231 comments

If You Wouldn’t Buy it, You Should Probably Sell it

dogboat

Dear Mr. Money Mustache,

I just came across your blog a few weeks ago after seeing a story about it on ABC.

While the idea of cutting back my lifestyle sounded horrible at first, once I dug in I saw what you were really talking about and it has been like a giant boxing glove hit me in the face. Until recently I thought we were doing pretty well. But suddenly I could see money leaking out everywhere in our lifestyle: the cable package, remaining student loans, restaurants, excessive driving, excessive air conditioning – everywhere.

My question is what to do about the  decisions that are already “locked-in”. We have some expensive and not-that efficient cars (A 2010 Mazda CX-9 and 2013 Acura TL), but at least they are paid off so we might as well drive them forever, right?

Also, we live about 15 miles from work in a house that is way too big for the four of us, but on the bright side we bought it in on foreclosure in 2009 and the value is up about $100,000 since then.

Finally, and I have an old (2000) speed boat and a camp trailer we use occasionally in the summers – these are paid off as well, but they do cost something to store and maintain (about $2400/year).

We’ve started biking more and doing more local activities and the kids like it. I just wish we hadn’t locked in these earlier poor decisions.

—-

First of all, let me admit that the above person is somewhat fabricated. I find letters like this waiting for me every morning when I wake up, and so many of them follow the same general pattern that I figured we could create a great lesson by combining some of the best details into one composite letter. And that lesson is the one right there in the title:

Don’t let the boat anchor of your past mistakes drag on you forever into your future.

Clinging to past behaviors is one of the built-in weaknesses (also known as Cognitive Biases) that we humans are born with. In this case, we’re talking about Loss Aversion and maybe a bit of the Sunk Cost Effect: we tend to value things we already have, and things we have poured a lot of money into, even if they are in fact pieces of crap when measured on an objective quality-of-life scale.

“I’d hate to take the depreciation hit on this 2012 Dodge Ram 1500 BigHorn after making three years of payments on it!” 

These prepackaged flaws are so powerful that we need to pull ourselves deliberately in the other direction in order to end up at a reasonable middle ground. Even when you think you’re living life in a reasonable fashion, this bias will still sneak up and bite you.

And it still bites me too – let’s look at another example from my own life right now. Do you remember that rental house I was so happy to have sold in the last article?

On paper, it looks pretty good: I was stuck with a supposed-to-be-$650,000 house back in 2010 that I was having trouble selling even with the listing price dropped down to $480k. Probably because the market value was more like 450. At the time, I felt stubborn and defiant:

“There’s no way I’m selling this prized bit of my work for $200,000 less than it is worth! I’ll just rent it out, collect some income, and ride the prices right back up. Then, justice will be served and my past mistakes won’t look so bad.”

However, and this is the key to this whole article, if the situation were reversed I would have given a completely different answer. Suppose it was the year 2010 in a different universe, and I was not saddled with that house. I was retired, had that same $450,000 sitting happily in index funds, and looking out at the carnage in the housing market. If someone had suggested I invest in this house, it would be a different conversation:

Random Person:  “Hey man, do you want to buy a $450,000 house in a high-end neighborhood with a strict Homeowner’s Association? It’ll give you $2400 in rent, plus whatever appreciation the housing market provides. Property taxes will run you around $3200/year and the HOA fees are another $960. And don’t forget maintenance!”

Me:  “Are you Effing Crazy!? I’m retired! I don’t need some fussy high-end rental. I’ll sit back and enjoy my index funds, or at least get something like a 4-plex that nets $4000/month for that kind of money!”

But cognitive bias struck, and I decided to rent out the place anyway.

And sure, things turned out roughly as a reasonable forecast would predict: I put it up for rent, and collected over $144,000 in rental income over the next five years. On top of that, the housing market recovered so the house appreciated by an additional $115,000. A total income of $259,000, which sounds pretty good on a $450,000 investment, right?

But wait. Let’s subtract the taxes and HOA fees at $20,800 over those five years.
Then subtract my maintenance costs, which added to about $10,000 (most of it spent just this past May as I restored the house to its original sparkling condition for sale).
Plus an estimate of the value of my labor for managing and maintaining it: 200 hours at $40, or $8,000.

This yields a net profit of about $220,000, meaning my $450,000 grew to $670,000.

It still sounds like an amazing windfall, but that’s just because $450 grand is a lot of money, and five years is a fair amount of time. On an annualized basis, this is like earning just 8%. Yet another example of how your money can work harder than you can.

