Blessed by the Potato

There is no special significance to seeing the digits roll over and all those zeroes line up on a milestone post like this one, number 1000 here at BbtP. It’s particularly meaningless because the URL doesn’t even have 1000 in it: it’s up there as 1125 — an artifact of having 125 posts/pages that didn’t become part of the post timeline. And the starting point isn’t the starting point of the website, just the point in 2005 when I switched over to WordPress.

But we’re (mostly) humans: we’re not strictly rational, and we do like to take time to reflect.

So woo-hoo, post #1000!

When I first got the idea for this site, I was a sleep-deprived high school student. When a less-awesome and significantly less-popular version than I had in my mind’s eye first launched, I was a sleep-deprived undergrad. When I switched over to WordPress and a more codified blog format (and “blog” became a word), I was a sleep-deprived master’s student. Now look at me: a sleep-deprived dad!

I’ve blogged about whatever happened to be on my mind, with primary focuses shifting over the years from video games to the environment, internet throttling to hybrid cars, and my now most-popular category: personal finance.

I’ve never pretended to have a schedule, so the frequency of blog posts has waxed and waned, anywhere from several long ones in a row as I pounded on the keyboard, to periods of relative quiet (like now — one of the few times I’ve posted less than once a week). I’ve had some good feedback to be sure, which is to be expected with such high-quality readership, but less back-and-forth in the comments than I expected: most posts have zero comments, and over-all I have more posts than comments from people who are not me. I can only assume that it implies that my posts and logic are perfect, since the primary function of comment sections is to point out errors and disagreements.

There’s no telling what the next thousand posts will bring. Likely more stories of my daughter, since that’s new. Maybe I’ll continue to average just one post a week vs. the three per week I was running at for much of the last 6 years. Or maybe having a hellishly long commute will lead to a lot of time to write — though likely with pen & paper or on my blackberry rather than on a computer.

I have no idea what will be coming down life’s road, but odds are good I’ll be writing and ranting about it here, and I hope you follow along with me.

Good news: I got a job offer this week!

The offer was laid out a little differently than I was expecting in that it comes with a defined benefit pension! These days a DB pension is a rare, nearly mythological thing, and it definitely adds value to the offer, possibly even more than a higher up-front salary. Being well, me, I decided to try to use a bit of spreadsheeting to come up with an approximation of how valuable that DB pension is to me. There are doubtless actual actuaries out there who would laugh at my attempts to do this from first principles, but if they do decide to correct my methods, I will welcome the learning opportunity :)

So without getting too far up into my business, let’s use some nice round fabricated numbers and suppose for the sake of argument here that I had a competing job offer with no pension but a $5k higher salary, and wanted to try to value the pension to compare (as much as is possible) the two offers. The DB pension involves taking some percentage of my salary from me to invest in the plan, and that is matched by contributions from my employer. Let’s say that my employer’s contributions would amount to $3.5k/year. That might be one quick way to value the DB: the amount of the bonus contributions from my employer. However, a pension is a little more complicated than that: I can’t actually use that money the way I would want to (whether for investing or spending), yet it’s also less risky than investing on my own in stocks/ETFs/e-series index funds would be.

If I go to the pension calculator provided on the website of the pension fund, I can see that with certain assumptions (namely that I’d continue to work for the same employer until age 60) that the pension would provide a stream of income in retirement, let’s say $26k/year here. A pension is a bit different than having a pool of investable assets in that it provides protection against longevity: no matter how old I manage to live to, the pension will continue to pay without running out. On the other hand, there’s less flexibility and no inheritance to leave behind if I do die early. Let’s be somewhat fair to the pension and assume I’ll live to a nice ripe old age of 89 (a few years longer than the actuarial tables might otherwise suggest).

