How I Went Into Debt Last Week

Aaron — Tue, 24 Jan 2012 10:14:04 +0000

Last week, as I’d mentioned both on Twitter and on my spending recap, my car finally called it quits.

The Nightmare

First, the locks went. Then, the temperature started skyrocketing. There was a clunking noise in the engine. Finally, it died six feet from

my driveway (okay, that part was lucky). After J and I pushed it into the driveway, we popped the hood and looked at what was wrong. J thinks it’s a cracked engine block, but in any case, it’s my dad’s car and he wants to look at it to see if it’s salvageable, so he’s getting it towed to his shop for possible parts.

I knew it was going to happen within the year, but I suppose I wasn’t prepared for it to happen this soon. I thought I would have at least a few more miserable months with that big hunk of steel. But, being a Type A neurotic planner, I, luckily, had been looking at cars with the suspicion that this would happen. This allowed me to act fast, out of necessity.

Since I work 75 minutes (on a really great, clear, light traffic day) away from my internship, plus another half an hour away from school, I require a car. It’s just not possible for me to take public transit. For example, J even had to drive me to work on Wednesday, the day after the car broke down, because the buses didn’t run as early as I’d have to leave in order to get to work on time. He had to take half a day off to chauffeur me around. So, yes, I need a car.

So, I bought a car the following day of finding out that my old car wouldn’t work, and I financed it.

The Dream

In the post above, I listed what I wanted in a car less than a month ago. Here’s what it specifies:

At the time of purchase, it would have to be less than five years old (Check)
It would have less than 60,000K on it (Check)
It would have to be white, black, gray, or another neutral colour for resale value (Check)
Could be standard or manual, I’m neutral (Standard)
Preferably four door (I drive my cars until they die, and four door is easier when kids are on the horizon) (Fail)
Get more than 45 MPG (Fail)
Be a Honda Civic, VW Jetta, or Toyota (Check)
Be less than $10,000 (Fail)

The Specs (Reality)

So, without going into financial specifics just yet, that’s what I’d hoped for in a car at the end of December. I’d say I did pretty good. What I ended up buying is a 2008 Honda Civic, with 42,000 KM on it. It’s black, two door standard which gets about 34 MPG.

I was ignorant to the fact that even few brand new cars get 45 MPG, so I had to “settle”. I realize now that 34 is great fuel economy. I changed my mind on the four door because I didn’t like any of the four doors I was seeing – I really, really loved the two doors for their sportiness. Luckily, my two door is pretty roomy.

The Financials

I know that financing is not a popular thing, and I know why, too. It’s debt. It accrues interest. It’s a useless waste of money.

My dream was to buy the car in cash, but unfortunately I didn’t have enough time to save up before my car broke down. I was stuck financing the majority of that cute little car.

Now, obviously, I’m already making this debt my bitch. I’m going to snowball, defer any found money (which I was originally going to put on my RRSP but, shit happens) to it, and generally work very, very hard to get rid of the debt.

Without further justification, here’s the financials:

Purchase price: $11,500
Documentation service fee: $395
Tax: $1427.40
Total paid down: $800
Total financed: $12,567.90
Interest rate: 4.99%
Balance to be paid back at any time without penalty
Interest only accrues on balance owing, not cumulative balance

So, there you have it. I could have purchased a beater for $1,000, but I can’t fathom having to deal with more car issues within just a few months. With my new car, I won’t really even have to worry about anything for years.

Plus, if I move to a place after I’ve graduated that’s in a more convenient location, I can sell it.

The Plan

..Is coming soon.

Due to my crazy, ridiculous schedule, I have yet to write a post about my plan, but it’s coming.

Also, I’ve named her Yolonda. Like — Yolonda the Honda.

How I Went Into Debt Last Week is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

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How I Went Into Debt Last Week