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A Butterfly Flaps Its Wings // The Story of Our Worst and Best Investment

recently, i visited for work the city where we used to live, and where we once owned a condo. on a whim, i drove past our old building, which brought back a flood of memories — how we came to buy it in the first place, all the work we did there to renovate it top to bottom, how tough it was to say goodbye, and what it did for our finances.

mr. onl and i have discussed many times whether purchasing that condo was ultimately a good decision or not, since we tend not to buy into the idea that you “make money” on a place if you sell for more than you bought it — that ignores the many large costs of ownership, and all the interest you pay the bank in the meantime — but it definitely set certain things into motion that have brought us to where we are today. it’s a reminder that it’s not always easy to tell good decisions from bad decisions — or good investments from bad investments — but rather it’s about what those decisions do to your trajectory, and what other decisions they influence.

think butterfly effect: a butterfly flaps its wings in the amazon, setting off a chain of events that ultimately leads to a hurricane in the atlantic. one decision impacts a lot of other things, and that’s definitely true about that condo for us. here’s the story:

the story of our worst and best investment

flashback to 2008, the year we got married, and also the  year the economy tanked. we had been working for years to save for a home, and had felt for our whole adult lives the way that many millennials say they feel now, that we’d never be able to afford a home. but then bear stearns failed, and lehman failed, and aig failed, and the phrase “too big to fail” became etched into our collective consciousness. in less than a year, the landscape was much different. because we’d saved a good amount and had good incomes, we were in a position to buy something bigger than the dumpy, rent-controlled, one-bedroom apartment where we lived for four years (man, do we miss that $900 rent, though!). we jumped at the chance.

after several months of tracking listings, and feeling like we had a good sense of what was out there, we got a realtor in early 2009, who told us that we couldn’t get a house for our price range, and we’re still not sure if that was true, but we believed her at the time. probably she sensed that we were being conservative with our budget, but we weren’t willing to budge. we wanted to know, this being kind of a scary economic period, that we could easily cover the mortgage and all of our standard bills on only one salary without being forced to go hungry. so resigning ourselves to a condo, we went out to look at places. we saw a dozen or so places that day and decided to place an offer on the one that later became ours. (fun fact: we’ve bought two homes for ourselves, and have spent a grand total of two days house hunting.)

over the course of the next three years, we fixed up every single room — we scraped down popcorn ceilings, we painted every surface, we ripped out carpet and put in bamboo, you get the idea. we did most of the work ourselves, but did outsource some of the electrical and flooring work, plus the messy popcorn scraping. still, we achieved a full renovation of the 1000 square feet for under $20,000, which we felt pretty great about at the time, especially because we didn’t choose the cheapest materials in every instance. and the best part about doing the renovation was that we loved the space, and loved it all the more for having designed it it all and having done most of the work ourselves. not to mention that we learned a million diy skills, from carpentry and painting to tiling and electrical.

a butterfly flaps its wings

after we’d been in the condo a few years, we got the opportunity to buy our mountain home because we both became remote employees in the aftermath of the 2008 crash, and were no longer attached to an office. we spent virtually all of our vacation time and most of our weekends traveling to the mountains, so the idea that we could actually live in the mountains some of the time was like a magical dream. at first, we thought we would split time until we could retire full-time to the mountains in “a decade or two.” so, given our conservative attitude toward spending, we were determined to constrain our spending on the house in the mountains so that we could still cover both mortgages on only one of our salaries, even with a 15-year mortgage on the house. (it would no longer be “comfortable” to cover both on one salary, but we didn’t want to be in a situation where we couldn’t cover our own bills, even if we went into rock bottom budget mode, if one of us got laid off.)

once we had the mountain house, we actually spent very little time in the city place, but didn’t decide to let it go right away — that took nearly two years. and when we finally did sell it, we sold for more than we’d paid, but not enough more that we’d call it a true profit. so was it a good decision to buy it, or should we have stayed put in the apartment where we had lived before, and which would have let us save more money more quickly?

