Small moves today can create big possibilities tomorrow.
In the same way, small moves years ago create big possibilities today.
I’ve certainly seen this in my own life.
The story starts, rather improbably, with a two hour wait on a train platform in the middle of the night.
And leads, also improbably, with the keys to my home.
Not a car owner
For the longest time, owning a car just never seemed to be a possibility. I could never afford it. I got through all my years at college without a car, and when I returned home after I graduated (because boomerang children ain’t just a millennial thing, folks) I entered the working world, still reliant on the bus and train.
And then one night, as I was returning from a cafe in a nearby suburb, I found myself with my train connections hopelessly muddled. The distance from cafe to home was maybe 20 minutes by car, and it was going to take me over two hours to get home this evening.
That night, I decided that it was time to buy a car.
A car owner
My criteria were very modest and practical: it had to work, it had to have good gas mileage, and it had to had a reputation for reliability. Style wasn’t even on my radar.
My total savings to date was around $2,000.
But I got lucky. After looking at AutoTrader magazine for a month or two (this in the days before Craigslist), I found a seller who was getting rid of a 1990 Geo Prizm hatchback. Asking price was $2,500.
The guy must have been in a hurry to sell it, because he dropped the price down to $1,800 right when I got there. (Does that count as a successful haggle?). A mechanic said that the car needed about $600 in repairs to be street-worthy, so I asked for that to be taken off the top.
And so, I wrote a check for $1,200, and was the owner of my first car. An 11 year old car with almost 100,000 miles on it.
What’s a Geo?
(The above is not for the Geo Prizm, but it’s a commercial I actually remember seeing on TV.)
What this turned out to mean, in a practical sense, is that the functional (Toyota) innards of the car such as the engine and transmission were indestructible, while every other (Chevy) piece of the car would effectively disintegrate.
The headliner would sag until it was touching my head. The rubber around the window would come loose such that the window would never quite close. One time the rear view mirror assembly actually popped off the window. The hatchback door lifts ran out of steam, such that I had to hold it up with one hand, lest it conk me on the head (which happened way too many times).
And yet, I doggedly persevered. I bought a headliner kit and some glue spray. I bought a new rubber window liner and put it in myself. I replaced so many plastic door openers that I bought the multi-pack.
Making things more difficult, in 1997 the make went away, being absorbed into Chevrolet. Half the car was Toyota and half Chevrolet, and each dealer told me to go to the other place for parts. Eventually, no one carried parts at all.
So I became intimately familiar with the junkyards. Taking the subway to super sketchy neighborhoods in the Bronx, driving two hours to a random place in New Jersey, all to get some thing, without which I couldn’t pass inspection.
It was hard. It was like a part time job keeping that thing going.
Never give up
“Maybe it’s time to get rid of the car, Mike.”
My dad (and basically everyone else I knew) would say this to me every time some other thing went wrong with the car. Perhaps it was my built in
stubbornness perseverance, but I always believed that holding on to this car was a better deal in the long run than getting rid of it.
So the years passed. Not only did I move to New York City with that car, but I moved out of New York City with that car, including the drive across the country to start a new life in Portland, where I now live.
It survived a few months in Portland, but I think the cross-country trip was more than its poor tired transmission could bear. I sold it for scrap for $250, which is actually a pretty amazing return on investment.
What if I had sold it?
What does this have to do with my home? Well, consider the question: how much did I save by holding on to this car for 10 years?
It’s an unknowable answer, but we can do some estimation.
The point of getting rid of the car and getting another one would be that I would save on maintenance. But how much would I really have saved?
This car had some perennial issues, such as exhaust pipes that would constantly crack and need welding. But what car doesn’t have issues? My mom has a car whose dashboard literally (and I mean “literally” literally) started to melt. My dad had a car that practically ate tires. And some cars need brakes semi-annually.
I had none of the these problems. And since I had a cheap car, my replacement parts were cheap as well. So I don’t believe that I paid any more on maintenance on this car than any other car I could have gotten. In fact, I believe that I paid a lot less, maybe $400-$500 a year.
I certainly paid a lot less in insurance, since I didn’t need to protect the (non-existent) value of the car. I estimate that I saved another $400-$500 a year on that.
Now, if I had bought a new car, it probably would have been in the $3-6,000 range. (I doubt I could have found another steal like I did.)
All of this, over the course of years, adds up to thousands of dollars in unspent money.
What I did instead
But it’s not like I had $10,000 just sitting around at this time in my life. Instead, it was money that didn’t get spent, that didn’t get put on a credit card, costing me finance charges.
This money I didn’t spend cascaded to all of my subsequent future financial moves. It meant that I was able to pay off my student loans that much quicker. Paying off my student loans allowed me to build up my emergency fund that much quicker. Building up my emergency fund allowed me to start saving up for a down payment that much quicker.
And saving up for a down payment allowed me to purchase my home.
And this will continue too. Buying a home earlier in life will mean that I will be able to pay it off that much sooner. And as living without paying rent/mortgage is the fastest way to build wealth, it’s not unreasonable to say that my 1990 Geo Prizm might have been the greatest and most lucrative purchase of my life so far.
It’s easy to make claims about what could happen in the future. But it’s much more powerful to talk about how a past decision turned out today.
So what financial decisions could you make today that will put you on better footing in the future? What will you 15 years from now wish you did today?
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