This question comes to me from a reader: “I’ve lived in a furnished home for 5 years. I’ve paid over $150,000.00 in rent. The home owner want me to pay for the Living Rm, Dining Rm and 2 Bedroom Set. Should I have to replace these furnishings?”

My first response was: heck, no.

Then I thought about a little. My response is still, probably not, but there could be situations where the renter is on the hook for the furniture.

Who Is Responsible for Replacement Furniture in a Rental Apartment
Typically, a furnished rental costs more than an unfurnished unit. The higher fee is intended to cover the initial cost of purchasing the furniture as well as the cost to replace it. The landlord is responsible for the cost of normal wear and tear for furniture.

However, unless it’s really cheap furniture, it should last more than five years. We recently replaced our sofa and chair. They were twelve years old. They are actually still very comfortable, but they were too big for our home and needed new slipcovers because the dry cleaner had ruined them. I expect to keep our new furniture for ten years, too. Longer for the less frequently used furniture like the guest sofabed.

If furniture is already in need of replacement after five years and it was new when the unit was rented, then the renter may have caused damage to the furniture. Pets can and often do ruin furniture. I hate to say this so bluntly, but very large people can also break furniture or wear it out faster. Children can be culprits, too.

If you, the tenant, have damaged the furniture, then you are responsible for replacing it, just as you would be if you burned a hole in the carpet or broke a window.

If your furniture is in decent condition and you just want it upgraded, check your lease and state laws to see how often furniture in rentals must be replaced. If you’re not at that point, then you have to share the burden.

If the furniture hasn’t been damaged by the tenant, but it has already worn out, then ask the landlord for the receipts for the original furniture. One look at the price and retailer should tell you whether the furniture was good quality. If it wasn’t, then the landlord should pay to replace it because he is the person who bought the crappy furniture in the first place.

The Case Against Furnished Apartments
Furnished apartments are usually intended to be short-term rentals – six to nine months is usually the most someone stays in a furnished apartment. They’re more typically rented by vacationers or business travels who would like a longer stay in a more homey environment than a hotel. They certainly shouldn’t be rented for five years. After a year, you’re just throwing money away.

A furnished apartment is at least $200 more than an unfurnished unit, and could be as much as $500 more, depending on the size of the property and its location. That’s fine if you’re only staying one to four weeks.

So, let’s assume the reader was paying $200 more than the rent for an unfurnished rental. She’s been paying $2500 a month for five years. That’s $2400 extra dollars a year, or an extra $12,000. That’s some pretty pricey furniture!

You can furnish an apartment pretty basically for around $3000 if you shop carefully on Craigslist or at stores like Ikea, then upgrade your furniture over time.

Before you pay extra to rent a furnished apartment, think carefully about how long you plan to be there. If you’re paying it yourself (in other words, you’re not a business traveler on long-term assignment), is the additional cost really worth the reduced hassled of buying your own furniture?

I’ve been waiting a long time to buy my new car. My trusty Toyota Corolla had just turned thirteen-and-a-half when the mechanic informed me that three of the four engine mounts were broken. It would cost $538 to repair it. I already planned to buy a car in November, so my husband and I decided to bump up that timetable rather than pour more money into the old car.

Researching New Cars
I know a lot of frugal experts recommend buying a used car, but that’s not my philosophy. I’d rather buy one brand new, thereby getting the free maintenance they usually offer and the full warranty. Then I keep the car at least ten years, instead of having to buy a new used car every seven or eight years.

My first step was to decide what kind of car I wanted. I wanted a hatchback for less than $25,000, but nicer than the starter-level hatchbacks.

By using new car research sites, I created a list of four cars: the Hyundai Elantra Touring, the Toyota Prius, the Mazda 3, and the Volkswagen Golf. I added the Honda Fit because a friend recommended it, but I sort of knew it wouldn’t meet my needs.

Before taking test drives, I read reviews at Edmunds.com and checked Consumer Reports for reliability ratings and common issues. I also looked at owner’s forums to see how happy people were.

Test Driving New Cars
I test drove the five cars in one afternoon. It took about three hours. Dealerships tend to be clumped together, so choose the area with most of the dealerships you’re considering. It was a bit grueling toward the end, but I wanted to get a feel for the cars back to back.

I went home and rated each of the cars on my personal scale. That knocked out the Volkswagen and the Fit. The Fit was too small, and the Golf was nice, but it didn’t wow me enough to make it worth an extra $4,000, especially given its mixed reliability history.

Next I made up a chart with the three remaining cars. I listed the following:

Make
Model
Trim
Options
MSRP
Invoice
Consumer Reports Reliability score
Personal Rating (1-5)
Fuel costs per year
Dealer financing offers
Bank financing rate
Rebates
Payments with dealer financing
Payments with bank financing
Total cost over ten years (Fuel and loan, maintenance is too hard to predict over ten years.)