the butterfly effect magic

we’ve done the math, and we’re certain we would have come out ahead if we’d stayed put and rented for a few more years until we moved to the mountains, if it had been possible to predict at the time that that’s what we’d ultimately decide to do (and we couldn’t actually have predicted that). but, we don’t regret buying the condo, even though it wasn’t a good investment on paper, with that perfect hindsight. despite that, i’d go so far as to say that buying it created some magic in our lives that put us on the path we’re on now. that magic came not from any direct financial effects (which weren’t awesome), or even from the joy that came from fixing it up (mostly) with our own hands (which was awesome).

instead, the magic was what that purchase did to our future decisions, namely constraining how much we spent on our mountain house, where we live full-time now. we certainly could have spent a lot more on a house in our town without much effort, even in the down market of 2011. just moving to a different neighborhood in our same town and buying an identical house could have cost us another $150K, no exaggeration. and we could have “afforded” a much higher price tag than we ended up spending if we didn’t have another mortgage on a condo in the city at the time we were house-hunting in the mountains.

now that we’re in ultra-focused early retirement saving mode, and part of that for us is paying off the house, we’re beyond grateful that we ended up buying modestly when we bought our mountain house. we’d have to work a lot harder to save enough to retire fully and to pay off a more expensive house — it could literally mean adding a year or even two to our timeline, just because of a different home choice. and that difference is far, far bigger than the money we spent unnecessarily on the condo.

so that’s how a not-so-great investment turned out to be — accidentally — our best investment ever. if we hadn’t rushed to buy that condo as soon as we could, who knows — we might have bought a house in our mountain town that cost double what we actually spent, and be on a much longer timeline to early retirement. that’s a bad investment we’ll make any time!

can you relate? any investments you’ve made that look bad on paper but had some other big benefit? any other fun butterfly effect stories you want to share? spill it all in the comments!

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43 replies »

  1. It’s not an investment, per se, but after graduating college in 2002 I bought a brand new Honda Civic. Actually, I leased it for a year and then purchased it (*face palm*). I was in no place financially to go ahead with this, but I was young and stupid. Looking back I know that was one of my stupidest financial decisions, but at the same time I’m still driving that Civic. I’ve had it 13 years, have had just one major repair, and I know it still has a lot more life left in it. My plan is to drive it until it falls apart…so in the end this “stupid” purchase might actually end up being a good one.

    • Woot for old Honda Civics! We bought ours new in 2004, and it’s still (mostly) going strong (and, really, that was me, since we hadn’t met yet. I didn’t see a problem with financing 100% of a brand new car. That’s my face palm!) I think if you are still driving that car, that that was a great investment, just as I think ours was. Heck, you could have bought about a thousand more expensive cars, but you went with a super economical and dependable one. Good move, 2002 Ernie! :-)

  2. I’ve actually thought about this topic a lot and whether or not some of the money that I blew through in an earlier life has actually set me up for early retirement now.

    The more I think about it, the more I realize that everybody is going to make financial mistakes. It’s really not a matter of if, it’s a matter of when, and how many. We all do it. It’s a natural part of life.

    Knowing that, I’d say that making those mistakes earlier in life, rather than later, is a very fortuitous position for me to be in. I realized in my late 20s and early 30s that I already had everything that people consider to be “success items”, like the high performance sports car (which I most affectionately refer to as my “money pit” – now sold, of course), a house in the suburbs, expensive toys lying around the house, expensive HD satellite service, yada yada.

    In a way, I think I got all of that out of my system in an earlier life so I can focus on what truly matters now – financial independence and quitting the rat race as soon as humanly possible.

    Had I not made those same financial mistakes in the past, I believe there is good reason to believe that I’d probably make them in the future, and I’d much rather have my biggest collection of financial screw ups to be behind me rather than in front of me.

    The ability for me to say “been there, done that” with some of the stuff that I’ve bought in the past may very well be preparing me to live out the remainder of my life not making those same mistakes again because I’ve already lived through it once. I now realize that having all that stuff didn’t add value to my life. In fact, it subtracted value from my wealth!

