I make financial mistakes. I make a lot of them, actually.
What I usually try to do when I screw up is not dwell on them. Instead, I try to identify why I made the mistake and then try to figure out how I can fix that issue. I don’t beat myself up over them – there’s no benefit in doing that. I’m human. I made a mistake. I’m going to make more in the future. The best thing I can do is just make sure that mistakes don’t turn into a culture of repeating them.
Here are ten mistakes I’ve made over the past year.
I’ve splurged too much on books. Most of the time, when I find out about a book I want to read, I either reserve it at the library and/or I check for it on PaperBackSwap. Most of the time. Far too often in the last year, I’ve allowed my impatience to get the better of me and I’ve just ordered the book off of Amazon.
Solution: The real problem is the convenience of book ordering from Amazon. My solution was simply to remove my card information from the site so that when I go on there to order, the “hassle factor” goes way up. It’s a lot easier to tell myself I can just patiently wait on Wolf Hall if it’s a hassle to order it.
I miscalculated my estimated taxes for 2009. Mostly, I’m just not very good yet at really estimating (at the start of the year) what I’ll make all year long. Trust me, if you’re self-employed and make an income that varies a lot from month to month and isn’t really predictable, the federal tax laws do not work in your favor. My mistake was estimating far too high at the start of the year this past year and then really struggling through the middle of the year as my income was really low.
Solution: I just need to be very, very careful when calculating my taxes and, because of the penalties involved if I miscalculate, I should calculate very much on the high end. It’s a lot better to pay extra now and forego the small amount of interest than it is to pay less now, realize you didn’t calculate quite right, and have to pay a stiff penalty.
I waffled too long on replacing my truck and passed on at least two great offers. As I shopped for a vehicle to replace my truck, I knew I had plenty of time. This led me directly to favor the “two birds in the bush” over the one in the hand and constantly skip over good deals I’d discovered.
Solution: We finally found a great vehicle and are moving forward with the purchase of it. I hope to write about it soon.
I left more cash than I should have in my checking account, foregoing nice interest returns elsewhere. Because our income is variable, our automatic savings transfers are on the low end of what they should be. Thus, during good months, money builds up in our checking account. I left it there instead of putting it into savings.
Solution: Be more vigilant with my balances and my automatic transfers. Check in on things at least twice a week and don’t be afraid to transfer money back and forth as needed.
I didn’t spend time re-evaluating long term goals. The big question, “where do I want to be in five years?” It’s something that I’ve learned is well worth reviewing on a very regular basis, particularly with the people most important to you. I didn’t do this and instead stuck with some visions from the past. Meanwhile, life goes on – we decide to have a third child and make some other personal decisions. Suddenly, the five year vision is quite a bit different – and our saving and planning tactics are a bit out of whack.
Solution: Look at the future more often. Talk to my wife at least every month about our future. Save our money for these goals in a way that’s pretty flexible so that if plans change, we’re not subject to financial penalties.
I gave less to charities in 2009 than I intended. Mostly, this was borne out of uncertainty about the uneven income I was making. I strongly padded my emergency fund during 2009 and charitable giving was one of the things that suffered in the process. We still gave, don’t get me wrong, but we didn’t give nearly as much as we could have.
Solution: Since most of the money we would have given is socked away right now, we can simply do more charitable giving in 2010 to make up for it. In addition, I’ve been steadily increasing my time given to volunteering over the past year, and time is money, after all.
I let my personal inbox overflow. The problem here wasn’t that I missed out on anything truly important (though I did come close to being late on a bill or two). The problem really was that I missed out on several opportunities for local political involvement and career advancement and, in one instance, in getting my child registered for youth sports.
Solution: I need to process my inbox to zero at least once a week. This was once a routine, but it got thrown off when I was in “crunch time” with my book. I need to get back to it.
I allowed myself to get talked into an expensive trip. Several of my friends and my wife persuaded me to take a trip to GenCon in Indianapolis this summer with a large circle of friends. I was resistant to this for months until I realized that at least one close friend had decided to go on the trip mostly because I was going. I let the guilt of that get to me.
Solution: I’m going to go on the trip and enjoy myself, but I’m going to save very carefully for the expenses. This is another reason to control the book spending, as mentioned in my first mistake.
I didn’t pay enough attention to my wife’s retirement planning. My wife’s investment advisor through her work had been managing her retirement savings. I made the mistake of assuming that the money was being managed well.
Solution: Even if there is an advisor involved with money management, I need to be involved myself and know exactly what’s going on. Even more important, if I see something I don’t like, I need to step up and make a change.
I backed away from some of my big career visions. During the crunch time of my upcoming book (and some cooldown afterwards), I let a lot of other ongoing projects slide for a while. This likely means some missed opportunities and some missed income.
Solution: I’ve recommitted myself to long-term projects with regards to my work. There are several projects that were allowed to run cold and I intend to pick them up and run with them in the coming weeks.
Yes, I mess up. A lot. Time to learn from them.