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I remember the feeling of being fresh out of college with a job and actually making some money. I felt let I was on top of the world. So what was the first thing that I did to celebrate? I decided to buy a NEW car. I wish I would have listened to my parents and just went with a used car, but I had my heart set on a new 2008 Mazda 3 GT. The GT model is the most expensive model of the Mazda 3…. Again, why couldn’t I just listen to my parents’ advice! Nonetheless, I ended up buying my new car for $23,000 with a 3-year loan @ 1.9% APR.
I was pretty happy with the interest rate, but I grew to hate my monthly payment. Every month it felt like I was being robbed when I had to pay Mazda Credit another $657. This was by far the biggest mistake I made coming out of college. I didn’t need to get a $23,000 car right out of school. If I could go back and do it again, I would have got a nice used car for $15,000. Undoubtedly, I would have paid a higher interest rate on a used car, but I surely would have saved around $7,500. That $7,500 could be in my savings account right now and put me closer to home ownership!
I think it is pretty common for 20 something right of college to go buy a new car. I know a lot of my friends did the same thing. Let me reiterate that this is dumb! I definitely needed to get a car because public transportation wasn’t an option for me. However, there was just no need for a $23,000 new car. I set myself back a few years of my current financial goals. In other words, I was dumb!
I recently finished paying off my car and it feels great to finally have that over with. I know one thing for sure, I will be driving this car for a VERY long time. Since I finished paying off my car, I have been able to put together a good emergency fund and start saving for a down payment on a house.
I hope that this post can help just ONE person avoid making a stupid financial decision. I would love to hear if anyone else made the same mistake as me and if it set you back with your financial goals.
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Oh my gosh—you saddled yourself with a $657 monthly car payment right out of college???? Good grief! Great post to warn others.
I paid $1500 cash for my 1997 chevy cavalier with 160,000 miles about one year into college and it lasted me through my first two post-college jobs, moving from Maryland to FL and then to TX, and through the purchase of my first home (all that took place in 6 years). What a great car that was! Hardly any repairs either.
Welcome to Yakezie!
Hi Amanda,
Yeah, what a mistake that was for me. I wish I would have done what you did. I guess it ended up being a good learning experience for me though.
Thanks for the welcome and I look forward to reading your blog!
Personal finance is a learning experience for all of it. You learn from your mistakes and move on. Although, it’s always easier to learn from the mistakes of others, haha. I don’t think I’ll buy a new car until I’m paying cash for it. There are some models where buying used instead of new doesn’t save that much, in which case it’s all about what you can afford and what fits into your goals.
You definitely do learn from your mistakes. I do agree that waiting until you can pay cash is the ideal solution.
By the way I like your balance sheets. I created one very similar that I plan to share each month.
Ouch, that’s an expensive lesson to learn. But I’m glad that you shared it with others. I’m sure that a lot of people will find themselves in the same exact situation, so your warning should help them!
I hope that it can help others! I have definitely had my fair share of financial irresponsibility. I’m actually writing a draft write now for the what motivates you to be financially responsible blog swap and realized I have done some truly stupid things in my past!
Hi Dave,
I do some web work for GM and just came across this post. I know that you already purchased your car but I wanted to make you and your readers aware of a discount that GM offers called the GM College Discount. It is available for current college students or those who have graduated within the last two years. If any of you are interested in learning more, visit the website http://bit.ly/dqKjne or feel free to stop by the Facebook page http://bit.ly/caU470. Hopefully some of you can benefit from this!
Best,
Colleen
[...] is by no means my only past financial mistake. Check out my post Financially Stupid Decisions After College – Buying a New Car to read about one of my other past mistakes. I hope I can help others avoid this [...]
[...] save thousands of dollars on a used vehicle. I wish I would have known about this and not bought a new car after I finished [...]