    So like you, I think an argument can be made that while the “investments” I made in my past probably look pretty bad on paper, the intangibles inherent with some of that spending aren’t necessarily easily describable on paper either.

    I’ve been stupid with my money, luckily very early in life. Now, I can focus on the rest of my life by living much more financially sound, making better decisions and prioritizing what truly matters most to my wife and I.

    • As you know, we feel the same way in terms of having a very different money mindset not all that long ago. Our restaurant habit was our “money pit,” since we never indulged in cars or McMansions or any physical things. But we don’t regret that stuff, one — because it was fun, and we have great memories, and two — because, like you said, we’re happy we did that irresponsible spending early in life, not later. Plus, we earned less then, so we just simply couldn’t blow as much money as we could now. :-)

  3. I remember starting Bargaineering in 2005, journaling about personal finance at a time when WordPress was new and blogging was relatively new. It was a time sink but I enjoyed it. It was a bad investment of my time, most people my age would be working more, socializing more, and otherwise spending that time differently. But after a few years, which included some good natured ribbing from friends asking how much money the site was making, it was able to support me full time and eventually create wealth on a level I never considered possible.

    When I was younger, when grades in school were a big part of the measure of a person, I thought grades were everything. They were easy to quantify. As I got older, started working, grades were replaced with money. It’s easy for money to become a big measure of a person because it’s easy to quantify.

    But when you look back on your life, no one thinks about money and grades or anything so easily quantifiable. The best and worst investments tend to be measured with that inaccurate yardstick.

    Not to get sappy but my best investment was deciding to do Greek Sing, a philanthropic musical show put on my the greek community at Carnegie Mellon, because I met my wife through it … and I’m not a great dancer or singer. :)

    • Do you have video of this Greek Sing?? ;-) How cool would it be if you had video of the moment you met your wife?

      Something about writing that blog clearly spoke to you, and fed your soul in some ways that can’t be quantified, as you said. Good for you for sticking to what made you happy, instead of following the herd!

  4. I have no doubt that all the money I blew through earlier in life and some bad decisions I made could have set me up for a quicker retirement – cashing out my 401k for instance, hahahaha…. sigh….

    My best decision so far (hindsight and all that) is oddly, choosing to NOT go home and watch Monday night football and instead stick around and help set up for a recruiting talk for a major oil company. After the talk, I talked my way into an interview spot for the next day, and then had to go home and create/spiff up my resume because I wasn’t planning on interviewing with those guys. Ultimately, they offered me an internship where I met Mrs. SSC. Had I gone home to watch football, no interview, internship with them, no Mrs. SSC, kids, etc… Weird how an inane decision like that can affect so much.

    But, all those experiences, good and bad got me where I am today and gave me perspective that I wouldn’t have otherwise. I’d still do almost everything the same, because I’d be worried about butterfly effects.

  5. Selling the house and going small was my best decision. We downsized about 95% of our “junk” including a 40 bookcases worth of a book collection and mounds of memorabilia and six full sets of dishes, pots, pans, cutlery (daily one for milk, one for meat, Shabbbot milk and meat, Passover Milk and meat) etc and so on. We moved from the three story huge house full of everything to a travel trailer and pick up truck. The freedom of being rid of “stuff” to clean around, things to worry about, and precious items to avoid breaking! We bought another house after 5 years but it is only 420 sq ft with very little room for “stuff” and I have been saving myself a huge amount of money by looking at stuff like really lovely blown glass dolphin ornaments and not buying them because I don’t have the room and I don’t want the fuss. Downsizing was my best ever move.

