Lazy Man and Money

You CAN Go Home Again

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San Francisco Bridge

[Today’s article is more of a journal entry than a personal finance article. We’ll back to personal finance later this week.]

There’s a famous saying book that states you can’t go home again. I wonder if those people have two “homes” like we do.

My wife’s annual pharmacy convention is in our other home, San Francisco, this week. I made the trip with her while the grandparents watched the children.

When we got there, we both had the same reaction, “Why did we ever leave this place?”

One of the great things about blogging is that it serves as a journal. I can look back on how I felt about moving to San Francisco in 2006 and how I felt about returning to Boston in 2012.

The simplest answer was that we wanted to be closer to family and friends… and it was much more affordable. I thought Silicon Valley real estate was in a bubble in 2006. The Zillow price estmate of the place we were renting went up 50% since we left in 2012. It would cost 1.2 million to buy it now and it is about 1200 sq. ft with no real yard. Crazy!

One of my favorite things about travel is that there’s no “Dishes Effect.” That’s what my wife and I call the day-to-day mundane chores that prevent you from doing really interesting things. There’s probably some museum or something in your town that you’ve never been to. You may drive by it every day, but you never get the chance to go inside.

Well on this trip, we did everything. We met up with 4 separate groups of friends from San Francisco… and the friends from the annual pharmacy convention.

Se started off the week with wine tasting in Santa Cruz. We bought a bottle for our son to drink in 17 years when he’s 21. It was from the year he was born. Understandably, he’s not too excited about it now. We went on the Santa Cruz boardwalk and talked to the seals. They were saying a lot of things, but the language barrier was too much.

We got up to Golden Gate park which was much more magical than when we had the Dishes Effect. We did the California Academy of Sciences, which was amazing (and expensive at more $30 a ticket.) I wish we had the kids with us. We’ll have to go back with them. I’ll also have to see how to get some kind of discount.

One night we did dinner at Harris’ Restaurant, which is a great steakhouse. We then went to Buena Vista where the Irish Coffee was invented. Our Uber driver even brought us down the winding Lombard Street. I had my first coffee of any kind. Then we went to the Tonga Room at the Fairmont Hotel. (We had done that before.) We finished up the night (nearly 2AM at this point) at Bourbon and Branch… an old fashioned hidden speakeasy. We were only able to find the secret word for the library (it’s “books”) and not the other hidden rooms. Next time we’ll make a reservation online. They had the best bartender I’ve ever seen. I liked when set an orange on fire and squirted maybe a single drop in the drink. I’m not sure if it made the drink any better, but it was a great show.

The only negative was the mental illness in San Francisco. It’s a lot worse than I remember and it was pretty bad before. Someone said that Nevada gave a bunch of their patients one-way bus tickets. I don’t know how true or not that is.

By the end of the trip, we were trying to figure out how to move back there. My wife says she could just show up in her old cubicle and work like nothing ever happened. We’d probably have to live in the military housing in Mountain View… if Moffett even still has that available. We weren’t realistically considering moving back. The same reasons that brought us east are true today.

What You Can Learn from the 4 Events in 2012 That Changed my Financial Life

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I’m rarely one to follow the pack. So when everyone publishes a review of 2012 in the first week or January, I say, “Let’s make em wait until February.” Also, rather than just give an update of what I did financially in 2012, I’m going to dig a little deeper and get a little Fat Alberty on you delivering a lesson or two.

1. Having a Baby

One of the biggest events of a person’s life is when they give life another. This past year I got to experience that. And while it is fun to joke that Little Man is a nice little tax deduction, he’s a whole lot more than that. Having looked at the the cost to raise a child in the United States it looks like this USDA calculator estimates our costs to raise Little Man will be $28,500 a year.