What if I had put this money into the plain old conservative Vanguard S&P500 index fund (VFIAX) instead, and allowed all dividend payments to automatically reinvest?

Plugging the dates into our amazing IndexView tool, I can see that a stock investment would have roughly doubled in that time period if you include dividend reinvestment. In other words, if I had ditched that house at $450,000 and just kicked back for the next five years, that chunk of money would be over $900,000 today.

Hindsight is 20/20, as they say.  The stock market could easily end up going sideways over a five-year period. But what matters is making the choice that is most likely to be the right thing for you. And that means thinking about today’s  big decisions as if there were no past baggage attached to them.

In the introductory story, the brand-new Mustachian is currently burdened with a money-burning 2010 Mazda CX-9 SUV, which would fetch about $12,000 on the used market. If she were starting from scratch with $12,000 in the wallet and no car, would she buy the same vehicle? Or perhaps the far superior 2010 Honda Fit which handles better, will cut the running costs in half, and costs over $3,000 less?

The $3000 cash difference plus a savings of $2500 per year in fuel, depreciation and maintenance will compound to a wealth difference of over $30,000 per decade, just from this one decision. Not many people realize the staggering effects of a poor vehicle choice, which is the reason SUVs exist in the first place. But now that the new knowledge has been acquired, it is time to act on it. Since she wouldn’t buy the SUV right now, she should sell the SUV right now.

Similarly, moving a double-commuting couple 15 miles closer to work will save you close to $100,000 every decade in direct car costs alone, but much more than that if you factor in the value of your own time and health. Most people don’t realize the shockingly high cost of car-commuting. If they did, distant suburbs and the the entire phenomenon of “rush hour” would not even exist. But once you do get the secret memo, it is time to act on it and move.

Lifestyle trinkets like motorboats and rarely-used cabins, ATVs and country club memberhips seem like an harmless treat you indulge in when you get your first promotion at work. But they tend to add up and become a massive tax on your life – draining attention and cashflow to the tune of hundreds of thousands more per decade. Once you realize that these little weekend amusements are equivalent to chaining yourself to an office for an extra 40 years, you might weigh the decision differently. And so you can change your decision. Right now.

But What about Transaction Costs?

The Economists of the audience are probably a bit annoyed right now: “Mustache’s examples don’t account for the time and money you need to spend to change cars, or change houses! Often if you take these into account it would wipe out the first several months of savings or more!

They are right to a certain extent. But I encourage people to push through the pain and get the deals done anyway, because making transactions is good for you.

Transactions, deals, friendships, and other arrangements with other humans are the highest-paying and often most rewarding thing you can do with your time. Even the ones that don’t go perfectly build your perspective and your Badassity.

Most of us make far too few transactions, and this lack of experience keeps us in fear, so we avoid them even more with each passing year. Your skill and comfort with life transactions is reflected directly in your wealth and the quality of your life.

So even if it does take a few hours to photograph the gas guzzlers and get them onto Craigslist, and even more hours to search out a new ride, make the investment and get the job done. The momentum you gain will start a chain reaction that helps you clean up all your other past mistakes.

What would you do differently if you could go back to age 19 and design your wealthy dream lifestyle from scratch?

How many of these things can you change and improve right now if you really put your mind to it?

I’m looking forward to getting fewer excuses for the past, and more announcements of massive change in the present, in my future emails.

 

  • Anders Rønnau July 3, 2015, 2:25 am

    10 years ago I put around $10.000 into a pension account. Then I didn’t add anything else to it after that. The admin cost is so high, that there’s still only $10.000 there now…
    I’ve just been looking at them like a sunk investment.
    After your post I realized that I am better off pulling them out taking a 60% (!) hit in tax, and investing them myself. That should make them worth more to me in less than 20 years and at least they’ll be working for me and not for the shitty pension company.
    Danish rules makes it impossible for me to get them out at less than 60%.

    Reply
  • Nick Bryant July 3, 2015, 8:58 am

    What you said about transactions was incredibly insightful. Once you have a certain amount of capital, your ability to buy and sell high ticket items will be a big factor in spending wisely and even making money. A good deal on a used car could save $2000-$4000, which is equivelant to 2-4 months of spending for me. A better deal on a house could easily save 5%, which, depending on the size of the deal, could be a huge chunk of change.

