I’ve made some pretty dumb debt decisions in my life. I’ll list my “Top 5″ starting with the “dumb†and finishing with the “dumbestâ€.
Dumbest Debt Decisions Ever: #3
When I was 18 years old, I financed my first brand-new car. My parents had purchased a used car for me when I turned 17, but I was determined to “get something cool.” I was a senior in high school and I was working for the local hospital. I was working for $5 an hour and my monthly take-home pay was roughly $600. So, I figured I could “easily” swing a $250 car payment. (Forgetting, of course, that I needed to pay for: gas, insurance, oil changes,etc. Plus, I was 18 and dating.) My father co-signed a loan with me, and I purchased a brand-new, 1993 Eagle Talon. (An Eagle Talon is a little “sports car”. Mine was black! I thought that I was the coolest guy in the world.) The total price for the car was about $13,000. I financed the car for 5 years, and my payments were about $275 a month. Here’s a brief history of the Eagle Talon:
I purchase the car for 13K.
I make 3 or 4 payments.
I quit my job, and get behind on my payments.
My dad has to take over the payments.
I feel like a total loser.
I finally get a new job, and I manage to help with making some of the payments.
My dad ends up paying about 75% of the car payments over the next few years.
After about 6 months, the paint began to come off of the car. The auto dealer says it’s my fault and will do nothing about it.
I own the car for about 3 years, and then I try to trade it.
The dealership will give me a grand total of $1000 dollars for the car. This is less than I owe on the car! I’m upside down on the loan. What do I do? Well, I roll the OLD loan into a NEW loan for another car!
An 18 year old kid working a part-time job has no business financing a new car. I should have been happy to drive the used car and I should have saved up to purchase a newer car.
Ugh, that’s awful. I’m tempted to lay the blame on your Dad for co-signing the loan. 18 year olds are generally pretty dumb or short sighted when it comes to making financial decisions (we need more personal finance classes in Middle/High School). The first time my parents co-signed for a car loan for me was after I had graduated from college and had a full time job in my field of study. The car was a Toyota Tercel (the economy car in the Toyota line at the time) and it was used. That was 1993, I drove that car until it died in 1999. I’m presently driving my paid off 1999 car (yikes, 8 years later). Most of my co-workers (I’ve been with the same co. since 1999) are on their 3rd or 4th car. They all joke about my crappy paid off car and I laugh at their $400+ monthly lease payments.
We all make dumb decisions, the good thing is that you made yours when you were young.
Hope you paid your dad off…
My brother actually did something similar but he actually makes a decent amount and can afford the payments unfortunately he got raped on the deal and is paying MSRP sticker price plus the financing and he didn’t even get the rebate… ouch…
I am going through this now and have paid for a new car before at 19% interest. Kept the car 6 years and a 12k dollar car cost me 21K and I sold it for $3200. What a rip off. I am talking about my car journey on my new debt blog..Maybe you guys will come out and show me some love. I am new at this. http://getinchargeoneyoungwomansstruggle.blogspot.com/
The first new car I bought was the sister model of your 93 Talon(mine was the 93 Eclipse). I was a year out of college and in better financial shape than an 18 year old, and absolutely loved that car. In fact, it’s still in my garage. Other than regular maintenance and having to replace a drive belt for $500, it’s been an absolute dream(and has been paid off for 11 years!)