Ladies, I am not one of those people who dishes out advice on female finance but also says things like ‘I’ve never had a credit card!’ (yay me!).
Or ‘I paid off my home loan by the time I turned 28!’ (yay me again!).
I have made every single financial mistake in the book. Some of them I have made more than once. As my mother likes to say, I do learn from my mistakes, but sometimes it takes more than one lesson.
I have had many, many credit cards. And I maxed out EVERY SINGLE ONE.
I haven’t paid off my home loan.
And – my favourite financial lesson – when I was 26 I decided to go out and buy myself a sports car.
Like all bad financial decisions, it was a spur-of-the-moment, impulse, ‘I deserve this’ purchase.
I had graduated from Uni and was finally working in an adult-job with an adult-wage. I had minimal savings but managed to go and get a car loan from the bank for an Audi TT. It was the cutest car ever, it even had personalised ‘TT’ number plates.
In fact, it was so adorable that after taking it for a test drive, I offered to buy it immediately. I didn’t organise a road worthy test.
I didn’t have my dad look at it (I knew he would tell me not to buy it).
I didn’t do any due diligence at all.
When the car got signed over into my name, I was so excited. I felt like I had made it.
I can remember driving around, listening to Just Dance by Lady Gaga on loud and thinking I was the hottest thing in town.
But then the repayments started. I can’t remember exactly how much they were, but I didn’t negotiate my rate or shop around. I just went to the bank I had always been with and asked for a car loan.
This was at the beginning of 2008, so we’ll say 15% but they were probably higher. Over a five year term, that is $274 per fortnight. At that time, I was on about $50,000 gross (before tax) per year or $1,500 net (after tax) per fortnight.
I was spending nearly 20% of my net wage on this car!
Just in case you don’t think this sounds like a lot, you shouldn’t be spending more than 10% of your gross pay (before tax) on vehicle expenses – and that’s everything. Car loan repayments, insurance and registration.