Hoboken Mom Condo Living
Planning the long-term & juggling the everyday

Since we put almost all our purchases on our AMEX Blue for Business, it makes it really easy for me to review our spending on a monthly basis. I do two things about once a year: 1) for one month go down to absolute bare bone spending so I can establish our baseline expenses in case of a fiscal emergency, and 2) review our spending over the last couple of months to see what expenditures could have been avoided.

Saving money has a purpose for me. I save money because I have nightmare visions of my family in a homeless shelter if my husband loses his job. Apparently I am ahead of the times because I have had a very frugal mentality for the last 15 years, which many Americans are now adopting. I try to overestimate expenses and underestimate income so there are no unpleasant surprises on a regular basis. And along the way, there are inevitably unexpected unpleasant surprises (I used to smack my car on the column next to our parking spot whenever I was sleep deprived -with two babies, that’s pretty much all the time).

Our family needs about $5k/month to survive. I look at our savings in terms of how much safety we have. I try to keep enough cash available for six months of expenses, and then if we had to, we could tap retirement funds (you can withdraw your initial Roth IRA contribution at any time without penalty). I also recently closed on a home equity loan that I would use judiciously in an emergency.

Up until the last four months, the reason why I saved was for the down payment on a bigger place. I knew that with our single income we were going to need a huge down payment to be able to afford anything decent in the NY metro area.

But then along the way, as the money mounted up in the bank, I found that all of a sudden our life choices started looking a lot different. A layoff could be an opportunity for  my husband to start his own business rather than an instant catastrophe. Granted, small business health insurance would be astronomical, but owning your own business is how you really make money. Obviously, it would have to be a really solid business plan, ideally with customers already in place. But businesses take a lot of cash to start, and I refuse to go into debt for something that is risky to begin with.

For me, money represents safety and freedom. Because we have no debt and adequate cash in the bank, I can choose to spend or not spend on babysitters and getting the house cleaned. I don’t have to work out of the house because we saved for our entire 10-year marriage before we had kids. Every bonus and income tax refund either went to pay down debt or into savings.  The way I look at it, if it’s not part of our accustomed monthly income, then we won’t miss spending it.

Yahoo! Finance has a pretty good article on the basics to improve your credit score. FICO scores are increasingly important to getting any sort of loan these days since lenders are nervous about default (people with the highest scores basically never default on loans.) Highlights include utilization % (debt:total amount of credit ratio), keeping your oldest cards in play, and the 10% for factors that you can’t easily control.

I check my credit report every year at annualcreditreport.com. It’s free once a year and pretty easy to do, although you get three huge documents to wade through.

There seems to be a growing consensus these days among real estate experts that the only way a buyer should venture into a Hoboken real estate purchase is with 20% down, no debt, and high income relative to the mortgage, or better yet, to put down more cash.

The magic income # bruited around seems to be $200k. It is really easy to get to $200k in the NYC area since college graduates tend to marry each other. A lawyer + a banker, a physician + corporate employee, you get the idea. So the income # isn’t the problem. The real issues are debt (especially student loan) and lack of savings. People who have been in grad school/training for most of their twenties haven’t had the time to save that the rest of us did.

Let’s look at your typical student loan debt. Apparently the average law graduate starts out with $80,000 in debt. That equates to about $718/month in payments, and that doesn’t include undergraduate debt. Worse, the interest rates and repayment periods (10-20 years?) range widely depending on whether the loans are federal or private. Most students have a patchwork of both.

So for your typical dual-income professional couple earning $200k, you also have close to $2k/month in loan payments. It’s like having another mortgage. How long would it take this couple to save $150k, a reasonable amount to buy a $600k condo? Assuming a 40% tax rate for federal and state income taxes, that leaves $120k/year, or $10k/month. Subtract $2k in student loans, and that leaves $8k/month.

Let’s assume this couple has no car loan (ha) and pays $4k/month for rent, utilities and food. Assuming they never take vacations or have any other discretionary expenses, the most they can save is $4k/month, or $48k/year. Realistically, they are more likely to save half that amount.

At $24k/year, it would take this hypothetical couple 6.25 years to save $150k. Add in wedding expenses, moving, pets, illness not fully covered by insurance (that would be all illnesses), buying a car, and that date gets pushed further back. So most couples could easily be looking at age 35 as the minimum purchase age for a condo.

That is why I am okay with mortgage vehicles that allow less than 20% down, like FHA loans. Credit scores are good indicators of how likely it is a loan will be repaid (a Countrywide banker told me people in the high 700s basically never default). As long as people are responsible about debt and buy for the long haul (ie don’t ditch their units when the market takes a dip), why shouldn’t they pay down a mortgage instead of renting?