    • That’s so awesome! How bold of you guys to do such a dramatic downsize! I knew you had gone with the small lifestyle, but didn’t realize it was so drastic. Thank goodness you were able to shift your mindset and be happy with that decision. And I’m with you — now I love going to look at some things… look, but don’t buy. :-)


    Also, cool story and interpretation! :) No matter how much I think about it, it always blows my mind to realize how much big purchases like cars and houses (and leases, in my case) can vary from each other in cost, even when we’re talking about two fairly similar examples, like the house you bought vs. the house you could have bought. I guess percentage-wise it’s probably the same as anything else — you could get a banana at Trader Joe’s for $0.19 but could easily pay $0.75 for the same banana at a convenience store — but since the numbers are so big in the case of houses, etc., it can turn into a life-changing decision.

    I’m still trying to figure out whether or not grad school was a good investment (or *purchase* really); the jury’s still out on that one, I think. I guess I’ll never really know for sure since life is a one-shot deal, not a controlled experiment.

    Today I’m the one writing blog comments from an airport, for a change. :) They’re telling us to board now, so gotta go.

    • Thanks! The photo is from Shoreditch in London two years ago. I prefer to have pretty nature pics on the site, but I love that photo, too, and couldn’t hold back anymore. ;-)

      You’re so right about that price variance! And also that letting yourself buy on the high end of that range for big ticket items like cars but especially homes can shape *everything* about your financial future.

      You probably won’t know the answer on grad school for a while, but that’s so fundamentally different from a *thing* purchase. You purchased an experience, an immersion, an enrichment, and knowledge. Some would say that’s priceless. :-)

      Safe travels! xo

  7. The hubby and I had this very discussion just last night, sitting in the living room of the house we said we’d never buy in the neighborhood we said we’d never live in the city we once joked we’d never move to. Life is so unpredictable! Plans made based on your future selves are always shy one vital component: who you’ll actually be when you get there. I wanted to rent, was determined never to be chained to one place (with or without a mortgage), and had done the research to prove to myself the cash not spent on a home could be invested safely enough to pay the monthly rent without ever reducing the principal. It was a great plan until we tried to implement it! Between pets (we started with three elderly pets but through a series of re-homing and strays had ended up with six), cars (we had several), tools and the like it became impossible to find a suitable place. Even paying for storage (which I was loathe to do) still left the pet issue. Over the course of a year I found a few possibilities, all of them huge concessions for location, quality of life, etc., and still only marginally attractive to either my husband or myself. I finally conceded that we would have to buy a place, but I set firm limits on location, size and energy efficiency, as well as price. We’d already been looking at least two weekends of each month for the past year, so we simply changed the focus from rent to buy and continued the search. We saw hundreds of homes, in and out of state. Nothing appealed to us and we both became disillusioned. At the time, I had nearly four more years of work left, so the house was going to function as a vacation/weekend place for several years, allowing us to slowly move stuff, declutter, downsize and prepare for retirement. We agreed to look at this place on a whim. It was way too big, needed expensive repairs, was thirty years old and over $100,000 over budget. It was the last place on the tour, and we nearly didn’t see it at all because we were so depressed after looking at the places that fit my strict criteria, but it was vacant so we followed through. And fell in love. Head over heels in love. It met none of our criteria, not even one of the basic “musts” on the list, but without a doubt it was the place for us, and once we shifted gears (after refusing to make an offer until the agent spent the entire next day showing us everything else), everything changed. We got the house at a great price, the foreclosing bank was easy to deal with, I got fed up and walked out on my job five days after we closed, we sold the old place for over $100,000 more than we expected, and made the move. Initially I was full of fear! Maintenance, repairs and utilities add up. It’s not cheap to live here! We cut back on whatever we can, but there’s no doubt it’s a costly place and who knows? We may not be able to maintain it in another ten years. But after our first year here, I can honestly say from the bottom of my heart with tears of gratitude welling up in my eyes as I write this, we love this house. We love this place. We love this life. Financial mistake? Only time will tell. Financial blogger or not, some things are not just more important than money, they blow money out of the water. And waking up in this lovely home in the lovely place every day for the rest of our lives is a priceless investment in contentedness that I would make again in a second.

