finance blog, Real Estate


Intangibles, short for intangible assets, are what economists and accountants call things that are not easily measured, valued, or counted. In life, it is the intangibles that matter.

Summer-like weather has me thinking about the reasons I work hard, save hard, and invest. My home has tangible value, and has appreciated in spite of the rough housing market.  The intangible aspects also have value to me.  Planting trees and watching them grow, year after year.  Maintaining my yard, and enjoying the first emerald green grass of the year.  Watching the flowers and flowering bushes come out in their sequence.  And of course, enjoying summer parties in the backyard.

I enjoy my modest home and the myriad home improvements I have made over the last decade.  Not only has been a reasonably good investment, my home has made me feel a greater connection to my community.

When I bought my house, I was approved for a much larger mortgage.  But I insisted on buying a cheaper house.  My first real estate agent kept showing me homes 10 of thousands of dollars above my price range.  After a couple months of that, I fired him, and selected another agent.  My next real estate agent actually respected my price range… only going over by a few thousand dollars, under the idea that we could make a lower offer conforming to my price range.

It worked.  After another several months of near misses, I found a house I really liked and offered $2500 below the asking price… valid for 24 hours.  After about eight tense hours at a friends house, my realtor called and said that the sellers had accepted.

For the last couple years I’ve been thinking that I’d like a larger house, with amenities like a 3-car garage.  We’ve even thought about buying land and building a custom home and looked at a few lots.  But so far I’ve resisted, partially because real-estate commissions and seller-side closing costs could eat easily up $15,000 of net worth.  In-town moving expenses would probably add another 3,000 dollars, and buyer-side closing costs (assuming we buy rather than build) another 7,000 dollars.  Something like $25,000 down the drain  to step into a new, upgraded dream home.

So the plan is to stick it out in the current home or another 5 or so years.  In order to enjoy it more we continue to make upgrades large and small.  About half of the upgrade work is DIY, the rest we contract out.  The return on investment for DIY work is probably 200%, the work contracted out will only pay back 50-60 cents on the dollar.

There is something nice about working on the home.  A sense of progress and accomplishment that is enjoyable.

I keep telling myself the cons of buying a dream home for twice the cost the current home.  Property taxes will double, utilities will go up, real-estate commissions and other costs will eat up a big chuck of equity, moving will be a hassle, etc.  And of course, do I want to live here for the next 10, 20 years?  Hard to say.  Until I make the next big move on the housing front, I plan to delay and enjoy my current home and neighborhood.  Take some walks, host some parties, and do some gardening.  Enjoying the intangibles of home ownership and try not be to hasty in my desire to keep up with the Joneses.

finance blog, Index Investing

The Art of the Deal

Perhaps more difficult to embrace than financial planning is the art of negotiation.

Growing up, I saw two very different approaches to personal finance.  Both of my parents were good savers, but that is were any similarity between their approach to finance ended. Dad’s investing style:  calm, disciplined, balanced, thoughtful, intuitive, enthusiastic, and confident.  Mom’s investing style: undisciplined, impulsive, emotional, intellectually-detached, and timid.   Over the years I saw another difference:  Dad’s approach was extremely successful and Mom’s was, well, not.

One quick example.  Dad was buying a new SUV.  He found one he wanted and was negotiating on price.  He was making headway getting a $1000 off then another $1000.  The sticker price was a joke.  They started perhaps $4500 apart and whittled the difference to about $2000. The car salesmen was starting to make pained expressions, but I could tell that they were not genuine.  Dad would walk away and the salesman would chase him down like a puppy, only his tail wouldn’t wag.  Then Mom lost it. She got mad and told Dad to quit beating up the poor salesman.  She said, “Our SUV is shot; we’re stuck here and we need a vehicle today.”  OMG, Dad dutifully took the current salesman’s offer.  I was stunned.  In 30 seconds Mom had managed to turn Dad’s hard-earned position of strength 180 degrees.  I had seen my Dad negotiate before and I wanted to see if he would get the full $2000 or just settle for $1500.  On the way out the door, while Mom was out of earshot, Dad said, “You know, Mom just cost us $1500?”  I nodded yes.  I was still in mild shock, but I knew he was correct.  I was attending a 12-round prize fight and Mohammad Ali’s corner had just threw in the towel — in the 3rd round!

To be continued…. So many stories.   Next story:  Making personal finance personal.

P.S. — Cover your eyes, a tiny bit of math.  Let’s say that in 30 seconds $1500 was lost.  That $3000 in a minute, or $180,000 lost in a hour.  Perhaps an odd way of seeing things, but that’s how my mind works.  And there is a kernel of Gestalt truth to it.


Frugal Investments That Pay Off

Not all investments are big.   One favorite small investment I recently made is changing the oil in my car with Mobil 1 Synthetic.  Why?  Because, IMO, it’s a great investment.  For an extra $30 I get two benefits.

  1. Vastly reduced engine wear.
  2. Longer oil life. (Meaning my oil will easily last 6,000-7,000 miles).

I don’t drive much compared to the average driver.  I drive about 8,000-9,000 miles per year.  But a lot of my driving is short distance, which is harder on the engine.  However the essentially homogeneous medium-length hydrocarbon chains help my engine fare well against frequent “cold-starts.”  That’s what research tells me.  Additionally I inherited my first car that made it to 287,000 miles with no engine work, from my family who used synthetic oil in it.

Another frugal investment that worked out great for me was a 4-year electrical engineering degree from a state college.  Could I have gone to MIT, Cal Tech, Stanford?  Sure… until I ran out of money or went up to my ears and beyond with student loans.  But, guess what?  When I came to interviews, I got job offers when folks from these same great schools as often as not got rejection letters.  Why?  Because it is a waste of time to get an BSEE from a big-name school.  I got a better undergrad education from a state school, at 1/5 the price!  Talk about a good deal.

A third example of fiscal frugality is paying for good snow tires.  I have a car I like, a life I like, and friends that I cherish.  I find good/great snow tires to be excellent insurance.  I want to keep these  safe.  And one easy way I can help do that is by having control and stopping power when the roads turn icy.  I already drive 10-15 MPH below the speed limit in bad winter road conditions… but if I drive much slower I increase the risk of  some huge, out-of-control, SUV rear-ending or side-swiping me.   Having great tires (I love Blizzaks) helps enormously.  The combination of driving for the conditions and being well equipped helps improve the odds.  A very high ROI proposition.

Finally, in the same vein as driving, is NOT driving.  I, for one, tend to believe the per mile statistics about driving vs. commercial flying.  Hands down flying is way safer than driving.  So, given a choice, I will shell out a few extra bucks to fly rather than drive for trips longer than about 700 miles.   Do I hate security lines? Yes!  Do I hate taking off my shoes and belt?  Yes!  Do I like sitting like a sardine in coach?  Hell, no!  But do I think it is safer to fly.  Ya, ya betcha!

So, investing is as much about the little things as the big ones.  Cheaper is not always better.