Budget help

[OnMyWay]

5 minutes ago, marine6357 said:

No Jake that is correct $500/month it really should be more because I actually pay $3200 a year in school taxes and another $3150 in county taxes per year. I live in one of the highest taxed counties in the US. That is the biggest reason I am wanting to get out of this state and country. Sick of forking over almost 22% of my monthly income to the Government. Not including sales tax on goods and services of 8.75% also where I live with have some of the highest percent of fuel taxes in the country. 

I pay about the same property tax on my Florida rental house.  Property insurance is high too.  However, Florida has no state income tax.

Are you going to rent the house?  If so, you have some other options for taxes and your situation is similar to mine.  If renting, I might offer more advice.  You don't have anything there for house maintenance and repairs.

For budgeting, I keep my U.S. expenses completely separate from my PH expenses.  Easier to track.

 

 

 

[marine6357]

39 minutes ago, OnMyWay said:

Are you going to rent the house?  If so, you have some other options for taxes and your situation is similar to mine.  If renting, I might offer more advice.  You don't have anything there for house maintenance and repairs.

Yes I have already lined up a young couple who are friends of mine we are going to do a rent to own contract. So all maintenance and repairs will be covered by them. We are doing a 5 year plan with 60% percent of rent going towards the principal and other 40% going for rent. At the end of 5 years they can either convert to conventional mortgage or we can adopt a new RTO plan. It really is a good plan for both of us as they are locking in the sales price of the home at today's figures  and hopefully get the benefits of a rising housing market. I am selling to them at $200,000 so at the end of the 5 year period they will only owe $161.300 for the remainder of the purchase price. Even at a increase of home value of 5% the house would then be valued at $210,000 so they would have equity of approximately $48,700. The way I look at it this is a win-win situation for both of us. Also if at the end of contract or default of terms they receive no money back from rent paid. So it really is in their best interest to keep the contract intact.

Edited January 5, 2018 by marine6357

[OnMyWay]

1 hour ago, marine6357 said:

Yes I have already lined up a young couple who are friends of mine we are going to do a rent to own contract. So all maintenance and repairs will be covered by them. We are doing a 5 year plan with 60% percent of rent going towards the principal and other 40% going for rent. At the end of 5 years they can either convert to conventional mortgage or we can adopt a new RTO plan. It really is a good plan for both of us as they are locking in the sales price of the home at today's figures  and hopefully get the benefits of a rising housing market. I am selling to them at $200,000 so at the end of the 5 year period they will only owe $161.300 for the remainder of the purchase price. Even at a increase of home value of 5% the house would then be valued at $210,000 so they would have equity of approximately $48,700. The way I look at it this is a win-win situation for both of us. Also if at the end of contract or default of terms they receive no money back from rent paid. So it really is in their best interest to keep the contract intact.

I also have my rental on a lease option plan, due in September '18.

Do you have a mortgage?  Those seem to be super good terms for the buyer.  With those terms, you should be charging much higher than market rent.  With my house, I charge about 20% higher than market rate and that is about the amount they get towards the down payment.

Statistics show that 90% of lease options or RTO do not close but with those terms your buyer certainly has a good shot at it.  What do you consider the "win" for you?  Make sure you write into the contract that they pay ALL closing costs.

Most people who sell a personal residence qualify to get a one time capital gains tax exclusion.  If you turn the house into a rental, you lose that, unless you move back into the house for 2 years before selling.  Something to consider.  That can be offset by other positives of renting and also the tax bracket you are in when you sell.

When you turn the house into a rental, it basically becomes a small business.  I am not a tax professional and you might want to consult with one, if you have not already.

 

[marine6357]

2 hours ago, OnMyWay said:

What do you consider the "win" for you?

Yes the reason for low amount for rent is because the couple that I am renting to have been very good friends to me. They have been there for me and my daughter since before the death of my wife. I count them as very special people in my life and feel this is one small way of showing my appreciation for their love and support thru a very difficult period in my life. So the win for me is I get to keep a special couple as friends and not worry about the financial benefit that I could receive thru other avenues.

2 hours ago, OnMyWay said:

Do you have a mortgage?  Those seem to be super good terms for the buyer.

The house is paid off and has been for a few years so anything I get is a windfall for me. What I am going to do with the amount that is going towards the mortgage will be placed into an interest bearing escrow account so at the end of contract they will receive that money as consideration a down payment towards the new mortgage excluding any interest incurred. Fortunately I have until August 2018 to figure out the logistics of all this, because that is when my daughter will be going to Boston University and they are locked into a lease on their current home until then.

 

Thanks for all the good info and I will accept any assistance if and when questions arise. 

[OnMyWay]

4 hours ago, marine6357 said:

Yes the reason for low amount for rent is because the couple that I am renting to have been very good friends to me. They have been there for me and my daughter since before the death of my wife. I count them as very special people in my life and feel this is one small way of showing my appreciation for their love and support thru a very difficult period in my life. So the win for me is I get to keep a special couple as friends and not worry about the financial benefit that I could receive thru other avenues.

Perfect!  The other great benefit is that you will not need a real estate agent and the 6+ % commission they charge.

 

[bows00]

Personally, I don't think budgets work.  I just have a general idea of how much I spend and make sure I have double that.  

[Clariss Kaye Tejada]

If i where you try to find some condo which is offering rent to own least if you dont to continue buying it its ok with then.

and base to your budget i think you can live hir smoothly unless u have a lot o vises....

[Gerald Glatt]

On 1/6/2018 at 2:34 PM, bows00 said:

Personally, I don't think budgets work.  I just have a general idea of how much I spend and make sure I have double that.  

Must be single eh?  I gave my wife an unlimited budget when we were doing the home....she overspent it/

 

[hk blues]

I guess there are 2 ways to look at a budget - 1) Calculate how much you think you will spend and live within it (or not) and 2) Calculate how much income-savings you have and live within it (no choice not to for this method.)

I'm an option 2 guy - I have finite income and infinite opportunities to spend!

I'd say the key thing is to build a buffer that will withstand inflation/exchange rate variations and the other things that throw spanners in the works.

[bows00]

18 minutes ago, hk blues said:

I guess there are 2 ways to look at a budget - 1) Calculate how much you think you will spend and live within it (or not) and 2) Calculate how much income-savings you have and live within it (no choice not to for this method.)

The budget is taught in many forms, even financial advisors on the radio have differing opinions.  

For example, "Dave Ramsey" will swear by the budget and recommend his app called "Every Dollar" to plan your spending dollars before the month begins.  "Ric Edelman", on the other hand, doesn't believe in budgets because in his opinion, they never work.  I tend to agree with the later.  But I do recommend using the app "Mint" which I use daily to get an instant look at my finances and net worth.