My “Financial Grownup” Moment

On the podcast I was listening to today, the guest was Bobbi Rebell, author of "How to Be a Financial Grownup: Proven Advice from High Achievers on How to Live Your Dreams and Have Financial Freedom.” In the book, she relates the stories of various business leaders who share the early life financial lessons that helped to mold them. This got me to thinking about my own “financial grown-up” moments.

One of the more dramatic, high-impact ones happened during my “freshman year of life.” A freshly minted electrical engineering grad, I was on my own for the first time, living large (by my standards at the time). Essentially, this meant I had a real job, an apartment with only one roommate, and a sports car (by my standards at the time).

The “sports car” was a brand spanking new 1986 Dodge Charger, shiny black with red pleather interior.  Car aficionados over a certain age may remember that the Dodge Shelby Charger was one of the most popular muscle cars back in the day. Mine, a non-Shelby Charger, was but a knockoff, a front-wheel drive 4-cylinder low-end version probably meant to target 21-year-old girls. Mission accomplished!  But hey, for someone whose previous rig was a 1972 Mercury Comet with holes in the floorboards, this was a pretty sweet upgrade.

I leased the car during spring of my senior year after securing a part-time job with my soon-to-be full-time employer.  For a while, I carpooled with my classmate Dave in his black Pontiac Firebird.  (I’m pretty sure it was the kind with the bird painted on the hood, but I couldn't swear to it.) But eventually, I wanted my own wheels.

For 10 months, it was bliss as this beautiful piece of machinery took me back and forth to work and anywhere else I wanted to go, reliably and in style (by my standards at the time). Life was good.  And then I got The Call.  At 6 AM. While asleep. On vacation in Florida.  “Your car has been stolen.” 

It took me a while to wake up enough to process this piece of information. Essentially, my roommate had come home from a night out to discover the driveway empty except for our tabby Jane, who was supposed to be an indoor cat.  Some scoundrels had broken into the apartment. There wasn’t much worth stealing inside, but I had left the keys to make it easy for them to steal the car, the only real prize.

Unbeknownst to my roommate and me, despite spending four years at the university across the street, we had chosen to live in the Stolen Car Capital Of The World at that time, Somerville, MA. The car was found stripped for parts less than a week later. And here’s where the “financial grown-up” lesson happens: my first property insurance claim.

Property insurance was required in Massachusetts, and I had been dutifully paying my bills, secure in the knowledge that I was “covered” if anything happened to the car.  Insurance company: “ Yes, the car is totaled.  We’ll send a check for its value directly to the lender and you will be responsible for paying off the rest of the loan.” Me: “OK, thanks. Wait, what? Rest of the loan?  I thought I was covered.” Insurance company: “You are, for the market value of the car.” Which went down by 1/3 the minute I drove it off the lot 10 months earlier. I would have to pay the gap between what it was worth and what was still owed. And that’s how I learned the difference between the insurance terms “ actual value” and “replacement value”, an expensive lesson indeed!