Surviving my first 42 months as an accidental landlord

600 Sq Ft of laminated floor for the weekend of hell!

The moment I dreaded for years came like a freight train this past summer.

For someone who became an accidental landlord the idea of switching tenants, renovating a property to turn it around ASAP, finding a new tenant and covering expenses without rent coming in can be simply terrifying and overwhelming.
This past summer as the kids were playing outside silhouetted by beautiful sunset I received the dreaded call. It wasn’t a leaky faucet or AC this time. My tenant was calling me to tell me that she couldn’t afford the rent anymore.
This was quite a surprise because I had not raised the rent for 46 months, but according to her she couldn’t afford my rent and she was moving. She didn’t want to sign any termination letter until she secured something and I agreed to give her a week. After all, she had been a great tenant, I thought. 
One week turned into two, and at the end of that second week, I had to tell her she would have to be responsible for another month of rent because I also needed some time to find a new tenant.
One day later, she changes her mind and decides she wants to stay with me until the spring of 2020. Apparently she was unable to find anything because her newly-wed husband has an eviction on his record. According to her, the eviction was not really his. He was living with his wife and 4+ kids, they got in a fight and he left. His wife found a different man but they didn’t continue paying rent and got evicted.
At this time I am thinking to myself  that the eviction is the least of my concerns, but rather, this guy walked out of his kids’ lives like nothing. Meanwhile, my tenant must think that she is a great catch taht would make the guy stick around to help her raise her own 4 kids. Crazy!!!

Through all these years, well 3 1/2, we have been up and down with our rental bank account. Before starting looking into the idea of financial independence and exploiting the concept of frugality we were at the mercy of different storms of expenses. However, once that we started setting up certain financial goals and educating ourselves about our finances, we realized that $500 in monthly cashflow was not bad for our rental but a hefty emergency fund was necessary to survive a vacancy, tenant damages and renovations.

So, we set off to build a decent fund. By the time that my tenant called me with her plan our account was not quite there( close to 6k) but we had about just enough to withstand switching tenants and a vacant month. Hence, when changed her mind and wanted to backpedal to stay with me I took it as an opportunity; sometimes you need that push to jump off the cliff. It wasn’t just because I wanted them out, but she had already said they couldn’t afford rent. Besides, I was noticing that the property was starting to deteriorate as a result of negligence. Lots of carpet stains from coffee spills and another beverages. The negligence kills me though! One time I asked her about a stain and she candidly responded: “we just didn’t get around to clean it.” WTF!!!!!
Besides from the damages, the new guy she married and not being able to afford rent there was also the fact that I was charging the same rent from three years back. Market value comps in my area suggested an increase of about 26%. I needed that! Taxes had crept in and the $500 cashflow was reduced to only $300.

Being a landlord for the Section 8 program

In case you don’t know, Section 8 is the government program that helps families in need with housing. In a nutshell, the way it works is by giving participants subsidy, many times referred to as a voucher, based on their income. The more you make the more you pay and the less you earn the more subsidy you receive. It also depends on the number of dependents you may have.

Why do I rent t section 8?

Plain and simple because I don’t get one phone call that is not Section 8. When we first started renting our property I refused to accept any Section 8 participants afraid of all the horror stories ( In my county you can decline Section 8). Although, it is easy for participants to not qualify as renters because usually their financial situation sends a quick alert to any background or credit check service.
On the other hand, when we started it was our way out of the neighborhood that had rapidly declined after the financial cataclysm of 2008.
We started being picky about who to rent to but once we found the house and neighborhood we wanted we had to move quick. We had to get someone in there and without knowing much about the numbers to operate a rental, $500 in cash-flow monthly seemed manageable.
I was able to pull a contract from the internet and before I knew it I was tumbling down the pipe to become a Section 8 landlord.
The first 6 months were nerve-wrecking but the rent was always there on time, so I couldn’t complain; until the end.

