People who write about personal finance sometimes get shafted. We’re supposed to have answers to everything, and Lord help us if we ever confess to having made a mistake with our money.
The logic goes something like: “Aren’t you supposed to be smart?”
It’s enough to make you want to smack them upside the head.
I learn from my mistakes. I use my lessons to get better about managing my money, and by the time those lessons make it to this blog, I feel confident the information will help you. Naturally, you should never take my word for it and should absolutely do your own research to make sure my recommendations fit your circumstances.
Here is a short list of mistakes I’ve made in the past few years. I hope you will learn from them, but remember it is not realistic to believe you will always get it right. The idea is to learn from your mistakes, and when possible, adapt the lessons learned into your strategy.
I Did Not Minimize My Tax Bill
I work freelance gigs outside of my full-time operation. If you were not aware of your ability to hire me, let’s change that, but I’d never considered writing off business-related expenses.
I would have never considered it had my new accountant not raised the point last year. I was never sure what expenses could qualify, and if I’m really being honest, I’m still educating myself on what is justifiable. Nevertheless, I have kept a tight record of my receipts for expenses directly related to the running of this site and the equipment and software I have purchased to do my job well.
So, if you file a Schedule SE (Form 1040,) make sure you understand your options. Anything you can do to reduce your tax burden will be time well spent.
I Postponed Medical Treatment
Remember last summer when I admonished you for not staying on top of your medical needs?
Well, here’s the rest of the story. I went to the doctor, got antibiotics, celebrated the pain relief, and promptly put off the actual treatment until the new year. I figured I would upgrade my insurance plan to pay less out of pocket.
Except, I never made it to the new year. The infection came back like the doctor had warned me it would. A month shy of the new year I was in so much pain I could barely function. I wound up spending nearly a thousand out of pocket, which is money I would have spent earlier that summer, but at least I would have avoided being out of commission for several days. That, to me, is a larger financial mistake.
So let me reiterate: If you have a medical need and have the means to tend to it, don’t be a moron like me and put it off.
I Bought into a Vacation I Never Took
You know how hotels love to sell you on special vacation packages?
One morning I was on the phone with a hotel chain, cancelling a work trip, and the representative asked if I wanted to take advantage of a special offer available only to members of a certain tier. I knew better than to fall for the flattery, but grabbing a discount on a trip to the beach did not sound awful.
One transfer later, and I was chatting it up with a sales representative who sold me on the idea of putting down $200 on four nights at a swanky resort, plus extra spending credit.
I wish I could blame my not taking advantage of the package on COVID. In truth, I had almost a year to take advantage of the opportunity before COVID was even a thing, but when you look closer at the opportunity, it was really the hotel chain trying to take advantage of me.
You see, they don’t spend a lot of time talking about the two hours you have to sit through a seminar pushing hard for you to take out a time share. I’m not saying time shares are a bad idea for everyone, but educate yourself before taking that leap. I’m confident I would have held my ground. Two hours is worth four nights at a steep discount, but losing $200 because I never fulfilled the trip was just as silly.
I Got Greedy with My Investments
Most of my stock investments are in index funds. I see no need to pay miscellaneous fees, but I’m always adjusting my financial strategy.
One morning I was browsing through a financial magazine and came across a reference to an international growth fund. My total international index fund had been doing well, but the idea of an actively managed fund with low fees was intriguing. I would be willing to cough up a little more in percentage fee if I could beat the market.
Less than a week after transferring a large portion of my original fund into this shiny object, I lost 20% of my investment. It’s almost been a year since I made that mistake, and I’ve not seen the numbers get back to anywhere near my initial contribution.
For the moment, my plan is to recover my losses and then transfer out. Except, I may throw in the towel and transfer out sooner, because this damn thing’s not showing any signs of rebounding in a timely fashion.
I Threw Away Time Off at Work
Now this one is likely the most embarrassing of my mistakes. Wait, no. My worse mistake we’ll talk about next week, but for the moment…
Over the past year I’d accumulated 24 hours of time off awards, separate from my personal leave. I had no idea these had a shelf life of one year. I’d been banking on using these hours this past holiday season, so when I learned a chunk of my expected time off had vanished, I was some kind of pissed.
It really does pay to read your employee guidelines, especially those pertaining to leave requests and incentives. Honestly, it pays to be very familiar with all your rights and privileges as an employee at your workplace. Failing to read all the material could mean you’re missing out on perks you may not even realize you had.
For example, will your employer match retirement contributions? And if they do, are you contributing at least up to that matching amount?
I Waited to Educate Myself About Credit Cards
Before my divorce, I had a fair understanding of credit cards. I knew about not carrying balances and understood the negative repercussions with making late payments, but my ex-wife oversaw all the short-term financial transactions. My area of expertise was long-term investments, such as retirement planning.
After our separation, I realized the importance of educating myself on all facets of personal finance. The up side to my previous arrangement is that she and I were on the same page about our financial goals, but just because your partner is stronger in one area does not mean you should drag your feet on the subject. You should always be just as informed in case you find yourself losing your partner.
Even after I started educating myself, it took a while for me to fully understand things like welcome bonuses. Looking back, I squandered a huge opportunity to score major points when I was going through the process of furnishing my apartment.
I Purchased a Membership I Never Touched
One morning … You know, I’m beginning to sense a pattern here. Clearly I do my dumbest thinking in the morning.
Anyway, one morning I saw a deal for Sam’s Club. At the time I had a Costco membership and was debating with myself about whether or not I should pay another sixty bucks for the annual membership. When I saw I could get Sam’s Club for 50% off, or $23 and some change, I decided to pounce.
My mistake? I pulled the trigger before researching the closest Sam’s Club. Yeah, there isn’t one.
I also pulled the trigger before realizing the membership was only good for in store purchases. If I wanted free delivery, I would need to upgrade my plan, and let me tell you, those delivery charges were quickly racking up when I started filling a test cart.
The irony is that after that little experience I circled right back to a Costco membership. I’m still not convinced it’s the smartest move. Costco marks up prices for items purchased online, and even if Costco didn’t get you, Instacart would.
I Put Off Buying My Leather Jacket
It took me three years to get around to buying a leather jacket. I knew I wanted a good quality jacket, but because of the expense, I also felt guilty about spending the money.
This mistake was bad for two reasons:
First, I assumed I needed to spend over a thousand dollars to get good quality. Yes, you can get good quality if you spend more than a grand, but as is true with most things, at that point you’re spending more for the name brand than the product itself. I spent half the amount and enjoyed the benefit of a family-owned business right in my own state.
Second, my feelings of guilt would have been warranted if my need for luxury items was a pattern. I do not make a habit of splurging on things for myself. The more expensive the item, the more time I’ll spend researching and debating with myself as to whether or not I can justify the cost.
A little guilt is not a bad thing. It’ll help you remain dedicated to cultivating good financial sense, but since we could die at any moment, it really does not make sense to fret about every purchase. If you’ve done a good job with your finances, you deserve to treat yourself.
Not every mistake listed here was a step backward. Yes, I wish I had learned quicker about credit cards so as to better maximize the welcome bonuses, but I am glad I took my time choosing my cards as opposed to chasing points. See what I mean about putting your mistakes into context?
Similarly, in retrospect, I probably should have stayed away from the shiny international growth fund, but investment is about taking chances. If you always play it safe, your returns will always be mediocre.
Me, I’ve learned not to make major financial decisions in the morning, but being the human that I am, I am sure in a couple years I will be able to write about the dumb mistakes I made one random afternoon or evening.
What about you? Are there any mistakes you felt bad about making in the moment that you would care to share with the group?