If We Could Have One Financial Do-Over…

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The following guest post was written as a part of the Yakezie blog swap. In this monthly event, Yakezie participants pair up and exchange articles on a common topic.  For June, we are trading posts on the common topic of “if we could have one financial do-over, what would it be and why?”

This article was written by Mr. S over at Broke Professionals. Mr. S and Suba are a husband/Wife team who are young and broke professionals. They write about personal finance related to young professionals, getting out of debt, increasing income, cutting expenses, and their own personal entrepreneurial journey.

You can view my swapped post over at Broke Professionals today at the following link – eBay Financial Scam Do-Over Wish.

If you had one financial do-over, what would it be and why? When I saw this topic, the first thought that went through my head was, “Wow, that’s going to be difficult!”, not because I couldn’t think of any, but because there are so many financial mistakes that I would like to do over. On further reflection, one mistake stands out above the others. It’s not something I want to do over because of the magnitude of the error but because it hurt me at a time when I was financially very shaky. So here goes –

Honda Hybrid Concept

Buying My First Car – A New Honda Civic Hybrid

I had just completed grad school, and by working while studying and living off Ramen noodles, I graduated with about $5000 in the bank. I got a job that I liked, moved to a beautiful place, and was generally feeling on top of the world.

At that point, I decided I needed a car. I shopped around a little (mistake 1) and decided that I would go for a new Honda because they depreciated very slowly. In addition, I planned to travel quite a bit, so I decided to go for a Hybrid to get the better gas mileage.

So, I went down to the Honda dealership and started the haggling over a new Honda Civic Hybrid. After many trips and conversations with the dealer, I managed to whittle him down from $25000 to $22000 and congratulated myself on my excellent (in my own eyes, of course) negotiation skills.

In order to reduce the amount of money I had to borrow, I decided to put down most of my $5K savings. I brought the car home and a couple of days later while looking through the glove compartment, came across a sheet of paper that shipped with the car from the manufacturer. Across the top of the page in big, bold, black text were the words – “Recommended MSRP = $21000”. There I came crashing down from the cloud 9 I was floating on thinking I had made this great steal. Things just got worse from there. I didn’t understand the terms of my loan agreement properly (big big mistake). I assumed that any money I paid over the monthly requirement would be used toward reducing the principal. Nope. The loan said that I had to pay a certain amount of interest, period. So paying more than necessary each month just brought in the end date but didn’t reduce the amount I had to fork over.

In addition, I was stupid enough not to regularly check my statement to see if the principal was being reduced over time. I just kept paying as much as I could toward the loan every month. At the end of 3 years, I had paid off the 7 year loan, but I had next to nothing in savings. Would I have been better off paying the monthly amount and investing the remaining money elsewhere. You betcha!

Honda Civic Hybrid Break-Even Analysis

Now let’s look at the car itself. The difference in price between the Civic Hybrid I bought and a regular Civic, at the time, was $4500. I was betting that I would drive so much that the extra mileage from the Hybrid would save me money.

Now let’s look at the facts. I get on average 43 mpg. Friends of mine who own a regular Civic, bought at approximately the same time, get about 35 mpg. So that’s an average of 8 more mpg that I get. Over a tank of gas therefore, I get 80 miles more than a regular Civic. Over the 6 and a half years I have owned the car I have driven 100,000 miles. At 43 mpg, that works out to 2326 gallons approximately. At 35 mpg, I would have filled in 2857 gallons instead. A difference of 531 gallons over 6 and a half years.

How much did that save me? Given that I live in Southern California, I pay more for gas than the rest of the country. To keep the math simple, lets assume that over this period gas has on average been selling at $4 per gallon, which is higher than reality. Applying that number, owning a Hybrid has so far saved me $2124. But wait a minute, I put down $4500 extra to start with. So I’m still in a hole for $2376.

In addition, we have to add the money I would have earned if I had invested that $4500. But, I look bad enough as it is. I don’t have to make things worse. You might say that well, I haven’t got rid of the car, so as gas prices rise, I will continue to save. That’s true, but keep in mind that the Hybrid has a battery pack that doesn’t last forever. Let’s say I replace it in 10 years. At my current rate of driving, over 10 years I would have saved $3271 (still assuming an average of $4 a gallon). So, without having broken even, I now have to shell out money for the battery pack. Oops!

