Updated on 07.25.08

The Single Biggest Money Mistake I’ve Ever Made

Trent Hamm

The single biggest money mistake I’ve ever made was the day I decided that my future self would pay for stuff that I wanted (not needed, but wanted) now.

The amazing part is that I remember it like it was yesterday.

I was twenty years old and a junior in college. I had taken the advice of a family friend and applied for a credit card about six months beforehand, but I hadn’t used it for anything during those six months.

I had spent most of an afternoon playing GoldenEye 007 with several friends. For those unaware, GoldenEye 007 was a “spy versus spy” video game where multiple players would attempt to eliminate the others by being stealthy. You had to, in essence, find good places to hide and snipe the other players.

Anyway, I thoroughly enjoyed it, and later that night, I went back to the tiny apartment I shared with several other people, kicked back on my air mattress in the corner, and watched some television.

But I kept thinking about GoldenEye. I wanted to play it. I was bored. I had been the worst player of the four of us earlier and I wanted to improve my skills before our next session.

And then I made the big mistake. I flipped open my wallet and saw the credit card and I thought about it.

I could go get an N64 and GoldenEye right now.

I’ll be able to afford it later. I’ll have a great career.

I could have it in an hour.

I’m so bored. It would me much more fun if I had it.

I can just go look.

So I got up and went to the local department store, which had the game in stock. I stood there looking in the case, mulling it over … and then I called over a clerk to get the items out for me. Not just an N64 and not just GoldenEye, but a second controller and two other games as well. I plopped about $400 on the credit card and walked out of the store.

I’d like to say I felt some twinge of guilt when I was leaving, but in all honesty I didn’t. I was just incredibly excited to go back to that apartment, hook up my new console, and play some games. I stayed up most of the night playing my new games and thoroughly enjoyed them.

What I didn’t enjoy was what came later. I received a bill for $17 in the mail a few weeks later. I paid it. It was the first of many bills, ones that became a constant part of my life. Soon, the bill was $30, then $50, then I was receiving multiple bills.

Those bills were drastically reducing my financial breathing room, and since I was already accustomed to using the plastic, I just kept living like I was before, just using the plastic to leverage spending.

Eight years later, I finally reached the meltdown point, and just like that earlier night, my financial future turned in a moment.

Those eight years taught me one incredibly crucial lesson. Every choice you make today, you have to live with tomorrow. If you put something you want on plastic, that bill is going to come in eventually, and it will cost much more than whatever the value of that item you’re buying is. If you make a friend today, that friend will help you tomorrow. If you make an enemy today, that enemy may just stand in your way tomorrow.

This one choice, the seemingly simple decision to go for it and buy something I wanted without really thinking about the long term consequences, shaped my life in a negative fashion for years. One moment in time can shape so much.

Feel free to share your own moment in the comments, if you have one.

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  1. I did roughly the same thing, at roughly the same age. Only I hadn’t even started college yet, and had no prospects for a “great career.” I snapped out of it about five years later and started tackling my credit card debt just about the time I was starting college. It wasn’t easy, but I played those introductory 0% APR credit card games (carefully) for about two years, and got out of debt in that time.

    Kudos to you for being honest and brave enough to post about this. Credit card debt is certainly one of the biggest financial mistakes anyone can make.

  2. Jeana says:

    I wrote a very similar post to this one, about the single most effective thing I’ve done to cut costs–realize that simply wanting something doesn’t justify buying it. You can read it here.

    (Do you allow links in your comments section? I guess I’m about to find out.)

  3. Movingonup! says:

    I had trouble with credit cards as soon as I was out of college. I had money and I wanted furniture and a cool apartment like the rest of my friends. I’m now quite certain all of my friends were in financial trouble too. Pottery Barn tastes on a Target budget.

