The Ten Biggest Money Mistakes I’ve Made Since My Financial Meltdown

When I had my own financial armageddon, I was in a terrible spot. I had made mountains of money mistakes in the previous several years and I found myself floundering because of all of those mistakes. I made a real commitment to turning my financial life around – and this site was (partially) the result of that commitment. Today, I find myself in a much better financial place.

However, that doesn’t mean I haven’t made some really hare-brained financial moves since that meltdown. Believe me, I have. Here are the ten stupidest financial moves I’ve made since turning my financial life around.

1. Splurging. At first, I just killed my spending off cold turkey, but at least twice after the meltdown, I went on buying sprees, buying a bunch of useless, stupid stuff. After the second one, I felt so guilty that I simply guilted myself out of doing it several times when the temptation struck me – and eventually the temptation to splurge basically vanished. In a way, this mistake led to a good conclusion, I suppose.

2. Not having any emergency fund for a while. I threw myself immediately into debt repayment and made some impressive progress very quickly, but I did it while walking the tightrope – I had no emergency fund at all at first. It only took one near-crisis for me to realize that having at least a small emergency fund is very worthwhile – if you don’t have it, where’s the next big bill for a car fix going to go? Right on that credit card, undoing all of your good work.

3. Not understanding frugality. For my “essentials,” I kept on buying many of the same expensive things. I never really bothered to think about whether I could save a lot of money by using a better shaving setup, for example, or that maybe I wasn’t actually buying the best bang for my buck at, well, anything. Soon, I began to realize how useful Consumer Reports could be and my grocery bills went down.

4. Not learning how to leverage my personal skills sooner. Instead of working hard at side activities that I did enjoy that earned a profit (like blogging, for instance), I mostly focused on hobbies that were a big, big financial drain. A simple and careful evaluation of how I spent my time revealed pretty quickly that I could have a lot of fun and improve my own bottom line.

5. Cutting my 401(k) contributions to zero for a short time. I thought this was the best way to secure my financial future, but in doing so, I was just throwing away the matching money from my employer. I should have merely cut it back to the amount that received the match – it might have meant that debt repayment took another couple months, but I would have been in much better financial shape.

6. Not understanding the value of time. I sold a ton of stuff on eBay, but I did it in an incredibly inefficient fashion. Selling 150 DVDs individually did maximize my financial return, but it was a ridiculously large time investment and thus my rate of return on that time investment was very low. I should have sold them all as a lot or two, then focused my energy on other projects that have a better rate of return for my time.

7. Not asking for credit card rate reductions right off the bat. Instead of simply flipping over my credit cards and calling up the companies to request a rate reduction, I merely smashed my head against the sand for a while. My credit was fine (thankfully), I just didn’t really get that this would be a reasonable move right off the bat. I did eventually call them up, but I wasted a substantial amount of money on finance charges before I made a simple 1-800 phone call.

8. Not learning to appreciate inexpensive cooking. I was a bit of a gourmand – spending $20 on a pound of cheese was completely reasonable to me. Now, I appreciate doing things like that on occasion, but I’ve learned there is a lot of space to explore with less expensive foods.

9. Having another child. In terms of a personal decision, this was incredibly wise – my son is the greatest thing that’s ever happened to me and I’m thrilled to have another. As a financial decision, especially given that I was backing away from a precipice, it might not have been the best move. I would feel a lot better if we were trying to conceive now, not in the middle of the third trimester.

10. Not thinking about the future. At first, I really just focused on getting rid of debts to help myself now and I didn’t really think about the long term future. While the debt repayment was a good idea, my single minded obsession left me unprepared to face investing when I got ready. I should have spent the time when I was repaying debts understanding and researching what was to come next.

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  1. Stephanie says:

    Just out of curiosity, how easy is it to get a rate reduction on my credit cards? How much should I ask for, what should I say? I pay my bill every month, but I don’t like the fear of accidentally not paying something and having a huge interest rate to deal with.

    Any advice on when to call, who to call, what to ask, etc. would be awesome!
    Thanks

  2. Brip Blap says:

    Good list. I still struggle with #3 – it took me a while to figure out that my favorite brand of cream cheese cost 3 times as much as the store brand and that they were barely indistinguishable. That sortof leads into #8 (gourmet eating) related to #4 (hobby spending). I like gourmet cooking, too, but if you want to save money you can’t eat filet mignon for dinner at home on a regular basis. I am trying to learn to cook fancy meals with non-fancy ingredients… not always easy, but doable.