Interestingly, the three cars were within $1000 of each other.

Next I went for my second test drives of the three cars, this time with my husband. I insisted on testing all three cars on the freeway. The first Toyota dealership I visited refused, so I found one who would let me take it on the freeway.

Based on that test drive, I narrowed it down to the Prius or the Elantra. The next day, I settled on the Elantra because it was $6000 cheaper and I hated looking through the Prius’s back window.

Finding a Price
I was already approved for a car loan through a bank, but this would have been the time to apply if I wasn’t. I also set about getting dealer quotes. I simply emailed a bunch of dealers through the websites. Initially I was looking for a 2010, but they were selling out fast, so I switched to 2011. I got several prices that way. Next I tried the Costco auto buying program and got a low price, but not the lowest. Finally, I used the American Express auto buying program and got the best price. That dealership was 30 miles away, but a dealer 1 mile from my house matched the price, which was $1450 below invoice (including rebates). If you’re not an Amex member, visit Zag.com to see who else offers their discount program.

Arranging the Deal
My husband and I went down to the dealership Saturday morning where my car was waiting for me. The dealer matched the lower bank financing rate (it was only .2 percent lower, so not a big negotiation point), so I financed through them. In exchange, I get free car washes once a month.

Now that we had settled on the price, we talked about the trade-in. I’ll admit, I probably could have gotten more, but I’ve never traded in a car before. Next time I’ll know better. I didn’t want to deal with selling it myself.

Finally, we went into the financing office to sign all the papers and transfer the title. We listened to their various sales pitches. I did accept the alarm offer, and they “threw in” VIN etching. Here’s a little tip: the car was ready the moment we stepped out of financing, which means that VIN was already etched, whether we’d been willing to pay for it or not. The alarm was also already installed, but they wouldn’t activate it unless we paid.

We rejected the hard-sell for gap insurance (insurance for the difference between the car’s value if it’s stolen or totaled and the loan balance.) The alarm already provided that coverage if the car was stolen. If someone hit me hard enough to total my car, you can be sure that we’d get more than the gap. We have the cash on hand to cover the gap should anything happen. The financing guy tried to argue that we’d still buy auto insurance if it wasn’t mandatory, but that’s a false argument. There’s a huge difference between auto insurance to protect us from financial ruin if we were to cause an accident and gap insurance that costs $500-$1000 and only covers $3000-$4000.

We also rejected the hard sell on an additional warranty with paint and upholstery coverage.

Getting My Car
We got the keys, the dealer reviewed the maintenance schedule with me, showed me how to work a few features, and then we took my new car home.

I’m buying a new car this weekend. My husband and I considered spending our entire emergency fund to pay cash for the car, but then we took a look at the budget and decided it was too big a risk. So, we’ve decided to get a car loan. Rates are pretty reasonable right now for people with our credit.

Car Loan Sources
You can get a car loan from various sources. Dealers may or may not be a good option. I also checked out credit unions and big banks.

Dealer Loans
Obviously, a dealer wants to give you the loan because they make more money that way. However, a dealer may not be the best option. The Mazda I considered came with 0% financing from the manufacturer. I seriously considered that offer, because our credit allows us to qualify for it. Ultimately I decided I liked a different car better, but it was tempting. Toyota was offering 2.9%, which is also better than bank rates. If you have great credit and can qualify for those rates, then dealer financing is probably the best option.

Credit Union Loans
Traditionally, credit unions have lower auto loan interest rates than banks. The credit unions I investigated were at 4.49% for loans over $15,000. After tax, title, and license in California, any car I buy will exceed that number. However, rates vary by location, so a credit union should be high on your list for potential car loans. If your credit isn’t great, a credit union should be your first stop for reasonable rates.

Bank Loans
If you have good credit, you should also check out rates at your local bank. I discovered that Bank of America was offering rates as low as 3.49%. I ultimately qualified for a 3.7% loan. The car I opted to buy has 3.9% dealer financing, so I’ll definitely be using my own financing. However, bank rates are usually much higher if you have poor credit.

Loan Co-Signers
My husband will be co-signing my loan. Since we’re married and co-responsible for the debt anyway, there’s no risk in this situation. However, you shouldn’t co-sign a loan, or ask someone to co-sign your loan, if you’re single. No matter how good your intentions are, there is always a risk of that you’ll run into trouble and someone else will get stuck with your payments or see their credit dinged. Friends don’t ask friends to damage their credit! If you can’t qualify for the loan on your own, you need to buy a cheaper car. Consider a used car, even.

On the flip side, many an unmarried couple has purchased a car together, or with one partner as a co-signer, only to break up later. What happens if your partner has financial trouble after the break-up and you get calls from debt collectors for property you don’t possess?

