a cool $95--yikes!), plus travel home for the holidays, plus presents and other assorted holiday expenses, I'm hit a little hard the next couple of months.

It's difficult for me to earn much more money than I do right now unless I get a raise or an outside job (both possibilities) but there are other sources for funds. For one thing, my income tax refund in the spring which is usually pretty sizable. Another is the cash rewards program on my credit card--it is tallied every month and awarded to me at the end of the year. Since I pay my balance in full every month, I don't pay interest so that's free cash, as it were. Not a lot, true, but every bit helps!

The money I'll be saving goes to two purposes--1) paying down the mortgage faster (I'm adding extra money every month toward the principal) and 2) savings (not that it's doing anything there, rates are so low right now). Although I think some of that will also go toward my Roth IRA--I'd like to up my monthly allocation.

As I said, I applied for an HPD grant: the main qualifications for this are you have to be a first-time homebuyer (I think) and you have to make under a certain amount. The grant will cover either your closing costs or your down payment (or at least help you out with it)--I'd already put down the down payment, so this would be put toward the closing costs. You have to jump through quite a few hoops for this grant--I had to take an online course for homebuyers, much of which I already knew about, and which took FOREVER, most of the week, to sit through. And as with the loan process and with the application for the building, you have to provide reams of paperwork. Luckily a lot of this paperwork is redundant. And after 2008's subprime mortgage meltdown I certainly understand (and appreciate, frankly) the need for meticulous due diligence. But after awhile I started saying "the next time I talk to Chase or HPD and they ask me for more paperwork, I'm gonna drop trou and show them my dick and say 'Because you've seen EVERYTHING else already.'"

The grant process ended up being pretty frustrating at times though--several times I'd have to send them stuff more than once. Why, I don't know, but it's annoying after emailing them XYZ, to hear several weeks later "outstanding documents include XYZ." ARGH. We actually had to extend the commitment--the original expiration was May 13 and they weren't ready yet, even though I'd sent them everything by the end of March. ARGH. Eventually the original closing date was June 14, and even that had to be pushed back to June 21. But finally it all happened, and I got an email the morning of, from Jason (my old landlord who was serving as my attorney on this) saying everything was covered so just show up with my checkbook and a photo ID. I was still nervous as I had little idea what to expect other than signing a lot of documents. I honestly felt as though I was going to vomit.

The closing went off great and Jason was right--EVERYTHING was covered. I mean everything, except for one $25 FedEx charge, for which I wrote a check. But I also got money back (I'd put down a deposit for the Offering Memorandum so I got that back, plus interest). Due to the peculiar circumstances of the building and its requirements, I also didn't have to pay a title transfer tax. So basically I walked away with an extra $75--plus I don't have to start paying off the mortgage until August. Not sure how that works but I'll take it!

I scheduled the move for Tuesday and hired movers. Griffin and Anya helped out quite a bit and I was literally RUNNING up and down the stairs (for which my calves are now chastising me). Griffin was the first friend of mine to see the new place and he was amazed. After we were done, we ate at a nearby beer-and-burger joint, did a little grocery shopping (there's a great store right on the corner with aaaaaaallll the artisanal ice cream and beers I could ever ask for) and then I started the dirty work of unpacking. As I unpacked I realized--the place is actually *bigger* than I'd remembered. (First time THAT'S ever happened since I've moved to NYC.) It's designed so intelligently that I'll have room for everything in the closets, etc. and I can keep the public areas very spare and cool and zen. AND I will *definitely* be able to invite everyone to parties (I'd worried with a studio that I'd have to really curate who I'd ask over, but it's a BIG studio). My favorite new discovery is the view--the night view is simply gorgeous. The window is huge and it looks uptown--there are several tall buildings 6-10 blocks uptown that overlook ours, plus the Metro North runs above ground there, so you have this constant glowing train passing by (but hardly any sound, the glass is very noise-proof), and of course glowing hi-rises in the distance. So, so beautiful. However I do need to put up curtains AS SOON AS POSSIBLE because the morning light is pretty strong--I've been clipping a comforter to the windows at night so I can sleep but that looks tacky :) Oh, it is all so beautiful.

I can't WAIT to try out the gym and use the terrace out back! And the laundry room! And the party room...

I've met a few of the residents so far--everyone kind of grins at each other as if to say WTH DID WE STEP IN IT OR WHAT. It's a co-op so we are all shareholders, and I would like to get on the board once I get settled. That's a ways off, as the building is only about half full right now. But I'd love to nudge them to develop/open up the rooftop sometime in the future--how awesome would that be, rooftop parties!

Can't wait to plan a housewarming party. I will post pics as soon as the place is cleaned up.

So, yeah. Big news last week--I bought an apartment in Manhattan. This is the culmination of an extremely arduous process (I've been in contract since the third week of January so it's been pretty much exactly six months) and I am VERY relieved it is finally over.

