kingrat | Entries tagged with personal finance

This summer, I received a letter from the I.R.S. claiming I didn't report $426,027 worth of income in 2004, resulting in an additional tax of $150,824 as well as $30,165 in penalties and $19,851 in interest.

My response was to bury my head in the sand, even though I knew exactly what I did wrong. My head wasn't exactly screwed on correctly.

I received a second letter and my deadline is fast coming up.

I checked the items they had listed. Some I messed up on. Some they messed up on. When I fixed my items, I had an additional loss of $863. However, I already hit the I.R.S. limit for my losses that year ($3,000) so I couldn't claim additional money back. The net result is that, despite the I.R.S. claiming otherwise, there is zero change to my taxes to 2004.

Now I just hope they don't fight me on the fixes I made.

I called Fidelity last week. They held my Expedia 401(k). I wanted to roll the plan over into my I.R.A. at RBC Dain Rauscher. Man did they argue with me trying to get me to keep my money with them. Eventually I talked them into closing the account.

I got the check today. They made it out to RBC Dane Raucher. I repeated the spelling for the C.S.R. twice, and he still did it wrong. So either he's a moron, or this is an attempt to delay me getting my money. An extra week for them to re-cut the check is minimum $65 in interest that stays in their pocket, at current money market rates. If it takes longer, they've made $150 because of their fuck-up.

I'm hoping that I can deposit the check anyway.

And they wondered why I wanted to move my money to a different institution.

I started working for Pacific Simulation in April 1995. My first salary was $18,000 a year. However, after a three-month probationary period I got a raise to $30,000. Just barely enough to buy a house. But I didn't have the job history to qualify for a loan. But by summer of 1996 I had a year there, and started looking for a house. Equity, I thought! No more paying money to the evil landlords and getting nothing in return.

By September, I had found the place I wanted, and made an offer. Then I had the laborious process of qualifying for a loan. I had the money. Turns out the bank Latah Federal Credit Union wanted an extreme amount of documentaiton. Primarily, they wanted to make sure I wasn't borrowing my down payment. And they wanted to make sure that, even though I had a bank statement covering the down payement, that I still wasn't borrowing the down payment and leaving my bank account untouched. So I had to document the trail of money from one bank to another, after I wrote the earnest money check from a different bank account. All that took me nearly two months. But on November 1st, I was able to move into my house.

The directions I gave to people to find the place were as follows: drive to Deary, it's the first house on the left. Deary isn't a big place. The welcome to Deary sign across the highway from my place said population 529. Or maybe 519. I forget. My place sits on about 8 acres of hillside leading up to the town cemetary. I love the space. I could go sit on the hillside at night and watch the stars. Deer and elk would be in my yard in the morning to eat the crabapples. I acquired a dog from a friend, lovingly named Runt-Dog. I put up a rope between two of my trees and hooked his lead to it. He was an Alaskan Husky. He liked to run. He had about 200 feet he could go. I had to return him though after he made a habit of escaping and eating townspeople's chickens.

While the location was nice, the house left something to be desired. The previous owners said that the basement got damp in the winter. The home inspector said there was probably more water than that. It was worse. In the spring, the water table of the hill pooled against my porous foundation, and the basement would fill with somewhere between 2 inches and 2 feet of water, depending on the weather. One day, I even came home to find the fire department outside my place. My roommate, Chip, had been startled by an explosion downstairs. The basement had filled up with so much water it put out the natural gas furnace (converted from a coal furnace) and the cool water caused part of the iron monstrosity to pop very loudly was it chilled. Thinking the place was about to go up in a ball of flame, he called the fire department before anyone realized what happened. As it was, it wasn't so bad a thing. The fire trucks have pumps. And it took only about 15 minutes for them to pump out the 2 feet of water I previously didn't know the place could contain. The next morning I got a sump pump because the floor drain couldn't keep up.

Other things were wrong with the house. No insulation. At one point or another, all three sources of heat broke. Luckily, not all at the same time. I got field mice. As problems go, that wasn't so big. First I got Eve to take care of that, and then when she got run over, Guinevere replaced her as my mouse-napper. Later, after I moved out, the chimney even fell off.

