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A Perk of The Crap Economy?

by J. Money on Tuesday, January 3, 2012

free money graffiti

Remember when we found out our house was de-valued by like 30% the other month by our county?  And because of it we owe LESS taxes on our house now?  Well, somehow I hadn’t put two and two together, and when I grabbed the mail the other day I noticed a fat new check there waiting for us.  To the tune of over $1,400 too!  WOW!

I guess we were over-paying now (our mortgage payment each month includes a % of our yearly tax bill), and so our mortgage company, Chase, sent the extra back to us :)  I mean, it was already *our* money to begin with, but still!  That’s as close to getting FREE money as you can get without doing anything in return, haha… another point for the awesome new year!

Then of course, the question became WHAT to do with it.  And instinctively the first thing that popped into my head was “put it right back into the mortgage.” But only milliseconds later did the rest of the ideas start flooding in:

  • What if we saved it for our new baby instead?
  • Or start our “house upgrade” fund I never seem to get up and running?
  • Or how about paying off that $1,500+ vet bill we now have cuz our poor cat keeps almost-dying? (We’ll get into that on another day, but needless to say his end is nearing very soon :(  All thoughts and prayers are welcome!)
  • Or just save it all for now and figure it out later?

And that was just what came to MY mind :)  Once we cross-referenced that with the Mrs’ thoughts, we ended up settling on a combination of things – even though she originally wanted to just apply the entire thing towards the vet bill (it was too boring for me).  This is what we ended up doing :

  • Applied $1,000 of this directly to paying off a chunk of Mr. Bob’s bill.  While these new charges weren’t entirely unexpected (we’d agreed to keep going a few more months unless it got really bad for both the cat AND our wallets (we’re almost at that point)) we hadn’t set aside a real budget for this part as yet, and just agreed to go with the flow.  Something that would have SCREWED us over in the past, but not since we’ve got everything under control and we don’t have to track every single penny anymore (a pro to doing it for years and years in the past!).
  • Used the remaining $400 and change to pay off more of our 2nd mortgage.  The one we’re working on first during Operation Kill Mortgages – even though we’re well aware that our 1st has a higher % at 5.5 over the 2.something. (We want that “win” of nixing the smaller one first, and then snowballing it all into the big scary $280,000+ one, *shiver*).

And just like that we spent $1,400 within a matter of minutes :) The power of technology, baby!  Haha… and USAA’s deposit via iPhone app – Woo!  It may not have taken us long to get rid of it, but the long-term effects will be great.  And better to get it out of our sweet little hands before temptation took over in other not-so-smart departments!  I wouldn’t have minded spending a little on our selves either, as we usually do when getting unexpected amounts like that (something that’s kept me sane throughout years of cleaning up our finances), but seeing how we just had Christmas, and then my birthday, it’s not like we  haven’t been spoiled lately :)  So a 100% less debt plan was a-okay with us!

What would you all have done if you got a sudden $1,400 in your accounts?  Has anyone else received a tax refund due to this crazy real estate meltdown?  I  have to imagine a lot of you have — not many houses have been going up!  I’d still much rather prefer that, of course, than a random one-time check in the mail like that, but I’m also super appreciative we can still AFFORD our house and we’re not facing foreclosure or any other horrible affects of this market either :( We gotta do our best to control whatever we can!

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(Photo by lloydcrew)


{ 42 comments… read them below or add one }

1 Elle January 3, 2012 at 7:38 am

What great news! Looks like we’re not getting a refund (which is good in way… ;) )
Right now if we got a $1,400 windfall it would go to our family car fund. We’re trying to beef it up as we don’t want to get a car loan.

I really hope your kitty does better this year. Our cat is 9 years old and so far he’s doing alright, but we had to pay some money to the vet when he was ill. Saving up for pets is a smart move.

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2 Monica January 3, 2012 at 8:08 am

We just got into our house in March, so we haven’t seen the benefit (?) of overfunding our escrow account. If we got a windfall, which we will after I file our taxes, it would go into our anorexic savings account and also to pay for our share of the family vacation that has been paid for already. I wish I could use it to pay someone to hire me. LOL

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3 MikeTheRed January 3, 2012 at 8:14 am

Since the only debt we have is a very very low interest car loan (to the point where lifetime on the loan, interest payments will total to about $400), and our emergency fund is filled to 1 full year of expenses, I’ve been splitting my spare money between two buckets:

1. First Home Fund – $4,000 now. Trying to get to $26k for a down payment.
2. Wife Quits Her Job Fund – $4,000 now. Trying to get to $20k to replace 6 months of my wife’s salary while she looks for a job she doesn’t hate.

