What's really beneath the nice car thing?

I was talking yesterday to a new friend, a woman who is in her first year of trying to drastically cut her spending in order to become financially independent so she can quit her job and be a full-time mom.

Instead of engaging in the typical circle-jerk of "FIRE is so amazing!" and "I haven't bought anything in four years! who needs shoes? or toothpaste?" we started talking about how hard it was. Specifically, how hard it was to drive old cars. 

She told me about the challenge of letting go of her precious brand-new car. It was a reward to herself when she reached a level of income that felt like she had "made it." She loved that car - loved driving it, loved looking at it, loved feeling like she had earned it with years of hard work - but when she decided that she wanted to reach financial independence, it was clear the car was an expense she couldn't justify. 

This is such a common story with people trying to be more frugal so they can work less, right? The crazy expensive car loan that cost them as much as their rent. The giant truck they never used to haul anything. Yearly upgrades to a newer car. But most of these conversations focus on the relief that happens when the car is gone. No more monthly payment. No more stress. 

There's another side to it that we don't talk about as much, maybe because we all feel a little embarrassed. We don't want to be seen as the shallow consumer who is tempted by the fickle gleam of a shiny decklid. She told me that she felt stupid even mentioning it to me; she knew cars were giant beasts of depreciation and stolen dollars. But she missed her car. 

"I get it!" I told her. And I totally did - I am constantly trying to convince myself to buy a nicer car, something shiny with heated leather seats and flashy rims.

"Why don't you just buy it then?" she asked. And it's true - Andrew and I could afford to buy a fancy car. And I do think about it often. At least once a year, I shop online for a BMW convertible or a Nissan Z (don't laugh, Andrew already teases me horribly about it). 

"I get really close," I admitted to her, "but I just can't get myself to do it." Because when I'm honest with myself about why I want a car, it really comes down to a few frustrating facts: I'm insecure, I care what people think, I want people to be impressed by me. 

And when I stare that realization directly in the face, the fun of buying a new shiny car is gone. I jokingly told her that my secret to curbing my spending is by realizing that 99% of my purchases are fueled by insecurity. 

"Be honest," I asked her, "How much of your fancy car was about keeping up with the Joneses?" 

A little, she admitted. She liked the idea of driving a nice car. She liked being seen by her friends as successful. "The day I sold my car, when I saw someone else driving my car away," she said, "it was like my old self was leaving with it and I wasn't sure if I wanted to be this new self." 

Then we started talking about our childhoods. Her family saw nice cars as a sign of being a hard worker and were always quick to upgrade to the newest model or most luxurious brand. When she started making more money, they pushed her to get herself a nice car too. She had achieved so much - didn't she want to reward herself? 

My story with cars is a little different. Growing up, my family always drove twenty-year-old Volvo station wagons that my dad repaired himself (Volvo's are a big part of Pattee family lore - one of my parents' first dates involved a broken Volvo, the backroads of Guatemala and a pair of pantyhose). My brother and I would get rides home from our friends' parents in their shiny minivans and SUVs and talk about how we needed to convince our parents to buy a new car. My dream car then was a 1990 hot red Mazda Miata and I saved every paycheck for two years to buy one. Then, right before my 16th birthday, I decided to blow it all on a trip to Europe and spent the next five years driving my parent's old Volvo. 

My car choices since then have bordered on the vagrant: a 1996 Toyota Camry with no door handles for $1800, a 2001 Honda Civic for $3K, and my current car: a 2006 Scion XB that I got for $5K.

At first I bought cheap cars because I didn't have the money to buy a nice car and then I bought cheap cars because I was trying to become financially independent before I hit 30, and then it turned into some kind of Moral Self-Righteous achievement: I drive a cheap car. I don't need a shiny car to prop up my ego. My cheap car and I are better than other people. 

That kept me happy with my torn seats and broken radio for a while...until I started working with a marketing agency. And we started visiting clients in their offices. I would get there early and watch my co-workers pull up. BMW. BMW. BMW. BMW. And then me, in my scratched up Scion with a wire hanging out from under the bumper like a rat's tail. Did I picture it or were my new co-workers wincing when they saw me get out of my car? Were they suddenly questioning if I was the successful, competent marketer I had sold myself as? Were our clients peering out their office windows at the sound of my squeaky brakes in their parking lot? 

