This is why you're broke 
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This is why you’re broke, auto edition

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black mazdaEver make a big financial blunder that taught you a lesson about money? I want to start cataloging those types of experiences from readers (who may choose to remain anonymous) in a recurring feature called “This is why you’re broke.”

If you’ve got any confessions of dumb financial behavior that you’d like to share to hopefully benefit others, take a minute to send them our way, with a picture if possible. Or you can hit us up on Twitter with the hashtag #whyimbroke.

One reader (full disclosure: she’s my wife) sends this story:

Mazda Speed3. Hatchback. Black with black interior. Stick shift with six gears. It has over 70,000 (relatively trouble-free) miles on it. Oh yeah, and a turbo. This is by far the best car I have ever owned or driven, but in retrospect, it was also a big waste of money.

I made several big mistakes when I bought it.

Mistake # 1 – I fell in love.

A good cheapskate never falls in love. A good cheapskate thinks rationally, not emotionally, especially when making a purchase decision that requires a six year loan. But, when I drove this car, the purr of the engine made my heart race. The rev of the turbo made my face flush. The fluttering feelings of infatuation clouded my better judgment and a few short hours later,  I was driving my new car home. I never even called any other car dealerships. Narry a google was searched. I walked in a test driver and I walked out a buyer.

Mistake #2 – I didn’t have a plan. I waltzed into that car dealership with not a care in the world. I had not called my bank and arranged financing. Nope, I was just going to test drive. Just give it a whirl and see how I liked it. Big mistake. After that first drive, the car sales men started pressuring me about how limited the availability of the  car was and how it was very unlikely that the car would even be available for purchase a few days later. My heart was already beating in time with that turbo and our love could not be stopped by something as trivial as financing. So of course, I ended up getting a bad loan (despite my good credit) by using the dealership financing.

Mistake #3 – I focused on the wrong number. Now as any good cheapskate can tell you, the most important thing about a car loan is that you pay the least amount of interest over the life of the loan and thus get the most car for the least amount of cash. This was NOT was I focused on while I was negotiating my loan. I was fixated on keeping my payment under $400 a month, so I was suckered into a six year loan. Fail.

Now as I drive with the windows down blasting this Sheryl Crow song, I know what she is REALLY talking about (and its not Eric Clapton)

What do you think? Have you ever wasted money on buying a new car?

(Photo: Flickr user Chris Ainsworth)

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10 Responses to “This is why you’re broke, auto edition”

  1. I didn’t waste money but I have bought a new car. It was in 2010 when car dealerships were doing horrible and I basically stole it from them for the price they sold it to me! I got a Honda civic that I will drive into the ground and it was well worth it.

  2. Don says:

    That is the exact same thing that happened to me when I bought my first vehicle out of college. I regretted the decision so much I ended up driving the truck for 10 years as a reminder. I was going to drive it into the ground until a policy at my work changed and I had to get something new. I just bought a new vehicle and did it the right way this time and have no regrets. That first vehicle taught me so many lessons that I’ll never forget.

    • jim says:

      Could you please tell us some of those many lessons so that we could learn? It seems to me that if you bought a vehicle and drove it for ten years, and it was still running, and you only got rid of it because your work forced you to, it was a very good decision on a reliable vehicle.

  3. Meagan says:

    Great job @lance! I dunno if I will ever buy a new car again. That new car smell just costs too much

  4. dojo says:

    Ohh, the car. Let’s say that someone (who’d remain nameless, but you can surely guess it’s me :) ) went in 2008 to a dealer for a car. And she fell in love with a car she could afford only in 4 year car payments (big payments). New. Beije, sleek, beautiful, small. Let’s say the same person, instead of being interested in the engine and stuff any normal person would take into account, wanted it to be beije (so that it goes well with the logo: black/red), to have nice tires and a lot of useless crap.

    I think next time, when I’ll get a car, I’ll have my husband pick one for me :D

  5. jestjack says:

    Alas this whole new car buying thing may be a “fond memory”… for me any way.I have recently been shocked at pricing of new trucks to replace my 11 year old unit. The “base or cheapest” pick ups appear to START at $25K before taxes…tags…etc. Sooo as these trucks approach $30K for a “bare-bones unit” compounding the folly with financing…just makes even less sense. Aaaand to pay cash one would need to yank $30K (if you had $30K) out of long term investments. So no truck for me….Who buys these things anyway?…..

  6. aua868s says:

    everyone says “buy used car”! I did a research recently on new cars Vs certified used cars. the difference in price is really not much. 2 points here…if I decide to buy an used car, it better be certified (don’t want to be the sucker who just inherited a boatload of issues)…for the 30k/40k miles on the certified used car, I would rather buy a brand new car with 0 miles in the odometer (maybe 20 miles on the odometer)

  7. Davey B says:

    Silver lining in the Mazda story is that at least the car is great and you don’t have a lemon….In many cases, that becomes part 2 of the story….Biggest ripoff I think is extended warranty packages for used cars…There is so much NOT covered by them…

  8. Anonymous says:

    I made the same mistake. Frustrated with a Chrysler Sebring that was unreliable and constantly requiring expensive repairs, I researched Consumer Reports for a great reliable car and fixed my heart on a Lexus.

    I didn’t research financing and basically got suckered into the same six year loan. Fortunately, its a great car that I plan to keep until the wheels fall off. It is now paid off and if I purchase a car in the future, it will most likely be CASH.

  9. Cedric says:

    Oh yeah! Well I just sold a car I had bought brand new 2 yrs ago(stupid!). Of course it depreciated faster than Usain Bolt but the good news is it’s gone and I got rid of over $9k of debt. The bad is I owe $4K in negative equity. So as I’m paying that off I’m smacking myself in the head with each payment. Car loans fugging suck


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