He Said She Said – Which Old Car Feels Right?

Last week, we mentioned that we’re having some trouble deciding on which “fun” car will get.  We can either restore the 40+-year-old yellow Mercedes Benz sedan that’s been in and out of the family for decades or we can fulfill Mr PoP’s childhood dreams and buy an early 90’s Honda (or Acura) NSX.  Either is going to be an expensive proposition, and we talked about just how expensive in our post last week. But for some background music for today’s post…take it away Janis!

While money does play some role in the decision, after looking at the numbers it’s less of a guiding factor in which car to have than it is a guide to being okay with the fact that it’ll definitely extend the road to our eventual financial independence a bit.  So coming to grips with the cost of having a “fun” car was definitely a useful exercise, but it doesn’t really help us get any closer to figuring out which fun car to get.

On that score, we both seem to change our minds quite a lot…

He Said

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Which Is The More Financially Wise* Old Car?

Sunny, 2004.

Sunny, 2004.

Two years ago, we successfully wrapped up our Q1 Car Challenge to test if we could reasonably drop down to a single car for the two of us.  We then sold our Jeep, dropping down to a single car. However, our status as a one car household technically didn’t last all that long as within a couple of months we ran across an ebay auction for Sunny, a bright yellow 40+-year-old Mercedes Benz sedan that had a long history in our lives. (The full story is here.) So we bought Sunny and shipped her to Florida sight unseen with the intention of restoring her to greatness (she had clearly been a bit neglected in the years since we saw her last). She has been sitting on our back patio under a cover waiting for us to finish our kitchen renovation before starting in on a Sunny renovation. (So we’ve been functionally a one car household while Sunny waited patiently for us to be ready.)

While the kitchen renovation isn’t done, it’s certainly getting closer and some of the brainstorming and planning for a Sunny restoration is starting to get a little more real. All of which is making us pause and wonder – is this really the right old car for us?

Let me back up for a second. Mr PoP is a bit of a car guy. He loves tinkering with old cars (something he hasn’t really had a chance to do much of since moving to Florida almost a decade ago). But he also loves fast cars and while he’s always liked Sunny, his not-so-secret car crush is on a Honda that’s now 20+ years old. That is, the Honda (or Acura) NSX.

For those of you who don’t have the benefit of an NSX-obsessed spouse who shows you pictures of various 20+ year old supercars regularly, think of this as an early 1990’s Honda version of a Ferrari. They’ll be re-releasing the NSX for the 2017 model year and it’ll cost $156K. That’s more than we paid for our house! Needless to say, we would not be in the market for a new one. But even the ones that are 20+ years old would still be more expensive than any other car we’ve ever purchased. By a long shot.

Since cost (and space in our little house) precludes us from both restoring Sunny AND purchasing an NSX, Mr PoP and I are definitely both on the same page that this is an either-or proposition. There are definitely some emotional items at play in this discussion, but for today, we’re just going to look at this from a financial perspective (we’ll hit on some of the emotions in a subsequent post). So what do the finances look like for each option?

Sunny

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PoP Balance Sheet – April 2016

Welcome to our April 2016 Balance Sheet!

We use the structure of a monthly income statement and balance sheet in tandem to make sure we are keeping our expenses low and planting our pennies wisely. If you’re not already tracking your finances using these two methods, go to mint.com and get started today! If you have any questions about how we do this just post a comment and we’ll be sure to help!

Our numbers in April were pretty steady.  We got a bit of a boost from the stock market being up slightly, and we made some deposits into our 401Ks and other accounts, despite having a pretty spendy month from all of our travels.  All in all, April was a little boring, but boring in a good way.

Anyhow, here are our numbers for April!

  • Our total assets went up by $11.4 
  • Our total liabilities went down by $0.6K 
  • Net worth went up by $12.0K 
  • Total net worth as of the end of April is $1,015.9K, which represents a 1.19% increase this month.

For the details…

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PoP Income Statement – April 2016

Our new BFF!

Warren, our new BFF!

Welcome to our April 2016 Income Statement!

Mr. PoP and I put these income statements together for two reasons. First, we want to be transparent about our finances because we’re trying to be role models for other people who are trying to plant their own pennies (and end up with dollars someday!). Second, we do this to make sure we’re on track to meet our own long-term goals. If you’re not tracking your income statement and balance sheet, we highly recommend you start using a program like Mint to keep track of it all.

I increased our income tax withholding quite a bit after paying our taxes this year, and this is the first month that shows the full effect of that. With rental income, variable and non-cash compensation, and tax credits that we have been lucky to take advantage of, we tend to need to change our withholdings quite a bit from year to year and this year I expect we’ll need to pay a good amount more than in 2015. The changes I made in March based on the IRS calculator may have overshot the mark in how much we will owe in taxes at the end of the year, so I’ll try and address this again after we’ve filled our 401Ks for the year which should happen sometime in the summer.

Speaking of taxes, paying our tax-man was one of the largest line items this month, but he continues to be worth every penny.

The other big line item this month was travel, which shouldn’t be a huge surprise considering we were away from home for nearly 50% of the month. The $2,332 in travel expenses here has about 13 days of travel incidentals in it (which we aim to keep at or below $100/day – we stayed well below), payment for our rental in Omaha, and about $1,000 in expenses for the trip to Ecuador that I’ll be taking in November. Travel spending has definitely been front loaded in March and April this year, and while these two months definitely represent the bulk of our 2016 travel spending, there will still be a bit more to come in the second half of the year as 2016 is really proving to be our year of travel.

The Bottom Line

  • Earnings before principal paydowns and savings allocations of $3,707.  

And the details…

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2015 Shareholder Letter

Warren Buffet’s #1 fan!

One of the ways that Mr. PoP has enjoyed learning about business and investing over the years is by reading (and re-reading!) Warren Buffet’s annual Shareholder Letters written to the shareholders of Berkshire Hathaway.  Though we missed the chance to publish our own Shareholder Letter the same day that Berkshire Hathaway did this year (that’s what we did for the2012, 2013, and 2014 editions), we figured we’d post it today since we’re leaving for Omaha to see the meeting in person with other cool folks like The 1500s, Even Steven, Income Surfer and A Fiery Millennial.  

If you’ll be in Omaha, drop us a line!  And if you won’t be in Omaha, you can still catch the meeting which will be livestreaming for the first time ever on Yahoo Finance on Saturday.  Definitely worth catching one way or another! 

Executive Summary

2015 was in many ways a “building” year.  Our net worth growth was the lowest that we’ve seen since starting our tracking in this space nearly four years ago.  The flat equities markets certainly weren’t a help there, but we also made several larger, long term capital expenditures (namely our giant remodel project, our new solar panels, and a new roof on our duplex) that should provide dividends (both of the monetary and happiness kind) for decades to come, though we haven’t recognized much (if any) monetary value from them so far.

Here’s what the past few years have looked like:

  • End of 2011 Net Worth: $256.7K
  • End of 2012 Net Worth: $417.3K
  • End of 2013 Net Worth: $624.4K
  • End of 2014 Net Worth: $826.6K
  • End of 2015 Net Worth: $949.3K
    • YOY Net Worth Increase of $122.7K, +14.8%
    • 2015 Gross Income: $200.8 Employment / $18.5 Investment Properties
    • 2015 Spending: $70.7K Personal ($23.9K Remodel, $26.8K Everything Else) / $15.9 Investment Properties

Money

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