    My weakness is that I hate selling things. So when I have an old bike, I trade it in to a stealership, rather than sell it. The idea of selling my car terrifies me, because I’ve never sold one before. Old electronics. The list goes on.

    Instead of lowballing myself, I’m going to look at making deals as a fun side-hobby and do some Craigslisting!

    Reply
  • Phroogal Will July 3, 2015, 10:11 am

    I use this method. It’s resulted in me having nothing in my life I don’t use regularly. Well, except a few spare car parts I got for free but there’s not much of a market for those so I’m keeping them until they are needed. They are wearable parts on my ’99 Eclipse. The car which I would definitely buy again – nonturbo, manual, hatchback, low cost to buy and run (and it looks good). Ahhh. :)

    Reply
  • Leo July 3, 2015, 12:15 pm

    Not everyone wants to drive around in a Honda Fit or other slow 4 cylinder. I drive a 2013 Mustang GT. It has 420 hp and goes 0-60 in 4.3 seconds. And with the Roush exhaust I put on, when I mash the gas it sounds like Armageddon. Sure I could save some fuel by driving around in some 4 cylinder that can’t even maintain its speed up a gentle slope, but the thrill I get from being pressed back in my seat when I floor my GT and listening to the sound of my big V8 is worth every penny. Also chicks don’t get moist from listening to the buzzing sound of your 110 hp 4 banger, but I can tell you that when they hear the deep rumble of my GT that only a big displacement V8 can produce, the panties come flying off. I do agree with you that SUVs are stupid though. But you have it all wrong about muscle cars.

    Reply
    • Mr. Money Mustache July 3, 2015, 3:54 pm

      I hear you, younger man – that’s what the advertisements tell you a “muscle car” will do for your lifestyle.

      But what if there was something even better than annoying everyone else in your city with muffler noise and burning gas? Something that pumped up your legs instead of making you fat, and helped you amass a million or two dollars while everyone else was out driving their bank-financed Mustangs to work until age 65? Would it be worth considering?

      As for the panties – I’ll take a pass on the type of ladies that are impressed by a loud V-8. Standards rise when you get a little older.

      Reply
      • Chris July 12, 2015, 10:05 am

        Amen, brother! And for the OP…if you’re into that, I can guarantee you that for every woman that gets turned on from your car, there are 50 that get turned on by a few million in the bank. Neither one of those types interests me.

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  • Samuel Mandell July 3, 2015, 3:14 pm

    I would tell my 21-year-old me who just got a great paying job at a software company to have well-defined financial goals. When you have such a good income at a young age, you don’t feel financial pressure, so it’s easy to just “go with the flow” and buy whatever you want, since you’re making so much that you’re automatically saving each month as long as you don’t go overboard. What I needed was to create artificial pressure for myself, in order to be motivated to put aside much more money and see the real impact of my spending habits.

    Also I wished I had told myself to not buy a new sporty car that lost a ton of value after it’s first year, but instead to buy that classic Mustang I always wanted that would have kept its value nicely.

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  • Ann July 3, 2015, 3:52 pm

    When I read the title, I expected the blog to be about not selling what you wouldn’t buy as a career…so if you wouldn’t buy a new fancy pants boat, you shouldn’t be a boat salesman. In other words, propagate Mustachianism–don’t invest your time in feeding face punch behavior.

    Reply
  • Gregory July 3, 2015, 9:25 pm

    This is a great set of ideas, this post.
    I am pretty well convinced, though, that one should hang on to basic tools — in particular, hand tools. (I’m not talking about high-end, space-consuming tools like table saws.)
    I say this because, in a rush to downsize a few years ago (I HAD to move right quick), I sold or gave away the majority of my hand tools.
    Now I need most of them again, and am having to buy replacements. Hand tools don’t take too much room to store. I wish I had kept them.

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  • GlobeTrttr July 5, 2015, 9:51 am

    Thanks for echoing my sentiments once again, MMM. It really is liberating to jettison some of the baggage which, in contemporary American (or Western) society, has a tendency to accumulate unchecked.

    I’m 32 and have a few personal thoughts to share:

    Cars: Biggest, most ridiculous money-suck in America, even before operting costs are factored in.

