Energy Usage, One Year Later

We’ve been in our new home for 24 months now. Around this time last year, we got our twelfth bill from Entergy at the new place. That meant a year’s worth of accumulated energy consumption data. This was a handy baseline, coming just days before we insulated underneath the house with closed-cell spray foam.

So here we are, one year later. As promised, here is the energy use data for the last twelve months.

Energy Usage

Month kWh Used Days Billed Avg. Daily Usage
11/11 571 28 20.4
10/11 673 30 22.4
9/11 1169 29 40.3
8/11 1389 31 44.8
7/11 1362 29 47.0
6/11 1229 30 41.0
5/11 637 32 19.9
4/11 390 28 13.9
3/11 642 31 20.7
2/11 3072 28 109.7
1/11 3042 35 86.9
12/10 2368 32 74.0

Obviously the big question is how this compares to last year’s data. Crunch the numbers yourself if you’re so inclined. I’m simply going to put the average daily use side by side.

Month Avg. Daily Usage
(After)
Avg. Daily Usage
(Before)
11 20.4 23.7
10 22.4 30.1
9 40.3 57.3
8 44.8 68.1
7 47.0 46.4
6 41.0 46.7
5 19.9 18.7
4 13.9 23.5
3 20.7 88.8
2 109.7 92.3
1 86.9 174.9
12 74.0 82.0

On average, we used less energy after the house was insulated. More to the point, if we total up all the kilowatt hours for the respective years, we find we used 23,390 before the insulation and 16,544 after. That’s a drop of almost 7,000 kWh. Even accounting for the freakish cold snap of January 2009, it’s a substantial reduction.

Or so it seems. How much does a kilowatt hour of electricity really cost? It’s complicated. Our bill shows energy charges and fuel charges and lots of stuff I can’t quite figure. I appreciate that Entergy has some tools for analyzing your bill, but I don’t understand why they don’t retain data longer than one year. I do know that our November 2011 bill is $22.97 (31%) lower than our November 2010 bill. I assume our savings more than offset the $2000 we spent on insulation.

Caveats: I talked about energy consumption but this is actually only electrical usage. We have some gas appliances, most notably our upstairs furnace. However, the downstairs furnace and of course the air conditioning system runs on electricity.

Some Good News

Since I spent so much time bellyaching here about our cashflow problems, I thought I should at least report some recent tidbits of good news.

  • We did not run out of money at the end of February. Granted, it’s a short month, but I think our austerity measures are paying off.
  • I did our taxes yesterday, and despite my fears we are indeed getting a substantial refund.
  • My online tax prep service (TurboTax) turned me onto Mint.com. I’d Iooked at Mint before but for some reason it never clicked. Now I see the appeal, and perhaps it will be helpful in the long term. In the short term it’s already yielded confirmation that we’ve reduced our grocery bill. It’s much easier than tabulating manually, and with nifty graphics too boot.

Grocery Comparison

Grocery Revelations

Cart on Grass

On the subject of our household finances, a consensus has emerged both in the comments of my recent post and elsewhere: Our grocery bill is out of whack, off the chain, out of control.

I agree. I’m not sure why I didn’t notice it myself earlier. In part, it might be an example of not seeing the tree for the forest. But mostly I attribute it to my general financial stupidity. I can think about numbers all day long, but put a dollar sign in front and I start getting sleepy.

In any case, I’m thankful to all those who brought this to my attention.

I’d reported spending over a grand on groceries over the last thirty days. That seemed a bit anomalous to me, but a weekly tab of $150-200 is not unusual. (Still high, I know. I’m getting to that, so bear with me.) If I had to guess I’d peg our monthly grocery expenses around $800.

But why guess? I checked my bank records and tabulated the numbers for the last six months.

August: $710.68
September: 617.94
October: $911.27
November: $976.98
December: $538.53
January: $1008.06

December was low because we spent a full week away from home, mostly living on my in-laws dime. January is actually under-reported, believe it or not, as I’m pretty sure I unloaded $100 worth of gift cards at the grocery.

The total comes to $4,763.46 for half a year. That averages to $793.91 per month, so it seems my above-cited guess was quite accurate.

I understand the average American household spends 9% on groceries. We are way over that. So, what’s going on? How is it possible that we spend so much on food? Do we have extravagant tastes? I don’t think so. We don’t buy a great deal of convenience foods or expensive meats or big ticket items. Occasionally I have splurged on booze, but I don’t think that accounts for the high receipts in this case. For the most part I don’t buy liquor at the grocery.

I’m tempted to blame the grocery. As a rule we shop at the nearest supermarket, which is the Rouse’s on Carrollton in Mid-City. (The totals above are exclusively from Rouse’s except for one visit to Dorginac’s in October and one visit to Winn-Dixie and another to Dorginac’s in November.) I’ve always felt good about shopping there because they are a regionally-based chain, and I’m generally happy with the quality and selection. But Xy’s often said their prices run high compared to other stores.

So, last Friday, Xy stopped at a Save a Lot on the West Bank of Jefferson Parish. She spent $81.82 and I was knocked out by the sheer quantity of groceries she brought home. It looked like 50% more than we’d bring home from a big trip to Rouse’s — at half the price.

We realized there were some key items she missed, so on Sunday we made a joint venture to a Save a Center here in Orleans Parish. That ran us $67.76, but we are now pretty well stocked for the next couple of weeks. I anticipate we’ll only need to get a few perishables over the coming weekend. If I’m right about this, we might expect to spend less than $400 per month on groceries just by changing the store where we buy most of our stuff. Obviously that would be a significant reduction, cutting our monthly grocery expense in half.

Maybe I’m wrong to blame Rouse’s. Maybe our shopping habits are really to blame. If so, shopping at Save a Lot would appear to effectively constrain our behavior. That could solve our budgetary problems in one fell swoop, and we might even learn something in the process.