Both of those buckets have only existed for about 4 months now. If we keep our savings rate roughly the same, and allocate all of our windfall amounts evenly between the two accounts, we’ll hit both totals by the end of 2012.

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4 Michelle @ Making Sense of Cents January 3, 2012 at 8:21 am

That’s great! I haven’t gotten anything like that. Our home value went down, but our property taxes went way up.

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5 Daisy January 3, 2012 at 8:52 am

Any time I get extra income – which is not frequently – I throw it all right on my credit card, or pay tuition with it if I am not carrying a balance on my card.

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6 Well Heeled Blog January 3, 2012 at 8:52 am

$1,400? Shopping spree! Hahah juuuuust kidding. :) Man, I’ve been away from the blog world – congratulations on being a new daddy!! You are going to be the coolest dad on the playground with your ‘hawk.

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7 Emmy January 3, 2012 at 9:16 am

If I got $1,400 in the mail – I’d probably cry. lol.

Just joking.

Maybe.

If I was smart I would put it in my savings and set it aside for my taxes – cause those kicked my butt in 2011. (2012 taxes…. you better be nice to me.) Or I would use it to help pay rent for the next two months.

If I’m not in a smart mood- SHOPPING! Maybe get that iPad I’ve had my eye on.

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8 Brian January 3, 2012 at 9:37 am

An extra $1400 huh? I would probably take $400 of it and put it in our anniversary trip fund (last one before the baby comes!) and take the other $1000 dump it into a ING to sit for a little bit and as soon as the little one arrives I would put it in a 529 plan (it would also give me $200 off my Indiana taxes!).

I’ll add your cat to my prayer list, I know how much it sucks to lose a pet.

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9 Jeff @ Sustainable Life Blog January 3, 2012 at 9:47 am

Sweet huge check J Money! If I got that, I’d send it to the car loan probably. I’m hoping to get a tax refund this year after owing last year, soo maybe I’ll be writing about this same situation in a few months.

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10 Alex January 3, 2012 at 9:54 am

That app is dangerous… I seem to use it twice a month turning thousands into nothing… (less debt)

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11 Andrea Travillian January 3, 2012 at 10:16 am

Got to love found money! If I got a lump sum right now I would add it to our emergency fund. Trying to rebuild it after taking a hit on a couple of houses during this wonderful housing market.

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12 Nick January 3, 2012 at 10:44 am

I probably would have done the same thing. Really, as long as you’re intentional with it instead of letting it leak out you’re in good shape. Poor kitty.

How long did it take you to realize you weren’t being scammed?

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13 Stephanie January 3, 2012 at 11:15 am

I’d probably put that money towards student loans. My husband and I don’t have particularly large student loans, which in a way is what’s so frustrating. We don’t have enough cash to pay them off in full, but since they are both relatively low, paying them off early is an achievable goal and it would be SO nice to have an extra $350 each month! We probably will get some money back since our town did a reassessment this fall and home values have fallen in our area. I doubt the refund will be nearly as much as yours, but what we do get will probably go toward those loans.

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14 Dani @ OK, Dani January 3, 2012 at 11:25 am

YAY for found money!
I got an unexpected bonus from work last week and put a bunch to my 401k and the rest to our downpayment house savings!

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15 Edward Antrobus January 3, 2012 at 11:39 am

Well, I did a preliminary going over of our tax filing and it looks like we somehow under withheld, by a substantial amount. Probably going to owe about $500, instead of getting a refund of little more than that, as we usually do.

Aside from that, I want to be paying down my hospital bill from October. So if I had this money, I would put it towards that, just like I was planning to do with the tax refund that I’m now not getting. :(

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16 J. Money January 3, 2012 at 11:53 am