What I wish I knew about Section 8

First of all, I have to say that it is not as bad as people make it seem. It really depends on the tenant you are working with. I have heard worse stories about non-section 8 -renters. You have to screen your tenant and get a feel for what kind of people you are dealing with. Poor or rich, I am sure you agree that you can find people are pieces of s*** in both groups. I have heard many stories of people not renting through Section 8 and destroying properties terribly. They get pissed and feel they are being taken advantage of and, of course, the only way to get back to the landlord is by trashing the place.
On the financial aspect, Section 8 can be terrific. The money will always be there with the exception of the tenant’s portion that you’ll have to collect. Getting that portion of the money will depend directly on the quality of the tenant you have chosen.
The one thing that sucked for me but I blame it on my ignorance and lack of understanding the navigation of the program, is that I was stuck with the same rent for years.

Why?
Well, not even a year after Trump got into office they started cutting funds for the Section 8 program. With that came a moratorium for landlords that prohibited the rent of current tenants to be increased. I thought that I was stuck with the same rent regardless if the tenant was the same or not. I thought I could not raise the rent. Period! I didn’t quite understand that my contract was a year contract though and after that, it turns into a month to month contract. The only requirement was a 30-day notice to the tenant.

When my tenant called me saying she was moving, she mentioned that she was able to get out of the contract as long as she gave me a 30-day notice. That prompted me to ask a lot of questions to my tenant’s section 8 case manager and was able to clarify a lot of things that I didn’t quite understand before.
For example, I didn’t know that if I really wanted to increase my rent all I had to do was wait out the firs year, get the tenant out and get a different one. You may be asking why to get rid of the tenant if it’s a good tenant? Well, because they would not give more money or a larger voucher to a tenant to stay with the same landlord. However, if the tenant goes  somewhere else the voucher amount is adjusted to market value; usually Section 8 follows the criteria of the Small Area Fair Market Rents to adjust the money amount given to their participants. Fair or not, that is the way it works.

Sometimes, of course, it is worth it sacrificing a little bit of money for the comfort of knowing that your rent will be there and that your tenant won’t let you down. That was a bit of my situation too. I didn’t care so much about making a killing in rent as I just wanted to make sure I didn’t have the property vacant. I was afraid of not being able to have the funds to go through the process of switching tenants.

A nice tenant turned into a dragon

Well, needless to say, trust nobody! I think I did fairly a good job screening my first tenant. But I did a terrible job allowing someone else moving in with her and being added to the lease. I can’t be sure( I am speculating) about this and I really give a crap… but I am convinced that the man my tenant married wrecked her finances. I should have screened the guy with a background check and credit report. You can’t expect a credit score of 700+ but a credit report it’s really a window to look into the character and level of responsibility an individual has. Do they have debt? Most likely. Are they making payments? Maybe. Do they have a victim story for everything in their report? Possibly. I personally feel that when there is a story for every blemish in the credit report, most likely than not they will include me in their story once we are done doing business. I do believe that we can all be down on our luck at some point, but when it’s all about “it’s not my fault, they are blaming me for something I didn’t do, etc” I move on and far away as soon as possible.

My tenant went from being reasonable and understanding to “you had a plan to get me and my family out.” The scary part of dealing with people who are under desperation and financial pressure that jeopardizes their family stability is that they are capable of anything, and the only thing they have to get back you as a landlord is by trashing the property.
My property wasn’t purposefully trashed; I don’t think. But my tenant was simply negligent in many regards that took a huge toll on her security deposit. I think that I did a pretty good job negotiating her situation, making her understand that all the shit happening in her life was not my fault and that I was nothing but flexible and accommodating to her needs. I never lost my cool, and she really pressed my buttons. 
There is always that feeling and animosity towards landlords of  “you are putting me and my family on the street, you a jerk. You have so much money and you are hurting us.” You know, the victim story. As if I had chosen to take my family to Disney for a week and honeymoon in the Bahamas even when I don’t have money for rent! So freaking crazy! That’s what my tenant did.
**If you are receiving the benefit of Section 8 and you find yourself reading this post, please take advantage of the benefit to secure your tomorrow. Don’t blow the fucking money on crap and expensive trips; don’t be an idiot**

Slay the fucking dragon!!

