Thursday, July 6, 2017

How Not to Spend 15 Thousand Dollars.

Q.  When is the right time to start saving?

A.  Think back to the first time you held a dollar in your hand....at least a couple years before that.

When beginning the road to Financial Independence, one will always make mistakes along the way. It's not that difficult to remember the biggest financial mistake you made that has impacted your life. For some of us, it's that student loan that now has to be repaid, for others perhaps it was an investment that's now gone south, for me it was my first car.

I started working odd jobs, mostly mowing lawns, at about twelve to thirteen years old. Even at a young age, I knew the value of working hard and saving my money. However, I also enjoyed spending it.

In high school, I moved with my family to Northen Virginia. While finishing up school I worked full time for a landscaping company that my brother owned, as well as a couple of other jobs along the way.

When I was 17, shortly after getting my drivers license, I bought my first car. It was a 2005 Volvo s40 Turbo sedan with about 120,000 miles on it. I actually ended up talking the previous owners into selling it for a pretty good price.

Later, I quickly discovered that parts for this car were not cheap. Replacing an engine was especially not a walk in the park. Through a combination of a malfunctioning part and a poor choice, I ended up spending $5k+ on replacing the car's engine.

I had now put $11k of my own money into that car. At 17, that was a big deal to me. Actually, that's still a huge deal to me. Until I finally got rid of that car a couple years later, I ended up dropping a few more grand on repairs and maintenance. My first car ended up costing me north of $15,000.
Lesson Learned: Never ever buy a car again. 

No, but really, If I could go back I would buy something cheaper and more reliable. Like a Honda Civic or a Toyota Corolla. Anything would have been better than buying that car.
If I would have taken that same $15k and invested it in Vanguard. At 8% interest compounded annually, it would have grown into more than $22,000 today.

However, I have learned that there is not much value in dwelling on the past. Rather, learning from the mistakes that we have made and changing the way that we act and make decisions moving forward. Thinking about that mistake today, only inspires me to make towards FI and being responsible with my finances.

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