Tuesday, January 22, 2013

An Offer

Though I've never explicitly stated it on either of my blogs, my wife and I hope to eventually move away from our current house and town to a quieter location out in the woods somewhere.  We'd like to have a large chunk of undeveloped land (preferably forested) to go along with a modest house, tucked away into a quiet corner of the state, away from neighbors, crowds, and traffic.

Though we haven't mapped out a specific plan to achieve this dream, my own preference would be to live mortgage-free in our current house for several more years as we continue working, saving, and investing.  Once we have enough income-producing investments, I'd like for us to scale back our work commitments and look for a way to transition to our future house in the woods.  I'd be open to either selling our current house or renting it out depending on the market conditions at the time, though at this point I think selling would be my first choice.  The sale proceeds could then be used to purchase the new property, using other saved money if needed to avoid taking on a mortgage.

Recently we noticed a property for sale in a location near some relatives.  The house and accompanying woods matched our dream well enough that we decided to explore it as an opportunity to get a head start on our next stage of life.  Unfortunately the seller was asking what in our opinion was an unreasonably high price -- even higher than what it last sold for in 2006 at the height of the real estate market in this part of the country.  Furthermore, the house had not seen any improvements recently, and was in need of maintenance in a few key areas like the roof and the furnace.  After discussing these concerns with our real estate agent, we decided to submit a low offer to see if the seller would be willing to come down in price.

Unfortunately the seller was not willing to even submit a counteroffer, but encouraged us to submit a higher offer of our own.  We decided against doing that.  While the property was nice, it is only a matter of time before the next owner has to spend some serious cash on upkeep.  Because we hadn't been actively seeking to take the next step in our life at this point, we decided not to stretch ourselves thin.  Potential sale proceeds of our current house wouldn't cover even the lower price we'd be willing to pay for the new property, so we would have to take out a mortgage for the difference.

We told the seller that the ball remains in his court.  If he ever decides to resume negotiations, we'll be willing to continue discussion at that time.  Until then we'll keep saving and investing our money.  If someone else comes along and decides to overpay for that property, so be it.  We'll find another one when the time is right.

Even though we came away empty-handed, I'm glad my wife and I had the opportunity to discuss our goals in more concrete terms.  When the next opportunity comes along, we'll be more prepared to act.

Thursday, January 3, 2013

Rollover

My wife has held several different jobs since we've been married.  Five years ago she left a job with a workplace savings plan similar to a pension.  We received statements from it for the first two years after she left that employer, but they didn't send us statements for the next two years.  I surprisingly had forgotten about its existence (very out of character for me) until we received another statement last week with a letter explaining the reason that statements had not been sent out for the previous two years (something about changes to the plan that made them not want to send any correspondence until it was finalized).

After getting this reminder, I dug into the details a bit more and learned that after two years of leaving her former job, the plan ceased to pay her any more interest (one of the changes they made recently).

What this means is we've had retirement assets sitting in an account for my wife earning absolutely nothing for the past three years.  I'm a little irritated at myself for not following up on this sooner.  The total value of the account was not such that we missed out on a huge chunk of earnings, but it's certainly a non-trivial amount that we could have put to better use in another type of investment.  Regardless, my wife is taking steps to roll this account over to an IRA in her name so those assets can start working for us again in the near future.

Continuing the recent trend of my wife's increased participation in the details of our personal finances, I asked her if she wanted to take responsibility for deciding how the rollover cash is invested once the transfer is complete.  She told  me she'd be up for the challenge as long as I am willing to talk to her about her ideas (which of course I am).  I'll be interested in following her decision process and seeing her take a more active role managing part of our long-term savings.