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Pay off the loan vs. stash the cash

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About $23,900 is owing on the second mortgage on my home, which I took out at 6.1% to renovate the investment house. I could pay the principal down at the rate of $250 a month plus about $3,500 a semester from a side job, or I could put that money into savings so it would be available to pay off the loan when I retire. Or, if I decide to sell my house (which is otherwise paid for), that amount would refill my pocket after the amount owing on the second is engrossed from the proceeds of the sale.

I figure this will allow me to pay off the mortgage in about two and a half years, or, over the same period, to accrue $25,000 in an interest-bearing account. Either way, the amount put into some kind of investment instrument–real estate or mutual fund–will be about the same.

Which is better? I agonize, I wring my dainty hands:

Item. The payment is very low–less than $170 a month.

Item. Despite the sagging real estate market, neither my house nor the investment house is losing much, because they are both in fairly “hot” central-city neighborhoods. Neither has dropped in value below what we paid; in fact, each has apparently risen somewhat. One is holding its value at about $50,000 to $70,000 more than its 2004 purchase price. The other is within walking distance to but out of earshot from a brand-new light rail route. In comparable cities, housing values have jumped along light rail lines. Barring a major recession, it’s unlikely either house will depreciate significantly.

Item. A major recession is not beyond the realm of possibility. In that case, property values certainly could drop, or worse, my son or I could lose our jobs. If that happened, it would be better to have $25,000 in liquid savings, not tied up in a house I may be unable to sell or even, if I’m unemployed, borrow against.

Item. My son and I plan to sell or rent the investment house in three to five years.

Item. Assuming things go well, I plan to retire in about three years. At that time I will have to decide whether to keep my house, which has much to recommend it, or to move someplace smaller and more economical to operate. If I decide to stay, I could use the $25,000 cash savings to pay off the loan or, at an 8% return, to cover the mortgage payments. If I decide to sell, about $23,000 will disappear from my profit on the house. But the cash savings will make up for it. Either way, it looks like a wash. In three years, I either have 23 grand put back into the house or I have 25 grand invested in a mutual fund.

Personally, I hate having a debt hanging over my head, and I hate paying interest. Even though the payment is low, if it runs the entire life of the loan I’ll end up paying twice as much as I borrowed. Of course, that won’t happen, because the investment house will be sold long before thirty years are up and I’ll pay off the renovation loan with the proceeds. Still, it’s a psychological burden. On the other hand, with the economy unsettled it may be better to stash the money in liquid instruments. Or convert it all to gold bullion and bury it in the backyard.
So: which is better? Keep the money liquid or put it back into real estate by paying off the loan?

Frugal Household Hints: Stovetop cleaner

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With everyone getting ready for New Year’s Eve entertaining (or maybe just taking advantage of a day off to clean up after the Christmas and Hanukkah festivities), this seems like a good time to launch a weekly feature: household hints for the tightwad. So, let’s start with this one:

Liquid stovetop cleaner made for glass-topped stoves has many other uses.

  • Windows and mirrors. Smear a thin coating over the glass, allow to dry, and rub clean with a soft rag. Gets all the grease, toothpaste splatters, and dog kisses-much better than blue window cleaners.
  • Gas stoves. Perfect for cleaning the shiny metal surface of a gas stovetop. Don’t get the paste into the little burner holes.
  • Teakettles. Cleans and polishes a teakettle that’s collected grease while sitting on or near a stovetop.
  • Kitchen and bathroom tiles. Does an incredible job of cleaning and polishing tile. Another tip: Try a Mr. Clean “Magic Eraser” on the grout.
  • Hazy drinking glasses. Polishes the stubborn deposit left by a poorly functioning dishwasher.
  • Tableware. Polishes stainless steel knives, forks, and spoons. I have used a tiny bit of it on silver with no harm, but I wouldn’t make it a habit.
  • Self-cleaning oven’s door. Works to remove the last bits of grease and haze from the inside of an oven door after the self-cleaning cycle has run and the oven is cool.

Voilà! One product does the work of glass cleaner, tile cleaner, and metal polish. And IMHO it works a lot better on glass and tile than anything else, especially when you’re dealing with that little skim of grease that settles on everything in a kitchen.
Have you found anything else to do with the stuff? Please share!

Lights in the night

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At first I thought it was a helicopter. But copters don’t dodge around at sharp angles, reverse themselves on a skyhooked dime. Then I decided it was undoubtedly a flying saucer. Well, except for what looked like a red tail light. Helicopter viewed through the atmospheric distortion of a cold desert night?

Tonight is clear and crisp. Just outside the front gate, Orion is climbing up the eastern sky right behind his scout, the god of war. The saucer or helicopter or whatever it is jerks back and forth in the sky, somewhere between the earth and the cosmic hunter. I walk in its general direction, east and south toward the park.

