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The stinkin' sewer assessment

January 22nd, 2013 at 06:51 am

In the very first year of homeownership, I was blessed to receive word from our friendly tax assessors of a mandatory $9,900 loan I would need to assume to help pay for our town's sewer treatment plant. Now I've been told often that I'm full of s***, but I'm not sure I generate $9,900 worth of s***, personally. But I didn't have much say in the matter.

It was a 20-year loan at 2% interest.

Each year, I'm faced with the unhappy annual tab. With interest, it comes to $605.48. There are no installment payments.

When you work p/t, for peanuts, a bill like this looms large. Now that I paid off the mortgage last summer, this ridiculous bill, plus the quarterly sewer usage fees, represented my fifth highest expense in 2012. (See, if I didn't religiously track all my expenses, all year long, I'd never know that.)

So now I'm toying with the idea of paying the darn thing off early. Doing so has its pros and cons.

Each year I pay $68 in interest. I called the assessor's office this morning and was told that under the current payment schedule, the loan wouldn't be paid off until 2018, 6 years from now. If I pay it all off now,early, the payoff amount would be $2,896. If I pay it off now, I save myself $68 a year x 6 years = $408.

However, if I wound up selling my house sometime within the next 6 years, I would have wasted some of that money since the loan goes with the house and under normal circumstances, whatever outstanding balance on the loan remained would be passed on to the new homeowner.

I think there's a pretty good chance I'll move within the next 6 years. I talk about wanting to downsize/reduce my expenses often. Yet talking about moving and doing so are two different things, and the thought of all the work required (not to mention, money) to get this house ready for market is, quite frankly, overwhelming when you consider it's all on me. And I have no spare change to make needed repairs right now when I know I'll be coming up short on just the usual monthly bills now that my unemployment benefits have gone the way of the dodo bird.

I'm still strongly leaning toward paying off the loan anyway. What do you think? Right now, as I look at my 2012 ranked expenses, it bothers me a great deal that "Sewers (usage/loan)" comes in the #5 spot, behind 1. COBRA, 2. property taxes/mortgage, 3. food and 4. heating oil.

It means I have to set aside $62 a month just to cover the sewer bill. If I pay off the loan, only the usage charge would remain, and that would come to about $11 a month.

I don't know, maybe this is all psychological. Pay it off now to improve my outlook now, as money's tighter than ever before, but face the possibility of losing a thousand dollars or so if I move sometime before 2018.

And while the $12,000 or so I've somehow managed to build up in my checking account and online emergency fund earn 0% and 1% interest, respectively, I think I shouldn't touch that since I'll likely be withdrawing slowly from that just to pay routine bills in coming months.

I would just cash out a portion of my taxable international mutual fund to pay for the sewer loan. This fund had a pretty good run in 2012....Hmmm.

5 Responses to “The stinkin' sewer assessment”

  1. Mary Says:

    I always hate when someone else dictates how I HAVE to spend my money. Sorry you have had this situation happen. Should you sell your property in the future, would there be a way to "pro-rate" your early payment so that the new owner assumes the value of the loan even though you paid it off early? If not, I would probably just stick that money away and make the yearly payment. The thought of losing thousands of dollars has never held much appeal to me. Even though you may not like the looks of the expense on your spreadsheet, at 2% interest rate, I would see if I could find a better return on that money without the risk of losing it if paid off early. Good luck with whatever your decision you make.

  2. CB in the City Says:

    What a crappy bill. Smile I know you have talked quite a bit about finding a condo, so my guess is that you will make the move in the not too far future. I think I would just stick to paying annually, as tempting as it is to get rid of a big bill.

  3. LuckyRobin Says:

    There is always this to consider: A buyer may not want to assume that loan and it could be a sticking point for the sale anyway. I mean, if I was trying to choose between two houses and one had me assuming a liability like that and the other didn't, I'd either request it be paid off by the owner before I would take ownership or that they lower the sale price of the home accordingly or I'd go with the house that didn't have that liability.

  4. latestart Says:

    I agree with LuckyRobin. You could have an advantage over the next house if there is no loan to payback or you maybe required to place the amount of the loan in an escrow account to be taken out of your proceeds.

  5. Jerry Says:

    Ten grand? That is a heavy load to bear and it would lead to a sticking point for a LOT of people, not just you. I hope that you are able to move soon and have some insurance of putting this municipality in your rear view mirror permanently. Good luck!
    Jerry

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