I may be a pretty savvy money saving mama now, but lemme tell you: I wasn’t always this way. Once upon a time, I was an idiotic 18-year-old with a credit card and penchant for YOLO. (Okay, so YOLO wasn’t a thing back then, but I was definitely living out the concept!)
I want to tell you a story about a big huge financial disaster that I got myself into, how I dug myself out, and how I turned it around to benefit me in the end!
Once upon a time…
When I was 18, I was a soldier in the US Army. I was stationed at a beautiful military base in California, on top of a huge hill overlooking the Pacific.
This was my first station out of Basic Training. Upon arrival at the base, new soldiers stay in a sort of lockdown for 4 weeks: in uniform 24/7, unable to leave the base, and strict rules on where we can go and when.
After those 4 weeks are up, we earn some privileges: the ability to wear civilian clothes, and the opportunity to leave the base.
This might not seem like a big deal, but after 3 months of basic training and 4 weeks of lockdown, putting on cute clothes that make me actually look like a girl and going out into the real world is a big deal.
The very first day that I had off base privileges, a friend and I walked down a really big hill, from the base down to the downtown area. We spent the day walking, browsing, shopping, and eating. When it was time to head back up the hill to check in before curfew… that hill was looking mighty big.
So I bought a car.
No seriously, my reason for buying a car was because I was too lazy to walk up a hill.
I walked onto a lot, asking a lot of dumb questions. Looking back, I can practically see the dollar signs in the skeezy car salesman’s eyes.
I bought a used Saturn worth $7500 for $16,000. I financed it through the lot at 15.9% interest. I also added on every insurance and fee they possibly could have thrown at me.
Realizing my mistake…
A few months later, I was discussing the purchase with an older and wiser friend in my class named Joe.
Joe explained to me a bunch of concepts I’d never heard of before — just how financing works, what things I was paying for that I could stop (like unnecessary “insurance” riders), and which ones were too late to bypass. He showed me how to dig out of this hole I’d dug for myself.
Now, I do not recommend debt in any way, but at that time I didn’t hold the same conviction. I tried to refinance the car to get a better interest rate, but since I was upside down, my bank wouldn’t touch the debt with a 10-foot pole. So I got one of those 0%-interest-for-24-months credit cards, and put enough on it to take my car loan down to its value. Then I refinanced through my bank for a reasonable 4.5% interest rate.
Another 8 months or so after that, I met my husband. He taught me so much about frugality and careful spending. Eventually we decided to live a debt-free life. We paid off the car, the credit cards, and all of our other debts — totaling over $100,000.
How We Turned That Frown Upside-Down…
5 years after that disastrous car purchase, Byron and I were married with two children, and trying for baby #3. And my lemon of a Saturn decided to kick the bucket. (Yes, it was a total lemon. I won’t get into all the things on it we had to replace during the short time we owned it.)
Even though we only had 2 children at the time, we knew we wanted a big family, so we decided to go ahead and upgrade to a minivan.
This time, we went into the purchase prepared.
We test-drove a half dozen different brands, and decided which make/model we wanted.
We researched the going rate for new & used vans of that make/model.
We went to a dozen lots to check their inventory, and called a dozen more to discuss things over the phone.
We negotiated with two dealers at the same time, pitting their best offers against each other.
We ended up getting a brand new Nissan Quest for less than a 2-year-old model.
At the dealership, we did not let the typical dealer sales techniques fool us. We overrode the whole “let me go ask my manager” spiel. We refused to discuss trade-in values until we had settled on the price of the van purchase. We came prepared with Kelly Blue Book values for the truck we were trading in.
We ended up paying $7,000 cash plus $14,000 trade in ($21,000 paid) for a van that was MSRP $24,995. No interest. No fees. No add-ons.
What I learned…
My mistakes don’t define me.
I can choose to wallow in self-loathing, beating myself up for a bad financial decision.
Or I can take that experience and let it shape the choices I make in the future.
Even if I take 1,000 steps in the wrong direction, it’s never too late to start heading in the right one.