My neighbor has, bar none, the best Christmas display in the city: the Burning Bush. Every year he wraps the big deciduous tree in his front yard with what must be several million lights. Somehow he contrives to have them glow in different colors every night–don’t ask, I have no idea! The colors rotate, so if you stand and watch for a while you see the tree’s trunks and branches burning red and then blue and then gold and then white and then red. . . . Tonight as I pass they’re mostly white, with a few flecks of blue here and there.

As I draw closer to the park, I realize the saucer is not somewhere over downtown Phoenix but actually is doing its acrobatics much closer to hand. And it isn’t just white and red; it’s glowing red, white and blue. Lo! It’s a model airplane, all tricked out in colors, its wings outlined in blue, its tail lit red, and its fuselage dinged in white. Up and down and around and around it swoops through the air like an illuminated swallow, tracing its owner’s delight.

When m’hijito was little, we used to bring his model rocket ships into this park to launch them into orbit. One of them, I’m sure, actually did reach those heights. It shot through a leaden gray overcast and–I swear!–never came back down. We snooped in all the neighboring yards and found nary a sign of it. As we speak that rocket is passing over southern Australia.

A mile’s walk through a cold dark, lights earthly and unearthly marking your way: stress control, and it’s free.

Make a New Year’s to-do list

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In my experience, New Year’s resolutions fade from memory along about January 7. Several reasons for this: we make unrealistic vows (“I will lose 100 pounds this year”); we cast our resolutions as broad generalizations rather than as specifics (“I will put more money into savings”); we ask ourselves to do things that don’t fit into our routine or are out of character (“I will teach myself to play bongo drums”), or are downright impossible (“and I will learn to play a Bach cantata on the bongo drums”).

What if, instead of resolving to achieve some broad goal, we made a checklist, the very sort of checklist that helps many of us get things done in an ordinary day or week? Instead of stating a wish, a to-do list tells you how to get through the process of accomplishing things. It speaks in specifics, not generalities. And a to-do list, being a pragmatic sort of device, is likely to fit in to the life we are already leading. On that theory, here is my 2008 to-do list:

1. Three days a week, add bicycling or mountain park hiking to exercise routine
2. Lose five to ten pounds by

a) staying off the sauce,
b) increasing exercise as above, and
c) continuing to eat lots of whole foods and less sugar & refined grain

3. Bring food to the office instead of ponying up $8 for the miserable restaurant fodder that passes as lunch
4. Drink tea, not coffee, and less of it
5. Learn to put widgets on iWeb pages
6. Join four social networking sites
7. Aim for two no-purchase days a week
8.Snowflake the Renovation Loan principal down by $1,000 (that’s $83.30 a month)
9. Invest $250 a month in an interest-bearing account to build liquid savings and to provide the option of paying off Renovation Loan within five years
10. Invest net income from side job (approx. $3500 a semester) in the same interest-bearing account
11. Wear better clothes to the office, using the wardrobe now expanded by after-Christmas clothing purchases
12. Try to wangle a Power Mac from the university
13. Build cross-campus collaboration by trying to land another research assistantship to be staffed by grad students in the publishing program
14. Build new ways to mentor graduate students and reinforce editorial training
15. Make new friends

a) through Meetup.com
b) rejoin the choir

As a list of New Year’s resolutions, this would be way too long. It could be cast as six broad, eminently forgettable goals: reduce stress, build readership for Funny about Money, pay down the Renovation Loan, save more money, improve job performance, and meet new people.

As a to-do list, it contains no more items to accomplish than I normally accrue for a single day. I think it’ll work.

What are your New Year’s resolutions? I challenge you to accomplish as many of yours as I will of mine! Meet me here after each quarter of 2008 to compare notes. See you in three months-and sooner, I hope.

No kidding?

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News flash! Researchers have discovered that, when it comes to job satisfaction, money matters more than a warm-fuzzy boss or an office decorated like a fern bar. “Conventional wisdom,” we’re told, has it that a pleasant environment and an understanding boss are more important to worker happiness than compensation.

New York Times columnist Paul Brown, citing the results of a survey reported in Family Business Agenda, reveals the top five keys to job satisfaction:

  • Pay
  • Benefits
  • Job security
  • Flexibility to balance work and life issues
  • Ability to communicate effectively with management

I have to allow that the Great Desert University has given me and my staff some mighty nice office space, as campus space goes. It’s in an old building called back out of condemnation, but IMHO much nicer than the proud new concrete and glass blocks the more privileged occupy: we get a big atrium full of tropical plants with an amazing flowering tree right outside our window. And for that we are all grateful.

The decent health insurance and the generous vacation allowance go a long way toward encouraging me to stay on the job, as does the fact that the university has a policy that encourages telecommuting. So does my low-key dean, who does not micromanage but stays out of the way so I can do my job effectively.