We are only a little more than four months into Little Man’s life. I feel safe in saying that we are going to come in far under that… at least for the first year. Here’s a breakdown:

  • Housing – The USDA estimate is that it will cost us another $10,600 in housing. I don’t think our housing costs have gone up that much, but it’s hard to say since that’s related to the #2 event (our move).
  • Food – The USDA estimate is $2,450. I think we are under that, but it is hard to calculate because right now he’s on breastmilk. That indirectly leads to his mom eating more food.
  • Transportation – There’s an estimated $3,125 in transportation costs. We bought a new car due to our move to Boston, and part of that was because I felt I needed a safer car for Little Man. On the other hand, my 12 year old car probably need replacing soon anyway.
  • Clothing – Due to the generousity of friends and family, especially my own mother’s gift of amazing bargain hunting, we shouldn’t have to buy clothes for the next five years. The USDA budgets $1438 and I think we’ll avoid much of this expense.
  • Health Care – One of the best benefits the military has going is its health care. I think we’ll save a vast majority of the $1113 that the USDA has allocated. The exception is out of pocket things like baby Tylenol and the like.
  • Child Care and Education – The USDA estimates $7,538 and this is where my blogging career really pays off. I can be that child care provider. I had estimated day care for Little Man to be around $15,000 a year. Since that’s after-tax money, it’s almost like adding $20,000 in salary. However, as it turns out we might be able to get almost full-time coverage for $6,000 at a military base. We’ll see if that comes to pass.

I think the lesson here is that raising a child can be done on a budget. It certainly helps to plan ahead (be a blogger), have a great support system (thanks Mom!), and get a good breaks (military benefits rock). Oh and if you are going to be a new parent soon, here’s some of my favorite baby gear.

2. Moving Across the Country

This year we moved back to Boston, which has always been where my heart is.

One thing I can say about Silicon Valley. Having lived there, I understand how a foreigner would come to United States thinking that the “streets are paved in gold.” Silicon Valley is a lot like that too. There’s a ton of money due to all the successful technology companies such as Google and Apple. I don’t know if it is the money or great schools like Stanford, but there are a ton of very smart people there.

Not only is it a land of opportunity, but the three feet of snow that we are getting right now in Boston reminds me how wonderful the weather is in San Francisco.

As wonderful as that is there were two major downsides for us: 1) Our friends and family are in Boston 2) The price of housing is 3 times more than what we can get in the Boston area. That’s literally a million dollar difference.

It’s not like Boston is a horrible place either. With Harvard and MIT, there are some smart people here too. I’ll probably always wonder what life would have been have been like, not just for me, but for Little Man, if we stayed in San Francisco.

What’s the lesson here? It’s probably nothing new, but geography does play a huge role in personal finance.

3. Refinancing Two Mortgages

Lost in the birth of baby and the move back to Boston is the financial move that flew under the radar. I was able to use the government’s HARP program to refinance two mortgages. With the drop in value of real estate over the last 8 years, these properties no longer had 20% equity and we were paying on average 6% interest on them. We were able to keep the payments close to the same and change 22 year mortgages to a 15 year one. The reason we were able to do that? The interest rate of 3.5% on a 15 year lowers the payments to what we were paying on the 30-year at 6%.

It was extremely difficult, especially because I’m a self-employed blogger. I might as well be a third-class citizen to mortgage underwriters. The hours on the phone and email really paid off…

The result of eliminating 7 years of mortgage payments on two properties is tremendous. Some rough math tells me it will save us $225,000 in mortgage payments.

The lesson here is to take advantage of these low interest rates if you can.

4. Buying a New Car

In any other year, buying a car would trump the money moves. After buying a house, it is usually the biggest purchase someone makes. One month in, I still have no regrets on buying my Subaru Forrester.

Wait, maybe I do.

The last lesson is that before you buy a new car, look at what is coming down the pike in the near future. It’s something that I think about whenever buying technology, but I somehow forgot about it with buying a car. I think it was because I was going in with the intention of buying a slightly used car and saving on depreciation. However, they made the new car a lot better deal because they had dealer incentives and 0% financing for 63 months.

It wasn’t until a few days later, I found out that they are coming out with a 2014 Forester in a couple of months that is going to get 5 miles more per gallon. As it turns out waiting wasn’t a good fit for us because we need to snow-worthy cars in New England, but doing some rough math, the money that I saved with the 0% financing is about what I was likely to save on gas through the life of the car.

I might still come out ahead if Subaru bumps up the price of the 2014 Forester as many expect they will.

Putting it All Together

Most years, I don’t make too many big financial moves. Obviously some of them like taking a new job or having a baby are common life milestones. Other things such as taking advantage of historically low interest rates (particularly for mortgages and cars) fits in the category of making the most of opportunity presented.

Now it’s time to take a year to settle down.

Financial Analysis of Moving From San Francisco to Boston

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DICKSON, TN – Last week, I mentioned that I’m moving from San Francisco to Boston and focused on the emotional change. With all that mamsy-pamsy junk out of the way, let’s dig into the mathy, financial fun side of the move.