  3. sc says:

    Regarding #2.

    The emergency fund over credit debt logic here seems a little off. If you look at the numbers, putting money toward the credit card debt still saves you money, even if you end up having to put some of the money back on to the card. Better to “undo” work than to never have done it at all.

    Example:
    You have no emergency fund, and a large CC debt at 15%. At “month 1″ you have $1000 to invest toward your debt or toward an emergency fund.

    Option A: Put it toward the debt. In 6 months you have an emergency and need 1000, which you charge to the card. You have saved about $75 in interest in the meantime, but are back where you started in terms of debt and still have no emergency fund.

    Option B: Put it in emergency fund. In 6 months you have an emergency and spend the 1000 out of the emergency fund. Your debt is $75 more than the first scenario. Your emergency fund is now about $18 from the interest on the money from the bank.

    In this situation the emergency fund option actually costs you $57.

    Financially you’d be better off putting EVERYTHING toward the high interest debt, even if it meant maybe increasing the debt down the road sometime. Emotional reasons might make it better to go the “emergency fund” route though.

  4. Moneymonk says:

    I can relate to #10, I never wanted to wait.
    Debt helped me get things as quicker

  5. plonkee says:

    Presumably #9 is for financial reasons, not just because its more fun trying to conceive than hanging round waiting for the baby to finally show up ;)

  6. yvie says:

    Have you ever tried pasta cooked with tomatoes in season, onions, black olives, garlic, oregano and basil? Yum and inexpensive. If your ingredients are fresh, they don’t have to be expensive to be delicious.

  7. john m says:

    I wished I invested in a Roth IRA when I first worked at age 17. Also, I wish I haven’t wasted a lot of money on trendy clothes. Now, I try to buy clothes that are made to last.

  8. Re Kids. We have two and I am so glad that we don’t just have a singleton. I feel like we’re more of a family now that we have two kids. When we just had one kid we were more like a couple with a child. Still a family but nuanced differently. Being a couple with a child allows you greater ability to focus on your marriage. It also is so much easier to be fiscally responsible. From a strictly financial standpoint and from an ease of life point of view having just one makes sense. But from an emotional long term point of view having two is definitely better. Just more bumps along the way. THought I would argue that perhaps you have more personal growth because of that!

  9. Jennifer says:

    Loved your article. As I am in the process of getting out of debt now, I have made some of the same mistakes, but will learn from your advice on the ones I haven’t made yet. Thanks. :)

  10. One of the things that has helped me immensely is joining Debtors Anonymous. This is a twelve step program modeled after Alcoholics Anonymous. It’s a spiritual program applying spiritual principles to dysfunction and lack of control around money.
    Thanks for your insights.

  11. sara says:

    A thought about inexpensive cooking- My dad’s best cooking lesson was that “Presentation is 90 percent of the meal.” Its amazing the difference that appearance makes in the enjoyment of the meal. This really makes it possible to eat meals that look and taste gourmet without spending lots of money. Paying attention to presentation in cooking means things as simple as using ingredients of contrasting colors (dried cranberries in a green salad) cutting vegetables into a variety of shapes (dice the onions up small and slice the carrots at an angle) and plating (just adding a dollop of white sour cream and some red paprika to each bowl of golden butternut squash soup last night made the dish go from “meh” to “wow!”) Even things as simple as wiping up the drips off of the rim of the plate before serving adds to the “restaurant feel”
    The idea is not to trick the eater by serving dolled up slop, but to remember that the eyes play a powerful part in our perception of quality. You’ll be amazed at how great a beautifully plated meal can taste and feel- It certainly doesn’t feel like budget! This is also a great cooking exercise to help discover new flavor combinations and recipe ideas.

  12. marybeth says:

    You could have waited to have children, but consider the fact that, you could have waited then had fertility issues. Most people don’t let the idea of having children slip by that easily, so the cost of fertility treatments or adoption would be MUCH higher than the expenses you incur in a traditional pregnancy.

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