The Business of Being Boho: Money Matters.
I wrote last month about my first big flub as a first-time home buyer. You can read about it here. But the gist was that we didn’t get a loan large enough to cover the upgrades that we wanted to make to our home. From fixing sewage pipes to remodeling our kitchen, we are paying cash to make the upgrades and living off of credit cards.
So I thought I’d give you an update about how it’s all going…and in a nutshell, it’s HARD.
I’ll start off by saying, I’m not hoping for a pity party here. We are extraordinarily fortunate. We just bought a house, a really cute one, so I’m not all like boohoo or anything. I’m sharing this story in case anyone who may be in a similar position now or someday may take something away from this that may be helpful.
So first things first, remodels are expensive. We knew that going in. We also knew that our contractor doesn’t take credit card, so pretty much every week for the past six weeks we’ve been handing him a large chunk of change (whatever was left of our savings after buying the house) to complete the remodel. When we got the original estimate and we could handle it financially, but as the weeks passed we ended up added things on: we found mold and rotting wood in the kitchen once the walls came down, we decided to remove the popcorn ceilings, we realized we needed an outlet in the backyard…It was all small stuff, but little by little the small stuff totally adds up. So lesson number one:
1.) Whatever the estimate is from your contractor, calculate (at least) an additional 20% for unforeseen matters.
Next up, don’t forget that moving costs money (and time!). Now this may seem obvious, but I was so busy trying to cover all of the costs for the new house, that I kinda forgot that moving is also very expensive. While many times I ‘kiss goodbye’ to rental deposits, I couldn’t do that this time because we really need the cash. So besides moving all of our stuff (and we have a fair amount) we also had to repaint, clean, scrub the house and fix up the yard at our old house which was a HUGE job. We even paid more than $200 for someone to come and haul away all of the stuff that wasn’t nice enough to hand off to Goodwill. That really hurt. The lesson here?:
2.) A.) Put aside money for the move. B.) schedule a junk pickup with the city. The city will come and haul trash away but you have to make an appointment first. We didn’t schedule that in advance and we ended up losing money. Also remember it takes 21 days (at least in California) to get rental deposits back, so don’t plan on using that cash right away to pay for any of the moving costs.
Next, what has been making this situation even more challenging and stressful is the fact that I am a freelancer. If either Jason or I had a steady income, this situation would be much more mellow. We’d know exactly when we’d be getting our next paycheck. But being a full-time freelancer means that not only do I not know where the next pay check is coming from, I don’t know when it’s coming. Most companies I work with pay 30, 60, 90 and even 105 days from the time that the job is done–which means I’m waiting on checks for work I completed in March. Yikes. What’s the takeaway here?:
3.) If you know you’re moving, and you work freelance, try and negotiate clients to pay half upfront–this may help the income flow in at more regular intervals as opposed to going months with no pay and then getting a fat check.
And the last lesson I’ll discuss today is about managing stress an expectations. This is the first time in my life I’ve ever racked up credit card debt. This is the first time in my life I’ve owed money to people. Even though companies take a long time to pay me, I’m not used to making people that work for me wait to receive payments. In fact, the idea of making people wait for money that they have earned, makes my stomach churn. I check my bank app about every 30 minutes to see if any payments have come in and I have been selling stuff left and right to try and cover my ass. So the last takeaway here is:
4.) Manage your own stress and expectations, as well as others’. I’m still working on this but I’m basically doing what I can to be open and communicate clearly with people who work with me, explaining that although I normally pay immediately upon receiving invoices, this month it’s going to take me 30 days to process payment. I’m also putting everything that I can on credit cards–even tax payments–(which means I pay a penalty). I’m doing this because it’s less stressful for me (and better for my small army of freelancers) to owe the bank money than real people–even if at the end of the day I’m paying a bit more in interest and fees…(especially since I owe them money because I’m remodeling my kitchen–it’s not like family emergency or something..thank goodness…)
And that’s about it. The good news is, I see a light at the end of the tunnel. I think that my stomach will continue to churn for about 30 days until more paychecks come in and debts are paid off. But lots of lessons learned and, I’m sure, still more to learn as time goes on…Any thoughts? How to you handle the stress (and logistics) of moving and remodeling a new home??
The sketch above was one that Jason (my husband) did on Ida’s chalkboard of our new house when we first put a bid on it…)