When I went through these numbers a year or so ago, I felt really depressed. By my own stupidity, I had wiped out money I had struggled to save, then gone on to pay a loan off early thinking I was saving interest when I wasn’t, and gambled on a car that wasn’t going to save me money at all. Pretty depressing. I guess the only silver lining in the cloud is that when gas prices go up, I actually feel a little better :)!

If I could go back in time, I would have bought a used car and saved myself a lot of money. 

If you had one financial do-over, what would it be and why?

Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.

  • Sorry to hear that you paid $1000 over the MSRP price! Did you check around on any online resources to see what these cars were retailing for before buying? 
  • Thanks so much for sharing your experiences with this. I really like how you performed/included the break-even analysis. 
    • I performed a similar analysis on this site last year, comparing “green” hybrid cars to regular cars to determine which is more economically sensible. Turns out that I concluded pretty much the same as you did here – that owning a “green” car isn’t the most economically justified course of action.
    • This really is unfortunate because it’d be nice if the economics of “saving-thy-planet” worked out in the consumers favor.
  • Personally, I wouldn’t beat myself up too much for making a mistake like you did, provided that you learn how to improve for the next time you buy a car. You bought a reliable, fairly inexpensive car that will most likely save you money compared to a lot of vehicles on the market (for example, if you bought a $40,000 Suburban right out of college). 


  1. Jacob, The answer to your first question is no, he didn't check around any online resources. It was a direct late night grocery-store type buy (he bought the car in the closest dealer he could find in just one visit). He did learn from that though – now he leaves all the purchases up to me 🙁 I bought a new car too (mainly because I didn't know any mechanic I could rely on at that time and I was too scared that I would buy a lemon. It was 4 years after I came to this country and I never had a car for the first 4 years). But I did ok with my new car. At least I didn't pay too much, I bought it for ~14000, a new Honda fit.
    My recent post Are you getting all the car insurance discounts you are eligible for

    • Thanks for sharing your experiences Suba! Sounds like he found a good person to team up with! I'm sure you're a pro with the finances.
      My recent post To Donate or Not to Donate Financial- Ethical- and Physical Concerns of Egg Donations

  2. valleycat1 says:

    My do-over experience: A number of years ago I worked for a company with an employee-funded thrift plan in lieu of a standard retirement plan. There was an employer match, and I knew we became vested at 10 years. Fast forward 10 years, and I quit my job to relocate and get married. I had worked there just over 10 years, and I quit my job in mid-October. When my settlement check for the thrift plan came in the mail later (you had to withdraw if you left the company), it was half what I expected – turns out the 10 year vesting was calculated as of December 31st following your 10-year hire date, not 10 years from the hire date. Obviously, if I had been aware of that I would have postponed the move & the wedding. Ouch.

    • Yikes! That is a do-over calling your name Valleycat1! I'm sorry that didn't work out better.

      What is an employer funded thrift plan? I've never heard of those…
      My recent post To Donate or Not to Donate Financial- Ethical- and Physical Concerns of Egg Donations

  3. That certainly does sound like a financial move you'd want to do over. You now know to do your homework on prices, find reviews on the lifetime cost of ownership (like the MPG difference) and thoroughly read contracts. Great lessons, but quite the pricy learning experience!
    My recent post SCQ- What are your money challenges

    • Thanks for reading Saved Quarter. I think the lifetime MPG difference analysis would be very important to do, especially when deciding between a hybrid and regular car.
      My recent post To Donate or Not to Donate Financial- Ethical- and Physical Concerns of Egg Donations

  4. Nothing like buyer's remorse huh? The car was a good lesson in buying used instead of new. Also, it's much better to learn it while you are young enough to recover from it.
    My recent post How Much Do We Save to Buy a House

    • I agree FSYA! It might have been a mistake, but it's one they can definitely bounce back from!
      My recent post To Donate or Not to Donate Financial- Ethical- and Physical Concerns of Egg Donations

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