  4. Marie says:

    I really liked this entry. I’ve been visiting your site for a while now and I’ve found it so super and inspirational. I’m in grad school and thankfully I get funded so I don’t have to get myself into loans, but I made some really stupid decisions that have me making ~500$ in payments every month so I can get rid of the card debt. I am trying to recover my sanity after spending too much money on way too many things that I really don’t need. It all started back in college when the people from MBNA (now Bank of America) came during the first weeks of classes and handed out credit card applications. At the moment I was dating this guy who instead of stopping me dead on my tracks and help me analyze the situation said, go ahead, the more you get the easier you’ll life will be. And I was doing well. Until I started in grad school. I manage to trash ~30K from a settlement into clothes, computers, cable, movies, dining out. Before I sat down and started looking at my finances really close I was already in ~20K in debt. With the snowball approach I’ve managed to clear up on out of the 2 cards I own and one other account. My goal for this year is to close that one account and start focusing on my 2 big credit card debt. Because I knew I couldn’t trust myself I chopped 2 of the credit cards and I am trying to set limits on using the 3rd one (so far I’m doing good). Thanks for all your tips. Hapy blogging!

  5. Kimberly says:

    I wonder how a parent teaches a child about finances so they knew the pitfalls of credit cards. I don’t remember every being taught and neither does my husband. Yet neither of us have ever had credit problems. We only buy what we need and what we know have the money in the bank to pay for and pay off our bill each month. Only twice in our 17 yrs of marriage could we not.It took 2 months to pay off the honeymoon and once we had a bad ice storm and insurance didn’t cover the damage. but it was not a long term debt.
    We talk to our boys about our credit and finances and why we don’t just use plastic to buy that cool toy or new computer system. We have talked about interest rates on cards. I hope it sinks in for them.

  6. Claire says:

    Absolutely true. And this idea can be expanded to so many other things: Every dollar you spend and don’t put into your emergency savings account could come back to bite you later when you have a true emergency and not enough money. Every important thing you put off now – getting a will, having enough life insurance – could turn into a problem for you later.

    That said, I think it’s important to not get overhwelmed by this. Do the absolute best you can, and if things don’t work out the way you wanted, know that you did what you could.

  7. Jaspenelle says:

    I am lucky I learned from my parents spending and later my inlaws how out of control plastic can get. So I don’t use it. It feels so much better to have money in the bank and to truly wait and earn something (rather then instant gratification.) I am grateful I learned it early.

  8. Justin says:

    I had a similar experience. While I never have had a credit card, my wife and I were doing our taxes and realized just how much money we had made, (and how much we had spent). We (foolishly) decided that we wanted to something to show for all of our hard work, but didn’t want to buy a house because we didn’t know where we wanted to be long term. So we decided to go out looking for a new car (just to look). We ended up buying an overpriced SUV without even putting any money down on it. Its been a year and a half of financial bondage, but it is almost paid off. We decided that we would never finance anything every again (except maybe a home).

  9. michael says:

    What’s the single best money saving thing you’ve done? Not “stopped with the credit cards” — that’s too easy. I mean, the one single action that cuts your costs (like using Amazon for groceries, or buying diapers in bulk, or carpooling, or what have you).

  10. thrifty27 says:

    My younger sister is starting college this fall and I worry about the same thing happening to her. I somehow managed to escape this situation but I don’t know if she will, we have different attitudes about money. It is good to see that there is a way out of it, thanks for being an inspiration!

  11. Jeanne-Erin says:

    Ugh. This post makes me nauseous. I remember making those choices, and the thrill I’d get in purchasing something so big. (I grew up in a poorer family, and we didn’t buy on credit.) I felt powerful, in control.

    I haven’t felt that feeling or been reminded of that feeling so viscerally for years. It comes back rather easily, though.

    And it’s not dissimilar to the feeling I get when I remember hangovers or car crashes.

    Thank you for helping me remember how far I’ve come, even if I’ve got a long way to go before all those bad decisions are paid off.

  12. Ros says:

    I did the same thing and was in credit card debt from college straight through my early 30s until I came across your PF blog and others with similar ‘renewed’ values. And then I found the tools and the mindset to make the debt go away. All I can say is that in the beginning: I didn’t know and I didn’t think. Duh.