What pool of capital would I need to provide that $26k yearly income? Assuming a conservative 2% real return, that would be roughly $594k saved at age 60. To get to that point, I’d have to save a fair bit every year between now and then. Using a slightly higher rate of return during the saving years (3% real) and assuming that the contributions increase at 1% per year (in-line with the raises I used in the pension calculator), that would be a hefty savings of almost $13k per year.

In other words, the DB pension could be worth a lot more than just the employer match being put up every year.

There are a few wrinkles though: the rate of return might be too conservative. I’m not too concerned on that point, since even if I use a more aggressive rate of return (3% in retirement, 5% in the savings years) the value of the DB plan still seems to be greater than the up-front salary of the hypothetical competing offer: I’d have to save $8.6k/yr on my own under those assumptions, which is still $5.1k more than the amount being taken off for the pension. Even if they gave me an additional $5k up front that I saved on my own, I might prefer the pension due to lower market and longevity risks (plus I’d lose out to taxes if I ran out of RRSP contribution room).

The other big wrinkle is that this is all assuming that I stay in the job (and that the pension plan doesn’t get significantly modified) until I turn 60. What seems to be weird about the pension calculation (which may be an artifact of the web calculator but I believe is actually in the payout calculation) is that there’s no time value to contributions: all that seems to matter is years of service. If I work from 33-36, that’s 3 years of service and seems to be worth the same as if I worked from 57-60. Yet clearly money saved while in my thirties should be able to compound and provide more monthly income in retirement than money contributed in my fifties. If I end up moving to a different job in the next few years, then my pension contributions won’t be compounding in the same way as if I had saved some money and invested it in an RRSP. That gets complicated though, since there is the option to cash out the commuted value to a LIRA, and I can’t find any way of estimating that. If I choose to leave the pension alone, then it looks like it’s still about as good as the amount I’m contributing and the employer match growing at 5% (then 2% during the payout years).

Though it’s tough to decide how valuable a DB pension is, it looks like it’s worth at least as much as the employer match, and possibly triple that. The older one is (and the longer one stays on the job), the more valuable the DB pension benefit becomes.

A reader asks whether or not he should start taking CPP early. There are hundreds of articles out there asking this very question, but that’s not going to stop me from giving you my take on it, too! [Edit: can’t believe I forgot to link to Michael James’ post on the matter, which has a graph!)

For those who are unaware, CPP stands for Canada Pension Plan: you pay into the plan in your working years, and in return in your sunset years the plan pays you a small pension. The normal age for that to happen is 65, but you can start taking payments as early as 60 if you like, or put off withdrawing until age 70. Taking it early incurs a penalty (you get 36% less if you start at 60), while you get a bonus to your payments if you defer taking it. My impression from reading all the articles along the way was that the system was set up to be pretty close to break-even, so you should just start taking payments early if you needed them, and defer if you didn’t (e.g., if you were still working at age 60).

But the question has been posed, so let’s answer it!

First up, the very simple case of not giving any value to having the payments early (i.e.: not investing). In that case there’s a break-even point around age 74 in terms of how much total money you can pull from the plan: if you die before age 74, you’ll have squeezed the most out of the plan by taking CPP right at 60. If you live longer, you’ll be glad for having put off withdrawing until age 65 to get that bigger benefit, and it’ll add up to getting more out of the plan in the end. This agrees with most of the articles I’ve found.

If you invest the money you start taking right away (or equivalently, keep more money in your investments because you’re spending the CPP money), then that gives more benefit to having money early on (it compounds). With a 3% real return, that pushes the break-even point back to age 76, and with a 6% return, it pushes the break-even back to age 80.

One non-financial reason for taking it early was given somewhere (and unfortunately I’ve closed the tab, or I’d give credit): even if you get less total payout, you should still take it early because you’ll enjoy a bit of money more at age 60 than you will more money at age 70. Your lifestyle expenses may be higher when you’re a young retiree in good health than when you’re older, so even a reduced pension will be put to better use. On the flip side, your medical bills may be higher in later life, and the higher payout of a deferred CPP payment may come in handy then.