For awhile now (at least since 2009) I've been scrutinizing the subway dailies (AM New York and NY Metro) for those ads that appear, usually on Thursdays, advertising new buildings that are going up that have set-asides for people like me who don't make a ton of money. Most of these buildings are rentals and are usually called 80/20 (as in 80% of the apartments are market-rate, 20% are income-restricted). I *only* wanted 80/20 buildings--no Mitchell-Lama or any of that type of program. I think these programs work best when they mix income levels. When I see an ad whose requirements I satisfy, I send in a request for an application. The income restrictions may vary--some are as low as $23,000 per year (WHO the hell makes that in Manhattan? I honestly don't even get how they find anyone for those--people who make that little money would have a VERY difficult time living in the city) or maybe $33,000. Anyway so I've had my application picked a couple of times before this. This is when the fun begins, because they call you into an interview and you have to produce REAMS of paperwork to prove you are in fact actually qualified. I mean, everything--bank statements, paystubs, utility bills, etc. The first time my application was picked ofr a building, the ad was badly written and I actually did not qualify which was...well, very upsetting. Then a little over a year later I was contacted by another building. I actually made it all the way through and qualified but they ran out of apartments, so I was put on the waiting list. I knew THAT would never happen--the building is the Mima on 42nd St., a luxury building--NO ONE who was lucky enough to get into that one was going to be going anywhere for a while. So back to the drawing board.

Last summer I sent in an application for a new building going up in SpaHa (Spanish Harlem). But this was not a rental--it was for homeowners. I wasn't crazy about the location but I thought--a whole building full of homeowners? That seems pretty good, they will have a stabilizing influence on the block. So I sent it in and got back a letter saying where I was on the list. I'd found an online forum where posters were going through the same process so I monitored that. Finally in January they called me in for an interview. Representatives of the seller (the developers) looked through my initial papers and thought that I qualified and they showed me the apartment the same day. It's a studio on the 3rd floor--and I fell in love with it immediately.

Here is the website for the building: La Celia.

I'll post pics later but among other amenities my kitchen has a BREAKFAST BAR. Which means I can entertain! All new appliances of course, and the refrigerator is HUGE. It's split-side, plus it has an ice/water dispenser in the door. Also the kitchen is wired out the wazoo--SIX OUTLETS in the kitchen alone. Oh--and a DISHWASHER. Yay, no more scrubbing pots!!!

The one window is very large--4 panels across. also, two closets PLUS a linen closet which makes this Southerner very happy. Very nice treated hardwood floors. One unit for both heat and A/C which means no more Air Conditioner of Damocles dangling out of the window and blocking the sunlight. The bathroom has a pretty little shower stall with a glass wall and glass door. As for the rest of the building, there is a gym, a party/community room, a laundry room and a terrace out back. Basically it's gorgeous and I love it.

So I signed the purchase contract and then started the loan process. MORE paperwork--I was sitting with the loan officer for something like 2 hours as I handed over statements, etc. He asked if he could pull my credit, I said of course. Then his eyes widened when he saw my credit score--OVER 800. Oh my Lord. I really didn't know it was that high--yay! So I qualified for a shit-ton of extra goodies like a SONYMA loan at 3% plus an HPD grant to cover my closing costs (NOICE because closing costs can really rack up--anywhere from $8K-20K). The best part is that my monthly nut (mortgage plus maintenance fees) won't be that much more than I'm paying now for rent.

New York State residents (and--I think??--everyone in the country now) can get three free credit reports per calendar year, one from each of the three big credit reporting agencies: TransUnion, Equifax and Experian. Go to AnnualCreditReport.com and choose which agency you'd like--for maximum effectiveness, go every four months. You have to give them your SSN and some other identifying information, and then they generate a report that shows your credit usage and history for the past seven years. Mine right now just has credit cards (including closed ones) but it used to show the two loans I've taken out. (Hmmm, I'm wondering if I should take out a loan of some kind, that helps improve your FICO score because it shows you can manage different types of credit.) I would also suggest generating the report at a computer where you can print it out, so you can look over the report and note any mistakes. If you do find mistakes, you need to write the reporting agency and have them fix it.

If you have credit cards (which, face it, most of us do) or a current loan do not EVEREVEREVER pay late. ALWAYS pay on time, even if it's just the minimum. The surest way to mess up your credit is to pay late.

(Do NOT go to FreeCreditReport.com, that site is a scam. In order to get your "free" report they make you sign up and pay for their service and it is supposedly very difficult to stop the service.)