    This morning I read this quote from Elizabeth Gilbert (Author, “Eat, Pray, Love”) that made me laugh for the cold, hard truth: “My father is the most frugal human being I’ve ever met. His most adamant instruction was that I should never under any circumstances go into debt. To this end, he passed along the message his own grandfather had taught him: ‘Borrowing money is like wetting your bed in the middle of the night. At first all you feel is warmth and release. But very, very quickly comes the awful, cold discomfort of reality.'” http://money.cnn.com/galleries/2008/pf/0807/gallery.smartest_advice.moneymag/10.html

    Touché and how I wish my dad or grandfather had instilled as much in me when I was younger!

  13. I got a credit card the summer before my senior year in college because I was going abroad and I wanted to use it for emergencies. Well, because I was leaving the country for a year, my buddies and I decided to go on a road trip before I left. The first thing I ever used that credit card on was a strip club in Colorado during that road trip…and I finally just paid the balance of that credit card off 5 and a half years later. I wish I would have never gotten the thing, but life’s best lessons are never the easy ones. That’s God for ya…

  14. Kathleen says:

    I’ve always been a saver, so I didn’t have a “moment” so to speak, but a light did click on at some point:

    I got my first job out of college in Washington DC. I was being pretty decently-paid for a college grad at the time, and by the time I’d budgeted out all my expenses, I still didn’t have too much left over for savings.

    I was looking around at the people I worked with in expensive Banana Republic wardrobes and nice cars. I asked my dad, “How do these people afford to live like this?” He replied, “What makes you think they can afford it?”

  15. Chris says:

    My biggest financial mistake was associating a new, higher paying job with new, better stuff. Two years ago I took a new job that in an instant more than tripled in total income and without any foresight, I tripled my home theater’s size. I thought because I was making more money, I could just pay off my credit cards in a month or so and soon I had a new HDTV, XBOX, a new computer and of course all the accessories that go along with those things. And now, I regret those decisions because I am starting to realize my own financial meltdown; credit card companies are calling constantly, my credit score has taken a huge hit and I can barely pay my utility bills each month. Just like Andy said, I wish I never got the credit cards, but I did, and now I’m fixing my mistakes. Your an inspiration Trent, thanks.

  16. Journeyer says:

    Gosh, I still do that given half a chance. So I try not to give myself a chance. We’ve cancelled our cards which of course has helped.

    The other huge temptation I’ve removed is to stay away from the shops. I used to go to shopping centres at least twice a week and would always be lured by something. Sometimes small purchases, sometimes large. I no longer shop for recreation and the savings have been significant.

  17. clint says:

    my story was a little different. I had a Discover card rep give me a free t-shirt at college regristran to sign up for a credit card. It took me over 8 years to get things under control and payed off. I think some times what life would have been like if that Credit card rep had not been there teaching me the most expencive lesson of my life. I now work getting people out of debt and have learned a lot about how the credit card companyes use your mind to get you to think that you “need” something and need it now.

    Stay out if you can Get out with everything you can if you are allready in.

    Debt is EVIL…stay away.

    Clint Lawton


  18. Trent,

    Have you ever considered where you would be financially if you hadn’t sunk into credit card debt? I wonder where you would be if you hadn’t had your financial meltdown. Would you be as passionate about money today? Would you have staged your spectacular recovery from debt? And have been able to quit you day job and start your new dream career out of the ashes of your experiece?

    My own financial story is essentially identical to yours, right down to the time line and what we charged to get into debt. But, in a very real way, I think getting into debt was the smartest thing I ever did financially. Yeah, it put me behind dollar-wise, big time. But getting into debt was what got me thinking about money, what got me passionate about it. I never thought, for example, about passive income, and the “crossover point” (which I discovered independently while doing Excel scenarios about getting out of debt). I remember in high school mocking a guy who had opened an IRA. Now that I’ve recovered from debt, and learned so much about money in that process, I’m focused on financial independence. If I never got into debt none of this would have happened. I would be living paycheck to paycheck spending my money on junk. Maybe I would have never had debt but I never would have had savings, retirement, or any type of plan either. I would have woken up at age 50 realizing I had no retirement plan.

