I want to talk about the biggest financial decision I have ever made and how it turned out. This story is sure to resonate with some of you out there who have been in the crypto space for some time now, but it has a twist that I wish I never made such a decision.
The decision was either to buy a car or invest to start a new business; And, I went for a car. Now you might be thinking, "that doesn’t sound that bad," do not rush, there is more to this story than what meets the eye.
This happened in July 2021 during the crypto bull run. Who can forget such days? Markets were literally on fire, and hence everyone was making real money, I was no exception. I was earning crypto, participating in DeFi staking, and earnings from blogging really well.
To provide you with something that would take you back to how good things were, I was earning more than $40 a day from all my crypto activities. People living in Nigeria can attest to the fact that this is a lot of money. It felt like I had hit a jackpot and to an extent, I really did.
However, this windfall did not come out of the blues. A year before the incident happened, I made a strategic decision to abandon any physical business, which I had, and concentrate fully on blogging and the crypto stuff. It seemed a tough decision, but turned out very well. Or at least I thought then.
But as I began to get the money, that was the first time I felt a state that I never experienced before. I was economically sound in every sense and I was paralyzed regarding options on how to spend the money. It really became a new outlook in my life and whenever I would think of the decision that I would make, I could foresee that it would have an effect in my future.
The options were clear: either start a new business or buy a car. Now, you might assume that this is a simple puzzle. Start a business, won't you? That's what all the financial gurus will tell you. But in real life it is not that simple.
I gave the options a lot of thought. On the one hand, starting a new business may probably provide long-term profits and financial security. On the other hand, I thought about juggling between blogging and crypto stuff, which is taking a lot of my time and intellectual power. Do I have the ability to start and run a new business on top of it all?
After a thorough consideration, It was clear that I wouldn't have time to face business activities because of my commitment to blogging and crypto stuff. So I went for the car. It was considered as a reward for all my hard work, a tangible image of my success.
The amount concerned was about 1.2 million Naira, about $2,000 at the time. To put this into perspective, the exchange rate of the dollar against the Nigerian Naira was around 540 NGN to the dollar at the time. That became my biggest financial decision I've ever made. It happened to be 4 times more than the amount of money I spent on a piece of land earlier that year.
Now you might be wondering how it turned out? Did I get the benefits for my new ride? First of all, it was an amazing feeling getting my first ride. I felt like a king as soon as I brought the car home. You know how it feels to get your first car, it's like you have done it all.
It wasn't just me that felt that way. You'll know how women and kids feel about their men and dads having a car, especially when it's new. My wife and kids were over the moon. Their pleasure became contagious and for a moment I felt like I had made the right deal. Seeing the joy and satisfaction in my wife's eyes and the children's delightfulness was precious.
But here is where the story takes a different turn. There's a touch of twist I haven't mentioned yet. Before I bought the car, I hadn't driven a car before. More importantly, I did not know anything about car maintenance. Yeah, you read that right. I bought the car without knowing how to drive it.
So I started to learn how to drive the car. This was not a pleasant experience at all. Like they say you shouldn't learn how to swim in the deep, I was basically trying to learn how to drive like one in a Formula 1 race. I bashed the poor car many times, damaging the body. It costs me extra money to fix it every time. It becomes like throwing money away carelessly, but I was too proud to admit that I might have made a mistake in buying the car.
I drove the car for two years. But then the real problems started. The engine starter started giving me problems. Now, I'm not a mechanic, but I quickly learned that car problems are like buses - they don't come by themselves by any means. One problem popped up leading to another and before I knew it I was drowning in maintenance fees.
It didn't take long to see that I couldn't handle the expenses. The vehicle that had become a symbol of my success had turned into a financial burden. So I made the difficult decision to sell it. And here's the kicker - I sold the car for less than a third of what I bought it for.
But wait, here is where it gets worse. Remember how I mentioned that this all happened during the crypto bull run? Well, you probably realize what happened next. The crypto market crashed and suddenly there was no way to make any extra easy money. My earnings dried up within a few months and there I was – no vehicle, no business venture and much less money than I started with.
As I look back on everything, I so much regret spending such a huge amount of money on a car. If I have invested that money in a business, it would probably still be making money for me today. Maybe it might even have expanded. Instead I went for luxury and learned a hard lesson.
I learned my financial lesson the hard way: never choose a liability over an asset. A car, no matter how excellent, is almost always a liability. It costs money to operate, it depreciates in value costs, and in my case it created more problems than it solved. However, an asset puts money in your pocket over the years.
This incident taught me the importance of long-term thinking about financial possibilities. The instant gratification of owning a nice car paled in contrast to the long-term benefits of investing in a business or other profit-generating asset.
It was a sweet story with a bitter end. But I hope that by sharing I can help others not to make the same mistake.
This is my submission for #septemberinleo Day one prompt.