My Financial Recovery

My Biggest Financial Mistake – Student Loan Default

Posted on: April 7, 2009 by Matt 5 Comments

Last Student Loan

Originally uploaded by here_for_now

I was reading a post by Frugal Dad this morning that asks what your biggest financial mistake was.  I started to think about it and my list is fairly long as I have made a lot of mistakes.  A quick search through the old memory banks and I can easily think of a few highlights:

• Squandering my inheritance from my mother’s estate.  I was in college and what is a poor college kid to do with $11,000 but buy beer and other stuff they do not need?  I excused the spending by saying the money reminded me of my lost mother and that I needed to spend it before financial aid for next year.  In retrospect – I was 18 years old and probably should not have been given the money.  I had no clue on how to even manage small amounts of money – bad choices were made.
• My first car: It worked for me and the price was right but the car was in pretty poor shape.  It was the last purchase I made with the money from my mother’s estate.  I do still think fondly of that old heap though.
• My most recent car: I am still paying for a SUV that I financed through a now ex-girlfriend. She is nice enough to allow me to continue paying her and not find other financing so I can not complain too much but I do look forward to August when I will send in the last that I owe her.

The list goes on and on.  However – I think my biggest mistake so far has to be allowing my student loans to default. Not just one or two of them but ALL OF THEM. There really was no need to get into a situation where my loans were defaulted.  I could have called and arranged deferments when I was having trouble getting up and running while first out of college but I did not.

The primary reason I did not call my creditors and make arrangements: I was afraid. My grace period had just ended and I managed to miss my first payments to all my creditors.  I then stopped getting the mail, opening the mail and even looking at my billing statements.  I was afraid that since I could not pay I was going to be in some sort of big trouble and that people were going to yell at me or something.  I really had no idea.  In hindsight I know it seems silly and that I have certainly taken the more painful of the possible routes.

Making the mistake of ignoring student loans has lead me to my current situation with a large amount of student loans in collections (roughly $20,000 for one creditor) so I am still paying for my mistake.  In addition I had 3 other sets of loans go into default as well.  However – these other 3 sets of loans were federally backed (not private like the ones in collections) and had rehabilitation programs available.  So currently the other student loans that I have are now in good standing or paid off – amazing what happens when you do not ignore your problems.

Naturally – if I could go back in time and start over again I would have called all of my creditors and been up front and honest with them.  Things probably would have worked out much better.  I was young and immature and made poor choices that I now get to clean up the mess from.  However – if you are out there and just starting out or are now finding yourself in a similar situation due to the rough economy: Please learn your lesson from my mistakes – call your creditors and make arrangements.  It may save you a lot of headaches in the long run.

Turn Off Your Car While Driving?

Posted on: September 29, 2008 by Matt 3 Comments

Car Accident 06

Originally uploaded by jonjon_01

MSN has an article up this morning titled: 8 extreme ways to save some scratch and the number one tip is to “Turn your car off — while it’s moving”!!! Maybe it is just me but this idea is completely insane!!!!  I understand the principle and how in theory it could save you a few drops of gas but is it anywhere near being worth the risk?  This tip really belongs over with Lazy Man and Money’s list of Three Ridiculous and Stupid Ideas That Save You Money, not on MSN encouraging people to give it a shot.  To the benefit of MSN readers (this article was linked on the main MSN homepage this morning) they do recommend that you “make sure you practice driving without power steering and power brakes in an open space before experimenting near other cars — or people” and tell you that AAA does not approve of the idea.

Since people seem to think that turning your car off while driving will somehow save you a few bucks in gas I think maybe we should look at the areas that it will potentially cost you a lot more.  If you think that risking your well being along with that of everyone else on or near a road is worth a few bucks in gas please also consider the costs of:

• Medical Bills: The first time you make a mistake you will probably have a few extra medical bills.  Car accidents are not cheap and not having the safety features built into your car available increases your chances of accident and injury.
• Car Repair: Body shops will be glad to take your money to fix up your car.
• Insurance Premiums: Imagine what your insurance company will think when the police report from an accident says that you had turned off your vehicle while it was in motion.  I am pretty sure that the premium will go up from an accident. If they catch word that it may have been caused by turning your car off I would not be surprised if they deem you uninsurable.
• Increased wear on car parts: Starting your car engages a lot of parts in your engine.  Turning your car off and on in traffic will probably strain (at the very least) your starter, transmission, alternator and various other parts.

Seriously – features like power brakes and power steering are there for a reason and cars are meant to be running while in operation.  I am in favor of saving a few bucks anywhere I can but at the very least think of your safety and the lives of other motorists, their families and pedestrians.