I told myself I didn't care, but who was I kidding? I started to park blocks away and pretend I couldn't find an empty spot in the lot. Even my Target blazer and Old Navy skirt were starting to look a little shabby next to so much Vera Wang and J Crew. Did I need a new wardrobe? Finally, I went to Andrew and told him that I thought my car was holding me back in my career. Hearing myself say that out loud was the wake-up call I needed. Wasn't that the same rationale I heard from so many of my friends who were driving new cars they couldn't afford? That I heard over and over from people who wanted to become financially independent but didn't want to give up their expensive cars? That they needed it for work. That they needed a new car because they wanted their kid to be safe. That they needed four-wheel drive. 

Maybe I wasn't so different from all those people I had been looking down on. 

This is why I don't judge you for missing your car, I told her. And it's why I don't blame myself for wanting a new one. Because at the end of the day, aren't we all just little kids on the playground? Wanting to make new friends. Wanting to have the cool shoes that the other kids are impressed by. Wanting our parents to approve of us. Wanting the gold star, A+, you did good, kid.  

So if you find the car that cures insecurity and guarantees the approval of others, let me know. I'll buy two. Until then, I'm sticking with the toaster oven. 

it may not be fancy, but at least it's Winnie approved.

it may not be fancy, but at least it's Winnie approved.

Can you buy a house with your fiance?

I want to buy a house in the next couple months and even though my partner and I are planning on getting married, we're not married yet. Should I buy the house alone or should he and I buy it together? I'm planning on putting down the entire down-payment. 

This question came in today from a reader and it's so simple and yet so not simple, so let's dive in. 

I bought a house with my boyfriend so I've touched on this topic before. What I haven't done is broken the different options down in detail so I'm going to do that now. 

Whenever I talk about money and relationships, I try to cover all three elements: Emotional, Practical and Legal. I've noticed that most people think about 1, maybe 2, of these elements when they make financial decisions and then are blindsided by the 3rd element which they've ignored but which still has huge importance. 

The most important thing here is that we protect both the relationship and the finances, giving each of them equal attention. 

The Emotional

Why are you buying a property? Is this a rental property or a "forever" home? Is your partner going to be okay living in a home that is not his? If it was entirely up to you, would you prefer to own the home alone or together? What does your partner want? 

My experience is that this is where many couples stumble, with one person assuming they will at some point get partial ownership of the house and the other person thinking, this is my house. I have seen many couples struggle with this, which has led me to believe that shared homes should be purchased together, and real estate investments should be purchased separately. 

The Practical

Practically speaking, you want to make the house as easy as possible to divide if you guys split up (this is true even if you get married and then divorced). That means if you buy the house together, you should have a plan for dividing it, such as who gets first-dibs on taking full ownership and what would be the terms of the payout to the other person? Would you pay to have the house appraised? Can one of you force the property to be sold? 

From what I've heard, it can be difficult and expensive to add someone to a title and loan after purchase (though I know people who have done this), and it makes it a little confusing who owns the equity (i.e. if you buy a house for $250K and the value rises to $300K and he gets added to the title and loan then, does he get to share in that $50K appreciation, or would you consider that yours?). 

You also want to think about repairs and improvements. If you plan on adding him to the title and deed, you might want him to share in the cost of the repairs and improvements NOW, before he's even been added. But from his standpoint, that wouldn't really make sense. 

Another piece of this is the downpayment. If you were already married, would you put down the full downpayment and consider the money "ours" or would you still think of that downpayment as your money, and expect to keep it if you two separate? 

The Legal

This is where it gets hairy. Some states might consider your partner paying towards monthly housing expenses or helping around as proof of his partial ownership, even if only your name is on the house title and loan. If you buy the house unmarried, you'll also want to make sure you have Joint Tenancy with Right of Survivorship, so that if one of you dies, the other person keeps full ownership of the home. 

My recommendations

- If you ultimately see living in this house with this man for 10+ years, I would buy the house together. It will reduce complications and awkwardness and allow you both to share in the joy of home ownership together. 

