Can I buy that?

The beautiful thing about having money in the bank is you can afford to buy things. The ugly thing about having money in the bank is, well, you can afford to buy things.

Although I’m grateful to be in the financial position we are currently in, sometimes I miss the days of paying down debt.

That does not mean I miss debt. 

But I do miss the clear and simple objective one has when working their way out of debt.

Overtime income?

Pay off debt.

Tax return?

Pay off debt.

Side Hustle?

Pay off debt.

Birthday money?

Pay off debt.

No matter the situation, the solution was always the same. 

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Within the last month or so, there have been a handful of relatively expensive items I’ve wanted to purchase, but haven’t managed to pull the trigger yet because I feel like it would be irresponsible. Here are a few of the items on my list.

Upgrade my iPhone 5 to a 6+: 

It’s kind of disgusting that we operate in a world where we believe our ridiculously expensive cell phones are essentially garbage after two years, simply because a newer model of the same phone exists. I’m a victim of the “ohhh, pretty-shiny-thing” cult as well. In a week I will be out of my ATT contract. I can upgrade my iPhone 5 to the new 6+ for $299. I’d get a better screen. A better battery. And a better camera.

That said, the primary purpose of my cell phone is to make/receive phone calls, make/receive text messages, make/receive emails. The iPhone 6 doesn’t do this any better than my current phone. Why would I pay to upgrade to a phone that has negligibly better features? Or a better question I suppose is, why do I WANT to do that?

Buy a Weber Grill: 

Five years ago, I got a relatively cheap ($199) Home Depot grill for my birthday. It has lived a long and glorious life, but after two moves, and years of use, the lack of quality is apparent. The burners no longer self-ignite. The thing is ginormous and eats up an excessive area of my patio. But most importantly, it doesn’t burn hot enough.

A burger should take 8 minutes to cook (about four minutes on each side). My grill has declined so much that it takes about 25 minutes for me to grill three burger patties. It’s a waste of propane and a terribly frustrating experience.

A Weber Grill would solve all of my problems. Just as Nordstrom is known for it’s superior customer service, Weber is known for manufacturing stellar grills. They aren’t cheap (base model is $399), but they are unmatched in value.

I love to grill and have been scouring craigslist like crazy trying to find a lightly used Weber. So far I’ve had no luck finding one that I feel is priced fair. The frugal part of me says I should wait until September to buy a new grill as that is typically when the big sales are to be had due to the end of the summer season, but the other part of me says that is stupid as I’d have to endure another grilling season with my barely functioning BBQ.

I’ve made a deal with myself that if I haven’t found one on craigslist by Memorial Weekend, I’m going to Home Depot and buying a brand spanking new one.

Pay for Electrical work:

This one isn’t so much a purchase, but more a “should we pay to have this work done.” We have an outlet in our pantry that we plugged our microwave in to a few months ago. Within one second of turning the microwave on, the outlet went out and our exterior security lights went off. It’s not the breaker. It’s not the outlet. It’s not the fuse. I’ve exhausted my electrical skills and can’t troubleshoot the problem on my own.

I had two electricians come by last week to get quotes. Since they aren’t yet sure what the problem is they could only give me estimates on how long they think it might take to identify the problem. Essentially, it’s going to cost about $300 for them to simply diagnose the problem, and potentially a lot more depending on what the issue is.

I hate having lights and outlets that don’t work. That said, these are probably the least important lights and outlets in my entire house so I don’t feel a rush to necessarily get them fixed. Why spend $300-$500 when we don’t need to? But when the time comes to sell our house, we are probably going to have to pay for this service anyways since a home inspector would surely note the issue.

I’ve never understood why people wait on upgrading their home. People will live 20 years with their builder grade laminate counter tops, only to replace them with granite when they decide they are ready to sell their house. Why not pay for the upgrade earlier and actually enjoy your counters? This is how I feel about my outlets. If I’m going to spend the money now, or down the road, why not have the electrical work done today?

I guess my issue is that I never want our financial privilege (money in the bank) to cloud my judgement and distort my perception of being a good steward of God’s resources (the money he has put in our bank).

Do I believe it’s okay to enjoy nice things? Absolutely.

Do I believe it can also be crippling? Absolutely.

 

Short term investing is the worst.

About two months ago, I took $14,000 out of our savings account and put it in a taxable investment account. To date, it’s probably been my least favorite financial move I’ve ever made.

In fact, it’s the worst.

It’s also, apparently, the responsible thing to do, but that’s besides the point.

 

Responsibility is totally overrated.

drink and drive

To be clear it’s not the investment that I picked that sucks. The interest I’m earning in my Vanguard fund is blowing my savings account out of the water, granted that’s not saying much when my savings APY is a measly 0.7%.

As great as having my money make more money is, I just can’t shake the uneasy feeling I’ve had. I hate feeling less liquid.