Unfortunately it seems this is a timely issue. Rising food prices fueled the unrest in Egypt, and that will be hitting home soon. American food prices are expected to rise as much as 29% this year. I hope that doesn’t erase the savings outlined above. I think we’ll be staying active with our community garden.

Austerity Program

Blood & Money

While politicians in DC wrangle with cutting the federal budget, I’m trying to do the same thing here at home. It ain’t easy. I suggested to Xy we might cancel our newspaper subscription — she was not happy about that. Well, neither am I, exactly. But a part of me relishes the challenge.

First a glimmer of good news. Because of some sort of federal social security rollback, my monthly take-home pay just increased by $72.33. I guess Xy’s should have increased as well, but it’s actually gone down $1.50. Not sure why. But it’s still a net gain of $70.83.

Also, we were overpaying by $100.00 per month on our car loan. This was an intentional decision on my part, in order to pay it down more quickly. Same with our house note. But in the interests of cash flow, we can just pay the minimum on both of these. Of course, our monthly home escrow payment is going up by approximately $250.00, which is what precipitated this sense of impending doom in the first place.

So let’s do away with those two overpayments, combine the $70 take-home boost, and just effectively cancel out the escrow increase.

Awesome. I feel better already.

It’s smoke and mirrors, of course. Remember we were already having trouble making it to the end of each month. We do need to tighten the belt.

Here’s some things we can’t cut.

Cable television: Don’t have it, can’t cut it.
Home phone: Don’t have one, can’t cut it. (But see below.)
Second car: Don’t have one, can’t sell it.
Theater: Haven’t really gone since our daughter was born.

Here’s a breakdown of things we could cut completely.

Books: I’d estimate my monthly book club habit costs me around $12.00 on average. Sometimes we read cheap paperbacks, sometimes expensive hardcovers, and there’s quite a range between. I should be able to borrow most of these books from the library. I work above a library, after all, and there’s always interlibrary loan. I just submitted my first request, for Midnight Robber by Nalo Hopkinson. As much as I like to support my local bookseller, I need that $19.99 this month.

Netflix: $14.99. Easy to cut.

Times-Picayune: $18.95. Vociferous objection from Xy duly noted.

Garden: Our community garden membership is $20.00 per month. Xy does a little work each month, and we get a basket of veggies and fresh eggs delivered on our door once or sometimes twice a month. I love that we’re getting locally grown organic food. I love the entrepreneurship of the guy who started the gardens. I love the educational aspect for our daughter. I really hate cutting this, because I think the food baskets are worth almost $20 in and of themselves, but perhaps not quite.

Yard: I’ve been paying a guy $35.00 to cut our lawn. Sometimes that adds up to $70.00 a month in the summertime when the grass goes twice as fast. It’s not that I’m lazy — really — but we don’t have a mower, and we don’t even have a good place to store a mower. I’m pretty sure a certain friend and neighbor will let me borrow his. I’ll be sure to bring it back right away. Promise. Also, our yard needs a little more attention, plus the exercise will be good for me.

Yoga: $15.00 per lesson at four per month = $60.00. A shame to cut this, but OK.

How much have we saved so far? I make it about $160.94.

So much for that. Now here’s some opportunities for saving rather than cutting:

Internet: Looks like we can save $13.00 if we switch from Cox Preferred to Cox Essential. That would drop us to a max download speed of 12 Mbps to 3 Mbps. But so what? I’m pretty sure we don’t get 12 Mbps during peak hours anyhow.

Grocery: Just as a baseline, we spent approximately $1,032.69 on groceries over the past month. Xy estimates that by hitting the Sav-A-Lot weekly we could save $80-120 per month on food costs. Let’s aim for a nice round $100.00.

Our total in now $273.94 per month. Hooray, this is starting to add up. That, more or less, may be what we need to make up the gap we have at the end of some months.

I was going to say that we don’t go out to eat much, if at all, but I note we’ve spent $116 or so at restaurants over the past month. One night the Sewerage & Water Board shut off water to our house as they fixed a blown main and so we went out and ended up spending $60 that we didn’t have. So that kind of thing has to be reined in.

Here are some costs that don’t appear negotiable, at least not immediately:

Energy: Hard to say, because it fluctuates, and we just added insulation under the house a few months ago. When we had our bill leveled it came out to $188/month. We keep our thermostat at a reasonable level, in my opinion, so I don’t see this one changing. Entergy solicited me to try SmartView yesterday, which is a no-cost pilot program to help people understand (and possibly reduce) their electricity usage — but we earn way too much to qualify.

Daycare: $690.00. I’ve realized our primary challenge is to get through the next four months. Then our daughter will be out of that daycare forever. We’ll get a bit of relief over the summer, and then the girl will begin Pre-K 3 at Xy’s school. It’s not free, alas, though it should be a bit cheaper than daycare. After a year of that, we hope to enroll her in a Pre-K program at a public school. That’s the plan, anyhow. If that works, our financial situation should improve in 16 months from now.

Cell phones: We pay Verizon $141.92 each month for our two phone plans. I have an unlimited web plan for my Blackberry, which Xy says she likes. A friend of mine suggested we could use an iTouch with Skype and save money, but I’m not convinced that would suit our needs. I’m pretty sure Xy would insist on being able to make an emergency call from the road. Perhaps we could tweak the plans we do have, but I find this awfully confusing. I think we’re locked in these plans until July or maybe May of next year. Maybe I need to call customer service.

Insurance: A friend recommended we get our insurance thru USAA, but since we’re not veterans this would require getting my father or father-in-law to buy some insurance. We could buy the smallest possible plan, say supplemental auto insurance for them, which might be worth it in the long run. Suffice it to say it’s a little complicated but bears further investigation.