- If you want to make a good investment, I would consider buying a modest house or duplex, living in it for now, and turning it into a rental or selling it for profit (if you're in that kind of a market) in 2-3 years. Be clear with him that this is 100% your property and that it's just an investment, and you'll happily buy a house with him when the time is right. 

- If you decide to buy the house together now, you could either put down less money for a downpayment so that he can afford half, or he could borrow half of the downpayment (from you or someone else), or you could write up a legal contract specifying that you're putting in X for the downpayment and should you two split up or divorce, you expect to get that X repaid (with or without interest).

- When you get married, get a prenup. Here's my free Prenup course which walks you through the process.  

Why women should get prenups

The data shows that during a divorce, women are hit harder financially than men. Which is why it always surprises me that women are so opposed to prenups. Well, until I remember that throughout the history of the world, legal agreements have generally been used to disempower, cripple and impoverish women...then I guess it kinda' makes sense. 

Here's the thing - whatever prenups used to signify, that's in the past and continuing to believe the stigma is only hurting you. Prenups are one of the most powerful tools for women to keep their wealth, protect themselves as homemakers and stay-at-home moms and retain ownership of their IP. 

Watch me talk to Money Magazine about the things women get wrong about prenups.

Gratitude is so hard

Last night, I was so upset that I left the house in tears.

I'd just gotten back from two intense back-to-back work trips. I had hours of client work that was overdue. I had found out that our remodel was about to go over budget. And we've been waiting on the results of a hopefully-not-scary medical test.

"I'm sick of working on Sundays, I never get ahead, I flinch everytime my phone goes off," I told Andrew. "I'm so overwhelmed I feel like I can't breathe."

He went through all his "wife-calming" remedies: a glass of water, kissing in bed, a hot shower, a snack.

He even went through a list of everything we should be grateful for: a roof over our heads, good jobs, a financial safety net, two working cars, a cuter-than-average dog (okay, that was actually the first thing he said...)

"I don't care," I told him. "I'm too cranky to be grateful."

As a last resort, I decided to go for a walk. Winnie and I set off in the dark. I live in an area that has a lot of transients and vandalism so I don't normally walk alone at night but tonight, I didn't care.

For ten blocks, I just thought about how mad I was at my life. Why did I have to work so much? Why couldn't our stupid remodel be done already? Why didn't we have more time to spend together? Why was my hair so stringy and why was everything SO BAD? I felt helpless. No matter how hard I tried to change and set boundaries and wake up earlier and prioritize, I always ended up here: overworked, overwhelmed and unhappy.

I kept walking, past couples walking hand-in-hand, two guys smoking outside of a sports bar and a homeless man rolling out a sleeping bag on the sidewalk.

I walked a few more blocks and then turned around. My hair was still wet from the shower and I was freezing. Even Winnie was shivering. It was time to go home and face my life.

When I passed the man with the sleeping bag, he was climbing inside. He had bare feet. I remembered something I read about how homeless people are constantly in need of warm socks.

I thought about offering to bring him an extra blanket or a pair of socks. Instead, I kept walking. I didn't have the energy to talk to anyone or deal with more bullshit. Besides, Winnie doesn't like men she doesn't know and Andrew would be getting worried if I was gone much longer.

I imagined Andrew back home in our condo. When I left, he was making a gorgonzola pizza and watching Stranger Things. He had promised me a back massage if I finished all my work. Just a few blocks from where I was standing, there was an apartment with heat and love and gorgonzola and Netflix. And it all belonged to me.

I turned back around. The man sat up when I approached.

"Hey," I said, "it's really cold. Do you need anything?"

He said he could use some food, so I walked three blocks to Starbucks, bought a sausage sandwich and brought it back to him.

What's the point of this? That life is hard, for everyone. Married and single. The rich and the poor. People who sleep on beds and people who sleep on sidewalks.

Gratitude is not a permanent mindset. Most of us are lucky to feel it even for one or two seconds every day. And it's hard to force yourself into it by reminding yourself how much you have.

But the feeling - true gratitude - is blissful. And last night, I was lucky to live in that bliss for the entire ten blocks it took me to get home.  

Go hard on homes or just go home?

