This post is in response to a contest being run over at DebtKid. He wants you to share your dumbest purchase for a chance to win his dumbest purchase, a Nintendo DS Lite. Be sure to leave a comment on his blog for 1 entry. If you have a personal finance blog and write a post about your dumbest purchase, you get 25 entries. You will have until March 18th to share your story.
My dumbest purchase is one that unfortunately, probably a lot of us have made. I bought a new car with no money down and rolled in negative equity.
I went through a period of wanting a new car every two years. When I went to purchase my new car, my credit was good enough that I did not need a down payment. I was smart enough to do my research on a fair price for the car but I was dumb enough to finance the full purchase price of the car and negative equity from my old car. Not only did I start off with negative equity when I drove my 100% financed new car off the lot, I also had the balance from my previous car loan rolled in making me even more upside down.
My last new car purchase, about 2 years ago, I paid about $26,000 for the car and rolled in about $4,000 in negative equity. My payment on my new car went up to about $120 more than my previous payment. Six months after the purchase, the value of my big SUV had dropped like a rock due to the high gas prices and I’d only managed to reduce the loan balance by about $800.
I’ve since paid the loan down by about $7,000 to date and I plan to pay off the car in full before the end of this year. If I pay off the loan by the end of this year, I will have financed the car for about 30 months instead of the original 72 month loan.
Bad Decisions from the M-Network:
The Dumbest Purchase We Ever Made @ beingfrugal.net
What Was Your Dumbest Purchase Ever @ CashMoneyLife
Dumbest Purchase Ever @ Gather Little by Little
My Dumbest Purchase Ever - It's a Mindset @ PaidTwice
My Dumbest Purchase Ever and Lessons Learned @ Moolanomy
Possibly My Wisest Purchase Ever @ Mrs Micah
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I did the EXACT same thing you did and it stands to be the dumbest thing I've ever done. I did it when I was 22, I'm 29 now.
The plus side to that is you do get to have the joy of driving a nice new car! What about the purchase of a rental property that you are upside down on and has a negative cash flow?