I've Been on Vacation.,,

The Mrs., myself, and Woobie(correct spelling-not Whoobie) left for a week in North Carolina on Oct 27th. It was not an ideal time to leave town, but when is it ever a good time. Julie's company is going through some reorganization which really needed her involvement, so she has been on the phone a few times and one of my long time competitors announced they are folding their tent at the end of the year. So, I've also been on the phone and checking resumes to fill an open sales position or two. They are having a hundred year drought down here in NC and I think it is easier to get a permit to build a swimming pool than to find a qualified sales representative who knows anything about the offset printing business who isn't 55 years old and burned out.

Anyhoo, the weather has been beautiful, the color has been spectacular, and I continue to be amazed how people are willing to build a million dollar house next door to an Appalachian shack. I would think it would make it difficult to do a real estate comp a few years form now when you try to sell the place before you move into the old farts home. However, they keep throwing them up and the prices are still increasing in spite of the national trend to the contrary.

We also spent four days in Charlotte. WOW! I haven't seen a city do what they have done in the past ten years. The entire downtown, which they call Uptown, is virtually all new construction. It is the second largest banking center in the USA. There are banks everywhere and they love to built monuments to themselves. Bank of America and Wachovia in particular seem to dominate the landscape. They have leveled anything that is a good spot for another high-rise condo or office tower.

Charlotte has a lot of similarities to Indianapolis. They are of similar size, are creating a new downtown population to support the arts, restaurants, and professional teams that are all located within walking distance. Everything inside the inner loop is prospering while the dregs are just mile away in the shadows of the stadiums, arenas, condos, and office towers. They both have a problem with urban sprawl. Traffic gets progressively worse the farther you drive from the center of town. The most prosperous neighborhoods are located north and south and both have an abundance of malls.

On the contrary, Charlotte seems to be reaching their goals much faster than Indianapolis. That may be primarily the result of Indianapolis having no significant local banks. I also get the impression the average paycheck in Charlotte seems to support living in a $500K condo on top of the fact that they pay significantly lower property taxes. Both downtowns seem to understand the importance of cleanliness, but they both share similar issues with the homeless. Indianapolis, on the other hand, has preserved a lot of its older architecture. It has a less sterile feel than Charlotte and Indy has also preserved much more green space even if it primarily used by the homeless(i.e. University Park). For what it is worth, Indy overwhelms Charlotte in the memorial/monument category. Racing is enormous in both cities. Indy is the home for open wheel and Charlotte is home to NASCAR which is dominating the racing crowd until the egos running open wheel gets their poop together.

As for the people, both towns have an abundance of nice people. However, folks in Charlotte seem a bit trimmer and visitors look like they are from NYC or DC. Indy's out-of-towners tend to be square dancers with thick ankles that get excited riding up and down any elevator with a glass wall. Hey, their money is green, Chicago doesn't want them, and we sure as hell need their help to pay for the "Oil Can"(Lucas Oil Stadium).

Don't forget to vote November 6th.

Commuting in Indy - Why It's Not for Me

When I was a squirt we were a one-car family. That was not unusual in the '50's. I was one of six children and by the '70's our family owned over eight cars, each with a gas-guzzling V-8 engines. Hey, gas was only about 35 cents per gallon. We were told that there was an endless supply of oil.

We all got married and collectively bought six more cars for our spouses, except for my brother Joe. His car was provided to him, but I'll save that story for my "Youngest Sibling Blog". Then, we all moved far away from the city where land was cheap and the houses were big. Life was grand. The six siblings had 19 children and I haven't counted cars lately, but you can see where I'm headed. In a wealthy country with over 300 million people there is not enough fuel and land for the process to continue.

I think it is time to re-think the American Dream.

I've lived the dream. My family of five owned a five bedroom house, five cars, and one enormous custom van. I had the means to pay for it all, but I did not leave much room for error. However, the twenty-somethings today have even less room for error. Our society can no longer expect to have more than the generation before them. But, they can still have a wonderful lifestyle. It will just take a little common sense to make it happen.

Make a list of the things you require and pick a spot somewhere in the middle to call home. My wife and I moved downtown from the burbs to be closer to work, entertainment, restaurants, and virtually everything else that used to require a car. We love it. Each of us has eliminated 15,000 miles of rush hour traffic a year. At 48 cents per mile we have saved over $10,000 per year in commuting cost and untold hours in traffic. We are now planning on being a one-car household again. We live in 40% of the space we used to own. Almost everything costs less now except for one thing-my property taxes.

If everyone exercises their right to vote in the next election, I think we can fix that, too.

Personal Finance 101 - When to Buy a House

When I purchased my first home the week after I graduated from college, I did not have a clue what I was doing. All I knew was that I did not want to live with my parents. Don't get me wrong. I had great parents. I had been living on my own in college for four years and I enjoyed the freedom.

So why in Heaven's name did I buy a house in a neighborhood that was "in transition"?

Because my old man told me it was a good idea. That's all I needed to hear. I trusted him. He had already crunched the numbers and he knew it would be a good experience for me. After all, how big of a mistake can you make on a $15,000 house? My gross pay was $700 per month. I was loaded!

Now here is the message. I cannot believe what I've been watching and reading about the sub-prime mortgage fiasco. How could smart people deliberately loan 100 percent of the purchase price of a home at an artificially low adjustable interest rate with a monthly payment that the buyers had little chance of paying off during the life of the loan? The mortgage companies did it to make money. And they knew that there were enough people gullible enough to buy the loans on the market.

How do you avoid becoming one of the statistics? It's really pretty simple.