A few months ago, I got an email from a 26-year old real estate investor. She wanted to buy another property and she was also scared of stretching herself too thin or getting in over her head. She wanted my advice. And at the end of the email, she asked me this:

What do you do when you're scared of failure?

I immediately typed a reply.

What do I do when I’m scared of failure? I believe in the numbers, not my fear. Because isn’t it always that simple? You run the numbers, evaluate the deal and if it makes sense, it makes sense. Of course I’m terrified, but if the numbers make sense, I pick up the phone and make the call.

But I didn’t send the email. For months. Because it’s also not that simple. And the truth is something more like this:

What do I do when I’m scared of failure? I don’t know. I’m scared of failure right now. I want to buy more properties and I doubt myself and I stress over my equity-to-debt ratio. I doubt my ability to find good deals. Sometimes I think I just want to cash out and put it all in index funds. I’m thinking of remodeling a unit, and I’m not sure. I’m thinking of doing a 1031 exchange on one of the houses, and I’m not sure. And I’m so fucking over getting phone calls about washing machines. 


Here’s what I wrote her*: 

  • You will always be trying to balance between your equity and your debt. The balance will never be perfect, but it will have moments of almost-perfection. Keep trying.

  • Every time your life changes, your real estate choices will change. You’ll hire property managers. You’ll decide to invest long-distance. You’ll decide you only want Class A neighborhoods. You’ll realize you want to be mortgage free. You’ll start only buying notes. And you’ll also un-decide all of those things too.That’s the nature of starting young / childless / single, so get used to it.

  • I suck at giving real estate advice. Because I’ve been luckier than most. And I still have my own risk adversity. And my own struggles with time management. My advice is based on my success which is based on a real estate market I don’t control. And this is true for everyone who gives you real estate advice. Nobody has the answers. And if they say they do, don’t give them (LBH, him) your credit card info.

Real estate is by far the most popular topic that I get emails about. And I love answering them. Why? Because real estate is so much simpler than sticky hairy things like sharing money with a spouse and how to not lend money to your friends and prenups and all that...so if you have a question about real estate, please do me a favor and email me :) 

Baby, right behind you

I just spent ten days in Hawaii.

And I learned that in Hawaii, all anyone can talk about is Sea Turtles.

Where are they? Turtle town? Where’s that? How far out? 100 meters?

How big? Oh, I saw bigger over at Makena beach. You shoulda’ been there. It was thick with turtles.

You see one?! Where? Point, show me! Where??? Is that it? I think I see it! No, nevermind that’s just a rock.

I wish I could say that I withheld from the search. That I instead sat on the beach and meditated on the state of global warming. But I didn’t. I was right there with them, shoving kids aside and pouncing on dark shadows and fervently searching the clear water.

It was turtle or bust.

For a solid hour, we stood in the waves in front of our hotel searching for a big turtle that had supposedly been seen in that spot earlier in the day. There was a big group of us, all manic with turtle fever.

Wave after wave, but nothing. He had moved on. The group slowly fell apart as people took off to drink more or search in other areas. Finally, we were the only ones left.

“One more wave and I’m done,” I told Andrew. The next wave came and there was nothing.

I turned my back on the ocean. I was done searching.  It had been a tough trip - full of in-laws and hangovers and sketchy AirBNBs. Sometimes, beautiful vacations don’t make us happy, they just serve to highlight how happy we wish we were.

“Baby, behind you,” Andrew called out. I braced myself for yet another kid to bump into me in their recently-purchased Costco snorkeling gear.

“Baby, right behind you,” he said again, in a voice that either meant “shark” or “big shark.”

And there it was. Suspended in a wave that was about to crash around me. A dark shadow against blue. His shoulder almost bumping my hipbone. The biggest turtle I’ve ever seen.

It was amazing, but it was also sad. Because as soon as I saw him, I realized that I should never have been hunting to see something so old and magical. That to search so hard is to somehow take the power out of the moment. To make the wild world my personal zoo.

That I was looking so hard for something, and it was never in front of my face. Instead it was  right behind me, where it belongs.

The thing you’re looking for, maybe it’s right behind you.

Maybe it’s almost touching you.

Maybe all you need is to stop your frantic search.