Coffee heat rising

w00t! Refinance time!

The credit union’s mortgage rates dropped to 5.375% this morning. Last time they hit this point, we decided to wait to see if they fell to their previous low of 5.25%. That was many a week ago.

Dang! Jump at it, or not jump?

Put in a call to my financial advisor. He said it was reasonable to expect rates to go back up and stay there. Mortgage rates, as he explained, aren’t closely tied to the Fed’s rates but depend more on the long-term prospects for the economy. In his opinion, the recession is On. Over the next year or so, he thinks things will get better-and he claims others think that, too-and so we can expect lending rates to rise.

Calculation: On the amount we owe, the difference between 5.25% and 5.375% is $16 a month. The difference in mortgage payments: more than $200 a month.

Rate grabbed.
$ $ $ $

Side Job: Episode 2

At last! The eightieth paper is sent back to its author.

Never again will I take on 80 writing students as a side job! Particularly not online, where collecting their papers takes as much as a minute apiece and sending the things back takes as long.

No joke: I measured it. By the time you’ve gone pointedy-clickety-pointedy-clickety- pointedy-clickety-type type type type-pointedy-clickety-pointedy-clickety-pointedy-clickety to upload and send a paper to a student through BlackBoard (GDU’s online course software), you’ve spent between 40 and 60 mind-numbing seconds. So it takes almost a mind-numbing hour just to return one section’s papers.

If I hadn’t wrenched my leg, I would have had to take this week as vacation time to read the 80 papers that showered down on my head last weekend. It’s taken a good 50 hours to plod through the stuff. So the time off for the injury was a nice (in the classic sense) confluence: my boss feels sorry for me and I use time I would have had to take off anyway to read papers with my foot up. It’s occupied the entire week. I worked until 1:00 a.m. this morning, then carried my computer to the Renovation House to meet a worker and thence to the doctor’s office, and finally home again to finish grading papers, forming 15 carefully crafted groups, entering grades in Excel and online, issuing instructions, writing and posting announcements, figuring out how to make the group discussion boards work for student members, and on and on.

Well, the worst is now over: the rest of the coursework will be turned in as group papers. So, instead of 80 papers at a time, I’ll have 15 to read.

Some of these people are amazing: a Korean kid with a long string of writing awards in Asia and fresh from an internship to die for; a Chinese student who did not learn English until after high school and already writes more intelligibly than certain native speakers of our recent acquaintance; and the usual run of blue-collar kids, men, and women bootstrapping themselves into the middle class. Let’s hope they all make it.

So, here’s the PF question:

When is a side job worth it? How much extra work are you willing to take on to obtain a second stream of income, and how large does that income stream have to be to justify taking on another job?

In my case, the 14 grand GDU is paying for me to teach the equivalent of four writing sections (a full-time courseload) works out to about $860 net a paycheck. Every penny of it is going in to the Renovation Loan savings fund.

But with an adequate (not great) salary coming in from my real job, I wonder if this extra work is worthwhile. I’m setting aside $250 a month out of my regular pay for the Renovation Loan savings fund, and meanwhile I’m snowballing down the principal by about $100 to $160 a month. It certainly does accelerate the goal of accumulating enough liquid cash to pay off the loan in one swell foop, if need be. But I wonder if there’s any hurry. Since the monthly payment is not onerous, what’s the hurry to collect enough cash to pay off that loan? Should I really be beating myself up for this?

If I lost my job and the only income I had were Social Security and the proceeds from investments, I would need the teaching income to live. I can’t make ends meet on much less than I’m earning, and if I collected Social Security now, it would come to less than a third of my present income. But not having lost my job…

What say you? When is working two jobs worth the effort?

How Much Is That Doggie in the Window: The cost of owning a pet

Out of idle curiosity, I ran a Quicken category report for the past 12 years and restricted the categories to one: “Dog.”

According to Quicken, to date I’ve shelled out $8,217 for the privilege of owning a dog—well, for five of those 12 years, two dogs. That doesn’t cover everything. For the first few years of Anna’s residence with me, I didn’t break out every food and toy and miscellaneous expense for the pooch.

And it doesn’t count the leather chair that had to be rebuilt after Anna chewed an arm off it (that was when SDXB started calling her “the thousand-dollar-a-day dog”). Or the carpets that had to be replaced after a long, slow house-training. Or the van I bought to carry her around after she developed a habit of placing her muzzle next to my ear and screaming until my eardrums hurt every time I put her in the car. The Camry I replaced with the gas-guzzling Sienna had at least another five years on it, and it was a great deal more fuel-efficient than the Dog Chariot. If you calculated in the cost of the replacement flooring (all tile) and the larger vehicle and the cost of running said larger vehicle, you’d be looking at, oh, say, another ten grand. That would bring us to something like $18,000 for the pleasure of 12 years of dog company.

Well, it doesn’t match the cost of raising a child. Yet.

But the next time you gaze into two limpid pools of puppy-love eyes, think: this is not a minor undertaking! Bringing a pet into your life is expensive. Vet bills (which can take your breath away-my last bill was $450!) are just barely the half of it. Over time the combined costs can add up to something very, very large.

Would all that money have gone into savings? Probably not. It likely would have been diddled away on living expenses. I do have to say, though, that if I hadn’t had that $450 vet bill, the larder would have been quite a bit fuller in the month I had to pay it. Yes. It would have been nice not to have to go hungry, or to raid retirement savings, to pay for the cost of owning a dog.

Anna is very elderly and frail. She won’t last much longer, alas. It makes me very sad. I can hardly imagine what my life will be like without a furry companion.

Still, when I contemplate the possibility of adopting another dog after she’s gone, I have to ask myself: can I afford another $18,000? Or even $8,217? When I’m 70-something and scraping by on Social Security, will I be able to take care of a dog?

I don’t think so. In fact, the cost of pet ownership is rapidly moving beyond the means of the average middle-class American. At one point, I estimated that a single person would need an annual income of at least $80,000 to own a dog without having to tighten her belt now and then. Possibly a two-earner household could afford an animal more comfortably. But for single middle-class earners, dogs are about on the order of horses: an indulgence for the wealthy.

How much do you spend on your pets? Do you think this is affordable in today’s economy?

Pay off the loan vs. stash the cash

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?