The Home 
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Homeownership Isn’t A Short-Term Investment

Don’t buy a home to make money because you won’t.

At the end of May, my wife and I will have owned our home for three years. It was a home that we purchased six months behind the burst of the housing boom and one that has still appreciated in the time since, a testament to the strength of the housing market in the area between Baltimore and Washington D.C. In our little development, similarly designed homes have been selling in the $310k-$320k, or about $15k-$25k more than what we paid for our home. Some of those don’t have the full basement renovation ours has, some don’t have new windows (which means they’re 25 years old), and so one might be tempted to say that those homes would sell for a couple thousand more if they did have some of those amenities. Even so, does that mean we “made” $15k-$25k on paper on our home investment?

Nope. We’ve spent $7,000 on new windows and sliding doors (a great deal I think), about $900 to carpet the basement, and will soon spend approximately $5,000 on a new roof. Total those up and you have yourself ~$14k of expenses. Okay, so deduct that from the $15k-$25k and you have an appreciation of $1k-$11k, not bad right? Then consider that we’ve paid nearly $35k in interest payments to the bank (of which a third is returned at tax time) and you see how this “investment” has actually lost us money.

Homeownership isn’t a short-term investment. Not only isn’t it a short-term investment, the majority of the “reward” derived from homeownership has more to do with living a better life than having more zeros in your bank account. Even though we have “lost” money (granted, we would’ve “lost” more had we been renting), we’ve made lots of great memories in the short time we’ve been in this house and had the pride of homeownership.

Life isn’t always about $$$.


 Frugal Living, The Home 
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10 Homeowner Secrets That Save You Money Now!

This guest post comes courtesy of Fred at One Project Closer, a home improvement blog written by one of my friends. As a sign of how good of a friend he is, he still made to my wedding despite his basement being flooded by a burst water heater. And until I read his post, I had no idea he was late!

With rising energy prices, fear of a recession, and the stock market erasing the gains of the last six months, you’re probably looking to save wherever you can right? Well, today I have the opportunity to share ten fantastic tips you can use, many with hardly any up front investment whatsoever, right this very second to save yourself some money.

1. Insulate Your Hot Water Heater ($20.00 investment). Unless you have a newer tankless model, your hot water heater has a large reservoir of water it keeps constantly heated. Traditional hot water heaters are constructed with a relatively small layer of insulation between the inner water reservoir and the outer metal shell, requiring the heater to run frequently to keep the water hot. Manufactures under-insulate hot water heaters to keep the units small enough to fit into tight spaces. For about $20.00, you can find a hot water heater insulation wrap at your local home improvement big box. Upon installation, a typical homeowner will save between $3.00-5.00/month on energy costs.

2. Turn Down Your Hot Water Heater Temperature ($0 investment). Most people are very conscious of raising/lowering the thermostat on their central AC/heating system, but haven’t even considered lowering the temperature on their hot water heater. Your hot water heater should always be set to the lowest temperature that provides your household the hot water you need. Lowering the water temperature from 125 deg. to 115 deg. saves a typical homeowner about $3.00-$10.00.

3. Don’t Let the Water Run While You Wash Dishes ($0 investment). It sounds silly, doesn’t it? But the reality is that nearly all of the cost of running the water is in heating the water. Leaving the water running for 30 minutes could cost you as much as $3. Instead, use your dishwasher (just don’t use the built drying heater or a water heating option like sanitize rinse). Dishwashers use less than half of the water to perform the same task. Or, better yet, fill your sink basin and wash dishes with the water turned off. That method uses less than a quarter of the water of the first method.

4. Don’t Use Your Fireplace on Extremely Cold Nights ($0 investment). Traditional wood fireplaces require an open flu to allow smoke to escape. The air that’s leaving the house with the smoke has to be replaced with air from somewhere else. In most traditional setups, replacement air comes back into the house through pores open to the outside (outlets, leaky windows and doors, attic accesses, etc). On very cold nights, the cold replacement air coming into the house more than offsets any heat gained from the fire itself. As a result, using a fireplace on a cold night could cost $1.00-$3.00 in energy just to replace the lost heat.

5. Caulk Your Attic Access Door ($3.00 investment). Gaps in attic access doors allow heat to escape from the upstairs of your house. Since you don’t go up into the attic much anyway, caulk the rim of the door to prevent your energy from floating away. Estimated savings: $2.00-4.00 / month.

6. Replace Your Light Bulbs with Energy Efficient Models ($20.00-80.00 investment). Compact Fluorescent (CFL) technology has come a long way in the last 5 years. More than ever, CFLs look and behave just like incandescents. These bulbs use about 23% of the energy of their incandescent counterparts and last about 20 times longer. One 100-watt equivalent CFL can save a homeowner more than $60.00 over the course of its life. You shouldn’t wait for your incandescents to burn out either. Every day an incandescent burns, it wastes nearly 80% of the energy it uses. Since you’ll have to replace it when it burns out anyway, you should make the switch today.

7. Consider Replacing Your Refrigerator ($700-1000 investment). Refrigerators that are more than 10 years old use about 50% more energy than their modern counterparts. The older your model, the more inefficient it is. For models that are more than 20 years old, a homeowner can expect to recover the investment in as little as 2.5 years. If you can find a newer model on Craigslist or in the classifieds, you might realize a recovery period of as little as 1 year.