How the Loan Process Works
About a week before you go to buy the car, apply for a loan online. I received instant approval, but the bank called the next day to review the terms and explain how it worked.

Once you get to the dealer, you should do your best to be in control. First agree on the price of the car. Never focus on the monthly payment as part of the negotiation unless you want to get screwed.

Next, you can ask about dealer financing if they have incentive offers going and you want to consider that route. Have backup financing ready, though, just in case you magically don’t qualify for that awesome rate.

The dealer will run your credit and come back with some numbers. If you agree, you’ll go to the financing office and sign the papers. If you don’t agree, tell them you have your own financing.

Some banks already have arrangements with certain dealers that streamline the process. If your bank and dealer don’t have a deal, the bank will provide you with instructions. You’ll still have to go to the finance office to sign papers. This is also where they’ll try to sell you more stuff.

When my husband bought his car, he paid cash for the whole thing. The dealer still tried to convince him to finance, with a rate of 9.9%!

If you want to check out loan rates, start at Bankrate.com or Edmunds.com for lists of local rates.

Tomato project 4

So it’s been about six weeks since my last tomato update, and boy do I have an update. I have tomatoes coming out my ears!

Tomato Harvest to Date
Two of the three tomato plants are thriving. The third has recently started to produce, but they’re pretty sorry looking tomatoes and I’m not sure I trust them. However, the other two plants are thriving. They’ve been producing about 7-8 tomatoes a week since my first harvest. I was worried my plants would have stopped producing by now due to heat, but we’re having an unusually cool summer, so my plants are going strong!

I created a garden journal by grabbing a sturdy spiral notebook out of the closet. I labeled each page with a plant. I record the planting date, and how much fruit I pick each time I pick it. I also record any issues with the plant, as well as the dates I fertilized it.

So far I’ve picked 41 tomatoes between the two plants. At one point, I had to give them away because I was going out of town and didn’t have time to eat them all.

Eggshells Make Great Fertilizer
Although I have an organic tomato fertilizer, I noticed that my tomatoes were getting blossom end rot. This usually indicates a lack of calcium. Since my soil is sandy, I need to fertilize more often. Rather than buy a special calcium fertilizer, I dried a bunch of eggshells and then ground them up. I’ve been adding lots of eggshells to my compost as well, so it should be very healthy once it’s ready.

Future Tomato Plans
If I’m going to make sauce from my tomatoes, I either need to plant more tomato plants or find a way to preserve them until I have enough ready. My plants are vined, so they produce over time rather than all at once. I can’t make sauce with 6-7 tomatoes, but I’m not sure if freezing them is a good idea. Anyone have experience with this?

So, next year, I have four options:
Plant more tomato plants. 3-4 healthy plants would give me more to work with.

Don’t vine them. If I let them be bushes, they’ll produce around the same time.

Vine one and bush one. The vine one can be for eating, and the bush can be for sauce.

Just enjoy fresh tomatoes as they come and make sauce from canned tomatoes. This is probably the easiest option since I plan to grow so many other vegetable next year. That would mean planting 1-2 plants max and vining them.

Is anyone else growing tomatoes? How is your garden growing?

If you’d like to get a free refinance, also called a no-cost refinance, I would start by calling a local broker. If you don’t know a broker personally, ask around. Someone you know does. Call them up and explain your current loan balance, interest rate, and income. Tell them you’d like to know if they offer a free or no-cost refi.

How Can It Be Free?
Obviously, it’s not really free. You pay a slightly higher interest rate for not having costs. Usually 1/8 of a point. In most cases, that’s not a big deal, but you should run the numbers to make sure it makes sense in your situation.

You should also make sure that the loan value is equal to or lower than your home value. In our case, both our appraisals came in higher, one substantially higher, than our purchase price. Actually, I think the second appraisal was too high. There’s simply no way my home value has increased 6% in the last year, even with the window treatments and new paint. But whatever, it got me my refinance.

If you need to pay down your mortgage to qualify for a refinance, determine whether you’ll really save that much money and have enough cash to pay the difference without completely draining your emergency fund.

When Should You Refinance?
Keep an eye on mortgage rates. Right now, they’re at record lows so it’s a great time to refinance. Keep in mind that the averages you see are just that: averages. Unless you pay points or costs, you won’t get the absolutely lowest rate available. Also, if you have a conforming jumbo or jumbo loan, your rate will be higher. You may hear rates being advertised on the radio that are much lower than yours, but those are reserved for loans below $417,000. If you’re close to that, ask your broker if paying down the mortgage to get below that magic number will reduce your rate.

What Kind of Mortgage Should You Get?
It really depends on your budget. Obviously, in this market a fixed rate is the best way to go. Today’s low adjustable rates will rise, but a fixed rate is a fixed rate for the term of the loan.