I loved having fat stacks of cash in the bank. 

Around this time last year Girl Ninja and I had $100,000 in our savings account. After putting $70,000 of that towards a down payment, and $14,000 in to our taxable account, we are left with about $15,000 in our savings account now.

There is no logical reason why I would need to keep more than that in our savings account. I should be patting myself on the back for diversifying our money across retirement accounts, real estate, and now short-term investments, but instead I want to crawl in to bed and start sucking my thumb.

Investing in our taxable account is certainly the most uncomfortable thing I’ve done in regards to managing our money. I just need to keep reminding myself to stay the course. No pain, no gain right?

What is “that responsible personal finance thing” you know you should be (or currently are doing) that makes you uncomfortable? 

The best test out there to tell you if you should buy a home.

Screen shot 2013-04-30 at Apr 30, 2013, 10.57.57 PM

My hunch is that most first-time homeowners buy their first place with the best of intentions. They imagine spending decades in their future abode, establishing roots, and engaging in their community.

But then life happens.

They have more kids than they originally thought they wanted (or discover they can’t have any kids), they get a job offer somewhere else, a loved one gets sick and needs constant care, or maybe they still love their house but hate their neighbors and decide to move. The statistics don’t lie, most people in their 20’s and 30’s, who buy homes, don’t live in said homes long enough to realize much of a financial benefit.

The average length of homeownership is hovering right around seven years.

Many of these homeowners kiss any potential profit goodbye when they pay nearly 10% in commissions and fees. At the end of the day, these homeowners were nothing more than glorified renters who could paint their walls.

So how can you determine if you’ll be able to make homeownership profitable?

Introducing my patent pending Vehicle Litmus Test.

Unless you live in the heart of a major metropolitan area (San Fran, LA, or NYC), I’m going to assume you own a car. (If you don’t, this whole post is pretty much a waste of your time). If you own a car, you should take the test below. If not, then this entire blog post is irrelevant.

/Begin Test

How long have you owned your current car? And how long did you own your previous car?

/End Test

It seems about 99% of people who buy new, or even new-to-them, cars always say something like “Oh, I’m going to drive this car in to the ground. I’ll have it at least 10 years.”

You probably said, or thought, something similar. Didn’t you? DIDN’T YOU!!!!!

But did you actually follow through with that promise?

How you answer that question says a lot. You bought a car thinking you would drive it in to the ground, but then made a total 180 and justified a change for something more fuel-efficient, more modern, larger, smaller, newer, cheaper, faster.

I get it.

Your priorities and desires changed. This is why the vehicle litmus test is so important.

Are you really going to stay in the house long enough to make buying worth it? You like to think you will, but does your track record say otherwise?

Drop a comment below with your answers to the litmus test. Be honest 🙂

My answers to the vehicle litmus test…

Car 1: Bought my Scion tC in 2006 brand new. Eight years later, still love it and have no plans to sell.

Car 2: Our 2006 Honda Pilot purchased in 2012 with 70k miles on it. Bought with intentions to drive to 150,000 miles.

Previous car: Girl Ninja’s 2005 Corolla she bought in 2006. Sold after six years so we could buy the Pilot. An upgrade that was totally unnecessary.

That time being responsible was dumb.

For three years Girl Ninja and I worked diligently to build our savings account up to $100,000. If you didn’t know, we picked $100,000 for two reasons. First, it sounded super sexy. Second, it would give us the ability to put 20% down on a home priced up to $400,000 (leaving $10,000 for closing costs/furniture and $10,000 for our emergency fund).

By April 2013 we hit our $100,000 savings goal. Two months later we put in our first, and only, offer which resulted in us buying our current $350,000 house. We locked in at a 4.125% interest rate, have a reasonable PITI payment, and a renter that pays us $400/mo to live in our basement.

Being responsible came with the following benefits: 

    • We don’t have to pay private mortgage insurance
    • It made our offer very competitive since sellers like cash
    • We had immediate equity in our house the day we moved in.

That said, I’m not convinced responsibility is necessarily the best choice. What would have happened if we started our house hunt when we would have had less than a 20% down payment?

Well…

We could have taken advantage of what pretty much everyone knew were the lowest interest rates we’d ever see. Somewhere around 3.3%. Instead, we locked in at 4.125% which means we pay $120/mo more in interest than some of our friends who bought in 2012.

We could have taken advantage of better inventory. By August 2011, we had $50,000 banked. Had we started looking then we would have had 4 months of inventory to pick from. When we actually started looking in early 2013, there was only 1.5 months of inventory. Meaning we had a SIGNIFICANTLY smaller selection of homes to pick from. Which in turn meant every home that we did look at went for OVER asking and had multiple offers on it (including the home we bought).