    I believe it is also the quickest money-draining lifestyle change you can make to slow that net negative cash flow to a mere trickle. Sell the new car, buy a used one. I’ve owned 1 new car and am on my 3rd used one currently, a 14-year old Toyota truck with 205k miles on it, which is worth today about the same as I paid for it after finding it on Craigslist a couple years ago- $5000. I drive it only on weekends for errands and around town – a company car gets me to to work and back. I cringe every time someone I know posts on social media about their brand new, shiny car for which they committed $20-$40,000 of their money. My internal response is, “there is no such thing as a new car as soon as it’s off the dealer’s inventory”. Fact is, a couple years down the road, they’ve lost $10 – $20K in depreciation alone while my old Toyota has just cost me $60-80 a month for insurance and some gas.

    This is a kick-ass blog and I truly feel that it is inspiring a lot of people to change their lives. Reading and re-reading the posts is time well spent.

    Reply
  • Miki July 5, 2015, 6:44 pm

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  • Mark July 5, 2015, 11:41 pm

    My house is wonderful, and in a wonderful place. Only my significant other lives 2000km away in a different EU member state.

    Ignore the transaction costs on selling all fine and dandy. But… What with 21.10% real estate roundtrip transaction cost? Quite a bit higher often in practice. Not to mention the local regulations that will cost another 15000€ to resell my place within 10 years from buying it. Let alone the 5% of my mortgage it costs in state and notary fees to refinance without reselling. Which is a necessary condition to even be able to rent it out… somewhat unofficially, because I would have to keep my official address on site until 2021 at least, and I can’t just officially rent out part of the house.

    Seem to have gotten myself stuck in a quite shitty situation…

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  • Jason July 6, 2015, 1:24 am

    The concept of the headline might be a little dangerous in an investment context – you’d always be doing something if there was no middle ground ‘holding’, and incurring ridiculous transaction costs!

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  • Arun July 6, 2015, 10:17 am

    Dave Ramsey uses this line of thinking to answer a lot of listeners on his show – ” If you didn’t already buy something, would take a loan now to buy it?”. I’m glad to see MMM used his own personal example and expanded on it such an enlightening way!

    Reply
  • CountryGirlatHeart July 7, 2015, 10:11 am

    I couldn’t agree more with this post. However, I have an important question…. a little background. I work from home a few days a week, and my office is moving closer to home – win for me. Future husband also currently has a commute, but in the process of changing jobs – win for him. However, we both need cars given the type of work we do (I clocked 240 miles yesterday). That kind of travel isn’t daily, but its common. And no, its not all to the same place – its all over. That said, the pay is good, so no complaints (even though we are a half step from FI, we will still do this type work as we enjoy it, and the hours are fluid). Plus I can write it off the mileage on my taxes. OK, so the question is, we have three cars (yes three). Two are older, used Toyotas that are not much to look at, but get us where we need to go. I also have a newer car (pre-mid life crisis purchase). Costs more to maintain, insure and eats gas. I agree that I should sell it, but the problem is – how? If this were a $3,500 car I would expect the buyer to show up with cash. But with a $15,000 car? I don’t really trust money orders, as any of this could be forged. So… how do you sell a high dollar car? Rather, how do you collect the money!?

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    • DrFunk July 9, 2015, 7:31 am

      I think you can sign up for pay processing accounts (paypal).

      Or, you can require that the buyer wire the money into your account. You can set up a temporary account at your bank, give the necessary info to the buyer, and the money should be in your account instantaneously.

      Reply
    • landd July 12, 2015, 10:45 pm

      If it’s local meet the buyer at their bank and watch them issue you the cashiers check. Or if the check is already issued go to the issuing bank with the buyer and cash the check and have it reissued by and for you. Then sign the paperwork. We’ve sold and bought a few cars this way on CL for even bigger deals. GL

      Reply
  • MarkH July 8, 2015, 5:47 am

    As a semi-related note I try not to “buy” anything I don’t directly need/use on a regular basis. I use my “craigslist borrow” strategy. As an example, I wanted to get into kayaking. I’d rented a few times in the past and knew I would really enjoy it as my workout and adventure activity. Around here camping is free on crown land so other than a bit of gas money it makes for cheap vacation time. Renting a decent sea kayak is $37/day plus tax. So a long weekend it’s about $120. A decent new sea kayak runs about $2,000. On craigslist or kijiji there seems to be a general pricing scheme of about half of retail when the item is a few years old. I bought a 5 year old, lightly used sea kayak for $900. I used it for a year and realized I wanted a better fitting, more advanced kayak as my skills grew. Pricing for a 5 or 8 or whatever year old kayak is really not any different unless its in poor condition. Mine was still good and I listed it for $1000. Solid it in 3 days for listed price. Not only did I avoid rental fees I made a profit on the kayak and will most likely do something similar if I upgrade or change it again. Even if I lost a few hundred dollars it still would save me over renting it two weekends so regardless I am ahead. I’ve done this with stereos, tools, tents, furniture (especially antiques that don’t loose their value) and dozens of other things. It won’t work for computers or TV’s or things that quickly go out of style but anything classic and quality you can probably do well with.

