26 May 2009

Debt = The Devil

I just recently sent in a small success story to a financial blog that I read almost daily. So, I thought I'd share my story with ya'll.

First off, I don't come from a family that has much and I certainly don't come from a family (or know many friends) that take finance and investments seriously. I didn't have the wisdom passed down to me. So, I can mainly thank getrichslowly.org for the valuable knowledge that I have today.

Ok, sorry I had to mention all that, but let's get to the point. Prior to September of last year (2007), for a few months I was non-mortgage debt free. I'm a single 31 year old with 2 cars and a house. My furniture is mainly used, but in good shape. Actually, to be honest, the couch and love seat are a little too 'floral' for me, but they were a gift. I'm not looking to update the furniture much b/c I'm sure, when I get married, the wife will have her way with the place anyway. ~:-D I'm also a big car nut. I specifically like imports and I like turning every day grocery getters into aggressive mean-machines. However, this car hobby of mine is probably the most expensive hobby I can think of!! I'm still working on balancing my car itch and saving at the same time.

Anyway, my little brother was in need of a good car. I had an older 94 Honda Accord that I got a great deal on. I kept it for a couple of years and took good care of it. This is what I called my "beater"; something you just putt around town in and a car you don't care about getting beat up. It saves gas money too! One day I decided I was going to give my beater to my brother. He had a car that he had a few accidents in, but it still ran well. It barely had headlights though (they pointed all kinds of directions and one headlight was just a bulb with plastic duct taped around it). A friend (Steven) and I beat the hood back in place and strapped bungee cords down to keep it from flying up. Poor bro! Haha!

Needless to say, my bro was overwhelmingly surprised when I handed the keys over to him. He, then, handed his only car over to me. I already decided that I was going to give his car away to someone who really needed a vehicle. I never met the guy that I gave the car to, but my buddy keeps me updated on how he's doing. As the story continues, the guy I gave the car to moved to ..:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Huntsville town and found a good job since he finally had reliable transportation. The truck that he was driving kept breaking down and he couldn't afford to fix it. Later, he was able to give someone else the truck. The person who received the truck had the means to fix it so he could provide his kid with a vehicle. And, the story goes on and on.

Shortly before I was able to hand the keys for my beater over to my bro, I found a great deal on a well pampered 2000 BMW 5-series. After looking at the sticker price, I said to myself, "I think I could afford that!" I checked on insurance costs, which were surprisingly low, and proceeded to pursue a loan through my local credit union. I completed a simple online application and was approved of the loan on the same day. Everything just seemed to fall into place. I actually prayed that if God wanted me to have this car, everything would work out smoothly…and, it did. My loan interest rate was set for 6.4% and the duration was approved for 60 months. Seeing how my payments were only $216 a month, I had no intention of paying the car off in the very short time I did. Originally, I was planning on paying the car off in 2 years. After finally signing the papers on the loan, I was just beginning to read about finance how important it is to pay off debt. The more I researched, the more I hated my new debt.

I now have a new philosophy on debt. It can be summed up best as: Debt = The Devil! I decided to kick it in gear and pay off my debt faster than the original 2 years time I was planning. I've been working full time as a programmer for a non-profit organization. Since I had a lot of free time on my hands after work (and no girlfriend) I decided to look for another part time job. Therefore, I started working in construction in the evening. I don't know much about construction, but all I cared about was learning something new I could use later and doing something completely opposite from sitting at a desk and staring at a screen all day. It ended up being a good mix for me. Later, construction became slow and I took on a second part time job (3 jobs total) at a local gym. Since then, I've been able to dedicate a lot of my extra money towards paying off my new used car debt. Let's not forget that I also have 2 roommates that are helping me pay for my monthly mortgage bill every month.

So, with all the extra money from part time jobs and extra income from my faithful roommates, I've just recently paid off my car loan. I started paying on the loan in November of 2007. It's now May 2008 and in 6 months time I've completely paid off my $12,500 loan!! I've never felt more accomplished and so excited about reaching my goal! This is actually one of the few times I feel like I've made a smart decision with my finances! AND, at the same time, I've helped others get off their feet when it comes improving their quality of life. God has truly blessed me!

I've already completed saving for my emergency fund (plus some). Now, my next goal is to eventually max out my company's 401k. And, I've just met with my 401k rep. to talk about what the best fit is for me. I'm also going to research how to invest in other areas. I hear index funds are the way to go. We'll see what works best.

Leave a comment and let me know what you think...

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