| Bad Financial Advice - Finance a Car | | | | that car at an 8% interest rate (having no credit to |
| I had just gotten done signing up for my first block | | | | my name and nobody who wanted to co-sign), I |
| of classes for my first semester in college. Finally - a | | | | ended up putting together a financing plan that would |
| little freedom! It's time to grow up and move on with | | | | later cost me THOUSANDS because of an |
| life. I'm all ready for life to begin except for one small | | | | unfavorable interest rate and a bad financial decision. |
| thing...I need a car! | | | | 5 years later... |
| Not knowing much about cars, not to mention | | | | Now I know that the "help" I was given by my |
| attempting to BUY one, I went to the source of all | | | | father was nothing short of bad financial advice. I |
| good advice, my father. In speaking with him about | | | | don't blame him because that's how he does things. |
| my need to have some sort of mode of | | | | Even today, at 55 years old, he has car payments. I |
| transportation to and from classes and work, he told | | | | decided NOW that I didn't want to be like that. |
| me I would need to have a car. "Naturally," I thought | | | | Here's the point: when I bought my first car, I didn't |
| to myself. So now what? | | | | quite understand how interest hurts. Thousands of |
| Over the course of the next week or so, he and I | | | | dollars later in interest paid, I have a better idea. I |
| drove onto nearly two dozen different car lots, | | | | vow to never pay interest again! A freshman in |
| trying to find something that I found suitable. All I | | | | college with a little over $5,000 to his name should |
| had was my life savings, and that was only $5,000, | | | | have NEVER made that type of an investment. A car |
| so I wanted to be fairly conservative as I shopped. | | | | is a depreciating asset. Yes, we all need some form |
| My first thought was, "Buy something for two or | | | | of transportation, but we don't need to be doing it in |
| three thousand. That should be good for now." As I | | | | style when we can't afford it. That money could |
| saw car after car that didn't fit my budget, I found | | | | have been used for the tuition I was going to need |
| myself speaking to my father about financing a car. | | | | to pay, or as I began to understand a bit more about |
| Keep in mind that I was just beginning college. I was | | | | finances, it could have been used for my first Roth |
| currently making $400 per week and getting ready | | | | IRA contribution. Either way, the thousands of dollars |
| to pay tuition for my first semester - nearly $2,000. | | | | could have been used better; instead, my pride got |
| How was I ever going to afford anything? | | | | the best of me, and I made a poor financial decision. |
| "Son, you'll always have a car payment; why don't | | | | Learn from me - buy something that you can afford. |
| you just finance what you like with a big down | | | | You'll be glad you did. |
| payment?" | | | | "You'll always have a car payment..." Some see things |
| Genius! Of course...I hadn't even considered that. | | | | that way; let's be more wise than that and pay |
| Then I can afford what I want! | | | | CASH for our depreciating assets; or, in other words, |
| Finally- I found what I wanted! The sticker said 17k, | | | | never finance a TOY! Dave Ramsey teaches that |
| but we worked the salesman down a couple of | | | | principle very clearly. Budget for your toys and pay |
| thousand. I ended up putting 4k down, leaving me | | | | cash for them. Have some patience. |
| with a meager thousand dollars in my bank. Financing | | | | |