    My friend has had much luck doing this with cars and boats too. Bought a 7 year old VW golf with low miles, drive it for 2 years and sell it for about the same price (he’s actually made profit on cars hes added 80,000km to).

    So I would also tell my 19 year old self to never buy anything new (well, except underwear – on sale of course).

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  • Luc July 8, 2015, 9:48 am

    MMM, thanks for an interesting blog. I was wondering if you ever second guess the concept of “the stock market always goes up over time”. I was wondering if you have any thoughts regarding the rate of return that can be expected in the decades to come. For myself, I invest heavily in the low cost S&P 500 mutual funds and Vanguard (Canada), but I was wondering what your opinion is on “peak growth”, in other words, if something cannot grow exponentially forever, it won’t.

    Personally, I’m seeing evidence of this every day in the form of suppressed wages and wage stagnation, low yields, consumer spending that is debt funded, reduced dividends to shareholders and increased payouts to executives, increased compensation and benefits packages to public sector employees at the expensive pf private sector workers, frothy PE ratios, and in Canada, a visible increase in homelessness.

    Looking at the graph of the TSX Venture Exchange for the last 15 years as an example – what is the supposed to be the incubator for Canadian start ups and a bellwether for Canadian entrepreneurship, the picture is, well, dismal to say the least. An example of a market that certainly does not always go up. Of course, Canada is an undiversified economy, and perhaps this is the reason.

    The larger point of this comment, is to ask the question “is exponential the growth in the S&P 500 and other stock markets around the world sustainable as a long term investment model”. Compounding and exponential growth are, as far as I’m aware, the same thing mathematically, and sometimes I wonder just how the “miracle of compounding” can continue indefinitely.

    For myself, I continue to invest this way because a) I believe that market growth is largely driven by the M2 money supply, and b), I don’t see many alternatives. Sure, I have investment real estate as well as a job, and my life is generally Mustachian, but at the end of the day, the BIG picture regarding whether or not the past (cFiresim etc) will repeat itself into the future, remains somewhat elusive.

    Anyway, this is probably more of a philosophical question, but would be interested to hear opinions on this.

    Ciao.

    Reply
  • Vicki from NZ July 9, 2015, 2:57 am

    Driving a nissan pulsar 1300 with 6 children, walking / running with large pram when the car is busy, the other day our small car moved 2 months worth of wood my husbands sourced for free, today I used it to pick up hay for the rabbits I breed and sell on line, which it also provides pet transport for when needed. I sell second hand clothes and other odds and ends on line when the house is cluttered. Moved 800 kms down the North Island to a much colder location as rent was 1/2 the cost and we have 1 acre of land to use. Finally for the first time in my life I am saving money with the goal of buying my own home! Yet I have 1/4 of the income I had 5 years ago. Thanks MMM for your dedication to the cause, this website is awesome.

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  • Snappr July 9, 2015, 7:25 am

    All I can say is that MMM is right. 100% correct. In the last year my family went from a newer mini-van with around a $20K loan to a 2006 Nissan Armada with a $11K loan. This was an attempt to cut debt fast using Dave Ramsey’s principles and still have a huge vehicle for my family of 5 and a 120lbs dog. But then I ran across MMM’s blog and felt sick at my stomach… Suddenly I realized I bought a huge gas guzzling 4×4 that can tow 10K pounds because of 1) “What if one of my kids wanted to take a friend with us?” or 2) “Those 2-3 camping trips we take a year, how could I take my dog?!”
    And then it hit me. My oldest son is 17 and drives, my wife drives and so do I. We have 3 cars… I don’t need a freaking huge SUV. So I painfully sold the Armada at a slight loss and bought $3,100 2003 Vibe 5-spd that I paid cash for. Yes we still have 3 vehicles (all get over 30MPG now), but I can tell you as soon as I grew a pair and did the right thing, I’m paying debt off faster then I ever thought possible.