I remain open to suggestions from all my friends and family. There is power in collective wisdom.

Damn

We’ve been having a bit of trouble making ends meet ever since Xy changed schools and took a $20K pay cut. Sometimes it’s that last week of the month, sometimes, just the last couple days. A number of times I’ve had to draw off our savings to make up the gap. It’s occasionally embarrassing and always worrisome.

We were just getting serious about looking for ways to save on our monthly budget, and then this bomb dropped: Yesterday morning I opened some mail and learned that our mortgage payment will be going up. Substantially. Insurance has gone up, and so have taxes, because our home assessment more than doubled. That’s a bummer, but I don’t see any error there; it seems the house was radically under-assessed last year. It sucks that the bank didn’t anticipate this correctly at the time of purchase, but that’s water under the bridge now. I talked it over with our Realtor and she confirmed that we don’t really have any options. We can mitigate a bit by making a lump payment now, which we’ll do, but the increase in our monthly payment will still be substantial. It’s going to make the monthly budget a lot tougher.

In recent years we’ve counted on a big tax refund, but with our reduced income we rethought our withholding, and so I don’t think we’ll be getting money back from Uncle Sam. We might even owe more. Shudder. Sure is a good thing Obama extended the Bush tax cuts for the middle class. Oops, I said something political. That will surely distract anyone who reads this from my actual point. Why react to my petty personal problems when you can pontificate on massive federal issues?

I have to confess that we haven’t really done any of the belt-tightening I mentioned last June. I wish there was some obvious substantial luxury expense we could forgo. Perhaps we can do enough small things to make a difference.

We always look for bargains at the grocery, but we rarely shy away from a food item because of the expense. We go to the nearest grocery rather than the cheapest. Recently I’ve cut back on the premium liquors and have been mostly drinking Bota Box. I’ve felt at liberty to buy books whenever I want them, which is at least once a month. I indulge in the occasional MP3 download from Amazon. We have our subscription to Netflix, which I still haven’t gotten around to canceling. There’s my yoga class. What else can we cut?

I guess that new fire pit is out of the question.

I may also need to rethink my attitude toward freelance work. I routinely reject queries for basic web development and consultation. Sometimes I do the work for free. But yesterday, motivated by a recent financial embarrassment, I changed my tune and said “yes” when a friend’s husband asked for my help. I quoted PJ’s old rate, $40 an hour, with a three-hour minimum. I’m sure he charges much more now, if he even does this sort of work. Jeez, I need to raise my rates already.

Financial matters have never been my strong suit, but I’m frankly worried how we’re gonna make it.

Energy Usage

I mentioned last January that we got stuck with a big ($500) utility bill that month. There was no question in my mind that our energy consumption was off the chain because of a record-breaking three-day cold snap. Now that I’ve got a year’s worth of utility bills, this is even more evident.

Here’s a handy chart from Entergy.

Energy Usage

And here’s the detailed breakdown…

Month kWh Used Days Billed Avg. Daily Usage
11/10 711 30 23.7
10/10 874 29 30.1
9/10 1661 29 57.3
8/10 2112 31 68.1
7/10 1393 30 46.4
6/10 1400 30 46.7
5/10 598 32 18.7
4/10 706 30 23.5
3/10 2574 29 88.8
2/10 2955 32 92.3
1/10 5947 34 174.9
12/09 2459 30 82.0

As one can see at a glance, we consumed about twice as much energy in January as we did in the month before or after.

I’m particularly happy to have this baseline data, because we are getting some insulation underneath our house Monday. As I mentioned in January, there was a study which looked at four different ways of insulating beneath raised homes right here at the Musician’s Village in New Orleans. After some nagging, I finally got Dr. Samuel V. Glass to send me a preview of the study, “Moisture Control in Insulated Raised Floors in Southern Louisiana.” Glass is a research scientist in the little-known field of “Building Moisture and Durability” at the U.S. Forest Products Laboratory in Madison, Wisconsin. The authors are presenting the research at a conference in December so it’s still not public, but you can view a news-style summary.

The main concern most people in these parts have about insulating underneath relates to moisture accumulation in the warm months. Moisture can lead to termites and mold and other bad things. From what I got out of the study, I think the number one thing that can minimize moisture problems is to just not set one’s thermostat too low in the summer.

Other than that, they seemed to find rigid foam boards and closed-cell spray foam to be the best. We are going with the latter from GreenBean. Closed-cell is purported to be the most expensive option, at least in terms of materials; it is costing us just over $2,000. I think I can also file for some sort of tax break before the end of the year.

So we’ll see what our energy consumption is like over the next year and compare. I’ll get back to you in November 2011.

Domain Games

There’s a certain domain name of which I am part owner, the other owner being my friend in Missoula. This domain is a three-letter dot-com and as we all know there are a limited number of those, therefore they have a certain value. I’m not naming the domain here, but I think the perceptive reader can figure it out.

A friend helped us register this domain back in the early nineties, when it was free. Since then, we have used it for a legitimate purpose; we are not cybersquatters.

Over the years, as the registered owner, I have gotten frequent inquiries about selling the domain. Most of these inquiries are not credible. They most often in the form of a one-liner e-mail, “Hey, you wanna sell that?” They rarely offer a price; it’s more common for them to ask me, “How much you want for that?” I find that sort of approach annoying and unprofessional.

Three years ago, my partner and I talked about actively seeking to sell the domain. We share a sentimental attachment to the domain, and I use it daily, but it’s the content that matters more than the address. We could move that content to another domain. We are not making money off the domain, and if someone else has a plan to do that, why not sell it and reap a little profit?

