Don’t Feed the Alligators

A Personal Finance Blog from a Small-Scale Landlord’s Perspective

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Rainy Window

Creative Commons License photo figure credit: Nictalopen

Having just settled in to the reality of ScrapperMom’s layoff, we learned this week that our tenant for the last year will not be renewing his lease.  Assuming that ScrapperMom gets no new work and that it takes us at least a month to rent the apartment, this leaves us with 38% less income in December than in November.  The only thing keeping us even next month will be the raise that I got last month.  This means that all of our savings and discretionary spending has gone to zero in the upcoming budget month.

Thankfully, we have planned well, and have an emergency fund that can get us by for quite a long time under the present circumstances.  Having just received that raise, there is no reason to expect that my job is not secure for some time to come.  Though with a paying down low interest debt in favor of boosting our savings and emergency fund.  We are still overpaying a couple of our loan accounts, and while it’s not by much, I may still have to bring these down to the minimum payment until our income rises again.

  • I’m glad that I have resisted the urge to invest given the down market.  While a great long term opportunity, this would have tied up cash that we may need to have available in a long term investment.
  • I wish that we had made it a priority to increase our savings sooner, despite the fact that we still have some debt.  This would have given us more confidence and breathing room in the current economy to know that we can weather the storm.
  • I wish that we had not bought an alligator.  We’re now feeling more stuck than ever, and I’m amazed out how quickly our fortunes have turned.
  • We’re not ruined yet, so we’re going to be looking for new ways to trim our expenses.  Many of our recurring expenses, like our Netflix or DirecTV plans can be trimmed by $5 or $10 per month.  Two months ago I would not have thought that this would make much difference, but now that every dollar matters so much more it may be worth doing.  On the flip side, we’ll be looking to stir up new business in the form of a new tenant, as well as looking for ways for ScrapperMom to bring in some new engineering work, or perhaps investigate some new opportunities.

    Have you or your families been affected by the economic downturn?  Do you have any ideas for us to trim our expenses or boost our income?  Let us know what you think in the Comments Section below!


    Creative Commons License photo figure credit: michaelrjohnson

    I do a fair amount of traveling for work using my own vehicle. Whenever I do, my company reimburses me on a per mileage basis. I have the option to enter my actual costs, but since these are generally much harder to figure out, I tend to use the per mile option. The IRS periodically updates the Standard Mileage Rate, which is the rate recommended for businesses and business deductions.  This rate goes up and down, and is presently at 58.5 cents per mile.

    This rate is meant to cover the total cost of the use of a vehicle: fuel, wear and tear, periodic maintenance, etc.  Something that has never quite sat well with me, however, is how to use this reimbursement for anything other than the cost of fuel.  By my calculations, it only costs me about 6.1 cents per mile in actual fuel costs, less than 1 cent per mile for oil and tires combined.  So what is the other 50 cents per mile to be used for?  I suppose that some portion of it should go towards insurance, and maybe even the cost of the car.

    Up until now, however, I have been failing to allocate any of that extra 50 cents to anything in particular.  It doesn’t show up as a budget item, and therefore simply ends up in our general slush fund.  Since this is extra money and we won’t miss it from our budget, it occurs to me that I should be using it for something vehicle related.

    The two most obvious choices for this extra money are 1. making extra payments on our existing car loan, and 2. adding to a future vehicle fund.  I’m inclined to opt for option #2 since it adds to our overall savings and does not tie up cash in a low interest loan.  This is especially important in the current economy where anything can happen at any time, and with ScrapperMom out of work.

    Do you travel for work and collect mileage reimbursements?  How do you allocate the “wear and tear” portion of the mileage benefit?


    Creative Commons License photo figure credit: notsogoodphotography

    Well I suppose I thought our jobs were untouchable despite the bad economy. In retrospect this is exactly why it is important to closely monitor your finances and have an emergency fund available in tough times. I found out this week that my boss is really struggling to find work for me and in the last few weeks, for himself as well. The work has been great for almost 2 years and it has given me the opportunity to see my little girl grow and change every day, as a stay at home, work at home mom.

    But now I am faced with a decision. My boss met with me last week and shared the bad news. He gave me three options:

    • I can continue to be on his payroll without the current guarantee of 20 hrs/wk. This could mean that although he may be able to give me up to 20 hrs, in the current economy 0/wk may be more likely for the foreseeable future.
    • I can become a contract employee. If he has work and I need/want to work, I can. If not, there are no worries or obligations for either of us. This will also mean a higher hourly rate due to the fact that he won’t have to pay payroll taxes. It also means that I can look elsewhere for other contract work.
    • The third option is to be laid off and collect unemployment benefits.

    So I took a look at how the unemployment benefits would break down for me. I’m in a unique situation in that I make a good hourly rate, despite only working 20 hrs/wk, but still wasn’t sure what that would mean for me since I only work part time. As MITBeta has said in the past, we can meet all our financial obligations on his income, but without some contribution from me, it is difficult to save and pay down debt aggressively.

    Here is what I came up with in regards to our State’s unemployment insurance benefits.  I am assuming I made $40/hr for the last quarter and $35/hr in the previous three quarters.  You basically earn up to 50% of your weekly rate up to the maximum benefit of $628/wk. They take your highest two quarters over the last year to figure out the weekly rate. Using my hourly rate of both $35/hr (this was while I was receiving health benefits) and $40/hr (after we switched to MITBeta’s health plan), I came up with about $750/wk. You are eligible for 30 times that amount as your benefit credit or about $11,250 in my case. Assuming 50% of that weekly rate to be $375/wk that comes out to 30 weeks of benefits.

    I think I am also eligible for an additional $25 for our daughter. So the total benefit would be around $400/wk or around $340 if we had state and federal taxes taken out.

    They allow you to work up to a 1/3 of your benefit rate. So for me that would be around $125/wk. I am in the process of talking with my former employer about working for them as a contract employee. They may or may not be able to give me anywhere from 5-20 hrs/wk. If I could get an hourly rate of $40/hr from them I would only be able to work 2-3 hrs before I became ineligible for benefits. You can get partial benefits, but obviously at this point we’d need to weigh the cost of my time to keep up with the job search requirements of unemployment insurance.  Given the fact that I am 7 months pregnant I am not really looking for a full time commitment, but just a chance to try working for another company from home to see how it would work. If it works well it would allow me some flexibility after the baby is born and give me more options in a downturn economy. Although both companies are in construction, the sectors they service are vastly different and are affected by the economy in different ways.

    What do you think? Have you been laid off and have you filed for unemployment benefits? Are you an employer that has had to lay off an employee? Let us know about your experience in the Comments Section.