So I quickly realized that my tenant was trying to use some intimidation by telling me that I should be aware of how some people simply destroys properties when they are not pleased or when landlords get them out.
I could not just park it outside of the house to watch what they were up to, but what I was able to do was to bring a “potential tenant” every week on their last 30 days. That’s right. I would show the property to friends, and potential tenants so that I would keep popping in at least weekly.
At first, she objected making it difficult and going as far as to tell me she didnt’ feel comfortable letting me in her home. What that fuck!!! Until finally I had to tell her that my only obligation with her was a 24 hour notice. That was my gently way of telling her “go screw yourself!” She was rather unpleasant the few times I visited but I was able to assess damages and more importantly check if they were moving out or not.
Going into the last month she wanted to play the “I don’t have the rent for next month” card. She wanted to use the security deposit as the last month rent, which I said absolutely not. You never do that. My response to her was very clear, “if you don’t have the money on the first of the month this all out of my hands and my lawyer will handle it; he is ready to file for eviction, but I really don’t want to do that to you and your family. You know how hard it is to find a place with an eviction in your record. Please don’t do this to your kids. Make sure you have the money on the first.” She had it.
In regard to possible damages to the property, my response was also straight forward “my insurance will cover anything exceeding the security deposit. However, if I notice any damage caused on purpose I will file a police report and I can assure you that nobody will ever rent to you, not to mention that you will lose your Section 8 benefit.”

I don’t like be a dick but it does bother me when people think that they can use their street smart shit to push you around.

Where am I at now?

Well, the property was completely renovated. Was it a pain in the ass? Yes.
I spent about 40 hours of work and roundabout $2,600 replacing all the trashed carpet, retouching paint, trim, replacing a vanity and blinds, plus doing some major cleaning.

I thought they had scraped the tile pattern off. But no, it was still there just submerged in filth.


The worst was a tile floor that was so bad that we had to buffer it with a Dremel tool. It had some sort of wax or hair product mixed with filth sedimented to the tile. Disgusting! Needless to say, I kept her security deposit. I am debating if I should contact her to try to arrange payment, which I am sure won’t happen, and then proceed with a collection agency; just to make sure it goes on her record. She really pissed me off towards the end!
I can’t stand the victim attitude she was trying to use to manipulate me.
The property was up and running in two weeks and I just got a new tenant. The cash flow went from $366 to $766. We needed this increase badly!

New Procedures

I made my contract tighter. More specific language about my right to get into the property with just a 24-hour notice. I am including a check-out list of procedures at the moment of signing the lease. Tenant has to read it and sign it, so it’s clear what my expectations are at the moment of moving out. I adjusted my late fees, and more importantly, I front-loaded my tenant with “this deal is not forever. At some point, you will move on, or I might need you out of the property. I am nice and I will be there when you need me but this is a business not a charity organization. I need my money on time.”
If there is anybody new joining the family on the lease they need to pay for a criminal background check and credit report, and there is not guaranteed that I will continue renting to them upon receiving the report.

Tools every landlord and techniques must use!

The place looks awesome! What you all think?!!

You need the right tool for the job, they say. Well, the one tool that saved me tons of time and it is well worth the $18 it cost me, is… drum roll!!
The Ridgid Miter Trim Cutter. This tool is like a set of pliers with different angles to snap the quarter round trim that goes along the perimeter of every room where you might install new flooring. Using this tool that I first hesitated to buy allowed me to cut the trim for three rooms, a hallway and a living room in almost two hours. It is absolutely a must!

An air compressor comes also handy to attach the trim to the baseboard. I have been using the Home Depot Porter Cable combo that comes with three guns and a stapler and no disappointment yet.

Last but not least, in the paint department, it is worth mentioning that the fewer colors you have around your rental house the better. Since our rental was initially our home we had quite a few color combinations. It could be simpler, but it is not a problem thanks to a little bit of planning. Every time I used a different color I took a picture of the barcode with the color formula on top of the can or container. Thanks to that, every time I want to retouch the walls I just get myself a $2.99 sample. I bring a picture of the color label, which now I have saved in my Google drive, and the Home Depot associate makes it right there for me. Rather than painting the whole house I just go around retouching the walls with some Dollar Tree brushes and I get the job done for easily under $50.

