First Week Finances

We have now been in Portland a week! We are currently staying with family, so the biggest financial concerns this week were a house and a car; the two largest expenses most families deal with.

Our car in Houston was probably the only real financial mis-step we have made over the last few years. Because of the size of the city and the culture, we ended up getting a larger vehicle than we really needed and a total gas guzzler (barely 18MPG!). Despite being from a trusted manufacturer that we had used several times before, it was a bit of a lemon. After five years there were small things that continued to plague us (lights needed changing every 6 months, bumper started coming off, random engine lights illuminate which dealer only could reset).

We had seriously considered road tripping from Houston to Portland, but frankly we didn’t trust our car to not break down in the middle of the desert, so we cut our losses, sold it back to the dealer in Houston and bought something up here that is a bit more Portland-friendly. Yes, it is a several thousand dollar hit out on our finances, but this car should last us 10 years and we are happy with it.  We are still considering whether the warranty extension is worth the cost and we have a bit of time to decide whether or not to buy it

The car was a side issue to the big expense, namely buying a house! We had done research before arriving, but it was still a shock to find out how different the housing market is up here. The prices have been increasing rapidly over the last few years for several reasons: Firstly, Portland is an attractive, livable city. Secondly, Portland is still cheaper than most major West Coast cities (the prices in San Francisco and Seattle are insane!) so this relatively lower housing cost draws businesses into the city.

We discovered the typical Portland real estate cycle last week; the best houses go on the market on a Friday, open houses are arranged for the weekend and then the houses are sold on Monday, often with multiple offers. Typically, the good houses are only on the market for 3-4 days, so you have to jump in quickly with an offer. We were lucky to find a house we really liked during our first full weekend, although using Redfin to search for open houses was critical!

We are paying all cash for our house, (this is attractive to sellers as it avoids a third party appraisal and allows us to close quicker) using the equity from our Houston sale. With mortgage rates still exceeding low we may be leaving money on the table by not investing the proceeds and mortgaging the new place. However we are very much trying to live the FIRE life totally debt free and we would prefer to have the house completely paid off from the start.

Obviously there is an element of risk in buying in a “hot” market, but it is manageable. We are not expecting to sell our new house in the next 10 years or so (though you never know!) so even if prices do drop they will rise again after a while. We will also be in a  desirable family neighborhood which helps a lot.

At present the house money is sitting in our money market mutual fund so it will at least gain a few hundred dollars in interest before closing. Unfortunately the sellers will not be moving out until August 1st so we will not take possession until then but this at least gives us some time to get our other affairs in order. Interestingly, the family currently living there are doing a similar life change to us in that they are upping sticks in order to move their family on a new adventure!

Our finances at present are a little fluid with money coming in and out related to the house and car, but it is manageable and should settle down in a month or so.

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6 Responses to First Week Finances

  1. Peter Wang says:

    Someday, I want to downsize from 2 cars in Houston to 1. That will require bike / e-bike, robotic ridesharing. It’ll come, before we know it.

    • Steve Traylen says:

      Having just one car in Houston is tough. Public Transport is not really reliable and is non existent in the suburbs.

  2. j gaines says:

    Steve, enjoyed your synopsis and the FIRE is the way to go. SO much less stress.
    Enjoy the NW.
    Jim Gaines

  3. Gary Wool says:

    House valuation doesn’t really matter if you don’t really plan on moving. In fact, there’s an argument to be made for flat values when you’re on a fixed income because those expenses directly associated with home value (insurance and property taxes) don’t go up. And since I brought it up, what percentage of your house’s value do you pay for those things? My sense is that it should be a lot lower than in Houston – at least the taxes part.

    Also, how are you handling insurance? High or low deductible? Extra riders? Replacement value? Since you have no lien, you have a lot of options exactly how you insure your property. There is a lot of “theoretical” discussion about this topic, but I wanted to get some insight from the people living it.

    • Steve Traylen says:

      Gary – yes, the property taxes a re lower, so we are just amortizing across the year as part of the budget (as we do with health insurance for example). When it comes to house insurance I will admit it is not a topic that we are that knowledgeable about, however we did go with high deductible as typically we have not very often (if ever) claimed on our insurance. We did earthquake/volcano insurance because you know, Oregon.

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