So we discussed it and came up with a price that we both found acceptable. My partner did most of the work in terms of research and arranging for an auction. But for some reason which eludes me now, we never went through with it.

Fast-forward to the present. Monday morning I got a voicemail and an e-mail from a broker looking to buy the domain, and they actually named a price — $10,000. I responded politely that the domain was not for sale. Soon I got a follow-up offer which was five times the original. I still said no. The broker made a third offer of $60K and asked “what price it would take” for us to part with the domain. I named the price my partner and I had cooked up three years ago. Now the broker wanted to know why our price was so high. She revealed their “dedicated pricing team” had appraised the domain. I won’t mention the figure here but it was substantially higher than her best offer but also much lower than our asking price.

$60K may sound like a lot of money, but keep in mind the broker would take a cut, and then my partner and I would split it, and then we’d have to pay taxes on it. I’d be lucky to see $20K. That’s still a good chunk of change, I suppose, but a dollar is definitely not what it used to be. As a matter of comparison, a couple years ago I pissed away $10K on the stock market, our tax refund this year was $9K, and Xy recently took a $20K pay cut. More money is always welcome, but I know we could absorb $20K into our annual living expenses and not even really notice.

My partner’s financial situation may be different, of course, and I need to be sensitive to that. Still, I don’t regret saying no yesterday. When I told Xy I’d turned down an offer of $60K for the domain, her response was “One million dollars, and not a penny less! Tell ’em your crazy wife said so!” I think if we sell the domain it should be on our terms, as a result of proactively seeking to sell it, rather than waiting for a deal to fall into our laps. That would seem the best way to assure we get a good price. But what do I know? I’m simply not motivated at this point to do the work necessary. And if we are unable to sell it for the price we desire, I am willing to accept that.

Coincidentally, as I was responding to these inquiries, I was also trying to untangle a confusing and messy situation regarding a domain name that belongs to a local civic organization. My head was abuzz with domain names and other contingencies and by the end of the day I was experiencing a bit of cognitive overload. But at least I got a good night’s sleep.

Floored

I recently got our energy bill for the period covering the recent cold snap: $500! Granted that was some record-setting weather but still… $500! Ouch. I’m still in shock. Or perhaps I should say I’m floored.

Some of my friends assumed this high bill was indicative of high energy costs here in Southeast Louisiana. I don’t know how we compare to other parts of the country, but I don’t think that’s the culprit.

Rather, it’s the amount of electricity used. We clocked almost 6,000 killowatt hours over the course of that month. That’s 174.9 kwh per day. I suppose it’s possible Entergy misread the meter, but let’s assume it’s accurate for now.

How could we possibly have consumed that much energy?

I suspect the problem is lack of insulation. We thought we were in pretty good shape because the house was insulated as part of the renovation. As the seller informed us:

The exterior walls of the house have R13 fiberglass insulation throughout the house. The second floor attic has R30. The lower attic (over the kitchen area) has R19, which was the heaviest insulation that would fit between the joists over that area….

All of the [vinyl] replacement windows (which includes most of the windows in the house) are double-glazed Low E, and Energy Star rated.

However, there’s no insulation underneath the house. Since it’s raised a few feet off the ground, that means plenty of air gets underneath there and when it’s cold you can definitely feel it.

It seems that insulating beneath raised houses in New Orleans presents special challenges. I found an interesting article about this, which outlines the four basic choices: fiberglass, rigid foam board, open-cell spray foam or closed-cell spray foam.

But the more I read the more daunting it looks. I was heartened to learn that a scientific study has been mounted right here in New Orleans, using the different methods to insulate underneath twelve houses in Musicians’ Village for twelve months. But after scouring the web I couldn’t find the final report, so I contacted the principal investigator (Sam Glass at the USDA FPS) and am waiting for a reply.

It’s all further complicated by the fact that our floor could use some repairs in a few places. I assume it would be best to address these repairs before adding insulation.

I don’t think this is something I’m going to tackle myself. There are just too many variables, too many things to screw up, and more work than I have time to accomplish, what with being a public school widower and a daddy.

Oh, the joys of home ownership.

Vehicular Challenge

Michael gave me a lift early Sunday morning to pick up the car from where Xy had abandoned it on Airline Highway the night before. It wouldn’t start. While we were unloading her Xmas shopping a cop pulled up and chastised us for leaving the car there overnight. He waited while I called Progressive Roadside Assistance. They told me all their tow contractors were fully booked and accepting only police calls. So I had the cop call it in, and eventually we got the car to the Banks Street Service Station. I had to borrow a bunch of cash from Michael to pay for the tow. (Note to self: Pay him back.)

This morning James gave Xy a ride to work. I called the closest car rental place and reserved a vehicle, then went over to Banks Street Station with the girl on my hip and explained the situation to Tommie. He called me back a few hours later and said that in his opinion the car needed a new engine and should probably be considered a total loss. (We still owe $4,333.18 on it.) Progressive won’t be able to get an adjuster out until Wednesday. I picked up the rental a few hours later — about the last car available since so many people had cars flooded over the weekend — and so we are driving a Kia Spectrum for the next little while.

To be honest I’m hoping the Saturn is totaled. We have really come to dislike that car. The worst thing about it is the antitheft system which triggers improperly under certain atmospheric conditions, rendering the car unstartable for eight minutes at a go. Number two, it rides waaay too low to the ground, constantly scraping bottom over the slightest dip in the road, and as recent events illustrate that’s just not a good thing when streets are flooding. And we have numerous miscellaneous gripes over the rapid deterioration of interior details.

So I think we are going to be shopping for a car real soon. We hoped to do so anyway, but events are forcing our hand.

Our last two cars were slightly-used Saturns. I was never crazy about the product, but I liked the Saturn approach to sales: no BS, no haggling, the price listed was just the price. Alas, Saturn is no more, and I wouldn’t buy them again anyway after our frustrations with this vehicle.