1. Do not buy a home unless you plan on living there at least five years.
2. Do not let your payment exceed 25% of your gross monthly income.
3. You should also have six months of your current income socked away in savings that you can access when you break your legs riding a scooter in the Bahamas.
4. And the most overlooked task is to sock away 10% of your gross income in some type of retirement account. A house isn't of much use to you when you retire if you do not have enough money to live in it.

Let's go back my first house. My monthly payment was $163.41(including principal, interest, and taxes). The payment was 23% of my gross. Check. I had no savings. However, I was allowed to borrow $18,000 because the house appraised for $23,000. So, I moved in and got a check for $3000. That was almost six months of income. Check. I told you my old man was smart. And I was actually able to save about $100(14%) per month until I met my future wife. Qualified check. But I'm sure you've all heard the story of Eve in the Garden of Eden. 'Nuf said.

As for the rest of your money, spend it!

We're #1 - Most Affordable Housing

For those of you who are looking for affordable housing, Forbes has just ranked Indy as having the lowest median housing prices among large cities in the U.S.A. The median price of a home in Indianapolis is now $112,000 with the average household income at just over $60,000.

So how much will your payment be? Let's assume you or your rich aunt have $22,000 for a down payment. That will save you the grief of mortgage insurance which can costs several hundred dollars per year if you make a down payment of less than 20 percent. That would leave you borrowing $90,000. On a 30 year fixed rate of 7% your principal and interest would be $598.77.

Then you need to add your property taxes and that is a bit of a guess because of the current property tax mess in Indianapolis. But, let's assume the government leaves property taxes somewhere in the same range as 2006. You could expect to pay around $1800 per year or $150 per month.

Of course the mortgage company wants to make sure you have insurance, so that will be escrowed into your payment. That will add an additional $35 per month to the payment.

That all tallies up to a monthly payment of $783.77 per month plus whatever you agreed to pay back to your rich aunt (She did not get rich giving her money away).

Another important thing to remember is maintaining your home. The more you do yourself the less it will cost, but try not to burn your little love nest down trying to rewire it or falling off the roof fixing a leak during a thunderstorm. I would suggest keeping a couple grand socked away. Your never can tell when the furnace is going to crap out on you when it is 5 degrees below zero and your pipes are freezing. BTW, plumbers cost more than heating and A/C guys.

Now, the bad news is I cannot think of a neighborhood I would want to live in where the houses cost $112,000. So, double all of the numbers unless your own a pit bull and don't mind if your next door neighbor is Donnie Baker.

Property Taxes and Politicians

Isn't it wonderful when voters awake from their eternal slumber when you hit them in their wallets? When the Governor spoke today, he did what everyone wanted to hear by ordering a reassessment of property taxes. Now, we need to see if the rest of the legislature can truly come up with a permanent solution to the unfair property tax system we have in the State of Indiana.

However, before we can sit back and relax, let me drop a few facts on you. The City of Indianapolis has some serious bills to pay that are seriously overdue. This isn't a complete list and the numbers may be a little off like Patrick Bauer's toupe', but here is a list of the money we, the taxpayers, owe.

-RCA Dome $46 million (We owed $35-40 million when it was completed in 1984). It will be imploded in two years, but we'll still owe the money
-IPS Schools $500-800 million ( The schools have been crumbling since court-ordered busing)
-Police/Fire Pension $450 million (Our last three mayors have been underfunding the pensions so they wouldn't need to raise property taxes).
-Lucas Oil Stadium $725 million ( Fortunately, it will be funded by new taxes that are not property related, but those new taxes could have paid other obligations. By the way, the Colts receive most of the revenue from the new stadium while we pay for it.)

Just those costs will add up to about $2,500 for every man, woman, and child plus interest over the next 20 to 25 years even if you never step inside the new stadium or attend a class in IPS.

Here is the challenge the politicians have. Fifty percent of Center Township pays little or no property tax. The City of Indianapolis, State of Indiana, IUPUI, White River State Park, The Domes, Circle Center Mall, Anthem, Lilly, Simon Property Group, Indiana Convention Center, and whoever else who was able to cut a deal to locate downtown pay little or no property tax. Most of those properties reside on ground that previously was occupied by small businesses that did pay tax, but most relocated to a lower tax environment or went out of business. That means there is less property to pay a huge bill.

So, what is the solution? I feel that Indiana needs to replace all property taxes with a consumption tax. It is working in developing economies around the world and it would truly be a bold step for Indiana to lead the nation rather than follow.

What do you think? I'd like to know.

Why Live in Indianapolis?

It certainly isn't Chicago or New York City, but it has been a good place to earn a living and raise a family. I've lived on the east , north, and south sides of the city. Since the offspring have left the nest, the Mrs. and I have lived downtown for the past six years. So, what's been my favorite? They all have their own unique advantages.

- The east side a great place to grow up. Almost anything you need is no more than a bike ride away.
- The north side is "nicer". The houses are bigger, the shopping is better, but you need a car for every member of the family. Nothing is close to where you live.
- Living on the south side is like being in "Pleasantville". It is a very uncomfortable place to be if you're a Democrat.
- I'll reserve my opinion of the west side since I have never lived on that side of town, but I will say it lacks the neighborhoods like Irvington, Kessler/Meridian, and Garfield Park.

So, what is it like to live downtown? For starters, most downtown residents have not lived here their entire lives. Quite a few were born in another country. We have neighbors from Scotland, Mexico, England, Singapore, Turkey, Argentina, and Nebraska. Most are professionals of one kind or another, very few ever had children, and all are quite at ease being around someone different from themselves. Actually, they enjoy it.

So, in closing, for the few who read this thanks for your time. The sun is setting and I'm going to go share a bottle of wine with whoever is out in the courtyard.