3 Classic Personal Finance Mistakes-Part 1
Here is the first of the 3 major personal finance mistakes I have made in the past 4 years. I feel that these few mistakes are at the core of my current fiscal difficulties. I have managed to correct two of these mistakes but I am still working on the third. I am dividing them into three different posts because I tend to be long winded.
The First Mistake I made was that I bought a brand new car after graduating from medical school.
My main justification for buying a new car was that I had to move across the country to a new city to complete my medical training and I needed a reliable way to get to and from work. I used the justification that I needed a reliable car and did not consider alternative, reliable means of transportation at that time.
The costs of this one decision include:
- the $4,000 cash savings I used as a down payment and the interest that money could have earned
- A Monthly car note for 5 years straining my cash flow
- the finance charges by the bank for my loan
- the increased insurance costs incurred by a new car owned by the bank
- maintenance and fuel costs each month
If I could do it again, I would have kept my old car. I feel now that the cost savings of driving a car that you own free and clear are clearly greater than the comfort of having a new car. I am able to say that now however because I currently have other options for transportation that I had not considered before I moved. What do you think about the comfort of having a new car vs the cost savings of driving an older model?