Thus I feel supremely unqualified for navigating the automotive purchasing transaction.

I don’t even really know what we want. I’d kind of like something that rides higher than a standard sedan but is not so bulky as sports utility vehicle. And wouldn’t it be nice if that also could run off electricity. A hybrid hybrid if you will. I gather such things don’t exist. So we are setting our sights lower. An affordable compact wagon perhaps? Lee got an HHR and that looks pretty good to me.

Any advice is most welcome.

Exhalation & Disclosure

I feel like I’m exhaling and relaxing for the first time since — when was it? — late July. That’s when the idea of moving first entered my head.

We’d learned our daughter had lead poisoning and then a few days later I had a close encounter with one of the guys from the corner. Ordinarily I would have laughed off the latter, but the news of our girl’s elevated lead level had softened me up emotionally. It was like a one-two punch.

That evening, as we visited our friends on Grand Route St. John, we stood out on the sidewalk having a drink and talking to neighbors. We noticed a house was for sale on their block, and I couldn’t help thinking how much nicer life would be if we lived there.

In the following days I started thinking about it more seriously and finally called our Realtor on August 5th.

I was leery of writing in much detail about the various steps of the process. Not superstition, just caution. Real estate transactions can be tricky, and I thought for once in my life I’d err on the side of discretion. So I started posting lots of music mixes instead of writing about the nitty-gritty details I was sweating.

I will try to recap the process now, mainly for my own amusement and edification. What follows may not be of interest to anyone else, but who knows?

Let me start by backing up a bit. We bought our house in 2002 for $107,000. Our 2009 Real Estate Assessment from City Hall estimated the fair market value at $170,000, which at the time I thought was a mistake:

I’d love to think we could get $170K for the house. But I’m inclined to think it’s less, probably a few tens of thousands less.

Yet our Realtor guessed we might be able to sell it for as much as $180,000. That gave me pause. After seven years of paying down the mortgage, we only owed $88,000. Thus, I realized that we had enough equity in our house to enable us to “trade up.” It wasn’t the lead paint or the destabilized neighborhood or any single factor motivating us — rather it was the general realization that we could improve our quality of life across the board. A “lifestyle change” is what our Realtor called it, a phrase which still makes me cringe, but which is perhaps accurate.

We developed a short list of features we wanted in a house. As we started looking, we quickly determined the houses we liked started at $250,000. Cheaper houses just didn’t seem like an improvement over what we already owned. But how could we possibly afford a house that costs a quarter million? Several factors at work here: With the sale of our old house we anticipated having enough cash for a substantial down payment. We now earn more than we did seven years ago. Plus, interest rates are even lower now than they were then. But really it all boils down to that first item. Not to be overly pedantic, but that’s the advantage of paying on a mortgage versus paying a landlord. I’d known this theoretically, but I didn’t I fully understand it until we started considering this transaction. I calculated our minimal selling price to be around $154,000 in order for us to afford a $250,000 purchase.

I talked to a banker who verified my numbers. Actually I contacted three bankers. I didn’t “shop the rate,” rather I was looking for the best service. We went with Iberia Bank because they seemed a little more on the ball and a little more personable.

We only looked inside two houses. The first was a couple doors down from Michael (and despite what Adrastos would say we considered that a plus) but the inside of the house left us a bit underwhelmed. It needed a little work; we really wanted a house that was ready to go.

The second house we looked at was down a block and around a corner from the first. It didn’t look quite as appealing from the curb, but as soon as we saw the inside we were sold. It was listed for $259,000. We made an offer of $250,000 on August 24th. Our offer stipulated the seller pay $3,000 of closing costs. The seller made a counter-offer, agreeing to the closing costs but upping the sale price to $253,000. We accepted.

I took a week off work to make some cosmetic repairs to our house to get it ready for market. This included repairing the four-year old damage to the kitchen ceiling.

Sorry Ceiling

In the process of scraping the ceiling I opened up a hole in the plaster, but amazingly enough I had on hand everything I needed to patch it up.

Repainted

I also painted the ceiling in the front room to cover some old water stains. They’d been there when we bought the house. I replaced our defunct garbage disposal; if I’d known it would be so easy I would have done it years ago. And I had a new porch light installed. (Thanks, Josh.)

The next week we did inspections on the house we planned to buy, and found some significant deficiencies. The seller eventually fixed these, but to get it done at the level we wanted we agreed to reduce the seller’s commitment on closing costs to just $1,500.

The week after that we put our house on the market. We had our first open house on Sept. 20th. Nobody came. Not a soul. A week later we had another, with only a couple visitors.

I had been secretly nursing a suspicion that this was all an empty exercise, that we in fact would not be able to sell our house and therefore not able to buy a new one, and that we were merely going through motions for the sake of some weird formality, that we were all players following a script, but when the show was over we’d sleep in the same bed as always.

And then, on the last day of September, we got three offers within a few hours of one another. All were from couples hoping to buy their first home. No slumlords. All were hoping to take advantage of a stimulus from the current administration which expires at the end of November.

Following the wisdom offered by my friend and real estate guru John Byrne, we didn’t go for the most lucrative offer. Instead, we selected the one which seemed to have the most solid financing. In fact that offer was the least lucrative of the three. We dickered back and forth over the exact price, with counter and counter-counter offers, and finally settled on $163,000, with us covering $3,000 of their closing costs.

In early October, they did an inspection on our house. The results were interesting to me because we’d never had a professional inspection done when we bought the place. They didn’t ask for us to fix much, probably because they knew were getting the house at a good bargain. We were to replace a couple missing gutter downspouts, replace some broken windows, and repair a couple dripping drainage pipes under two sinks. I’m glad they didn’t ask us to repair the water damage caused by the drip under the kitchen sink.