Yesterday at work we've been working our way through a bunch of boxes of Girl Scout cookies that a guy left behind when he left the firm. I was eyeing the currently open box on the counter, which were the Do-Si-Dos, and asked if there were any other open boxes of something better, like Tagalongs or Thin Mints. One of the analysts was trying to figure out what I wanted, and I said "I'm looking to upgrade our cookie portfolio. Currently our allocations are about evenly distributed among all the varieties, and most of their positions look strong. However the Do-Si-Dos have been underperforming this quarter and I'd like to reallocate and phase them out." The analyst replied "yes, there's a strong sell on the Do-Si-Dos."

At work they are renovating our floor, so we're relocating to another floor way down for a year (no more amazing view for those of you who've visited me!). But this is nice--we get a gorgeous view of the Cathedral *and* any parades that go up Fifth Avenue. And there are marble counters!

Holy crap! GOOG is going through the roof today, up 12%! (I've been tracking this stock obsessively since splurging on it a few weeks ago.)

So I finished reading (finally) Larry McDonald's A Colossal Failure of Common Sense. I'd put it aside last summer after reading about a third and was then reminded of it in May after watching the movie Too Big to Fail on HBO at Lori's place. (Which--by the way? AMAZING movie. Just fantastic and well worth watching. Really captures the terror of those weeks in the fall of '08.) Anyway watching the movie I was reminded of the McDonald book, especially because 2Big similarly pillories Dick Fuld, who comes off as a criminally self-absorbed, in denial, petulant jerk. Think Nixon in finance, the kind of guy who holds grudges and makes terrible decisions because he can't stand to be seen as "less than" in any way. So I went back to Failure and found it much faster reading this time--apparently I'd absorbed the concepts. It's a great book for a non-insider--there is a certain amount of lingo to master but he does a pretty good job of breaking down exactly how this mess came about. There is a slight implicit political bias to it but I can get past that. When you realize how it happened, you start shaking your head, like WHY did anyone think saddling poor people with unworkable mortgages was a good idea? This isn't just the very commendable goal of trying to help poor people (aka subprime borrowers) by navigating the mortgage process, or reducing the interest rates for them or whatever--this is setting them up to fail by signing ANYONE and everyone, no matter what*. There were all sorts of terrifying loan structures like NINJAs (No Income, No Job or Assets) and ARMs (Adjustable Rate Mortages--people would sign a loan thinking their payments would be, say, $2000/month and then after 6 months--WHOOSH!--they went skyward, to $3500 or more). Honestly, I can't place blame on these borrowers--it's an article of faith that owning your own home is the American dream. Furthermore it's a fundamental tenet of financial solvency that it's better to buy a home and earn equity than to rent (which earns you no equity and of course you don't own anything after finishing a lease). If someone comes to you offering you a loan, when up til now people like you are denied access to loans (either due to racism or just financial common sense), wouldn't you assume they know what they're talking about? Why would they set you up to fail--whom does that help? It just makes no sense.

*These subprime loans were then collectively bundled into bonds (RMBS--Residential Mortgage-Backed Securities), and sold all over the world. So part of the problem of sorting out this mess is that no one knows who actually owns the titles to some of these properties. (Which actually helps some of the defaulting borrowers--can't kick someone out and sell their home from under it if you can't track down the owner because it's actually some bond customer in Norway or Japan. Hence some people have defaulted and just stayed in their homes.) Traditionally the bank that held your title was your local bank, just like traditional vetting methods for getting a mortgage include face to face meetings (no autobot and a careful assessment of your credit history, and assets and income.

One of the great features of the McDonald book is how he makes these concepts manageable and comprehensible. Partly this is because his prose is hardly eloquent! But this is mostly a strength--he writes like he talks. He brings a face to this process--he first introduces the legions of predatory lenders by talking how "trends tend to start in California" and describing a new kind of "banker," mortgage salesman who live in California and are incentivized to sign up as many mortgages as possible and who revel in their success with their Jags and Mercs and hit the gym and the tanning booth a lot. He calls them the bodybuilders.

Here is a fantastic article in New York magazine about predatory lending. Depressing as hell, but it helps you understand how the bulk of the blame lies with these lenders who lied to everyone just to line up loans they knew the borrowers couldn't repay. In this poor woman's case, she was scammed by her churchman (I use the term "bishop" advisedly--I doubt he's ordained with any kind of reputable denomination, he's a "bishop" like Al Sharpton is a "reverend"--he just uses the title without having earned it. And I love that the writer of the article actually tracked down this scammer at his house). I feel so terrible for this poor woman--she is genuinely trying to do the right thing, she's trying to fix this and seems like a hard worker and a self-improver who was treated very badly. She doesn't deserve this.

ETA: McDonald's book makes me want to start shorting stocks (i.e., betting they'll go down instead of up)--I bet I could do okay in distressed debt! Sadly, because of where I work, I'm not allowed by law. I have all sorts of restrictions about how I trade because of my job.