So my final answer is a little wishy-washy: most people will expect to live beyond the break-even point, so waiting until the “normal” age of 65 to take CPP should make sense. However, it’s not by a huge margin, so if you need the money starting at age 60, then take it starting at that point.

The Ottawa Citizen had a great couple of articles on a joint NASA/NRC/CSA project to study snow storms and weather radar. While the first article about the project is not bad, what made it notable was the follow-up freedom of information release showing the ridiculous layers of bureaucracy and message massaging that had to happen before a non-answer was released. An op-ed the next day lamented the extreme information secrecy of the government.

I think scientific communication is important — indeed, it’s something I’m hoping to make a career out of here. So it’s kind of sad to see such an epic failure of communication in this case. What makes it especially sad is the number of people involved: I counted at least 4 different people in the FoI series of emails who were dedicating time and effort to not communicate, and there were more who appeared in just one or two short snippets. I bet you could not communicate with just one person in the department, or even an unhelpful sign on the door and a voicemail message. These guys, in theory, are supposed to help translate the science for the lay people and do the communications so the scientists can do science, though with the present government the entire goal may simply to act as a firewall between the scientists and everyone else. But wouldn’t everyone have been better off if one of the scientists just did the talking for himself?

So I see this kind of thing and can’t help but think “what are they getting paid for?” Couldn’t that money be better used for the main mission: science?

Wayfare (and, I suppose, myself) chose to go with a midwife as the care provider for her pregnancy. As it turns out, the delivery was handled by an OB (and 2 other doctors and like 7 nurses), but that’s the way things go sometimes. In fact, I think that our case shows that the system in place in Ontario is a good one: had things progressed as planned, it would have been the midwife attending the delivery. Yet when preeclampsia lead to an induction and a complicated birth, the hospital on-call medical team was there and ready to help. Just because you choose a midwife doesn’t mean you give up the resources of the hospital in the worst-case scenario.

There are a tonne of resources out there about midwifery and how to make your decision, including several books (I know, Wayfare read many of them). In short, a midwife is someone who is a specialist in helping women in pregnancy and through to early post-natal care (such as breastfeeding), with a focus on natural delivery. It is a regulated profession, and in Ontario their use is covered by OHIP. There are many points in the debate about using a traditional physician or OB for pregnancy or a midwife, but the main ones are the potentially unnecessary interventions in physician-assisted births, and that midwives try to put the patient’s wishes first. In particular, the high Caesarean rates. A C-section is an invasive surgery, and while it’s very much needed in the delivery tool-kit, there’s a charge that it’s vastly over-used because it makes the doctor’s life easier at the expense of the patient’s wishes. The advocates of midwifery say that the majority of pregnancies and deliveries are very natural processes, and don’t require interventions or the specialized training of a surgeon. Instead, they need the support and guidance of a patient midwife.

So a midwife will work towards a natural birth, helping with positions and what-not, and can also provide some measure of interventions if needed. They’re very attentive to their mothers-to-be, with a typical midwife visit being an un-rushed affair with lots of opportunity to ask questions and get coaching along the way. There’s also a very good chance that the midwife who provides your prenatal care will be the one to help you through the delivery, whereas with a physician you may just get whoever is on call at the hospital that night. Plus she comes by a few times after birth to check on the baby and answer our many, many questions, which helps a lot since it takes a while to get around to getting a family doctor or pediatrician.

