Over the last two years I’ve shared some of my biggest money management failures with the hope it may prevent some of my readers from making similar mistakes. To emphasize this point I am highlighting the top 5 mistakes I have made (so far).
Leasing a New Toyota 4Runner: When I first graduated from college, I had my mind set on leasing a brand new Toyota 4Runner from the local dealership in town. I was 22 and had no other financial obligations other than a few student loans (hey, I’ve got 20 years to pay those back, right?) and I needed a cool $34,000 SUV to get my buddies and I around town!
I convinced myself I could lease the vehicle and invest the difference in a good mutual fund earning 12% and come out ahead over traditional financing.
Did I invest the difference in a good mutual fund? NO! My financial calculations didn’t account for the fact that I was only 22 and was more inclined to blow that money on partying and other frivolous expenditures!
Even if I had, the year was 2000 and the “Internet Bubble” was just getting ready to burst!
I would have been much better off had I just saved up and purchased a slightly used vehicle with cash as I eventually ended up doing!
Buying a New Motorcycle: Not only was this a bad move financially, but it was probably the unsafest thing I’ve ever done with money also!
For a little background on this story, its worth mentioning that I had never (EVER) ridden a motorcycle in my life and I didn’t have a motorcycle license.
A few of my friends had motorcycles and I thought it would be fun to join them! Did I go out and buy an inexpensive beginner motorcycle to learn on? No! I went out and financed one of the most expensive “high performance” models available on the market!
Although I lost a few thousand dollars on this financial transaction, at least I escaped with my life!
My Experience Day Trading: Another favorite financial story of mine! Imagine being in a college classroom taking an exam and worrying about whether or not a risky tech stock you had just purchased a few minutes earlier (on margin) was going up or down?
This is exactly what was going on in my life in 1998 when I began experimenting with day trading during my undergraduate studies at Maine Maritime Academy!
Not Keeping Track of my Checking Account: Until I created my simple Excel Based Checkbook Registry, I was incredibly irresponsible when it came to keeping track of my money! I really had no idea how much money I had in my checking account at any given time and frequently overdrew my checking account.
Even though I had very few financial responsibilities and a great income, I was constantly over drafting my checking account!
Fortunately, the simple checking account spreadsheet I made allowed me to easily track multiple accounts at once and I have balanced my accounts down to the last penny over the last 6 years!
Not Buying Lakefront Property in Maine: 10 Years ago, lakefront property in Maine was basically “given” away. Rustic lakefront cottages could be purchased under $80,000 which would have been easily within my reach. I love being on around lakes during the warmer summer months and have always planned on getting a place of my own!
Like most investments, hindsight is 20/20 and few people realized that within the next 10 years prices on these properties would more than triple placing them out of my reach for the foreseeable future! Nonetheless, I’m still a little disappointed in myself for not taking advantages of several opportunities that were presented to me in 1999 and 2000 when I was contemplating purchasing a lakeside property in Maine.
{ 3 comments… read them below or add one }
these seem like common mistakes…at least you realize it now. some people never do
Wow! Sounds like you were pretty risky in your younger years! I think failure is just part of being successful with money and you can’t look back on things and hope you had done something different.
We go through life making decisions, and we can only hope that the ones we make at the place and time with the information we have are what feels right to us. If circumstances change for better or worse, we have no control over it.
Once in a while, it’s good to look back like this and learn from past efforts and apply those to future decisions. At the same time, it can make us very skiddish to take risk, so it should be a delicate balance.
Yeha, me too. I could have bought the camp next to my parents lake house the year I graduated for 35k. But I was too cool to live next to my parents at that time. I Regret that one often!