Details of our debt
Hope those of you living in the US had a great holiday weekend. It is always nice to take a break and relax.
Let me first make a correction in my previous post. I stated that it has been two years since my wife and I used a credit card. Actually it has been three years. In three years we have been using a debit card. A common myth recently has been that debit cards are less secure than credit cards. The truth is that they are very much safe to use.
So how did I get into debt? Well, like most people do. First, I made the mistake of leasing my car. Once the lease was over after 39 months I ended up buying the car with financing. The purchase price of my car when I leased was around $16,500. Once my car is finally paid off I will have put nearly $24,000 into it.
This is stupid tax. I paid more money by financing than I could have if I used cash. “But I will always have a car payment.” If you think like this then you will always be broke.
I also made a huge mistake of not working while going to college. This is fine if you have grant money or scholarships. I had neither, so I took out loans. I even took out private loans through a bank because I wanted more money. This was a huge mistake that would hurt me later in life.
The most recent loan has been the purchase of a brand new Honda for my wife in March 2005. We have both learned from this expensive decision. Never again will we buy a new car. Our next car will be 1-2 years old. We cannot afford to lose thousands of dollars on the depreciation costs.
We also financed our furniture, laser eye surgery and other items that have since been paid off. We drifted into debt. How much debt. We calculated that in May 2005 our debt was nearly $104,000. In May 2006 our debt was nearly $93,000.
We have already paid off $10,000, but as you can see we still have a long way to go.