Over the next few weeks I got these repaired. I asked for referrals on the neighborhood discussion group and found some good people who knocked it out right quick and for a reasonable price. Louis Blady did the gutters so fast it made my head spin. We had six windows that needed to be replaced. Six! (I recently referred to it the “House of Broken Windows.”) I could have replaced them myself, but it would have taken me twice as long and the work would have been half as good as what Kevin Krause did for us. He and our former neighbor Jesus tried to help with the dripping sinks, but ultimately I had to call in JC Services to resolve that situation.

Meanwhile I was shopping for insurance for our new home. Even though I’d been pretty happy with our insurer in the post-Katrina scenario, I didn’t like the rates they quoted me. We ended up going with Whitney Insurance and saving over a thousand dollars.

And so October slipped away.

Somewhere along the line, somebody dropped the ball. I really don’t know who. It’s entirely possible that it was all my fault, but I’m going to blame it on a bad cell phone connection. All of a sudden I was informed we were supposed to close on October 30th. Oops. I already had plans to be in Houston that day. Our buyer was leaving town after that, so the closing had to be postponed until mid-November.

Then we had to negotiate a pre-occupancy agreement with our seller. We agreed to pay $500 for one week’s rent, and move in a week before the closing.

So we got ready to move. Major props to my mother-in-law who spent a week packing our possessions into boxes.

And then we moved. Major props to our friends and neighbors who knocked that job out in a mere four and a half hours.

The week after we moved was a strange one. We were living in a new house, but we did not own it. We were living out of boxes. We were making frequent trips back to the old house which now stood vacant and forlorn (and seeming more spacious than ever) retrieving those last little things like garden hoses and potted plants, cleaning out the shed, and so on. We were also going back there with loads of laundry, since we did not yet have a washer and dryer at the new house, and our old washer and dryer was included in the terms of the sale. It was also a strange week because Seph was out of daycare more than she was in. Monday was a wash because of Ida; Wednesday was Veteran’s Day; Friday we kept her home because she was sick with what turned out to be an ear infection.

On Wednesday our buyers had their final walkthru of our old house, which I attended. It was my first time to meet them; a young couple, buying their first home, they reminded me of no one so much as Xy and me seven years ago. Younger, even. It was a good feeling.

Finally, on Friday the 13th, I experienced the joy and wonder of a double back-to-back closing. There was some last minute confusion of course. The title company was telling me I needed to bring a certified check, but they wouldn’t know the amount until the documents arrived from the lender. They were supposed to be there a day in advance, but as the hour approached the ambiguity remained. Finally I left my office and headed to the Garden District office where the closing was to transpire, with instructions for the title company to call me when they got the amount so I could pass by the bank and get the certified check. But in the final analysis this wasn’t necessary, and I didn’t need to bring a check at all.

We actually made money on this deal. Here’s the final breakdown. We sold our old house for $163,000 and bought the new one for $253,000. When all the closing costs and whatnot were sorted out we left the table with $6,600.28 in hand. We got an interest rate of 4.875%. With hazard and flood insurance, our monthly payment will clock in at approximately $1,400 — only $200 more than what we were paying on our old house.

At the end of the day I believe everyone was happy. Our buyers were getting their piece of the American dream. Our seller was making good on his investment. Our Realtors were getting their commissions. And we were definitely happy with the way things worked out.

I do have to wonder how Katrina and the floods of ’05 factor into all of this. If it wasn’t for the flood, we surely wouldn’t have renovated as extensively. We would not have rewired and replumbed the house. The disaster forced our hand. But it also destabilized the neighborhood. I wonder if our house would have sold for more or less if it had never flooded. And would we have been motivated to sell if the neighborhood hadn’t changed so drastically?

In retrospect I now realize this was the biggest financial transaction of my entire life. Yet it didn’t seem nearly as momentous as when we purchased our first house seven years ago. That event is of course documented in ROX #91 and #92. I suppose that was a bigger transition — becoming a property owner for the first time. Now that we are amongst the landed gentry, trading up is more of an incremental move rather than a paradigm shift.

Closing In

I’m gearing up to sign a bunch of papers in about an hour and a half. First we’re closing on the sale of our old house. Immediately after that we’re closing on the purchase of our new house. The latter is predicated on the former. I have power of attorney so I can sign for Xy who would normally be at work but stayed home today to look after our daughter who was running a fever last night. (We were worried about the H1N1 but the doctor says it’s just an ear infection.) Everything should go smoothly but I still have a low-level sense of dread that something will go wrong at the last minute. I need to bring a certified check to the closing, but even at this late hour I don’t know the amount because someone (the lender, I think) is dragging their feet. I’m waiting for that critical piece of info so I can ride to the bank, get the check, and then ride on to the title company for the ink-fest. Meanwhile the tension mounts.

At least it is a beautiful day for a bike ride.

Counter

House update: Our initial offer was $9K below the seller’s asking price, which got us to a nice round number. We also specified they cover $3K of closing costs. They made a counteroffer, bumping the price back up $3K. We are accepting this counteroffer and making a deposit. Now we just have to sell our house.

Hassling with Humana

I really hate our whole healthcare/insurance system, which is why I get excited when I hear about reform and discouraged when it seems to go off-track.

This is on my mind today because of the inane interaction I just had with my health insurance provider, Humana.

Back in June, when we were traveling, our daughter got an infected toe, so we went to the nearest convenient place, a “doc in a box” in Bloomington, Indiana.

We paid $25 upfront as a co-pay, and they said they’d bill Humana for the rest.

