My Biggest Financial Mistake

by Erika Torres

I have never been irresponsible with money. I had my first credit card at 14. In college, I had an on-campus job and babysat A LOT. I have never been late on a payment, I have never  defaulted on a loan, I have excellent credit.

But the biggest financial mistake I ever made was buying more car than I could afford.

image found here

(not my car, but just like my car)

I love my car. It is a 2006 Honda Accord Coupe, fully loaded with leather seats, sun roof and navigation system. And yes, I bought it brand new in September of 2006, meaning I’ve been paying this car for five years and it’s not due to be paid off until August 2012. A six-year payment plan! That is insane.

How did I get myself into this mess?

Well, for one, my first car–a 1996 sea green Ford Escort I named Nemo– had broken down. So I had been without a car for a week and I was desperate to buy a new one. Desperation is never a good trait to have when you’re buying a car.

I also had just graduated college and started my first job. I felt I deserved a nice car. It wasn’t like I was splurging on a BMW or Mercedes. It was a Honda! I deserved a nice car for all my hard work.

I remember getting price quotes from dealerships online first. However, when I entered the dealership, the salesman automatically added $1,000 to the price he had originally quoted me by saying it was for the fresh coat of paint, the scratch-resistant stickers on the doors and some other BS excuse he fed me. I had read online to watch out for this kind of price hiking and to just walk away. But I didn’t walk away–I desperately needed a car.

I also didn’t know what I was signing. I had no clue it was a six-year financing plan. I was under the impression it was five years (still not great, but it was the only way I could afford the car.) I got financing through the dealership rather than my local bank–this mistake cost me an extra percentage point in interest. I only put $3,000 down. That barely covered the taxes.

Basically, I did everything wrong. And it cost me dearly. $434.96 a month for the past 5 years. That’s an insane car payment in my opinion.

But I am so glad it’s over because yesterday, I paid it off in full.

I paid it off in full!

Our savings is now back down under the $1,700 mark (although we do have an extra $1,000 floating in our vacation fund in case of a big emergency) but with Eric’s paycheck coming by January 1st, I just couldn’t wait any longer. I wanted that bill gone!

It felt sooo good to update our total debt.

I realized the mistakes I made and know that we won’t be making the same car-buying mistakes in the future. I hope we don’t have to buy a new car for at least another two years, but we’ll see.

What was your biggest financial mistake?


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Anna September 2, 2012 - 9:56 am

Ive been reading your blog and we sound like the exact same person! It’s crazy. I am happy u are Car loan free. I made the exact same mistake and am still paying for it. I always think to myself I will never buy another car unless I have the cash to pay for it. I have 18 months left but I’ve been throwing extra cash on. Shouldn’t be paid off for another 2.5 years. I’m gonna have a celebration the day it’s paid off 🙂

Pam at MoneyTrail December 6, 2011 - 6:25 pm

Cars are very enticing! Congrats for recognizing your mistake and pulling yourself out of debt!

RubySongbird December 6, 2011 - 12:49 am

Congrats on paying off your car! I’m still working on mine, but hopefully will have it paid in full in the next couple years. That’s a great financial holiday gift to yourself 🙂

Nicky November 30, 2011 - 5:03 pm

Congrats! My biggest financial mistake is also buying a car. I already had a car that was paid in full. I decided to get a new to me car because I was a new mom and my baby’s stroller was giving me a hard time going into the trunk. Great reason, right? My payments were $500/month. Long story short I paid it off in 3 years. That’s a mistake I’ll never make again. I LOVE my Honda Pilot and thankfully in the end it all worked out. Lesson Learned.

Andrea November 29, 2011 - 7:13 am

Congrats on paying off your car, must feel great! I remember the feeling.

My greatest mistake was probably buying a house with no money but it’s also turned out to me a great blessing as I’ve learned so much these past few years and I don’t know if I would have ended up blogging/getting my finances in order/paying off my debt if I wouldn’t have made thatmistake in the first place

Paula @ Afford Anything November 19, 2011 - 9:58 pm

Congratulations on paying it off!! What a relief that must be! And I’m glad you learned from the experience.

My high school boyfriend — who I occasionally talk to (about once a year when I visit my hometown) — just signed onto a 6-year car loan. His explanation? “It’s like a 5-year loan but with 1 extra year.” Eiyiyi. Glad I didn’t stick with him! 🙂

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Hawaii Planner November 17, 2011 - 1:06 pm

First off, congrats on paying off your car! That’s awesome. I, uhm, spent $30K paying for a wedding that I shouldn’t have. For a variety of reasons. Namely because I wanted to back out & thought of all the money we had spent (ex & I paid for it all ourselves) & felt trapped & that it was just cold feet. Wrong. Talk about wasted money! I cringe every time I think of that “learning lesson.”

britt@knewlywifed November 17, 2011 - 11:26 am

Thank you for posting this. I have been driving the same car since high school and I’ll be in the market soon. Good to know what to look out for!

