How I Made A Big Financial Decision

How I Made A Big Financial Decision

Today’s episode is money related but it might be a little different than what I normally talk about. I don’t know. I can’t tell anymore. But what I want to do is I want to walk you through a big financial decision that I made. I talked about it actually on the podcast not too long ago. I was saying that I was considering buying a car. I’ve typically been somebody who has leased a car but I was considering buying a car and I have finally made that decision and I have completed the purchase just this past weekend. I thought it might be good to share.

Now what I don’t want you to be taking away from this is that Tara bought a car or thinks you should buy a car versus lease a car. I actually don’t have any opinion and it really, really depends on your personal situation. Leasing cars are a great way to drive a vehicle at a price point that you can afford by just shopping around for lease payments. We know that buying a car, you wouldn’t want to buy a new car because cars really lose their value the second they roll off the lot. That’s not always a great decision around buying a car.

What I’m going to share is just my process for purchasing a big financial decision, for making a big purchase. 

I think that is probably where I want you to take some value away from this episode. I’m just going to give you a little back story and context around me and vehicles. In 2009, one of my lease vehicles, I was leasing at the time a Toyota Highlander and the lease was up. Now this was in the middle of the great recession. It was in the middle of our first business that my husband was running the first business, I was still working for an employer because we needed health benefits and we needed steady income coming in. We had two young children. My son was three, my daughter was one at this time.

We went to go and lease another Toyota Highlander and we were very, very surprised to find out that we could not afford it. It was like a year that they had improved the design or what have you on the Highlanders, which I had always felt like a very pretty basic vehicle, but they had made some changes and the lease payments had gone up significantly and we couldn’t afford it. For me it was a huge, huge moment emotionally to realize that this life that we once had that was affordable was no longer affordable.

Now our financial situation, this was four years in, I already knew this. This wasn’t shocking to me per se. We had been struggling for a very, very long time starting this first business. It was sucking all of our capital, all of our energy, and all of our time to keep it going. This wasn’t necessarily new but it just felt like a different level of a gut punch that we couldn’t afford this car. I got really concerned for what we could afford because I did need a vehicle to get back and forth to work, to something that I could put the kids into and get them to daycare.

Because that was a whole part of my routine at the time was rushing through my morning to get the kids ready, to get them into daycare, so I can get to work on time where my boss would stand in front of my office, no joke, with her clipboard and a watch, making sure I was there at exactly eight o’clock in the morning. It isn’t any wonder why women leave their places of employment.

This was a big deal, and it did feel like a part of my freedom could be taken away. We did some research after we freaked out. We did some research on what’s a really safe car, what’s a really reliable car engine wise. My husband has incredibly good handyman skills. He’s used to working on cars. He’s very mechanical. I’m very fortunate to have somebody who speaks that kind of language because I don’t. That is definitely a strength where I do not have a strength.

What we did was we found an auction site that auctioned off used cars. We put a bid in on a Volvo station wagon. Luck was on our side in the sense that nobody else bid against us and we put in a really, really way below, like $6,000 below what this car was valued at price. It was so low that the poor dealer who was auctioning this car contacted us and begged us to take a different vehicle because he was going to lose so much money on it, which we did not take that other vehicle.

My husband went. It was in Pennsylvania so he went with his pickup. I believe that he went with his pickup or maybe he rented a truck. But I think he went with his pickup and towed the car home. We were able to get a loan barely and he towed the car home and this is what we drove for years. For me, I have stuff, is what I’m saying, around leasing cars, car dealerships, buying cars, all that stuff. When I looked at some of the financial trauma from that time of my life, this is something that activates me. It’s been a long time, obviously, 2009 was a long time ago.

We eventually declared bankruptcy in 2010, which blew up our credit and we have spent the last 12 years rebuilding our credit, getting credit cards, even being allowed to have a credit card. I will tell you that JPMorgan Chase, despite my amazing credit history now, will still not give me a credit card. JPMorgan Chase will still not give me a line of credit for my business, so I still have those challenges, but the bankruptcy is off of our records now. A lot of that healing is done and behind us, and sometimes it still comes up.

