Car crap

[judecorp]

So the Nissan dude finally got back to me and said that they aren't getting any new cars for the rest of the month and said we'd have to wait. I told him we couldn't wait that long and he said he would get back to me. So I'm starting to think the Versa is a bust. We can try to call a couple of other dealers but no one seems to have them and we can't wait a month for a car. So frustrating. I hope they don't give us a hard time when we go get our deposit back.

We're in the process of househunting and honestly, I don't know how people can afford to buy houses. We're actually looking at cheap houses (for New England) and the monthly payments, with taxes, will be pretty close to what we're paying now, probably. I thought we were moving to SAVE money. Argh. So now Jen will be making less money and we'll have more expenses. Hopefully I won't be taking a pay cut, too, or I'll be working two jobs and the babymaking will go out the window. Phooey.

I'm sure this is just stress talking but right now I just think that I was foolish to think that things were starting to work out. Bleh. We need a car and a place to live, STAT!

p.s. I'm glad that House and SVU are back into new episodes.

Comments

[tool-of-satan.livejournal.com]

You know that you can deduct your property taxes from your federal income tax, and (at the moment, anyway) your mortgage interest as well, right? So, if the mortgage plus property taxes equal your current rent, you ARE saving money, since your income tax goes down. And as noted by others some of what you are paying becomes equity you get back eventually.

[charlwoo.livejournal.com]

Now that's something I didn't originally account for -- that mortgage INTEREST is a tax deduction.
Other expenses of a home include a monthly water bill (over $100 for me) and home maintenance. You also assume some risk if property values decline (likely over the next 2-3 years). Also, your equity is locked up and inaccessible unless you take out a HELOC, which you pay interest on while paying it back. And in Massachusetts, you can deduct 50% of your annual rent up to $3000 for a state income tax deduction. Finally, remember that for any tax break, you are still spending money, you're just not paying tax on that money that you spend. For example, if I spend $1000 from my take-home pay and it's all tax-deductable, that's like I've spend $1000 from my gross paycheck instead of my paycheck after taxes -- if I'm taxed at 33%, I've really spent $666 from my take-home pay instead of $1000.
Here are the factors that I can think of so far in figuring out the break-even point for buying versus renting, no PMI, assuming a 33% federal income tax rate and a 5% state income tax rate. I'm sure I'm missing some expenses on both sides of the equation, any feedback would be much appreciated! All number are annual (for example, water bill would be the total annual water bill).
Mortgage interest + property taxes + water bill + maintenance - (interest * .33) - (property taxes * .33) = rent - (3000 * .05) + moving costs
So, let's take some reasonable (as best as I can tell) numbers and plug them in:

Rent at 1400/month. Move once every two years costing $2000 to move.

Mortgage interest + property taxes + water bill + maintenance - (interest * .33) - (property taxes * .33) = 1400 - (3000 * .05) + 1000
Mortgage interest + property taxes + water bill + maintenance - (interest * .33) - (property taxes * .33) = 16800 - (3000 * .05) + 1000
Mortgage interest + property taxes + water bill + maintenance - (interest * .33) - (property taxes * .33) = 17650

house cost = x
mortgage interest = 5.8% of mortgage (bankrate.com, assuming one can get the lowest rate, compounded annually which might not be the case)
property taxes = $11.73 per $1000 of assessed value (www.northamptonma.gov), assume property is assessed for mortgage - closing costs (~1% of mortgage)
water bill = $100/month (for me at least)
maintenance = 2% of mortgage (estimating for a home that need regular maintenance)

(x * .058) + {[x - (x * .01)]/1000 * 11.73} + 1200 + (x * .02) - [(x * .058) * .33] - ({[x - (x * .01)]/1000 * 11.73} * .33) = 17650

solve for x.

(x * .058) + {[x - (x * .01)]/1000 * 11.73} + (x * .02) - [(x * .058) * .33] - ({[x - (x * .01)]/1000 * 11.73} * .33) = 17650 - 1200
(x * .058) + {[x - (x * .01)]/1000 * 11.73} + (x * .02) - [(x * .058) * .33] - ({[x - (x * .01)]/1000 * 11.73} * .33) = 16450
.058x + {[x - .01x]/1000 * 11.73} + .02x - .33(.058x) - ({[x - .01x]/1000 * 11.73} * .33) = 16450
.078x + {11.73[x - .01x]/1000} - .33(.058x) - ({11.73[x - .01x]/1000} * .33) = 16450
.078x + {[11.73x - .1173x]/1000} - .01914x - ({[11.73x - .1173x]/1000} * .33) = 16450
.05886x + {0.01173x - 0.0001173x} - ({0.01173x - 0.0001173x} * .33) = 16450
.05886x + 0.01173x - 0.0001173x - (0.0038709x - 0.000038709x) = 16450
.05886x + 0.01173x - 0.0001173x - 0.0038709x - 0.000038709x = 16450
0.066563091x=16450
x= 247133.96

Which means that, with these assumptions, you would be throwing away the same amount of money renting at $1400/month and moving once every other year as you would by taking on a mortgage of $247k. If your mortgage is less than 247k, than you are building equity versus renting at $1400/month.
For me personally, if I were to buy a place, I would also have to factor in the costs of owning a second car as well as gas and vehicle maintenance if I needed a car to commute.

[charlwoo.livejournal.com]

Whups. Ignore this line:
Mortgage interest + property taxes + water bill + maintenance - (interest * .33) - (property taxes * .33) = 1400 - (3000 * .05) + 1000

[judecorp.livejournal.com]

Okay,
1. You are a major nerd with the math. And I love it.
2. I didn't even know you were still out there! Hi!
3. We would be mortgaging less than you say and pay just about that much in rent. So I guess we'd be working out pretty well. Which is comforting.

Thank you. :)

[charlwoo.livejournal.com]

Awesome :)

[judecorp.livejournal.com]

You need a new picture, dude. That wig thing scares the poo out of me. ;)

[judecorp.livejournal.com]

Yes, I know that you can deduct property tax and mortgage interest. In fact, mortgage interest deductions are the single largest Federal welfare programs in the United States! (Go go social work school.) And while I am jazzed about lower income tax, I also know that we have to pay our day-to-days, and that's what scares me... not what might come off the back end at tax time.

I'm sure it will all work out. I'm just SO TIRED of struggling and having us both make together less than most of the people we know make alone.