Published November 18, 2015|6 min read
Last month I celebrated my 32nd birthday. I am thankful for growth – I’m making way better decisions now than I was just a few years ago. I made some big financial mistakes in my twenties, and I want to share four of them with you because I don’t want any of you to be in any of these predicaments.I didn’t pay attention to certain things as much as I should have. I hope that you learn from my mistakes. Unfortunately, I’m still paying for some of them.
I purchased my first car in 2007 at the age of 23. It was a used 2000 Chevy Malibu. At the time I needed a car badly. I found the Malibu at one of the used car lots in Savannah, GA, where I was living at the time. The car only cost $6000. I put $1800 as a down payment. I was ecstatic to have my first car. Little did I know I would be in for a surprise just a week later.I decided to drive the car to Atlanta the following week to show my family. About an hour into the trip the car shut down on the interstate. One minute I was cruising at 65 miles per hour, the next moment I was pulling over to the shoulder. I had no idea what was going on.
After a few minutes I started the car up and it worked for about 30 minutes until it shut down again. I eventually realized that the car would drive, but only if the I drove it less than 50 miles per hour. A trip that usually takes three hours ended up taking six. The next morning I took the car to my aunt’s mechanic shop. They ran a diagnostic and found out I needed a new fuel pump. The parts and the labor would cost nearly $500. I felt sick. I purchased the car "As Is" – without a warranty.I only had the car for a week so I figured I would call the dealership and see if they would reimburse me. I was lucky. They weren’t obligated to pay me anything, but I received a check covering the parts and the repairs within a week. I dodged a bullet.I learned a very valuable lesson during that ordeal: always have a mechanic look at a used car before you buy it.
The second financial mistake that I made was that I didn’t pay attention to my student loans. I took out federal and private loans while I was in college. I didn’t take out the maximum, but I did take out more than I needed. I figured I would get a job with a nice salary immediately after I graduated from college. It didn’t quite work out like that.I graduated in 2008. You know, the beginning of the last recession? I didn’t get a full time job until 2009. I didn’t actually take my loans seriously until 2013. In between graduation and taking my loans seriously, my loans had been deferred for a while, and over the years I had made enough small payments to keep them from going into collections. Of course, that wasn’t enough: the balances of both my private and federal loans were higher than ever.
When I finally started taking my loans seriously, my private loan balance is a little over $25,000. I only took out $14,000 worth of private loans. Quick math: that’s $11,000 more than the amount was when I graduated.If I could go back in time I would have made more payments and devised some kind of plan to eliminate them. For now, I’m stuck paying off interest fees.
I went out to bars and clubs way too much in my twenties. My accounts showed it. I didn’t save nearly enough money. I lived for the moment instead. I did attempt to save, but my savings would disappear every few months because I wanted it right then and there.In October 2009, I was at a very low place financially. It was a year after I graduated from college. I had a job, but I wasn’t making much money. I didn’t have any savings or insurance. I was struggling to pay bills and to make things worse my roommate was thinking about raising the rent. I realized that I needed to make a change and it needed to happen soon. I would be starting a new job the next week so I figured it would be easy to save more money.The new job allowed me to save a little more. I haven’t hit rock bottom since, but my savings is not even close to where I want it to be. I currently have a small amount coming out of my check each month that goes to an online savings account. In due time, I know that I will be able to save much more.
There were numerous times where I would splurge at restaurants or buy multiple rounds of shots at the bars for my friends and I. But I couldn’t pay for this with cash or my bank account – I was using a credit card instead.One day, I decided to look at my credit card statement. I was $4000 in the hole. This happened in 2012. I attempted to try and pay off the credit card, but I couldn’t do it. I didn’t have enough discipline to continuously pay it off. One minute the credit card balance would be going down. The next minute I would be racking up more charges. Also, since I didn’t have any savings, I would use the card if I had an emergency with my car or if I needed gas.There is an upside: I finally was able to get a full-time salaried position last year. I’m making more money than I ever had before. I’ve been able to get that credit card balance to the lowest it’s been since 2007. I plan to have it paid off by January 2017. I am currently using the debt snowball method to pay off my debt. So far, it’s working great. I will continue to making money via side hustling to make that happen. I also haven’t charged anything all year. I’ve been able to accomplish this by making sure that I have spending money on me if I’m going out. Also, I leave my credit cards at home.
I don’t have an exact figure but I will say that those mistakes cost me about $20,000 in late fees, interest fees, and other fees. They say you learn from your mistakes. They were not lying. If you are still in your twenties pay close attention to every financial decision that you make. Being in a lot of debt in your early thirties isn’t fun. Use my mistakes as a lesson and get your finances in order.
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