Straight Dollars and Cents

Many people take a new job because it will pay them more money. At least that’s usually a big factor. That’s not the case here. We’ll be losing about $500 a month. A portion of my wife’s military pay is pegged to the costs of living in an area. San Francisco is one of the highest, if not the very highest on the scale. Boston is still very high on the compensation list.

On the other hand, unlike many military moves, where the spouse (i.e. me) has his/her job completely uprooted, all my income should remain unchanged.

As for the actual costs of moving, the military foots most of that bill. They even gave us some cash for incidental costs incurred in moving. The only thing that I can think of is that we are giving up some Groupons. We might use those next year (minus the promotional value) when we plan to come and visit.

Costs of Living

The cost of living in Boston and where we would be living is considerably less than San Francisco. Here’s one example: our 1400 sq. ft home with a small patio was costing us $3200 a month to rent… and that is a bargain compared to the nearly $900,000 it would cost to buy it.

It is that reality that put a swift end to any thoughts of living in San Francisco permanently. When my wife retires from the military, her housing allowance disappears… and blogging in San Francisco doesn’t pay more than blogging in Winslow, Arizona.

Opportunities Gained and Lost

Whenever you evaluate something as big as this, it also is worth looking into the opportunity cost.

In general, my wife’s military status is pretty rigid. It’s not like the private sector where living in Silicon Valley gives someone a chance at switching to a better technology job down the line. That said, when the time for promotions come around, a switch to a new job shows growth and looks very good.

It’s always tough to quantify “opportunity”, but it doesn’t appear that my wife will lose much and has more to gain.

On the other hand, I’ve had the pleasure of working with a number of financial start-ups in Silicon Valley. I wrote for Prosper’s blog, which was a nice side job. I got the chance to work a bit with Mint, which wasn’t the best experience (they are in a better direction now than they were before). Beyond the work things, SaveUp (review: SaveUp Brings the Fun While Rewarding You for Saving) invited me to their Christmas party.

I’ll surely miss out on some of these opportunities, but I’m not sure how much they’ve added to the bottom line.

The Hidden Benefits

The biggest hidden benefit is one that I haven’t mentioned yet. With the new position my wife will work 4 ten hour days a week, with two of them work from home. It’s interesting to note that even the government recognizes that it is a signficant cost savings when people work from home. With only two days of commuting, we’ll recognize a savings on gas and wear and tear on the car. (She was already bringing her lunch most of the time, so that’s not a saving like some would recognize by working from home.)

In San Francisco, my wife had occasionally been working from home and she found that she would naturally work 9 or 10 hours, putting her commuting time into work. Now she’ll actually get credit for it. The 10-hour days when she has to go into the office will be difficult, but the hope is two days a week isn’t too bad, especially in exchange for 3-day weekend.

It took me a couple of weeks to realize another hidden perk. My wife gets 30 days of vacation a year (government jobs are good like that). In 5 day work weeks, that turns out to be 6 weeks. In 4 day work weeks, it is 7.5 weeks of vacation. This is where I ask readers not to go off into a tangent about government spending, the fiscal cliff, or any of the related topics that I have been listening to on talk radio as I drive across the country.

Breaking away from financial analysis for a second, my wife will now be around the home 5 days a week to see our son grow up versus the 2 days of week she had in San Francisco. This is huge for us.

Child Care Costs

While I hardly expect our extended families to put in a lot of time with baby sitting… having grandmothers around will likely lead to some savings.

Summing it up

This didn’t turn out to be the kind of financial analysis that I had hoped when I wrote the title. However, just setting the up the pros and cons list makes me quite confident that we’ll come out of this move for the better.

P.S. Did you catch the dateline in the beginning of this post. I’ve always wanted to do that. Just like a real reporter, right? We’re mostly through our travel across the country (taking the Southern route to avoid storms as much as possible). We couldn’t figure out why Nashville was so expensive to stay in, but it turns out that it has the Grammy’s concert and the baseball winter meetings going on.

