Virtus3,
Now that you've seen sense on the automobile issue, I'm going to weigh in for a moment on the house issue. I'm inspired by FWPs long and impassioned post which generally points in the right direction -- even if I think she doesn't give financial and accounting terms their proper technical meanings, and paints with too broad a brush.
An owner-occupied house is an "asset" (an item of property that has value and utility to its owner), and generally is a pretty good asset to own, but is it often not a terribly great "investment" (an asset that you own with the expectation that it will provide future returns -- periodic rents / dividends, a high resale price, etc.). By contrast, stocks, bonds and rental properties can all be good investments.
A "liability" is basically a monetary amount which you owe, like a car loan, a student loan, a credit card balance or a home mortgage loan. A wealthy and very prudent family can have plenty of assets (houses, cars, stocks, etc.) and basically no liabilities, because they save up and pay cash for everything. But most of us tend to want to use assets that we can't afford to buy outright, so we'll assume a matching liability: we put down 20% cash to buy a house, and assume a mortgage which covers the rest of the purchase price -- so we have an asset worth, say, $200,000, a liability worth -$160,000 and a net worth of $40,000.
It should be clear from the above that an owner-occupied house is not a "liability." It truly is an asset. The same is true of a car, boat, computer or stereo system. The credit card debt arising from when you put the stereo on your Visa card -- that's a liability.
The thing about tangible assets, though, is that they tend to depreciate. They get physically worn out, or broken, or become outmoded and not very useful for their original purpose. What good is a VCR these days -- even if it still works fine -- if all the new movies now are published on DVD or accessed on streaming services? You may have paid $100 for the VCR years ago. You'd be lucky to get $10 for it today at a yard sale. That's why most consumer goods, even though they are assets, tend to be bad investments. And that's why most personal finance writers will tell you to exclude your car, wardrobe and consumer electronics from a list of assets you draw up to determine your degree of financial independence -- their value melts away quickly and it can be hard to sell them for a good price if you really need the cash. Consider how long it is taking you to sell your Jeep; whereas one can sell $30,000 of stock using an online brokerage with about five minutes of effort for a mere $7 commission. And you will get the best price on offer at the time you choose to sell, as submitted by bidders and market-makers from across the country, without fretting over lowball dealership offers.
An owner-occupied house is a bit of an edge case. A typical single family residential property generally consists of land and the improvements thereon (i.e. the structure of the house). Land doesn't depreciate. It may become more or less desirable (and fluctuate in price) based on market factors, but it doesn't wear out as such. So buying a house in Washington DC in the 1970s would have worked out well financially, mainly because land values have gone up, while buying the same house in Detroit in the 1970s would not have worked out as well, again mainly because of land value movements. That is one reason why owner-occupied housing has some "investment" like features -- the land ownership aspect -- while a new car assuredly does not.
The structure, by contrast, is more like a car and does depreciate over time. But here, too, there is a bit of nuance -- walls and foundations might last 100+ years and be nearly as permanent as land; a roof might only last 20-odd years; kitchen cabinets perhaps 15 years; a refrigerator 10 years. So if you renovate your kitchen, you might boost your home value the moment the project is done, but over the next 15 years of living in the house you'll depreciate that away and you'll lose whatever price premium was associated with saying "new kitchen" on the for-sale ad. It's an item of consumption, just like buying a new car and driving it for 15 years until the wheels fall off is consumption of a consumer good, not an investment. If you built an extension with added foundations and walls, though, it might lead to a more permanent increase in the house's value. Meanwhile, the underlying value of the land will have fluctuated, so it will be hard to tease apart the influence of each factor at play when you finally sell the house.
And, as FWP points out, tangible assets also have out-of-pocket maintenance requirements, which can be above and beyond the "silent" depreciation that goes on. Not only does that Jeep become worth less every day it sits in your driveway, but you have to pay to change the oil and keep the battery fresh. Not only does your once-new kitchen slowly depreciate over time, but you need to mop the floors, paint the walls, clean the gutters, pay your property taxes, insurance and everything else. Which adds to the overall cost of your lifestyle.
The next point to consider is summed up in the technical term "imputed rent." You have to live somewhere. You'd strongly prefer to live in a decent house or apartment, and not in a cardboard box under a bridge. If you own a house free and clear, you can avoid having to pay rent every month on an apartment. The rent you otherwise would have paid had you not owned the house is "imputed rent." Of course, you do have to pay the maintenance costs and suffer the depreciation outlined above, so you don't have a *free* place to stay. The buy-vs.-rent calculation is far beyond the scope of this post, but suffice it to say that there are many scenarios where buying is a better deal than renting. It might not be a great investment, but it's a more efficient way to consume housing.
The final point is this: One of the key insights of the MMM blog and forum is that there are many opportunities in the consumer world to obtain near-substitute products and services -- often times, better for us even if not obviously popular -- at a fraction of the usual consumer expenditure rate. You can cut your food budget, and improve the health of your diet, buy cooking sensibly at home after shopping intelligently at the grocery store, avoiding a lot of the mindless eating out that is now so common. You can get from home to work to social outings at a fraction of the usual cost by some combination of: a. Buying a sensible used car instead of an oversized fancy new car; b. Walking or biking more frequently; c. Being more thoughtful about where you choose to live, work and play to reduce total mileage; etc. You can entertain yourself by joining the library and maybe a streaming services, and cutting a pricey cable subscription. There are a lot of easy wins when trying to optimize the typical American lifestyle.
But housing can get a bit knotty: Once you avoid the obvious waste of getting a 2500+ sq. ft. home that is far too big for your family's needs, it becomes a very location- and person-specific question of what region you want to live in, where your job opportunities are, where your family and friends live, where your essential services are located. There is plenty of scope for cost optimization and efficiency even in some of the most expensive metro areas, but that will often require much more soul searching and trade-off making.
The house value and housing-related costs you report are quite reasonable relative to national averages and your family income level. Given that, given your attitude that does not scream "FIRE ASAP no matter what it takes" -- and, most importantly, given your new baby on the way -- I wouldn't put an emphasis on tweaking your housing situation. The hassle and transaction costs are very non-trivial there. Unless you've omitted some key fact (e.g. 100 mile daily commute because of insane location choice -- but based on other things you said I don't see how that's the case), I wouldn't recommend any changes.
But FWP has a point -- when thinking about housing (and really about most things) don't trick yourself into thinking that an item of consumption is actually an item of investment. Once you've saved up a bit it will be a non-issue to sink $20,000 into a kitchen upgrade which you will enjoy for the next 10+ years. Your family probably get more enjoyment out of that than sinking it into a fancier car. But it's really not equivalent to sinking $20,000 into your Vanguard retirement account.