This has been a long post, but I don’t get to write that often because I am so extremely busy with the kids. Nonetheless, I wanted to share my landlord experience with others. Hopefully, you pick up a couple of ideas here that may serve you on your journey of real estate investing.
I am not a super experienced investor or claim to be one. I am just a regular Joe who is trying t make those dollars go the farthest so that I can reach my financial independence relatively early.
If you have any tip or comment I would love to hear it. All points are always well taken.

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Net worth Update

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We absolutely love the Great Lakes!

Well, I have been away for quite some time but the family keeps me busy. Having 4 kids at home in the summer is not an easy task and my wife couldn’t do it all by herself, as well as it wouldn’t be fair.
My family and the summer have kept me away from the keyboard but I am still chugging along on the FI road; I can’t believe the year is already over the June hump. Many times I find myself wishing time to pass by quick just because I am thinking of all our financial milestones I will hit on the way but I am trying to correct that mindset; time is our most valuable asset after all.

Anyway, I will give you my net worth update and then add few more personal things in a separate section so you don’t have to read it if you don’t want to.

A Picture is worth more than a thousand words?

Well, not many thousands here but at least some. Here is where we are at and significantly better than a few years back:

:Untitled

It may seem like not much for many people but this really blows my mind. All the way unitl 2017 we were living from paycheck to paycheck, paying down credit cards and bills, gasping for the next tax return to pour it into our credit card balance and pretend to be out of debt for few months or weeks…
Now we have managed to be credit card debt-free through the whole 2018 year and 2019. No debt other than our mortgages and the pesky student loan we are battling.

Still from paycheck to paycheck

We are still from paycheck to paycheck with the exception that now our money doesn’t go to somebody else’s pocket as soon as I get paid but rather to ourselves. We are trying to always pay ourselves first. What do I mean by that? Well, we are easily having extra $800 each month after paying all our bills, but instead of using that extra money to eat out more or buy more things we are taking it straight to the most pesky debt we have, which is our 22K student loan. We have managed to pay almost have of it between last year and this year and hope to be done by 2021. Each month, religiously we take $300 out of my first paycheck and $416 from my second paycheck. Usually we save them up for a couple of months and then dump all that money on the student loan balance. That way the money saved up can be partially emergency fund.

The current balance of the student loan is 11K. By continuing making the same payment the balance should come down to about 8K. I am not that concerned about the interest we are paying; it used to be 6.5% but we lowered it to 4.75% by taking a home equity loan against our rental property.
In the worst case scenario our tax returns are usually around 10K, which should be more than enough to completely pay off this loan and remove those $716 from the debt ledger and potentially go back to fund my 403B.

Maximizing earnings

One of the key factors to position yourself in a good financial situation is to minimize your spending and maximize your earnings as much as possible. Widening the gap between income and expenses will pave your way to FI.
If you make a lot of money but you spend just as much as you earn, your net worth will go nowhere.

In the case of teachers the opportunities to maximize earnings are not quite as easy and usually require extra credit hours at an approved college or institution.
In my case, this year I was able to max out my salary after taking 8 credit hours of coursework. The investment was $900, but this small investment will bump up my salary for almost 6K, leaving me a couple of thousands short of the magic 100K! Woot -woot!

New savings

We will be enjoying some new savings once I start my school year. We finally decided to switch from PPO health insurance to HMO. The difference is about half price. I used to pay $220 bi-weekly(went up to $280) and now I’ll be paying only $122 per paycheck to cover my whole family of six people.
My car insurance used to be $100 and I was able to slash it down to $48 eliminating things I really didn’t need such as coverage for my car in case of collision with an under insured motorist a fault. I did this because I really don’t care about fixing my car in case of collision. It would be cheaper to buy another used car.
I also had some supplement health insurance in case of a collision with an under insured motorist at fault, which supposedly would cover medical expenses. My regular health insurance would be enough to cover hospitalization expenses, so I got rid of that.