This is my history with car things. I just say that to say it wasn’t easy for me to walk into a dealership over the weekend and buy a car. You might have your thing. It might not be a car. We all have something that causes us to be activated around money, sometimes deeply activated, traumatized, or uncomfortable around money. I want to first acknowledge that and that’s what I wanted to do by sharing that story.

Six months ago, I started to think, “Do I want to buy my car? Do I want to buy a car? Do I want to lease another car?” I’m sick of these never ending lease payments where I’m constantly feeding the lease beast. My husband and I, our big financial goal right now, is to start to wind down what work looks like for us. We are doubling down, tripling down on some of our investments. We are looking at what we want our lives to look like once we are in that 50 to 60 year old category. I am 46 right now. My husband is 48. We have worked our entire lives.

I’ve worked since I was 14. My husband has done the same. We were raised in a culture where we were led to believe that the harder you work, the further ahead you get, the more money you make. I can assure you that that is not necessarily accurate or true. I think there is some level of effort that needs to go into making money, whether you work for somebody else or you work for yourself, and then beyond that is a state of diminishing returns.

We have owned a business on or off for the last 17 years. It has not always been easy. Running a service-based business the way I run one is way easier than my husband who runs a manufacturing business, especially in this post-COVID world. That has really shifted our perspectives on what we want for the long term. As I was considering what we wanted for the long term, one of the things that we do is we buy quality products. We also buy quality services, but we buy quality over quantity.

We don’t need a lot of things. This is actually on our thrive list, at least, it’s on mine. We don’t need a lot of things but we want high-quality things because we take care of our items. I could be buying something now that I’ll have in 15 years from now and that will serve me as I’m looking to wind down how much I’m working or what that really looks like for me.

For example, before we got married, we lived together before we got married, so when we first moved in together, we bought a bedroom set from Ethan Allen. Ethan Allen’s got really great furniture. We bought a chair from Pottery Barn, also they have very quality furniture. We had had that bed and that chair for 20 years. The things that I’m buying now, if I buy them in good quality, they could be with me well into the time that I’ll be retiring and looking to retire, or at least scale back my work or be work optional.

I do consider that. What am I buying now when I have the funds to buy it that could still be here for me even in 10 years, 15 years, or 20 years, so that I take these things with me and they’re not a need or a necessity at a time in my life where I might not be living on as much money as I am today. I don’t know if that’s a helpful thought, I just want to share some of the ways that I was thinking about this. Those are the factors behind do I buy the car or do I lease the car.

Typically, we have always been like, “What’s the lowest payment?” 

You might be that person. You might be like, “I’m just looking to have the lowest amount of payments, the lowest payment.” Sometimes when you go to buy a car, that’s not the case. It’s not the lowest payment option. We really want to understand what is it that we’re looking to accomplish in our lives right now, but also how this help us, if at all, for our future financial goals that might be 3 to 10 years out. That’s through the lens that I was considering my options.

I was also considering my options through my thrive list. I am not a big car person. I drive very minimally. I drive about 4,000 miles a year, believe it or not. I drive around town. Maybe I take a couple of trips, especially over the last few years, but I don’t drive this vehicle a ton. I’m not putting a ton of miles on it. It’s not like I have a long commute that I want a specific looking car or a car that does something specifically because I’m sitting in traffic and I want to be comfortable or any of those things. This is not on my thrive list for an item that I want to or feel I need to go all in on.

I took six months to consider my options. I want to let you know it is okay to take the time to consider your options and to consider the investment or the expense, however you look at it, that you are about to make. You might have a threshold like, “I don’t need to think about things for six months if they are at a certain price point, and if they’re over a certain price point, then I do need to consider them for a longer term.”

While I was considering these options, my thrive list is important is because of a couple of things. 