My biggest mistake in general is not researching before I buy big purchases (like washer/dryer, etc). I just go in and ‘grab’ something, and that’s a terrible mistake!

Katie (Red) November 17, 2011 - 10:28 am

Way to go! My biggest mistake was definitely opening 6 credit card accounts to buy groceries, clothes, and more crap I didn’t need. I racked up $3,500 in credit card debt, could rarely make the payments. It took a car accident (and pay-out) to get myself back on track.

Sonya November 16, 2011 - 6:14 pm

Congrats on paying off the car! Cars are the worst money suck! I got lucky with the first one I owned. Practically new with lots of good features for a steal! I paid less than $200/month for 4 years. The car I currently have was still a good deal with similar car payments but it was 5.5 years to make the payments what we needed. Luckily after selling my 1st car we were able to pay off 6 months of it right away. I don’t think I’ll ever have a brand-new car just because my parents had a lemon with the ONLY car they have ever bought new! Our current one is 6 years old but we bought it with less than 17,000 miles on it when it was 3 years old! Makes me feel less bad about it!

LBC Teacher November 16, 2011 - 6:01 pm

We have pretty much the exact same story! I bought my car in June of ’06, brand new and totally overpaid for it. I was on the six year plan, but managed to pay it off 11 months early. I won’t make the same mistakes in car buying again, but I will say that I still LOVE my car. So there’s that benefit.

And I love it even more now that it’s all paid off! I’m driving this sucker into the ground!


Army Amy* November 16, 2011 - 4:36 pm

My first car was also my worst financial decision. I was paying $500 a month for 7 years! Why did I think that was a good idea?! Thankfully, I sold my car to Carmax this summer. They paid off my car and gave me a check for $3000. Score!*

Teacher Girl November 16, 2011 - 3:15 pm

Woot! Congrats girl!

I was in a similarly desperate scenario when I bought my car and sort of made a bad decision by not just leaving and going to another dealer, but since the car I choose was pretty cheap (average 2008 Honda civic) it wasn’t too big of a deal. All my credit card debt in college and my inability to save any money during that time? THAT is my biggest financial mistake.

Stevie November 16, 2011 - 12:59 pm

Woohoo! That is so awesome to have it all paid off! That must feel SO good.
My biggest financial mistake was also buying a car – a Honda, too! I bought it in 2007 when I had been promoted and got a raise. I was making good money, my other expenses were pretty low, so I figured I would be fine. But then I got laid off in early 2008. I was on unemployment for awhile and then got another job, but things were really tight. I couldn’t afford to feed myself because I was so worried about making that damn car payment. Then I got laid off AGAIN. So I got rid of the car. I’ve now been car free for almost 3 years and I love it!

From Shopping to Saving November 16, 2011 - 12:55 pm

Just found your blog and it is adorbs!!!!! Congrats on paying it off 🙂 My biggest financial mistake was getting a credit card and then learning how to shop online. I spent so much on shopping and didn’t know how to save money in college.

Love your last post – BF and I are totally an old married couple and we aren’t married! Sadly we have no friends after we moved to a town where none of our friends live. I ended up learning how to love staying in!

Mysti November 16, 2011 - 11:38 am

Congrats on paying off the car!!! Funny you mention cars today…as that is all I am talking about these days over in my corner of the world.

My worst financial mistake…..not realizing how long my student loans were going to really take to pay off. I should have paid more when I was younger before life got in the way.

Whit November 16, 2011 - 11:27 am

Congrats on paying off your car! What an amazing feeling of relief that must be.

I often wonder if I will feel my current car is a financial burden one of these days. … I paid for my first car with cash, outright. My dad sold it to me for half of its value and it served me well. Until it didn’t and started crapping out on me all the time.

I started lusting after the new Ford Fiestas. Big time. I made the mistake of test-driving one and I left the lot with it that day.
My payments for a brand new car are totally reasonable to me…$265 on a six-year loan. I wish it wasn’t a six year loan, but I do feel more comfortable this way and I always pay ahead each month, as much as I can.

jobo November 16, 2011 - 10:03 am

Congrats! That is a huge one to pay off. I loved doing that for my last car! As for me? Gulp. Buying a house in 2005 at the height of the market for 330K (double gulp), doing an 80/20 mortgage (two mortgages basically, to avoid PMI), then when Pete and I divorced, having to sell the house at the worst possible time – when the market tanked, and short selling it for the whopping price of…159K. Um yep. There went our credit too. But, the one good thing? Walking away from it, debt free and onward. Good credit now and so much more 🙂

Dave November 16, 2011 - 9:25 am

Way to go! Getting a car lease and then purchasing the car at the end of the lease was my biggest mistake. I wish I had bought a used car right at the start.

