And now, a share from my personal Facebook page:
Ya, so – sometimes, when you think you have your sh*t figured out, you really don’t.
You find yourself in the home decor section of Wal-Mart, evaluating your life choices and wondering how you got there.
Adulting, is like throwing a crazy dinner party. You do your best to plan, but then everyone shows up at once and you have too many things cookin’.
Sometimes babes, you drop and ruin things even with the best of intentions and despite your best research on how to balance at all. You simply can’t watch all the burners. It’s best to always have a backup salad that doesn’t require heating, and plenty of alcohol to make the burned bits bearable.
That is exactly how I would describe how most adults are trying to juggle it all- too many things on the burners and lots of wine.
This came to light for me in comparing my 30th year of living with my 31st. When I was 30, I was gearing up to buy the home we now reside in- and I was cruising along to my 20% down payment and I had my little Roth IRA that I did my max on every year. CRUSHING IT.
Except at 31, the house buying experience has made me wonder how I’ve even made it this far. It’s not fun to admit this-but I totally didn’t plan ahead for property taxes, and I got a big ol’ bill I wasn’t prepared for- to the tune of $3,226.
I was hoping I could figure it out along the way, but I got punched in the face with life a few times. Buying a house, that was supposed to be completely move-in ready with a new roof, new floors, new water heater, new HVAC- all of that, well- it didn’t go as smoothly as hoped. While I’m very lucky, I also had a monthly series of expensive house problems that started the week we moved in that meant I was pretty emotionally and financially spread thin.
With all of the house problem distractions, it usually meant I didn’t really get to pay close enough attention to my new expenses. One giant thing I missed, was that my mortgage was set up based on outdated property valuations from the year before I bought the house in 2016, not its current value that was assessed before I bought the house in 2017.
Thusly, my escrow account wasn’t funded sufficiently and I would need to make up the difference in short order. I didn’t get the notice that my property had been valued at a much higher amount because those notices were sent out before I bought the house- I could have caught it in my closing documents, but does anybody read those? Maybe you do, I didn’t look at it page for page after we closed.
Do Not Pass Go. Do Not Collect $200. Ouchies.
So, how does one get shorted on their escrow account?
For those of you lucky enough not to already be playing the “Let’s Get A Mortgage!” game, your escrow account is essentially a part of your home buying package and thus, a part of your ongoing mortgage. It’s essentially where your money is held to pay property taxes.
Your property taxes are based on the value of your home that’s determined by a dude (or lady!) that walks around the hood, and looks to see what your home is worth, usually from the curb. Literally, that’s how it works. (Ya, I know right? I will be dumping some trash in my yard if you need me.)
Yes, yes- there is also other factors that come into play, like neighborhood values of other homes that are comparable to yours- but to me, I’m thinking I got a “damn her porch is en pointe” tax for just being so tip top with my container garden.
I mean, I’d tax that cuteness too. Patio lemons?
So, you are required to keep your escrow nice and full to cover your butt for taxes. (Because the government always, always gets their share.) In my case, I missed the key thing- understanding what factors impacted how my escrow account was calculated.
Unfortunately, my home was valued at a lot in more in 2017 vs. 2016 due to the improvements that were made to sell it- but that was the valuation they pulled into my 2017 mortgage (despite the fact that 2017 numbers were available by the time I closed on a home)>
Yes, I should have caught this, but in the flurry of paperwork, and in the flurry of saving my $52,000 down payment from fraudsters (that story to come!) I sort of glazed over that fact and figured I would be able to handle any tax increases as they came.
Well, life does not go as planned- that’s why having savings set aside for the things you know are coming and especially, for the things you don’t know are coming is key.
I didn’t realize that in November, my escrow account went kaput because I hadn’t been charged enough upfront for my 2017 taxes.
Not only did I get hit with a $3,200+ bill to get my escrow account up to the level it needs to be, but my property is going to be assessed again in 2018, and I will likely be hit with another property tax hike. Yowza.
Ya, I really, really hate typing that. I didn’t see TWO property tax bill increases coming within 3 months of each other, and no, I wasn’t prepared for a 30% hike that I couldn’t even contest because I had owned the house for a whopping 8 days.
Sometimes you have to learn by doing. You can read about the theory of gravity in a book, or you can also expedite that discovery process by falling down a flight of stairs. I mean, it works.
This was one of those posts I wasn’t super excited to be sharing – but the path forward isn’t always a straight line. Sometimes you make strides, take your eyes off the prize for a bit and realize you’ve broken some stuff. At that point, you can chalk it up to learning and make adjustments with the new data you’ve acquired, stair style.