There is the question of a 30-year mortgage vs. a 15-year-mortgage. If you’re in the first couple years of your loan, a 30-year loan is probably the most doable. If you’re halfway through, then a 15-year-loan will help you save money on interest, both by reducing your rate and reducing the interest paid over the term.

If you’re at less than fifteen years, take a close look at those numbers again. How much interest do you really have left on the loan? Make sure your the total interest over the life of the loan will be less than you’d pay in total with the original loan. Finally, you can refi to any term, but continue to pay the same amount you did before, which will allow you to pay down your mortgage faster.

Crazy like a fox! Yes, just one year after closing on my original purchase, I’ve refinanced my mortgage twice. It cost me nothing but a little bit of time and paper, but the combined refinances will save us $160 a month on the mortgage. Over ten years, that’s a whopping $15,000!

How I Got Two No-Cost Refis in Six Months
I have a mortgage broker friend. He emailed me about four months after we closed on our first loan to let me know he could get me a free refi that would drop our rate by a quarter point. At the time, this was a fantastic deal.

We sent him our bank statements, got the appraisal, and then he sent a notary to our house to sign the papers. We closed right before Christmas.

Fast forward five months. After rising slightly, interest rates started falling drastically. My mortgage broker friend emailed again, with another free refi offer. This time he could get us down to 5% even. I confirmed that we could refi while my husband was on disability. He checked and said yes, so we started the process again.

Fortunately, the answer turned out to be no. We were midway through the process when we had to call a halt. I say fortunately, because rates continued to fall. About six weeks later, my husband was back to work full time and we had a full-time paystub to send over. The appraisal was still good, and in fact our loan paperwork was still in the system. Even better, we could now get a rate of 4.875. We closed within ten days of restarting the process.

What about the Extra Year of Interest?
Both times we refinanced into new 30 year mortgages. We didn’t add to our loan balances, so the equity we’ve accrued over the past year is still ours. We did essentially “lose” that extra year of interest we paid, however it’s not a big concern for me for three reasons:

First, we don’t plan to stay in the house for 30 years. I imagine we’ll be here about ten. It doesn’t make a difference at that point whether we’re at year nine of our loan or year ten. The loan balance is the same.

Second, if we did somehow stay in the house for more than ten years, by that point we should be able to make catch up payments. We’d have $24,249 in interest to make up, but it’s still doable if we spread it out over a couple of years.

Third, over thirty years, the interest savings is $25,640, so even if we stayed thirty years and never made catch-up payments, we’d still save $1,400 in interest.

Why Not Pay Costs?
Both times we could have paid the closing costs to get the rate down another 1/8 of a point. We opted not to because the additional savings weren’t significant enough to save us a big chunk of change. We’d rather keep that money in our pockets, thank you!

Why Not Wait?
We could have waited a little longer to see if rates fell further, but I also need to buy a new car. It looks like I’ll be buying it in the next two weeks. I wanted that refi done before I started applying for car loans.

So now you know my story. Tomorrow I’ll tell you how to get a free refi of your own.

So, my vacation happened to coincide with the one-year anniversary of buying my house. It’s been quite a year. Here’s a quick review of my first year:

Boxes Moved: 80
Rooms painted: 9
Rooms left to plant: 1
Ceilings painted: 2
Ceilings I will paint in the future: 0
Thanksgivings Hosted: 1 (my first)
Refinances: 2
Husband’s surgeries: 2
Employer reorganizations: 1
Pieces of furniture bought: 17
Pieces of furniture left to buy: 10
Rugs bought: 0
Rugs left to buy: 6
Lemons picked from my tree: I lost count, but let’s conservatively say 200
Tomato plants planted 3
Tomato plants producing fruit: 2
Tomato plants suffering misfortune: 1
Tomatoes harvested: 15
Compost bins started: 1
Contractors to visit my house (including estimates): 33
Expensive plumbing repairs: 2
Warranty claims: 7
Warranty claims that resolved a problem: 2
Fires burned in either of my two fireplaces: 0
Lessons Learned: 1,000,005

I’ve posted several of my adventures in homeownership along the way, but here are a few of the more important lessons I’ve learned:

Schedule three repair estimates. Only two will show up.

The things that seem vital can usually be put off, and the things that seem like they can be put off will probably irritate you so much that you do them sooner.

Everything is expensive, especially when it comes to plumbing.

Painting a ceiling is really, really hard. Especially when you get the wrong kind of paint. Do yourself a favor and hire a pro.

If your mom informs you that you’re hosting your first Thanksgiving and you don’t have a dining room table, a six-person patio table will do. Just put baby mittens on the legs so they don’t scratch the floor.

Do not hire Mike Diamond. For anything. Ever. Not even an estimate.

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