The Balanced Spreadsheet-Financial News, Budget Advice, Debt help, Financial Tips, and other advice

December 23, 2009

Home Evaluation Comparison

Filed under: Excel fun, Mortgage, Personal Finance, Real Example, Uncategorized — Tags: , , , , — thebalancedspreadsheet @ 1:57 pm

As a follow up to a post I made earlier in the week on online home evaluations websites that was based on the article  “Value judgments“, I decided to do a group comparison, using the websites listed in the article, on my condo and see how close each one was to one another.  I took the six mentioned, Chase Bank, Cyberhomes, Eppraisal.com, RealEstate.com, Realtor.com, and Zillow.  In addition, I included the average sales price of condos in my development over a 6 month (2 units) and 1 year (4 units) period.  I came out with the following results:

Home Evaluation Comparison

Home Evaluation Comparison

A few things that jumped out at me:  Both the 1 year and 6 month actual sales data were higher then all but two of the websites.  That kind of surprised me as going into it I figured the websites would overvalue the house compared to actual sales data.

The realestate.com number was the middle point in a range.  Unfortunately the range was about $30,000, which is not really helpful when you are talking about a $100,000 home.  Even if I included the high range it still would have been the lowest estimate by far.

Overall the average price is inline with the $95,000 I have currently on our balance sheet.  I think every few months it will be good to checkup and do another comparison to see if there has been any movement in the price.  After doing the comparison I feel comfortable with the number and probably will not change it.  Hopefully in the spring when real estate starts to pickup more units will be sold and the value will increase.  Doing the comparison was fun but I would not, and do not, put much stock into the results as a “definite” on what my condo is worth.

December 21, 2009

Are Mortgage Evaluation tools accurate?

Filed under: Mortgage, News Review, Personal Finance — Tags: , , , — thebalancedspreadsheet @ 2:21 pm

Jim Weiker wrote an excellent column on Sunday in my hometown paper The Columbus Dispatch titled “Value judgments”.  The article took a look at online home evaluations websites such as Cyberhomes, RealEstate.com, Zillow, and others and compared their estimates to the actual sales price of recently sold homes in the Columbus, OH area.

The article had some good research as they used 27 recently sold homes and came up with the following results:

“A Web site operated by Chase Bank was the most accurate of the sites examined. The site, http://www.mortgage.chase.com, offered the closest estimate 13 of the 27 times.”

“The least-accurate sites were Zillow and RealEstate.com, an arm of the home loan company LendingTree.”

While these websites can be helpful, they are not the end all, be all and should be used with caution:

“‘It’s a good place to start if you’re trying to figure out the value of your home,’ said spokeswoman Mary Kay Bean. ‘It’s not the same as having an appraiser come in and evaluate the home.'”

The sites don’t know the condition of the home or an owner’s eagerness to sell.
   
They tend to be more reliable in areas of similar new homes, which offer plenty of comparisons, but less trustworthy in old neighborhoods or rural areas where one-of-a-kind homes are more common.

This was a fun article to read as I try and keep an estimate of our homes value each month in our net worth updates.  I have written before that I am constantly trying to find the best way to determine its value and have used these online estimates often.  However there can be big swings from month to month and I have often questioned the estimates given each month and I am not the only who is experiencing it.  Jonathan over at mymoneyblog.com had a great post a few months back asking if internet home valuation tools are worth it.

Like the article states, these sites can be good place to start to get a rough estimate of a homes value, but there are many factors in determining a home’s value and ultimately the best way to get a solid estimate is to get an appraisal done.  Personally I just use these sites as a rough estimate to see the estimated value on my personal residence.  When we start looking for a house in the next year or so I will not be using these sites as a guide in determining what house are for sale below market value or how much to make an initial bid on. 

In the net few days I am going to do a group comparison using all the different sites and see how close I come to the $95,000 that is currently on our balance sheet.  It should be an interesting experiment!

Does anybody else know of any other good home evaluation websites not listed in the article or had any similar experiences using their evaluations?

