My Dear reader,
Here is a confession of mine: About a month ago I finally made a huge decision to sell my beautiful 2013 3 series BWM and replace it with a cute little Prius – used – bought for cash. I don’t think I have to go into details on how much a relief that was and how truly happy I am right now after it is all done. But I do want to give you a little bit of a background story and a few points on why this decision has been made.
It was a dream of mine for a while to drive a BMW. I had a nice beautiful picture displayed on my vision board of a red Beemer. Well, we all know that visualization technics work and after a careful consideration, lots of doubts, insecurities and excitement, I was at the dealership signing papers. I knew exactly what I wanted in the car, I knew exactly how much money I want to pay monthly for it and what interest rate I will agree on. Well, I am a smart individual who have been working in a banking industry for about 10 years now so I know how to budget, how much financing costs and what this strange thing called debt. But, we were young, newly married, stable jobs, perfect credit score, no extra obligations – so I thought, why not. Well it worked for a couple years and I was happy. But I always had a thought in my mind that that thing – gorgeous sexy BMW – is just not quite me. It is too much. I am not flashy, I am actually pretty reserved and I am not that kind of person who will be running around the streets showing off my shiny little car to everybody and hoping to get the Looks. Nope, I surely did not need this. In fact, when people would ask me about it, I felt slightly uncomfortable and made sure to tell them that it is not brand new – it was in fact 2013. Now realizing it, I was trying to make myself feel better about this flashy fancy purchase of mine that didn’t even belong to me – it used to belong to the BMW Financial.
So, just a couple months ago, my husband and I started talking about budgets and how much we would like to get out of debt. We started reading and following Dave Ramsey, doing a close look at our budgets, seeing what fits us and what doesn’t. Well, my only debt besides the house was that flashy car that I didn’t care much about. I still absolutely loved her so it was a hard decision but it was made: I decided to get rid of it. I decided to get rid of that $500 monthly payment that I didn’t want to have because guess what: yes I could afford it but it was so tight on my budget that I didn’t have any room for “play money”. We also have a son now and we want him to go to Toddler camps and sports, and we we want to travel and explore the world and do all other things that this life has been created for us. So this $500 payment was absolutely on my way. We also, started shifting our lifestyle to more simplier, earth-friendly lifestyle and a cute little Prius fit this description better than any other car in the world.
So when we found a buyer and the paperwork was done, my husband and I, relieved and happy, were driving home jokingly saying “here, now You enjoy my $500 monthly payment – I will be enjoying life”.
A couple months later I cannot be happier.
So to conclude this long blog post, a few general thoughts: Most of people are struggling financially, almost all are living above their means. They spend more than they earn, and their debt is overwhelming them. A great book I read called 16 habits of Rich people says: “Spendno more than 5 percent on auto loans and never lease. These folks keep their cars until the wheels fall off.” And that’s what we will do. And if we would live in the city where no car is needed and a public transportation can get you around, I would happily get rid of it. But in AK, you have to have a car. But guess what, it is a thing that gets you from point A to point B ; it has to work good and look good but it surely doesn’t have to be flashy. When in the future I will be making really good money and will be able to buy a $40K car for cash – sure maybe I will get myself a BMW. Or maybe at that stage, I so will not care about it and I will get a nice “flashy” Prius. Or maybe we will move to Maui and nobody would give a thing on what you are driving. Nobody knows what future holds. But I know one thing for sure: Credit Score is a Debt Score. Your credit cards are you debt cards. If you have to take out a car loan, you cannot afford that card. And why did we ever decide to agree with our society to live in debt? Well this topic is to be continued…