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    • Mr. Money Mustache July 9, 2015, 1:00 pm

      Right on! As I always say, the best vehicle for a large family (up to 10 people plus four dogs) is TWO late-2000s Toyota Prii. Most of the time, not everyone is traveling exactly the same place at exactly the same time, so it gives you flexibility and each gets about 50MPG. On those rare times you are all 100% in sync, you take both cars and your efficiency for both combined is 25MPG. Still better than any other 10-passenger vehicle.

      Reply
  • German July 9, 2015, 12:37 pm

    Right on MMM.
    Two months ago I went from my all decked out F-150 (used mainly to commute 25 miles each way to office job) to a 2009 Honda Fit. I almost cried when I heard the sound system in my Honda Fit and it didn’t sound like the $1,000 sound system I had in my truck. Without a doubt, it is hard to let go of those things that you have put money in and you “have earned” and you “can afford” but would I spend 1K on stereo and speakers today? No. therefore; SOLD! The 24″ wheels on my truck that only added to the gas guzzling… SOLD! The savings are insane, I now enjoy going to the gas station (as crazy as that sounds).

    I’ll never forget the face of people when they saw me pull up in my truck as I was going to test drive their cars. One guy said, “why would you want to trade down, keep the truck” he clearly didn’t get the secret memos.

    Reply
    • Rpatrick July 10, 2015, 7:05 am

      You could upgrade your sound system. Probably very similar to a Civic in fit and speaker size. Lots of stereos on Craigslist.

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  • Money Saving July 9, 2015, 3:20 pm

    I agree that it is often painful to engage in transactions to get to a new lower cost living situation. We have done this across the board in our life by simplifying one or two things a month. In the end, we will be financially independent 20 years earlier! You have to be ruthless about cutting back everything that is fluff in your life – cars, cabins, boats, large houses, etc.

    The fun part of the game is that cutting expenses is like whack-a-mole. As soon as you get to a lower cost base in one area, you now have a new area to target. It can become iterative to where you continue to simplify more and more just for the fun of it. The fictional character portrayed above is on the right track, but still has a long way to get out of the comfort zone and make some real life changing decisions to get to the next “level!”

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  • Mark July 10, 2015, 9:12 am

    StacheMan- I bought a 2010 Honda fit this year on your advice for 10.5K with 2 near new sets of tires. I have to drive a lot for my sales job and occasionally make deliveries. This baby is PERFECT for me. What I find interesting- when I occasionally check Craigslist to see what they are selling for, they are hardly ever listed I’m assuming because they’re getting snapped up so fast. Could this be the mustache effect? Seems like it.
    Best part is I’m anticipating selling mine for 10K (I’ll try for 10.5) when I take off to travel in 9 months. I’ll basically be out $500 in depreciation plus the taxes I paid on the purchase. It costs $22 to fill and goes 350 miles (I get .55/mi reimbursement from work) , and ZERO problems so far or anticipated. The ultimate Stachemobile! Thanks dude!

    Reply
  • Smart Money MD July 10, 2015, 1:17 pm

    The same can be said about clothing as well. We tend to pile up closets full of new clothing, shoes, and outfits and find that there are probably only a core set of clothes that we routinely wear anyway. The rest is simply thousands of dollars of closet-filling outfits that we probably wouldn’t have bought in the first place.

    Reply
  • Ji July 14, 2015, 3:33 am

    House purchasing into a slump (1994) or the gradual rise thereafter can work out OK. 2 of my friends and I purchased flats in south London, 2 in Croydon (10 minutes fast train to central London) and one in Southwark (10 minutes by bus to the river). All jumped in value with mine now approximately 4-5 times initial purchase price.

    My flat is being rented out as I now live in Japan. Just about to buy a nice little house here, September hopefully, though this is almost 100% guaranteed not to go up in value. Housing in Japan is disposable so my 35 year old house would be demolished by most Japanese buyers. However I’m hoping to live in and improve it for something approaching my current rental payments and in 10 to 15 years rent it out for about a 10% of the purchase price per annum.

    If anyone is interested Japan is quite frugal in some ways, lots of cycling, public transport and walking. But few people regularly cook, many eat out, and diet is actually quite poor – sushi, sashimi etc. are healthy but most people don’t eat this regularly as it’s expensive.

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  • JP July 15, 2015, 3:11 pm

    This article really hits home with me. My wife and I made the foolish decision to take generic office jobs and buy an expensive rowhouse in Washington, DC four years ago. We are now in a position where it doesn’t make sense to relocate, but it never made sense to move here to begin with. The daily regret is horrible.