In May 1998, I took a job in Boise. Thinking I would move back within a couple of years, I decided to rent the house. The first renter was Nikki something or the other. She went by Jewl online. And sometimes in person too. See, not just goths like to rename themselves with stupid made-up names. She was a friend of a friend. I got the first month's rent check before I left, and never saw another dime from her. Not only that, she ran up a $500 phone bill in the month after I was there before I had it shut off. She was gone by the end of the summer, and she left the place trashed.

My next set of renters, I don't recall how I acquired. Again, I got the first month's rent from them. The agreement I had with them was that I would knock off any work they did on the place off their rent. I never saw another check. They ended up trashing the place as well.

I left the place empty for three months. I contacted a realtor and started the paperwork to list and sell the place. Then I got a call from Marama Platt. She was a friend or co-worker or something like that. I forget exactly. She needed a place and wondered if she could rent my place. So I agreed, and stopped the realtor stuff. She and her sister lived there for a year and a half. I saw less than $1,000 in rent from them. And then in the dead of winter they moved out without telling me. First I knew of it was when I got a call from the City of Deary about a $300 water bill. Turned out they left all the faucets off the my pipes froze. The place flooded. My neighbor found it and shut off the water when the city came out to see what was up.

I left the place empty since then. Occasionally the town high schoolers break in and drink in there. The chimney fell down. People tried to run off with property. I was mostly hoping the place would burn down and I'd get the insurance and be done with it.

I started looking at selling it again a couple of years ago. Contacted the realtor, but when I got the paperwork to do the listing, I never opened it. Couldn't face what a monumental idiot I'd been for not selling immediately when I moved. Turned out when I opened the envelope last year that they figured they could sell it for $80,000, if I fixed a bunch of things. I paid $100,000.

Like being unable to open the envelope, the house became the pink elephant my friends weren't to talk about with me. Jason brought it up occasionally, and I'd give very short answers along the lines of I don't want to talk about it. He'd occasionally suggest we go over to the house. I always said, I don't want to. The ostrich approach doesn't solve the problem of course, but it does have one benefit: I wasn't as aware of the axe aimed at my neck and thus I didn't fret about it as long as I didn't think about it.

Twice over the last couple of years I got contacted by people who wanted to rent. In the first case, his income seemed sketchy just from his description. The second time was this spring. The girl's income seemed solid. I didn't need the money from the rent. Been paying the mortgage despite it sitting empty. If I was gonna rent the place to someone, I wanted someone who could support themselves on the theory they'd take better care of my house than the previous renters. And they'd be less hassle. The lack of hassle was really the driving thing. She sent me her particulars, and I was about to start calling them to verify when I looked at her supervisor at her job. Same last name. She worked for her mom. Who she also was living with. Who wanted her out of the house. Nope, couldn't rely on her mom to tell me the truth about her income. Then I got a called from the neighbors: was I going to rent to J? They were quite upset as she was a local druggie and they didn't want that near their kids. I told them I wasn't going to rent to her, as I was unsure of the income. In the chit-chat, he expressed an interest in buying the place.

Which brings me to the point of my story. It's sold. It's done. I have a check in hand. He's bought the place. I can pull my head out of the ground. Out of my ass, if you will. I took a bath on the place. But I did get more than I owe, so that's a plus.

However, that's pretty much my last tie to the area there. I'm assuming I won't ever move back now. Which saddens me, because it's a nice area. Maybe some day I'll go back to school and use my University of Idaho credits. But at this point, I'm assuming it's unlikely. Perhaps I'll visit every so often just to play pool at Mingles, and to pick up a book or two at Bookpeople. And maybe stop in at Extended Hand on Sunday nights if it's still running.

So now I have $700+ a month extra, starting next week. What to do with it? Pay off my car sooner? I got sugar baby offers the last time I posted something about this; take them up on it? Maybe I'll use it to finance a trip overseas? Pay to remodel this place a bit? Get some new computer equipment? Invest in my retirement? I got 6 days to decide what to do with the first one at least.

Current Mood: relieved

I have a verbal agreement to sell my house, and the buyer has his financing put together.