My husband and I never goto Starbucks. I used to manicure my nails at home back when I actually had time for manicures (keeping my nails trimmed and neat is the new goal since I now have two shrieky small people clinging to me constantly). I buy my husband’s chewing gum in bulk. By cutting down or entirely eliminating small recurring expenses, I estimate we save about $2k/year.

But you can go further than that. I have been to a spa exactly once in my life -the day I got married. Instead, I buy really good quality facial cleansers and moisturizers and use them religiously. And I use a hair epilator since I am lazy and like the fact that my underarms stay smooth for at least a week. I like the minimum of fuss, but I also like the fact that my Braun Silk Epil lasts forever -the first one I bought in college worked until this last winter. That works out to about $0.20/use.

There is also the convenience factor. I don’t have to make time in my crammed schedule to goto a salon, wait for a technician to become available, and then be treated. My beauty routine takes less than 10 minutes and I can do it whenever I have a free moment. I get my hair cut by another Hoboken mom who comes to my house every couple of months and cuts three heads of hair in one visit. It costs $50 for all three of us, and the quality and convenience are unbeatable.

My cleaning person is scheduled to come to my condo once a month. In between, I tidy up, vacuum and steam mop the floors once a week. When we moved into our giant 4BR, I knew the old Swiffer Wetjet wasn’t going to cut it since we now have a vast expanse of beautiful hardwood floors as well as a lot of kitchen tile. We also finally have room to store a steamer, so I bought a Bissell Green Tea Steam Mop.

Four months later, I absolutely adore it. I keep the tank filled with boiled filtered water, and whenever there is a major spill, I wipe up the mess and then steam clean the area. It works like a charm, and the three best features are that it sterilizes the floor (key during potty training) and there are no recurring expenses plus no chemicals for my babies to be exposed to. Most other floor cleaners have proprietary cleaning solutions -because the Bissell just uses water, I don’t have to keep anything else on hand to make it work. And I love the two microfiber pads -when one gets really filthy, I toss it in the washing machine and put the clean one on the Bissell so it is ready for the next time I need it.

They NYTimes has a great Your Money article on how to get the best rate on a balance transfer and how to maximize rewards from credit cards. The highlights are:

• 2.99% lifetime interest on a balance transfer (2.5% xfer fee)
• Forum for credit cards with free balance transfers and low fees
• Overview on cash back and travel rewards cards

I am slowly starting to come around to the MrRebates site. My positive experiences are starting to outnumber the negative, especially when I cannot find an online coupon for a merchant (they really do have an amazing # of merchants on there). I am up to a whole $5 in rebates! Not bad for two weeks (the average rebate seems to be 4%).

One of the first questions that I get asked when I tell people I bought a 4BR in Hoboken is, “How are the schools?” It has happened so often that I have a fairly pat answer about how the public schools are decent from K-6 and then there are good magnet schools as well as superb (and relatively inexpensive) private schools.

But I don’t think I go far enough with my answer. My response is inadequate because I don’t tell people who I am. I know the NYC area schools inside and out because I am a third-generation Brooklynite. Believe me, Hoboken public schools look like paradise compared to the ones in Brooklyn. I also have many cousins (I believe 9) who have attended the excellent public schools in Scarsdale. And I am a graduate of Hunter College High School and Columbia College. My siblings attended Stuyvesant High School and Brooklyn Tech (to NYC parents, it is like hitting a grand slam to have all three of your children go to these highly selective specialized public schools).

So what does all this mean? First of all, I would never live in an area where I wasn’t confident my children would get the education they need to succeed in life. My siblings and I went to an indifferent public grade school. I am not convinced that children need absolute top-notch instructors and resources in those grades. I think you need a decent grounding, but if your parents are educated and take you to museums and generally teach you, your professional success will not be impaired.

That being said, let’s address the myth that a suburban education is automatically better. Of my nine cousins who went through the superb Scarsdale school system, three are doctors. The other six work in liberal artsy type jobs but are no means enormously successful. In fact, my family members who went through the NYC public schools are overall more successful than the ones who grew up in Scarsdale. Could it be, perhaps, that we are just bright, from an educated family (my dad is a doctor) and extremely driven?

I am not averse to having a little uncertainty in my children’s lives. I believe they are bright (hard to tell for sure when they are 1 and 3), but intelligence is not enough. You have to like learning and to want to work to grow your mind. And knowing you have to work to get into a good high school is not necessarily a bad thing. Getting into Hunter and Columbia gave me a confidence and drive that have helped me get ahead in life. I have goals and work to achieve them, like buying a 4BR while staying home with my kids.

I also found it liberating to go to different schools from my siblings (nothing more annoying than getting compared to my sister)  as well as the ability to break away from the inevitable cliques. The problem with suburban public schools is that you stay with the same group of classmates from ages 4-18. That’s a long time to be stuck with each other, and people change a lot during those ages. When they are not just classmates but also neighbors, that means there is no escaping them at after-school activities and during weekends. I can think of at least six people I was glad to shed with grade school and high school, and I have never seen them again.

As far as college goes, it is actually more difficult to get into college from an elite high school. When I interviewed at Harvard, the admissions officer told me they could fill the entire incoming class with qualified candidates just from the NYC area. There are a limited # of slots the top colleges fill from each school, so if many of your classmates are really bright and have high scores, you are out of luck. I had classmates who transferred out of Hunter their junior year to less competitive schools in order to improve their college admission chances.

Life is full of uncertainty. It is really easy to second-guess your decisions. The best you can do is to weigh all your options (I like to write down the pros and cons to really be able to compare them), make a decision and don’t look back. The fact that my husband can see our children every morning and evening is priceless for us. We are close to NYC for museums as well as a stone’s throw away from Liberty Science Center. If I had to make a bet, I would bet my kids turn out just fine growing up in Hoboken.

The latest financing trend is for FHA spot approvals (individual units are approved to put down 3.5%, it used to be the whole building had to get approved). Apparently to qualify in Hoboken, a building needs to have at least 10 units, no retail, no more than 49% tenants, and no more than 10% ownership in any 1 entity.

Recent federal legislation has changed the appraisal process so only lenders can order an appraisal (mortgage brokers and  real estate agents used to be able to also). What’s happening is that lenders are using appraisal management companies to manage the process for them. It’s a double whammy because consumers are paying more for the appraisal (add in another layer and costs go up) but appraisers are getting paid less. Worse, lenders are giving work only to appraisers who do exactly what they want (overlook defects and come up with the #s they want).

This raises the potential for fraud -terrific! Always what I wanted to hear when it comes to buying or refinancing a home. And here I was all happy that my condo appraised for $125k more than we paid back in March.

A condo recently sold in Hoboken. You have dissenting comments from:

• the buyer (WOW)
• an interested buyer (nag)
• the listing agent (Tania, the post’s author)
• a rejected buyer’s agent (Lori Turoff)

I am getting whiplash trying to sort through the different viewpoints. There is something wrong with our real estate system if it generates this much confusion.

I use a combination of shopping online and in real life (IRL) to buy clothes and shoes for my family. I can sometimes find things in stores that are difficult to find online, like my daughter’s entire summer wardrobe of shorts and tops (got to love Target’s $3.99 Circo line). But when I am looking for something specific at a good price, the internet can’t be beat.

My recent shoe purchases provide a good case study for how I mingle internet and IRL shopping. I spent $362.54 to buy 11 pairs of shoes (6 for my toddler girl, 4 for me, and 1 for my baby son). We now have enough shoes for me and my daughter for the next two years. The reason why I didn’t buy more shoes for my son is because it’s too early to tell how quickly his feet are going to grow as well as what shoes fit him best, so if I buy too much in advance, I run the risk of him not wearing the shoes because they are the wrong fit or out of season. I’m better off waiting until he outgrows his current shoes and then taking him to be fitted at Shoestrings.

The eternal conflict in shopping is whether to buy online or in real life (IRL). There are pros and cons to both. The pricing  at Jersey Gardens and Target tends to be pretty similar to online prices. There are things I can only find in the stores, like multi-packs of long pants and onesies at the Carter outlet and Circo shorts and tops at Target. The con to shopping IRL is the time (I estimate it takes me four times as long), the hit or miss aspect (sometimes you find a ton of stuff, other times you get there just after a sale and the shelves are picked clean) and the inability to find non-standard things like fabric swim diapers.

MrRebates tally: after one week of membership, I am 2:2 (2 wins, 2 fails). The wins were Organize.com (5% rebate + $2 coupon)  and Target (4% rebate + 10% WorkingAdvantage coupon). The fails were Fogdog (25% off single item plus free shipping and returns, did not work with 6% rebate) and BuildaSign (10% coupon did not work with 3% rebate).

I modified the old How a CEO Can Live on $500k a Year to reflect the way my family lives.

How a Family of Four Can Live on $100k/year