First of all, right now, what’s the landscape for used cars? Inflation has hit used cars like a mofo. Anybody who’s been reading the papers knows that the cost of used cars have gone up significantly. I did not look up a specific number but I feel like I’ve seen that they could be up like 30% in terms of inflation, which is a lot of money. If you’re buying a used car, that could be $10,000 depending on the vehicle.

The other thing we know about buying a car right now is interest rates are going up. If you’re going to take a loan on a car or a loan on anything, our interest rates are going up and that’s something that we want to be considering as well. When I first said I’m going to buy a car, I actually wanted to buy the car I had in 2015, the one lease ago. I loved it. It was small. I did that intentionally so I didn’t have to pack a gazillion kids into my car and be a carpool mom. I thought it was a sexy little car. It made me feel sexy when I drove it and I absolutely loved that car. I thought that I was going to buy that car again. I was looking at it.

Then upon further conversation with my husband, he said, “Well first of all, I think we really need to think through buying out the lease you have.” I did not want to hear that. The car I have now is—this is like first world problems—it’s okay, my car now is okay. It doesn’t make me feel the way my other car did, and I realized that I’m saying this with a ton of privilege. I was like, “I don’t want to talk about buying out my existing vehicle.” But he said, “Listen, over the last three years, you’ve put $17,000 miles on this vehicle.”

Here’s what I don’t think a lot of people realize, and he pointed out to me that when you lease a car, your lease buyout is predicated on the price of the car at that time. When I leased this car in 2019, we were not hit with the inflation that we’re seeing currently on cars and they have to honor the rate that is in that contract. I was like, “Oh.” Because my husband was just buying out the lease on his vehicle at the time and that’s when he realized that. He was even thinking that he was going to buy the vehicle and turn around and sell it because that’s how less money it was that he could buy it off of lease. He wound up buying it for his business.

Having that six months gave me time to consider my options to have these conversations with people who know more. 

Instead of being stuck in my ways or tantruming that I wanted this other car, I really had to get honest with myself and be like, “But a car is not on your thrive list, Tara. That’s not what matters to you about this thing.” I was like, “Okay.” I decided that, right then and there, I was going to buy out that lease.

What helped me decide was my thrive list, that I gave myself time to consider all my options, that I considered my long-term financial goal when making this decision. I consulted. I consulted not only with my husband, I consulted with my father who I feel is a trusted advisor, and my accountant. I do not make big financial decisions without considering other people’s input. I know who I can ask for what things.

That’s how I look at my network. I’m like, “All right, who do I know in my network who would be helpful in helping me get the information I need, challenging my perspective, or helping me make this decision?” I don’t make these decisions in a vacuum. I didn’t just go out and buy a car and do as I pleased. I really was thoughtful and mindful about it.

Knowing that I was going to be most likely financing this car, I did have cash, I could have gotten cash together to buy the vehicle outright, but any time that I can use someone else’s money for a period of time, at a low interest rate—low interest rate being like under three and a half percent—I will do that. I will do that. I will take advantage of that. Anytime anybody gives me like zero percent financing on a credit card, I will make sure that we pay it off in time because you know on those, if you don’t pay it off on time, they wham you with all of the interest from the beginning, just so you know. We make sure that it gets paid off on time so we can take advantage of the zero percent without triggering that interest payment.

I know a lot of folks in my circle and sphere have issues with debt. They have beliefs around debt that came from their parents, that came from society, that came from Dave Ramsey, wherever they came from, they have this fear around debt. I like to share that I do take on debt when it makes sense because I want to destigmatize that. I lived a lot of years paying cash for everything when we went bankrupt. When I built my credit back up again, I absolutely started to use it, especially in business, to use a line of credit on your business or to take a loan on your business. I think it’s a real big myth that you’re never going to have to go into debt to grow your business.

Now that doesn’t mean, again, just randomly buying things. You’re going to want to consider what it is that you’re investing in to go into that might put you in debt for the growth of your business. You want to be smart about it. You want to make wise decisions. But to think that you’re never going to take on debt as a business owner is a fallacy and an unrealistic expectation. You don’t have to take on debt if you are just “I will not take on debt”, you don’t have to, but also realize you’re potentially making a trade-off around your growth. I really want to be someone who models that you can take on debt responsibly.