After all the research Wayfare did, and our own experience with the process, I think a midwife was a really good way to go, and I’d recommend it to other pregnant couples. If we haven’t high-risked ourselves out of the option, we’ll go with our midwife again. I make that recommendation with just a few minor caveats though:

The first is the big one for me: though midwives do hospital deliveries, many people associate the idea of a midwife with a home delivery, and many of the books and articles on midwives are intertwined with those on home births. They push not only a midwife for your natural (or mostly-natural) delivery, but also a home birth as being the best option. I was uncomfortable with the home birth idea before-hand (our plan was a midwife-assisted hospital delivery), and after our experience I think you’d have to be half-crazy to try a home-birth. Yes, a midwife has first aid training and certain supplies, but if something goes seriously wrong there’s just no way she could handle it. If you tear something (or in engineering speak, blow out an O-ring) and decide that yes, you would very much like the epidural after all, you’re out of luck. So if you start reading up on midwives and come across this information on the magical wonder of a home birth, I’d say to skip over that option. Indeed, I wouldn’t even necessarily pick a regular hospital delivery: I had “NICU on-site” as one of my criteria for picking a hospital, and in hindsight was really glad it was.

The second is that midwives are something of an “alternative medicine” practice, and tend to associate with other such practitioners. So you can quickly run down the line from your midwife with her care and sets of evidence-based practices and standardized blood workups to a referral to a naturopath, herbal preparations, or further down the line to acupuncture or out-right quackery like homeopathy. Yet they do also provide the good care of checking the fetal heart rate, prenatal screening, regular monitoring of the mother’s blood pressure and urine glucose/protein, etc.

The third is a bit of give-and-take: a pro for using a midwife is the patient-centred care, helping you to shape the way your own pregnancy and delivery will go. Whether you want it to be at home or in the hospital, with drugs or without, they will help work with you and develop that plan. But they make a lot of things that are standard-of-care sound optional: for example, a quick vitamin K injection is standard after birth as newborns can sometimes be a little deficient, and it will help them clot. I found that with some of the midwives instead of “we normally do this, but if you really object we can avoid it for you” it was “well, if you want, we can give vitamin K. Totally up to you.” Just the way it was put made me a little afraid they were just a touch too flexible sometimes, and wouldn’t default to the standard-of-care if the new moms were even a little bit apprehensive about interventions.

But those are all very manageable caveats. In the pro column you have a great pregnancy resource who is very unrushed and patient with your endless lists of questions (well, maybe we’re a bit abnormal in the number of questions we can come up with), patient-centred care, totally open to trying to meet your wishes for the birth experience, with a good chance of your primary or secondary midwife actually being the person who will attend the birth. You can page her any time if you have a concern, and usually hear back promptly.

IMHO a midwife-assisted hospital birth is a great way to go, giving you the best of both worlds: good patient-centred care for a calm, natural delivery your way in the majority of cases where that’s possible, while still being able to summon 3 doctors and 7 nurses in an instant for the minority of cases where it’s needed.

Foreword: this is an emotional post, one of those that I wrote more for my own sake than for you to read. It’s rambling and disjointed and running a touch long, so I won’t be offended if you skip over it and wait for something on math or hybrids or finance. I also need to mention up front that Blueberry is home with us and doing great.

I’m just all tears and raw nerves.

I keep seeing that blue, unmoving body and thinking “babies don’t come back from that. You don’t get this perfect pink smiling child from that.” I’m afraid it’s a dream, or a mistake, and they’ll whisk her off to some other room at any moment.

The educated part of me does know that it was a very brief period with a 0 APGAR score, and that babies are very resilient: if there even was any brain damage, she’ll heal up, adjust, compensate, and probably end up being smarter and better adjusted than me.

I used to think that the scariest two words in the English language were “Scottish cuisine”, but now I know for a fact they’re “code pink”.

It’s kind of weird because at the time I was just in the moment, and I knew I had to keep cool and let the medical team do their thing. I had to be ready to deal with whatever came next, to support Wayfare, or help make decisions for baby’s care. Then I was just overwhelmed with joy when she started breathing on her own, and even in the incubator it was so magical to reach in and touch her arm and see her look at me.

