October 2020 – Home Inspection and Appraisal Costs

We’re buying a home! Well, we’re in the process of buying one. After all, these things have fallen through before on us so I’m not celebrating yet. However, we’re further along than we’ve ever been and it’s an awesome house in a neighborhood we like. We’re past the home inspection so that’s good but still have a few obstacles ahead.

First we’re waiting and waiting for the appraisal before we can finish up the mortgage process. Unfortunately, the appraisal is taking forever and really adding to the stress of the whole thing. I didn’t realize there was so much crap involved in the home buying process but there’s a lot and there’s a bunch of costs associated with it too.

We do have a separate savings account for the down payment and closing costs that showed up as expenses in the long ago past. However, the individual expenses throughout the process will show up here as they’re not something specific we saved for.

It’s interesting to see how much the costs add up. It’s $500+ for a home inspection, $100 for some water test, $600 for some other thing and suddenly you’re in for quite a bit before you’re even close to getting the house. It could all fall through and those things are sunk costs that you never get back.

Take the home inspection for example, it’s an important thing and you want to make sure it’s done well but if they find something big and the seller doesn’t want to fix it or split it, it’s money you can’t recover if you walk away from the deal.

I knew the costs were coming but I wasn’t expecting them to be so rapid fire before the sale is guaranteed. Luckily, our home inspection came back with relatively minor things and the sellers were pretty open to fixing most of them. However, I do know we have a few other things to fix at the new home when and if we close so more expenses are coming up!

That means we’re likely going to see some expensive months ahead and that starts right here. The home inspection and appraisal might be done but there’s still the lawyer fees, carpet cleaning, probably movers and then minor replacements we want to make before we move in after our close in December. I’m sure this will kill any goals I set earlier this year in terms of savings but who cares, we’re buying a home!

It’s an exciting time(and stressful) but also certainly an expensive one. I’m hopeful the appraisal comes back soon and is in line with our price so we can move forward with everything and start locking it all in for sure!

On the dividend side, October isn’t anything like September but I’m eager to start a new streak of growth. My M1 Finance accounts are starting to see the benefit of all the extra money flowing into them and making these off months grow at a decent clip. They’ve been a good source of growth in terms of portfolio size but also helpful on the dividend front!

Last October, dividends came in at $230.36 so let’s see where they sit this year.

October Dividends

October came in at $254.59. That’s a 10.5% boost over last year!

Growth has certainly slowed year over year mainly due to plummeting bond yields in these off months but I won’t complain about any growth in a year like this. My M1 finance portfolios have really offset those shrinking yields. October is a good view of that as last year’s $16.25 in October from M1 is up to $53.38 this month.

2018 was a weird year since a bunch of ETFs that normally pay in September paid out late but it’s clear that the growth has been there. I had $50.70 in dividends in 2016 and am now hitting $254.59 just a few years later.

I’ve been above $200 since February of this year and hope to start hitting $300+ every month sometime next year.

I think the fact that I’m putting more money into those M1 accounts which hold individual securities that pay out in various months will serve to help these off months grow at a much faster rate next year.

For the year, I’m up 2.3% which isn’t amazing but certainly starting to tick up in recent months. That comes after a few months of shrinking dividends as stock payouts struggled to catch up to shrinking bond and cash yields.

October is a small month especially in light of the $2,500+ I got in September but these small months add up and help grow future payouts. Re-invested, these payouts will increase future dividend income by $7.38 annually. It’s not huge but every little bit is important if I want to take advantage of the power of compound growth.

Steve, my dividend employee, slowed down a bit after a productive September. His wage this month was $1.53/hr and that brings his annual wage down to $5.24/hr. Steve makes most of his money in the big months like September but his biggest month, December is still ahead so that wage will end up higher than that before the year is out.

You can see that in the graph below.

Overall, can’t complain about months where I see growth especially in a year like this one. I’ll continue to put money into the market and I’ll reinvest any dividends I get and hopefully see bigger growth next year. However, with what’s going on with the world these days, it’s hard to predict if we’ll see a lot more dividend cuts and even lower yields in the future.

October Total : $254.59
2020 Total : $8,740.65
Portfolio monthly hourly wage : $1.53/hr
Portfolio annual hourly wage : $5.24/hr

October 2020 Expenses and Savings Rate

The start of buying a house expenses are the name of the game this month.

I’m lucky that this was a three paycheck month or the numbers would be rather rough. However, since it was, I think I was able to handle the home inspection and home appraisal costs pretty well.

As it was a three paycheck month, this won’t compare well to last October which wasn’t but just for the sake of comparison, I hit a 29.49% savings rate last year. That was the month of our Atlanta trip so it was a combination of travel and food expenses that led to a lower than average savings rate month.

Let’s see how I did this month.

My savings rate for October was 53.24%. If I include employer contributions, that number ticks up to 60.59%.

On a gross income basis, I saved 38.5% of my income and that number becomes 43.77% after employer contributions.

That’s a pretty strong number considering I have the home inspection, an appraisal and other random costs in there.

In fact, the home bills(which include those things) are the #1 expense this month beating out the usual suspect, rent, which comes in at #2.

Thankfully this was a 3 paycheck month as this ended up being a pretty expensive one. That’s why I ended up with a savings rate above 50% for the 7th time this year. This was actually only my 4th most expensive month of this year despite having a few of those home costs in there so it shows that this was a surprisingly expensive year.

However, the fact that this was #4 speaks to the low expenses beyond the rent. Health insurance was there as usual and I had some left over dentist bills(with more to come since I need to get an apicoectomy next, don’t google it, it sounds bad) which brings up health expenses next.

After that, there’s the usual suspects and a slight bump in pet expenses due to the fact that I had to get some food and treats for the most cuddly member of our family.

Overall, this was a good month on the expense front and it shows with another 50%+ savings rate. However, this might be one of the last one of these solid months I see for a while. I’ve got a dentist appointment on Friday that will lead to more dental expenses and then we’ve got the whole home buying thing going on.

We’re still a month away from closing but we already know we want to hire some cleaners, movers and buy at least a new dishwasher when we move in next month. There’s probably going to be a bunch of other expenses that will go along with closing that I haven’t accounted for just yet.

On top of that, our lease actually isn’t up until well into next year so it’s possible we’ll be paying both a mortgage AND rent until they can find someone to fill our place which will suck quite a bit and make for some tough months ahead.

However, now that I write about it, a lot of those do seem like they might be December onward expenses so perhaps November is my last chance at a 50%+ month for a while.

We’ll see how it goes but as far as updates go, this one wasn’t bad at all especially if this home process can continue and end up with us owning a home. I’m totally ok with my savings taking a dip for a few months if it means we’ll get the home that we’ve been seeking for years.

It started to happen this month with the home inspection and other expenses and will certainly continue well into 2021. That might impact future dividend growth as well since I won’t be able to save as much.

This months dividend growth was pretty good and I’m hoping for continued growth through the end of the year but if our rent situation stretches well into 2021, that might mean 2021 growth rates might not be all that amazing as I certainly won’t be saving that much.

Thanks for reading gang and I hope your October was a good one on all fronts.