I am estimating about $4K savings in health insurance and about $624 in car insurance, which I will most likely allocate to pay off our student loan.

The biggest optimization

Almost 4 years ago my wife and I took the biggest leap of faith trying to get out of the neighborhood we were in. If you have read some of my other posts you may know the story. We had to make a choice between selling our house and pocket maybe 5K after owning this house for about 12 years or rent it out for at least a year and make more than that with a positive cashflow of $500 per month.

So we moved out to an awesome area and became landlords. We have rented our first home to the same tenant for 42 months. We were scared to death at first because the only calls we could get were Section 8 recipients and we have heard horrible stories about Section 8 tenants. We had no option. We screened our tenant the best we possibly could and it was overall a pretty good run. The only hic-cup was a rent increase moratorium imposed by Section 8 to landlords due to funds cuts.

We weren’t able to increase our rent for almost 4 years and we were opting for the security of having a tenant that was always on time with the rent at the expense of some more income. However, nothing is forever and this summer I received the infamous call from my tenant explaining that after getting married she would no longer qualify to receive assistance. According to the tenant they couldn’t afford rent even when I didn’t increase it for almost 4 years.

Luckily I put a lot of effort on building an emergency fund that would cover a potential vacancy and repairs. As they started looking for a new place I also started to look for a new tenant. In the process I realized that rent has simply skyrocketed in the area. According to my area rental market I should be able to collect about $500 extra a month, which would leave me with a positive cash-flow of about $850 monthly. From 3.7K annually we were getting, now we will go to 9.9K!
Unfortunately, my tenant changed her mind and decided they wanted to stay with me after realizing they couldn’t find anything cheaper. Sadly, I had to say no. That sent things in a down spiral of nastiness and rudeness but at the end things worked out and she is willingly moving out after a few threats of evicting her. I felt sorry for the family but I can’t subsidize housing for someone who thinks that honeymooning in the Bahamas and going to Disney is more important than affording housing for her family.

This is a huge move for our family! We plan to use all those savings to continue investing and paying off the mortgage of this rental before we invest in another property.

Summer 2019

This summer was outstanding. We took a a trip to northern Michigan to bask in the sun and enjoy the unsalted, free-shark waters. We took our camper (used) up there and spent about ten days enjoying each other’s company. I have not calculated the total cost of the trip but I am estimating close to $1000 including gas, food, ice cream and a few eating outs with the fam. We did lots of biking, kayaking, hiking, paddle boarding, fishing, etc. Most of the things for free except for our ice cream nights which ran for about $24 for a family of six people; totally worth it!
In the next two weeks the whole situation with our rental should unfold. Old tenant moving out, new one moving in, Section 8 inspection, and sometime in between I will need to lay down 600 Sq Ft of laminated flooring to replace the rental’s beaten up carpet.
Wish me luck!

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Found this awesome Traffic Master floor for $0.49 at Home Depot

In the meantime, I just sewed a couple of holes in my old work shoes and I am just ready to start a brand new school year. I would love to squeeze another year out of my old Sketchers 🙂 My older kids don’t stop saying “why don’t you just buy yourself some brand-new shoes?” They don’t get it yet.

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Saving my shoes for another year of rumbling at school

I would love to hear about your summer. How are your financial goals for the year panning out? Are you hitting your financial milestones?

 

 

How to get your car insurance for almost half price

Do you ever find yourself frustrated because after reading so many articles about saving money you realize that you are already doing all the tricks under the sunt? Sometimes I wish I was the latte drinker, so I could just cut it out and save a ton. We budget, plan meals for six, get down with almost every DIY out there, side hustle, etc, etc, etc. At the end, we feel like there is no much more we can do other than keep riding towards FIREville slowly and steady.