    I’ve noticed that most bloggers have been in debt problems AND are as focused on financial independence as they are on debt reduction. This is incredibly inspiring to me. I think getting into and then out of debt is a humongously valuable lesson. Expensive, yes, but so highly educational.

    Do you agree? Would you be as financially smart now, and as well off now, financially (and even professionally and personally) if you had NOT taken on debt? Does debt recovery make us stronger?

  19. Joe says:

    I love that line: Every choice you make today, you have to live with tomorrow.

    I don’t have big problems with credit cards, but I am getting more and more interested (addicted?) with the idea of stock picking. I have recently thought I was a Maverick, partly because it brings a good feeling. Today one of my few investments dropped over 40%. Not a ton of money… but I was only thinking about the possibility of making 40% in two months, but loosing it never really seemed that possible (it was already “80% off”). I know statistically i’d be better off with index funds, but it just feels good to be in control.

    Every choice you make today, you have to live with tomorrow. A great mantra.

  20. mgroves says:

    “Every choice you make today, you have to live with tomorrow.”

    If only the government would live by that motto when people ask for handouts.

  21. Shevy says:

    Oooh, Frugal Bachelor has an interesting point! If we hadn’t messed up in the past, would we have the passion to really do well or would we just plod along?

  22. Ryan says:

    The funny thing is, if you bought the N64 and Goldeneye today, it wouldn’t be a splurge at all. The two together probably cost only a few bucks.

    Come to think of it… it was a really good game…hmmm..

  23. Ryan says:

    Yeah, but dude…it was GoldenEye! How often do life’s GoldenEyes come along? Or did I miss the point? Jk. That’s a great story.

  24. Lurker Carl says:

    “The funny thing is, if you bought the N64 and Goldeneye today, it wouldn’t be a splurge at all. The two together probably cost only a few bucks.”

    This is the perfect reason to wait before buying the latest and greatest. That “six month rule” can be your financial best friend, especially with electronics.

  25. older and a maybe little wiser says:

    I decided to narrow this down from a list of four.
    My worst decision was not paying off my student loans when I cashed out my Worldcom options in 1999. I did pay off my credit card debt, and an old loan from a friend, and I put $10k in the bank as an emergency fund. But I invested the remaining $10k in a few hand-picked stocks that were worth $4k when I decided to cut my losses. The emergency fund gradually went to a series of non-emergencies. Nine years later, the loans remain.

  26. guinness416 says:

    Frugal Bachelor, I’d say plenty of people (including myself) have always had solid and boring and safe financial histories without major debt, but are passionate about staying on top of our investments and goals. I can think of a dozen moneybloggers off the top of my head who fit that description. You may be right in Trent’s case, I don’t know, but it’s not either-or.

  27. MoneyBlogga says:

    My biggest money mistake put me in the financial hole very early on and that was thinking, “I make $x amount of money a month which means I can make monthly debt repayments up to that very same amount each month.” That literally meant that my entire paycheck was gone before I even received it, month after month. I picked up on this way of thinking from watching my own parents totally mismanage money. I thought this was how it was done. I admit that I skipped out on a lot of debt when I left the UK for the USA because I was way in over my head and my manic depression was running wild.

  28. Christine says:

    Everyone should read this article! EVERYONE. This should be in a pamphlet and handed out at college orientation! I too, got sucked into my first CC in college.

  29. jasz says:

    “Stop using credit” may not seem like exciting advice, but I wouldn’t say it’s easy! Over the last 40 years our society has urged it’s citizens to have everything they want RIGHT NOW.
    Paying off (and getting away from) credit has been both the smartest and the most difficult financial move we’ve made. Sometimes the simple answer is the best.

  30. spaces says:

    My biggest money mistake was financing a private law school with debt. The cynics in this business say “Go top 14, go public, or don’t go at all” and I have come to agree with that phrase. I worked my tail off during school, held various jobs, lived cheap and carpooled in, was frugal generally, and graduated at the top of my class into a ‘good job’, but school was horrendeously expensive. I graduated with enough student loan debt that I am forced to choose jobs, cases and clients — truly, to shape my career — based primarily on compensation. And I have been one of the lucky ones in this profession, I have never truly lacked decently-paying work.

