Hola compadres!

(We’ve just got back from a weeks vacation in Spain, so naturally I’m now fluent in Spanish!…Not).

We’re approaching this blogs 6th birthday, so I thought I’d better give you guys an update on the project and the life in the Total Balance household.

Status on the project

The summer went by just as quickly as spring came and went 🙁 Summer is my favorite time of the year here in Denmark, and we’re now slowly preparing ourselves for another long winter (such is the life of us northerners).

When people ask me

“So, are you done with the house project yet?”

I tell them that I feel we’re 95% there, but in reality when you live in an older house, you’re never really going to reach 100%…There’s always going to be something that needs fixing (or the wife starts new projects!). But in terms of the renovation of the inside of the house, we feel that we’re 95% there. We’re still missing some trim and some of our closets still don’t have doors! (We can’t agree on which doors to get, and also we really don’t want to spend more money on closets! haha).

Then there’s the outside of the house. Outside “renovations” is (if you ask me) a summer job, so the window of opportunity has kind of already passed us by. Naturally, my wife do not share that opinion (as you can imagine)…

Because we still have some outside “renovations” to finish, we’ve got some building supplies stored outside, so it’s still looking somewhat like a built site. It would be nice to get those projects finished (but they cost time and money!), so we could also enjoy the outside of the house/garden.

Anyway, we still have projects to finish before we can say that we’re DONE. So we’ve not gotten the house appraised yet, so we still don’t know if the bank value the renovation as much as we do. I know you guys love the numbers, so I’ve done a quick tally of the major items.

Here is the budget for the renovation, compared to the actual spend (some of them are estimates):

As you can tell, we managed to blow past our budget in almost all major categories…

And unfortunately, this sheet does not cover all our actual spending. We’ve spent approximately DKK 100-150.000 more than this on: I have no fucking clue 🙁

All the “small stuff” adds up. I get in a bad mood just by thinking about this, but I don’t want to paint the picture brighter than it actually is. Be VERY careful if you consider undertaking a renovation of this magnitude yourself…I can’t really recommend it, unless you have very deep pockets! 😛

If we set a conservative value on our current home – now after the renovation – we’re just breaking even. If we put it on the market today at what I believe would be an optimistic price, our efforts would net us a yield of roughly 10%. Since this would be tax free, I suppose it’s not a bad yield for 8 months work, but had you told me that this would be the outcome prior to the reno, I would definitely have said “no thank you”.

But not everything can be measured in monetary value 🙂 The move to a new location has given us and our daughter a whole new level of freedom and joy. Our daughter walks to and from school every day, and this has freed up more than 1 hour of our time every day (commuting to and from school). She can also now walk to most of her friends, and this has given her a whole new feeling of independence. It has been all worth it when we see how much more joy she gets from being closer to her friends. SHE however doesn’t recognize this fact yet – she still sometimes say we should have stayed in the old house, because then we could have avoided all the stress and hard work of the reno. I think in time, she will also be able to see that it was all worth it 🙂

The move was also about lowering our “running costs”, and this will also definitely benefit us going forward.

Status on the finances

Now that the interest has begun to decline a bit (for now), next year should see decent savings in our monthly budget as we currently have a 1-year flex-mortgage. This means that on January 1st 2025 our mortgage will get a new interest rate.

We currently pay 4.05% (+ fees) and the new rate is currently hovering around 3% for the 1-year flex mortgage. However, if you fix the rate for 5 years you can secure a rate around 2.65% (+ fees). The fees vary depending on your LTV, but also depending on how long you fix it for. For some reason our bank favor the 1-year over the 3- and 5-year fixed mortgages. We currently pay 0.57% in fee (bidrag) to the bank on-top of the 4% interest rate. If we convert to 3-year fixed rate we then have to pay 0,77% in fee!? This makes no sense to me, as this has LESS risk than the 1-year fixed. If we fix it for 5 years the fee is 0.65%. This means that right now, the cheapest (and safest option) would be to fix the rate for 5 years, which would give us a combined rate of 3.3% (interest+fee). From a historical perspective that is a fairly good deal…

However, our current loan is granted based on a 60% LTV. If we get a decent valuation, we could possibly hit <40% LTV. Why does this matter? This would put us in a lower fee-bracket (but it will require us to pay the bank to issue a new mortgage, which also has a cost).