December 18, 2009

79.9% Credit Card? Who would use that?

Filed under: News Review, Personal Finance — Tags: , , , , , — thebalancedspreadsheet @ 2:56 pm

I came across this article from the AP this morning while browsing the web titled Credit card’s newest trick: 79.9 percent interest.  It is about First Premier Bank and how it is marketing the expensive credit card at 79.9% APR.  It is marketed toward subprime customers who can not get a traditional credit card.

There are some interesting quotes and figures in the article.  The cards credit limit is only $250-$300 but the annual fees are currently $256 in the first year!  Although starting in Feb 2010 the fees will drop to $75 in compliance with the new credit card regulations.  With all that being said this quote really got me:

“Even when the cost of credit is astronomical, for people in true emergencies, it’s much better than not having access to credit,” said Odysseas Papadimitriou, CEO of CardHub.com.

If you have read this blog for any length of time, you know that I am pretty much anti-credit card.  With that being said, I can not believe that quote.  They would be better off to continually get ripped off with high fees and interest rates then to not have access to credit?  Well how much of a blessing has their credit been so far?  It has lead to defaults and higher interest rates!  Unbelievable!  People who have shown the inability to handle credit should not be extended more!  To me this is just another example of the poor being taken advantage of, similar to pay day loans.  Now granted the people who sign up for this card did have a choice before filling out the application and they should be held responsible for their debt, but to me you have to have some kind of moral responsibility as a business to not market this stuff.  Sadly the reason they do market this junk is because people use it and it is profitable.  I think we just need to educate more on how bad of a product this is and how it is not beneficial to consumers in the long run.

Well there’s my soap box.  Anybody else have any thoughts on this?

December 16, 2009

The ROTH 401 (K)

Filed under: Personal Finance, Retirement, Uncategorized — Tags: , , , — thebalancedspreadsheet @ 11:20 am

Last Friday, my employer gave me an early Christmas gift.  They sent out word that starting in 2010 they would be offering a ROTH 401(K) option along with the traditional 401(K) plan! This was very good news as I already contribute to a ROTH IRA and as I have discussed before in comparing traditional and ROTH IRA’s, the tax free growth you get with a ROTH almost always is better then the deferred growth you get with a traditional retirement plan. The differences between a traditional 401(K) and a ROTH 401(K) are very similar to the differences between a traditional and ROTH IRA.

The big difference is still the tax treatment.  Contributions to Traditional 401(K)’s are tax deferred while ROTH 401(K) contributions are made after taxes and have tax free growth.  That means that ROTH 401(K) contributions will result in a higher tax bill in the year you make the contribution compared to a traditional 401(K).  However, under both plans, if the company matches any of the proceeds that amount and its growth is tax deferred.

The one big advantage of the ROTH 401(K) versus the ROTH IRA is the contribution limits.  You can contribute up to $16,500 combined in 401(K)’s in 2009 compared to just $5,000 for IRA’s.  That means you can get up for $11,500 more in tax free growth a year!  There is also no income limit to participate in a ROTH 401(K) while with a ROTH IRA the limit is $105,000 for single filers and $166,000 for married filing jointly.

After crunching the numbers it looks like I will be making the switch from Traditional 401(K) to ROTH 401(K) in 2010.  I will put 9% of my paycheck into the ROTH 401(K).  My employer matches 6%, so that means I will be getting 15% of my net pay into 401(K).  I will stop contributing to my ROTH IRA in 2010.  This will increase my tax bill for 2010 but down the road I will more then make up for it.  The one thing I was worried about in contributing to a ROTH 401(K) was whether or not the tax free contributions would bump me up into the 25% tax bracket in 2010.  However it looks like I will still be in the 15% tax bracket. 

Has anybody else had experiences with a ROTH 401(K)?  Did you like it?  Hate it? Or were you indifferent?  Any feedback is appreciated.

