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This is why you’re broke, auto edition

Posted By Claes Bell On 10/10/2013 @ 2:30 pm In This is why you're broke | 10 Comments

Ever 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 [3], with a picture if possible. Or you can hit us up on Twitter [4] 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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