It wasn’t until about 20 hours later that I was able to hold her in my arms outside the incubator. Just after that it kind of hit me like a brick wall and I just broke down crying:

We were back in the ward. Wayfare had a shared room, and in the rooms are these little cradles because they want the mothers to spend as much time as possible with the newborns. The other mother had her new baby in the room, and I sat down and stared at our empty cradle and cried because our baby was in the NICU and not with her mother. Weird, since by that point I knew it had turned out ok and even though she was still being watched in the NICU, she was in fine health… but it wasn’t until everything was kind of stable and settled that I the emotional roller-coaster ride caught up to me and I had my little traumatic breakdown.

I’m still a mess of emotions. Every now and then I flash back and hear in my head “code pink” over the intercom and the NICU pediatrican calling out “one-and-two-and-three-and-four” and just start crying and worrying about how close we came to losing her. Or the opposite, I’ll look at her perfect little face and start crying from the overwhelming joy.

One thing is for sure: nothing went according to plan.

Wayfare had a list prepared for labour: things to remember, and things to bring, and people to call for the big event. I saw it out and at the ready when I came home from the hospital from a nap and laughed and cried at how quickly that all went right out the window… For the last month of the pregnancy, Wayfare had unfortunately been experiencing a few complications: swelling and weight gain beyond what’s normal, and high blood pressure. These can indicate that the pregnancy is stressing the mother’s health, but they were slowly building up and weren’t so bad that it was an issue: just something to carefully monitor, and for her to live with until she delivered and they could resolve themselves. Last week though things started to escalate as she had traces of protein in her urine, which is indicative of stress on the kidneys. Then on Tuesday the traces became a fair bit of protein in the urine, and the urine production itself fell off a cliff: I think she said she only produced about 100 mL total that day, despite drinking plenty of fluids.

The midwives agreed it was time to consult an OB, go to the hospital, and get an induction (or potentially, a C-section) to move this pregnancy along.

An induction basically consists of two phases. The first is to get the cervix — which if you’re not up on your female sexual organ anatomy, can be thought of as the doorway the baby has to pass through to get out of the womb — to open up. It starts almost completely closed, and will open to something like 10 cm before the baby will pass through. So a drug is given to encourage the cervix to “ripen” or thin and open up. Even when medically stimulated, this tends to be a slow process: opening 1 cm per hour is a pretty decent rate, and it can take longer than that if the body isn’t ready. The second phase of induction is to give a drug that mimics oxytocin, which causes the uterus to contract and push the baby out, and this isn’t given until the cervix is at least most of the way along to opening.

So after giving Wayfare the cervidil to start the first phase of the induction, I was sent home to get some sleep: it was going to be 12-24 hours before anything more was expected, and I needed my rest.

Even the induction didn’t go as planned… after less than an hour of sleep she called me in a panic to get back to the hospital. Even without the oxytocin/pitocin, she was into furious, almost tonic contractions: one building up just seconds after the previous had ended. Her cervix had dilated 6 cm in 30 minutes, and there wasn’t time to do an exam after 6 cm, so we don’t even know if she was fully dilated by the birth. Things moved extremely quickly then, with doctors and nurses materializing, Wayfare’s body pushing involuntarily, and then — very quickly, in one push and one cut of the surgeon’s blade — the birth. All-told labour was just over an hour.

Out came Blueberry. Though she had a strong heart rate when the monitor was last hooked up just a few minutes before, and was kicking up a storm through the contractions, she came out blue and still. I didn’t get to cut the cord; there wasn’t time to even ask. Clamp. Cut.

Resuscitation.

Being readers and planners and worriers, we had even decided in our birth plan what to do if there was an issue with baby, and she had to be separated from mommy: my job would be to follow baby, and Wayfare would be accompanied by her mom. But they wouldn’t let me follow her to the NICU, and it was several nail-biting hours before I could see her. Even more before Wayfare was able to be moved to a wheelchair to visit.