Humana did not pay, so I got a statement from the doc-box. Total charge: $109.00. Less our $25.00 payment, that’s $84.00 I owe them. A helpful note was included: “Your insurance was filed but did not pay. Your insurance was refiled today. If you have questions contact you insurance. Please pay balance due.” A further note in case you didn’t get the full import: “Your insurance is filed as as a courtesy. If you have insurance questions, PLEASE CONTACT YOUR INSURANCE CARRIER FIRST, then advise us of your claim.”

I got on Humana’s website. I was able to remember my username and password for a change. I accessed the Claim Details. “Status: COMPLETED.” OK, but was it paid? “Paid: 06/23/2009″ Aha, so it was paid? “Humana Paid: 0.00″ Oh, I guess it wasn’t paid.

Then I noticed this little message, which I will reproduce in its entirety.

Message 1: This service was performed by a non participating provider and exceeds the Maximum Allowable Fee (MAF). You are not responsible for the difference between the MAF and the amount the provider bills you for the services.Should you be billed for this, please contact 1-866-427-7478. For additional information please refer to the Schedule of Benefits and Glossary section in your Benefit Plan Documen

The Maximum Allowable Fee, in case you’re wondering, is $91.07. Don’t ask me how they derived that arcane number, but there it is. Apparently I am not responsible for the difference between the MAF and the total charge. That difference is $17.93, and if I’m billed for this, I should call Humana at the number listed.

So I did call. I asked my first question. Why is there a listing for the date the claim was paid, when in fact the claim was not paid? Do you see how that could be confusing? No, the rep maintained, she did not. Well, I said, belaboring the point most egregiously, when a normal human being hears that zero dollars were paid on a certain date, most people would conclude that no payment occurred on any date. So how could Humana list a date for the payment, when there was no payment greater than zero? She confessed she could see how it might be confusing to me, but it was not confusing to her.

Once we got that foolishness out of the way, I asked about the MAF. What’s this $17.93 for which I am “not responsible”? That stumped her, and she had to put me on hold for half an hour, after which time she came back, apologized, and said someone would have to call me back.

I proceeded to bend her ear for a little while longer about Humana’s online database of participating physicians. We’re supposed to use this to find a doctor. But the information is vastly out of date, with most of the physicians in my area flooded out after Katrina. That was four years ago, by the way.

A short while after our friendly chat ended, I got a call back from Humana. The rep explained there is a typo on the website. The text that says “You are not responsible” should read “You are responsible.” Ah, what a difference one little word makes.

Oh, by the way, this medical expense would have been covered if we had just taken the time to call in to Humana and ask for a referral to a participating physician. Never mind that we were on the road and just wanted to get our girl to the nearest convenient doctor. The doctor we chose was not “participating” so we’re not covered.

What part of this system makes any sense?

Whitney?

When we moved to New Orleans ten years ago we set up a bank account with Hibernia. We wanted to bank local, and we heard Hibernia sponsoring the local NPR affiliate, so we figured they were as good a choice as any. They had branched out to Texas and Mississippi and Arkansas, but their headquarters were in New Orleans. It was the largest and oldest bank based in the state of Louisiana at that time.

However, Hibernia was acquired by Capital One in 2005. (They say Katrina knocked a good $300 million off the purchase price.) Capital One of course is not a local bank. They are headquartered in Virginia.

We’ve stuck with them so far, more out of inertia than anything else, but I’d rather use a local bank. (Why bank local? For the same reasons it’s good to shop local.) Also, I’m kind of put out by some of Capital One’s questionable practices.

And another thing: I’m still ticked off about the way Capital One configured their Mid-City branch when they rebuilt after the flood of ’05. They’ve got an ATM in the lobby, but of course that’s only available when the bank is open. I asked them (both before they built and after they reopened) to consider allowing extended access. No dice. Most of the time when I come by to use the ATM I’m locked out. I have to stand in line with the cars. Obviously that’s not the worst thing in the world, but it is an annoyance. I said to Xy that I’d move our account to the first bank to open a 24-hour walk-up ATM in Mid-City.

That brings us to Whitney Bank.

Whitney

They have just built a new branch office at the corner of Canal and Jeff Davis, quite close to our house, much closer than Capital One. This is on the site of the old Walgreen’s that never reopened after Katrina. It’s a much better design than Walgreen’s, as they built to the corner in a pedestrian-friendly fashion. In fact, that whole intersection is looking halfway decent now.

But what’s that on the side of the building? Could it be?

Walk-Up ATM

Yes, a walk-up ATM, available anytime. Be still my heart.

Whitney is a local bank. With Hibernia out of the picture, it’s now the oldest bank in the state.

So why am I not rushing over there to deposit my pennies and nickels? Well, in part I’m given pause because a few years ago I read Rising Tide by John Barry. This is a fascinating history of the big flood of 1927. (Buy it from a local bookseller.) And it does not paint Whitney in a very good light. In fact it makes the institution look positively evil. But then again, Hibernia was characterized in much the same way. Also the Times-Picayune, yet I’m still maintaining my subscription. Then again, the T-P is the only daily paper in town. There are other banks — but none so convenient.

Also I have a friend, not the most progressive-minded person in the world, who nevertheless seems to think Whitney is a regressive old-line elitist institution that is holding New Orleans back.

So I’m curious what other people might think. Is Whitney really that bad?

Curbed

The damage to our car from running up on that curb has been repaired. The bill? $4,008.53. Xy’s response: Time to get a new car. My response: At least we met our deductible.

On a related note, the future of Saturn appears uncertain at this point, so I’m rather discouraged about ever getting satisfaction on the non-starting issue.

And speaking of curbs, sort of, I was happy to see work crews on my block this morning, ripping out some old beat-up sidewalks for wholesale replacement.

