Have I made mistakes? Of course! Just to list them quickly:
Renting the ‘nicest’ apartment
Buying a new car
Buying a car for the fun of it
The credit card
Now to give further explanation into them.
Renting the ‘nice’ apartment
This was my biggest mistake. When I moved to my current city, I went looking for an apartment. Because of my hectic schedule before I moved, I was unable to take the time to look myself. So I hired a lady to do the work for me. She charged a one-time fee of $200. She did everything from from finding the places to negotiating exactly what I wanted.
Overall, I was quite happy with the process and would do it again in a heartbeat. The process was easy and painless.
Regrettably, I only gave her a week to do research, so when I got there she had only mapped out 7 options for me. Quite good for only being able to look for a week. I set a price range of $500-$600 a month for a two bedroom apartment, which is the norm for an apartment that size in my area.
I realize now – I asked for a two bedroom apartment and barely had any furnishings to fill it with. (I still mentally kick myself for wanting a two bedroom apartment!)
As we visited each apartment, I was unhappy because they were all extremely small and came with no utilities. Just recently, I found out I could have had a one bedroom all-inclusive for the same price. Just as I was getting tired of seeing place after place turn out to be a dump, we arrived at the last apartment. To my surprise, it was extremely spacious, in a great neighbourhood, and had recently been redone. The only downside was it was $150 over what I was looking to spend and did not include utilities.
Nonetheless, I made up my mind in seconds and signed the lease within a day of visiting the apartment.
Buying a new car
When I was in high school, I worked part-time jobs that provided me with the income to buy myself a used car, which I payed off in a year. It was a good car, in great shape, and had low mileage. When I bought the car, it was 7 years old, and that was 4 years ago. Because I didn’t do regular maintenance on the car (learned my lesson), my brake lines rusted out and it would have cost much more to fix the car than it was actually worth.
Thus I went ahead and financed a new 2011 Ford Focus SE. It was an unexpected expense and, without a down payment, ended up costing me $338 a month. This pretty much ate up the wiggle room I had in my budget, which was supposed to be roughly $400 after all my expenses.
Buying a car for the fun of it
I spent almost a year working at a car dealership while I was in high school. During that time I developed a fascination with fast cars. While I was taking my technician course, I got the chance to buy a used ‘sports’ car. I thought it was a great deal at the time and gladly paid the $4200 the guy wanted. This is probably my biggest regret, because I used up all my savings to buy that car.
After owning it for less than a year I sold it to my cousin for $2000. I have only ever seen $1000, but I decided to leave it be; I don’t want to lose family over a car.
The credit card
My story is undoubtedly no different than anyone else’s. Due to all of the above, I had trouble paying everything but bills. My borrowed credit kept rising and rising. Due to rising minimum payments, some months I really had a hard time finding money for food. After about a six months with a credit card limit over its max, I finally got a raise at work that enabled me to start making heavier payments on my card. I figured the best way to pay of my credit card would be to put as much money as I could on the card. This was a bad mistake as I ended up having to draw from my credit card again for day-to-day expenses. This led to a cycle where I have been unable (until recently!!) to lower my credit card balance.
For my next post, I will be posting about how I am slowly recovering from debt and on the path to being debt free within 6 months.
I’ve made similar mistakes with apartments and cars. When you don’t fully appreciate finances, the temptation is to go ahead and get the best you think you can afford. You don’t stop to think about what you really need. At least you have recognized those mistakes now and are working towards improving your finances.
Exactly. I feel much better about myself now that I am taking action towards my poor decisions.
[...] previously posted about my mistakes. But what do I consider the biggest mistakes that people my age make? All the people I know around [...]