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  • Stefan Koehler July 19, 2015, 10:19 am

    Announcement of Change:
    Just a couple of days ago I decided to sell my 2002 Toyota Tacoma Pickup Truck and go car-less. I’m not driving much anyway, since I’m biking most of the time, for occasional rides to Costco, my dentist, my doctor, fall deer camp I’m going to get an Uber or Zipcar. I’m also thinking electric bike w/ trailer, but don’t want to buy something new right away. I already have two bikes – a cheap bike from Craigslist that gets me through the rough Wisconsin winter and a folding bike that I take everywhere in my suitcase (Bike Friday).

    My truck has been a good friend for the last decade. I used to say “Every Man Needs a Truck”. Great story when I bought it on eBay and picked it up in Texas and drove it to Wisconsin. As an immigrant from Germany my pickup has been part of my American dream, since they don’t have pickups over there.

    Still, I feel liberated already. A couple of questions reamain, though: What are my deer hunting pals going to say if I show up in a Zipcar?? How am I going to haul the huge buck that I’m going to get this fall?

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    • Gerard July 24, 2015, 9:03 am

      Please please please tell me you’re gonna pull it home on a bike trailer, and post pictures.

      Reply
  • HasGoals July 21, 2015, 9:55 am

    At long last!

    I have read through every single blog post and can finally call myself an honorary Mustachian!

    I feel like we are old pals even though you don’t know me. I realize that I suck and that I represent an exploding volcano of wastefulness. I know that with every mile I drive, every soda I drink, and every time I eat out, I am slowly choking the life out of my future. I have accepted some voluntary discomfort into my life. And I proudly use my universal men’s grooming device knowing that it pays for itself once more each time I use it!

    I’m writing to let you know that:
    We dropped cable.
    We no longer buy soda.
    We brew our own coffee instead of driving for Starbucks.
    We eat out once a week instead of six times a week.
    We both have bicycles and I’m almost fit enough to ride the 10 miles round-trip to work.
    We drive an older used Toyota Camry instead of a Jeep Wrangler.
    We’ve paid off two credit cards and two student loans.
    We’re going to add insulation to our attic instead of complaining about our electricity bill.
    We’ll finish paying off an old car loan on a wrecked vehicle, a mountain of student loans, and a mortgage in 8 years instead of 28.

    We’re working towards not eating out at all, reducing the “miscellaneous” category on our spending, and in-sourcing where we can. We’re no longer worried about missing a paycheck or two.

    I just wanted to let you know that you’ve been an encouragement along the way and I truly appreciate your vision for saving the entire human race from destroying itself through over-consumption.

    Reply
  • Andrew P July 21, 2015, 6:42 pm

    Reminds me of this quote, “Think not so much of what you lack as what you have: but of the things that you have, select the best, and then reflect how eagerly you would have sought them if you did not have them. At the same time, however, take care that you do not through being so pleased with them accustom yourself to overvalue them, so as to be disturbed if you should ever not have them.” -Marcus Aurelius

    Reply
  • Mrs Handlebar Mustache July 23, 2015, 7:03 pm

    It takes a real man to fess up to questionable choices in the past, you can take real credit for doing that in this post Mr Money.

    On an aside, I wonder if buying a “Classic Car” instead of a relatively new used car would be a mustachian move. The right one will increase in value each year instead of depreciate. Just sayin…

    Reply
    • Da55id July 24, 2015, 8:13 am

      This is what I did. Bought the 9 year old car for $13,500, and two years later they are going for $16,000 and higher. If you get a low volume roadster/convertible with the sportiest/powerful factory option you can usually find low mileage cars for low prices. Sky Redline, Crossfire SRT6, Pontiac Solstice (coupe in this case). Of course this is only after all debts are paid off, and for the sake of joie de vivre – which is priceless!!

      Reply
  • K July 24, 2015, 12:20 pm

    I admit that I am guilty of this. I bought a 2001 Honda Accord after finishing grad school (and the A/C on my 1979 Monte Carlo died). But, not much mileage (less than 70k at 14 years old) since for virtually all family stuff we used my wife’s minivan. Then, making decent cash, I bought myself a gift in 2007 – a Miata (now with 16k miles). Ought to get rid of one if not both…..$150 in annual registration plus insurance and depreciation.

    This article makes me think of MMM’s very insightful observation that one can think of Craigslist as virtual storage. Don’t use something, but think you might at some point in the future, then “store” it at Craigslist……and have the option of taking out of storage (i.e. buying) at a later date.

