Here is a story of how my most expensive mistake changed my life.
Now Let’s Talk Money: Meet Millennials Series with Ian
I haven’t always been financially responsible. When I was growing up, I had various part time jobs and I spent every dollar from those jobs. In addition to that, I was the ultimate lazy teenager. I didn’t want a job and all I wanted to do was play video games and hang out with my friends.
This all came to a head in 2007 when I graduated from university and was lucky enough to land my first career. I’ll call a spade a spade, I was able to land this position because my mother worked in the industry that I was studying in. This ‘in’ allowed me to get an interview that I would otherwise probably not get. You may roll your eyes but I can’t lie and say I hustled to get a career right out of university. The old time saying ‘It’s not what you know, it’s who you know’ could not be more true for my situation.
Deciding To Splurge On My Car
I tell you all of this because this job granted me a $48,000 salary while still living at home with my parents. What did I do with this newfound fountain of wealth with no payments in the world? I spent it, of course!
I was still a dumb kid that wouldn’t listen to my parents or my brother for that matter. They were begging me to not buy a $41,000 brand new car on a $48,000 salary. “Save up and buy a $5,000 used car from AutoTrader” my brother kept saying but again I did not listen. I thought, “hey, $500 per month, what’s the big deal?”. Well, I had the poor man’s mentality. I didn’t view the car as a $41,000 car, I viewed it as a $500/month finance payment. This view is what drives so many people to stay poor.
Why Buying An Expensive Car Was A Mistake
Want free money?
As said by Dave Ramsey, a poor man wants to know how much something will cost him per month. A rich man will want to know how much it costs. If I had listened to my parents and brother, I would have been able to buy a $5,000 car in a few short months and then spent my last 5 years without a car payment. This itself could have propelled me even further than I am today. Instead, I kept that $500 car payment for 7 years!
Did this car payment destroy my financial future? No. This single mistake actually changed my life. From that point forward I had a responsibility. A responsibility to myself to have $500 in my bank every single month or the bank would take my car away. This fear changed the way I viewed spending money. I really love cars and I loved the idea of looking rich. How stupid was I?
I started this internal game in my head where I would save the $500 dollars for next month’s car payment and then repeat it to take away my anxiety of losing my precious car. I kept doing this over and over, saving a month’s payment at a time. Before I knew it I had $10,000 saved. “That’s interesting,” I thought to myself when I crossed the $10,000 mark. This is truly where my life changed. I got a kick out of seeing my bank account cross that threshold. This ‘kick’ was something I had experienced before but it was far more powerful. It was similar to the small kicks that I got when I purchased new clothes, CDs/DVDs or electronics.
My goal changed though. I had put myself into a place where I had 20 months of car payments locked away. I never wanted to go back below that level. Instead, I was going to save up enough money to pay off my car in full.
How It Changed My Life
Well, life throws us curve balls. By the time I had saved up enough money to pay off my car I was at a point in my life where my girlfriend (now wife) and I wanted to move in together. The money that I had to save for my car out of fear ended up being the down payment (with the addition to my girlfriends savings) on our first home. How much of a down payment? $56,000.
If you are young and you are reading this; please learn from me and countless others. Don’t fall into the trap of looking rich. Be rich by living frugally while you are young so that later you can have anything you want.
Have any of you wasted money on cars that you really couldn’t afford?
Author’s Bio Ian Spencer @MillJourney87