Why I Shouldn’t Have Bought a Car

We all make mistakes. So why are money mistakes some of the hardest to admit to? Most people will readily admit poor relationship choices or clutsy incidents such as falling down the stairs (or in my case falling into Portage Avenue* for absolutely no reason). But are you hesitant to disclose your financial screw-ups? We often are. In my experience we seem to hold ourselves to a higher standard where money is concerned. It’s like we’re supposed to have some innate money management knowledge, and are embarrassed to admit that we don’t.

So today I will tell you about what is probably my biggest money mistake. This happened ten years ago and it still really embarrasses me.

In 2005 I bought a car. Not a big deal, you might say. The problem was that I bought a car that I didn’t need, didn’t really want, and spent way too much money to do so.

Why did I decide to buy a car?

Because there were occasional times that I wanted to stay out late, was (stupidly) uncomfortable taking cabs, and was feeling guilty about sometimes getting rides with people. It was a purely emotional decision. My combined feelings of anxiety (about riding in taxis and spending the money to do so) and discomfort (about liking when people would give me rides but feeling bad about accepting them) resulted in the poor decision to buy my own car.

Did I need the car for other things? Yes, I could have used the car to get to work. But for a lot of my jobs I either worked downtown and busing made more sense, or I walked. (Even after I bought the car I still took the bus all winter as it was safer and easier than driving.) And for grocery shopping I didn’t need that much for just myself, got some food delivered, and occasionally took a cab from the grocery store when I had to. I barely needed a car. But I didn’t think this through at the time.

Car shopping done completely wrong

I decided that I wanted to buy an Asian hatchback-style car, similar to what I’d previously owned (and sold because I couldn’t afford the repairs). I liked the ability to potentially carry larger items in the car. (I still ended up having to rent a truck to bring home things from the hardware store.) And the hatchback models were changing. The newer ones seemed to have tiny trunks so the hatch part was really just the back seats. I refused to consider that type.

The result of all this was that I stubbornly narrowed my options down to very few possibilities. I was prepared to pay whatever it cost to get “exactly what I wanted”. So dumb.

I also jumped into the purchase quickly. Once I make a decision I like to act on it immediately. (I’m still like this, but my thorough analysis techniques have improved.) I wanted to buy the car now. So when I found the type of car that I wanted at only one dealer I jumped at that “opportunity” and didn’t shop around at all.

Yes, I didn’t take my time, I didn’t shop around, and I purchased a used car from a dealer. In Manitoba there is tax on used cars from a dealer, which I didn’t know ahead of time. That added to the price significantly. And I remember saying yes to some of those “options” that they harass you about since I didn’t know any better. Did I mention I didn’t know anything about cars or buying cars? I still don’t.

I got approved for a car loan – I think it was for 5 years at about 4.5%. I can’t remember exactly. What I do remember is that my car payments were the same amount as my mortgage payments, which should tell you something. My car cost half of what my house cost.**  I think it was around $14,000. Or about half a year’s gross salary at the time.

Of course then there’s the insurance, maintenance, and gas costs. But I’ll ignore that part for now.

Let’s do some car math

If an average cab ride cost $20, for $14,000 I could have paid for 700 cab rides. I ended up owning that car for seven years, so that works out to 100 cab rides per year, or almost 2 a week. (!) This is actually the first time I’ve done that math so I’ve shocked myself.

The amount of times that I actually wanted a car was about once a month. I’ll be generous with myself and say 20 cab rides a year. So 20 a year, at $20 each, times 7 years = $2,800.

$14,000 – $2,800 = $11,200 wasted

In case it isn’t abundantly clear by now this mistake cost me thousands of dollars, plus a lot of unnecessary stress such as when:

  • my car got stuck in the back lane after a heavy snow fall and I needed help to push it out of the way
  • it was broken into twice and I had to deal with insurance claims
  • I skidded on some ice and spun over the median twice, luckily not injuring myself or anyone else

What have I learned from this experience?

Probably not enough. But I am currently living happily car-free. In a future post I’ll discuss all my more affordable transportation options.

In hindsight this is how I messed up:

  • making financial decisions based on emotions, not logic
  • not doing the math about a large purchase
  • being stubborn and not thoroughly researching all my options
  • not thinking about other ways I could meet my needs for less money

Can we all learn?

Do you have a similar story? I suspect you might. These wrong decisions are very common. As long as you learn from it and try to do better in the future that’s really all you can hope for. And don’t be afraid to share these stories with the younger generation. Not learning about money choices when I was young didn’t make my life any easier.

* One of the busiest streets in Winnipeg. This is why you should never cross against the light. You never know when you will literally fall in front of a bus.

** In 2003 I bought a small, really rundown 100 year-old house for $26,500. I did next to nothing as far as upgrades and sold it in 2007 for $39,000.