For the most part, my personal finance history is pretty good. Ever since I started working way back in high school, I’ve always saved a portion of my earnings. I also have done a good job of controlling my spending. However, I have a few skeletons in my personal finance closet. I still get a pit in my stomach thinking how dumb these mistakes were, but you live and you learn, right?
Big Mistake No. 1: Totaling My First Car
When I turned 16, I bought my first car. I used some money that I inherited from my grandpa to fund the purchase. Before that time, the money was socked away in a high yield CD earning me a nice return.
My dad and I went car shopping and I found an awesome 1998 red Isuzu Hombre pick-up. My dad and I were able to get a good deal and ended up paying $8,000 for it.
Fast forward two weeks. It’s my best friend’s 16th birthday party and he decided to go laser tagging. Instead of carpooling, our entourage thought it would be cool if we each took our own car and re-created the scene in Swingers where the guys drive to the party in the hills (I was a huge Swingers fan back in high school).
On the way back, I rear ended a huge Chevy pickup. The Hombre didn’t stand a chance. Don’t let the name of my pick up fool you. Hombres are dinky things. The entire front end of the Hombre was swallowed underneath the Chevy’s bed. My car was totaled. Thankfully no one was hurt, except for my little Hombre. The Chevy hardly sustained any damage. I think there were some dents on the bumper.
I was so depressed that I didn’t go to school the next day. I think I was more depressed about being relegated to depending on my mom for transportation again than I was about losing the car. However, my depression at the loss of money soon took the lead.
A few months later, I bought a 1992 Smurf Blue Chevy Cavalier for $1,800. I bought a Chevy Cavalier because Jon Favreau’s character in Swingers drove a Cavalier. However, mine was shaped like a box, and Favreau had a later year model with a sleeker design. It was a good little car. It got me through high school and my first year of college. Then I began having problems with it starting. It died a week before I left to live in Mexico for two years.
Totaling my car ended up costing me over $10,000. $10,000! I’m getting a pit right now in my stomach thinking about the interest that I could have earned with that. I did learn some lessons, though.
- Drive carefully!
- When I have kids, they’re going to drive inexpensive cars. If I would have bought the Cavalier instead of the Hombre, I would have saved myself $8,000. I say this now, but I’m not a parent yet. I’m sure it will be hard to say no to my kids. I need to start practicing saying no now.
- Make sure to have decent car insurance.
- Never re-create the car train scene like in Swingers. If I hadn’t been a chump and had car pooled, I would have had that pick-up still. The more you drive, the more you increase your chances of wrecks. This is especially true with young people.
Big Mistake No. 2: Buying Too Much Computer
The summer I got home from spending two years in Mexico, I started to throw around some serious cash, especially with computers and gadgets. I was starting class in the fall, so I needed a laptop. Instead of going to CompUSA and finding one of those $400 lap top deals, I went on Dell.com and made a custom laptop with all the bells and whistles. I don’t remember half the stuff I had put on it, but I know that it was definitely too much computer for me. I was just going to type papers with it and surf the web, not create Industrial Light and Magic movies. I ended up spending $2,500.
However, I didn’t stop there. I got the bright idea that a Pocket PC would really boost my efficiency, so I threw down another $500 for an HP Pocket PC with Wi-fi. Of course I didn’t remember that I had already tried using a PDA a few years earlier and that I didn’t like it. I guess I was blinded by the idea of having an internet connection in the palm of my hand.
You might be asking where I got all this money to drop. No, mom and dad didn’t pay for it. Before I left for Mexico, I saved like a mad man. I set up a ladder CD system and invested some money. By the time I had gotten home, my money had grown considerably.
Well, I stopped using the Pocket PC after 6 months. I moved to the paper and pen system that I have always been comfortable with. I sold the Pocket PC on eBay for a little more than $150, so I lost $350. My Dell lasted me about two years, but during those two years I had several problems with it. Thankfully, I had the warranty to pay for it, but it was always a big hassle.
In a matter of a week I spent over $3,000 on a laptop that had stuff I didn’t need and a gadget I didn’t like using. $3,000! That’s a semester’s worth of tuition. Instead of taking out loans, I could have used that money to pay for school. I was such a chump.
- Buy the cheapest computer possible. I really don’t have many computing needs. Just something to write papers with and surf the web. Consequently, I can get away with spending $500 on a computer. When my Dell finally bit the dust and my warranty was up, I went out and bought a $500 Compaq Presario. I’ve been really happy with it so far. Despite being $2,000 less than the Dell, I’ve had fewer problems with it. This piece of advice isn’t universal. If you have a need to buy a computer with high computing power, then the investment is well worth it. But if you’re like me, you can get away with spending only $500.
- Take time to make big purchases. I think my biggest mistake with these purchases is that I made them so quickly. I didn’t take time to shop around for better deals. I bet if I had practiced some tantric shopping, I wouldn’t have bought the Pocket PC. I’m also sure I would have realized that I could have gotten a nice computer without spending a small fortune.
So, my biggest financial mistakes cost me a total of $13,000. Yikes. There’s no point in dwelling on it. I just need to take those lessons I’ve learned from my mistakes and move on. Hopefully, I won’t be repeating them in the future.
What are your biggest financial mistakes? Drop a comment so we can commiserate together.
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[tags]personal finance, Swingers, Dell, Pocket PC[/tags]