I knew that I was going to really want to try for a loan for financing. I monitor my credit score anyway. It’s something that I have done as we’ve rebuilt from bankruptcy, but as over the last six months, I was monitoring my credit score, I was making sure that, first of all, I always pay my bills on time, that is the number one way to get your credit score up, make sure you pay your bills on time.

The other way to have a good credit score is to have a specific debt to credit ratio, so that you’re not using so much of your credit, and that also increases your score. I was making sure that I was paying off. I actually started paying off my credit cards weekly because I wanted to make sure that I was keeping that debt to credit ratio low so that when they went to run my credit, they would see that.

The other thing that I do is my credit is frozen. I go through Equifax, Experian, and TransUnion, those are the three credit reporting companies. You are entitled to a free credit report from each of those companies annually. They do also have a free sign up where you can create an account, you can log in, you can check your credit, and you can put your credit on freeze. A lot of fraud has started happening around credit cards over the last two years, more so than ever before, and I have made sure that, for the most part, my credit is frozen. That means that people can’t access it, to run it, to open a credit card that is not in my name or anything like that. They can’t check my credit unless I unfreeze that account so they can check my credit.

That’s the other thing that credit scores look at, how many times are you having your credit run, are you constantly opening new credit cards and applying for credit? Having that frozen and not allowing anybody to access my credit has also helped my credit score go up. But what I noticed was my credit score went up 30 points in the last 30 to 60 days. I’m not a credit expert, obviously, I went bankrupt and rebuilt so I want to be really transparent. We had zero credit, like nobody would give us a credit card.

Capital One was the only company that really helped us rebuild from bankruptcy. Today, 10 years later, my credit score is almost 830, perfect. It’s really important as a business owner that you take your credit score seriously, because if you do need a line of credit, if you do need to take a loan, these things are looked at. Some of my largest clients who have businesses into the millions and millions of dollars, the primary reason, when we look at what is the critical few tasks that they do for their business that nobody else in the business can do, it’s being the financial backer, it’s being the person who can access credit and capital when needed because if they couldn’t do it, nobody else in that business could.

It is important as a business owner to monitor your credit score. 

I do want to just note that I think I might have found a little hack around paying your credit cards each week, give it a try, there’s nothing wrong with trying it, to increase your credit score. I think that’s really what happened. Just for a reference when I still had the bankruptcy on my credit report, my credit score was in the 600s. When that came off of my credit report, it went into the 700s. Then for the last year and a half that has been off my credit report, I’ve been diligently working to increase my credit.

The other thing that will improve your credit score is we’re talking about that ratio of credit to debt, if you’re somebody who’s very responsible with credit cards and there isn’t a lot of activation for you around here and you pay them off or what have you, go ask for an increase to your credit cards because that gives you more credit that you’re likely not going to use, but it improves that ratio. That’s just some things that I did in the last six months to go in to buy the car with the best possible credit score I can have because that was going to get me the best possible interest rate on the loan.

All right. I’m just going to tie it all together. I went in to buy the car and car dealers give me anxiety. I spoke about this earlier, part of it’s from my history, but I think also it’s like how many women have gone into a car dealership and have had the car person just talk to their spouse, talk to their husband, not take them seriously, mansplain to them, or any of that stuff. I know that when we implement Profit First in The Bold Profit Academy, going into a bank has a lot of stuff that comes with it for women as well as myself for similar reasons.

This is not a place that we have been taught or trained or made to feel comfortable and they don’t come up that much. 

It’s not like you’re walking into a car dealership on a monthly basis, on a yearly basis. I was having a lot of nervousness and anxiety, and full, full disclosure, I want to be very, very honest and clear, I doubted myself until I signed the papers. I second guessed myself for the decision I was making to buy the car until I signed the papers.