Ah, but yes, money matters. The late great switch from bimonthly to biweekly pay did nothing for my morale, nor did I notice any of my staff dedicating a dance to spring to the wisdom of this decision. Twenty weeks of incorrect paychecks didn’t help much, either. And when Barack Obama proposed to exempt the low-income elderly from taxes and then defined “low income” as exactly my salary, well . . . that was alarming. If I were ten or fifteen years younger, I’d be looking for another job right now.

Because Arizona is a right-to-work state, pay is relatively low compared to other urbanized American states. For educators, this phenomenon is enhanced by the fact that the legislature has historically underfunded education.

GDU has justified its pauperly salaries by telling prospective faculty that living in a resort climate is worth the difference, and besides, it’s less costly to live here because you don’t have to buy all those winter clothes. (Yeah. Recruiters have actually said that with a straight face!) But the truth is, the cost of living in the Phoenix metropolitan area-the fifth-largest city in the country-is no lower than in other major U.S. cities, with the exception of grand urbs such as New York, Boston, San Francisco, Los Angeles, Chicago, and Seattle. Prices for housing within reasonable driving distance of work are comparable to or higher than housing prices in most large cities. Gas is almost $3 a gallon. Food is expensive, and because sprawl has run most farmers out of business, pickings are mighty slim in farmer’s markets. The cost of one power company’s electricity is said to be the highest in the nation. So while salaries are low, it’s no cheaper to live here than in places where pay is better. To my mind, that translates to “lower standard of living.”

It’s hard to imagine how anyone could conclude otherwise, or fail to see how much money matters.
Am I all wet? What keeps you on your job? And what do you see as the greatest contributor to your job satisfaction?

Freedom’s just another word…

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Continuing the project to declutter every room in the house, so rudely interrupted by my job, today I attacked the office and cleaned off all the work surfaces, the bookcase, and the file cabinet, built new hanging files for the various projects that have been stashed in mounds here and there, and tossed or shredded whole trashcanfuls of miscellaneous pieces of paper with old notes on them. Interesting. I’d forgotten the desktop is made of wood.

I’m determined to put away or throw away every dust-catcher that does not have some real, useful reason to occupy a surface. No junk on the surfaces! The goal is to be able to dust without having to pick up and wipe off any more pieces of junk than absolutely necessary. This is part of the stress reduction scheme: simplify housecleaning.

As I was tossing large quantities of paper, outdated reminders, and meaningless keepsakes, it struck me once again that a desire to be free of clutter is characteristic of a frugal mind-or even a miserly one.

My father, who could at times raise frugality to a high art, loathed having junk around him. When we left Saudi Arabia, where I grew up, we took almost nothing with us but our clothes-he never allowed us to buy anything of value while we were there, on the theory that Americans could be evacuated at any time and all the elaborate European and Asian furnishings our compatriots filled their homes with would have to be left behind. Each time we moved (and I realized one day that my mother had moved house on average of once every two years during their 32-year marriage), we threw stuff away. We never carried anything with us that we didn’t really need. I guess he set an early example of voluntary simplicity: a simplicity motivated by a determined bent for frugality, not to say tight-fistedness. He didn’t want to own anything we didn’t need and he didn’t want to pay to move it.

Onward to the two hall closets, repository of two years’ worth of free sample toothpaste from the dentist, the lifetime supply of Costco AA batteries, and several jars of pills of unknown age and provenance.

These closets are like archaeological digs, filled with strange artifacts. Lessons from the remote past:

  • Never buy jackets from catalogs. Out with the pumpkin-colored wool jacket that I’ve kept for years because it looked so good in the Land’s End catalog it ought to look good on me. The truth is–and has always been!–that the thing never fit right, it doesn’t keep me warm, and it’s just plug-ugly.
  • Never buy things out of desperation. Out with the hideous red car coat from The Limited, purchased in an attempt to remedy the Land’s End fiasco. What was I thinking? I hate double-breasted coats!
  • Refrain from sleeping on the ground. Out with the man’s waterproof windbreaker acquired during the three long months spent hiking, bumming rides, and camping in the outback of Canada and Alaska.
  • Don’t get silly about men. Rescued: The clothes hangers that SDXB,* incredibly, smeared with black marker, lest they be confused with mine and he lose those handy pieces of blue and pink plastic when he moved out of my house.

The three-foot-tall “To Donate” box is chuckablock full. It will take half the weekend to haul all the valuables to St. Vincent’s or Deseret Industries. Somebody out there will be happy to get those coats, with the weather nipping down to the 20s. But the gift to me is greater: freedom from junk!

*SDXB: Semi-demi ex-boyfriend, aka “The Emperor of Cheap”