@Elle – Yeah it is, esp. when you need to start giving it IVs and 5 kinds of medicines a day! Yikes… but at some point his/her quality of life goes way down, along w/ your money, and it’s time to say good-bye :( So soak up all the love he’s giving you while he’s nice and healthy! They sure are cute little fur balls :)
@Monica – Hah! You can kinda sorta do that by paying for updated resume/clothes/training? :) But I get what you’re saying… would be nice to say “Here’s $500, now where do I sign?”
@MikeTheRed – YES! That is sexy – both of those goals. So good you’re gonna hit it by end of the year too! Keep it up!
@Michelle @ Making Sense of Cents – Oh jeez, how does that work? Maybe it’ll adjust in the next year or two? (It took ours 3 years to finally catch up to “realistic” values)
@Daisy – You’re a smart one :)
@Well Heeled Blog – Awww, thx! I’m gonna do my damn best to take care of my child, believe you me!
@Emmy – Haha… there’s nothing wrong with spending a little on your self, and saving the rest :) Though that iPad would take out 50% of it! Haha.. here’s wishing you sexy infuses of money this year! Maybe you can find a used iPad 1 in meantime? I bet you can get one for $200-$300.
@Brian – Thanks man, that means a lot. We’re hoping to have a few more good weeks out of him, but it’s not looking that good… smart idea on a nice anniversary trip too before the baby hits! I might have to copy you on that one :)
@Jeff @ Sustainable Life Blog – I hope you do! It’s a helluva nice feeling :) I’m about to write a check for $12,000 right now for taxes – and that just covers ONE quarter! Haha… but it was a great quarter, income wise, which is why I need to pay so much ;) At least I won’t be surprised when it comes to file for the year – when you pay regularly you limit the craziness (though it’s still not fun).
@Alex – Haha, at least it’s a good problem to have ;)
@Andrea Travillian – Oh jeez, it’s not fun is it? I’ll send some positive vibes your way that you’ll get some nice found money yourself! :)
@Nick – It only took me 5 seconds until I recalled our valuation going down the other month ;)
@Stephanie – Awww, well I think as long as you continue pushing forward and applying as much as you can towards them, you’ll be able to say you’re debt-free soon! It’s never a fun process, but you’re totally right in that getting that extra $ each month will be incredible! I can’t wait for you to reach it! :)
@Dani @ OK, Dani – SEXY!! That’s what I’m talking about, girl!

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17 LB January 3, 2012 at 11:53 am

I would put some towards school, maybe remodeling our bedroom/bathroom, and some for one of my upcoming trips I want to take this year. Pretty boring, but I know what I want.

Congrats on the money. It always feels good to find extra money :)

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18 The Frugallery January 3, 2012 at 12:01 pm

That’s awesome! I assume next year your monthly payment towards taxes will be less. I would encourage you to think about what you’re going to do with the extra monthly amount. $1400 in a lump sum you think about, but $100 extra a month might slip through your fingers without you noticing.

I would probably put it in savings. We don’t have any debt and are still renting, so there’s nothing tangible to put the money towards. But savings can’t hurt!

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19 Long January 3, 2012 at 12:02 pm

My property taxes actually went up this past year. I went to the county’s property tax appeal workshop and found out that foreclosures and short sales do not count as a comp when appealing your property tax. They get adjusted upwards as if they were a regular sale. So, even though there are a few foreclosures and short sales in the area, they do not affect how the property tax gets calculated.

On another note, if I suddenly got $1,400 back…I would use part of it to pay for the refinishing of my wood floors and use the rest of it to help pay off my wife’s car.

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20 Sandy Webb January 3, 2012 at 12:33 pm

I too recently received $400 back from my mortgage company because of a shrinking home value. Additionally, my payment went down another $50. It has gone down a total of $100 in the last 2 years. While a shrinking home value is not good, I continue to pay the same mortgage amount I have been. That means that beginning this month I am paying an extra $100 per month on my mortgage….not too shabby for a single broke chick! Also, I used the $400 check to pay down a credit card that has vet bills on it. Pets, gotta love them!

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21 Jen January 3, 2012 at 12:40 pm

I’m awaiting the check from my escrow overpayment as well…it may only be $100 or $200, though. When it comes through, straight to the evil, lingering credit card debt. I want it GONE. Tax refund will probably take care of it once and for all, and then I can start bulking up the vacation to the UK fund for 2013.

Speaking of baby, congrats again!

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22 SmartAssetTeam January 3, 2012 at 1:23 pm

I rent, so this doesn’t really happen to me. I know exactly what I would do with a check of that size though. I would use it towards my last tuition bill, it would get me about half way there!

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23 Anthony January 3, 2012 at 2:45 pm

I love (LOVE!!! LOVE!!! LOVE!!!) where I live. Your house is de-valued by the county, and Chase sends you back $1,400 from overages in your escrow?!?!

My parish (a county in Louisiana) and city tax together is under $500 for the YEAR! Granted, I live in a $150k-ish house, but $1,400 is 3 years worth of city and parish property taxes!

