I have a ton of dumb purchase stories but let me tell you my personal favorite which is my own. I was halfway through my MBA and had just landed a job at private equity firm. I thought this was it, I had made it! I would now be commuting so I asked my dad to help me shop for a car one weekend. I had $6k saved up to buy something. We headed to the Honda dealership to get my sweet new ride. We looked around a bit and I asked my dad to go find a salesmen to ask about a price on a used CRV. I started wandering towards the sales floor and saw him across the street at the Mercedes dealership!! He was already with a salesmen sitting in a Mercedes SUV. One thing led to another and before you know it I’m leaving the dealership in my used Mercedes SUV. I also left with a $20k loan, my poor $6k flushed as a down payment, and a $330 monthly payment for the next five years.
This my friends is what happens when you’re a spineless jellyfish and let people convince you to do things you don’t want. I’ve been a pushover since I could remember. I think its my extreme dislike of conflict combined with my inner need to show people I’m smart and successful, when reality this purchase made me look like an absolute idiot. No my 25 year old self did NOT need a Mercedes! I was already racking up debt left and right from student loans and credit cards. My loans were in deferment so I hadn’t felt the burn of repayment yet. I thought I could definitely handle my $330 payment with my fancy new private equity job.
I think it took me about 7 months to realize I had to ditch that car. I was starting to worry about my student loans and my credit card was skyrocketing. Paying for that premium gas, that $200 a month parking garage (because of course you have to park your Mercedes somewhere fancy), and those $150 oil changes had worn me down. I was also in a pretty bad accident which significantly reduced the value (not that it wasn’t already reduced because the value of any car you buy depreciates like crazy the first few months you own it).
Cars have to be the most useless “investment” of all time. As soon as you drive it off the lot its value is clipped like crazy. You pour hundreds of dollars a month into it not including basics like gas, insurance, and repairs. Most people are underwater on their loans for at least two years after they get their loan.
So goes my saga of trying to sell that beast back. I found a really nice 2005 Honda civic at the dealership across from my office and went over one day to check it out. I ended up being $1,000 underwater on my Mercedes loan, but said screw it, bought the car in cash, paid the difference, and left that day with my new beater. I still saved about $15k by paying that underwater amount and outright for my Honda rather than paying the rest of the loan and maintenance on my Mercedes.
The relief I felt was instant. I didn’t have to worry about a huge payment, premium gas, or the stress of knowing I had 4 more years trapped to a vehicle I had grown to resent. It’s been 2 years since I traded in my car and I still get comments from my family and friends making fun of how old it is, asking when I’m going to get a new car, and calling it crap. My little car is adorable, paid for, runs great (knock on wood), and I’ll drive it into the ground. I will never take out a car payment again, ever! Also, have you ever in your life liked someone less because of the car they drove? The majority of you will say no; some will say yes and if so you’re an asshole get off my site! No one cares what car you drive in reality! If you get caught up in that reality, soon someone you know will buy a nicer car than you, and you begin to think about trading up. Consuming more more more for no reason. Take it from me, trading in my fancy car for my little old Honda was one of the best decisions I’ve ever made. No car payment, no stress!