We Paid Off Our Condo!

Victory is sweet.

Well, after almost three long years, and lots of dedication, the moment has come.  We sent the last payment in to Chase bank and we are now completely debt free.  It is such an amazing feeling.  Honestly I don’t think it has completely hit me quite yet.  As I write this it is March 1st, 2016 and today would normally be the day another mortgage payment would need to be made.  Now, the next time we get paid, much less of that money will be going toward the usual expenses – it’ll just be a pile of good old cash.

Our total time to payoff the mortgage was 995 days.  Honestly I did not think we were going to make the 1000 day mark.  A bonus came through at the perfect time and we also pulled a little money from savings to make that one final payment (hence the 100%+ percent of take home pay in the graph below).  Check out the final graphs below:

mortgage030116

mortgage030116percentoftakehome

The moral of the story?  Long, consistent positive actions eventually lead to awesome results.  Looking at that graph above makes me happy but it also makes me sigh and shake my head – it felt like forever! I know it was only a little less than three years, but it felt like we were constantly shoving money at this thing and that it would never end.

I think around the halfway mark was when things started to click that we were actually doing something meaningful.  The mortgage balance was down considerably, and we were starting to see real progress.  At the beginning of this year, the light was at then end of the tunnel.  Thankfully, throughout the entire month of February the stars aligned and we were able to combine: a bonus from my job + some extra cash in our accounts + radically reducing our spending temporarily, in order to make one big final payment.

Wow, this feels great, I guess I don’t know what else to say.  It’ll all probably hit Mrs. Mase and I later this month.  As for now, we’re going to go to bed in peace – finally a debt free household 🙂

Stealthy Neighborhoods

I have been thinking during the past week a lot about the topic of being stealthy while growing and maintaining one’s wealth.  Although we’re not rich (yet), I can see a time in the not-too-far future where Mrs. Mase and I will have to intentionally make strategic decisions with how we live our lives so that not too much of our private financial business is revealed to others.  We have it easier than a lot of people – neither of us are doctors, lawyers, financial planners, etc. so there are few social pressures or expectations around dressing a certain way all the time, driving a luxury (or at least newer) car, or living in a fancy home in a very fancy neighborhood.

That’s the good part.  The trick comes in when you want to enjoy a certain level of lifestyle – I know there is a point in my life when I do want to charter a private jet.  I do want to set up scholarship funds that help thousands.  I do want to own very nice things.  I’d be lying if I said material wealth was not a motivating factor in wanting to be rich.  Although it is not the only factor, of course, it is something we aspire to.

Maybe I’m getting ahead of myself, because we are definitely not rich yet.  I’d say we’re solidly stable and growing, which is a great feeling, since just a few years ago we were in a very different place.  I think one of the reasons this is starting to come into my mind is because there are already certain topics that I know would feel awkward or uncomfortable discussing with people – paying off our mortgage for example.  With the exception of one or two very close family members, nobody will ever know (at least, that’s the intention).  Knowing the personalities of people I know and associate with, there are just too many potentially negative consequences of even casually mentioning it in a conversation.

I think the best way to go about it is to keep your wealth to yourself.  There are many bloggers and gurus out there who gladly share all of their financial info on the internet for the sake of complete transparency, and I respect that.  People benefit from real-world numbers.  But putting my net worth and income out there for everyone to see is just something I don’t know if I or Mrs. Mase will ever feel comfortable doing!

This brings us to the subject of the opposite of stealth wealth – those who are completely open with their spendy lifestyles.  From the late Dr. Tom Stanley’s research, we know that the majority of people who live in very nice houses in the fancy parts of town are in fact, not millionaires, but simply high income earners who have enough cash flow in the here and now to leverage their lifestyle.  It’s one thing to read this in a book, but another to see it in real life.  Just the other day Mrs. Mase shared some interesting data with me about a few of the neighborhoods in our area that are well known as “good” places to live.  Neighborhood A is considered the Ritz Carlton of the city, where the perceived “rich people” are said to live.  Neighborhood B is considered to be another very nice neighborhood, but not as glitzy as Neighborhood A.  Here are the average home values and household incomes of each that my wife found:

Neighborhood A

  • Median Home Value: $695,435
  • Median Household Income: $177,507
  • Median Home Value to Income Ratio: 3.91

Neighborhood B

  • Median Home Value: $323,003
  • Median Household Income: $96,564
  • Median Home Value to Income Ratio: 3.34

Overall St. Louis Area

  • Median Home Value: $108,100
  • Median Household Income: $34,488
  • Median Home Value to Income Ratio: 3.13

Neighborhoods A and B are certainly well above average on the income scale, especially compared to the local St. Louis region as a whole.  Both probably are full of dual income households made up of professionals and small business owners.  The thing that gets me is people in both neighborhoods are generally less conservative with their housing than your average St. Louis household is.  Even though the folks in Neighborhood A make twice as much as those in Neighborhood B, there are homes are more than twice as valuable.

This higher than expected home value to income ratio suggests that the high income earners in Neighborhood A are mostly “income statement affluent” types, who feel they should be able to leverage more money than the average person because they make so much more.

In talking with Mrs. Mase about where our next place to live would be (we will inevitably leave our current neighborhood b/c of space constraints and the availability of certain types of properties), we’ve thought about living in a place like Neighborhood B.  It is solidly more affluent, and has a high but not shockingly high average household income.  I say that last part in particular to highlight how important we feel it is to own a home in a neighborhood where our personal household income is higher than the median, at least to some degree.  This is important to us because, as Stanley’s research points out, where you live have a heavy influence on your spending patterns.