So for the sake of full head-slapping transparency, I was a frugality writer at Frugal Beautiful for 7 years, yet in 2016 & 2017, I had been bleeding out money for a variety of reasons, and beyond putting 20% down on my home, I didn’t really have a budget or a reason to budget, so I was adrift.
Some expenses were new- normal house repairs, abnormal home repairs (like finding out half my house has no insulation- and no, the inspector didn’t mention it), but I was also contributing to a new 401k (which is a good thing!) through work, and ramping up our charity project, Virtual Charity Runs.
After attending the Women’s March in Austin last year, I made a commitment to be a monthly donor to Planned Parenthood in Texas, the NAACP Legal Defense Fund, Texas Public Radio and made several smaller donations to the Human Rights Campaign and a few other worthy causes. I felt I had cushion in my life and it was time to give back.
That being said- yes, I had a lot of “good” expenses, but I also got into some dumb money habits on autopilot, I also had a lot going on that meant I wasn’t paying attention or aligned with a bigger vision.
I had subscribed to several subscription boxes because they were fun and I liked getting surprises in the mail (to the tune of over $1,000 a year for the 3 I had). I didn’t need all the stuff that came with them, but subscribed none the less. I hadn’t assessed my insurance coverage or phone plan in ages- leaving potential savings on the table. On the whole, my partner and I were getting sloppy with our meal planning and food waste was embarrassingly bad.
I was getting my hair done more often than I used to (4 times a year versus my 2-3 times a year, meaning I was spending $300 more a year), and it was a lot of little things that slowly meant my intentionality was slipping and I fell into a routine of consumption without much thought. I bought more books and paid for more apps. Little things become big things over time, and you tell yourself you “simply can’t save any more,” but you’re just not trying. Yup, it can happen to anyone.
Essentially, I was really spread thin, really distracted and I wasn’t paying close enough attention to my personal spending, nor being sure I committed 100% to building an emergency fund back up. It caught up with me.
It’s easy to lose your mooring when you don’t have a goal to work towards and anchor your behavior.
It came to a head when I got the bill from my mortgage company that I owed $3,126 to fill up my escrow account, and after that was paid, I would still owe an additional $200 more a month on my mortgage payment. Coupled that with the fact I also discovered that our house was seriously missing insulation in half of it, and I knew I was completely screwed.
My assets wouldn’t cover my liabilities and I had made a fatal mistake- I figured I could handle it when the time came and of course, bills don’t care about your personal calendar.
I had now at least $5,000 in bills, new another tax hike would likely be coming and I had about $2,500 in my emergency fund and an upcoming bucket list trip to pay for.
So, What Now?
I’m going to be honest- I’m learning from this mistake and doing two things I’m really uncomfortable with. The fella has given me an advance on his portion of the mortgage payments, and I’m using a 0% APR Credit Card to get me through the next 3 months and pay for the attic repairs and insulation we need.
Yes, yes yes. I am not a fan of this– I have never been in credit card debt, ever. But, I have a 12 month introductory period with no interest, and I will be cutting expenses after our Europe trip to ensure that my $3,000 in credit card purchases are paid off in five months, and any cash that my fella fronts to cover the property tax is paid back in the next four months.
Is it ideal? Heck no. Am I going to hustle? Heck yes.
-I have a new goal- to not only pay off any debt in 5 months, but to also get my emergency fund back up to sustainable levels. My goal by September will be to have at least $5,000 in liquid savings, have at least $1,000 in the property tax slush fund in another savings account and get my travel savings to at least $1,000.
-I’m also going to be setting aside monthly savings to cover any property tax hikes in the future and ensure I’m prepared. I also know how to contest my property taxes and file for a deduction, so I’m armed with a new knowledge I didn’t have before.
-I’m selling about 6 of my old Kate Spade purses (yes, I really had that many purses I don’t use) for what I’m hoping to be about $500 in income. I have about 3 bags I use regularly, I don’t need 9.
-We’ve fully booked our spare room out with Airbnb (assuming all things go to plan) for about $4,800 in income.
-Finally, I’ve picked up some side hustle writing gigs that will generate over $7,000 in the next 6 months.
-I feel super charged with my goals, but that I can still make it work to get my house in working order AND continue to donate to causes that I care about. I’m getting trained as a volunteer with Planned Parenthood and a local foster care organization, so I can give my time as well. It feels GREAT to have purpose beyond just financial goals.
So- sometimes you have to learn by first falling down a flight of stairs, but it’s your choice how long you want to stay at the bottom. 🙂