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24 Peter January 3, 2012 at 4:58 pm

Our home value dropped substantially as well, however, since we had already made adjustments in our escrow account after taxes went down they weren’t withholding too much. As a result we aren’t getting anything back. :(

If we were getting it back, however we’d be putting it towards our “buy a newer/bigger house before the market goes back up and we can’t afford it” fund. :)

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25 Dan January 4, 2012 at 11:17 am

I think this post is a little misleading. Many localities, including mine, simply raise the property tax rate to make up for the lose due to declining values. It’s the age old problem; when times are good the government raises taxes because you have more, when times are bad they raise them because they need the money.

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26 Chris January 4, 2012 at 11:30 am

Agree with Dan. My property taxes have been raised 20% over the past 3 years to cover budget shortfalls. Doesn’t matter that home values have gone down.

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27 Burk January 4, 2012 at 11:43 am

Agree with Dan and Chris. My value has dropped substantially since we purchased three years ago. Our taxes have increased every year, along with every other house in the county. Your county will figure it out soon. I’d keep that money for when they do.

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28 kathy January 4, 2012 at 12:08 pm

You put 2 and 2 together and you got 5.

Your taxes will not go down 30% because your value goes down 30%. Unless, of course, your local government has just laid off 30% of its teachers, 30% of its firefighters, 30% of its police, and 30% of the DPW, etc.

Your property value will lower your taxes if it is lower IN RELATION TO OTHER HOMES. But that works whether your value goes up or down, it’s about how it is faring compared to other homes. Ie, if your home goes up by 50% and everyone elses goes up by 100% congrats! You just got a big tax break. If, on the other hand, your house goes down 30% and everyone else’s goes down 50%, then you’re out of luck because your taxes are going up.

You were just overpaying into your escrow. It happens all the time. Maybe your assessment went down because you live in a bad neigborhood and your loss in value was more than average. More likely your insurance went down or they were just taking too much out in general.

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29 NYC Marketing January 4, 2012 at 12:25 pm

It looks like you didnt know one important thing. It takes several years before you see changes in your real estate taxes. If your property goes down 25% in 2011 it doesnt mean that your 2012 tax bill will be 25% less. From what I remember last time I looked into this issue – in NY it takes ~3-5 years to see reflacted assestment translate into higher / lower taxes.

Here are my taxes for a 1 bedroom condo:

2010 $3,080
2009 $2,836
2008 $2,776
2007 $3,721
2006 $3,721
2005 $3,577

When the RE market tanked in 2007 my taxes did not go down, instead they went up for all the previous years when assestments were higher.

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30 J. Money January 4, 2012 at 12:51 pm

Haha, I like it when you can tell exactly when a Consumerist post hits. Glad you all are all here though, thx for stopping by and sharing your thoughts :)

@LB – Knowing what you want is sexy! Good for you.
@The Frugallery – I already said what we did with it ;) Most against our latest Vet bills, and the rest towards 2nd mortgage. We have enough saved up which is a nice problem to have!
@Long – Well that sucks, sorry to hear it man. Awesome that you’re refinishing your wood floors though! We’re in the process of contemplating switching from carpet to hardwood ourselves. Well, actually we ARE gonna do that, but it’s a matter of when, and whether to give it a shot ourselves or not. We’ll see :)
@Sandy Webb – Nice! That’s exactly the right spirit too — keep pushing forward with the $ amount you’re already used to anyways, and get that mortgage down faster! Well done :) And sorry to hear you have sicky pets too – all a part of ownership, eh?
@Jen – Great! Glad you’re getting some back too – putting it towards vacations are always good in my books. Hope you can get there quicker than 2013 though!
@SmartAssetTeam – Good! It’s mart to know what you’d do w/ extra money when it comes in. Can’t wait for you to be totally debt-free soon!
@Anthony – Sweet! That’s not shabby at all, my man. $500 a year is incredible, well done :) When I posted about this months ago people were saying they had to pay $5,000-$7,000 and more each year! Crazy on how it can change depending on where you live, even if you have the same amount of house. Glad you found your dream location :)
@Peter – Hah! That’s the last thing I want. If I’m ever buying again, it will be the same size or smaller… unless I hit the millions ;) I can barely maintain this crazy place of ours.
@Dan – Sure, this is obviously not gonna be the case for everyone, but as you can see a majority so far has mentioned similar results.
@Chris – That sucks, sorry to hear. It def. depends on where you live it seems.
@Burk – Ours had been going up for years too, until it finally re-set to a new value. Every county seems to be different, but it looks like ours get re-evaluated every 3-4 years. We’ll see what happens w/ the next one – my guess is it’ll stay about the same.
@kathy – Not disagreeing with you there ;) The county reeassesed all our homes in my area after 3-4 years, and it looks like we’re all valued lower now. So we were overpaying ourselves this year. Others may not have of course, but we were and now we get to have some of it back.
@NYC Marketing – Agreed. I didn’t know when our homes were re-assessed up until about 4 months ago when I posted about this originally. It took a few years for it to be changed, and ever since we’ve been paying the same amount into escrow – so now we get a nice refund. Would much rather have it this way, personally, than the opposite problem of *owing* lots more money. Though ofcourse if that meant our homes were worth more in the real world (not tax world) then I’d be all for it ;)

