“Money is like gasoline during a road trip. You don’t want to run out of gas on your trip, but you’re not doing a tour of gas stations. You have to pay attention to money, but it shouldn’t be about the money.” –Tim O’Reilly
I like to reflect on the financial decisions I’ve made over the past year because trying to explain them, in writing, ultimately forces me to better understand the machinery involved, and often suggests additional actions I might consider taking, now or in the future.
“I’m sure you know the quote ‘Writing is nature’s way of letting you know how sloppy your thinking is’, and knowing how sloppy your thinking is allows you to sharpen it, test your arguments, and test different explanations. I find, more often than not, that I understand something much less well when I sit down to write about it than when I’m thinking about it in the shower. In fact, I find that I change my own mind on things a lot when I try to write them down. It really is a powerful tool for finding clarity in your own mind.” —Marc Brooker in Writing Is Magic
There was a time when I couldn’t wait to start drafting these annual reports. And then, 3 years ago, I stopped working. Without income to save, I thought, what did I have to say about saving? Only recently have I begun to appreciate how that sense of the word, what financial planners call “accumulation”, obscures another sense: “preservation”. And maybe I have learned a thing or two about the ebb and flow of preservation.
The full extent of our savings (spread across a handful of taxable and tax-advantaged accounts) are still invested in a single S&P 500 index fund. No change there. But without the regular influx of cash from a paycheck, every few months I sell shares from one of our taxable accounts to cover our expenses. Think of it as dollar-cost-averaging on the sell-side. What floors me is how well our taxable accounts have maintained their value over the last 3 years—even in the face of a protracted pandemic.
Landscaping drew me in for a number of reasons, but I had completely forgotten about one until digging it up recently: on February 3, 2020, I got an estimate back from a landscaper that seemed so astronomically high, I decided I just had to start doing the work myself. I hired a tree service company to do what I couldn’t, and they showed up the very next day. You know how people say “Oh, you must be saving a ton of money doin’ that yourself”? My reaction is usually, “I dunno, I’m at Home Depot like every other day,” because it feels like I’m actually spending a ton, but at least I’m learning a ton, and I think I’m getting a better result in the end.
You’d think I’d have found time to write this while “snowbound in Tahoe”, but my priorities then were jigsaw puzzling, snowshoeing, and cooking good food from scratch, full stop. In truth, Stephanie did most of the jigsaw puzzle, because I had begun puzzling over something else: where to live once she had chosen Fresno State for grad school.
We’d already surveyed several apartment complexes, so we had a good sense of the quality and price points available. But still I found myself asking the question, what if we bought a place? How would 3 years of rent compare to the costs unique to buying a house (i.e. real estate agent commission, property tax, homeowner’s insurance, closing costs, etc.)?
My back-of-the-envelope and admittedly flawed analysis (“flawed” because I assumed both a flat stock market and a flat housing market; also I didn’t foresee the extent of the renovations we’d take on, nor can I predict the impact they’ll have on a future sale) suggested that we’d throw away more money renting over three years than buying, even without any price appreciation. So I started looking at listings, got in contact with an agent, and we found ourselves in contract on a house while still in Tahoe.