We could have taken advantage of lower prices. Between 2011 and 2013 prices jumped 10%+. This means we could have gotten a $350,000 for about $315,000 back in 2011. Normally calling the bottom of a market is pretty sketchy, but just about every one and their mother knew in late 2011 early 2012 we were virtually bottomed out.

 

So as you can see, being responsible is not always the responsible thing to do. In our case, it’s literally costed us tens of thousands of dollars.

Long story short: Being irresponsible isn’t always a bad thing.

 

Screw being a millionaire

Ninja Mansion

When I graduated college, at 21 years old, I really only had one goal for myself in regards to my personal finances.

GET FILTHY FREAKING RICH

But here I am, seven years later, realizing that I don’t actually care about being wealthy.

I know, I know. You’re probably thinking, “Ninja, you’re a hypocrite. Some of your posts definitely seem like you’re all about building wealth.”

After all, I haven’t been shy about sharing how we’ve…

…averaged a 50%+ savings/investing rate since we’ve been married.

…rented out a room in our home to help bring in extra income.

…increased our net worth a silly amount each year (up $70k in 2013)

Meh, you say tomato, I say to-MAH-to.

You see, we aren’t saving an obscene amount of our income, living frugally, or investing in our retirement accounts so we can reach the coveted millionaire status. That couldn’t be further from the truth. 

AN EXAMPLE:

Instead of talking about money, let’s talk about physical appearance as related to fitness. At 6’2 and 175-ish pounds, I tend to be a little leaner than most other men my height.

But make no mistake, I don’t ski, take Nova on walks, or coach high school tennis so that I can be in better shape. Instead, I’m fortunate to be in decent shape because I have a proclivity to do active things; like ski, go on walks, and play tennis.

I care more about the cause, less about the effect. 

The same is true for our money. I never want to lose sight of what is important. I have an innate desire to live well below my means, and save or give away my excess. This was true when my household income was $38,000 a year, and is still true today at $120,000. I don’t measure my value by my net worth, square footage, or income.

So while yes, I do think I’ll be a millionaire one day, please let me make it clear: I don’t care to be a millionaire. 

I just want to be a good steward of the resources God’s given us. It just so happens stewardship often begets wealth building.

Don’t avoid risk, embrace it.

How many of us are guilty of allowing fear to keep us from doing potentially great things?

 

ME! I’M GUILTY OF THAT!

 

I wrote last week about my desire to add a two bedroom rental unit to the side of our house. About 10% of you thought it was a good idea in theory. The other 90% of you thought it was too risky.

 

  • What if I couldn’t find renters?
  • How would this effect Baby Ninja if he is raised in a major construction zone?
  • Where would we get the money?

Of course, these are all things worth considering, and believe me I have. It is my families well-being on the line after all. There is definitely risk in adding a $100,000 addition to our house

But there is also risk in NOT exploring this idea.

  • Our cash savings continues to depreciate since the interest it earns wont keep up with inflation.
  • I forfeit the potential to earn $700/mo profit on a $100,000 investment.
  • Our house will remain less marketable since we only have one bathroom.
  • Etc, etc, etc.

You get the point. 

Whether my accessory dwelling unit idea comes to fruition remains to be seen. I got a ton more calculations to do and people to meet with before I can fully wrap my brain around it. But I’ll be darned if I’m going to let some risk paralyze me from doing potentially great things.

A reader of MMM said it best…

Risk cannot be completely eliminated and trying is a fool’s mission. Focusing on eliminating it in one area pushes it into another. I can completely eliminate the risk of flying by never getting on an aircraft (unless one then falls on my head). But that elimination shifts the risk to train, boat, car or bicycle risk. Eliminate all of those and I’m stuck at home, statistically the place most accidents happen. Life is not certain. Ying and yang are the norm. Understanding the risk inherent in anything and that of the alternatives can then inform our choices. That’s about all you can do.

Preach. 

How do you account for risk when you make your financial decisions? 

Try to be not broke.

Over the last two weeks I’ve purchased six round trip plane tickets. It’s insane. Between baby showers and weddings, we knew we’d be dropping some serious coin on flights this summer. But dang, $1,600 disappeared from our bank account faster than a Twinkie at fat camp.

Fortunately being not broke is pretty awesome. It allows you the ability to take advantage of incredible deals when they pop up. It gives you peace-of-mind in the event of an “Oh $#@!” emergency. And it gives you the freedom to experience things you may have otherwise missed out on like weddings and graduations.

There really is nothing else to be said besides…

Financial freedom rocks my face off.

Don’t be discouraged if you aren’t there yet. Stay the course. Work hard. Focus on the end goal. You didn’t get in debt overnight, and you probably wont get out if it overnight. Patience and perseverance is the name of this game.

Being not broke is awesome. I hope you are either right there with me, or plan to join me soon.

On a scale of broke to loaded where do you fall? Has your financial freedom allowed you to take advantage of any incredible deals or opportunities lately!?