If we take the average of the conservative valuation (estimated) and the optimistic valuation (estimated) we’re just 10 monthly payments from reaching 40% LTV.

For some reason, the <40% mark is the holy grail. It’s a ladder that goes from 80% to 60% to 40%. If you’re below 40% LTV the bank is considering you “low risk”. They thus reward you with a discount on the fee (bidrag). In our case, if we get a valuation somewhere between what we consider as the conservative (4.5 million) and the optimistic (5.0 million) we’re within the 40% LTV range. But we’re currently on a 30-year mortgage (with 28.5 years left), and getting a new mortgage is not free. Unfortunately this ladder does not automatically work in your favor on your current loan. This is clearly a “bank-trick” that requires you to PAY for a new mortgage in order to drop into a lower fee bracket. Typical dipshit bank-move. Anyway, the fee savings only amounts to 0.20% in our case (going from the 60% LTV bracket to the 40% LTV bracket), so it’s more a matter of principal for me than something that actually represent a great monetary value. 0.20% in savings over the next 10 years does however amount to more than €4.000 – but getting a new loan could easily run us €1.500…That leaves €2.500 in potential savings.

For now my conclusion on this matter is that it doesn’t make sense for us to PAY to get a new loan, unless the new loan provides us something that our current loan doesn’t.

ENTER: The option of getting a 10-year fixed 3% loan (here the fee would only be 0.30%). This would mean that we would be debt free in 10 years. It would also save us a ton in interest payments (if we pay off our loan in 10 years instead of 30). Of course it would see our monthly mortgage payments double compared to today…This would mean that we would not have much left to put towards our Total Balance. Everything would be used to pay down the mortgage…

What do you guys think? What would you do?! 🙂

 

Status on our life in the new home

Since we’re still in a “rebuild”-phase both in terms of our cash reserves and our actual home, I feel like we’re still living inside a project.

Unfortunately my mental state has also been somewhat deteriorating as of late. It’s been a long time (years) since I remember feeling “on top”. I think it’s time for me to conclude and just put it out there “on paper” that I’m suffering from a mild depression. I feel like I’ve lost the ability to feel passionate about anything. I don’t have any hobbies, and I’ve become a grumpy old man. A buzz kill. This probably started way back (before I even started this blog) and it’s been like being on a roller coaster these past few years. Few highs, many lows. We could also just call it a mid-life crisis, but given that this started in my early 30’s I think that would be a bit unfair. I’ve been searching for different ways to “lift my spirits” and raise my mood, but I’ve yet to find the silver bullet.

I’m currently unhappy at work, and that quickly spills over into my home life, which is really unfair to my family. I have realized that I certainly cannot save myself to happiness, but having 0 money in my account definitely doesn’t lift my spirit either! I’m hoping that once our spending normalizes and our savings once again begin to grow, I might feel a momentary lift in spirit – but I know that it will be short lived. I’ve got to find a more permanent fix to my roller coaster. I was hoping that someone smarter than me had the answer, but he too disappointed. Happiness comes from within, but spending too much time in your own head seems to have the opposite effect (at least that’s my experience).

Don’t worry, I’m not suicidal or anything, but I just can’t seem to find contentment in trying to survive every day. It doesn’t seem like much of a life, if you can’t find enjoyment in even the little things. It’s probably time to visit a(nother) therapist 🙂

Yesterday the wife and I tried cryotherapy. 3 minutes in a cryo-chamber in your underwear was a pretty wild experience! Before that we had spent 30 minutes in a sauna, so it was a huge contrast. Heat is not my thing, but the cold shock I feel like might hold some potential. 3 minutes of you just trying to breathe and block out the extreme cold. Survive for 3 minutes and worry about the rest later.

The wife has purchased an ice-bath now… Wish me luck! HAHA

Until next time!