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Hi! I'm Mike and this is my wife, Jen!  Since we began this site, we've learned to live more frugally, completely eliminate our debts, create new income, radically increase our net worth, and live altogether better lives!  Sign up below for instant access to our members-only toolbox, including our exclusive guide:  15 Steps to Fix Your Broken Finances and Live a Better Life!

Monday
Jun232014

Resisting the Urge to Buy a New Car

Sometimes I miss my car.  Having a second car in the family gave us loads more flexibility, plus it was nice to be able to just get in it and go do something without having to worry about everyone else's schedule.  To me, driving my car was an event.  I loved it.  But, truth be told, I just didn't drive it that much.  My office is only ten minutes away by bicycle and Jen's is five minutes away by car.  As much as I liked the flexibility of having it, it did sit in the garage quite a bit.  

So I sold it and we became a one-car family.  Instantly we reduced insurance expenses, maintenance costs, and I no longer had a monthly payment.  Since I liked to rub on my car on the weekends with expensive waxes and polishes, those expenses went away too.

Our 2005 Odyssey mini-van, as soul-killing to drive as it is, has served us well.  We change its oil on time every 3,000 miles and it has rewarded us with trouble-free driving.  Paying for a 10-year, 100,000 mile warranty when we bought it paid off narrowly when the few problems that we have had emerged (side door issues, a problem with the DVD player, etc.).  

115,000 miles later, we seem to be at some sort of inflection point.  It started leaking somewhere in the back tailgate area.  After a few Google searches, I found out that that problem was fairly common and I was able to fix it myself by removing a few clogged up drain ports.  I accidentally left some watermelons that I had bought for a party in the back-- I forgot about them and, a few days later, the car really stunk.  Jen, at this point, began to ask about a new mini-van.  I convinced her to hold out.

Now the right front headlight keeps coming on and off and I haven't yet been able to figure that one out.  Also, our exhaust has started to clang.  Yesterday, in a monsoon of a rainstorm, the battery indicator went off on the dash and the van shut itself down for a second.  All the while, the pressure to buy a new one builds.  

Why am I resisting still?  

1.  We don't have a car payment and I love that fact.  If I buy a new van, I will have to pay cash-- I don't want a car payment-- and that takes cash out of our investments.

2.  Our existing van has its fair share of bangs and bruises.  If I buy a new one, I get to once again stress about parking lots and our kids' collective effects on the interior.  Right now, if they have ice cream in the car, I can give them a stern warning about not making a mess.  If I have a new van, the ice cream won't be allowed, until the inevitable wear and tear causes me to give in.  Plus, I'll assuredly spill coffee at some point.

3.  Buying another mini-van is still buying a mini-van.  I don't care how nice it would be, inside and out, but it is still a mini-van.  It is an expression of pure family utility, a condition that it can never transcend.

4.  I absolutely despise the hassles of a new car purchase.  Even with techniques that I've used in the past to stop dead the back and forth negotiations over price, you still have to worrry about the trade-in, and, more importantly to me, I have to get the car registered in the state where we are residents, worry about the taxes and fees, get new stickers and plates, and then do all of the stuff to get the car stickered for DoD. 

So, my plan for now is to shlep our Odyssey over to our local mechanic, track down the existing problems and pay for them to be fixed.  Whatever that ends up costing will sure be a whole lot cheaper than the alternative, our investments will remain right where they are, working hard to make us wealthier, and I won't have to worry about the stuff above.  

Plus, that watermelon smell is almost gone.  Jen, are you reading this?

Monday
Jun162014

Why I'm Done Worrying About Our Zestimate

As I've pointed out numerous times, our net worth continues to get pummeled, primarily because the Zestimate (Zillow's estimate on the value of a home) on our rental home continues to go down.  I made this chart for my last income report, for instance to show the spread:

All the while, Financial Samurai and others keep talking about recovering housing prices (granted, Sam lives in San Francisco and that market is on fire).  But, I've also read time and again how the Pacific Northwest, where our rental home is located, was supposed to have fared better than many other places.

Something clearly doesn't add up.

So I spent some time recently using Zillow's "recently sold" feature to try to find some comparables that have sold around mine.  For the life of me, I can't account for the difference in Zestimate, say between this house that sold for $242,000 last year (Zestimate of $249,459 at time of writing)...

... and my very similar home (Zestimate for $203,648 at time of writing).  In fact, digging into it a bit more, I find my house actually has better upgrades, plus a fantastic bit of landscaping and outdoor deck / entertainment area.

So, I'm just going to check comparables on my own from now on and establish a Mikestimate for how much my house is worth, which I'm blurting out right now:  $245,000.  This is the value I'm using for my net worth calculation.

I'll update this on my own periodically.  I've lost confidence in the Zestimate for my home and I think it can be arrived at more accurately by looking at comparables.

Any thoughts?

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