Subscribe
I recently explained my history of having no money and as promised, will now come clean with the mistakes I’m still making:
I’m driving the wrong car
I’ve never owned a car long enough to get it inspected. The first Jeep Cherokee was a lease, and I foolishly let them talk me into not converting the lease into a purchase. Then I couldn’t afford the new Jeep Cherokee, so I took it back and they gave me a Dodge Neon with a loan amount equal to the price of the Neon plus about $6,000. Then I crashed the Neon. That was actually okay, but only because I had Gap Insurance. Always get Gap Insurance, friends. It literally saved me from being homeless.
Years later I got a Scion xB. That thing was delicious, but I grew ever more jealous of my wife’s Prius, so I traded up and got one of my own. Sometimes I wish I hadn’t done that, because I now have a $595 monthly car payment. I know it doesn’t equal out, but it sure feels good to fill the tank only once every two weeks. I’m taking care of the Prius the way I forgot to with the Scion, and I fully intend to drive it until it won’t drive anymore. I think it’s due for inspection sometime this summer.
I love shiny electronics, and they love me
Like most geeks, I have a rapport with computers that is difficult to establish with other humans, and I tend to hoard sources of entertainment. Gadgets are an expensive hobby. It never seems that way to read about them, because the journalists get them for free. I have to remind myself of that. As an Interaction Designer, I’m always looking for a more elegant solution, for more ways to automate my life, and I can rationalize any purchase by telling myself that exposure to these things will help me in my career.
That’s how I managed to “buy” an iPhone. But as you’ve guessed, I put it on a credit card. Nearly everything I own that is worth something was put on a credit card. But I’m committed to stopping that. As of this writing, I have just over $7,000 in credit card debt, which I expect to have paid off within the next 16 months.
So, I have to keep telling myself that I don’t literally need an Apple TV, or a 1 Terabyte external hard drive. When I force myself to think about it, there’s nothing in the entertainment compartment of my lifestyle that is actually broken. It’s just not perfectly elegant, and for right now, because other things are broken, that’ll have to do.
I don’t sell enough of my stuff
When I upgraded my iBook to a new MacBook last May (see previous problem with shiny electronics), only about $1,000 of the purchase went on a credit card, ‘cause I managed to sell the iBook on eBay for about $600. I’ve got a boatload of unused electronics that I could be selling, but it seems like such an effort to even bother writing descriptions for them. If you have any advice for doing this more easily, I’m happy to hear it.
The interest rates are too high
On both our cars and the house, our interest rates are higher than they could be. At the time, of course, it was the best we could do. I should mention at this point that my wife’s credit history is slightly worse than mine, and until we started making mortgage payments, my FICO score was on the positive end of “Fair”. Naturally, the FICO isn’t the only thing that creditors look at, but mine has increased roughly 70 points in the last year. One of these days, I should really look into refinancing at least one of the cars.
It’s somewhat painful to admit mistakes, especially when they’re ongoing and not likely to change anytime soon. But if you don’t acknowledge there’s a problem, the likelihood of it being fixed goes down to zero. So, it’s a start.
April 25th, 2008 at 9:47 am
He who knows and knows that he knows…he is wise.
You have just proved that you are wise. I am sure that not too long from now, you will be writing a post titled Why we now have money.
Best regards
April 25th, 2008 at 11:14 am
You need a cash diet!! Spend only cash – no credit. But at least you are admitting your weaknesses and that will help – you’ll be thinking about this entry next time you get a weakness to buy something. I’m really appauled at your cars – if you were better with those it might allow you a little more weakness in the other areas.
I like sweet cars, too, in particular expensive ones. I usually buy an entry level luxury car off lease. In other words one that is 3-4 years old that most likely someone else leased. There is an abundance of these cars and you can usually get a good deal. 3 years ago I bought an Acura TL off lease for less than $20k (taxes and all) and I’m still driving it. When its cleaned up it is a sweet ride. I plan on getting at least 2 more years out of it and keep it looking good. I’ve got a nicer (albeit older) ride than most of my friends and its paid for!!
April 25th, 2008 at 1:03 pm
Have you checked out Penfed, for refinancing your Prius?
Current rate for new AND used cars AND re-fi’s is 4.25% (12 to 60 months).
http://www.penfed.org
I am coveting a Prius right now. Are you happy with it? I currently drive a 2002 Dodge Grand Caravan.
April 25th, 2008 at 3:04 pm
I really enjoyed reading this post – your honesty is refreshing, and I can personally relate to everything that you wrote! It’s nice to see I’m not the only one…
April 25th, 2008 at 5:14 pm
MSMomsmoney, I am happy with the Prius, yes. Keeping the mileage as high as possible is a fun little game that keeps me focused on the driving task instead of, say, rocking out to my music.
April 26th, 2008 at 6:02 pm
Once you get done with the car note, you will be in a great place. 16 months to pay off 7k in credit card debt is not bad.
April 28th, 2008 at 12:08 am
Hopefully in 16 months you can blog about “why I have money now.” The upside of all this seems to be that you are completely conscious of your mistakes!
April 28th, 2008 at 5:26 am
Nothing has enhanced my wealth more than moving to a city where one doesn’t need a car, and getting rid of my car.
I’m referring only to the money I save on car ownership (including purchase price, maintenance, insurance, and gasoline). But it wouldn’t surprise me if shedding the stress of car ownership has also made me a more productive worker (and since I am a free lance consultant, my productivity increase—whatever its explanation—has led directly to more income).