“What do you think of it Aaron?” asked the salesmen.
“Oh – that is sweet.”
“Yeah – it certainly is. We just got ‘er in a few days ago and I'm sure it'll go fast.”
“I'm sure..” I uttered – mesmerized.
“Should we go and look at some other cars in the back? Or should we give this one a test drive?”
“Ah.. yeah, we probably should look at some others. But I really like this one.”
“It sure is a looker. I'll bet you and your friends would look great driving in this… ”
He had me. In fact – the car had me at first glance. And, I was about to make the worst financial decision in my life.
It was the fall of 2001 and my clunker of several years had broken down. I was working full-time at a design firm making about $22k/year, living on my own and ready to take on the world. Or, so I thought.
“What kind of interest rate can I get?” I meekly asked the self-assured loan officer.
“18%,” he said smugly. “…Haha! – Just kidding. We can get you 10% on this.”
“Oh. That's not bad,” I blurted out without even thinking.
I felt like sweat was visibly pouring down my face. The whole loan process didn't sit well with me. I needed a car. But this one? Right now? – for this amount of money?
“So, we got you at 10% for 5 years, with a total price of $13,000. How's that sound?”
“Great,” I said – lying.
[If you've been paying attention this far – I was about to take on a loan for $13k, with a salary of just over $20k. Made sense – right?]
With little financial know-how and more concerned with how I might look with these new wheels, I signed up for five long years of 10% monthly interest payments on a depreciating asset.
It was (and probably still is) the worst financial decision I have ever made.
While I'm not thankful for the decision I made – I am grateful for what that decision accomplished in my life. Disturbed by the choice I made that day, I soon decided to start my own debt-free journey.
I learned two things from my experience at the car dealership. One, listen to yourself. Don't ever make a large financial decision you don't feel good about. Two, don't ever make a financial decision to impress others.
Your turn. Now that I've spilled my guts – what's the worst money mistake you've ever made – AND what did you learn from it?