8. Change the Filter on your HVAC every 3-6 months ($5 investment). HVAC filters remove dust and allergens from your house as your HVAC circulates air for heating/cooling. These filters get dirty, eventually restricting air flow. When this happens, your furnace has to work harder to achieve the same temperature change – wasting energy. Changing the filter takes only minutes. If you haven’t changed your filter for more than a year, you can expect a ~$5.00/month savings in months where you run your HVAC the most.

9. Install (and use) a Programmable Thermostat ($50-$100 investment). Programmable thermostats allow you to adjust the temperature in your home based on the time of day, and day of the week. If no one is home during the day, it simply doesn’t make sense to keep the house at the same temperature. Typical homeowners can expect to see $10.00-$40.00 / month savings after installing these nifty little devices. Remember that a programmable thermostat will only save money if it’s programming features are actually used. So, get a programmable thermostat that’s easy to learn.

10. Set Your PC to Auto-hibernate ($0 investment). A computer, monitor, and printer can easily draw 300 watts. With electricity as high as $0.15/KWh, this equates to more than $1.00/day. If you only use your computer for 2 hours a day, setting the system to auto-hibernate (instead of leaving it on) saves as much as $25.00/month.


 The Home 
4
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How To Fight Your Property Tax Assessment

One of the less often discussed effects of the subprime lending crisis and falling home values is the effect lower home values will have on property taxes. While a drop in home values is bad for a homeowner, a lower property value assessment is sort of like the silver lining. Unfortunately for homeowners, counties and states aren’t so good at lowering assessments. So, if you suspect your home has recently fallen in value, consider fighting your next assessment.

As an aside for any Maryland homeowners, you will have to apply for the Homestead credit this year if you want to stop your property taxes from shooting through the roof. The state discovered that lots of investors were getting tax breaks through the Homestead Tax Credit and have instituted a one-time application process. If you own your home and are living in it as your primary residence, they’ll approve you. With property taxes going down, they’re looking to squeeze out tax revenue from wherever they can find it. For more information, read this FAQ on the Maryland Homestead Tax Credit.

The follow seven tips come straight from Money but I can boil it down into something a little simpler.

How does your county assesses the value of homes? Two common ways are with comparables (or “comps”) and with replacement/rebuilding value (very similar to how banks appraise homes). With comparables they just look at similar houses and what they recently sold for. With replacement/rebuilding value, they “guess” based on how much they think it would cost to replace it. After you figure that out, request your assessors evidence so you can examine it for any errors. Chances are the assessor didn’t walk through every room in your house (or even enter your house) and is basing it on public records. Did he or she put the correct number of bedrooms and bathrooms? Is the square footage correct? Any discrepancies can be used to adjust the value of your home.

Build a case for a lower property assessment and do it quickly. Most places have a time limit for an appeal, Money says 60 days it the norm but I’ve seen places with 45 days and 90 days. Your case will be based on how your county assesses home value. If they use comparables, get some comparables and use them as ammunition (get 5-10, more is better).

Meet with the assessor first, then file an appeal. If you can convince the assessor that he or she assessed your home higher than he or she should have, it’ll help your case when it comes time to appear before the review board because they’ll be there. If you convince them, they’ll put up less of a fight. At the appeal board, prepare an 8-10 minute presentation with pictures of the comparables and a spreadsheet of the data. Think about what you would want to see if you were on the board. If you’ve done your homework, act professionally, then you have a good shot.

What if you lose? They recommend you move up to the state board and then to court if that fails. Money says that going to court will require a lawyer but that counties and states will often want to settle just because it’s just as expensive for them as it would be for you. They might not give up all of it, but they could give up a big piece.

Good luck!


 The Home 
2
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I Had A Leak In My Roof!

Two nights ago my fiancée and I discovered that the carpet in the upstairs office was a little damp. After a little investigating, we discovered that the wall was soft! We tore down the drywall, removed the soaking wet insulation, and realized that our roof was leaking. After a restless night, I woke up the next day, called up three contractors, and eventually had some repairs done. The culprit appeared to be the flashing around the chimney and the tin covering on the chimney. The final bill was $675 (though I worked out something with the contractor where I’d get that rebated back on a full blown roof replacement, which I know I’ll need) and a weight off our shoulders. I still need to replace the insulation, drywall, and paint that office… maybe the painting will happen after the honeymoon. (I’m also a little hesitant to put everything back up in case our repairs didn’t solve the problem…)

Ugh…

On a happier note, I discovered a cool site called FreeRice.com through BzzAgent. I’m a BzzAgent, which means I occasionally get free products, give them away to my friends, and write about their reactions to them (if you want to join, email me). I’ve given away gum, yogurt, etc. etc. Anyway, one part of the site involves talking about cool websites that have tried to improve their online exposure through BzzAgent. Until today I hadn’t written anything about any of them because they didn’t really appeal to me, until FreeRice.com. You answer multiple choice vocabulary questions and they donate 20 grains of rice for each correct answer. You don’t sign up for anything, they don’t send you anything, and they donated 149,541,380 grains of rice donated yesterday (Valentine’s Day). Give it a whirl, maybe you’ll learn a few words and someone gets a bowl of rice.


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