    They are both in such great condition…….help! In three years, daughter will be driving…….she needs that Accord!

    Reply
    • Mr. Money Mustache July 24, 2015, 3:07 pm

      Good thinking, K. I think many of the Mustachians currently reading could use your 2001 Accord.

      As for your future driver, why not give her the gift of NOT giving her a car at age 16? I bought my first car with my own money at age 22, after graduating and starting my first high-paying full time engineering job.

      Reply
      • Lady Fordragon July 24, 2015, 4:04 pm

        I agree with MMM. I bought my first car, which was used, at age 23 with my own money. Well, I did finance a portion of it (face punch), but I ended up paying it off in a year and half and after 7 years it’s still going strong. When it does eventually die, I definitely plan on buying my next car with cash. You definitely tend to appreciate things bought with your own money.

        Reply
        • K July 25, 2015, 9:27 am

          Good point. I wasn’t given a car, but my parents let me buy my own car at 16…..also a mistake since I chose a Fiat X-1/9 (Fix it Again Tony). After it became too expensive to maintain, I used my parents’ cars when needed through junior year of college. Then, bought a old VW Rabbit for $500, put new tires on it and it died. Finally, given my grandmother’s 1979 Monte Carlo in 1993 (only 24k miles…..bank, library, grocery store), which I drove until 2001 and bought the Accord. At best, I’d probably let her use it, while paying for gas and insurance increment, and then let her younger brother use it when it comes his time………and, then let either of them buy it if desired. Having them use a quality car would avoid the sort of issues I had as a uninformed youngster.

          I’ve had people stick notes on it 2-3 times asking if I wanted to sell. Perhaps I will just get it ready for sale and see what happens. KBB def doesn’t value the low mileage as much……just worth $800 than if it had twice the mileage at 140k.

          Reply
      • pachipres August 17, 2015, 7:08 pm

        We helped our 17 year old son out with a car and he did pay us back but he got so many tickets and a potential serious accident, I will not do this again for him or my other younger sons.

        Reply
  • Xman July 29, 2015, 12:56 pm

    I was at the Canadian Museum of History with my three kids today and we were taking a walk outside on the grounds near the fountains. At one point, I look over and I see the dog and canoe from the picture at the top of your post. LOL

    Reply
  • pachipres August 17, 2015, 9:58 pm

    Is it wrong to have a cabin or boat or camp trailer if it brings you joy?

    Reply
  • Nicole Patterson August 21, 2015, 3:57 am

    Me and my husband have also made bad choices through the years and we had to pay the price for being young and stupid. We were both in our 20-s when we bought a house outside of London in a place that has poor reputation. There are no schools, many emigrant families and crime… We took a credit and bought a big and expensive house … our jobs were fine back then but after this we had to change them. The loan we are still paying is very big and we cannot afford to travel or spend money for anything… I hope that we will be able to move to a place in a better hood where we can raise our children…

    Reply
  • David May 5, 2017, 12:51 pm

    Total noob here, just really started reading articles, but have been convicted about my ways for awhile…
    Oh! the carnage. Two years ago, we moved out of a house we were renting 2 miles from work, with free buses, that we were paying $800 a month for, to a big house on land out in the country, now a 40 minute commute into work. Now have a $1600 mortgage payment (with PMI), plus all the extra expenditures of living out in the country. I really do suck at money. Would love to talk to myself just 2.5 years ago.
    BUT… We’re selling the big country house to move back into town, where we will be getting rid of 2 cars and biking and walking much, much more. The market has exploded in our town, so that we’ll be lucky to match our mortgage payment in rent. But we’ll still be coming out WAY ahead.

    Looking forward to becoming more badass every day.

    Reply
  • Kevin May 23, 2017, 8:35 pm

    utterly fantastic article. not mentioned but this is one of the hardest parts of investing: when to sell a dog. obviously one of the tenets of this blog is index funds, and i’m working aggressively in that direction, but i still have residue from my first forays into investing hiding in the cupboard (relatively small canadian resource stocks) and i am on record talking to family members with the exact same words highlighted in your example MMM. “oh if the price would just rise another dollar, with the dividends i’ve earned in the past three years i’d be close to breaking even”. i think this article was the kick in the ass i needed to cut bait. dont be dumb. punch yourself in the face, take your medicine, move on, and enjoy greater returns.

    Reply

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