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31 Heather January 4, 2012 at 1:43 pm

If I had a check for $1,400 I’d put it in savings. My brother-in-law is expecting a baby in May, so we are flying to Boston in May to visit him or her (they aren’t finding out the sex) and then in August my other brother-in-law is getting married in Vegas, so we have to pay for that as well. I’d use the $1,400 for hotel and flights to Vegas.

At this point, with our tax return, I’m using that for those two trips. Really hoping we get a decent return or else we’re screwed even though we are saving as much as we can each month for the trips.

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32 Bill January 4, 2012 at 2:19 pm

Lower home values do NOT mean lower property taxes, morons. They just adjust the rate to make up the difference

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33 Jessica @ Faith Permeating Life January 4, 2012 at 2:34 pm

We received a VERY generous check from my grandmother for Christmas. We took 10% for electronics–my husband had asked for parts to build a new computer for Christmas, and he was able to buy the rest of the parts and have my brother, the computer engineer, help him build it while he was still in town for the holidays. I also got a piece of that to buy an external hard drive–I’ve scanned the majority of what was in our filing cabinet so it’s not taking up physical space, but it was taking up lots of space on my laptop! Then the other 90% went toward paying off my husband’s student loan debt–we cut the remaining balance almost in half and should have it paid off by the end of 2012!

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34 J. Money January 4, 2012 at 2:49 pm

@Heather – Wow, a couple fun adventures in the works – that’s cool :) I don’t know how they don’t find out about the baby’s sex too! I feel like somewhere between all the office visits that someone would blurt it out, or they’d see it on paperwork, or something by accident, ya know? Cool if they can pull it off, but def. tricky I feel. I kinda wanted to wait for our new one too, but the Mrs. was pretty adamant about knowing (so we can plan/etc) so we’ll find out here in the next cple months – woohoo!
@Bill – They do in this case, and as you can see in 75% of the others here leaving comments too. Friend.
@Jessica @ Faith Permeating Life – Nice! I admire people who are smart enough to put computers together like that, it sounds fund :) One of my old co-workers used to do that as a hobby, and would get all kinds of awesome looking cases and lights/fans/etc. He made this one black one w/ neon blue emanating from the entire thing, haha… it was dope.

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35 Jessica @ Faith Permeating Life January 4, 2012 at 4:46 pm

@J. Money
The case he got is pretty awesome. It’s got a window in it so you can see the insides of the computer :)
(P.S. Love your response to Bill… I need to do better at responding nicely to people who insult me/others.)

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36 Burk January 5, 2012 at 2:54 pm

Thanks for the response J. Money, and I wish you the best of luck. Hopefully your value isn’t falling too drastically, indicating a bigger problem in your area.

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37 J. Money January 6, 2012 at 4:59 pm

@Jessica @ Faith Permeating Life – The haters are gonna hate, right? ;)
@Burk – Thanks :) I hope not too! I think it’s stabilized over the past 1-2 years, so fingers crossed it stays that way… unless it wants to go up, of course ;) Have a good weekend.

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38 David January 9, 2012 at 9:43 am

I’d put the extra $1400 straight to my student loans. I’m graduating the first week of May and an extra $1400 would enable me to pay it off 2 weeks before graduation instead of on graduation. Congrats on the refund.

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39 J. Money January 9, 2012 at 10:23 am

Nice! Way to pay it all off on perfect time like that, don’t know many who have :) Congrats on almost graduating!

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40 Paula @ Afford Anything January 9, 2012 at 12:13 pm

I’m still battling my property taxes! We bought our house for $225K in November 2010. They assessed our house at $395K in March 2011, and taxed us accordingly!! We filed an appeal, and last week, they sent a letter telling us they denied the appeal, so now we have to show up in person for a “hearing.”

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41 J. Money January 10, 2012 at 10:24 am

Wow, well that sucks. I hope you keep fighting it and win, my friend! I wonder what’s holding it back? Or did you get a killer deal?? :)

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