My “Financial Grownup” Moment: The Aftermath

In my previous blog post, I described how I learned the difference between the insurance terms “replacement cost” and “actual value”… the hard way. Not to mention the expensive way: through first-hand experience, that often unwelcome catalyst of growth. And grow I did. I became, if not entirely a financial grownup, a different person around money.

For sure, this misfortune landed hard on the impressionable 22-year-old I was at the time, and with good reason.  I ended up having to come up with a down payment on a new car, and make payments on that car and the old one for an entire year. Talk about punishing the victim!  That news would have been tough even for a grownup to swallow, much less the financial neophyte I was at the time. The injustice of it struck me to the marrow and I wanted to do everything in my power to avoid being subjected to it ever again.

Of course, the perp who stole the vehicle was never identified, so I couldn’t take my anger out on the person who actually deserved it.  Instead, I would make up for the loss a different way. I vowed never to buy or lease a new car again for the rest of my life. I would buy used and drive it until the wheels fell off.  Let somebody else absorb the depreciation that comes with driving it off the lot. Let somebody else pay the sky-high insurance bill that comes with new car ownership. Now that I understood how car values worked, I was not going to allow myself to be taken for a ride again.

Never, eh? As Prince once put it, “It means forever and that's a mighty long time.” Although I was not typically a drama queen, this was not the first such a eternal vow I had ever taken. At age 8, I got a haircut that I deemed so hideous, I vowed never to cut my hair again. This vigilant stand lasted 8 years, a really long time but definitely not forever.

The haircut that launched the other big vow.  By no means the most hideous at the table (it was the 70's, after all), but enough to merit a new strategy.

The haircut that launched the other big vow.  By no means the most hideous at the table (it was the 70's, after all), but enough to merit a new strategy.

On the other hand, my “no new cars” pledge stands to this day. Truth be told, it has served me well.  Perhaps I have paid more in car maintenance than if I bought new, but I’ve always made it a point to drive known-reliable vehicles that go the distance without a lot of repair bills.  Having a small or zero car payment and lower insurance costs all that time meant that a lot more cash flow was freed up for saving and investment.

Not only that, it gave me insight later on when I became a financial planner and clients with big car payments would tell me “I will never have a enough money to retire.” Hmmmm, could it be that your retirement is parked in the driveway??  So while it's difficult to quantify and almost comically ironic, I am convinced that having my car stolen as a 20-something was one of the most gainful things ever to happen to me. Lucky me!