Sidewalk Replacement

Maybe It’s Right to Be Nervous Now

Back in June 2006 we had some extra money lying around from our insurance settlement. I’m hesitant to name dollar amounts publicly. Let’s just say it qualified as “a lot” in my book. More than a month’s salary, less than a year’s. I hope that is sufficiently vague.

So I decided to invest in the stock market.

Ah, you can tell where this is going already, can’t you?

When I wrote about this a couple years ago I got a number of comments from readers, most advising caution. But I decided to keep this money in the market for a few reasons. For one thing, I was getting financial advice from my father, whom I trust. For another, I am already socking away a certain amount each month into safer managed funds. Also, I didn’t put all this cash in the market, only part of it. And finally, I understood the risk. This particular chunk of change was a windfall, money we could theoretically afford to lose. As I said back in June:

Worst case scenario: I lose all this money. Eh, so what. We’ll still be ahead of where we were pre-Katrina.

The system we used worked something like this: We identified stocks that were commanding a good price for options. Then we bought those stocks and sold the options. This is called selling “covered call options.” At the end of each monthly cycle, we generally sold off any stocks that didn’t hit their strike price and start over again.

After about a year or so, I’d done pretty well. My portfolio was up 50%.

Then things started to go downhill. Soon all my profit had evaporated and I began to lose money. I watched with sick fascination as my portfolio dwindled to half my original stake, then a quarter, then a tenth. Somewhere in there I got a margin call and had to sell off some stocks. Did I mention we bought stock on margin?

Then yesterday I got another margin call and was forced to sell off what little stock I had left.

So that money is gone. All of it. In fact, I owe the brokerage house a little.

I’m a bit stunned. I really thought we could ride this out. I thought, if I just hold on long enough, if I just brazen it out, surely we’ll bounce back a bit. Turns out I didn’t have that choice. The daily headlines fret about when the market will “find its bottom,” but it seems I’ve found mine.

It was an interesting ride, but now it’s over. Easy come, easy go, I guess. I was a bit uncomfortable as a capitalist anyway.

It still sucks. But I’m very glad I didn’t have all my eggs in that basket.

As for Dad, he is much more invested in the market than I, so he’s really feeling it. He sends this cheerful comment:

Mom and I don’t have much money left but we can get by until the grim reaper comes along.

He was born at the beginning of the Great Depression, and he says this is the worst financial crisis he’s ever seen.

And I understand the nation of Iceland may well go bankrupt. Things are rough all over.

Assessment

We got our 2009 Real Estate Assessment from City Hall Friday.

Last year, I didn’t understand property assessments, but now I think I do, kinda sorta, so I’m actually able to make some sense of this notice.

Last year, our assessed value was $720 (land) + $1000 (structure) for a total of $1720 — the entirety of which was exempt, being under the $7500 Homestead Exemption. We still paid a smidgen of property tax because we live in Orleans Parish and our firefighter tax is figured without regard to the Homestead Exemption, if I’m recalling correctly. Did I get that right?

This year, our assessed value is $1840 (land) + $15160 (structure) for a total of $17000. That means we now qualify for the full $7500 Homestead Exemption. The taxable total is the remainder, $15280. If we can assume a millage rate of .12920, that means we’d owe $1974 in taxes. Add another $160 for police and fire, and that gets us to $2134.

What confused me about this business in the past is the fact that assessments are 10% of fair market value. So these numbers imply that we’ve gone from an estimated fair market value of only $17,200 to $170,000. Now that I understand how this works, it’s clear that our 2008 assessment was low, way low. I don’t know if that was a Katrina thing or if it’s one of those houses that have been under-assessed for years. Our 2009 assessment is much closer to what I imagine the value of our house might be.

But actually I think it’s a bit high. We only paid $107K for the house. Our renovations have mostly just gotten it back to where it was before the Federal Flood, though the lead remediation was a substantial improvement. I’d love to think we could get $170K for the house. But I’m inclined to think it’s less, probably a few tens of thousands less.

Then again, I’m no expert on real estate. My feelings about the value of the house are pretty subjective. If this really is a fair assessment, we’ll pay it with no more grumbling than most taxpayers. If it’s high I’d like to get it adjusted. But how do I know the difference?

I’m wondering if I should make a trip down to the assessor’s office. I’ve got until August 15th.

Drop Off

I left my daughter with a bunch of strangers this morning. Kind of an odd experience, but not as upsetting as I might have thought. The folks at the daycare seem to know what they’re doing, and the whole scene inspired confidence.

This is teacher prep week, so Xy’s not quite back at work full time yet. She was going to do the drop-off herself, but decided last night that she was too likely to burst into tears. So it fell upon me, as it will regularly once school starts. I strapped her onto my chest and walked the four blocks. Didn’t integrate the bike into the routine yet. It was threatening rain, so I wanted my hands free for the umbrella. Didn’t need it, though.

Daycare is expensive. I’ve rented whole houses for less than we’ll pay per month. It certainly does make one look twice at the possibility of one parent staying home to care for the child. Garvey says he and his wife manage it; coincidentally I read (in Parade of all places) about another couple (from Indiana of all places) who are doing the same thing. In both cases, these folks are making ends meet with substantially less salary and a bigger mortgage and they’re not going into debt.

I don’t know how they do it. We don’t live an extravagant lifestyle. By my calculations, even if we cut out all luxuries — no internet, no Netflix, no alcohol, never eat at a restaurant — it still doesn’t add up to that much. I don’t know what else we could cut.

Anyway, those calculations will have to wait, because we’re committed to our present course for at least the next school year. Xy isn’t the type to welch on an obligation; she’s said she’ll teach this year, and so she shall. That means our daughter will be in the hands of others for a good portion of the day.

And I think she’ll enjoy it. She seems fairly happy and comfortable with strangers, and I suppose there’s some socialization value even at this young age.

But the next month may be a difficult transitional period.