    • What a beautiful story! And you’re SO right that some things are much more important than money. How wonderful that you’ve found a home that makes you happy and suits your life. And it sounds like stars aligned to make it work for you, which must make it feel that much more special. Thank you for sharing your story!

  8. My worst investment was taking some summer job earnings and investing it in solar companies when I was 19/20. My $5k investment went to zero… I’d say I had two really good investments: 1) majoring in accounting and 2) my time invested in figuring out this financial independence thing. Both are complimentary and are helping me chart my path to FIRE. :)

    • Oh man — that will sour you on investing early on. Good job getting back in the game after that experience. And yeah, sounds like you are on a solid “investment” path now with your career and your planning for FIRE.

  9. I think I win – we’ve bought one house and spent 0 days house-hunting! (We bought it sight-unseen from pictures on the interwebs! – we’re so advanced!) :)

  10. This is great insight, especially considering the whole whirlwind my fiancé & I experienced this summer with almost buying (in a rush process – so glad we did not)! I absolutely love the butterfly effect analogy (and quite honestly, really enjoy the movie as well with Ashton Kutcher lol). While sometimes going down the road to financial independence only takes a small realization for some of us, I think for quite a majority it takes a large happening to determine that they want to set the record straight (i.e. student loan debt, mortgages, keeping up with the jones’). For me, it was also the purchase of a new car a few years back (that seriously didn’t even cross my mind as being a bad thing because I was never taught otherwise). Now, it’s the only debt I have with a low interest rate and I view this “oh crap” situation now as “Okay, when this car is paid off then goes kaput I will be investing in a used car I pay with all cash.” That to me – even though the purchase is a negative now, has set off a full widespread effect of positive habits (along with getting rid of my student debt)! Never financing items, avoiding interest that isn’t benefiting me, paying in cash, staying out of debt etc. Thanks for sharing your story!

    • LOL — Never saw that movie, actually! :-) I think that car purchase could very well end up being a good thing if it inspired so many things in you — getting on the FI path, avoiding debt at all costs… those are awesome things. And in the scheme of things, a car purchase isn’t THAT big a deal long term… at least you didn’t but a McMansion with a balloon loan, or something devastating like that! :-)

  11. Oh, do I ever have a story! I bought a semi-detached home in a small town that has since turned into my upside down retnal property. At the height of the market 2007, I decided I had a bunch of disposable income and wanted to buy my parents a home. All our lives we lived in a tiny house (aka a trailer) and I wanted to give them something really nice. After all, I was engaged to be married and between the two of us we made over 200k/year. Not bad for someone who wasn’t even 30 yet. So, I over paid for a property. It’s actual worth was probably around $85k. I paid $119k. Yep. Today it is worth $97k and I still owe $96k. At least I have $1k equity. Ugh. I was so naive at the time, I didn’t even consider the house could considerably drop in value. Aside from the cost, I also put about $20k into it to make it really shine. And on top of that, I was subsidizing their living expenses in the home to the tune of about $800/mo. They were basically covering the taxes with their portion. And, I failed to mention that my fiance and I split up a few months after the purchase, leaving me with my single income and a home that I bought for other people. I tried to live there but found out that I could not live with my parents at that age. I felt too much like a failrue. This was silly in retrospect, but at the time, I was an emotional mess. So, I ended up getting an apartment on top of the subsidized house for my parents. Yep…I pretty much screwed up an entire decade of my life with one financial decision. Talk about a butterfly flapping its wings. Yikes. I’m back on a better path these days. I just got married and we have a FIRE plan. My current line of thinking is to chalk it up to experience and pay it off as soon as possible so it starts to net me passive income. I think I’ll write a post about this!

    Mrs. Mad Money Monster

    • Wow — That’s quite a story! But hey — at least you made those mistakes when you were young and still have time to bounce back from them, and you clearly learned a TON.

