I’ve Paid For This Twice Already…

Know the facts before you decide

No Credit Needed is really getting into a groove now of advice I can completely relate to in the 33 Days and 33 Ways to Reduce Debt and Increase Savings series. Day 10 was about selling your stuff (which I’ve been talking about and doing for months) and Day 12 is Be Sure, which basically is know what you are doing and be certain of the decisions you make before you make them…. and I could not agree more!

In the past I have made several shaky if not downright stupid financial decisions. There were the student loans I took out without a second thought and then consolidated once I started repaying them without once considering the interest rate or length of payment plan, just the “how much do I have to pay a month” number. I am now ashamed to admit that the first two years, I was paying interest only on my loans. Not really because I thought it was a good idea… the fact is, I gave it ZERO thought. That was the plan I was offered when consolidating and I simply agreed without a second thought.

Then there was the banking on future income to pay for the present. Our “not so big not crazy expensive but still above our means wedding” was paid about half in cash and half on our credit card. My spouse had a good job with a more than decent income and we banked on using a good portion of that over the next little while to repay all of those expenses. Until the company he was working for basically folded and he was laid off and unemployment paid only a fraction of his previous salary. We went from having this plan to pay things off pretty quickly, to simply treading water and adding daily to that debt. Re-employment for him took a relocation and a pay cut as well as me giving up my job, and it took more than a while to get back on our feet. Banking on the future to pay for the present has left us in a position where we are still paying for the past today (although the wedding part is finally done, it is the unemployment part that is still being paid for). Instead we should have been saving in the present to pay for the future so we would have been prepared for the unexpected. Hard expensive lessons to learn.

I will say though, that as time has progressed we have become better stewards of our money and have begun to seriously think through financial decisions before we make them. When we bought our car we researched prices online to determine what was a good value, stuck to our guns about not buying on the spot, and negotiated for a better interest rate as well as resisted the myriad of upsells the dealership tried to add on to the car. Yes, we did finance it (we weren’t in a position to pay for it in cash and our then-current 11 year old car needed way more repairs than it was worth and was a time bomb waiting to happen) but we did it in a considered and thoughtful way for the position we were in at the time. And then when we bought our house we knew what our income could afford and we stuck to that, even when the mortgage co offered us loans for up to 30% more than our firm high number. We may have ended up buying a little more house than we need, but not more than we can comfortably pay for because we stayed under our firm high number. I’m not claiming we are perfect, but we are definitely improving.

I have talked a lot in the past about how knowledge is power, and I truly believe that. Knowledge is power. The more you know before you make a final decision, the better. Don’t make financial decisions on impulse or without carefully considering all of your options and needs and constraints and how those interact. You’ll be in a healthier financial position for it, and a lot happier in the long run as well.

~J

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