I am not quite sure where to start, so I will start with my first brand new car purchase. I was 18 and had a 1988 Dodge K car. It was an old (but nice) granny car. I wanted a "cool" car, so without my father's permission, I went to the Jeep dealership. The salespeople acted like fresh meat had just arrived at their doorstep. I felt like a King! I had never been treated with so much "respect". Needless to say, I left 3 hours later with a brand new 1994 Jeep Wrangler 4x4 for the STICKER price of $11,300 and a $340 car payment. At the time I worked at Pizza Hut as a driver for measly pay. I remember to this day the disappointment in my Dad's voice. He was crushed that I didn't consult him before this purchase.
Fast forward 6 months (yes just 6 months). I was "tired" of manually taking the top off of my Jeep, and wanted something different. I pulled up to a stoplight and saw a brand new convertible where the driver was simply pushing a button and the top was coming down. I wanted one, now! I consulted my Dad, and he said absolutely not. But I was rebellious and knew everything. I went to a Chevy dealer and spotted a red 1993 Pontiac Sunbird with a white convertible top, for the bargain basement price of $10,300. I left 2 hours later with a $14,700 loan, because the dealership "did me a favor" and financed my negative equity.
You might be getting the picture here. I FINALLY learned my lesson when I bought my first house. My credit was shot and I had zero cash. But, by a miracle, I found financing for my house at the god awful rate of 13% on a $82,500 loan. My payments were $936/mo!! It hit me when I would be talking to friends and they would tell me what their payments were. If I had just listened to my Dad and practiced some patience, where would I be now?
I sold my house 2 years later for exactly the same price I paid for it. Luckily, I was a Realtor, so my broker didn't charge me her fees with the exception of the legal paperwork.
I am now married with 2 kids and one more on the way. We have shaped our finances now so that we live strictly on cash. The only loans I have are a 6% real estate loan and my student loans. I budget every paycheck down to the penny, and because of this AWESOME blog, I stumbled onto hsbcdirect.com and am earning 5.05% interest on my life savings (a little over $10k, now).
I abbreviated quite a bit of my story, because simply I didn't want you to fall asleep. Probably the best financial book that I have read is Dave Ramsey's Total Money Makeover. I followed his plan starting a few years ago, and it is now a way of life. While I still have some debt, it's not the worst kind of debt, and my house will pay me back eventually. I don't believe the hype that the housing market is crashing. I believe it is correcting the problems that have occured over the past decade and bringing some of the unjustifiable prices back down to earth. Plus, there hasn't been a better time to buy a house than now and for the next couple of years. It's a buyers market. Buy right and SAVE BIG!