Post of the Day
March 16, 2000

Board Name:
Living Below Your Means

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Subject:  Old Betsy Changed My Life
Author:  Tooner

In 1977 I bought a 1976 Vega with 9000 miles on it. In 1981 I graduated from a technical school, got a new job and moved to Texas. The day after I moved there the car broke down. Turned out not to be serious, but I decided to start saving for a new car; after all, the Vega was 5 years old.

In 1984 I still had the car and $14,000 saved up, but things had changed. I used the money to go back to college. In 1985 I was granted entry into a program with my employer where I worked part time and went to school part time, but I was paid full time. It was a 72 mile commute one-way, so I bought a new S-10 Pick-up in 1985, thinking the car wouldn't last. I was living on campus so room and board were already paid for, and that allowed me to put all my money towards car payments, so I was able to pay off the truck within a year. But the old Vega still ran fine, and I ran up all the commute miles on it and thus, saving the truck. 1986 found me taking a leave-of-absense from my job, meaning I no longer received a paycheck.

I lost my job in 1987 due to massive lay-offs. However, I graduated in 1988. I was broke, unemployed, but I had a COLLEGE DEGREE and NO DEBT. At the time my situation looked bleak, jobs were harder to find then, but I didn't realize then how rich I was.

In 1990 I moved to another state. The Vega was STILL running just like new, but it was a rusted hulk and banged up, and it needed a new clutch. Instead of moving the car, I gave it to a friend who had trouble making ends meet. He drove the car for a year (with the bad clutch!) and then HE gave it away to another friend.

It's now 2000, and I'm still driving the same truck. Now that I have the benefit of hindsight, I am amazed at how a car changed my whole life. I never would have gone to college if I hadn't started saving for a new car I mistakenly thought I needed. The truck has been equally reliable, and all the money I've been able to divert into IRA's and 401(k)'s is starting to add up. I MEAN ADD UP.

I learned a valuable lesson through sheer blind luck of how saving money and making do with what you have can really change your life. You have so many more options when you have the cash without the debt.

It makes me cringe every time I see a 20-something just out of college "treat" themselves to new car, especially when they already have a reliable, but older, vehicle. That money, if applied toward a new home or a retirement fund, is so POWERFUL, especially when the person is young and has time for an investment to grow. All they're doing is enslaving themselves to the banks and credit cards, and the time they could have had for saving is lost, forever.

I have to say it again: Having cash without debt is a powerful way to control what you can do with your life. This doesn't mean run your car into the ground or live in a studio apartment and eat cold beans, but the concept is true for whatever you spend money on.

I am saving for a new car, the truck won't last forever, but I'm in no hurry to buy. It still runs just fine and every month that a car "payment" goes into MY pocket, I know it will change my life for the next 20 years and impact how and when I can retire.

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