“I Think I’ll Go to Boston”

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“I’ll get out of California, I’m tired of the weather…
Oh yeah and I think I’ll go to Boston,
I think that I’m just tired
I think I need a new town, to leave this all behind…
I think I need a sunrise, I’m tired of the sunset,
I hear it’s nice in the Summer, some snow would be nice… oh yeah,”

– Boston by Augustana

A little over six years ago, my wife and I moved from Boston to California… just before that song got popular. I was the mirror image of those lyrics… traveling in the opposite direction, but for some of the same reasons (“just tired”). The two biggest reasons were my wife and my careers. Her job was wearing on her. When you work at a federal prison and the inmates are the bright spot, you know things are not good.

At the same time, my current company was paying me in the bottom 5 percentile of my Salary.com value as a senior software engineer. At the time I got the job, 2004, things were still pretty bad after the dot com bust. When company’s VP left the compensation database lying around… well, let’s just say it was clear I was being taken advantage of. There were people with much less experience making a lot more money. I made my case for an increase, not mentioning that I knew others were being paid more, but it wasn’t successful. I didn’t get any more money, any more stock, or even more vacation time. I rarely ask for anything and they didn’t even throw me a bone.

My wife stumbled on a rare opportunity out in San Francisco. By rare, there are probably about 200 jobs in the country that my wife can transfer to as a pharmacist with the military. I had never thought about leaving Boston, but I was pissed off enough at my company that I said, “Go ahead, might as well apply.” She did. After three rounds of interviews, we were on our way to San Francisco.

I had always lived within a 15 mile radius of Boston. I had underestimated how tough the adjustment period would be for me. All my friends and family were in Boston. My brother was making me an uncle! Many of my friends were having their first children, too. I didn’t know anyone out here in San Francisco. I missed Boston.

That song became a dagger to my heart every time it hit the airwaves. I became extremely jealous of that fictional person who traded places with me… leaving California to go to Boston.

In six years, one can make a lot of adjustments. I joined a Meet-up group with a lot of people who came to San Francisco from Boston and were interested in sports. Together we shared a lot of highs and lows. We watched the Red Sox, Celtics, and Bruins win world championships. We watched the Patriots lose a couple of Super Bowls. In time, we did things that were completely unrelated to sports like tour Napa wineries. We got together at Christmas. I didn’t realize it until this year, but for the third straight year, we hosted Thanksgiving dinner at our house.

On the blogging side of things, I met enough people to fill a think tank. There are too many to mention, but a few that stand out are Kevin Gillett to SVB and her husband from The Digerati Life, and Revanche from A Gai Shan Life. Actually each of these people are stand-alone think tanks.

Today, I am that person in the song. I’m no longer the mirror image.

As my wife and I packed the car to go to the hospital to have our baby, she got an email alert on her phone. The military had just sent over the official paperwork for her new job in Boston. We are going home!

Home.

I’m not even sure what that word means any more. The last time I went to Boston, I had to ask how large the medium sub at D’Angelo’s was. They confiscated my Bostonian membership card on the spot. They say home is where the heart lies. If that’s true, Tony Bennett’s is still here in San Francisco. After talking with my wife, our hearts lie in two places now. We are Robin Scherbatsky caught with ties in two places, but neither feeling like a true home. The episode ended with Robin learning a lesson that we are hoping sinks in with us: We’ve got two homes and with that comes twice the awesomeness. We get to get back to our Boston roots and ridiculous accents (Side Note: watch this 30 second commercial for typical Southie Boston accents) and we know the Silicon Valley culture (a little more on that in a future post).

Baz Luhrmann sang, “Live in Northern California once, but leave before it makes you soft.” Truer words have rarely been sung. Today on the news they had a big weather advisory that it had been raining for 20 minutes.

The hope for later this week is to do a financial analysis of the move, which, as it usually does, played a key role.

San Francisco Fishing Charter with Captain Perry (and Personal Finance Links)

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A couple of weeks ago, my friend San Francisco Boater on a fishing expedition. He had made friend with Captain Perry Kerson who does fishing charters in San Francisco. SF Boater suggested that we go out and see what fish we can catch. On this day, the quest was for some halibut. I had been out fishing with SF Boater a couple of times before and we have a history of not catching fish.

This day was different. We caught a couple of fish. One was even a halibut. Here is a picture of the first mate Mikey gutting the fish.

Gutting a Fish
Gutting a Fish


I have to say that I didn’t like the idea of getting up early to go out on the cold ocean, but it was a lot more fun that I imagined. If you are in the San Francisco area and are looking to go fishing

And now for the personal finance links:

Money Writers:

Top PF Posts: