Adventures in Home Buying Continued...

Our house buying adventure continues. In this episode: first meetings with a realtor; getting pre-approved for a mortgage; realizing that compromises are a part of the deal.

First Meeting with a Realtor - good friends of ours recently bought their first house and were so enamoured with their realtor that they convinced us to use her as well. Turns out the same realtor also helped a couple of other friends, so supposedly she knows what she's doing.

We met with her in person last Thursday and I have to say, I am not THAT impressed. Clearly she is informed and energetic, but she spoke to us as if we were unprepared and uneducated children. Lady, I already explained I am a lawyer and an MBA by training and before setting an appointment with you we read a couple of books on purchasing a house and did our homework on what it is that we want to buy. Give some respect. After that initial meeting though, she aggressively threw herself into the project and while I am traveling on business, she has been going out with my wife to see some houses. Some interesting prospects at this point, but nothing that blew my wife away. I'll get to see some of the better prospects this weekend.

Getting Pre-approved for a Mortgage - our realtor recommended a mortgage broker and I spoke with her and went through the pre-approval process. As I twittered a couple of days ago, the broker thinks that we should have no problem getting the mortgage we are looking for. Another nice piece of information, our FICO score: 799. Identical for both of us. Sweet. Maybe paying our bills on time all these years and having no debt will pay some dividends.

Compromise is Part of the Plan - here's an axiom: no matter what your budget, the house you really want is only $100K more expensive than your budget... urghh... The budget will hold. We are made of iron. We shall not fall prey to temptation. Not, I say. Not.

But it's not just the budget. Every house has something a little off. Maybe it's too close to the freeway or too far from the park. Maybe the kitchen is old or the lay-out is crappy. It's actually upsetting, but it appears that compromise is required when looking for a house. I guess the important thing is to be patient and to not compromise on those things that are REALLY important to you.

Enjoyed this post? Please consider subscribing to Money and Such by free RSS Feed or by email. You can also follow me on Twitter.

United Sucks AGAIN!

Airlines these days are notorious for nickeling and diming their customers, but as far as I am concerned, this week United really outperformed their competition. I don't think anything new happened here, but this was my first opportunity to experience their lousy service in its full glory. You see, I recently lost my Premier status on Star Alliance.

I am traveling on the East Coast this week, and while checking for my flight in San Francisco yesterday, I used the self-service check-in machines at the airport. Thinking I could simply grab my boarding card and walk away, I had a nasty little surprise waiting. United - holding me hostage to the little cardboard ticket I needed from their machine - started pitching me all sorts of upgrades. One at a time.

Do you want more leg-room (5 inches worth) for $49? No.

OK, but do you want to upgrade to first class for $199? No.

OK, but would you like to sign-up for double miles rewards for as little as $149? No. I just want my freaking boarding card so I can walk away and buy a newspaper and a snack before I have to board your crowded, smelly plane on which I will be served no food for 6 hours.

Oh, don't worry sir, you're in luck. Your flight is delayed. Right now it's showing 15 minutes late, but by the time you'll actually take off it will be 3 hours behind schedule. However, as a personal service to our valued customers, and to make sure you get a little bit of exercise before your long flight, we're going to change gates for you three separate times. Oh, goody.

Well, never mind me. I am a veteran business traveler and I am used to taking crap from airlines. When it became clear that our flight would be 3 hours delayed, the gate agent came on the speaker and with only a hint of irony said "those of you who were going to connect in DC will be missing their continuing flights. The good news is that the DC area has over 1000 hotels, and United will put you up for the night". I kid you not.

I hate United.

Enjoyed this post? Please consider subscribing to Money and Such by free RSS Feed or by email. You can also follow me on Twitter.

House Hunting: Fear and Excitement in Silicon Valley

It looks like we're getting serious about this house hunting business. On Thursday morning my wife and I will be meeting with a realtor to seriously begin our search for a new house. No, we haven't made the final decision to buy, but we are certainly taking some concrete steps.

Over the past week I have been reading my real estate books, I have been soliciting advice from friends and seeking recommendations for Realtors, my wife and I even sat down together and put down in writing our perfect house profile which we intend to give to the realtor we choose. We are even getting ready to get pre-approved for a mortgage...

In my gut I feel a combination of excitement and fear. If we go through with this, it will be the largest deal and largest financial commitment that we are ever likely to make. At work, I negotiate multi-million dollar deals a few times a year without a tinge of nervousness, but this is the first time I will be working on a 6 or 7 figure deal with our own money.

You see, as a renter, my financial concerns are an order of magnitude smaller than they would be when we own a house. If we lose our jobs, we can always pack-up or sell our stuff, take the kids and go hiking in India for a year or two. No big deal. We can bring our monthly burn rate down to a crawl. We also have a considerable cushion of savings which we have built up over the years. This cushion should be sufficient to take us through any but the most disastrous of economic scenarios without serious hardship.

When buying a house, the equation will change. Most of the money that we have saved will be used for our down payment (we will absolutely retain an emergency fund equal to 6 months of living expenses, in cash). The house, while a very valuable asset, is a non-liquid asset and unlocking its value is very dependent on the vagaries of the housing market. Home equity line of credit? Ask the folks who lost their credit lines when the sub-prime crisis developed into a full blown melt-down. Nope. Cash is always king, and it looks like we may be about to abdicate... :-)

On the other hand, what excitement! In our late thirties, we have never owned our own house. I love the idea of having a place to call our own. How awesome would that be? It's been a while since I have been that excited about anything.

Fear and excitement in Silicon Valley. They should make a movie.

Enjoyed this post? Please consider subscribing to Money and Such by free RSS Feed or by email. You can also follow me on Twitter.

Cash for Clunkers: I Don't Buy It

The cash for clunkers program has been wildly successful if you judge by the fact that the first billion dollars in the plan has run out in a matter of days. This money was expected to last well into the fall. The program has apparently done a lot to get people to buy new cars, and getting people to spend money is the whole point of a stimulus program, right? Well, I don't buy it.

Let me start by saying that the program is clearly doing some good. Yes, it did get folks to open their wallets, and clearly some ol' gas guzzlers are going to get scrapped, but is that enough? As far as I am concerned, this stimulus program was pretty much a give away to American car companies. Those very same companies to which the government has already given billions of our dollars.

If the goal of the plan was to get gas guzzling cars and trucks off the road, why did the program pay consumers $3,500 for a minute increase in gas mileage? Folks who traded-in an SUV or light truck could get away with an increase of only a couple of miles in gas mileage and still participate in the program. I can't prove this, but I am willing to bet that in many cases the CO2 emissions required to produce and deliver a new car greatly exceeded the energy that would be saved by the small MPG increase. If the reason for the program is environmental, why not require buyers to replace their vehicles with hybrid cars that would get at least 40 MPG? The answer is simple: such fuel efficient cars are made by foreign manufacturers, and we can't be giving money away to foreigners... even if those cars are produced by Japanese companies here in the US... nah, we can talk about the environment, but giving money to foreigners?! Unthinkable.

Second, how does destroying our assets improve our situation? Cars traded-in under the cash for clunkers program are destroyed. Yes, that's right, they are taken off the road and shredded. How does that help our national economy? Should we boost our construction industry by bulldozing old houses? Would we be better off as a nation if we destroyed our bridges so we could build new ones? We are taking assets that could be re-used and we are dumping them. How can that possibly make us richer as a nation? Is there some alchemy involved here?

Finally, this program is no doubt inflicting severe collateral damage on charities who would otherwise receive many of the vehicles being traded-in as donations. Here is some anecdotal evidence for that happening.

The only sound reasoning for such a program, in my opinion, is the environmental rationale, however those are clearly secondary and minor in the way the program is designed, as far as I can tell.

After I finished writing this post, I read this article which suggests that folks are buying cars with better fuel economy than is required by the Cash for Clunkers rules. If that is indeed the case, my objections on environmental reasons may be over stated (even though the combined gas mileage average is clearly far lower than it could be). We'll see.

Enjoyed this post? Please consider subscribing to Money and Such by free RSS Feed or by email. You can also follow me on Twitter.

Demand Health Care Reform!

A monumental battle is playing out in Washington, between those who strive for health care reform, and those who are doing everything in their power to maintain the staus-quo. The American people must stand-up and tell Congress that we do not only demand reform, but that we demand meaningful and sustainable reform that will guarantee health coverage to all Americans.

I call on my readers to take action to make sure that the first chance for real reform in over a decade is not wasted. We must make our voices heard.

Visit HealthReform to understand where we are, what we need to change and how we can get there. Join the fight!

Here is some data from that site which tells a very clear and well substantiated story for why health care reform is required for California. You can get similar information about the state where you live:

• Roughly 19.7 million people in California get health insurance on the job¹, where family premiums average $13,297, about the annual earning of a full-time minimum wage job. ²
• Since 2000 alone, average family premiums have increased by 114 percent in California.³
• Household budgets are strained by high costs: 19 percent of middle-income California families spend more than 10 percent of their income on health care.⁴
• High costs block access to care: 13 percent of people in California report not visiting a doctor due to high costs.⁵
• California businesses and families shoulder a hidden health tax of roughly $1,400 per year on premiums as a direct result of subsidizing the costs of the uninsured.⁶

AFFORDABLE HEALTH COVERAGE IS INCREASINGLY OUT OF REACH IN CALIFORNIA

• 19 percent of people in California are uninsured, and 71 percent of them are in families with at least one full-time worker.⁷
• The percent of Californians with employer coverage is declining: from 58 to 54 percent between 2000 and 2007.⁸
• While small businesses make up 77 percent of California businesses,⁹ only 46 percent of them offered health coverage benefits in 2006.¹⁰
• Choice of health insurance is limited in California. Kaiser Permanente alone constitutes 24 percent of the health insurance market share in California, with the top two insurance providers accounting for 44 percent.¹¹
• Choice is even more limited for people with pre-existing conditions. In California, premiums can vary based on demographic factors and health status, and coverage can exclude pre-existing conditions or even be denied completely in some cases.

To read the citations and end notes cited above, follow this link.

Enjoyed this post? Please consider subscribing to Money and Such by free RSS Feed or by email. You can also follow me on Twitter.