–

My cousin was the first on that side of the family to father a child of the next generation. Everyone wanted to fawn over him, but the mother was crazy protective: she wouldn’t let anyone in the same room without washing their hands, and holding or touching him was out of the question.

Before the birth, I was telling Wayfare that there was no way I was going to be like that. Kids heal fast and need some environmental exposure to build up their immune systems. I might even lean the other way and invite people to “come and lick the baby” to boost her immune system. Wayfare looked at me and said “asking people to lick the baby is kind of weird”. Ok, maybe not lick per se — though babies are delicious — but you know: I’d let people hold her and visit; she’d play in the dirt and climb trees; she’d get kisses from puppy dogs and eat Oreos off the floor if it had only been 3 seconds.

Now, I don’t know. I’m afraid I may be broken, and I’ll end up being the most over-protective dad in the universe.

–

After-thoughts: just like Wayfare, Blueberry does have a real name, but will be “Blueberry” here.

I wrote the bulk of this post sometime on Day 2, after cracking up emotionally when we got Blueberry back from the NICU, and I just needed to try to put myself back together. I think writing some of it out helped. It’s now Day 4, and I’m starting to worry and fret a little less (though as Wayfare will confirm, just a little less). I’ve now managed to spend more time with our little family together and happy than separated and terrified, more time marvelling at my adorable daughter in my arms than reaching through a port in the incubator, and that’s helped a lot. While I’m still sleep deprived, I’m not at the 1-hour-in-24 level, which has made me feel a bit more human.

Each night so far I’ve spent at least two hours just holding Blueberry while she sleeps: I can’t bear to put her in the crib when I could just hold her in one arm while I eat or watch TV or whatever. Plus she seems to like it. But things are finally starting to feel normal-ish again. New normal perhaps, since no matter how she got here, things are never going to be quite the same again with a baby. I’ll probably stop being so ridiculous soon, and put her in a crib like a normal person.

I want to start off by saying very quickly that Wayfare and I had a beautiful little girl this morning, and that everybody is doing well.

I kind of want to write down all the terrifying and wonderful details while they’re still kind of fresh, but I also don’t want to spend too long away from either of them, and I need to spend this time sleeping. Plus I’m not sure I want to share all the emotional stuff, or if I even can express it in words.

But for now, for those who would like to know: it’s a girl, she was 7 lbs 1 oz, she’s got 10 fingers and 10 toes, all nice and evenly distributed. Mom’s exhausted but doing fine (though really wishing there was a private room available so she could sleep).

Rather than talk about myself this fortnightly update I figured I’d turn it over to my RL friends who are starting new blogs for the spring. First up is Ben, who’s launching a new business venture in southern Ontario in the form of an organic farm. Here’s Ben with the details:

Fresh Start Farm is a project Lisa and I have put together in order to test the waters when it comes to market gardening and earning a sustainable living farming. We are both huge foodies and we’ve been growing all kinds of things for our own consumption on a small scale over the years. At the same time we have both yearned for more space where we could expand our gardening into full-on farming. We both agree that the farming lifestyle is one that we would love to embrace.

After attending the Guelph Organic Conference last year, we both agreed that it was going to be our goal, over the next 5 years, to transition our current careers from what they are now, to full time farming.

We have rented a piece of land, roughly ¼ acre, in Pelham, a short drive from our house in Welland, while we continue the search for a suitable homestead to purchase.

We have invested a decent amount in seeds, soil amendments, tools and things, although the biggest investment will come in the form of our time throughout the growing season this year. In order to sell the produce we produce, we have rented a booth at the Welland Farmers’ Market, which is a fairly large and well attended market very close to our home and farm.

We have created the website in order to blog about our experience as well as get the word out as to what’s going on, what our problems and successes are, and most importantly, what we will have for sale at the market, once that time of year rolls around!