Now, I was there for four hours, it’s like they do it on purpose. I don’t know. I actually don’t think they were doing it on purpose in this case but it felt like they were doing it on purpose. I was there for four hours and I really had to breathe, get present, and not freak out. But I think that it’s really important to know that when you’re making big decisions, you will doubt yourself. Don’t think there’s something wrong with you because you’re second guessing your decision. The point though is don’t back out because you’re second guessing yourself or else you’ll never make the decision because you’re always going to be second guessing yourself. I don’t know how else to say that.

Bought the car, and because of the prep work that I did, I got a 1.9% financing. I certified the car. I got a 10-year warranty because I plan on keeping this car for a very long time. I took out a three-year loan, which actually doubled my payments from my lease payment, but that’s okay because I really want to pay this thing off. I’m hoping that I pay it off sooner actually. But I don’t have to because I have a 1.9% financing that feels like almost free money today, especially with the way that interest rates are increasing.

Everything turned out amazing. I get into the car to drive it and my energy completely shifts. I feel like a total badass that I survived four hours in the car dealership. I actually made them service and wash my car while I was there since I was going to be waiting. I felt like I had a good experience and I was reflecting on how that experience is just one more box that I could check off in me feeling more confident and more empowered around my money.

Sometimes those feelings of confidence and empowerment are on the other side of doing something that’s really uncomfortable and maybe even makes you anxious. 

I felt the immediate energy shift. I felt like a badass driving my car and for the last two days, I’ve done nothing but say, “I bought a car and I’m so proud of myself.” It all worked out really amazing in the end.

I want to just share some of the things that I think you can take away from this conversation. 

The first thing is your thrive list helps you prioritize and make decisions. 

The second is give yourself time. If you’re making a big decision, it’s okay to give yourself time. Plan for it. I see this so much as people are like, “Well, I feel really crappy about my financial situation because I can’t have a new car, buy a car, a house, a condo, some investment, or luxury travel.”

One does not just wake up one day and buy a car. One doesn’t just wake up one day and buy a house. One doesn’t just wake up one day and go on this luxury trip. You have to plan for it. How big that is is how long you’re going to need to plan for it. Give yourself some time. Think things through, make a plan, tap into the people in your network as advisors even if they’re not the person. Maybe they know someone. Who do you know that would be able to help me with making this decision?

I made sure that both my husband and my CFO, my accountant, were on speed dial while I was at the car dealership in case I had a question because some of those decisions that I was needing to make weren’t in my strength zone. They were like, “Do you want the service package for, I don’t know how much it was, it was like $2,700?” I don’t know anything about servicing cars. I’m not supposed to know that. My husband knows that. He’s really good with cars. Maybe it’s not your husband who knows it because maybe they’re not great with cars, but maybe it’s a friend, a parent, a sibling, or something. It’s okay to have people around you who are helping you make decisions. It takes a team.

Know how the decision fits into your goals. I knew how this fits into my longer term goal. I’m buying this for my future financial decisions. The last thing is self-doubt is normal. Expect it and learn how to befriend it, please. Because if you’re going to be in a state of self-doubt where you can’t make a decision and you’re giving into that, you’re never going to get out of that cycle because it’s like always with us.

The habit or the goal isn’t no self-doubt, it’s befriending the self-doubt and saying, “Hey, I get that you’re feeling doubt right now. This is really normal.” “Hey, self-doubt, what do you need to feel comfortable with this decision?” Or “Hey, self-doubt, I feel really confident and comfortable making this decision. It’s okay. Thanks for letting me know that I should check in.” How can you befriend your self-doubt?

Anyway, I hope that you all have gotten something out of this episode. I feel like it wasn’t necessarily like typical. It wasn’t business related, but I also think it was really important. If you had takeaways from this episode, I do want you to share them with me over at @thetaranewman on Instagram. Leave me a review. Also, don’t forget to sign up for The Revenue Goal Calculator because that’s also a big part in helping you understand what you can and can’t afford, how much you’re going to need to pay yourself if you make big decisions like this, and what your revenue needs to be in your business to support all of it holistically.

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