    Happily, the best decision I made was buying a small fixer-upper home in what became a gentrified neighborhood largely untouched by the current crisis. In a few years, I might be able to sell it at a substantial enough profit to finally pay off my educational debt and start over in another neighborhood.

  31. Excellent post, Trent. I think the reason your site is so successful is because you are so transparent with your own shortcomings. Your honesty and self-awareness help us on levels far removed from finances.

    “Every choice you make today, you have to live with tomorrow.” This might be the most profound statement I’ve read on the Internet in quite awhile. Nice job.

  32. Wow!
    This is a great insight how such a small decision like buying a N64 can lead you down that path of destruction. Thankyou for your insight

  33. Sentient Meat says:

    Yeah, but it was Goldeneye. My friends and I played that heavily in college. It’s not too bad: 1 system and game to be enjoyed by many friends? And today the most recent system I have is a GameCube. I always end up playing Rock Band at someone else’s house so I never have to pay for it. It all comes out in the wash. They got free gaming in the past, I get free gaming now.

  34. Sisterfunkhaus says:

    It’s nice to see you write about this. My husband and I were in the same boat and are now out. It’s crazy how much better it actually feels to buy something and know that it’s yours and that you don’t owe anyone anything. We have far more money now and live better now than when we used credit cards. We have little worry and can save $$$ for emergencies instead of sending it to credit cards.

  35. randomlife says:

    Avoiding debt as much as possible is excellent advice, but I think you’re missing an important point. Sometimes paying extra money in order to get use of something earlier is more desirable than paying less for it later.

    My point is that being aware of the extra cost and taking that into consideration should be taken into account in any of these credit decisions.

    Let’s say I can’t afford to shell out $2000 for a nice trip to Hawaii next month. But if someone told me that I can either wait until I have saved up $2000 or I can go next month and just pay $40 a month for it, I think I would opt to go as soon as I could. EVEN THOUGH the credit plan would end up costing me say, $4000 total because the payments are spread out over a long period of time with interest, I think I would still do it.

    Some people might say, I don’t want to pay twice the cost of something. But to me, that’s the price of getting to do it now instead of waiting years.

    In my opinion, debt isn’t “evil”. You just have to look at what it will ultimately cost you and decide whether or not that price is too high.

  36. Tony says:

    I never intended on a credit card. Then one day the local sub shop had a deal where you got a free sub when you filled out a credit card application. And I was hungry. A year later I had a maxed out credit card at $3,500. One of my worst offenses – regularly buying a keg on credit, charging $5 at the door, and not sending the cash towards the credit card bill.

    But I learned from it. I’m glad to have learned the lesson early on. And it did make for a fun final two years of college!

  37. liv says:

    I guess i should not have gambled in Vegas this weekend…

  38. Derek Wong says:

    Loved the Goldeneye on N64, though! :)

    I’m definitely glad for the things that I learned while growing up. Things about being frugal, and dealing with money. It’s helped to avoid some of the pitfalls of life (at least for me).

  39. James says:

    I developed a similar behavioral pattern my freshman year of college 7 years ago. I got in the habit of going out to eat and recreational shopping and managed to spend most of the $5000 that had been in my savings account. I never looked at my bills or thought of budgeting. Not only did my bad habits destroy my savings, they strained my family and friend relationships too. Only after getting some perspective and taking a hard look at my lifestyle did things start to improve.

    Goldeneye was an awesome game though. I was also a fiend on MarioKart 64.

  40. Christine says:

    I really think this depends on your own personal level of self-control. My husband and I have a card that we use to go to concerts in the summer months. We are avid about it, and see any performer we like, mostly regardless of cost. Onto the low-interest card it goes. At the end of the concert season, we divide by nine and make large payments each month sept-may (we live in PA, and the weather is not good for concerts during the colder months). Next season, we go out again. It all depends on how you use it, or if it uses you.

