Financial mistakes. We’ve all made them, including yours truly. I want to tell you about one: her name was Shelby. You see, when I was younger, single, and had a little extra money lying around, I did what any guy would have done: went out and bought a nice car.

College Ben worked hard; I had multiple summer jobs and hustled from one to the next. I was actually probably more frugal back in those days and stockpiled almost every dollar I had into my bank account. It was the summer before my junior year of college and from a financial standpoint, things were looking pretty good. I had a couple thousand in the bank and had saved plenty to last me thru the next year at school (I could afford not to work while in school). I had a choice to make, as that money was burning a hole in my pocket, just sitting there in my bank account.  I could have done something smart with it, like invest it away or keep it in savings. But that didn’t seem like very much fun. I then decided that perhaps I should buy a new car…a nice one.

Over the summer, having made the decision to upgrade my ride, I then agonized over the decision of which car to buy. American muscle finally won out, and I decided that I wanted a Ford Mustang GT. Whew, what a beauty. Of course, despite being on the whole a ‘foolish decision’ to purchase said car, I did my homework on it. I researched and found that the Mustang would be the best bang for my buck, aka the most horsepower for the dollar. I then spent a month or two looking around for my dream car. Towards the end of summer, I’d finally found the car of my dreams. A charcoal grey 2002 Ford Mustang GT. The then owner had spared no expense and had actually dropped “$9,000” into the car himself. It had everything: speakers, a DVD player, new foot pedals and a shifter, custom exhaust work and lots of engine modifications to make it go vroom-vroom. The sum for said dream car? Conveniently right outside of the $10,000 budget I’d set for myself: $12,000. I had to have it though, for I was smitten. I told myself I’d work a little harder for the rest of the summer.

Phew, talk about making an entrance when I got back to school. I was suddenly that guy. Life was good. Girls wanted to ride with me and guys wanted to be me (or at least that’s how it played out in my head). I loved driving it and got excited every time I got in the car. I got butterflies each time I turned the key in the ignition. As with most dreams, reality quickly set in.

I’d always heard that 22-year-old males already faced higher insurance premiums for car insurance. For some reason I figured that for a 22-year-old male with a prior accident and a super sporty car, insurance wouldn’t be all that bad. Actually, it was. My insurance rate was $1,800 per year on that car. I could have just gotten regular liability insurance on it, but since the car cost me so much, I knew I had to pay extra for the full coverage. The V8 4.6L engine was no gas sipper either, and with all the modifications, it took premium gasoline. I started dreading seeing that gas needle go down in the car. Finally, it also took an emotional toll on me as well. I would spend an hour or so each week washing her, caring for her and worrying about her. I’d frequently go check on her when I left her parked there at school.

That car was my baby, but from what I hear about real children, they get expensive! Not only did the $12,000 car account for probably 80% of my total financial net worth, but its maintenance and upkeep took up a fair amount of my monthly budget!  I ended up keeping that car for about 2 years or so. Selling it was a whole other story; it took me months to find the right buyer, willing to pay the fair price I was looking for. Somehow, I managed to sell it for $9,000, and only lost $3,000 of my initial investment. Ironically, the kid I sold it to reminded me of myself, just a couple years younger. I then went out and bought a much cheaper car, one with (slightly) better gas mileage and one that I would not worry about all the time.

Looking back, a lot of people might tell me that was a pretty big financial mistake. I foolishly dropped way too much money into an expensive car that ate up too much money both in the initial purchase and in the upkeep. The wreck and speeding ticket that I got in it certainly didn’t help either!

Do I consider it a mistake? Probably, I was young and foolish and I know now that I probably shouldn’t have spread myself so thin in terms of locking all my money up.  Had I not bought it could I have had $3,000+ more in the bank right now? Probably. I certainly learned more about managing my money and learned to not tie up 80% of my net worth in a car. I always joke and say that car got me my current wife, as she noticed my car, thought it was ‘pretty cool,’ and then started hanging out with me. Can you really put a price on true love?

We’ve all made financial mistakes – or in this case maybe not a mistake but perhaps just not the best decision. I’m still here today and am in good financial shape, so I guess it worked out okay in the long run! The important thing after making a bad financial decision is to quickly take the steps to make it right, learn from them and move on!

What about you? Any financial mistakes that you’ve made? Feel free to comment here or tell me about it on Facebook/Twitter!

*If the pictures didn’t do the car justice, perhaps you’ll appreciate the car a little more after watching the following YouTube video of my first time at a drag strip racing the car. You’ll notice I actually lost that race!

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