Learn From My Mistake! My Car Was Repossessed

I've been thinking, I can't be the only one with ridiculous money mistakes in my past. What if we all shared (anonymously, of course) our stories so we could help each other learn from our goofs? After all, we're all friends here, right? I'll get us warmed up...

If you walk out of your office, or the mall, or your house, to find your car missing, you're probably cursing like a sailor and immediately dialing 911 to track down the theives. When that happened to me this past summer, I was totally swearing up a storm, but knew immediately I was the only one to blame. I had been five months behind on car payments, and my '93 Corolla had been respossessed. The worst part may have been when my coworker mentioned she had driven behind my car on the tow truck and wondered what had broken down. Ummm, my finances? I couldn't tell her the truth.

A year-and-a-half before, I got a new job that nearly doubled my salary – and required a car for the half-hour drive to the 'burbs. Feeling flush, I acted impulsively and bought the first car I test drove, going above my set budget, and with already damaged credit, qualifying for only an obscene 30% loan. I'd never bought a car on my own before, and when I drove off knowing it would cost me nearly $600 a month for the loan payment and insurance, I was sure I could handle it.

Thing is, that expense pretty much wiped out my raise – poof! And with other credit card and student loan payments, I was already living beyond my means. The car put me over the edge, and within a year, I was getting behind on payments. Every month, I thought I'd get it back on track, but playing catchup with those kind of fees and interest rates was nearly impossible. I was getting daily calls from the loan company, which I ignored, too embarrassed to explain myself. I started researching how to voluntarily give back the car, but put off actually doing it. Avoidance, ladies, is not the answer.

And sure enough, they took care of it for me. I was both scared and happy, humiliated to have to pick up my stuff from the tow yard in trash bags, but exhilarated to be free of those burdensome payments. Not that I got off scot-free – they sold the car at auction for less than my loan, so I'm still on the hook for five grand with no wheels to show for it. I think this was something that had to happen to me – a smack in the face to finally take care of my finances, if you will – but I certainly don't recommend it! So what can we all learn from it?

• Stick to your budget. And have one in the first place! I had no grasp of all my expenses and how that compared to my income. Turns out, I was shelling out way more than I was bringing in. Any time you're thinking of adding a new monthly expense, go over your existing obligations and make sure you know what you can realistically cover.

• It's worth the effort to shop around. Don't rush your purchase. This should be easy – we all love shopping, don't we? But this isn't the gossip mag you impulsively throw on top of your groceries at the check out. Research what you want online, know what you can pay, walk away and think about it before signing anything. They make you think it's the last car of its kind, but you can always find another.

• If you have bad credit, you're better off saving or borrowing from family for a cheap used car. I could have been patient and saved for three months to buy an older car outright, which I would still have, along with a cleaner credit record. Financing offers instant gratification, but unless you can score one of the awesome 0% or cash back deals (and there are lots these days), you're gonna pay through the nose and probably only do more damage.

• Answer those creditor's calls. They want to get paid, so they're actually willing to work with you to settle debts for lesser amounts, lower interest rates and work out payment plans that fit your budget. Getting at least some of the money back from you is better than none. Ultimately, I probably would have still lost the car, but I could have saved hundreds in fees – not to mention some dignity! – if I had dealt with it sooner. Even now, they're willing to settle the remainder for half the price if I pay in a lump sum. I'm working on it.

Now it's your turn! What money mistakes have you made that we could learn from? How have you turned around a financial crisis? Any advice you've learned the hard way? Embarrassing, funny, inspiring, unbelievable stories – let's hear 'em all!