I’m sure most of your readers are in Toronto, so they would probably never attend the Welland Market, but in the future we may start offering a CSA delivery to the GTA. I still have a strong connection to North York, and I would love to get a booth at that market, if possible. In the interim, I encourage everyone to follow us as we go about doing what we do, offer comments and questions, and see that it is possible to be awesome if you want to be!

And also Lenny has launched a blog where he talks about whatever he feels like (so far, making his own pizza dough and encryption).

As for me, I’ve got my first job interview coming up later in the week. This is for a position I applied for in December, so I guess they’re not in a terrible rush to hire someone (and does give me hope for all the other applications I haven’t heard back on yet — there could yet be good news!). I’d say I’m pretty nervous to face the interview, but Wayfare’s way worse. To be fair, she knows how terrible I am at interviewing and the awful turns interviews can take, whereas I am consumed by the notion that I am generally awesome in all things, so it’ll be fine. ;)

Flag football is coming to an end, and much to my surprise attendance never got better. Who are these people that shell out over $100 to join a football league and only show up for one game? After much discussion and debate I decided not to join any leagues for the spring: as good as team sports are for motivating me to actually get out and exercise, there’s just too much uncertainty with a new job (any. day. now.) and baby on the way (same). Plus many of the spring leagues are on weeknights, and I have zero desire — nay, a full-on hatred of the very thought — of commuting around Toronto rush-hour at 6pm to try to make a game half-way across the city. Others may whine, but I’ll take a 10pm Sunday game every time.

I leave London alone for two months, and it all goes to hell…

Another article at the Globe warning about the housing market. I like the way Tom Bradley phrased this: “When I pull together the economic fundamentals, valuation and sentiment, real estate, as an investment, doesn’t look very attractive. The distribution of potential outcomes looks asymmetrical to me – limited upside and plenty of possible downside. But what really screams out at me is how many important factors are at extremes … bad extremes. One or two off-trend numbers can be explained away, but too many are jumping off the charts – price increases, mortgage rates, loan growth, consumer debt and home ownership levels.”

James Randi on scientists and trust and skepticism.

Nelson tries to find a way to short the Canadian real estate market.

Teacher Man, writing for CFB, says the Canadian real estate bubble can’t be denied any longer.

Reader Rhea, from Seattle writes in:

We have a rental property in what was supposed to be an up-and-coming neighborhood near Downtown Seattle. We lived there for 2 years and loved it. It is on the top floor of what was a new condo (now 7 years old), and has amazing views of the water, mountains, and downtown. We paid $275,000 7 years ago. Then we moved and bought a house and rented it out for 4 years for $1500/mo. That tenant left and we tried to find another renter, but had a hard time at that price point, eventually renting it out for $1300. We pay about $2100/mo including HOD’s. We got into a bad mortgage deal, as was typical at the time. Zero down/Interest Only.

All condo sales in the building have been short sales, and estimation of condo [market value] is around 200k. Question is, do we re-finance, which would cost us 125k to get mortgage down an amount which renters would cover. Or short sell it?

Hi Rhea, thanks for the question.

I’ll start with a question of my own: why did you hold on to the condo after you bought a house? Is it because you planned on moving back in later, or because you loved the idea of becoming landlords, or was it purely an investment motivation?

The fact is, as an investment, the condo turned out to be a poor one. You’ve lost money on it, and the thing to realize is that the money is gone and you can’t get it back. You can realize the loss bit by bit as the rent falls short of the monthly costs, or you can face the loss all at once by paying down the mortgage deficiency now or doing a short sale, but no matter how you slice it, it’s not coming back.

With that realization, the most important thing to consider for your decision of what to do in the future is your motivation for holding on to this condo. If you just love being a landlord and would do it even if you had to pay for the privilege, just so you could speak with tenants and help put roofs over their heads, or if you plan on moving back in to this specific unit in the next few years, then one of the options for continuing to hold on to it would best suit you. If you don’t love being a landlord, and were just looking for an investment, then you might want to think about just taking your losses and selling it.

