No BS Finance

Ever hear of the old folk-tale that bad things come in threes? Well, unexpected expenses definitely fall into the category of “bad things”, and we just had a run of three.

1. Car - my 8-year-old car started pulling to the left several months ago and I had it fixed today. I though it needed an alignment, but it turns out I needed new tires. Add in an oil change and just like that, $300 is gone.
2. House - an exterior spigot started leaking a couple of weeks ago. It was in a hard place to reach and we’re just not plumbers. We have a neighbor who is, so he came over and fixed it for us. It required a complete replacement and could only be reached by putting a small hole in our basement wall. And, poof, another $300 is gone. At least he didn’t charge us his normal $40 for travel.
3. Groceries - Maureen went to the supermarket today specifically to take advantage of a one-day-only double coupon event. Turns out their ad didn’t include any indications of limits (only 5 coupons, none of which could be higher than $1 off). Total impact: $6.50 of “lost” savings.

Any guess as to which one caused the most heartburn?

I moved to the Twin Cities last year for a temporary assignment. Since the job was scheduled to last three years before I would return to our corporate office, we decided to minimize the interest rate on the mortgage for our new home. Given that housing is significantly more expensive here, it made perfect sense. I’ve never been a fan of adjustable-rate mortgages (ARMs), but it seemed like a no-brainer for our situation. So, we took a mortgage that adjusted annually after three years.

All is well…until I accepted a permanent placement at this location. Now the ARM doesn’t look like such a great deal, given the rise in interest rates this past year.

Of course, a lot can happen in the next two years. Interest rates could fall again and the impact wouldn’t be so great. However, fixed rates in 2 years may be significantly higher than a year ago. That will sting if we decide to refinance.

The moral of the story: sometimes you can get too cute trying to maximize every dollar in the short-term and have it cost you down the road. Things change, so stick with what’s simple and comparitively safe, given your level of risk aversion, of course.