Erini November 16, 2011 - 8:53 am


My last car, which was also my… 4th car (at the age of 20! ACK!).. was a Dodge Neon… 2001 I think. Maybe 2003. I can’t remember. I paid $1000 down in cash, and somehow got the payments to be just over $100/month. The main problem was that as a student, even working 3 jobs on campus, I think I pulled in about $130-150 a month. My mom had to take it over for me.

… so when I sold the car a couple years ago (I didn’t take it with me to Chicago, so it sat at my dad’s for a year before it sold), I gave 3/4 of the money to my mom. Hard to do, but it was the VERY right thing to do.

I know I’ll need/want another car some day.. especially with starting a business (I’m very much hoping I’ll have to make local deliveries!).. but yeah, it’s an expense I’m glad I don’t have right now. And I do have a deal with myself that there is absolutely NO way I can get a car again unless I pay at least $1000 cash up front again. (Ideally I’d like to do more.)

kim November 16, 2011 - 7:29 am

Congrats! Did you know that your auto insurance rate might go down now that you own it? And while you weren’t happy with the financing, it is a great car that will last years – decades even (I have one too)! So you paid for it up front, but it will save you down the road.

Here’s my dumb mistake – I got the upgrade of fog lights (lived in CO at the time), and I was going out of town, so there was no time to install them. I was supposed to go back and get them installed…but never did. A few hundred bucks I shouldn’t have parted with in the first place!

Tanner November 16, 2011 - 7:05 am

Congrats indeed! My parents made every single mistake on the book when they bought their last car (which I’m 15 payments away from paying off, at $410/mo!), so I am really happy for you. Can’t wait until I get to that point as well!

A Super Girl November 16, 2011 - 6:27 am

Congratulations! This was a great reminder that I need to start doing a bit of car shopping. I still have my first car, that I paid cash for in 2002. It’s a ’97 Taurus and thanks to some monetary help from the parents over the years, it still runs. But its time is definitely nearing an end. I keep saying I need to start looking, but I haven’t and I know I’m just going to end up in the kind of desperation situation you were in!

Michelle November 16, 2011 - 6:19 am

Congrats on paying it off! I should be done with my car payments soon. I’m hoping to pay it off early. Right now it’s $400 a month. AHHH!

Daisy November 16, 2011 - 6:01 am

Wow, congrats! That’s awesome!

I haven’t done anything like that (although I dream of buying a new car every time I climb into mine), but my biggest mistake only ended up costing me $3000. It took me forever to pay off because it went on my credit card and my payments barely made the minimum and the interest.

Melissa November 16, 2011 - 5:59 am

Ah, that’s so awesome!! Congrats! Must be such a good feeling!

I’ve never really made a major, or even minor, financial mistake. I mean, there was that time I spent my grocery money on new records during the first week of the month, and had to eat spaghetti and water for the rest of the month, but that’s not really the same! Haha.

I’m pretty sure my lack of mistakes is really just because I’ve always been too poor to have the funds to MAKE any mistakes. So by that measure, maybe my biggest financial mistake was becoming a writer! Gulp.

Paula @ Eat: Watch: Run November 16, 2011 - 5:11 am

Congrats! I love paying things off. I JUST paid off my floors in my house this month. See ya floor bill! I’ve been paying on that for a year and a half now. Feels gooooood.

The one thing I’m awesome at is buying cars. I had the dealer do the same thing to me. I bought my 2006 Honda EX at the end of ’05 and they upped the price because it had mud flaps and a trunk tray. I told them to take it out. They said that they couldn’t. Then I told them that’s not my fault they couldn’t take it out so I should have to pay for it…so I didn’t. I even got them to take an additional $200 off the car because I wanted the windows tinted and the last dealer I was at said they would do it for me as an extra (I ALWAYS ask for window tinting.) They told me no a lot. I walked away, and they ran after me as I was driving off in the parking lot. Happens EVERY time. Basically their asking price was 22k and I still paid 18k for it. I put down 7k, payments were $220 a month, but I paid more and had it paid off in a little over 2 years instead of 3.

Man, this was a long comment. Sorry about that ! 🙂

Shannon November 16, 2011 - 4:18 am

Congrats!! That is such a great feeling. I haven’t’ had a truck payment in a long time and while it I will need a new one soon I just really don’t want the payment that comes with it. What a sigh of relief though. Way to go!


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