At a current value of $200,000 and current rent of $1300/mo, your price-to-rent is 154X, which is in the roughly break-even range. Continuing to hold it shouldn’t hurt you further (at least not much), but it’s still not a very good investment. If you can get the rent back up to $1500/mo (while still maintaining good tenant quality and low vacancy) then it might be worth holding on to, with a price-to-rent of 133X, but it’s still not a stellar investment, especially if you find being a landlord to be a time-sucking chore (and the time commitment will only get worse as your unit approaches 10 years of age and starts to need more maintenance and appliance replacements).

So ask yourself whether you have a good non-investment reason for holding on to the condo, and if you don’t, then speak to a real estate broker about selling it. If you do still want to hold on to it even if it isn’t a good investment, and if you have the cash available to pay down the mortgage and refinance, then speak to a mortgage broker or your bank about your refinancing options.

For my Canadian readers (which I thought was all of you — no idea where Rhea came from!) this is an example of “speculative holding.” Rhea didn’t buy her condo with the intention of being a real estate speculator, nor the house that followed… but instead of selling the condo to buy the house, she held on to rent it out. Thankfully no one I know in person has become a speculative holder, but I’ve seen them around the various personal finance fora, choosing to borrow against the starter home to buy the second and then rent it out, rather than sell to move up… becoming real estate speculators in the process. This is a kind of phantom speculative demand: you don’t see them lining up in the cold, clamouring to buy pre-construction, and they’re not at any point applying for an investment mortgage, but the speculative holding has the same effect on the market… and on the speculators themselves.

Not to pick on Rhea, but in this particular case it was egregious speculation: with an interest-only mortgage if it’s cash flow negative you should know immediately something is going wrong. With an amortized mortgage if you’re not very good at math, it’s easy to fool yourself that you’re at least “building equity” while being “a little” cash-flow negative.

I read the The Hunger Games books not that long ago, in part because of the hype for the upcoming movie. I enjoyed it, plowing right on into the 2nd and 3rd books in the series. The action seemed well-suited to a movie adaptation, so I had high hopes going into the theatre today.

Unfortunately I can’t recommend the movie. The biggest drawback is the terrible camera work. It’s shaky cam, like the Blair Witch Project or Cloverfield, except worse: instead of just being one shaky camera, it’s rapid cuts between many shaky cameras. And not just for the action scenes (which are likely deliberately motion blurred to nothingness to get a PG rating): even just sitting down to eat dinner seems to require rapid cuts to different shaking viewpoints.

So here is what I propose: director Gary Ross and Michael Bay should be put into an arena where they will fight to the death. The winner will get a tripod, the loser, well… But a much-needed tripod! So worth it!

Other than that, it was okay: they seemed to do a decent job of streamlining the plot to fit the time and format. The acting was pretty decent, which is a tough feat with so many child actors. The movie had some behind-the-scenes looks at the arena and the gamemakers, which I think were good additions. There were a few points though where I had to question if people who hadn’t read the book would be able to follow along.

Spoilers!

For instance, Katniss and Rue decide to blow up the food & supplies cache of the careers, but don’t explain why in the movie, so it seems really random. Watching the movie, you wonder why Katniss doesn’t just put an arrow into a few of them from her cover in the bushes, and what blowing up their stuff serves to accomplish — in the book it’s explained that they’re dependent on the supplies from the cornucopia, so if she can take those away they’d be on a more even footing, or even an advantage to Katniss with her superior survival skills. Plus the story does a pretty good job of not having Katniss run around terminating other kids with her superior archery skills, even though that’s what it looks like the book is building towards at first.

Then, after Rue dies, it’s kind of strange to see Katniss get so worked up, since Rue had all of like 3 minutes of screentime before that. I think their relationship was built up much better in the book, and I didn’t catch any hint of “you remind me of my kid sister who I loved so much I volunteered for this freak show to save her” in the on-screen relationship.