I mail off the written agreement on Monday.

Closing should be in 2 or 3 weeks.

What can fuck this up now is if he changes his mind, or someone has made a claim against my title since I bought the place. Be odd if I didn't know about that. I doubt he'll change his mind given that he took out a second loan on his current house and a personal line of credit already. This way he does it without a mortgage, and technically will own the place free and clear with no encumbrances. So then he plans to take out an equity line of credit against my house and pay off the personal line of credit. All without an official mortgage. Pretty slick.

I will reveal the sordid tale later. For now, I just want that posted so people can pull the comment up if they Google on that company.

My father died in 1972. He left me a bit of money. Not a lot, but some. My mom invested this money, and it's value reach about $40,000 by the time it was turned over to me in 1993. I had some shares in Microsoft, and some investments in mutual funds offered by the American Funds Group. I used the mutual funds to pay for some of my college expenses, and I forget what else. I didn't touch the Microsoft stuff. By 1999, my Microsoft stock was worth over $200,000. Then they lost their monopoly case. Today, my Microsoft stock is worth something like $70,000.

Why do I bring this up? Diversification. Everything was in one basket and when that basket went down I went from well-off to large savings. It could have been worse.

I've been making a point to invest my Expedia stock option dollars differently. Mostly I have it in exchange traded funds (E.T.F.s, tradeable mutual funds). Some in E.T.F.s for international stocks. One is a junk bond E.T.F. One is a real estate E.T.F. Three U.S. index E.T.F.s (S&P smallcap 600, Dow Jones, Amex Intellidex). I only have three individual stocks. The Microsoft, Schering Plough, and some IAC (which is the parent company for my employer). A lot of my co-workers got their stock options and converted it into Expedia stock. I sold most of it and spread it out. Basically, it'll take the entire market as well as the Asian markets going down for me to drop. I lose out on the possibility of buying into the hot stock and seeing my money go up 300% in one year, but I also don't have to worry about IAC getting caught in some sort of Enron/Worldcom/HealthSouth/Adelphia/Qwest/Tyco problem and me losing all my money.

I've been looking at oil recently and gas prices. Demand is going to grow, and world oil production is near capacity. And building up new production capacity takes time. Years. Which means oil prices are only going to go up for a while. So how do I get in on that? Could invest in oil companies. There's a couple of commodity based mutual funds as well. So I'm doing something like that. My broker pointed out the Rogers Raw Material Fund which buys commodities futures, with something like 40% of the commodities being petro. It's not a mutual fund and not regulated like one, so I'm a bit worried about that. But the mutual funds cheated despite regulation. This one is an unregulated limited partnership. I spent two days reading the prospectus and the partnership agreement, trying to decipher all the stuff. Nothing horrible, though they do dispense with some arms-length requirements that would be in place in a regulated environment. For instance, rather than go with the cheapest subscription manager, they use Uhlmann Price Securities which is owned by a manager of the fund. The prices they pay to U.P.S. might be cheapest, they might not. Don't know. I know the limits of the fees the Rogers Fund charges. So I'm covered in that respect. Was looking for the fund to do things like funnel trades through affiliated brokers who give them kickbacks. That's not allowed in the agreement.

Anyway, as I said, it's an attempt to diversify from stocks. But it's relatively risky. I feel like a day trader, or like i'm investing in a hedge fund or something. I stopped at my broker's office this morning to sign the paperwork on it. One of the items in there is something to verify that I am able to take on the risk inherent in a hedge fund or other alternative investment. You can't invest if you are putting in all of granny's nest egg, for instance. On the one hand, I want to run back and get my money back cause it's stepping into something that's not safe. On the other hand, I feel like a big shot investor for stepping into this world.

The guy in Idaho will have his financing together next week. Not sure how to go about actually selling it though. His financing doesn't include a mortgage. He probably should get title insurance and pick an escrow agent to handle the closing. I bought the place with a loan, and the real estate agent handled everything. My condo was done sans real estate agent, but I have a mortgage so we got an escrow service to do all the closing on that. In this case, we don't have either.

Nevertheless, I'm about to end that 9 year experiment.

That'll be another $700 per month I can spend.