December 15, 2009

How to rent a car or hotel with a Debit Card

Filed under: Uncategorized — Tags: , , , , — thebalancedspreadsheet @ 8:46 am

Recently I have been asking and answering different financial questions on the Cash Commons website. A question was asked about how to reserve rental cars and hotels without a credit card. You can read the full question and my response (the handle name is The Balanced Spreadsheet) on the website.

As someone who does not have a credit card I must use a debit card on all my rentals. Supposedly it is harder to rent with a debit card only but I have never run into that problem. A lot of people cite the trouble of renting with a debit card as a reason to carry a credit card as an “emergency” but simply put, I do not think that is a very valid reason.

December 11, 2009

Cash Breakdown November 2009

Filed under: Excel fun, Personal Finance, Real Example — Tags: , — thebalancedspreadsheet @ 9:27 am

Here is a quick cash breakdown before the end of the year.  Despite having  various emergencies, our Car/Vacation fund has surprisingly risen since September.

Cash Breakdown November 2009

Emergency Fund-No changes here with the amount staying at the same at $10,000.  It is great to know that we have ten grand in the bank in case of medical emergency or job loss.  Currently there is no desire to increase or decrease this amount.

Working Funds-This is the last month before I buy some company stock.  As described in June’s cash breakdown update, because I participate in my employers stock purchase program, I need to cover the $1,667 that is withheld from my pay check each month.  Next month this amount will reset to zero. 

Insurance Accrual-This only include our life insurance accrual as our car insurance premium got paid in December.  Since we pay our car insurance semi-annually (June and December) and the our life insurance annually (June), I need to “accrue” monthly the cash needed to pay the bill when it is due instead of having to come up with the full amount on the month it is due.  I simply just take premium due and divide by 12 for my accrual.

IRA Funding-This amount is just for me.  We have fully caught up on my wife’s IRA funding.  It is part of our financial goals that we put 15% of our gross pay into retirement accounts.  For 2009 we have combined to contribute over $2,500.00 each into a ROTH IRA for 2009.  The maximum for 2009 that you can individually contribute is $5,000.  The rest of our retirement funding goes into a 401(K) where our employers match.

Car/Vacation-The remainder of the cash balance goes in this fund.  It’s nice to see the balance increase over $1,000 in two months.  We are planning on taking our one year anniversary trip in May at a yet to be determined location.  There are no plans to purchase a new car but it is nice to have the money in the bank just in case.

December 1, 2009

November ’09 Net Worth Update (+4.23%)

Filed under: Uncategorized — Tags: , , — thebalancedspreadsheet @ 6:34 pm

Net Worth Nov '09

Net Worth Nov '09

Cash-This took a bigger hit then what was expected primarily due to some unexpected financial emergencies this month.  We also had our semi annual car insurance payment due at the end of the month.  Thankfully we were able to weather the storm by good budgeting.  We pretty much have Christmas all budgeted so next month that will make things easier.

Employee Stock Purchase Program– Nothing new to report here, as another $1,667 was taken out of my paycheck and will be used to buy company stock at the end of the quarter which is December 31st.

House-A few condos have sold for more then the $95,000 that is on the balance sheet.  I think we have might have hit the bottom of the real estate market.  With that being said I am still leaving the condo valued at $95,000 for now.  I would rather be conservative then jumping the gun.

Retirement-After a flat October, the market rebounded some more.  About a third of our increase this month is due to new contributions, the rest was gains. Overall our investments are up around or over 30% since the beginning of the year.

Pension-I passed the income threshold in November so that is the reason for the increase.  From month to month you barely notice the $200 increase, but over time it is nice to see that build up.

Mortgage-Another triple mortgage payment reduces the principal by ~$1,750!  I have discussed our decision to pay down the mortgage as quickly as we can before. It is really cool to see the principle reduced by big chunks every month.  At our current rate, we will pay the mortgage off on July, 2013.  I have decided against refinancing for now due to the breakeven point being 24 months.  YTD we have almost paid off $20,000 in principal.

You can see past net worth updates at the net worth history page.

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