If we moved to Neighborhoods A or B our spending patterns would likely increase without us knowing it.  This is the classic “keep up with the Jones’ syndrome”.  Sure, we all have ultimate control over what we spend and what we do not.  The thing is though, it’s a lot harder to avoid splurging if you constantly see new cars in your neighbors’ driveway.

We’ve also had our eye on houses in Neighborhood C.  This neighborhood is a solid, working class neighborhood that isn’t flashy, but boasts some beautiful homes with a wide range of values.  There a businesses constantly moving in and setting up shop, it’s walkable, etc.  Here are the housing/income stats:

Neighborhood C

  • Median Home Value: $121,912
  • Median Household Income: $35,175
  • Median Home Value to Income Ratio: 3.46

Ahh, now this is a neighborhood that is more indicative of the St. Louis region as a whole.  The average home value to income ratio is a little higher than I’d like to see, but the median household income and median home values are low enough in an absolute sense that I’d feel more comfortable moving into this neighborhood (in some ways) than into Neighborhood B.  It’s not flashy, would still provide great housing options, and has some other perks.

Needless to say, the point of this discussion is simply to recognize that every neighborhood has it’s own characteristics, and that those who hide their wealth are much less likely to live in flashy neighborhoods.  I think I read that the vast majority of millionaires live in homes values at less than $350,000.  That seems about right.  It’s big enough to get a nice amount of space, very solid features, and a good location (at least in the St. Louis area!)  However, it’s not so big and glamorous that people look at it as they walk through your doorway and immediately start asking for handouts.

We Changed Banks…Again

Bank-sign-3Over a year ago, we rejoiced triumphantly as we left the discombobulated mess that is Bank of America and went to a smaller, regional bank instead.  BofA was so bad, they would charge us fees month after month for no reason, even though their representatives would assure us in person that these fees should never be charged.  Because every time I called for help I got a different person, our problem would only get solved temporarily, and with a lot of twenty minute phone calls to go along with it.

At the bank we’ve been at for the past year, things had been going great.  Both Mrs. Mase and I knew all of the employees at our local branch, and they took good care of us.  Before long, things worked like clockwork and we didn’t have to deal with big bank problems anymore.  Or so I thought.

Even though we went a smaller bank that was more personable, we still went to one that had corporate strategy and stockholders as their primary focal point – not necessarily the customers.  Now, I don’t want to speak badly about them because they really were/are a decent bank, it’s just the series of events that forced us to leave happened to occur in a sour kind of way.

We got a letter in the mail near the end of last year stating that our particular bank branch was being sold to another regional bank, and that they were going to transfer over all of our accounts in mid- January.  After that we just started getting new check books in the mail.  There were no phone calls or follow up letters from the people at this new bank.  The people at the old bank had no idea what was going on themselves and couldn’t provide much useful information about the transition.  This was problematic because the next closest branch was fairly out of the way from where we live and where my wife works.  Again, we felt like we were just tossed around in the sea of the bank’s customers as one of many, and we certainly didn’t feel appreciated as customers anymore.

In looking for a new bank to house our family’s accounts,  we automatically ruled out any of the big banks.  Our past experiences and those of family and friends have shown us that that’s not the way to go if you desire a more personal (read: at least minimally human) banking experience.  Going to another regional bank seemed like an option, but what was to stop them from selling off their branch to a competitor too?  Granted, the probability of this occurring is relatively unknown, but we didn’t want to take the chance given the annoyance involved in shifting all of your money to another institution.

Next we explored online banks, which we considered as a feasible option.  One of the top contenders was Simple, an online bank based out of Portland.  After hours of research it really seemed like it might be the bank for us.  That was, until we learned that they do not offer joint accounts.  For us, this was a big deal, so we continued the search.  Also, the notion of not being able to withdraw cash easily on a regular basis made us think twice about online banks.  Although the world is moving toward exclusively digital transactions, we’re just not there yet.  When the day comes that the Federal Reserve stops printing physical money, we’ll deal with it.  Until then, cash is king!

We ultimately decided on going with a local credit union that has a branch that is a two minute walk from our house.  The convenience, obviously, is unparalleled, and the staff is friendly.  When can still go whenever we need to withdraw cash.  Most importantly though, the credit union has been around since the 60’s and is a credit union, so by definition we are the owners (technically, members).  This means slightly higher interest rates on deposits, more personalized service, and as close to guaranteed stability as you can get.  As long as the general population in St. Louis remains stable and growing modestly, there should be a reasonable pool of the population who can do business with the credit union.

I used to worry a lot about joining a credit union because the local nature of it worried me.  With the big banks, I liked knowing that I could travel to another city, in a completely different part of the country, and still be able to go to my bank’s ATM or branch.  With technology in 2016 though, this definitely isn’t a problem for most credit unions because of the CO-OP network.  Also, if we ever do move from the area, we’ll just switch to another credit union in the new location.

If you aren’t banking with a credit union, I would suggest at least looking into it.  You never know what the other side of the fence looks like until you take a peek.  Because I had never had experience with credit unions, I simply went along with what other people did – get an account at one of the big banks.  Sure, those guys tend to have fancier apps, bigger buildings and lots of money to loan you – but do they actually treat you like a person?  Do you they really give you the most competitive rates?  It’s important to continually ask yourself these questions.  After all – this is your money we’re talking about here!