Monday, May 14, 2012

Finance Freak Out

I have a beautiful house, now that we've done so much work on it these past couple of months. My house hasn't looked this good since we first moved in. It's gorgeous. In preparation for the visit of the guy from the property management company, Homero and I spent almost all of the last three days cleaning, Homero outside and I inside. The children all helped, too. I had Hope and Paloma washing the kitchen cabinets. 

Everything looked so nice I took some pictures, just so I can remember how clean it's actually capable of being:

The dining room

Kitchen (look at those shiny cabinets! Nice job, kids)

The living room.

Of course, as I was reminded by the look on the property manager's face, my idea of a really clean house and yard is not the same as some people's. The man specifically mentioned getting something done about the weeds - he had no idea of course that we'd just burned a pile of weeds five feet high and ten feet across. It took Phil three full days to pull and chop and otherwise destroy all those weeds. But even after 25 man-hours of work, the yard still looks like crap, if what you are used to is the manicured cul-de-sac look.

Same goes for the rest of the house. This house is clean - really clean - by old farmhouse standards. We scrubbed the floors, the walls, and even touched up the paint in the high  traffic areas. But as everyone who lives in an old farmhouse knows, there are cracks and crevices that will never be clean. There are some surfaces that cannot be cleaned, only replaced. Like the grout in the shower, to cite just one example. A sixty year old house will never be new construction clean.

We have done just about everything we can to fix up the house for renting out. The list is long: new carpet and new paint in all three bedrooms; new carpet in the playroom (about a half-acre of it); pressure washing and staining the entire deck; major yard work. We can't afford much more, even if we had the energy and the time, which we don't. The house is just going to have to do, as is.

In matter of fact, I was pleasantly surprised to find that my private assessment of the appropriate rent turned out to be just about exactly what Mr. Property management suggested. I had been thinking that if we were to rent it privately, I'd advertise it at $1250. Mr. property management suggested $1200.

Together with the rental income on the house in Seattle, we should have a decent income while we are in Oaxaca. We will not have the same income as we do during a year here, because Homero generally makes more as a mechanic than the house will bring in in rent, but of course our expenses in Mexico will be considerably less than they are here. That doesn't mean, however, that we are going to come out ahead. Preparations for going have been terrifically expensive so far.

The improvements we made to the house are things that needed to be done in any case, so the cost of doing them shouldn't really count towards the tally, but I'm counting it anyway. Because if it were just for us, we would have lived probably an extra five years with a moldy deck and disgusting carpets. We're cheap and we just don't care. I haven't kept good records (which, it occurs to me right this minute, was very stupid, since these improvements are most likely deductible), but we've spent somewhere like - let me see...

new carpet and paint for bedrooms: $1,800
new carpet for playroom: $550
deck: $400
paying Phil for yard work: $250


The other big expense is setting aside some money to dole out to Rowan over the year. She will have a free place to live (here) and a car with the insurance paid for, and her tuition and books covered, but that's it. Oh wait no, of course we are paying her health insurance. But she is going to be responsible, for the first time in her life, for her own food, gas, and share of the utilities.

We told her that we will help out, but that we cannot give her enough to cover all her expenses - nor would we even if we could. It's important that she start taking on a greater share of her own care and maintenance - greater responsibility to go along with the much greater freedom she will suddenly have when we leave.  Having seen among her peers what happens when parents dole out extravagantly to meet their children's every need, she agrees with us. She has a part-time job and is proud to be making her own money, but we know that that will hardly cover even the most basic expenses. We have arranged to send her $300 a month, and have set aside that money ahead of time, which makes another...


Then there are the expenses associated with the actual journey. Plane tickets, last time I looked, were running about $800 a pop. Three of us will be flying. Homero will be driving the van, which first needs a new engine. I don't even know what that will cost but I'm going to assign it the conservative figure of $1000 (Homero has sources for cheap used engines). The combined costs of gasoline, customs tolls, and highway tolls will be another $1000 or so. Let's see, now we are up to...


Holy crap. I haven't added this up before now. $11,000. Yikes. Okay - deep, slow breaths. Let's cap it here before I hyperventilate and pass out. The negative side of the ledger reads $11,000. Let's take a look at the positive side.

Rental income from this house, assuming $1,200/month will be $14,400. The Seattle house brings in $19,200. That's $33,600. But my mom taught me to subtract at least a month's income for repairs, so call it $30,000. Property taxes, combined, run $7,000. Now we're down to $23,000. Good lord, I've already spent half of next year's income. But what's done is done, and it won't actually affect what goes into our pockets next year, just what's left to us this year. What WILL affect our cash flow is that I'm going to assume Rowan will have a few emergencies that require us to send extra funds - doctor's bills, car repair, that sort of thing. I'm going to budget another thousand for those, leaving us $22,000.

Divide by twelve and you get $1,833 a month. That's not a lot of money even in Oaxaca. We'll be living small. Allright, thanks for listening everybody, I'm going to go brew myself a nice cup of valerian root tea. Goodnight.

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