With that said, sometimes you do hear advices from different bloggers and podcasters in the FIRE community that stick with you and kind of become part of your toolbox. One of those tools that always has stuck with me was the words of J. Money at budgetsaresexy.com who I heard once saying “make sure you challenge every expense in your budget.” Yes, budgets can be a pain at the beginning but once you got yours down it becomes the most eye-opening experience financially speaking. Not only you realize where your hard-earned salary is going but it also helps you to project how much you will need in future months, as well as it can give you a starting point in your FI journey( I did it to figure out My Plan)

 Anyway, 2018 was a great year for my family. We managed to stay completely out of credit card debt, and we got used to budget and track our income. We also managed to pay cash for a brand-new roof and keep our saving ratio untouched.

We have gone through each item in that budget scrutinizing how much we are spending in each category and how we can either cut back in expenses or tame the wildest beast called “miscellaneous.”

Now, some expenses are a true pain in the Arsch. Why? Because they are time consuming. They require research, looking up terms and lingo that you are not familiar with and sometimes you even do some reading your state laws to make an educated decision.

For a while, I have had my eyes on our car insurance. It seemed to me that $100 a month, $1,200 a year for two cars was too much; just as a speculative observation. Regardless, I was thirsty for some more savings and $100 a month seemed like an opportunity to challenge. But again, I needed time to do my due research and shop around for better options. I didn’t want to call my agent without knowing exactly what is in my coverage and end up confused and intimidated with all the jargon.

With the arrival of my teacher summer break this was on top of my priority list.

As I mentioned before we were paying $100 monthly for two cars. We have a Corolla 2004 (177k) and a Dodge Caravan 2005(140K). Our lives unfold within a 15-mile radius. We haven’t had tickets in more than 6-7 years. My expectation was to lower that bill to maybe $80. That would have made me very happy.

The Results

Starting July 2019 we will be paying only $40 a month for both cars, which will save our family $720 yearly. Another added bonus this was that we realized we never added our new (used) car to the policy. That would have been a huge disaster if one of us would have gotten into an accident!
Let me explain. We used to have a Grand Caravan that died with a transmission problem and we went on to buy another used Caravan; notice it’s not “Grand” but just Caravan. Since the insurance card still said Caravan the needed change went unnoticed. We have 4 kids, super busy tending to them and we missed. No excuse though. It was a terrible oversight.

This makes reflect on the importance of looking carefully into all these things. Many times we all tend to pay things as we go and we don’t question much.

It’s scary to think that if we would have gotten in a car accident with that car, we could have been found ourselves in a predicament with no insurance to cover for damages, potentially sued, etc, just because we did not make a simple phone call to change it.

Straightening this up is probably the greatest saving of all…

Slaying $100 beast: What we had and what we have now…

Well, in terms of liability everything stayed the same. Our coverage for our liability under “Bodily Injury” stayed 100K for each person involved, 300K each occurrence. This is what my coverage would be if I get in a car accident, someone gets hurt. My insurance will cover that amount.

Under property damage, which would pay damages to other vehicle I wanted to cut back. However, it seems to be a preset with the “Bodily Injury” coverage I mentioned before and there was no additional cost. So I kept that. My reasoning for trying to cut back was the fact that the average cost for a brand new vehicle in the U.S. is 36K. I figured, I could go with half the coverage for property damage (50K, rather than 100K) and save some but it wasn’t possible. So that stayed at 100K as it was.

The Truth

I care less about our cars. That is the bottom line. I don’t brag about my cars or are a topic of conversation unless I am talking about savings, FIRE or if I am bragging about how many miles they have; now that last one is a badge of honor,

To me our cars are temporary vehicles to go from point A to point B. They are old cars that have served us well, but I have no emotional attachment with them.

This came up as I was talking to our agent and we were going through what they call comprehensive coverage. If you look at your policy, which I highly recommend, you will find a section that says “Uninsured Motorists Insurance Limits.” Under this section you may find the comprehensive insurance coverage; at least with Allstate that’s how they call it. Basically, it means that you will be covered for some categories in the given case that the other driver’s insurance is not enough to pay.

Now, what they call comprehensive coverage is kind of camouflaged in the same section. Our agent explained to me that this is what would cover us if a branch falls on the car and breaks the windshield, or the car is in a hail storm (it just happened a week ago), the car gets broken in or hit by a lightning, etc. Well, the problem is that there is a deductible that comes with that coverage and it is $500. It is also costing us $20. Not much, but I like how $20 look in my account.

