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The dent does not bother us, but my wife does not want to have to explain it if anyone asks because she is embarassed that she damaged the car.
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Perhaps I'm reading too much into this, but lying to defend from embarassment is a very slippery slope. If she had an affair, would she feel justified in lying to you about it, because "she was embarassed" ? On the other hand, anyone truly mean enough to mock her for it may be better off not knowing about it. There's no sense telling the truth to someone if you know they will not be respectful in return. If I were in your position, I'd try to help her release that no one is perfect. Being a bad driver can be a very funny thing, especially since its just a little dent. I don't think you should be concerned that she's telling her sister "a story," but I would if she were telling people who'd laugh with her about it the story as well.