The DUMBEST (Financial) Move I’ve Ever Made
November 11, 2009 by Lakita
Filed under Practical Advice
Dancers, not all of our “moves” are related to choreography! Regular readers of this site know that I have an interest in financial stewardship, debt reduction and personal finances. I recently paid off my laptop and it felt great! It was a financial weight (ok, DUMBbell) that I should have attacked and annihilated a long time ago. I wish I could say that was my dumbest move…but that trophy goes to my 2004 Mitsubishi Outlander!
In 2002, I graduated from the Rochester Institute of Technology and was commissioned as an officer in the United States Air Force. I had a guaranteed job for at least the next 4 years. With that reasoning, I bought my first brand new car…a 2002 Mitsubishi Lancer (think Fast & the Furious 2 without the spoilers or ground lights). The payments were manageable, but the damage was already done. I was bitten by the new car bug!
Fast forward 2 ½ years and I am “itching” for a new car. Somehow, I made up in my mind that I needed a new vehicle. I justified the purchase of a mini-SUV by the fact that I would be moving soon and the larger vehicle would prove handy. I started looking around and my eyes landed on the 2004 Mitsubishi Outlander.
I’ll spare you all the details of my non-existent negotiating skills. I’m sure I was a car salesman’s dream customer. I traded in my 2002 for a brand new car with monthly payments that were TWICE AS MUCH as my previous payments. All this with NO MONEY DOWN. I hope you all are seeing the red flags!
To make matters worse, exactly a week after I drove off the lot, 2-days before I was supposed to make my initial payment, I was in a 3-car accident (snow storm). Fortunately, everyone walked away without a scratch, but my new car needed $4,000 of repairs after I paid my insurance deductable. Also, the frame was not damaged, but it is still a black mark on the vehicle should I ever decide to sell it. New cars depreciate fast enough as it is…certainly did not need my help!
By this point I was already starting to regret my shiny new toy purchase. Some people actually suggested I return the car to the dealer saying I changed my mind since I haven’t paid anything yet! I’m not sure if they were serious or not, but that would certainly be less than ethical and was not an option.
Let’s recap why this was a DUMB Financial Move:
1. There was absolutely nothing wrong with the 2002 car I had
2. I traded in a gently used vehicle that was almost paid off for a more expensive vehicle with higher payments and a longer loan period
The irony of the car accident and the fact that I didn’t relocate even though that was my primary justification just adds insult to injury. The fact of the matter is a new car is rarely a wise investment. Leased vehicles are even worse! Since vehicles depreciate as soon as you drive them off the lot, purchasing a 6-month used or even 1 year old vehicle could save you thousands.
Personal finance guru Dave Ramsey has a lot to say about debt and how to effectively purchase cars. I believe his Drive Free – Retire Rich scenario uses optimistic percentages, but the principal is solid – save and plan for the big purchases.
Remember, just because you can afford something, it doesn’t mean it is a good move. This wouldn't have been such a dumb move if I actually needed reliable transportation, but that was not the case.
Why are you sharing this story?
I receive several e-mails from dance ministers that surround financial issues. While some things cannot be helped (medical bills, lost job etc), we can mitigate unforeseen financial damage by eliminating dumb moves. I also realize a lot of the readers are young adults / undergraduates…that seems to be when the "new car bug" hits the hardest! I hope by sharing this story and can help someone avoid a similar mistake.
What about you?
I’ve shared my story, I’d love you hear yours in the comments below!
Here are a few other personal finance related articles from Company Keepers Dance Ministry Talk written with ministers in mind:
Posted by Lakita Humber
Lakita Humber serves as the founder of Paneh Praise Dance & Mime Ministry and host of the Equipping the Saints Dance & Worship Arts Conference. Find out more about her or follow her on Twitter (@Paneh).
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At least you've learned the lesson and can help others avoid the same mishap. Our experiences whether they are of our own making or not can be used by God to help others.
Hmmm… I've made several, but the worst is planning a major dance conference without understanding the total cost until it was too late to turn away!
Long story short: I hired a conference manager (who I paid monthly) to manage a large conference since I was busy serving other ministries. I had hoted several dance conferences in the church setting for several years. Since I had never done a hotel conference, I wanted an "expert" to help me navigate and not get burned, or so I thought… I signed a contract, put down a deposit, and opened registration!
Months passed by and finally the hotel called me 2 weeks before the conference teling me that I owed them $23,500! I was floored! After I got up off of the floor, I realized that there was a $25,000 food and beverage minimum that had to be met (ummm- was that the small print?). Less than 30 days away, I needed a miracle, and bad!
After MUCH prayer and wise counse, the Lord granted me favor with the hotel, and the bill was reduced to $15,000 (room rental and sleeping rooms). That amount was better than $25,000, but we must also consider that I paid for several flights, contracted honorariums and love offerings! We walk by faith, but we MUST use wisdom.
In the end, we were able to pay the hotel and several speakers, but the experience almost cost me my ministry, my reputation, and my health! I am grateful that the Lord delivered me, but I also learned to count the cost before building. I have hosted another conference since then and was able to accurately assess the costs and take care of all agreed responsibilities. What a blessing!
I encourage anyone making financial moves to do your homework! We can have a vision, but must understand that it takes provision. Even if our intentions are pure, ignorance is not bliss. Pray to the Lord for wisdom and understanding that it might be well with you.
Too bad about your accident. That really makes you re-think your purchase. It's very easy to get caught up in the consumerism that plagues the world.
I too have made bad mistakes with money. Leased a new car ten years ago, then ended up buying it after the lease. The money spent on that car was way more than what the sticker price was. Fortunately, I am still driving that car today. However, that was just one lesson in car purchasing.
The next mistake was when my wife and I bought our first car as a couple. We intended to buy a used car and found ourselves driving away with a brand new 2005 Honda Civic. We ended up selling as we needed money for a house and baby.
Just recently my wife and I bought a used car to replace the second car we once had. We paid with cash. No car payment. We even negotiated the price down. We now own two cars. It is a good feeling not to have a car payment anymore.
The wife and I actually agreed never to borrow money again.
Thanks for sharing your story.
@FruitfulVine2: Amen! If someone can avoid the same mishap then it was worth sharing!
@Rekesha: Thank you for sharing that! It is so relevant as many readers are event organizers! We MUST count the cost.
@Steve: And thank you for sharing your story! I checked your website….from your banner with the Gateway Arch I thought you were a St. Louis neighbor! Either way, your site looks interesting and I'll add it to my reader.
Thanks for sharing.
A couple years ago my husband and i were looking for ways to make money. So we followed the advice of a fellow co-worker and invested in a product which was apart of a pyramid scheme. Long story short, we had to end up giving away most of the product and to this day we have not sold 1 nor were we able to get back the money we spent on it. It caused a serious financial dent in our pockets because not too long after that my husband lost his job. It was a strain but God really came through for us. We learnt what it meant to have little to almost nothing. We promised never to make such silly mistakes again nor make financial moves without consulting the Lord
Rohzan,
Thanks for sharing your story as well! I'm glad it all worked out for you with the help of the Lord, and more importantly, you learned from your mistake. Blessings!
Lakita
All,
I've posted the 2nd DUMBEST Financial Move I've ever Made on my new website
http://personalfinancejourney.com
Check it out!
Lakita