The other money pit was the auto collision insurance for uninsured motorist. In other words, if I get in a car accident and the other driver is at fault and his/her insurance is not enough to cover my damage my insurance will kick in. Sincerely, I am not interested in this for the same reason I mentioned before. We have old cars. The most we could get for our cars is around 2K and this coverage was costing us $114.

Finally there was the “automobile medical payments” for underinsured motorist. This works in a similar way as the “auto collision.” In the given case I get hurt or one of my car passengers if the other driver at fault is underinsured to cover medical expenses my insurance would kick in and over my medical expenses. This sounds great and plays with your emotions too, but we have a terrific insurance policy with my school district. If I end up in a hospital due to a car accident my health insurance would pay. So, auf wiedersehen with that too!
There were few other fees that were eliminated with the comprehensive insurance change.

So, our new car insurance monthly fee will be $40 instead of $100.

Latest update

Since I started writing this post and looking into the numbers something didn’t seem quite right. I was told I was going to pay $40, but looking at the statement for the next billing cycle it says 320.58. Divided by 6 months it comes up to $53. $13 difference.

I had to call again to clarify and this is what’s happening. For the next two months we will pay $40, after that it will be $53.

Bummer! Still god savings but not as good as it once seemed.

However, in the conversation my agent told me that I could get a 10% discount if I pay six months in advance instead of installments. That would bring my premium to $288 for six months ( $48 monthly in my budget).

But wait there is more. If I go paperless, they will give me another 5% off. The premium would be $272 every six months ($45 in my budget or insurance bucket).

Car Insurance Before After
Pemium $600 $320
10% Discount for paying 6 months   -$32
5% Discount for going paperless   -$16
Total $600 $272
Six months savings   $328
1 year savings $656
Cost opportunity for 20 years at 8% return $32,421

Side story

As I was looking into all this, I had to go into our van glove box to get the policy number from the insurance card. Sure enough the one I found was expired. I told my wife to make sure she had the updated one. At some point she had to leave, the kids are fighting over who sits where, who walks out the door first, etc. She forgets about the card.

Five minutes later, she calls me to tell me she was pulled over because one of the headlights wasn’t working and she has no insurance card. Really? I couldn’t make this up.

Luckily, since I went through all the trouble of creating for the first time my login with our insurance company I was able to pull it up right away on the screen, take a picture and text it to her. We got only a warning ticket.

Can we call that a $150 savings?

Conclusion

This is still unfolding and hope the savings remain the same through the year.

The discount was not as good as I thought it was at first but saving $656 a year I think it is still good enough to be happy about it. I think it is terrific. Especially when I never can find where to cut more than what we already cut.

The lesson though, is we all need to find the time within our busy schedules to scrutinize our expenses. There are hidden fees everywhere, and we just pay them sometimes because we don’t question them in the first place. We get used to paying the same amount month after month and we never look back to unveil hidden fees or things that we simply do not need or want to pay for.

Fees that sometimes are disguised with a “recurring fee” label or “billing origination fee.” A cloud synapsis fee or any other bullshit they can come up with to charge you more. Companies know exactly how to play these word games and appeal to your emotions to achieve their ultimate goal: take the most they can from you.

Another lesson from all this is the importance of staying on top of anything that has potential to become a legal issue or lawsuit against you. All it took me to figure out exactly what I have in my coverage was a phone call and a bit of time. Logging you’re your insurance company website will provide you with most of the information you need to know.

Last but not least, like the cool dude with the mohawk ( J. Money, that is) says: Challenge every single expense.

Have you been able to rack up any good savings after reading other blogger’s recommendations? Feel free to share any mega savings you’ve gotten or over-sighted for years.

*** Disclaimer: This post is simply my opinion based on my own experiences. By no means this intends to be a recommendation of what you should do. I am not a professional or financial adviser and take no responsibility for other people’s actions after reading this. Seek professional advice.***