  41. Brandon says:

    Growing up fairly poor and witnessing my mother make money mistake after money mistake I was really timid of getting a credit card. I made it through undergrad, law school, and my MBA without ever getting a credit card. I was “cash only”.. When it came time for me to graduate and buy my 1st home, guess what? my credit score sucked.

    I have a little sister who is going to college in a few weeks. I picked out a student credit card for her and told her (and our parents) that she should use it for food only, and only at a grocery store (more cash back). Credit cards are great tools, and there are lots of perks if used properly.

  42. Brad says:

    I grew up in a frugal house. I could go on but most people who know what that means can guess. When I started working at 16 I was cocky because I made 10x what my friends did. I was making about 3k a month as a programmer. Then I moved to the USA and I currently make 72k a year. I am 24. For the last 5 years I have overspent, not saved a penny and regretted every second of it. I had debt, upsidedown (twice over) new cars and live in a 2k a month apartment.

    I have a 5 year plan to get out of debt, own a house and get my family started. You live and learn. But when I think about what I could have done with the extra 2k a month I had for 5 years and I try to figure out what I did with it, it makes me pretty sick. I BLEW IT ALL.

    It felt great when I did it.
    It feels terrible every day now.

  43. Johan Idstam says:

    Hmmm, Google served me an ad for an American Express Gold Card when I read this post in Bloglines.



  44. Amy says:

    Great entry! You should send it to the federal government…oops, too late.

  45. michael bash says:

    I was born in 1944, my brother in 1947, our parents in 1915 & 1916. We learned this frugal economic stuff growing up. My Dad was a university prof. by the way. From what Trent says somewhere along the line the “frugal economic stuff” stopped being taught/learned. That’s the problem, e.g. the house of cards housing problem. The song says, “I want it all, and I want it now!” I think we’re in big trouble.

  46. Lily says:

    30 years ago I was in the military. I married a man 15 years my senior and we’ve been happily married for 28 years. I lived in the barracks, no plastic. My only two monthly bills were for a modest car and the insurance. I lived well within my means and sent money to my parents to help them out.

    My new husband was used to juggling finances so I trusted him to take my money and pool it with his when we married. He had plastic, bills, rent, utilities, etc.

    My “Golden Eye 077” moment came when my husband and I discussed buying a house. In 1982 at 21 years old the thought of buying a $100,000 house in Southern California seemed impossible. But he did the number-crunching and described how it would work. Still not convinced, I asked, “What about saving money for a rainy day?” His response….. “We have enough credit for a rainy day.”

    For decades later we struggled to make ends meet, living from paycheck to paycheck. Horrified once when I was fired from a job.

    Recently, I resolved to get a handle on my finances. It was high time to grow up and take responsibility for my finances.

    My husband could not be happier as he was under considerable stress doing it all. Now, he may not have the $ to run out and buy some impulsive “treat.” But he says it’s a small price to pay to have me share in the finances.

    The most profound influence in helping to turn my financial status around has been the information dished out relentlessly by Trent on TheSimpleDollar.com.

    Trent, your blog has transform the way I look at money. Reading your daily emails have been an inspiration. I have a looooooong way to go to become financial “healthy.” But you’ve empowered me with knowledge and motivation to stay on track. Slowly I’ve managed to get my husband on board. I’m now 48 and he’s 63. And it’s high time we get our finances in order so that we can enjoy the rest of our lives living out our dreams and not having to worry about running out of money.

    Your blog has taught us how to make the most out of what we have. And how we were making very bad, choices.

    I am now optimistic about our financial future and I have you to thank.

    Thanks Trent!

  47. Tina says:

    I am a new reader and I’m really enjoying reading your current and past posts.
    I had a similar experience in college, but I took the opposite route and decided NOT to make the purchase. Now I think of that as one of the best decisions I ever made.
    Thanks for all the helpful information!

  48. Ro says:

    I grew up in a home without any money because my father racked up credit card bills before it was a way of life. I remembered how it felt to be that broke. As a result I have rarely carried a credit card balance because I don’t ever want to live that way again – so broke.

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