Net Worth, hurdling toward zero

Two days ago I recalculated our net worth and got a huge shock -- if I value our house according to Zillow.com, our net worth has dropped from around $65,000 this year to a mere $15,000. How can this happen? I wondered.

The housing market is really crazy right now, and the worth of our house went from $230,000 earlier this year (according to Zillow) to $198,000. Since we also put in $22,000 worth of improvements this summer, that is a total loss of $54,000 -- ouch!

While we may not be able to sell our property for more than $198K right now, I decided to adjust the worth of the house back to $215,000 -- what we would expect to get from it. Our net worth still dropped $30,000, but I think this shows our actual spending/saving habits. We took out $45,000 in equity, paid off all our credit cards and our home equity line of credit. We still have about $4,000 left, which we will probably need to buy some kind of transportation for my husband.

When I calculated that out two days ago, it depressed me so much I spent the day in a real funk. Here I am, trying to save money, and our net worth is plummeting. It's like trying to diet and watching the scale climb.

Our biggest mistake this year was trying to sell the house in a down market. We had a million reasons for doing so, most of which were valid. We were honestly trying to downsize and move into a smaller/cheaper place, using the house to pay off all our old debt. The problem is that talking about downsizing may be easy, but actually doing it was hard. Looking at starter homes after five years of fixing up was terribly depressing, and in the end we spent a ton of money trying to sell our house while paying rent on another house, rent for storage, and utilities on both houses -- all on top of our mortgage. We spent a lot of money we will never see, and had an endlessly frustrating summer. Here's what we learned:

1. A house is NOT a good investment if it is your primary home. We know people who move into houses, fix them up and sell them for a profit. This is great if you don't have small children and don't get bitten by a down market. Not so good for us.

2. Downsizing is harder than it looks. We were faced with poor choices: move into a crumby neighborhood, buy a fixer-upper, move out into the suburbs. We looked at each and weren't happy with any of them. How could we live in a bad neighborhood with our oldest just getting ready for school? Could we really bear to live in another fixer-upper with two kids and not enough time? Could we stand a commute -- or more importantly, could our hardly-working vehicles stand it? In the end, we couldn't accept any of these things.

3. You have more than you think. After a miserable summer in a swamp-cooled house, my house -- yes, the one I have despised for five years -- was a veritable mansion with smooth floors, a working dishwasher, an energy-efficient, new washing machine, and air conditioning. I was living in the lap of luxury and was too obsessed with what I didn't have to realize it.

We've had a rough year. My husband didn't get the job he was hoping for, even after nine interviews (yes, NINE!). If he had, it would have doubled his salary -- a big blow for us. I quit my job out of frustration and exhaustion and to save us money. We had family disputes over an estate property, issues with our rental, and just this week our second car finally gave up the ghost and died for good. I had hoped to raise our net worth by $20,000 this year, not drop it by $30,000, but, as the famous Scarlett O'Hara said, "Frankly, Rhett, I don't give a damn." Oh wait, that's not the one. It's, "Tomorrow is another day." :)

Right now we are faced with a killer decision: buy a new car, a new-used car, get by with one car or buy a scooter. My husband only commutes a couple miles, so the scooter is a decent option, but getting by with one car (that only works most of the time and not all of the time) is still a challenge.

Ce la vie.