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NEWS | Sept. 27, 2012

My biggest mistake as an Airman - a new car

By Master Sgt. Ryan McCauley 633rd Civil Engineer Squadron

During the last two weeks, I have heard two separate stories about Airmen purchasing overpriced cars, with loans at ridiculously high interest rates.

When I hear these stories I can't help but think about the first major mistake I made as a brand new Airman - a mistake that cost me almost $100,000 15 years later.

As a newly minted Airman 1st Class, at Keesler Air Force Base, Miss., in 1997 I decided the best choice for my steady stream of paychecks was a $330 car payment, and a sweet set of wheels to drive me and my friends back and forth from the mall, restaurants and beaches along the gulf coast.

After all the costs were factored in, I was spending about 40 percent of my total income on loan payments, insurance and gas. It was no big deal for a new Airman with no other financial obligations, right?


Had I known then what I know now, I could have hitched a ride with someone else to the local hotspots. After all, we marched to and from training each day, and the dining hall was located in my squadron's main building. Even at my first duty station in Altus, Okla., I walked across the street to get my workday started, and the dining hall was just as close to where I lived.

Had I spent that year living within my means, and investing that $330 a month, and saving the other $700, I might have been able to buy that same car for a much cheaper price a year later.

If I would have simply invested my $330 per month in something as simple and basic as a S&P 500 index fund since January 1997, today that nest egg would have grown to almost $100,000.

It's important to note here that during this time our economy suffered two major setbacks slowing the markets rate of return. If someone would have been standing there when I signed that loan and gave me the choice between pulling the trigger on that sweet '96 Cutlass Supreme, and $100,000 cash 16 years later, I'll give you one guess to which option I would have chosen.

Thankfully, I learned this lesson about three years after I bought the car when a co-worker introduced me to some basic personal finance and financial market concepts. I've since spent the better part of the last two decades making decisions which have the best interest of my family's future in mind.

Please take this lesson to heart, and avoid making the same mistake I made. The very mistakes Airmen around you have, no doubt, already made. Educate yourself on the dangers of taking on too much debt.

Get smart on methods to save and invest for your future. Sign up for the Airmen & Family Readiness Investment seminars. Talk to your supervisor about the consequences of spending 40 percent of your paycheck on a car.

Doing so creates both a fit and ready force, and can pave the way to even greater successes in your personal and professional future.