It wasn’t our fault that a drunk driver plowed into our parked car in the middle of the night while we were on vacation more than 500 miles from home. No one was hurt; it could have been worse. Our loss was insured and we got just enough money to pay off the loan. We needed to replace that car anyway.
To buy a new car would have required borrowing the down payment and taking on bigger monthly payments. We could have financed a used car with lower payments, but that was beneath what we thought we deserved. A better option—or so we thought— was to lease a new car with nothing down and lower payments than we’d been making.
At this critical decision point in our lives, my husband and I blew it. We made the worst choice possible: to lease a new car. It was a decision that turned into a financial nightmare.
Our first leased car lost its value terribly, so we owed a lot when the lease was up. Again, we had no available cash, so rolling the shortfall into another lease was easy. We repeated this many times, and even upped the ante by leasing two new cars at a time. It became nearly impossible to break this cycle that went on for 22 years.
Looking back, it’s easy to see the error of our ways. However, I believe that even in my financially stupid years, if I’d taken five minutes to visualize the choice we were about to make in light of the future, I would have at least hesitated. I want to believe we would have made a different choice.
Over a million people graduated from college these past couple of months. Some started new jobs, while many are still looking; some moved into new apartments, while most moved back home. One thing they all share, they’re facing a world of new financial obligations.
Many graduates already carry a load of debt. To those who are in debt up to their eyeballs, I offer some unsolicited advice. (And this goes for the rest of you, who might be years or decades from college graduation—but are still carrying a load of debt.)
The decisions you make now will impact your life in a profound way for years to come
If you decide to stretch out your student loan payments, take on car payments, and all the other things you believe you deserve, prepare to take a financial plunge from which it will be difficult to recover. You will open the door to awful things.
The other option is to commit to an upward trajectory by choosing frugality. Even with student debt, if you choose to avoid new debt and live below your means so you can repay your debt quickly, you will be on your way to financial freedom. Once debt-free, you’ll be ready to soar.
You’ve reached a critical decision point. There’s no turning back now. Your choices are clear. It’s either up or down. Choose wisely.