      • Thank you! Your post inspired me to share it. Young is a relative term. I did waste the majority of my early 30s being counterproductive to the progress I made in my 20s. But, yes, I did learn a ton. If my story can reach just one person and inspire them to do things a little differently, it was worth it :)

  12. If we hadn’t made all of the mistakes we made, we may not be on the path we’re on. But we could have done with fewer mistakes as I don’t think we needed to learn every lesson about depreciation. New cars were probably the best/worst lesson.

    • Haha — So true, Claudia! I’m sure many of us agree — some of the mistakes are good in that they got us where we are, but we needn’t have made so many. :-) Happy holidays to you guys!

  13. A few years back I bought some BRIC trackers as they were hot at that time. It took more than 5 years to realise they were not the right stuff to hold on to. I did not make a huge loss, but it was the little loss that got me thinking on investing with trackers and led me to being a couch potato for a big part of my portfolio. This time, spread world wide…

    But the biggest mistake Is probablt to discover the whole FIRE community only at the age of 38… I have spent most of the 2009-2014 bull run in cash. to be honest, It also felt safe to have the cash as we got married, bought a house and got 2 kids. Better late than never to discover the FIRE ideas!

    • I’m not familiar with BRIC trackers, but I think I get your point — a not-so-great investment led you to rethink things and ultimately find the FIRE community. So that seems like a pretty great outcome! :-)

  14. I bought a condo in a ski town *slightly* below the height of the market, dreaming that I could live and work up there for parts or wholes of every winter, etc…. had a baby, got separated and then divorced a year later, had an opportunity to sell at only a slight loss at the time, but was an emotional basket case and not thinking too clearly, held on, rented out a few winters while the kiddo was really little, and held on thinking that eventually the market would recover. Since I had the place, I committed to days on the mountain with the little nugget between the ages of 4-8, ended up getting 15-25 ski days each winter, finally realizing at the end of the ski season in 2016 that owning two places wasn’t for me and that I still wanted to spend lots of time in the winter in the mountains but did not want to have a laundry list of chores to do anymore when I’m supposed to be enjoying myself. Believe it or not, I am grateful for the experience despite losing a very large chunk of capital and continuing to lose money every year I owned it (11 years!) even though I had it on a vacation rental program when we weren’t using it. Here’s what I think would have been different: I likely would have purchased a more expensive primary residence had I not had two mortgages, I don’t think I would have committed so hard core to going to the mountains every 2-3 weekends for 5 years with the little one, I and my child would not be so knowledgeable on a variety of mountain subjects including but not limited to – different types of avalanches, trees native to the eastern sierras, types of chairlifts and super volcanoes. I didn’t even mention how great of a skier my now 9 year old is! I felt this amazing sense of relief once I sold the place and we thoroughly enjoyed ourselves this season with zero post ski day chores. I know now how much of a burden real estate investments can be mentally as well as financially and think that should I choose to make another real estate investment, I will do so with much greater knowledge based on firsthand experience and an expensive mistake. :)

    • I love your perspective on what many would deem a “mistake”! Same here with our condo — if we hadn’t hung onto it, we for SURE would have bought a more expensive “retirement home,” and it for sure would not already be paid off. Plus we probably wouldn’t have been able to buy our rental, at least not without stretching. So yeah, it doesn’t feel like a mistake in our case either. And bonus for you with all that great mountain time, and ski skills for the kiddo! You know I especially appreciate that. ;-)

      • It was a huge mistake, I don’t forget that part, but I think differently about all investments now. I’m all caught up now – I started reading your blog 4/2016 so the comment barrage is over. :) I held back since I could have commented on almost everything. Love HST for the record… though I will admit the first time I read his stuff, I was a little confused.

      • Holy crap — can’t believe you got through them all (262 posts!). Here’s your imaginary medal. :-D And Hunter S. is my bizarro world soulmate. ;-)

      • Ya well the good news is that I might stop asking dumb questions on topics you covered thoroughly. No need for imaginary participation medals here… :) I appreciate your content.

      • To be clear, it would NOT be a participation medal. It would be a medal for actual achievement. ;-) (You read almost half a million words here, the equivalent of 5 or 6 novels.)